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Ennis reports 6.2% increased revenue

Tuesday, April 26, 2011

Press release from the issuing company

Midlothian, Texas - Ennis, Inc., today reported financial results for the quarter and the year ended February 28, 2011.

Highlights

- Revenues for the year increasedby $32.3 million over the same period last year, or 6.2%. For the quarter revenues were up $10.0 million over the previous year, or 8.2%.

- Gross profit margins increased 200 basis points ("bs") over the prior year, from 26% to 28.1% for the fiscal year ended February 28, 2010 and 2011, respectively.

- Diluted earnings per share increased by 26.5% for the fiscal year, from $1.36 per share for fiscal year 2010 to $1.72 per share for fiscal year 2011.

Financial Overview

For the quarter, consolidated net sales increased by $10.0 million, or 8.2%, from $121.4 million for the quarter ended February 28, 2010 to $131.4 million for the quarter ended February 28, 2011. Print sales for the quarter were $66.2 million, compared to $66.1 million for the same quarter last year, or an increase of 0.2%. Apparel sales for the quarter were $65.2 million, compared to $55.3 million for the same quarter last year, or an increase of 17.9%. Overall gross profit margins ("margins") during the quarter decreased slightly from 28.2% for the three months ended February 28, 2010 to 27.5% for the three months ended February 28, 2011. Print margins increased from 26.6% to 26.9%, while our Apparel margins decreased from 30.1% to 28.0%, due to higher cotton costs and the impact of the start-up of our Agua Prieta facility. While our Apparel margins decreased slightly over the comparable quarter last year, they were in line with our nine month numbers (27.8% for the nine months ended November 30, 2010 compared to 28.0% for the current quarter). Net earnings were $9.8 million, or 8.1% of sales, for the three months ended February 28, 2010 and $9.8 million, or 7.5% of sales, for the quarter ended February 28, 2011. Diluted EPS for the quarter remained at $0.38 per share, due to the impact of higher cotton costs and the impact of the Agua Prieta startup. We estimate that the impact of the start-up of Agua Prieta during the quarter was approximately $2.4 million or $1.6 million after tax.

Net sales increased from $517.7 million for the year ended February 28, 2010 to $550.0 million for the year ended February 28, 2011, an increase of $32.3 million or 6.2%. Print sales for the year were $272.7 million, compared to $282.3 million for the same period last year, or a decrease of 3.4%. Apparel sales for the year were $277.3 million, compared to $235.4 million for the same period last year, or an increase of 17.8%. Overall, margins increased 200 bps, from 26.1% for fiscal year 2010 to 28.1% for fiscal year 2011. Print margins increased from 27.6% to 28.3%, while Apparel margins increased from 24.4% to 27.9%, for the year ended February 28, 2010 and 2011, respectively. Net earnings increased from $35.2 million, or 6.8% of sales, for the year ended February 28, 2010 to $44.6 million, or 8.1% of sales, for the year ended February 28, 2011. Diluted earnings increased from $1.36 per share to $1.72 per share for the year ended February 28, 2010 and 2011, respectively, or 26.5%. We estimate that the start-up impact associated with the Agua Prieta facility was approximately $4.6 million ($3.0 million after tax) for the period. We still estimate the total negative impact associated with the start-up of the Agua Prieta facility to be within our original guidance of around $9.0 million, with the majority of the remaining portion being incurred during the first and second quarter of fiscal year 2012.

The Company, during the quarter, generated $17.5 million of EBITDA (earnings before interest, taxes, depreciation, and amortization) compared to $18.8 million for the comparable quarter last year. For the year ended February 28, 2011, the Company generated $81.5 million of EBITDA compared to $70.1 million for the comparable period last year.

Keith Walters, Chairman, Chief Executive Officer and President, commented as follows, "We are pleased with the operational results for the year, especially considering all the challenges and the start-up of our new manufacturing facility located in Agua Prieta, Mexico. Operationally, both sectors showed positive margins improvements for the year. Our Print margins were up 70 bps, while Apparel margins were up 350 bps for the year. The Apparel sector continued to show strong sales growth, with an increase of 17.9% for the quarter. While we have been successful to date in managing the increases in our raw material costs, we continue to be concerned with the potential impact of cotton pricing on our operational results for fiscal year 2012. Our ability to continue to manage this potential cost increase will be dependent upon many factors, a number of which are outside our control. Examples are: the continued recent positive development in employment numbers, the availability of cotton, the impact of current gasoline prices on consumers discretionary spending and lastly, the pricing policies of our competitors. The construction of our new apparel manufacturing facility in Agua Prieta, Mexico continues to progress and nears completion. We continue to test processes, calibrate equipment and train employees, but expect to be producing greater than 1.0 million pounds of fabric out of this facility during the upcoming quarter. We continue to anticipate potential cost savings to be realized once this facility reaches its full production capacity. Many challenges will present themselves for fiscal year 2012; however, we feel confident in being able to meet them. We will continue to be vigilant to deliver the planned results."

 

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