Nexstar Broadcasting Group's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Nexstar Broadcasting Group (NXST)

Q4 2011 Earnings Call

March 08, 2012 10:00 am ET


Perry A. Sook - Founder, Executive Chairman, Chief Executive Officer, President, Chief Executive Officer of Nexstar Broadcasting Inc, President of Nexstar Broadcasting Inc and Director of Nexstar Broadcasting Inc

Thomas E. Carter - Chief Financial Officer, Principal Accounting Officer and Executive Vice President


Bishop Cheen - Wells Fargo Securities, LLC, Research Division

John Kornreich

Edward J. Atorino - The Benchmark Company, LLC, Research Division

Harry DeMott

Barry L. Lucas - Gabelli & Company, Inc.

Unknown Analyst



Good day, and welcome to the Nexstar Broadcasting Group's 2011 Fourth Quarter Conference Call. Today's call is being recorded. All statements and comments made by management during this conference and other statements of historical fact may be deemed forward-looking statements within the meaning of Section 21 of the Securities Act of 1933 and Section 21A of the Securities and Exchange Act of 1934. The company's future financial conditions and results of operation, as well as forward-looking statements, are subject to change. The forward-looking statements and comments made during the conference call are made only as of the date of today's conference call. Management will also be discussing non-GAAP information during this call. In compliance with Regulation G, reconciliations of this non-GAAP statement and GAAP measurements are included in today's news announcement. The company does not undertake any obligation to update forward-looking statements reflective of changes and circumstances. In addition, given Nexstar's announcement of July 21, 2011, that the company's Board of Directors decided to explore and evaluate strategic alternatives intended to maximize shareholder value, including a possible sale of the company, Nexstar does not intend to disclose developments with respect to the strategic review process until such time as the Board of Directors has approved a transaction or otherwise deems disclosure appropriate. As such, management will not be making comments on this topic today.

At this time, I'd like to turn the conference over to your host, Nexstar President and CEO, Perry Sook. Please go ahead, sir.

Perry A. Sook

Thank you, and good morning, everyone. I'd like to thank you all for joining us to review our 2011 fourth quarter and our full-year 2011 operating results. Tom Carter, our Chief Financial Officer, is here with me this morning as well as Tim Busch and Brian Jones, our Co-Chief Operating Officers.

I'm very proud to report today that Nexstar generated record odd-year fourth quarter financial results, including an 8.4% increase in 2011 fourth quarter total revenue, excluding total [ph] spending. We ended what was a strong 2011 for Nexstar with the fourth quarter core revenue growth of 6.4%. That marked the highest rate of quarterly core revenue growth during the year and our ninth consecutive quarter of year-over-year core television advertising revenue growth. Solely reflecting the impact of $20.6 million in year-over-year declines in political revenue, our Q4 '11 net revenue came in at $86.2 million, which was 11.2% behind last year's final.

Nexstar's continued leadership in new business development resulted in a 4.6% increase in fourth-quarter local spot revenue and an 11.6% rise in national spot revenue. Our year-over-year core revenue growth marks a quarterly sequential improvement over the 5.3% growth in Q3 of '11, the 4.3% increase in Q2 and the 3.3% rise posted in Q1 of '11. And it is more than double the 2.9% core local and national television ad revenue growth recorded in last year's fourth quarter.

In addition, the strength in core advertising activity, Nexstar's record odd-year fourth quarter revenue, EBITDA and free cash flow highlight the continued growth in every one of our non-television advertising revenue sources, with each reaching record annual levels of contribution. Our Q4 core TV ad revenue growth was complemented by a 34.9% rise in retransmission fee revenue, an 8.1% increase in e-Media revenue and a 9% improvement in our management agreement revenue.

To illustrate how effective our revenue distribution and diversification plans have been for Nexstar, our total net revenue for the fourth quarter of 2011 is 16.5% ahead of the $74 million reported in the fourth quarter of '09 and 20.4% ahead of the $71.6 million reported in the fourth quarter of '07. Furthermore, our 2011 fourth quarter revenue from non-television advertising revenue sources grew by approximately 79% from the 2009 levels and 172% from the comparable 2007 levels.

Nexstar's full-year 2011 core local and national revenue rose 4.8%, while annual net revenue declined just 2.2% for the year despite the cyclical impact of approximately $33 million variance in political advertising in 2011. This offset was largely backfilled by the increases in core, as well as the excellent growth I described from our non-traditional revenue sources.

We generated record odd-year fourth quarter broadcast cash flow of $34.9 million and adjusted EBITDA of $29.6 million and free cash flow of $15.3 million. For the full year, we generated record odd-year free cash flow of $34.2 million.

Taking a minute now to look at the 2-year cycle run rate, Nexstar generated a total of $94.3 million of free cash flow in 2011 and '10 or an average of $47.2 million per year. This would equate to over $1.50 per share of free cash flow and I'll discuss later how our expected growth, including the timing of our recently completed retransmission agreements, will lead to free cash flow growth increasing based on the 2011, 2012 cycle.

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