Valassis Marks Third Quarter With Strong Earnings

Valassis Inc. generated third-quarter revenue of $544.1 million, a drop from the $563.7 million it pulled in a year ago. But the company recorded $13.8 million in net earnings, a turnaround from the $5.2 million net loss it reported a year ago. The quarter ended Sept. 30.

Most of the company’s good fortune stemmed in part from a significant reduction in the cost of goods sold.

Within its operating units, shared mail pulled in $319.5 million, down 2.3% compared to the prior year quarter. The company attributed in part to a reduction in unprofitable packages. Segment profit for the quarter was $29.6 million, up 124.2% from third quarter 2008 due to effective cost management, including package optimization efforts, newspaper alliances and general corporate expense reductions.
Valassis’ neighborhood targeted products generated $92.0 million, down 14% from the $107 million it recorded. According to the company, run-of-Press revenue was down related to reduced client ad spend within the wireless and financial verticals, and revenue in sampling was down due to its cyclical nature. Segment profit for the quarter was $3.9 million, down 22% from the $5 million it pulled in a year ago.

Revenue from free-standing inserts was $92.6 million, up 1.3% compared to the prior year quarter. This was due to an industry unit volume increase of approximately 3.4%. Valassis said these promotions represent an important medium for marketers who need to reach deal-seeking consumers. Segment profit for the quarter was $2.3 million, compared to $200,000 in the prior year quarter due to increased unit volume and reduced costs.

Revenue for the international, digital media and services was $40 million, up 4.4% compared to the prior year quarter. Segment profit for the quarter was $6.9 million compared to a loss of $4 million in the prior year quarter due primarily to the increase in U.S. coupon clearing volume and the discontinuance of underperforming businesses. According to NCH Marketing Services, Inc. (Valassis’ coupon-processing and analytics subsidiary), year-to-date reports show consumer packaged goods coupon distribution up 11% and coupon redemption up 23% compared to the same period last year.