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Valassis Cuts 2012 Outlook, Sees 2013 EPS Below View

Media and marketing services company Valassis Communications, Inc. (VCI: Quote) on Friday lowered its adjusted earnings guidance for the full-year 2012 to give effect to a favorable income tax adjustment. The company also provided earnings forecast for the full-year 2013, just below Street view.

"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," President and CEO Rob Mason said in a statement.

The Livonia, Michigan-based company reiterated its full-year 2012 earnings guidance of $2.98 per share, and capital expenditures of between $20 million and $22 million.

However, the company said it is restating adjusted earnings guidance to $3.11 from the previous forecast of $3.23 per share. This is to exclude the impact of the favorable income tax adjustment of $0.12 per share disclosed earlier along with the third quarter financial results.

On average, seven analysts polled by Thomson Reuters expect the company to report earnings of $3.20 per share for fiscal 2012. Analysts' estimates typically exclude special items.

The guidance assumes the use of 50 percent of annual free cash flow for stock repurchases. The company has already made repurchases worth $87.1 million, as of September 30, 2012.

Looking ahead to fiscal 2013, the company currently anticipates earnings of $3.50 per share, on projected overall revenue growth in the mid-single-digits, with revenues expected to more than double in the digital business.

Street is currently looking for full-year 2013 earnings of $3.55 per share on annual revenues of $2.17 billion.

The fiscal 2013 guidance assumes mid-single-digit increases in selling, general and administrative costs. The company also assumes adjusted EBITDA of about $315.0 million and capital expenditures of about $25 million, primarily for digital business and process improvements.

Further, the company said it will use about 35 to 40 percent of free cash flow for continued stock repurchases during 2013, with the repurchase program not obligated to acquire any particular amount of shares of common stock.

"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," Mason added.

VCI closed Thursday's regular trading session at $27.54, up $0.23 on a volume of 0.59 million shares.

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by RTT Staff Writer

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