EX-99.1 2 b71438ncexv99w1.htm EX-99.1 PRESS RELEASE DATED JULY 29, 2008 exv99w1
Exhibit 99.1
(NASHUA LOGO)
         
Contact:
  Tom Brooker/John Patenaude   Rich Coyle
 
  Nashua Corporation   Sard Verbinnen & Co
 
  847-318-1797/603-880-2145   212-687-8080
NASHUA REPORTS SECOND QUARTER 2008 RESULTS
     NASHUA, N.H., July 29, 2008 — Nashua Corporation (NASDAQ: NSHA), a manufacturer and marketer of labels, thermal specialty papers and imaging products, today announced financial results for the second quarter ended June 27, 2008.
Net sales for the second quarter of 2008 were $67.0 million, compared to $67.7 million for the second quarter of 2007. Gross margin for the second quarter of 2008 was $11.3 million, or 16.9%, compared to $12.3 million, or 18.2%, for the second quarter of 2007. Income from continuing operations before income taxes was $0.5 million in the second quarter of 2008 compared to income from continuing operations before income taxes of $2.1 million in the second quarter of 2007. Net income was $0.3 million in the second quarter of 2008, or $0.06 per share, compared to net income of $1.3 million, or $0.21 per share, in the second quarter of 2007. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $1.4 million for the second quarter of 2008 compared to $3.3 million for the second quarter of 2007. The results for the second quarter of 2008 include severance expense of $0.6 million related to a reduction in workforce and $0.2 million of environmental-related expense.
Net sales for the six months ended June 27, 2008 were $130.9 million, compared to $132.9 million for the first six months of 2007. Gross margin for the first six months of 2008 was $21.2 million, or 16.2%, compared to $23.7 million, or 17.9%, for the first six months of 2007. Loss from continuing operations before income taxes for the first six months of 2008 was $0.1 million compared to income from continuing operations before income taxes of $3.2 million in the first six months of 2007. Net loss was $0.1 million for the first six months of 2008, or $0.01 per share, compared to net income of $2.2 million, or $0.36 per share, for the first six months of 2007. EBITDA was $2.4 million for the first six months of 2008 compared to $5.7 million for the first six months of 2007.
Business Segment Highlights
Nashua’s Label segment, which prints and converts product for the grocery, food service, retail, transportation, entertainment and general industrial markets, reported net sales for the second quarter of 2008 of $25.1 million and gross margin of $4.0 million, or 15.8%. Net sales for the second quarter of 2007 were $28.4 million and gross margin was $5.3 million, or 18.5%.
The Label segment sales declined 11.6% from the second quarter of 2007. The decrease is primarily attributable to a decline in Nashua’s automatic identification product line as a result of lower volume due to the slowing economy and the loss of a customer. Margins in the Label segment were negatively impacted by the lower volume and competitive pricing in the marketplace.
Nashua’s Specialty Paper segment, which includes the paper coating and converting businesses, produces a wide range of applications for labeling, packaging, ticketing and point of sale transactions, thermal, dry gum and heat-seal products for use in the transportation, retail, gaming, shipping and delivery,

 

 

2
entertainment, medical and distribution industries. The Specialty Paper segment reported net sales for the second quarter of 2008 of $42.6 million and gross margin of $7.2 million, or 16.8%. Net sales for the second quarter of 2007 were $40.0 million and gross margin was $6.8 million, or 17.1%.
The Specialty Paper segment sales increased 6.5% over the second quarter of 2007. The improvement was primarily a result of increased sales in the thermal point of sale and thermal facesheet product lines. Gross margin dollars increased as a result of the increased volume. The gross margins decreased as a percent of sales due to competitive pricing pressures.
Thomas Brooker, President and Chief Executive Officer, stated, “While sales have been negatively impacted by a slowing economy, we continue to focus our efforts to increase sales and improve production efficiencies to maintain profitability. During the second quarter, we reduced our workforce to further streamline our operation.”
Use of Non-GAAP Measures
EBITDA is presented as supplemental information that the management of Nashua believes may be useful to some investors in evaluating the Company because it is widely used as a measure of evaluating a company’s operating performance, as well as to evaluate its operating cash flow. EBITDA is used by management in the computation of ratios utilized for financing purposes and for planning and forecasting in future periods. EBITDA is calculated by adding net interest expense, income tax expense, depreciation and amortization back into net income. EBITDA should not be considered a substitute either for net income, as an indicator of Nashua’s operating performance, or for cash flow, as a measure of Nashua’s liquidity. In addition, because all companies may not calculate EBITDA in exactly the same manner, the presentation here may not be comparable to other similarly titled measures of other companies.
About Nashua
Nashua Corporation manufactures and markets a wide variety of specialty imaging products and services to industrial and commercial customers to meet various print application needs. The Company’s products include thermal coated papers, pressure-sensitive labels, colored copier papers, bond, point of sale, ATM and wide format papers, entertainment tickets, as well as ribbons for use in imaging devices. Additional information about Nashua Corporation can be found at www.nashua.com.
Forward-looking Statements
This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. When used in this press release, the words “plan,” “should,” “will,” “expects,” “anticipates” and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, but are not limited to, the Company’s future capital needs and resources, fluctuations in customer demand, intensity of competition from other vendors, timing and acceptance of new product introductions, delays or difficulties in programs designed to increase sales and profitability, general economic and industry conditions, and other risks set forth in the Company’s filings with the Securities and Exchange Commission, and the information set forth herein should be read in light of such risks. In addition, any forward-looking statements represent the Company’s estimates only as of the date of this press release and should not be relied upon as representing the Company’s estimates as of any subsequent date. While the Company may elect to update forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so, even if its estimates change.

