- Net Revenue Growth Drives Record 4Q
Operating Income of $68.9 Million, Broadcast Cash Flow of $94.5
Million, Adjusted EBITDA of $85.6 Million,and Free Cash Flow
of $65.2 Million -
- Full Year 2014 Free Cash Flow Rises 88.1%
to $159.7 Million while Combined Full Year 2014 and 2013 Free Cash
Flow Reaches $244.7 Million;Year-end 2014 Basic Weighted
Outstanding Shares of 30.8 Million -
Nexstar Broadcasting Group, Inc. (NASDAQ:NXST) (“Nexstar” or
“the Company”) today reported record financial results for the
fourth quarter and twelve months ended December 31, 2014 as
summarized below.
Summary 2014 Fourth Quarter Highlights
($ in thousands)
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2014 2013
Change 2014
2013 Change Local Revenue $ 77,219
$ 75,106 +2.81 % $ 279,150 $ 265,376 +5.19 %
National Revenue $ 31,094 $ 32,827 (5.28 )% $
109,930 $ 113,423 (3.08 )%
Core Revenue
$ 108,313 $ 107,933 +0.35 %
$
389,080 $ 378,799 +2.71 % Political
Revenue $ 35,366 $ 1,537 +2200.98 % $ 64,294 $ 5,152 +1147.94 %
Retransmission Fee Revenue $ 44,134 $ 26,815 +64.59 % $ 154,963 $
101,119 +53.25 % Digital Media Revenue $ 14,231 $ 6,623 +114.87 % $
46,692 $ 30,846 +51.37 % Other $ 1,232 $ 1,070 +15.14 % $ 4,514 $
4,280 +5.47 % Trade and Barter $ 8,756 $ 8,347
+4.90 % $ 31,214 $ 31,529 (1.00 )%
Total
Gross Revenue $ 212,032 $ 152,325
+39.20 %
$ 690,757 $ 551,725 +25.20 %
Agency Commission $ 19,228 $ 14,203 +35.38 % $
59,446 $ 49,395
+20.35
%
Net Revenue $ 192,804 $ 138,122
+39.59 %
$ 631,311 $ 502,330 +25.68 %
Gross Revenue Excluding
Political
$ 176,666 $ 150,788
+17.16
%
$ 626,463
$
546,573
+14.62
%
Income from Operations $ 68,899 $ 32,078 +114.79 % $
173,237 $ 103,241 +67.80 %
Broadcast Cash
Flow(1) $ 94,500 $ 55,311 +70.85 % $ 269,908 $ 193,008
+39.84 %
Broadcast Cash Flow Margin(2) 49.01 %
40.05 % 42.75 % 38.42 %
Adjusted EBITDA(1) $
85,611 $ 49,266 +73.77 % $ 234,734 $ 166,669 +40.84 %
Adjusted
EBITDA Margin(2) 44.40 % 35.67 % 37.18 % 33.18 %
Free Cash Flow(1) $ 65,231 $ 30,199 +116.00 % $
159,734 $ 84,921 +88.10 %
(1) Definitions and disclosures regarding non-GAAP financial
information are included on page 4, while reconciliations are
included on page 7.
(2) Broadcast cash flow margin is broadcast cash flow as a
percentage of net revenue. Adjusted EBITDA margin is Adjusted
EBITDA as a percentage of net revenue.
CEO Comment
Perry A. Sook, Chairman, President and Chief Executive Officer
of Nexstar Broadcasting Group, Inc. commented, “The 39.6% rise in
fourth quarter net revenue concluded what was already a record year
financially for Nexstar. Fourth quarter BCF, Adjusted EBITDA and
free cash flow increases of 70.9%, 73.8% and 116.0%, respectively,
reflect margin growth related to the significant operating leverage
in our model as well as the value of our initiatives to maximize
the political advertising opportunity, manage costs and actively
expand our scale through strategic, accretive acquisitions. These
factors, coupled with recently completed value-building
transactions which added 27 stations as well as a leading digital
media advertising and programmatic technology provider, have
positioned Nexstar for continued near- and long-term growth. We
expect 2015 to be the Company’s fourth consecutive year of record
free cash flow as our platform expansion and revenue
diversification efforts have eliminated the cyclicality associated
with political advertising.
“During the fourth quarter, we successfully managed inventory to
maximize our share of election spending in our markets. Fourth
quarter television ad revenue inclusive of political advertising
grew 31.2% as Nexstar’s spot inventory management initiatives
resulted in a 23-fold year-over-year increase in political revenue
and flat core local and national spot revenue. Reflecting our
expanded platform and presence in states with high levels of
political spending activity, 2014 fourth quarter political revenue
rose by 29% over comparable 2012 fourth quarter levels. Notably,
excluding political, gross revenue in the fourth quarter grew over
17% from the same period in 2013, reflecting Nexstar’s further
success in leveraging the value of our television broadcasting
operating model and content creation capabilities into a
diversified platform with multiple high margin revenue streams.
