With its shares comfortably above $90 and its March 23 COVID-19 influenced dip to $46.26 well in its past, Nexstar Media Group — flush with national attention from the Sept. 1 prime-time debut of NewsNation, a three-hour prime-time news block on its WGN America — is ready to buy back another big chunk of Class A common stock.
In a pre-market opening announcement from Nexstar made Wednesday (9/2), the company’s board of directors signed off on an “expansion” of its share repurchase authorization.
This allows Nexstar to execute up to an additional $300 million of repurchases of its Class A common stock.
It’s a hefty expansion, as Nexstar’s share repurchasing program capacity until now stood at $84.2 million — an authorization that came on June 30.
“The expanded repurchase authorization reflects our confidence in the company’s growing free cash flow from operations and our long-term commitment to deploying capital in a manner that can enhance shareholder value,” said Nexstar Chairman and President/CEO Perry Sook.
He pointed to Nexstar’s “record” financial results seen through the first six months of 2020 and the generation of approximately $618 million of free cash flow as a key trigger for the bigger stock buyback opportunity.
And, with growing distribution and political revenue, alongside monthly sequential increases in core advertising revenue since April, confidence is high in the Nexstar C-suite.
There’s also positive cash distributions from Nexstar’s 31.3% ownership of TV Food Network that’s driving that positive assessment that the company’s operating momentum will continue despite the challenging operating environment presented by the novel coronavirus pandemic.
“Accordingly, we believe that our free cash flow combined with the active management of our balance sheet provides us with the financial flexibility to further support our shareholder value creation initiatives, including our return of capital programs such
as share repurchases and our quarterly cash dividend, as well as for leverage reduction and select opportunistic accretive transactions,” Sook said.
As of June 30, Nexstar had approximately 45.3 million shares of Class A common stock outstanding — the only class of shares outstanding.
Repurchases by Nexstar are subject to available liquidity, general market and economic
conditions, alternate uses for the capital and other factors. Share repurchases may be made from time to time in open market transactions, block trades or in private transactions in accordance with applicable securities laws and regulations and other legal requirements, including compliance with the company’s finance agreements.
There is no minimum number of shares that Nexstar is required to repurchase, and the repurchase program may be suspended or discontinued at any time without prior notice. All
shares purchased will be held in Nexstar’s treasury for possible future use. The company anticipates funding any share repurchases from its cash flow from operations.
How did investors react to the announcement? Highly positively, as NXST was up by 2.2% within the first 30 minutes of trading, to $96.03.
