10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended November 30, 2022

OR

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from to

Commission File Number 1-5807

ENNIS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Texas	75-0256410
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
2441 Presidential Pkwy., Midlothian, Texas	76065
(Address of Principal Executive Offices)	(Zip code)

Registrant’s Telephone Number, Including Area Code: (972) 775-9801

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $2.50 per share	EBF	New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of December 30, 2022, there were 25,836,392 shares of the Registrant’s common stock outstanding.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2022

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION
	Item 1. Condensed Consolidated Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets at November 30, 2022 and February 28, 2022	3
	Condensed Consolidated Statements of Operations for the three and nine months ended November 30, 2022 and November 30, 2021	5
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended November 30, 2022 and November 30, 2021	6
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and nine ended November 30, 2022 and November 30, 2021	7
	Condensed Consolidated Statements of Cash Flows for the nine months ended November 30, 2022 and November 30, 2021	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	26
	Item 4. Controls and Procedures	26
PART II: OTHER INFORMATION
	Item 1. Legal Proceedings	27
	Item 1A. Risk Factors	27
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	27
	Item 3. Defaults Upon Senior Securities	28
	Item 4. Mine Safety Disclosures	28
	Item 5. Other Information	28
	Item 6. Exhibits	28
SIGNATURES		29

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	November 30,		February 28,
	2022		2022
Assets
Current assets
Cash	$	87,000	$	85,606
Accounts receivable, net of allowance for doubtful receivables of $1,692 at November 30, 2022 and $1,200 at February 28, 2022		45,738		39,022
Inventories, net		49,922		38,538
Prepaid expenses		2,434		1,863
Total current assets		185,094		165,029
Property, plant and equipment
Plant, machinery and equipment		153,504		151,126
Land and buildings		59,987		59,642
Computer equipment and software		18,430		18,368
Other		4,321		4,275
Total property, plant and equipment		236,242		233,411
Less accumulated depreciation		186,802		179,778
Net property, plant and equipment		49,440		53,633
Operating lease right-of-use assets, net		14,214		15,544
Goodwill		93,438		88,677
Intangible assets, net		44,078		45,569
Other assets		386		392
Total assets	$	386,650	$	368,844

See accompanying notes to condensed consolidated financial statements.

3

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS-Continued

(unaudited, in thousands, except for par value and share amounts)

	November 30,			February 28,
	2022			2022
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	15,361		$	16,678
Accrued expenses		19,117			15,422
Current portion of operating lease liabilities		4,914			5,090
Total current liabilities		39,392			37,190
Liability for pension benefits		3,729			5,729
Deferred income taxes		11,905			11,405
Operating lease liabilities, net of current portion		9,215			10,241
Other liabilities		987			464
Total liabilities		65,228			65,029
Shareholders’ equity
Common stock $2.50 par value, authorized 40,000,000 shares; issued 30,053,443 shares at November 30, 2022 and February 28, 2022		75,134			75,134
Additional paid-in capital		124,593			123,990
Retained earnings		213,725			197,998
Accumulated other comprehensive loss:
Minimum pension liability, net of taxes		(17,086	)		(18,587	)
Treasury stock		(74,944	)		(74,720	)
Total shareholders’ equity		321,422			303,815
Total liabilities and shareholders' equity	$	386,650		$	368,844

See accompanying notes to condensed consolidated financial statements.

4

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share and per share amounts)

	Three months ended						Nine months ended
	November 30,						November 30,
	2022			2021			2022			2021
Net sales	$	110,245		$	102,968		$	329,145		$	300,349
Cost of goods sold		76,768			73,768			226,445			213,062
Gross profit		33,477			29,200			102,700			87,287
Selling, general and administrative		17,292			17,513			52,916			54,523
(Gain) loss from disposal of assets		15			1			15			(275	)
Income from operations		16,170			11,686			49,769			33,039
Other expense
Interest expense		—			(3	)		-			(7	)
Other, net		(496	)		(878	)		(1,010	)		(1,136	)
Total other expense		(496	)		(881	)		(1,010	)		(1,143	)
Earnings before income taxes		15,674			10,805			48,759			31,896
Income tax expense		4,388			3,242			13,652			9,569
Net earnings	$	11,286		$	7,563		$	35,107		$	22,327
Weighted average common shares outstanding
Basic		25,809,581			26,020,210			25,812,216			26,053,898
Diluted		25,888,815			26,020,210			25,892,873			26,151,480
Earnings per share
Basic	$	0.44		$	0.29		$	1.36		$	0.86
Diluted	$	0.44		$	0.29		$	1.36		$	0.85
Cash dividends per share	$	0.250		$	0.250		$	0.750		$	0.725

See accompanying notes to condensed consolidated financial statements.

5

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)

	Three months ended				Nine months ended
	November 30,				November 30,
	2022		2021		2022		2021
Net earnings	$	11,286	$	7,563	$	35,107	$	22,327
Adjustment to pension, net of taxes		717		885		1,501		1,482
Comprehensive income	$	12,003	$	8,448	$	36,608	$	23,809

See accompanying notes to condensed consolidated financial statements.

6

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(unaudited, in thousands, except share and per share amounts)

											Accumulated
					Additional						Other
	Common Stock				Paid-in			Retained			Comprehensive			Treasury Stock
	Shares		Amount		Capital			Earnings			Income (Loss)			Shares			Amount			Total
Balance, August 31, 2022		30,053,443	$	75,134	$	124,031		$	208,898		$	(17,803	)		(4,266,835	)	$	(74,944	)	$	315,316
Net earnings		—		—		—			11,286			—			—			—			11,286
Adjustment to pension, net of deferred tax of $179		—		—		—			—			717			—			—			717
Dividends paid ($0.25 per share)		—		—		—			(6,459	)		—			—			—			(6,459	)
Stock based compensation		—		—		562			—			—			—			—			562
Balance, November 30, 2022		30,053,443	$	75,134	$	124,593		$	213,725		$	(17,086	)		(4,266,835	)	$	(74,944	)	$	321,422
Balance, February 28, 2022		30,053,443	$	75,134	$	123,990		$	197,998		$	(18,587	)		(4,253,824	)	$	(74,720	)	$	303,815
Net earnings		—		—		—			35,107			—			—			—			35,107
Adjustment to pension, net of deferred tax of $375		—		—		—			—			1,501			—			—			1,501
Dividends paid ($0.75 per share)		—		—		—			(19,380	)		—			—			—			(19,380	)
Stock based compensation		—		—		1,497			—			—			—			—			1,497
Exercise of stock options and restricted stock		—		—		(894	)		—			—			51,071			894			—
Common stock repurchases		—		—		—			—			—			(64,082	)		(1,118	)		(1,118	)
Balance, November 30, 2022		30,053,443	$	75,134	$	124,593		$	213,725		$	(17,086	)		(4,266,835	)	$	(74,944	)	$	321,422
Balance, August 31, 2021		30,053,443	$	75,134	$	123,116		$	196,809		$	(19,685	)		(4,006,268	)	$	(70,053	)	$	305,321
Net earnings		—		—		—			7,563			—			—			—			7,563
Adjustment to pension, net of deferred tax of $295		—		—		—			—			885			—			—			885
Dividends paid ($0.25 per share)		—		—		—			(6,525	)		—			—			—			(6,525	)
Stock based compensation		—		—		642			—			—			—			—			642
Exercise of stock options and restricted stock		—		—		(14	)		—			—			826			14			—
Common stock repurchases		—		—		—			—			—			(102,757	)		(1,942	)		(1,942	)
Balance, November 30, 2021		30,053,443	$	75,134	$	123,744		$	197,847		$	(18,800	)		(4,108,199	)	$	(71,981	)	$	305,944
Balance, February 28, 2021		30,053,443	$	75,134	$	123,017		$	194,436		$	(20,282	)		(4,103,630	)	$	(71,756	)	$	300,549
Net earnings		—		—		—			22,327			—			—			—			22,327
Adjustment to pension, net of deferred tax of $494		—		—		—			—			1,482			—			—			1,482
Dividends paid ($0.725 per share)		—		—		—			(18,916	)		—			—			—			(18,916	)
Stock based compensation		—		—		2,444			—			—			—			—			2,444
Exercise of stock options and restricted stock		—		—		(1,717	)		—			—			98,188			1,717			—
Common stock repurchases		—		—		—			—			—			(102,757	)		(1,942	)		(1,942	)
Balance, November 30, 2021		30,053,443	$	75,134	$	123,744		$	197,847		$	(18,800	)		(4,108,199	)	$	(71,981	)	$	305,944

See accompanying notes to condensed consolidated financial statements.

7

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Nine months ended
	November 30,
		2022			2021
Cash flows from operating activities:
Net earnings	$	35,107		$	22,327
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		7,766			7,752
Amortization of intangible assets		5,280			6,137
(Gain) loss from disposal of assets		15			(275	)
Bad debt expense, net of recoveries		585			408
Stock based compensation		1,497			2,444
Net pension expense		1			945
Changes in operating assets and liabilities:
Accounts receivable		(5,898	)		(569	)
Prepaid expenses and income taxes		(487	)		(357	)
Inventories		(10,921	)		(6,227	)
Other assets		(570	)		(15	)
Accounts payable and accrued expenses		1,471			2,090
Other liabilities		151			(365	)
Net cash provided by operating activities		33,997			34,295
Cash flows from investing activities:
Capital expenditures		(3,338	)		(4,143	)
Purchase of businesses, net of cash acquired		(8,767	)		(4,340	)
Proceeds from disposal of plant and property		—			825
Net cash used in investing activities		(12,105	)		(7,658	)
Cash flows from financing activities:
Dividends paid		(19,380	)		(18,916	)
Common stock repurchases		(1,118	)		(1,942	)
Net cash used in financing activities		(20,498	)		(20,858	)
Net change in cash		1,394			5,779
Cash at beginning of period		85,606			75,190
Cash at end of period	$	87,000		$	80,969

See accompanying notes to condensed consolidated financial statements.

8

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED NOVEMBER 30, 2022
(unaudited)

1. Significant Accounting Policies and General Matters

Basis of Presentation

These unaudited condensed consolidated financial statements of Ennis, Inc. and its subsidiaries (collectively referred to as the “Company,” “Registrant,” “Ennis,” or “we,” “us,” or “our”) for the period ended November 30, 2022 have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP') and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2022, from which the accompanying consolidated balance sheet at February 28, 2022 was derived. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial information have been included and are of a normal recurring nature. The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the disclosure and reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates these estimates and judgments on an ongoing basis, including those related to bad debts, inventory valuations, property, plant and equipment, intangible assets, pension plan, accrued liabilities, and income taxes. The Company bases estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of operations for any interim period are not necessarily indicative of the results of operations for a full year.

Recent Accounting Pronouncements

Recently Issued Accounting Updates

There are no recent accounting pronouncements that are anticipated to have a material impact on the Company's condensed consolidated financial statements.

2. Revenue

Nature of Revenues

Revenues from contracts with customers for the sale of commercial printing products in the continental United States is primarily recognized at a point in time in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Revenue from the sale of commercial printing products, including shipping and handling fees billed to customers, is recognized upon the transfer of control to the customer, which is generally upon shipment to the customer when the terms of the sale are freight on board ("FOB") shipping point, or, to a lesser extent, upon delivery to the customer if the terms of the sale are FOB destination.

In a small number of cases and upon customer request, the Company prints and stores commercial printing product for customer specified future delivery, generally within the same year as the product is manufactured. In this case, revenue is recognized upon the transfer of control when manufacturing is complete and title and risk of ownership is passed to the customer. Storage revenue for certain customers may be recognized over time rather than at a point in time. As of the date of this report, the amount of storage revenue is not significant to the Company’s condensed consolidated financial statements. The output method for measure of progress is determined to be appropriate. The Company recognizes storage revenue in the amount for which it has the right to invoice for revenue that is recognized over time and for which it demonstrates that the invoiced amount corresponds directly with the value to the customer for the performance completed to date.

The Company does not disaggregate revenue and operates in one sales category consisting of commercial printed product revenue, which is reported as net sales on the condensed consolidated statements of operations. The Company does not have material contract assets and contract liabilities as of November 30, 2022.

Significant Judgments

Generally, the Company’s contracts with customers are comprised of a written quote and customer purchase order or statement of work, and governed by the Company’s trade terms and conditions. In certain instances, it may be further supplemented by separate pricing agreements and customer incentive arrangements, which typically only affect the transaction price. Contracts do not contain a

9

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED NOVEMBER 30, 2022
(unaudited)

significant financing component as payment terms on invoiced amounts are typically between 30 to 60 days, based on the Company’s credit assessment of individual customers, as well as industry expectations. Product returns are not significant.

From time to time, the Company may offer incentives to its customers considered to be variable consideration including volume-based rebates or early payment discounts. Customer incentives considered to be variable consideration are recorded as a reduction to revenue as part of the transaction price at contract inception when there is a basis to reasonably estimate the amount of the incentive and only to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Customer incentives are allocated entirely to the single performance obligation of transferring printed product to the customer.

For customers with terms of FOB shipping point, the Company accounts for shipping and handling activities performed after the control of the printed product has been transferred to the customer as a fulfillment cost. The Company accrues for the costs of shipping and handling activities if revenue is recognized before contractually agreed shipping and handling activities occur.

The Company’s contracts with customers are generally short-term in nature. Accordingly, the Company does not disclose the value of unsatisfied performance obligations nor the timing of revenue recognition.

3. Accounts Receivable and Allowance for Doubtful Receivables

Accounts receivable are reduced by an allowance for an estimate of amounts that are uncollectible. Substantially all of the Company’s receivables are due from customers in the United States. The Company extends credit to its customers based upon its evaluation of the following factors: (i) the customer’s financial condition, (ii) the amount of credit the customer requests, and (iii) the customer’s actual payment history (which includes disputed invoice resolution). The Company does not typically require its customers to post a deposit or supply collateral. The Company’s allowance for doubtful receivables is based on an analysis that estimates the amount of its total customer receivable balance that is not collectible. This analysis includes the pooling of receivables based on risk assessment and then assessing a default probability to these pooled balances, which can be influenced by several factors including (i) current market conditions, (ii) historical experience, (iii) reasonable forecast, and (iv) review of customer receivable aging and payment trends.

The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance in the period the payment is received.

The following table presents the activity in the Company’s allowance for doubtful receivables (in thousands):

	Three months ended					Nine months ended
	November 30,					November 30,
	2022			2021		2022			2021
Balance at beginning of period	$	1,523		$	1,016	$	1,200		$	961
Bad debt expense, net of recoveries		192			249		585			408
Accounts written off		(23	)		-		(93	)		(104	)
Balance at end of period	$	1,692		$	1,265	$	1,692		$	1,265

10

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED NOVEMBER 30, 2022
(unaudited)

4. Inventories

With the exception of approximately 12.3% and 14.0% of its inventories valued at the lower of last-in first-out ("LIFO") for the periods ended November 30, 2022 and February 28, 2022, respectively, the Company values its inventories at the lower of first-in, first-out ("FIFO") cost or net realizable value. The Company regularly reviews inventories on hand, using specific aging categories, and writes down the carrying value of its inventories for excess and potentially obsolete inventories based on historical usage and estimated future usage. In assessing the ultimate realization of its inventories, the Company is required to make judgments as to future demand requirements. As actual future demand or market conditions may vary from those projected by the Company, adjustments to inventories may be required. Reserves for excess and obsolete inventory at November 30, 2022 and fiscal year ended February 28, 2022 were $1.6 million and $1.5 million, respectively.

The following table summarizes the components of inventories at the different stages of production as of the dates indicated (in thousands):

	November 30,		February 28,
	2022		2022
Raw material	$	31,982	$	25,276
Work-in-process		7,576		5,547
Finished goods		10,364		7,715
	$	49,922	$	38,538

5. Acquisitions

The Company applies the acquisition method of accounting for business combinations. Under the acquisition method, the acquiring entity in a business combination recognizes 100% of the assets acquired and liabilities assumed at their acquisition date fair values. Management utilizes valuation techniques appropriate for the asset or liability being measured in determining these fair values. Any excess of the purchase price over amounts allocated to assets acquired, including identifiable intangible assets and liabilities assumed, is recorded as goodwill. Where amounts allocated to assets acquired and liabilities assumed is greater than the purchase price, a bargain purchase gain is recognized. Acquisition-related costs are expensed as incurred.