“Nexstar’s strong fourth quarter television ad revenue growth
was complemented by a 64.6% rise in retransmission fee revenue and
a 114.9% increase in digital media revenue which benefited from
organic growth as well as our mid-year accretive acquisitions of a
leading digital publishing and agency services platform and the
provider of cloud-based CMS, engagement and monetization solutions.
Nexstar’s annual retransmission revenue growth of 53.3% reflects
both the 2013 contract renewals with our distribution partners and
escalators. We expect our long-term distribution revenue growth
trend to continue as in late 2014 additional contract renewals
representing about 40% of the Company’s MVPD subscribers were
completed and another 30% of our subscribers will be renewed in
2015. Fourth quarter 2014 net revenue rose 66% over the same period
in 2012, the last Presidential election year, while free cash flow,
our most important financial performance metric, was up over 127%
over the same period which clearly illustrates the value creation
related to our revenue diversification and platform building
strategies.
“Recently closed accretive acquisitions will build upon the
leverage in our operating model throughout 2015 and beyond.
Specifically, during the fourth quarter we completed the
acquisition of seven stations in four markets from Grant Company
and early in 2015 we closed the largest acquisition in the
Company’s history, adding the net operations of 18 stations in nine
markets from Communications Corporation of America. This was
followed by the completion of a single station transaction in
Phoenix and completion of a single station transaction in Las Vegas
thereby bringing our TV station portfolio to 107 stations under
ownership or management, serving 58 separate DMAs and reaching
approximately 17% of all U.S. television households. These
transactions further diversify our operating base, create new
duopoly markets, are financially accretive and, in the case of the
Marshall Broadcasting Group, Inc. (“Marshall”) transaction, fulfill
Nexstar’s commitment to catalyze and support broadcast station
ownership by minority-owned companies, which is also a key FCC
initiative.
“We are pleased with the integration of the 27 recently acquired
stations and are realizing the anticipated synergies and
efficiencies we forecasted at the time the transactions were
announced. Earlier this month we further broadened and diversified
Nexstar’s digital video advertising offerings with highly-targeted
optimization tools and programmatic capabilities through the
acquisition of Yashi, Inc. Yashi’s targeting and programmatic
technology, combined with our existing digital offerings, further
expands the innovative multi-platform marketing solutions that
Nexstar offers to local and national advertisers, agencies and
digital publishers while maximizing our multi-screen revenue
opportunities. And by adhering to our established acquisition and
integration criteria, we acquired a profitable, fast-growing online
video advertising business at an attractive pro-forma Adjusted
EBITDA multiple.
“With our focus on growing free cash flow, we remain disciplined
in managing costs and driving BCF and Adjusted EBITDA margins. The
rise in fourth quarter station direct operating expenses (net of
trade expense) and SG&A primarily reflects higher variable
costs related to the higher local and political revenues, and the
operation of acquired stations and digital assets also contributed
to the year-over-year increase in corporate expense. Our
significant revenue growth combined with ongoing expense management
resulted in fourth quarter BCF and Adjusted EBITDA margins
improving substantially to 49.0% and 44.4%, respectively.
Impressively, full year free cash flow rose 88.1% to $159.7 million
while combined full year 2014 and 2013 free cash flow totaled
$244.7 million.
“The combination of our operating successes and accretive
station transactions has positioned Nexstar to return capital to
shareholders through cash dividends while reducing leverage
throughout 2015. Tomorrow, we will pay the first quarterly cash
dividend of $0.19 per share of our Class A common stock following
the Board’s authorization last month to increase the quarterly cash
dividend by 26.7 percent. Importantly, we believe the total annual
capital allocation for dividends of approximately $23.7 million
relative to our projected free cash flow continues to afford the
Company the liquidity and financial flexibility to further expand
our marketing solutions platform through additional accretive
station and digital media acquisitions, while reducing leverage and
pursuing other initiatives that enhance long-term shareholder
value.
“Looking forward, we project that with the addition of the 27
new stations and Yashi, Nexstar will generate pro-forma free cash
flow of approximately $450 million during the 2015/2016 cycle, or
average pro-forma free cash flow of approximately $7.25 per share
per year as we ended 2014 with 30.8 million basic outstanding
shares. Furthermore, with the free cash flow generated from this
base of operations, we expect Nexstar’s net leverage, absent
additional strategic activity, to be in the mid 4x range at the end
of 2015 and to decline to the low 3x range by the end of 2016.”
