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Valassis Communications Inc. (NYSE:VCI)

J.P. Morgan Technology, Media and Telecom Conference Transcript

May 17, 2012 11:10 AM ET

Executives

Bob Recchia – Chief Financial Officer

Analysts

Unidentified Analyst

I’m pleased to welcome Valassis Communications to the J.P. Morgan TMT Conference. Valassis is a leading marketing -- media and marketing services company, both national and local level, reaching $100 million households every week through the mail, internet and store and newspapers. With us today is Bob Recchia, CFO. Thanks for being here Bob.

Bob Recchia

Thank you.

Unidentified Analyst

To start it off, could you give an update on advertising trends you are seeing both for Valassis, specifically in the wider promotional market?

Bob Recchia

Yeah. Just I would start with Valassis specifically the numbers that we saw in the first quarter are pretty much an indication of what we expect in the first half of the year in terms the trends. And in that, I mean, the businesses that we’ve been doing well and should continue to perform well and the challenge businesses mainly the once we are reliant on consumer packaged goods revenues. I think they are going to continue to be challenge for the first half of the year.

We should see an uptick in our Shared Mail business which is the obviously our driver for the business in Q2. We’ve still got a little bit of time left in Q2 to rapid it up, but I think we’ll see an uptick versus Q1.

Our Clearing business continues to do very, very well that’s the NCH business. We do believe we are seeing a leveling off on coupon redemption is really a function of the decrease in number of coupons that we’ve seen going out from FSI over the past really three quarters are starting to take effect even though rate of redemption has gone up, we are seeing a leveling out there. But we still think that business will continue to perform very well throughout 2012.

Problem here is for us continue to be neighborhood targeted with margins continue to be under pressure. I don’t see that elevating anytime soon and then the FSI business obviously as a result of the pull back in the spend from CPGs has been impacted somewhat negatively.

We are going to have comp issues throughout the first three quarters of the year in terms revenue not as bad on the profitability side, because it’s primarily as a result of loosing the customer co-op business.

But we haven’t seen the bounce back from the consumer packaged goods companies yet. Clearly not what it was in the back half of last year, it was down about 10%, we think it will be downward single digits in the first half of this year as an industry.

So we are seeing it stabilizing out. We do think it will come back to some degree in the back half of the year because we are talking to customers who are loosing market share with pull back in FSI. So I’d rather believe there is going to be a little bit of an uptick in second half of the year, but it’s a little bit earlier to tell.

As far as the broader market, I think you were talking that, we think the overall spend market is probably showing down about 1%. How that relates across all project, I don’t know but that’s the number we are getting.

Unidentified Analyst

And you would say that’s the promotional market, how does…

Bob Recchia

Yeah. That’s the ad market. Yeah, the ad market.

Unidentified Analyst

Overall ad market. Okay. And you had a tough first quarter, much it was expected, I think you’ve -- you had said that, it was a bit disappointing, but you maintain your full year outlook. So is it the Shared Mail and maybe some CPGs spending coming back that gives you the confidence that you still going to hit your targets?

Bob Recchia

Well, I think, it’s a couple of things, one, we think Q2 is stronger in Shared Mail than Q1 was. I’m not banking on CPGs spend coming back for the rest of the year, so we saw the model that the way it is today.

And then we did talked at the end of Q1 that we are going to sit and try take some costs out of the underperforming businesses, because we’ve got revenue down in few of the segments and even more so in some of the smaller businesses, we need to right size those businesses and make them a little bit more efficient. So we are going through that process right. We’ll be talking a little bit more about in detail on the second quarter call.

Unidentified Analyst

So you are further into Shared Mail the uptick you are seeing this quarter versus some of the weakness you saw last quarter. You talked about, what you are saying as a specific ad categories or just bookings being naturally a bit volatile?

Bob Recchia

Okay. So, I need to clarify this, because when we talk about uptick versus weakness, we are probably talking about $5 million or $6 million of revenue. It just -- it’s not that precise for us.

We came in Q1 at 1.7% revenue growth, if I take you back to the third quarter of last year. We did 1.4% and after that we were continually defending ourselves that we can get to 3% and we actually did 5.4% in the fourth quarter, which got us to 3.3% for the year.

Unfortunately the business is a little bit lumpy and it’s reliant upon when marketers are going to run programs. So when we do 1.7% growth in the quarter we are not concerned about it. If we do a negative 1.7%, I would be concerned about it.

