Courier Corporation (Nasdaq: CRRC), one of America’s leading
book manufacturers and specialty publishers, today announced
results for the quarter ended June 25, 2011, the third quarter of
its 2011 fiscal year. Revenues were $61.9 million, down 5% from
last year’s third-quarter sales of $64.9 million, helped by solid
gains in textbook sales but hurt by the continuing fallout from the
bankruptcy proceedings of one of the nation’s largest
booksellers.
The loss of sales to Borders Group, Inc., was particularly
damaging to Courier’s Research & Education Association (REA)
publishing business, for which Borders had been a key customer.
Faced with continuing uncertainty about the fate of the remaining
Borders stores, Courier took a pre-tax, non-cash impairment charge
of $8.6 million or $.43 per diluted share, representing all of
REA’s goodwill. As a result, the company reported a third-quarter
net loss of $3.1 million or $.26 per diluted share. Excluding the
impairment charge, adjusted net income for the quarter was $2.0
million or $.17 per diluted share, up 15% from net income of $1.8
million or $.15 per diluted share in the third quarter of fiscal
2010. A reconciliation of adjusted net income and other non-GAAP
measures is included in the tables at the end of this release.
For the first nine months of fiscal 2011, Courier revenues were
$185.7 million, versus $186.9 in fiscal 2010. Net loss for the year
to date was $6.3 million or $.52 per diluted share, versus net
income of $6.0 million or $.50 per diluted share in the first nine
months of fiscal 2010. Excluding the third-quarter impairment
charge and second-quarter charges for restructuring following a
plant closing and a bad-debt provision related to Borders, adjusted
net income for the first nine months of fiscal 2011 was $4.0
million or $.34 per diluted share.
In Courier’s book manufacturing segment, robust demand for
college textbooks highlighted a strong quarter in the education
market. However, trade sales were down sharply, reflecting reduced
ordering in the wake of Borders’ store closings. Courier’s
publishing segment was similarly affected, with sales to Borders
down $650,000 in the third quarter and down $2.4 million for the
first nine months of fiscal 2011.
“The situation at Borders continued to be a major thorn in our
side,” said Courier Chairman and Chief Executive Officer James F.
Conway III. “The resulting shrinkage in trade demand affected both
our own publishing segment and the publishing customers we serve as
a manufacturer.
“Yet it was also a quarter of important accomplishments. With
new presses up and running at both our Indiana and Massachusetts
facilities, we extended our leadership in four-color technology
while meeting high demand for college textbooks and even faster
growth in customized textbook production. We had another solid
quarter with our largest religious customer, helping them to bring
Scriptures to more countries than ever. We published several books
that won prestigious industry awards. And we completed the painful
task of closing our one-color plant in Stoughton, Massachusetts,
achieving significant savings with no adverse impact on our service
to customers.
“Not least of all, we also maintained our strong cash flow and
healthy balance sheet. And as a result, we have once again declared
our quarterly dividend of $.21 per share, signaling a continuing
commitment to deliver value to shareholders.”
Book manufacturing: delivering with digital and
offset
Courier’s book manufacturing segment had third-quarter sales of
$55 million, down 3% from $56.8 million in last year’s third
quarter. The segment’s third-quarter operating income was $5.1
million, up 35% from $3.7 million a year ago. Gross profit in the
segment was $11.6 million or 21% of sales, versus $10 million or
17.6% of sales in fiscal 2010, reflecting an increased percentage
of four-color work as well as operating efficiencies made possible
by recent technology investments and the closing of the Stoughton
plant.
For fiscal 2011 to date, book manufacturing sales were $163.6
million, up slightly from $161.7 million in fiscal 2010. The
segment’s operating income through nine months was $11.3 million,
versus $12.2 million in fiscal 2010, excluding the second-quarter
restructuring costs.
