Net Revenue Drives Record Q2 Operating
Income of $333.4 Million, Net Income of $226.5 Million,
Adjusted EBITDA of $486.3 Million and Free Cash Flow of $219.0
Million
All-Time High Quarterly and Six Month Return
of Capital to Shareholders of $284.3 Million and $479.5 Million,
Respectively
Nexstar Media Group, Inc. (NASDAQ: NXST) (“Nexstar” or “the
Company”) today reported financial results for the second quarter
ended June 30, 2022 as summarized below:
Summary 2022 Second Quarter
Highlights
Three Months Ended June
30,
%
Six Months Ended June
30,
%
($ in millions)
2022
2021
Change
2022
2021
Change
Core Advertising Revenue
$413.0
$423.5
(2.5
)
$841.1
$835.2
+0.7
Political Advertising Revenue
86.7
8.5
+920.0
110.4
13.9
+694.2
Total Television Advertising
Revenue
$499.7
$432.0
+15.7
$951.5
$849.1
+12.1
Distribution Revenue
646.1
617.0
+4.7
1,314.0
1,238.2
+6.1
Digital Revenue
88.2
73.4
+20.2
166.9
139.8
+19.4
Other Revenue
11.1
9.2
+20.7
22.8
18.4
+23.9
Net Revenue
$1,245.1
$1,131.6
+10.0
$2,455.2
$2,245.5
+9.3
Income from Operations
$333.4
$288.3
+15.6
$662.8
$573.2
+15.6
Net Income
$226.5
$199.8
+13.4
$477.9
$399.0
+19.8
Adjusted EBITDA Before Transaction and
Other One-Time Expenses(1)
$489.2
$419.7
+16.6
$1,133.5
$992.3
+14.2
Adjusted EBITDA(1)
486.3
418.8
+16.1
1,129.0
990.2
+14.0
Adjusted EBITDA Margin(2)
39.1
%
37.0
%
46.0
%
44.1
%
Free Cash Flow Before Transaction and
Other One-Time Expenses(1)
$221.9
$182.1
+21.9
$783.9
$666.8
+17.6
Free Cash Flow(1)
219.0
181.2
+20.9
779.4
664.7
+17.3
The contribution from Nexstar’s 31.3%
ownership stake in TV Food Network and other investments is
included in the Condensed Consolidated Statements of Operations
under caption “Income from equity method investments, net” while
revenue from NewsNation is included in core advertising revenue and
distribution revenue.
(1) Definitions and disclosures regarding non-GAAP financial
information including reconciliations are included at the end of
the press release.
(2)
Adjusted EBITDA margin is Adjusted EBITDA as a percentage of
net revenue.
CEO Comment Perry Sook, Nexstar’s Chairman and Chief
Executive Officer, commented, “Nexstar delivered record second
quarter financial results, including all-time high second quarter
net revenue, Adjusted EBITDA and free cash flow that once again
exceeded consensus expectations. Our results benefitted from strong
year-over-year growth in political advertising, distribution, and
digital revenues. Total television advertising revenue growth of
15.7% was driven by record second quarter political advertising
revenue, which more than tripled on a quarterly sequential basis
and rose four-fold versus the comparable 2020 period. In the first
half of 2022, we returned 61.5% of Nexstar’s year-to-date free cash
flow to our shareholders through a combination of dividends and
share repurchases. This represents an all-time quarterly and six
months high return of capital to shareholders of $284.3 million and
$479.5 million, respectively.
“We continue to have solid three-year visibility on our growth
trajectory, given the expected continuation of strong political
advertising for the 2022 mid-term and 2024 presidential election
cycles and the renewals of distribution agreements in 2022 and 2023
representing the substantial majority of our subscribers. In
addition, we do not currently see evidence that macroeconomic
challenges are having a material impact on Nexstar’s business. As a
result, we are reiterating our pro forma average annual free cash
flow guidance of $1.4 billion over the 2022/2023 cycle. The Board’s
recent approval of a new $1.5 billion share repurchase
authorization, further underpins our confidence in Nexstar’s free
cash flow growth outlook.”
