SOURCE: Nashua Corporation

August 13, 2009 16:15 ET

Nashua Reports Second Quarter 2009 Results

NASHUA, NH--(Marketwire - August 13, 2009) - Nashua Corporation (NASDAQ: NSHA), a manufacturer and marketer of labels, thermal specialty papers and imaging products, today announced financial results for the second quarter ended July 3, 2009.

Net sales for the second quarter of 2009 were $61.2 million, compared to $67.0 million for the second quarter of 2008. Gross margin for the second quarter of 2009 was $8.9 million, or 14.5%, compared to $11.3 million, or 16.9%, for the second quarter of 2008. Loss before income taxes was $0.3 million in the second quarter of 2009 compared to income before income taxes of $0.5 million in the second quarter of 2008. Net loss was $0.3 million in the second quarter of 2009, or $0.06 per share, compared to net income of $0.3 million, or $0.06 per share, in the second quarter of 2008. Earnings before interest, taxes, depreciation and amortization and special charges (adjusted EBITDA) were $1.9 million for the second quarter of 2009 compared to $1.4 million for the second quarter of 2008. 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. The results for the second quarter of 2009 include special charges of $1.2 million related to the proposed merger of the company with Cenveo, Inc., severance expense of $0.2 million related to workforce reductions, and environmental expenses of $0.1 million.

Net sales for the six months ended July 3, 2009 were $123.7 million, compared to $130.9 million for the first six months of 2008. Gross margin for the first six months of 2009 was $17.8 million, or 14.4%, compared to $21.2 million, or 16.2%, for the first six months of 2008. Loss before income taxes for the first six months of 2009 was $0.6 million compared to a loss before income taxes of $0.1 million in the first six months of 2008. Net loss was $0.6 million for the first six months of 2009, or $0.12 per share, compared to net loss of $0.1 million, or $0.01 per share, for the first six months of 2008. Adjusted EBITDA was $2.9 million for the first six months of 2009 compared to $2.4 million for the first six months of 2008.

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 second quarter of 2009 of $27.6 million and gross margin of $2.9 million, or 10.4%. Net sales for the second quarter of 2008 were $25.1 million and gross margin was $4.0 million, or 15.8%.

Label Products segment sales increased 9.8 percent mainly due to increased sales in automatic identification and pharmacy product lines. Gross margins were lower due to an inventory adjustment and competitive pricing pressures in the marketplace.

Nashua's Specialty Paper Products 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 Products segment reported net sales for the second quarter of 2009 of $34.6 million and gross margin of $5.8 million, or 16.7%. Net sales for the second quarter of 2008 were $42.6 million and gross margin was $7.2 million, or 16.8%.

Sales in the Specialty Paper Products segment decreased approximately 19 percent. The decline was mainly attributable to lower sales in the wide format product line as a result of softness in the construction industry; decline in the thermal point of sale product line due to softness in retail sectors; and decline in the thermal facesheet product line due to softness in the overall label market. Gross margins declined as a result of the lower volumes and severance cost.

Thomas Brooker, President and Chief Executive Officer, stated, "Given the status of the economy and the markets we serve, the company has performed well."

On May 6, 2009, the company entered into an Agreement and Plan of Merger with Cenveo, Inc. and NM Acquisition Corp., a wholly owned subsidiary of Cenveo. Consummation of the merger is subject to the approval of the Merger Agreement by our shareholders at a special shareholder meeting to be held at the company's Park Ridge, Illinois office on September 15, 2009.

Use of Non-GAAP Measures

Adjusted 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. Adjusted EBITDA is used by management in the computation of ratios utilized for financing purposes and for planning and forecasting in future periods. Adjusted EBITDA is calculated by adding net interest expense, income tax expense, depreciation and amortization back into net income. Adjusted 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 Adjusted 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.

Second Quarter 2009 Earnings Results



NASHUA CORPORATION SUMMARY RESULTS OF OPERATIONS



Periods ended July 3 and June
 27, respectively
Dollars in thousands, except
 per share amounts                  Three Months           Six Months
 (Unaudited)                      2009       2008       2009       2008
                                ---------  ---------  ---------  ---------

Net sales                       $  61,196  $  67,003  $ 123,674  $ 130,929
Cost of products sold              52,334     55,676    105,922    109,744
                                ---------  ---------  ---------  ---------
Gross margin                    $   8,862  $  11,327  $  17,752  $  21,185
Gross margin %                       14.5%      16.9%      14.4%      16.2%

Selling and distribution
 expenses                           4,957      6,823     10,348     13,075
Administrative expenses             3,168      4,093      6,763      7,854
Research and development
 expenses                             144        178        291        364
Special charges (1)                 1,235          -      1,235          -
Loss from equity investment            14         92         12        129
Interest expense                       23        128        188        291
Interest income                         -        (24)        (1)       (72)
Change in fair value of
 interest rate swap                    22       (241)       143        119
Other income (2)                     (370)      (223)      (579)      (487)
                                ---------  ---------  ---------  ---------
     Income (loss) from
      continuing operations
      before income taxes            (331)       501       (648)       (88)

Income tax provision                    -        201          -        (35)
                                ---------  ---------  ---------  ---------

     Net income (loss)          $    (331) $     300  $    (648) $     (53)
                                =========  =========  =========  =========

Earnings per share:

Net income (loss) per common
 share                          $   (0.06) $    0.06  $   (0.12) $   (0.01)
                                =========  =========  =========  =========
Average common shares               5,317      5,412      5,316      5,404
                                =========  =========  =========  =========

Net income (loss) per common
 share assuming dilution        $   (0.06) $    0.06  $   (0.12) $   (0.01)
                                =========  =========  =========  =========
Average common and potential
 common shares                      5,317      5,518      5,316      5,404
                                =========  =========  =========  =========


(1) Special charges for the three and six months ended July 3, 2009
    represents expenses related to the proposed merger with Cenveo.
(2) Other income for the three and six months ended July 3, 2009 and
    June 27, 2008 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.




