Net Revenue Growth Drives Record 2Q
Operating Income of $52.5 Million up 50.4%,
Adjusted EBITDA of $74.9 Million up 51.0%,
and Free Cash Flow of $50.1 Million up 64.8%
Nexstar Broadcasting Group, Inc. (NASDAQ:NXST) (“Nexstar” or
“the Company”) today reported record financial results for the
second quarter ended June 30, 2015 as summarized below.
Summary 2015 Second Quarter
Highlights
($ in thousands)
Three Months EndedJune
30,
Six Months Ended
June 30,
2015 2014 Change
2015 2014 Change Local Revenue $
93,991 $ 70,461 +33.4 % $ 178,515 $ 136,103 +31.2 %
National Revenue $ 38,793 $ 26,075 +48.8 % $
74,371 $ 53,264 +39.6 %
Core Revenue
$ 132,784 $ 96,536 +37.5 %
$
252,886 $ 189,367 +33.5 % Political
Revenue $ 1,906 $ 6,746 (71.7 )% $ 2,266 $ 10,749 (78.9 )%
Retransmission Fee Revenue $ 69,719 $ 34,960 +99.4 % $ 136,283 $
70,089 +94.4 % Digital Media Revenue $ 21,180 $ 13,248 +59.9 % $
40,492 $ 19,525 +107.4 % Other $ 1,379 $ 1,131 +21.9 % $ 2,580 $
2,112 +22.2 % Trade and Barter $ 11,785 $ 7,701
+53.0 % $ 23,178 $ 14,829 +56.3 %
Total Gross Revenue $ 238,753 $
160,322 +48.9 %
$ 457,685 $
306,671 +49.2 % Less Agency Commission $ 17,431
$ 13,392 +30.2 % $ 32,972 $ 25,908
+27.3
%
Net Revenue $ 221,322 $ 146,930
+50.6 %
$ 424,713 $ 280,763 +51.3 %
Gross Revenue Excluding Political $
236,847 $ 153,576 +54.2 %
$
455,419 $ 295,922 +53.9 %
Income
from Operations $ 52,542 $ 34,942 +50.4 % $ 90,446 $ 62,642
+44.4 %
Broadcast Cash Flow(1) $ 85,361 $
58,701 +45.4 % $ 161,089 $ 109,313 +47.4 %
Broadcast Cash
Flow Margin(2) 38.6 % 40.0 % 37.9 % 38.9 %
Adjusted EBITDA(1) $ 74,887 $ 49,600 +51.0 % $
138,932 $ 91,708 +51.5 %
Adjusted EBITDA Margin(2)
33.8 % 33.8 % 32.7 % 32.7 %
Free Cash Flow(1)
$ 50,069 $ 30,378 +64.8 %
$ 93,022 $ 55,633 +67.2 %
(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, “Nexstar’s
consistent operating momentum and financial growth was evident
again in the second quarter as we delivered another period of
record financial results with profitability metrics all exceeding
consensus expectations. Contributions from recently completed
acquisitions combined with organic core advertising, distribution
and digital media revenue growth and our focus on managing
operations for current cash flow and future growth, resulted in all
of our non-political revenue sources posting substantial second
quarter increases.
“The record second quarter results highlight the benefit of our
initiatives to integrate our portfolio of broadcasting and digital
media properties while leveraging our scale, extracting anticipated
revenue and cost synergies and capitalizing on the many growth
opportunities throughout our portfolio and in the local markets we
serve. As such, we remain confident that significant year-over-year
growth in our non-political revenue sources will continue in the
second half of the year and we expect 2015 to mark the Company’s
fourth consecutive year of record free cash flow as we prepare for
what are expected to be record levels of political advertising in
2016.
“During the quarter, we continued to advance the visibility of
our long-term growth with the successful re-negotiation of a
retransmission consent agreement with one of our top five
distribution partners. We also extended affiliation agreements for
five CBS television stations owned or operated by Nexstar and
created the NBC affiliate in Lafayette, Louisiana and the
MyNetworkTV affiliate in Waco, Texas both of which successfully
launched on July 1. With the creation of the new NBC and
MyNetworkTV affiliates, we innovatively and efficiently
re-allocated Nexstar’s existing spectrum assets thereby creating
two new duopolies with no incremental M&A costs while further
elevating our advertising and retransmission consent revenue
growth. At the same time, reflecting our commitment to localism and
the markets we serve, during the quarter, Nexstar and Mission
Broadcasting, Inc. (“Mission”) garnered nine regional Edward R.
Murrow Awards bringing the number of broadcasting and journalism
awards that our stations have won since 2009 to nearly 500.
“With 2015 first half operating results in the books, Nexstar is
on pace to achieve its projected pro-forma free cash flow of
approximately $456 million during the 2015/2016 cycle, or average
pro-forma free cash flow of approximately $7.30 per share per year.
