Courier : Education Sales Fuel Third-Quarter Growth at Courier
07/18/2007| 07:51am US/Eastern
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Courier Corporation (Nasdaq: CRRC), one of America's
leading book manufacturers and specialty publishers, today announced
results for the quarter ended June 30, 2007, the third quarter of its
2007 fiscal year. Sales grew in both of Courier's
business segments, enabling the company to post record third-quarter
revenues of $73.4 million, up 4% from last year's
third-quarter sales of $70.4 million. Key contributors to the increase
were strong education sales and the inclusion of full quarterly results
from Creative Homeowner, acquired by Courier partway through last year's
third quarter. Net income for the quarter was $6.7 million, up 10% from
prior-year results of $6.1 million. Net income per diluted share was
$.53, up 10% from $.48 in the third quarter of fiscal 2006.
For the first nine months of fiscal 2007, Courier sales were $214.1
million, up 15% from $185.6 million in 2006. Net income through nine
months was $16.3 million, up 9% from $14.9 million from a year ago. Net
income per diluted share for the period was $1.29, up 8% from $1.19 in
fiscal 2006.
Book manufacturing sales increased modestly in the quarter, with robust
growth in the education and specialty trade markets partly offset by a
slow quarter in religious sales. Third-quarter sales in Courier's
specialty book publishing segment rose 18%, in part due to the inclusion
of full-quarter results at Creative Homeowner.
?Once again, our balanced portfolio and
disciplined approach served us well across a variety of market
conditions,? said Courier Chairman and Chief
Executive Officer James F. Conway III. ?In
book manufacturing, our sizable investment in four-color capacity for
the education market continued to pay dividends, with our new presses
running at capacity for much of the quarter and Moore Langen performing
superbly to meet rising demand from textbook publishers, offsetting a
shortfall in religious sales. In publishing, we faced a challenging
environment for booksellers as well as continued softness in the home
improvement market served by Creative Homeowner. At the same time, a
strong market for test-preparation materials enabled REA to post an 18%
sales increase in the quarter. All told, both sides of our business were
able to offset weakness in specific markets by taking advantage of
strength in others, resulting in a 10% profit improvement across the
company.?
Book manufacturing gains from record salesin education
Courier's book manufacturing segment reported
third-quarter sales of $58.5 million, up slightly from last year's
third quarter. Pretax income for the segment was up 16% in the quarter
to $10.1 million, from $8.7 million in fiscal 2006. Gross profit in the
segment rose 11% to $17.2 million, increasing as a percentage of sales
to 29.5% from 27.0% a year earlier, primarily due to productivity gains,
high capacity utilization and the efficiency of Courier's
four-color MAN Roland presses. For the year to date, book manufacturing
sales were $168.9 million, up 9% from fiscal 2006. Year-to-date pretax
income in the segment was $23.9 million, up 13% from $21.2 million in
2006.
The book manufacturing segment focuses on three publishing markets:
education, religion, and specialty trade. Sales to the education
market rose 23% in the quarter, driven by increasing demand for
four-color textbooks. For the first nine months of the fiscal year,
education sales were up 18%. Sales to the religious market were
down 27% in the third quarter following a 22% increase in the second
quarter, reflecting timing issues as well as reduced orders from a key
customer. For the year to date, religious sales were down 5%. Sales to
the specialty trade market were up 26% in the third quarter, and
up 22% for the year to date, reflecting a combination of one-time
orders, new customer relationships and increases in share with existing
customers.
?Our investments in our Kendallville, Indiana
plant and Moore Langen's book cover
production capabilities have increasingly established Courier as the
four-color service leader for the education market,?
said Mr. Conway. ?Despite a slowdown in
scripture sales this past quarter, we continue to expect solid growth in
the religious market, where we have been a global leader for 75 years.
With this growth in mind, we continue to invest in additional capacity
and improved efficiency at our Philadelphia religious printing plant.
With the industry's best equipment, best
workforce and a customer base second to none, we look forward to
sustained growth in all our book manufacturing markets.?
Courier's specialty publishing segment
includes three businesses: Dover Publications, a publisher with
thousands of titles in dozens of specialty trade markets; Research &
Education Association (REA), a publisher of test preparation books and
study guides; and (since April 2006) Creative Homeowner, a publisher and
distributor of books on home design, home improvement, gardening and
crafts.
Third-quarter sales for the segment were $17.9 million, up 18% from
$15.2 million in last year's third quarter.
Year-to-date sales were $52.8 million, an increase of 45% over the first
nine months of fiscal 2006. Of these totals, Creative Homeowner
contributed $6.8 million in the third quarter and $21.0 million through
nine months. Last year Creative Homeowner contributed $4.4 million in
third-quarter sales, representing the two months following its
acquisition by Courier on April 28, 2006. On a comparable 13-week and
year-to-date basis, Creative Homeowner sales were down from 2006,
reflecting a soft housing sector and reduced traffic at home improvement
centers, which constitute the company's
largest sales channel. Sales at Dover Publications were comparable to
last year's third quarter, with strong sales
to smaller retailers offset by uneven ordering from large booksellers.
