IRVING, Texas–(BUSINESS WIRE)–Nexstar Media Group, Inc. (NASDAQ: NXST) today reported financial results for the first quarter ended March 31, 2024. Please visit Nexstar’s website to view the full press release.
STATEMENT FROM PERRY A. SOOK, FOUNDER, CHAIRMAN AND CEO
“Nexstar is off to a strong start in 2024, delivering the highest first quarter net revenues in the Company’s history and once again outpacing consensus expectations for Adjusted EBITDA and Adjusted Free Cash Flow. As the industry’s largest local broadcaster with the most-watched broadcast television programming, Nexstar’s value to our distribution and advertising partners is demonstrated by our continued strong financial performance, including all-time quarterly high distribution revenue. We continue to make progress at The CW, reducing operating losses by $50 million year-over-year and kicking off the 2023/2024 broadcast season by delivering two sequential quarters of primetime audience improvement. Looking ahead, we remain confident that Nexstar will deliver another strong year of financial results and expect to build momentum through 2024, given the anticipated record-level of political spending this presidential election cycle.”
2024 First Quarter Financial Summary
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($ in millions) |
|
Three Months Ended March 31, |
|||||
|
|
|
2024 |
|
2023 |
|
% Change |
|
|
Distribution |
|
$761 |
|
$728 |
|
4.5 |
|
|
Advertising |
|
512 |
|
517 |
|
(1.0 |
) |
|
Other |
|
11 |
|
12 |
|
(8.3 |
) |
|
Net Revenue |
|
$1,284 |
|
$1,257 |
|
2.1 |
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|
|
|
|
|
|
|||
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Net Income |
|
$167 |
|
$88 |
|
89.8 |
|
|
% Margin(1) |
|
13.0 |
% |
7.0 |
% |
6.0 |
|
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|
|
|
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|
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Adjusted EBITDA(2) |
|
$542 |
|
$496 |
|
9.3 |
|
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% Margin(1) |
|
42.2 |
% |
39.5 |
% |
2.7 |
|
|
|
|
|
|
|
|||
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Adjusted Free Cash Flow(2) |
|
$403 |
|
$377 |
|
6.9 |
|
|
(1) |
Net Income margin is Net Income as a percentage of Net Revenue. Adjusted EBITDA margin is Adjusted EBITDA as a percentage of Net Revenue. |
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(2) |
Definitions and disclosures regarding non-GAAP financial information including reconciliations are included at the end of the press release. In the first quarter of 2024, we adjusted our definition of Adjusted EBITDA to add back stock-based compensation expense and restructuring expenses and to subtract out pension credits. We also adjusted our definition of Adjusted Free Cash Flow (formerly referred to as Attributable Free Cash Flow) to subtract out pension credits and payments for capitalized software obligations and to adjust for actual cash contributions from noncontrolling interests in lieu of adjusting for our partners’ share of losses in The CW. The comparative prior year disclosures presented herein were also recast to conform with the current presentation. |
Company and Business Highlights
- Announced a 25% increase in the quarterly cash dividend to $1.69 per share of its common stock, marking the Company’s eleventh consecutive annual dividend increase.
- Adopted a policy separating the roles of the Company’s Chairperson and Chief Executive Officer, which will take effect after Mr. Sook leaves the Company and the Board.
- Received $40 million of gross proceeds from the sale of our ownership interest in Broadcast Music, Inc. (BMI).
- Entered into a multi-year time brokerage agreement with KAZT-TV in Phoenix, Arizona, the nation’s 11th largest television market, and added The CW Network affiliation.
- Successfully completed the transition of all 117 markets to Nexstar’s own national sales organization from third-party representation.
- Entered into multi-year agreements with Comscore and Nielsen for linear and cross-platform audience measurement across Nexstar’s local TV, broadcast, network, and digital businesses.
- Delivered consecutive quarters of primetime ratings growth at The CW in the first two quarters since the launch of the 2023/2024 broadcast season.
- Announced that The CW’s seven-year NASCAR Xfinity series deal beginning in 2025 will start ahead of schedule, with all 2024 playoff races now scheduled to air exclusively on The CW beginning in September 2024.
- Achieved our near-term target of reaching over 50% of U.S. television households with an ATSC 3.0, or NextGen TV, signal from a Nexstar owned or operated station following the Chicago and San Diego market launches.
Financial Highlights
- Net Revenue. Record first quarter net revenue of $1.28 billion, increased by $27 million, or 2.1%, reflecting growth in distribution revenue, partially offset by a slight decline in advertising and other revenue. Approximately 59% of Nexstar’s first quarter revenue was derived from distribution revenue.