Second Quarter 2022 Business Highlights
- Nexstar shareholders voted in favor of all proposals
recommended by the Board of Directors at the 2022 Annual
Shareholders’ Meeting, including an amendment to the corporate
charter to eliminate the Company’s Class B and Class C Common Stock
classes.
- Nexstar’s Common Stock (previously referred to as “Class A
Common Stock”) has been the only class of shares outstanding since
2013.
- Nexstar refinanced the Company’s senior secured term loans and
revolving credit facilities reducing annual cash interest expense
by approximately $10.0 million and extending its maturities. As
part of the refinancing:
- Nexstar Media Inc. closed a new $2,425.0 million term loan A
facility and a new $550.0 million revolving credit facility, and
Mission Broadcasting, Inc., an independently owned variable
interest entity, closed a new $75.0 million revolving credit
facility.
- The net proceeds were used to repay existing indebtedness and
refinance and modestly upsize existing revolving credit facility
commitments.
- We completed the sale of one of our remaining real estate
properties in Chicago for gross cash proceeds of $45.3
million.
- The Company expanded programming at NewsNation, the fastest
growing national cable news network, to 86 hours of original news
programming per week, which is more than four times the number of
news hours on the network at its launch in September 2020.
- We launched NextGen TV (or ATSC 3.0) in four additional markets
- Greenville, SC, Fresno-Visalia, CA, Richmond-Petersburg, VA and
Shreveport, LA.
- Nexstar stations earned a total of 31 regional Edward R. Murrow
Awards from the Radio Television Digital News Association (RTDNA),
including recognition for “Overall Excellence,” “Best Newscast,”
“Digital,” and “Excellence in Diversity, Equity and
Inclusion.”
- Nexstar employees across the country provided nearly 17,000
hours of community service in celebration of the Nexstar Founder’s
Day of Caring, an annual event where the Company’s employees
receive paid time off to volunteer on behalf of a local charity,
non-profit organization or public service agency.
Second Quarter 2022 Financial Highlights
- Record second quarter net revenue of $1.25 billion increased
10.0% from the prior year quarter.
- Revenue growth was driven by strong political advertising
revenue and healthy year-over-year increases in distribution,
digital and other revenue, offset by a decline in core
advertising.
- 59.9% of Nexstar’s second quarter net revenue was generated by
distribution, digital and other revenue sources.
- Second quarter core television advertising revenue of $413.0
million decreased 2.5% year-over-year.
- Key categories responsible for the decline included insurance,
automotive, direct response, government spending related to the
COVID-19 pandemic and packaged goods. The decline was offset, in
part, by continued strength in the entertainment, home
repair/manufacturing and related categories such as carpet/floor
covering and air conditioning/heating and fast food/restaurants,
among others.
- New-to-television revenue of $36.2 million increased 10.0%
year-over-year.
- Record second quarter political advertising revenue of $86.7
million increased 920.0% year-over-year and 302.0% over the second
quarter of 2020.
- The increase reflects strong early mid-term election spending
primarily related to primary election advertising.
- Record second quarter distribution revenue rose 4.7%
year-over-year to approximately $646.1 million.
- The increase reflects the renewal of distribution agreements in
2021 on improved terms and annual rate escalators, partially offset
by MVPD subscriber attrition.
- Record second quarter digital revenue increased 20.2%
year-over-year to approximately $88.2 million.
- Revenue growth was driven by strong year-over-year increases in
Nexstar’s digital advertising revenue and agency services business,
combined with the impact of The Hill, which was acquired in the
third quarter of 2021.
- Record second quarter adjusted EBITDA increased 16.1% to $486.3
million, representing a 39.1% margin, and record second quarter
free cash flow increased 20.9% to $219.0 million, representing
45.0% of Adjusted EBITDA.
- Growth in Adjusted EBITDA was primarily attributable to
increased revenue net of related variable expenses and continued
operational focus on controlling fixed expense growth.
