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 2006 RESULTS
NASHUA, N.H., April 27, 2006 —Nashua Corporation (NASDAQ: NSHA), a manufacturer and marketer of labels and thermal specialty papers, today announced financial results for the first quarter ended March 31, 2006.
Net sales for the first quarter of 2006 were $64.8 million, compared to $67.6 million for the first quarter of 2005. Gross margin for the first quarter of 2006 was $9.8 million, or 15.1%, compared to $10.4 million, or 15.5%, for the first quarter of 2005. Nashua reported a pre-tax loss from continuing operations of $0.9 million in the first quarter of 2006 compared to a pre-tax loss from continuing operations of $0.7 million in the first quarter of 2005. The net loss from continuing operations was $0.6 million, or $0.09 per share, for the first quarter of 2006, compared to a net loss of $0.4 million, or $0.07 per share, for the first quarter of 2005. Net income from discontinued operations was $1.0 million for the first quarter of 2006 compared to a net loss of $1.2 million for the first quarter of 2005. Net income for the first quarter of 2006 was $0.4 million, or $0.07 per share, compared to a net loss $1.6 million, or $0.27 per share, for the first quarter of 2005.
Pre-tax income from continuing operations in the first quarter of 2006 included severance cost of $0.7 million. The severance was comprised of personnel reductions due to the Label Products segment plant consolidation project, exit of the coated carbonless product line and a reduction in workforce in the dot matrix ribbon distribution product line in the Specialty Paper Products segment. In addition, the first quarter results reflect incremental pension cost of $0.5 million related to the application of a lower discount rate (5.5%) and updated mortality tables in the computation of pension expense as of December 31, 2005, as prescribed under accounting guidelines. Pre-tax income from continuing operations for the first quarter of 2005 included a $0.6 million charge for severance related to corporate and Specialty Paper Products segment headcount reductions.
Discontinued operations net income of $1.0 million in the first quarter of 2006 included $0.7 million of income from the toner and developer business operations and asset sale, and a gain of $0.3 million related to the liquidation of an inactive foreign subsidiary. Discontinued operations for the first quarter of 2005 included the loss of $1.2 million from operations of the toner and developer business, including severance and pension curtailment cost associated with the exit of the business.
Andrew Albert, Chairman, President and Chief Executive Officer of Nashua Corporation said, “While we continue to make good progress aligning our business with demand and with our program to generate cash, top line growth and margin improvement in the Label and Specialty Paper segments did not meet our expectations. Margins, while relatively flat on a percentage basis, were also negatively impacted by the severance and pension expenses. Management is focused on top line sales momentum and margin improvement as the critical operating objectives for the remainder of 2006.”
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Albert continued, “Nashua’s strategy to exit lower margin or mature businesses on a cash-generating basis is on target. We ceased the manufacture of toner and developer in March 2006, have sold certain intellectual property and fixed assets to Katun Corporation and expect to complete the sale of the remaining machinery and equipment in the second quarter. Excluding future royalties from intellectual property, the toner liquidation should net between $4 million and $5 million. The Nashua real estate is under contract for $2 million and is expected to close in 2006, and the 43-acre, two-building Merrimack campus and Omaha real estate are being actively marketed.”
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 first quarter of 2006 of $26.3 million, gross margin of $3.4 million, or 12.8%, and pre-tax income of $0.5 million. Net sales for the first quarter of 2005 were $26.3 million, gross margin was $3.7 million, or 14.1%, and pre-tax income was $1.2 million.
Albert stated, “Sales in the Label Products segment were flat year over year. Margins were negatively impacted by severance, plant shut down costs related to the plant consolidation project and by incremental pension cost, which in the aggregate totaled more than $500,000.
“As part of our overall plan to streamline operations and enhance customer service, we announced a plan to close our St. Louis plant by mid-summer, and consolidate Label Products manufacturing in Tennessee, Nebraska and Florida. As part of this plan, we recently executed a five-year lease for a 42,000 square-foot facility in Jacksonville, Florida, which will replace our existing facility in St. Augustine, Florida. We believe our three-facility Label Product manufacturing operation will provide the flexibility and efficiency needed to respond to the growth opportunities we see for our label business. In addition, we expect that our plant consolidation project will achieve savings of more than $1 million in 2007.”
