FOR IMMEDIATE RELEASE
ENNIS, INC. REPORTS RESULTS
FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2015 AND
DECLARES QUARTERLY DIVIDEND
Midlothian, TX. December 21, 2015 — Ennis, Inc. (the “Company”), (NYSE: EBF), today reported financial results for the three and nine months ended November 30, 2015. Highlights include:
| • | Apparel margin increased 1,170 basis points over the comparable quarter, 750 basis points over the sequential quarter and 420 basis points for the three month period. |
| • | Adjusted EBITDA, a non-GAAP measure, increased 15.2% over the comparable nine month period. |
| • | Cash provided by operating activities increased by 70.6% over the comparable nine month period. |
| • | Diluted earnings per share increased over the comparable quarter last year from a loss of $(2.76) to $0.41 and increased over the comparable nine month period from a loss of $(2.05) to $1.20. |
Financial Overview
The Company’s consolidated net sales for the quarter ended November 30, 2015 were $139.5 million compared to $147.0 million for the same quarter last year, a decrease of 5.1%. Print sales decreased 0.2% from $97.7 million to $97.5 million and apparel sales decreased 15.0% from $49.3 million to $41.9 million. Consolidated gross profit margin (“margin”) was $40.6 million for the quarter, or 29.1%, compared to $36.5 million, or 24.8% for the same quarter last year. Print margin was 30.5% for the quarter compared to 30.2% for the same quarter last year, while apparel margin increased 1,170 basis points from 14.2% for the comparable quarter last year to 25.9% for the current quarter. Apparel margin improvement resulted from lower input costs, improved manufacturing efficiencies and stability in selling prices. Net earnings for the quarter were $10.7 million, or $0.41 per diluted share, as compared to a GAAP loss of $(71.2) million and a loss of $(2.76) per diluted share. Consolidated net earnings for the three months ended November 30, 2014 prior to the impairment charge of $93.3 million were $7.9 million, or $.31 per diluted share.
The Company’s consolidated net sales for the nine month period increased slightly from $440.0 million to $440.8 million. Print sales were $294.7 million, compared to $283.9 million for the same period last year, an increase of $10.8 million, or 3.8%. Apparel sales were $146.0 million, compared to $156.1 million for the same period last year, a decrease of $10.1 million or 6.5%. Consolidated margin increased on a dollar basis from $110.1 million to $118.7 million and increased on a percentage basis from 25.0% to 26.9% for the nine months ended November 30, 2014 and 2015, respectively. Print margin increased from 30.6% to 30.9% due to continued realization of synergies with acquired businesses by the elimination of duplicative costs. Apparel margin increased 420 basis points from
14.8% to 19.0% due to lower input costs, stability in selling prices and improved manufacturing efficiencies during the most recent period. As a result, consolidated net earnings increased from a loss of $(53.1) million, or (12.1)% of net sales, for the nine months ended November 30, 2014 to $30.9 million, or 7.0% of net sales, for the nine months ended November 30, 2015. Diluted earnings per share increased from a loss of $(2.05) to $1.20 for the nine months ended November 30, 2014 and 2015, respectively. Consolidated net earnings for the nine month period last year prior to the impairment charge of $93.3 million were $26.0 million, or $1.00 per diluted share.
Non-GAAP Reconciliations
The Company believes the non-GAAP financial measure of Adjusted EBITDA (Adjusted EBITDA is calculated as net earnings before interest, taxes, depreciation, amortization and impairment charges) provides 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 yields metrics which are more useful in assessing management performance. In addition, Adjusted 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 the Company’s performance, 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.
During the third quarter, the Company generated $21.6 million in Adjusted EBITDA compared to $17.1 million for the comparable quarter last year, or an increase of 26.4%. For the nine month period ended November 30, 2015, the Company generated $63.1 million of Adjusted EBITDA compared to $54.8 million for the comparable period last year, or an increase of 15.2%.
