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 sales in 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.� Soft housing sector dampens specialty
publishing results 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. COURIER CORPORATION CONSOLIDATED STATEMENTS OF
INCOME (Unaudited) (In thousands, except per share amounts) �
QUARTER ENDED NINE MONTHS ENDED June 30, June 24, June 30, June 24,
2007 � 2006 � 2007 � 2006 � � Net sales $ 73,411 $ 70,424 $ 214,059
$ 185,635 Cost of sales � 48,986 � � 48,310 � � 145,860 � � 127,115
� � Gross profit 24,425 22,114 68,199 58,520 � Selling and
administrative expenses 13,402 12,560 41,106 35,363 Interest
expense (income), net � 419 � � 168 � � 1,117 � � (80 ) � Income
before taxes 10,604 9,386 25,976 23,237 � Provision for income
taxes � 3,923 � � 3,330 � � 9,663 � � 8,301 � � Net income $ 6,681
� $ 6,056 � $ 16,313 � $ 14,936 � � Net income per diluted share $
0.53 � $ 0.48 � $ 1.29 � $ 1.19 � � Cash dividends declared per
share $ 0.18 � $ 0.12 � $ 0.54 � $ 0.36 � � Wtd. average diluted
shares outstanding 12,708 12,607 12,684 12,582 � SEGMENT
INFORMATION: � Net sales: Book Manufacturing $ 58,497 $ 57,700 $
168,923 $ 155,365 Specialty Publishing 17,917 15,243 52,835 36,426
Intersegment sales � (3,003 ) � (2,519 ) � (7,699 ) � (6,156 )
Total $ 73,411 $ 70,424 $ 214,059 $ 185,635 � Income before taxes:
Book Manufacturing $ 10,147 $ 8,731 $ 23,915 $ 21,232 Specialty
Publishing 844 1,120 3,014 3,269 Stock based compensation (375 )
(359 ) (1,101 ) (1,055 ) Intersegment profit � (12 ) � (106 ) � 148
� � (209 ) Total $ 10,604 $ 9,386 $ 25,976 $ 23,237 COURIER
CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
(Dollars in thousands) � � June 30, September 30, ASSETS 2007 2006
� Current assets: Cash and cash equivalents $ 1,345 $ 1,483
Accounts receivable 46,832 46,002 Inventories 40,304 29,565
Deferred income taxes 3,886 3,703 Other current assets � 1,953 �
1,110 Total current assets 94,320 81,863 � Property, plant and
equipment, net 92,926 85,248 Goodwill and other intangibles 68,290
69,097 Prepublication costs 10,303 9,327 Other assets � 1,752 �
1,653 � Total assets $ 267,591 $ 247,188 � � LIABILITIES AND
STOCKHOLDERS' EQUITY � Current liabilities: Current maturities of
long-term debt $ 88 $ 88 Accounts payable 15,203 15,778 Accrued
taxes 558 3,362 Other current liabilities � 16,073 � 16,462 Total
current liabilities 31,922 35,690 � Long-term debt 27,251 17,222
Deferred income taxes 10,116 8,913 Other liabilities � 3,089 �
3,037 � Total liabilities � 72,378 � 64,862 � Total stockholders'
equity � 195,213 � 182,326 � Total liabilities and stockholders'
equity $ 267,591 $ 247,188 COURIER CORPORATION CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in
thousands) � � For the Nine Months Ended June 30, June 24, 2007
2006 � Operating Activities: Net income $ 16,313 $ 14,936
Adjustments to reconcile net income to cash provided from operating
activities: Depreciation and amortization 14,201 10,857 Stock based
compensation 1,101 1,055 Deferred income taxes 1,351 1,236 Changes
in working capital (16,305 ) (4,827 ) Other, net � (173 ) � (153 )
� Cash provided from operating activities � 16,488 � � 23,104 � �
Investment Activities: Capital expenditures (17,920 ) (14,821 )
Business acquisitions, net of cash acquired - (51,164 )
Prepublication costs � (4,327 ) � (2,737 ) � Cash used for
investment activities � (22,247 ) � (68,722 ) � Financing
Activities: Long-term borrowings, net 10,029 16,793 Cash dividends
(6,745 ) (4,439 ) Proceeds from stock plans 1,806 936 Excess tax
benefits from stock based compensation � 531 � � - � � Cash
provided from financing activities � 5,621 � � 13,290 � � Decrease
in cash and cash equivalents (138 ) (32,328 ) � Cash and cash
equivalents at the beginning of the period � 1,483 � � 34,038 � �
Cash and cash equivalents at the end of the period $ 1,345 � $
1,710 � � Non-GAAP measures - EBITDA: Net income $ 16,313 $ 14,936
Provision for income taxes 9,663 8,301 Interest expense (income),
net 1,117 (80 ) Depreciation and amortization � 14,201 � � 10,857 �
EBITDA $ 41,294 � $ 34,014 �
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