Nashua’s Specialty Paper segment, which includes the paper coating and converting businesses, is the Company’s largest business segment. The Specialty Paper Products segment reported net sales for the first quarter of 2006 of $39.3 million, gross margin of $6.3 million, or 16.0%, and pre-tax income of $0.5 million. Net sales in the first quarter of 2005 were $42.2 million, gross margin was $6.7 million or 15.8%, and pre-tax income was $0.2 million.
Albert stated, “Sales in the Specialty Paper segment declined due to lower thermal label face-sheet products and point of sale products. Sales and margins were also negatively impacted by the exit of the coated carbonless product line, as well as by incremental pension cost, which together totaled over $425,000. While sales were slightly lower than a year ago, margins in the converting portion of the Specialty Paper Products segment outperformed last year’s results on a percentage basis, and helped increase margins for the entire segment.
“We continue to deliver growth in the wide format product line in this segment, and expect to expand our manufacturing operations by the beginning of the third quarter,” said Albert. “In addition, we are introducing an expanded color graphics line during the second quarter that will enhance our value added offering in a growth segment of the wide format market.”
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Mr. Albert continued, “As we announced on March 15, Tom Brooker will join Nashua as CEO and President on May 4. Tom is an outstanding executive whose 25 years of direct experience enables him to know our industry extremely well. In particular, his expertise in sales and marketing will help Nashua leverage the significant progress that’s been made in recent years to make the Company leaner, more focused and better positioned to pursue higher-margin business opportunities. I’m looking forward to Tom joining the great Nashua team and to working with him in my capacity as Chairman.”
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, bond, 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.
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,” 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 impairment of goodwill, 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 2006 Earnings Results
NASHUA CORPORATION SUMMARY RESULTS OF OPERATIONS
(Unaudited) | ||||||||
Periods ended March 31 and April 1, respectively | Three Months | |||||||
In thousands, except per share amounts | 2006 | 2005 | ||||||
Net sales | $ | 64,811 | $ | 67,646 | ||||
Cost of products sold | 55,023 | 57,198 | ||||||
Gross margin | $ | 9,788 | $ | 10,448 | ||||
Gross margin % | 15.1 | % | 15.5 | % | ||||
Selling, distribution and administrative expenses | 10,576 | 10,781 | ||||||
Research and development expenses | 201 | 237 | ||||||
Loss from equity investment | 14 | — | ||||||
Interest expense, net | 307 | 409 | ||||||
Other income(2) | (362 | ) | (292 | ) | ||||
Loss from continuing operations before income taxes | (948 | ) | (687 | ) | ||||
Income tax benefit | 385 | 265 | ||||||
Loss from continuing operations | (563 | ) | (422 | ) | ||||
Income (loss) from discontinued operations, net of taxes(1) | 1,004 | (1,198 | ) | |||||
Net income (loss) | $ | 441 | $ | (1,620 | ) | |||
Earnings per share: | ||||||||
Loss from continuing operations | $ | (0.09 | ) | $ | (0.07 | ) | ||
Income (loss) from discontinued operations | 0.16 | (0.20 | ) | |||||
Net income (loss) per common share | $ | 0.07 | $ | (0.27 | ) | |||
Average common shares | 6,123 | 6,079 | ||||||
Loss per common share from continuing operations assuming dilution | $ | (0.09 | ) | $ | (0.07 | ) | ||
Income (loss) per common share from discontinued operations assuming dilution | 0.16 | (0.20 | ) | |||||
Net income (loss) per common share assuming dilution | $ | 0.07 | $ | (0.27 | ) | |||
Average common and potential common shares | 6,123 | 6,079 | ||||||
(1)Income from discontinued operations for the three months ended March 31, 2006 includes the results of our Toner and Developer business which we exited effective March 31, 2006 and income from the liquidation of our Photo UK entity, Loss from discontinued operations for the three months ended April 1, 2005 represents the results of our Toner & Developer business.
(2)Other income for the three months ended March 31, 2006 and April 1, 2005 represents income from the rental of unused warehouse space at our New Hampshire facilities.