Acquisition of School Photo Marketing

On November 30, 2022, the Company acquired the assets and business from School Photo Marketing ("SPM"), which is based in Morganville, New Jersey, for $8.8 million (with additional potential earn-out consideration of up to $1,000,000 over a four-year period upon the attainment of specified financial benchmarks) plus the assumption of trade payables, subject to certain adjustments. The Company performed a preliminary allocation of the total estimated consideration and recorded the underlying assets acquired (including certain identified intangible assets) and liabilities assumed based on their estimated fair values using the information available as of the acquisition date. This allocation is preliminary and subject to change, which may be material. All goodwill of $4.8 million recognized as a part of this acquisition is deductible for tax purposes. The Company also recorded intangible assets with definite lives of approximately $3.2 million in connection with the transaction, which are also deductible for tax purposes.

The following table summarizes the Company's preliminary purchase price allocation for SPM as of the acquisition date (in thousands):

Accounts receivable	$1,403
Inventories	463
Other assets	84
Right-of-use asset	487
Property, plant and equipment	250
Goodwill and intangibles	7,974
Operating lease liability	(487)
Accounts payable and accrued liabilities	(1,407)
	$8,767

Acquisition of AmeriPrint Corporation

11

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED NOVEMBER 30, 2022
(unaudited)

On June 1, 2021, the Company acquired the assets and business from AmeriPrint Corporation ("AmeriPrint"), which is based in Harvard, Illinois, for $3.9 million in cash plus the assumption of trade payables, subject to certain adjustments. Goodwill of $0.5 million recognized as a part of the acquisition is deductible for tax purposes. The Company also recorded intangible assets with definite lives of approximately $1.1 million in connection with the transaction. The acquisition of AmeriPrint, which prior to the acquisition generated approximately $6.5 million in sales for its fiscal year ended December 31, 2020, brings added capabilities and expertise to our expanding product offering including barcoding and variable imaging.

The following is a summary of the purchase price allocation for AmeriPrint (in thousands):

Accounts receivable	$	417
Inventories		732
Property, plant and equipment		2,000
Goodwill and intangibles		1,607
Accounts payable and accrued liabilities		(834	)
	$	3,922

6. Leases

The Company leases certain of its facilities and equipment under operating leases, which are recorded as right-of-use assets and lease liabilities. The Company’s leases generally have terms of 1 – 5 years, with certain leases including renewal options to extend the leases for additional periods at the Company’s discretion. At lease inception, all renewal options reasonably certain to be exercised are considered when determining the lease term. The Company currently does not have leases that include options to purchase or provisions that would automatically transfer ownership of the leased property to the Company.

Operating lease expense is recognized on a straight-line basis over the lease term, and variable lease payments are expensed as incurred. The Company had no variable lease costs for the nine months ended November 30, 2022 and November 30, 2021.

The Company determines whether a contract is or contains a lease at the inception of the contract. A contract will be deemed to be or contain a lease if the contract conveys the right to control and directs the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from the use of the property, plant, and equipment.

Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates based on the BBB Corporate Bond Rate at lease commencement date, as rates are not implicitly stated in most leases.

Components of lease expense for the three and nine months ended November 30, 2022 and November 30, 2021 were as follows (in thousands):

	Three months ended				Nine months ended
	November 30, 2022		November 30, 2021		November 30, 2022		November 30, 2021
Operating lease cost	$	1,517	$	1,454	$	4,545	$	4,688
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,522	$	1,459	$	4,550	$	4,675
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	2,042	$	—	$	2,848	$	3,441

12

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED NOVEMBER 30, 2022
(unaudited)

Weighted Average Remaining Lease Terms
Operating leases	3 Years
Weighted Average Discount Rate
Operating leases		3.84	%

Future minimum lease commitments under non-cancelable operating leases for each of the fiscal years ending are as follows (in thousands):

	Operating
	Lease
	Commitments
2023 (remaining 3 months)	$	1,025
2024		5,248
2025		4,514
2026		2,893
2027		1,168
2028		153
Thereafter		-
Total future minimum lease payments	$	15,001
Less imputed interest		872
Present value of lease liabilities	$	14,129

7. Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets of acquired businesses and is not amortized. Goodwill and other intangible assets are tested for impairment at a reporting unit level. The annual impairment test of goodwill and intangible assets is performed as of December 1 of each fiscal year.

The Company uses qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the fair value of a reporting unit exceeds its carrying amount, including goodwill. Some of the qualitative factors used in applying this test include consideration of macroeconomic conditions, industry and market conditions, cost factors affecting the business, overall financial performance of the business, and performance of the share price of the Company.

If qualitative factors are not deemed sufficient to conclude that the fair value of the reporting unit more likely than not exceeds its carrying value, then a one-step approach is applied in making an evaluation. The evaluation utilizes multiple valuation methodologies, including a market approach (market price multiples of comparable companies) and an income approach (discounted cash flow analysis). The computations require management to make significant estimates and assumptions, including, among other things, selection of comparable publicly traded companies, the discount rate applied to future earnings reflecting a weighted average cost of capital, and earnings growth assumptions. A discounted cash flow analysis requires management to make various assumptions about future sales, operating margins, capital expenditures, working capital, and growth rates. If the evaluation results in the fair value of the goodwill for the reporting unit being lower than the carrying value, an impairment charge is recorded.

13

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED NOVEMBER 30, 2022
(unaudited)

Definite-lived intangible assets are amortized over their estimated useful lives and tested for impairment if events or changes in circumstances indicate that the asset may be impaired.

The carrying amount and accumulated amortization of the Company’s intangible assets at each balance sheet date are as follows (in thousands):

	Weighted
	Average
	Remaining		Gross
	Life		Carrying		Accumulated
As of November 30, 2022	(in years)		Amount		Amortization		Net
Amortized intangible assets
Trademarks and trade names		10.4	$	29,328	$	11,786	$	17,542
Customer lists		5.3		79,126		52,666		26,460
Non-compete		2.8		235		159		76
Total		7.3	$	108,689	$	64,611	$	44,078
As of February 28, 2022
Amortized intangible assets
Trademarks and trade names		11.0	$	28,207	$	10,301	$	17,906
Customer lists		6.1		76,458		48,903		27,555
Non-compete		3.3		877		769		108
Total		8.0	$	105,542	$	59,973	$	45,569

Aggregate amortization expense was $5.3 million and $6.1 million for the nine months ended November 30, 2022 and November 30, 2021, respectively.

The Company’s estimated amortization expense for the current and next four fiscal years is as follows (in thousands):

2023	$	7,130
2024		7,354
2025		7,180
2026		6,565
2027		5,481

Changes in the net carrying amount of goodwill as of the dates indicated are as follows (in thousands):

Balance as of March 1, 2021	$	88,647
Goodwill acquired		30
Balance as of February 28, 2022		88,677
Goodwill acquired		4,761
Balance as of November 30, 2022	$	93,438

During fiscal year 2022, the Company recorded a measurement period adjustment of $0.5 million to reduce goodwill related to the Infoseal acquisition. The Company records additions of $0.5 million and less than $0.1 million to goodwill related to the acquisition of AmeriPrint and Superior Copies, respectively. Additionally, $4.8 million was added to goodwill related to the acquisition of SPM.

14

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED NOVEMBER 30, 2022
(unaudited)

8. Accrued Expenses

The following table summarizes the components of accrued expenses as of the dates indicated (in thousands):

	November 30, 2022		February 28, 2022
Employee compensation and benefits	$	13,907	$	11,587
Taxes other than income		1,513		947
Accrued legal and professional fees		534		251
Accrued interest		-		31
Accrued utilities		128		108
Accrued acquisition related obligations		9		34
Income taxes payable		2,160		1,606
Other accrued expenses		866		858
	$	19,117	$	15,422

9. Long-Term Debt

The Company did not renew its Credit Agreement which expired November 11, 2021. The Company has had no outstanding long-term debt under the revolving credit line since paid in full in August 2019. As of November 30, 2022, the Company had $0.5 million outstanding under a standby letters of credit arrangement secured by a cash collateral bank account.

10. Shareholders’ Equity

The Company’s board of directors (the "Board") has authorized the repurchase of the Company’s outstanding common stock through a stock repurchase program, which authorized amount is currently up to $60.0 million in the aggregate. Under the repurchase program, purchases may be made from time to time in the open market or through privately negotiated transactions depending on market conditions, share price, trading volume and other factors. Such purchases, if any, will be made in accordance with applicable insider trading and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice.

During the nine months ended November 30, 2022, the Company repurchased 64,082 shares of common stock under the program at an average price of $17.46. There were no repurchases of common stock during the three-month period ended November 30, 2022. Since the program’s inception in October 2008, there have been 2,213,111 common shares repurchased at an average price of $16.29 per share. As of November 30, 2022, $23.9 million remained available to repurchase shares of the Company’s common stock under the program.

11. Stock Based Compensation

The Company grants stock options, restricted stock and restricted stock units ("RSUs") to key executives and managerial employees and non-employee directors. Prior to June 30, 2021, the Company had one stock incentive plan, the 2004 Long-Term Incentive Plan of Ennis, Inc., as amended and restated as of May 18, 2008 and was further amended on June 30, 2011 (the "Old Plan"). The Old Plan expired June 30, 2021 and all remaining unused shares expired. Subject to the affirmative vote of the shareholders, the Board adopted the 2021 Long-Term Incentive Plan of Ennis, Inc. (the "New Plan") on April 16, 2021 authorizing 1,033,648 shares of common stock for awards and was approved by the shareholders at the Annual Meeting on July 15, 2021 by a majority vote. The New Plan expires June 30, 2031 and all unissued stock will expire on that date. At November 30, 2022, the Company has 977,277 shares of unissued common stock reserved under the New Plan for issuance and uses treasury stock to satisfy option exercises and restricted stock awards.

The Company recognizes compensation expense based on the grant date fair value of the award for stock options, restricted stock grants and RSUs on a straight-line basis over the requisite service period. The estimated number of shares to be achieved for performance based RSUs is updated each reporting period. For the three months ended November 30, 2022 and November 30, 2021, the Company included in selling, general and administrative expenses, compensation expense related to stock-based compensation of $0.6 million and $0.6 million, respectively. For the nine months ended November 30, 2022 and November 30, 2021, the Company

15

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED NOVEMBER 30, 2022
(unaudited)

included in selling, general and administrative expenses, compensation expense related to stock-based compensation of $1.5 million and $2.4 million, respectively.

Stock Options

The Company had no outstanding vested or unvested stock options at any time during the nine months ended November 30, 2022 and November 30, 2021. No stock options were granted during the nine months ended November 30, 2022 and November 30, 2021.

Restricted Stock

The following activity occurred with respect to the Company’s restricted stock awards for the nine months ended November 30, 2022, of which 22,000 shares were granted under the New Plan:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Outstanding at March 1, 2022		67,164		$	18.73
Granted		22,000			19.78
Terminated		—			—
Vested		(39,381	)		19.00
Outstanding at November 30, 2022		49,783		$	18.99

As of November 30, 2022, the total remaining unrecognized compensation cost related to unvested restricted stock was approximately $1.1 million. The weighted average remaining requisite service period of the unvested restricted stock awards was 1.7 years.

Restricted Stock Units

During the nine months ended November 30, 2022, 39,574 performance-based RSUs and 9,893 time-based RSUs were granted under the New Plan. The fair value of the time-based RSUs was estimated based on the fair market value of the Company’s stock on the date of grant of $19.47 per unit. The fair value of the performance-based RSUs, using a Monte Carlo valuation model, was $23.17 per unit. The performance measures include a threshold, target and maximum performance level providing the grantees an opportunity to receive more or less shares than targeted depending on actual financial performance. The award will be based on the Company’s return on equity, EBITDA and adjusted for the Company’s Relative Shareholder Return as measured against a defined peer group.

The performance-based RSUs will vest no later than March 15, 2024, which is the deadline for the Compensation Committee to determine the extent of the Company’s attainment of the Performance Goals during the Performance Period that ends on February 29, 2024. The time-based RSUs vest ratably over two to three years from the date of grant.

The following activity occurred with respect to the Company’s restricted stock units for the nine months ended November 30, 2022:

	Time-based					Performance-based
				Weighted				Weighted
				Average				Average
	Number of			Grant Date		Number of		Grant Date
	Shares			Fair Value		Shares		Fair Value
Outstanding at March 1, 2022		35,071		$	20.38		140,287	$	23.17
Granted		9,893			19.47		39,574		23.17
Terminated		—			—		—		—
Vested		(11,690	)		20.38		—		—
Outstanding at November 30, 2022		33,274		$	20.11		179,861	$	23.17

As of November 30, 2022, the total remaining unrecognized compensation cost of time-based RSUs was approximately $0.4 million over a weighted average remaining requisite service period of 1.8 years. As of November 30, 2022, the total remaining unrecognized compensation of performance-based RSUs was approximately $1.7 million over a weighted average remaining requisite service period of 1.7 years.

16

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED NOVEMBER 30, 2022
(unaudited)

12. Pension Plan

The Company and certain subsidiaries have a noncontributory defined benefit retirement plan (the "Pension Plan"), covering approximately 13% of the Company’s aggregate employees. Benefits are based on years of service and the employee’s average compensation for the highest five compensation years preceding retirement or termination.

Pension expense is composed of the following components included in cost of goods sold and selling, general, and administrative expenses in the Company’s consolidated statements of earnings (in thousands):

	Three months ended						Nine months ended
	November 30,						November 30,
	2022			2021			2022			2021
Components of net periodic benefit cost
Service cost	$	236		$	269		$	708		$	806
Interest cost		492			420			1,475			1,261
Expected return on plan assets		(924	)		(931	)		(2,774	)		(2,792	)
Amortization of:
Unrecognized net loss		601			639			1,806			1,919
Settlement charges		786			750			786			750
Net periodic benefit cost	$	1,191		$	1,147		$	2,001		$	1,944

The Company is required to make contributions to the Pension Plan. These contributions are required under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 ("ERISA"). Due to the enactment of the Highway and Transportation Funding Act ("HATFA") in August 2014, plan sponsors can calculate the discount rate used to measure the Pension Plan liability using a 25-year average of interest rates plus or minus a corridor. The Company’s minimum required contribution to the Pension Plan is zero for the Pension Plan year ending February 28, 2023. Assuming a stable funding status, the Company would expect to make a cash contribution to the Pension Plan of between $1.5 million and $3.0 million per year. However, changes in actual investment returns or in discount rates could change this amount significantly. There was a $2.0 million contribution made in September 2022 to avoid a Pension Benefit Guaranty Corporation variable premium. As our Pension Plan assets are invested in marketable securities, fluctuations in market values could potentially impact our funding status, associated liabilities recorded and future required minimum contributions. At November 30, 2022, we had an unfunded pension liability recorded on our balance sheet of approximately $3.7 million.

13. Earnings Per Share

Basic earnings per share have been computed by dividing net earnings by the weighted average number of common shares outstanding during the applicable period. Diluted earnings per share reflect the potential dilution that could occur if stock options, performance-based RSUs or other contracts to issue common shares were exercised or converted into common stock.

The following table sets forth the computation for basic and diluted earnings per share for the periods indicated:

	Three months ended				Nine months ended
	November 30,				November 30,
	2022		2021		2022		2021
Basic weighted average common shares outstanding		25,809,581		26,020,210		25,812,216		26,053,898
Effect of dilutive RSUs		79,234		—		80,657		97,582
Diluted weighted average common shares outstanding		25,888,815		26,020,210		25,892,873		26,151,480
Earnings per share
Net earnings - basic	$	0.44	$	0.29	$	1.36	$	0.86
Net earnings - diluted	$	0.44	$	0.29	$	1.36	$	0.85
Cash dividends	$	0.250	$	0.250	$	0.750	$	0.725

The Company treats unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities, which are included in the computation of earnings per share. Our unvested restricted shares participate on an equal basis with common shares; therefore, there is no difference in undistributed earnings allocated

17

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED NOVEMBER 30, 2022
(unaudited)

to each participating security. Accordingly, the presentation above is prepared on a combined basis. No options were outstanding for the nine months ended November 30, 2022 and November 30, 2021.

14. Concentrations of Risk

Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash and trade receivables. Cash is placed with high-credit quality financial institutions. For the purposes of the condensed consolidated statements of cash flows, the Company considers cash to include cash on hand and in bank accounts. The Federal Deposit Insurance Corporation insures accounts up to $250,000. At November 30, 2022, cash balances included $86.2 million that was not federally insured because it represented amounts in individual accounts above the federally insured limit for each such account. This at-risk amount is subject to fluctuation on a daily basis. While management does not believe there is significant risk with respect to such deposits, no assurance can be made that the Company will not experience losses on the Company’s deposits.