So the difference between those coming in at 3% versus 1.7% in Q1 was $4 million and it’s just not that precise that we are, I would call one, if we come in at 3.5%, I wouldn’t call it a robust quarter. We still think 3% is the right number for us to manage to and we can get to that.

So really the difference between Q1 and Q2 is not going to be anything we can point to, specifically it just going to be, could have been something happening a year ago versus now.

The market has remained fairly strong for us. It is all about executing and continuing to take share in a print market that is probably about $7 billion overall when we look at all the newspaper placement that’s out there and as the newspapers continue to loss circulation, and they do continue to loss circulation, the numbers are out again for first of the year, I think, we are down 4% or something like, the numbers are pretty bad. We continue to have greater relevance for marketers that want to get into the home with printed ad.

Unidentified Analyst

Talk about pricing and volume in Shared Mail. I think pricing was a bit more of an initiative for you after doing some discounting in the recession. How do you stand with that and you even grew packages for the first time in a while last quarter, where you looking to add?

Bob Recchia

Right. So in 2009 and ’10, we use price to grow volume, which is not unusual and a mature business, it’s actually the formula that most companies would use. But when we look at the amount of price that we were giving, I mean, something we are giving it up a little too quickly long-term trend that wasn’t good. We had to get more sophisticated on how to use price and when to use price.

So 2011 was a transitionary year where we tried to centralize the pricing of the organization. We put in the pricing center. We force the sales organization to rethink how they went to customers and we went out with price increases across the board.

That’s definitely not the way to do it, but we didn’t have any data points, so we went out with that, you are going to get some volume fall up when you do that, there is a direct correlation in pricing volume. But it was very successful for the year. We took a two year trend that was probably mid single-digit price decline and get rid of that pricing in 2012 is actually slightly up in 2011.

And what we’ve learned is there are places where we have some pricing power and we should try to take price increases or places where we should just try and hold on to what we have and there are places where we need to use price in order to gain volume.

And that’s really, as we look forward, that’s the strategy going forward, we will do all three of those things where we think it’s appropriate as oppose to a one size fits all approach that we took in 2011. We think that allows to protect our volumes, but also get price where we really should be getting.

Unidentified Analyst

And your packaged strategy?

Bob Recchia

Packaged strategy is really not to grow packages other then the growth that takes place normally within U.S. household which use to be about three quarters of 1% I have no idea what it is today, it’s probably less than that.

But what happens from quarter-to-quarter as we may have a big marketer that wants to add certain households where there is enough volume there, we can justify, so you will see seasonal adjustments to the packages that might be plus or minus 1%, it’s not going to be a dramatic growth.

Unidentified Analyst

How should we think about competition in the Shared Mail business, I think it’s pretty fragmented on the local basis?

Bob Recchia

Well, I mean, the competition in Shared Mail is the newspaper, I’m sure, that’s really who we day in and day out go up against, there isn’t anybody else I think in, there is a couple of markets where we run into a penny saver type business like (inaudible) in Southern California and in Florida, but other than that it really is the newspaper industry.

Unidentified Analyst

And how are they trying to kind of react the shared declines they have, is this really a big advantage for you?

Bob Recchia

This is the reason I think that in the midst of what I will describe is, a secular decline and for instance we continue to grow, our offering is getting stronger. So if you think about the newspaper offering to a retailer. At point in time, if you look at the Detroit market you might have had a 60% household penetration for the Detroit News and Free Press, meaning, six out of 10 households was buying the paper.

What's happened over time is, let’s say, 20 years ago or 15 years, it was about 60%. The other 40% of the newspaper want to get into those household with their TMC program, which is total market coverage. It was a carry delivered program that was drawn on the driveway which just adds in it. Okay.

So picture, this selling environment, 60% of the households pay for the paper, 40% get it for free, get the ads for free. Today, 25% of the households, if you’re lucky, you are paying for the paper, and 75% are getting free. The readership on the free ads, if you will, that are thrown on the driveway. That’s about 25% is effective as they pay to driver.

So their offering, every year gets weaker. In the same period of time, since we won’t add those for the last five years, our package has gone from an average of seven pieces to 10. And what used to be grocery, a hardware store, a local tire shop today has Walmart, IKEA, Lowe's, it has the Valassis coupon book. Some of them have the new score coupon book.

