Ennis Reports Quarterly and Year-End Financial Results, Addresses COVID-19 Contingency Plans
Ennis, Inc., reported financial results for the quarter and fiscal year ended February 29, 2020. Highlights include:
- Revenues increased $6 million, or 6% for the comparative quarter, and $37.6 million, or 9.4%, for the comparative fiscal year.
- Earnings per diluted share for the current quarter were $0.33 compared to $0.32 for the comparative quarter last year. Earnings per diluted share were $1.47 for the fiscal year as compared to $1.45 for the last fiscal year.
- Our plants are essential to the supply chain and are currently functioning.
Financial Overview
The Company’s revenues for the fourth quarter ended February 29, 2020 were $106.7 million compared to $100.7 million for the same quarter last year, an increase of 6%. Gross profit margin (“margin”) was $29.9 million for the quarter, or 28.1%, as compared to $29.1 million, or 28.9% for the fourth quarter last year. Net earnings for the quarter were $8.6 million, or $0.33 per diluted share, compared to $8.2 million, or $0.32 per diluted share, for the fourth quarter last year.
The Company’s revenues for the fiscal year ended February 29, 2020 were $438.4 million compared to $400.8 million for the prior fiscal year, an increase of 9.4%. Margin for the fiscal year was $128.9 million, or 29.4%, as compared to $123.4 million, or 30.8% for the prior fiscal year. Net earnings for the fiscal year were $38.3 million, or $1.47 per diluted share compared to $37.4 million, or $1.45 per diluted share for the prior fiscal year.
Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, “Overall we are pleased with our performance for the quarter and the year. Our gross profit margin percentage for the quarter and the year continues to be impacted by the consolidation and integration of our past four acquisitions completed in 2019, which all had gross profit and operating margins considerably lower than our historical margins. While we continue to see improvements, we don’t expect to see these acquisitions fully integrated into our systems until sometime in the first half of fiscal year 2021. With that being said, these acquisitions increased our sales by $55.3 million and added $0.15 to our diluted earnings per share for the year.
Looking forward, we expect fiscal year 2021 to be a very challenging year for the economy in general and in our industry due to the COVID-19 pandemic. The uncertainty as to the duration and severity of the pandemic makes forecasting the impact extremely difficult at this time. Given our support of many essential sectors of the economy, including healthcare, government, food and beverage and others, currently our plants have been deemed essential to the supply chain and are operating close to expected utilization levels. We have developed, and continue to assess, contingency plans covering a multitude of potential scenarios depending on the gravity and length of the pandemic.
Now, more than ever, we are thankful for our strong unlevered balance sheet and cash position. We recently extended the maturity date of our $100 million credit facility (which was coming up for renewal in August 2020) to November 11, 2021, which allows us access to even more capital if needed. During these troubling times we will take such actions we deem necessary to support our dividend, concentrate on generating cash from operations, and continue to explore strategic acquisitions when deemed advantageous to the Company and our shareholders. Our financial position is such that it is highly unlikely we would need government support recently made available under the CARES Act and at this time the Company has no intent to request such aid. Therefore we would not be under any proscribed limitations such as those on stock buy-backs, other than our focus to support our dividend and possible acquisition targets.”
Non-GAAP Reconciliations
To provide important supplemental information to both management and investors regarding financial and business trends used in assessing its results of operations, the Company reports the non-GAAP financial measure of EBITDA (EBITDA is calculated as net earnings from operations before interest expense, tax expense, depreciation, and amortization). From time to time the Company may also report adjusted gross profit margin, adjusted earnings and adjusted diluted earnings per share, each of which is a non-GAAP financial measure.
Management believes that these non-GAAP financial measures provide useful information to investors as a supplement to reported GAAP financial information. Management reviews these non-GAAP financial measures on a regular basis and uses them to evaluate and manage the performance of the Company’s operations. In addition, EBITDA is a component of the financial covenants and an interest rate metric in the Company’s credit agreement. Other companies may calculate non-GAAP financial measures differently than Ennis, which limits the usefulness of the Company’s non-GAAP measures for comparison with these other companies. While management believes the Company’s non-GAAP financial measures are useful in evaluating Ennis, this information should be considered as supplemental in nature and not as a substitute or an alternative for, or superior to, the related financial information prepared in accordance with GAAP. These measures should be evaluated only in conjunction with the Company’s comparable GAAP financial measures.
The following table reconciles EBITDA, a non-GAAP financial measure, for the three and twelve months ended February 29, 2020 and February 28, 2019 to the most comparable GAAP measure, net earnings (dollars in thousands).
Click to enlarge.
In Other News
The 2020 Annual Meeting of Shareholders will be held on July 16, 2020, with a record date of May 18, 2020.
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The preceding press release was provided by a company unaffiliated with Printing Impressions. The views expressed within do not directly reflect the thoughts or opinions of the staff of Printing Impressions.
