Jun 26, 2017   SOURCE: BusinessWire

Ennis, Inc. Reports Results for the First Quarter Ended May 31, 2017

Ennis, Inc. (the "Company"), (NYSE: EBF), today reported financial results for the first quarter ended May 31, 2017. Highlights include:

  • Print sales increased $4.2 million, or 4.6% on a comparative quarter basis.
  • Print’s gross profit margin increased from 29.5% to 31.6% on a comparative quarter basis.
  • Diluted earnings per share from print operations increased from $0.26 to $0.31.

Financial Overview

This financial overview includes the Company’s continuing print operations and its discontinued apparel operations on a separate and combined basis. The Company sold Alstyle Apparel on May 25, 2016, resulting in the print division becoming the on-going continuing operations of the Company thereafter.

The Company’s net print sales for the first quarter ended May 31, 2017 were $94.6 million compared to $90.4 million for the same quarter last year, an increase of 4.6%. Gross profit margin ("margin") for continuing operations was $29.9 million for the quarter, or 31.6%, as compared to $26.7 million, or 29.5% for the same quarter last year. The Company’s margin in the first quarter last year was negatively impacted by approximately $1.3 million in connection with the move of one of its folder operations. Diluted earnings per share for the print operations were $0.31, compared to $0.26 for the same quarter last year.

Last year’s May 31, 2016 first quarter earnings from the apparel discontinued operations was $0.10 per diluted share, and the combined earnings for continued and discontinued operations was $0.36 per diluted share for the quarter. The net loss from the sale of the Company’s apparel operations during the quarter, net of tax, was $26.0 million, or ($1.01) per diluted share. The net loss included a $16.0 million, or $10.3 million net of taxes, write-off of the Company’s balance of foreign currency translation adjustments recorded in accumulated other comprehensive income. As a result, for the quarter ended May 31, 2016, the Company realized a net loss of ($16.9) million, or ($0.65) per diluted share.

Non-GAAP Reconciliations

The Company believes the non-GAAP financial measure of EBITDA (EBITDA is calculated as net earnings from continuing operations 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 Ennis, 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 first quarter ending May 31, 2017, the Company generated EBITDA from print operations of $16.1 million compared to $13.8 million for the comparable quarter last year.

The following table reconciles EBITDA from print operations, a non-GAAP financial measure, to the most comparable GAAP measure, net earnings from continuing operations (dollars in thousands).

    Three months ended
May 31,     May 31,
2017 2016
 
Net earnings from continuing operations $ 7,784 $ 6,683
Income tax expense 4,571 3,925
Interest expense 190 2
Depreciation and amortization   3,521     3,142  
EBITDA from continuing operations (non-GAAP) $ 16,066   $ 13,752  
 
% of sales 17.0 % 15.2 %
 

Keith Walters, Chairman, Chief Executive Officer and President, commented on continuing operations by stating, “We are pleased with the operational performance during the first quarter. The integration of our most recent acquisition, Independent Printing Company, is coming along nicely. Its operations for the quarter added approximately $9.7 million in sales and $0.03 to our diluted earnings per share. On March 1, 2017, we changed the remaining useful lives of the Company’s trade names from indefinite-life to definite-life, which negatively impacted our financial results by approximately $0.01 per diluted share. Also, as recently announced, our Board, after considering our cash position, debt level, and anticipated cash flows, along with our focus on opportunities for share repurchases and acquisitions, increased our quarterly dividend rate from $0.175 per share to $0.20 per share, an increase of 14.3%. In connection with our share repurchase program, during the quarter we repurchased 191,033 shares of our common stock at an average price of $17.33 per share and have $18.4 million still available under our program. Finally, I would like to remind our shareholders that our annual shareholders’ meeting is scheduled for July 20, 2017 and we hope to see you there.”

About Ennis

Since 1909, Ennis, Inc. is 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, the Company 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, 2017. 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 Consolidated Operating Results

May 31, May 31,
2017 2016
Revenues $ 94,590 $ 90,410
Cost of goods sold   64,671     63,716  
Gross profit margin 29,919 26,694
Operating expenses   17,387     16,077  
Operating income 12,532 10,617
Other expense   177     9  
Earnings from continuing operations before income taxes 12,355 10,608
Income tax expense   4,571     3,925  
Earnings from continuing operations 7,784 6,683
Income from discontinued operations, net of tax - 2,481
Loss on sale of discontinued operations, net of tax   -     (26,042 )
Net earnings (loss) $ 7,784   $ (16,878 )
 

Weighted average common shares outstanding

Basic   25,422,856     25,783,770  
Diluted   25,436,787     25,810,735  
 

Earnings (loss) per share - basic and diluted

Earnings per share on continuing operations $ 0.31 $ 0.26
Earnings per share on discontinued operations   -     0.10  
0.31 0.36
Loss per share on sale of discontinued operations   -     (1.01 )
Net earnings (loss) $ 0.31   $ (0.65 )
 
 
May 31, February 28,

Condensed Consolidated Balance Sheet Information

2017 2017
Assets
Current assets
Cash $ 84,323 $ 80,466
Accounts receivable, net 36,359 37,368
Inventories, net 29,249 27,965
Other   2,355     3,451  
  152,286     149,250  
Property, plant & equipment 48,626 49,995
Other   123,486     125,040  
$ 324,398   $ 324,285  
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 11,661 $ 14,202
Accrued expenses   17,764     15,766  
  29,425     29,968  
Long-term debt 30,000 30,000
Other non-current liabilities   13,031     12,962  
Total liabilities   72,456     72,930  
 
Shareholders’ equity   251,942     251,355  
$ 324,398   $ 324,285  
 
Three months ended
May 31,

Condensed Consolidated Cash Flow Information

2017 2016
Cash provided by operating activities $ 12,346 $ 15,047
Cash provided by (used in) investing activities (711 ) 106,037
Cash used in financing activities   (7,778 )   (6,620 )
Change in cash 3,857 114,464
Cash at beginning of period   80,466     7,957  
Cash at end of period $ 84,323   $ 122,421