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Courier Corporation (CRRC)

F1Q09 Earnings Call

January 14, 2009 2:30 pm ET


James F. Conway, III – Chairman of the Board, President & Chief Executive Officer

Robert P. Story, Jr. – Executive Vice President, Chief Operating Officer & Director

Peter M. Folger – Chief Financial Officer & Senior Vice President


Jamie Clement – Sidoti & Company

Paul Hogan – Fenimore Asset Management



Welcome to the quarterly one 2009 Courier Corporation earnings conference call. My name is Nancy and I will be your coordinator for today. At this time all participants are in a listen only mode. We will be facilitating a question and answer session towards the end of this conference. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call Mr. Jim Conway, Chairman and Chief Executive Officer.

James F. Conway, III

Welcome to Courier Corporation’s first quarter conference call. I’m Jim Conway, Chairman and Chief Executive Officer. Thank you for joining us. We released our earnings at about nine o’clock this morning. I hope you have all had a chance to see the results. Faced with an unusually challenging economy we had a mixed quarter that was far from what we wanted but better than many other companies were experiencing at the same time.

Our publishing businesses all reported sales decline with Creative Homeowner once again, the hardest hit. On the other hand, we had an up quarter in book manufacturing with healthy growth in sales of Four-color books for the education and trade markets and modest growth in religious books. As previously announced, we’ve taken a variety of steps both during the quarter and as recently as this week to bring our costs in line with market conditions in both of our business segments.

Painful as some of these steps have been we are confident that they will keep us on the firmest possible footing going forward. We also had our annual shareholders meeting this morning and I’m pleased to report that all votes passed. We reelected three directors and reappointed Deloitte & Touche as auditors, all by a wide margin. I would like to thank all of you for your support.

Courier’s Chief Operating Officer Bob Story is here with me today and Peter Folger, Courier’s Chief Financial Officer is also here with us. Bob will begin with an overview of financial results for the first quarter. I will then discuss the key issues driving our business. I’ll also provide an outlook for the remainder of the year. Bob, please go ahead.


Before I begin I’ll remind you that during this call we will be making forward-looking statements relating to the company’s financial goals and business environment. Actual results may differ materially. Information about the factors that could potentially impact our financial results is included in today’s press release and in our filings with the SEC including our 2008 annual report on Form 10K.

We encourage you to review those factors in conjunction with any forward-looking statements we make today. During this call we will discuss certain non-GAAP financial measures including EBTIDA. You will find additional disclosures regarding these non-GAAP measures in our press release including reconciliations of these measures with comparable GAAP measures. These non-GAAP measures should be considered in addition to not as a substitute for or superior to GAAP financial measures.

Also during this call whenever we refer to earnings per share it will be on a diluted basis. That’s the administrative stuff and now the results. This quarter we were operating in a very difficult economic environment that challenged most every business in the US and most certainly challenged all of us in the book business. For Courier the impact was felt most significantly in our publishing segment where sales were down 25% compared to a year ago.

Contrasting this, sales were up 2% in our book manufacturing segment where we experienced weakness in certain products or markets but we enjoyed continued growth in two key categories: testaments for the religious market; and textbooks for the educational market. Consolidates sales for the first quarter were $60 million down 5% from last year. Earnings per share were $0.06 in the quarter compared to $0.11 last year caused by a decrease in earnings in the publishing segment resulting from the large drop in sales.

EBTIDA was $6.7 million in the quarter down 13% from last year. Now, I’ll break these results down between our two business segments. Before I begin, I have to mention that we have begun measuring segment profitability on the basis of operating income rather than pre-tax income which means we no longer allocate interest income or expense for the segment. We believe that this is a better measure for comparing operating results. Prior year numbers have been adjusted to be consistent with this method.

Now, I’ll start by reviewing the results of the specialty publishing segment which is comprised of Dover Publications, Research & Education Association or REA; and Creative Homeowner. Specialty publishing sales were $11.5 million in the first quarter down $3.8 million or 25% from last year with the largest decline at Creative Homeowner where sales were down 41%.

Our biggest business challenge has been Creative Homeowner which publishes and distributes books on home design, decorating and gardening through a variety of channels, the largest being home center chains. Creative’s sales have been under severe pressures since the housing market began its downturn two years ago and as the housing market worsened so did Creative’s results. In response we took a variety of measures at Creative during the second half of 2008 including headcount reductions, inventory write downs and a tightening of editorial focus.

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