Ennis Inc., Midlothian, Texas, has reported financial results for the first quarter ended May 31, 2016. Highlights include:
- The company completed the sale of the apparel segment to Gildan for $110.0 million.
- Print sequential gross profit margin increased from 27.7 percent to 29.5 percent on a sequential quarter basis.
- Diluted earnings per share from operations (continued and discontinued) remained constant at $0.36.
- Diluted earnings per share from continuing operations decreased from $0.34 to $0.26.
As previously announced, the company completed the sale of its apparel business to Gildan Activewear on May 25, 2016. Based on closing date working capital, which is subject to audit, the all-cash purchase price for the apparel business was $110.0 million. The results of the apparel segment have been accounted for as discontinued operations for the quarter ended May 31, 2016, and comparable prior year results have been restated to reflect this accounting.
The company’s net sales from continuing operations for the quarter ended May 31, 2016 were $90.4 million compared to $96.8 million for the same quarter last year, a decrease of 6.6 percent. Gross profit margin for continuing operations was $26.7 million for the quarter, or 29.5 percent, as compared to 27.7 percent for the sequential quarter and 31.0 percent for the same quarter last year. Diluted earnings per share from continuing operations for the quarter were $0.26, compared to $0.34 for the same quarter last year. Earnings from discontinued operations during the quarter were $0.10, compared to $0.02 for the same quarter last year. The combined results for continued and discontinued operations were $0.36 per diluted share for both the quarter and the comparable quarter last year.
The net loss arising from the sale of the company’s apparel operations during the quarter, net of tax, was $26.0 million, or $1.01 per share, which included the write-off of the company’s balance of foreign currency translation adjustments recorded in accumulated other comprehensive income of $16.0 million, or $10.3 million, net of taxes. As a result, for the quarter the company realized a net loss of $16.9 million, or $0.65 per diluted share compared to net earnings of $9.2 million, or $0.36 per diluted share for the same quarter last year.
Keith Walters, chairman, CEO and president of Ennis Inc., released the following statement:
We are pleased that we were able to close the sale of the apparel business within the first quarter. The completion of this transaction will allow us to focus on our core print business, including pursuing acquisitions that fit our corporate strategy. As previously announced, in connection with the sale, the company declared a one-time cash dividend of $1.50 per share to shareholders of record on July 11, 2016, which is payable on Aug. 8, 2016. The print performance for the quarter, while improving over the sequential quarter’s results, did not meet the expectations we have for this business. Operational results for the quarter were impacted by the unavoidable relocation of our Folder Express operations from Omaha, Neb. to Columbus, Kan., which was implemented last quarter. The startup training process for the labor force has impacted efficiencies, and we estimate the loss of efficiencies associated with the move impacted our financial performance by approximately $1.6 million for the quarter. While we have seen improvements in this operation, we continue to expect this move will impact our financial performance in the short term. However, we continue to be pleased with the integration of recent acquisitions and the margins of print operations as a whole. I would also like to remind our shareholders that our annual shareholders’ meeting is scheduled for July 21, 2016. I hope to see you there.
Related story: Ennis Inc. Closes Sale of Its Apparel Division