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8-K - FORM 8-K - ENNIS, INC.d715295d8k.htm

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

ENNIS, INC. REPORTS RESULTS

FOR THE YEAR AND QUARTER ENDED FEBRUARY 28, 2014 and SETS RECORD DATE

FOR ANNUAL SHAREHOLDER MEETING

Midlothian, April 21, 2014 — Ennis, Inc. (the “Company”), (NYSE: EBF), today reported financial results for the quarter and fiscal year ended February 28, 2014. Highlights for the year include:

 

    Consolidated sales increased 1.7%

 

    Print sales increased $5.2 million

 

    Apparel sales increased $3.7 million

 

    Consolidated gross profit margin increased 320 basis points

 

    Print gross profit margin increased 50 basis points

 

    Apparel gross profit margin increased 790 basis points

 

    Non-GAAP diluted EPS increased 42.1% to $1.35 per share, before impairment charge of $0.85 per share resulting in GAAP diluted EPS of $0.50 per share.

Financial Overview

The Company’s consolidated net sales for the quarter were $132.1 million compared to $123.6 million for the same quarter last year. Print sales increased 12.7% on a comparable quarter basis, from $79.8 million to $89.9 million. Apparel sales decreased 3.6% for the comparable quarter, from $43.9 million to $42.3 million. Consolidated gross profit margin (“margin”) during the quarter remained level at 25.4% in comparison to last year’s quarter. On a quarter comparison basis, print margin decreased 120 basis points, from 29.6% to 28.4%, while apparel margin increased 140 basis points, from 17.6% to 19.0%. Apparel margin continued to improve due to lower input costs and higher production levels. Net earnings (loss) for the quarter decreased from $7.1 million, or 5.7% of net sales, for the quarter ended February 28, 2013 to ($14.5) million for the quarter ended February 28, 2014, due to a goodwill and trademark impairment charge of $24.2 million relating to the apparel division. Diluted earnings (loss) per share decreased from $0.27 for the quarter ended February 28, 2013 to ($0.55) for the quarter ended February 28, 2014. Excluding the impairment charge, non-GAAP earnings for the quarter would have been approximately $7.7 million, or approximately $0.30 per share.

For the fiscal year, consolidated net sales increased from $533.5 million for the year ended February 28, 2013 to $542.4 million for the year ended February 28, 2014, or an increase of 1.7%. Print sales for the year increased $5.2 million or 1.6%, from $334.7 million to $339.9 million, while apparel sales for the year increased $3.7 million or 1.9%, from $198.8 million to $202.5 million. Consolidated margin increased from 23.3% to 26.5% for the fiscal years ended 2013 and 2014, respectively. For the fiscal year by segment, print margin increased from 29.2% to 29.7%, and apparel margin increased from 13.2% to 21.1% due to lower input costs and increased production levels. Net earnings for the period decreased from $24.7 million, or 4.6% of net sales for the fiscal year ended February 28, 2013, to $13.2 million, or 2.4% of net sales for the fiscal year ended February 28, 2014, due to the goodwill and trademark impairment charge of $24.2 million in the fourth quarter. Diluted earnings per share decreased from $0.95 to $0.50 for each year, respectively. Excluding the impairment charge, non-GAAP net earnings for the year would have been approximately $35.3 million, or approximately $1.35 per diluted share.


Non-GAAP Reconciliations

The Company believes the non-GAAP financial measures of net earnings and diluted earnings per share on a proforma basis, excluding impairment, and EBITDA (EBITDA is calculated as net earnings before interest, taxes, depreciation, amortization, and impairment charge) provide 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. 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.

Proforma Net Earnings and Earnings per Share (dollars in thousands, except per share):

The following table reconciles proforma net earnings and proforma diluted earnings per share, non-GAAP financial measures, to the most comparable GAAP measures, net earnings and diluted earnings per share, to show the impact of impairment on reported earnings.

 

     For the quarter ended February 28, 2014      For the year ended February 28, 2014  
     As           Proforma      As            Proforma  
     Reported     Impairment     Results      Reported      Impairment     Results  

Earnings (loss) before income taxes

   $ (12,105   $ (24,226   $ 12,121       $ 31,792       $ (24,226   $ 56,018   

Income tax expense (benefit)

     2,362        (2,066     4,428         18,603         (2,066     20,669   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Net earnings (loss)

   $ (14,467   $ (22,160   $ 7,693       $ 13,189       $ (22,160   $ 35,349   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Diluted earnings (loss) per share

   $ (0.55   $ (0.85   $ 0.30       $ 0.50       $ (0.85   $ 1.35   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

During the fourth quarter, the Company generated $16.6 million in EBITDA compared to $14.6 million for the comparable quarter last year. For the fiscal year ended February 28, 2014, the Company generated $71.5 million of EBITDA compared to $53.5 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     Year ended  
     February 28,     February 28,  
     2014     2013     2014     2013  

Net earnings (loss)

   $ (14,467   $ 7,074      $ 13,189      $ 24,715   

Income taxes

     2,362        3,980        18,603        13,903   

Interest expense

     459        322        1,268        1,528   

Depreciation/amortization

     4,026        3,271        14,219        13,384   

Impairment of goodwill and trademarks

     24,226        —          24,226        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA (non-GAAP)

   $ 16,606      $ 14,647      $ 71,505      $ 53,530   
  

 

 

   

 

 

   

 

 

   

 

 

 

