UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 21, 2012 (December 21, 2012)
Ennis, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Texas | 1-5807 | 75-0256410 | ||||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number |
(IRS Employer Identification No.) | ||||
2441 Presidential Pkwy. Midlothian, Texas |
76065 | |||||
(Address of Principal Executive Offices) | (Zip Code) |
Registrants Telephone Number, Including Area Code: (972) 775-9801
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.*
On December 21, 2012, Ennis, Inc. issued a press release announcing its financial results for the three and nine months ended November 30, 2012. A copy of the press release is attached hereto as Exhibit 99.1.
* | The information furnished under Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing. |
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. | Description | |
99.1 | Ennis, Inc. press release dated December 21, 2012 announcing its financial results for the three and nine months ended November 30, 2012 (furnished pursuant to Item 2.02 of Form 8-K). |
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 hereunto duly authorized.
Ennis, Inc. | ||||||
Date: December 21, 2012 | By: | /s/ Richard L. Travis, Jr. | ||||
Richard L. Travis, Jr. Chief Financial Officer |
EXHIBIT INDEX
Exhibit No. |
Description | |
99.1 | Ennis, Inc. press release dated December 21, 2012 announcing its financial results for the three and nine months ended November 30, 2012 (furnished pursuant to Item 2.02 of Form 8-K). |
Exhibit 99.1
FOR IMMEDIATE RELEASE
ENNIS, INC. REPORTS RESULTS
FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2012
Midlothian, December 21, 2012 Ennis, Inc. (the Company), (NYSE: EBF), today reported financial results for the three and nine months ended November 30, 2012.
Financial Overview
Our consolidated net sales were $129.0 million for the third quarter ended November 30, 2012 compared to $121.8 million for the third quarter ended November 30, 2011, or an increase of 5.9%. Print sales increased 17.8% for the quarter, from $69.2 million to $81.5 million. Apparel sales for the quarter declined by 9.9% (down 6.9% on units and down 3.0% on price) from $52.6 million to $47.4 million. Our consolidated gross profit margin (margin) decreased from 24.8% to 23.7% for the quarters ended November 30, 2011 and November 30, 2012, respectively. Our print segment margin increased from 27.8% to 28.7%, while our apparel segment margin, which continues to be impacted by higher cotton costs residing in finished goods, decreased from 20.8% to 15.2% for the quarter. As a result, our net earnings decreased from $6.9 million, or 5.7% of net sales, for the quarter ended November 30, 2011 to $6.2 million, or 4.8% of net sales, for the quarter ended November 30, 2012. Diluted earnings per share decreased from $0.27 to $0.24 for the quarters ended November 30, 2011 and November 30, 2012, respectively.
For the nine month period, net sales increased from $395.5 million to $409.9 million, or 3.6%. Print sales for the nine month period were $254.9 million, compared to $205.5 million for the same period last year, an increase of $49.4 million, or 24.0%. Apparel sales for the nine month period were $155.0 million, compared to $189.9 million for the same period last year, or a decrease of 18.4% (down 12.7% on units and down 5.7% on price). Overall our margin decreased from 26.3% to 22.6% for the nine months ended November 30, 2011 and 2012, respectively. Our print margin increased during the period from 28.4% to 29.1%, while our apparel margin decreased from 24.0% to 12.0%, again due to higher cost of cotton in finished goods. Net earnings for the period decreased from $28.0 million, or 7.1% of net sales, to $17.6 million, or 4.3% of net sales, for the nine months ended November 30, 2011 and 2012, respectively. Diluted earnings per share decreased from $1.08 to $0.68 for the nine months ended November 30, 2011 and 2012, respectively.
During the third quarter, the Company generated $13.2 million in EBITDA (a non-GAAP financial measure calculated as net earnings before interest, taxes, depreciation, and amortization) compared to $14.5 million for the comparable quarter last year. For the nine month period ended November 30, 2012, the Company generated $38.9 million of EBITDA compared to $55.3 million for the comparable period last year.
