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Apparel sector shows strong sales growth - Ennis
22
Jun '10
Ennis, Inc. reported financial results for the first quarter ended May 31, 2010.

Highlights

• Consolidated revenues for the quarter increased 7.6% over the comparable quarter last year.
• Consolidated gross profit margins increased 630 basis points (“bps”) over the comparable quarter last year.
• Net earnings increased 97.0% over the comparable quarter.
• Diluted earnings per share increased from $0.26 per share for the same quarter last year to $0.50 for the current quarter.

Financial Overview
For the quarter, consolidated net sales increased by $9.9 million, or 7.6%, from $130.8 million for the quarter ended May 31, 2009 to $140.7 million for the quarter ended May 31, 2010. Print sales for the quarter were $67.8 million, compared to $71.7 million for the same quarter last year, or a decrease of 5.4%. Apparel sales for the quarter were $73.0 million, compared to $59.1 million for the same quarter last year, or an increase of 23.5%. Overall gross profit margins ("margins") increased from 23.7% to 30.0% for the quarters ended May 31, 2009 and May 31, 2010, respectively. Print margins increased from 26.4% to 30.3%, and Apparel margins increased from 20.4% to 29.7%, for the quarters ended May 31, 2009 and May 31, 2010, respectively. Net earnings for the quarter increased from $6.6 million, or 5.1% of sales, for the quarter ended May 31, 2009 to $13.0 million, or 9.3% of sales, for the quarter ended May 31, 2010. Diluted EPS increased from $0.26 per share to $0.50 per share for the quarters ended May 31, 2009 and May 31, 2010, respectively.

The Company, during the quarter, generated $23.7 million in EBITDA (earnings before interest, taxes, depreciation, and amortization) compared to $14.3 million for the comparable quarter last year.

Keith Walters, Chairman, Chief Executive Officer and President, commented by saying, “We are extremely pleased with the operational results this quarter. Operationally, both sectors were able to significantly increase their margins, with Print increasing 390 bps, against paper costs increases, and Apparel increasing 930 bps due to continued operational efficiencies and lower cotton pricing. Our Apparel sector showed strong sales growth during the quarter as well, without having to make major price concessions. While we saw the benefit of lower cotton costs during the quarter in our apparel sector, we continue to be concerned with current cotton pricing which continues to be extremely high. Also, we recently received notification of additional paper price increases. Our ability to pass these costs increases on to the market continues to be unknown and is dependent upon the continuing economic recovery and the actions of our competitors. The construction of our new apparel manufacturing facility in Agua Prieta, Mexico continues to progress and we continue to expect that production will begin in this facility during the third quarter of our current fiscal year. Wecontinue to look forward to the start-up of this new facility and the potential cost savings, once fully operational. So while much was accomplished during this last quarter, many challenges remain for fiscal year 2011. As always, we will continue to remain vigilant to the task at hand.”

Ennis, Inc. 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.

Ennis Inc

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