Notably, with over $93 million in free cash flow generated
year-to-date, we’ve already recorded approximately $3 per share in
free cash flow. With accelerating growth in the back half of the
year and the full year benefit in 2016 of these new affiliations
and retrans renewals combined with our ability to capture large
shares of political advertising in our markets, we believe we have
excellent visibility toward achieving our free cash flow
targets.
“During the second quarter, the successful integration of
recently acquired stations combined with ongoing initiatives to
leverage our targeted localism, content and advertiser
relationships drove a 51% rise in net revenue, more than offsetting
the $4.8 million year-over-year decline in political advertising
revenue. Excluding political advertising revenue and including
results from our recent acquisitions, second quarter gross revenue
grew 54%, reflecting core television ad revenue growth, a
significant rise in retransmission consent revenues and continued
digital media revenue increases. Nexstar’s record second quarter
television ad revenue was complemented by a nearly 100% rise in
retransmission fee revenue and a nearly 60% increase in digital
media revenue which both benefited from organic growth as well as
our recent accretive acquisitions. 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 approximately
45% of our subscribers will be renewed in 2015, inclusive of the
top five partner that was successfully renewed in July. Nexstar’s
ongoing revenue diversification is reflected in the growth in total
second quarter retransmission fee and digital media revenue which
rose 89% to $90.9 million, and accounted for 41% of 2015 second
quarter net revenue, compared to 33% of net revenue in the year-ago
period and 26% of net revenue in the 2013 second quarter.
“Second quarter BCF, Adjusted EBITDA and free cash flow
increases of 45.4%, 51.0% and 64.8%, respectively, reflect the
value of our initiatives to actively expand our scale through
strategic, accretive acquisitions while managing costs. The
value-building accretive transactions completed in late 2014 and
early 2015 added 27 stations as well as a digital media advertising
and programmatic technology provider to our growth platform. With
their successful integration we are realizing the forecasted
synergies and efficiencies that were disclosed at the time the
transactions were announced. Specifically, in January 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
single station transactions in Phoenix and Las Vegas bringing our
TV station portfolio to 107 stations under ownership or management,
serving 58 separate DMAs.
“With our priority of generating free cash flow, we remain
disciplined in managing costs and in addressing our capital
structure, leverage and cost of capital. Reflecting this focus,
second quarter corporate expense came in slightly better than our
guidance at $10.5 million. Record revenue and disciplined expense
and capital structure management led to second quarter 2015 free
cash flow of $50.1 million representing growth of approximately
145% over the second quarter of 2013, the previous non-political
period, which clearly highlights the value being derived from our
platform building and revenue diversification strategies.
“In summary, Nexstar’s ongoing operating execution and
discipline in managing costs, combined with select accretive
station transactions have positioned the Company to achieve record
revenue and free cash flow in 2015, 2016 and beyond. Importantly,
our station platform now reaches approximately 18% of all U.S.
television households. As such there remains considerable
opportunity for Nexstar to further expand our platform through
additional accretive station and digital media acquisitions and we
remain active and engaged on this front. At the same time, our
focus on the capital structure and cost of capital have positioned
Nexstar with the financial flexibility to simultaneously further
consolidate mid-sized markets and return capital to shareholders
while maintaining a favorable leverage profile, which, pro-forma
for the completion of all announced transactions is expected to
result in a total leverage ratio of approximately 3.0 times at
year-end 2016.”
The consolidated debt of Nexstar, its wholly owned subsidiaries,
Mission and Marshall Broadcasting Group, Inc. at June 30, 2015, was
$1,500.4 million and senior secured debt was $699.9 million. The
Company’s total net leverage ratio at June 30, 2015 was 4.22x
compared to a total permitted leverage covenant of 6.75x. The
Company’s first lien net leverage ratio at June 30, 2015 was 1.93x
compared to the covenant maximum of 4.00x.
