Ennis, Inc. (the “Company") (NYSE: EBF) today reported financial results for the quarter and the year ended February 28, 2010.

Highlights
  • Revenues for the quarter increased by $4.1 million over the same quarter last year, or 3.5%. For the year revenues were down $66.3 million over the previous year, or 11.4%.
  • Gross profit margins increased 610 basis points (“bps”) over the comparable quarter and 150 bps over the previous year.
  • Diluted earnings (loss) per share increased for the quarter from ($2.44) per share to $.38 per share for the same quarter this fiscal year. For the year, diluted earnings (loss) per share increased from ($1.27) per share for fiscal year 2009 to $1.36 per share for fiscal year 2010.

Financial Overview

For the quarter, our net sales increased by $4.1 million, or 3.5%, from $117.3 million for the three months ended February 28, 2009 to $121.4 million for the three months ended February 28, 2010. Our Print sales for the quarter were $66.1 million, compared to $73.8 million for the same quarter last year, or a decrease of 10.4%. Apparel sales for the quarter were $55.3 million, compared to $43.6 million for the same quarter last year, or an increase of 26.8%. Our overall gross profit margins ("margins") during the quarter increased from 22.1% for the three months ended February 28, 2009 to 28.2% for the three months ended February 28, 2010. Our Print margins increased from 23.7% to 26.6%, while our Apparel margins increased from 19.3% to 30.1%, for the respective periods. Our earnings (loss) for the quarter increased from ($62.9) million for the three months ended February 28, 2009 to $9.8 million for the three months ended February 28, 2010, primarily due to the improved margins realized by both our segments during the quarter and impact associated with the goodwill and trademark impairment charge of $67.9 million during the comparable period last year. Our diluted earnings (loss) per share ("EPS") increased from ($2.44) per share to $.38 per share for the three months ended February 28, 2009 and February 28, 2010, respectively.

Net sales decreased from $584.0 million for the year ended February 28, 2009 to $517.7 million for year ended February 28, 2010, a decrease of $66.3 million or 11.4%. Our Print sales for the year were $282.3 million, compared to $327.0 million for the same period last year, a decrease of $44.7 million or 13.7%. Our Apparel sales decreased from $257.0 million for the year ended February 28, 2009 to $235.4 million for the year ended February 28, 2010, a decrease of $21.6 million, or 8.4%. Overall, our margins increased 150 bps, from 24.6% for fiscal year 2009 to 26.1% for fiscal year 2010. Our Print margins increased from 26.1% to 27.6%, while our Apparel margins increased from 22.6% to 24.4%, for the year ended February 28, 2009 and February 28, 2010, respectively. Our earnings (loss) for the period increased from ($32.8) million for the year ended February 28, 2009 to $35.2 million for the year ended February 28, 2010, primarily due to a goodwill and trademarks asset impairment charge of $67.9 million during fiscal year 2009 and improved operating margins realized during fiscal 2010. Our diluted earnings (loss) per share increased from ($1.27) per share to $1.36 per share for the year ended February 28, 2009 and February 28, 2010, respectively.

The Company, during the quarter, generated $18.8 million in EBITDA (earnings before interest, taxes, depreciation, amortization and impairment charges) compared to $11.1 million for the comparable quarter last year. For the year ending February 28, 2010, the Company generated $70.1 million in EBITDA compared to $71.0 million for the comparable period last year.

Reconciliation of GAAP to Non-GAAP measure (dollars in thousands):
  Three months ended       Year ended
February 28, February 28,
2010     2009 2010     2009
 
Earnings (loss) before income taxes $ 15,395 $ (60,545 ) $ 55,669 $ (13,059 )
Interest expense 545 660 2,627 3,363
Depreciation/amortization 2,854 3,144 11,817 12,860
Impairment of goodwill and trademarks   -   67,851     -   67,851  
EBITDA (non-GAAP) $ 18,794 $ 11,110   $ 70,113 $ 71,015  
 

Keith Walters, Chairman, President & CEO, commented by saying, “As expected, due to the economic environment, fiscal year 2010 proved to be an extremely challenging year from many perspectives. From a sales perspective, we continued to see double digit sales declines across both sectors through the first nine months of the year, and while the Apparel sector rebounded nicely in the fourth quarter on a comparable basis, the Print sector continued to show some continued weakness. From a margin perspective, even given the challenging sales landscape, we were able to improve our margins across both sectors with our Apparel sector improving 180 bps and our Print sector improving 150 bps. We were able to accomplish this through a successful implementation of our cost reduction initiatives which were tied to our projected volume levels and our continued disciplined approach to business. Going forward, we see fiscal year 2011 continuing to be a challenging year as well. While we expect sales to improve across both sectors next year, we are starting to see paper price increases on the Print side and cotton prices, on our Apparel side, are once again at levels not seen in quite some time. Our ability to be able to pass these costs increases on to the market is unknown at this point. Much will depend upon not only the continued recovery of the economy, but the actions of our competitors as well. We will also have the challenge, in this coming fiscal year, of bringing on line our new apparel manufacturing facility in Agua Prieta, Mexico. This facility once completed and fully operational is expected to significantly reduce our apparel manufacturing costs; however, it will not be without its challenges and adverse costs to get it to that point. So while much work was done and much was accomplished this past year, in an extremely challenging environment, much still needs to be accomplished in fiscal year 2011. Again, while many challenges remain, we will continue to stay focused on the task at hand. And we again enter this year with excellent liquidity, an even lower leverage ratio and stronger balance sheet, which should allow us to take advantage of other unique opportunities should they present themselves.”

