SOURCE: Nashua Corporation

November 01, 2007 16:30 ET

Nashua Reports Third Quarter 2007 Results

NASHUA, NH--(Marketwire - November 1, 2007) - 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 28, 2007.

Net sales for the third quarter of 2007 were $67.6 million, compared to $69.5 million for the third quarter of 2006. Gross margin for the third quarter of 2007 was $11.6 million, or 17.1%, compared to $10.7 million, or 15.4%, for the third quarter of 2006. Income from continuing operations before income taxes for the third quarter of 2007 was $1.3 million compared to a loss from continuing operations before taxes of $1.8 million for the third quarter of 2006. Income from continuing operations for the third quarter of 2007 was $0.9 million, or $0.16 per share, compared to a loss from continuing operations of $1.2 million, or $0.20 per share, in the third quarter of 2006. Net income for the third quarter of 2007 was $0.9 million, or $0.16 per share, compared to net loss of $1.2 million, or $0.19 per share, in the third quarter of 2006. Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $2.8 million for the third quarter of 2007, compared to $0.3 million for the third quarter of 2006.

The results for the third quarter of 2006 included a curtailment loss of $939,000 related to the freezing of pension benefits for certain hourly employees which was partially offset by a curtailment gain of $206,000 associated with the cessation of postretirement benefits for the same active hourly employees. The results for the third quarter of 2006 also included severance charges of $740,000. Nashua did not record any curtailment losses or gains or severance charges during the third quarter of 2007

Net sales for the nine months ended September 28, 2007 were $200.5 million, compared to $199.8 million for the nine months ended September 29, 2006. Gross margin for the nine months ended September 28, 2007 was $35.3 million, or 17.6%, compared to $30.0 million, or 15.0%, for the nine months ended September 29, 2006. Income from continuing operations before income taxes for the nine months ended September 28, 2007 was $4.5 million, compared to a loss from continuing operations before income taxes of $4.4 million for the nine months ended September 29, 2006. Income from continuing operations for the first nine months of 2007 was $2.7 million, or $0.47 per share, compared to loss from continuing operations of $2.8 million, or $0.45 per share, in the first nine months of 2006. Net income for the nine months ended September 28, 2007 was $3.0 million, or $0.52 per share, compared to a net loss of $1.7 million, or $0.28 per share, for the nine months ended September 29, 2006. EBITDA from continuing operations was $8.5 million for the nine months ended September 28, 2007, compared to $1.4 million for the same period in 2006.

Commenting on the results for the quarter, Tom Brooker, President and Chief Executive Officer, stated, "While sales decreased slightly in the third quarter, we were successful in increasing gross margin dollars and percentages, largely through decreases in manufacturing cost. Net income improved as a result of our increased margins and continued focus on expense control. Sales on a year-to-date basis increased slightly while margins and net income increased substantially due to cost improvements and continued expense control. We will focus both on increasing sales revenue and expense control as we work to improve performance."

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 2007 of $27.8 million and gross margin of $5.0 million, or 17.9%. Net sales for the third quarter of 2006 were $28.2 million and gross margin was $4.7 million, or 16.5%.

Sales in the Label segment decreased slightly on a quarter-to-quarter basis as declines in the retail shelf and supermarket scale product lines were partially offset by increases in our automatic identification and pharmacy product lines. Margins increased in the quarter due to lower manufacturing cost and the pass-through of price increases to customers.

The Company's Specialty Paper Products segment, which includes the paper coating and converting businesses, reported net sales in the third quarter of 2007 of $40.4 million and gross margin of $6.4 million, or 15.9%. Net sales in the third quarter of 2006 were $41.5 million and gross margin was $6.1 million, or 14.6%.

Sales in the Specialty Paper segment decreased 2.9% primarily due to lower sales in our ribbons, laser, financial and IBM-branded product lines which were partially offset by increases in our thermal point of sale, thermal facesheet, and ticket and tag product lines. While margin dollars decreased due to the lower volume, margin percentage increased due to lower manufacturing costs and costs for certain raw materials together with a stronger mix of higher-margin products.

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.

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 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," "expects," "will," "plans," 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 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.

