Ennis Posts Overall Sales Gain as Print Sales Decline

MIDLOTHIAN, TX—Dec. 20, 2010—Ennis Inc. reported financial results for the three and nine months ended Nov. 30, 2010.

YTD Highlights:

• Consolidated revenues for the nine months ended November 30, 2010 were $418.6 million compared to $396.4 million for the same period ended last year, an increase of $22.2 million or 5.6 percent.

• Consolidated gross profit margins increased 280 basis points (“bps”) over the comparable nine month period last year.

• Diluted earnings per share increased from $0.98 per share for the same period last year to $1.34 for the current period, or an increase of 36.7 percent.

Financial Overview

For the quarter, consolidated net sales increased by $7.0 million, or 5.5 percent, from $127.8 million for the quarter ended Nov. 30, 2009 to $134.8 million for the same quarter of 2010.

• Print sales for the quarter were $69.5 million, compared to $70.6 million for the same quarter last year, or a decrease of 1.5 percent. Print margins decreased from 28.5 percent to 27.9 percent.

• Apparel sales for the quarter were $65.3 million, compared to $57.2 million for the same quarter last year, or an increase of 14.2 percent. Apparel margins increased from 24.8 percent to 26.3 percent.

Net earnings increased from $9.2 million, or 7.2 percent of sales, for the quarter ended Nov. 30, 2009 to $9.6 million, or 7.2 percent of sales, for the quarter ended Nov. 30, 2010.

For the nine month period ended Nov. 30, net sales increased to $418.6 million from $396.4 million in 2009, or 5.6 percent.

• Print sales for the period were $206.5 million, compared to $216.3 million for the same period last year, or a decrease of 4.5 percent. Print margins increased from 27.9 percent to 28.8 percent.

Apparel sales for the period were $212.1 million, compared to $180.1 million for the same period last year, or an increase of 17.8 percent. Apparel margins increased from 22.7 percent to 27.8 percent.

Net earnings increased from $25.4 million, or 6.4 percent of sales, for the nine months ended November 30, 2009 to $34.8 million, or 8.3 percent of sales, for the nine months ended November 30, 2010. Diluted earnings increased from $0.98 per share to $1.34 per share for the nine months ended November 30, 2009 and 2010, respectively.

The company, during the quarter, generated $18.1 million of EBITDA (earnings before interest, taxes, depreciation, and amortization) compared to $18.2 million for the comparable quarter last year. For the nine month period ended November 30, 2010, the Company generated $64.1 million of EBITDA during the period, compared to $51.3 million for the comparable period last year.

Keith Walters, Chairman, CEO and President, commented, “We continue to be pleased with our operational results this year. Operationally, both sectors continue to show strong margins for the quarter. Apparel margins were up 150 bps over the comparable quarter last year and 510 bps for the year. Against stronger comps, our Apparel sector continues to show strong sales growth, with an increase of 14.2 percent during the quarter. We continue to be concerned with the potential impact of cotton pricing on our operational results for the fourth quarter and fiscal year 2012. Our ability to manage this potential cost increase will be dependent upon many factors, a number of which are outside our control. Examples are the continued economic recovery of the United States, availability of cotton and the pricing policies of our competitors. The construction of our new apparel manufacturing facility in Agua Prieta, Mexico continues to progress. We were testing processes, calibrating equipment and training employees during the quarter. We continue to anticipate potential cost savings to be realized once this facility reaches its full production capacity. Many challenges remain in the fourth quarter and for fiscal year 2012. We will continue to be vigilant to deliver the planned results.”

About Ennis
Ennis, Inc. (www.ennis.com) is primarily engaged in the production of and sale of business forms, apparel and other business products. The company is one of the largest private-label printed business product suppliers in the United States. Headquartered in Midlothian, Texas, the company has production and distribution facilities strategically located throughout the United States of America, Mexico and Canada, to serve the company’s national network of distributors. The company, together with its subsidiaries, operates in two business segments: the Print Segment ("Print") and Apparel Segment ("Apparel"). The Print Segment is primarily engaged in the business of manufacturing and selling 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, 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 six distribution centers located throughout North America.

Source: Financial release.