About Ennis

Ennis, Inc. ( www.ennis.com) is primarily engaged in the production of and sale of business forms, apparel and other business products. The Company is one of the largest private-label printed business product suppliers in the United States. Headquartered in Midlothian, Texas, the Company has production and distribution facilities strategically located throughout the United States of America, Mexico and Canada, to serve the Company’s national network of distributors. The Company, together with its subsidiaries, operates in two business segments: the Print Segment ("Print") and Apparel Segment ("Apparel"). The Print Segment is primarily engaged in the business of manufacturing and selling business forms, other printed business products, printed and electronic media, presentation products, flex-o-graphic printing, advertising specialties and Post-it® Notes, internal bank forms, secure and negotiable documents, envelopes and other custom products. The Apparel Segment manufactures T-Shirts and distributes T-Shirts and other active-wear apparel through six distribution centers located throughout North America.

Safe Harbor Under The Private Securities Litigation Reform Act of 1995

Certain statements contained in this press release that are not historical facts are forward-looking statements that involve a number of known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement expressed or implied by such forward-looking statements. The words “anticipate,” “preliminary,” “expect,” “believe,” “intend” and similar expressions identify forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for such forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. These statements are subject to numerous uncertainties, which include, but are not limited to, the Company’s ability to effectively manage its business functions while growing its business in a rapidly changing environment, the Company’s ability to adapt and expand its services in such an environment, the variability in the prices of paper and other raw materials. Other important information regarding factors that may affect the Company’s future performance is included in the public reports that the Company files with the Securities and Exchange Commission. The Company undertakes no obligation to revise any forward-looking statements or to update them to reflect events or circumstances occurring after the date of this release, or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The inclusion of any statement in this release does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.
Ennis, Inc.
Condensed Financial Information
(In thousands, except per share amounts)
             
Three months ended Twelve months ended

Condensed Operating Results
February 28, February 28,
2010 2009 2010 2009
Revenues $ 121,385 $ 117,326 $ 517,738 $ 584,029
Cost of goods sold   87,172   91,397     382,419     440,553  
Gross profit 34,213 25,929 135,319 143,476
Impairment of goodwill and trademarks - 67,851 - 67,851
Operating expenses   18,321   18,181     76,737     85,703  
Operating income (loss) 15,892 (60,103 ) 58,582 (10,078 )
Other expense   497   442     2,913     2,981  
Earnings (loss) before income taxes 15,395 (60,545 ) 55,669 (13,059 )
Income tax expense   5,561   2,376     20,463     19,709  
Net earnings (loss) $ 9,834 $ (62,921 ) $ 35,206   $ (32,768 )
 

Earnings (loss) per share
Basic $ 0.38 $ (2.44 ) $ 1.37   $ (1.27 )
Diluted $ 0.38 $ (2.44 ) $ 1.36   $ (1.27 )
 
February 28,

Condensed Balance Sheet Information
2010 2009
Assets
Current assets
Cash $ 21,063 $ 9,286
Accounts receivable, net 57,249 57,467
Inventories, net 75,137 101,167
Other   12,990     14,334  
  166,439     182,254  
Property, plant & equipment 65,720 54,672
Other   200,540     199,454  
$ 432,699   $ 436,380  
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 27,463 $ 24,723
Accrued expenses 22,338 18,947
Current portion of long-term debt   -     210  
  49,801     43,880  
Long-term debt 41,817 76,185
Deferred credits and pension liability   27,821     24,309  
Total liabilities   119,439     144,374  
 
Shareholders’ equity   313,260     292,006  
$ 432,699   $ 436,380  
 
 
February 28,

Condensed Cash Flow Information
2010 2009
Cash provided by operating activities $ 82,567 $ 44,216
Cash used in investing activities (20,244 ) (5,350 )
Cash used in financing activities (50,488 ) (32,464 )
Effect of exchange rates on cash   (58 )   (509 )
Change in cash 11,777 5,893
Cash at beginning of period   9,286     3,393  
Cash at end of period $ 21,063   $ 9,286  

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