Ennis Inc. Reports Q2 Financial Results

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Ennis Inc., Midlothian, Texas, reported financial results for the three and six months ended Aug. 31, 2020. Highlights include:

• Revenues decreased 20.4% for the comparative quarter and 2.7% sequentially.
• Earnings per diluted share decreased $0.12 per share for the comparative quarter, but increased $0.09 per diluted share, or 56% over the sequential quarter.
• The company’s gross profit margin decreased on a comparative quarter basis from 29.8% to 29.0%, but increased on a sequential quarter basis from 26.9%.

Financial Overview
The company’s revenues for the second quarter ended Aug. 31, 2020 were $86.6 million compared to $108.8 million for the same quarter last year, a decrease of 20.4%. Gross profit margin was $25.2 million for the quarter, or 29.0%, as compared to $32.5 million, or 29.8% for the second quarter last year. Net earnings for the quarter were $6.4 million, or $0.25 per diluted share compared to $9.5 million, or $0.37 per diluted share for the second quarter last year. While Ennis Inc.’s net earnings for the quarter were down on a comparable basis, they were up 56% from $0.16 per diluted share for our sequential quarter.

The company’s revenues for the six-month period ended Aug. 31, 2020 were $175.6 million compared to $216.8 million for the same period last year, a decrease of 19.0%. Margin was $49.1 million, or 27.9%, as compared to $65.2 million, or 30.0% for the six-month periods ended Aug. 31, 2020 and Aug. 31, 2019, respectively. Net earnings for the six-month period ended Aug. 31, 2020 were $10.6 million, or $0.41 per diluted share compared to $19.2 million, or $0.74 per diluted share for the same period last year.

Keith Walters, chairman, CEO and president, released the following statement:

While our results continue to be significantly impacted by the COVID-19 pandemic, they continue to be within our expectations. During the second quarter we continued to make significant advances in right sizing our organization, which resulted in a 210 basis point improvement over our sequential quarter’s gross profit margin (from 26.9% to 29.0%), a $1.6 million decrease in our sequential quarter’s SG&A expenses, an increase in our sequential quarter’s cash position of over $8.0 million, and an increase in our sequential quarter’s EBITDA % of sales from 11.3% to 15.1%. The U.S. economy continues to be significantly impacted by the COVID-19 pandemic and while parts of the economy have started to re-open, unemployment rates continue to be extremely high and consumer optimism remains low. We continue to monitor incoming order volumes so that we can proactively adjust our costs accordingly. Although no one is sure of the exact timing of an economic recovery, we will continue to stay focused during this period of economic and social unrest. We will continue to explore acquisitions that make sense and hunt for new sales in new markets and new channels. We will focus, as always, on maintaining our dividend. We expect that our strong balance sheet and strong free-cash flow position should provide us with the means to accomplish these objectives.

Non-GAAP Reconciliations
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. 18, 2020, the board of directors declared a quarterly cash dividend of 22.5 cents per share on the company’s common stock. The dividend is payable on Nov. 6, 2020 to shareholders of record on Oct. 9, 2020.

View the complete report here.

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