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