Valassis Sees Its Revenues Slide and Net Earnings Take a Big Hit

LIVONIA, MI—July 26, 2012—Valassis announced financial results for the second quarter ended June 30, 2012. Its revenues were $540.2 million, a decrease of 4.4 percent 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, a decrease of 28.4 percent from $30.3 million in the prior-year quarter. Excluding 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.

“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 CEO. “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.”

Business Segment Discussion

• Shared Mail: Revenues for the second quarter of 2012 were $348.8 million, an increase of 3.4 percent compared to the prior year quarter. Segment profit for the quarter was $52.3 million, an increase of 9.6 percent 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 percent 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 percent compared to the prior year quarter. Segment profit for the quarter was $7.3 million, a decrease of 12.0 percent 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 percent compared to the prior year quarter. Segment profit for the quarter was $2.3 million, a decrease of 64.1 percent 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.

About Valassis
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, with approximately 7,000 associates in 28 states and eight countries, Valassis is widely recognized for its associate and corporate citizenship programs, including its America's Looking for Its Missing Children program.

Source: Valassis.