Financial Performance - Revenues for the quarter ended November 30, 2024, were $99.8 million, a decrease of $4.8 million or -4.6% compared to the same quarter last year[2] - Net earnings for the quarter were $10.2 million, or $0.39 per diluted share, compared to $9.9 million, or $0.38 per diluted share for the same quarter last year[13] - Gross profit margin for the quarter was 29.3%, an increase from 29.2% in the same quarter last year[14] - For the nine-month period ended November 30, 2024, revenues were $301.9 million, a decrease of $20.8 million or -6.4% compared to the same period last year[7] - EBITDA for the three months ended November 30, 2024, was $18.3 million, compared to $18.2 million for the same quarter last year[5] - Net sales for the three months ended November 30, 2024, were $99,771 million, a decrease of 1.3% from $104,621 million in the same period last year[21] - Gross profit for the nine months ended November 30, 2024, was $89,932 million, down 8.0% from $97,671 million year-over-year[21] - Net earnings for the three months ended November 30, 2024, were $10,204 million, compared to $9,906 million in the prior year, reflecting a 3.0% increase[21] - Earnings per share (diluted) for the three months ended November 30, 2024, was $0.39, up from $0.38 in the same quarter last year[21] Shareholder Returns - The company returned $72.3 million to shareholders in dividends during the quarter, including a special dividend of $2.50 per share[8] - The Board of Directors declared a quarterly cash dividend of $0.25 per share, payable on February 6, 2025[17] Cost Management - Selling, general and administrative costs were reduced by $1.1 million compared to the same quarter last year[14] Cash Flow and Assets - Cash provided by operating activities for the nine months ended November 30, 2024, was $53,097 million, an increase from $52,500 million year-over-year[21] - Total current assets decreased to $152,415 million from $201,382 million as of February 29, 2024[21] - Cash at the end of the period was $55,704 million, down from $83,902 million at the end of the previous year[21] - The company’s total assets decreased to $346,055 million from $399,190 million year-over-year[21] Liabilities and Financial Position - Total liabilities decreased to $48,359 million from $49,349 million year-over-year[21] - The company maintains a strong balance sheet with no debt and significant cash reserves, allowing for continued operations and potential acquisitions[8] Business Acquisitions - The company acquired a business in late June, contributing $3.3 million in revenues and $0.02 in diluted earnings per share for the third quarter[3] Asset Disposal - The company reported a loss from the disposal of assets of $(138) million for the three months ended November 30, 2024, compared to a gain of $1 million in the same period last year[21]

Core Viewpoint - The article discusses the challenges and unpredictability of financial markets, emphasizing the importance of historical knowledge in making investment decisions [1]. Group 1 - The author highlights a personal passion for financial history and its application to market analysis [1]. - There is an acknowledgment of the difficulty in predicting market trends and spotting value, suggesting a cautious approach to investment [1]. Group 2 - The article does not provide specific company or industry insights, focusing instead on the author's perspective and experiences [1].

Dividends and Financial Position - The Board declared a quarterly cash dividend of $0.25 per share and a one-time special dividend of $2.50 per share, with an expected payout of approximately $72.4 million[19]. - The company had a cash balance of $100.0 million and short-term investments of $22.7 million as of August 31, 2024, indicating strong liquidity[104]. - Working capital increased by $10.9 million or 6.5% from $167.6 million at February 29, 2024, to $178.5 million at August 31, 2024[106]. - Cash provided by operating activities was $35.0 million for the six months ended August 31, 2024, consistent with the prior year[107]. - Cash used in financing activities increased by $1.8 million during the six months ended August 31, 2024, primarily due to common stock repurchases[109]. - The funded status of the Pension Plan requires future contributions between $1.0 million and $3.0 million per year, with a contribution of $1.2 million made during the period ended August 31, 2024[110]. - The company had no outstanding debt as of August 31, 2024, but may face interest rate risk if future borrowing occurs[113]. Sales and Revenue Performance - Net sales for the three months ended August 31, 2024, were $99.0 