Valassis predicts mid-single-digit overall revenue growth year-over-year for its 2013 financial guidance, due to reduction of about US$204M in projected 2012 revenue related to its Neighborhood Targeted business
December 14, 2012
– Valassis (NYSE:VCI) today provided financial guidance for full-year 2013, expecting diluted earnings per share (EPS) of $3.50, which is calculated based on an estimated 39.7 million in weighted average fully diluted shares outstanding for the year ending Dec. 31, 2013. Additionally, our 2013 guidance includes the expectation of adjusted EBITDA* of approximately $315.0 million and capital expenditures of approximately $25 million, primarily for our digital business and process improvements.
“We are confident that the actions we have taken throughout 2012 have set the stage for growth of both revenue and diluted EPS in 2013,” said Rob Mason, Valassis President and Chief Executive Officer. “Our commitment to driving shareholder value will be enhanced through an expected combination of improved earnings, continued stock repurchases, a thoughtful approach to capital expenditures and the adoption of a cash dividend policy.”
We assume the following macro trends in our 2013 outlook:
continued economic uncertainty;
low-single-digit growth in U.S. advertising spend; and
American consumers’ continued focus on savings.
Our 2013 model includes the following assumptions:
Mid-single-digit overall revenue growth, when compared to projected calendar year 2012 revenue after taking into account the reduction of approximately $204 million in projected 2012 revenue related to our Neighborhood Targeted business that will be contracted and recorded on a net fee basis in 2013.
Shared Mail revenue growth of 3% with an anticipated increase in pieces per package and a slight decrease in total packages compared to 2012.
We expect a postal rate increase of approximately 2.7% in January 2013 which we expect to pass on to clients per our Shared Mail contracts. Since postage is on average approximately 50% of Shared Mail revenue, our clients will receive an approximate 1.35% increase.
Top-line growth in the Free-standing Inserts (FSI) segment driven by increased pages with 43 scheduled publications.
Revenue growth of greater than 100% in our digital business.
A mid-single-digit increase in Selling, General and Administrative costs is expected in 2013 compared to 2012. This is expected to be primarily driven by growth in our digital business and the inclusion of results for a full year from Brand.net as well as budgeting for an increase in variable compensation plans.
2013 non-cash stock-based compensation expense is estimated to be approximately $14.3 million based on our current stock price and fair value assumptions and anticipated 2013 equity compensation grants, compared to approximately $12.5 million for 2012.
As previously announced, the adoption of a new dividend policy pursuant to which we anticipate paying a quarterly cash dividend. The timing and amount of future dividends under the dividend policy are subject to the discretion and approval of the Board and Valassis’ compliance with all laws and agreements of Valassis applicable to the declaration and payment of cash dividends. Valassis may modify, suspend or discontinue the dividend policy at any time at its discretion.
The use of approximately 35-40% of free cash flow for continued stock repurchases during 2013. Our stock repurchase program does not obligate us to acquire any particular amount of shares of common stock, and may be modified or suspended at any time at our discretion.
Based on our current results and outlook, we reiterate our full-year 2012 diluted EPS guidance of $2.98 and capital expenditures of between $20 million and $22 million. We are restating our guidance for adjusted diluted EPS* to $3.11 (previously $3.23) to exclude the impact of the favorable income tax adjustment of $0.12 previously disclosed in our third quarter earnings release.
Conference Call Information
We will hold an investor call today to discuss our 2013 financial guidance at 10 a.m. (ET). The call-in number is 1-877-941-0844 (Conference ID: 4575937). The call will be simulcast on our website at www.valassis.com. This earnings release, webcast and a transcript of the conference call will be archived on our website under “Investors.”