The book manufacturing segment focuses on three publishing
markets: education, religious, and specialty trade. Sales to the
education market were up 10% in the quarter and up 6% through nine
months, reflecting higher sales of four-color textbooks for
colleges and universities. Sales to the religious market were down
3% from fiscal 2010’s third quarter, but up 6% at the company’s
largest religious customer. Through the first nine months of fiscal
2011, religious sales were up 4%. Sales to the specialty trade
market were down 23% from last year’s third quarter and down 9% for
the year to date, as publishers adjusted their ordering in response
to the problems at Borders and the impact of e-books.
In June, the company installed its third HP four-color digital
inkjet press at its Courier Digital Solutions facility in
Chelmsford, Massachusetts, immediately utilizing this added
capacity to meet sharply increased demand for customized textbooks.
Meanwhile it successfully redistributed the one-color work formerly
assigned to its Stoughton plant to other facilities with no impact
on quality or customer service. Courier expects the plant closing
to result in annualized pre-tax savings of approximately $4.5
million.
“The healthy market for college textbooks in general, and
customized editions in particular, drove the strongest growth in
our manufacturing segment,” said Mr. Conway. “In the religious
market, we had a very good quarter with our largest customer,
continuing the momentum from an outstanding second quarter and
extending our Scripture distribution partnership into more than 100
countries. But while we had expected trade sales to be off
following the Borders bankruptcy, the slump proved deeper than we
had anticipated, with many trade publishers holding back on
ordering and others reducing quantities in the face of a diminished
sales channel.
“The good news was that our increased four-color capacity proved
extremely useful both at our Kendallville, Indiana offset plant and
at Courier Digital Solutions, with both facilities operating around
the clock as the education market headed toward its seasonal peak.
While demand for elementary and high school textbooks continues to
be hampered by tight school budgets and the uncertainties
surrounding state textbook adoption programs, the college market
keeps chugging along, with customized textbooks growing even
faster.”
Publishing: channel erosion at Borders
Courier’s specialty publishing segment includes three
businesses: Dover Publications, a niche publisher with thousands of
titles in dozens of specialty trade markets; Creative Homeowner,
which publishes books on home design, decorating, landscaping and
gardening; and Research & Education Association (REA), a
publisher of test preparation books and study guides.
Third-quarter revenues for the segment were $9.9 million, down
9% from $10.9 million in last year’s third quarter, with reduced
sales to Borders accounting for more than two-thirds of the
shortfall. The segment’s operating loss for the quarter was $1.2
million, versus a loss of $0.4 million last year. For fiscal 2011
to date, segment sales were $30.8 million, versus $34.1 million for
the first nine months of fiscal 2010. The segment’s operating loss
through nine months was $3.2 million, excluding the second-quarter
bad-debt provision for Borders, versus a loss of $925,000 for last
year’s first nine months.
Fallout from the impact of the Borders bankruptcy continued to
affect all three publishing businesses, but was most acute at REA,
where sales were down 21% in the quarter and 29% for the first nine
months of the year. Despite this drop, REA remained profitable in
the quarter, helped by the continuing popularity of its AP Crash
Course books. However, given the current situation at Borders,
Courier recorded an impairment of all of REA’s goodwill through a
pre-tax, non-cash charge of $8.6 million or $.43 per diluted
share.
Meanwhile, results varied through other sales channels. Reduced
traffic at home improvement centers continued to hurt Creative
Homeowner sales, down 10% in the quarter and 11% year-to-date. But
at Dover, increases in online and international business partially
offset the decline in Borders sales; for the quarter, Dover’s sales
were off 6%.
“It has been a tough year for bricks-and-mortar booksellers and
the publishers who serve them,” said Mr. Conway. “In response, all
of our publishing businesses have become leaner and more focused;
as a result, for example, Creative Homeowner was able to cut its
third-quarter loss to less than half of last year’s. Equally
important, all three businesses continue to produce outstanding
titles, including two Gold winners in the 2011 Benjamin Franklin
Awards and a Bronze winner in the Independent Publisher Book
Awards. And our growth in online and international sales testifies
to our strong connection to readers and families everywhere.