NASHUA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS



                                             (Unaudited)
                                               July 3,       December 31,
Dollars in thousands                             2009            2008
                                            --------------  --------------

Assets
  Cash and cash equivalents                 $            -  $        1,592
  Accounts receivable                               25,586          27,469
  Inventories                                       20,075          21,785
  Other current assets                               7,050           5,599
                                            --------------  --------------
     Total current assets                           52,711          56,445

  Plant and equipment, net                          18,628          20,154
  Goodwill, net of amortization                     17,374          17,374
  Intangibles, net of amortization                     236             260
  Other assets                                       4,512           5,970
                                            --------------  --------------
     Total assets                           $       93,461  $      100,203
                                            ==============  ==============

Liabilities and Shareholders' Equity
  Accounts payable                          $       14,906  $       11,968
  Accrued expenses                                   7,755           8,900
  Current maturities of long-term debt               3,000           8,125
  Current maturities of notes payable                    5              18
                                            --------------  --------------
     Total current liabilities                      25,666          29,011

  Long-term debt                                         -           2,800
  Other long-term liabilities                       46,527          46,879
                                            --------------  --------------
     Total long-term liabilities                    46,527          49,679

  Common stock and additional capital               21,087          20,684
  Retained earnings                                 39,057          39,705
  Accumulated other comprehensive loss:
     Minimum pension liability
      adjustment(a)                                (38,876)        (38,876)
                                            --------------  --------------
     Total shareholders' equity                     21,268          21,513
                                            --------------  --------------

     Total liabilities and shareholders'
      equity                                $       93,461  $      100,203
                                            ==============  ==============


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




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



Periods ended July 3 and June 27,
 respectively                             Three Months       Six Months
In thousands (Unaudited)                  2009     2008     2009     2008
                                        -------  -------  -------  -------

Net income (loss) from continuing
 operations                             $  (331) $   300  $  (648) $   (53)
Add back:
  Interest expense                           23      128      188      291
  Interest income                             -      (24)      (1)     (72)
  Change in fair value of interest rate
   swap                                      22     (241)     143      119
  Special charges                         1,235        -    1,235        -
  Income tax provision                        -      201        -      (35)
  Depreciation and amortization             992    1,052    1,977    2,103
                                        -------  -------  -------  -------

Earnings from continuing operations
 before interest, taxes, depreciation,
 amortization and special charges       $ 1,941  $ 1,416  $ 2,894  $ 2,353
                                        =======  =======  =======  =======




NASHUA CORPORATION SELECTED FINANCIAL DATA



Periods ended July 3 and June
 27, respectively
Dollars in thousands                Three Months          Six Months
 (Unaudited)                      2009       2008       2009       2008
                                ---------  ---------  ---------  ---------

NET SALES

Label Products                  $  27,615  $  25,144  $  54,802  $  51,170
Specialty Paper Products           34,623     42,646     70,375     81,234
All Other                             890        920      2,484      2,013

Reconciling Items:
         Eliminations              (1,932)    (1,707)    (3,987)    (3,488)
                                ---------  ---------  ---------  ---------
   Net sales                    $  61,196  $  67,003  $ 123,674  $ 130,929
                                ---------  ---------  ---------  ---------


GROSS MARGIN

Label Products                  $   2,881  $   3,980  $   5,764  $   7,785
Specialty Paper Products            5,766      7,174     11,166     13,067
All Other                             258        188        865        354

Reconciling Items:
         Eliminations                 (43)       (15)       (43)       (21)
                                ---------  ---------  ---------  ---------
  Total gross margin from
   continuing operations        $   8,862  $  11,327  $  17,752  $  21,185
                                ---------  ---------  ---------  ---------


DEPRECIATION AND AMORTIZATION

Label Products                  $     402  $     457  $     798  $     924
Specialty Paper Products              489        501        983      1,003
Reconciling Item:
         Corporate                    101         94        196        176
                                ---------  ---------  ---------  ---------
  Total depreciation and
   amortization                 $     992  $   1,052  $   1,977  $   2,103
                                ---------  ---------  ---------  ---------

INVESTMENT IN PLANT AND
 EQUIPMENT

Label Products                  $     121  $      52  $     228  $     155
Specialty Paper Products               64         34        196        171
Reconciling Item:
         Corporate                      3         45          3        330
                                ---------  ---------  ---------  ---------
  Total  investment in plant
   and equipment                $     188  $     131  $     427  $     656
                                ---------  ---------  ---------  ---------

PENSION AND POSTRETIREMENT
 EXPENSE

Label Products                  $      70  $      67  $     141  $     134
Specialty Paper Products               50         48        100         96
Reconciling Item:
         Corporate                    403        169        806        337
                                ---------  ---------  ---------  ---------
  Total pension and
   postretirement expense       $     523  $     284  $   1,047  $     567
                                ---------  ---------  ---------  ---------


Contact Information

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

    Rich Coyle
    Sard Verbinnen & Co
    212-687-8080