LIVONIA, Mich., Dec. 14, 2012 /PRNewswire/ -- 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:
Our 2013 model includes the following assumptions:
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."
Non-GAAP Financial Measures
*We define adjusted EBITDA as net earnings before interest expense, net, other non-cash expenses (income), net, income taxes, depreciation, amortization, and stock-based compensation expense. We define adjusted diluted EPS as diluted EPS excluding the effect, net of tax, of restructuring and other non-recurring costs and the expiration of certain tax reserves. Adjusted EBITDA and adjusted diluted EPS are non-GAAP financial measures commonly used by financial analysts, investors, rating agencies and other interested parties in evaluating companies, including marketing services companies. Accordingly, management believes that these non-GAAP measures may be useful in assessing our operating performance and our ability to meet our debt service requirements. In addition, these non-GAAP measures are 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 performance criteria for incentive compensation. Additionally, because of management's focus on generating shareholder value, of which profitability is a primary driver, management believes these non-GAAP measures, as defined above, provide an important measure of our results of operations.
However, these non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as alternatives to, operating income, cash flow, EPS or other income or cash flow data prepared in accordance with GAAP. Some of these limitations are:
Because of these limitations, adjusted EBITDA and adjusted diluted EPS should not be considered as measures 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 these non-GAAP financial measures only supplementally. Further important information regarding reconciliations of these non-GAAP financial measures to their respective most comparable GAAP measures can be found below.
Reconciliation of Full-year 2013 Adjusted EBITDA Guidance to Full-year 2013 Net Earnings Guidance(1):
($ in millions)
plus: Interest expense, net
Depreciation and amortization
Other non-cash expenses (income), net
plus: Stock-based compensation expense
(1) Due to the forward-looking nature of adjusted EBITDA, information to reconcile adjusted EBITDA to cash flows from operating activities is not available without unreasonable effort. We believe that the information necessary to reconcile these measures is not reasonably estimable or predictable.
Reconciliation of Full-year 2012 Adjusted Diluted EPS to Full-year 2012 Diluted EPS Guidance:
Net earnings (in millions)
Restructuring and other non-recurring costs
Tax benefit due to expiration of certain tax reserves
Adjusted diluted EPS
Weighted Average Diluted Shares Outstanding (in thousands)(1)
(1) Represents estimated weighted average diluted shares outstanding for the year ending Dec. 31, 2012 and assumes the use of 50% of annual free cash flow for stock repurchases. As of Sept. 30, 2012, $87.1 million had been used for share repurchases year to date.
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, Michigan 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. Valassis companies include Valassis Direct Mail, Inc., Valassis Canada, Promotion Watch, Valassis Relationship Marketing Systems, LLC, NCH Marketing Services, Inc. and Brand.net. For more information, visit www.valassis.com, www.redplum.com and www.save.com. To learn about advertising opportunities with RedPlum, please call 1-800-437-0479.
Cautionary Statements Regarding Forward-looking Statements
This document contains "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 preferences for different promotional materials, strategies or coupon delivery methods, including, without limitation, as a result of declines in newspaper circulation and/or increased competition from new media formats including digital; 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; certain covenants in our debt documents could adversely restrict our financial and operating flexibility; 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, including, without limitation, high levels of coupon redemption rates; 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; possible governmental regulation or litigation affecting aspects of our business; clients experiencing financial difficulties, or otherwise being unable to meet their obligations as they become due, could affect our results of operations and financial condition; uncertainty in the application and interpretation of applicable state sales tax laws may expose us to additional sales tax liability; and general economic conditions, whether nationally, internationally, or in the market areas in which we conduct our business, including the adverse impact of the ongoing economic downturn on the marketing expenditures and activities of our clients and prospective clients as well as our vendors, with whom we rely on to provide us with quality materials at the right prices and in a timely manner. These and other risks and uncertainties related to our business are described in greater detail in our filings with the United States Securities and Exchange Commission, including our reports on Forms 10-K and 10-Q and the foregoing information should be read in conjunction with these filings. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.