Ennis Posts Lower Net Earnings on Flat Net Sales
MIDLOTHIAN, TX—June 25, 2012—Ennis Inc. reported financial results for the first quarter ended May 31, 2012.
Its consolidated net sales were $142.5 million for the quarter ended May 31, 2012, compared to $143.3 million for the quarter ended May 31, 2011. Print sales for the current quarter were $87.3 million vs. $67.1 million for the same quarter last year, or an increase of 30.1 percent. Apparel sales for the current quarter were $55.2 million, compared to $76.1 million for the same quarter last year, or a decrease of 27.5 percent.
Overall our gross profit margins decreased from 27.7 percent to 19.8 percent for the quarters ended May 31, 2011 and May 31, 2012, respectively. Our print margin decreased slightly from 28.8 percent to 27.9 percent, due to the lower margins of our recent acquisitions. Our apparel margin, which continues to be impacted by the higher yarn costs flowing through its cost of sales, decreased from 26.8 percent to 7.0 percent for the quarter.
Net earnings decreased from $11.4 million, or 8 percent of sales, for the quarter ended May 31, 2011, to $3.9 million, or 2.7 percent of sales, for the quarter ended May 31, 2012.
During the quarter, the company generated $10.0 million in EBITDA, compared to $21.9 million for the comparable quarter last year.
Keith Walters, chairman, CEO and president, commented, “Our print operations continued to deliver revenue and operational results as expected. The two new acquisitions (Printegra and PrintXcel) delivered sales of $19.6 million for the quarter, which was slightly higher than expected, and operational profits of $.8 million, which was less than expected due to some duplicate transitional costs and some operational inefficiency, which we expect to have corrected over the next several quarters.
“Our apparel results, as expected, continue to be negatively impacted by higher raw material costs flowing into cost of sales. This negative impact will gradually abate over the next quarter or two as the higher cost items, which have been in our finished goods inventory and flowing into our cost of sales, are replaced with items manufactured with significantly lower raw material costs,” Walters continued.
“The apparel market continues to be somewhat constrained, from a volume perspective, and pricing in the marketplace continues to be highly competitive. While the apparel sector continues to be somewhat challenged, we feel good about the long-term prospects of both sectors. As always, no matter what direction this fiscal year takes, you can be assured we will remain vigilant to the task at hand.”
Ennis Inc. is primarily engaged in the production of 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, TX, the company has production and distribution facilities strategically located throughout the United States of America, Mexico and Canada. Together with its subsidiaries, it operates in two business segments: the Print Segment (“Print”) and Apparel Segment (“Apparel”).