SOURCE: Nashua Corporation

February 24, 2009 16:15 ET

Nashua Reports Fourth Quarter and 2008 Year End Results

NASHUA, NH--(Marketwire - February 24, 2009) - Nashua Corporation (NASDAQ: NSHA), a manufacturer and marketer of labels, thermal and specialty papers, and imaging products, today announced financial results for the fourth quarter and year ended December 31, 2008.

Net sales for the fourth quarter of 2008 were $67.7 million, compared to $72.3 million for the fourth quarter of 2007. Gross margin for the fourth quarter of 2008 was $7.7 million, or 11.3%, compared to $12.9 million, or 17.9%, for the fourth quarter of 2007. Loss from continuing operations before income taxes for the fourth quarter of 2008 was $2.9 million, compared to income from continuing operations before income taxes of $2.0 million for the fourth quarter of 2007. Net loss for the fourth quarter of 2008 was $6.0 million, or $1.11 per share, compared to net income from continuing operations of $1.1 million, or $0.21 per share, for the fourth quarter of 2007. Loss before interest, taxes, depreciation and amortization from continuing operations was $1.2 million for the fourth quarter of 2008, compared to earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations of $3.4 million for the fourth quarter of 2007.

Excluding the net after tax effect of the items discussed below and a non-cash tax charge, the net loss for the fourth quarter is $0.6 million. The fourth quarter 2008 loss from continuing operations before income taxes includes severance expense of $0.4 million, a change in the fair value of the rate swap of $0.3 million and expense of $1.3 million associated with the closure of the label converting facility located in Jacksonville, Florida. Excluding these items, the fourth quarter loss from continuing operations before income taxes is $0.9 million. The net loss for the fourth quarter of 2008 includes a non-cash tax charge of $4.3 million related to the valuation reserve on deferred tax assets.

Net sales for the year ended December 31, 2008 were $264.9 million, compared to $272.8 million for the year ended December 31, 2007. Gross margin for the year ended December 31, 2008 was $39.4 million, or 14.9%, compared to $48.3 million, or 17.7%, for the year ended December 31, 2007. Loss from continuing operations for the year ended December 31, 2008 was $19.8 million, or $3.65 per share, compared to income from continuing operations of $3.9 million, or $0.67 per share, for the year ended December 31, 2007. Net loss for the year ended December 31, 2008 was $19.8 million, or $3.65 per share, compared to net income of $4.1 million, or $0.72 per share, for the year ended December 31, 2007. EBITDA from continuing operations, excluding the goodwill impairment charge, was $3.2 million for the year ended December 31, 2008, compared to EBITDA for continuing operations of $12.0 million for the year ended December 31, 2007.

Excluding the net after tax effect of the items discussed below and a non-cash tax charge, the net income for the year is $0.4 million. The 2008 loss from continuing operations before income taxes includes a non-cash goodwill impairment charge of $14.1 million, severance expense of $1.1 million, a change in the fair market value in the interest rate swap of $0.5 million, and expense of $1.3 million associated with the closure of the label converting facility located in Jacksonville, Florida. Excluding these items, the 2008 income from continuing operations before income taxes is $0.6 million. The 2008 net loss includes the non-cash tax charge of $4.3 million related to the valuation reserve on deferred tax assets.

Business Segment Highlights

Label Products:

Nashua's Label Products segment, which prints and converts product for grocery, food service, retail, transportation, entertainment and general industrial markets, reported net sales for the fourth quarter of 2008 of $28.0 million and gross margin of $1.6 million, or 5.9%. Net sales for the fourth quarter of 2007 were $31.0 million and gross margin was $5.7 million, or 18.4%. For fiscal year 2008, net sales were $105.1 million and gross margin was $13.3 million, or 12.7%. For 2007, net sales were $115.5 million and gross margin was $21.0 million, or 18.2%.

Label Products segment sales declined $3.0 million in the fourth quarter of 2008 as compared to the fourth quarter of 2007 due to the decline in automatic identification label sales mainly attributable to the loss of a major customer earlier in the year. Gross margins for the quarter were negatively impacted by the lower volume and the cost associated with the closure of the Jacksonville, Florida manufacturing facility. The segment incurred unabsorbed fixed cost during the transfer of manufacturing from our Florida plant to our Nebraska and Tennessee manufacturing facilities.

Specialty Paper Products:

Nashua's Specialty Paper Products segment reported net sales for the fourth quarter of 2008 of $39.9 million and gross margin of $5.7 million, or 14.3%. Net sales for the fourth quarter of 2007 were $41.9 million and gross margin was $7.0 million, or 16.7%. Net sales for fiscal year 2008 were $162.2 million and gross margin was $25.3 million, or 15.6%. Net sales for fiscal year 2007 were $160.3 million and gross margin was $26.6 million, or 16.6%.

