SOURCE: Nashua

April 30, 2007 16:10 ET

Nashua Reports First Quarter 2007 Results

NASHUA, NH--(Marketwire - April 30, 2007) - Nashua Corporation (NASDAQ: NSHA), a manufacturer and marketer of labels and thermal specialty papers, today announced financial results for the first quarter ended March 30, 2007.

Net sales for the first quarter of 2007 were $65.2 million, compared to $64.8 million for the first quarter of 2006. Gross margin for the first quarter of 2007 was $11.5 million, or 17.6%, compared to $9.8 million, or 15.1%, for the first quarter of 2006. Nashua reported income from continuing operations before taxes of $1.1 million in the first quarter of 2007 compared to a loss from continuing operations before taxes of $0.9 million in the first quarter of 2006. Income from continuing operations was $0.6 million, or $0.10 per share, for the first quarter of 2007, compared to a loss from continuing operations of $0.6 million, or $0.09 per share, for the first quarter of 2006. Income from discontinued operations was $0.3 million for the first quarter of 2007 compared to income of $1.0 million for the first quarter of 2006. Net income for the first quarter of 2007 was $0.9 million, or $0.15 per share, compared to net income of $0.4 million, or $0.07 per share, for the first quarter of 2006. Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA) was $2.4 million for the first quarter of 2007 compared to $0.9 million for the first quarter of 2006.

Pretax income from continuing operations in the first quarter of 2007 includes severance cost of $0.3 million primarily related to changes in the Company's management structure. The first quarter of 2006 included severance cost of $0.7 million related to personnel reductions. In addition, the first quarter of 2007 reflected a decrease in pension cost of $0.5 million from the first quarter of 2006.

Discontinued operations in the first quarter of 2007 included $0.3 million related to the recovery of legal fees associated with the favorable conclusion of the previously disclosed Cerion litigation. Income from discontinued operations net income of $1.0 million in the first quarter of 2006 included $0.7 million of income from the toner and developer business operations and sale of certain toner and developer assets and a gain of $0.3 million related to the liquidation of an inactive foreign subsidiary. The Company exited the toner and developer business in the first quarter of 2006.

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 of $28.2 million and gross margins of $5.1 million, or 17.9%, for the first quarter of 2007. For the first quarter of 2006, net sales were $26.3 million and gross margins were $3.4 million, or 12.8%.

The net sales increase of 7% for the segment resulted mainly from improved sales in the automatic identification product line. The gross margin increase is primarily attributable to increased volumes and a lower cost structure resulting from the label plant consolidation in 2006.

Nashua's Specialty Paper Products segment, which includes the paper coating and converting businesses, reported net sales of $38.0 million and gross margin of $6.3 million, or 16.6%, for the first quarter of 2007. For the first quarter of 2006, net sales were $39.3 million and gross margins were $6.3 million, or 16.0%.

The sales decline in the Specialty Paper Products segment was mainly the result of declines in the financial and ribbon product lines in the converted business which offset increased sales of thermal products. Margins for the first quarter of 2006 included severance cost of $0.4 million.

Thomas Brooker, President and Chief Executive Officer, stated, "The actions taken last year to streamline management, combine the sales force and consolidate plants are beginning to result in stronger financial results. We continue to focus on our strategy to leverage our resources to generate top line growth and pursue profitable opportunities while controlling costs. We recently added six sales representatives who are expected to help us continue to grow revenue and better utilize our manufacturing capacity."

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.

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 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," 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 impairment of goodwill, 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 2007 Earnings Results

NASHUA CORPORATION SUMMARY RESULTS OF OPERATIONS

Periods ended March 30, 2007 and March 31, 2006,
 respectively
Dollars in thousands, except per share amounts          Three Months
 (Unaudited)                                          2007         2006
                                                  -----------  -----------

Net sales                                         $    65,169  $    64,811
Cost of products sold                                  53,718       55,023
                                                  -----------  -----------
Gross margin                                      $    11,451  $     9,788
Gross margin %                                           17.6%        15.1%

Selling, distribution and administrative expenses      10,066       10,576
Research and development expenses                         274          201
Loss from equity investment                                71           14
Interest expense, net                                     112          307
Other income (1)                                         (168)        (362)
                                                  -----------  -----------
     Income (loss) from continuing operations
      before income taxes (benefit)                     1,096         (948)
Income tax provision (benefit)                            459         (385)
                                                  -----------  -----------
     Income (loss) from continuing operations             637         (563)

Income from discontinued operations, net of
 taxes(2)                                                 289        1,004
                                                  -----------  -----------
     Net income                                   $       926  $       441
                                                  ===========  ===========

Earnings per share:
 Income (loss) from continuing operations         $      0.10  $     (0.09)

 Income from discontinued operations                     0.05         0.16
                                                  -----------  -----------

Net income per common share                       $      0.15  $      0.07
                                                  ===========  ===========
Average common shares                                   6,140        6,123
                                                  ===========  ===========