The Company believes its credit risk with respect to trade receivables is limited due to industry and geographic diversification. As disclosed on the condensed consolidated balance sheets, the Company maintains an allowance for doubtful receivables to cover the Company’s estimate of credit losses associated with accounts receivable.

The Company, for quality and pricing reasons, purchases its paper products from a limited number of suppliers. While other sources may be available to the Company to purchase these products, they may not be available at the cost or at the quality the Company has come to expect.

15. Related Party Transactions

The Company leases a facility and sells product to an entity controlled by a member of the Board who was the former owner of Integrated Print & Graphics, a business that the Company acquired. The total right-of-use asset and related lease liability as of November 30, 2022 was $0.8 million and $0.9 million, respectively. During the nine months ended November 30, 2022, total lease payments made to, and sales made to, the related party were approximately $0.3 million and $3.0 million, respectively.

16. Income Taxes

The Company is subject to U.S. federal income tax as well as income taxes of multiple state jurisdictions. The quarterly income tax provision was computed based on our estimated annualized effective tax rate and the full-year forecasted income or loss plus the tax impact of unusual, infrequent, or nonrecurring significant items during the period.

Our effective tax rate for the three and nine months ended November 30, 2022 and 2021 was 28.0% and 30.0%, respectively, which varied from the U.S. federal statutory tax rate of 21.0% primarily due to the effects of state income taxes, nondeductible compensation and other permanent items. The Company made cash payments for income taxes of $13.1 million and $9.7 million, respectively, for the nine months ended November 30, 2022 and 2021.

17. Subsequent Events

On December 15, 2022, the Board declared a quarterly dividend on the Company's common stock of 25.0 cents per share, which will be paid on February 2, 2023 to shareholders of record as of January 5, 2023. The expected payout for this dividend is approximately $6.5 million.

18

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2022

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Statements

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read together with the unaudited consolidated financial statements and related notes of Ennis, Inc. (collectively with its subsidiaries, the “Company,” “Registrant,” “Ennis,” or “we,” “us,” or “our”), included in Part 1, Item 1 of this report, and with the audited consolidated financial statements and the related notes of the Company included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2022.

All of the statements in this report, other than historical facts, are forward-looking statements, including, without limitation, the statements made in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As a general matter, forward-looking statements are those focused upon anticipated events or trends, expectations, and beliefs relating to matters that are not historical in nature. The words “could,” “should,” “feel,” “anticipate,” “aim,” “preliminary,” “expect,” “believe,” “estimate,” “intend,” “intent,” “plan,” “will,” “foresee,” “project,” “forecast,” or the negative thereof or variations thereon, and similar expressions identify forward-looking statements.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for these forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that forward-looking statements are subject to known and unknown risks, uncertainties and other factors relating to its operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company. These known and unknown risks, uncertainties and other factors could cause actual results to differ materially from those matters expressed in, anticipated by or implied by such forward-looking statements.

These statements reflect the current views and assumptions of management with respect to future events. The Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, even though its situation and circumstances may change in the future. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. The inclusion of any statement in this report does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

We believe these forward-looking statements are based upon reasonable assumptions. All such statements involve risks and uncertainties, and as a result, actual results could differ materially from those projected, anticipated or implied by these statements. Such forward-looking statements involve known and unknown risks, including but not limited to: general economic, business and labor conditions and the potential impact on our operations; our ability to implement our strategic initiatives and control our operational costs; dependence on a limited number of key suppliers; our ability to recover the rising cost of raw materials and other costs (including energy, freight, labor and benefit costs) in markets that are highly price competitive and volatile; uninsured losses, including those from natural disasters, catastrophes, pandemics, theft, sabotage, or cyber attacks; the impact of the COVID-19 pandemic or future pandemics on the U.S. and local economies, our business operations, our workforce, our supply chain and our customer base; our ability to timely or adequately respond to technological changes in the industry; the impact of the internet and other electronic media on the demand for forms and printed materials; the impact of foreign competition, tariffs, trade regulations and import restrictions; customer credit risk; competitors’ pricing strategies; a decline in business volume and profitability could result in an impairment in our reported goodwill negatively impacting our operational results; our ability to retain key management personnel; our ability to identify, manage or integrate acquisitions; the impact of a data-breach of sensitive information, ransomware attack or other cyber incident on the Company; and changes in government regulations including measures intended to minimize the impact of COVID-19. In addition to the factors indicated above, you should carefully consider the risks described in and incorporated by reference herein and in the risk factors in our Annual Report on Form 10-K for the fiscal year ended February 28, 2022 before making an investment in our common stock.

Overview

Ennis, Inc. (formerly Ennis Business Forms, Inc.) (collectively with its subsidiaries, “the “Company,” “Registrant,” Ennis,” or “we,” “us,” or “our”) was organized under the laws of Texas in 1909. We and our subsidiaries print and manufacture a broad line of business forms and other business products. We distribute business products and forms throughout the United States primarily through independent distributors. This distributor channel encompasses independent print distributors, commercial printers, direct mail, fulfillment companies, payroll and accounts payable software companies, and advertising agencies, among others. We also sell products to many of our competitors to satisfy their customers’ needs.

For a discussion regarding the impact of the ongoing COVID-19 pandemic on our business, please see Business Challenges—COVID-19 Pandemic and Results of Operations, below.

19

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2022

Business Overview

Our management believes we are the largest provider of business forms, pressure-seal forms, labels, tags, envelopes, and presentation folders to independent distributors in the United States.

We are in the business of manufacturing, designing, and selling business forms and other printed business products primarily to distributors located in the United States. We operate 55 manufacturing plants throughout the United States in 20 strategically located states as one reportable segment. Approximately 96% of the business products we manufacture are custom and semi-custom products, constructed in a wide variety of sizes, colors, number of parts, and quantities on an individual job basis, depending upon the customers’ specifications.

The products we sell include snap sets, continuous forms, laser cut sheets, tags, labels, envelopes, integrated products, jumbo rolls and pressure sensitive products in short, medium and long runs under the following labels: Ennis®, Royal Business Forms®, Block Graphics®, 360º Custom LabelsSM, ColorWorx®, Enfusion®, Uncompromised Check Solutions®, VersaSeal®, Ad ConceptsSM, FormSource LimitedSM, Star Award Ribbon Company®, Witt Printing®, B&D Litho®, Genforms®, PrintGraphics®, Calibrated Forms®, PrintXcel®, Printegra®, Forms ManufacturersSM, Mutual Graphics®, TRI-C Business FormsSM, Major Business SystemsSM, Independent PrintingSM, Hoosier Data Forms®, Hayes Graphics®, Wright Business GraphicsSM, Wright 360SM, Integrated Print & GraphicsSM, the Flesh CompanySM, Impressions DirectSM and AmeriPrintSM; We also sell the Adams McClure® brand (which provides Point of Purchase advertising); the Admore®, Folder Express®, and Independent Folders® brands (which provide presentation folders and document folders); Ennis Tag & LabelSM (which provides custom printed, high performance labels and custom and stock tags); Allen-Bailey Tag & LabelSM, Atlas Tag & Label®, Kay Toledo Tag®, and Special Service Partners® (SSP) (which provides custom and stock tags and labels); Trade Envelopes®, Block Graphics®, Wisco®, and National Imprint Corporation® (which provide custom and imprinted envelopes) and Northstar® and General Financial Supply® (which provide financial and security documents); InfosealSM and PrintXcel® (which provide custom and stock pressure seal documents). School Photo Marketing is a one-stop shop for over 1,300 school portrait photographers and professional photo labs nationwide, providing them with a complete array of products and services that reach over 15 million families and 30,000 schools, primarily in the K-8 market. We sell predominantly through independent distributors, as well as to many of our competitors. Northstar Computer Forms, Inc., one of our wholly-owned subsidiaries, also sells direct to a small number of customers, generally large banking organizations (where a distributor is not acceptable or available to the end-user). Adams McClure, LP, a wholly-owned subsidiary, also sells direct to a small number of customers, where sales are generally through advertising agencies.

The printing industry generally sells its products either predominantly to end users, a market dominated by a few large manufacturers such as R.R. Donnelley and Sons, Staples, Inc., Standard Register Co. (a subsidiary of Taylor Corporation), and Cenveo, Inc., or, like the Company, through a variety of independent distributors and distributor groups. While it is not possible, because of the lack of adequate public statistical information, to determine the Company’s share of the total business products market, management believes the Company is the largest producer of business forms, pressure-seal forms, labels, tags, envelopes, and presentation folders in the United States distributing primarily through independent distributors.

There are a number of competitors that operate in this segment, ranging in size from single employee-owned operations to multi-plant organizations. We believe our strategic locations and buying power permit us to compete on a favorable basis within the distributor market on competitive factors, such as service, quality, and price.

Distribution of business forms and other business products throughout the United States is primarily done through independent distributors, including business forms distributors, resellers, direct mail, commercial printers, payroll and accounts payable software companies, and advertising agencies.

Raw materials principally consist of a wide variety of weights, widths, colors, sizes, and qualities of paper for business products purchased primarily from one major supplier at favorable prices based on the volume of business.

Business products usage in the printing industry is generally not seasonal. General economic conditions and contraction of the traditional business forms industry are the predominant factors in quarterly volume fluctuations.

Recent Acquisitions

On June 1, 2021, we acquired the assets and business of AmeriPrint in Harvard, Illinois. The acquisition of AmeriPrint, which prior to the acquisition generated approximately $6.5 million in sales for its fiscal year ended December 31, 2020, brings added capabilities and expertise to our expanding product offering including barcoding and variable imaging.

20

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2022

On November 30, 2022, we acquired the net assets and business of SPM in Morganville, New Jersey. The acquisition of SPM brings a new channel with products produced through our existing manufacturing operations.

Our Business Challenges

Our industry is currently experiencing consolidation of traditional supply channels, product obsolescence, paper supplier capacity adjustments, and increased pricing and potential supply allocations due to demand/supply curve imbalance. Technology advances have made electronic distribution of documents, internet hosting, digital printing and print-on-demand valid, cost-effective alternatives to traditional custom-printed documents and customer communications. Improved equipment has become more accessible to our competitors. We face highly competitive conditions throughout our supply chain in a price-competitive print industry. The challenges of our business include the following:

COVID-19 Pandemic – The global spread of the novel strain of COVID-19 has significantly impacted health and economic conditions throughout the United States and the world, including the markets in which we operate. Beginning in March 2020 in response to the sales impact of the COVID-19 pandemic, we made modifications to our cost structure by reducing employee cost, ceasing operations at an under-utilized facility, as well as exiting two facilities with expiring leases and moving production to our other facilities. The Company saw economic improvement during fiscal year ended February 28, 2022 and we continue to see strong demand for our product. Although the U.S. economy has gained in recovery, it continues to be significantly impacted by supply chain disruptions, labor shortages, and shifting demand.

There continues to be significant uncertainties associated with the COVID-19 pandemic. The full extent of the impact of the COVID-19 pandemic on the Company’s operational and financial performance is currently uncertain and will depend on many factors outside the Company’s control discussed under the caption, “Risk Factors”, in Item 1A of our Annual Report on Form 10-K for the fiscal year ended February 28, 2022. For further information, please see “Cautionary Note Regarding Forward-Looking Statements,” above and “Risk Factors” contained within our Annual Report on Form 10-K for the fiscal year ended February 28, 2022.

We will continue to monitor incoming order volume as well as rising raw material and other input costs so that we can proactively adjust our pricing and costs accordingly.

Transformation of our portfolio of products – While traditional business documents are essential in order to conduct business, many are being replaced through the use of cheaper paper grades or imported paper, or devalued with advances in digital technologies, causing steady declines in demand for a portion of our current product line. In addition, the impact of COVID-19 on the speed of this transformation is unknown, but it is expected to accelerate the decline for some of our products. Transforming our product offerings in order to continue to provide innovative, valuable solutions through lower labor and fixed charges to our customers on a proactive basis will require us to make investments in new and existing technology and to develop key strategic business relationships, such as print-on-demand services and product offerings that assist customers in their transition to digital business environments. In addition, we will continue to look for new market opportunities and niches through acquisitions, such as the addition of our envelope offerings, tag offerings, folder offerings, healthcare wristbands, specialty packaging, direct mail, pressure seal products, secure document solutions, innovative in-mold label offerings and long-run integrated products with high color web printing, which provide us with an opportunity for growth and differentiate us from our competition. The ability to make investments in new and existing technology and/or to acquire new market opportunities through acquisitions is dependent on the Company’s liquidity and operational results. While currently the pandemic has not materially impacted our liquidity and it is not currently expected to, a protracted delay or reversal in the economy recovering could have a negative impact on our continued ability to make the aforementioned investments or to consummate acquisitions.

Production capacity and price competition within our industry – Changes in the value of the U.S. dollar can have a significant impact on the pricing and supply of paper. The weakening of the U.S. dollar will usually result in the dissipation of any pricing advantage that foreign imports have over domestic suppliers, which typically results in lower levels of imported papers and an increase in domestic exports. With increased pricing power, domestic paper producers can better control the supply of paper by eliminating capacity or changing the products produced on their large paper machines. The strengthening of the U.S. dollar usually has the opposite effect: more cheap imported paper; less domestic exports; and lower pricing power in the hands of domestic paper producers. Domestic paper suppliers typically seek to balance supply and demand, including by (if possible) taking capacity out of the market, whether by taking production off-line or switching production to alternative paper products. Generally, if mills are running at high capacity, suppliers are able to raise prices.

As the economy has improved, demand has increased for coated and uncoated freesheet papers which has reduced the excess inventory in the market. It is unclear whether this is a temporary situation or if conditions could stretch for a more extended amount of time. Regardless of these factors, many of which are cyclical, we continue to believe paper pricing will remain in a range which will not

21

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2022

unfavorably impact our margins. Additionally, the possibility of paper shortages in the market is not a major concern due to our primary material supplier’s commitment to the Company. Consistent with our historical practice, we intend to continue to focus on effectively managing and controlling our product costs through the use of forecasting, production and costing models, as well as working closely with our domestic suppliers to reduce our procurement costs, in order to minimize effects on our operational results. In addition, we will continue to look for ways to reduce and leverage our fixed costs.
 

Continued consolidation of our customers – Our customers are distributors, many of which are consolidating or are being acquired by competitors. We continue to maintain a majority of the business we have had with our customers historically, but it is possible that these consolidations and acquisitions, which we expect to continue in the future, ultimately will impact our margins and sales.

Critical Accounting Policies and Estimates

In preparing our condensed consolidated financial statements, we are required to make estimates and assumptions that affect the disclosures and reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates and judgments on an ongoing basis, including those related to allowance for doubtful receivables, inventory valuations, property, plant and equipment, intangible assets, pension plan obligations, accrued liabilities and income taxes. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. Our Annual Report on Form 10-K for the year ended February 28, 2022, includes a description of certain critical accounting estimates, including those with respect to the pension plan, goodwill and other intangible assets, revenue recognition, inventories and income taxes, which we believe are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management's judgments and estimates. There have been no material changes to the critical accounting policies, significant judgements and estimates described in our Annual Report on Form 10-K for the year ended February 28, 2022.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that are anticipated to have a material impact on our consolidated financial statements.

Results of Operations

The following discussion provides information which we believe is relevant to understanding our results of operations and financial condition. The discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto, which are incorporated herein by reference. The operating results of the Company for the three and nine months ended November 30, 2022 and the comparative period for 2021 are set forth in the unaudited consolidated financial information included in the tables below.

