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Ennis improves margins and finishes 2010 with profitable Q4

Tuesday, April 27, 2010

Press release from the issuing company

Midlothian, Texas - Ennis, Inc. reported financial results for the quarter and the year ended February 28, 2010.

Highlights
-Revenues for the quarter increased by $4.1 million over the same quarter last year, or 3.5%. For the year revenues were down $66.3 million over the previous year, or 11.4%.
-Gross profit margins increased 610 basis points ("bps") over the comparable quarter and 150 bps over the previous year.
-Diluted earnings (loss) per share increased for the quarter from ($2.44) per share to $.38 per share for the same quarter this fiscal year. For the year, diluted earnings (loss) per share increased from ($1.27) per share for fiscal year 2009 to $1.36 per share for fiscal year 2010.

Financial Overview
For the quarter, our net sales increased by $4.1 million, or 3.5%, from $117.3 million for the three months ended February 28, 2009 to $121.4 million for the three months ended February 28, 2010. Our Print sales for the quarter were $66.1 million, compared to $73.8 million for the same quarter last year, or a decrease of 10.4%. Apparel sales for the quarter were $55.3 million, compared to $43.6 million for the same quarter last year, or an increase of 26.8%. Our overall gross profit margins ("margins") during the quarter increased from 22.1% for the three months ended February 28, 2009 to 28.2% for the three months ended February 28, 2010. Our Print margins increased from 23.7% to 26.6%, while our Apparel margins increased from 19.3% to 30.1%, for the respective periods. Our earnings (loss) for the quarter increased from ($62.9) million for the three months ended February 28, 2009 to $9.8 million for the three months ended February 28, 2010, primarily due to the improved margins realized by both our segments during the quarter and impact associated with the goodwill and trademark impairment charge of $67.9 million during the comparable period last year. Our diluted earnings (loss) per share ("EPS") increased from ($2.44) per share to $.38 per share for the three months ended February 28, 2009 and February 28, 2010, respectively.

Net sales decreased from $584.0 million for the year ended February 28, 2009 to $517.7 million for year ended February 28, 2010, a decrease of $66.3 million or 11.4%. Our Print sales for the year were $282.3 million, compared to $327.0 million for the same period last year, a decrease of $44.7 million or 13.7%. Our Apparel sales decreased from $257.0 million for the year ended February 28, 2009 to $235.4 million for the year ended February 28, 2010, a decrease of $21.6 million, or 8.4%. Overall, our margins increased 150 bps, from 24.6% for fiscal year 2009 to 26.1% for fiscal year 2010. Our Print margins increased from 26.1% to 27.6%, while our Apparel margins increased from 22.6% to 24.4%, for the year ended February 28, 2009 and February 28, 2010, respectively. Our earnings (loss) for the period increased from ($32.8) million for the year ended February 28, 2009 to $35.2 million for the year ended February 28, 2010, primarily due to a goodwill and trademarks asset impairment charge of $67.9 million during fiscal year 2009 and improved operating margins realized during fiscal 2010. Our diluted earnings (loss) per share increased from ($1.27) per share to $1.36 per share for the year ended February 28, 2009 and February 28, 2010, respectively.

The Company, during the quarter, generated $18.8 million in EBITDA (earnings before interest, taxes, depreciation, amortization and impairment charges) compared to $11.1 million for the comparable quarter last year. For the year ending February 28, 2010, the Company generated $70.1 million in EBITDA compared to $71.0 million for the comparable period last year.

Keith Walters, Chairman, President & CEO, commented by saying, "As expected, due to the economic environment, fiscal year 2010 proved to be an extremely challenging year from many perspectives. From a sales perspective, we continued to see double digit sales declines across both sectors through the first nine months of the year, and while the Apparel sector rebounded nicely in the fourth quarter on a comparable basis, the Print sector continued to show some continued weakness. From a margin perspective, even given the challenging sales landscape, we were able to improve our margins across both sectors with our Apparel sector improving 180 bps and our Print sector improving 150 bps. We were able to accomplish this through a successful implementation of our cost reduction initiatives which were tied to our projected volume levels and our continued disciplined approach to business. Going forward, we see fiscal year 2011 continuing to be a challenging year as well. While we expect sales to improve across both sectors next year, we are starting to see paper price increases on the Print side and cotton prices, on our Apparel side, are once again at levels not seen in quite some time. Our ability to be able to pass these costs increases on to the market is unknown at this point. Much will depend upon, not only the continued recovery of the economy, but the actions of our competitors as well. We will also have the challenge, in this coming fiscal year, of bringing on line our new apparel manufacturing facility in Agua Prieta, Mexico. This facility once completed and fully operational is expected to significantly reduce our apparel manufacturing costs; however it will not be without it challenges and adverse costs to get it to that point. So while much work was done and much was accomplished this past year, in an extremely challenging environment, much still needs to be accomplished in fiscal year 2011. Again, while many challenges remain, we will continue to stay focused on the task at hand. And we again enter this year with excellent liquidity, an even lower leverage ratio and stronger balance sheet, which should allow us to take advantage of other unique opportunities should they present themselves."

 

 

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