Q1 Net Revenue Drives Net Income of $167 Million, Adjusted
EBITDA of $542 Million and Adjusted Free Cash Flow of $403
Million
All-Time High Quarterly Distribution Revenue
Reduced Year-over-Year Quarterly Losses at The CW by $50
Million
Quarterly Return of Capital to Shareholders of $168 Million,
Reducing Shares Outstanding by 1.7%
Nexstar Media Group, Inc. (NASDAQ: NXST) (“Nexstar” or the
“Company”) today reported financial results for the first quarter
ended March 31, 2024. Please visit Nexstar’s website to view the
full press release.
STATEMENT FROM PERRY A. SOOK, FOUNDER, CHAIRMAN AND
CEO
“Nexstar is off to a strong start in 2024, delivering the
highest first quarter net revenues in the Company’s history and
once again outpacing consensus expectations for Adjusted EBITDA and
Adjusted Free Cash Flow. As the industry’s largest local
broadcaster with the most-watched broadcast television programming,
Nexstar’s value to our distribution and advertising partners is
demonstrated by our continued strong financial performance,
including all-time quarterly high distribution revenue. We continue
to make progress at The CW, reducing operating losses by $50
million year-over-year and kicking off the 2023/2024 broadcast
season by delivering two sequential quarters of primetime audience
improvement. Looking ahead, we remain confident that Nexstar will
deliver another strong year of financial results and expect to
build momentum through 2024, given the anticipated record-level of
political spending this presidential election cycle.”
2024 First Quarter Financial Summary
($ in millions)
Three Months Ended March
31,
2024
2023
% Change
Distribution
$761
$728
4.5
Advertising
512
517
(1.0
)
Other
11
12
(8.3
)
Net Revenue
$1,284
$1,257
2.1
Net Income
$167
$88
89.8
% Margin(1)
13.0
%
7.0
%
6.0
Adjusted EBITDA(2)
$542
$496
9.3
% Margin(1)
42.2
%
39.5
%
2.7
Adjusted Free Cash Flow(2)
$403
$377
6.9
(1)
Net Income margin is Net Income
as a percentage of Net Revenue. Adjusted EBITDA margin is Adjusted
EBITDA as a percentage of Net Revenue.
(2)
Definitions and disclosures
regarding non-GAAP financial information including reconciliations
are included at the end of the press release. In the first
quarter of 2024, we adjusted our definition of Adjusted EBITDA to
add back stock-based compensation expense and restructuring
expenses and to subtract out pension credits. We also adjusted our
definition of Adjusted Free Cash Flow (formerly referred to as
Attributable Free Cash Flow) to subtract out pension credits and
payments for capitalized software obligations and to adjust for
actual cash contributions from noncontrolling interests in lieu of
adjusting for our partners’ share of losses in The CW. The
comparative prior year disclosures presented herein were also
recast to conform with the current presentation.
Company and Business Highlights
- Announced a 25% increase in the quarterly cash dividend to
$1.69 per share of its common stock, marking the Company’s eleventh
consecutive annual dividend increase.
- Adopted a policy separating the roles of the Company’s
Chairperson and Chief Executive Officer, which will take effect
after Mr. Sook leaves the Company and the Board.
- Received $40 million of gross proceeds from the sale of our
ownership interest in Broadcast Music, Inc. (BMI).
- Entered into a multi-year time brokerage agreement with KAZT-TV
in Phoenix, Arizona, the nation’s 11th largest television market,
and added The CW Network affiliation.
- Successfully completed the transition of all 117 markets to
Nexstar’s own national sales organization from third-party
representation.
- Entered into multi-year agreements with Comscore and Nielsen
for linear and cross-platform audience measurement across Nexstar’s
local TV, broadcast, network, and digital businesses.
- Delivered consecutive quarters of primetime ratings growth at
The CW in the first two quarters since the launch of the 2023/2024
broadcast season.
- Announced that The CW’s seven-year NASCAR Xfinity series deal
beginning in 2025 will start ahead of schedule, with all 2024
playoff races now scheduled to air exclusively on The CW beginning
in September 2024.
- Achieved our near-term target of reaching over 50% of U.S.
television households with an ATSC 3.0, or NextGen TV, signal from
a Nexstar owned or operated station following the Chicago and San
Diego market launches.
Financial Highlights
- Net Revenue. Record first quarter net revenue of $1.28 billion,
increased by $27 million, or 2.1%, reflecting growth in
distribution revenue, partially offset by a slight decline in
advertising and other revenue. Approximately 59% of Nexstar’s first
quarter revenue was derived from distribution revenue.
