NASHUA REPORTS 4TH Q. & 03 YEAR RESULTS

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NASHUA REPORTS 4TH Q. & 03 YEAR RESULTS

 user 2004-02-12 at 10:13:00 am Views: 95
  • #5092

    Nashua Reports Fourth Quarter and 2003 Year End Results

    NASHUA, N.H.–(BUSINESS WIRE)–Feb. 11, 2004–Nashua Corporation (NYSE: NSH), a premier 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, 2003.

    Net sales for the fourth quarter of 2003 were $75.2 million, compared to $75.0 million for the fourth quarter of 2002. Gross margin for the quarter was $13.8 million, or 18.3%, compared to $14.1 million, or 18.9%, for the fourth quarter of 2002. The Company reported a net loss for the fourth quarter of 2003 of $0.9 million, or $0.15 per share, compared with net income of $0.4 million, or $0.07 per share, for the fourth quarter of 2002. The results for the fourth quarter of 2003 included a one-time non-cash charge for postretirement healthcare benefits for New Hampshire-based union employees ($1.6 million), severance costs ($1.0 million) – partially offset by savings ($0.5 million) – and a one-time charge related to the settlement of certain commitments under the CEO’s employment contract ($0.3 million). These charges were previously disclosed by the Company in its January 21, 2004 news release. The fourth quarter results for 2002 included a net non-cash gain of $0.2 million related to the curtailment of pension and postretirement plans.

    Net sales for the year ended December 31, 2003, were $288.9 million, compared to $283.2 million for the year ended December 31, 2002. Gross margin for the full year was $53.8 million, or 18.6%, compared to $56.1 million, or 19.8%, for 2002. Net income for the full year was $0.1 million, or $0.02 per share, compared to $2.3 million, or $0.40 per share, for 2003.

    Andrew Albert, Chairman, President and Chief Executive Officer of Nashua Corporation said, “For the year 2003, Nashua reported increased sales and remained profitable in the face of intense competition and continued overcapacity in the paper industry. On balance, Nashua continues to perform acceptably and is taking decisive actions to both contain costs and grow by making strategic investments that improve plant utilization, leverage our national sales and marketing resources, expand our business offerings, and strengthen our relationships with customers.”

    Highlights for the year included:

    – The acquisition of the operations of the Label Company in St. Louis, Missouri, which provides additional flexibility for Nashua’s Label segment while enhancing the Company’s relationship with a longstanding customer and providing additional volume for Nashua’s Coating operations within its Specialty Paper segment.

    – Expansion of Nashua’s supermarket and wide format product lines through several small acquisitions that were completed in the fourth quarter of 2003. These acquisitions also enabled the Company to leverage its marketing and sales resources.

    – Strategic investments in equipment and information technology, which provide enhanced capabilities to service customers while increasing efficiency and reducing costs. These investments included new label printing and processing equipment and enhancements to the Company’s leading edge “Nashua Advantage” web-based ordering system and the introduction of a new “E Catalogue” that gives customers an easy and efficient way to order Nashua products.

    Albert stated, “Investments to provide customers with a wider array of products and reduction of costs through equipment and information systems upgrades will continue to be a primary focus in 2004.”

    Business Segment Highlights

    Nashua’s Label segment, which prints and converts product for grocery, food service, retail, transportation, entertainment and general industrial markets, reported sales for the fourth quarter of 2003 of $27.1 million, gross margin of $4.9 million, or 18.0%, and pre-tax operating income of $1.7 million. Sales for the fourth quarter of 2002 were $26.6 million, gross margin was $4.4 million, or 16.5%, and pre-tax operating income was $1.2 million.

    “Sales in our Label segment increased approximately 2% in the fourth quarter of 2003 compared to the fourth quarter of 2002. The increase is mainly attributable to the addition of a supermarket products business acquired in February 2003,” said Albert. “Margins improved due to a combination of manufacturing efficiencies and lower material costs. The improved profitability of the Label segment for the fourth quarter reflects the positive effect of our investments in equipment and continuing cost containment initiatives.”

    The Company’s Specialty Paper Products segment, which includes Nashua’s paper coating and converting business, reported sales for the fourth quarter of 2003 of $43.0 million, compared to $43.4 million for the fourth quarter of 2002. Gross margins for the quarter were $7.5 million, or 17.6%, compared to $8.7 million, or 20%, for the fourth quarter of 2002. Pre-tax operating income for the fourth quarter of 2003 was $0.6 million, compared to pre-tax income of $1.7 million for the fourth quarter of 2002.