million, a decrease of $7.8 million or 7.3% compared to $106.8 million for the same period in 2023[94]. - For the six months ended August 31, 2024, net sales were $202.1 million, a decrease of $15.9 million or 7.3% compared to $218.1 million for the same period in 2023[99]. Cost and Profitability - Cost of goods sold decreased by $4.4 million or 6.0% to $69.3 million for the three months ended August 31, 2024, resulting in a gross profit margin of 30.1%[95]. - The gross profit margin for the six months ended August 31, 2024, was 30.0%, down from 30.8% for the same period in 2023[100]. - Selling, general, and administrative expenses were $16.6 million for the three months ended August 31, 2024, a decrease of $1.8 million or 9.7% compared to $18.3 million for the same period in 2023[96]. - Income from operations for the three months ended August 31, 2024, was $13.2 million, or 13.3% of net sales, down from $14.7 million or 13.8% for the same period in 2023[97]. - Net earnings for the three months ended August 31, 2024, were $10.3 million, compared to $10.9 million for the same period in 2023, with diluted earnings per share of $0.40[99]. Operational Challenges and Strategic Initiatives - The company is facing challenges such as product obsolescence and increased pricing due to supply chain disruptions, impacting operational results[86]. - The company plans to transform its product offerings to include digital solutions and innovative products, requiring investments in technology and strategic business relationships[87]. - Continued consolidation among distributors may impact the company's margins and sales in the future[89]. - The company emphasizes the importance of managing operational costs and maintaining margins amid competitive pricing pressures[88]. Manufacturing and Distribution - As of August 31, 2024, the company operates 58 manufacturing plants across 20 states, with approximately 94% of products being custom and semi-custom[82]. - The company believes it is the largest provider of business forms and related products to independent distributors in the United States[81]. - The company distributes products primarily through independent distributors, including commercial printers and advertising agencies[85]. - Paper mill shipments were down in the first half of 2023, but the company has maintained stable supply in early 2024 while managing cost pressures[88]. Financial Management and Future Outlook - There have been no material changes to critical accounting estimates during the quarter ended August 31, 2024[90]. - There have been no significant changes in contractual obligations since February 29, 2024, that would materially impact financial condition[113]. - The company anticipates sufficient cash flows from operating activities to cover future operating and capital requirements[112]. - The company has long-term contracts with paper suppliers to ensure adequate sources of raw materials[111]. - Management expects to meet required volumes for certain rebate programs tied to minimum purchase commitments[111]. - The company does not utilize derivative instruments for trading purposes and employs interest rate swaps to manage borrowing costs[113].

Financial Performance - Revenues for the second quarter ended August 31, 2024, were $99.0 million, a decrease of $7.8 million or 7.3% compared to $106.8 million in the same quarter last year[1][2] - Earnings per diluted share for the current quarter were $0.40, down from $0.42 in the comparative quarter last year[2][15] - Gross profit margin for the quarter was 30.1%, compared to 31.0% for the same quarter last year[2][4] - For the six-month period ended August 31, 2024, revenues were $202.1 million, a decrease of $16.0 million or 7.3% from $218.1 million for the same period last year[3] - EBITDA margin improved slightly to 18.6% of sales compared to 18.5% during last year's second quarter[4] - Cash provided by operating activities was $34.9 million for the quarter, compared to $34.9 million in the same quarter last year[17] Acquisitions and Investments - The Company completed the acquisition of Printing Technologies, Inc., enhancing production capabilities and diversifying product offerings[5] - The Company maintains a strong balance sheet with no debt and significant cash reserves, allowing for continued operations and funding of acquisitions[5] Dividends - The Board declared a quarterly cash dividend of $0.25 per share and a special dividend of $2.50 per share, payable on November 8, 2024[10] Assets - Total assets increased to $406.8 million as of August 31, 2024, compared to $399.2 million in the previous year[16]

