MIDLOTHIAN, Texas
,
April 24, 2023
(press release)
–
Ennis, Inc. (the “Company”), (NYSE: EBF), today reported financial results for the quarter and fiscal year ended February 28, 2023. Highlights include: Financial Overview The Company’s revenues for the fourth quarter ended February 28, 2023 were $102.7 million compared to $99.7 million for the same quarter last year, an increase of 3.0%. The increase was attributable to $1.4 million in revenues from our recent acquisition of School Photo Marketing, as well as price increases that were partially offset by volume decreases attributable in part to seasonal factors. Gross profit margin was $28.4 million, or 27.6%, as compared to $27.4 million, or 27.5% for the same quarter last year. Our gross profit margin decreased on a sequential basis from 30.4% for the third quarter ended November 30, 2022 to 27.6%. Our margin during the period was negatively impacted by a decrease in revenue volume, increased cost of material and labor, and to a lesser extent by the acquisition of School Photo Marketing at the beginning of its low margin off-season. Our net earnings for the quarter were $12.2 million, or $0.47 per diluted share as compared to $6.7 million, or $0.26 per diluted share for the same quarter last year. Quarterly net earnings results were favorably impacted by a $5.8 million gain or $0.17 per diluted share from the sale of an unused manufacturing facility. The Company’s revenues for the fiscal year ended February 28, 2023 were $431.8 million compared to $400.0 million for the prior fiscal year, an increase of 8.0%. Gross profit margin was $131.1 million, or 30.3%, as compared to $114.7 million, or 28.7% for the prior fiscal year. Net earnings for the fiscal year were $47.3 million or $1.82 per diluted share, compared to $29.0 million, or $1.11 per diluted share for the prior fiscal year. The $5.8 million gain from the sale of an unused manufacturing facility impacted the current fiscal year results by $0.17 per diluted share. Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, "We are pleased with our performance for the fourth quarter. Throughout our fiscal year ended February 28, 2023, we experienced strong demand for our products and navigated a challenging environment with supply chain disruptions and inflationary cost pressures not seen in decades. Our revenues and operating income for the quarter improved on a year-over-year basis. Our EBITDA increased from $60.7 million (15.2% of sales) for the fiscal year ended February 28, 2022 to $82.3 million (19.1% of sales) for the fiscal year ended February 28, 2023. In the fourth quarter, EBITDA increased from $15.8 million (15.8% of sales) to $20.5 million (19.9% of sales) over last year's fourth quarter. During the quarter we sold an unused manufacturing facility which resulted in a $5.8 million gain and increased our diluted earnings per share $0.17. Our Gross profit margin increased to 30.3% for the current fiscal year compared to 28.7% for the prior fiscal year, an increase of 1.6%. Increased foreign imports and demand declines have currently stabilized price increases of North American printing & writing paper. The extent to which import pressures remain in place will likely play a major role in price stability or decreases. We continue to monitor incoming order volumes as well as rising raw material and other input costs so that we can proactively adjust our pricing and costs accordingly. We believe we have one of the strongest balance sheets in the industry, with no debt and significant cash. Our profitability and strong financial condition will allow us to continue operations and fund acquisitions without incurring debt. Given those strengths, we also anticipate timely access to credit should larger acquisition opportunities materialize as we continue to explore strategic opportunities in the acquisition arena to increase profitability." 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 the non-GAAP financial measure of EBITDA (EBITDA is calculated as net earnings before interest expense, tax expense, depreciation, and amortization). The Company may also report adjusted gross profit margin, adjusted earnings and adjusted diluted earnings per share, each of which is a non-GAAP financial measure. 