Ennis Reports Financial Results, Declares Quarterly Dividend
Ennis, Inc., Midlothian, Texas reported financial results for the three and six months ended Aug. 31, 2018.
- Revenues increased $3.7 million, or 3.9 percent on a comparative quarter basis, and $2.5 million, or 1.3 percent for the six-month period.
- Diluted earnings per share increased from $0.34 to $0.37 on a comparative quarter basis and from $0.64 to $0.74 for the six month period.
The company’s revenues for the second quarter ended Aug. 31, 2018 were $98.6 million compared to $94.9 million for the same quarter last year, an increase of 3.9 percent. Gross profit margin ("margin") was $30.3 million for the quarter, or 30.8 percent, as compared to $30.9 million, or 32.5 percent for the second quarter last year. Net earnings for the quarter were $9.6 million, or $0.37 per diluted share, compared to $8.5 million, or $0.34 per diluted share, for the second quarter last year.
The company’s revenues for the six-month period ended Aug. 31, 2018 were $192.0 million compared to $189.5 million for the same period last year, an increase of 1.3 percent. Margin was $60.5 million, or 31.5 percent, as compared to $60.9 million, or 32.1 percent for the six month periods ended Aug. 31, 2018 and Aug. 31, 2017, respectively. Net earnings from operations for the six-month period ended August 31, 2018 were $18.8 million, or $0.74 per diluted share compared to $16.3 million, or $0.64 per diluted share for the same period last year.
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 adjusted gross profit margin, adjusted earnings and adjusted diluted earnings per share, each of which is a non-GAAP financial measure. To provide additional information, the company also reports the non-GAAP financial measure of EBITDA (EBITDA is calculated as net earnings from operations before interest expense, tax expense, depreciation, and amortization).
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.
Reconciliations of non-GAAP financial measures for the quarter to the most directly comparable measures calculated and presented in accordance with GAAP are set forth in the following table. Other companies may calculate non-GAAP adjusted financial measures differently than Ennis, which limits the usefulness of the non-GAAP measures for comparison with these other companies. While management believes the company’s non-GAAP financial measures are useful in evaluating Ennis, this information 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.
Keith Walters, chairman, CEO and president said:
Overall we are pleased with our second quarter performance given the challenges facing the industry. The industry continues to be challenged by raw material and freight cost increases. Tight supply conditions have allowed for multiple price increases for raw materials over the last eight months. These price increases will continue to have a negative impact on earnings until manufacturers are able to pass the increased costs through to the marketplace. Historically the price increases we experienced were less frequent and allowed us to make pricing adjustments in a more orderly manner. We believe the size and number of increases this year have impacted manufacturers’ ability to timely pass through the increased price adjustments to end users. Also, as we anticipated, our recent acquisitions had a dilutive impact on our margin for the second quarter. We believe once we have fully analyzed the acquired businesses’ cost structures and implement our costs systems, the margins of the acquired businesses will improve to expected levels. While we don’t foresee these challenges changing in the short-term, we do expect pricing and costs in the marketplace to normalize over the long term. However, even with increased manufacturing costs, our net earnings for the quarter increased on a comparable quarter basis from 9.0 percent to 9.7 percent due to lower operating and corporate tax costs. We continue to believe we have one of the strongest balance sheets in the industry and our cash position remains significant. As such, we will continue to explore strategic acquisitions as a way to profitably utilize our cash and leverage our balance sheet.
In Other News
Ennis announces that on Sept. 21, 2018 its Board of Directors declared a quarterly cash dividend of 22.5 cents a share on its common stock. The dividend is payable on Nov.5, 2018 to shareholders of record on Oct. 12, 2018.
For more information about Ennis, visit www.ennis.com.