Consolidated Summary

Unaudited Consolidated Statements of	Three Months Ended November 30,										Nine Months Ended November 30,
Operations - Data (in thousands)	2022					2021					2022					2021
Net sales	$	110,245		100.0	%	$	102,968		100.0	%	$	329,145		100.0	%	$	300,349		100.0	%
Cost of goods sold		76,768		69.6			73,768		71.6			226,445		68.8			213,062		70.9
Gross profit margin		33,477		30.4			29,200		28.4			102,700		31.2			87,287		29.1
Selling, general and administrative		17,292		15.7			17,513		17.0			52,916		16.1			54,523		18.2
(Gain) loss from disposal of assets		15		—			1		—			15		—			(275	)	(0.1	)
Income from operations		16,170		14.7			11,686		11.3			49,769		15.1			33,039		11.0
Other expense		(496	)	(0.5	)		(881	)	(0.8	)		(1,010	)	(0.3	)		(1,143	)	(0.4	)
Earnings before income taxes		15,674		14.2			10,805		10.5			48,759		14.8			31,896		10.6
Provision for income taxes		4,388		4.0			3,242		3.1			13,652		4.1			9,569		3.2
Net earnings	$	11,286		10.2	%	$	7,563		7.4	%	$	35,107		10.7	%	$	22,327		7.4	%

22

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2022

Three months ended November 30, 2022 compared to three months ended November 30, 2021

Net Sales. Our net sales were $110.2 million for the quarter ended November 30, 2022, compared to $103.0 million for the same quarter in the prior year, an increase of $7.2 million, or 7.0%. Our net sales increased on a year-over-year basis due to continued strong customer demand for our product and increased pricing to cover inflationary cost. Our net sales decreased slightly $(1.0) million or -0.9% on a sequential quarter basis, from $111.2 million for the quarter ended August 31, 2022 to $110.2 million for the current quarter due to lower sales volumes.

Cost of Goods Sold and Gross Profit Margin. Our cost of goods sold increased $3.0 million, or 4.1%, from $73.8 million for the three months ended November 30, 2021 to $76.8 million for the three months ended November 30, 2022. Our gross profit was $33.5 million for the quarter ended November 30, 2022 compared to $29.2 million for the same quarter in the prior year. We made pricing adjustments to cover inflationary costs and improved operational efficiencies all of which contributed to improve our gross profit margin to 30.4% in the third quarter of 2022 compared to the prior year’s third quarter of 28.4%.

Selling, general, and administrative expense. For the three months ended November 30, 2022, our selling, general, and administrative ("SG&A") expenses were $17.3 million compared to $17.5 million for the three months ended November 30, 2021, a decrease of $0.2 million, or 1.3%. As a percentage of net sales, SG&A expenses for the current quarter were 15.7% and 17.0% for the three months ended November 30, 2022 and November 30, 2021, respectively. The decrease in SG&A costs were a result of savings from operational efficiencies and the consolidation of our underperforming manufacturing facilities in the prior year.

Gain (loss) from disposal of assets. The $15,000 net loss from disposal of assets during the prior year quarter is primarily attributed to the sale of equipment.

Income from operations. Primarily due to factors described above, our income from operations for the three months ended November 30, 2022 was $16.2 million, or 14.7% of net sales, as compared to $11.7 million, or 11.3% of net sales, for the three months ended November 30, 2021. Income from operations decreased on a sequential quarter basis by $1.1 million from $17.3 million for the quarter ended August 31, 2022.

Other expense. Other expense was $0.5 million for the three months ended November 30, 2022 compared to other expense of $0.9 million for the three months ended November 30, 2021.

Provision for income taxes. Our effective tax rate was 28.0% for the three months ended November 30, 2022 as compared to 30.0% for the three months ended November 30, 2021. The primary reason for the decrease in the effective tax rate is permanent non-deductible expense resulting from final distributions in the prior year from our deferred compensation plan which was terminated in November 2020.

Net earnings. Net earnings, due to the factors above, were $11.3 million for the three months ended November 30, 2022 as compared to $7.6 million for the comparable quarter in the prior year, an increase of $3.7 million. Net earnings per diluted share for the three months ended November 30, 2022 were $0.44, compared to $0.29 for the same quarter in the prior year.

Nine months ended November 30, 2022 compared to nine months ended November 30, 2021

Net Sales. Our net sales were $329.1 million for the nine-month period ended November 30, 2022, compared to $300.3 million for the same period last year, an increase of $28.8 million, or 9.6%. Our net sales increased due to continued strong customer demand for our products and increase in pricing to cover inflationary costs. In addition, AmeriPrint, our acquisition completed on June 1, 2021, positively impacted our net sales by approximately $1.9 million during the current period compared to the same period last year.

Cost of Goods Sold and Gross Profit Margin. Our cost of goods sold increased $13.3 million, or 6.2%, from $213.1 million for the nine months ended November 30, 2021 to $226.4 million for the nine months ended November 30, 2022. Our gross profit was $102.7 million for the nine-month period ended November 30, 2022 compared to $87.3 million for the same period in the prior year. We made pricing adjustments to cover inflationary costs and improved operational efficiencies all of which contributed to improve our gross profit margin to 31.2% from the prior year nine-month period of 29.1%.

Selling, general, and administrative expense. For the nine months ended November 30, 2022, our SG&A expenses were $52.9 million compared to $54.5 million for the nine months ended November 30, 2021, a decrease of $1.6 million, or 2.9%. As a percentage

23

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2022

of net sales, SG&A expenses for the period were 16.1% and 18.2% for the nine months ended November 30, 2022 and November 30, 2021, respectively. The decrease in SG&A costs was a result of savings from operational efficiencies and the consolidation of our underperforming manufacturing facilities in the prior year.

Gain (loss) from disposal of assets. The $15,000 loss from disposal of assets during the nine-month period ended November 30, 2022 was primarily attributed to the sale of equipment. The $0.3 million net gain from disposal of assets during the nine months ended November 30, 2021 is primarily attributed to the sale of a previously held-for-sale facility that had transferred its operations to another facility.

Income from operations. Primarily due to factors described above, our income from operations for the nine months ended November 30, 2022 was $49.8 million, or 15.1% of net sales, as compared to $33.0 million, or 11.0% of net sales, for the nine months ended November 30, 2021.

Other expense. Other expense was $1.0 million for the nine months ended November 30, 2022 compared to expense of $1.1 million for the nine months ended November 30, 2021.

Provision for income taxes. Our effective tax rate was 28.0% for the nine months ended November 30, 2022 as compared to 30.0% for the nine months ended November 30, 2021. The primary reason for the decrease in the effective tax rate is permanent non-deductible expense resulting from final distributions in the prior year from our deferred compensation plan which was terminated in November 2020.

Net earnings. Net earnings, due to the factors above, were $35.1 million for the nine months ended November 30, 2022 as compared to $22.3 million for the comparable period in the prior year, an increase of $12.8 million. Net earnings per diluted share for the nine months ended November 30, 2022 were $1.36, compared to $0.85 for the same period in the prior year.

Liquidity and Capital Resources

We rely on our cash flows generated from operations to meet all cash requirements of our business. The primary cash requirements of our business are payments to vendors in the normal course of business, capital expenditures, compensation obligations and the payment of dividends to our shareholders. We expect to generate sufficient cash flows from operations necessary to cover our operating and capital requirements for the foreseeable future. We believe our strong liquidity position will help us mitigate the ongoing adverse impacts of COVID-19 and the inflationary environment.

	November 30,		February 28,
(Dollars in thousands)	2022		2022
Working capital	$	145,702	$	127,839
Cash	$	87,000	$	85,606

Working Capital. On November 30, 2022, we had $87.0 million in cash. During the period, our cash position increased by $1.4 million and our working capital increased $17.9 million or 14.0%, from $127.8 million at February 28, 2022 to $145.7 million at November 30, 2022. Our current ratio, calculated by dividing our current assets by our current liabilities, increased from 4.4 to 1.0 at February 28, 2022 to 4.7 to 1.0 at November 30, 2022. Our working capital and current ratio were positively impacted primarily by an increase in our cash, inventories and accounts receivable offset by an increase in our income taxes payable.

	Nine months ended November 30,
(Dollars in thousands)	2022			2021
Net cash provided by operating activities	$	33,997		$	34,295
Net cash used in investing activities	$	(12,105	)	$	(7,658	)
Net cash used in financing activities	$	(20,498	)	$	(20,858	)

Cash flows from operating activities. Cash provided by operating activities was $34.0 million in the nine months ended November 30, 2022 compared to $34.3 million in the comparative period ended November 30, 2021. Our net earnings increased $12.8 million for the nine months ended November 30, 2022 compared to the nine months ended November 30, 2021. An increase in accounts receivable used cash of $5.9 million in the current period compared to an increase in accounts receivable using cash of $0.6 million in the prior year. An increase in inventories used cash of $10.9 million in the nine months ended November 30, 2022 compared to $6.2

24

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2022

million in the nine months ended November 30, 2021. An increase in accounts payable provided cash of $1.5 million in the nine months ended November 30, 2022 compared to an increase in accounts payable providing cash of $2.1 million in the nine months ended November 30, 2021. The increase in accounts receivable in the current period was primarily due to higher sales volumes and increases in selling prices as well as timing of payments from customers. Our days sales outstanding, which measures how quickly receivables are collected, increased slightly to 38 days from 36 days (February 28, 2022). There are multiple factors that have contributed to the increased inventory balances. First, raw material prices are higher. Second, some plants have ordered additional paper supplies to accommodate large orders amidst less predictable supply chain conditions. Our days’ sales of inventory increased to 53 days from February 28, 2022 (46 days). We continue to closely monitor and manage our outstanding trade receivables and inventories. The Company continues to monitor incoming orders and is adjusting its raw material purchases accordingly.

Cash flows from investing activities. Cash used in investing activities was $12.1 million in the nine months ended November 30, 2022 compared to $7.7 million in the nine months ended November 30, 2021. Capital expenditures primarily of equipment was $3.3 million and $4.1 million for the nine months ended November 30, 2022 and November 30, 2021, respectively. In the nine months ended November 30, 2022, $8.8 million was used to acquire businesses as compared to $4.3 million used to acquire businesses in the nine-month period ended November 30, 2021.

Cash flows from financing activities. We used $0.4 million less cash in financing activities during the nine months ended November 30, 2022 compared to the same period in the prior year. The decrease in cash used during the nine months ended November 30, 2022 compared to the nine months ended November 30, 2021 resulted from $0.8 million less of common stock repurchased under our stock repurchase program in the current period compared to the nine months ended November 30, 2021 and the payment of $0.5 million more in dividends in the current period.

Credit Facility – We did not renew our Credit Agreement, which expired November 11, 2021. We have had no outstanding long-term debt under the revolving credit line since paid in full in August 2019. As of November 30, 2022, we had $0.5 million outstanding under a standby letters of credit arrangement secured by a cash collateral bank account. It is anticipated that our cash and funds from operating cash flows will be sufficient to fund anticipated future expenses.

Pension Plan – We are required to make contributions to our Pension Plan. These contributions are required under the minimum funding requirements of ERISA. Due to the enactment of HATFA in August 2014, which effectively raises the discount rates mandated for determining the value of a plan’s benefit liability and annual cost of accruals, our minimum required contribution to the Pension Plan is zero for the Pension Plan year ending February 28, 2023. Assuming a stable funding status, we would expect that our future contributions to be between $1.0 million and $3.0 million per year. However, changes in actual investment returns or in discount rates could change this amount significantly. There was a $2.0 million contribution made in September 2022 to avoid a Pension Benefit Guaranty Corporation variable premium. As our Pension Plan assets are invested in marketable securities, fluctuations in market values could potentially impact our funding status, associated liabilities recorded and future required minimum contributions. At November 30, 2022, we had an unfunded pension liability recorded on our balance sheet of $3.7 million.

Inventories – We believe our inventory levels are sufficient to satisfy our customer demands and we anticipate having adequate sources of raw materials to meet future business requirements. We have long-term contracts in effect with paper suppliers that govern prices, but do not require minimum purchase commitments. Certain of our rebate programs do, however, require minimum purchase volumes.

Capital Expenditures – We continue to make capital expenditures for operational maintenance purposes, as may be required. Additionally, we will carefully review and make new capital expenditures for equipment to the extent such expenditures make economic sense by improving our operations and not jeopardizing our strong liquidity position. We expect our capital requirements for our current fiscal year, exclusive of capital required for possible acquisitions, will be within our historical levels of between $3.0 million and $5.0 million. For the nine months ended November 30, 2022, we have spent approximately $3.3 million on capital expenditures. We expect to fund these expenditures through existing cash flows.

Contractual Obligations – There have been no significant changes in our contractual obligations since February 28, 2022 that have, or are reasonably likely to have, a material impact on our results of operations or financial condition.

25

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2022

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Interest Rates

From time to time, we are exposed to interest rate risk on short-term and long-term financial instruments carrying variable interest rates. We may from time to time utilize interest rate swaps to manage overall borrowing costs and reduce exposure to adverse fluctuations in interest rates. We do not use derivative instruments for trading purposes. While we had no outstanding debt at November 30, 2022, we will be exposed to interest rate risk if we borrow in the future.

This market risk discussion contains forward-looking statements. Actual results may differ materially from this discussion based upon general market conditions and changes in domestic and global financial markets.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosures. Our controls and procedures are tested and evaluated at regular intervals to confirm that they are adequate and followed by our personnel to prevent misstatement of the Company’s financial statements. Due to the inherent limitations of control systems, not all misstatements may be detected. Those inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls could be circumvented by the individual acts of some persons or by collusion of two or more people. Our controls and procedures can only provide reasonable, not absolute, assurance that the above objectives have been met. Pursuant to Exchange Act Rules 13a-15 and 15d-15, a review and evaluation were carried out under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our “disclosure controls and procedures” as of November 30, 2022. Based upon that review and evaluation, the company concluded that there were deficiencies in certain aspects of our information technology controls that permitted a threat actor to gain access to the Company’s network on November 30, 2022 and subsequently launch a ransomware attack that resulted in the encryption of some of the Company’s servers and desktop computers. While the encryption attack did not result in any impairment of the Company’s financial data in its ERP system, the deficiencies in our network access IT controls that made our network vulnerable to the ransomware attack constituted a material weakness. Accordingly, we concluded that our disclosure controls and procedures were ineffective as of November 30, 2022 due to the deficiencies in our IT controls as discussed below.

The Company experienced a cyber-attack between November 30, 2022 and December 2, 2022. Due to a limited gap in the protection provided by our network security software, a threat actor was able to gain access to a remote server at one of our plants during the evening hours of November 30, 2022, the last day of our third quarter of our fiscal year. By gaining access to that remote server, the threat actor was able to glean corporate administrator credentials that had been recorded on that remote server, which gave the threat actor the ability to launch a ransomware attack on servers at the corporate headquarters that was carried out on December 2, 2022. That ransomware attack was detected while in progress and immediate action was taken to isolate our network and eradicate the ransomware from our servers so that we could begin the process of restoring the affected devices from backups. Notably, the databases used for our financial reporting and disclosures were not affected by the cyber-attack and we validated that our third quarter financial data recorded before the attack was the same as the financial data following the attack. Nevertheless, the aggregate deficiencies in our network access IT controls that permitted the cyber-attack constitute a material weakness in that they created a possible opportunity for the threat actor to impair our systems and accounting processes to the extent that there could be a reasonable possibility that a material misstatement of the company’s annual or interim financial statements would not be prevented or detected in a timely manner. However, in this instance, based on our subsequent investigation we believe that the material weakness did not result in any identified misstatements to the financial statements and there are no changes in previously released financial results.

Our management including our Chief Executive Officer and Chief Financial Officer, has concluded that, notwithstanding the material weakness arising out of the aggregate deficiencies in some of our network access IT controls that were evident as of November 30, 2022, the consolidated financial statements in this Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the period presented in conformity with U.S. GAAP.

The Company has already taken corrective action to address the network access IT control deficiencies that permitted the cyber-attack. The Company has also retained independent experts to assist in the investigation of the cyber-attack. As the Company continues

26

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2022

its investigation with the assistance of its retained experts, it may identify further deficiencies in its IT controls which will then be addressed in the Company’s continuing remediation efforts.

There have been no other changes in our internal control over financial reporting (as defined in Rule 13a–15(f) or Rule 15d–15(f) of the Exchange Act) that occurred during the nine months ended November 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of their property is subject.

Item 1A. Risk Factors

There have been no material changes in our Risk Factors as previously discussed in our Annual Report on Form 10-K for the year ended February 28, 2022.

Increasing global cybersecurity attacks and regulatory focus on privacy and security issues could impact our business, expose us to increased liability, subject us to lawsuits, investigations and other liabilities and restrictions on our operations that could significantly and adversely affect our business.

Along with our own data and information in the normal course of our business, we and our customers and partners collect and retain significant volumes of certain types of data, some of which are subject to specific laws and regulations. Complying with varying jurisdictional requirements is becoming increasingly complex and could increase the costs and difficulty of compliance, and violations of applicable data protection laws. Many of our clients provide us with information they consider confidential or sensitive, and many of our client’s industries have established standards for safeguarding the confidentiality, integrity and availability of information relating to their businesses and customers. Data stored in our systems or available through web portals is susceptible to cybercrime or intentional disruption, which have increased globally across all industries in terms of sophistication and frequency. Disclosure of data maintained on our network, a security breach of our systems or other similar events may damage our reputation, subject us to regulatory enforcement action, third party litigation and cause significant reputational or financial harm for our clients and partners. Any of these outcomes may adversely affect our results of operations, financial condition and cash flows.

