Nexstar Media Group Reports Record Second Quarter Net Revenue of $1.25 Billion

IRVING, Texas–(BUSINESS WIRE)–Nexstar Media Group, Inc. (NASDAQ: NXST) today reported financial results for the second quarter ended June 30, 2022 as summarized below:

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).

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.