Exhibit 99.1
| Contact: | Andy Albert/John Patenaude | Rich Coyle | ||
| Nashua Corporation | Citigate Sard Verbinnen | |||
| 847-318-1710/603-880-2145 | 212-687-8080 |
NASHUA REPORTS FIRST QUARTER 2004 RESULTS
Sales Increase to $71.2 Million from $67.2 Million a Year Ago
Nashua Raises Guidance for 2004
NASHUA, N.H., April 27, 2004 —Nashua Corporation (NYSE: NSH), a manufacturer and marketer of labels, thermal specialty papers and imaging products, today announced financial results for the first quarter ended April 2, 2004.
Net sales for the first quarter of 2004 were $71.2 million, compared to $67.2 million for the first quarter of 2003. Gross margin for the first quarter of this year was $13.9 million, or 19.6%, compared to $12.6 million, or 18.7%, for the first quarter of 2003. Nashua reported pretax income of $1.5 million in the first quarter of 2004 compared to $0.3 million in the first quarter of 2003. Net income was $0.9 million in the first quarter, or $.16 per share, compared to $0.2 million, or $.03 per share, in the first quarter of 2003. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $3.8 million for the first quarter of 2004 compared to $2.6 million for the first quarter of 2003.
“Nashua’s top and bottom line growth in the first quarter reflect improved performance from each of our businesses and the positive impact of the strategic acquisitions and investments we have made in recent years on the one hand and the effectiveness of cost containment initiatives on the other,” said Andrew Albert, Chairman, President and Chief Executive Officer of Nashua.
In noting improved performance, Albert also stated that, “While there are preliminary signs of an improved business environment, overcapacity and intense competition continue to characterize the industry, and thus Nashua will continue to focus on cost containment initiatives even as we pursue higher margin opportunities, invest to make our businesses more efficient and pursue promising new technologies, such as Radio Frequency Identification (RFID), which are of growing importance to our customer base.”
Albert also reported that Nashua amended its credit facility in the first quarter of 2004. The amended credit facility, which will be in effect until February 2007, includes revised financial covenants that provide Nashua additional flexibility.
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 sales in the first quarter of 2004 of $25.8 million, gross margin of $4.6 million, or 17.7%, and pretax income of $1.9 million. Sales in the first quarter of 2003 were $23.2 million, gross margin was $4.1 million, or 17.8%, and pretax income was $1.5 million.
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“The strong 11 percent sales increase for the Label Products segment reflects increased demand from new and existing customers as well as sales attributable to seasonal restocking activity. Revenue growth also comes from increased sales in the supermarket scale product line due to last year’s acquisition of the assets of The Label Company and higher automatic identification product line sales,” said Albert. “Business performance improvements compared to last year were driven by top line growth as margins remained essentially flat, reflecting continued overcapacity in the industry. We expect that the improved demand in the Label segment will continue into the second quarter based on existing April orders.”
Albert noted that, “Label has redoubled its efforts to deliver non-commodity products and services to customers that differentiate Nashua in the marketplace. Our Label$Dollars products, which are in-store redeemable coupons contained within a pricing label, inventory management systems, and the convenience of online ordering via our “e-catalogue” increase the level of interactivity between Nashua and its customers and are examples of unique value-added products and services that strengthen our relationships with customers.”
Nashua’s Specialty Paper segment, which includes the paper coating and converting operations, is the Company’s largest business segment. The Specialty Paper segment reported sales in the first quarter of 2004 of $40.3 million, gross margin of $8.1 million, or 20.0%, and pretax income of $1.7 million. Sales in the first quarter of 2003 were $38.8 million, gross margin was $7.3 million or 18.7%, and pretax income was $.6 million.
Albert said, “The four percent sales increase in the Specialty Paper segment is due largely to a significant increase in the sale of wide format products for the architectural, engineering and construction markets due to our broader distribution network and enhanced product offering together with greater sales of financial receipts utilized for ATM’s, teller systems and check processing, and thermal roll product utilized in point of sale applications. Sales increases more than offset lower sales due to changing technology in the mature dry gum, heat seal, carbonless and bond paper product lines and the loss of sales from the exit of the non-strategic cut-sheet product line in the third quarter of 2003.”
“Margins and pretax profit have been positively impacted by both sales increases and cost containment measures in this segment,” Albert noted. “The increased margin generated in our converting operation was partially offset by lower margins generated in our coating operation due to lower sales of higher margin mature products and competitive pressures which lowered margins on thermal face sheet sold to laminators.”