The following table reconciles EBITDA, a non-GAAP financial measure, to the most comparable GAAP measure, net earnings (dollars in thousands):
Three months ended | Nine months ended | |||||||||||||||
November 30, | November 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Net earnings |
$ | 6,170 | $ | 6,892 | $ | 17,641 | $ | 28,028 | ||||||||
Income taxes |
3,330 | 4,118 | 9,923 | 16,111 | ||||||||||||
Interest expense |
335 | 405 | 1,206 | 1,887 | ||||||||||||
Depreciation/amortization |
3,330 | 3,035 | 10,113 | 9,295 | ||||||||||||
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EBITDA (non-GAAP) |
$ | 13,165 | $ | 14,450 | $ | 38,883 | $ | 55,321 | ||||||||
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The Company believes the non-GAAP financial measure of EBITDA provides important supplemental information to both management and investors regarding financial and business trends used in assessing its results of operations. The Company believes adding back the specified items to net earnings provides a more meaningful comparison to the corresponding reported periods and internal budgets and forecasts, provides management with a more relevant measurement of operating performance and is more useful in assessing management performance. In addition, EBITDA is a component of financial covenants and an interest rate metric in the Companys credit facility.
Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, Our apparel results for the quarter continued to be impacted by the higher residual cost of cotton remaining in our finished goods inventory. As we have previously stated, we attempted to match the sale side price with the cost side in selling through this high cost inventory rather than reducing our selling price significantly below our imbedded costs and thus allowing us to take a loss in one quarter, as some of our competitors. We continue to believe this was the right approach with the overall impact associated with this over-time approach being lower than if we had taken a loss in one quarter. However, at this point, most of the higher cost cotton has made its way through our finished goods inventory and the divergence between the current purchase cost of cotton and the average cost in our finished goods inventory has returned to a closer spread. We expect to see improvement in our apparel margins in the quarters to come, absent unforeseen economic disruption. Our print gross profit margin continues to remain healthy; however, legacy selling, general and administrative costs associated with our recent acquisitions remain as we integrate these locations into our ERP systems. We believe our system conversions are going well and will provide a solid basis for lowering the overall cost structures of these plants in the future. I continue to feel positive about fiscal year 2014, especially now that our apparel division has worked through their higher cotton costs. However, I am, as most, concerned with economic discussions currently occurring in Washington D.C. and how ultimate decisions may impact next year. There remain many economic uncertainties for many businesses that our government needs to provide clarity. How will their actions or inactions impact businesses, consumers and our economy in general over the short and long term is still to play out. Nevertheless, we will continue to stay vigilant to the task at hand.
About Ennis
Ennis, Inc. (www.ennis.com) is primarily engaged in the production and sale of business forms, apparel and other business products. The Company is one of the largest private-label printed business product suppliers in the United States. Headquartered in Midlothian, Texas, the Company has production and distribution facilities strategically located throughout the United States of America, Mexico and Canada, to serve the Companys national network of distributors. The Company, together with its subsidiaries,
operates in two business segments: print and apparel. The print segment manufactures and sells business forms, other printed business products, printed and electronic media, presentation products, flex-o-graphic printing, advertising specialties and Post-it® Notes, internal bank forms, plastic cards, secure and negotiable documents, envelopes and other custom products. The apparel segment manufactures T-Shirts and distributes T-Shirts and other active-wear apparel through nine distribution centers located throughout North America.
Safe Harbor Under The Private Securities Litigation Reform Act of 1995
Certain statements contained in this press release that are not historical facts are forward-looking statements that involve a number of known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement expressed or implied by such forward-looking statements. The words anticipate, preliminary, expect, believe, intend and similar expressions identify forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. These statements are subject to numerous uncertainties, which include, but are not limited to, the Companys ability to effectively manage its business functions while growing its business in a rapidly changing environment, the Companys ability to adapt and expand its services in such an environment, the variability in the prices of paper and other raw materials. Other important information regarding factors that may affect the Companys future performance is included in the public reports that the Company files with the Securities and Exchange Commission, including but not limited to, its Annual Report on Form 10-K for the fiscal year ending February 29, 2012, and its subsequent quarterly reports on Form 10-Q for its 2013 fiscal year. The Company does not undertake, and hereby disclaims, any duty or obligation to update or otherwise revise any forward-looking statements to reflect events or circumstances occurring after the date of this release, or to reflect the occurrence of unanticipated events, although its situation and circumstances may change in the future. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The inclusion of any statement in this release does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.
