Courier Reports Record Q2 Earnings: 32% Over Prior Year
Press release from the issuing company
NORTH CHELMSFORD, Mass.--April 17, 2003-- Courier Corporation, one of America's leading book manufacturers and specialty publishers, today announced record earnings for the quarter ended March 29, 2003, the second quarter of the company's 2003 fiscal year. Courier reported income from continuing operations of $3.8 million, or $.70 per diluted share, an increase of 32% over corresponding second-quarter results in the prior year of $2.9 million, or $.54 per diluted share. Sales from continuing operations were $48.6 million for the quarter, up 1% from second-quarter sales of $48.1 million in fiscal 2002.
For the first six months of Courier's 2003 fiscal year, earnings from continuing operations were up 35% to $7.5 million or $1.40 per diluted share, from $5.6 million or $1.06 per diluted share for the first half of fiscal 2002. Six-month sales were $97.4 million, up 4% from the first half of fiscal 2002. These figures do not include results from Courier Custom Publishing, which was sold by Courier in December 2002 and has since been accounted for as a discontinued operation.
"The second quarter of fiscal 2003 once again found us on track and benefiting from renewed signs of life in several of our book manufacturing markets," said Courier Chairman and Chief Executive Officer, James F. Conway III. "While market growth remained uneven, we made the most of our opportunities and were able to exceed consensus earnings estimates for the quarter. In book manufacturing, we were particularly pleased to see double-digit year-over-year sales growth in specialty trade, which had been our hardest-hit market during the downturn. Meanwhile, our specialty publishing segment achieved excellent performance in direct-to-consumer sales at Dover Publications and recorded a 32% increase in pretax income.
"On a company-wide level, we continued to grow stronger both financially and organizationally. Our gross profit percentage rose over last year to 32% for both the second quarter and the first six months of the fiscal year. We continued to improve on our already excellent financial condition, finishing the quarter with $13 million in cash, up $7.3 million so far this year. And we strengthened our Board of Directors with the addition of Ronald L. Skates, who enjoyed a long and successful career as president and CEO of Data General Corp. and brings a new perspective and considerable financial expertise to Courier."
Results by segment
Book manufacturing sales for the second quarter of fiscal 2003 were $41.1 million, an increase of 2% over last year's second quarter. Second-quarter pretax income for the segment was $4.7 million, up 30% from a year earlier. For the first six months of fiscal 2003, book manufacturing sales were up 5%, and pretax income was up 39%.
As a book manufacturer, Courier serves publishers in three markets: religious, education and specialty trade. Sales to the religious market were off 6% in the second quarter, but up 4% for the first six months, in line with previous projections. Sales to the education market were up 6% for the second quarter and 9% for the fiscal year to date. Sales in higher education (which represents the majority of Courier's education sales) were up 20% for the quarter and 17% for the first six months of fiscal 2003, reflecting renewed demand for reprints of college texts following the previous year's inventory reductions. In the elementary/high school market, sales were off 20% from fiscal 2002's second quarter, and down 10% for the first six months, reflecting a lighter schedule of state textbook adoptions and tight state budgets this year. Sales to the specialty trade market were up 11% over fiscal 2002 for the second quarter, and 9% on a year-to-date basis. Many segments of the specialty trade market showed renewed strength. Healthy demand for game books for Playstation® 2 and other platforms offset slow sales of books on computers and technology, which were hampered by the continuing slump in the technology sector of the economy.
"There were several significant stories in book manufacturing this quarter," said Conway. "Externally, we had an improving picture among specialty trade publishers, plus a growing demand for four-color production for educational books. Internally, we continued to press forward with innovations in process management and increases in plant productivity, which enabled us to deliver outstanding service. All these factors contributed to an increase in our gross profit percentage in book manufacturing, which is now up 250 basis points for the year, to 28%."
Dover Publications, Courier's specialty book publishing segment, reported pretax income of $1.2 million for the quarter, an increase of 32% over fiscal 2002's second-quarter figure of $0.9 million. Sales for the quarter were $9.1 million, up 3% from last year's second quarter and $17.4 million in the first half of the year, equal to last year's comparable period. Direct-to-consumer sales, which comprise approximately 14% of Dover's total sales were up 34% for the second quarter and 22% for the first six months of fiscal 2003. These gains were offset by mixed results from retailers, with sales down at large bookstore chains but up at craft stores, gift shops and other non-bookstore retailers.
"Dover's increasingly effective direct marketing to consumers provided the spark that enabled it to post impressive results during the quarter," said Mr. Conway. "Innovative catalogs, better list management, and new e-commerce capabilities helped drive significant direct-to-consumer sales gains and steadily expand our customer universe. Online consumer sales in particular were up 46% for the first six months of fiscal 2003. We also took significant steps to enhance our support for trade customers, with the result that our SalesPartner electronic direct marketing program grew to more than 2,000 members. Finally, through declining product costs related to the sale of inventory from the original acquisition and a healthy direct sales mix, we succeeded in ratcheting up Dover's gross margins in the quarter by 200 basis points."
"With two very good quarters in hand, we are confident that we will reach our earnings goals for the year," said Mr. Conway. "In fact, because our second quarter outperformed expectations, we are raising our earnings guidance for fiscal 2003 by $.05 per diluted share. We look forward to continued gradual recovery in the economy in general and in book manufacturing in particular. We are still investing in equipment to meet renewed demand while working hard to maximize our operating efficiency. In specialty publishing, we are capitalizing on our direct customer channels while expanding our base among retailers and working closely with them to identify new opportunities. Dover is stronger than ever both editorially and in marketing, and we are as excited as ever about its long-term prospects.
"For fiscal year 2003 as a whole, we expect Courier's sales from continuing operations to be in the range of $208 to $213 million, representing an increase of approximately 4% to 6% over comparable fiscal 2002 sales. And after increasing our guidance by $.05 per diluted share, we now expect earnings per diluted share from continuing operations to be in the range of $3.45 to $3.60, up approximately 13% to 18% from last year's comparable earnings of $3.06 per diluted share. In the face of war overseas and an uncertain domestic economy, we are proud of our accomplishments to date, and delighted to be on track for Courier's seventh consecutive year of double-digit earnings growth," Conway concluded.
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