EX-99.1 2 b72790ncexv99w1.htm EX-99.1 PRESS RELEASE - "NASHUA REPORTS THIRD QUARTER 2008 RESULTS AND SHARE REPURCHASE PROGRAM DATED OCTOBER 30, 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 THIRD QUARTER 2008 RESULTS
AND SHARE REPURCHASE PROGRAM
          NASHUA, N.H., October 30, 2008 — Nashua Corporation (NASDAQ: NSHA), a manufacturer and marketer of labels, thermal specialty papers and imaging products, today announced financial results for the third quarter ended September 26, 2008.
          Net sales for the third quarter of 2008 were $66.2 million, compared to $67.6 million for the third quarter of 2007. Earnings before interest, taxes, depreciation and amortization (EBITDA), excluding a goodwill impairment charge, were $2.0 million for the third quarter of 2008 compared to $2.8 million for the third quarter of 2007. Gross margin for the third quarter of 2008 was $10.6 million, or 15.9%, compared to $11.6 million, or 17.1%, for the third quarter of 2007. Loss from continuing operations before income taxes for the third quarter of 2008 was $13.4 million compared to income from continuing operations before income taxes of $1.3 million for the third quarter of 2007. Net loss for the third quarter of 2008 was $13.7 million, or $2.52 per share, compared to net income of $0.9 million, or $0.16 per share, in the third quarter of 2007.
          The results for the third quarter of 2008 include a non-cash goodwill impairment charge of $14.1 million, $0.3 million related to the present value of lease commitments associated with the exit of the Cranbury, New Jersey distribution facility and $0.1 million of severance expense related to the closure of the company’s Jacksonville, Florida label converting facility and consolidation into the Company’s facilities in Omaha, Nebraska and Jefferson City, Tennessee. Excluding the non-cash goodwill impairment charge, income from continuing operations before income taxes for the third quarter of 2008 was $0.8 million.
          Net sales for the nine months ended September 26, 2008 were $197.2 million, compared to $200.5 million for the nine months ended September 28, 2007. EBITDA, excluding the goodwill impairment charge, was $4.3 million for the nine months ended September 26, 2008, compared to $8.5 million for the same period in 2007. Gross margin for the nine months ended September 26, 2008 was $31.7 million, or 16.1%, compared to $35.3 million, or 17.6%, for the nine months ended September 28, 2007. Loss from continuing operations before income taxes for the nine months ended September 26, 2008 was $13.5 million, compared to income from continuing operations before income taxes of $4.5 million for the nine months ended September 28, 2007. Net loss for the first nine months of 2008 was $13.7 million, or $2.54 per share, compared to net income of $3.0 million, or $0.52 per share, in the first nine months of 2007.
          Commenting on the results for the quarter, Thomas Brooker, President and Chief Executive Officer, stated, “We are operating in an exceedingly challenging business environment as the markets we serve have been significantly impacted by the economic downturn. We continue to focus our efforts towards profitable revenue growth and cost containment in order to maintain operating profitability.”

 

 

 2
Business Segment Highlights
          Nashua’s Label Products segment, which prints and converts product for the grocery, food service, retail, transportation, entertainment, and general industrial markets, reported net sales for the third quarter of 2008 of $25.9 million and gross margin of $3.9 million, or 15.1%. Net sales for the third quarter of 2007 were $27.8 million and gross margin was $5.0 million, or 17.9%.
          Net sales in the Label segment declined 6.8 percent in the third quarter of 2008 primarily as a result of the decline in the automatic identification product line mainly due to the loss of a major customer. Margins declined mainly due to lower volumes, competitive pricing pressures and severance cost related to the consolidation of our Jacksonville, Florida facility into our Omaha, Nebraska and Jefferson City, Tennessee manufacturing facilities.
          The Company’s Specialty Paper Products segment reported net sales in the third quarter of 2008 of $41.1 million and gross margin of $6.5 million, or 15.9%. Net sales in the third quarter of 2007 were $40.4 million and gross margin was $6.4 million, or 15.9%.
          Net sales in the Specialty Paper segment increased 1.9 percent in the third quarter of 2008. The sales increase resulted primarily from increased sales in our thermal point of sale product line. Gross margin as a percentage of net sales remained unchanged for the quarter.
Share Repurchase
          The Company announced that its Board of Directors has authorized the repurchase of up to one million shares of the company’s common stock from time to time on the open market. The timing and amount of any shares repurchased will be determined by Nashua’s management based on its evaluation of market conditions and other factors. The repurchase program may be suspended or discontinued at any time. The repurchase program will be funded using the Company’s working capital.
          Nashua has approximately 5.7 million shares of common stock outstanding as of September 26, 2008.
          Commenting on the share repurchase program, Mr. Brooker stated, “We believe that we have a strong financial position and are poised to take advantage of market opportunities. We will continue to focus on profitable revenue growth and cost containment. The repurchase of company shares represents an excellent long-term investment and demonstrates our commitment to enhancing shareholder value.”
Use of Non-GAAP Measures
          EBITDA is presented as supplemental information that management of Nashua Corporation 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.