- Distribution Revenue. First quarter distribution revenue of
$761 million was an all-time quarterly high for the company,
increasing $33 million, or 4.5%, over the comparable prior year
quarter. Distribution revenue growth was primarily due to
distribution contract renewals in 2023 on terms favorable to the
Company, annual rate escalators, and the return of our partner
stations on one MVPD in January, partially offset by MVPD
subscriber attrition. Distribution revenue includes retransmission
revenue, carriage fees, affiliation fees, and spectrum leasing
revenue.
- Advertising Revenue. First quarter advertising revenue of $512
million decreased $5 million, or 1.0%, compared to the prior year
quarter reflecting a $36 million year-over-year reduction in core
and digital advertising revenue due to ongoing advertising market
softness offset, in part, by a $31 million year-over-year increase
in election-year political advertising to $39 million. Advertising
revenue includes core television advertising, digital advertising
and political advertising revenue.
- Net Income. First quarter net income of $167 million increased
$79 million, or 89.8%, compared to the prior year quarter,
reflecting increased revenue, lower operating expenses driven by
reduced amortization of broadcast rights at The CW, and a $40
million gain on the sale of our ownership interest in BMI offset,
in part, by increased interest expense. Net Income margin increased
to 13.0% from 7.0% in the comparable prior year period.
- Adjusted EBITDA. First quarter Adjusted EBITDA of $542 million
increased $46 million, or 9.3%, compared to the prior year quarter
primarily reflecting revenue growth and a $50 million
year-over-year reduction in losses at The CW, partially offset by
an increase in other operating and corporate and elimination
expenses and a reduction of cash distributions from equity method
investments at TV Food Network LLC (“TVFN”) primarily related to
lower advertising revenue. Adjusted EBITDA margin improved to 42.2%
from 39.5% in the comparable prior year period.
- Adjusted Free Cash Flow. First quarter Adjusted Free Cash Flow
of $403 million, increased $26 million, or 6.9%, due primarily to
the increase in Adjusted EBITDA offset, in part, by higher interest
expense due to rising interest rates, slightly higher capital
expenditures and lower cash contributions from our partners in The
CW.
Capital Allocation
- In the first quarter of 2024, as shown in the table below, the
Company used cash on hand and cash flow from operations to repay
$30 million of debt, pay $57 million in dividends, and repurchase
666,574 shares of Nexstar’s common stock at an average price of
approximately $166.11 for a total of $111 million.
($ in millions, shares in thousands)
Three Months Ended March
31,
2024
2023
Cash Used For
Debt repayment
$30
$31
Acquisitions
-
-
Stockholder return
168
225
Common stock dividends
57
50
Stock repurchases
111
175
Shares Outstanding
End of period
33,038
35,984
Less: Beginning of period
33,601
36,810
Change in shares outstanding
(563
)
(826
)
% Change
(1.7%
)
(2.2%
)
Debt, Cash and Leverage
- The consolidated debt of Nexstar and Mission Broadcasting, Inc.
(“Mission”), an independently owned variable interest entity, as of
March 31, 2024 was $6.81 billion, including senior secured debt of
$4.10 billion.
- The Company calculates its leverage ratios in accordance with
the terms of its credit agreements which exclude The CW Network’s
operations and cash balance. As of March 31, 2024, The CW Network
had $90 million of cash on its balance sheet.
- As of March 31, 2024, the Company’s first lien net leverage
ratio was 2.21x compared to a covenant of 4.25x and its total net
leverage ratio was 3.73x.
- The table below summarizes the Company’s unrestricted cash
balances and debt obligations (net of financing costs, discounts
and/or premiums) as of March 31, 2024 and as of December 31,
2023.
($ in millions)
March 31, 2024
December 31, 2023
Unrestricted Cash
$237
$135
Revolving Credit Facilities
$62
$62
First Lien Term Loans
4,037
4,064
5.625% Senior Unsecured Notes due 2027
1,717
1,717
4.75% Senior Unsecured Notes due 2028
994
994
Total Debt
$6,810
$6,837
First Quarter Conference Call
Nexstar will host a conference call at 10:00 a.m. ET today.
Senior management will discuss the financial results and host a
question-and-answer session. The dial in number for the audio
conference call is +1 877-407-9208 or +1 201-493-6784, conference
ID 13745345 (domestic and international callers). Participants can
also listen to a live webcast of the call through the “Events and
Presentations” section under “Investor Relations” on Nexstar’s
website at nexstar.tv. A webcast replay will be available for 90
days following the live event at nexstar.tv.
