Ennis, Inc. Reports Results for the First Quarter Ended May 31, 2018

MIDLOTHIAN, Texas--()--Ennis, Inc. (the “Company"), (NYSE: EBF), today reported financial results for the first quarter ended May 31, 2018. Highlights include:

  • Revenues increased $6.3 million, or 7.3% on a sequential quarter basis, but were down slightly on a comparative quarter basis.
  • Gross profit margin increased from 31.7% to 32.3% on a comparative quarter basis.
  • Diluted earnings per share increased from $0.31 to $0.36 on a comparative quarter basis.

Financial Overview

The Company’s revenues for the first quarter ended May 31, 2018 were $93.4 million compared to $94.6 million for the same quarter last year, a decrease of 1.3%. Gross profit margin ("margin") was $30.2 million for the quarter, or 32.3%, as compared to $30.0 million, or 31.7% for the first quarter last year. Net earnings for the quarter were $9.2 million, or $0.36 per diluted share compared, to $7.8 million, or $0.31 per diluted share, for the first quarter last year.

Non-GAAP Reconciliations

To provide important supplemental information to both management and investors regarding financial and business trends used in assessing its results of operations, from time to time the Company reports adjusted gross profit margin, adjusted earnings and adjusted diluted earnings per share, each of which is a non-GAAP financial measure. To provide additional information, the Company also reports the non-GAAP financial measure of EBITDA (EBITDA is calculated as earnings from operations before interest, taxes, depreciation, and amortization).

Management believes that these non-GAAP financial measures provide useful information to investors as a supplement to reported GAAP financial information. Management reviews these non-GAAP financial measures on a regular basis and uses them to evaluate and manage the performance of the Company’s operations. In addition, EBITDA is a component of the financial covenants and an interest rate metric in the Company’s credit agreement.

Reconciliations of non-GAAP financial measures for the quarter to the most directly comparable measures calculated and presented in accordance with GAAP are set forth in the following table. Other companies may calculate non-GAAP adjusted financial measures differently than Ennis, which limits the usefulness of the non-GAAP measures for comparison with these other companies. While management believes the Company’s non-GAAP financial measures are useful in evaluating Ennis, this information should be considered as supplemental in nature and not as a substitute or an alternative for, or superior to, the related financial information prepared in accordance with GAAP. These measures should be evaluated only in conjunction with the Company’s comparable GAAP financial measures.

The following table reconciles EBITDA, a non-GAAP financial measure, for the first quarter of this year and the first quarter of last year to the most comparable GAAP measure, net earnings (dollars in thousands).

    Three months ended
May 31,
2018     2017
Net earnings $ 9,247 $ 7,784
Income tax expense 3,082 4,571
Interest expense 261 190
Depreciation and amortization   3,450     3,521  
EBITDA (non-GAAP) $ 16,040   $ 16,066  
 
% of sales 17.2 % 17.0 %
 

Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, “We are pleased with our first quarter performance. We continue to build on the momentum of last year. We recently completed the integration of our ERP system at our Independent operation and believe we can further optimize its performance. We also recently completed the acquisition of a tag company based in Caledonia, New York and look forward to it contributing to our bottom line in the months to come. We continue to explore strategic opportunities in the acquisition arena as a way to profitably utilize our cash.”

Mr. Walters also noted, “Given our strong balance sheet and continued strong performance, our Board approved a 12 ½% increase in our quarterly dividend, effective with our upcoming regularly scheduled August dividend payment. This is the third increase in our quarterly dividends in the last six years, and the second in the last two years. We also purchased approximately 38,000 shares of our common stock in the first quarter, under our stock repurchase program, at an average price of $17.92 per share. In accordance with our repurchase program, we will continue to repurchase our shares when we believe the market price is undervalued. The industry continues to be challenged by paper price increases, trucking shortages and allocations of certain paper grades. The printing industry hasn’t experienced paper allocations for several decades, and we believe our long-term relationship with our paper supplier will allow the Company to avoid any material disruption in our supply chain. While we don’t see any of these challenges changing in the short-term, we are encouraged by our performance so far this year and feel positive about the remainder of the year. We continue to strengthen one of the strongest balance sheets in the industry and our cash position remains significant, which allows us many opportunities.”

About Ennis

Since 1909, Ennis has been primarily engaged in the production and sale of business forms 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, Ennis has production and distribution facilities strategically located throughout the USA to serve the Company’s national network of distributors. Ennis 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, tags and labels and other custom products. For more information, visit www.ennis.com.

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 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, 2018. 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)
(unaudited)
 
Three months ended

Condensed Consolidated Operating Results

May 31,
2018       2017
Revenues $ 93,419 $ 94,590
Cost of goods sold   63,228     64,598  
Gross profit margin 30,191 29,992
Operating expenses   17,731     17,331  
Operating income 12,460 12,661
Other expense   131     306  
Earnings before income taxes 12,329 12,355
Income tax expense   3,082     4,571  
Net earnings $ 9,247   $ 7,784  
 

Weighted average common shares outstanding

Basic   25,333,673     25,422,856  
Diluted   25,363,772     25,436,787  
 

Earnings per share

Basic $ 0.37   $ 0.31  
Diluted $ 0.36   $ 0.31  
 
 
May 31, February 28,

Condensed Consolidated Balance Sheet Information

2018 2018
Assets
Current Assets
Cash $ 96,420 $ 96,230
Accounts receivable, net 36,241 35,654
Inventories, net 30,971 26,480
Other   1,614     4,980  
  165,246     163,344  
Property, plant & equipment 46,371 45,908
Other   120,710     120,187  
Total Assets $ 332,327   $ 329,439  
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable $ 11,290 $ 12,168
Accrued expenses   16,622     17,403  
  27,912     29,571  
Long-term debt 30,000 30,000
Other non-current liabilities   8,639     8,164  
Total liabilities   66,551     67,735  
Shareholders' Equity   265,776     261,704  
Total Liabilities and Shareholders' Equity $ 332,327   $ 329,439  
 
 
Three months ended
May 31,

Condensed Consolidated Cash Flow Information

2018 2017
Cash provided by operating activities $ 11,890 $ 12,346
Cash used in investing activities (5,937 ) (711 )
Cash used in financing activities   (5,763 )   (7,778 )
Change in cash 190 3,857
Cash at beginning of period   96,230     80,466  
Cash at end of period $ 96,420   $ 84,323  
 

Contacts

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

Contacts

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