Nashua’s Imaging Supplies, or Toner, segment reported sales in the first quarter of 2004 of $6.5 million, gross margin of $1.3 million, or 20.2%, and pretax income of $146,000. Sales for the first quarter of 2003 were $6.0 million, gross margin was $1.2 million or 20.1%, and pretax income was $58,000. Sales increases were generated in the Ricoh compatible toners and resin product lines.
“The improved profitability of Nashua’s Toner business in the first quarter of 2004 was based on 8% sales increases, better manufacturing absorption and the impact of ongoing cost containment initiatives,” said Albert. “During the second quarter of 2004, we are scheduled to bring four new toner products to market and will continue to carefully manage cost.”
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Albert stated, “During the first quarter, Nashua’s consolidated SG&A and research expenses as a percent of sales have decreased by almost a full percentage point compared to a year ago and leveraged our divisions’ performances.”
Guidance
In discussing expectations for the remainder of 2004, Albert noted that while preliminary signs of improvement in the business environment are visible, overcapacity and intense competition continue to characterize the industry and make results difficult to predict. Nashua’s revised guidance assumes that industry conditions will continue to improve moderately. Either a positive or negative change in the outlook would cause Nashua to alter its forecast.
“With that caveat,” Albert stated, “if we achieve sales in the forecasted range between $290 million and $305 million, we expect net income for the year 2004 to be between $4.1 million or $.68 per share and $4.5 or $.75 per share.”
Albert concluded by stating that, “As Nashua moves through 2004 we will work to leverage our strengthening financial position to continue growing our value proposition, expand and deepen our business relationships with our customers and business partners, make appropriate investments in the equipment, information systems, resources and research that enhance our processes and reduce our cost structure, and maximize shareholder returns by creating a stronger, more focused company that is consistently profitable.”
Use of Non-GAAP Measures
EBITDA is presented as supplemental information that 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 back net interest expense, income tax expense, depreciation and amortization to 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 EBITDA may not be calculated identically by all companies, 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, point of sale, ATM and wide format papers, entertainment tickets, as well as toners, developers, and ribbons for use in imaging devices. Additional information about Nashua Corporation can be found at www.nashua.com.
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Forward-looking Statements
This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, including earnings, revenue and profitability projections. When used in this press release, the words “should,” “will,” “expects,” “anticipates,” “predict” 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, the settlement of various tax issues, 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.
First Quarter 2004 Earnings Results
NASHUA CORPORATION SUMMARY RESULTS OF OPERATIONS
| (Unaudited) | ||||||||
| Periods ended April 2 and March 28, respectively | Three Months | |||||||
| In thousands, except per share amounts | 2004 | 2003 | ||||||
| Net sales | $ | 71,232 | $ | 67,193 | ||||
| Cost of products sold | 57,287 | 54,595 | ||||||
| Gross margin | $ | 13,945 | $ | 12,598 | ||||
| Gross margin % | 19.6 | 18.7 | ||||||
| Selling, distribution and administrative expenses | 11,416 | 11,337 | ||||||
| Research | 554 | 709 | ||||||
| Loss from equity investment | 139 | 22 | ||||||
| Interest expense, net | 314 | 289 | ||||||
| Net gain on curtailment of post-retirement plans | — | (47 | ) | |||||
Income before income taxes | 1,522 | 288 | ||||||
| Income tax provision | 591 | 112 | ||||||
Net income | $ | 931 | $ | 176 | ||||
Basic earnings per share: | ||||||||
Net income per common share | $ | 0.16 | $ | 0.03 | ||||
| Average common shares | 5,957 | 5,824 | ||||||
Diluted earnings per share: | ||||||||
Net income per common share assuming dilution | $ | 0.15 | $ | 0.03 | ||||