    Said Albert, “The fourth quarter sales decline in the Specialty Paper segment resulted from the sale of the marginal cut sheet paper product line in the third quarter, together with declines in the mature dry gum, heat seal, carbonless and bond point of sale (POS) paper product lines. These declines were offset by increases in the thermal and wide format product lines. Margins decreased as a result of sales mix, severance cost and higher than forecasted workers’ compensation claims. Net income for the fourth quarter was negatively impacted by lower margins and one time severance costs.”

    Nashua’s Imaging Supplies, or Toner, segment reported sales for the fourth quarter of 2003 of $6.4 million, compared to $5.9 million for the fourth quarter of 2002. Gross margins for the quarter were $1.3 million, or 21%, compared to $1.1 million, or 18.8%, in the fourth quarter of 2002. Pre-tax income for the fourth quarter of 2003 was $0.4 million, compared to a $0.1 million loss for the fourth quarter of 2002.

    “Sales in the fourth quarter were positively impacted by greater resin and Ricoh-compatible toner sales. Increased volumes had a favorable impact on margins for the fourth quarter. We are encouraged by the strengthening of sales and margin in the fourth quarter,” said Albert.

    Use of Non-GAAP

    EBITDA is presented in the tables accompanying this release as supplemental information which 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. 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.

    Guidance

    In discussing the expectations for the coming year, Albert said, “Sales, margin and expense control are key to achieving our 2004 budgeted goals. We expect sales to increase and to be in a range between $294 million and $310 million. Also, we expect net income for the year to be in the range between $3.0 million, or $.51 per share, and $3.4 million, or $.57 per share.”

    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, 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 U http://www.nashua.com/U.

    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,” “will,” “expects” 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 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.

    Fourth Quarter 2003 Earnings Results
    NASHUA CORPORATION SUMMARY RESULTS OF OPERATIONS
    Periods ended December 31,
     respectively                      (unaudited)
    In thousands, except per share    Three Months       Twelve Months
     amounts                         2003      2002      2003      2002
    ---------------------------------------------------------------------
    Net sales                      $ 75,207  $ 74,984  $288,906  $283,190
    Cost of products sold            61,445    60,836   235,101   227,102
                                   --------  --------  --------  --------
    Gross margin                   $ 13,762  $ 14,148  $ 53,805  $ 56,088
    Gross margin %                     18.3%     18.9%     18.6%     19.8%
    Selling, distribution and
     administrative expenses         12,481    12,640    47,768    47,839
    Research                            590       724     2,469     3,139
    Loss from equity investment         219        24       523        59
    Interest expense, net               327       327     1,295     1,492
    Restructuring and unusual
     income (a)                         (68)      (64)      (68)      (88)
    Net (gain) loss on curtailment
     of postretirement plans (b)      1,646      (181)    1,599      (181)
                                   --------  --------  --------  --------
      Income (loss) before income
       taxes                         (1,433)      678       219     3,828
    Income tax provision (benefit)     (544)      252       117     1,512
                                   --------  --------  --------  --------
      Net income (loss)            $   (889) $    426  $    102  $  2,316
                                   --------  --------  --------  --------
    Basic earnings per share:
    Net income (loss) per common
     share                         $  (0.15) $   0.07  $   0.02  $   0.40
                                   --------  --------  --------  --------
    Average common shares             5,901     5,815     5,869     5,783
                                   --------  --------  --------  --------
    Diluted earnings per share:
    Net income (loss) per common
     share assuming dilution       $  (0.15) $   0.07  $   0.02  $   0.39
                                   --------  --------  --------  --------
    Average common and potential
     common shares                    5,901     5,932     5,999     5,873
                                   --------  --------  --------  --------
    (a) Net restructuring and unusual income for the three and twelve
        months ended December 31, 2003 of $68,000 and the three and twelve
        months ended December 31, 2002 of $64,000 and $88,000 represent
        net reductions to our previously established restructuring
        reserve.
    (b) Net (gain) loss on curtailment of postretirement plans for the
        three and twelve months ended December 31, 2003 of $1.6 million
        represents a loss with respect to postretirement healthcare
        benefits for union employees located in New Hampshire. Net (gain)
        loss on curtailment of postretirement plans for the three and
        twelve months ended December 31, 2002 of $.2 million represents a
        net gain related to changes to the Nashua Corporation Retirement
        Plan for Salaried Employees, the Supplement Executive Retirement
        Plan and postretirement benefit plans.
    