Financial Performance - Net sales for the quarter ended May 31, 2024, were $103.1 million, a decrease of $8.2 million or -7.4% compared to $111.3 million for the same quarter in the prior year[75]. - Net earnings for the quarter were $10.7 million, down from $11.6 million in the prior year, reflecting a decrease of 8.1%[74]. - Income from operations for the three months ended May 31, 2024, was $13.7 million, representing 13.3% of net sales, down from $15.7 million or 14.1% for the same period in 2023[87]. - Net earnings for the three months ended May 31, 2024, were $10.7 million, compared to $11.6 million for the same quarter last year, with diluted earnings per share decreasing from $0.45 to $0.41[88][89]. Cost and Expenses - Cost of goods sold decreased by $5.1 million or 6.6%, from $77.3 million in Q2 2023 to $72.2 million in Q2 2024, resulting in a gross profit margin of 30.0%[76]. - Selling, general, and administrative expenses were $17.2 million, a decrease of $1.1 million or 6.0% compared to $18.3 million in the same quarter last year[77]. Cash Flow and Investments - Cash provided by operating activities increased to $23.1 million for the three months ended May 31, 2024, compared to $21.7 million for the same period in 2023[102]. - Cash used in investing activities was $5.0 million for the three months ended May 31, 2024, down from $7.1 million in the same period of 2023[103]. - Capital expenditures for the three months ended May 31, 2024, were approximately $2.5 million, with total capital requirements expected to remain between $3.0 million and $6.0 million for the fiscal year[91]. Tax and Contributions - The effective tax rate for the quarter was 27.5%, slightly down from 28.0% in the same quarter last year[79]. - The funded status of the Pension Plan is expected to require contributions between $1.0 million and $3.0 million per year, with a contribution of $1.2 million made in fiscal year 2024[108]. Market Conditions and Strategy - The company experienced a weakened demand environment with increased competition on price, impacting sales volume and revenues[75]. - The integration of the ERP system at recent acquisitions is expected to improve efficiencies and performance moving forward[76]. - The company plans to continue exploring new market opportunities and acquisitions to enhance its product offerings and growth potential[65]. Working Capital and Liquidity - Working capital increased by $6.8 million or 4.0%, from $167.6 million at February 29, 2024, to $174.3 million at May 31, 2024[82]. - The current ratio decreased from 6.0 to 1.0 at February 29, 2024, to 5.7 to 1.0 at May 31, 2024[82]. - The company had $0.3 million outstanding under a standby letter of credit arrangement as of May 31, 2024, and anticipates sufficient cash and short-term investments to fund future expenditures[105]. Legal Matters - The company was awarded $5.8 million in damages in a legal case, pending appeal, with cash bonds of approximately $5.1 million posted by defendants[112]. Inventory Management - Inventory levels are deemed sufficient to meet customer demands, supported by long-term contracts with paper suppliers[109]. Other Income - Other income increased to $1.0 million for the three months ended May 31, 2024, primarily due to higher interest income of $1.4 million compared to $0.8 million in the same period last year[99].

Financial Performance - Revenues for the first quarter ended May 31, 2024, were $103.1 million, a decrease of $8.2 million or 7.4% compared to $111.3 million for the same quarter last year [1]. - Gross profit margin for the quarter was 30.0%, down from 30.6% in the same quarter last year [5]. - Net earnings for the quarter were $10.7 million, or $0.41 per diluted share, compared to $11.6 million, or $0.45 per diluted share for the same quarter last year [1]. - EBITDA increased from $18.1 million last quarter to $19.0 million this quarter, maintaining 18.4% as a percentage of sales [2]. - Cash provided by operating activities was $23.1 million, an increase from $21.7 million in the same quarter last year [15]. Shareholder Returns - The company declared a quarterly cash dividend of $0.25 per share, payable on August 5, 2024 [10]. - The company repurchased 91,883 shares of common stock at an average price of $19.79 per share during the quarter [4]. Assets and Liabilities - Total assets increased to $406.2 million from $399.2 million in the previous quarter [15]. - The company has no debt and significant cash reserves, allowing for continued operations and potential acquisitions [4]. Operational Improvements - The integration of the ERP system at recent acquisitions is expected to improve performance moving forward [3].

