Ennis reports 8.8% decrease in sales
Wednesday, October 05, 2011
Press release from the issuing company
Ennis, Inc. (the “Company"), today reported financial results for the three and six months ended August 31, 2011.
For the quarter, consolidated net sales decreased by $12.6 million, or 8.8%, from $143.0 million for the quarter ended August 31, 2010 to $130.4 million for the quarter ended August 31, 2011. Print sales for the quarter were stable at $69.2 million, compared to $69.1 million for the same quarter last year. Due to unexpected softness in the market, Apparel sales for the quarter ended August 31, 2011 were $61.2 million, compared to $73.9 million for the same quarter last year, or a decrease of 17.2%. Overall gross profit margins ("margins") decreased from 27.8% to 26.1% for the quarters ended August 31, 2010 and August 31, 2011, respectively. Print margins increased during the period from 28.2% to 28.6%, while Apparel margins due to higher input costs decreased from 27.4% to 23.4%. Net earnings for the quarter decreased from $12.1 million, or 8.5% of sales, for the quarter ended August 31, 2010 to $9.7 million, or 7.4% of sales, for the quarter ended August 31, 2011. Diluted EPS decreased from $0.47 per share to $0.37 per share for the quarters ended August 31, 2010 and August 31, 2011, respectively.
For the six month period, net sales decreased from $283.8 million for the six months ended August 31, 2010 to $273.6 million for the six months ended August 31, 2011, or 3.6%. Print sales for the period again remained relatively stable at $136.3 million, compared to $136.9 million for the same period last year. Apparel sales for the period were $137.3 million, compared to $146.8 million for the same period last year, or a decrease of 6.5%. Overall margins decreased from 28.9% to 27.0% for the six months ended August 31, 2010 and 2011, respectively. Print margins decreased slightly during the period from 29.2% to 28.7%, while Apparel margins decreased from 28.5% to 25.3%, again due to higher raw material costs. Net earnings for the period, decreased from $25.2 million, or 8.9% of sales, for the six months ended August 31, 2010 to $21.1 million, or 7.7% of sales, for the six months ended August 31, 2011. Diluted earnings decreased from $0.97 per share to $0.81 per share for the six months ended August 31, 2010 and 2011, respectively.
The Company, during the quarter, generated $19.0 million in EBITDA (earnings before interest, taxes, depreciation, and amortization) compared to $22.2 million for the comparable quarter last year. For the six month period ended August 31, 2011, the Company generated $40.9 million of EBITDA during the period, compared to $46.0 million for the comparable period last year.
Keith Walters, Chairman, Chief Executive Officer and President, commented by saying, "Overall the operational results for the quarter were as expected. Print continued to deliver steady revenue levels and operational results, while margins in our Apparel division were compressed some, due to higher raw material costs. Our Apparel raw material cost, on a comparable basis, was up approximately 50%, with continued increases expected over the next six months as the impact of the higher priced cotton makes its way through inventory. What wasn't expected was the softness in the market during the last quarter. Whether this is just a temporary situation or one we will have to manage for an extended period of time is unknown. As we indicated previously, manufacturers' ability to navigate through this period of higher cotton costs was dependent upon many factors, one being the continued economic recovery. The current softness in the marketplace will make this an even more challenging task for all concerned. The new manufacturing facility in Agua Prieta, MX is fully operational and all production has now been transitioned from our Anaheim, CA facility to this facility. So while many challenges have been negotiated to date, many challenges and uncertainties continue to mark the short term landscape. However, as always, we will remain vigilant to the task at hand."
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