Ennis, Inc. (the “Company"), (NYSE: EBF), today reported
financial results for the three and six months ended August 31,
2017. Highlights include:
- Revenues increased $3.7 million, or
4.1% on a comparative quarter basis and $7.8 million, or 4.3% for
the six month period.
- Gross profit margin increased from
29.6% to 32.4% on a comparative quarter basis.
- Diluted earnings per share from
continuing operations increased from $0.26 to $0.34 for the quarter
and from $0.52 to $0.64 for the six month period.
Financial Overview
The financial overview for the six months includes only the
Company’s continuing print operations as the results of its
discontinued apparel operations have not changed. The Company sold
Alstyle Apparel on May 25, 2016, resulting in the print division
becoming the continuing operations of the Company.
The Company’s revenues for the quarter ended August 31, 2017
were $94.9 million compared to $91.2 million for the same quarter
last year, an increase of 4.1%. Gross profit margin ("margin") was
$30.8 million for the quarter, or 32.4%, as compared to $27.0
million, or 29.6% for the second quarter last year. Net earnings
for the current quarter were $8.5 million, or $0.34 per diluted
share compared to $6.8 million, or $0.26 per diluted share for the
same quarter last year. During the 2016 second quarter, operational
results included relocation and start-up costs arising from the
Company’s folder operations and medical expenses in excess of
historical levels. These costs and expenses negatively impacted the
prior year’s quarterly net earnings by approximately $2.2 million,
or $0.09 per diluted share.
The Company’s revenues for the six month period ended August 31,
2017 were $189.5 million compared to $181.7 million for the same
period last year, an increase of 4.3%. Margin was $60.7 million, or
32.0%, as compared to $53.7 million, or 29.6%, for the six month
period ended August 31, 2017 and August 31, 2016, respectively.
Earnings from continuing operations for the six month period ended
August 31, 2017 were $16.3 million, or $0.64 per diluted share
compared to $13.5 million, or $0.52 per diluted share for the same
period last year. The costs from the folder relocation and higher
than historical medical expenses negatively impacted the Company’s
net loss for the six months ended August 31, 2016 by approximately
$3.1 million, or $0.12 per diluted share.
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. These non-GAAP
financial measures provide useful information to management in
evaluating the Company’s period-to-period performance because they
eliminate certain items that the Company does not consider to be
indicative of earnings from on-going operating activities.
Management believes that excluding these items provides more
information on the underlying trends in the Company’s operating
performance and allows for enhanced comparisons of the Company’s
operating results to historical performance and against
competitors. 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 included herein
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 the Company, 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 from continuing
operations, a non-GAAP financial measure, to the most comparable
GAAP measure, net earnings from continuing operations (dollars in
thousands).
Three months ended Six months
ended August 31, August 31, 2017 2016 2017
2016 Net earnings from continuing operations $ 8,540
$ 6,784 $ 16,324 $ 13,467 Income tax expense 5,016 3,981 9,587
7,906 Interest expense 204 231 394 233 Depreciation and
amortization 3,552 3,181 7,073
6,323 EBITDA from continuing operations
(non-GAAP) $ 17,312 $ 14,177 $ 33,378 $ 27,929 % of sales
18.2 % 15.5 % 17.6 % 15.4 %
Keith Walters, Chairman, Chief Executive Officer and President,
commented by stating, “We continue to be pleased with our
operational performance during the year. Our recent acquisition
continues to perform nicely with operating results improving as
integration continues to progress. For the six months ended August
31, 2017, this addition has added approximately $20.0 million in
revenues and $0.07 to our diluted earnings per share. Recent
changes to our health program appear to have stemmed the tide, at
least for the time being, in the rising costs of medical claims. As
a result, we did not take an additional charge to our medical
reserve as we did in last year’s second quarter. Also, the negative
impact of the relocation and start-up of a folder operating company
seems to be behind us, which also positively impacted our quarterly
results. It appears the costs and expenses experienced last year
related to the folder operation relocation and higher than
historical medical expense have been successfully dealt with and
are behind us from an operational perspective. While we feel the
environment overall will remain challenging, we are positive about
the remainder of this fiscal year. We continue to further
strengthen one of the strongest balance sheets in the industry and
our cash position remains significant.”
In Other News
Ennis announces that on September 22, 2017 the Board of
Directors declared a quarterly cash dividend of 20 cents a share on
its common stock. The dividend is payable November 10, 2017 to
shareholders of record on October 13, 2017.
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, 2017
and its Quarterly Report on Form 10-Q for the fiscal quarter ending
May 31, 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 Six months ended
Condensed
Consolidated Operating Results
August 31, August 31, 2017 2016
2017 2016 Revenues $ 94,887 $ 91,246 $ 189,477 $
181,656 Cost of goods sold 64,100 64,208
128,771 127,924 Gross profit margin 30,787
27,038 60,706 53,732 Operating expenses 17,144 16,053
34,531 32,130 Operating income 13,643
10,985 26,175 21,602 Other expense 87 220 264
229 Earnings from continuing operations before
income taxes 13,556 10,765 25,911 21,373 Income tax expense
5,016 3,981 9,587 7,906 Earnings
from continuing operations 8,540 6,784 16,324 13,467 Income from
discontinued operations, net of tax - - - 2,481 Loss on sale of
discontinued operations, net of tax - - -
(26,042 )
Net earnings (loss) $ 8,540 $ 6,784
$ 16,324 $ (10,094 )
Weighted average
common shares outstanding
Basic 25,342,747 25,893,218 25,388,292
25,847,051 Diluted 25,366,001
25,910,375 25,405,863 25,868,799
Earnings (loss)
per share - basic and diluted
Earnings per share on continuing operations $ 0.34 $ 0.26 $ 0.64 $
0.52 Earnings per share on discontinued operations -
- - 0.10 0.34 0.26 0.64 0.62 Loss per
share on sale of discontinued operations - - -
(1.01 ) Net earnings (loss) $ 0.34 $ 0.26 $ 0.64
$ (0.39 )
August 31, February
28,
Condensed
Consolidated Balance Sheet Information
2017 2017 Assets Current assets Cash $ 83,865
$ 80,466 Accounts receivable, net 38,171 37,368 Inventories, net
29,228 27,965 Other 3,652 3,451
154,916 149,250 Property, plant &
equipment 47,761 49,995 Other 123,223 125,040
$ 325,900 $ 324,285
Liabilities and
Shareholders' Equity Current liabilities Accounts payable $
10,753 $ 14,202 Accrued expenses 15,543 15,766
26,296 29,968 Long-term debt
30,000 30,000 Other non-current liabilities 13,624
12,962 Total liabilities 69,920
72,930 Shareholders’ equity 255,980
251,355 $ 325,900 $ 324,285
Six months ended August 31,
Condensed
Consolidated Cash Flow Information
2017 2016 Cash provided by operating activities $
19,176 $ 29,078 Cash provided by (used in) investing activities
(2,915 ) 105,253 Cash used in financing activities (12,862 )
(57,063 ) Change in cash 3,399 77,268 Cash at beginning of
period 80,466 7,957 Cash at end of
period $ 83,865 $ 85,225
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170925005215/en/
Ennis, Inc.Mr. Keith S. Walters, 972-775-9801Chairman,
Chief Executive Officer and PresidentorMr. Richard L. Travis, Jr.,
972-775-9801CFO, Treasurer and Principal Financial and Accounting
OfficerorMr. Michael D. Magill, 972-775-9801Executive Vice
President and SecretaryFax: 972-775-9820www.ennis.com
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