IRVING, Texas--(BUSINESS WIRE)--Nexstar Media Group, Inc. (NASDAQ: NXST) today reported financial results for the fourth quarter ended December 31, 2020 as summarized below. The actual results presented herein for the three months ended December 31, 2020 and 2019 reflect the full operations of both the Nexstar’s legacy broadcasting and digital operations and quarterly results from the Tribune Media stations which were acquired on September 19, 2019. Fourth quarter 2020 revenue from WGN America, also acquired in the Tribune transaction, is included in core advertising revenue and distribution fee revenue. The contribution from Nexstar’s 31.3% ownership stake in TV Food Network and other investments acquired in the Tribune transaction is included in the full income statement on page 7 under “Income (loss) on equity investments, net.”
|
Summary 2020 Fourth Quarter Results and Full Year Highlights |
||||||||||||||||||||||||
|
Three Months Ended December 31, |
Years Ended December 31, |
|||||||||||||||||||||||
|
($ in thousands) |
2020 |
2019 |
Change |
2020 |
2019 |
Change |
||||||||||||||||||
|
Core Advertising Revenue |
$ |
473,524 |
$ |
525,458 |
(9.9 |
)% |
$ |
1,571,072 |
$ |
1,335,126 |
+17.7 |
% |
||||||||||||
|
Political Advertising Revenue |
$ |
298,270 |
$ |
36,526 |
+716.6 |
% |
$ |
507,564 |
$ |
51,889 |
+878.2 |
% |
||||||||||||
|
Total Television Advertising Revenue |
$ |
771,794 |
$ |
561,984 |
+37.3 |
% |
$ |
2,078,636 |
$ |
1,387,015 |
+49.9 |
% |
||||||||||||
|
Distribution Fee Revenue |
$ |
527,986 |
$ |
445,831 |
+18.4 |
% |
$ |
2,152,622 |
$ |
1,368,881 |
+57.3 |
% |
||||||||||||
|
Digital Revenue |
$ |
65,036 |
$ |
74,310 |
(12.5 |
)% |
$ |
223,368 |
$ |
241,519 |
(7.5 |
)% |
||||||||||||
|
Other Revenue |
$ |
11,795 |
$ |
17,965 |
(34.3 |
)% |
$ |
46,643 |
$ |
41,909 |
+11.3 |
% |
||||||||||||
|
Net Revenue |
$ |
1,376,611 |
$ |
1,100,090 |
+25.1 |
% |
$ |
4,501,269 |
$ |
3,039,324 |
+48.1 |
% |
||||||||||||
|
Income from Operations |
$ |
530,531 |
$ |
256,498 |
+106.8 |
% |
$ |
1,375,396 |
$ |
655,131 |
+109.9 |
% |
||||||||||||
|
Net income |
$ |
362,912 |
$ |
113,851 |
+218.8 |
% |
$ |
808,060 |
$ |
236,295 |
+242.0 |
% |
||||||||||||
|
Adjusted EBITDA Before One-Time Transaction Expenses(1) |
$ |
671,317 |
$ |
408,224 |
+64.4 |
% |
$ |
1,995,645 |
$ |
972,281 |
+105.3 |
% |
||||||||||||
|
Adjusted EBITDA(1) |
$ |
657,052 |
$ |
379,219 |
+73.3 |
% |
$ |
1,951,212 |
$ |
898,149 |
+117.2 |
% |
||||||||||||
|
Adjusted EBITDA Margin(2) |
47.7 |
% |
34.5 |
% |
43.3 |
% |
29.6 |
% |
||||||||||||||||
|
Free Cash Flow Before One-Time Transaction Expenses(1) |
$ |
450,591 |
$ |
202,865 |
+122.1 |
% |
$ |
1,304,571 |
$ |
520,885 |
+150.5 |
% |
||||||||||||
|
Free Cash Flow(1) |
$ |
443,170 |
$ |
173,860 |
+154.9 |
% |
$ |
1,280,086 |
$ |
439,457 |
+191.3 |
% |
||||||||||||
| (1) | Definitions and disclosures regarding non-GAAP financial information including reconciliations are included at the end of the press release. Given the Company’s previous disclosure that effective November 1, 2020 it combined its broadcast and digital operations, commencing with the fourth quarter of 2020, Nexstar no longer report broadcast cash flow but investors can calculate a comparable metric for the combined broadcast and digital operations by adding back corporate expense to Adjusted EBITDA. | |
| (2) | Adjusted EBITDA margin is Adjusted EBITDA as a percentage of net revenue. |
CEO Comment
Perry A. Sook, Chairman and Chief Executive Officer of Nexstar Media Group commented, “Nexstar’s fourth quarter financial results conclude an outstanding year, as we set new records across every key financial performance metric, all of which exceeded consensus expectations. Reflecting margin growth related to our record revenue and the strong operating leverage in our business model, Nexstar generated record year-over-year fourth quarter adjusted EBITDA and free cash flow growth of 73.3% and 154.9%, respectively. While we continue to operate in a dynamic environment, full year 2020 free cash flow was in line with our pre-pandemic expectations and 2021 is off to a solid start. As a result, we are reinstating guidance and expect to generate pro-forma average annual free cash flow of approximately $1.27 billion over the 2021/2022 cycle which supports our view that Nexstar’s path to growth, expanded returns of capital and enhanced shareholder returns remains on plan.
