Business News

Valassis Announces Results for the Second Quarter Ended June 30, 2012

Thursday 26. July 2012 - Valassis (NYSE: VCI) today announced financial results for the second quarter ended June 30, 2012. Second-quarter 2012 revenues were $540.2 million, a decrease of 4.4% from $565.2 million in the prior year quarter. This decrease in revenues was due primarily to the absence of custom co-op programs within our FSI segment and continued reduced spending by consumer packaged goods (CPG) clients across our various business segments.

Second-quarter 2012 net earnings were $21.7 million, which included $10.7 million, net of tax, of non-recurring restructuring charges and asset impairments resulting from the discontinuance of the sampling and solo direct mail products, as well as other cost reductions across our remaining product lines. This represents a decrease of 28.4% from $30.3 million in the prior year quarter, which included a loss on extinguishment of debt and related charges, net of tax, of $3.4 million. Excluding these non-recurring charges, second-quarter 2012 adjusted net earnings* were $32.4 million compared to second-quarter 2011 adjusted net earnings* of $33.7 million.
Second-quarter 2012 diluted earnings per share (EPS) was $0.51, which included the negative impact of the aforementioned restructuring charges of $0.25. This represents a decrease of 15.0% from $0.60 in the prior year quarter, which included the negative impact of the aforementioned loss on extinguishment of debt of $0.07. Excluding these non-recurring charges, second-quarter 2012 adjusted diluted EPS* was $0.76, compared to second-quarter 2011 adjusted diluted EPS* of $0.67.
Second-quarter 2012 diluted cash EPS* was $1.10, an increase of 22.2% from $0.90 in the prior year quarter. Second quarter 2012 adjusted EBITDA* was $76.8 million, a decrease of 5.3% from $81.1 million in the prior year quarter.
“During the quarter, we executed a plan to improve our company’s ability to drive future growth in our core and innovation businesses,” said Rob Mason, President and Chief Executive Officer. “We increased our investment in digital media with the acquisition of Brand.net, exited our solo direct mail and newspaper sampling businesses, and right sized our organization.”
Some additional highlights include:
— Selling, General and Administrative (SG&A) Costs: Second-quarter 2012
SG&A costs were $83.5 million (which included $5.9 million in
restructuring and other non-recurring costs) compared to prior year
quarter SG&A costs of $80.8 million.
— Capital Expenditures: Capital expenditures for the second quarter and
first half of 2012 were $2.5 million and $11.8 million, respectively.
— Stock Repurchases: During second-quarter 2012, we repurchased $64.5
million, or 3.2 million shares, of our common stock at an average price
of $19.94 per share under our stock repurchase program.
— Liquidity:
— We reduced total debt by $3.7 million during second-quarter 2012,
and we ended the quarter with net debt (total debt less cash) of
$519.8 million.
— At June 30, 2012, we had $75.2 million in cash.
Outlook
Based on our plan, the recent acquisition of Brand.net and current outlook, we are updating full-year 2012 guidance as follows:
— diluted EPS of $2.86 (previously $3.07) which reflects the non-recurring
restructuring and other costs described above offset by a reduction in
the number of shares outstanding due to the acceleration in stock
repurchases (which results in adjusted diluted EPS* of $3.11 primarily
due to such acceleration in stock repurchases) and
— diluted cash EPS* of $4.18 (previously $3.97) due to the reduction in
capital expenditures to approximately $26 million (previously
approximately $32 million).
Business Segment Discussion
— Shared Mail: Revenues for the second quarter of 2012 were $348.8
million, an increase of 3.4% compared to the prior year quarter.
Segment profit for the quarter was $52.3 million, an increase of 9.6%
compared to the prior year quarter. The improvement in segment results
was driven primarily by an increase in volume and lower segment SG&A
costs; however, segment profit was negatively impacted by reduced Wrap
revenue.
— Neighborhood Targeted: Revenues for the second quarter of 2012 were
$77.5 million, a decrease of 12.7% compared to the prior year quarter.
Segment loss for the quarter was $2.4 million compared to segment profit
in the prior year quarter of $0.8 million, due to the aforementioned
revenue declines. Segment results were negatively impacted primarily by
the decline in newspaper inserts and sampling.
— Free-standing Inserts (FSI): Revenues for the second quarter of 2012
were $70.5 million, a decrease of 21.0% compared to the prior year
quarter. Segment profit for the quarter was $7.3 million, a decrease of
12.0% compared to the prior year quarter. Segment results for the
quarter were negatively impacted by the absence of custom co-op business
and continued reduced spending by CPG marketers.
— International, Digital Media & Services (IDMS): Revenues for the second
quarter of 2012 were $43.4 million, a decrease of 13.2% compared to the
prior year quarter. Segment profit for the quarter was $2.3 million, a
decrease of 64.1% compared to the prior year quarter. Segment results
were negatively impacted by reduced CPG spend in solo direct mail,
in-store and NCH, our coupon clearing business, which more than offset
the increase in revenues and profits in our digital business.
Segment Results Summary


Quarter Ended
June 30,
Segment Revenues ($ in millions) 2012 2011 % Change
—- —- ——–
Shared Mail $348.8 $337.2 3.4%
—— —— —-
Neighborhood Targeted $77.5 $88.8 -12.7%
—– —– —–
Free-standing Inserts $70.5 $89.2 -21.0%
—– —– —–
International, Digital Media & Services $43.4 $50.0 -13.2%
—– —– —–
Total Segment Revenues $540.2 $565.2 -4.4%
—— —— —-

Quarter Ended
June 30,
Segment Profit ($ in millions) 2012 2011 % Change
—- —- ——–
Shared Mail $52.3 $47.7 9.6%
—– —– —-
Neighborhood Targeted $(2.4) $0.8 -400.0%
—— —- —-
Free-standing Inserts $7.3 $8.3 -12.0%
—- —- —-
International, Digital Media & Services $2.3 $6.4 -64.1%
—- —- —-
Total Segment Profit $59.5 $63.2 -5.9%