Ennis, Inc. (the “Company"), (NYSE: EBF), today reported financial results for the first quarter ended May 31, 2012.

Financial Overview

Our consolidated net sales were $142.5 million for the quarter ended May 31, 2012 compared to $143.3 million for the quarter ended May 31, 2011. Print sales for the current quarter were $87.3 million, compared to $67.1 million for the same quarter last year, or an increase of 30.1%. Apparel sales for the current quarter were $55.2 million, compared to $76.1 million for the same quarter last year, or a decrease of 27.5%. Overall our gross profit margins ("margins") decreased from 27.7% to 19.8% for the quarters ended May 31, 2011 and May 31, 2012, respectively. Our print margin decreased slightly from 28.8% to 27.9%, due to the lower margins of our recent acquisitions. Our apparel margin, which continues to be impacted by the higher yarn costs flowing through its cost of sales, decreased from 26.8% to 7.0% for the quarter. As a result, our net earnings decreased from $11.4 million, or 8.0% of sales, for the quarter ended May 31, 2011 to $3.9 million, or 2.7% of sales, for the quarter ended May 31, 2012. Diluted EPS decreased from $0.44 per share to $0.15 per share for the quarters ended May 31, 2011 and May 31, 2012, respectively.

During the quarter, the Company generated $10.0 million in EBITDA (earnings before interest, taxes, depreciation, and amortization) compared to $21.9 million for the comparable quarter last year.

Reconciliation of Non-GAAP to GAAP measure ( dollars in thousands):
      Three months ended
May 31,
2012   2011
Earnings before income taxes $ 6,108 $ 17,850
Interest expense 469 818
Depreciation/amortization   3,441   3,199
EBITDA (non-GAAP) $ 10,018 $ 21,867

Keith Walters, Chairman, Chief Executive Officer and President, commented by saying, “Our print operations continued to deliver revenue and operational results as expected. The two new acquisitions (Printegra and PrintXcel) delivered sales of $19.6 million for the quarter, which was slightly higher than expected, and operational profits of $.8 million, which was less than expected due to some duplicate transitional costs and some operational inefficiency, which we expect to have corrected over the next several quarters. Our apparel results, as expected, continue to be negatively impacted by higher raw material costs flowing into cost of sales. This negative impact will gradually abate over the next quarter or two as the higher cost items, which have been in our finished goods inventory and flowing into our cost of sales, are replaced with items manufactured with significantly lower raw material costs. The apparel market continues to be somewhat constrained, from a volume perspective, and pricing in the marketplace continues to be highly competitive. While the apparel sector continues to be somewhat challenged, we feel good about the long-term prospects of both sectors. As always, no matter what direction this fiscal year takes, you can be assured 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

Condensed Operating Results
May 31,
2012 2011
Revenues $ 142,528 $ 143,258
Cost of goods sold   114,279     103,557  
Gross profit margin 28,249 39,701
Operating expenses   22,022     20,857  
Operating income 6,227 18,844
Other expense   119     994  
Earnings before income taxes 6,108 17,850
Income tax expense   2,229     6,426  
Net earnings $ 3,879   $ 11,424  

Earnings per share
Basic $ 0.15   $ 0.44  
Diluted $ 0.15   $ 0.44  
May 31, February 29,

Condensed Balance Sheet Information
2012 2012
Current assets
Cash $ 14,967 $ 10,410
Accounts receivable, net 58,681 58,790
Inventories, net 117,372 132,572
Other   15,130     17,438  
  206,150     219,210  
Property, plant & equipment 94,826 99,516
Other   211,905     213,236  
$ 512,881   $ 531,962  
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 19,605 $ 27,924
Accrued expenses   19,933     22,317  
  39,538     50,241  
Long-term debt 85,000 90,000
Other non-current liabilities   30,941     31,846  
Total liabilities   155,479     172,087  
Shareholders’ equity   357,402     359,875  
$ 512,881   $ 531,962  
Three months ended
May 31,

Condensed Cash Flow Information
2012 2011
Cash provided by operating activities $ 14,766 $ 11,271
Cash used in investing activities (126 ) (2,117 )
Cash used in financing activities (9,561 ) (3,869 )
Effect of exchange rates on cash   (522 )   263  
Change in cash 4,557 5,548
Cash at beginning of period   10,410     12,305  
Cash at end of period $ 14,967   $ 17,853  

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