- In the second quarter of 2022, the Company used cash flow from
operations to:
- Reduce debt by approximately $26.9 million, and
- Return $284.3 million to shareholders through the repurchase of
1,454,612 shares of Nexstar’s common stock at an average price of
approximately $170.47 per share for a total cost of $248.0 million,
and quarterly cash dividend payments of $36.3 million.
- As of June 30, 2022, Nexstar had 39.4 million shares of common
stock outstanding. As of August 4, 2022, Nexstar has approximately
$1.6 billion available under its share repurchase authorization,
inclusive of the $1.5 billion new share repurchase program
authorized by the Board of Directors on July 28, 2022, and net of
shares repurchased subsequent to June 30, 2022.
Debt and Leverage Review
- The consolidated debt of Nexstar and Mission Broadcasting,
Inc., an independently owned variable interest entity, at June 30,
2022 was $7,234.0 million, including senior secured debt of
$4,451.8 million.
- The Company’s first lien net leverage ratio at June 30, 2022
was 2.01x compared to a covenant of 4.25x.
- The Company’s total net leverage ratio at June 30, 2022 was
3.32x.
The table below summarizes the Company’s debt obligations (net
of financing costs, discounts and/or premiums).
($ in millions)
June 30, 2022
December 31, 2021
Revolving Credit Facilities
$61.5
$61.5
First Lien Term Loans
4,390.3
4,571.5
5.625% Senior Unsecured Notes due 2027
1,789.8
1,790.2
4.75% Senior Unsecured Notes due 2028
992.4
991.9
Total Outstanding Debt
$7,234.0
$7,415.1
Unrestricted Cash
$276.4
$190.9
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 +1
646-828-8073, conference ID 5103351 (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 www.nexstar.tv. A webcast replay
will be available for 90 days following the live event at
www.nexstar.tv.
Definitions and Disclosures Regarding non-GAAP Financial
Information Adjusted EBITDA is calculated as net income, plus
interest expense (net), loss on extinguishment of debt, income tax
expense (benefit), depreciation of property and equipment,
amortization of intangible assets and broadcast rights, (gain) loss
on asset disposal, impairment charges, (income) loss from equity
method investments, distributions from equity method investments
and other expense (income), minus reimbursement from the FCC
related to station repack and broadcast rights payments. 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 and ability to service debt.
Free cash flow is calculated as net income, plus interest
expense (net), loss on extinguishment of debt, income tax expense
(benefit), depreciation of property and equipment, amortization of
intangible assets and broadcast rights, (gain) loss on asset
disposal, stock-based compensation expense, impairment charges,
(income) loss from equity method investments, distributions from
equity method investments and other expense (income), minus
payments for broadcast rights, cash interest expense, capital
expenditures, proceeds from disposals of property and equipment,
and operating cash income tax payments. We consider 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 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 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 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, including 290,000 hours of original video
content each year. Nexstar owns America’s largest local
broadcasting group comprised of top network affiliates, with 200
owned or partner stations in 116 U.S. markets reaching 212 million
people. Nexstar’s television assets also include NewsNation,
America’s fastest-growing national news and entertainment cable
network reaching 70 million television homes, 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 The Hill and BestReviews, are collectively a Top
10 U.S. digital news and information property. In addition to
delivering exceptional content and service to our communities,
Nexstar provides premium multiplatform advertising opportunities at
scale for businesses and brands seeking to leverage the strong
consumer engagement of our compelling content offering. For more
information, please visit www.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,
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,
the ability to service and refinance our outstanding debt,
successful integration of acquired television stations and digital
businesses (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.
-tables follow-
Nexstar Media Group,
Inc.