Acquisitions - The company acquired Eagle Graphics and Diamond Graphics on October 11, 2023, which generated approximately $8.7 million in combined sales in the last full year prior to acquisition [27]. - On June 2, 2023, Ennis acquired UMC Print, which reported approximately $16.1 million in sales for 2022, enhancing its commercial printing capabilities [28]. - The acquisition of Stylecraft Printing Company on May 23, 2023, added approximately $7.0 million in sales for the fiscal year ended December 31, 2022 [29]. - Ennis acquired School Photo Marketing assets on November 30, 2022, which had approximately $10 million in sales in the preceding twelve months [30]. - Acquisitions during the fiscal year constituted approximately 3.8% of total assets and 5.0% of total revenues as of February 29, 2024 [163]. - The company acquired Stylecraft, UMC, Eagle, and Diamond, which constituted approximately 3.8% of assets and 5% of net sales as of February 29, 2024 [197]. Financial Performance - Net sales for fiscal year 2024 were $420.1 million, a decrease of $11.7 million or 2.7% from $431.8 million in fiscal year 2023, primarily due to a $32.9 million decrease in volume demand, partially offset by a $21.2 million increase from recent acquisitions [126]. - Cost of goods sold decreased by $6.0 million or 2.0% from $300.8 million in fiscal year 2023 to $294.8 million in fiscal year 2024, resulting in a gross profit margin of 29.8% compared to 30.3% in the previous year [128]. - Selling, general and administrative expenses were $68.8 million in fiscal year 2024, a decrease of $2.0 million or 2.8% from $70.8 million in fiscal year 2023, maintaining a consistent percentage of sales at 16.4% [130]. - Income from operations decreased by $9.7 million to $56.5 million or 13.4% of net sales in fiscal year 2024, down from $66.2 million or 15.3% in fiscal year 2023 [133]. - Net earnings for fiscal year 2024 were $42.6 million, or $1.64 per diluted share, compared to $47.3 million, or $1.82 per diluted share in fiscal year 2023, impacted by decreased revenues [137]. - Cash provided by operating activities increased to $69.1 million in fiscal year 2024, up $22.3 million from $46.8 million in fiscal year 2023 [142]. - Working capital increased by approximately $12.2 million or 7.9% from $155.4 million at February 28, 2023, to $167.6 million at February 29, 2024, with a current ratio rising from 4.8 to 1.0 to 6.0 to 1.0 [140]. - Cash used in investing activities was $55.0 million in fiscal year 2024, compared to $11.5 million in fiscal year 2023, primarily due to net purchases of short-term investments and increased costs to acquire businesses [145]. - Total assets increased to $399,190,000 as of February 29, 2024, compared to $393,835,000 as of February 28, 2023, reflecting a growth of approximately 1.1% [209]. - Current assets rose to $201,382,000, up from $196,626,000, marking an increase of about 2.8% year-over-year [209]. - Cash decreased to $81,597,000 from $93,968,000, a decline of approximately 13.1% [209]. - Accounts receivable decreased to $47,209,000 from $53,507,000, representing a reduction of about 11.7% [209]. - Total liabilities decreased to $49,349,000 from $62,403,000, a significant decline of approximately 20.9% [212]. - Shareholders' equity increased to $349,841,000 from $331,432,000, reflecting a growth of about 5.5% [212]. - Retained earnings rose to $236,196,000, up from $219,459,000, indicating an increase of approximately 7.6% [212]. Operational Challenges - The company faces intense competition, particularly from office supply superstores, which may require price reductions or incentives to maintain market share [63][66]. - Digital technologies are expected to continue eroding demand for printed business documents, necessitating a shift towards custom and full-color products [54][56]. - Economic downturns may lead to increased customer bankruptcies, heightening the risk of non-payment on sales [70]. - Transportation costs are significant, and increases in freight expenses could adversely affect operational results [71]. - Environmental regulations may impose additional liabilities or obligations that could impact future operating results [67]. - Labor costs are increasing due to economic factors, with approximately 8% of employees represented by labor unions, which could lead to potential labor disputes and increased operational costs [64][65]. - The company relies on a limited number of suppliers for raw materials, with a significant portion of paper products sourced from one major supplier, which poses risks related to price fluctuations and supply disruptions [57][58]. - The company faces challenges including product obsolescence and increased pricing due to supply chain imbalances, impacting traditional business forms and documents [110]. Employee and Labor Relations - Ennis employs 1,941 individuals, with 156 represented by labor unions under collective bargaining agreements [45]. - Approximately 12% of employees are covered by a noncontributory defined benefit retirement plan, which may be impacted by fluctuations in market values and interest rates [59]. - Employee health benefits costs are significant and have risen in recent years, potentially impacting financial results and cash flow [77]. - The company has various cost control measures in place to manage rising healthcare costs, which are expected to continue impacting financial results [77]. Environmental Commitment - The company recycled 20.9 million pounds of paper and 1.7 million pounds of cardboard and cores in 2024, demonstrating its commitment to environmental stewardship [38]. Cybersecurity - The company experienced a ransomware attack on November 30, 2022, which resulted in a brief disruption but incurred no material expenses and is not expected to have a significant financial impact [76]. - The company has not identified any material cybersecurity risks affecting business operations or financial conditions during the fiscal year ended February 29, 2024 [82]. - The company has implemented a cybersecurity risk management program based on best practices and guidelines from the National Institute of Standards and Technology [80]. Shareholder Returns - A dividend of $0.25 per share was paid in each quarter of fiscal years 2023 and 2024, reflecting the company's commitment to returning value to shareholders [98]. - The company has authorized a stock repurchase program of up to $60.0 million, with $23.4 million remaining available for repurchases as of February 29, 2024 [101]. - The cumulative total shareholder return for Ennis, Inc. from February 28, 2019, to February 29, 2024, shows a performance of $121.81 on an initial $100 investment, compared to $199.09 for the S&P 500 and $139.56 for the Russell 2000 [103][104]. Pension and Retirement Plans - The Pension Plan was 100% funded on a projected benefit obligation basis and 107% on an accumulated benefit obligation basis as of February 29, 2024 [59]. - The discount rate for pension obligations increased to 5.15% in fiscal year 2024 from 5.00% in fiscal year 2023, impacting the pension plan's funded status [118]. - The company anticipates future contributions to its Pension Plan will be between $1.0 million and $3.0 million per year, depending on the plan's funding status [150]. - Estimated pension benefit payments to participants total $38.7 million, with $3.2 million due in less than one year [154].

