Ennis, Inc. Reports Results For The Year And Quarter Ended February 29, 2012

Ennis, Inc. (the “Company"), (NYSE: EBF), today reported financial results for the quarter and year ended February 29, 2012.

Financial Overview

Our consolidated net sales for the quarter were $121.5 million, or down 7.5% from $131.4 million for the same quarter last year. Our print sales for the quarter were $72.4 million as compared to $66.2 million for the same quarter last year, an increase of $6.2 million, or 9.4%. Our apparel sales at $49.1 million for the quarter were down $16.1 million as compared to $65.2 million for the same quarter last year due to softness in the market and continued pricing pressures. Overall our gross profit margins ("margins") for the quarter were 21.8% as compared to 27.5% for the same quarter last year. On a segment basis, our print margins increased from 26.9% to 28.3%, while our apparel margins, due to continued higher input costs, primarily cotton, decreased from 28.0% to 12.2%. Our net earnings for the quarter, which were impacted by lower apparel sales and margins, were $3.3 million or $.13 per diluted share, as compared to $9.8 million or $.38 per diluted share for the same quarter last year.

For the year, our net sales decreased from $550.0 million for the fiscal year ended February 28, 2011 to $517.0 million for the fiscal year ended February 29, 2012, or a decrease of 6.0%. Our print sales for the year were at $278.0 million, compared to $272.7 million for last year, an increase of $5.3 million, or 1.9%. Our apparel sales for the year were $239.0 million, as compared to $277.3 million, or a decrease of 13.8%. Overall our margins decreased from 28.1% to 25.2% for the year ended February 28, 2011 and February 29, 2012, respectively. Our print margins increased slightly during the year from 28.3% to 28.4%, while our apparel margins decreased from 27.9% to 21.6%, again due to higher input costs and pricing pressures. Our net earnings decreased from $44.6 million, or 8.1% of sales for the year ended February 28, 2011, to $31.4 million or 6.1% of sales for the period ended February 29, 2012. Our diluted earnings decreased from $1.72 per share to $1.21 per share for the year ended February 28, 2011 and February 29, 2012, respectively.

The Company, during the quarter, generated $8.7 million in EBITDA (earnings before interest, taxes, depreciation, and amortization) compared to $17.5 million for the comparable quarter last year. For the year ended February 29, 2012, the Company generated $64.0 million of EBITDA compared to $81.5 million for the comparable period last year.

Reconciliation of Non-GAAP to GAAP measure ( dollars in thousands):
Three months ended Year ended
February 29, February 28, February 29, February 28,
2012 2011 2012 2011
Earnings before income taxes $ 5,241 $ 14,595 $ 49,380 $ 69,417
Interest expense 398 262 2,285 1,234
Depreciation/amortization   3,089   2,599   12,384   10,897
EBITDA (non-GAAP) $ 8,728 $ 17,456 $ 64,049 $ 81,548

Keith Walters, Chairman, Chief Executive Officer and President, commented by saying, “Our print operations continued to deliver revenue and operational results as expected. We feel good about our two print acquisitions this past year, and expect these acquisitions to add at least $80 million in sales and $.25 in diluted earnings. Our apparel results, as we have discussed previously, were impacted by the higher raw material costs now flowing out of our finished goods into our cost of sales. While the spot price of cotton has dropped significantly over the last half of our fiscal year, this unfortunately does not represent the cost of cotton in our finished good inventory or most large apparel manufacturers’ finished goods inventory. Most large manufacturers locked in cotton contracts in order to guarantee an uninterrupted supply of cotton and price stability. Unfortunately, these locked in prices are significantly higher than the current spot price. As such, large manufacturers, such as Alstyle, have had to navigate through this issue over the past quarter or so. We expect this to continue until the current lower priced cotton makes its way through our finished goods inventory. In addition, pricing in the marketplace has not been consistent with these higher costs, thus putting additional pressures on apparel margins. Products are being sold in the marketplace at prices, in certain circumstances, less than the associated raw material costs. Our philosophy has always been to try to at least cover our costs in our pricing. Consequently, we feel this has and will impact our apparel sales in the short-term. Therefore, while fiscal year 2012 was challenging, we view fiscal year 2013 to be equally challenging, due to the high priced cotton overhang in inventories and current market pricing on the sell side. We do feel that our new manufacturing facility in Agua Prieta, Mexico, coupled with our strong balance sheet and our print operations, places us in a better position than most to weather the storm. While the short-term landscape for apparel appears somewhat challenged, the two Print acquisitions will help offset those challenges from an earnings and sales perspective in the next year. We feel good about the long-term prospects of both sectors and as such our Board approved an increase in our share buy-back program and recently announced a 13% increase in our quarterly dividend amount. No matter what directions fiscal year 2013 takes, you can be assured that we will remain vigilant to the task at hand.”

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, plastic cards, 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 nine 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 29,

February 28,

February 29,

February 28,
2012 2011 2012 2011
Revenues $ 121,526 $ 131,407 $ 517,014 $ 549,999
Cost of goods sold   94,991   95,316   386,501     395,501  
Gross profit margin 26,535 36,091 130,513 154,498
Operating expenses   20,560   21,183   78,825     83,677  
Operating income 5,975 14,908 51,688 70,821
Other expense   734   313   2,308     1,404  
Earnings before income taxes 5,241 14,595 49,380 69,417
Income tax expense   1,911   4,776   18,022     24,786  
Net earnings $ 3,330 $ 9,819 $ 31,358   $ 44,631  

Earnings per share
Basic $ 0.13 $ 0.38 $ 1.21   $ 1.73  
Diluted $ 0.13 $ 0.38 $ 1.21   $ 1.72  
February 29, February 28,

Condensed Balance Sheet Information
2012 2011
Current assets
Cash $ 10,410 $ 12,305
Accounts receivable, net 58,790 58,359
Inventories, net 134,211 100,363
Other   17,438     11,371  
  220,849     182,398  
Property, plant & equipment 99,516 93,661
Other   211,597     197,669  
$ 531,962   $ 473,728  
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 27,924 $ 18,868
Accrued expenses 22,317 27,644
Current portion of long-term debt   -     586  
  50,241     47,098  
Long-term debt 90,000 50,000
Deferred credits   31,846     28,947  
Total liabilities   172,087     126,045  
Shareholders’ equity   359,875     347,683  
$ 531,962   $ 473,728  
Year ended

February 29,

February 28,

Condensed Cash Flow Information
2012 2011
Cash provided by operating activities $ 24,573 $ 32,766
Cash used in investing activities (50,810 ) (35,985 )
Cash provided by (used in) financing activities 23,691 (6,005 )
Effect of exchange rates on cash   651     466  
Change in cash (1,895 ) (8,758 )
Cash at beginning of period   12,305     21,063  
Cash at end of period $ 10,410   $ 12,305  

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