Sales at REA were up 18% on the growing success of its high-stakes test
preparation books.
Third-quarter pretax income for the segment was $0.8 million, down 25%
from $1.1 million in fiscal 2006, with a $600,000 pretax loss at
Creative Homeowner offsetting a 22% increase in pretax income across
Courier's other publishing businesses.
Through nine months, pretax income was $3.0 million, down 8% from $3.3
million in 2006 as a result of the loss at Creative Homeowner.
Similarly, the segment's gross profit in the
third quarter was 40.1% of sales, down from 43.7% a year ago, reflecting
the impact of Creative Homeowner results.
?New Fun Kits, innovative merchandising and
strong sell-through helped Dover combat a soft retailing environment,
but not enough to maintain the momentum from the previous quarter,?
said Mr. Conway. ?Creative Homeowner had
success expanding its crafts line, but faced the headwind of reduced
traffic at home improvement centers. On the other hand, REA's
quarter was positive from beginning to end. With a strong flow of new
products and continued merchandising innovation from all three
businesses, I look forward to a busy fall season.?
Outlook
?Three-quarters of the way through our 2007
fiscal year, we are running ahead of last year and poised for a strong
finish,? said Mr. Conway. ?We
are, however, adjusting our guidance to reflect the past quarter's
performance. As we look to the close of the year, we are as excited as
ever about the opportunities in our key markets and our ability to reach
out to new customers and new readers. Our book manufacturing segment
continues to win business through quality and service while setting new
standards for operating efficiency. Our publishing businesses are
delivering attractive, targeted products and traffic-building programs
of proven effectiveness.
?For the fourth quarter of fiscal 2007, we
expect sales of $89 million to $93 million, an increase of 7% to 11%
over last year's 14-week fourth quarter. And
we expect fourth-quarter earnings of $.86 to $.91 per diluted share, an
increase of 13% to 20% over last year. As a result, for fiscal 2007
overall, we expect total sales of between $303 million and $307 million,
representing sales growth of 13% to 14% over the previous 53-week year.
And we expect fiscal 2007 earnings per share of between $2.15 and $2.20,
an increase of between 10% and 13% from earnings of $1.95 per diluted
share in fiscal 2006, excluding the effect of the reversal of a tax
accrual, which added $.30 to fourth-quarter and full-year earnings in
2006.
?In addition to measuring our performance by
generally accepted accounting principles, we also track several non-GAAP
measures including EBITDA (earnings before interest, taxes, depreciation
and amortization) to provide additional insight into the company's
operating cash flow performance. This measure should be considered in
addition to, not a substitute for or superior to measures of financial
performance prepared in accordance with GAAP. For the first nine months
of fiscal 2007, Courier's EBITDA was $41.3
million, up 21% from the same period in 2006. For the full year of 2007
we expect EBITDA to be between $64 million and $65 million. This would
represent an increase of 21% to 23% for the year.?
About Courier Corporation
Courier Corporation prints, publishes and sells books. Headquartered in
North Chelmsford, Massachusetts, Courier has two business segments,
full-service book manufacturing and specialty book publishing. For more
information, visit www.courier.com.
This news release includes forward-looking statements.Statements
that describe future expectations, plans or strategies are considered ?forward-looking
statements? as that term is defined under the
Private Securities Litigation Reform Act of 1995 and releases issued by
the Securities and Exchange Commission.The words ?believe,??expect,??anticipate,??intend,??estimate?
and other expressions, which are predictions of or indicate future
events and trends and which do not relate to historical matters identify
forward-looking statements.Such statements are subject to risks
and uncertainties that could cause actual results to differ materially
from those currently anticipated.Factors that could affect
actual results include, among others, changes in customers'
demand for the Company's products, including
seasonal changes in customer orders and shifting orders to lower cost
regions, changes in market growth rates such as the housing market,
changes in raw material costs and availability, pricing actions by
competitors and other competitive pressures in the markets in which the
Company competes, consolidation among customers and competitors, success
in the execution of acquisitions and the performance and integration of
acquired businesses, changes in operating expenses including medical and
energy costs, changes in technology including migration from paper-based
books to digital, difficulties in the start up of new equipment or
information technology systems, changes in copyright laws, changes in
tax regulations, changes in the Company's
effective income tax rate, and general changes in economic conditions,
including currency fluctuations and changes in interest rates.Although
the Company believes that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could be inaccurate,
and therefore, there can be no assurance that the forward-looking
statements will prove to be accurate.The forward-looking
statements included herein are made as of the date hereof, and the
Company undertakes no obligation to update publicly such statements to
reflect subsequent events or circumstances.
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