First Quarter 2006 Earnings Results
NASHUA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) | ||||||||
March 31 | December 31 | |||||||
Dollars in thousands | 2006 | 2005 | ||||||
Assets | ||||||||
Cash and cash equivalents | $ | 720 | $ | 653 | ||||
Accounts receivable | 32,118 | 33,922 | ||||||
Inventories | 22,319 | 22,284 | ||||||
Other current assets | 3,650 | 2,980 | ||||||
Total current assets | 58,807 | 59,839 | ||||||
Plant and equipment, net | 33,337 | 36,462 | ||||||
Assets held for sale | 754 | — | ||||||
Goodwill, net of amortization | 31,516 | 31,516 | ||||||
Intangibles, net of amortization | 1,659 | 1,773 | ||||||
Other assets | 16,415 | 15,329 | ||||||
Total assets | $ | 142,488 | $ | 144,919 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Accounts payable | $ | 14,762 | $ | 14,992 | ||||
Accrued expenses | 8,424 | 8,965 | ||||||
Current maturities of long-term debt | — | 3,500 | ||||||
Current maturities of notes payable | 83 | 333 | ||||||
Total current liabilities | 23,269 | 27,790 | ||||||
Long-term debt | 26,350 | 25,250 | ||||||
Notes payable | 348 | 368 | ||||||
Other long-term liabilities | 38,300 | 37,777 | ||||||
Total long-term liabilities | 64,998 | 63,395 | ||||||
Common stock and additional capital | 22,069 | 22,023 | ||||||
Retained earnings | 58,301 | 57,860 | ||||||
Accumulated other comprehensive loss: | ||||||||
Minimum pension liability adjustment(a) | (26,149 | ) | (26,149 | ) | ||||
Total shareholders’ equity | 54,221 | 53,734 | ||||||
Total liabilities and shareholders’ equity | $ | 142,488 | $ | 144,919 | ||||
(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 2006 Earnings Results
NASHUA CORPORATION
RECONCILIATION OF NET LOSS FROM CONTINUING OPERATIONS TO EARNINGS FROM CONTINUING OPERATIONS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
RECONCILIATION OF NET LOSS FROM CONTINUING OPERATIONS TO EARNINGS FROM CONTINUING OPERATIONS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
(Unaudited) | ||||||||
Periods ended March 31 and April 1, respectively | Three Months | |||||||
In thousands | 2006 | 2005 | ||||||
Loss from continuing operations | $ | (563 | ) | $ | (422 | ) | ||
Add back: | ||||||||
Interest expense, net | 307 | 409 | ||||||
Income tax benefit | (385 | ) | (265 | ) | ||||
Depreciation on fixed assets | 1,407 | 1,594 | ||||||
Amortization of intangible assets | 163 | 114 | ||||||
Earnings from continuing operations before interest, taxes, depreciation and amortization | $ | 929 | $ | 1,430 | ||||
First Quarter 2006 Earnings Results
NASHUA CORPORATION SELECTED FINANCIAL DATA FROM
CONTINUING OPERATIONS
CONTINUING OPERATIONS
Periods ended March 31 and April 1, respectively | Three Months | |||||||
Dollars in thousands(Unaudited) | 2006 | 2005 | ||||||
NET SALES | ||||||||
Label Products | $ | 26,282 | $ | 26,328 | ||||
Specialty Paper Products | 39,287 | 42,226 | ||||||
All Other | 661 | 343 | ||||||
Reconciling Items: | ||||||||
Eliminations | (1,419 | ) | (1,251 | ) | ||||
Net sales | $ | 64,811 | $ | 67,646 | ||||
PRETAX LOSS | ||||||||
Label Products | $ | 473 | $ | 1,163 | ||||
Specialty Paper Products | 543 | 239 | ||||||
All Other | 137 | 37 | ||||||
Reconciling Items: | ||||||||
Unallocated corporate expenses | (1,794 | ) | (1,717 | ) | ||||
Interest expense, net | (307 | ) | (409 | ) | ||||
Total pretax loss | $ | (948 | ) | $ | (687 | ) | ||
DEPRECIATION AND AMORTIZATION | ||||||||
Label Products | $ | 717 | $ | 659 | ||||
Specialty Paper Products | 757 | 934 | ||||||
Reconciling Item: | ||||||||
Corporate | 96 | 115 | ||||||
Total depreciation and amortization | $ | 1,570 | $ | 1,708 | ||||
INVESTMENT IN PLANT AND EQUIPMENT | ||||||||
Label Products | $ | 180 | $ | 485 | ||||
Specialty Paper Products | 474 | 971 | ||||||
Reconciling Item: | ||||||||
Corporate | 12 | 17 | ||||||
Total investment in plant and equipment | $ | 666 | $ | 1,473 | ||||
PENSION EXPENSE | ||||||||
Label Products | $ | 352 | $ | 161 | ||||
Specialty Paper Products | 243 | 138 | ||||||
Reconciling Item: | ||||||||
Corporate | 222 | 45 | ||||||
Total pension expense | $ | 817 | $ | 344 | ||||