MIDLOTHIAN, Texas--June 15, 2005-- Ennis, Inc. today reported financial results for the first fiscal quarter ended May 31, 2005.
For the first quarter of fiscal 2006, net sales were $149.1 million compared to $65.7 million in the comparable quarter last year, or an increase of $83.4 million. Net Sales for quarter ended May 31, 2005 were 10.8% higher than the previous quarter's sales of $134.5 million. Net income of $10.6 million for the quarter ended May 31, 2005 increased by $6.0 million over the prior year's quarterly level of $4.6 million, and by $3.6 million over the previous quarter ended Feb. 28, 2005. Diluted earnings per share for the quarter ended May 31, 2005 were $0.41 compared to $0.27 in the quarters ended May 31, 2004 and Feb. 28, 2005. As mentioned in the 10K for the fiscal year ended Feb. 28, 2005, profits in the apparel segment are strongest in the first and second fiscal quarters for the Company. Profits in the printing segment tend to be consistent from quarter to quarter, absent the gain or loss of large customers.
The Company generated $23.9 million in EBITDA (earnings before interest, taxes, depreciation and amortization) for the first quarter of fiscal year 2006 compared to $9.8 million in the comparable quarter of fiscal year 2005 and $18.0 million for the quarter ended February 28, 2005. The increase of 143.9% in the current quarter over the previous year's quarter was due primarily to the acquisitions of Alstyle Apparel, Crabar/GBF and Royal Business Forms.
Keith Walters, Chairman, President & CEO, commented by saying, "we are delighted that the pro forma financial impact of the merger with Alstyle, as set forth in the S-4 filed in September of last year, has been exceeded by our first quarter results. We feel that this merger will continue to provide increased value for our shareholders as the Company retires the acquisition debt as quickly as the associated cash flows will permit."
During the fiscal quarter, the Company paid down a total of $14 million on the debt leaving a combined balance of $120 million in funded debt at quarter end May 31, 2005. The Company continues to believe that the debt generated from last year's acquisitions will be retired in the three to four-year timeframe.
Print Solutions Performance
Sales in the Print Solutions Segment were $80.7 million for the first fiscal quarter of 2006, up 22.8% over the prior year's comparable quarter, primarily due to the Crabar/GBF and Royal acquisitions. The Print Solutions Segment is comprised of sales and profits of the Forms Solutions Group, Promotional Solutions Group and Financial Solutions Group. Sales in the Forms Solutions and Promotional Solutions Group increased due to acquisitions of Crabar/GBF and Royal as well as an increase in new business in the Promotional Solutions Group. The Financial Solutions Group sales were flat in the current quarter compared to the comparable quarter last year. The Print Solutions Segment generated $13.3 million in EBITDA for the quarter ended May 31, 2005 compared to $11.5 million in the previous fiscal year's quarter, an increase of 15.7%. This increase was due to acquisitions previously mentioned as well as the growth in sales in the Promotional Products arena.
Apparel Solutions Performance
Sales in the Apparel Solutions Segment were $68.4 million for the first fiscal quarter of 2006, an increase of 32.3% over the previous quarter's sales of $51.7 million, or $16.7 million. EBITDA generated by the Apparel Segment was $12.6 million or 80% higher than the previous quarter amount of $7.0 million. This increase was due to the seasonal increase in sales.
Selling, general and administrative (SG&A) expenses were $17.8 million or 12.0% of net sales, compared to $9.4 million or 14.3% of net sales in the prior year quarter ended May 31, 2004. SG&A in the previous quarter ended Feb. 28, 2005 was $18.1 million or 13.4% of net sales. The increase in SG&A of $8.4 million over the prior year was primarily the result of the acquisitions of Crabar/GBF, Royal and Alstyle Apparel. The Company continues to focus on ways to reduce SG&A expenses from its acquisitions to further enhance the profitability to the Company and improve its cash flow to further reduce the acquisition debt.
During the quarter, the Company has improved the internal controls and its financial oversight of accounting matters of Alstyle. Issues related to the financial reporting process at fiscal year-end 2005 prompted the auditors to inform the Audit Committee of a material weakness in the financial reporting process of Alstyle. Corporate personnel of the Company closely monitored the accounting processes of Alstyle for the quarter ended May 31, 2005. Consequently, the financial close was completed on a timely basis with no adjustments. The Company feels it has satisfactorily addressed this material weakness and plans to continue to provide close financial oversight in future periods. Additionally, the Company reported a material weakness related to the recording of assets involved in the acquisition of Alstyle. The Company has improved its communication processes and procedures related to acquisitions and feels that this weakness, although isolated to one instance, has been remediated.
Additionally the Company finished the closing of the Dayton, Ohio, administrative center for Crabar/GBF and the Edison, N.J., facility. With regard to the Edison closing, the Company has relocated some people, equipment and sales to other locations on the east coast. The Company also took advantage of the additional space available in its Anaheim facility to relocate its Bell, Calif., facility for Admore into the additional space. The Cerritos facility for GenForms will also relocate into the Anaheim facility during the second quarter of this year.
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