% of sales

     12.6     11.8     13.2     10.0

Keith Walters, Chairman, Chief Executive Officer and President, commented, “Overall our results before taking into account the impairment charge continue to show improvement over comparable periods. Our EBITDA was 12.6% for the quarter compared to 11.8% for the same quarter last year and 13.2% for the year compared to 10.0% for last year. Our apparel results continued to improve during the quarter, even though the impact of lower raw material costs over comparable quarters has all but dissipated. While we continue to make cost-side improvements, the apparel market continues to be extremely challenging, both from a volume and pricing perspective. Apparel volumes, during the quarter, continued to be softer than expected, especially on the East Coast and Mid-West. We attribute this weakness to the extreme weather conditions experienced across the country this winter. Due to this market softness, pricing pressures continued to be prevalent in the marketplace. Whether discounted pricing, which we believe is driven by a desire to maintain production volumes, coupled with overall softness in the marketplace, will continue into the next fiscal year is unknown. With respect to the print segment, our sales during the quarter were softer than expected. Combined with the impact of our recent acquisitions, these resulted in our print margin being down slightly during the quarter. Even so, our print margin continued to fall within its historical parameters. While the market continues to be challenging, we remain optimistic about the upcoming fiscal year on many fronts. We look forward to the impact of our acquisitions on next years’ operational results. Potential acquisition opportunities remain strong. Our apparel manufacturing facility continues to show improvement and we expect it to increase the contribution to our operating results as production levels continue to increase. While the apparel market continues to be challenging, it has recently shown signs of improving, so while there are still many unknowns about the upcoming year, we continue to be optimistic and will remain opportunistic.”

Other News: The Company announced today the Board of Directors has set the record date and meeting date for the Annual Shareholder Meeting. The Annual Meeting of Shareholders will be held on July 24, 2014, with a record date of May 27, 2014.

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,” “look forward to” 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, and its subsequent quarterly reports on Form 10-Q for its 2014 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.

For Further Information Contact:

Mr. Keith S. Walters, Chairman, Chief Executive Officer and President

Mr. Richard L. Travis, Jr., CFO, Treasurer and Principal Financial and Accounting Officer

Mr. Michael D. Magill, Executive Vice President and Secretary

Ennis, Inc.

2441 Presidential Parkway

Midlothian, Texas 76065

Phone: (972) 775-9801

Fax: (972) 775-9820

www.ennis.com


Condensed Financial Information

(In thousands, except share and per share amounts)

 

     Three months ended      Year ended  
     February 28,      February 28,  

Condensed Operating Results

   2014     2013      2014      2013  

Revenues

   $ 132,138      $ 123,638       $ 542,442       $ 533,506   

Cost of goods sold

     98,558        92,295         398,649         409,354   
  

 

 

   

 

 

    

 

 

    

 

 

 

Gross profit margin

     33,580        31,343         143,793         124,152   

Impairment of goodwill and trademarks

     24,226        —           24,226         —     

Operating expenses

     21,045        19,817         86,403         83,759   
  

 

 

   

 

 

    

 

 

    

 

 

 

Operating income (loss)

     (11,691     11,526         33,164         40,393   

Other expense

     414        472         1,372         1,775   
  

 

 

   

 

 

    

 

 

    

 

 

 

Earnings (loss) before income taxes

     (12,105     11,054         31,792         38,618   

Income tax expense

     2,362        3,980         18,603         13,903   
  

 

 

   

 

 

    

 

 

    

 

 

 

Net earnings (loss)

   $ (14,467   $ 7,074       $ 13,189       $ 24,715   
  

 

 

   

 

 

    

 

 

    

 

 

 

Weighted average common shares outstanding

          

Basic

     26,122,869        26,045,894         26,125,348         26,035,571   
  

 

 

   

 

 

    

 

 

    

 

 

 

Diluted

     26,139,652        26,064,064         26,146,325         26,053,452   
  

 

 

   

 

 

    

 

 

    

 

 

 

Earnings (loss) per share

          

Basic

   $ (0.55   $ 0.27       $ 0.50       $ 0.95   
  

 

 

   

 

 

    

 

 

    

 

 

 

Diluted

   $ (0.55   $ 0.27       $ 0.50       $ 0.95   
  

 

 

   

 

 

    

 

 

    

 

 

 

 

     February 28,     February 28,  

Condensed Balance Sheet Information

   2014     2013  
Assets   

Current assets

    

Cash

   $ 5,316      $ 6,232   

Accounts receivable, net

     63,695        60,071   

Inventories, net

     130,095        109,698   

Other

     15,037        17,415   
  

 

 

   

 

 

 
     214,143        193,416   
  

 

 

   

 

 

 

Property, plant & equipment

     91,565        91,913   

Other

     230,639        209,963   
  

 

 

   

 

 

 
   $ 536,347      $ 495,292   
  

 

 

   

 

 

 
Liabilities and Shareholders’ Equity   

Current liabilities

    

Accounts payable

   $ 22,062      $ 22,256   

Accrued expenses

     19,815        20,783   
  

 

 

   

 

 

 
     41,877        43,039   
  

 

 

   

 

 

 

Long-term debt

     105,500        57,500   

Other non-current liabilities

     26,035        33,537   
  

 

 

   

 

 

 

Total liabilities

     173,412        134,076   
  

 

 

   

 

 

 

Shareholders’ equity

     362,935        361,216   
  

 

 

   

 

 

 
   $ 536,347      $ 495,292   
  

 

 

   

 

 

 
     Year ended  
     February 28,  

Condensed Cash Flow Information

   2014     2013  

Cash provided by operating activities

   $ 32,755      $ 49,957   

Cash provided by (used in) investing activities

     (65,511     1,195   

Cash provided by (used in) financing activities

     32,508        (55,215

Effect of exchange rates on cash

     (668     (115
  

 

 

   

 

 

 

Change in cash

     (916     (4,178

Cash at beginning of period

     6,232        10,410   
  

 

 

   

 

 

 

Cash at end of period

   $ 5,316      $ 6,232