Exhibit 99.1
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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,
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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
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 | ||||||||