Ennis Announces Quarter and Year Results, Adds $5 Million to Stock Repurchase Program
Ennis Inc., located in Midlothian, Texas, reported financial results for the quarter and year ended Feb. 29, 2012. The company's consolidated net sales for the quarter were $121.5 million, or down 7.5 percent from $131.4 million for the same quarter last year, while for the year net sales decreased from $550.0 million for the fiscal year ended Feb. 28, 2011 to $517.0 million for the fiscal year ended Feb. 29, 2012, or a decrease of 6.0 percent.
Print sales for the quarter were $72.4 million as compared to $66.2 million for the same quarter last year, an increase of $6.2 million, or 9.4 percent. For the year, print sales were at $278.0 million, compared to $272.7 million for last year, an increase of $5.3 million, or 1.9 percent. Apparel sales were down for both the quarter and the year. Sales were $49.1 million for the quarter, down $16.1 million as compared to $65.2 million for the same quarter last year. Overall apparel sales for the year were $239.0 million, down 139 percent from $277.3 million.
Ennis attributed its overall sales decreases to softness in the apparel market and continued pricing pressures. On a segment basis, its print margins increased, while apparel margins dropped due to continued higher input costs, primarily cotton.
"Our print operations continued to deliver revenue and operational results as expected," said Keith Walters, chairman, chief executive officer and president of Ennis Inc. "We feel good about our two print acquisitions this past year, and expect these acquisitions to add at least $80 million in sales and $.25 in diluted earnings."
Like most apparel suppliers, Ennis Inc., which owns Alstyle Apparel, was negatively impacted by soaring cotton costs in 2011. The company is still processing cotton purchased at the inflated prices due to contracts signed at that time which locked the price for cotton at a rate higher than it is today. "In addition, pricing in the marketplace has not been consistent with these higher costs, thus putting additional pressures on apparel margins," Walters said. "Products are being sold in the marketplace at prices, in certain circumstances, less than the associated raw material costs. Our philosophy has always been to try to at least cover our costs in our pricing. Consequently, we feel this has and will impact our apparel sales in the short-term. Therefore, while fiscal year 2012 was challenging, we view fiscal year 2013 to be equally challenging, due to the high priced cotton overhang in inventories and current market pricing on the sell side."
This week, the company also announced that the board of directors approved an additional $5 million be added to the company's stock repurchase program.
"The decision to add an additional $5 million to the company's stock repurchase program, along with our board's recent decision to raise our dividend rate, reflects the confidence of both management and our board in the company's continued business strength," said Keith Walters, chairman, president and chief executive officer of Ennis Inc. "With this addition, the company will have almost $9 million available for share repurchases. We believe that the purchase of our shares, given the current price at which the common stock is trading, relative to the company's earnings per share and book value per share, is a solid investment in the company and will add to shareholder value."
Under the repurchase program, shares may be purchased from time to time in the open market or through privately negotiated transactions depending on market conditions, share price, trading volume and other factors, and such purchases, if any, will be made in accordance with applicable insider trading and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice.
"While the short-term landscape for apparel appears somewhat challenged, the two print acquisitions will help offset those challenges from an earnings and sales perspective in the next year. We feel good about the long-term prospects of both sectors and as such our board approved an increase in our share buy-back program and recently announced a 13 percent increase in our quarterly dividend amount," Walters said. "No matter what directions fiscal year 2013 takes, you can be assured that we will remain vigilant to the task at hand."
For more information, visit www.ennis.com.