Exhibit 99.1
Contact: Andy Albert/John Patenaude Judy Brennan/Rich Coyle
Nashua Corporation Citigate Sard Verbinnen
847-318-1710/603-880-2145 212-687-8080
NASHUA REPORTS FIRST QUARTER 2003 RESULTS
Sales Increase to $67.2 Million from Year Ago Sales of $64.5 Million
All Three Business Units Profitable in the First Quarter
NASHUA, N.H., APRIL 23, 2003 -- Nashua Corporation (NYSE: NSH), a premier
manufacturer and marketer of labels, thermal specialty papers and imaging
products, today announced financial results for the first quarter ended March
28, 2003.
Net sales for the first quarter of 2003 were $67.2 million, compared to $64.5
million for the first quarter of 2002. Gross margin for the first quarter of
this year was $12.6 million, or 18.7%, compared to $12.5 million, or 19.4%, a
year earlier. Nashua reported pretax income of $0.3 million in the first quarter
compared to $0.2 million in the first quarter of 2002. Net income was $0.2
million in the first quarter, or $.03 per share, compared to $0.1 million, or
$.02 per share, in the first quarter of 2002. Earnings before interest, taxes,
depreciation and amortization (EBITDA) were $2.6 million for the first quarter
of 2003 and $2.5 million for the first quarter of 2002.
"Nashua is performing positively in what continues to be a particularly
challenging environment," said Andrew Albert, Chairman, President and Chief
Executive Officer of Nashua. "We continue to have good balance in our business,
consolidated sales are up, and each of our segments operated profitably in the
first quarter. Our results attest to the effectiveness of the cost containment
initiatives we've put in place during the last two years and reflect the
contributions of our strategic acquisitions. We believe that Nashua remains
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poised to take advantage of an improvement in the economy, which should spur
internally generated growth and enhance margins.
"As we move forward, we are continuing to make judicious investments in
acquisitions, equipment and new technologies that we believe will position the
Company to capture growth and new business as the economy improves," Albert
stated.
As previously announced, during the first quarter Nashua acquired the operations
of The Label Company from Bunzl Distribution in February and signed a multi-year
agreement to supply Bunzl with weigh scale, promotional and product
identification labels.
"The addition of The Label Company is an excellent strategic fit that, like
other recent Nashua acquisitions, simultaneously accomplishes several important
objectives," said Albert. "It provides us with additional flexibility within our
label operations and, at the same time, enhances our relationship with Bunzl, a
long-time Nashua customer. The addition also generates additional volume for our
coating facility, enabling us to operate more efficiently."
In March, Nashua signed a strategic development agreement with Parlex
Corporation (NASDAQ: PRLX), a world leader in the design and manufacture of
flexible interconnection products. The agreement creates an organization that
will draw on both parties' relative expertise in ink and printed circuit
technology, label converting, and the design, application and production of
flexible circuits. Under the agreement, the team will work to develop innovative
products and applications for use in the automotive, cellular and Radio
Frequency Identification (RFID) markets.
BUSINESS SEGMENT HIGHLIGHTS
Nashua's Label segment, which prints and converts product for the grocery, food
service, retail, transportation, entertainment and general industrial markets,
had sales in the first quarter 2003 of $23.2 million, gross margin of $4.1
million, or 17.8%, and pretax income of $1.5 million. Sales in the first quarter
of 2002 were $23.1 million, gross margin was $3.9 million, or 16.9%, and pretax
income was $1.0 million.
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"Sales in our Label segment remained level with the first quarter of last year,
and margins and pretax income increased mainly due to cost containment and the
acquisition of The Label Company assets," said Albert. "Overall, in the face of
stiff competition, the Label segment performed well. The acquisition of The
Label Company was accretive to earnings in the first quarter."
Nashua's Specialty Paper segment, which includes the paper coating and
converting business and is the Company's largest business segment, had sales of
$38.8 million in the first quarter compared to $35.8 million in the prior-year
period. Gross margin for the quarter was $7.3 million, or 18.7%, compared with
$7.0 million, or 19.6%, a year ago. Pretax income for the first quarter of 2003
was $0.6 million compared to $1.3 million in 2002.
Albert said, "The sales increase in our Specialty Paper segment is due, for the
most part, to the effects of our 2002 strategic acquisitions of Computer Imaging
Supplies (CIS), a maker of proprietary security products designed to prevent
Point of Sale (POS) retail fraud, and certain assets of Dietzgen LLC, which gave
us access to large format converting for the architectural, engineering and
construction markets.
"That said," noted Albert, "competition remains strong in this segment, and our
margins and pretax income declined from a year ago. Softness continues in the
airline, hotel and entertainment industries, which are important customers for
Nashua's Specialty Paper products. Retail sales, a key driver of our converting
business, were particularly weak in the first quarter. We are continuing to work
hard to gain new business and have taken recent actions expected to further
reduce costs by approximately $1.2 million on an annualized basis."
Nashua's Imaging Supplies, or Toner, segment had sales in the first quarter of
$6.0 million compared to $6.1 million a year earlier. Gross margin for the
quarter was $1.2 million, or 20.1%, compared to $1.6 million, or 25.7%, in the
first quarter of 2002. Margins were impacted by a change in product mix from the
previous year and lower absorption of
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production cost. Pretax income in the quarter was $0.1 million compared to $0.3
million in the first quarter of 2002.
