Nexstar Media Group (NXST) Q4 2017 earnings summary

Executive summary

• FY17 was the sixth consecutive record year; net revenue rose 120.4% to $2.432B, primarily reflecting the Media General merger and higher retransmission revenue.

• Q4 revenue was $653.7M, operating income $140.8M, net income attributable to Nexstar $378.5M and diluted EPS $8.03; net income included a $322.2M provisional tax benefit for FY17.

• Strong cash generation supported investment, debt reduction, acquisitions, share repurchases and higher dividends; FY18 expectations included another record year.

Financial highlights

• FY17 net revenue was $2.432B versus $1.103B in FY16; income from operations was $518.7M versus $287.3M.

• Net income attributable to Nexstar was $475.0M and diluted EPS $10.07; results included a $322.2M provisional tax benefit from federal rate reduction and $57.7M net gain on station disposals.

• Adjusted EBITDA was $743.3M, or $802.2M excluding $58.9M of one-time transaction expenses; broadcast cash flow was $868.6M.

• Free cash flow was $469.0M, or $528.0M excluding one-time transaction expenses; operating cash flow was $136.7M, down from $261.5M, including substantial one-time tax and interest payments.

• Revenue mix: retransmission compensation $995.8M (+152.7%), digital $230.8M (+126.8%), political advertising $31.6M versus $108.5M in FY16.

Outlook and guidance

• Expected average free cash flow slightly above $600M annually for the 2018/2019 cycle and another record financial year in 2018.

• Growth drivers cited included midterm election advertising, retransmission and digital growth, continued acquisition-related revenue, and operating synergies.

• Expected net leverage in the mid-to-high 3x range at FY18 year-end, absent additional strategic activity.

• The 2018 dividend increased 25% to $0.375 per share quarterly; future payments remain subject to board discretion and debt restrictions.