Ennis, Inc. Reports Results for the First Quarter Ended May 31, 2013

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Ennis, Inc. Reports Results for the First Quarter Ended May 31, 2013

Apparel Segment Continues Positive Movement

MIDLOTHIAN, Texas--(BUSINESS WIRE)-- Ennis, Inc. (the "Company") (NYS: EBF) today reported financial results for the first quarter ended May 31, 2013. Highlights for the quarter include:

  • Consolidated gross profit margin increased 610 basis points
    • Print gross profit margin increased 180 basis points
    • Apparel gross profit margin increased 1,330 basis points
  • Diluted EPS increased 120% to $0.33 per share

Financial Overview

The Company's consolidated net sales for the quarter were $138.5 million compared to $142.5 million for the same quarter last year and $123.6 million for the sequential quarter. Print sales were down 6.8% on a comparable quarter basis, from $87.3 million to $81.4 million, but were up 2.0% on a sequential quarter basis from $79.8 million. Apparel sales increased 3.3% for the comparable quarter, from $55.2 million to $57.0 million, with a 10.6% increase in volume offset by a pricing decline of 7.3%, and increased 29.8% on a sequential quarter basis from $43.9 million. Consolidated gross profit margin ("margin") for the quarter increased 610 basis points from 19.8%, for the same quarter last year, to 25.9%. For a quarter comparison basis, print margin increased from 27.9% to 29.7%, and apparel margin increased from 7.0% to 20.3%. Our apparel margin continues to increase on both a comparable and sequential quarter basis, as lower priced cotton is starting to favorably impact apparel's margin. The Company expects its margins will continue to improve as average finished goods costs continue to decline and sales volume increases. Print margins improved from the continued elimination of duplicative costs by the further integration of recent acquisitions. As a result, net earnings increased from $3.9 million, or 2.7% of net sales, for the quarter ended May 31, 2012 to $8.5 million, or 6.1% of net sales, for the quarter ended May 31, 2013. Diluted earnings per share increased from $0.15 for the same quarter last year to $0.33 for the quarter.

During the quarter, the Company generated $17.0 million in EBITDA (a non-GAAP financial measure calculated as net earnings before interest, taxes, depreciation, and amortization) compared to $10.0 million for the comparable quarter 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
May 31,
2013  2012
 
Net earnings$8,506$3,879
Income taxes4,9972,229
Interest expense251469
Depreciation/amortization 3,219 3,441
EBITDA (non-GAAP)$16,973$10,018
 

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 the financial covenants and an interest rate metric in the Company's credit facility.

Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, "Overall we are pleased with our results for the quarter. Our apparel results continued to improve on both a sequential and comparative basis, as lower priced cotton, which has been flowing into our finished goods inventory, is starting to impact our operational results. We realized a 240 basis point sequential margin improvement last quarter and a 270 basis point sequential margin improvement this quarter. We would expect our apparel margin to continue to improve as the average carrying value of our finished goods inventory declines and as our operational efficiencies improve as production levels increase. While the overall apparel market continues to be challenged, both from a pricing and volume perspective, we have seen some pricing stability. Our print margin remained healthy improving 180 basis points over last year's comparable quarter, as we continue to eliminate duplicate costs associated with our recent acquisitions. Overall we feel positive about the quarter and the remainder of the year."

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 28, 2013. 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

Condensed Operating Results

May 31,
20132012
Revenues$138,466$142,528
Cost of goods sold 102,671  114,279 
Gross profit margin35,79528,249
Operating expenses 22,198  22,022 
Operating income13,5976,227
Other expense 94  119 
Earnings before income taxes13,5036,108
Income tax expense 4,997  2,229 
Net earnings$8,506 $3,879 
 

Weighted average common shares outstanding

Basic 26,038,068  25,963,369 
Diluted 26,055,869  25,983,907 
 

Earnings per share

Basic$0.33 $0.15 
Diluted$0.33 $0.15 
 
May 31,February 28,

Condensed Balance Sheet Information

2013 2013
Assets
Current assets
Cash$14,396$6,232
Accounts receivable, net63,78460,071
Inventories, net97,975109,698
Other 14,124  17,415 
 190,279  193,416 
Property, plant & equipment90,04391,913
Other 209,095  209,963 
$489,417 $495,292 
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable$20,966$22,256
Accrued expenses 19,018  20,783 
 39,984  43,039 
Long-term debt45,00057,500
Other non-current liabilities 34,157  33,537 
Total liabilities 119,141  134,076 
 
Shareholders' equity 370,276  361,216 
$489,417 $495,292 
 
Three months ended
May 31,

Condensed Cash Flow Information

20132012
Cash provided by operating activities$21,551$14,766
Cash used in investing activities(662)(126)
Cash used in financing activities(12,501)(9,561)
Effect of exchange rates on cash (224) (522)
Change in cash8,1644,557
Cash at beginning of period 6,232  10,410 
Cash at end of period$14,396 $14,967 



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
or
Fax: 972-775-9820
www.ennis.com

KEYWORDS:   United States  North America  Texas

INDUSTRY KEYWORDS:

The article Ennis, Inc. Reports Results for the First Quarter Ended May 31, 2013 originally appeared on Fool.com.

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