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: Tom Brooker/John Patenaude Nashua Corporation
847-318-1797/603-880-2145 Rich Coyle Sard Verbinnen & Co
212-687-8080
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