Ennis, Inc. Reports Results for the First Quarter Ended May 31, 2014

MIDLOTHIAN, Texas--(BUSINESS WIRE)--

Ennis, Inc. (the “Company"), EBF, today reported financial results for the first quarter ended May 31, 2014.

Financial Overview

The Company's consolidated net sales for the quarter were $141.2 million, an increase of $2.7 million or 1.9%, from $138.5 million for the same quarter last year. At the segment level, print sales were up $7.0 million, or 8.6%, while apparel sales declined $4.2 million or 7.4% in comparison to the same quarter last year. Consolidated gross profit margin ("margin") decreased from 25.9% for the same quarter last year to 25.1% for this year's quarter. At the segment level, print margin increased 80 basis points, from 29.7% to 30.5%, due to improved operational efficiencies, while apparel margin decreased 430 basis points, from 20.3% to 16.0%, due to lower selling prices and slightly higher input costs. As a result, net earnings decreased slightly from $8.5 million, or 6.1% of net sales, for the previous year's quarter to $8.0 million, or 5.7% of net sales, for this year's quarter. Diluted earnings per share decreased from $0.33 for the 2013 quarter to $0.31 for the 2014 quarter.

Non-GAAP Reconciliations

The Company believes the non-GAAP financial measure 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 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.

During the quarter, the Company generated $17.3 million in EBITDA compared to $17.0 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,
			2014				2013
Net earnings		$	8,032			$	8,506
Income taxes			4,717				4,997
Interest expense			502				251
Depreciation/amortization			4,036				3,219
EBITDA (non-GAAP)		$	17,287			$	16,973
% of sales			12.2	%			12.3	%

Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, “Overall we are pleased with our results for the quarter. Our print margins improved during the quarter as we continued to make operational improvements at our recent acquisitions. The apparel market, as noted previously, continues to be very challenging. The unusually cold winter seemed to have further stressed the retail market. While the market had some improvement as the quarter progressed, pricing continued to be extremely competitive, especially given the recent increases in raw material and other input costs. Based on the previous quarter, we planned for some of the market dynamics experienced; but what was not anticipated was the extent of the negative retail environment, which impacted our ability to achieve projected contributions from our apparel operations. However, we did see some improvement in the retail market as our quarter progressed. Whether this will continue is unknown. In addition, whether the discounted pricing prevalent in the marketplace will continue throughout the year is also unknown. We believe we are well positioned to make positive strides forward during the remainder of the year. On the print front, we continue to be pleased with the progression of our most recent print acquisitions and look forward to the integration and contribution of our recent acquisition of Sovereign Business Forms and related entities. Overall, while the market continues to be challenging on the apparel side, we remain optimistic about the remainder of the fiscal 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, 2014. 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.

`
Condensed Financial Information
(In thousands, except share and per share amounts)
				Three months ended
Condensed Operating Results				May 31,
					2014				2013
	Revenues			$	141,186			$	138,466
	Cost of goods sold				105,798				102,671
	Gross profit margin				35,388				35,795
	Operating expenses				21,794				22,198
	Operating income				13,594				13,597
	Other expense				845				94
	Earnings before income taxes				12,749				13,503
	Income tax expense				4,717				4,997
	Net earnings			$	8,032			$	8,506
Weighted average common shares outstanding
	Basic				25,973,227				26,038,068
	Diluted				25,987,377				26,055,869
Earnings per share
	Basic			$	0.31			$	0.33
	Diluted			$	0.31			$	0.33
				May 31,				February 28,
Condensed Balance Sheet Information					2014				2014
		Assets
Current assets
	Cash			$	13,266			$	5,316
	Accounts receivable, net				63,904				63,695
	Inventories, net				129,598				130,095
	Other				15,642				15,037
					222,410				214,143
Property, plant & equipment					90,228				91,565
Other					229,253				230,639
				$	541,891			$	536,347
		Liabilities and Shareholders' Equity
Current liabilities
	Accounts payable			$	21,290			$	22,062
	Accrued expenses				21,301				19,815
					42,591				41,877
Long-term debt					105,500				105,500
Other non-current liabilities					26,876				26,035
	Total liabilities				174,967				173,412
Shareholders' equity					366,924				362,935
				$	541,891			$	536,347
				Three months ended
				May 31,
Condensed Cash Flow Information					2014				2013
Cash provided by operating activities				$	13,312			$	21,551
Cash used in investing activities					(303	)			(662	)
Cash used in financing activities					(5,382	)			(12,501	)
Effect of exchange rates on cash					323				(224	)
Change in cash					7,950				8,164
Cash at beginning of period					5,316				6,232
Cash at end of period				$	13,266			$	14,396