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ADVO Reports First Quarter Results
WINDSOR, CT February 8, 2007 ADVO, Inc. (NYSE: AD) today reported that revenue for its first fiscal quarter ended December 30, 2006 was $384.3 million versus $358.2 million in the prior year quarter, and operating income was $2.1 million versus $20.6 million in the prior year quarter. Diluted E.P.S. was $0.02 versus $0.38 in the prior year quarter. The quarter contained non-recurring costs related to the litigation and pending merger with Valassis, Inc. (NYSE: VCI) totaling $19.2 million in operating income and $0.37 in diluted E.P.S. Year-over-year growth in revenue was 7.3%, operating income declined 89.7% as reported and grew 3.4% excluding non-recurring costs, and E.P.S. declined 94.7% as reported and grew 2.6% excluding non-recurring costs.
During the first fiscal quarter of 2007 the Companys shared advertising packages grew 3.5% over the prior year period to 1.1 billion. Total shared advertising piece volumes grew 6.2% over the prior year period to 9.2 billion, and pieces per package grew 2.6% to 8.6. Revenue per piece(a) declined 2.9% to $37.00, driven by declines in zone products (ShopWise® Wrap and Missing Child Card) revenue, increased remnant insert volume and lighter weight advertising inserts. First quarter zone products revenue declined $5.3 million year-over-year.
Gross margin as a percentage of revenue declined 0.5 percentage points over the prior year period, to 22.4%. Total distribution cost as a percent of revenue increased 2.2 percentage points over the prior year period, to 50.5%, driven by increases in shared advertising packages. Print and paper declined 1.2 percentage points as a percent of revenue versus the prior year period, and all other direct costs netted a 0.5 percentage point improvement. SG&A was up $22.6 million over the prior year quarter, including the $19.2 million of non-recurring costs. Operating income as a percent of revenue for the first fiscal quarter of 2007 was 0.6% (down 5.2 percentage points) on an as reported basis, and 5.6% (down 0.2 percentage points) excluding non-recurring costs related to the transaction with Valassis.
The Companys debt balance at quarter-end was approximately $127 million and book cash was $24.8 million.
The Company will not be holding an analyst call to discuss its first quarter earnings due to the pending merger with Valassis.
The following information was filed by Advo Inc on Thursday, February 8, 2007 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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