| Average common and potential common shares | 6,069 | 5,960 | ||||||
First Quarter 2004 Earnings Results
NASHUA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET
| (Unaudited) | ||||||||
| April 2 | December 31 | |||||||
| Dollars in thousands | 2004 | 2003 | ||||||
Assets | ||||||||
| Cash and cash equivalents | $ | 812 | $ | 1,183 | ||||
| Accounts receivable | 31,556 | 31,665 | ||||||
| Inventories | 24,895 | 22,735 | ||||||
| Other current assets | 5,892 | 5,205 | ||||||
| Total current assets | 63,155 | 60,788 | ||||||
| Plant and equipment, net | 39,751 | 40,777 | ||||||
| Goodwill, net of amortization | 31,516 | 31,471 | ||||||
| Intangibles, net of amortization | 1,668 | 1,781 | ||||||
| Other assets | 15,514 | 16,859 | ||||||
Total assets | $ | 151,604 | $ | 151,676 | ||||
Liabilities and Shareholders’ Equity | ||||||||
| Accounts payable | $ | 16,710 | $ | 20,474 | ||||
| Accrued expenses | 13,525 | 14,368 | ||||||
| Current maturities of long-term debt | 3,400 | 3,400 | ||||||
| Current maturities of notes payable | 250 | 250 | ||||||
| Total current liabilities | 33,885 | 38,492 | ||||||
| Long-term debt | 27,350 | 24,200 | ||||||
| Notes payable | 710 | 960 | ||||||
| Other long-term liabilities | 27,022 | 26,827 | ||||||
| Total long-term liabilities | 55,082 | 51,987 | ||||||
| Common stock and additional capital | 20,927 | 20,418 | ||||||
| Retained earnings | 54,408 | 53,477 | ||||||
| Accumulated other comprehensive loss: | ||||||||
| Minimum pension liability adjustment(a) | (12,698 | ) | (12,698 | ) | ||||
| Total shareholders’ equity | 62,637 | 61,197 | ||||||
Total liabilities and shareholders’ equity | $ | 151,604 | $ | 151,676 | ||||
| (a) | Our minimum pension liability adjustment represents an increase in our minimum pension liability resulting from a decline in the fair market values of equities held by company-sponsored pension plans. |
First Quarter 2004 Earnings Results
NASHUA CORPORATION
RECONCILIATION OF NET INCOME TO EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION
| (Unaudited) | ||||||||
| Periods ended April 2 and March 28, respectively | Three Months | |||||||
| In thousands | 2004 | 2003 | ||||||
| Net income | $ | 931 | $ | 176 | ||||
| Add back: | ||||||||
| Interest expense, net | 314 | 289 | ||||||
| Income tax provision | 591 | 112 | ||||||
| Depreciation on fixed assets | 1,844 | 1,822 | ||||||
| Amortization of intangible assets | 113 | 163 | ||||||
| Earnings before interest, taxes, depreciation and amortization | $ | 3,793 | $ | 2,562 | ||||
First Quarter 2004 Earnings Results
NASHUA CORPORATION SELECTED FINANCIAL DATA
| Periods ended April 2 and March 28, respectively | Three Months | |||||||||||
| Dollars in thousands (Unaudited) | 2004 | 2003 | ||||||||||
NET SALES | ||||||||||||
| Label Products | $ | 25,773 | $ | 23,225 | ||||||||
| Specialty Paper Products | 40,288 | 38,791 | ||||||||||
| Imaging Supplies | 6,451 | 6,042 | ||||||||||
| Reconciling Items: | ||||||||||||
| Eliminations | (1,280 | ) | (867 | ) | ||||||||
| Other(a) | — | 2 | ||||||||||
| Net sales | $ | 71,232 | $ | 67,193 | ||||||||
PRETAX INCOME | ||||||||||||
| Label Products | $ | 1,938 | $ | 1,465 | ||||||||
| Specialty Paper Products | 1,668 | 616 | ||||||||||
| Imaging Supplies | 146 | 58 | ||||||||||
| Reconciling Items: | ||||||||||||
| Other income(a) | (11 | ) | — | |||||||||
| Unallocated corporate expenses | (1,905 | ) | (1,609 | ) | ||||||||
| Interest expense, net | (314 | ) | (289 | ) | ||||||||
| Net gain on curtailment of post-retirement plans | — | 47 | ||||||||||
| Total pretax income | $ | 1,522 | $ | 288 | ||||||||
DEPRECIATION AND AMORTIZATION | ||||||||||||
| Label Products | $ | 611 | $ | 573 | ||||||||
| Specialty Paper Products | 907 | 985 | ||||||||||
| Imaging Supplies | 344 | 357 | ||||||||||
| Reconciling Item: | ||||||||||||
| Corporate | 95 | 70 | ||||||||||
| Total Depreciation and Amortization | $ | 1,957 | $ | 1,985 | ||||||||
INVESTMENT IN PLANT AND EQUIPMENT | ||||||||||||
| Label Products | $ | 259 | $ | 554 | ||||||||
| Specialty Paper Products | 384 | 232 | ||||||||||
| Imaging Supplies | 77 | 121 | ||||||||||
| Reconciling Item: | ||||||||||||
| Corporate | 93 | 188 | ||||||||||
| Total Investment in plant and equipment | $ | 813 | $ | 1,095 | ||||||||
| (a) | Represents other operating activity which falls below the quantitative threshold for a reportable segment. |