ADVO Grows Second Quarter Revenue 6%, Ad Volumes Grow 8%.Business Editors WINDSOR Windsor, British royal family Windsor (wĭn`zər), family name of the royal house of Great Britain. The name Wettin, family name of Albert of Saxe-Coburg-Gotha, consort of Queen Victoria, was changed to Windsor by George V in 1917. , Conn.--(BUSINESS WIRE)--April 15, 2004 ADVO, Inc. (NYSE NYSE See: New York Stock Exchange : AD) today reported that revenues for its second fiscal quarter ended March 27, 2004 topped $300 million for the second consecutive quarter. Revenue for the quarter, traditionally the Company's seasonally lowest revenue and profit period, reached $304.3 million, an increase of 6.0% over the prior year. This growth was achieved despite the negative impact of the grocery strike in Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, , which ended in March. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. E.P.S. was a record high $0.38 for the quarter, up 5.6% over the prior year. Second quarter revenue and E.P.S. sequentially increased from the first quarter results for the first time in the Company's history, and indicate the on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" positive trends in the Company's business. The Company estimates that its results for the quarter were negatively impacted by grocery strike losses of $3.0 million in revenue and $0.03 in E.P.S. due to declines in both the weight and volumes of advertising circulars distributed. The impacts primarily occurred in January January: see month. and February, when the Company's advertising packages are less utilized, and therefore the lost profit opportunity is greatest. The resolution of the grocery strike in March contributed to strong revenue growth in the month of 14.7%. However, revenue growth in this seasonally overweight Overweight Refers to an investment position that is larger than the generally accepted benchmark. Notes: For example, if a company normally holds a portfolio whose weighting of cash is 10%, and then increases cash holdings to 15%, the portfolio would have an overweight month meant that profit flow-through for the quarter was less than if the revenue had been spread across the quarter. Results for the period were also impacted by executive severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when expense of $1.1 million (or $0.02 in E.P.S.) and bad debt expense which increased $1.6 million (or $0.03 in E.P.S.) versus an historically low level in the prior year. The Company's advertising piece volumes grew 8.1% over the prior year quarter, to 7.4 billion, and pieces per package grew 5.1%. Total shared packages distributed were up 2.9%, as the Company continues to grow its in-home network in response to client's increasing need to reach more consumers more frequently. Revenue per piece was down 1.8%, due to continued strong demand in lighter weight and lower price point products, as well as declines in the weights of advertising circulars due to the grocery strike. Gary Mulloy, ADVO's Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , stated, "We are very pleased with the continuing momentum our business is demonstrating. Demand continues to grow at a significant pace, with total advertising volumes up 8% over prior year. Additionally, we are beginning to see revenues accelerate since the resolution of the California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). Grocery strike. This gives us confidence that our business will show continuing strength in the second half of our fiscal year, and we are therefore comfortable with our ability to achieve full-year E.P.S. in line with our previous guidance of $1.72-1.80 including the first quarter refinancing Refinancing An extension and/or increase in amount of existing debt. charge." The Company will hold an analyst conference call to discuss its second quarter earnings today at 5:15-6:00 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . The call in number is (800) 818-5264, and the replay number is (888) 203-1112 (access code #316242). The replay will be available until midnight May 15, 2004. The call will also be available via webcast through the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of ADVO's website at www.advo.com. This report contains certain forward looking statements regarding the Company's results of operations and financial position within the meaning of Sections 21E of the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . Such forward looking statements are based on current information and expectations and are subject to risks and uncertainties which could cause the Company's actual results to differ materially from those in the forward looking statements. The Company's business is promotional in nature, and ADVO serves its clients on a "just in time" basis. As a result, fluctuations in the amount, timing, pages, weight, and kinds of advertising pieces can vary significantly from week to week, depending on its customers' promotional needs, inventories, and other factors. In any particular quarter these transactional fluctuations are difficult to predict, and can materially affect the Company's revenue and profit results. The Company's business contains additional risks and uncertainties which include, but are not limited to: general changes in customer demand and pricing; the possibility of consolidation in the retail sector; the impact of economic or political conditions on advertising spending and the Company's distribution system; postal and paper prices; possible governmental regulation or legislation affecting aspects of the Company's business; the efficiencies achieved with technology upgrades; the amount of shares the Company repurchases in the future under its buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may program; fluctuations in interest rates related to the outstanding debt; and other general economic factors. ADVO, Inc. (NYSE: AD) is the largest targeted in-home print advertising company in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , with annual revenues of nearly $1.2 billion. The Company's shared mail advertising programs reach, on average, 67 million US households weekly, and 105 million households monthly. This includes its core ShopWise(TM) branded programs, and the reach of its ADVO National Network Extension (A.N.N.E.) program. Additionally, the Company's SuperCoups(R) advertising solutions provide targeted advertising for local neighborhood businesses. ADVO launched the America's Looking For Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. Its Missing Children(R) program in partnership with the National Center for Missing & Exploited Children and the United States Postal Service postal service, arrangements made by a government for the transmission of letters, packages, and periodicals, and for related services. Early courier systems for government use were organized in the Persian Empire under Cyrus, in the Roman Empire, and in medieval in 1985, and ADVO's missing child cards are responsible for safely recovering 131 children. ADVO has 23 mail processing facilities and 34 sales offices nationwide and in Canada. ADVO's corporate headquarters are located at One Targeting Centre, Windsor, Connecticut Windsor was the first English settlement in the State of Connecticut, the 5th Colony to receive Statehood in the United States of America. Windsor is a suburban community in Hartford County, adjacent to the north to Connecticut's Capital, Hartford, with a relatively diverse 06095, and the Company can be visited at its Web site at www.advo.com.
ADVO, Inc.
Results of Operations (Unaudited)
Three and Six Months Ended March 27, 2004
(In thousands, except per share data)
Three Months Ended Six Months Ended
------------------- -------------------
March March March March
27, 29, 27, 29,
2004 2003 2004 2003
--------- --------- --------- ---------
Revenues $304,311 $287,065 $606,688 $578,243
Cost of sales 223,460 212,268 444,817 426,622
Selling, general &
administrative 61,896 56,060 123,158 112,911
--------- --------- --------- ---------
Operating Income 18,955 18,737 38,713 38,710
Interest expense 1,240 1,673 2,623 4,571
Write-off of debt issue costs -- -- 1,401 --
Other (income) / expense, net (293) (282) (840) (547)
--------- --------- --------- ---------
Income before income taxes 18,008 17,346 35,529 34,686
Provision for income taxes 6,483 6,418 12,790 12,834
--------- --------- --------- ---------
Net Income $11,525 $10,928 $22,739 $21,852
========= ========= ========= =========
Basic earnings per share $0.38 $0.37 $0.76 $0.74
========= ========= ========= =========
Diluted earnings per share $0.38 $0.36 $0.74 $0.73
========= ========= ========= =========
Dividends declared per share $0.11 $-- $0.22 $--
========= ========= ========= =========
Weighted average basic shares 30,097 29,724 30,018 29,703
Weighted average diluted shares 30,660 29,985 30,554 29,966
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