Ennis Reports Revenue and Earnings Declines, Better Margins

MIDLOTHIAN, TX—December 21, 2009—Ennis, Inc. (NYSE: EBF), today reported financial results for the three and nine months ended November 30, 2009.

Highlights:

• Consolidated revenues for the quarter ended November 30, 2009 were $127.8 million compared to $142.5 million for the quarter ended November 30, 2008, a decrease of $14.7 million or 10.3%.

• Consolidated gross profit margins increased 20 basis points from 26.6% for the quarter ended November 30, 2008 to 26.8% for the quarter ended November 30, 2009.

• The Company generated $71.5 million in cash from operations during the nine month period ended November 30, 2009, an increase of $35.3 million, or 97.4%, over the comparable period last year.

Financial Overview

For the quarter, consolidated net sales decreased by $14.7 million, or 10.3%, from $142.5 million for the quarter ended November 30, 2008 to $127.8 million for the quarter ended November 30, 2009. Print sales for the quarter were $70.6 million, compared to $82.6 million for the same quarter last year, or a decrease of 14.5%. Apparel sales for the quarter were $57.2 million, compared to $59.9 million for the same quarter last year, or a decrease of 4.5%.

Overall gross profit margins ("margins") increased from 26.6% to 26.8% for the quarters ended November 30, 2008 and November 30, 2009, respectively. Print margins increased from 26.4% to 28.5%, and Apparel margins decreased from 26.9% to 24.8%, for the quarters ended November 30, 2008 and November 30, 2009, respectively.

Earnings for the quarter decreased from $9.9 million, or 6.9% of sales, for the quarter ended November 30, 2008 to $9.2 million, or 7.2% of sales, for the quarter ended November 30, 2009. Diluted EPS decreased from $0.38 per share to $0.36 per share for the quarters ended November 30, 2008 and November 30, 2009, respectively.

For the nine month period, net sales decreased from $466.7 million for the nine months ended November 30, 2008 to $396.4 million for the nine months ended November 30, 2009, or 15.1%. Print sales for the period were $216.2 million, compared to $253.3 million for the same period last year. Apparel sales for the period were $180.1 million, compared to $213.4 million for the same period last year.

Print margins increased from 26.8% to 27.9%, while Apparel margins were 23.3% and 22.7%, for the nine months ended November 30, 2008 and 2009, respectively.

Net earnings for the period decreased from $30.2 million, or 6.5% of sales, for the nine months ended November 30, 2008 to $25.4 million, or 6.4% of sales, for the nine months ended November 30, 2009. Diluted earnings decreased from $1.17 per share to $0.98 per share for the nine months ended November 30, 2008 and 2009, respectively.

The Company, during the quarter, generated $18.2 million in EBITDA (earnings before interest, taxes, depreciation, and amortization) compared to $19.5 million for the comparable quarter last year. For the nine month period ended November 30, 2009, the Company generated $51.3 million in EBITDA during the period, compared to $59.9 million for the comparable period last year. Operating cash flows increased from $36.2 million for the nine months ended November 30, 2008 to $71.5 million for the nine months ended November 30, 2009.

Keith Walters, Chairman, President & CEO, commented by saying, "Our earnings performance as a percentage of sales improved this quarter as compared to the same quarter last year, even with the 10.3% decline we experienced in our sales. Our sales continue to be impacted by the negative economic environment and competitors’ pricing strategies. I am proud of the fact that during the quarter even given our competitors’ pricing strategies, we were able to increase both our gross margin and net earnings margin, as a percent of sales, by 20 basis points and 30 basis points, respectively. We continue to maintain a strong balance sheet, with excellent liquidity and leverage ratios. I am extremely pleased with our management of our balance sheet during this difficult time, as we have been able to generate $71.5 million in cash from our operations, almost doubling our last year’s production, which we have used to fund our capital expenditures, increase our cash position and pay-down our outstanding debt, reducing our debt-to-equity to less than 0.14-to-1.0. While these economic times continue to be challenging, we remain optimistic in our ability to maintain our earnings level."

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.