 

 

Second Quarter 2008 Earnings Results
NASHUA CORPORATION SUMMARY RESULTS OF OPERATIONS
                                 
Periods ended June 27 and June 29, respectively   Three Months     Six Months  
Dollars in thousands, except per share amounts (Unaudited)   2008     2007     2008     2007  
Net sales
   $ 67,003     $ 67,688     $ 130,929     $ 132,857  
Cost of products sold
     55,676       55,390       109,744       109,110  
 
                        
 
                                
Gross margin
   $ 11,327     $ 12,298     $ 21,185     $ 23,747  
Gross margin %
     16.9 %     18.2 %     16.2 %     17.9 %
 
                                
Selling, distribution and administrative expenses
     10,916       10,258       20,929       20,438  
Research and development expenses
     178       171       364       445  
Loss from equity investment
     92       69       129       140  
Interest expense
     128       256       291       340  
Interest income
     (24 )     (61 )     (72 )     (69 )
Change in fair value of interest rate swap
     (241 )     (159 )     119       (123 )
Other income (1)
     (223 )     (331 )     (487 )     (615 )
 
                        
 
                                
Income (loss) from continuing operations before income taxes
     501       2,095       (88 )     3,191  
 
                                
Income tax provision (benefit)
     201       843       (35 )     1,302  
 
                        
 
                                
Income (loss) from continuing operations
     300       1,252       (53 )     1,889  
 
                                
Income from discontinued operations, net of taxes (2)
     —       —       —       289  
 
                        
 
                                
Net income (loss)
   $ 300     $ 1,252     $ (53 )   $ 2,178  
 
                        
 
                                
Earnings per share:
                                
Income (loss) from continuing operations
   $ 0.06     $ 0.21     $ (0.01 )   $ 0.31  
 
                                
Income from discontinued operations
     —       —       —       0.05  
 
                        
 
                                
Net income (loss) per common share
   $ 0.06     $ 0.21     $ (0.01 )   $ 0.36  
 
                        
Average common shares
     5,412       6,069       5,404       6,105  
 
                        
 
                                
Income (loss) per common share from continuing operations assuming dilution
   $ 0.05     $ 0.20     $ (0.01 )   $ 0.30  
Income per common share from discontinued operations assuming dilution
     —       —       —       0.05  
 
                        
 
                                
Net income (loss) per common share assuming dilution
   $ 0.05     $ 0.20     $ (0.01 )   $ 0.35  
 
                        
Average common and potential common shares
     5,518       6,139       5,404       6,171  
 
                        
 
(1)   Other income for the three and six months ended June 27 2008 and June 29, 2007 represents royalty income related to the 2006 sale of toner formulations and recognition of the deferred gain on the 2006 sale of New Hampshire real estate.
 
(2)   Income from discontinued operations for the six months ended June 29, 2007 represents the reimbursement of our deductible related to the Cerion litigation which was dismissed by the courts.

