Midlothian, Tex. – Ennis, Inc. (the “Company”) today reported financial results for the quarter and fiscal year ended February 28, 2021. Highlights include:
Revenues were $89.9 million for the quarter, a decrease of $16.7 million or 15.7% for the comparative quarter and $358.0 million for the fiscal year, a decrease of $80.4 million, or 18.3% for the comparative fiscal year.
Earnings per diluted share for the current quarter were $0.20 compared to $0.33 for the comparative quarter last year. Earnings per diluted share were $0.93 for the fiscal year as compared to $1.47 for the last fiscal year. Quarterly results were impacted by a pension settlement charge related to a large amount of lump-sum distributions paid to retirees. The settlement charge of $1.6 million impacted quarterly results by $0.05 per share.
Our gross profit margin for the quarter increased on a comparative quarter basis from 28.1% to 29.6%. Gross profit margin was 29.0% for the fiscal year compared to 29.4% for the prior fiscal year.
The Board declared the amount of the next quarterly dividend early and increased it 11%, from $0.225 to $0.25 per share.
The Company’s revenues for the fourth quarter ended February 28, 2021 were $89.9 million compared to $106.7 million for the same quarter last year, a decrease of 15.7%. Gross profit margin was $26.6 million, or 29.6%, as compared to $29.9 million, or 28.1% for the same quarter last year. Net earnings for the quarter were $5.1 million, or $0.20 per diluted share as compared to $8.6 million, or $0.33 per diluted share for the same quarter last year.
The Company’s revenues for the fiscal year ended February 28, 2021 were $358.0 million compared to $438.4 million for the prior fiscal year, a decrease of 18.3%. Gross profit margin was $103.8 million, or 29.0%, as compared to $128.9 million, or 29.4% for the prior fiscal year. Net earnings for the fiscal year were $24.1 million or $0.93 per diluted share, compared to $38.3 million, or $1.47 per diluted share for the prior fiscal year.
Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, “Our fourth quarter operational performance was largely in line with our expectations given the challenging environment presented by the coronavirus (COVID-19) pandemic. Management’s ability to adjust operations and costs during the changing circumstances throughout the year allowed us to preserve and improve our gross profit margins, 29.6% for the current quarter compared to prior year quarter of 28.1% and 29.0% for the fiscal year compared to 29.4% for the prior fiscal year. There were a greater number of retirees this year electing lump-sum distributions rather than an annuity which impacted actuarial determinations. The financial impact was to require a larger settlement charge to earnings, in addition to the usual service and interest charge normally expensed. In addition, our pension obligations declined by approximately $3 million as result of a large number of lump sum distributions. This charge impacted earnings by $0.05 per share for the quarter. Earnings from operations increased as a percentage of sales from the comparative quarter, $9.5 million or 10.6% of sales as compared to $10.9 million or 10.3% of sales for the comparative quarter.
We continued to invest in our business, including our most recent acquisition of Infoseal at the end of 2020, a leader in the production of pressure seal documents. This well-known brand brings added capabilities and expertise to our expanding product offering including our existing VersaSeal pressure seal product line. Infoseal products are sold through our traditional sales channel of independent distributors and this business continues our strategy to support our loyal distributors with an industry leading product offering.
The U.S. economy continues to be significantly impacted by the COVID-19 pandemic and parts of the economy have started to re-open as vaccinations become more prevalent, but remain subject to ongoing surges and local shutdowns, creating a very fluid economic environment. Total nonfarm payroll employment rose by 916,000 in March, and the unemployment rate edged down to 6.0 percent, as recently reported by the U.S. Bureau of Labor Statistics (“BLS”). These improvements in the labor market reflect the continued resumption of economic activity that had been curtailed due to the COVID-19 pandemic. Job growth was encouraging in March, led by gains in leisure and hospitality, public and private education, and construction. These BLS statistics provide evidence that various sectors continue to improve, while others have not. We continue to monitor incoming order volumes so that we can proactively adjust our costs accordingly.
Our continued financial strength, including a current ratio (current assets divided by current liabilities) of 4.2, cash balance of $75.2 million, and available line of credit of $99.4 million allows us to be well-positioned for the future to be able to withstand unforeseen adversities as well as take advantage of acquisition opportunities.
Dividend Increase and Declaration
Additionally, the Board of Directors announced today that they have increased the quarterly dividend to twenty-five cents ($0.25) per share from twenty-two and one half cents ($0.225) per share on its common stock, or an increase of 11.1%. Mr. Walters commented, noting “This is not a special dividend, but should be reflective of future quarterly dividend amounts subject, as always, to the Board’s normal review process. The Board took this action after taking into account the Company’s strong financial position and confidence in our future and anticipated cash flows and hopes that this dividend increase, along with our continuing focus on accretive acquisitions, will reward our shareholders with greater returns over a longer period of time. While the Board chose to declare this dividend earlier than usual, it will be paid on a timeline consistent with past practice as it is payable August 9, 2021 to shareholders of record on July 9, 2021.”
To provide important supplemental information to both management and investors regarding financial and business trends used in assessing its results of operations, from time to time the Company reports the non-GAAP financial measure of EBITDA (EBITDA is calculated as net earnings before interest expense, tax expense, depreciation, and amortization). The Company may also report adjusted gross profit margin, adjusted earnings and adjusted diluted earnings per share, each of which is a non-GAAP financial measure.
Management believes that these non-GAAP financial measures provide useful information to investors as a supplement to reported GAAP financial information. Management reviews these non-GAAP financial measures on a regular basis and uses them to evaluate and manage the performance of the Company’s operations. In addition, EBITDA is a component of the financial covenants and an interest rate metric in the Company’s credit agreement. Other companies may calculate non-GAAP financial measures differently than the Company, which limits the usefulness of the Company’s non-GAAP measures for comparison with these other companies. While management believes the Company’s non-GAAP financial measures are useful in evaluating the Company, when this information is reported it should be considered as supplemental in nature and not as a substitute or an alternative for, or superior to, the related financial information prepared in accordance with GAAP. These measures should be evaluated only in conjunction with the Company’s comparable GAAP financial measures.
In Other News
The 2021 Annual Meeting of Shareholders will be held on July 15, 2021, with a record date of May 17, 2021.