The following table reconciles Adjusted EBITDA, a non-GAAP financial measure, to the most comparable GAAP measure, net earnings (dollars in thousands).
| Three months ended November 30, | Nine months ended November 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
Net earnings (loss) | $ | 10,674 | $ | (71,179 | ) | $ | 30,891 | $ | (53,131 | ) | ||||||
Income tax expense (benefit) | 6,269 | (9,556 | ) | 18,142 | 1,044 | |||||||||||
Interest expense | 260 | 472 | 1,120 | 1,499 | ||||||||||||
Depreciation and amortization | 4,374 | 4,007 | 12,958 | 12,064 | ||||||||||||
Impairment of goodwill and trademarks | — | 93,324 | — | 93,324 | ||||||||||||
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Adjusted EBITDA (non-GAAP) | $ | 21,577 | $ | 17,068 | $ | 63,111 | $ | 54,800 | ||||||||
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% of sales | 15.5 | % | 11.6 | % | 14.3 | % | 12.5 | % | ||||||||
Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, “Our print group’s performance continued to be solid during the quarter. Even though our apparel group’s sales continued to be impacted by the soft retail environment, its operational performance improved significantly during the quarter consistent with our expectations. Lower input costs, improving manufacturing efficiencies and stable selling prices resulted in the apparel group’s margin improving 1,170 basis points over the comparable quarter last year, 750 basis points over the sequential quarter and 420 basis points over the previous year’s nine month results. With respect to our print business, we continue to be pleased with the integration of recent acquisitions and the margins of our print group as a whole. The print group’s recent acquisitions have been accretive to earnings and continue to meet our performance projections. Also, during the quarter we continued to reduce our debt by 28.6%, or $18.0 million,
due to effective management of our receivables and inventories and the strong performance of recently acquired operations, bringing the aggregate debt reduction for the year to $61.5 million and an outstanding balance as of November 30, 2015 of $45.0 million. Overall, we believe the remainder of fiscal year 2016 will be challenging due to the retail and global economic environment, but we remain optimistic about our continued ability to navigate it.”
In Other News
The Company announced that the Board of Directors on December 18, 2015 approved the payment of a quarterly cash dividend of 17 1⁄2 cents a share on its common stock. The dividend is payable February 5, 2016 to shareholders of record on January 8, 2016.
About Ennis
Ennis, Inc. (www.ennis.com) is primarily engaged in the production and sale of business forms, apparel and other business products. The Company is one of the largest private-label printed business product suppliers in the United States. Headquartered in Midlothian, Texas, the Company has production and distribution facilities strategically located throughout the United States of America, Mexico and Canada, to serve the Company’s national network of distributors. The Company, together with its subsidiaries, operates in two business segments: print and apparel. The print segment manufactures and sells business forms, other printed business products, printed and electronic media, presentation products, flex-o-graphic printing, advertising specialties and Post-it® Notes, internal bank forms, plastic cards, secure and negotiable documents, envelopes and other custom products. The apparel segment manufactures T-shirts and distributes T-shirts and other active-wear apparel through nine distribution centers located throughout North America.
Safe Harbor under the Private Securities Litigation Reform Act of 1995
Certain statements contained in this press release that are not historical facts are forward-looking statements that involve a number of known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement expressed or implied by such forward-looking statements. The words “anticipate,” “preliminary,” “expect,” “believe,” “intend” and similar expressions identify forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for such forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. These statements are subject to numerous uncertainties, which include, but are not limited to, the Company’s ability to effectively manage its business functions while growing its business in a competitive environment, the Company’s ability to adapt and expand its services in such an environment and the variability in the prices of cotton, paper and other raw materials. Other important information regarding factors that may affect the Company’s future performance is included in the public reports that the Company files with the Securities and Exchange Commission, including but not limited to, its Annual Report on Form 10-K for the fiscal year ending February 28, 2015. The Company does not undertake, and hereby disclaims, any duty or obligation to update or otherwise revise any forward-looking statements to reflect events or circumstances occurring after the date of this release, or to reflect the occurrence of unanticipated events, although its situation and circumstances may change in the future. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The inclusion of any statement in this release does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.