The Company was targeted with an encryption ransomware attack on November 30, 2022. The attack was discovered while it was in process and immediate action was taken to isolate our network to limit the scope of any damage. The attack resulted in brief disruption to the operation of our systems as we took our servers offline to eradicate the ransomware and restore our data and applications from secure backups. The Company did not communicate with the ransomware threat actor and never considered paying any ransom demand. Instead, the Company eliminated the ransomware and immediately proceeded to restore its critical files and functions. The Company incurred no material expense in connection with the ransomware attack. Based on the Company’s assessment to date and on the information currently known, the incident has not had a significant financial impact and the Company does not believe the incident will have a material impact on its business or future operating results.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

At its July 14, 2022 meeting, the Ennis, Inc. Board of Directors authorized an additional $20 million in funding for the Company’s share repurchase program that was first implemented in 2008. With this latest funding authorization, the cumulative funds authorized for share repurchases totals $60 million. Under the repurchase program, purchases may be made from time to time in the open market or through privately negotiated transactions depending on market conditions, share price, trading volume and other factors. Such purchases, if any, will be made in accordance with applicable insider trading rules and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice.

27

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2022

During the nine months ended November 30, 2022, the Company repurchased 64,082 shares of common stock under the program at an average price of $17.46. As of November 30, 2022, $23.9 million remained available to repurchase shares of the Company’s common stock under the program.

Items 3, 4 and 5 are not applicable and have been omitted

Item 6. Exhibits

The following exhibits are filed as part of this report.

Exhibit Number	Description
Exhibit 3.1(a)	Restated Articles of Incorporation, as amended through June 23, 1983 with attached amendments dated June 20, 1985, July 31, 1985, June 16, 1988 and November 4, 1998, incorporated herein by reference to Exhibit 3.1(a) to the Registrant’s Form 10-Q filed on October 6, 2017 (File No. 001-05807).
Exhibit 3.1(b)	Amendment to Articles of Incorporation, dated June 17, 2004, incorporated herein by reference to Exhibit 3.1(b) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended February 28, 2007 filed on May 9, 2007 (File No. 001-05807).
Exhibit 3.2	Fourth Amended and Restated Bylaws of Ennis, Inc., dated July 10, 2017, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on July 10, 2017 (File No. 001-05807).
Exhibit 31.1	Certification Pursuant to Rule 13a-14(a) of Chief Executive Officer.*
Exhibit 31.2	Certification Pursuant to Rule 13a-14(a) of Chief Financial Officer.*
Exhibit 32.1	Section 1350 Certification of Chief Executive Officer.**
Exhibit 32.2	Section 1350 Certification of Chief Financial Officer.**
Exhibit 101	The following information from Ennis, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2022, filed on January 10, 2023, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail.*
Exhibit 104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith

** Furnished herewith

28

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2022

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ENNIS, INC.
Date: January 10, 2023	/s/ Keith S. Walters
	Keith S. Walters
	Chairman, Chief Executive Officer and President
Date: January 10, 2023	/s/ Vera Burnett
	Vera Burnett
	Chief Financial Officer, Treasurer and
	Principal Financial and Accounting Officer

29

EX-31.1

Exhibit 31.1

RULE 13a-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Keith S. Walters, Chief Executive Officer of Ennis, Inc., certify that:

1.I have reviewed this quarterly report on Form 10-Q of Ennis, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Keith S. Walters

Keith S. Walters

Chief Executive Officer

January 10, 2023

EX-31.2

Exhibit 31.2

RULE 13a-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Vera Burnett, Chief Financial Officer of Ennis, Inc., certify that:

1.I have reviewed this quarterly report on Form 10-Q of Ennis, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Vera Burnett

Vera Burnett

Chief Financial Officer

January 10, 2023

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Keith S. Walters, Chairman of the Board and Chief Executive Officer of Ennis, Inc. (the “Company”), certify, that pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code:

(1)The Quarterly Report on Form 10-Q of the Company for the period ended November 30, 2022, as filed with the Securities Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/ Keith S. Walters

Keith S. Walters

Chairman of the Board and

Chief Executive Officer

Date: January 10, 2023

The foregoing Certification is being furnished solely pursuant to 18 U.S.C. Section 1350; it is not being filed for purposes of Section 18 of the Securities Exchange Act, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation languages in such filing.

EX-32.2

EXHIBIT 32.2

SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Vera Burnett, Chief Financial Officer of Ennis, Inc. (the “Company”), certify, that pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code:

(1)The Quarterly Report on Form 10-Q of the Company for the period ended November 30, 2022, as filed with the Securities Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/ Vera Burnett

Vera Burnett

Chief Financial Officer

Date: January 10, 2023

The foregoing Certification is being furnished solely pursuant to 18 U.S.C. Section 1350; it is not being filed for purposes of Section 18 of the Securities Exchange Act, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation languages in such filing.

XML

Document and Entity Information - shares	9 Months Ended
	Nov. 30, 2022	Dec. 30, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Nov. 30, 2022
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Trading Symbol	EBF
Entity Registrant Name	ENNIS, INC.
Entity Central Index Key	0000033002
Current Fiscal Year End Date	--02-28
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		25,836,392
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity File Number	1-5807
Entity Incorporation, State or Country Code	TX
Entity Tax Identification Number	75-0256410
Entity Address, Address Line One	2441 Presidential Pkwy
Entity Address, City or Town	Midlothian
Entity Address, State or Province	TX
Entity Address, Country	US
Entity Address, Postal Zip Code	76065
City Area Code	972
Local Phone Number	775-9801
Document Quarterly Report	true
Document Transition Report	false
Title of 12(b) Security	Common Stock, par value $2.50 per share
Security Exchange Name	NYSE

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Nov. 30, 2022	Feb. 28, 2022
Current assets
Cash	$ 87,000	$ 85,606
Accounts receivable, net of allowance for doubtful receivables of $1,692 at November 30, 2022 and $1,200 at February 28, 2022	45,738	39,022
Inventories, net	49,922	38,538
Prepaid expenses	2,434	1,863
Total current assets	185,094	165,029
Property, plant and equipment
Plant, machinery and equipment	153,504	151,126
Land and buildings	59,987	59,642
Computer equipment and software	18,430	18,368
Other	4,321	4,275
Total property, plant and equipment	236,242	233,411
Less accumulated depreciation	186,802	179,778
Net property, plant and equipment	49,440	53,633
Operating lease right-of-use assets, net	14,214	15,544
Goodwill	93,438	88,677
Intangible assets, net	44,078	45,569
Other assets	386	392
Total assets	386,650	368,844
Current liabilities
Accounts payable	15,361	16,678
Accrued expenses	19,117	15,422
Current portion of operating lease liabilities	4,914	5,090
Total current liabilities	39,392	37,190
Liability for pension benefits	3,729	5,729
Deferred income taxes	11,905	11,405
Operating lease liabilities, net of current portion	9,215	10,241
Other liabilities	987	464
Total liabilities	65,228	65,029
Shareholders’ equity
Common stock $2.50 par value, authorized 40,000,000 shares; issued 30,053,443 shares at November 30, 2022 and February 28, 2022	75,134	75,134
Additional paid-in capital	124,593	123,990
Retained earnings	213,725	197,998
Accumulated other comprehensive income loss:
Minimum pension liability, net of taxes	(17,086)	(18,587)
Treasury stock	(74,944)	(74,720)
Total shareholders’ equity	321,422	303,815
Total liabilities and shareholders' equity	$ 386,650	$ 368,844

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Nov. 30, 2022	Feb. 28, 2022
Statement of Financial Position [Abstract]
Allowance for doubtful receivables	$ 1,692	$ 1,200
Common stock, par value	$ 2.50	$ 2.50
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	30,053,443	30,053,443

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Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Income Statement [Abstract]
Net sales	$ 110,245	$ 102,968	$ 329,145	$ 300,349
Type of revenue [extensible list]	Net sales	Net sales	Net sales	Net sales
Cost of goods sold	$ 76,768	$ 73,768	$ 226,445	$ 213,062
Type of cost, good or service [extensible list]	Cost of goods sold	Cost of goods sold	Cost of goods sold	Cost of goods sold
Gross profit	$ 33,477	$ 29,200	$ 102,700	$ 87,287
Selling, general and administrative	17,292	17,513	52,916	54,523
(Gain) loss from disposal of assets	15	1	15	(275)
Income from operations	16,170	11,686	49,769	33,039
Other expense
Interest expense	0	(3)	0	(7)
Other, net	(496)	(878)	(1,010)	(1,136)
Total other expense	(496)	(881)	(1,010)	(1,143)
Earnings before income taxes	15,674	10,805	48,759	31,896
Income tax expense	4,388	3,242	13,652	9,569
Net earnings	$ 11,286	$ 7,563	$ 35,107	$ 22,327
Weighted average common shares outstanding
Basic	25,809,581	26,020,210	25,812,216	26,053,898
Diluted	25,888,815	26,020,210	25,892,873	26,151,480
Earnings per share
Basic	$ 0.44	$ 0.29	$ 1.36	$ 0.86
Diluted	0.44	0.29	1.36	0.85
Cash dividends per share	$ 0.250	$ 0.250	$ 0.750	$ 0.725

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Statement of Comprehensive Income [Abstract]
Net earnings	$ 11,286	$ 7,563	$ 35,107	$ 22,327
Adjustment to pension, net of deferred tax	717	885	1,501	1,482
Comprehensive income	$ 12,003	$ 8,448	$ 36,608	$ 23,809

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Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]
Beginning balance at Feb. 28, 2021	$ 300,549	$ 75,134	$ 123,017	$ 194,436	$ (20,282)	$ (71,756)
Beginning balance common stock, shares at Feb. 28, 2021		30,053,443
Beginning balance, treasury stock, shares at Feb. 28, 2021						(4,103,630)
Net earnings	22,327			22,327
Adjustment to pension, net of deferred tax	1,482				1,482
Dividends paid	(18,916)			(18,916)
Stock based compensation	2,444		2,444
Exercise of stock options and restricted stock			(1,717)			$ 1,717
Exercise of stock options and restricted stock, shares						98,188
Common stock repurchases	(1,942)					$ (1,942)
Common stock repurchases, shares						(102,757)
Ending balance at Nov. 30, 2021	305,944	$ 75,134	123,744	197,847	(18,800)	$ (71,981)
Ending balance common stock, shares at Nov. 30, 2021		30,053,443
Ending balance treasury stock, shares at Nov. 30, 2021						(4,108,199)
Beginning balance at Aug. 31, 2021	305,321	$ 75,134	123,116	196,809	(19,685)	$ (70,053)
Beginning balance common stock, shares at Aug. 31, 2021		30,053,443
Beginning balance, treasury stock, shares at Aug. 31, 2021						(4,006,268)
Net earnings	7,563			7,563
Adjustment to pension, net of deferred tax	885				885
Dividends paid	(6,525)			(6,525)
Stock based compensation	642		642
Exercise of stock options and restricted stock			(14)			$ 14
Exercise of stock options and restricted stock, shares						826
Common stock repurchases	(1,942)					$ (1,942)
Common stock repurchases, shares						(102,757)
Ending balance at Nov. 30, 2021	305,944	$ 75,134	123,744	197,847	(18,800)	$ (71,981)
Ending balance common stock, shares at Nov. 30, 2021		30,053,443
Ending balance treasury stock, shares at Nov. 30, 2021						(4,108,199)
Beginning balance at Feb. 28, 2022	$ 303,815	$ 75,134	123,990	197,998	(18,587)	$ (74,720)
Beginning balance common stock, shares at Feb. 28, 2022	30,053,443	30,053,443
Beginning balance, treasury stock, shares at Feb. 28, 2022						(4,253,824)
Net earnings	$ 35,107			35,107
Adjustment to pension, net of deferred tax	1,501				1,501
Dividends paid	(19,380)			(19,380)
Stock based compensation	1,497		1,497
Exercise of stock options and restricted stock	0		(894)			$ 894
Exercise of stock options and restricted stock, shares						51,071
Common stock repurchases	$ (1,118)					$ (1,118)
Common stock repurchases, shares	(64,082)					(64,082)
Ending balance at Nov. 30, 2022	$ 321,422	$ 75,134	124,593	213,725	(17,086)	$ (74,944)
Ending balance common stock, shares at Nov. 30, 2022	30,053,443	30,053,443
Ending balance treasury stock, shares at Nov. 30, 2022						(4,266,835)
Beginning balance at Aug. 31, 2022	$ 315,316	$ 75,134	124,031	208,898	(17,803)	$ (74,944)
Beginning balance common stock, shares at Aug. 31, 2022		30,053,443
Beginning balance, treasury stock, shares at Aug. 31, 2022						(4,266,835)
Net earnings	11,286			11,286
Adjustment to pension, net of deferred tax	717				717
Dividends paid	(6,459)			(6,459)
Stock based compensation	$ 562		562
Common stock repurchases, shares	0
Ending balance at Nov. 30, 2022	$ 321,422	$ 75,134	$ 124,593	$ 213,725	$ (17,086)	$ (74,944)
Ending balance common stock, shares at Nov. 30, 2022	30,053,443	30,053,443
Ending balance treasury stock, shares at Nov. 30, 2022						(4,266,835)

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Condensed Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Statement of Stockholders' Equity [Abstract]
Deferred tax adjusted to pension	$ 179	$ 295	$ 375	$ 494
Dividends paid per share	$ 0.250	$ 0.250	$ 0.750	$ 0.725

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Cash flows from operating activities:
Net earnings	$ 35,107	$ 22,327
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	7,766	7,752
Amortization of intangible assets	5,280	6,137
(Gain) loss from disposal of assets	15	(275)
Bad debt expense, net of recoveries	585	408
Stock based compensation	1,497	2,444
Net pension expense	1	945
Changes in operating assets and liabilities:
Accounts receivable	(5,898)	(569)
Prepaid expenses and income taxes	(487)	(357)
Inventories	(10,921)	(6,227)
Other assets	(570)	(15)
Accounts payable and accrued expenses	1,471	2,090
Other liabilities	151	(365)
Net cash provided by operating activities	33,997	34,295
Cash flows from investing activities:
Capital expenditures	(3,338)	(4,143)
Purchase of businesses, net of cash acquired	(8,767)	(4,340)
Proceeds from disposal of plant and property	0	825
Net cash used in investing activities	(12,105)	(7,658)
Cash flows from financing activities:
Dividends paid	(19,380)	(18,916)
Common stock repurchases	(1,118)	(1,942)
Net cash used in financing activities	(20,498)	(20,858)
Net change in cash	1,394	5,779
Cash at beginning of period	85,606	75,190
Cash at end of period	$ 87,000	$ 80,969

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Significant Accounting Policies and General Matters

9 Months Ended

Nov. 30, 2022

Accounting Policies [Abstract]

Significant Accounting Policies and General Matters

1. Significant Accounting Policies and General Matters

Basis of Presentation

These unaudited condensed consolidated financial statements of Ennis, Inc. and its subsidiaries (collectively referred to as the “Company,” “Registrant,” “Ennis,” or “we,” “us,” or “our”) for the period ended November 30, 2022 have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP') and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2022, from which the accompanying consolidated balance sheet at February 28, 2022 was derived. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial information have been included and are of a normal recurring nature. The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the disclosure and reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates these estimates and judgments on an ongoing basis, including those related to bad debts, inventory valuations, property, plant and equipment, intangible assets, pension plan, accrued liabilities, and income taxes. The Company bases estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of operations for any interim period are not necessarily indicative of the results of operations for a full year.

Recent Accounting Pronouncements

Recently Issued Accounting Updates

There are no recent accounting pronouncements that are anticipated to have a material impact on the Company's condensed consolidated financial statements.

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Revenue

9 Months Ended

Nov. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue

2. Revenue

Nature of Revenues

Revenues from contracts with customers for the sale of commercial printing products in the continental United States is primarily recognized at a point in time in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Revenue from the sale of commercial printing products, including shipping and handling fees billed to customers, is recognized upon the transfer of control to the customer, which is generally upon shipment to the customer when the terms of the sale are freight on board ("FOB") shipping point, or, to a lesser extent, upon delivery to the customer if the terms of the sale are FOB destination.

