Net Revenue Growth Drives 1Q Record
Operating Income of $110.1 Million, Record BCF of $188.2 Million,
Adjusted EBITDA of $171.5 Million and Free Cash Flow of $102.2
Million, Before One-Time Transaction Expenses
Nexstar Media Group, Inc. (NASDAQ: NXST) (“Nexstar” or “the
Company”) today reported record financial results for the first
quarter ended March 31, 2017 as summarized below. On January 17,
2017, Nexstar completed its acquisition of Media General, Inc. and
also closed on the divestitures of 13 television stations. All
actual results presented herein reflect the impact of $47.7 million
of one-time transaction expenses incurred in the quarter ended
March 31, 2017. The actual results presented herein for the three
months ended March 31, 2017 reflect the Company’s legacy Nexstar
broadcasting and digital operations (less seventy-three days of
results from six Nexstar station divestitures) and seventy-three
days of results from the Media General stations (net of
divestitures). The comparable three month period ended March 31,
2016 reflects the Company’s legacy Nexstar broadcasting and digital
operations.
Three Months Ended March
31,
($ in thousands)
2017
2016
Change Local Revenue $ 202,430 $ 93,767 +115.9 % National
Revenue $ 77,711 $ 35,450 +119.2 %
Core Advertising Revenue
$ 280,141 $ 129,217 +116.8 %
Political Revenue $ 1,995 $ 11,754 (83.0 )% Retransmission Fee
Revenue $ 231,895 $ 97,313 +138.3 % Digital Revenue $ 46,705 $
22,533 +107.3 % Other $ 4,461 $ 1,605 +177.9 % Trade and Barter
Revenue $ 12,442 $ 11,417 +9.0 %
Gross Revenue $
577,639 $ 273,839 +110.9 % Less: Agency
Commission $ 37,322 $ 18,181 +105.3 %
Net Revenue $
540,317 $ 255,658 +111.3 %
Gross
Revenue Excluding Political $ 575,644 $
262,085 +119.6 %
Income from Operations
$ 110,151 $ 57,929 +90.1 %
Broadcast Cash Flow(1) $ 188,213
$ 98,063 +91.9 %
Broadcast Cash Flow
Margin(2) 34.8 % 38.4 %
Adjusted EBITDA Before One-Time Transaction
Expenses(1) $ 171,490 $
86,765 +97.6 %
Adjusted EBITDA Before One-Time
Transaction Expenses Margin(2) 31.7 %
33.9 % Adjusted EBITDA(1) $
123,814 $ 82,252 +50.5 %
Adjusted EBITDA
Margin(2) 22.9 % 32.2 %
Free Cash Flow Before One-Time Transaction
Expenses(1) $ 102,213 $
56,633 +80.5 %
Free Cash Flow(1) $
54,537 $ 52,120 +4.6 %
_______________
(1) Definitions and disclosures regarding non-GAAP
financial information including reconciliations are included at the
end of the press release. (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 record
first quarter results highlight our expanded scale, ongoing
diversification and unwavering commitment to localism, innovation
and growth as we capitalize on the many opportunities to serve
viewers and businesses in our local markets. Our record first
quarter net revenue led to record cash flows before the impact of
$47.7 million of one-time transaction expenses which we disclosed
and estimated at $46.0 million on our fourth quarter conference
call. A partial quarter’s contribution from the Media General
transaction and the continued strength of Nexstar’s legacy
operations led to triple digit growth in all of our non-political
revenue sources and combined with our expense discipline and focus
on managing operations for cash flow, resulted in BCF, Adjusted
EBITDA and free cash flow growth before transaction expenses of
91.9%, 97.6% and 80.5%, respectively. Importantly, the Media
General integration and synergy realization plans are proceeding
ahead of schedule, and to date we have harvested approximately 85%
of the $81 million of year one synergies we previously
identified.