"Our Toner segment returned to profitability in the first quarter and now has
been profitable for four of the last five quarters," said Albert. "As with our
other businesses, competition remains keen, but we are confident Toner can
continue to generate a positive cash flow and make a profit contribution to our
overall business. We will continue the necessary work of reducing costs wherever
feasible and introducing new products to meet the changing needs of customers.
We anticipate a third consecutive year of improved profitability"
GUIDANCE
In discussing the expectations for the remainder of 2003, Albert said, "Our
expected results are based on sales levels which are particularly difficult to
predict in the current uncertain economic environment. If we achieve sales in
the forecasted range between $290 million and $295 million, we expect net income
for the year 2003 to be between $3.2 million or $.55 per share and $3.4 or $.59
per share.
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.
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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, 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," "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 2003 Earnings Results
NASHUA CORPORATION SUMMARY RESULTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS
Periods ended March 28 and March 29, respectively ---------------------------------
In thousands, except per share amounts 2003 2002
- ------------------------------------------------- -------- --------
Net sales $ 67,193 $ 64,523
Cost of products sold 54,595 52,003
-------- --------
Gross margin $ 12,598 $ 12,520
Gross margin % 18.7 19.4
Selling, distribution and administrative expenses 11,337 11,101
Research 709 779
Loss from equity investment 22 --
Interest expense, net 289 394
Net gain on curtailment of post-retirement plans (47) --
-------- --------
INCOME BEFORE INCOME TAXES 288 246
Income tax provision 112 103
-------- --------
NET INCOME $ 176 $ 143
======== ========
BASIC EARNINGS PER SHARE:
NET INCOME PER COMMON SHARE $ 0.03 $ 0.02
======== ========
Average common shares 5,824 5,722
======== ========
DILUTED EARNINGS PER SHARE:
NET INCOME PER COMMON SHARE ASSUMING DILUTION $ 0.03 $ 0.02
======== ========
Average common and potential common shares 5,960 5,788
======== ========
First Quarter 2003 Earnings Results
NASHUA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 28 December 31
Dollars in thousands 2003 2002
- -------------------- --------- -----------
ASSETS
Cash and cash equivalents $ 1,249 $ 1,085
Accounts receivable 28,748 29,918
Inventories 23,783 20,434
Other current assets 5,209 4,985
--------- ---------
Total current assets 58,989 56,422
Plant and equipment, net 43,168 42,369
Goodwill, net of amortization 31,336 29,462
Intangibles, net of amortization 1,997 1,672
Other assets 16,312 16,263
--------- ---------
TOTAL ASSETS $ 151,802 $ 146,188
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 20,064 $ 17,931
Accrued expenses 13,132 15,230
Current maturities of long-term debt 2,000 2,000
Current maturities of notes payable 250 250
--------- ---------
Total current liabilities 35,446 35,411
Long-term debt 28,250 23,000
Notes payable 1,210 1,210
Other long-term liabilities 24,533 24,549
--------- ---------
Total long-term liabilities 53,993 48,759
Common stock and additional capital 20,243 20,074
Retained earnings 53,551 53,375
Accumulated other comprehensive loss:
Minimum pension liability adjustment(a) (11,431) (11,431)
--------- ---------
Total shareholders' equity 62,363 62,018
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 151,802 $ 146,188
========= =========
(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 2003 Earnings Results
NASHUA CORPORATION
RECONCILIATION OF NET INCOME TO EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION
(UNAUDITED)
THREE MONTHS
Periods ended March 28 and March 29, respectively --------------------------
In thousands 2003 2002
- ------------------------------------------------- ------ ------
Net income $ 176 $ 143
Add back:
Interest expense, net 289 394
Income tax provision 112 103
Depreciation on fixed assets 1,822 1,870
Amortization of intangible assets 163 --
------ ------
Earnings before interest, taxes, depreciation and amortization $2,562 $2,510
====== ======
First Quarter 2003 Earnings Results
NASHUA CORPORATION SELECTED FINANCIAL DATA
THREE MONTHS
Periods ended March 28 and March 29, respectively -------------------------------
Dollars in thousands (Unaudited) 2003 2002
- ------------------------------------------------- -------- --------
NET SALES
Label Products $ 23,225 $ 23,069
Specialty Paper Products 38,791 35,832
Imaging Supplies 6,042 6,059
Reconciling Items:
Eliminations (867) (468)
Other(a) 2 31
-------- --------
Net sales $ 67,193 $ 64,523
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PRETAX INCOME
Label Products $ 1,465 $ 961
Specialty Paper Products 616 1,282
Imaging Supplies 58 265
Reconciling Items:
Other income(a) -- 8
Unallocated corporate expenses (1,609) (1,876)
Interest expense, net (289) (394)
Net gain on curtailment of post-retirement plans 47 --
-------- --------
Total pretax income $ 288 $ 246
-------- --------
Depreciation and amortization $ 1,985 $ 1,870
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Investment in plant and equipment $ 1,095 $ 665
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(a) Represents other operating activity which falls below the quantitative
threshold for a reportable segment.