Specialty Paper Products segment sales declined $2.0 million in the fourth quarter of 2008 as compared to the fourth quarter of 2007 due to the decline in the sales in wide format and thermal facesheet product lines. Margins were negatively impacted by the shortfall in sales and competitive pricing pressures in the marketplace.

Thomas Brooker, Nashua's President and Chief Executive Officer, stated, "Adjusted net income from operations for 2008 is $0.4 million after excluding the expenses related to the items noted in the press release. Although this result is below the expectation we had at the beginning of 2008, this has been a challenging year. We consolidated label manufacturing facilities, closed wide format distribution centers and reduced our workforce by approximately ten percent. While these were difficult decisions which had a significant negative impact on our 2008 results, they were required to allow us to enter 2009 with a lower cost structure. We continue to focus our sales efforts in targeted key markets, control expenses and improve productivity throughout our business which should allow us to grow our business profitability. Our balance sheet is financially sound and we believe that our strong financial posture will allow us to weather the recessionary storm."

Use of Non-GAAP

EBITDA is presented as supplemental information, which the management of Nashua believes, may be useful to some investors in evaluating Nashua 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. Nashua'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. When used in this press release, the words "should," "believe" 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, Nashua'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 Nashua'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 Nashua's estimates only as of the date of this press release and should not be relied upon as representing Nashua estimates as of any subsequent date. While Nashua may elect to update forward-looking statements at some point in the future, Nashua specifically disclaims any obligation to do so, even if its estimates change.

Fourth Quarter 2008 Earnings Results


NASHUA CORPORATION SUMMARY RESULTS OF OPERATIONS


Periods ended December 31,
 respectively
Dollars in thousands,
 except per share amounts        Three Months            Twelve Months
 (Unaudited)                   2008        2007        2008        2007

Net sales                   $   67,735  $   72,332  $  264,903  $  272,799
Cost of products sold           60,073      59,389     225,498     224,545
                            ----------  ----------  ----------  ----------
Gross margin                $    7,662  $   12,943  $   39,405  $   48,254
Gross margin %                    11.3%       17.9%       14.9%       17.7%

Selling and distribution
 expenses                        6,390       6,219      25,937      24,088
Administrative expenses          3,830       4,463      14,857      16,991
Research and development
 expenses                          150         187         666         806
Loss from equity investment          1          31         192         200
Interest expense                   119         215         535         765
Interest income                     (4)        (68)        (98)       (179)
Change in fair value of
 interest rate swap                344         214         538         295
Goodwill  impairment charge (1)      -           -      14,142           -
Other income (2)                  (232)       (284)       (958)     (1,196)
                            ----------  ----------  ----------  ----------
   Income (loss) from
    continuing operations
    before income taxes         (2,936)      1,966     (16,406)      6,484

Income tax provision (3)         3,086         856       3,358       2,633
                            ----------  ----------  ----------  ----------

   Income (loss) from
    continuing operations       (6,022)      1,110     (19,764)      3,851

Income from discontinued
 operations, net of taxes (4)        -           -           -         289
                            ----------  ----------  ----------  ----------
   Net income (loss)        $   (6,022) $    1,110  $  (19,764) $    4,140
                            ==========  ==========  ==========  ==========

Earnings per share:
 Income (loss) from
  continuing operations     $    (1.11) $     0.21  $    (3.65) $     0.67

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

Net income (loss) per
 common share               $    (1.11) $     0.21  $    (3.65) $     0.72
                            ==========  ==========  ==========  ==========
Average common shares            5,422       5,394       5,414       5,743
                            ==========  ==========  ==========  ==========

Income (loss) per common
 share from continuing
 operations assuming
 dilution                   $    (1.11) $     0.20  $    (3.65) $     0.66
Income per common share
 from discontinued
 operations assuming
 dilution                            -           -           -        0.05
                            ----------  ----------  ----------  ----------

Net income (loss) per
 common share assuming
 dilution                   $    (1.11) $     0.20  $    (3.65) $     0.71
                            ==========  ==========  ==========  ==========
Average common and
 potential common shares         5,422       5,479       5,414       5,817
                            ==========  ==========  ==========  ==========


(1) Goodwill impairment charge for the twelve months ended December 31,
2008 relates to our Specialty Paper Products business.
(2) Other income for the three and twelve months ended December 31, 2008
and 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.
(3) Income tax provision for the three and twelve months ended December 31,
2008 includes a $4.3 million valuation reserve charge related to our
derferred tax assets.
(4) Income from discontinued operations for the twelve months ended
December 31, 2007 represents the reimbursement of our deductible related to
the Cerion litigation which was dismissed by the courts.