 

 

 3
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, bond, point of sale, ATM and wide format papers, entertainment tickets, and ribbons for use in imaging devices. Additional information about Nashua Corporation can be found at www.nashua.com.
Forward-looking Statements
          This press contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, including statements regarding the Company’s intention to grow revenue on a profitable basis, control cost to maintain profitability, and repurchase shares of its common stock from time to time under the stock repurchase program. When used in this press release, the word “will,” “anticipate,” “should” 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 market price of the Company’s common stock prevailing from time to time, the Company’s cash flows from operations, general economic conditions, 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, the resolution of certain litigation matters 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.

 

 

Third Quarter 2008 Earnings Results
NASHUA CORPORATION
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION, AMORTIZATION AND GOODWILL IMPAIRMENT CHARGES
                                 
Periods ended September 26 and September 28, respectively   Three Months     Nine Months  
In thousands (Unaudited)   2008     2007     2008     2007  
Net income (loss) from continuing operations
   $ (13,689 )   $ 852     $ (13,742 )   $ 2,741  
Add back:
                                
Interest expense
     125       215       416       555  
Interest income
     (22 )     (48 )     (94 )     (117 )
Change in fair value of interest rate swap
     75       205       194       82  
Income tax provision
     307       475       272       1,777  
Goodwill Impairment
     14,142       —       14,142       —  
Depreciation and amortization
     1,033       1,123       3,136       3,491  
 
                        
 
                                
Earnings from continuing operations before interest, taxes, depreciation, amortization and goodwill impairment charges
   $ 1,971     $ 2,822     $ 4,324     $ 8,529  
 
                        

 

 

Third Quarter 2008 Earnings Results
NASHUA CORPORATION SUMMARY RESULTS OF OPERATIONS
                                 
Periods ended September 26 and September 28, respectively   Three Months     Nine Months  
Dollars in thousands, except per share amounts (Unaudited)   2008     2007     2008     2007  
Net sales
   $ 66,239     $ 67,610     $ 197,168     $ 200,467  
Cost of products sold
     55,681       56,046       165,425       165,156  
 
                        
 
Gross margin
   $ 10,558     $ 11,564     $ 31,743     $ 35,311  
Gross margin %
     15.9 %     17.1 %     16.1 %     17.6 %
 
                                
Selling, distribution and administrative expenses
     9,645       9,959       30,574       30,397  
Research and development expenses
     152       174       516       619  
Loss from equity investment
     62       29       191       169  
Interest expense
     125       215       416       555  
Interest income
     (22 )     (48 )     (94 )     (117 )
Change in fair value of interest rate swap
     75       205       194       82  
Goodwill impairment charge (1)
     14,142       —       14,142       —  
Other income (2)
     (239 )     (297 )     (726 )     (912 )
 
                        
 
                                
Income (loss) from continuing operations before income taxes
     (13,382 )     1,327       (13,470 )     4,518  
 
                                
Income tax provision
     307       475       272       1,777  
 
                        
 
                                
Income (loss) from continuing operations
     (13,689 )     852       (13,742 )     2,741  
 
                                
Income from discontinued operations, net of taxes (3)
     —       —       —       289  
 
                        
 
                                
Net income (loss)
   $ (13,689 )   $ 852     $ (13,742 )   $ 3,030  
 
                        
 
                                
Earnings per share:
                                
Income (loss) from continuing operations
   $ (2.52 )   $ 0.16     $ (2.54 )   $ 0.47  
 
                                
Income from discontinued operations
     —       —       —       0.05  
 
                        
 
                                
Net income (loss) per common share
   $ (2.52 )   $ 0.16     $ (2.54 )   $ 0.52  
 
                        
Average common shares
     5,425       5,386       5,410       5,864  
 
                        
 
                                
Income (loss) per common share from continuing operations assuming dilution
     $(2.52 )   $ 0.16     $ (2.54 )   $ 0.46  
Income per common share from discontinued operations assuming dilution
     —       —       —       0.05  
 
                        
 
                                
Net income (loss) per common share assuming dilution
   $ (2.52 )   $ 0.16     $ (2.54 )   $ 0.51  
 
                        
Average common and potential common shares
     5,425       5,465       5,410       5,934  
 
                        
 
(1)   Goodwill impairment charge for the three and nine months ended September 26, 2008 relates to our Specialty Paper Products business.
 
