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Apparel sales down 21.7% at Ennis in H1 FY'12
26
Sep '12
Ennis Inc. reported financial results for the three and six months ended August 31, 2012.

Financial Overview

Our consolidated net sales were $138.3 million for the second quarter ended August 31, 2012 compared to $130.4 million for the second quarter ended August 31, 2011, or an increase of 6.1%. Print sales increased 24.3% for the quarter, from $69.2 million to $86.0 million.

Apparel sales for the quarter declined by 14.5% (down 4.5% on units and down 10% on price) from $61.2 million to $52.3 million. Our consolidated gross profit margin ("margin") decreased from 26.1% to 24.5% for the quarters ended August 31, 2011 and August 31, 2012, respectively.

Our print segment margin increased from 28.6% to 30.7%, while our apparel segment margin, which continues to be impacted by higher cotton costs, decreased from 23.4% to 14.4% for the quarter.

As a result, our net earnings decreased from $9.7 million, or 7.4% of net sales, for the quarter ended August 31, 2011 to $7.6 million, or 5.5% of net sales, for the quarter ended August 31, 2012. Diluted earnings per share decreased from $0.37 to $0.29 for the quarters ended August 31, 2011 and August 31, 2012, respectively.

For the six month period, net sales increased from $273.6 million to $280.9 million, or 2.7%. Print sales for the six month period were $173.4 million, compared to $136.3 million for the same period last year, an increase of $37.1 million, or 27.2%.

Apparel sales for the six month period were $107.5 million, compared to $137.3 million for the same period last year, or a decrease of 21.7% (down 14.7% on units and down 7% on price).

Overall our margin decreased from 27.0% to 22.1% for the six months ended August 31, 2011 and 2012, respectively. Our print margin increased during the period from 28.7% to 29.3%, while our apparel margin decreased from 25.3% to 10.6%, again due to higher cotton costs.

Net earnings for the period decreased from $21.1 million, or 7.7% of net sales, for the six months ended August 31, 2011 to $11.5 million, or 4.1% of net sales, for the six months ended August 31, 2012. Diluted earnings per share decreased from $0.81 to $0.44 for the six months ended August 31, 2011 and 2012, respectively.

During the second quarter, the Company generated $15.7 million in EBITDA compared to $19.0 million for the comparable quarter last year. For the six month period ended August 31, 2012, the Company generated $25.7 million of EBITDA compared to $40.9 million for the comparable period last year.

Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, “Our print operations continue to deliver revenue and operational results as expected. Our two recent acquisitions, Printegra and PrintXcel, delivered sales and profits for the second quarter better than expected.

“While our apparel results continue to be negatively impacted by higher raw material costs increasing the cost of finished goods and cost of sales, we are beginning to see improvement in this segment’s margin. Apparel’s margin during the second quarter improved 740 basis points over the preceding quarter; and we expect its margin to continue to improve during the current quarter as higher cost raw materials are being replaced with raw materials with significantly lower costs.

“The apparel market continues to be constrained from a volume perspective, and pricing in the marketplace continues to be highly competitive. While challenges continue in the apparel sector, we are confident about the long-term prospects of both sectors. As always, no matter what direction this fiscal year takes, you can be assured we will remain vigilant to the task at hand.”

Ennis Inc.


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