We have all the franchise retail companies and here we’ve got Verizon, T-Mobile. We look a lot more like the newspaper. So what's happening is our offering to the customers getting stronger, the newspapers offering is getting weaker.

Now there is still no substitute, if you will, for the paid subscriber. That’s still the gold standard in terms of advertising. But when the paid subscriber continues to become less of the overall mix, we start to do better.

I think that's the reason that our offering is still growing on newspapers that are continuing to trend.

Unidentified Analyst

As we think about your newspaper delivered products, your FSI book, you Neighborhood Targeted. How, in the past, you’ve been looking to move that into the Shared Mail Package? How has that gone for you?

Bob Recchia

We’ve sort of the reach the point where we got about $15 million. I think its $14.7 million in our Shared Mail Package. That’s the right number. We don’t think we need to go beyond that. We don’t think we should.

The newspapers that we have replaced are ones that either we’re performing or we’re too high priced. So if we get a newspaper that’s too high priced, we can move out of it. But there’s no plans at this point to change that number any higher.

Unidentified Analyst

Are the advertisers satisfied with the different distribution?

Bob Recchia

Yeah. We tell you that the average redemption rate depends on how we’re doing it. If we’re placing a newspaper with the Shared Mail Package, we are indexing at about 0.8 or 0.85 somewhere in that range, which means on average, we’re indexing at 85% of what our average newspaper is.

Now, it doesn’t mean, you can’t replace the newspapers, you just replace the weaker performing newspapers. You can still do it, where you’re just augmenting the newspaper circulation redeems at less than that. So those are not as good but the flipside of it is if we want to increase newspaper circulation to what news does, they have free publications at new stands.

They have all the things that for years, we wouldn’t do because you don’t redeem well. And they’ve got those on their market list as well. So if we just went with, kind of, the blue-chip newspapers, redemption rates would be higher but you can’t get the scale that you need. So you’ve got to augment.

We chose to do with Shared Mail. News choses to do it with TMCs and unpaid circulation. It all basically, it all basically, it all still works but it does bring down average redemption rate.

Unidentified Analyst

And in your FSI business, it’s mostly consumer packaged goods, advertisers and I think, there's a lot of confusion out there over the spike in coupon redemptions, you’ve seen which seem to be a good thing for your business versus the pullback of spending that they've been showing. So can you help us frame what's going on there?

Bob Recchia

Well, I think there is a couple of things. One, if you look at last year, I’ll take you back a couple of years, coupon redemption rates spiked. I think it was ‘09 with the economy weakening and the manufactures at that point in time, kind of rolled it out because they knew that the consumers needed an incentive to buy things. Right. The economy is very, very weak.

They then corrected for that along the way and the way you correct for that is you lower your coupon value, you create offers we have to buy to get the discount.

There is a lot of ways you can mange, shorten your expiration date and you managed on your redemption cost that way. That was working really well for a period of time and then we got to the middle of last year and if we think back to really last year, the economic uncertainty started to spike up.

We didn't know what -- where the economy was going. With that, consumer confidence starts to go down. There is a direct correlation between consumer confidence and coupon usage. There's no lag. It goes almost, its mirror image of one another.

So, immediately, middle of last year. Coupon usage spiked way up. Now it’s consumer confidence. It also is the crazy coupon show, what was it called.

Unidentified Analyst

Extreme coupon.

Bob Recchia

Extreme coupon was at its peak and people were getting more exposure to coupons. At the same time, they were trying to stretch their food dollar, budget dollars. So coupon usage started to go way up, manufactures got caught. At the same time, coupon usage is going up.

They were taking on commodity cost increases but the interesting thing about this coupon usage. It was just the consumer being more diligent about using coupons. They were brand switching. So if you're selling the same amount of Crest toothpaste but you're selling more discount, at the same time, your commodity costs are going up, you can take a margin squeeze.

I think that's what happened. I’m answering the question for hundreds of CPGs with one answer. I'm sure they are all a little bit different, but that's generally what we were getting out of it is they were driving additional volume, they were getting margin squeezed. Most of the consumer packaged goods companies have pretty dismal year last year, especially the back half.

There isn’t lot of growth domestically in the consumer packaged goods industry. Most of its international. So they pulled back their spending. Now all of them but many of them did. Some have comeback in the first part of 2012 and they are spending at more normalized levels.