“The uneasy economy continues to take its toll, but we are
fortunate to be able to produce exceptionally attractive books
quickly and economically due to our access to Courier Digital
Solutions. This capability will serve us even better when consumer
spending improves.”
Outlook
“Our fourth quarter is traditionally the strongest in our fiscal
year,” said Mr. Conway. “We expect that pattern to hold true this
year as well. Our relationships with world leaders in educational
and religious publishing have never been stronger, and with the
college textbook market in full swing, we are benefiting from our
recent investments in capacity through higher utilization of our
most efficient equipment.
“At the same time, the Borders situation continues to cast a
shadow over both of our business segments, and as a result we have
adjusted our guidance to reflect no further sales to Borders as
well as a continued shortfall in trade sales in the book
manufacturing segment. In addition, we recognize that e-books will
probably continue to account for an increasing percentage of trade
book sales.
“As a result, for the fourth quarter of fiscal 2011, we expect
earnings of $.36 to $.46 per diluted share, versus $.35 per diluted
share in last year’s fourth quarter.
“For fiscal 2011 overall, we expect to achieve total sales of
between $258 million and $263 million, versus $257 million in
fiscal 2010. And we expect earnings per diluted share of between
$.70 and $.80, excluding the second-quarter restructuring costs and
bad-debt provision, as well as the third-quarter impairment charge.
This compares with fiscal 2010 earnings of $.85 per diluted share,
excluding last year’s impairment charge.
“In addition to measuring our performance by generally accepted
accounting principles (GAAP), we also track several non-GAAP
measures including EBITDA (earnings before interest, taxes,
depreciation and amortization) as an additional indicator of 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.
In fiscal 2011, we expect EBITDA to be between $38 million and $40
million, excluding the second-quarter restructuring costs and
bad-debt provision, and the third-quarter impairment charge. This
compares with EBITDA of $38 million in fiscal 2010, excluding last
year’s impairment charge.
“Factors not incorporated into our guidance include the
possibility of future impairment or restructuring charges.”
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, 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, insolvency of key
customers or vendors, changes in the Company’s labor relations,
success in the execution of acquisitions and the performance and
integration of acquired businesses including carrying value of
intangible assets, restructuring and impairment charges required
under generally accepted accounting principles, 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 consumer
product safety regulations, changes in environmental regulations,
changes in tax regulations, changes in the Company’s effective
income tax rate and general changes in economic conditions,
including currency fluctuations, changes in interest rates, changes
in consumer confidence, changes in the housing market, tightness in
the credit markets and other risks, uncertainties and factors
discussed in the Company’s Form 10-Q, Form 10-K and in
the Company’s other filings with the U.S. Securities and Exchange
Commission (SEC) or in materials incorporated therein by reference.
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 CONDENSED STATEMENTS OF OPERATIONS
(Unaudited) (In thousands, except per share amounts) QUARTER
ENDED NINE MONTHS ENDED June 25, June 26, June 25, June 26, 2011
2010 2011 2010 Net sales $61,894 $64,919 $185,708 $186,902
Cost of sales 47,174 51,036 150,509 141,423
Gross profit 14,720 13,883 35,199 45,479
Selling and administrative expenses 11,242 10,877 36,353 35,374
Impairment charge (1) 8,608 - 8,608 -
Operating income (loss) (5,130 ) 3,006 (9,762 ) 10,105
Interest expense, net 194 130 645 367
Income (loss) before taxes (5,324 ) 2,876 (10,407 )
9,738 Income tax provision (benefit) (2,195 ) 1,106
(4,127 ) 3,749 Net income (loss) ($3,129 ) $1,770
($6,280 ) $5,989 Net income (loss) per diluted
share ($0.26 ) $0.15 ($0.52 ) $0.50 Cash
dividends declared per share $0.21 $0.21 $0.63
$0.63 Wtd. average diluted shares outstanding 11,996
11,962 11,978 11,937 SEGMENT INFORMATION:
Net
sales:
Book Manufacturing $54,997 $56,838 $163,627 $161,659 Specialty
Publishing 9,872 10,854 30,760 34,136 Elimination of intersegment
sales (2,975 ) (2,773 ) (8,679 ) (8,893 ) Total $61,894 $64,919
$185,708 $186,902
Operating income
(loss):
Book Manufacturing $5,050 $3,727 $3,799 $12,224 Specialty
Publishing (1,154 ) (424 ) (3,949 ) (925 ) Impairment charge (1)
(8,608 ) - (8,608 ) - Stock based compensation (366 ) (329 ) (1,072
) (1,012 ) Intersegment profit (52 ) 32 68 (182 )
Total ($5,130 ) $3,006 ($9,762 ) $10,105 (1) In the third
quarter of this fiscal year, the Company recorded a $8.6 million
non-cash, pre-tax impairment charge related to REA which on an
after-tax basis was $5.2 million, or $.43 per diluted share.
