By: E&P Staff
Valassis reported a 6.5% drop in 3Q revenue, citing competitive pricing pressures and the ADVO lawsuit.
Total revenue decreased to $248.9 million while earnings per share slipped 4.8% to 40 cents excluding $10.1 million in non-recurring charges related to the pending ADVO acquisition and lawsuit.
?While we have made important progress in some areas of our business, year-to-date, our 2006 performance has fallen short of expectations,? said Alan Schultz, Valassis chairman, president, and CEO, in a statement. ?Clearly, the free-standing insert (FSI) industry continues to be very price competitive, and in fact, the revenue and profit decline in this segment of our business in 3Q is entirely attributable to pricing.?
Schultz said pricing will negatively affect 2007 FSI revenue and profitability.
Co-op FSI revenue declined 7.1% to $105.9 million for the quarter. FSI cost of goods sold was down roughly 3% on a cost per thousand (CPM) basis due to the reductions in media insertion rates and the cost of paper.
Run of Press (ROP) revenue fell 17.4% to $24.6 million due to a change in mix to more fee-based business versus margin-based business.
Neighborhood Targeted Products revenue decreased 10% to $79 million due mostly to consolidation in the telecommunications and appliance manufacturing industries.
Household Targeted Products revenue was flat at $12.6 million.
International and Services revenue grew 22.4% to $26.8 million.
Schultz announced a growth strategy for the company geared towards ?sustainable growth and the enhancement of shareholder values.? It addresses four key strategies including diversifying the revenue base, restoring and enhancing profit margins, and leveraging data and technology.
Executives with Valassis declined to provide 2007 EPS guidance due to the outcome of the ADVO lawsuit and FSI negotiations.