- Distribution Revenue. First quarter distribution revenue of $761 million was an all-time quarterly high for the company, increasing $33 million, or 4.5%, over the comparable prior year quarter. Distribution revenue growth was primarily due to distribution contract renewals in 2023 on terms favorable to the Company, annual rate escalators, and the return of our partner stations on one MVPD in January, partially offset by MVPD subscriber attrition. Distribution revenue includes retransmission revenue, carriage fees, affiliation fees, and spectrum leasing revenue.
- Advertising Revenue. First quarter advertising revenue of $512 million decreased $5 million, or 1.0%, compared to the prior year quarter reflecting a $36 million year-over-year reduction in core and digital advertising revenue due to ongoing advertising market softness offset, in part, by a $31 million year-over-year increase in election-year political advertising to $39 million. Advertising revenue includes core television advertising, digital advertising and political advertising revenue.
- Net Income. First quarter net income of $167 million increased $79 million, or 89.8%, compared to the prior year quarter, reflecting increased revenue, lower operating expenses driven by reduced amortization of broadcast rights at The CW, and a $40 million gain on the sale of our ownership interest in BMI offset, in part, by increased interest expense. Net Income margin increased to 13.0% from 7.0% in the comparable prior year period.
- Adjusted EBITDA. First quarter Adjusted EBITDA of $542 million increased $46 million, or 9.3%, compared to the prior year quarter primarily reflecting revenue growth and a $50 million year-over-year reduction in losses at The CW, partially offset by an increase in other operating and corporate and elimination expenses and a reduction of cash distributions from equity method investments at TV Food Network LLC (“TVFN”) primarily related to lower advertising revenue. Adjusted EBITDA margin improved to 42.2% from 39.5% in the comparable prior year period.
- Adjusted Free Cash Flow. First quarter Adjusted Free Cash Flow of $403 million, increased $26 million, or 6.9%, due primarily to the increase in Adjusted EBITDA offset, in part, by higher interest expense due to rising interest rates, slightly higher capital expenditures and lower cash contributions from our partners in The CW.
Capital Allocation
- In the first quarter of 2024, as shown in the table below, the Company used cash on hand and cash flow from operations to repay $30 million of debt, pay $57 million in dividends, and repurchase 666,574 shares of Nexstar’s common stock at an average price of approximately $166.11 for a total of $111 million.
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($ in millions, shares in thousands) |
|
Three Months Ended March 31, |
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||
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|
|
2024 |
|
2023 |
|
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Cash Used For |
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|
|
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Debt repayment |
|
$30 |
|
$31 |
|
|
Acquisitions |
|
– |
|
– |
|
|
Stockholder return |
|
168 |
|
225 |
|
|
Common stock dividends |
|
57 |
|
50 |
|
|
Stock repurchases |
|
111 |
|
175 |
|
|
Shares Outstanding |
|
|
|
||
|
End of period |
|
33,038 |
|
35,984 |
|
|
Less: Beginning of period |
|
33,601 |
|
36,810 |
|
|
Change in shares outstanding |
|
(563 |
) |
(826 |
) |
|
% Change |
|
(1.7% |
) |
(2.2% |
) |
Debt, Cash and Leverage
- The consolidated debt of Nexstar and Mission Broadcasting, Inc. (“Mission”), an independently owned variable interest entity, as of March 31, 2024 was $6.81 billion, including senior secured debt of $4.10 billion.
- The Company calculates its leverage ratios in accordance with the terms of its credit agreements which exclude The CW Network’s operations and cash balance. As of March 31, 2024, The CW Network had $90 million of cash on its balance sheet.
- As of March 31, 2024, the Company’s first lien net leverage ratio was 2.21x compared to a covenant of 4.25x and its total net leverage ratio was 3.73x.
- The table below summarizes the Company’s unrestricted cash balances and debt obligations (net of financing costs, discounts and/or premiums) as of March 31, 2024 and as of December 31, 2023.
|
($ in millions) |
|
March 31, 2024 |
|
December 31, 2023 |
|
|
Unrestricted Cash |
|
$237 |
|
$135 |
|
|
Revolving Credit Facilities |
|
$62 |
|
$62 |
|
|
First Lien Term Loans |
|
4,037 |
|
4,064 |
|
|
5.625% Senior Unsecured Notes due 2027 |
|
1,717 |
|
1,717 |
|
|
4.75% Senior Unsecured Notes due 2028 |
|
994 |
|
994 |
|
|
Total Debt |
|
$6,810 |
|
$6,837 |
|
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 across its television and digital platforms, including more than 310,000 hours of programming produced annually by its business units. Nexstar owns America’s largest local television broadcasting group comprised of top network affiliates, with over 200 owned or partner stations in 117 U.S. markets reaching 220 million people. Nexstar’s national television properties include The CW, America’s fifth major broadcast network, NewsNation, America’s fastest-growing national cable news network, 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 its local TV station websites, The Hill and NewsNationNow.com, are collectively a Top 10 U.S. digital news and information property. For more information, please visit nexstar.tv.