COURIER
CORPORATION SEGMENT RESULTS OF OPERATIONS (Unaudited) (In
thousands)
BOOK MANUFACTURING
SEGMENT
QUARTER ENDED NINE MONTHS ENDED June 25, June 26, June 25, June 26,
2011 2010 2011 2010 Net sales $54,997 $56,838 $163,627
$161,659 Cost of sales 43,445 46,847 138,810
128,856 Gross profit 11,552 9,991 24,817 32,803
Selling and administrative expenses 6,502 6,264
21,018 20,579 Operating income $5,050
$3,727 $3,799 $12,224
SPECIALTY PUBLISHING
SEGMENT
QUARTER ENDED NINE MONTHS ENDED June 25, June 26, June 25, June 26,
2011 2010 2011 2010 Net sales $9,872 $10,854 $30,760 $34,136
Cost of sales 6,653 6,992 20,446 21,276
Gross profit 3,219 3,862 10,314 12,860 Selling and
administrative expenses 4,373 4,286 14,263
13,785 Operating loss ($1,154 ) ($424 ) ($3,949 )
($925 ) COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (In thousands)
June 25, September 25,
ASSETS
2011 2010 Current assets: Cash and cash equivalents $48 $107
Investments 1,266 1,090 Accounts receivable 31,570 35,123
Inventories 41,053 39,933 Deferred income taxes 3,961 4,109 Other
current assets 5,905 2,388 Total current assets 83,803 82,750
Property, plant and equipment, net 101,095 103,009 Goodwill
and other intangibles 18,694 27,409 Prepublication costs 7,261
7,734 Deferred income taxes 2,737 - Other assets 1,241 1,292
Total assets $214,831 $222,194
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities: Current maturities of long-term debt
$1,788 $1,794 Accounts payable 11,959 14,399 Accrued taxes 514 617
Other current liabilities 15,145 15,358 Total current liabilities
29,406 32,168 Long-term debt 27,768 21,904 Deferred income
taxes - 1,385 Other liabilities 7,415 3,788 Total
liabilities 64,589 59,245 Total stockholders' equity 150,242
162,949 Total liabilities and stockholders' equity $214,831
$222,194 COURIER
CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands) For the Nine Months Ended June
25, June 26, 2011 2010 Operating Activities: Net income (loss)
($6,280 ) $5,989 Adjustments to reconcile net income (loss) to cash
provided from operating activities: Depreciation and
amortization 17,437 15,527 Impairment charge 8,608 - Stock-based
compensation 1,072 1,012 Deferred income taxes (3,974 ) 674 Gain on
disposition of assets - (183 ) Changes in other working capital
(3,840 ) (6,418 ) Other long-term, net 3,515 (249 )
Cash provided from operating activities 16,538 16,352
Investment Activities: Capital expenditures (11,670 )
(12,635 ) Business acquisition - (3,000 ) Prepublication costs
(3,218 ) (3,151 ) Proceeds on disposition of assets - 590
Short-term investments (176 ) (47 ) Cash used for investment
activities (15,064 ) (18,243 ) Financing Activities:
Long-term debt borrowings, net 5,858 8,819 Cash dividends (7,610 )
(7,548 ) Proceeds from stock plans 219 241
Cash provided from (used for) financing activities (1,533 ) 1,512
Decrease in cash and cash equivalents ($59 ) ($379 )
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) as additional indicators of the
company's operating cash flow performance. These measures should be
considered in addition to, not a substitute for or superior to,
measures of financial performance prepared in accordance with GAAP.
