On August 8, 2024, Nexstar Media Group Inc (NXST, Financial) released its 8-K filing for the second quarter of 2024, showcasing record net revenue and significant financial achievements.
Company Overview
Nexstar Media Group Inc is the largest television station owner-operator in the United States, with over 200 stations in 116 markets. Of its 200 stations, 155 are affiliated with the four national broadcast networks: CBS, Fox, NBC, and ABC. The 2019 merger with Tribune made Nexstar the top broadcast affiliate for both Fox and CBS, as well as the number-two partner for NBC and number three for ABC. The firm has stations in 12 of the top 20 television markets and reaches 68% of U.S. TV households. Nexstar also owns NewsNation, a nationwide pay-television network, 75% of The CW, and a 31% stake in Food Network and Cooking Channel.
Performance and Challenges
Nexstar Media Group Inc reported record second-quarter net revenue of $1.27 billion, a 2.3% increase from the previous year. This performance is crucial as it reflects the company's ability to grow despite market challenges. The company faced a decline in other revenue streams but managed to offset this with growth in distribution and advertising revenue.
Financial Achievements
The company achieved a net income of $106 million, up 41.3% from the previous year, and an Adjusted EBITDA of $398 million, an 18.8% increase. These achievements are significant for a diversified media company like Nexstar, as they indicate strong operational efficiency and profitability.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Net Revenue | $1,269 million | $1,240 million | 2.3% |
| Net Income | $106 million | $75 million | 41.3% |
| Adjusted EBITDA | $398 million | $335 million | 18.8% |
| Adjusted Free Cash Flow | $78 million | $74 million | 5.4% |
Commentary from Management
"Nexstar delivered another period of solid financial results, building on our strong start to the year. Following a first quarter in which Nexstar generated record first-quarter distribution and total net revenue, we did it again, generating our highest-ever second-quarter distribution and total net revenue. During the quarter, we continued executing on our plan at The CW, reducing operating losses by $33 million year-over-year and $83 million year-to-date as our organizational and programming changes are driving improved cash flows and the third consecutive quarter of ratings growth in primetime entertainment programming. Overall, our strong year-to-date operating performance yielded $483 million of Adjusted Free Cash Flow and we returned $358 million, or 74% of Adjusted Free Cash Flow, to shareholders in the form of dividends and share repurchases. Looking ahead, we expect to benefit from anticipated record levels of political spending on broadcast television in the second half of the year."
Income Statement Highlights
Net revenue for the quarter was $1.27 billion, driven by a 5.5% increase in distribution revenue to $734 million and a 2.2% increase in advertising revenue to $522 million. The company's net income margin improved to 8.4% from 6.0% in the prior year, reflecting increased revenue and lower operating expenses.
Balance Sheet and Cash Flow
As of June 30, 2024, Nexstar's consolidated debt stood at $6.78 billion, with a first lien net leverage ratio of 2.19x, well within the covenant of 4.25x. The company reported an Adjusted Free Cash Flow of $78 million for the quarter, a 5.4% increase from the previous year.
Capital Allocation
During the second quarter, Nexstar used cash on hand and cash flow from operations to repay $31 million of debt, pay $55 million in dividends, and repurchase 847,904 shares of its common stock for a total of $135 million. This capital allocation strategy underscores the company's commitment to returning value to shareholders.
Conclusion
Nexstar Media Group Inc's strong financial performance in the second quarter of 2024 highlights its resilience and strategic execution in a challenging market environment. The company's record net revenue, improved profitability, and robust cash flow generation position it well for future growth and shareholder value creation.
Explore the complete 8-K earnings release (here) from Nexstar Media Group Inc for further details.
