MRO Magazine

Ennis, Inc. Reports Results for the Three and Six Months Ended August 31, 2015 and Declares Quarterly Dividend


September 18, 2015
By Business Wire News

MIDLOTHIAN, Texas

Ennis, Inc. (the “Company”), (NYSE: EBF), today reported financial results for the three and six months ended August 31, 2015. Highlights include:

  • Consolidated net sales increased $8.3 million for the six months, or 2.8%.
  • EBITDA, a non-GAAP measure, increased 10.1% over the comparable six month period.
  • Cash provided by operating activities increased by 87.6% over the comparable six month period.
  • Diluted earnings per share increased 10.3% from the comparable quarter last year from $0.39 to $0.43 and increased 14.5% from the comparable period last year from $0.69 to $0.79.

Financial Overview

The Company’s consolidated net sales for the quarter ended August 31, 2015 were $150.8 million compared to $151.8 million for the same quarter last year, a decrease of 0.7%. Print sales increased 2.7% from $97.9 million to $100.5 million and apparel sales decreased 6.9% from $54.0 million to $50.3 million. Consolidated gross profit margin (“margin”) was $40.6 million for the quarter, or 26.9%, compared to $38.2 million, or 25.1% for the same quarter last year. Print margin was 31.2% for the quarter compared to 31.1% for the same quarter last year, while apparel margin was 18.4% for the quarter compared to 14.3% for the comparable quarter last year. Apparel margin was positively impacted by improving manufacturing efficiencies and lower input costs. Net earnings for the quarter was $11.0 million, or $0.43 per diluted share as compared to $10.0 million, or $0.39 per diluted share for the same quarter last year, an increase of 10.3%.

The Company’s consolidated net sales for the six month period increased from $293.0 million to $301.3 million, or 2.8%. Print sales were $197.2 million, compared to $186.3 million for the same period last year, an increase of $10.9 million, or 5.9%. Apparel sales were $104.1 million, compared to $106.8 million for the same period last year, a decrease of $2.7 million or 2.5%. Consolidated margin increased on a dollar basis from $73.6 million to $78.2 million and increased on a percentage basis from 25.1% to 25.9% for the six months ended August 31, 2014 and 2015, respectively. Print margin increased from 30.8% to 31.1% due to continued elimination of duplicative costs associated with our recent acquisitions. Apparel margin increased from 15.1% to 16.2% due to improving manufacturing efficiencies and lower input costs during the current quarter. As a result, consolidated net earnings increased from $18.0 million, or 6.2% of net sales, for the six months ended August 31, 2014 to $20.2 million, or 6.7% of net sales, for the six months ended August 31, 2015. Diluted earnings per share increased 14.5% from $0.69 to $0.79 for the six months ended August 31, 2014 and 2015, respectively.

Non-GAAP Reconciliations

The Company believes the non-GAAP financial measure of EBITDA (EBITDA is calculated as net earnings before interest, taxes, depreciation, and amortization) 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 yields metrics which are more useful in assessing management performance. In addition, EBITDA is a component of the financial covenants and an interest rate metric in the Company’s credit facility. While management believes this non-GAAP financial measure is useful in evaluating the Company’s performance, this information should be considered as supplemental in nature and not as a substitute for, or superior to, the related financial information prepared in accordance with GAAP.

During the second quarter, the Company generated $22.3 million in EBITDA compared to $20.5 million for the comparable quarter last year, or an increase of 8.8%. For the six month period ended August 31, 2015, the Company generated $41.5 million of EBITDA compared to $37.7 million for the comparable period last year, or an increase of 10.1%.