Some have not. There are some that are lagging way behind in market share still that we’re waiting to see if they are going to turn it back on. You can't get market share back in our view without doing an FSI. There is nothing else out there. That is going to move the tonnage for them.

So I think it’s going to play out yet. I don't think it's going back to the levels that we saw where the industry had a peak in 2010. But I think it will probably come back a little bit as the years starts to unfold. It’s hard to tell because the consumer packages of these companies are not doing particularly well, at least they weren’t in their domestic operations.

Unidentified Analyst

What you think will trigger the rebound?

Bob Recchia

I think if some of the companies are continuing to spend, start to take share and do well. It’s going to force the other guys to respond. The private label industry, if you will did not respond when the CPGs pull back on spending of your last six, months ago.

In general, the private-label brands raise price instead to try and equalize it out. So they took it as an opportunity to raise price. Had they stayed down, that would put more pressure on CPG. So I think it all gets down to how they perform on a market share basis. If they can hold their market share and do it a less discounting, they should do that.

Okay. But if they start to lose the market share, there is an ROI calculation that I’m sure they are going to go through and decide whether they should increase your spending.

Unidentified Analyst

In your experience, how long does this cycle tend to play through the couple of quarters?

Bob Recchia

No. I have done this for 30 years. I have never seen this. Okay. So I’m waiting to see how this plays out. The 10% decrease in spending -- we've never seen those in industry. These are kind of uncharted waters for us. It will play out differently for different brands.

The key for us is to stay in front of them and continue to show them ideas on how to manage the coupon liability. There clearly is a little bit more money going into digital coupons today but not anywhere near where the pullback was.

So there's not a substitute that they’ve come up with to say, we’re going to do this instead. It’s just a general pullback right now.

Unidentified Analyst

The greater awareness in usage of coupons by consumers. Is this a longer term positive an opportunity for you?

Bob Recchia

You would think so but having said that we took a 10% decrease in the industry volume right in line with the kind of the jump in usage of coupons. I have a hard time believing it’s a bad thing, but it has to be managed by the CPGs. So anytime somebody is using your product more, it’s got to be viewed as a positive. It does give us a better ROI than overall alternatives.

The difference between print and digital was substantial. It's got even larger with higher redemption rates. So it's all good. But I think we’re staring at something that caught the consumer packaged goods companies somewhat by surprise and the reaction to it hasn’t been typically how they reacted in the past.

Unidentified Analyst

Any questions out here in the audience? We will move into the digital side. I think a lot of folks see it as a threat to your company. How can you turn it to an opportunity? I know it’s a big initiative for you.

Bob Recchia

Actually, you have to kind of look at it by segment by product. If you look at it with regard to consumer packaged plus couponing, digital coupons have been out there now for 10 years. So pretty much everybody it does a paper coupon, it does digital coupon. And I would tell you that, they’re part of the mix for customers today, but they’re not going to replace what we do in print.

And the interesting thing is there’s two ways to deliver digital coupon. One is we called printed home where you go online, you select the coupon, you print on your printer as you bring in the store. And the other is download to card, as you can register your cellphone or your card, your loyalty card, you go on kroger.com, if you will and you click on the Coupons you awarded mean to their POS system.

The interesting thing is you are twice as likely to reading the coupon if you printed out and if you downloaded. Because print is a call to action, it’s a reminder notice to you that you have it. So, that’s still as a key to us in terms how the consumer is interacting with this.

So on the coupon front for digital it’s going to continue to grow and it’s going continue to get easier. There are applications that are out there. We have one that’s -- it’s very new. It’s in test right now.

And the consumer is going to have a lot of different ways to get a coupon other loaded into their grocery stores, you want cell system or download it in printed out home -- it’s very easy to do. But it’s much more expensive. In the ROI is not as good as those with the print coupon today. As it relates to the rest of our business, when you look at the Shared Mail business, we don't really have a digital alternative threat per se, because what we do.

You could take our Shared Mail Package and digitized over the unit and you could put it on our website and tell people there it is -- the circulars are one this website, nobody’s going to go there, that’s not how we use digital. We use digital to search for one particular thing.

So if I want to buy a power drill, I’m not going to typing Lowe’s, I’m not typing power drill. I’m going to typing RedPlum to go, so if we might have one that week. So there isn’t a digital alternative to what we do. Having said that every one of those customers that we have in the package has a digital strategy. And what we've been doing with them and there is a probably the fastest growing part of our digital business is when Lowe’s or IKEA or whatever it is in market with a circular.

