Ennis, Inc. Reports Results For The Year And Quarter Ended February 28, 2011

Ennis, Inc. (the “Company"), (NYSE: EBF), today reported financial results for the quarter and the year ended February 28, 2011.

Highlights
  • Revenues for the year increased by $32.3 million over the same period last year, or 6.2%. For the quarter revenues were up $10.0 million over the previous year, or 8.2%.
  • Gross profit margins increased 200 basis points (“bps”) over the prior year, from 26.1% to 28.1% for the fiscal year ended February 28, 2010 and 2011, respectively.
  • Diluted earnings per share increased by 26.5% for the fiscal year, from $1.36 per share for fiscal year 2010 to $1.72 per share for fiscal year 2011.

Financial Overview

For the quarter, consolidated net sales increased by $10.0 million, or 8.2%, from $121.4 million for the quarter ended February 28, 2010 to $131.4 million for the quarter ended February 28, 2011. Print sales for the quarter were $66.2 million, compared to $66.1 million for the same quarter last year, or an increase of 0.2%. Apparel sales for the quarter were $65.2 million, compared to $55.3 million for the same quarter last year, or an increase of 17.9%. Overall gross profit margins ("margins") during the quarter decreased slightly from 28.2% for the three months ended February 28, 2010 to 27.5% for the three months ended February 28, 2011. Print margins increased from 26.6% to 26.9%, while our Apparel margins decreased from 30.1% to 28.0%, due to higher cotton costs and the impact of the start-up of our Agua Prieta facility. While our Apparel margins decreased slightly over the comparable quarter last year, they were in line with our nine month numbers (27.8% for the nine months ended November 30, 2010 compared to 28.0% for the current quarter). Net earnings were $9.8 million, or 8.1% of sales, for the three months ended February 28, 2010 and $9.8 million, or 7.5% of sales, for the quarter ended February 28, 2011. Diluted EPS for the quarter remained at $0.38 per share, due to the impact of higher cotton costs and the impact of the Agua Prieta startup. We estimate that the impact of the start-up of Agua Prieta during the quarter was approximately $2.4 million or $1.6 million after tax.

Net sales increased from $517.7 million for the year ended February 28, 2010 to $550.0 million for the year ended February 28, 2011, an increase of $32.3 million or 6.2%. Print sales for the year were $272.7 million, compared to $282.3 million for the same period last year, or a decrease of 3.4%. Apparel sales for the year were $277.3 million, compared to $235.4 million for the same period last year, or an increase of 17.8%. Overall, margins increased 200 bps, from 26.1% for fiscal year 2010 to 28.1% for fiscal year 2011. Print margins increased from 27.6% to 28.3%, while Apparel margins increased from 24.4% to 27.9%, for the year ended February 28, 2010 and 2011, respectively. Net earnings increased from $35.2 million, or 6.8% of sales, for the year ended February 28, 2010 to $44.6 million, or 8.1% of sales, for the year ended February 28, 2011. Diluted earnings increased from $1.36 per share to $1.72 per share for the year ended February 28, 2010 and 2011, respectively, or 26.5%. We estimate that the start-up impact associated with the Agua Prieta facility was approximately $4.6 million ($3.0 million after tax) for the period. We still estimate the total negative impact associated with the start-up of the Agua Prieta facility to be within our original guidance of around $9.0 million, with the majority of the remaining portion being incurred during the first and second quarter of fiscal year 2012.

The Company, during the quarter, generated $17.5 million of EBITDA (earnings before interest, taxes, depreciation, and amortization) compared to $18.8 million for the comparable quarter last year. For the year ended February 28, 2011, the Company generated $81.5 million of EBITDA compared to $70.1 million for the comparable period last year.
           
Three months ended Year ended
February 28, February 28,
2011 2010 2011 2010
 
Earnings before income taxes $ 14,595 $ 15,395 $ 69,417 $ 55,669
Interest expense 262 545 1,234 2,627
Depreciation/amortization   2,599   2,854   10,897   11,817
EBITDA (non-GAAP) $ 17,456 $ 18,794 $ 81,548 $ 70,113
 

Keith Walters, Chairman, Chief Executive Officer and President, commented as follows, “We are pleased with the operational results for the year, especially considering all the challenges and the start-up of our new manufacturing facility located in Agua Prieta, Mexico. Operationally, both sectors showed positive margins improvements for the year. Our Print margins were up 70 bps, while Apparel margins were up 350 bps for the year. The Apparel sector continued to show strong sales growth, with an increase of 17.9% for the quarter. While we have been successful to date in managing the increases in our raw material costs, we continue to be concerned with the potential impact of cotton pricing on our operational results for fiscal year 2012. Our ability to continue to manage this potential cost increase will be dependent upon many factors, a number of which are outside our control. Examples are: the continued recent positive development in employment numbers, the availability of cotton, the impact of current gasoline prices on consumers discretionary spending and lastly, the pricing policies of our competitors. The construction of our new apparel manufacturing facility in Agua Prieta, Mexico continues to progress and nears completion. We continue to test processes, calibrate equipment and train employees, but expect to be producing greater than 1.0 million pounds of fabric out of this facility during the upcoming quarter. We continue to anticipate potential cost savings to be realized once this facility reaches its full production capacity. Many challenges will present themselves for fiscal year 2012; however, we feel confident in being able to meet them. We will continue to be vigilant to deliver the planned results.”

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 Year ended

Condensed Operating Results
February 28, February 28,
2011 2010 2011 2010
Revenues $ 131,407 $ 121,385 $ 549,999 $ 517,738
Cost of goods sold   95,316   87,172   395,501     382,419  
Gross profit margin 36,091 34,213 154,498 135,319
Operating expenses   21,183   18,321   83,677     76,737  
Operating income 14,908 15,892 70,821 58,582
Other expense   313   497   1,404     2,913  
Earnings before income taxes 14,595 15,395 69,417 55,669
Income tax expense   4,776   5,561   24,786     20,463  
Net earnings $ 9,819 $ 9,834 $ 44,631   $ 35,206  
 

Earnings per share
Basic $ 0.38 $ 0.38 $ 1.73   $ 1.37  
Diluted $ 0.38 $ 0.38 $ 1.72   $ 1.36  
 
February 28, February 28,

Condensed Balance Sheet Information
2011 2010
Assets
Current assets
Cash $ 12,305 $ 21,063
Accounts receivable, net 58,359 57,249
Inventories, net 100,363 75,137
Other   11,371     12,990  
  182,398     166,439  
Property, plant & equipment 93,661 65,720
Other   197,669     200,540  
$ 473,728   $ 432,699  
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 18,868 $ 27,463
Accrued expenses   27,644     22,338  
  46,512     49,801  
Long-term debt 50,586 41,817
Deferred credits   28,947     27,821  
Total liabilities   126,045     119,439  
 
Shareholders’ equity   347,683     313,260  
$ 473,728   $ 432,699  
 
Year ended
February 28,

Condensed Cash Flow Information
2011 2010
Cash provided by operating activities $ 32,766 $ 82,567
Cash used in investing activities (35,985 ) (20,244 )
Cash used in financing activities (6,005 ) (50,488 )
Effect of exchange rates on cash   466     (58 )
Change in cash (8,758 ) 11,777
Cash at beginning of period   21,063     9,286  
Cash at end of period $ 12,305   $ 21,063  

Copyright Business Wire 2010

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