For Further Information Contact:
Mr. Keith S. Walters, Chairman, Chief Executive Officer and President
Mr. Richard L. Travis, Jr., VP-Finance and CFO, Treasurer and Principal Financial and Accounting Officer
Mr. Michael D. Magill, Executive Vice President
Ennis, Inc.
2441 Presidential Parkway
Midlothian, Texas 76065
Phone: (972) 775-9801
Fax: (972) 775-9820
www.ennis.com
Ennis, Inc.
Condensed Financial Information
(In thousands, except per share amounts)
Three months ended | Nine months ended | |||||||||||||||
November 30, | November 30, | |||||||||||||||
Condensed Operating Results |
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues |
$ | 128,996 | $ | 121,846 | $ | 409,868 | $ | 395,488 | ||||||||
Cost of goods sold |
98,385 | 91,663 | 317,059 | 291,510 | ||||||||||||
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Gross profit margin |
30,611 | 30,183 | 92,809 | 103,978 | ||||||||||||
Operating expenses |
20,594 | 19,086 | 63,942 | 58,265 | ||||||||||||
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Operating income |
10,017 | 11,097 | 28,867 | 45,713 | ||||||||||||
Other expense |
517 | 87 | 1,303 | 1,574 | ||||||||||||
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Earnings before income taxes |
9,500 | 11,010 | 27,564 | 44,139 | ||||||||||||
Income tax expense |
3,330 | 4,118 | 9,923 | 16,111 | ||||||||||||
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Net earnings |
$ | 6,170 | $ | 6,892 | $ | 17,641 | $ | 28,028 | ||||||||
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Earnings per share |
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Basic |
$ | 0.24 | $ | 0.27 | $ | 0.68 | $ | 1.08 | ||||||||
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Diluted |
$ | 0.24 | $ | 0.27 | $ | 0.68 | $ | 1.08 | ||||||||
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November 30, | February 29, | |||||||
Condensed Balance Sheet Information |
2012 | 2012 | ||||||
Assets | ||||||||
Current assets |
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Cash |
$ | 9,234 | $ | 10,410 | ||||
Accounts receivable, net |
57,996 | 58,790 | ||||||
Inventories, net |
109,481 | 132,572 | ||||||
Other |
16,850 | 17,438 | ||||||
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193,561 | 219,210 | |||||||
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Property, plant & equipment |
93,147 | 99,516 | ||||||
Other |
210,799 | 213,236 | ||||||
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$ | 497,507 | $ | 531,962 | |||||
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Liabilities and Shareholders Equity | ||||||||
Current liabilities |
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Accounts payable |
$ | 20,873 | $ | 27,924 | ||||
Accrued expenses |
19,212 | 22,317 | ||||||
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40,085 | 50,241 | |||||||
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Long-term debt |
60,000 | 90,000 | ||||||
Other non-current liabilities |
32,972 | 31,846 | ||||||
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Total liabilities |
133,057 | 172,087 | ||||||
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Shareholders equity |
364,450 | 359,875 | ||||||
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$ | 497,507 | $ | 531,962 | |||||
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Nine months ended | ||||||||
November 30, | ||||||||
Condensed Cash Flow Information |
2012 | 2011 | ||||||
Cash provided by operating activities |
$ | 40,635 | $ | 26,964 | ||||
Cash provided by (used in) investing activities |
2,030 | (11,061 | ) | |||||
Cash used in financing activities |
(43,678 | ) | (11,895 | ) | ||||
Effect of exchange rates on cash |
(163 | ) | 448 | |||||
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Change in cash |
(1,176 | ) | 4,456 | |||||
Cash at beginning of period |
10,410 | 12,305 | ||||||
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Cash at end of period |
$ | 9,234 | $ | 16,761 | ||||
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