Non-GAAP reconciliation - EBITDA: Net income (loss) ($6,280
) $5,989 Income tax provision (benefit) (4,127 ) 3,749 Interest
expense, net 645 367 Depreciation and amortization 17,237 15,527
Impairment charge 8,608 - Restructuring costs 7,472 -
EBITDA $23,555 $25,632
COURIER
CORPORATION OTHER RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
(Unaudited) (In thousands, except per share amounts)
Quarter Ended Nine Months Ended June 25, 2011 June 25, 2011 Income
Income Net Income Income Income Net Income (Loss) Tax Net (Loss)
per (Loss) Tax Net (Loss) per Before Provision Income Diluted
Before Provision Income Diluted Taxes (Benefit)
(Loss) Share Taxes (Benefit) (Loss)
Share GAAP basis measures ($5,324 ) ($2,195 ) ($3,129 )
($0.26 ) ($10,407 ) ($4,127 ) ($6,280 ) ($0.52 ) Impairment
charge (1 ) 8,608 3,443 5,165 0.43 8,608 3,443 5,165 0.43
Restructuring costs (2 ) - - - 7,472 2,787 4,685 0.39 Bad-debt
provision (3 ) - - -
750 285 465 0.04
Non-GAAP measures $3,284 $1,248
$2,036 $0.17 $6,423
$2,388 $4,035 $0.34
BOOK MANUFACTURING
SEGMENT
Quarter Ended Nine Months Ended June 25, 2011 June 25, 2011 GAAP
Restruc- Non- GAAP Restruc- Non- Basis turing GAAP Basis turing
GAAP Measures Costs (2) Measures Measures
Costs (2) Measures Net sales $54,997 $54,997 $163,627
$163,627 Cost of sales 43,445 - 43,445
138,810 (7,061 ) 131,749
Gross profit 11,552 - 11,552 24,817 7,061 31,878 Selling and
administrative expenses 6,502 - 6,502
21,018 (411 ) 20,607
Operating income $5,050 - $5,050
$3,799 $7,472 $11,271
SPECIALTY PUBLISHING
SEGMENT
Quarter Ended Nine Months Ended June 25, 2011 June 25, 2011 GAAP
Bad-Debt Non- GAAP Bad-Debt Non- Basis Provision GAAP Basis
Provision GAAP Measures (3) Measures Measures
(3) Measures Net sales $9,872 $9,872 $30,760 $30,760
Cost of sales 6,653 - 6,653
20,446 20,446 Gross
profit 3,219 - 3,219 10,314 - 10,314 Selling and
administrative expenses 4,373 - 4,373
14,263 (750 ) 13,513
Operating income (loss) ($1,154 ) - ($1,154 )
($3,949 ) $750 ($3,199 ) (1 ) In
the third quarter of this fiscal year, the Company recorded a $8.6
million non-cash, pre-tax impairment charge related to
REA,representing all of REA's goodwill as well as $200,000 related
to the write-down of under-performing titles. (2 ) In the
second quarter of fiscal 2011, the Company closed its book
manufacturing plant in Stoughton, Massachusetts, due tothe impact
of technology and competitive pressures affecting the one-color
paperback books in which the plant specialized.Restructuring
charges included $4.4 million related to severance and pension
withdrawal liabilities and $3.1 million forlease termination and
other facility closure costs. (3 ) In the second quarter of
fiscal 2011, the Company recorded a $750,000 bad-debt provision
related to Borders Group, Inc.
(MM) (NASDAQ:CRRC)
Historical Stock Chart
From Aug 2024 to Sep 2024
(MM) (NASDAQ:CRRC)
Historical Stock Chart
From Sep 2023 to Sep 2024