Courier Reports 1Q Results, Says Economy Not Out of the Woods Yet
Press release from the issuing company
NORTH CHELMSFORD, Mass., Jan. 17 - Courier Corporation, one of America's leading book manufacturers and specialty publishers, today announced results for the quarter ending December 29, 2001, the first quarter of the company's 2002 fiscal year. Courier reported net income of $2.6 million, or $.50 per diluted share, for the first quarter of fiscal 2002 versus $2.7 million, or $.51 per diluted share, in the prior year (adjusted for a real estate gain and adoption of a new accounting pronouncement - see table below). Sales for the quarter were $45.7 million compared to the previous year's first quarter of $54.2 million.
"Like virtually everyone in our industry, we were operating in a tough environment all fall,'' said Courier Chairman and Chief Executive Officer James F. Conway III. "While the Christmas season proved to be better than expected for book retailers, the reduced expectations going into the season led to aggressive inventory control measures by retailers and publishers alike, which translated into reduced orders for book manufacturers. Yet in the midst of this situation, we were notably successful at minimizing the impact of reduced orders on overall earnings. Tight cost controls, improved operating efficiencies, and strong performance by our Dover Publications subsidiary were critical to this success.''
Results by segment
Book manufacturing sales for the first quarter of fiscal 2002 were $38.3 million, a decrease of $7.8 million or 17% from fiscal 2001's first quarter. First quarter pretax income for the segment was $3.1 million, or $.41 per diluted share, down 18% from a year earlier. Sales to the religious market were off by 8%, primarily as a result of manufacturing issues which slowed shipments; with the resolution of these issues, the company expects shipments to accelerate significantly during the second quarter. Sales to the education market decreased by 21% from the prior year, a decline which cut across virtually every segment from elementary to college and appeared to be a direct consequence of the overall economic slowdown. Sales to the specialty trade publishing market were down 24%, reflecting continued caution on the part of booksellers, distributors and publishers and a resulting decline in inventories, despite a modest year-over-year increase in consumer demand for books.
"Our book manufacturing business made the best of a difficult situation this past quarter,'' said Conway. "While sales were off in all three markets (religion, education and specialty trade), our backlog in the religious market was up significantly at the end of the quarter, and gross profit as a percentage of sales actually rose by 1 percentage point over the same quarter a year ago.''
Dover Publications sales, at $8.5 million, were flat compared to fiscal 2001's first quarter, though the fiscal 2001 results were magnified by backlogs related to Courier's acquisition of Dover Publications in September 2000. On a comparable year-to-year basis, Dover orders were up 11%, in line with the company's expectations of double-digit growth both for the quarter and for the remainder of the year. Pretax income for the segment was $908,000, or $.11 per diluted share, nearly triple the results from the first quarter of fiscal 2001.
The company's customized education segment, consisting of Courier Custom Publishing, had sales of $90,000 for the quarter. Fiscal 2001 first-quarter sales in this segment were $422,000, which included revenues for The Home School, which Courier divested in March 2001. Courier Custom Publishing orders grew during the quarter, reflecting successes in marketing customized coursepacks to college professors and students. The segment lost $.02 per diluted share for the quarter, versus a loss of $.05 per diluted share in fiscal 2001.
"In light of the difficult economic environment, I am pleased with the way our organization has performed throughout this period,'' said Conway. "We have responded appropriately and efficiently to challenging circumstances, which include both the current recession and the continuing inventory consolidation among book retailers and distributors. We have also implemented new systems which will further increase our efficiency and responsiveness going forward, and should reinforce our already strong reputation as a service leader for the industry.
"Consumers have provided good news for the entire industry by continuing to buy books in record numbers. The contraction in the number of books in the supply chain can't continue forever. We anticipate that by the second half of our fiscal year demand will begin to grow again as we head into the busy manufacturing season.
"At the same time, we are increasingly reaping the benefits of our acquisition of Dover Publications and cultivation of Dover's extraordinary customer base through a new online marketing and retailing channel. We are particularly pleased with the rise in Dover's order flow, gross profit margin and pretax income, all of which were in line with our expectations and bode well for the remainder of the year and beyond. We continue to look for double- digit growth in sales and earnings as our ambitious program for Dover unfolds.''
While cautioning that the economy "is clearly not out of the woods yet,'' Conway remains optimistic about prospects for the remainder of the year. "We expect our second quarter earnings to exceed our first quarter and, for fiscal year 2002 as a whole, we expect sales in the range of $210 to $215 million, and earnings per diluted share in the range of $2.75 to $2.85.''
About Courier Corporation
Courier Corporation prints, publishes and sells books. Headquartered in North Chelmsford, Mass., Courier has three lines of business: full-service book manufacturing, specialty publishing and customized education. For more information, visit www.courier.com.
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