Ennis Reports Q2 2006 Results, Print Solutions Segment Up
Tuesday, September 27, 2005
MIDLOTHIAN, Texas--Sept. 26, 2005-- Ennis, Inc. today reported financial results for the fiscal quarter and six months ended August 31, 2005. Sales increased $74.7 million over same quarter prior year and $158.1 million over prior year six-month period 96% increase in profits from $5.4 million to $10.6 million for the quarter and a 113% increase for the six-month period, $9.9 million to $21.1 million Growth in EPS to $0.41 per share for the quarter and $0.82 per share for the six month period, increases of 28% and 39%, respectively Financial Overview For the second quarter of fiscal 2006, net sales were $148.1 million compared to $73.4 million in the comparable quarter last year, or an increase of $74.7 million. For the six-month period, net sales were $297.2 million, compared to $139.1 million in the prior year. Net income of $10.6 million for the quarter ended August 31, 2005 increased by $5.2 million over the prior year's quarterly level of $5.4 million, and by $11.2 million in the current six-month period over the prior year. Diluted earnings per share were $0.41 and $0.82, respectively, for the quarter and six months ended in August 2005, compared to $0.32 and $0.59 per share in the prior year. As mentioned in the Form 10K or Annual Report for the fiscal year ended February 28, 2005, profits in the apparel segment are strongest in the first and second fiscal quarters for the Company. Profits in the printing segment tend to be consistent from quarter to quarter, absent the gain or loss of large customers. The Company generated $23.8 million and $47.8 million in EBITDA (earnings before interest, taxes, depreciation and amortization) for the second quarter and first six months of fiscal year 2006 compared to $10.9 million and $20.8 million in the comparable periods of fiscal year 2005. The increases in both periods over the previous year's periods were due primarily to the acquisitions of Alstyle Apparel, Crabar/GBF and Royal Business Forms. Keith Walters, Chairman, President & CEO, commented by saying, "We continue to be pleased that the post-merger operating results of the Company are meeting or exceeding the pro-forma financials contained in the Form S-4 filed in September of last year. We feel that this merger will continue to provide increased value for our shareholders as the Company retires the acquisition debt as quickly as the associated cash flows will permit." Print Solutions Performance Sales in the Print Solutions Segment were $83.9 million and $164.6 million for the fiscal quarter and six-month period ended in August 2005, up 14.3% and 18.3%, respectively, over the prior year's comparable periods, primarily due to the Crabar/GBF and Royal acquisitions. The Print Solutions Segment is comprised of sales and profits of the Forms Solutions Group, Promotional Solutions Group and Financial Solutions Group. Sales in the Forms Solutions and Promotional Solutions Group increased due to acquisitions of Crabar/GBF and Royal, as well as an increase in new business in the Promotional Solutions Group. The Financial Solutions Group sales were flat in the current quarter compared to the comparable quarter last year. The Print Solutions Segment generated $13.0 million and $26.3 million in EBITDA for the quarter and six-month periods ended August 2005 compared to $12.8 million and $24.3 million in the previous fiscal year's periods, increases of 1.6% and 8.2%, respectively. This increase was due to acquisitions previously mentioned. Apparel Solutions Performance Sales in the Apparel Solutions Segment were $64.2 million and $132.6 million for the quarter and six months ended in August 2005. Sales for the second quarter declined as expected from the first quarter of 68.4 million. EBITDA generated by the Apparel Segment was $12.6 million and $25.2 million for the quarter and six-month periods ended in August 2005, respectively. Consolidated Selling, General and Administrative Consolidated selling, general and administrative (SG&A) expenses were $17.8 million and $35.6 million for the current year quarter and six-month periods, 12.0% of net sales for both periods, compared to $10.8 million or 14.7% of net sales in the prior year quarter and $20.2 million or 14.5% of net sales for the prior year six-month period. The increase in total SG&A over the prior year periods was primarily the result of the acquisitions of Crabar/GBF, Royal and Alstyle Apparel, however, SG&A as a percent of sales decreased. The Company continues to focus on ways to reduce SG&A expenses from its acquisitions to further enhance the profitability to the Company and improve its cash flow to further reduce the acquisition debt. Operational Issues As previously announced during the first quarter, the Company closed the Dayton, Ohio administrative center for Crabar/GBF, Inc., the Edison, New Jersey facility and relocated the Admore, Inc. Bell, California facility to Anaheim, California. Additionally, in the second quarter, the Company closed the Medfield, Massachusetts facility and relocated the equipment and sales to other locations. Also, the Company took advantage of the additional space available in its Anaheim facility to begin the previously announced relocation of the Cerritos, California facility, which will be completed in the third fiscal quarter.