A 9% increase in sales in its book manufacturing segment in the fourth quarter ended September 24, offset a 15.1% decline in publishing sales at Courier Corp., leading to a 5% revenue gain for the quarter and big jump in earnings. As a result, Courier finished fiscal 2011 with sales of $259.4 million, up from $257.1 million in fiscal 2010, although one-time impairment and restructuring charges and a $700,000 Borders writeoff led to a decline in earnings in the year to $134,000 compared to $7.1 million last year; excluding the charges income would have been $10.7 million.
Courier CEO James Conway said results at the company’s manufacturing and publishing segment reflected ongoing trends in the industry that include the Borders bankruptcy and shrinking retail shelf space plus the impact of digital reading devices. The closing of Borders led to a 9% decline in printing sales in its trade specialty segment and contributed to another weak performance in the publishing segment for the year where revenue fell 11%, to $40.8 million and the division had an operating loss of $4.1 million compared to a loss of $714,000 last year. Courier said the liquidation of Borders had direct and indirect impacts on its publishing business both in the quarter and the year. The direct impact came from the loss of $900,000 in sales to Borders itself; indirect consequences included reduced consumer purchasing at other bookstores and reduced remainder sales in a market temporarily saturated by the Borders liquidation. In the quarter, sales were down 14% at Dover, 20% at Creative Homeowner, and 20% at REA, for which Borders had been the second-largest customer. Despite its sales decline, REA remained profitable, but Dover and Creative Homeowner reported operating losses.
While publishing sales overall fell, Courier said it had double-digit increases in sales to online retailers and excellent sales growth at mass merchandising chains. The company also continued to invest in digitized content, not only by releasing e-books, but by improving its ability to reintroduce or repurpose out-of-print titles, and making the quality of its content more visible to online shoppers and search engines. Online study guides and apps are also in the works. Courier noted that after the fiscal year closed it took additional steps to lower the cost structure of its publishing operation. Today is the last day at Courier for Eric Zimmerman, head of the publishing group; publishing will now be under Rajeev Balakrishna who was promoted to senior v-p and general counsel, with overall responsibility for publishing operations. The company also announced that with the retirement of COO Bob Story, Peter Folger, Courier’s senior v-p and chief financial officer, is now of head of book manufacturing operations.
In the manufacturing segment last year sales were $230.2 million, up 3% from $222.8 million in fiscal 2010. The segment’s full-year operating income was up 18% to $22.5 million, excluding the restructuring costs, versus $19.1 million in fiscal 2010. Offsetting the decline in trade printing was a 9% increase in the education market and a 5% increase in the religion market.
Looking at fiscal 2012, Conway said: “Our greatest successes as a book manufacturer in fiscal 2011 came from playing to our strengths in the education and religious markets, and we expect to do more of the same in fiscal 2012. We also expect Courier Digital Solutions to continue to outpace the overall education market with its integrated solutions for customized textbook production. On the publishing side, having worked our way through the worst of the Borders collapse, we expect conditions in the traditional bookstore supply chain to gradually stabilize. At the same time, we continue to pursue additional relationships in non-bookstore channels, both bricks-and-mortar and online. And we will be courting consumers not only through this broader range of channels, but also through the release of e-books and other digital content alongside our print offerings.”
Overall, Courier expects fiscal 2012 sales of between $273 million and $286 million, an increase of between 5% and 10%, and earnings per diluted share of between $.75 and $1.05, which compares with its fiscal 2011 earnings of $.89 per diluted share, excluding the Borders receivable write-off.
