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| Valassis Reports Net Earnings Up 141% for the Second Quarter Ended June 30, 2009 |
Raises Full-year 2009 Adjusted EBITDA* Guidance by LIVONIA, Mich., First-half revenue for 2009 was "We continue to outperform most media companies because our product
portfolio is well aligned with what research indicates is a permanent shift in
shopper behavior toward value-oriented media," said
Some additional financial highlights include:
-- 2009 Profit Maximization Plan (PMP) Continues to be Ahead of Schedule:
Second-quarter 2009 selling, general and administrative (SG&A) costs
were
Outlook We are updating full-year 2009 guidance based on our current outlook.
Given continued success with our PMP and assuming no further economic
downturns, we are increasing full-year 2009 adjusted EBITDA* guidance to
"We are very pleased with our cost management efforts in the first half
which have resulted in significant margin and profit improvement," said (1) Effective Jan.1, 2009, we adopted Financial Accounting Standards
Board's Staff Position No. APB 14-1, "Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial
Cash Settlement)", (FSP APB 14-1) which requires retrospective application.
This adoption of FSP APB 14-1 had no effect on the current period. Previously
reported net earnings and EPS for the quarter ended
Business Segment Discussion
-- Shared Mail: Revenue for the second quarter of 2009 was
Conference Call Information We will hold an investor call today to discuss our second-quarter 2009
results at Non-GAAP Financial Measures *We define adjusted EBITDA as earnings before net interest expense, other non-cash expenses (income), net, income taxes, depreciation, amortization, stock-based compensation expense associated with SFAS No. 123R, non-recurring restructuring and severance costs and amortization of a client contract incentive. Adjusted EBITDA is a non-GAAP financial measure commonly used by financial analysts, investors, rating agencies and other interested parties in evaluating companies, including marketing services companies. Accordingly, management believes that adjusted EBITDA may be useful in assessing our operating performance and our ability to meet our debt service requirements. In addition, adjusted EBITDA is used by management to measure and analyze our operating performance and, along with other data, as our internal measure for setting annual operating budgets, assessing financial performance of business segments and as a performance criteria for incentive compensation. However, this non-GAAP financial measure has limitations as an analytical tool and should not be considered in isolation from, or as an alternative to, operating income, cash flow or other income or cash flow data prepared in accordance with GAAP. Some of these limitations are:
-- adjusted EBITDA does not reflect our cash expenditures for capital
equipment or other contractual commitments;
-- although depreciation and amortization are non-cash charges, the
assets being depreciated or amortized may have to be replaced in the
future, and adjusted EBITDA does not reflect cash capital expenditure
requirements for such replacements;
-- adjusted EBITDA does not reflect changes in, or cash requirements for,
our working capital needs;
-- adjusted EBITDA does not reflect the significant interest expense or
the cash requirements necessary to service interest or principal
payments on our indebtedness;
-- adjusted EBITDA does not reflect income tax expense or the cash
necessary to pay income taxes;
-- adjusted EBITDA does not reflect the impact of earnings or charges
resulting from matters we consider not to be indicative of our ongoing
operations; and
-- other companies, including companies in our industry, may calculate
this measure differently and as the number of differences in the way
two different companies calculate this measure increases, the degree
of its usefulness as a comparative measure correspondingly decreases.
Because of these limitations, adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or reduce indebtedness. We compensate for these limitations by relying primarily on our GAAP results and using this non-GAAP financial measure only supplementally. Further important information regarding operating results and reconciliations of this non-GAAP financial measure to the most comparable GAAP measures can be found below.
