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8-K - FORM 8-K - ENNIS, INC.d94217d8k.htm

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

ENNIS, INC. REPORTS RESULTS

FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2015 AND

DECLARES QUARTERLY DIVIDEND

Midlothian, TX. September 18, 2015 — 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  12 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.

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


Ennis, Inc.

Condensed Consolidated Financial Information

(In thousands, except share and per share amounts)

 

Condensed Consolidated Operating Results

  

Three months ended

August 31,

    

Six months ended

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   
  

 

 

   

 

 

    

 

 

   

 

 

 

 

Condensed Consolidated Balance Sheet Information

   August 31,
2015
     February 28,
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