Ennis Inc. released its latest financial results that include its third quarter, which ended Nov. 30, and the combined statistics for the period that includes the first three quarters of the fiscal year.
Highlights include:
- Consolidated gross profit margin increased 400 basis points for the quarter and 430 basis points for the period.
- Apparel gross profit margin increased 650 basis points for the quarter and 970 basis points for the period.
- Print gross profit margin increased 210 basis points for the quarter and 110 basis points for the period.
- Diluted EPS increased 50 percent to $0.36 per share for the quarter and 55.9 percent to $1.06 per share for the period.
“Overall we are pleased with our results for the quarter,” Keith Walters, Chairman, CEO and President of Ennis said. “Our apparel results continued to improve as lower input costs of manufacturing and raw materials continues to favorably impact comparable operational results. Although we continue to make cost-side improvements, the apparel market continues to be extremely challenging, both from a volume and pricing perspective.
“During the third quarter, we faced increased pricing pressures due to competitors’ discounting. Whether this discounted pricing, which we believe is driven by a desire to maintain certain production volumes, will continue into the next calendar year or not is unknown.”
The company’s consolidated net sales for the quarter were $136.6 million compared to $129 million for the same quarter last year. Print sales were up 10.1 percent on a comparable quarter basis, from $81.5 million to $89.7 million. Apparel sales decreased 1.1 percent for the comparable quarter, from $47.4 million to $46.9 million. Although apparel unit sales were up 5.5 percent for the quarter, average selling price was down 6.6 percent.
Consolidated gross profit margin (“margin”) during the quarter increased 400 basis points over last year’s comparable quarter from 23.7 percent to 27.7 percent. On a quarter comparison basis, print margin increased 210 basis points, from 28.7 percent percent to 30.8 percent, while apparel margin increased 650 basis points, from 15.2 percent to 21.7 percent. Apparel margin continued to improve on a comparable basis due to lower input costs and higher production levels.
As a result, net earnings increased from $6.2 million, or 4.8 percent of net sales, for the 2012 third quarter to $9.3 million, or 6.8 percent of net sales, for the third quarter this year. Diluted earnings per share increased 50 percent from $0.24 for the 2012 quarter to $0.36 for the 2013 quarter.
“With respect to the print segment, our print margin continues to improve as we continue to integrate our acquisitions,” Walters said. “We are pleased to expand our market share in envelopes and presentation folders through our new acquisitions during the current quarter.”
For the nine month period, consolidated net sales increased from $409.9 million to $410.3 million, or 0.1 percent from the same period last year. Print sales for the nine month period were $250.1 million, compared to $254.9 million for the same period last year, a decrease of $4.8 million, or 1.9 percent. Apparel sales for the nine month period were $160.2 million, compared to $155 million for the same period last year, or an increase of $5.2 million or 3.4 percent. Apparel unit sales increased 9.8 percent for the period, while average selling price per unit decreased 6.4 percent. The consolidated margin increased from 22.6 to 26.9 percent for the respective nine-month periods in 2012 and 2013.
Print margin increased during the period from 29.1 to 30.2 percent, as a result of the elimination of duplicative costs associated with the integration of acquisitions. Apparel margin increased 970 basis points from 12 to 21.7 percent for the comparable nine month period, due to lower input costs and increased production levels.
Net earnings increased from $17.6 million, or 4.3 percent of net sales, to $27.7 million, or 6.7 percent of net sales, from last year to this year during the same nine months. Diluted earnings per share increased 55.9 percent from $0.68 in 2012 compared to $1.06 in 2013 during the nine-month time frame.
During the third quarter, the company generated $19 million in EBITDA (a non-GAAP financial measure calculated as net earnings before interest, taxes, depreciation, and amortization) compared to $13.2 million for the comparable quarter last year. For the nine-month period this year, the company generated $54.9 million of EBITDA compared to $38.9 million for the comparable period last year.
Ennis believes the non-GAAP financial measure of EBITDA 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 is more useful in assessing management performance. In addition, EBITDA is a component of the financial covenants and an interest rate metric in the company’s credit facility.
“While the market continues to be challenging, we remain optimistic about the remainder of the fiscal year and the first part of next year,” Walters said.
For more information, visit www.ennis.com.