NASHUA CORPORATION SUMMARY RESULTS OF OPERATIONS


Periods ended September 28 and
 September 29, respectively
Dollars in thousands, except
 per share amounts                  Three Months          Nine Months
 (Unaudited)                      2007       2006       2007       2006
                                ---------  ---------  ---------  ---------
Net sales                       $  67,610  $  69,487  $ 200,467  $ 199,756
Cost of products sold              56,046     58,772    165,156    169,795
                                ---------  ---------  ---------  ---------
Gross margin                    $  11,564  $  10,715  $  35,311  $  29,961
Gross margin %                       17.1%      15.4%      17.6%      15.0%

Selling, distribution and
 administrative expenses            9,959     11,281     30,397     32,597
Research and development
 expenses                             174        128        619        522
Loss from equity investment            29         71        169        190
Interest expense, net                 372        620        520      1,221
Net loss on curtailment of
 postretirement plans                   -        733          -        733
Other income (1)                     (297)      (286)      (912)      (944)
                                ---------  ---------  ---------  ---------
     Income (loss) from cont
      ops before income taxes
      (benefit)                     1,327     (1,832)     4,518     (4,358)
Income tax provision (benefit)        475       (619)     1,777     (1,600)
                                ---------  ---------  ---------  ---------
     Income (loss) from
      continuing operations           852     (1,213)     2,741     (2,758)

Income from discontinued
 operations, net of taxes(2)            -         54        289      1,058
                                ---------  ---------  ---------  ---------
     Net income (loss)          $     852  $  (1,159) $   3,030  $  (1,700)
                                =========  =========  =========  =========

Earnings per share:
 Income (loss) from continuing
  operations                    $    0.16  $   (0.20) $    0.47  $   (0.45)

 Income from discontinued
  operations                            -       0.01       0.05       0.17
                                ---------  ---------  ---------  ---------

Net income (loss) per common
 share                          $    0.16  $   (0.19) $    0.52  $   (0.28)
                                =========  =========  =========  =========
Average common shares               5,386      6,146      5,864      6,133
                                =========  =========  =========  =========

Income (loss) per common share
 from continuing operations
 assuming dilution              $    0.16  $   (0.20) $    0.46  $   (0.45)
Income per common share from
 discontinued operations
 assuming dilution                      -       0.01       0.05       0.17
                                ---------  ---------  ---------  ---------

Net income (loss) per common
 share assuming dilution        $    0.16  $   (0.19) $    0.51  $   (0.28)
                                =========  =========  =========  =========
Average common and potential
 common shares                      5,465      6,146      5,934      6,133
                                =========  =========  =========  =========


(1) Other income for the three and nine months ended September 28, 2007
    represents income from the deferred gain from the sale of real estate
    and royalty income related to the 2006 sale of toner formulations.
    Other income for the three and nine months ended September 29, 2006
    represents income from the rental of unused warehouse space at our New
    Hampshire facilities.

(2) 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.  Income from
    discontinued operations for the nine months ended September 29, 2006
    includes the results of our Toner and Developer business which we
    exited effective March 31, 2006 and income from the liquidation of an
    inactive foreign subsidiary.



NASHUA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS

                                               (Unaudited)
                                              September 28    December 31
Dollars in thousands                              2007           2006
                                              -------------  -------------
Assets
 Cash and cash equivalents                    $       4,612  $         289
 Accounts receivable                                 29,564         29,568
 Inventories                                         22,498         23,764
 Other current assets                                 2,958          2,670
                                              -------------  -------------
     Total current assets                            59,632         56,291

 Plant and equipment, net                            23,958         26,399
 Goodwill, net of amortization                       31,516         31,516
 Intangibles, net of amortization                       375            606
 Other assets                                        11,443         12,803
                                              -------------  -------------
     Total assets                             $     126,924  $     127,615
                                              =============  =============

Liabilities and Shareholders' Equity
 Accounts payable                             $      17,533  $      16,620
 Accrued expenses                                     8,612          8,639
 Current maturities of long-term debt                   625              -
 Current maturities of notes payable                     83             83
                                              -------------  -------------
     Total current liabilities                       26,853         25,342

