Nexstar 3Q Rev Sets Record With 43% Gain

Nexstar Broadcasting Group today reported its third quarter net revenue rose 42.6% to $224.9 million. Core revenue increased 37.8% to $125.9 million.

The numbers break down to:

• Local revenue was up 33.7% to $88 million.

• National revenue increased 48.2% to $37.9 million.

• Retransmission consent revenue rose 96.5% to $80 million.

• Political revenue decreased 85.9% to $2.6 million.

• Digital media revenue climbed 55.6% to $20.1 million.

• Net revenue rose 42.6% to $224.9 million.

• Income from operations was up 15.9% to $48.3 million.

Perry A. Sook, Nexstar chairman, president and CEO, commented: “Nexstar generated record third quarter revenue, BCF, Adjusted EBITDA and free cash flow, all of which exceeded consensus expectations. Our results again reflect the strength of our existing operations, the successful integration of recently completed accretive station and digital media acquisitions, and exceptional distribution revenue growth.

“Nexstar’s consistent industry out-performance is the direct result of our disciplined operating and cost management practices, revenue diversification initiatives and the success we are achieving in identifying, financing and integrating accretive acquisitions. With our long-term strategic focus on completing accretive transactions that expand our scale and free cash flow, Nexstar remained active and successful during the third quarter in building the platform for continued growth and the return of political advertising revenue in 2016.

“During the quarter we announced another accretive transaction whereby we will acquire four CBS-affiliated stations in North Dakota. Pro-forma for its completion by early 2016, and the continued strength of our operating results and recent share repurchases, Nexstar’s 2015/2016 free cash flow projection increases to approximately $467 million, or average pro-forma free cash flow of approximately $7.62 per share per year. As reflected by our proposal to acquire Media General in an accretive manner, we fully intend to remain active on this front as our proven corporate, broadcast and digital media management teams have built an excellent record of delivering enhanced shareholder value on a near- and long-term basis.

“Third quarter organic and acquisition related revenue growth in all of our non-political revenue sources, including a 37.8% rise in core ad revenue, a 55.6% increase in digital media revenue and retransmission fee revenue that was 96.5% higher than the comparable year-ago period, more than offset an 85.9% year-over-year reduction in political revenue. Excluding political advertising revenue, third quarter revenue grew 55.3%.

“In addition, Nexstar’s accretive M&A activity is accelerating our revenue diversification initiatives as reflected in total third quarter retransmission fee and digital media revenue growth, which rose 86.6% to $100.2 million and accounted for 44.5% of net revenue. By comparison, total third quarter retransmission fee and digital media revenue comprised 28.3% of net revenue in the 2013 third quarter, the previous non-political period. We expect our long-term distribution revenue growth trend to continue. In late 2014 additional contract renewals representing about 40% of the Company’s MVPD subscribers were completed while another approximately 45% of our subscribers are being renewed in 2015.

“Third quarter BCF, Adjusted EBITDA and free cash flow increases of 27.5%, 27.5% and 19.0%, respectively, highlight the value of our strategies to expand our scale while delivering organic core advertising, distribution and digital media revenue growth and exercising cost disciplines. The value-building accretive transactions completed over the last year added 27 stations as well as a digital media advertising and programmatic technology provider to our growth platform.

“On a pro forma basis, since 2011 Nexstar has acquired 62 television stations and four digital media businesses for approximately $1.2 billion in accretive transactions and with their successful integration we are realizing the forecasted synergies and efficiencies disclosed at the time the transactions were announced.

“Our focus on building shareholder value through platform and free cash flow building initiatives is being complemented by a keen focus on managing costs and the capital structure. At the same time, our growing free cash flow affords us the financial flexibility to continue pursuing additional accretive transactions, while simultaneously reducing leverage and returning capital to shareholders through the quarterly cash dividend and share repurchases.

“As we prepare for what are expected to be record levels of political advertising in 2016, Nexstar is on pace to achieve its projected pro-forma free cash flow of approximately $467 million during the 2015/2016 cycle which will mark the Company’s fourth and fifth consecutive years of record free cash flow. Notably, with over $139 million in free cash flow generated year-to-date, we’ve already recorded over $4.55 per share in free cash flow in 2015. With the full year benefit in 2016 of significant retrans renewals, the upcoming completion of the North Dakota transaction and our ability to capture large shares of political advertising in our markets, we believe we have excellent visibility to delivering on or exceeding our free cash flow targets.

“Importantly, our pro forma station platform reaches approximately 18% of all U.S. television households. As such, Nexstar has a considerable runway for further expansion through additional accretive station and digital media acquisitions. Nexstar is already growing rapidly as a result of our highly successful organic and M&A initiatives, and we remain active and engaged in pursuing other accretive transactions.”

Read the company’s report here.