Ennis Reports Q1 Revenue Increase, Print Sales Decrease 1 Percent
Midlothian, Texas-based Ennis, Inc. reported financial results for the first quarter ended May 31, 2011.
• Consolidated revenues for the quarter increased $2.6 million, or 1.8 percent over the comparable quarter last year.
• Apparel sales increased $3.1 million, or 4.2 percent over the comparable quarter last year.
• Diluted earnings per share decreased from $0.50 per share for the same quarter last year to $0.44 for the current quarter.
For the quarter, consolidated net sales increased by $2.6 million, or 1.8 percent, from $140.7 million for the quarter ended May 31, 2010 to $143.3 million for the quarter ended May 31, 2011. Print sales for the quarter were $67.1 million, compared to $67.8 million for the same quarter last year, or a decrease of 1 percent. Apparel sales for the quarter were $76.1 million, compared to $73.0 million for the same quarter last year, or an increase of 4.2 percent. Overall gross profit margins ("margins") decreased from 30 percent to 27.7 percent for the quarters ended May 31, 2010 and May 31, 2011, respectively. Print margins decreased from 30.3 percent to 28.8 percent, and Apparel margins decreased from 29.7 percent to 26.8 percent, for the quarters ended May 31, 2010 and May 31, 2011, respectively. Net earnings for the quarter decreased from $13.0 million, or 9.3 percent of sales, for the quarter ended May 31, 2010 to $11.4 million, or 8 percent of sales, for the quarter ended May 31, 2011. Diluted EPS decreased from $0.50 per share to $0.44 per share for the quarters ended May 31, 2010 and May 31, 2011, respectively.
The company, during the quarter, generated $21.9 million in EBITDA (earnings before interest, taxes, depreciation and amortization) compared to $23.7 million for the comparable quarter last year.
Keith Walters, chairman, chief executive officer and president, commented, "Overall we are pleased with the operational results this quarter, even though our reported margins for both sectors decreased over their comparables due to higher raw material costs. In our Apparel sector alone, our raw material costs flowing through our operating results increased approximately 35 percent over the comparable quarter last year. In addition, our Apparel sector had manufacturing inefficiencies associated with the start-up and transition to our new manufacturing facility in Agua Prieta, Mexico of approximately $2.2 million, or 289 basis points, which were not incurred during the same quarter last year. Our major concern for the current fiscal year still remains the high cost of cotton. Even with the significant increase in our cotton cost flowing through our operating results this quarter, the current cost of cotton going into our inventory is still much higher. Our ability to pass these cost increases on to the market continues to be unknown and is dependent upon the continuing economic recovery and the actions of our competitors. Sales for the Print sector appear to have stabilized, but still remain challenged. Apparel sales during the quarter were restricted some, to help facilitate the transition to our new manufacturing facility. The new apparel manufacturing facility continues to progress and we are in the final stages of transitioning production from our Anaheim, Calif. facility to the new facility. We continue to expect this transition to be completed by the end of our second fiscal quarter. So while many challenges were negotiated during the quarter, many challenges remain for fiscal year 2012. As always, we will continue to remain vigilant to the task at hand."
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