Valassis’ Cost Cutting Spikes Its Net Earning as Revenues Fall
LIVONIA, MI—Oct. 25, 2012—Valassis announced financial results for the third quarter ended Sept. 30, 2012. Revenues totaled $523.8 million, compared to $528.4 million in the prior year quarter. Its net earnings were $36.7 million, an increase of 33.5 percent from $27.5 million in 2011. This increase was primarily the result of the previously announced cost reductions and a favorable income tax adjustment resulting from the expiration of certain tax reserves.
Third-quarter 2012 adjusted EBITDA was $75.2 million, an increase of 7.7 percent from $69.8 million in the prior year quarter.
“This quarter, we delivered strong growth in EPS and adjusted EBITDA,” said Rob Mason, president and CEO. “Notable gains in our free-standing insert business, ongoing operational improvements within shared mail, and continued cost containment efforts were key drivers that contributed to our results.”
Business Segment Discussion
Shared Mail: Revenues for the third quarter of 2012 were $331.4 million, an increase of 0.3 percent compared to the prior year quarter. Segment profit for the quarter was $52.3 million, an increase of 13.2 percent compared to the prior year quarter. The improvement in segment profit was due to an increase in pieces per package and effective cost management, including package optimization efforts and SG&A reductions.
Neighborhood Targeted: Revenues for the third quarter of 2012 were $75.8 million, a decrease of 1.4 percent compared to the prior year quarter. Segment loss for the quarter was $1.1 million compared to segment profit in the prior year quarter of $0.4 million due to continued margin pressure.
Free-standing Inserts (FSI): Revenues for the third quarter of 2012 were $72.2 million, a decrease of 1.8 percent compared to the prior year quarter. Segment profit for the quarter was $7.6 million, compared to a segment loss of $0.8 million in the prior year quarter. Segment results for the quarter were positively impacted primarily by an increase in average pages per book, which offset the absence of approximately $14 million in custom co-op revenue.
International, Digital Media & Services (IDMS): Revenues for the third quarter of 2012 were $44.4 million, a decrease of 6.5 percent compared to the prior year quarter. Segment revenues were negatively impacted primarily by the reduced consumer packaged goods spend affecting in-store as well as a decrease in coupon redemption volume impacting NCH, our coupon clearing business. The revenue decreases in these businesses offset the growth in our digital business. Segment profit for the quarter was $0.1 million compared to $3.2 million in the prior year quarter, primarily due to the continued investment in our digital business.
Valassis is one of the nation’s leading media and marketing services companies, offering unparalleled reach and scale to more than 15,000 advertisers. Its RedPlum® media portfolio delivers value on a weekly basis to over 100 million shoppers across a multi-media platform – in-home, in-store and in-motion. Through its digital offerings, including redplum.com and save.com, consumers can find compelling national and local deals. Headquartered in Livonia, MI, it has approximately 7,000 associates in 28 states and eight countries.