Ennis Inc. Reports Financial Results, Declares Quarterly Dividend
Ennis Inc., Midlothian, Texas, recently reported financial results for the three and nine months ended Nov. 30, 2016.
Highlights for continuing operations (which excludes the former Alstyle apparel segment) include:
- Adjusted diluted earnings per share (a non-GAAP financial measure) was $0.27 for the quarter and $0.91 for the nine-month period, compared to $0.33 and $1.05 for the comparative periods last year.
- Adjusted gross profit margin (a non-GAAP financial measure) was 30.1 percent for the quarter and 31.4 percent for the nine-month period, compared to 30.5 percent and 30.9 percent for the comparative periods last year.
- Diluted earnings per share decreased from $0.33 to $0.22 for the comparative quarter and declined from $1.05 to $0.74 for the comparative nine-month period.
The company’s net sales for the third quarter ended Nov. 30, 2016 were $88.7 million compared to $97.5 million for the same quarter last year, a decrease of 9.0 percent. Gross profit margin was $25.3 million, or 28.5 percent, as compared to 29.6 percent for the sequential quarter and 30.5 percent for the same quarter last year. Diluted earnings per share were $0.22, compared to $0.33 for the same quarter last year. Operational results were impacted by a $2.0 million charge for increased medical expenses incurred during the quarter. Excluding this charge, on a non-GAAP basis, for the quarter adjusted gross profit margin would have been 30.1 percent ($26.6 million), adjusted net earnings would have been $7.0 million and adjusted diluted earnings per share would have been $0.27.
The company’s net sales for the nine-month period ended Nov. 30, 2016 were $270.3 million compared to $294.7 million for the same period last year, a decrease of 8.3 percent. Gross profit margin was $79.0 million, or 29.2 percent, as compared to $91.0 million, or 30.9 percent for the same period last year. Diluted earnings per share for the nine-month period were $0.74, compared to $1.05 for last year’s comparable period. Operational results for the period were impacted by the Folder Express relocation of $2.7 million, incurred prior to the quarter, and the aggregate increased medical expenses of $4.3 million incurred during current and previous quarters. Excluding these charges, on a non-GAAP basis, for the nine months adjusted gross profit margin would have been 31.4 percent ($84.9 million), adjusted net earnings would have been $23.6 million and adjusted diluted earnings per share would have been $0.91.
During the third quarter, the company generated EBITDA (a non-GAAP financial measure) of $12.4 million compared to $16.8 million for the comparable quarter last year. For the nine-month period ended Nov. 30, 2016, the company generated $40.3 million of EBITDA compared to $52.0 million for the comparable period last year. Excluding both the impact of the Folder Express relocation and the aggregate increased medical expenses, on a non-GAAP basis, the company generated adjusted EBITDA of $14.4 million, or 16.2 percent of sales for the three months and $47.3 million, or 17.5 percent of sales for the nine months ended Nov. 30, 2016.
Combined Continued and Discontinued Operations
Earnings from the Alstyle apparel discontinued operations during the nine-month period were $0.10, compared to $0.15 for the same period last year. The combined results for continued and discontinued operations for the nine months were $0.84 per diluted share compared to $1.20 for the same period in 2015. The net loss resulting from the sale of the apparel operations, net of tax, was $26.0 million, or a loss of $1.01 per share, which included the write-off of $16.0 million for foreign currency translation adjustments, or $10.3 million, net of taxes. As a result, on a combined basis, for the nine-month period the company’s continuing and discontinued operations realized a net loss of $4.4 million, or a loss of $0.17 per diluted share compared to net earnings of $30.9 million, or $1.20 per diluted share for 2016 and 2015, respectively.
Keith Walters, CEO of Ennis Inc., released the following statement:
While overall the quarter did not meet our expectations, we are pleased to report that the Folder Express operation no longer has a negative impact on our operational results. Although this operation has come a long way over the past nine months, we continue to focus on returning it to the contribution levels we believe are achievable for this business unit. As we experienced in the second quarter, operational results for the quarter continued to be impacted by medical claims. As a result, we expensed an additional $2.0 million to our medical reserve. To mitigate against further medical charges, we are implementing a new cost reimbursement program for our health plan as of the start of the new calendar year. However, while all indications are that this program should reduce our medical claims expense consistent with historical levels, actual cost savings may vary from anticipated levels. Generally, the print market continues to be fairly soft with competitive pricing, resulting in downward pressure on operating margins. Our balance sheet remains strong with a debt ratio, net of cash, of negative .07 percent. Our strong balance sheet supports our ability to pursue potential acquisition opportunities as they present themselves as we look to increasing the leverage of our corporate structure. Also, our cash position and operational cash flow provides us the flexibility to continue to repurchase common stock under our existing stock repurchase program as we may determine is in the company’s and our shareholders’ best interest. We repurchased 387,352 shares of our common stock during the third quarter at an average price of $15.41, with repurchases over the last six months totaling 491,057 shares. The transition services we agreed to provide to the buyer of our former apparel business segment, Alstyle, will be concluding shortly, which should allow us to reduce related redundant costs. While market conditions continue to be challenging, we believe we are well positioned to not only provide quality products, but also products that are competitively priced.
In other news, on Dec. 16, 2016 the board of directors declared a quarterly cash dividend of 17.5 cents a share on the company’s common stock. The dividend is payable on Feb. 8, 2017 to shareholders of record as of Jan. 11, 2017.
On Dec. 19, 2016 the board of directors increased the authorized amount under the company’s stock repurchase program by an additional $20.0 million, bringing the authorized to $40.0 million and the amount now available under the program for stock repurchases to $22.4 million.
To view the complete report, visit www.ennis.com.