Nexstar Media Group, Inc.

Welcome to Nexar Media Group's first quarter 2022 results call. Today's call is being recorded. I'm going to now wait to turn the conference over to Joe Jafani, Investor Relations. Please go ahead, sir.

Thank you, Anna. Good morning, everyone. Let me just read the safe harbor language, and then we'll get right into the call. All statements and comments made by management during today's call, other than statements of historical fact, may be deemed forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995. Nexstar cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those reflected by the forward-looking statements made during the call. For additional details on these risks and uncertainties, please see Nexstar's annual report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission, as well as Nexstar's subsequent public filings with the SEC. Nexstar undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. With that, it's now my pleasure to turn the conference over to your host, Nexstar founder, chairman, and CEO, Perry Suk. Perry, please go ahead.

Thank you, Joseph, and good morning, everyone. Thank you for joining us. We appreciate you being with us here today to discuss Nexstar's record first quarter financial results, which include the highest quarterly free cash flow in the company's history. With me on the call today are Tom Carter, President and Chief Operating Officer, and Leanne Leha, our CFO. I'll start with a summary of recent highlights and developments, followed by Tom's operation review and Leanne's financial review. So, while the equity market is testing new levels of volatility, it was another boring, beat consensus expectations, no drama quarter here at Nexstar. The type of performance investors should know to expect from us. Our outstanding results represent an excellent start to what we expect will be another year of record financial performance for our shareholders and for the next star nation. First quarter top and bottom line performance was driven by strong year-over-year growth across all of our revenue sources, as well as the first quarter cash distribution from our TB Food Network ownership interests. Net revenue, adjusted EBITDA, and free cash flow all came in well ahead of expectations. continuing our track record of exceeding consensus expectations. A recurring theme this earnings season for companies across all industries and all market caps are Wall Street's concerns about the economic and business impact of supply chain issues, high inflation, and rising interest rates. With that in mind, let me spend a few minutes reviewing why Nexstar is entering the second quarter from a position of strength, which we will build upon to create new value for shareholders this year and going forward. First, 55% of our total net revenue is derived from distribution revenue, which is contractual. This is a recurring revenue source that provides us with a solid foundation for continued growth, not only in Q2, but through the balance of this year and beyond. As we've commented in quarters past, we continue to see stabilizing low single-digit rates of subscriber attrition. Second, as you know, 2022 is a political year where we will benefit from strong shares of political advertising spending given our scale and our presence in many of the key battleground states. In Q1, we delivered strong early political results with our revenue up 40% over pro forma Q1 of 2018. Importantly, fundraising, which is a key indicator for political ad spend, increased 91% over Q1 of 2018, according to the Federal Elections Commission. We expect fundraising levels to accelerate as we move through the year, given these positive trends and recent events. As America's largest local broadcasting company, we have the scale and resources to produce and distribute the most comprehensive political news and live debate coverage in our markets. We are also realizing meaningful content synergies between our broadcast operations and NewsNation, as well as our creative acquisition of The Hill. These distinct competitive advantages reinforce our confidence that Nexstar will deliver record midterm election net political advertising revenue in 2022. meaningfully exceeding our pro forma 2018 levels. Third, in Q1, core advertising, which represents 35% of our net revenue, was up 4%. Of our core advertising revenue, 59% is from services, 26% is from goods, and 15% from auto. Given that mix and large exposure to the services industry, we are somewhat insulated from the supply chain and inflation issues elsewhere. And while it is true that auto continues to be a challenged category, overall, we're pacing very close to last year in that category. Looking forward, there are many bright spots among our advertising categories. Experiential-based businesses of entertainment and travel are back in a big way post-pandemic, and medical health care, home repair, manufacturing, and fast food restaurants are also pacing up very nicely. Fourth, while a smaller percentage of our revenue, our core digital and our digital agency services business is growing at a mid-teens rate, and that shows no signs of slowing. Fifth, our operating expenses are largely fixed and insulated from inflationary pressures, while our advertising rates can increase with inflation. And last, our balance sheet and our capital structure are both in great shape. Our trailing 12-month leverage is 3.4 times, and we had a borrowing cost below 4% in the first quarter. Looking a bit further out, we continue to have excellent long-term three-year visibility on our growth trajectory. In addition to political revenue this year and the presidential election in 2024, 2023 and 2024 will benefit from distribution agreement renewals from virtually all of our subscribers over this period, which we expect will materially benefit our cash flow. As a result, we remain confident in our ability to generate pro forma average annual free cash flow in excess of $1.4 billion over the 22-23 cycle, and we will continue to deploy that cash flow to maximize shareholders' return. In terms of our longer-term prospects, we are positioned to benefit from both organic and inorganic growth opportunities. On the organic front, NewsNation continues to move forward towards our goal of becoming a 24-7 cable news network. Ratings continue to grow every month as consumer awareness builds, making NewsNation the fastest-growing national cable news network, further validating the value of our strategy to bring consumers balanced and unbiased news. In this regard, in the first quarter, NewsNation was regarded and recognized by several media watchdog organizations, including Ad Fontes Media, NewsGuard, and AllSides, for its trustworthiness and lack of bias. In the first quarter, we further expanded our NewsNation programming and now offer 60 hours per week of live news analysis and talk. The value of our NewsNation strategy was recently validated by Moffitt Nathanson in a research report which highlighted that in 2021, the top three cable news networks were responsible for 59% of the viewing time of all of the top 20 cable networks. With our early progress and achievements, our commitment to profitably growing this asset remains unchanged. We also continue to lead the industry in launching next-gen TV markets with ATSE 3.0 technology. In Q1, we launched three more markets and a fourth one in April, marking progress towards our goal of covering half of all U.S. television households with an ATSE 3.0 signal by the end of this year. As one of the nation's largest holders of broadcast spectrum, we are excited about both the enhancements to our core business as well as the myriad new revenue opportunities that this technology upgrade will enable us. The continued industry momentum around ATSC 3.0 was evident at the NAB show in April, and we're analyzing more and more potential monetization models for this asset. For example, BitPath, a business in which we are an investor, demonstrated the use of an ATSC 3.0 broadcast network signal to improve and correct GPS signals since our powerful land-based spectrum can overcome certain weaknesses inherent in a satellite signal. This could have wide application for delivery services, driverless vehicles, drones, or any other service where mobile devices must be position aware. Shifting to new capital allocation, our disciplined approach allows us to capitalize on the best opportunities to create the greatest long-term value for our shareholders. In January, we announced our ninth consecutive annual dividend increase to 90 cents per share per quarter, representing a compound annual growth rate of 25% since our dividend was initiated. We will continue to deploy cash with a shareholder-friendly focus through a mix of dividend payments, share repurchases, and debt reduction, while also continuing to pursue a creative M&A and investing in our business for future growth. Nexstar's consistently strong performance continues to validate the value creation potential of our current capital allocation strategy. In summary, we remain confident in our near and long-term growth opportunities. Nexstar's powerful, diversified platform produces and distributes some of the most compelling local and national news, sports, and entertainment content in America with the best margins in the broadcasting industry. We have excellent three-year visibility on the business and our ability to deliver on our free cash flow targets, give an expected strong midterm and presidential political advertising, as well as distribution agreement renewals representing a significant percentage of our subscribers over this period. As such, we have a solid foundation to continue driving near and long-term growth and the enhancement of shareholder value in spite of the market and other world events. With that, now let me turn the call over to Tom Carter for the operations review. Tom?