Ennis, Inc. Reports Results for the First Quarter Ended May 31, 2006

Ennis, Inc. (the "Company"), (NYSE:EBF), today reported financial results for the first quarter ended May 31, 2006.


-- Net earnings increased 7.3% over the same quarter last year, from approximately $10.6 million to approximately $11.3 million.

-- Diluted EPS increased by 7.3% over the same quarter last year, from $.41 per share to $.44 per share for the year.

Financial Overview

For the quarter, net sales decreased by $4.0 million, or 2.7% from $149.1 million for the quarter ended May 31, 2005 to $145.1 million for the quarter ended May 31, 2006. Sales in the Print Solutions segment for the period were $77.1 million, compared to $80.7 million for the same period last year. The Apparel Solutions segment sales for the period were $68.0 million, compared to $68.4 million for the same period last year. Due mainly to improved margins realized at the Apparel Group during the quarter, the Company's overall margins improved from 25.1% to 26.1% for the quarters ended May 31, 2005 and 2006, respectively. Net earnings for the quarter increased by $772,000, or 7.3%, from $10.6 million for the quarter ended May 31, 2005 to $11.3 million for the quarter ended May 31, 2006. Diluted earnings increased from $.41 per share to $.44 per share for the quarters ended May 31, 2005 and 2006, respectively. The decline in the Print Solutions segment's revenues during the quarter is primarily due to the impact associated with a large promotional customer which the Company ceased doing business with during the fourth quarter of fiscal year 2006, approximately $4.0 million, and the impact of the two print plants closings, which were in 2005, approximately $2.0 million. Without these items, the Print Solutions segment's revenues for the quarter actually increased by approximately 3% quarter over quarter.

The Company generated approximately $24.3 million in EBITDA (earnings before interest, taxes, depreciation and amortization) during the quarter, compared to $24.2 million for the comparable quarter last year. Reconciliation of Non-GAAP to GAAP measure (dollars in thousands):

                                                  Three months ended
                                                        May 31,
                                                    2006       2005
                                                 ---------- ----------

Earnings before income taxes                        17,983     17,308
Interest expense                                     1,792      2,243
Depreciation/amortization                            4,483      4,629
                                                 ---------- ----------
EBITDA (non-GAAP)                                   24,258     24,180
                                                 ========== ==========

Keith Walters, Chairman, President & CEO, commented by saying, "We are extremely pleased with our results for the quarter. We realized that our closing of the two print plants last fiscal year and our decision to cease doing business with a major promotional customer would most likely impact our top-line in the short-term; however being true to our stated focus on profit versus revenue growth, we felt that these moves were in the best interest of our stakeholders. In addition, while we recently completed two acquisitions in the print sector, due to the timing of these acquisitions, neither of these had a significant impact on our operational results during the reported quarter. While we will continue to look for strategic acquisitions in both the print and apparel sectors, we will, as in the past, continue to manage our business with an eye on the bottom line."

About Ennis

Ennis, Inc. (www.ennis.com) (formerly Ennis Business Forms, Inc.) is primarily engaged in the production of and sale of business forms, apparel and other business products. The Company is one of the largest private-label printed business product suppliers in the United States. Headquartered in Midlothian, Texas, the Company has production and distribution facilities strategically located throughout the United States of America, Mexico and Canada, to serve the Company's national network of distributors. The Company, together with its subsidiaries, operates in two business segments: the Print Solutions Segment and Apparel Solutions Segment. There are three groups within the Printing Solutions Segment: the Forms Solutions Group, Promotional Solutions Group, and Financial Solutions Group. The Apparel Solutions Segment consists entirely of the Apparel Solutions Group. The Forms Solutions Group is primarily engaged in the business of manufacturing and selling business forms and other printed business products. The Promotional Solutions Group is primarily engaged in the business of design, production and distribution of printed and electronic media, presentation products, flex-o-graphic printing, advertising specialties and Post-it(R) Notes. The Financial Solutions Group designs, manufactures and markets printed forms and specializes in internal bank forms, secure and negotiable documents and custom products. The Apparel Solutions Group manufactures T-Shirts and distributes T-Shirts and other active-wear apparel through six distribution centers located throughout North America.

Safe Harbor Under The Private Securities Litigation Reform Act of 1995

Certain statements contained in this press release that are not historical facts are forward-looking statements that involve a number of known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement expressed or implied by such forward-looking statements. The words "anticipate," "preliminary," "expect," "believe," "intend" and similar expressions identify forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. These statements are subject to numerous uncertainties, which include, but are not limited to, the Company's ability to effectively manage its business functions while growing its business in a rapidly changing environment, the Company's ability to adapt and expand its services in such an environment, the variability in the prices of paper and other raw materials. Other important information regarding factors that may affect the Company's future performance is included in the public reports that the Company files with the Securities and Exchange Commission. The Company undertakes no obligation to revise any forward-looking statements or to update them to reflect events or circumstances occurring after the date of this release, or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The inclusion of any statement in this release does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

                             Ennis, Inc.
                   Condensed Financial Information
               (In thousands, except per share amounts)

                                                 Three months ended
Condensed Operating Results                           May 31,
-----------------------------                     2006        2005
                                              ----------- ------------
     Revenues                                   $145,113     $149,113
     Cost of goods sold                          107,298      111,635
                                              ----------- ------------
     Gross profit                                 37,815       37,478
     Operating expenses                           18,078       17,837
                                              ----------- ------------
     Operating income                             19,737       19,641
     Other expense                                 1,754        2,333
     Income tax expense                            6,653        6,750
                                              ----------- ------------
         Net earnings                            $11,330      $10,558
                                              =========== ============

Earnings per share
     Basic                                         $0.44        $0.42
                                              =========== ============
     Diluted                                       $0.44        $0.41
                                              =========== ============

Condensed Balance Sheet Information             May 31,   February 28,
-----------------------------------              2006         2006
                                              ----------- ------------
Current assets:
     Cash                                         $9,322      $13,860
     Accounts receivables, net                    46,750       41,686
     Inventories, net                             89,227       89,155
     Other                                        15,673       13,754
                                              ----------- ------------
                                                 160,972      158,455
                                              ----------- ------------
Property, plant & equipment                       65,859       63,803
Other                                            271,612      272,143
                                              ----------- ------------
                                                $498,443     $494,401
                                              =========== ============
Current liabilities
     Accounts payable                            $24,485      $26,589
     Accrued expenses                             32,117       25,752
     Current portion of long-term debt            11,255       11,620
                                              ----------- ------------
                                                  67,857       63,961
                                              ----------- ------------
Long-term debt                                    95,814      102,916
Deferred credits                                  29,971       30,189
                                              ----------- ------------
     Total liabilities                           193,642      197,066
                                              ----------- ------------

Shareholders' equity                             304,801      297,335
                                              ----------- ------------
                                                $498,443     $494,401
                                              =========== ============

                                                 Three months ended
                                                      May 31,
Condensed Cash Flow Information                   2006        2005
-------------------------------               ----------- ------------
Cash provided by operating activities            $12,181      $18,775
Cash used in investing activities                 (5,260)      (4,880)
Cash used in financing activities                (11,408)     (17,674)
Effect of exchange rates on cash                     (51)         (21)
                                              ----------- ------------
Change in cash                                    (4,538)      (3,800)
Cash at beginning of period                       13,860       10,694
                                              ----------- ------------
Cash at end of period                             $9,322       $6,894
                                              =========== ============

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