Income (loss) per common share from continuing
 operations assuming dilution                     $      0.10  $     (0.09)
Income per common share from discontinued
 operations assuming dilution                            0.05         0.16
                                                  -----------  -----------

Net income per common share assuming dilution     $      0.15  $      0.07
                                                  ===========  ===========
Average common and potential common shares              6,199        6,123
                                                  ===========  ===========

(1) Other income for the three months ended March 30, 2007 represents
income from the deferred gain from the sale of real estate.   Other income
for the three months ended March 31, 2006 represents income from the rental
of unused warehouse space at our New Hampshire facilities.
(2) Income from discontinued operations for the three months ended March
30, 2007 represents reimbursement of our deductible related to the
Cerion litigation which was dismissed by the courts.  Income from
discontinued operations for the three months ended March 31, 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)
                                                  March 30    December 31
Dollars in thousands                                2007          2006
                                                ------------  ------------

Assets
 Cash and cash equivalents                      $      1,270  $        289
 Accounts receivable                                  27,392        29,568
 Inventories                                          25,598        23,764
 Other current assets                                  2,733         2,670
                                                ------------  ------------
     Total current assets                             56,993        56,291

 Plant and equipment, net                             25,545        26,399
 Goodwill, net of amortization                        31,516        31,516
 Intangibles, net of amortization                        519           606
 Other assets                                         12,747        12,803
                                                ------------  ------------
     Total assets                               $    127,320  $    127,615
                                                ============  ============

Liabilities and Shareholders' Equity
 Accounts payable                               $     15,682  $     16,620
 Accrued expenses                                      9,625         8,639
 Current maturities of notes payable                      83            83
                                                ------------  ------------
     Total current liabilities                        25,390        25,342

 Long-term debt                                        3,800         4,750
 Notes payable                                           264           285
 Other long-term liabilities                          28,573        28,211
                                                ------------  ------------
     Total long-term liabilities                      32,637        33,246

 Common stock and additional capital                  22,385        22,342
 Retained earnings                                    61,581        61,358
 Accumulated other comprehensive loss:
     Minimum pension liability adjustment(a)         (14,673)      (14,673)
                                                ------------  ------------
     Total shareholders' equity                       69,293        69,027
                                                ------------  ------------

     Total liabilities and shareholders' equity $    127,320  $    127,615
                                                ============  ============

(a) Our minimum pension liability adjustment represents a 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 March 30, 2007 and March 31, 2006,
 respectively                                             Three Months
In thousands (Unaudited)                                 2007       2006
                                                      ---------- ---------

Net income (loss) from continuing operations          $      637 $    (563)
Add back:
  Interest expense, net                                      112       307
  Income tax provision (benefit)                             459      (385)
  Depreciation on fixed assets                             1,132     1,407
  Amortization of intangible assets                           87       163
                                                      ---------- ---------

Earnings from continuing operations before interest,
 taxes, depreciation and amortization                 $    2,427 $     929
                                                      ========== =========



NASHUA CORPORATION SELECTED FINANCIAL DATA

Periods ended March 30, 2007 and March 31, 2006,
 respectively                                           Three Months
Dollars in thousands   (Unaudited)                    2007         2006
                                                  -----------  -----------

NET SALES

Label Products                                    $    28,219  $    26,282
Specialty Paper Products                               38,037       39,287
All Other                                                 908          661

Reconciling Items:
         Eliminations                                  (1,995)      (1,419)
                                                  -----------  -----------
   Net sales                                      $    65,169  $    64,811
                                                  -----------  -----------


Gross Margin

Label Products                                    $     5,053  $     3,363
Specialty Paper Products                                6,326        6,282
All Other                                                 110          143

Reconciling Items:
         Eliminations                                     (38)           -
                                                  -----------  -----------
  Total gross margin from continuing operations        11,451        9,788
                                                  -----------  -----------

DEPRECIATION AND AMORTIZATION

Label Products                                    $       539  $       557
Specialty Paper Products                                  512          647
Reconciling Item:
         Selling, Administrative and Research and
          Development                                     168          366
                                                  -----------  -----------
  Total depreciation and amortization             $     1,219  $     1,570
                                                  -----------  -----------

INVESTMENT IN PLANT AND EQUIPMENT

Label Products                                    $        48  $       180
Specialty Paper Products                                  192          474
Reconciling Item:
         Selling, Administrative and Research and
          Development                                      38           12
                                                  -----------  -----------
  Total Investment in plant and equipment         $       278  $       666
                                                  -----------  -----------

PENSION AND POSTRETIREMENT EXPENSE

Label Products                                    $       100  $       352
Specialty Paper Products                                   37          243
Reconciling Item:
         Selling, Administrative and Research and
          Development                                     225          222
                                                  -----------  -----------
  Total pension and postretirement expense        $       362  $       817
                                                  -----------  -----------

Contact Information

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

    Rich Coyle
    Sard Verbinnen & Co
    212-687-8080