“We remain confident that significant year-over-year growth in
our non-political revenue sources will continue throughout the
year, and we expect 2017 to mark the Company’s sixth consecutive
year of record financial results. With the operating momentum
across our business and our integration initiatives proceeding
according to plan, we remain confident in Nexstar’s ability to meet
or exceed our targets for average annual free cash flow in the
2017/2018 cycle of approximately $565 million, or approximately
$12.00 per share, per year. Overall, the Media General transaction
is meeting our expectations and will result in excess of 55% growth
in our annual average pro forma 2017/2018 free cash flow per share
relative to the record performance of our legacy operations in
2016.
“For the quarter, net revenue rose 111% as our increased scale
and the ongoing execution of our strategies to leverage our local
content and diversify our revenue sources more than offset the $9.8
million year-over-year decline in political advertising. First
quarter core television ad revenue growth of 117% was complemented
by a 138% rise in retransmission fee revenue and a 107% increase in
digital media revenue both of which benefited from organic growth
as well the addition of the Media General operations. Our strong
local sales teams and focus on managing core ad inventory resulted
in a modest increase in pro forma combined Company same-station
local advertising revenue, despite the absence of political and
soft first quarter GDP trends as the U.S. economy grew during the
period at its weakest pace in three years. Reflecting
transaction-related growth and our historical success in growing
political ad spending during odd-year cycles, we reported first
quarter political revenue of approximately $2 million marking a
454% rise over the comparable 2015 period. Notably, excluding
political, gross revenue grew 120% in the first quarter compared to
the prior year, 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.
“Highlighting further success against our diversification
initiatives, combined digital media and retransmission fee revenue
of $278.6 million more than doubled compared to the prior year
period and accounted for 51.6% of net revenue marking the highest
contribution to our quarterly revenue mix for the combined metric
and significant growth over the 2016 first quarter level of 46.9%.
The year-over-year increase in first quarter non-television revenue
reflects new distribution agreements reached in late 2016 with
multichannel video programming distributors covering approximately
10 million subscribers, Media General revenue synergies related to
the after acquired clauses in our retransmission consent contracts,
and our expanded digital operations.
“The rise in first quarter station direct operating expenses
(net of trade expense) and SG&A expense primarily reflects the
operation of acquired stations and digital assets and increases in
network affiliation expense. First quarter corporate expense was in
line with our overall guidance and our prior indication that we
would incur transaction costs related to the completion of the
Media General transaction and certain divestitures.
“With significant and growing free cash flow Nexstar has
excellent visibility to delivering on or exceeding our free cash
flow targets in the current cycle and a clear path for the
continued near- and long-term enhancement of shareholder value. As
always, we remain focused on actively managing our capital
structure to provide the financial flexibility to support our near-
and long-term growth. In this regard, subsequent to the closing of
the Media General transaction, Nexstar made voluntary prepayments
on its Term Loan B amounting to $125.0 million and called the
entire $525 million of the 6.875% senior unsecured notes. As a
result, we reduced our funded debt at March 31, 2017, by [$650]
million relative to the levels at the time we closed the Media
General transaction. We continue to expect Nexstar’s net leverage,
absent additional strategic activity, to be in the high 4x range at
the end of 2017 and to decline to the mid 3x range by the end of
2018.
“To ensure precise execution across our significantly expanded
operating base, during the first quarter we promoted Tim Busch to
serve as President of the Nexstar Broadcasting Inc., announced
three newly-created regional managers and moved quickly to fill
open general manager positions and to date have hired or promoted
22 new station GMs. We also hired our Washington D.C. News Bureau
Chief, CBS News veteran Bill Mondora, who will leverage our
expanded team of journalists and production resources to deliver
local content to communities across Nexstar’s markets. We added
sales resources to the former Media General markets and continue to
transition our stations onto the same operating systems, platforms
and services. We also announced the appointment of technology
venture capital investor and former Rubicon Project president and
board member, Greg Raifman, to President of Nexstar Digital LLC.
Greg brings outstanding leadership and entrepreneurial skills to
Nexstar and a record of success in efficiently scaling advertising
technology and services companies to a position of market
leadership while accelerating revenue growth. He will continue the
progress we have made integrating our digital products under the
Nexstar Digital brand, while evaluating new potential complementary
capabilities that maximize results for our customers and create
revenue opportunities for the Company’s shareholders.
