Ennis Posts Increased Print Sales in Q4
Thursday, April 25, 2013
Press release from the issuing company
Midlothian -- Ennis, Inc., today reported financial results for the quarter and fiscal year ended February 28, 2013. Highlights for the quarter include:
- Consolidated sales increased 1.7%
- Print sales increased $7.4 million
- Apparel sales declined $5.2 million
- Consolidated gross profit margin increased 360 basis points
- Print gross profit margin increased 130 basis points
- Apparel gross profit margin increased 540 basis points
- Diluted EPS increased 108% to $0.27 per share
Our consolidated net sales for the fourth quarter were $123.6 million, an increase of 1.7% from $121.5 million for the same quarter last year. Print sales increased 10.2% for the quarter, from $72.4 million to $79.8 million, while apparel sales declined by 10.6% for the quarter, from $49.1 million to $43.9 million. Our consolidated gross profit margin ("margin") for the fourth quarter increased from 21.8%, for the same quarter last year, to 25.4%. For the fourth quarter by segment, print margin increased from 28.3% to 29.6%, and apparel margin increased from 12.2% to 17.6%. Lower priced cotton is beginning to favorably impact the Apparel segment's finished goods inventory and we expect our apparel margins to continue to improve as the cost of cotton in finished goods continues to decline and as sales volume increases. Print margins improved from the elimination of some of the duplicate selling, general and administrative costs associated with our recent acquisitions and further integration of these operations onto our systems. As a result, our net earnings increased from $3.3 million, or 2.7% of net sales, for the fourth quarter ended February 29, 2012 to $7.1 million, or 5.7% of net sales, for the fourth quarter ended February 28, 2013. Diluted earnings per share increased from $0.13 for the quarter ended February 29, 2012 to $0.27 for the quarter ended February 28, 2013.
For the fiscal year, our net sales increased from $517.0 million for the year ended February 29, 2012 to $533.5 million for the year ended February 28, 2013, or an increase of 3.2%. Print sales for the year increased $56.7 million or 20.4%, from $278.0 million to $334.7 million, while apparel sales for the year decreased $40.2 million or 16.8%, from $239.0 million to $198.8 million. Our consolidated margin decreased from 25.2% to 23.3% for the fiscal years ended 2012 and 2013, respectively. For the fiscal year by segment, print margin increased from 28.4% to 29.2%, and apparel margin decreased from 21.6% to 13.2% due to the higher cost of cotton in finished goods and reduced sales volume stemming from sale-side pressure. As a result, our net earnings decreased from $31.4 million, or 6.1% of net sales for the fiscal year ended February 29, 2012, to $24.7 million, or 4.6% of net sales for the fiscal year ended February 28, 2013. Diluted earnings per share decreased from $1.21 to $0.95 for each year, respectively.
During the fourth quarter, the Company generated $14.6 million in EBITDA (a non-GAAP financial measure calculated as net earnings before interest, taxes, depreciation, and amortization) compared to $8.7 million for the comparable quarter last year. For the fiscal year ended February 28, 2013, the Company generated $53.5 million of EBITDA compared to $64.0 million for the prior fiscal year.
The Company believes the non-GAAP financial measure of EBITDA provides important supplemental information to both management and investors regarding financial and business trends used in assessing its results of operations. The Company believes adding back the specified items to net earnings provides a more meaningful comparison to the corresponding reported periods and internal budgets and forecasts, provides management with a more relevant measurement of operating performance and is more useful in assessing management performance. In addition, EBITDA is a component of the financial covenants and an interest rate metric in the Company's credit facility.
Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, "Overall we are pleased with our results for the quarter. As we have stated previously, our apparel results for the fiscal year were impacted by the high cost of cotton in finished goods inventory. We attempted to match the sales price with the cost through the sale of this high cost inventory, rather than reducing our selling price below our embedded costs. Thus, we absorbed the negative financial impact over our inventory turn cycle rather than recognizing the large impact of an inventory write-down in a single quarter, as some of our competitors did. We continue to believe this was the right approach with the overall financial impact being lower than if we had taken a significant loss in one or two quarters. However, most of the higher cost cotton has made its way through our Apparel's finished goods inventory and the divergence between the current purchase cost of cotton and the average cost in finished goods inventory continues to shrink. As a result, we expect our Apparel margin will continue to improve, as it did this past quarter. Our Print margin continued to remain healthy and improved this quarter as we started to eliminate some of the duplicate selling, general and administrative costs associated with our recent acquisitions."
In other news, the Company announced today the Board of Directors has set the record date for the Annual Shareholder Meeting. The Annual Meeting of Shareholders will be held on July 25, 2013, with a record date of May 24, 2013.
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