The table below summarizes the Company’s debt obligations:
($ in millions)
6/30/2015
12/31/2014 Revolving Credit Facility $ 2.0 $ 5.5 First Lien
Term Loans $ 697.9 $ 705.0 6.875% Senior Unsecured Notes $ 525.5 $
525.6 6.125% Senior Unsecured Notes $ 275.0 $ -
Total Debt $
1,500.4 $ 1,236.1
Cash on Hand $ 26.9 $ 131.9
Second 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 719/325-2354, conference ID 6551580 (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), net loss on asset
disposal and non-cash representation contract termination fee,
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), net loss on asset disposal, non-cash
compensation expense and non-cash representation contract
termination fee, less payments for broadcast rights, cash interest
expense, capital expenditures and net operating 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 18.0% of all U.S. television households. Nexstar’s
portfolio includes affiliates of NBC, CBS, ABC, FOX, MyNetworkTV,
The CW, Telemundo, Bounce TV, Me-TV, LATV, RTV, Estrella, This TV,
Weather Nation Utah, Movies! and News/Weather. 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 Ended
June 30,
Six Months Ended
June 30,
2015 2014 2015 2014 Net
revenue $ 221,322 $ 146,930 $ 424,713 $
280,763 Operating expenses: Corporate expenses 10,474
9,101 22,157 17,605 Station direct operating expenses, net of
trade, depreciation and amortization 72,848 43,185 140,654 83,564
Station selling, general, and administrative expenses, net of
depreciation and amortization 46,083 34,695 91,689 67,231 Trade and
barter expense 11,641 7,581 22,939 14,723 Amortization of broadcast
rights, excluding barter 5,195 2,771 10,357 5,731 Amortization of
intangible assets 11,237 6,112 24,297 12,305 Depreciation
11,302 8,543 22,174
16,962 Total operating expenses 168,780
111,988 334,267 218,121 Income
from operations 52,542 34,942 90,446 62,642 Interest
expense, net (20,391 ) (15,339 ) (39,684 ) (30,509 ) Loss on
extinguishment of debt - (71 ) - (71 ) Other expenses (150 )
(127 ) (268 ) (255 ) Income before income
taxes 32,001 19,405 50,494 31,807 Income tax expense (12,101
) (8,461 ) (18,682 ) (13,510 ) Net income
19,900 10,944 31,812 18,297 Net loss attributable to noncontrolling
interest 421 - 1,416
- Net income attributable to Nexstar $ 20,321
$ 10,944 $ 33,228 $ 18,297 Basic
net income per common share attributable to Nexstar $ 0.65 $ 0.36 $
1.06 $ 0.60 Basic weighted average number of common shares
outstanding 31,325 30,641 31,260 30,622 Diluted net income
per common share attributable to Nexstar $ 0.63 $ 0.34 $ 1.03 $
0.57 Diluted weighted average number of common shares outstanding
32,382 31,932 32,319 31,921
Nexstar Broadcasting Group,
Inc.
Reconciliation of Broadcast Cash Flow
and Adjusted EBITDA (Non-GAAP Measures)
UNAUDITED
(in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
Broadcast Cash Flow and EBITDA: 2015
2014 2015 2014 Income from
operations $ 52,542 $ 34,942 $ 90,446 $ 62,642 Add: Depreciation
11,302 8,543 22,174 16,962 Amortization of intangible assets 11,237
6,112 24,297 12,305 Amortization of broadcast rights, excluding
barter
5,195
2,771
10,357
5,731
Loss on asset disposal, net 125 161 927 146 Corporate expenses
10,474 9,101 22,157 17,605 Non-cash representation contract
termination fee - - 1,516 - Less: Payments for broadcast
rights 5,514 2,929 10,785
6,078 Broadcast cash flow 85,361 58,701
161,089 109,313 Margin % 38.6 % 40.0 % 37.9 % 38.9 % Less:
Corporate expenses 10,474 9,101
22,157 17,605 Adjusted EBITDA $ 74,887
$ 49,600 $ 138,932 $ 91,708 Margin %
33.8 % 33.8 % 32.7 % 32.7 %
Nexstar Broadcasting Group,
Inc.
Reconciliation of Free Cash Flow
(Non-GAAP Measure)
UNAUDITED
(in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
Free Cash Flow: 2015 2014 2015
2014 Income from operations $ 52,542 $ 34,942
$ 90,446 $ 62,642 Add: Depreciation 11,302 8,543 22,174
16,962 Amortization of intangible assets 11,237 6,112 24,297 12,305
Amortization of broadcast rights, excluding barter 5,195 2,771
10,357 5,731 Loss on asset disposal, net 125 161 927 146 Non-cash
compensation expense 2,804 1,913 5,662 3,556 Non-cash
representation contract termination fee - - 1,516 - Less:
Payments for broadcast rights 5,514 2,929 10,785 6,078 Cash
interest expense 19,460 14,678 37,868 29,158 Capital expenditures
5,710 5,063 11,234 9,032 Operating cash income taxes, net of
refunds(1) 2,452 1,394 2,470 1,441
Free cash flow $ 50,069 $ 30,378 $ 93,022 $ 55,633
(1) Excludes the payment of $15.172 million in taxes related to
tax liabilities assumed in or resulting from various station
acquisitions and sales.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150806005297/en/
Nexstar Broadcasting Group, Inc.Thomas E. Carter,
972-373-8800Chief Financial OfficerorJCIRJoseph Jaffoni/Jennifer
Neuman212-835-8500nxst@jcir.com
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