The consolidated total debt of Nexstar, its wholly owned
subsidiaries, Mission Broadcasting Inc. (“Mission”) and Marshall at
December 31, 2014, was $1,236.1 million and senior secured debt was
$710.5 million. The Company’s total net leverage ratio at December
31, 2014 was 4.40x compared to a total permitted leverage covenant
of 6.75x. The Company’s first lien net leverage ratio at December
31, 2014 was 2.41x compared to the covenant maximum of 4.00x.
The table below summarizes the Company’s debt obligations:
($ in millions)
12/31/2014
12/31/2013 Revolving Credit Facility $ 5.5 $ - First Lien
Term Loans $ 705.0 $ 545.4 6.875% Senior Unsecured Notes $ 525.6
$ 525.7
Total Debt $ 1,236.1 $ 1,071.1
Cash
on Hand $ 131.9 $ 40.0
Notes Offering
On January 29, 2015, Nexstar Broadcasting Group, Inc.’s
wholly-owned subsidiary, Nexstar Broadcasting, Inc. (“Nexstar
Broadcasting”), completed the sale and issuance of $275.0 million
aggregate principal amount of 6.125% senior notes due 2022. The
Notes were priced at par and are senior unsecured obligations of
Nexstar Broadcasting and are guaranteed by the Company and Mission
and certain of Nexstar Broadcasting’s and Mission’s future
restricted subsidiaries on a senior unsecured basis.
Nexstar Broadcasting used the net proceeds from the offering to
fund the acquisition of two television stations in two markets from
Landmark Television, LLC and Landmark Media Enterprises, LLC,
Meredith Corporation and SagamoreHill of Phoenix, LLC, and the
digital company Yashi, Inc., and to pay related fees and
expenses.
Dividends
On January 30, 2015 the Board of Directors approved a 26.7
percent increase in the quarterly cash dividend to $0.19 per share
of its Class A common stock beginning with the dividend declared
for the first quarter of 2015. The dividend is payable on Friday,
February 27, 2015, to shareholders of record on Friday, February
13, 2015.
Fourth 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 719/325-2308, conference ID 9877322 (domestic
and international callers). In addition, a live audio webcast of
the call will be accessible to the public on Nexstar’s web site,
www.nexstar.tv and a recording of the webcast will be archived on
the site for 90 days following the live event.
Definitions and Disclosures Regarding non-GAAP Financial
Information
Broadcast cash flow is calculated as income from operations,
plus corporate expenses, depreciation, amortization of intangible
assets and broadcast rights (excluding barter) and loss (gain) on
asset disposal, net, minus broadcast rights payments.
Adjusted EBITDA is calculated as broadcast cash flow less
corporate expenses.
Free cash flow is calculated as income from operations plus
depreciation, amortization of intangible assets and broadcast
rights (excluding barter), loss (gain) on asset disposal, net, and
non-cash compensation expense, less payments for broadcast rights,
cash interest expense, capital expenditures and net cash income
taxes.
Broadcast cash flow, adjusted EBITDA and free cash flow results
are non-GAAP financial measures. Nexstar believes the presentation
of these non-GAAP measures are useful to investors because they are
used by lenders to measure the Company’s ability to service debt;
by industry analysts to determine the market value of stations and
their operating performance; by management to identify the cash
available to service debt, make strategic acquisitions and
investments, maintain capital assets and fund ongoing operations
and working capital needs; and, because they reflect the most
up-to-date operating results of the stations inclusive of pending
acquisitions, TBAs or LMAs. Management believes they also provide
an additional basis from which investors can establish forecasts
and valuations for the Company’s business.
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.
About Nexstar Broadcasting Group, Inc.
Nexstar Broadcasting Group is a leading diversified media
company that leverages localism to bring new services and value to
consumers and advertisers through its traditional media, digital
and mobile media platforms. Nexstar owns, operates, programs or
provides sales and other services to 107 television stations and
related digital multicast signals reaching 58 markets or
approximately 17.0% of all U.S. television households. Nexstar’s
portfolio includes affiliates of NBC, CBS, ABC, FOX, MyNetworkTV,
The CW, Telemundo, Bounce TV, Me-TV, Estrella, This TV, Weather
Nation Utah, Movies!, News Weather, RTV and LATV. Nexstar’s
community portal websites offer additional hyper-local content and
verticals for consumers and advertisers, allowing audiences to
choose where, when and how they access content while creating new
revenue opportunities.
Forward-Looking Statements
This news release 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, the Company 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 news release,
concerning, among other things, changes in net revenue, cash flow
and operating expenses, involve risks and uncertainties, and are
subject to change based on various important factors, including the
impact of changes in national and regional economies, our ability
to service and refinance our outstanding debt, successful
integration of acquired television stations (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 served by the Company,
volatility in programming costs, the effects of governmental
regulation of broadcasting, industry consolidation, technological
developments and major world news events. Unless required by law,
we undertake 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 news
release 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 our filings with the Securities and
Exchange Commission.
