Ennis Inc. Reports Results for the First Quarter Ended May 31, 2015 and Declares Quarterly Dividend
Ennis Inc., Midlothian, Texas, reported financial results for the first quarter ended May 31, 2015. Highlights include:
- Consolidated net sales increased $9.4 million for the quarter, or 6.7 percent.
- EBITDA, a non GAAP measure, increased 11.5 percent over the comparable quarter.
- Cash provided by operating activities increased by 130.9 percent.
- Diluted earnings per share increased 16.1 percent from $0.31 for the comparable quarter last year to $0.36 for current year quarter.
Financial Overview
The company's consolidated net sales for the quarter ended May 31, 2015 were $150.6 million compared to $141.2 million for the same quarter last year, an increase of 6.7 percent. Print sales increased 9.5 percent from $88.4 million to $96.8 million and apparel sales increased 1.9 percent from $52.8 million to $53.8 million. Consolidated gross profit margin ("margin") was $37.5 million for the quarter, or 24.9 percent, compared to $35.4 million, or 25.1 percent for the same quarter last year. Print margin was 31.0 percent for the quarter compared to 30.5 percent for the same quarter last year, while apparel margin was 14.1 percent for the quarter compared to 16.0 percent for the comparable quarter last year. Apparel margin was impacted by higher input costs due to lower initial manufacturing efficiencies related to our strategic decision to transition to more non-commodity program business and the continuing competitive selling price pressures in the marketplace on commodity type products. Net earnings for the quarter was $9.2 million, or $0.36 per diluted share as compared to $8.0 million, or $0.31 per diluted share for the same quarter last year, an increase of 16.1 percent.
Non-GAAP Reconciliations
The company believes the non-GAAP financial measure of EBITDA (EBITDA is calculated as net earnings before interest, taxes, depreciation and amortization) provides important supplemental information to both management and investors regarding financial and business trends used in assessing its results of operations. The company believes adding back the specified items to net earnings provides a more meaningful comparison to the corresponding reported periods and internal budgets and forecasts, provides management with a more relevant measurement of operating performance and yields metrics which are more useful in assessing management performance. In addition, EBITDA is a component of the financial covenants and an interest rate metric in the company's credit facility. While management believes this non-GAAP financial measure is useful in evaluating Ennis, this information should be considered as supplemental in nature and not as a substitute for, or superior to, the related financial information prepared in accordance with GAAP.
During the quarter, the company generated $19.2 million in EBITDA compared to $17.3 million for the comparable quarter last year, or an increase of 11.5 percent.
"The print group continued its strong performance during the quarter, improving margins by 50 basis points. The apparel group continues to be impacted by market dynamics. The discounting that was prevalent in the apparel marketplace for most of last fiscal year is continuing as expected into fiscal 2016," said Keith Walters, chairman, chief executive officer and president, Ennis. "As such, our ability to raise prices to offset any input cost increases has been, and we believe will continue to remain, difficult. Margins will continue to be restrained below historical levels unless relieved from the cost side. We are starting to see some relief on the cotton pricing, which could lead to cost side relief in quarters to come, unless we are forced to concede these savings due to market pressures. While our apparel sales improved during the quarter due to the non-commodity private label programs we entered into as part of our strategic initiative, our cost, as expected, increased some due to manufacturing complexities associated with these programs. These costs should fall back in line now that all the processes have been put into place and the initial learning curve overcome.
"On the print front, we continue to be pleased with the integration of the latest acquisitions and the margins of our print group as a whole," he added. "We were also pleased by the fact that we were able to pay down our debt 20 percent during the quarter, or $21.0 million, due to the effective management of our receivables and inventories. Overall, while we continue to believe fiscal year 2016 will be challenging, we continue to remain optimistic about its potential and are pleased with the results so far."
In Other News
The company announced last week that the board of directors has declared a quarterly cash dividend of 17.5 cents a share on its common stock. The dividend is payable Aug. 7, 2015 to shareholders of record on July 10, 2015.
Click here to view the complete report.
About Ennis Inc.
Ennis Inc. is primarily engaged in the production and sale of business forms, apparel and other business products. The company is one of the largest private-label printed business product suppliers in the United States. Headquartered in Midlothian, Texas, the company has production and distribution facilities strategically located throughout the United States of America, Mexico and Canada, to serve the company's national network of distributors. The company, together with its subsidiaries, operates in two business segments: print and apparel. The print segment manufactures and sells business forms, other printed business products, printed and electronic media, presentation products, flex-o-graphic printing, advertising specialties and Post-it Notes, internal bank forms, plastic cards, secure and negotiable documents, envelopes and other custom products. The apparel segment manufactures T-Shirts and distributes T-Shirts and other active-wear apparel through nine distribution centers located throughout North America. For more information, visit www.ennis.com.
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