Ennis Reports Revenues Down In Third Quarter, But Signs Of Improvement Visible
Ennis, Inc. has reported financial results for the three- and nine-month periods that ended November 30. Midlothian, Texas-headquartered Ennis, parent company of industry suppliers Folder Express (PPAI 354129, S1), Independent Folders (PPAI 111993, S2) and Admore, Inc. (PPAI 111144, S10), notes that while third-quarter revenues decreased 19.6 percent year-over-year, from $114.9 million in 2019 to $92.4 million in 2020, they were up 6.7 percent from the preceding quarter.
Ennis’ third-quarter gross profit margin was $28.1 million, or 30.4 percent, as compared to $33.8 million, or 29.5 percent for the third quarter last year. Net earnings for the quarter were $8.4 million, or $0.32 per diluted share compared to $10.6 million, or $0.41 per diluted share, in 2019. And while net earnings for the quarter were down on a comparable basis, they were up 28 percent from $0.25 per diluted share for our sequential quarter.
The company’s revenues for the nine-month period that ended November 30 were $268.1 million compared to $331.7 million for the same period last year, a decrease of 19.2 percent. Margin was $77.2 million, or 28.8 percent, compared to $99 million, or 29.8 percent, for the same period in 2019. Net earnings for 2020’s nine-month period were $19 million, or $0.73 per diluted share, compared to $29.7 million, or $1.14 per diluted share, for the same period last year.
“As we expected, our results continue to be significantly impacted by the coronavirus (COVID-19) pandemic,” says Keith Walters, chairman, president and CEO. “Our modification to our cost structure in response to the sales impact of the COVID-19 pandemic and the integration of our recent acquisitions resulted in improvements in our gross profit margin and operating income as a percentage of sales. During the third quarter, our gross profit margin percentage improved to 30.4 percent from our sequential quarter of 29 percent and from the prior year’s third quarter of 29.5 percent. Our operating income improved to 12.5 percent from our sequential quarter of 10.3 percent and from the prior year’s third quarter of 12.3 percent, and EBITDA increased over the sequential quarter from $13.1 million to $15.8 million, representing 15.1 percent and 17 percent of sales, respectively. Our balance sheet continues to be strong with our cash position increasing to $89.4 million from our sequential quarter of $83.9 million and a current ratio—current assets divided by current liabilities—of 4.89.”
Walters adds, “The U.S. economy continues to be significantly impacted by the COVID-19 pandemic and parts of the economy have started to re-open, but remain subject to ongoing surges and local shutdowns, creating a very fluid economic environment. As a recent indicator, according to the Bureau of Labor Statistics, total nonfarm payroll employment rose by 245,000 in November, reflecting a degree of resumption of economic activity that had previously been curtailed due to the COVID-19 pandemic and efforts to contain it. According to the BLS report, in November notable job gains occurred in transportation and warehousing, professional and business services, and health care, whereas employment levels declined in government and retail trade. These BLS statistics provide evidence that various sectors continue to improve, while others have not, which we believe was reflected in our sequential sales increase.
“We continue to monitor incoming order volumes so that we can proactively adjust our costs accordingly. Although no one is sure of the exact timing of an economic recovery, we will continue to stay focused during this period of economic unrest. We will continue to explore acquisitions that can utilize our cash position more effectively and hunt for new sales in new markets and new channels. We will focus, as always, on maintaining our dividend. We expect that our strong balance sheet and strong free-cash flow position should provide us with the means to accomplish these objectives.”