“As the nation’s leading local media company with a portfolio of
premiere stations and digital assets, a strong balance sheet, an
attractive weighted average cost of capital, and prodigious annual
free cash growth, we continue to have the financial flexibility to
reduce leverage, evaluate additional accretive strategic growth
investments and expand our return of capital to shareholders. In
summary, Nexstar is executing very well on all functions including
our operations, integration, synergy realization, capital
structure, and service to our local communities. Our disciplines in
these areas have driven significant growth as well as consistency
and visibility to our results. We look forward to realizing the
significant strategic and economic benefits from the Media General
transaction in 2017 and remain confident that our ongoing
initiatives to drive distribution, digital and odd-year political
revenue growth across our platform combined with prudent management
of our capital structure are a proven formula for sustained long
term financial growth.”
The consolidated debt of Nexstar, its wholly owned subsidiaries
and its variable interest entities (“VIEs”) (collectively, the
“Company”) at March 31, 2017, was $4,501.9 million including senior
secured debt of $2,934.4 million. The Company’s total net leverage
ratio at March 31, 2017 was 4.7x.
The table below summarizes the Company’s debt obligations (net
of financing costs and discounts):
($ in millions)
3/31/2017
12/31/2016 Revolving Credit Facilities $ 3.0 $ 2.0
First Lien Term Loans $ 2,931.4 $ 662.2 6.875% Senior Unsecured
Notes $ - $ 520.7 6.125% Senior Unsecured Notes $ 272.7 $ 272.6
5.875% Senior Unsecured Notes $ 409.6 $ - 5.625% Senior Unsecured
Notes $ 885.2 $ 884.9
Total Debt $ 4,501.9
$ 2,342.4 Cash on Hand $
72.9 $ 87.7
Media General Contingent Value Right
In connection with Nexstar’s merger with Media General, one
Contingent Value Right (“CVR”) was issued for each of Media
General’s outstanding common shares, stock options and other
stock-based awards. The CVR entitles the holder to receive a pro
rata share of the net proceeds from the disposition of Media
General’s spectrum in the Federal Communications Commission’s
spectrum auction. The CVRs are not transferable, except in limited
circumstances. Later this month, Nexstar will be notifying the CVR
Rights Agent, American Stock Transfer, of our estimate of
“Distributable Company Proceeds” and “Estimate Holdback” amounts as
required under the Contingent Value Rights Agreement. While exact
timing is not certain, we anticipate the first payments being made
to CVR holders this summer and continuing thereafter until all of
the spectrum proceeds have been received. Please refer to the
Contingent Value Rights Agreement for additional details.
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 719/325-4940, conference ID 1598799 (domestic
and international callers). In addition, a live audio webcast of
the call will be accessible to the public on Nexstar’s web site,
http://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 (including one-time transaction expenses),
depreciation, amortization of intangible assets and broadcast
rights (excluding barter), (gain) loss on asset disposal, non-cash
representation contract termination fee and change in the fair
value of contingent consideration, minus broadcast rights
payments.
Adjusted EBITDA before one-time transaction expenses is
calculated as broadcast cash flow less corporate expenses,
excluding one-time transaction expenses. Adjusted EBITDA is
calculated as Adjusted EBITDA before one-time transaction expenses
less corporate one-time transaction expenses.
Free cash flow is calculated as income from operations plus
depreciation, amortization of intangible assets and broadcast
rights (excluding barter), (gain) loss on asset disposal, non-cash
compensation expense, non-cash representation contract termination
fee and change in the fair value of contingent consideration, less
payments for broadcast rights, cash interest expense, capital
expenditures and net operating cash income taxes.
Broadcast cash flow, Adjusted EBITDA before one-time transaction
expenses, 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 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 Media Group, Inc.
Nexstar Media 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 170 television stations and related digital
multicast signals reaching 100 markets or nearly 39% of all U.S.
television households. Nexstar’s portfolio includes primary
affiliates of NBC, CBS, ABC, FOX, MyNetworkTV and The CW. 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. 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 SEC.
Nexstar Media Group, Inc.