Reconciliation of 2009 Adjusted EBITDA Guidance to 2009 Net Earnings
Guidance:
Full-year 2009
Revised Guidance
($in millions)
-------------
Net Earnings $62.4
------------ -----
Add back:
Interest expense, net 82.4
Income taxes 39.2
Depreciation and amortization 66.9
Other non-cash income (15.8)
EBITDA $235.1
Add back:
FAS123r expense 6.1
Non-recurring restructuring/severance 3.8
------------------------ ---
Adjusted EBITDA $245.0
--------------- ------
Reconciliation of Adjusted EBITDA to Net Earnings
and Cash Flow from Operations
(dollars in thousands)
Unaudited
Three Months Ended
June 30,
------
2009 2008
---- ----
Net Earnings - GAAP $15,948 $6,614
======= ======
plus: Income taxes 9,666 4,629
Interest expense, net 21,231 24,586
Depreciation and amortization 17,407 17,185
less: Other non-cash income, net (2,766) (1,048)
------ ------
EBITDA $61,486 $51,966
Stock-based compensation expense 1,719 1,973
Amortization of client contract
incentive - 1,215
Restructuring costs / severance 1,773 810
Adjusted EBITDA $64,978 $55,964
------- -------
Interest expense, net (21,231) (24,586)
Income taxes (9,666) (4,629)
Restructuring costs, cash (1,773) (810)
Changes in operating assets and
liabilities 51,426 51,695
------ ------
Cash Flow from Operations $83,734 $77,634
======= =======
Six Months Ended
June 30,
-------
2009 2008
---- ----
Net Earnings - GAAP $28,976 $17,555
======= =======
plus: Income taxes 18,320 11,652
Interest expense, net 42,625 49,980
Depreciation and amortization 35,067 34,823
less: Other non-cash income, net (11,461) (2,167)
------- ------
EBITDA $113,527 $111,843
Stock-based compensation expense 2,768 3,429
Amortization of customer contract
incentive - 2,430
Restructuring costs / severance 2,556 1,447
Adjusted EBITDA $118,851 $119,149
-------- --------
Interest expense, net (42,625) (49,980)
Income taxes (18,320) (11,652)
Restructuring costs, cash (2,556) (1,447)
Changes in operating assets and
liabilities 68,046 24,965
------ ------
Cash Flow from Operations $123,396 $81,035
======== =======
About Safe Harbor and Forward-Looking Statements Certain statements found in this document constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks and
uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
price competition from our existing competitors; new competitors in any of our
businesses; a shift in client preference for different promotional materials,
strategies or coupon delivery methods, including, without limitation, as a
result of declines in newspaper circulation; an unforeseen increase in paper
or postal costs; changes which affect the businesses of our clients and lead
to reduced sales promotion spending, including, without limitation, a decrease
of marketing budgets which are generally discretionary in nature and easier to
reduce in the short-term than other expenses; our substantial indebtedness,
and ability to refinance such indebtedness, if necessary, and our ability to
incur additional indebtedness, may affect our financial health; the financial
condition, including bankruptcies, of our clients, suppliers, senior secured
credit facility lenders or other counterparties; our ability to comply with or
obtain modifications or waivers of the financial covenants contained in our
debt documents; certain covenants in our debt documents could adversely
restrict our financial and operating flexibility; recent disruptions in the
credit markets that make it difficult for companies to secure financing;
fluctuations in the amount, timing, pages, weight and kinds of advertising
pieces from period to period, due to a change in our clients' promotional
needs, inventories and other factors; our failure to attract and retain
qualified personnel may affect our business and results of operations; a rise
in interest rates could increase our borrowing costs; we may be required to
recognize additional impairment charges against goodwill and intangible assets
in the future; the outcome of ADVO's pending shareholder lawsuits; our current
litigation with
VALASSIS COMMUNICATIONS, INC.
Consolidated Balance Sheets
(dollars in thousands)
Unaudited
Assets June 30, Dec. 31,
2009 2008
Current assets:
Cash and cash equivalents $141,139 $126,556
Accounts receivable 377,159 479,749
Inventories 34,086 48,173
Refundable income taxes 9,649 15,509
Deferred income taxes 1,808 1,879
Other 20,725 31,235
Total current assets 584,566 703,101
Property, plant and equipment, at cost 490,440 484,765
Less accumulated depreciation (276,794) (250,828)
Net property, plant and equipment 213,646 233,937
Intangible assets, net 886,110 892,422
Investments 2,344 2,555
Other assets 21,041 21,166
Total assets $1,707,707 $1,853,181
VALASSIS COMMUNICATIONS, INC.
