Valassis today provided financial guidance for 2012, expecting full-year diluted earnings per share (EPS) of $3.07 and diluted cash EPS* of $3.97. We believe diluted EPS and diluted cash EPS* are the most relevant performance measures for our business, and we are calculating these based on an estimated 42.9 million in weighted average fully diluted shares outstanding for the year ended Dec. 31, 2012. We expect 2012 capital expenditures of approximately $32 million primarily for technology and product development.
"We are confident in our ability to deliver strong EPS growth," said Rob Mason, Valassis Chief Executive Officer and President elect. "The anticipated volume growth and strong operating leverage within our Shared Mail business coupled with our stock repurchase program are key to the success of our 2012 plan. Additionally, we intend to place greater urgency and increased focus on building innovative solutions that include blending print and digital."
Our 2012 guidance takes into consideration the following assumptions:
- We expect low-single-digit growth in U.S. advertising spend for 2012, along with continued economic uncertainty which we believe will maintain the heightened consumer demand for value-oriented media.
- We expect a postal rate increase of approximately 2% in January 2012 which we expect to pass on to clients per our Shared Mail contracts. Since postage is on average approximately 50% of Shared Mail revenue, for every potential 1% increase in postage, our clients will receive an approximate 0.5% increase.
- Shared Mail pieces per package are expected to increase while we anticipate packages to remain flat compared to 2011.
- Our 2012 cooperative Free-standing Inserts (FSI) schedule will have 41 publications compared to 42 in 2011.
- A low-single-digit increase in Selling, General and Administrative costs is expected in 2012 compared to 2011, excluding non-cash stock-based compensation expense in 2011 and 2012. In addition, 2012 non-cash stock-based compensation expense is estimated to be approximately $12.4 million based on our current stock price and fair value assumptions and anticipated 2012 equity compensation grants, compared to approximately $13.2 million for 2011.
- We assume the use of 50% of free cash flow for stock repurchases during 2012. However, we may use more or less than 50% of free cash flow. 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 2011 guidance for adjusted EBITDA* to be $315.1 million. We are updating full-year 2011 guidance as follows:
- diluted EPS to be $2.39 (previously $2.33);
- adjusted diluted EPS* to be $2.62 (previously $2.56) (both exclude the effect of loss on extinguishment of debt and related charges);
- diluted cash EPS* to be approximately $3.65, calculated using current estimated 2011 full-year weighted average diluted shares outstanding of 49.1 million (previously $3.56, calculated using estimated full-year weighted average diluted shares of 49.3 million based on shares outstanding at Sept. 30, 2011); and
- 2011 annual capital expenditures to be approximately $24 million (previously approximately $27 million).