 

Second Quarter 2008 Earnings Results
NASHUA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
                 
    (Unaudited)        
    June 27     December 31  
Dollars in thousands   2008     2007  
Assets
                
Cash and cash equivalents
   $ 7,390     $ 7,388  
Accounts receivable
     29,132       29,375  
Inventories
     21,853       19,998  
Other current assets
     2,603       2,828  
 
            
Total current assets
     60,978       59,589  
 
                
Plant and equipment, net
     21,885       23,291  
Goodwill, net of amortization
     31,516       31,516  
Intangibles, net of amortization
     291       331  
Other assets
     12,734       12,975  
 
            
Total assets
   $ 127,404     $ 127,702  
 
            
 
                
Liabilities and Shareholders’ Equity
                
Accounts payable
   $ 15,838     $ 14,432  
Accrued expenses
     8,493       9,185  
Current maturities of long-term debt
     2,500       1,875  
Current maturities of notes payable
     31       31  
 
            
Total current liabilities
     26,862       25,523  
 
                
Long-term debt
     10,300       10,925  
Notes payable
     3       18  
Other long-term liabilities
     28,362       29,728  
 
            
Total long-term liabilities
     38,665       40,671  
 
                
Common stock and additional capital
     20,625       20,203  
Retained earnings
     59,595       59,648  
Accumulated other comprehensive loss:
                
Minimum pension liability adjustment(a)
     (18,343 )     (18,343 )
 
            
Total shareholders’ equity
     61,877       61,508  
 
            
 
                
Total liabilities and shareholders’ equity
   $ 127,404     $ 127,702  
 
            
 
(a)   Our minimum pension liability adjustment represents an increase in our minimum pension liability resulting from changes to our pension plans in 2007.

 

Second Quarter 2008 Earnings Results
NASHUA CORPORATION
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
                                 
Periods ended June 27 and June 29, respectively   Three Months     Six Months  
In thousands (Unaudited)   2008     2007     2008     2007  
 
                                
Net income (loss) from continuing operations
   $ 300     $ 1,252     $ (53 )   $ 1,889  
Add back:
                                
Interest expense
     128       256       291       340  
Interest income
     (24 )     (61 )     (72 )     (69 )
Change in fair value of interest rate swap
     (241 )     (159 )     119       (123 )
Income tax provision (benefit)
     201       843       (35 )     1,302  
Depreciation and amortization
     1,052       1,149       2,103       2,368  
 
                        
 
                                
Earnings from continuing operations before interest, taxes, depreciation and amortization
   $ 1,416     $ 3,280     $ 2,353     $ 5,707  
 
                        

 

Second Quarter 2008 Earnings Results
NASHUA CORPORATION SELECTED FINANCIAL DATA
                                 
Periods ended June 27 and June 29, respectively   Three Months     Six Months  
Dollars in thousands (Unaudited)   2008     2007     2008     2007  
NET SALES
                                
 
                                
Label Products
   $ 25,144     $ 28,448     $ 51,170     $ 56,667  
Specialty Paper Products
     42,646       40,030       81,234       78,067  
All Other
     920       1,097       2,013       2,005  
 
                                
Reconciling Items:
                                
Eliminations
     (1,707 )     (1,887 )     (3,488 )     (3,882 )
 
                        
Net sales
   $ 67,003     $ 67,688     $ 130,929     $ 132,857  
 
                        
 
                                
GROSS MARGIN
                                
 
                                
Label Products
   $ 3,980     $ 5,273     $ 7,785     $ 10,326  
Specialty Paper Products
     7,174       6,826       13,067       13,150  
All Other
     188       199       354       309  
 
                                
Reconciling Items:
                                
Eliminations
     (15 )     —       (21 )     (38 )
 
                        
 
Total gross margin from continuing operations
   $ 11,327     $ 12,298     $ 21,185     $ 23,747  
 
                        
 
                                
DEPRECIATION AND AMORTIZATION
                                
 
                                
Label Products
   $ 457     $ 516     $ 924     $ 1,055  
Specialty Paper Products
     501       506       1,003       1,018  
Reconciling Item:
                                
Corporate
     94       127       176       295  
 
                        
Total depreciation and amortization
   $ 1,052     $ 1,149     $ 2,103     $ 2,368  
 
                        
 
                                
INVESTMENT IN PLANT AND EQUIPMENT
                                
 
                                
Label Products
   $ 52     $ 59     $ 155     $ 107  
Specialty Paper Products
     34       150       171       342  
Reconciling Item:
                                
Corporate
     45       16       330       54  
 
                        
Total Investment in plant and equipment
   $ 131     $ 225     $ 656     $ 503  
 
                        
 
                                
PENSION AND POSTRETIREMENT EXPENSE
                                
 
                                
Label Products
   $ 67     $ 79     $ 134     $ 157  
Specialty Paper Products
     48       58       96       117  
Reconciling Item:
                                
Corporate
     169       225       337       450  
 
                        
Total pension and postretirement expense
   $ 284     $ 362     $ 567     $ 724