In a small number of cases and upon customer request, the Company prints and stores commercial printing product for customer specified future delivery, generally within the same year as the product is manufactured. In this case, revenue is recognized upon the transfer of control when manufacturing is complete and title and risk of ownership is passed to the customer. Storage revenue for certain customers may be recognized over time rather than at a point in time. As of the date of this report, the amount of storage revenue is not significant to the Company’s condensed consolidated financial statements. The output method for measure of progress is determined to be appropriate. The Company recognizes storage revenue in the amount for which it has the right to invoice for revenue that is recognized over time and for which it demonstrates that the invoiced amount corresponds directly with the value to the customer for the performance completed to date.

The Company does not disaggregate revenue and operates in one sales category consisting of commercial printed product revenue, which is reported as net sales on the condensed consolidated statements of operations. The Company does not have material contract assets and contract liabilities as of November 30, 2022.

Significant Judgments

Generally, the Company’s contracts with customers are comprised of a written quote and customer purchase order or statement of work, and governed by the Company’s trade terms and conditions. In certain instances, it may be further supplemented by separate pricing agreements and customer incentive arrangements, which typically only affect the transaction price. Contracts do not contain a

significant financing component as payment terms on invoiced amounts are typically between 30 to 60 days, based on the Company’s credit assessment of individual customers, as well as industry expectations. Product returns are not significant.

From time to time, the Company may offer incentives to its customers considered to be variable consideration including volume-based rebates or early payment discounts. Customer incentives considered to be variable consideration are recorded as a reduction to revenue as part of the transaction price at contract inception when there is a basis to reasonably estimate the amount of the incentive and only to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Customer incentives are allocated entirely to the single performance obligation of transferring printed product to the customer.

For customers with terms of FOB shipping point, the Company accounts for shipping and handling activities performed after the control of the printed product has been transferred to the customer as a fulfillment cost. The Company accrues for the costs of shipping and handling activities if revenue is recognized before contractually agreed shipping and handling activities occur.

The Company’s contracts with customers are generally short-term in nature. Accordingly, the Company does not disclose the value of unsatisfied performance obligations nor the timing of revenue recognition.

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Accounts Receivable and Allowance for Doubtful Receivables

9 Months Ended

Nov. 30, 2022

Receivables [Abstract]

Accounts Receivable and Allowance for Doubtful Receivables

3. Accounts Receivable and Allowance for Doubtful Receivables

Accounts receivable are reduced by an allowance for an estimate of amounts that are uncollectible. Substantially all of the Company’s receivables are due from customers in the United States. The Company extends credit to its customers based upon its evaluation of the following factors: (i) the customer’s financial condition, (ii) the amount of credit the customer requests, and (iii) the customer’s actual payment history (which includes disputed invoice resolution). The Company does not typically require its customers to post a deposit or supply collateral. The Company’s allowance for doubtful receivables is based on an analysis that estimates the amount of its total customer receivable balance that is not collectible. This analysis includes the pooling of receivables based on risk assessment and then assessing a default probability to these pooled balances, which can be influenced by several factors including (i) current market conditions, (ii) historical experience, (iii) reasonable forecast, and (iv) review of customer receivable aging and payment trends.

The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance in the period the payment is received.

The following table presents the activity in the Company’s allowance for doubtful receivables (in thousands):

	Three months ended					Nine months ended
	November 30,					November 30,
	2022			2021		2022			2021
Balance at beginning of period	$	1,523		$	1,016	$	1,200		$	961
Bad debt expense, net of recoveries		192			249		585			408
Accounts written off		(23	)		-		(93	)		(104	)
Balance at end of period	$	1,692		$	1,265	$	1,692		$	1,265

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Inventories

9 Months Ended

Nov. 30, 2022

Inventory Disclosure [Abstract]

Inventories

4. Inventories

With the exception of approximately 12.3% and 14.0% of its inventories valued at the lower of last-in first-out ("LIFO") for the periods ended November 30, 2022 and February 28, 2022, respectively, the Company values its inventories at the lower of first-in, first-out ("FIFO") cost or net realizable value. The Company regularly reviews inventories on hand, using specific aging categories, and writes down the carrying value of its inventories for excess and potentially obsolete inventories based on historical usage and estimated future usage. In assessing the ultimate realization of its inventories, the Company is required to make judgments as to future demand requirements. As actual future demand or market conditions may vary from those projected by the Company, adjustments to inventories may be required. Reserves for excess and obsolete inventory at November 30, 2022 and fiscal year ended February 28, 2022 were $1.6 million and $1.5 million, respectively.

The following table summarizes the components of inventories at the different stages of production as of the dates indicated (in thousands):

	November 30,		February 28,
	2022		2022
Raw material	$	31,982	$	25,276
Work-in-process		7,576		5,547
Finished goods		10,364		7,715
	$	49,922	$	38,538

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Acquisitions

9 Months Ended

Nov. 30, 2022

Business Combinations [Abstract]

Acquisitions

5. Acquisitions

The Company applies the acquisition method of accounting for business combinations. Under the acquisition method, the acquiring entity in a business combination recognizes 100% of the assets acquired and liabilities assumed at their acquisition date fair values. Management utilizes valuation techniques appropriate for the asset or liability being measured in determining these fair values. Any excess of the purchase price over amounts allocated to assets acquired, including identifiable intangible assets and liabilities assumed, is recorded as goodwill. Where amounts allocated to assets acquired and liabilities assumed is greater than the purchase price, a bargain purchase gain is recognized. Acquisition-related costs are expensed as incurred.

Acquisition of School Photo Marketing

On November 30, 2022, the Company acquired the assets and business from School Photo Marketing ("SPM"), which is based in Morganville, New Jersey, for $8.8 million (with additional potential earn-out consideration of up to $1,000,000 over a four-year period upon the attainment of specified financial benchmarks) plus the assumption of trade payables, subject to certain adjustments. The Company performed a preliminary allocation of the total estimated consideration and recorded the underlying assets acquired (including certain identified intangible assets) and liabilities assumed based on their estimated fair values using the information available as of the acquisition date. This allocation is preliminary and subject to change, which may be material. All goodwill of $4.8 million recognized as a part of this acquisition is deductible for tax purposes. The Company also recorded intangible assets with definite lives of approximately $3.2 million in connection with the transaction, which are also deductible for tax purposes.

The following table summarizes the Company's preliminary purchase price allocation for SPM as of the acquisition date (in thousands):

Accounts receivable	$1,403
Inventories	463
Other assets	84
Right-of-use asset	487
Property, plant and equipment	250
Goodwill and intangibles	7,974
Operating lease liability	(487)
Accounts payable and accrued liabilities	(1,407)
	$8,767

Acquisition of AmeriPrint Corporation

On June 1, 2021, the Company acquired the assets and business from AmeriPrint Corporation ("AmeriPrint"), which is based in Harvard, Illinois, for $3.9 million in cash plus the assumption of trade payables, subject to certain adjustments. Goodwill of $0.5 million recognized as a part of the acquisition is deductible for tax purposes. The Company also recorded intangible assets with definite lives of approximately $1.1 million in connection with the transaction. The acquisition of AmeriPrint, which prior to the acquisition generated approximately $6.5 million in sales for its fiscal year ended December 31, 2020, brings added capabilities and expertise to our expanding product offering including barcoding and variable imaging.

The following is a summary of the purchase price allocation for AmeriPrint (in thousands):

Accounts receivable	$	417
Inventories		732
Property, plant and equipment		2,000
Goodwill and intangibles		1,607
Accounts payable and accrued liabilities		(834	)
	$	3,922

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Leases

9 Months Ended

Nov. 30, 2022

Leases [Abstract]

Leases

6. Leases

The Company leases certain of its facilities and equipment under operating leases, which are recorded as right-of-use assets and lease liabilities. The Company’s leases generally have terms of 1 – 5 years, with certain leases including renewal options to extend the leases for additional periods at the Company’s discretion. At lease inception, all renewal options reasonably certain to be exercised are considered when determining the lease term. The Company currently does not have leases that include options to purchase or provisions that would automatically transfer ownership of the leased property to the Company.

Operating lease expense is recognized on a straight-line basis over the lease term, and variable lease payments are expensed as incurred. The Company had no variable lease costs for the nine months ended November 30, 2022 and November 30, 2021.

The Company determines whether a contract is or contains a lease at the inception of the contract. A contract will be deemed to be or contain a lease if the contract conveys the right to control and directs the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from the use of the property, plant, and equipment.

Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates based on the BBB Corporate Bond Rate at lease commencement date, as rates are not implicitly stated in most leases.

Components of lease expense for the three and nine months ended November 30, 2022 and November 30, 2021 were as follows (in thousands):

	Three months ended				Nine months ended
	November 30, 2022		November 30, 2021		November 30, 2022		November 30, 2021
Operating lease cost	$	1,517	$	1,454	$	4,545	$	4,688
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,522	$	1,459	$	4,550	$	4,675
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	2,042	$	—	$	2,848	$	3,441

Weighted Average Remaining Lease Terms
Operating leases	3 Years
Weighted Average Discount Rate
Operating leases		3.84	%

Future minimum lease commitments under non-cancelable operating leases for each of the fiscal years ending are as follows (in thousands):

	Operating
	Lease
	Commitments
2023 (remaining 3 months)	$	1,025
2024		5,248
2025		4,514
2026		2,893
2027		1,168
2028		153
Thereafter		-
Total future minimum lease payments	$	15,001
Less imputed interest		872
Present value of lease liabilities	$	14,129

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Goodwill and Intangible Assets

9 Months Ended

Nov. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

7. Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets of acquired businesses and is not amortized. Goodwill and other intangible assets are tested for impairment at a reporting unit level. The annual impairment test of goodwill and intangible assets is performed as of December 1 of each fiscal year.

The Company uses qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the fair value of a reporting unit exceeds its carrying amount, including goodwill. Some of the qualitative factors used in applying this test include consideration of macroeconomic conditions, industry and market conditions, cost factors affecting the business, overall financial performance of the business, and performance of the share price of the Company.

If qualitative factors are not deemed sufficient to conclude that the fair value of the reporting unit more likely than not exceeds its carrying value, then a one-step approach is applied in making an evaluation. The evaluation utilizes multiple valuation methodologies, including a market approach (market price multiples of comparable companies) and an income approach (discounted cash flow analysis). The computations require management to make significant estimates and assumptions, including, among other things, selection of comparable publicly traded companies, the discount rate applied to future earnings reflecting a weighted average cost of capital, and earnings growth assumptions. A discounted cash flow analysis requires management to make various assumptions about future sales, operating margins, capital expenditures, working capital, and growth rates. If the evaluation results in the fair value of the goodwill for the reporting unit being lower than the carrying value, an impairment charge is recorded.

Definite-lived intangible assets are amortized over their estimated useful lives and tested for impairment if events or changes in circumstances indicate that the asset may be impaired.

The carrying amount and accumulated amortization of the Company’s intangible assets at each balance sheet date are as follows (in thousands):

	Weighted
	Average
	Remaining		Gross
	Life		Carrying		Accumulated
As of November 30, 2022	(in years)		Amount		Amortization		Net
Amortized intangible assets
Trademarks and trade names		10.4	$	29,328	$	11,786	$	17,542
Customer lists		5.3		79,126		52,666		26,460
Non-compete		2.8		235		159		76
Total		7.3	$	108,689	$	64,611	$	44,078
As of February 28, 2022
Amortized intangible assets
Trademarks and trade names		11.0	$	28,207	$	10,301	$	17,906
Customer lists		6.1		76,458		48,903		27,555
Non-compete		3.3		877		769		108
Total		8.0	$	105,542	$	59,973	$	45,569

Aggregate amortization expense was $5.3 million and $6.1 million for the nine months ended November 30, 2022 and November 30, 2021, respectively.

The Company’s estimated amortization expense for the current and next four fiscal years is as follows (in thousands):

2023	$	7,130
2024		7,354
2025		7,180
2026		6,565
2027		5,481

Changes in the net carrying amount of goodwill as of the dates indicated are as follows (in thousands):

Balance as of March 1, 2021	$	88,647
Goodwill acquired		30
Balance as of February 28, 2022		88,677
Goodwill acquired		4,761
Balance as of November 30, 2022	$	93,438

During fiscal year 2022, the Company recorded a measurement period adjustment of $0.5 million to reduce goodwill related to the Infoseal acquisition. The Company records additions of $0.5 million and less than $0.1 million to goodwill related to the acquisition of AmeriPrint and Superior Copies, respectively. Additionally, $4.8 million was added to goodwill related to the acquisition of SPM.

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Accrued Expenses

9 Months Ended

Nov. 30, 2022

Payables and Accruals [Abstract]

Accrued Expenses

8. Accrued Expenses

The following table summarizes the components of accrued expenses as of the dates indicated (in thousands):

	November 30, 2022		February 28, 2022
Employee compensation and benefits	$	13,907	$	11,587
Taxes other than income		1,513		947
Accrued legal and professional fees		534		251
Accrued interest		-		31
Accrued utilities		128		108
Accrued acquisition related obligations		9		34
Income taxes payable		2,160		1,606
Other accrued expenses		866		858
	$	19,117	$	15,422

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Long-Term Debt

9 Months Ended

Nov. 30, 2022

Debt Disclosure [Abstract]

Long-Term Debt

9. Long-Term Debt

The Company did not renew its Credit Agreement which expired November 11, 2021. The Company has had no outstanding long-term debt under the revolving credit line since paid in full in August 2019. As of November 30, 2022, the Company had $0.5 million outstanding under a standby letters of credit arrangement secured by a cash collateral bank account.

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Shareholders' Equity

9 Months Ended

Nov. 30, 2022

Equity [Abstract]

Shareholders' Equity

10. Shareholders’ Equity

The Company’s board of directors (the "Board") has authorized the repurchase of the Company’s outstanding common stock through a stock repurchase program, which authorized amount is currently up to $60.0 million in the aggregate. Under the repurchase program, purchases may be made from time to time in the open market or through privately negotiated transactions depending on market conditions, share price, trading volume and other factors. Such purchases, if any, will be made in accordance with applicable insider trading and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice.

During the nine months ended November 30, 2022, the Company repurchased 64,082 shares of common stock under the program at an average price of $17.46. There were no repurchases of common stock during the three-month period ended November 30, 2022. Since the program’s inception in October 2008, there have been 2,213,111 common shares repurchased at an average price of $16.29 per share. As of November 30, 2022, $23.9 million remained available to repurchase shares of the Company’s common stock under the program.

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Stock Based Compensation

9 Months Ended

Nov. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock Based Compensation

11. Stock Based Compensation

The Company grants stock options, restricted stock and restricted stock units ("RSUs") to key executives and managerial employees and non-employee directors. Prior to June 30, 2021, the Company had one stock incentive plan, the 2004 Long-Term Incentive Plan of Ennis, Inc., as amended and restated as of May 18, 2008 and was further amended on June 30, 2011 (the "Old Plan"). The Old Plan expired June 30, 2021 and all remaining unused shares expired. Subject to the affirmative vote of the shareholders, the Board adopted the 2021 Long-Term Incentive Plan of Ennis, Inc. (the "New Plan") on April 16, 2021 authorizing 1,033,648 shares of common stock for awards and was approved by the shareholders at the Annual Meeting on July 15, 2021 by a majority vote. The New Plan expires June 30, 2031 and all unissued stock will expire on that date. At November 30, 2022, the Company has 977,277 shares of unissued common stock reserved under the New Plan for issuance and uses treasury stock to satisfy option exercises and restricted stock awards.

The Company recognizes compensation expense based on the grant date fair value of the award for stock options, restricted stock grants and RSUs on a straight-line basis over the requisite service period. The estimated number of shares to be achieved for performance based RSUs is updated each reporting period. For the three months ended November 30, 2022 and November 30, 2021, the Company included in selling, general and administrative expenses, compensation expense related to stock-based compensation of $0.6 million and $0.6 million, respectively. For the nine months ended November 30, 2022 and November 30, 2021, the Company

included in selling, general and administrative expenses, compensation expense related to stock-based compensation of $1.5 million and $2.4 million, respectively.

Stock Options

The Company had no outstanding vested or unvested stock options at any time during the nine months ended November 30, 2022 and November 30, 2021. No stock options were granted during the nine months ended November 30, 2022 and November 30, 2021.

