On June 17, 2024, Ennis Inc (EBF, Financial) released its 8-K filing for the first quarter ended May 31, 2024. Ennis Inc, a manufacturer and supplier of print products for the wholesale trade, reported a mixed performance with earnings per share (EPS) surpassing analyst estimates, while revenue fell short.
Company Overview
Ennis Inc is a leading manufacturer and supplier of print products for the wholesale trade. The company's diverse product portfolio includes advertising specialties, business forms and supplies, commercial printing, eCommerce solutions, envelopes, labels and tags, and folders and packaging. Ennis Inc operates under various labels such as Ennis, Royal Business Forms, Block Graphics, 360º Custom LabelsSM, ColorWorx, Enfusion, among others.
Financial Performance and Challenges
For the first quarter of fiscal 2024, Ennis Inc reported revenues of $103.1 million, a 7.4% decrease from $111.3 million in the same quarter last year. Despite the revenue decline, the company achieved an EPS of $0.41, exceeding the analyst estimate of $0.36. However, this was a decrease from the $0.45 EPS reported in the same quarter last year.
Gross profit for the quarter was $30.9 million, representing a gross profit margin of 30.0%, compared to $34.0 million and a margin of 30.6% in the previous year. The decline in revenue and gross profit highlights the challenges faced by Ennis Inc amidst softening demand and an uncertain economic environment.
Key Financial Achievements
Despite the challenges, Ennis Inc demonstrated strong financial management. The company's EBITDA increased from $18.1 million in the previous quarter to $19.0 million this quarter, maintaining an EBITDA margin of 18.4%. This improvement was attributed to disciplined cost management and pricing strategies.
Ennis Inc also completed the integration of its ERP system at two recent acquisitions, which contributed to improved performance. The company repurchased 91,883 shares of its common stock in the open market at an average price of $19.79 per share and increased its investment in U.S. government treasury bills by $2.6 million.
Income Statement Highlights
| Three months ended | May 31, 2024 | May 31, 2023 |
|---|---|---|
| Net Sales | $103,108 | $111,294 |
| Cost of goods sold | $72,204 | $77,253 |
| Gross profit | $30,904 | $34,041 |
| Net earnings | $10,687 | $11,635 |
| Earnings per share (diluted) | $0.41 | $0.45 |
Balance Sheet and Cash Flow
Ennis Inc reported total assets of $406.2 million as of May 31, 2024, up from $399.2 million at the end of the previous fiscal year. The company maintained a strong balance sheet with no debt and significant cash reserves of $91.4 million. Cash provided by operating activities was $23.1 million, while cash used in investing and financing activities were $5.1 million and $8.3 million, respectively.
Commentary from Management
"Our results for the quarter were within our expectations given softening demand amidst an uncertain economic environment. While we experienced a decline compared to the first quarter of our previous fiscal year, our gross profit margin showed a 160-basis point increase over the previous quarter as revenues, profits and earnings per share all increased this quarter. Our EBITDA increased from $18.1 million last quarter to $19.0 million this quarter." - Keith Walters, Chairman, Chief Executive Officer and President
Dividend Declaration
On June 14, 2024, the Board of Directors declared a quarterly cash dividend of 25.0 cents per share on the company’s common stock, payable on August 5, 2024, to shareholders of record on July 5, 2024.
Conclusion
Ennis Inc's first-quarter performance reflects the challenges of a softening market but also highlights the company's strong financial management and strategic initiatives. The company's ability to maintain profitability and a robust balance sheet positions it well for future growth and acquisition opportunities.
Explore the complete 8-K earnings release (here) from Ennis Inc for further details.