“Throughout 2020, our enterprise-wide focus on managing operations for current and future cash flow, combined with the actions we took to offset and, in many cases, overcome the economic impacts brought on by the pandemic, enabled us to generate record free cash flow of approximately $1.28 billion, representing growth of approximately 191% over 2019. We brought 28.4% of every net revenue dollar to the free cash flow line allowing us to invest in our local media platform and in complementary accretive acquisitions, while paying down approximately $1.0 billion in secured debt and returning approximately $383 million to shareholders in the form of share repurchases and dividends, as we reduced our year-end outstanding share count to 43.3 million shares.
“Throughout Nexstar’s history, our focus on free cash flow growth has supported greater levels of service and investment in our local operations and communities and increased shareholder returns. Consistent with our capital allocation priorities and long-standing commitment to enhancing shareholder value, in January, the Board of Directors increased Nexstar’s quarterly dividend by 25% to $0.70 per share and authorized the repurchase of up to an additional $1.0 billion of our Class A common stock. The Board’s repurchase authorization reflects the attractiveness of Nexstar’s free cash flow yield and a potential acceleration of share repurchases as our leverage moderates and large-scale acquisitions become more scarce given the current regulatory environment. The double-digit increase in Nexstar’s dividend for the eighth consecutive year and the implementation of a significant share repurchase authorization will allow us to continue delivering industry leading risk-adjusted returns to our shareholders.
“Turning to our revenue results, Nexstar generated fourth quarter net revenue of $1.4 billion representing a 25.1% increase over the prior year, essentially on a same station basis. Our inventory management and pricing strategies enabled us to maximize political revenue in our markets and with over $507 million in full year political revenue, we significantly exceeded our political advertising revenue guidance. Television ad revenue inclusive of political advertising grew 37.3% in the fourth quarter as the more than seven-fold increase in year-over-year political revenue was partially offset by a core spot revenue decline as we allocated ad inventory to political advertisers. Reflecting last year’s addition of the Tribune stations and presence in states with high levels of political spending activity, 2020 fourth quarter political revenue rose by 112.8% over the 2018 mid-term election cycle and increased 396.8% over the comparable 2016 Presidential election cycle.
“While robust demand from campaigns and issue advertisers this election season resulted in a reduction in inventory available for local and national advertisers in October, we continued to generate a sequential month-over-month improvement in core advertising revenue in November and December, which were the strongest months of the year since the pandemic began. In addition, Nexstar’s local sales initiatives continued to generate healthy levels of new business with fourth quarter new-to-television ad revenue rising both on a quarterly sequential and year-over-year basis. In total, our sales teams generated $27.8 million of fourth quarter new-to-television revenue, marking a 9.9% rise over the third quarter and a 35% increase over the comparable 2019 period.
“Fourth quarter 2020 distribution fee revenue rose 18.4% year-over-year to approximately $528 million reflecting our renewal of distribution agreements in 2019, partially offset by the one-time impact of outages during distribution negotiations with a satellite television company during the quarter. Excluding the aforementioned one-time impact, subscriber trends across our platform continue to remain consistent with our expectations and the ongoing distribution revenue growth trends we project. With our successful renewal of 2020 year-end distribution agreements representing approximately 18% of our subscriber base and 70%+ of our subscriber base renewed in 2019, continued revenue growth from this source remains highly visible for 2021.
“Fourth quarter 2020 total digital revenue declined 12.5%, due to de-emphasizing unprofitable lines of business that produced high volumes without substantial margins. However, digital profitability was up substantially over the comparable prior-year period. Following the acquisition of Tribune Media, over the past year Nexstar has transitioned its digital operations to focus on content and audience development. As a result, Nexstar’s digital network delivered record growth and audience engagement in 2020, ranking #1 in local news for every month of the year and reaching all-time highs across key performance indicators including average monthly users of 91 million, total pageviews of 7.8 billion, total multiplatform minutes of 10.4 billion and total digital video views of 1.6 billion, according to Comscore.
“In the fourth quarter, we completed the first transaction under our new ‘content first’ strategy with the accretive acquisition of BestReviews, a leading consumer product recommendations company. BestReviews diversifies our digital content portfolio while presenting the company with new and significant revenue channels by leveraging our media content, national reach and significan