    Fourth Quarter 2003 Earnings Results
    NASHUA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET
                                             December  December
                                                31        31
    Dollars in thousands                       2003      2002
    -----------------------------------------------------------
    Assets
      Cash and cash equivalents              $  1,183  $  1,085
      Accounts receivable                      31,665    29,918
      Inventories                              22,735    20,434
      Other current assets                      5,205     4,985
                                             --------  --------
        Total current assets                   60,788    56,422
      Plant and equipment, net                 40,777    42,369
      Goodwill, net of amortization            31,471    29,462
      Intangibles, net of amortization          1,781     1,672
      Other assets                             16,859    16,263
                                             --------  --------
        Total assets                         $151,676  $146,188
                                             --------  --------
    Liabilities and Shareholders' Equity
      Accounts payable                       $ 20,474  $ 17,931
      Accrued expenses                         14,368    15,230
      Current maturities of long-term debt      3,400     2,000
      Current maturities of notes payable         250       250
                                             --------  --------
        Total current liabilities              38,492    35,411
      Long-term debt                           24,200    23,000
      Notes payable                               960     1,210
      Other long-term liabilities              26,827    24,549
                                             --------  --------
        Total long-term liabilities            51,987    48,759
      Common stock and additional capital      20,418    20,074
      Retained earnings                        53,477    53,375
      Accumulated other comprehensive loss:
        Minimum pension liability
         adjustment(a)                        (12,698)  (11,431)
                                             --------  --------
        Total shareholders' equity             61,197    62,018
                                             --------  --------
        Total liabilities and shareholders'
         equity                              $151,676  $146,188
                                             --------  --------
    (a) Our minimum pension liability adjustment for the year ended
        December 31, 2003 represents an increase in our pension liability
        resulting from a decline in the discount rate and expected return
        on plan assets utilized to compute our pension liability. Our
        minimum pension liability adjustment for the year ended December
        31, 2002 represents an increase in our pension liability resulting
        from a decline in the fair market values of equities held by
        company- sponsored pension plans and a decline in the discount
        rate and expected return on plan assets.
    
    Fourth Quarter 2003 Earnings Results
    NASHUA CORPORATION
    RECONCILIATION OF NET INCOME TO EARNINGS BEFORE INTEREST,
    TAXES, DEPRECIATION AND AMORTIZATION
    Periods ended December 31,
     respectively                      Three Months       Twelve Months
    Dollars in thousands (unaudited)  2003     2002      2003      2002
    ---------------------------------------------------------------------
    Net income (loss)              $   (889) $    426  $    102  $  2,316
    Add back:
      Interest expense, net             327       327     1,295     1,492
      Income tax provision (benefit)   (544)      252       117     1,512
      Depreciation on fixed assets    1,896     1,853     7,461     7,294
      Amortization of intangible
       assets                           122        99       481       287
                                   --------  --------  --------  --------
    Earnings before interest,
     taxes, depreciation and
     amortization                  $    912  $  2,957  $  9,456  $ 12,901
                                   --------  --------  --------  --------
    
    Fourth Quarter 2003 Earnings Results
    NASHUA CORPORATION SELECTED FINANCIAL DATA
    Periods ended December 31,
     respectively
    Dollars in thousands              Three Months       Twelve Months
     (unaudited)                     2003      2002      2003      2002
    ---------------------------------------------------------------------
    NET SALES
    Label Products                 $ 27,080  $ 26,591  $101,801  $100,837
    Specialty Paper Products         42,960    43,438   169,023   160,736
    Imaging Supplies                  6,352     5,857  $ 23,459    24,042
    Reconciling Items:
        Eliminations                 (1,185)     (902)   (5,379)   (2,456)
        Other(a)                          -         -         2        31
                                   --------  --------  --------  --------
      Net sales                    $ 75,207  $ 74,984  $288,906  $283,190
                                   --------  --------  --------  --------
    PRETAX INCOME
    Label Products                 $  1,725 $   1,190  $  5,844  $  5,529
    Specialty Paper Products            565     1,668     4,372     6,534
    Imaging Supplies                    370       (63)      444       911
    Reconciling Items:
        Other income (loss)(a)          (17)       (1)      (19)        6
        Unallocated corporate
         expenses                    (2,171)   (2,034)   (7,596)   (7,929)
        Interest expense, net          (327)     (327)   (1,295)   (1,492)
        Restructuring and unusual
         income                          68        64        68        88
        Net gain (loss) on
         curtailment of post
         retirement plans            (1,646)      181    (1,599)      181
                                   --------  --------  --------  --------
      Total pretax income (loss)   $ (1,433) $    678  $    219  $  3,828
                                   --------  --------  --------  --------
    Depreciation and amortization  $  2,018  $  1,952  $  7,942  $  7,581
                                   --------  --------  --------  --------
    Investment in plant and
     equipment                     $  1,022  $  1,733  $  4,307  $  4,349
                                   --------  --------  --------  --------
    (a) Represents other operating activity which falls below the
        quantitative threshold for a reportable segment.