NASHUA, NH , 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,
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.
NASHUA CORPORATION SUMMARY RESULTS OF OPERATIONS
Periods ended June 27 and June 29,
respectively
Dollars in thousands, except per Three Months Six Months
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.
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.
NASHUA CORPORATION
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
======= ======= ======= =======
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
-------- -------- -------- --------
Contacts: Tom Brooker/John Patenaude Nashua Corporation
847-318-1797/603-880-2145 Rich Coyle Sard Verbinnen & Co
212-687-8080
Nashua (MM) (NASDAQ:NSHA)
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