Forward-Looking Statements
This communication includes forward-looking statements. We have
based these forward-looking statements on our current expectations
and projections about future events. Forward-looking statements
include information preceded by, followed by, or that includes the
words "guidance," "believes," "expects," "anticipates," "could," or
similar expressions. For these statements, Nexstar claims the
protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.
The forward-looking statements contained in this communication,
concerning, among other things, future financial performance,
including changes in net revenue, operating expenses and cash flow,
involve risks and uncertainties, and are subject to change based on
various important factors, including the impact of changes in
national and regional economies, the ability to service and
refinance our outstanding debt, successful integration of business
acquisitions (including achievement of synergies and cost
reductions), pricing fluctuations in local and national
advertising, future regulatory actions and conditions in the
television stations' operating areas, competition from others in
the broadcast television markets, volatility in programming costs,
the effects of governmental regulation of broadcasting, industry
consolidation, technological developments and major world news
events. Nexstar undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. In light of these risks, uncertainties
and assumptions, the forward-looking events discussed in this
communication might not occur. You should not place undue reliance
on these forward-looking statements, which speak only as of the
date of this release. For more details on factors that could affect
these expectations, please see Nexstar’s other filings with the
Securities and Exchange Commission.
Definitions and Disclosures Regarding Non-GAAP Financial
Information
Adjusted EBITDA is calculated as net income, plus or (minus):
transaction and other one-time expenses, stock-based compensation
expense, depreciation and amortization expense (excluding
amortization of broadcast rights for The CW), (payments) for
broadcast rights (excluding broadcast rights payments for The CW),
(gain) loss on asset disposal, impairment charges, interest
expense, net, (income) loss from equity method investments, cash
distributions from equity method investments, pension and other
postretirement plans costs (credit), income tax expense (benefit)
and other expense (income). We consider Adjusted EBITDA to be an
indicator of our assets’ operating performance and a measure of our
ability to service debt. It is also used by management to identify
the cash available for strategic acquisitions and investments,
maintain capital assets and fund ongoing operations and working
capital needs. We also believe that Adjusted EBITDA is useful to
investors and lenders as a measure of valuation.
Adjusted Free Cash Flow is calculated as net income, plus or
(minus) transaction and other one-time expenses, stock-based
compensation expense, depreciation and amortization expense
(excluding amortization of broadcast rights for The CW), (payments)
for broadcast rights (excluding broadcast rights payments for The
CW), (gain) loss on asset disposal, impairment charges, interest
expense, net, (income) loss from equity method investments, cash
distributions from equity method investments, pension and other
postretirement plans costs (credit), income tax expense (benefit)
and other expense (income) minus cash interest expense, capital
expenditures, payments for capitalized software obligations and
operating cash income tax payments, plus proceeds from disposal of
assets and insurance recoveries and cash contribution from
noncontrolling interests. We consider Adjusted Free Cash Flow to be
an indicator of our assets’ operating performance. In addition,
this measure is useful to investors because it is frequently used
by industry analysts, investors and lenders as a measure of
valuation for broadcast companies, although their definitions of
free cash flow may differ from our definition.
For a reconciliation of these non-GAAP financial measurements to
the GAAP financial results cited in this news announcement, please
see the supplemental tables at the end of this release.
With respect to our forward-looking guidance, no reconciliation
between a non-GAAP measure to the closest corresponding GAAP
measure is included in this release because we are unable to
quantify certain amounts that would be required to be included in
the GAAP measure without unreasonable efforts. We believe such
reconciliations would imply a degree of precision that would be
confusing or misleading to investors. In particular, a
reconciliation of forward-looking Adjusted Free Cash Flow to the
closest corresponding GAAP measure is not available without
unreasonable efforts on a forward-looking basis due to the high
variability, complexity and low visibility with respect to the
charges excluded from these non-GAAP measures. For example, the
definition of Adjusted Free Cash Flow excludes stock-based
compensation expenses specific to equity compensation awards that
are directly impacted by unpredictable fluctuations in our stock
price. In addition, the definition of Adjusted Free Cash Flow
excludes the impact of non-recurring or unusual items such as
impairment charges, transaction-related costs and gains or losses
on sales of assets which are unpredictable. We expect the
variability of these items to have a significant, and potentially
unpredictable, impact on our future GAAP financial results.
About Nexstar Media Group, Inc.
Nexstar Media Group, Inc. (NASDAQ: NXST) is a leading
diversified media company that produces and distributes engaging
local and national news, sports and entertainment content across
its television and digital platforms, including more than 310,000
hours of programming produced annually by its business units.