We’re selling them and display at the same time to expand the reach, same creative, same offers and our ideas are drive them to the printed piece or drive them to lowes.com or ikea.com given to try and transact. So that’s been the strategy with really the rest of the customer base.

Unidentified Analyst

What do you seeing out in market, do you see any online players really making strides here in the promotional space? You’ve got the coupons in the world out there but I don’t think that’s quite you're competitive side, anyone is really, I know getting contraction?

Bob Recchia

Well, I mean obviously couponing and what they have done. They’ve done traction to do it that or whether not that works long-term for everybody. But when you look at the couponing business, coupons.com is the leader in that business. They have lion share of the market.

And they are going to be very difficult time to seek with offers, okay, unless somebody comes up with something different. We’re all working and different alternatives but they have done a pretty good job of answering all the customer’s needs with regard to that.

In terms of where the other dollars are going, well, we see them going, we see a lot of money going into display, that seems to be capturing a fairly good side, good portion of marketers budgets, it’s something we sell on a regular basis, but resell and are in display right now for other peoples network mode specifically one their network.

And that we are seeing, it’s not really promotion for advertising related. On the promotion side, I think you have to point to coupons.com, you have point to groupon and I’m not sure there is a third one out there that’s getting a lot of traction. There maybe but I’m not aware of it.

Unidentified Analyst

Moving to in-store, you’ve made some good market share gains over the last few years, it’s been kind of a new initiative for you. I think the CPG spending has been an issue for you. But how do you look at the business right now?

Bob Recchia

Well, the CPG spending has been an issue for the industry, which is really as a news an there are several other smaller players that do different things and everybody can suffering the same thing. I think Carolina has been going through the same thing as well, with regard to just lower volumes. It’s because in-store is expensive in ROIs and it is good is every alternatives, so tend to be (inaudible).

The industry itself that we competed, its really head-to-head with news. So it is very difficult, because you got to pullback on the spin side. And as retailers now come up for renewal, there is ORs. There is a bidding that’s taken place for that retailer for the right market within that store. And the cost of doing that is going up. Because obviously, news is not going to see that those markets to us, and we’re trying to grow our business.

So that is a -- that’s a challenge that we have right now that we really didn’t have and we brought on SuperValu and when they see initially because of SuperValu really came to us. We didn’t see as long as we signed them up and then since then the competitive landscape has got lot more difficult.

Unidentified Analyst

How long are the contract generally?

Bob Recchia

Well, I have seen them as long as 10 years on the other side but typically you are looking at things that go two to three years.

Unidentified Analyst

And news as they come in, it’s had, it’s been a pretty profitable business for them. How -- what your target margins here and you have been able to get some margin gain side of despite the revenue headwinds?

Bob Recchia

Well, I think we have a fairly good start to it. But with the pullback and the fact that the cost of acquiring new stores is going up in the margin profile isn’t what we expect it to be.

So this one is niche to play out. We got to see where the competitive landscapes is going on as thing but clearly the margins are not what we want it to be and we innovate something that you knew in the store because that we give us and advantage we need to try to create something at the other guy doesn’t have. That we can sell in the store perhaps gain shared doing that way.

Unidentified Analyst

We have a questions from the audience.

Question-and-Answer Session

Unidentified Analyst

(Inaudible)

Bob Recchia

The first question was the length of contracts we signed in Shared Mail and those can go even for one to three years. I don’t think I have seen much longer than that but one to three years is typical.

And the second part of question is what sort of analytics do we have to help CPGs or any customers for that matter. Most of where we can help is in the targeting, not necessarily for CPGs because it’s impact if this company has their own analytics. They know they get all the reports from us from the Clearing. So they can run their own analytics on what coupon redemption is and what product lift is. They will do that away from us most of the time. They don’t really want to share all that information with us because I think we could use it potentially price.

Where we add value in the Shared Mail side of the business is really in the targeting. So if somebody is doing all of their distribution be a newspaper, we could go in and show him how to use newspaper and mail at the same time to optimize or buy and we’ve actually now started to add digital into the mix. So that depending upon who the audience is and who you want to get to, we can create a mix for them that optimizes their marketing knowledge.