Fourth Quarter 2008 Earnings Results


NASHUA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS


                                                 (Unaudited)
                                                 December 31   December 31
Dollars in thousands                                 2008          2007
                                                 -----------   -----------

Assets
 Cash and cash equivalents                       $     1,592   $     7,388
 Accounts receivable                                  27,469        29,375
 Inventories                                          21,785        19,998
 Other current assets                                  5,599         2,828
                                                 -----------   -----------
     Total current assets                             56,445        59,589

 Plant and equipment, net                             20,154        23,291
 Goodwill, net of amortization                        17,374        31,516
 Intangibles, net of amortization                        260           331
 Other assets                                          5,970        12,975
                                                 -----------   -----------
     Total assets                                $   100,203   $   127,702
                                                 ===========   ===========

Liabilities and Shareholders' Equity
 Accounts payable                                $    11,968   $    14,432
 Accrued expenses                                      8,900         9,185
 Current maturities of long-term debt                  8,125         1,875
 Current maturities of notes payable                      18            31
                                                 -----------   -----------
     Total current liabilities                        29,011        25,523

 Long-term debt                                        2,800        10,925
 Other long-term liabilities                          46,879        29,746
                                                 -----------   -----------
     Total long-term liabilities                      49,679        40,671

 Common stock and additional capital                  20,684        20,203
 Retained earnings                                    39,705        59,648
 Accumulated other comprehensive loss:
     Minimum pension liability adjustment(a)         (38,876)      (18,343)
                                                 -----------   -----------
     Total shareholders' equity                       21,513        61,508
                                                 -----------   -----------

     Total liabilities and shareholders' equity  $   100,203   $   127,702
                                                 ===========   ===========

(a) Our minimum pension liability adjustment represents an increase in our
minimum pension liability.



Fourth Quarter 2008 Earnings Results


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


Periods ended December 31,
 respectively                     Three Months            Twelve Months
In thousands (Unaudited)        2008        2007        2008        2007
                            ----------  ----------  ----------  ----------

Net income (loss) from
 continuing operations      $   (6,022) $    1,110  $  (19,764) $    3,851
Add back:
  Interest expense                 119         215         535         765
  Interest income                   (4)        (68)        (98)       (179)
  Change in fair value of
   interest rate swap              344         214         538         295
  Income tax provision           3,086         856       3,358       2,633
  Goodwill Impairment                -           -      14,142           -
  Depreciation and
   amortization                  1,306       1,117       4,442       4,608
                            ----------  ----------  ----------  ----------

Earnings (loss) from
 continuing operations
 before interest, taxes,
 depreciation, amortization
 and goodwill impairment
 charges                    $   (1,171) $    3,444  $    3,153  $   11,973
                            ==========  ==========  ==========  ==========



Fourth Quarter 2008 Earnings Results


NASHUA CORPORATION SELECTED FINANCIAL DATA


Periods ended December 31,
 respectively
Dollars in thousands              Three Months            Twelve Months
 (Unaudited)                    2008        2007        2008        2007
                            ----------  ----------  ----------  ----------

NET SALES

Label Products              $   28,030  $   31,020  $  105,143  $  115,535
Specialty Paper Products        39,898      41,855     162,244     160,279
All Other                        1,392       1,069       4,378       4,067

Reconciling Items:
         Eliminations           (1,585)     (1,612)     (6,862)     (7,082)
                            ----------  ----------  ----------  ----------
   Net sales                $   67,735  $   72,332  $  264,903  $  272,799
                            ----------  ----------  ----------  ----------


GROSS MARGIN

Label Products              $    1,642  $    5,715  $   13,332  $   21,027
Specialty Paper Products         5,718       7,006      25,332      26,554
All Other                          291         209         736         698

Reconciling Items:
         Eliminations               11          13           5         (25)
                            ----------  ----------  ----------  ----------

  Total gross margin from
   continuing operations    $    7,662  $   12,943  $   39,405  $   48,254
                            ----------  ----------  ----------  ----------


DEPRECIATION AND AMORTIZATION

Label Products              $      713  $      474  $    2,082  $    2,033
Specialty Paper Products           499         533       1,996       2,051
Reconciling Item:
         Corporate                  94         110         364         524
                            ----------  ----------  ----------  ----------
  Total depreciation and
   amortization             $    1,306  $    1,117  $    4,442  $    4,608
                            ----------  ----------  ----------  ----------

INVESTMENT IN PLANT AND
 EQUIPMENT

Label Products              $      134  $      161  $      609  $      400
Specialty Paper Products           304         160         587         763
Reconciling Item:
         Corporate                 122         115         452         183
                            ----------  ----------  ----------  ----------
  Total  investment in
   plant and equipment      $      560  $      436  $    1,648  $    1,346
                            ----------  ----------  ----------  ----------

PENSION AND POSTRETIREMENT
 EXPENSE

Label Products              $       81  $       79  $      291  $      316
Specialty Paper Products            59          59         210         236
Reconciling Item:
         Corporate                 219         242         755         966
                            ----------  ----------  ----------  ----------
  Total pension and
   postretirement expense   $      359  $      380  $    1,256  $    1,518
                            ----------  ----------  ----------  ----------

Contact Information

  • Contact:

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

    Rich Coyle
    Sard Verbinnen & Co
    212-687-8080