Consolidated Balance Sheets, Continued
(dollars in thousands)
Unaudited
Liabilities and Stockholders' Equity June 30, Dec. 31,
2009 2008
---- ----
Current liabilities:
Current portion, long-term debt $6,197 $90,855
Accounts payable and accruals 379,129 440,214
Progress billings 33,027 44,539
Total current liabilities 418,353 575,608
Long-term debt 1,087,108 1,111,712
Other liabilities 61,102 66,029
Deferred income taxes 98,214 94,418
Stockholders' equity:
Common stock 636 635
Additional paid-in capital 90,072 87,305
Retained earnings 484,939 455,963
Treasury stock (520,170) (520,170)
Accumulated other comprehensive loss (12,547) (18,319)
------- -------
Total stockholders' equity 42,930 5,414
------ -----
Total liabilities and stockholders'
equity $1,707,707 $1,853,181
---------- ----------
VALASSIS COMMUNICATIONS, INC.
Consolidated Statements of Operations
(in thousands, except per share data)
Unaudited
Three Months Ended
June 30, %
--------
2009 2008 Change
---- ---- ------
Revenue $544,037 $594,925 - 8.6%
Costs and expenses:
Costs of products sold 410,043 460,970 - 11.0%
Selling, general and
administrative 86,659 96,869 - 10.5%
Amortization 3,256 2,305 + 41.3%
Total costs and expenses 499,958 560,144 - 10.7%
Operating income 44,079 34,781 + 26.7%
Other expenses and income:
Interest expense 21,385 25,227 - 15.2%
Interest income (154) (641) - 76.0%
Other (income) and expenses (2,766) (1,048) + 163.9%
------ ------ -------
Total other expenses and income 18,465 23,538 - 21.6%
Earnings before income taxes 25,614 11,243 + 127.8%
Income taxes 9,666 4,629 + 108.8%
----- ----- -------
Net earnings $15,948 $6,614 + 141.1%
------- ------ -------
Net earnings per common share, diluted $0.33 $0.14 + 135.7%
Weighted average shares
outstanding, diluted 48,961 48,088 + 1.8%
Supplementary Data
------------------
Amortization $3,256 $2,305
Depreciation 14,151 14,880
Capital expenditures 6,607 6,674
VALASSIS COMMUNICATIONS, INC.
Consolidated Statements of Operations
(in thousands, except per share data)
Unaudited
Six Months Ended
June 30, %
--------
2009 2008 Change
---- ---- ------
Revenue $1,095,192 $1,192,006 - 8.1%
Costs and expenses:
Costs of products sold 837,533 916,327 - 8.6%
Selling, general and
administrative 172,887 194,048 - 10.9%
Amortization 6,312 4,611 + 36.9%
Total costs and expenses 1,016,732 1,114,986 - 8.8%
Operating income 78,460 77,020 + 1.9%
Other expenses and income:
Interest expense 43,029 51,348 - 16.2%
Interest income (404) (1,368) - 70.5%
Other (income) and expenses (11,461) (2,167) + 428.9%
------- ------ -------
Total other expenses and income 31,164 47,813 - 34.8%
Earnings before income taxes 47,296 29,207 + 61.9%
Income taxes 18,320 11,652 + 57.2%
------ ------ ------
Net earnings $28,976 $17,555 + 65.1%
------- ------- ------
Net earnings per common share, diluted $0.60 $0.37 + 62.2%
Weighted average shares outstanding,
diluted 48,693 48,023 + 1.4%
Supplementary Data
------------------
Amortization $6,312 $4,611
Depreciation 28,755 30,212
Capital expenditures 8,643 15,696
SOURCE |