Condensed Consolidated
Statements of Operations
(in millions, except per share
amounts, unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net revenue
$
1,245.1
$
1,131.6
$
2,455.2
$
2,245.5
Operating expenses (income):
Corporate expenses
50.3
42.0
96.7
85.4
Direct operating expenses
501.6
462.4
991.6
911.7
Selling, general and administrative
expenses, excluding corporate
216.3
200.5
417.7
400.5
Amortization of broadcast rights
27.4
31.6
55.2
62.5
Amortization of intangible assets
77.4
73.8
155.1
147.5
Depreciation of property and equipment
39.3
39.9
78.4
79.4
Reimbursement from the FCC related to
station repack
(0.6
)
(6.9
)
(2.3
)
(12.3
)
Other
-
-
-
(2.4
)
Total operating expenses
911.7
843.3
1,792.4
1,672.3
Income from operations
333.4
288.3
662.8
573.2
Income from equity method investments,
net
35.9
27.1
73.6
56.9
Interest expense, net
(75.4
)
(70.1
)
(144.6
)
(142.2
)
Pension and other postretirement plans
credit, net
10.8
17.6
21.7
35.3
Other (expenses) income, net
(6.6
)
7.6
(11.5
)
6.2
Income before income taxes
298.1
270.5
602.0
529.4
Income tax expense
(71.6
)
(70.7
)
(124.1
)
(130.4
)
Net income
226.5
199.8
477.9
399.0
Net loss attributable to noncontrolling
interests
1.0
0.3
1.2
2.0
Net income attributable to Nexstar Media
Group, Inc.
$
227.5
$
200.1
$
479.1
$
401.0
Net income per common share attributable
to Nexstar Media Group, Inc.:
Basic
$
5.66
$
4.70
$
11.80
$
9.34
Diluted
$
5.56
$
4.51
$
11.54
$
8.93
Weighted average number of common shares
outstanding:
Basic
40.2
42.6
40.6
42.9
Diluted
40.9
44.4
41.5
44.9
Nexstar Media Group,
Inc.
Reconciliation of Adjusted
EBITDA (Non-GAAP Measure)
($ in millions, unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
Adjusted EBITDA:
2022
2021
2022
2021
Net income
$
226.5
$
199.8
$
477.9
$
399.0
Add (Less):
Interest expense, net
75.4
70.1
144.6
142.2
Income tax expense
71.6
70.7
124.1
130.4
Depreciation of property and equipment
39.3
39.9
78.4
79.4
Amortization of intangible assets
77.4
73.8
155.1
147.5
Amortization of broadcast rights
27.4
31.6
55.2
62.5
Stock-based compensation expense
13.1
10.4
26.2
22.0
Amortization of right-of-use assets
attributable to favorable leases
0.2
0.2
0.4
0.4
Loss (gain) on asset disposal and
operating lease terminations, net
-
(8.7
)
(0.3
)
(8.5
)
Transaction and other one-time
expenses
2.9
0.9
4.5
2.1
Income from equity method investments,
net
(35.9
)
(27.1
)
(73.6
)
(56.9
)
Distributions from equity method
investments
31.1
29.7
224.1
207.4
Pension and other postretirement plans
credit, net
(10.8
)
(17.6
)
(21.7
)
(35.3
)
Other expenses (income), net
6.6
(7.6
)
11.5
(6.2
)
Gain on disposal of a business unit,
net
-
-
-
(2.4
)
Reimbursement from the FCC related to
station repack
(0.6
)
(6.9
)
(2.3
)
(12.3
)
Payments for broadcast rights
(32.7
)
(46.7
)
(66.1
)
(92.3
)
Adjusted EBITDA before transaction,
one-time and other non-cash items
491.5
412.5
1,138.0
979.0
Margin %
39.5
%
36.5
%
46.4
%
43.6
%
Less: Transaction and other one-time
expenses
(2.9
)
(0.9
)
(4.5
)
(2.1
)
Adjusted EBITDA before other non-cash
items
488.6
411.6
1,133.5
976.9
Margin %
39.2
%
36.4
%
46.2
%
43.5
%
Add (Less):
Stock-based compensation expense
(13.1
)
(10.4
)
(26.2
)
(22.0
)
Pension and other postretirement plans
credit, net
10.8
17.6
21.7
35.3
Transaction and other one-time
expenses
2.9
0.9
4.5
2.1
Adjusted EBITDA before transaction and
other one-time expenses
$
489.2
$
419.7
$
1,133.5
$
992.3
Margin %
39.3
%
37.1
%
46.2
%
44.2
%
Less: Transaction and other one-time
expenses
(2.9
)
(0.9
)
(4.5
)
(2.1
)
Adjusted EBITDA
$
486.3
$
418.8
$
1,129.0
$
990.2
Margin %
39.1
%
37.0
%
46.0
%
44.1
%
Nexstar Media Group,
Inc.