Restricted Stock

The following activity occurred with respect to the Company’s restricted stock awards for the nine months ended November 30, 2022, of which 22,000 shares were granted under the New Plan:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Outstanding at March 1, 2022		67,164		$	18.73
Granted		22,000			19.78
Terminated		—			—
Vested		(39,381	)		19.00
Outstanding at November 30, 2022		49,783		$	18.99

As of November 30, 2022, the total remaining unrecognized compensation cost related to unvested restricted stock was approximately $1.1 million. The weighted average remaining requisite service period of the unvested restricted stock awards was 1.7 years.

Restricted Stock Units

During the nine months ended November 30, 2022, 39,574 performance-based RSUs and 9,893 time-based RSUs were granted under the New Plan. The fair value of the time-based RSUs was estimated based on the fair market value of the Company’s stock on the date of grant of $19.47 per unit. The fair value of the performance-based RSUs, using a Monte Carlo valuation model, was $23.17 per unit. The performance measures include a threshold, target and maximum performance level providing the grantees an opportunity to receive more or less shares than targeted depending on actual financial performance. The award will be based on the Company’s return on equity, EBITDA and adjusted for the Company’s Relative Shareholder Return as measured against a defined peer group.

The performance-based RSUs will vest no later than March 15, 2024, which is the deadline for the Compensation Committee to determine the extent of the Company’s attainment of the Performance Goals during the Performance Period that ends on February 29, 2024. The time-based RSUs vest ratably over two to three years from the date of grant.

The following activity occurred with respect to the Company’s restricted stock units for the nine months ended November 30, 2022:

	Time-based					Performance-based
				Weighted				Weighted
				Average				Average
	Number of			Grant Date		Number of		Grant Date
	Shares			Fair Value		Shares		Fair Value
Outstanding at March 1, 2022		35,071		$	20.38		140,287	$	23.17
Granted		9,893			19.47		39,574		23.17
Terminated		—			—		—		—
Vested		(11,690	)		20.38		—		—
Outstanding at November 30, 2022		33,274		$	20.11		179,861	$	23.17

As of November 30, 2022, the total remaining unrecognized compensation cost of time-based RSUs was approximately $0.4 million over a weighted average remaining requisite service period of 1.8 years. As of November 30, 2022, the total remaining unrecognized compensation of performance-based RSUs was approximately $1.7 million over a weighted average remaining requisite service period of 1.7 years.

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Pension Plan

9 Months Ended

Nov. 30, 2022

Retirement Benefits [Abstract]

Pension Plan

12. Pension Plan

The Company and certain subsidiaries have a noncontributory defined benefit retirement plan (the "Pension Plan"), covering approximately 13% of the Company’s aggregate employees. Benefits are based on years of service and the employee’s average compensation for the highest five compensation years preceding retirement or termination.

Pension expense is composed of the following components included in cost of goods sold and selling, general, and administrative expenses in the Company’s consolidated statements of earnings (in thousands):

	Three months ended						Nine months ended
	November 30,						November 30,
	2022			2021			2022			2021
Components of net periodic benefit cost
Service cost	$	236		$	269		$	708		$	806
Interest cost		492			420			1,475			1,261
Expected return on plan assets		(924	)		(931	)		(2,774	)		(2,792	)
Amortization of:
Unrecognized net loss		601			639			1,806			1,919
Settlement charges		786			750			786			750
Net periodic benefit cost	$	1,191		$	1,147		$	2,001		$	1,944

The Company is required to make contributions to the Pension Plan. These contributions are required under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 ("ERISA"). Due to the enactment of the Highway and Transportation Funding Act ("HATFA") in August 2014, plan sponsors can calculate the discount rate used to measure the Pension Plan liability using a 25-year average of interest rates plus or minus a corridor. The Company’s minimum required contribution to the Pension Plan is zero for the Pension Plan year ending February 28, 2023. Assuming a stable funding status, the Company would expect to make a cash contribution to the Pension Plan of between $1.5 million and $3.0 million per year. However, changes in actual investment returns or in discount rates could change this amount significantly. There was a $2.0 million contribution made in September 2022 to avoid a Pension Benefit Guaranty Corporation variable premium. As our Pension Plan assets are invested in marketable securities, fluctuations in market values could potentially impact our funding status, associated liabilities recorded and future required minimum contributions. At November 30, 2022, we had an unfunded pension liability recorded on our balance sheet of approximately $3.7 million.

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Earnings Per Share

9 Months Ended

Nov. 30, 2022

Earnings Per Share [Abstract]

Earnings Per Share

13. Earnings Per Share

Basic earnings per share have been computed by dividing net earnings by the weighted average number of common shares outstanding during the applicable period. Diluted earnings per share reflect the potential dilution that could occur if stock options, performance-based RSUs or other contracts to issue common shares were exercised or converted into common stock.

The following table sets forth the computation for basic and diluted earnings per share for the periods indicated:

	Three months ended				Nine months ended
	November 30,				November 30,
	2022		2021		2022		2021
Basic weighted average common shares outstanding		25,809,581		26,020,210		25,812,216		26,053,898
Effect of dilutive RSUs		79,234		—		80,657		97,582
Diluted weighted average common shares outstanding		25,888,815		26,020,210		25,892,873		26,151,480
Earnings per share
Net earnings - basic	$	0.44	$	0.29	$	1.36	$	0.86
Net earnings - diluted	$	0.44	$	0.29	$	1.36	$	0.85
Cash dividends	$	0.250	$	0.250	$	0.750	$	0.725

The Company treats unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities, which are included in the computation of earnings per share. Our unvested restricted shares participate on an equal basis with common shares; therefore, there is no difference in undistributed earnings allocated

to each participating security. Accordingly, the presentation above is prepared on a combined basis. No options were outstanding for the nine months ended November 30, 2022 and November 30, 2021.

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Concentrations of Risk

9 Months Ended

Nov. 30, 2022

Risks and Uncertainties [Abstract]

Concentrations of Risk

14. Concentrations of Risk

Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash and trade receivables. Cash is placed with high-credit quality financial institutions. For the purposes of the condensed consolidated statements of cash flows, the Company considers cash to include cash on hand and in bank accounts. The Federal Deposit Insurance Corporation insures accounts up to $250,000. At November 30, 2022, cash balances included $86.2 million that was not federally insured because it represented amounts in individual accounts above the federally insured limit for each such account. This at-risk amount is subject to fluctuation on a daily basis. While management does not believe there is significant risk with respect to such deposits, no assurance can be made that the Company will not experience losses on the Company’s deposits.

The Company believes its credit risk with respect to trade receivables is limited due to industry and geographic diversification. As disclosed on the condensed consolidated balance sheets, the Company maintains an allowance for doubtful receivables to cover the Company’s estimate of credit losses associated with accounts receivable.

The Company, for quality and pricing reasons, purchases its paper products from a limited number of suppliers. While other sources may be available to the Company to purchase these products, they may not be available at the cost or at the quality the Company has come to expect.

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Related Party Transactions

9 Months Ended

Nov. 30, 2022

Related Party Transactions [Abstract]

Related Party Transactions

15. Related Party Transactions

The Company leases a facility and sells product to an entity controlled by a member of the Board who was the former owner of Integrated Print & Graphics, a business that the Company acquired. The total right-of-use asset and related lease liability as of November 30, 2022 was $0.8 million and $0.9 million, respectively. During the nine months ended November 30, 2022, total lease payments made to, and sales made to, the related party were approximately $0.3 million and $3.0 million, respectively.

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Income Taxes

9 Months Ended

Nov. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

16. Income Taxes

The Company is subject to U.S. federal income tax as well as income taxes of multiple state jurisdictions. The quarterly income tax provision was computed based on our estimated annualized effective tax rate and the full-year forecasted income or loss plus the tax impact of unusual, infrequent, or nonrecurring significant items during the period.

Our effective tax rate for the three and nine months ended November 30, 2022 and 2021 was 28.0% and 30.0%, respectively, which varied from the U.S. federal statutory tax rate of 21.0% primarily due to the effects of state income taxes, nondeductible compensation and other permanent items. The Company made cash payments for income taxes of $13.1 million and $9.7 million, respectively, for the nine months ended November 30, 2022 and 2021.

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Subsequent Events

9 Months Ended

Nov. 30, 2022

Subsequent Events [Abstract]

Subsequent Events

17. Subsequent Events

On December 15, 2022, the Board declared a quarterly dividend on the Company's common stock of 25.0 cents per share, which will be paid on February 2, 2023 to shareholders of record as of January 5, 2023. The expected payout for this dividend is approximately $6.5 million.

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Significant Accounting Policies and General Matters (Policies)

9 Months Ended

Nov. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

These unaudited condensed consolidated financial statements of Ennis, Inc. and its subsidiaries (collectively referred to as the “Company,” “Registrant,” “Ennis,” or “we,” “us,” or “our”) for the period ended November 30, 2022 have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP') and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2022, from which the accompanying consolidated balance sheet at February 28, 2022 was derived. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial information have been included and are of a normal recurring nature. The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the disclosure and reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates these estimates and judgments on an ongoing basis, including those related to bad debts, inventory valuations, property, plant and equipment, intangible assets, pension plan, accrued liabilities, and income taxes. The Company bases estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of operations for any interim period are not necessarily indicative of the results of operations for a full year.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recently Issued Accounting Updates

There are no recent accounting pronouncements that are anticipated to have a material impact on the Company's condensed consolidated financial statements.

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Accounts Receivable and Allowance for Doubtful Receivables (Tables)

9 Months Ended

Nov. 30, 2022

Receivables [Abstract]

Allowance for Doubtful Receivables

The following table presents the activity in the Company’s allowance for doubtful receivables (in thousands):

	Three months ended					Nine months ended
	November 30,					November 30,
	2022			2021		2022			2021
Balance at beginning of period	$	1,523		$	1,016	$	1,200		$	961
Bad debt expense, net of recoveries		192			249		585			408
Accounts written off		(23	)		-		(93	)		(104	)
Balance at end of period	$	1,692		$	1,265	$	1,692		$	1,265

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Inventories (Tables)

9 Months Ended

Nov. 30, 2022

Inventory Disclosure [Abstract]

Components of Inventories

The following table summarizes the components of inventories at the different stages of production as of the dates indicated (in thousands):

	November 30,		February 28,
	2022		2022
Raw material	$	31,982	$	25,276
Work-in-process		7,576		5,547
Finished goods		10,364		7,715
	$	49,922	$	38,538

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Acquisitions (Tables)

9 Months Ended

Nov. 30, 2022

AmeriPrint Corporation [Member]

Business Acquisition [Line Items]

Summary of Purchase Price Allocation

The following is a summary of the purchase price allocation for AmeriPrint (in thousands):

Accounts receivable	$	417
Inventories		732
Property, plant and equipment		2,000
Goodwill and intangibles		1,607
Accounts payable and accrued liabilities		(834	)
	$	3,922

School Photo Marketing [Member]

Business Acquisition [Line Items]

Summary of Purchase Price Allocation

The following table summarizes the Company's preliminary purchase price allocation for SPM as of the acquisition date (in thousands):

Accounts receivable	$1,403
Inventories	463
Other assets	84
Right-of-use asset	487
Property, plant and equipment	250
Goodwill and intangibles	7,974
Operating lease liability	(487)
Accounts payable and accrued liabilities	(1,407)
	$8,767

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Leases (Tables)

9 Months Ended

Nov. 30, 2022

Leases [Abstract]

Components of Lease Expense

Components of lease expense for the three and nine months ended November 30, 2022 and November 30, 2021 were as follows (in thousands):

	Three months ended				Nine months ended
	November 30, 2022		November 30, 2021		November 30, 2022		November 30, 2021
Operating lease cost	$	1,517	$	1,454	$	4,545	$	4,688
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,522	$	1,459	$	4,550	$	4,675
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	2,042	$	—	$	2,848	$	3,441

Weighted Average Remaining Lease Terms
Operating leases	3 Years
Weighted Average Discount Rate
Operating leases		3.84	%

Summary of Future Minimum Lease Commitments Under Non-cancelable Operating Leases

Future minimum lease commitments under non-cancelable operating leases for each of the fiscal years ending are as follows (in thousands):

	Operating
	Lease
	Commitments
2023 (remaining 3 months)	$	1,025
2024		5,248
2025		4,514
2026		2,893
2027		1,168
2028		153
Thereafter		-
Total future minimum lease payments	$	15,001
Less imputed interest		872
Present value of lease liabilities	$	14,129

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Nov. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Carrying Amount and Accumulated Amortization of Intangible Assets

The carrying amount and accumulated amortization of the Company’s intangible assets at each balance sheet date are as follows (in thousands):

	Weighted
	Average
	Remaining		Gross
	Life		Carrying		Accumulated
As of November 30, 2022	(in years)		Amount		Amortization		Net
Amortized intangible assets
Trademarks and trade names		10.4	$	29,328	$	11,786	$	17,542
Customer lists		5.3		79,126		52,666		26,460
Non-compete		2.8		235		159		76
Total		7.3	$	108,689	$	64,611	$	44,078
As of February 28, 2022
Amortized intangible assets
Trademarks and trade names		11.0	$	28,207	$	10,301	$	17,906
Customer lists		6.1		76,458		48,903		27,555
Non-compete		3.3		877		769		108
Total		8.0	$	105,542	$	59,973	$	45,569

Estimated Amortization Expense

The Company’s estimated amortization expense for the current and next four fiscal years is as follows (in thousands):

2023	$	7,130
2024		7,354
2025		7,180
2026		6,565
2027		5,481

Changes in Net Carrying Amount of Goodwill

Changes in the net carrying amount of goodwill as of the dates indicated are as follows (in thousands):

Balance as of March 1, 2021	$	88,647
Goodwill acquired		30
Balance as of February 28, 2022		88,677
Goodwill acquired		4,761
Balance as of November 30, 2022	$	93,438

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Accrued Expenses (Tables)

9 Months Ended

Nov. 30, 2022

Payables and Accruals [Abstract]

Components of Accrued Expenses

The following table summarizes the components of accrued expenses as of the dates indicated (in thousands):

	November 30, 2022		February 28, 2022
Employee compensation and benefits	$	13,907	$	11,587
Taxes other than income		1,513		947
Accrued legal and professional fees		534		251
Accrued interest		-		31
Accrued utilities		128		108
Accrued acquisition related obligations		9		34
Income taxes payable		2,160		1,606
Other accrued expenses		866		858
	$	19,117	$	15,422

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Stock Based Compensation (Tables)

9 Months Ended

Nov. 30, 2022

Share-Based Payment Arrangement [Abstract]

Summary of Restricted Stock Awards and Restricted Stock Units Activity

The following activity occurred with respect to the Company’s restricted stock awards for the nine months ended November 30, 2022, of which 22,000 shares were granted under the New Plan:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Outstanding at March 1, 2022		67,164		$	18.73
Granted		22,000			19.78
Terminated		—			—
Vested		(39,381	)		19.00
Outstanding at November 30, 2022		49,783		$	18.99

The following activity occurred with respect to the Company’s restricted stock units for the nine months ended November 30, 2022:

	Time-based					Performance-based
				Weighted				Weighted
				Average				Average
	Number of			Grant Date		Number of		Grant Date
	Shares			Fair Value		Shares		Fair Value
Outstanding at March 1, 2022		35,071		$	20.38		140,287	$	23.17
Granted		9,893			19.47		39,574		23.17
Terminated		—			—		—		—
Vested		(11,690	)		20.38		—		—
Outstanding at November 30, 2022		33,274		$	20.11		179,861	$	23.17

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Pension Plan (Tables)

9 Months Ended

Nov. 30, 2022

Retirement Benefits [Abstract]

Summary of Pension Expense Composed of Components Included in Cost of Goods Sold and Selling, General and Administrative Expenses

Pension expense is composed of the following components included in cost of goods sold and selling, general, and administrative expenses in the Company’s consolidated statements of earnings (in thousands):

	Three months ended						Nine months ended
	November 30,						November 30,
	2022			2021			2022			2021
Components of net periodic benefit cost
Service cost	$	236		$	269		$	708		$	806
Interest cost		492			420			1,475			1,261
Expected return on plan assets		(924	)		(931	)		(2,774	)		(2,792	)
Amortization of:
Unrecognized net loss		601			639			1,806			1,919
Settlement charges		786			750			786			750
Net periodic benefit cost	$	1,191		$	1,147		$	2,001		$	1,944

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Earnings Per Share (Tables)

9 Months Ended

Nov. 30, 2022

Earnings Per Share [Abstract]

