Exhibit 99.1
| | | | | |
| 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.”
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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.
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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
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| 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 | |
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| Earnings from continuing operations before interest, taxes, depreciation, amortization and goodwill impairment charges | | $ | 1,971 | | | $ | 2,822 | | | $ | 4,324 | | | $ | 8,529 | |
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Third Quarter 2008 Earnings Results
NASHUA CORPORATION SUMMARY RESULTS OF OPERATIONS
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| 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 | |
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| Gross margin | | $ | 10,558 | | | $ | 11,564 | | | $ | 31,743 | | | $ | 35,311 | |
| Gross margin % | | | 15.9 | % | | | 17.1 | % | | | 16.1 | % | | | 17.6 | % |
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| 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 | ) |
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Income (loss) from continuing operations before income taxes | | | (13,382 | ) | | | 1,327 | | | | (13,470 | ) | | | 4,518 | |
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| Income tax provision | | | 307 | | | | 475 | | | | 272 | | | | 1,777 | |
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Income (loss) from continuing operations | | | (13,689 | ) | | | 852 | | | | (13,742 | ) | | | 2,741 | |
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Income from discontinued operations, net of taxes(3) | | | — | | | | — | | | | — | | | | 289 | |
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Net income (loss) | | $ | (13,689 | ) | | $ | 852 | | | $ | (13,742 | ) | | $ | 3,030 | |
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Earnings per share: | | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations | | $ | (2.52 | ) | | $ | 0.16 | | | $ | (2.54 | ) | | $ | 0.47 | |
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| Income from discontinued operations | | | — | | | | — | | | | — | | | | 0.05 | |
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Net income (loss) per common share | | $ | (2.52 | ) | | $ | 0.16 | | | $ | (2.54 | ) | | $ | 0.52 | |
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| Average common shares | | | 5,425 | | | | 5,386 | | | | 5,410 | | | | 5,864 | |
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| 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 | |
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Net income (loss) per common share assuming dilution | | $ | (2.52 | ) | | $ | 0.16 | | | $ | (2.54 | ) | | $ | 0.51 | |
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| Average common and potential common shares | | | 5,425 | | | | 5,465 | | | | 5,410 | | | | 5,934 | |
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| (1) | | Goodwill impairment charge for the three and nine months ended September 26, 2008 relates to our Specialty Paper Products business. |
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| (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. |
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| (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
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| | | (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 | |
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| Total current assets | | | 61,704 | | | | 59,589 | |
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| 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 | |
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Total assets | | $ | 112,743 | | | $ | 127,702 | |
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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 | |
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| Total current liabilities | | | 29,054 | | | | 25,523 | |
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| Long-term debt | | | 9,675 | | | | 10,925 | |
| Notes payable | | | — | | | | 18 | |
| Other long-term liabilities | | | 25,568 | | | | 29,728 | |
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| Total long-term liabilities | | | 35,243 | | | | 40,671 | |
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| 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 | ) |
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| Total shareholders’ equity | | | 48,446 | | | | 61,508 | |
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Total liabilities and shareholders’ equity | | $ | 112,743 | | | $ | 127,702 | |
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| (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
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| Periods ended September 26 and September 28, respectively | | Three Months | | | Nine Months | |
| Dollars in thousands(Unaudited) | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
NET SALES | | | | | | | | | | | | | | | | |
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| 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 | |
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| Reconciling Items: | | | | | | | | | | | | | | | | |
| Eliminations | | | (1,789 | ) | | | (1,588 | ) | | | (5,277 | ) | | | (5,470 | ) |
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| Net sales | | $ | 66,239 | | | $ | 67,610 | | | $ | 197,168 | | | $ | 200,467 | |
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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 | |
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| Reconciling Items: | | | | | | | | | | | | | | | | |
| Eliminations | | | 15 | | | | — | | | | (6 | ) | | | (38 | ) |
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| Total gross margin from continuing operations | | $ | 10,558 | | | $ | 11,564 | | | $ | 31,743 | | | $ | 35,311 | |
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DEPRECIATION AND AMORTIZATION | | | | | | | | | | | | | | | | |
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| Label Products | | $ | 445 | | | $ | 504 | | | $ | 1,369 | | | $ | 1,559 | |
| Specialty Paper Products | | | 494 | | | | 500 | | | | 1,497 | | | | 1,518 | |
| Reconciling Item: | | | | | | | | | | | | | | | | |
| Corporate | | | 94 | | | | 119 | | | | 270 | | | | 414 | |
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| Total depreciation and amortization | | $ | 1,033 | | | $ | 1,123 | | | $ | 3,136 | | | $ | 3,491 | |
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INVESTMENT IN PLANT AND EQUIPMENT | | | | | | | | | | | | | | | | |
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| Label Products | | $ | 320 | | | $ | 132 | | | $ | 475 | | | $ | 239 | |
| Specialty Paper Products | | | 112 | | | | 261 | | | | 283 | | | | 603 | |
| Reconciling Item: | | | | | | | | | | | | | | | | |
| Corporate | | | — | | | | 14 | | | | 330 | | | | 68 | |
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| Total Investment in plant and equipment | | $ | 432 | | | $ | 407 | | | $ | 1,088 | | | $ | 910 | |
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PENSION AND POSTRETIREMENT EXPENSE | | | | | | | | | | | | | | | | |
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| Label Products | | $ | 76 | | | $ | 80 | | | $ | 210 | | | $ | 237 | |
| Specialty Paper Products | | | 55 | | | | 60 | | | | 151 | | | | 177 | |
| Reconciling Item: | | | | | | | | | | | | | | | | |
| Corporate | | | 199 | | | | 274 | | | | 536 | | | | 724 | |
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| Total pension and postretirement expense | | $ | 330 | | | $ | 414 | | | $ | 897 | | | $ | 1,138 | |
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