QUARTERLY REPORT

Nexstar’s 2Q Net Revenue Grows 24%

The increase to $1.1 billion from 2Q 2020 was boosted by core ad revenue growth of 42%, higher distribution fee revenue (up 15%) and digital revenue growth of 57%.

Nexstar Media Group this morning reported financial results for the second quarter of 2021 that included net revenue of $1,131,590, an increase of 23.7% from the same quarter of 2020.

Core ad revenue totaled $424 million, up 42% from $298 million in 2Q 2020.

Political ad revenue was $8.5 million, down 60.5% from a year ago.

Distribution fee revenue grew 15% to $617 million.

Digital revenue climbed 57.3% to $73.4 million.

Other revenue fell 20.4% to $9.3 million.

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Net income totaled $199.7 million, an increase of 103.5% from 2Q 2002.

Free cash flow was $181 million, down 7% from $195 million.

Perry A. Sook, Nexstar chairman, president and CEO, said: “Nexstar’s strong operating and financial growth momentum as well as our commitment to enhancing shareholder value was highlighted again in the second quarter as we delivered another period of outstanding financial results and industry-leading capital returns.

“Record second quarter net revenue reflects our team’s success in generating a faster and stronger-than-anticipated recovery in core advertising as well as continued double-digit distribution revenue growth. Overall, our record second quarter net revenue of $1.13 billion, net income of $199.8 million and Adjusted EBITDA of $418.8 million were well ahead of consensus expectations, while free cash flow of $181.2 million was impacted by the timing of 2021 operating cash tax payments. With our year-to-date operating results pacing ahead of internal forecasts, we are raising our pro-forma average annual free cash flow guidance for the 2021/2022 cycle by $60 million to approximately ~$1.33 billion.

“During the second quarter, we remained active with our initiatives to enhance shareholder value, repurchasing approximately $138 million of our Class A common shares and returning approximately $30 million to shareholders through our quarterly cash dividend. Through the first six-months of 2021, Nexstar allocated approximately $319 million toward share repurchases and dividends, while maintaining total net leverage below 4x. As such, we are well on our way to exceed the $383 million in total capital returned to shareholders in full year 2020 during the current quarter. Our 2021 repurchase activity to-date, and the approximate $916 million remaining under our current share repurchase authorization, reflects the Board’s confidence in Nexstar’s solid financial position, the durability of our business model and our ability to continue delivering robust levels of free cash flow.

“Nexstar’s record second quarter net revenue increased 23.7% over the prior year, as we continue to successfully monetize our local content leading to significant year-over-year core and digital ad revenue growth, which more than offset the approximate $13 million year-over-year decline in political advertising.

“Total television advertising revenue, including political advertising revenue, increased 35.1% over the prior year reflecting a 42% rise in core advertising, outpacing expectations and highlighting growing demand for our premium local and national marketing solutions as the broad-based economic recovery continues across our markets.

“In addition, Nexstar’s local sales initiatives continue to deliver healthy levels of new business with our sales teams generating $32.9 million of second quarter new-to-television revenue, marking a 59% increase over the prior year and a 18% rise over first quarter 2021 levels. Nexstar’s new business strategies, ongoing sales training, and performance-focused incentive structure, all continue to prove highly effective in generating results and our local sales teams are working hard to drive further revenue share gains in the second half of the year.

“Second quarter 2021 distribution fee revenue rose 15% year-over-year to approximately $617 million, reflecting our renewal of distribution agreements in 2020 representing approximately 18% of our subscriber base, synergies related to Mission Broadcasting’s acquisition of WPIX-TV and stable subscriber trends across our platform that remain consistent with our expectations. As a result, Nexstar has solid visibility into our contractual distribution economics with over 85% of our Big Four affiliations contracted through December 31, 2022. As such, we expect continued retransmission revenue growth reflecting contract renewals representing a high-single digit percentage of our subscribers in 2021 and approximately 60% of our subscribers in 2022.

“Second quarter 2021 total digital revenue increased 57% to approximately $73.4 million with digital profitability up substantially over the prior year period. Top-line growth was driven by strong year-over-year growth in our local digital advertising revenue and agency services business, combined with contributions from the December 2020 accretive acquisition of Best Reviews, a leading consumer product recommendations company. Nexstar’s integrated content and audience development strategies continue to generate strong audience engagement with our media content and significant consumer digital usage across our digital network of 400+ digital touchpoints.

“During the second quarter, Mission Broadcasting closed on a new $300 million Term Loan B Facility. The net proceeds from Mission’s new Term Loan B Facility were used to pay down borrowings under its existing Revolving Credit Facility, pay shared service fees to Nexstar and for general corporate purposes. In addition, concurrent with the closing of the Term Loan B Facility, Mission re-allocated $255 million of its Revolving Credit Facility commitments to Nexstar’s Revolving Credit Facility. At quarter end, there was a total of $365.7 million available under the two Revolving Credit Facilities. The transaction had no material impact on Nexstar’s leverage profile. As always, we remain focused on actively managing our capital structure and continue to expect Nexstar’s net leverage, absent additional strategic activity, to be in the sub 4x range at the end of 2021.

“In June, Nexstar marked its 25th anniversary of the Company’s founding. Over the last two-and-a-half decades, the Company’s transformational growth and financial success have been driven by our revenue diversification strategies, disciplined approach toward capital allocation and an organization-wide commitment to localism and operational excellence. As the largest broadcast group and the top producer of local news programming in North America, Nexstar is mobilizing our resources at scale to leverage the many opportunities we see across the business over the near- and long-term to deliver growing levels of content monetization.

“To support our next phase of growth, last November we implemented a new operational structure by combining our broadcasting and digital operating subsidiaries under Nexstar Media Inc. to align the Company’s leadership in local content production with its management teams and promoted our Executive Vice President and Chief Financial Officer, Tom Carter, to President and Chief Operating Officer. In July, we announced that Lee Ann Gliha, an accomplished finance leader with more than 20 years of experience in TMT investment banking, will assume the CFO role from Tom. Lee Ann will be instrumental in advancing our strategic objectives. Overall, we are confident that the actions we have taken over the past year and the management team we have put in place positions Nexstar to continue providing outstanding content and service to our local communities, while extending our record of delivering exceptional financial results and industry leading risk-adjusted returns to our shareholders.

“In summary, our strategic priorities remain focused on serving our local communities and driving increased content monetization, while returning capital to shareholders, reducing leverage and making thoughtful investments in our business to drive future growth. Looking ahead, with Nexstar’s operating momentum across our businesses, we expect to generate year-over-year growth across all of our non-political revenue sources for the remainder of 2021. The solid foundation of our assets and operations combined with the resiliency of our business model give consistency to our results and our service to our local communities and local and national advertisers has never been stronger. As such, we continue to have excellent visibility to deliver on or exceed our upsized free cash flow targets in the 2021/2022 cycle as well as a clear path for the continued near- and long-term enhancement of shareholder value.”

Read the company’s report here.


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