Summary 2007 Fourth Quarter Highlights:
Net revenue for the quarter ended December 31, 2007 was $71.6 million compared to $77.2 million in the fourth quarter of 2006.
Income from operations was $12.7 million for the three months ended December 31, 2007 compared with $18.9 million in the quarter ended December 31, 2006. The Company reported a net loss per diluted share of $0.09 for the three months ended December 31, 2007 compared to net income per diluted share of $0.16 in the fourth quarter of 2006.
Broadcast cash flow totaled $28.2 million in the fourth quarter of 2007 compared with $33.8 million for the same period in 2006. EBITDA totaled $24.1 million for the fourth quarter of 2007, compared to $29.3 million in the fourth quarter of 2006, while free cash flow was $9.8 million in the fourth quarter of 2007, compared with $12.4 million in the fourth quarter of 2006.
Summary 2007 Full Year Highlights:
For the 2007 full year, net revenue was $266.8 million, a $1.6 million increase over $265.2 million for 2006. Income from operations was $40.5 million for the year ended December 31, 2007 compared with $45.9 million for the year ended December 31, 2006. The Company reported a net loss per diluted share of $0.70 for 2007, compared with a net loss per diluted share of $0.32 for 2006.
Broadcast cash flow in 2007 was $98.5 million compared to $103.1 million for 2006. EBITDA totaled $85.1 million for 2007 compared to $88.5 million for 2006, while free cash flow rose to $28.0 million in 2007, a $0.4 million increase over 2006.
CEO Comment
Perry A. Sook, Chairman, President and Chief Executive Officer of Nexstar Broadcasting Group, Inc., commented, “Our impressive fourth quarter results exceeded our guidance as well as consensus expectations for the period. Nexstar is leveraging its core business into new sources of revenue growth and is successfully overcoming the ‘odd year/even year’ revenue disparity caused by political advertising.
“In 2007 Nexstar generated approximately $4.3 million of gross political revenue compared to $27.0 million in 2006. Nevertheless, we finished 2007 with record annual net revenue of $266.8 million and free cash flow of $28.0 million. Retransmission consent revenue grew over 25% in 2007 to $17.2 million and we generated over $5.1 million in new media revenue in 2007 in our first year of this initiative. These factors, combined with our accretive acquisition of WTAJ-TV in Johnstown/Altoona, PA in December of 2006, helped minimize the cyclical impact of lower political revenues in 2007.
“Nexstar is recognized for its innovative virtual duopolies, local news leadership, groundbreaking negotiations of retransmission consent agreements and differentiated approach to new media. In this regard, we continue to adapt, innovate and anticipate the needs of consumers and advertisers and recently launched our ‘nexstarGREEN’ and ‘DTV Answers’ campaigns. While both of these initiatives are focused on localism and serving our viewers, they are also being embraced by advertisers and sponsors resulting in new revenue channels for Nexstar.
“Nexstar expects to achieve record operating results in 2008. We’ll benefit from significant levels of political spending as candidates bring their agendas to viewers and voters. Year over year increases in core and political advertising and continued growth from all of our new revenue sources will translate into meaningful revenue gains and will drive record setting BCF, EBITDA and free cash flow. Our strategy is to deploy 2008 free cash flow to complete both our digital television build out and to significantly reduce debt. We’ll end 2008 with the lowest debt leverage ratio in the Company’s history and we will have completed our digital television capital expenditure program. As such, Nexstar will enter 2009 positioned to generate significant free cash flow.”
Same-Station Results
On a same-station basis, our 2007 fourth quarter net revenue was $68.1 million compared with $77.2 million in the fourth quarter of 2006, a decrease of 11.8%, while EBITDA was $22.3 million, compared with $29.3 million in the same period of 2006. On a same-station basis, our 2007 full year net revenue was $255.0 million compared with $265.2 million for the same period of 2006, while EBITDA was $80.0 million for 2007 full year compared with $88.5 million in the same period of 2006. Same-station results exclude the operating results from WTAJ-TV, the CBS affiliate serving the Johnstown-Altoona, Pennsylvania market, which was acquired on December 29, 2006.
Outstanding Debt
The Company’s total debt at December 31, 2007 was $681.2 million, compared to $681.1 million at December 31, 2006. The total debt figures include the accreted value of the Company’s 11.375% notes, which do not become interest paying until April 2008. As of December 31, 2007 and 2006, total bank debt under Nexstar’s and Mission Broadcasting, Inc.’s senior credit facilities was $356.7 million and $370.1 million, respectively.
As defined in the Company’s credit agreement, consolidated total debt was $539.7 million at December 31, 2007, net of allowable cash on hand of $15.0 million. The Company’s total leverage ratio at December 31, 2007 was 6.27x compared to a permitted leverage covenant of 7.0x. Covenants under the Company’s credit agreement exclude Nexstar Finance Holdings, Inc.’s 11.375% notes, which accreted to $126.5 million as of December 31, 2007.
The Company projects that its total debt leverage ratio at year-end 2008 will be less than 5.5x compared to its permitted leverage covenant of 6.50x at December 31, 2008.
Total interest expense in the fourth quarter of 2007 was $13.8 million, compared to $13.5 million for the same period in 2006. Cash interest expense for the fourth quarter of 2007 was $10.0 million, compared to $9.6 million for the same period in 2006. Cash interest expense excludes non-cash interest expense related to amortization of debt financing costs and accretion of the discount on Nexstar’s 11.375% senior discount notes and 7% senior subordinated notes.
Nexstar Broadcasting owns KSNF in Joplin and KSFX in Springfield and operates KODE in Joplin and KOLR in Springfield.
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