Reconciliation of Free Cash
Flow (Non-GAAP Measure)
($ in millions, unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
Free Cash Flow:
2022
2021
2022
2021
Net income
$
226.5
$
199.8
$
477.9
$
399.0
Add (Less):
Interest expense, net
75.4
70.1
144.6
142.2
Income tax expense
71.6
70.7
124.1
130.4
Depreciation of property and equipment
39.3
39.9
78.4
79.4
Amortization of intangible assets
77.4
73.8
155.1
147.5
Amortization of broadcast rights
27.4
31.6
55.2
62.5
Stock-based compensation expense
13.1
10.4
26.2
22.0
Amortization of right-of-use assets
attributable to favorable leases
0.2
0.2
0.4
0.4
Loss (gain) on asset disposal and
operating lease terminations, net
-
(8.7
)
(0.3
)
(8.5
)
Transaction and other one-time
expenses
2.9
0.9
4.5
2.1
Income from equity method investments,
net
(35.9
)
(27.1
)
(73.6
)
(56.9
)
Distributions from equity method
investments
31.1
29.7
224.1
207.4
Pension and other postretirement plans
credit, net
(10.8
)
(17.6
)
(21.7
)
(35.3
)
Other expenses (income), net
6.6
(7.6
)
11.5
(6.2
)
Gain on disposal of a business unit,
net
-
-
-
(2.4
)
Payments for broadcast rights
(32.7
)
(46.7
)
(66.1
)
(92.3
)
Cash interest expense
(71.9
)
(66.4
)
(137.5
)
(134.8
)
Capital expenditures, excluding station
repack and CVR spectrum
(34.0
)
(33.5
)
(61.8
)
(61.1
)
Capital expenditures related to station
repack
-
(1.0
)
(0.8
)
(5.4
)
Proceeds from disposal of assets(1)
-
13.3
0.3
14.3
Operating cash income tax payments,
net
(175.1
)
(167.3
)
(178.3
)
(172.8
)
Free cash flow before transaction,
one-time and other non-cash items
211.1
164.5
762.2
631.5
Less: Transaction and other one-time
expenses
(2.9
)
(0.9
)
(4.5
)
(2.1
)
Free cash flow before other non-cash
items
208.2
163.6
757.7
629.4
Add: Pension and other postretirement
plans credit, net
10.8
17.6
21.7
35.3
Transaction and other one-time
expenses
2.9
0.9
4.5
2.1
Free cash flow before transaction and
other one-time expenses
$
221.9
$
182.1
$
783.9
$
666.8
Less: Transaction and other one-time
expenses
(2.9
)
(0.9
)
(4.5
)
(2.1
)
Free cash flow
$
219.0
$
181.2
$
779.4
$
664.7
____________________ [1] Excludes proceeds from the sale of
certain real estate property of $40.4 million during Q2 2022 ($45.3
million in total including deposits received in the first quarter
of 2022 and the fourth quarter of 2021).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220804005275/en/
Investors: Thomas E. Carter President and Chief Operating
Officer Nexstar Media Group, Inc. 972/373-8800
Lee Ann Gliha Executive Vice President and Chief Financial
Officer Nexstar Media Group, Inc. 972/373-8800
Joseph Jaffoni or Jennifer Neuman JCIR 212/835-8500
or nxst@jcir.com
Media: Gary Weitman EVP and Chief Communications Officer
Nexstar Media Group, Inc. 972/373-8800
or gweitman@nexstar.tv
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