Revenue in LSC Communications’ book group dropped 21.4% in the first quarter ended March 31, 2020, falling from $260 million in last year’s first period to $204 million in the most recent quarter.
The printing giant, which filed Chapter 11 bankruptcy protection on April 13, attributed the decline to lower educational book volumes and temporary declines in its religion book business, which it attributed to moving the primary production of bibles to a different facility. The move, LSC said, has been completed. The decline in educational sales was due to “relatively high” inventory levels at publishers and in the distribution channel.
Book revenue was also negatively affected by a $9 million decline in pass-through paper costs. One bright spot for the book group, however, was increased business in its trade segment.
For the entire company, sales in the quarter fell 17%, to $701 million. The net loss was cut to $51 million, from $125 million in the first quarter of 2019, though both periods include one-time charges.
Like some publicly-held publishers, LSC was unable to provide any guidance to how its business will fare in 2020. In its quarterly filing with the Securities & Exchange Commission, the company listed a number of challenges confronting the company which could have “a material adverse effect” on its financial performance in the year.
Looking at conditions in its book group, LSC pointed to such issues as the potential for schools not to reopen in the fall due to Covid-19, something that would negatively impact the manufacturing of educational materials. Continued closure of physical bookstores and of other retailers that sell books could also hurt trade sales.
LSC said it does have enough financial liquidity to get it through the bankruptcy process.