Ennis Inc. Reports Results for the Year and Quarter Ended Feb. 28, 2014
Ennis Inc., Midlothian, Texas, recently reported financial results for the quarter and fiscal year ended Feb. 28, 2014.
The company's consolidated net sales for the quarter were $132.1 million compared to $123.6 million for the same quarter last year. Print sales increased 12.7 percent on a comparable quarter basis, from $79.8 million to $89.9 million. Apparel sales decreased 3.6 percent for the comparable quarter, from $43.9 million to $42.3 million. Consolidated gross profit margin during the quarter remained level at 25.4 percent in comparison to last year's quarter. On a quarter comparison basis, print margin decreased 120 basis points, from 29.6 percent to 28.4 percent, while apparel margin increased 140 basis points, from 17.6 percent to 19.0 percent. Apparel margin continued to improve due to lower input costs and higher production levels. Net earnings for the quarter decreased from $7.1 million, or 5.7 percent of net sales, for the quarter ended Feb. 28, 2013 to $14.5 million for the quarter ended Feb. 28, 2014, due to a goodwill and trademark impairment charge of $24.2 million relating to the apparel division. Diluted earnings per share decreased from $0.27 for the quarter ended Feb. 28, 2013 to $0.55 for the quarter ended Feb. 28, 2014. Excluding the impairment charge, non-GAAP earnings for the quarter would have been approximately $7.7 million, or approximately $0.30 per share.
For the fiscal year, consolidated net sales increased from $533.5 million for the year ended Feb. 28, 2013 to $542.4 million for the year ended Feb. 28, 2014, or an increase of 1.7 percent. Print sales for the year increased $5.2 million or 1.6 percent, from $334.7 million to $339.9 million, while apparel sales for the year increased $3.7 million or 1.9 percent, from $198.8 million to $202.5 million. Consolidated margin increased from 23.3 percent to 26.5 percent for the fiscal years ended 2013 and 2014, respectively. For the fiscal year by segment, print margin increased from 29.2 percent to 29.7 percent, and apparel margin increased from 13.2 percent to 21.1 percent due to lower input costs and increased production levels.
Net earnings for the period decreased from $24.7 million, or 4.6 percent of net sales for the fiscal year ended Feb. 28, 2013, to $13.2 million, or 2.4 percent of net sales for the fiscal year ended Feb. 28, 2014, due to the goodwill and trademark impairment charge of $24.2 million in the fourth quarter. Diluted earnings per share decreased from $0.95 to $0.50 for each year, respectively. Excluding the impairment charge, non-GAAP net earnings for the year would have been approximately $35.3 million, or approximately $1.35 per diluted share.
The company believes the non-GAAP financial measures of net earnings and diluted earnings per share on a proforma basis, excluding impairment, and EBITDA (EBITDA is calculated as net earnings before interest, taxes, depreciation, amortization, and impairment charge) provide 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 is 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.
Keith Walters, Ennis Inc. chairman, chief executive officer and president, commented:
Overall our results before taking into account the impairment charge continue to show improvement over comparable periods. Our EBITDA was 12.6 percent for the quarter compared to 11.8 percent for the same quarter last year and 13.2 percent for the year compared to 10.0 percent for last year. Our apparel results continued to improve during the quarter, even though the impact of lower raw material costs over comparable quarters has all but dissipated. While we continue to make cost-side improvements, the apparel market continues to be extremely challenging, both from a volume and pricing perspective. Apparel volumes, during the quarter, continued to be softer than expected, especially on the East Coast and Mid-West. We attribute this weakness to the extreme weather conditions experienced across the country this winter. Due to this market softness, pricing pressures continued to be prevalent in the marketplace. Whether discounted pricing, which we believe is driven by a desire to maintain production volumes, coupled with overall softness in the marketplace, will continue into the next fiscal year is unknown. With respect to the print segment, our sales during the quarter were softer than expected. Combined with the impact of our recent acquisitions, these resulted in our print margin being down slightly during the quarter. Even so, our print margin continued to fall within its historical parameters. While the market continues to be challenging, we remain optimistic about the upcoming fiscal year on many fronts. We look forward to the impact of our acquisitions on next year's operational results. Potential acquisition opportunities remain strong. Our apparel manufacturing facility continues to show improvement and we expect it to increase the contribution to our operating results as production levels continue to increase. While the apparel market continues to be challenging, it has recently shown signs of improving, so while there are still many unknowns about the upcoming year, we continue to be optimistic and will remain opportunistic.
In other news, the company's board of directors has set the record date and meeting date for the Annual Shareholder Meeting. The Annual Meeting of Shareholders will be held on July 24, 2014, with a record date of May 27, 2014.
For more information, visit www.ennis.com.