Ennis Revenue Up in Second Quarter

Midlothian, Texas-based Ennis reported financial results for the three and six months ended Aug. 31, 2010.

Highlights included:

• Consolidated revenues for the six months ended Aug. 31, 2010 were $283.8 million compared to $268.6 million for the same period ended last year, an increase of $15.2 million or 5.7 percent.

• Consolidated gross profit margins increased 400 basis points ("bps") over the comparable six month period last year.

• Diluted earnings per share increased from $0.63 per share for the same period last year to $0.97 for the current period, or an increase of 54.0 percent.

Financial Overview

For the quarter, consolidated net sales increased by $5.2 million, or 3.8 percent, from $137.8 million for the quarter ended Aug. 31, 2009 to $143.0 million for the quarter ended Aug. 31, 2010. Print sales for the quarter were $69.1 million, compared to $73.9 million for the same quarter last year, or a decrease of 6.5 percent. Apparel sales for the quarter were $73.9 million, compared to $63.9 million for the same quarter last year, or an increase of 15.6 percent. Overall gross profit margins ("margins") increased from 26.0 percent to 27.8 percent for the quarters ended Aug. 31, 2009 and Aug. 31, 2010, respectively. Print margins decreased from 28.7 percent to 28.2 percent, and apparel margins increased from 22.9 percent to 27.4 percent, for the quarters ended Aug. 31, 2009 and Aug. 31, 2010, respectively. Net earnings, for the quarter, increased from $9.5 million, or 6.9 percent of sales, for the quarter ended Aug. 31, 2009 to $12.1 million, or 8.5 percent of sales, for the quarter ended Aug. 31, 2010. Diluted EPS increased from $0.37 per share to $0.47 per share for the quarters ended Aug. 31, 2009 and Aug. 31, 2010, respectively.

For the six-month period, net sales increased from $268.6 million for the six months ended Aug. 31, 2009 to $283.8 million for the six months ended Aug. 31, 2010, or 5.7 percent. Print sales for the period were $136.9 million, compared to $145.6 million for the same period last year, or a decrease of 6.0 percent. Apparel sales for the period were $146.8 million, compared to $123.0 million for the same period last year, or an increase of 19.4 percent. Print margins increased from 27.5 percent to 29.2 percent, while apparel margins increased from 21.7 percent to 28.5 percent, for the six months ended Aug. 31, 2009 and 2010, respectively. Net earnings, for the period, increased from $16.2 million, or 6.0 percent of sales, for the six months ended Aug. 31, 2009 to $25.2 million, or 8.9 percent of sales, for the six months ended Aug. 31, 2010. Diluted earnings increased from $0.63 per share to $0.97 per share for the six months ended Aug. 31, 2009 and 2010, respectively.

The company, during the quarter, generated $22.2 million of EBITDA (earnings before interest, taxes, depreciation, and amortization) compared to $18.8 million for the comparable quarter last year. For the six month period ended Aug. 31, 2010, the company generated $46.0 million of EBITDA during the period, compared to $33.1 million for the comparable period last year.

Keith Walters, chairman, chief executive officer and president, commented, "We continued to be pleased with the operational results this year. Operationally, both sectors continue to be able to increase or hold their margins when compared to prior comparable periods. Print margins continue to run ahead of last year and our apparel margins are up 680 bps over the prior year, even while fighting the negative head winds of higher paper and cotton prices. Our apparel sector continued to show strong sales growth during the quarter as well, with sales being up 15.6 percent for the quarter. We continue to be concerned with current cotton pricing which continues to be extremely high. Also, paper pricing continues to be volatile. Our ability to continue to manage these costs increases continues to be unknown and is dependent upon the economic recovery, outside market factors and the actions of our competitors. The construction of our new apparel manufacturing facility in Agua Prieta, Mexico continues to progress and we expect operations to begin at this facility over the next couple of quarters. We continue to look forward to the start-up of this new facility and the potential cost savings, once fully operational. So while much has been accomplished so far this fiscal year, many challenges remain for fiscal year 2011. As always, we will continue to remain vigilant to the task at hand."

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