Ennis, Inc. Reports Results For The Three And Six Months Ended August 31, 2012

Ennis, Inc. (the “Company"), (NYSE: EBF), today reported financial results for the three and six months ended August 31, 2012.

Financial Overview

Our consolidated net sales were $138.3 million for the second quarter ended August 31, 2012 compared to $130.4 million for the second quarter ended August 31, 2011, or an increase of 6.1%. Print sales increased 24.3% for the quarter, from $69.2 million to $86.0 million. Apparel sales for the quarter declined by 14.5% (down 4.5% on units and down 10% on price) from $61.2 million to $52.3 million. Our consolidated gross profit margin ("margin") decreased from 26.1% to 24.5% for the quarters ended August 31, 2011 and August 31, 2012, respectively. Our print segment margin increased from 28.6% to 30.7%, while our apparel segment margin, which continues to be impacted by higher cotton costs, decreased from 23.4% to 14.4% for the quarter. As a result, our net earnings decreased from $9.7 million, or 7.4% of net sales, for the quarter ended August 31, 2011 to $7.6 million, or 5.5% of net sales, for the quarter ended August 31, 2012. Diluted earnings per share decreased from $0.37 to $0.29 for the quarters ended August 31, 2011 and August 31, 2012, respectively.

For the six month period, net sales increased from $273.6 million to $280.9 million, or 2.7%. Print sales for the six month period were $173.4 million, compared to $136.3 million for the same period last year, an increase of $37.1 million, or 27.2%. Apparel sales for the six month period were $107.5 million, compared to $137.3 million for the same period last year, or a decrease of 21.7% (down 14.7% on units and down 7% on price). Overall our margin decreased from 27.0% to 22.1% for the six months ended August 31, 2011 and 2012, respectively. Our print margin increased during the period from 28.7% to 29.3%, while our apparel margin decreased from 25.3% to 10.6%, again due to higher cotton costs. Net earnings for the period decreased from $21.1 million, or 7.7% of net sales, for the six months ended August 31, 2011 to $11.5 million, or 4.1% of net sales, for the six months ended August 31, 2012. Diluted earnings per share decreased from $0.81 to $0.44 for the six months ended August 31, 2011 and 2012, respectively.

During the second quarter, the Company generated $15.7 million in EBITDA (a non-GAAP financial measure calculated as net earnings before interest, taxes, depreciation, and amortization) compared to $19.0 million for the comparable quarter last year. For the six month period ended August 31, 2012, the Company generated $25.7 million of EBITDA compared to $40.9 million for the comparable period last year.

The following table reconciles EBITDA, a non-GAAP financial measure, to the most comparable GAAP measure, net earnings ( dollars in thousands):
  Three months ended   Six months ended
August 31, August 31,
2012   2011 2012   2011
 
Net earnings $ 7,592 $ 9,712 $ 11,471 $ 21,136
Income taxes 4,364 5,567 6,593 11,993
Interest expense 402 664 871 1,482
Depreciation/amortization   3,342   3,061   6,783   6,260
EBITDA (non-GAAP) $ 15,700 $ 19,004 $ 25,718 $ 40,871
 

The Company believes the non-GAAP financial measure of EBITDA provides important supplemental information to both management and investors regarding financial and business trends used in assessing its results of operations. The Company believes adding back the specified items to net earnings provides a more meaningful comparison to the corresponding reported periods and internal budgets and forecasts, provides management with a more relevant measurement of operating performance and is more useful in assessing management performance. In addition, EBITDA is a component of financial covenants and an interest rate metric in the Company’s credit facility.

Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, “Our print operations continue to deliver revenue and operational results as expected. Our two recent acquisitions, Printegra and PrintXcel, delivered sales and profits for the second quarter better than expected. While our apparel results continue to be negatively impacted by higher raw material costs increasing the cost of finished goods and cost of sales, we are beginning to see improvement in this segment’s margin. Apparel’s margin during the second quarter improved 740 basis points over the preceding quarter; and we expect its margin to continue to improve during the current quarter as higher cost raw materials are being replaced with raw materials with significantly lower costs. The apparel market continues to be constrained from a volume perspective, and pricing in the marketplace continues to be highly competitive. While challenges continue in the apparel sector, we are confident 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 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: print and apparel. The print segment manufactures and sells 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, including but not limited to, its Annual Report on Form 10-K for the fiscal year ending February 29, 2012, and its subsequent quarterly reports on Form 10-Q for its 2013 fiscal year. The Company does not undertake, and hereby disclaims, any duty or obligation to update or otherwise revise any forward-looking statements to reflect events or circumstances occurring after the date of this release, or to reflect the occurrence of unanticipated events, although its situation and circumstances may change in the future. You 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 Six months ended

Condensed Operating Results
August 31, August 31,
2012 2011 2012 2011
Revenues $ 138,344 $ 130,384 $ 280,872 $ 273,642
Cost of goods sold   104,395   96,290   218,674     199,847  
Gross profit margin 33,949 34,094 62,198 73,795
Operating expenses   21,326   18,322   43,348     39,179  
Operating income 12,623 15,772 18,850 34,616
Other expense   667   493   786     1,487  
Earnings before income taxes 11,956 15,279 18,064 33,129
Income tax expense   4,364   5,567   6,593     11,993  
Net earnings $ 7,592 $ 9,712 $ 11,471   $ 21,136  
 

Earnings per share
Basic $ 0.29 $ 0.37 $ 0.44   $ 0.82  
Diluted $ 0.29 $ 0.37 $ 0.44   $ 0.81  
 
August 31, February 29,

Condensed Balance Sheet Information

 
2012 2012

Assets
Current assets
Cash $ 13,205 $ 10,410
Accounts receivable, net 63,591 58,790
Inventories, net 108,247 132,572
Other   14,695     17,438  
  199,738     219,210  
Property, plant & equipment 94,241 99,516
Other   211,558     213,236  
$ 505,537   $ 531,962  

Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 21,679 $ 27,924
Accrued expenses   19,846     22,317  
  41,525     50,241  
Long-term debt 70,000 90,000
Other non-current liabilities   31,930     31,846  
Total liabilities   143,455     172,087  
 
Shareholders’ equity   362,082     359,875  
$ 505,537   $ 531,962  
 
Six months ended
August 31,

Condensed Cash Flow Information
2012 2011
Cash provided by operating activities $ 29,360 $ 12,744
Cash provided by (used in) investing activities 2,889 (3,965 )
Cash used in financing activities (29,111 ) (7,860 )
Effect of exchange rates on cash   (343 )   1,083  
Change in cash 2,795 2,002
Cash at beginning of period   10,410     12,305  
Cash at end of period $ 13,205   $ 14,307  

Copyright Business Wire 2010

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