There are certain markets where the newspaper is going to get them a better result. And in those markets we’ve got to recommend the newspaper even though inherently we make more money and then distributing through our own product. They are going to measure, if we give them bad advice, they are going to pull it back immediately and we loose our credibility.

So it’s a matter of showing customers well Shared Mail can benefit them in terms of overall sales lift in that market profitability and then mixing that together with newspaper buy and today including a digital buying with that and that’s really the one thing that we can opt, nobody else can, because nobody else has a Shared Mail knowledge and information, people have newspaper and people have digital but very few have of all both of those deals running on the third. So I think that’s our competitor advantage.

Unidentified Analyst

Bob, on the cost you have done a great job driving margin expansion over the years. If the revenues later in the year don’t coming as expected, are there still things you can do to, to keep up earnings?

Bob Recchia

Well, we talked about on the first quarter call because we did get off to a bit of the slow start. It was really not far of them from what we had targeted, it was actually very close to it. But not a great first quarters and we’ve done a couple of segments right now that are under performance.

So we’ve been in the process since that call by identifying buckets that we can go after in terms of cost. We’ll talk a little bit more about it on the second quarter call in terms of specifically what the plans are in the back half of the year, but we can and we will have take some cost out back half of the year.

Unidentified Analyst

The Neighborhood Targeted business that you identified that as a challenging business right now. What’s your outlook for longer term can you see, rebound do you want to stand this business.

Bob Recchia

We are going to stay in the business. I think number one I don’t see a rebound in it unless the actually climate changes and the crucial printing really ad place with market. And I don’t see it will happen in the near-term. So I think it’s going to remain a competitive, very competitive business for us.

So as we look at that, what we’re trying to do today is figure out whether we are making the money or we are not. And making sure that we’re not chasing business that we might win that really doesn’t make a profit, right.

So we’re spending a lot of time segmenting our customers and looking at why we win, why we win. And we use to have a much more profitable segment. Now the industry in the way of work has changed but there is still pieces in there that are profitable and we still get them. And with that focus is got to be I’m trying to expand that piece of it as oppose to chasing everything that’s out there.

Now we do chase somethings for they were targeted that are big newspaper placement deals when we do a lot of Shared Mail of that customer, because we want to control that newspaper placement if we can. It gives us a greater ability to move business from newspapers into the mail because is more trust there for handling it for them.

When in newspaper placement agency gets a big piece of business that we have a chunk Shared Mail with they are naturally tendency is we want to place at newspapers because that’s what they do. So there is a little bit of Neighborhood Target that I would call defensive measure but we are trying to really break it down more in terms of -- are we chasing business today that we just don’t make money at and if so how do we get away from that and focus on the things that we can make better margins with.

Unidentified Analyst

You’ve talked before about the attractive margins and moving piece from the newspaper to the Shared Mail Package for you. Is that still an opportunity when you can migrate?

Bob Recchia

It definitely is an opportunity and we continue to do that caveat is it has to work for the customer. If it doesn’t, they are going to right back in this sophisticated market or so. We make sure we move something over that we really believe is going to work.

And we’ll continue to do that it’s not -- the primary growth that we give in Shared Mail those is not coming from a shift that we create between Neighborhood Targeted in Shared Mail. That’s a shift between newspaper and Shared Mail that we get directly into Shared Mail more than we shift over.

Unidentified Analyst

And just, so it will be my last question, you have done a great free cash flow story over the years and currently can you update us on your received cash this year and long return high qualities?

Bob Recchia

We gave guidance. What we said was we in the guidance have assumed we’ll taking 50% of free cash and buying shares back creatively throughout the year. And then I follow that by saying I can only show you what happened that way. It’s never does. Since then is sort of became they are going to spend half to free cash flow on share buyback, which I think is a good directionally, okay.

I think we will spend half of our free cash at least on share buyback. I think we will do this opportunistically as we tend throughout the year. And the other half will either built cash with or if you complying small acquisitions that we can do but strategically fits and we will do that.

We will buy more share with it. And so we want to keep the flexibility to do that because I think last year we said we expect to use the majority of our free cash to buyback shares. And I think we did about $170 million free cash and we spend $214 million. So we can do more if you chose to do more but I think the commitment we’ve made is with that.

Unidentified Analyst

We are out of time. Thank you, Bob.

Bob Recchia

Thank you.

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Source: Valassis' Management Presents at J.P. Morgan Technology, Media and Telecom Conference (Transcript)
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