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,
2015     2014 2015     2014
 
Net earnings $ 11,046 $ 10,016 $ 20,217 $ 18,048
Income tax expense 6,486 5,883 11,873 10,600
Interest expense 382 525 860 1,027
Depreciation and amortization   4,374     4,058     8,584     8,057  
EBITDA (non-GAAP) $ 22,288   $ 20,482   $ 41,534   $ 37,732  
 
% of sales 14.8 % 13.5 % 13.8 % 12.9 %
 

Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, “Our print group’s performance continued to be solid during the quarter. Our apparel group’s performance showed significant improvement during the quarter. Improved manufacturing efficiencies and lower input costs during the quarter allowed the apparel group to show margin improvements of 410 basis points over the comparable quarter last year and 430 basis points over the most recent previous quarter. During the quarter, we started to see the benefit of lower cotton and other input costs. On the print front, we continue to be pleased with the integration of the latest acquisitions and the margins of our print group as a whole. We also continued to pay down our debt during the quarter by 26.3%, or $22.5 million, due to the effective management of our receivables and inventories. Overall, while we continue to believe fiscal year 2016 will continue to be challenging due to the overall retail and global economic environment, we continue to remain optimistic about the remainder of the year.”

In Other News

The Company announced today that the Board of Directors has declared a quarterly cash dividend of 17 ½ cents a share on its common stock. The dividend is payable November 6, 2015 to shareholders of record on October 9, 2015.

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 competitive environment, the Company’s ability to adapt and expand its services in such an environment and the variability in the prices of cotton, 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 28, 2015. 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 Consolidated Financial Information
(In thousands, except share and per share amounts)
 
Three months ended Six months ended

Condensed Consolidated Operating Results

August 31, August 31,
2015 2014 2015 2014
Revenues $ 150,761 $ 151,841 $ 301,337 $ 293,027
Cost of goods sold   110,131     113,653   223,163     219,451  
Gross profit margin 40,630 38,188 78,174 73,576
Operating expenses   23,440     21,821   46,112     43,615  
Operating income 17,190 16,367 32,062 29,961
Other (income) expense   (342 )   468   (28 )   1,313  
Earnings before income taxes 17,532 15,899 32,090 28,648
Income tax expense   6,486     5,883   11,873     10,600  
Net earnings $ 11,046   $ 10,016 $ 20,217   $ 18,048  
 

Weighted average common shares outstanding

Basic   25,662,828     25,990,496   25,636,203     25,991,444  
Diluted   25,693,256     26,002,701   25,657,519     26,004,549  
 

Earnings per share

Basic $ 0.43   $ 0.39 $ 0.79   $ 0.69  
Diluted $ 0.43   $ 0.39 $ 0.79   $ 0.69  
 
August 31, February 28,

Condensed Consolidated Balance Sheet Information

2015 2015
Assets
Current assets
Cash $ 18,851 $ 15,346
Accounts receivable, net 62,012 62,865
Inventories, net 97,838 119,814
Other   14,234     18,517  
  192,935     216,542  
Property, plant & equipment 87,029 92,875
Other   141,345     143,845  
$ 421,309   $ 453,262  
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable $ 24,760 $ 21,275
Accrued expenses   19,819     18,972  
  44,579     40,247  
Long-term debt 63,000 106,500
Other non-current liabilities   20,463     21,835  
Total liabilities   128,042     168,582  
 
Shareholders’ equity   293,267     284,680  
$ 421,309   $ 453,262  
 
Six months ended
August 31,

Condensed Consolidated Cash Flow Information

2015 2014
Cash provided by operating activities $ 60,675 $ 32,338
Cash used in investing activities (2,824 ) (11,414 )
Cash used in financing activities (52,512 ) (12,638 )
Effect of exchange rates on cash   (1,834 )   180  
Change in cash 3,505 8,466
Cash at beginning of period   15,346     5,316  
Cash at end of period $ 18,851   $ 13,782  

Ennis, Inc.
Mr. Keith S. Walters, 972-775-9801
Chairman, Chief Executive Officer and President
or
Mr. Richard L. Travis, Jr., 972-775-9801
CFO, Treasurer and Principal Financial and Accounting Officer
or
Mr. Michael D. Magill, 972-775-9801
Executive Vice President and Secretary
Fax: 972-775-9820
www.ennis.com