Ennis Inc. Reports 16% Revenue Increase in Its Q2 Financial Report
Ennis Inc., Midlothian, Texas, recently reported financial results for the second quarter ended Aug. 31, 2021. Highlights include:
- Revenues were $100.5 million for the quarter compared to $86.6 million for the same quarter last year, an increase of $13.9 million or 16.0%.
- Earnings per diluted share for the current quarter were $0.29 compared to $0.25 for the comparative quarter last year, an increase of 16%.
- Our gross profit margin for the quarter was 28.8% compared to 29.0% for the comparative quarter last year.
The company’s revenues for the second quarter ended Aug. 31, 2021, were $100.5 million compared to $86.6 million for the same quarter last year, an increase of $13.9 million, or 16.0%. The gross profit margin was $28.9 million, or 28.8%, as compared to $25.2 million, or 29.0%, for the same quarter last year. Net earnings for the quarter were $7.5 million, or $0.29 per diluted share, as compared to $6.4 million, or $0.25 per diluted share, for the same quarter last year.
The company’s revenues for the six-month period ended Aug. 31, 2021, were $197.4 million compared to $175.6 million for the same period last year, an increase of $21.8 million or 12.4%. The gross profit margin was $58.1 million, or 29.4%, as compared to $49.1 million, or 27.9% for the six-month periods ended Aug. 31, 2021, and Aug. 31, 2020, respectively. Net earnings for the six-month period ended Aug. 31, 2021, were $14.8 million, or $0.57 per diluted share compared to $10.6 million or $0.41 per diluted share for the same period last year, an increase of $4.2 million or $0.16 per diluted share.
Keith Walters, chairman, CEO and president of Ennis Inc., released the following statement:
Overall, we are pleased with our performance for the quarter. As the recovery from the COVID-19 pandemic continues, some of our customers are seeing sales return to normalized levels. While our gross profit margin percentage for the quarter slightly decreased from 29.0% to 28.8% due primarily to higher inflationary factors, our EBITDA margin was consistent in the low to mid 15% range. Our recent acquisitions added approximately $6.7 million in revenues and $0.02 in diluted earnings per share for the quarter and $11.9 million in revenues and $0.04 in diluted earnings per share for the six-month period. Paper production declined last year due to the pandemic and, as the economy improved, increased demand initially was satisfied with the existing inventory at the paper mills.
While paper mills now are operating at a very high capacity, they are basically producing to fill orders rather than stock inventory, which is contributing to the tight market in some grades of paper. Paper prices have also increased due to global logistics issues that have delayed and reduced imports that have typically filled gaps in domestic supply. While the availability of paper in the North American market is very low, our strong vendor relationship with our paper supplier allows us to meet customer demand for their business product needs. We also have been adjusting our pricing to cover paper inflation during the year, but the impact of inflation with most of our other vendors as well as the labor market has had a slight impact on gross profit margin. To account for those other inflationary factors, we anticipate additional pricing adjustments to maintain our gross profit margins at their historical levels.
We are in the process of consolidating a few of our underperforming manufacturing facilities into existing locations with excess capacity to reduce future costs and improve our operational efficiency. We anticipate incurring additional costs during this transitional process which could include a probable pension settlement charge of approximately $2.3 million by the end of the fiscal year. Management estimates the future lump-sum payments will exceed the settlement threshold resulting in this settlement charge. The settlement charges are non-cash charges that accelerate the recognition of unrecognized pension benefit costs that would have been incurred in subsequent periods when plan payments, primarily lump sums from qualified pension plans exceed a threshold of service and interest cost for the period.
We believe we have one of the strongest balance sheets in the industry, with low debt and significant cash. We have not borrowed against our long-term bank line of credit line for three consecutive years, which expires in November 2021. With our profitability and strong financial condition that has allowed us to fund acquisitions without incurring debt, we are considering the nonrenewal of the facility or renewing with a smaller line of the credit limit.
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. In addition, EBITDA is a component of the financial covenants and an interest rate metric in the company’s credit agreement. 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.
In Other News
On Sept. 17, 2021, the board of directors declared a quarterly cash dividend of 25.0 cents per share on the company’s common stock. The dividend is payable on Nov. 5, 2021, to shareholders of record on Oct. 8, 2021.
For more information, visit www.ennis.com.
The preceding press release was provided by a company unaffiliated with Print+Promo. The views expressed within do not directly reflect the thoughts or opinions of Print+Promo.