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. Other companies may calculate non-GAAP financial measures differently than the Company, which limits the usefulness of the Company’s non-GAAP measures for comparison with these other companies. While management believes the Company’s non-GAAP financial measures are useful in evaluating the Company, when this information is reported it 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, a non-GAAP financial measure, for the three and twelve months ended February 28, 2023 and February 28, 2022 to the most comparable GAAP measure, net earnings (dollars in thousands). Three months ended Twelve months ended February 28, February 28, February 28, February 28, 2023 2022 2023 2022 Net earnings $ 12,193 $ 6,655 $ 47,300 $ 28,982 Income tax expense 3,978 3,393 17,630 12,962 Interest expense — 2 — 9 Depreciation and amortization 4,310 4,888 17,356 18,777 EBITDA (non-GAAP) $ 20,481 $ 14,938 $ 82,286 $ 60,730 % of sales 19.9 % 15.0 % 19.1 % 15.2 % In Other News The 2023 Annual Meeting of Shareholders will be held on July 13, 2023, with a record date of May 24, 2023. About Ennis Founded in 1909, 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, integrated forms and labels, presentation products, flex-o-graphic printing, advertising specialties and Post-it® Notes, internal bank forms, plastic cards, secure and negotiable documents, specialty packaging, direct mail, 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 that may be 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 severity and duration of the COVID-19 pandemic and related economic repercussions, the erosion of demand for our printer business documents as the result of digital technologies, risk or uncertainties related to the completion and integration of acquisitions, the limited number of available suppliers and variability in the prices of paper and other raw materials, and operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees and potential plant closures. 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, 2022. 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. Unaudited Condensed Consolidated Financial Information (In thousands, except share and per share amounts) Three months ended Twelve months ended Condensed Consolidated Operating Results February 28, February 28, 2023 2022 2023 2022 Revenues $ 102,692 $ 99,665 $ 431,837 $ 400,014 Cost of goods sold 74,342 72,229 300,787 285,291 Gross profit margin 28,350 27,436 131,050 114,723 Operating expenses 17,877 16,887 70,793 71,410 (Gain) Loss from disposal of assets (5,911 ) 4 (5,896 ) (271 ) Operating income 16,384 10,545 66,153 43,584 Other expense 213 497 1,223 1,640 Earnings before income taxes 16,171 10,048 64,930 41,944 Income tax expense 3,978 3,393 17,630 12,962 Net earnings $ 12,193 $ 6,655 $ 47,300 $ 28,982 Weighted average common shares outstanding Basic 25,820,639 25,935,882 25,818,737 26,026,477 Diluted 25,959,448 25,935,882 25,951,141 26,109,341 Earnings per share Basic $ 0.47 $ 0.26 $ 1.83 $ 1.11 Diluted $ 0.47 $ 0.26 $ 1.82 $ 1.11 February 28, February 28, Condensed Consolidated Balance Sheet Information 2023 2022 Assets Current Assets Cash $ 93,968 $ 85,606 Accounts receivable, net 53,507 39,022 Inventories, net 46,834 38,538 Other 2,317 1,863 Total Current Assets 196,626 165,029 Property, plant & equipment, net 47,789 53,633 Operating lease right-of-use assets 13,133 15,544 Goodwill and intangible assets 135,907 134,246 Other 380 392 Total Assets $ 393,835 $ 368,844 Liabilities and Shareholders’ Equity Current liabilities Accounts payable $ 18,333 $ 16,678 Accrued expenses 18,067 15,422 Current portion of operating lease liabilities 4,847 5,090 Total Current Liabilities 41,247 37,190 Other non-current liabilities 21,156 27,839 Total liabilities 62,403 65,029 Shareholders' Equity 331,432 303,815 Total Liabilities and Shareholders' Equity $ 393,835 $ 368,844 Twelve months ended February 28, Condensed Consolidated Cash Flow Information 2023 2022 Cash provided by operating activities $ 46,776 $ 50,678 Cash used in investing activities (11,457 ) (10,052 ) Cash used in financing activities (26,957 ) (30,210 ) Change in cash 8,362 10,416 Cash at beginning of period 85,606 75,190 Cash at end of period $ 93,968 $ 85,606
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