Nexstar owns America’s largest local television broadcasting group
comprised of top network affiliates, with over 200 owned or partner
stations in 117 U.S. markets reaching 220 million people. Nexstar’s
national television properties include The CW, America’s fifth
major broadcast network, NewsNation, America’s fastest-growing
national cable news network, popular entertainment multicast
networks Antenna TV and REWIND TV, and a 31.3% ownership stake in
TV Food Network. The Company’s portfolio of digital assets,
including its local TV station websites, The Hill and
NewsNationNow.com, are collectively a Top 10 U.S. digital news and
information property. For more information, please visit
nexstar.tv.
Nexstar Media Group,
Inc.
Condensed Consolidated
Statements of Operations
(in millions, except for share
and per share amounts, unaudited)
Three Months Ended March
31,
2024
2023
Net revenue
$1,284
$1,257
Operating expenses:
Direct operating
548
538
Selling, general and administrative
216
218
Corporate
55
48
Depreciation and amortization
190
249
Total operating expenses
1,009
1,053
Income from operations
275
204
Income from equity method investments,
net
19
25
Interest expense, net
(114
)
(107
)
Pension and other postretirement plans
credit, net
7
9
Gain on disposal of an investment
40
-
Other income (expenses), net
1
(1
)
Income before income taxes
228
130
Income tax expense
(61
)
(42
)
Net income
167
88
Net loss attributable to noncontrolling
interests
8
23
Net income attributable to Nexstar Media
Group, Inc.
$175
$111
Net income per common share attributable
to Nexstar Media Group, Inc.:
Basic
$5.25
$3.03
Diluted
$5.16
$2.97
Weighted average number of common shares
outstanding:
Basic (in thousands)
33,449
36,718
Diluted (in thousands)
34,024
37,448
Nexstar Media Group,
Inc.
Reconciliation of Adjusted
EBITDA and Adjusted Free Cash Flow (Non-GAAP Measure)
($ in millions, unaudited)
Three Months Ended March
31,
2024
2023
Net income
$167
$88
Add (Less):
Transaction and other one-time
expenses(1)
1
7
Stock-based compensation expense
18
14
Depreciation and amortization
expense(2)
138
142
(Payments) for broadcast rights(2)
(19
)
(27
)
Interest expense, net
114
107
Income from equity method investments,
net
(19
)
(25
)
Cash distributions from equity method
investments(3)
129
157
Pension and other postretirement plans
(credit), net
(7
)
(9
)
Income tax expense
61
42
Gain on disposal of an investment
(40
)
-
Other
(1
)
-
Adjusted EBITDA
$542
$496
Add (Less):
Cash interest expense, net
(112
)
(104
)
Capital expenditures
(44
)
(36
)
Payments for capitalized software
obligations
(1
)
(2
)
Proceeds from disposal of assets and
insurance recoveries
1
1
Operating cash income tax payments,
net
(2
)
(2
)
Cash contribution from noncontrolling
interests
19
24
Adjusted Free Cash Flow
$403
$377
(1)
Primarily includes severance,
legal and other direct expenses associated with our completed or
proposed strategic transactions and/or acquisitions, any fees or
other direct expenses associated with financing transactions, and
severance and other direct expenses associated with restructuring
activities.
(2)
Depreciation and amortization
expense excludes amounts related to amortization of broadcast
rights for The CW (already deducted from Net Income (loss)).
Payments for broadcast rights also excludes amounts related to The
CW. By using The CW’s reported amortization of broadcast rights in
our definition of Adjusted EBITDA, we match timing of revenues with
the expense of the programming.
(3)
Distribution received from our
investment in TV Food Network LLC during Q1 2023 excludes $69
million, the portion that is related to its accounts receivable
securitization program. As our investee stops or reduces the amount
of accounts receivable it sells into the program and our
distribution is reduced, we amortize that amount back into our
Adjusted EBITDA and Adjusted Free Cash Flow. During Q1 2024, the
amount related to the distribution received from TV Food Network
LLC includes $9 million of such amortization.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240503776043/en/
Investor Contacts: Lee Ann Gliha EVP and Chief Financial
Officer Nexstar Media Group, Inc. 972/373-8800
Joe Jaffoni, Jennifer Neuman JCIR 212/835-8500 or
nxst@jcir.com
Media Contact: Gary Weitman EVP and Chief Communications
Officer Nexstar Media Group, Inc. 972/373-8800 or
gweitman@nexstar.tv
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