(2)   Other income for the three and nine months ended September 26, 2008 and September 28, 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.
 
(3)   Income from discontinued operations for the nine months ended September 28, 2007 represents the reimbursement of our deductible related to the Cerion litigation which was dismissed by the courts.

 

 

Third Quarter 2008 Earnings Results
NASHUA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
                 
    (Unaudited)        
    September 26     December 31  
Dollars in thousands   2008     2007  
Assets
                
Cash and cash equivalents
   $ 4,867     $ 7,388  
Accounts receivable
     29,782       29,375  
Inventories
     24,539       19,998  
Other current assets
     2,516       2,828  
 
            
Total current assets
     61,704       59,589  
 
                
Plant and equipment, net
     21,206       23,291  
Goodwill, net of amortization
     17,374       31,516  
Intangibles, net of amortization
     275       331  
Other assets
     12,184       12,975  
 
            
 
                
Total assets
   $ 112,743     $ 127,702  
 
            
 
                
Liabilities and Shareholders’ Equity
                
Accounts payable
   $ 18,346     $ 14,432  
Accrued expenses
     8,179       9,185  
Current maturities of long-term debt
     2,500       1,875  
Current maturities of notes payable
     29       31  
 
            
Total current liabilities
     29,054       25,523  
 
                
Long-term debt
     9,675       10,925  
Notes payable
     —       18  
Other long-term liabilities
     25,568       29,728  
 
            
Total long-term liabilities
     35,243       40,671  
 
                
Common stock and additional capital
     20,883       20,203  
Retained earnings
     45,906       59,648  
Accumulated other comprehensive loss:
                
Minimum pension liability adjustment(a)
     (18,343 )     (18,343 )
 
            
Total shareholders’ equity
     48,446       61,508  
 
            
 
                
Total liabilities and shareholders’ equity
   $ 112,743     $ 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.

 

 

Third Quarter 2008 Earnings Results
NASHUA CORPORATION SELECTED FINANCIAL DATA
                                 
Periods ended September 26 and September 28, respectively   Three Months     Nine Months  
Dollars in thousands (Unaudited)   2008     2007     2008     2007  
NET SALES
                                
 
                                
Label Products
   $ 25,943     $ 27,848     $ 77,113     $ 84,515  
Specialty Paper Products
     41,112       40,357       122,346       118,424  
All Other
     973       993       2,986       2,998  
 
                                
Reconciling Items:
                                
Eliminations
     (1,789 )     (1,588 )     (5,277 )     (5,470 )
 
                        
 
                                
Net sales
   $ 66,239     $ 67,610     $ 197,168     $ 200,467  
 
                        
 
                                
GROSS MARGIN
                                
 
                                
Label Products
   $ 3,905     $ 4,986     $ 11,690     $ 15,312  
Specialty Paper Products
     6,547       6,398       19,614       19,548  
All Other
     91       180       445       489  
 
Reconciling Items:
                                
Eliminations
     15       —       (6 )     (38 )
 
                        
 
                                
Total gross margin from continuing operations
   $ 10,558     $ 11,564     $ 31,743     $ 35,311  
 
                        
 
                                
DEPRECIATION AND AMORTIZATION
                                
 
                                
Label Products
   $ 445     $ 504     $ 1,369     $ 1,559  
Specialty Paper Products
     494       500       1,497       1,518  
Reconciling Item:
                                
Corporate
     94       119       270       414  
 
                        
Total depreciation and amortization
   $ 1,033     $ 1,123     $ 3,136     $ 3,491  
 
                        
 
                                
INVESTMENT IN PLANT AND EQUIPMENT
                                
 
                                
Label Products
   $ 320     $ 132     $ 475     $ 239  
Specialty Paper Products
     112       261       283       603  
Reconciling Item:
                                
Corporate
     —       14       330       68  
 
                        
Total Investment in plant and equipment
   $ 432     $ 407     $ 1,088     $ 910  
 
                        
 
                                
PENSION AND POSTRETIREMENT EXPENSE
                                
 
Label Products
   $ 76     $ 80     $ 210     $ 237  
Specialty Paper Products
     55       60       151       177  
Reconciling Item:
                                
Corporate
     199       274       536       724  
 
                        
Total pension and postretirement expense
   $ 330     $ 414     $ 897     $ 1,138