-tables follow-
Nexstar Broadcasting Group,
Inc.
Condensed Consolidated Statements of
Operations
(in thousands, except per share amounts,
unaudited)
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2014 2013 2014
2013 Net revenue $ 192,804 $ 138,122 $ 631,311
$ 502,330 Operating expenses: Corporate expenses 8,889 6,045
35,174 26,339 Station direct operating expenses, net of trade,
depreciation and amortization 48,996 37,251 178,817 139,807 Station
selling, general, and administrative expenses, net of depreciation
and amortization 37,517 34,271 139,581 124,594 Loss on asset
disposal, net 499 1,245 638 1,280 Trade and barter expense 8,874
8,129 31,333 30,730 Amortization of broadcast rights, excluding
barter 2,730 3,068 11,634 12,613 Amortization of intangible assets
7,153 7,248 25,850 30,148 Depreciation 9,247 8,787
35,047 33,578 Total operating expenses 123,905
106,044 458,074 399,089 Income from operations
68,899 32,078 173,237 103,241 Interest expense, net (15,920)
(15,891) (61,959) (66,243) Loss on extinguishment of debt -
(33,676) (71) (34,724) Other expenses (129) (1,207)
(556) (1,459) Income (loss) before income tax expense
52,850 (18,696) 110,651 815 Income tax (expense) benefit
(22,001) 6,244 (46,101) (2,600) Net income
(loss) $ 30,849 $ (12,452) $ 64,550 $ (1,785) Basic
net income (loss) per common share $ 1.00 $ (0.41) $ 2.10 $ (0.06)
Basic weighted average number of common shares outstanding 30,962
30,465 30,774 29,897 Diluted net income (loss) per common
share $ 0.96 $ (0.41) $ 2.02 $ (0.06) Diluted weighted average
number of common shares outstanding 32,102 30,465 32,003 29,897
-tables follow-
Nexstar Broadcasting Group,
Inc.
Reconciliation of Broadcast Cash Flow
and Adjusted EBITDA (Non-GAAP Measures)
UNAUDITED
(in thousands)
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
Broadcast Cash Flow and EBITDA: 2014
2013 2014
2013 Income from operations: $
68,899 $ 32,078 $ 173,237 $ 103,241 Add: Depreciation 9,247 8,787
35,047 33,578 Amortization of intangible assets 7,153 7,248 25,850
30,148 Amortization of broadcast rights, excluding barter
2,730
3,068
11,634
12,613
Loss on asset disposal, net 499 1,245 638 1,280 Corporate expenses
8,889 6,045 35,174 26,339 Non-cash representation contract
termination fee - - 353 - Less: Payments for broadcast
rights 2,917 3,160 12,025
14,191 Broadcast cash flow 94,500 55,311
269,908 193,008 Margin % 49.01 % 40.05 % 42.75 % 38.42 % Less:
Corporate expenses 8,889 6,045
35,174 26,339 Adjusted EBITDA $ 85,611
$ 49,266 $ 234,734 $ 166,669 Margin %
44.40 % 35.67 % 37.18 % 33.18 %
Nexstar Broadcasting Group,
Inc.
Reconciliation of Free Cash Flow
(Non-GAAP Measure)
UNAUDITED
(in thousands)
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
Free Cash Flow: 2014 2013
2014 2013 Income
from operations $ 68,899 $ 32,078 $ 173,237 $ 103,241 Add:
Depreciation 9,247 8,787 35,047 33,578 Amortization of intangible
assets 7,153 7,248 25,850 30,148 Amortization of broadcast rights,
excluding barter 2,730 3,068 11,634 12,613 Loss on asset disposal,
net 499 1,245 638 1,280 Non-cash compensation expense 2,114 500
7,598 2,080 Non-cash representation contract termination fee - -
353 - Less: Payments for broadcast rights 2,917 3,160 12,025
14,191 Cash interest expense 15,161 15,194 59,167 62,963 Capital
expenditures 6,478 4,387 20,300 18,736 Cash income taxes, net of
refunds 855 (14 ) 3,131 2,129
Free cash flow $ 65,231 $ 30,199 $ 159,734 $ 84,921
Nexstar Broadcasting Group, Inc.Thomas E. Carter,
972-373-8800Chief Financial OfficerorJCIRJoseph JaffoniorJennifer
Neuman212-835-8500nxst@jcir.com
Nexstar Media (NASDAQ:NXST)
Historical Stock Chart
From Feb 2024 to Mar 2024
Nexstar Media (NASDAQ:NXST)
Historical Stock Chart
From Mar 2023 to Mar 2024