Computation for Basic and Diluted Earnings Per Share

The following table sets forth the computation for basic and diluted earnings per share for the periods indicated:

	Three months ended				Nine months ended
	November 30,				November 30,
	2022		2021		2022		2021
Basic weighted average common shares outstanding		25,809,581		26,020,210		25,812,216		26,053,898
Effect of dilutive RSUs		79,234		—		80,657		97,582
Diluted weighted average common shares outstanding		25,888,815		26,020,210		25,892,873		26,151,480
Earnings per share
Net earnings - basic	$	0.44	$	0.29	$	1.36	$	0.86
Net earnings - diluted	$	0.44	$	0.29	$	1.36	$	0.85
Cash dividends	$	0.250	$	0.250	$	0.750	$	0.725

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Revenue - Additional Information (Detail)	9 Months Ended
	Nov. 30, 2022
Disaggregation Of Revenue [Line Items]
Revenue unsatisfied performance obligation, practical expedient	true
Minimum [Member]
Disaggregation Of Revenue [Line Items]
Contract with customer, customer payment terms	30 days
Maximum [Member]
Disaggregation Of Revenue [Line Items]
Contract with customer, customer payment terms	60 days

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Accounts Receivable and Allowance for Doubtful Receivables - Allowance for Doubtful Receivables (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Receivables [Abstract]
Balance at beginning of period	$ 1,523	$ 1,016	$ 1,200	$ 961
Bad debt expense, net of recoveries	192	249	585	408
Accounts written off	(23)	0	(93)	(104)
Balance at end of period	$ 1,692	$ 1,265	$ 1,692	$ 1,265

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Inventories - Additional Information (Detail) - USD ($) $ in Millions	Nov. 30, 2022	Feb. 28, 2022
Inventory Disclosure [Abstract]
Percentage of Inventories valued at LIFO	12.30%	14.00%
Amount of valuation reserve for excess and obsolete inventory	$ 1.6	$ 1.5

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Inventories - Components of Inventories (Detail) - USD ($) $ in Thousands	Nov. 30, 2022	Feb. 28, 2022
Inventory Disclosure [Abstract]
Raw material	$ 31,982	$ 25,276
Work-in-process	7,576	5,547
Finished goods	10,364	7,715
Inventories	$ 49,922	$ 38,538

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Acquisitions - Additional Information (Detail) - USD ($) $ in Thousands	Dec. 31, 2020	Nov. 30, 2022	Feb. 28, 2022	Jun. 01, 2021	Feb. 28, 2021
Business Acquisition [Line Items]
Percentage of assets acquired and liabilities assumed at their acquisition date fair values		100.00%
Goodwill		$ 93,438	$ 88,677		$ 88,647
AmeriPrint Corporation [Member]
Business Acquisition [Line Items]
Total purchase consideration		3,922		$ 3,900
Goodwill				500
Intangible assets				$ 1,100
Net sales	$ 6,500
School Photo Marketing [Member]
Business Acquisition [Line Items]
Total purchase consideration		$ 8,767

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Acquisitions - Summary of Purchase Price Allocation (Detail) - USD ($) $ in Thousands	Nov. 30, 2022	Jun. 01, 2021
AmeriPrint Corporation [Member]
Business Acquisition [Line Items]
Accounts receivable	$ 417
Inventories	732
Property, plant & equipment	2,000
Goodwill and intangibles	1,607
Accounts payable and accrued liabilities	(834)
Total purchase consideration	3,922	$ 3,900
School Photo Marketing [Member]
Business Acquisition [Line Items]
Accounts receivable	1,403
Inventories	463
Other assets	84
Right-of-use asset	487
Property, plant & equipment	250
Goodwill and intangibles	7,974
Operating lease liability	(487)
Accounts payable and accrued liabilities	(1,407)
Total purchase consideration	$ 8,767

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Leases - Additional Information (Detail) - USD ($) $ in Thousands	9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Lessee Lease Description [Line Items]
Leases description	The Company leases certain of its facilities and equipment under operating leases, which are recorded as right-of-use assets and lease liabilities. The Company’s leases generally have terms of 1 – 5 years, with certain leases including renewal options to extend the leases for additional periods at the Company’s discretion. At lease inception, all renewal options reasonably certain to be exercised are considered when determining the lease term. The Company currently does not have leases that include options to purchase or provisions that would automatically transfer ownership of the leased property to the Company.
Leases, renewal options, description	The Company’s leases generally have terms of 1 – 5 years, with certain leases including renewal options to extend the leases for additional periods at the Company’s discretion.
Variable lease cost	$ 0	$ 0
Minimum [Member]
Lessee Lease Description [Line Items]
Leases terms	1 year
Maximum [Member]
Lessee Lease Description [Line Items]
Leases terms	5 years

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Leases - Components of Lease Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Lease, Cost [Abstract]
Operating lease cost	$ 1,517	$ 1,454	$ 4,545	$ 4,688
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities, Operating cash flows from operating leases	1,522	1,459	4,550	4,675
Right-of-use assets obtained in exchange for lease obligations, Operating leases	$ 2,042	$ 0	$ 2,848	$ 3,441
Weighted Average Remaining Lease Terms, Operating leases	3 years		3 years
Weighted Average Discount Rate, Operating leases	3.84%		3.84%

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Leases - Summary of Future Minimum Lease Commitments Under Non-cancelable Operating Leases (Detail) $ in Thousands	Nov. 30, 2022 USD ($)
Lessee, Operating Lease, Liability, to be Paid [Abstract]
2023 (remaining 3 months)	$ 1,025
2024	5,248
2025	4,514
2026	2,893
2027	1,168
2028	153
Thereafter	0
Total future minimum lease payments	15,001
Less imputed interest	872
Present value of lease liabilities	$ 14,129

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Goodwill and Intangible Assets - Carrying Amount and Accumulated Amortization of Intangible Assets (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Nov. 30, 2022	Feb. 28, 2022
Finite-Lived Intangible Assets [Line Items]
Weighted Average Remaining Life (in years)	7 years 3 months 18 days	8 years
Gross Carrying Amount	$ 108,689	$ 105,542
Accumulated Amortization	64,611	59,973
Amortized intangible assets, Net	$ 44,078	$ 45,569
Trademarks and Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Remaining Life (in years)	10 years 4 months 24 days	11 years
Gross Carrying Amount	$ 29,328	$ 28,207
Accumulated Amortization	11,786	10,301
Amortized intangible assets, Net	$ 17,542	$ 17,906
Customer Lists [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Remaining Life (in years)	5 years 3 months 18 days	6 years 1 month 6 days
Gross Carrying Amount	$ 79,126	$ 76,458
Accumulated Amortization	52,666	48,903
Amortized intangible assets, Net	$ 26,460	$ 27,555
Non-Compete [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Remaining Life (in years)	2 years 9 months 18 days	3 years 3 months 18 days
Gross Carrying Amount	$ 235	$ 877
Accumulated Amortization	159	769
Amortized intangible assets, Net	$ 76	$ 108

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Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Feb. 28, 2022
Finite-Lived Intangible Assets [Line Items]
Amortization of trade names, customer lists, and patent	$ 5,280	$ 6,137
Goodwill acquired	$ 4,761		$ 30
Infoseal LLC [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill acquired			500
AmeriPrint Corporation [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill acquired			500
Superior Copies [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill acquired			100
SPM [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill acquired			$ 4,800

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Goodwill and Intangible Assets - Estimated Amortization Expense (Detail) $ in Thousands	Nov. 30, 2022 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2023	$ 7,130
2024	7,354
2025	7,180
2026	6,565
2027	$ 5,481

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Goodwill and Intangible Assets - Changes in Net Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Nov. 30, 2022	Feb. 28, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill, Beginning balance	$ 88,677	$ 88,647
Goodwill acquired	4,761	30
Goodwill, Ending balance	$ 93,438	$ 88,677

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Accrued Expenses - Components of Accrued Expenses (Detail) - USD ($) $ in Thousands	Nov. 30, 2022	Feb. 28, 2022
Payables and Accruals [Abstract]
Employee compensation and benefits	$ 13,907	$ 11,587
Taxes other than income	1,513	947
Accrued legal and professional fees	534	251
Accrued interest	0	31
Accrued utilities	128	108
Accrued acquisition related obligations	9	34
Income taxes payable	2,160	1,606
Other accrued expenses	866	858
Accrued expenses, Total	$ 19,117	$ 15,422

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Long-Term Debt - Additional Information (Detail) $ in Thousands	9 Months Ended
	Nov. 30, 2022 USD ($)
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Credit facility maturity date	Nov. 11, 2021
Long-term debt	$ 0
Third Amendment [Member] | Standby Letters of Credit [Member]
Line of Credit Facility [Line Items]
Long-term debt	$ 500

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Shareholders' Equity - Additional Information (Detail) $ / shares in Units, $ in Millions	3 Months Ended	9 Months Ended	169 Months Ended
	Nov. 30, 2022 USD ($) shares	Nov. 30, 2022 USD ($) $ / shares shares	Nov. 30, 2022 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Repurchase of common stock | shares	0	64,082	2,213,111
Repurchase of common stock, average cost per share | $ / shares		$ 17.46	$ 16.29
Total remaining amount available to repurchase of shares		$ 23.9
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program, authorized aggregate amount	$ 60.0	$ 60.0	$ 60.0

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Stock Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021	Apr. 16, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of outstanding vested and unvested stock options	0	0	0	0
Number of stock options granted			0	0
Remaining unrecognized compensation cost	$ 1.1		$ 1.1
Weighted average remaining requisite service period			1 year 8 months 12 days
Selling, General and Administrative Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense related stock based compensation before tax	0.6	$ 0.6	$ 1.5	$ 2.4
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock options granted			22,000
RSUs vesting description			The performance-based RSUs will vest no later than March 15, 2024, which is the deadline for the Compensation Committee to determine the extent of the Company’s attainment of the Performance Goals during the Performance Period that ends on February 29, 2024. The time-based RSUs vest ratably over two to three years from the date of grant.
Performance-based RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remaining unrecognized compensation cost	1.7		$ 1.7
Weighted average remaining requisite service period			1 year 8 months 12 days
Restricted stock units granted			39,574
Fair value of restricted stock units granted			$ 23.17
Time-based RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remaining unrecognized compensation cost	$ 0.4		$ 0.4
Weighted average remaining requisite service period			1 year 9 months 18 days
Restricted stock units granted			9,893
Fair value of restricted stock units granted			$ 19.47
2021 Long-Term Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unissued common stock reserved	977,277		977,277
Number of shares authorized					1,033,648

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Stock Based Compensation - Summary of Restricted Stock Awards Activity (Detail) - Restricted Stock [Member]	9 Months Ended
	Nov. 30, 2022 $ / shares shares
Restricted stock grant activity
Outstanding at Beginning, Number of Shares | shares	67,164
Number of Shares, Granted | shares	22,000
Number of Shares, Vested | shares	(39,381)
Outstanding at Ending, Number of Shares | shares	49,783
Outstanding at Beginning, Weighted Average Grant Date Fair value | $ / shares	$ 18.73
Weighted Average Grant Date Fair Value, Granted | $ / shares	19.78
Weighted Average Grant Date Fair Value, Vested | $ / shares	19.00
Outstanding at Ending, Weighted Average Grant Date Fair value | $ / shares	$ 18.99

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Stock Based Compensation - Summary of Restricted Stock Units Activity (Detail)	9 Months Ended
	Nov. 30, 2022 $ / shares shares
Time-based RSUs [Member]
Restricted stock unit activity
Outstanding at Beginning, Number of Shares | shares	35,071
Number of Shares, Granted | shares	9,893
Number of Shares, Vested | shares	(11,690)
Outstanding at Ending, Number of Shares | shares	33,274
Outstanding at Beginning, Weighted Average Grant Date Fair value | $ / shares	$ 20.38
Weighted Average Grant Date Fair Value, Granted | $ / shares	19.47
Weighted Average Grant Date Fair Value, Vested | $ / shares	20.38
Outstanding at Ending, Weighted Average Grant Date Fair value | $ / shares	$ 20.11
Performance-based RSUs [Member]
Restricted stock unit activity
Outstanding at Beginning, Number of Shares | shares	140,287
Number of Shares, Granted | shares	39,574
Outstanding at Ending, Number of Shares | shares	179,861
Outstanding at Beginning, Weighted Average Grant Date Fair value | $ / shares	$ 23.17
Weighted Average Grant Date Fair Value, Granted | $ / shares	23.17
Outstanding at Ending, Weighted Average Grant Date Fair value | $ / shares	$ 23.17

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Pension Plan - Additional Information (Detail) - USD ($)		1 Months Ended	9 Months Ended
	Feb. 28, 2023	Sep. 30, 2022	Nov. 30, 2022	Feb. 28, 2022
Defined Benefit Plan Disclosure [Line Items]
Employees covered under noncontributory Pension Plan			13.00%
Compensation period preceding retirement and termination			5 years
Period used for calculating Pension Plan liability			25 years
Contribution to avoid a Pension Benefit Guaranty Corporation variable premium		$ 2,000,000.0
Unfunded pension liability			$ 3,729,000	$ 5,729,000
Minimum [Member]
Defined Benefit Plan Disclosure [Line Items]
Expected contributions			1,500,000
Maximum [Member]
Defined Benefit Plan Disclosure [Line Items]
Expected contributions			$ 3,000,000.0
Scenario Forecast [Member]
Defined Benefit Plan Disclosure [Line Items]
Minimum required contribution to the plan	$ 0

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Pension Plan - Summary of Pension Expense Composed of Components Included in Cost of Goods Sold and Selling, General and Administrative Expenses (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Components of net periodic benefit cost
Service cost	$ 236	$ 269	$ 708	$ 806
Interest cost	492	420	1,475	1,261
Expected return on plan assets	(924)	(931)	(2,774)	(2,792)
Amortization of:
Unrecognized net loss	601	639	1,806	1,919
Settlement charge	786	750	786	750
Net periodic benefit cost	$ 1,191	$ 1,147	$ 2,001	$ 1,944

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Earnings Per Share - Computation for Basic and Diluted Earnings Per Share (Detail) - $ / shares	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Earnings Per Share [Abstract]
Basic weighted average common shares outstanding	25,809,581	26,020,210	25,812,216	26,053,898
Effect of dilutive RSUs	79,234	0	80,657	97,582
Diluted weighted average common shares outstanding	25,888,815	26,020,210	25,892,873	26,151,480
Earnings per share
Net earnings - basic	$ 0.44	$ 0.29	$ 1.36	$ 0.86
Net earnings - diluted	0.44	0.29	1.36	0.85
Common Stock, Dividends, Per Share, Cash Paid	$ 0.250	$ 0.250	$ 0.750	$ 0.725

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Earnings Per Share - Additional Information (Detail) - USD ($)	9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Earnings Per Share [Abstract]
Undistributed earnings	$ 0
Options outstanding	0	0

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Concentrations of Risk - Additional Information (Detail)	Nov. 30, 2022 USD ($)
Concentration Risk [Line Items]
Cash balances not federally insured	$ 86,200,000
Maximum [Member]
Concentration Risk [Line Items]
Maximum insurance available to depositors under the FDIC's general deposit insurance rules	$ 250,000

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Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021	Feb. 28, 2022
Related Party Transaction [Line Items]
Operating lease right-of-use assets, net	$ 14,214		$ 14,214		$ 15,544
Operating lease liability	14,129		14,129
Operating lease cost	1,517	$ 1,454	4,545	$ 4,688
Integrated Print & Graphics (Integrated) [Member]
Related Party Transaction [Line Items]
Operating lease right-of-use assets, net	800		800
Operating lease liability	$ 900		900
Operating lease cost			300
Sales received from lease			$ 3,000

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Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Income Tax Disclosure [Abstract]
Effective tax rate	28.00%	30.00%	28.00%	30.00%
Statutory rate			21.00%
Payment for income taxes			$ 13.1	$ 9.7

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Subsequent Events - Additional Information (Detail) - Subsequent Event [Member] $ / shares in Units, $ in Millions	Dec. 15, 2022 USD ($) $ / shares
Subsequent Event [Line Items]
Dividends payable, date declared	Dec. 15, 2022
Dividend payable date	Feb. 02, 2023
Dividend payable, date of record	Jan. 05, 2023
Expected payout of dividend | $	$ 6.5
Common Stock [Member]
Subsequent Event [Line Items]
Dividend payable per share | $ / shares	$ 0.25