Business News

NASHUA REPORTS FOURTH QUARTER AND 2007 YEAR END RESULTS

Friday 15. February 2008 - 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, 2007.

Net sales for the fourth quarter of 2007 were $72.3 million, compared to $69.3 million for the fourth quarter of 2006. Gross margin for the fourth quarter of 2007 was $12.9 million, or 17.9%, compared to $10.7 million, or 15.4%, for the fourth quarter of 2006. Income from continuing operations before taxes for the fourth quarter of 2007 was $2.0 million, compared to $8.5 million for the fourth quarter of 2006. Income from continuing operations for the fourth quarter of 2007 was $1.1 million, or $0.21 per share, compared to income from continuing operations of $4.8 million, or $0.77 per share, for the fourth quarter of 2006. There was no income from discontinued operations for the fourth quarter of 2007. Income from discontinued operations for the fourth quarter of 2006 was $0.5 million. Net income was $1.1 million, or $0.21 per share, for the fourth quarter of 2007, compared to net income of $5.3 million, or $0.86 per share, in the fourth quarter of 2006. Earnings before interest, taxes, depreciation and amortization, also known as EBITDA, from continuing operations was $3.4 million for the fourth quarter of 2007, compared to $10.7 million for the fourth quarter of 2006, which included the $9.0 million gain from the sale of real estate in Merrimack, New Hampshire for 2006.

The fourth quarter 2006 results included a gain of $9.0 million related to the sale of the Merrimack, New Hampshire real estate, $0.2 million of income related to the curtailment of the postretirement benefits for certain hourly employees, and an expense of $0.6 million related to an impairment of intangible assets.

Net sales for the year ended December 31, 2007 were $272.8 million, compared to $269.0 million for the year ended December 31, 2006. Gross margin for the year ended December 31, 2007 was $48.3 million, or 17.7%, compared to $40.7 million, or 15.1%, for the year ended December 31, 2006. Income from continuing operations for the year ended December 31, 2007 was $3.9 million, or $0.67 per share, compared to income from continuing operations of $2.0 million, or $0.32 per share, for the year ended December 31, 2006. Income from discontinued operations for the year ended December 31, 2007 was $0.3 million, or $0.05 per share, compared to income from discontinued operations of $1.6 million, or $0.26 per share for the year ended December 31, 2006. Net income for the year ended December 31, 2007 was $4.1 million, or $0.72 per share, compared to $3.6 million, or $0.58 per share, for the year ended December 31, 2006. EBITDA from continuing operations was $12.0 million for the year ended December 31, 2007, compared to $12.1 million for the year ended December 31, 2006. EBITDA for the year ended December 31, 2006 included the $9.0 million gain from the sale of the Merrimack, New Hampshire real estate.

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 2007 of $31.0 million and gross margin of $5.7 million, or 18.4%. Net sales for the fourth quarter of 2006 were $28.6 million and gross margin was $4.5 million, or 15.6%. For fiscal year 2007, net sales were $115.5 million and gross margin was $21.0 million, or 18.2%. For 2006, net sales were $109.7 million and gross margin was $16.3 million, or 14.9%.

The sales increase in the Label Products segment in the fourth quarter of 2007 is primarily a result of an increase in the automatic identification product line due to incremental orders from an existing customer. Gross margins improved due to the increase in sales volume and the overall reduction in manufacturing cost.

Specialty Paper Products:

Nashua’s Specialty Paper Products segment, which includes its paper coating and converting businesses, reported net sales for the fourth quarter of 2007 of $41.9 million and gross margin of $7.0 million, or 16.7%. Net sales for the fourth quarter of 2006 were $42.0 million and gross margin was $6.3 million, or 15.0%. Net sales for fiscal year 2007 were $160.3 million and gross margin was $26.6 million, or 16.6%. Net sales for fiscal year 2006 were $162.5 million and gross margin was $24.1 million, or 14.9%.

Sales in the Specialty Paper Product segment were relatively flat in the fourth quarter of 2007 as compared to the same period in 2006. Margins increased due to improved plant efficiencies and the overall reduction in manufacturing cost.

Thomas Brooker, Nashua’s President and Chief Executive Officer, stated, “I am pleased with the year to date results and our overall progress in the marketplace. Our revenue growth and profit improvement are due to the excellent work of all Nashua employees. We will continue to focus on profitable sales growth opportunities, operational improvement and financial prudence in 2008.”


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.