For Further Information Contact:
Mr. Keith S. Walters, Chairman, Chief Executive Officer and President
Mr. Richard L. Travis, Jr., CFO, Treasurer and Principal Financial and Accounting Officer
Mr. Michael D. Magill, Executive Vice President and Secretary
Ennis, Inc.
2441 Presidential Parkway
Midlothian, Texas 76065
Phone: (972) 775-9801
Fax: (972) 775-9820
www.ennis.com
Ennis, Inc.
Condensed Consolidated Financial Information
(In thousands, except share and per share amounts)
Condensed Consolidated Operating Results | Three months ended November 30, | Nine months ended November 30, | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenues | $ | 139,451 | $ | 146,971 | $ | 440,788 | $ | 439,998 | ||||||||
Cost of goods sold | 98,877 | 110,455 | 322,040 | 329,906 | ||||||||||||
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Gross profit margin | 40,574 | 36,516 | 118,748 | 110,092 | ||||||||||||
Impairment of goodwill and trademarks | — | 93,324 | — | 93,324 | ||||||||||||
Operating expenses | 23,069 | 23,802 | 69,181 | 67,417 | ||||||||||||
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Operating income (loss) | 17,505 | (80,610 | ) | 49,567 | (50,649 | ) | ||||||||||
Other (income) expense | 562 | 125 | 534 | 1,438 | ||||||||||||
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Earnings (loss) before income taxes | 16,943 | (80,735 | ) | 49,033 | (52,087 | ) | ||||||||||
Income tax expense (benefit) | 6,269 | (9,556 | ) | 18,142 | 1,044 | |||||||||||
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Net earnings (loss) | $ | 10,674 | $ | (71,179 | ) | $ | 30,891 | $ | (53,131 | ) | ||||||
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Weighted average common shares outstanding | ||||||||||||||||
Basic | 25,684,026 | 25,753,345 | 25,665,069 | 25,926,157 | ||||||||||||
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Diluted | 25,728,144 | 25,753,345 | 25,692,930 | 25,926,157 | ||||||||||||
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Earnings (loss) per share | ||||||||||||||||
Basic | $ | 0.42 | $ | (2.76 | ) | $ | 1.20 | $ | (2.05 | ) | ||||||
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Diluted | $ | 0.41 | $ | (2.76 | ) | $ | 1.20 | $ | (2.05 | ) | ||||||
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| November 30, | February 28, | |||||||
Condensed Consolidated Balance Sheet Information | 2015 | 2015 | ||||||
| Assets | ||||||||
Current assets | ||||||||
Cash | $ | 13,710 | $ | 15,346 | ||||
Accounts receivable, net | 54,243 | 62,865 | ||||||
Inventories, net | 98,570 | 119,814 | ||||||
Other | 14,476 | 18,517 | ||||||
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| 180,999 | 216,542 | |||||||
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Property, plant & equipment | 86,303 | 92,875 | ||||||
Other | 139,753 | 143,845 | ||||||
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| $ | 407,055 | $ | 453,262 | |||||
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| Liabilities and Shareholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 20,986 | $ | 21,275 | ||||
Accrued expenses | 19,475 | 18,972 | ||||||
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| 40,461 | 40,247 | |||||||
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Long-term debt | 45,000 | 106,500 | ||||||
Other non-current liabilities | 21,620 | 21,835 | ||||||
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Total liabilities | 107,081 | 168,582 | ||||||
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Shareholders’ equity | 299,974 | 284,680 | ||||||
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| $ | 407,055 | $ | 453,262 | |||||
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| Nine months ended November 30, | ||||||||
Condensed Consolidated Cash Flow Information | 2015 | 2014 | ||||||
Cash provided by operating activities | $ | 79,151 | $ | 46,398 | ||||
Cash used in investing activities | (3,979 | ) | (12,386 | ) | ||||
Cash used in financing activities | (75,028 | ) | (24,187 | ) | ||||
Effect of exchange rates on cash | (1,780 | ) | (473 | ) | ||||
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Change in cash | (1,636 | ) | 9,352 | |||||
Cash at beginning of period | 15,346 | 5,316 | ||||||
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Cash at end of period | $ | 13,710 | $ | 14,668 | ||||
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