Apparel margins drop due to higher cotton costs; Ennis
26 Apr '11
5 min read
While our Apparel margins decreased slightly over the comparable quarter last year, they were in line with our nine month numbers (27.8% for the nine months ended November 30, 2010 compared to 28.0% for the current quarter). Net earnings were $9.8 million, or 8.1% of sales, for the three months ended February 28, 2010 and $9.8 million, or 7.5% of sales, for the quarter ended February 28, 2011. Diluted EPS for the quarter remained at $0.38 per share, due to the impact of higher cotton costs and the impact of the Agua Prieta startup. We estimate that the impact of the start-up of Agua Prieta during the quarter was approximately $2.4 million or $1.6 million after tax.
Net sales increased from $517.7 million for the year ended February 28, 2010 to $550.0 million for the year ended February 28, 2011, an increase of $32.3 million or 6.2%. Print sales for the year were $272.7 million, compared to $282.3 million for the same period last year, or a decrease of 3.4%. Apparel sales for the year were $277.3 million, compared to $235.4 million for the same period last year, or an increase of 17.8%. Overall, margins increased 200 bps, from 26.1% for fiscal year 2010 to 28.1% for fiscal year 2011.
Print margins increased from 27.6% to 28.3%, while Apparel margins increased from 24.4% to 27.9%, for the year ended February 28, 2010 and 2011, respectively. Net earnings increased from $35.2 million, or 6.8% of sales, for the year ended February 28, 2010 to $44.6 million, or 8.1% of sales, for the year ended February 28, 2011. Diluted earnings increased from $1.36 per share to $1.72 per share for the year ended February 28, 2010 and 2011, respectively, or 26.5%.
We estimate that the start-up impact associated with the Agua Prieta facility was approximately $4.6 million ($3.0 million after tax) for the period. We still estimate the total negative impact associated with the start-up of the Agua Prieta facility to be within our original guidance of around $9.0 million, with the majority of the remaining portion being incurred during the first and second quarter of fiscal year 2012.
The Company, during the quarter, generated $17.5 million of EBITDA (earnings before interest, taxes, depreciation, and amortization) compared to $18.8 million for the comparable quarter last year. For the year ended February 28, 2011, the Company generated $81.5 million of EBITDA compared to $70.1 million for the comparable period last year.
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