 Long-term debt                                      12,175          4,750
 Notes payable                                          229            285
 Other long-term liabilities                         23,711         28,211
                                              -------------  -------------
     Total long-term liabilities                     36,115         33,246

 Common stock and additional capital                 20,080         22,342
 Retained earnings                                   58,549         61,358
 Accumulated other comprehensive loss:
     Minimum pension liability adjustment(a)        (14,673)       (14,673)
                                              -------------  -------------
     Total shareholders' equity                      63,956         69,027
                                              -------------  -------------

     Total liabilities and shareholders'
      equity                                  $     126,924  $     127,615
                                              =============  =============

(a)Our minimum pension liability adjustment represents an decrease in our
   minimum pension liability resulting from changes to our pension plans
   in 2006.



NASHUA CORPORATION
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION AND AMORTIZATION


Periods ended September 28 and
 September 29, respectively            Three Months         Nine Months
In thousands (Unaudited)              2007      2006      2007      2006
                                    --------- --------  --------- --------

Net income (loss) from continuing
 operations                         $     852 $ (1,213) $   2,741 $ (2,758)
Add back:
  Interest expense, net                   372      620        520    1,221
  Income tax provision (benefit)          475     (619)     1,777   (1,600)
  Depreciation on fixed assets          1,080    1,338      3,311    4,077
  Amortization of intangible assets        43      163        180      491
                                    --------- --------  --------- --------

Earnings from continuing operations
 before interest, taxes, depreciation
 and amortization                   $   2,822 $    289  $   8,529 $  1,431
                                    ========= ========  ========= ========



NASHUA CORPORATION SELECTED FINANCIAL DATA


Periods ended September 28 and
 September 29, respectively
Dollars in thousands                Three Months          Nine Months
 (Unaudited)                      2007       2006       2007       2006
                                ---------  ---------  ---------  ---------
NET SALES


Label Products                  $  27,848  $  28,196  $  84,515  $  81,178
Specialty Paper Products           40,357     41,549    118,424    120,503
All Other                             993        663      2,998      2,151

Reconciling Items:
      Eliminations                 (1,588)      (921)    (5,470)    (4,076)
                                ---------  ---------  ---------  ---------
   Net sales                    $  67,610  $  69,487  $ 200,467  $ 199,756
                                ---------  ---------  ---------  ---------


GROSS MARGIN

Label Products                  $   4,986  $   4,655  $  15,312  $  11,840
Specialty Paper Products            6,398      6,063     19,548     17,858
All Other                             180        (11)       489        255

Reconciling Items:
      Eliminations                      -          8        (38)         8
                                ---------  ---------  ---------  ---------
  Total gross margin from
   continuing operations        $  11,564  $  10,715  $  35,311  $  29,961
                                ---------  ---------  ---------  ---------


DEPRECIATION AND AMORTIZATION

Label Products                  $     504  $     534  $   1,559  $   1,589
Specialty Paper Products              500        676      1,518      1,943
Reconciling Item:
      Corporate                       119        291        414      1,036
                                ---------  ---------  ---------  ---------
  Total depreciation and
   amortization                 $   1,123  $   1,501  $   3,491  $   4,568
                                ---------  ---------  ---------  ---------

INVESTMENT IN PLANT AND
 EQUIPMENT

Label Products                  $     132  $     322  $     239  $     674
Specialty Paper Products              261        342        603      1,514
Reconciling Item:
      Corporate                        14         55         68        207
                                ---------  ---------  ---------  ---------
  Total Investment in plant
   and equipment                $     407  $     719  $     910  $   2,395
                                ---------  ---------  ---------  ---------

PENSION AND POSTRETIREMENT
 EXPENSE

Label Products                  $      80  $     207  $     237  $     598
Specialty Paper Products               60        171        177        513
Reconciling Item:
      Corporate                       274        409        724      1,280
                                ---------  ---------  ---------  ---------
  Total pension and
   postretirement expense       $     414  $     787  $   1,138  $   2,391
                                ---------  ---------  ---------  ---------

Contact Information

  • Contact:
    Nashua Corporation
    Tom Brooker
    847-318-1797
    John Patenaude
    603-880-2145

    Rich Coyle
    Sard Verbinnen & Co.
    212-687-8080