Condensed Consolidated Statements of
Operations
(in thousands, except per share amounts,
unaudited)
Three Months Ended March 31,
2017 2016 Net revenue $ 540,317 $ 255,658
Operating expenses: Corporate expenses 64,399 15,811 Direct
operating expenses, net of trade 216,060 87,946 Selling, general
and administrative expenses, excluding corporate 109,903 52,354
Trade and barter expense 12,900 11,344 Depreciation 22,226 12,558
Amortization of intangible assets 48,158 12,079 Amortization of
broadcast rights, excluding barter 14,236 5,637 Gain on disposal of
stations, net (57,716 ) - Total operating expenses
430,166 197,729 Income from operations 110,151 57,929
Interest expense, net (79,237 ) (20,654 ) Loss on debt
extinguishment (31,804 ) - Other expenses (107 ) (136
) (Loss) income before income taxes (997 ) 37,139 Income tax
benefit (expense) 5,941 (14,865 ) Net income 4,944
22,274 Net loss (income) attributable to noncontrolling interests
1,105 (547 ) Net income attributable to Nexstar $
6,049 $ 21,727 Basic net income per common share
attributable to Nexstar $ 0.14 $ 0.71 Basic weighted average number
of common shares outstanding 44,200 30,658 Diluted net
income per common share attributable to Nexstar $ 0.13 $ 0.69
Diluted weighted average number of common shares outstanding 45,419
31,538
Nexstar Media Group, Inc.
Reconciliation of Broadcast Cash Flow
and Adjusted EBITDA (Non-GAAP Measures)
UNAUDITED (in thousands)
Three Months Ended March 31,
Broadcast Cash Flow and Adjusted EBITDA: 2017
2016 Income from operations $ 110,151 $ 57,929
Add: Depreciation 22,226 12,558 Amortization of intangible
assets 48,158 12,079 Amortization of broadcast rights, excluding
barter 14,236 5,637 Gain on asset disposal, net (57,622 ) (97 )
Corporate expenses 64,399 15,811 Change in the fair value of
contingent consideration - 404 Less: Payments for broadcast
rights 13,335 6,258 Broadcast cash flow
188,213 98,063 Margin % 34.8 % 38.4 % Less: Corporate
expenses, excluding one-time transaction expenses 16,723
11,298 Adjusted EBITDA before one-time transaction
expenses 171,490 86,765 Margin % 31.7 % 33.9 % Less:
Corporate one-time transaction expenses 47,676 4,513
Adjusted EBITDA $ 123,814 $ 82,252 Margin % 22.9 % 32.2 %
Nexstar Media Group, Inc.
Reconciliation of Free Cash Flow
(Non-GAAP Measure)
UNAUDITED (in thousands)
Three Months Ended March 31,
Free Cash Flow: 2017 2016
Income from operations $ 110,151 $ 57,929 Add: Depreciation
22,226 12,558 Amortization of intangible assets 48,158 12,079
Amortization of broadcast rights, excluding barter 14,236 5,637
Gain on asset disposal, net (57,622 ) (97 ) Non-cash compensation
expense 4,810 3,134 Change in the fair value of contingent
consideration - 404 Corporate one-time transaction expenses 47,676
4,513 Less: Payments for broadcast rights 13,335 6,258 Cash
interest expense(1) 56,972 19,707 Capital expenditures 13,510 7,581
Operating cash income taxes, net of refunds 3,605
5,978 Free cash flow before one-time transaction expenses
102,213 56,633 Less: Corporate one-time transaction expenses
47,676 4,513 Free cash flow $ 54,537 $ 52,120
_______________
(1) Excludes payments of $19.6 million in one-time
fees during Q1 2017 associated with the financing of the Company’s
merger with Media General.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170509005434/en/
Nexstar Media Group, Inc.Thomas E. Carter, 972-373-8800Chief
Financial OfficerorJCIRJoseph Jaffoni / Jennifer Neuman,
212-835-8500nxst@jcir.com
Nexstar Media (NASDAQ:NXST)
Historical Stock Chart
From Apr 2024 to May 2024
Nexstar Media (NASDAQ:NXST)
Historical Stock Chart
From May 2023 to May 2024