Acquisitions - Ennis, Inc. acquired Eagle Graphics, Inc. and Diamond Graphics, Inc. on October 11, 2023, which generated approximately $8.7 million in sales for the fiscal year ended December 31, 2022[126][128]. - The acquisition of UMC Print on June 2, 2023, added strategic locations and capabilities, with UMC Print generating approximately $16 million in sales for the fiscal year ended December 31, 2022[129]. - Ennis, Inc. acquired Stylecraft Printing Company on May 23, 2023, which generated approximately $7.0 million in sales for the fiscal year ended December 31, 2022[130]. - The company acquired School Photo Marketing on November 30, 2022, which generated approximately $5.9 million in sales for the fiscal year ended December 31, 2021[131]. - $19.9 million was used to acquire businesses in the nine months ended November 30, 2023, compared to $8.8 million in the same period of the previous year[166]. Financial Performance - Net sales for the three months ended November 30, 2023, were $104.6 million, a decrease of $5.6 million or -5.1% compared to $110.2 million in the same quarter of 2022[143]. - For the nine months ended November 30, 2023, net sales were $322.7 million, a decrease of $6.5 million or 2.0% compared to $329.1 million in the same period last year[153]. - Income from operations for the three months ended November 30, 2023, was $13.1 million, or 12.5% of net sales, down from $16.2 million or 14.7% in the same quarter of 2022[147]. - Net earnings for the three months ended November 30, 2023, were $9.9 million, compared to $11.3 million in the same quarter of the prior year, with diluted earnings per share of $0.38[150]. - Gross profit margin for the nine-month period was 30.3%, down from 31.2% in the prior year, attributed to lower volumes shipped[154]. Cost Management - Cost of goods sold decreased by $2.7 million or 3.5%, from $76.8 million in Q3 2022 to $74.1 million in Q3 2023, resulting in a gross profit margin of 29.2%, down from 30.4% in the prior year[144]. - Selling, general, and administrative expenses increased slightly by $0.1 million or 0.6% to $17.4 million, representing 16.6% of net sales for the current quarter[145]. - Ennis, Inc. aims to manage operational costs and maintain margins despite pressures from weak volumes and competitive pricing in the industry[134]. Market Challenges - Ennis, Inc. faces challenges from inflation and potential recessionary concerns, which could impact demand for its products[132]. - The printing industry is experiencing consolidation, with many distributors being acquired, which may affect Ennis, Inc.'s margins and sales[136]. - The company is focused on transforming its product offerings to adapt to digital technologies and changing market demands[133]. Cash Flow and Investments - Cash provided by operating activities was $52.5 million for the nine months ended November 30, 2023, compared to $34.0 million in the same period of 2022[165]. - Cash used in investing activities increased to $43.2 million for the nine months ended November 30, 2023, compared to $12.1 million for the same period in 2022[166]. - Capital expenditures for equipment were $4.9 million for the nine months ended November 30, 2023, up from $3.3 million in the prior year[166]. - The company spent approximately $4.9 million on capital expenditures for the nine months ended November 30, 2023, and expects capital requirements for the current fiscal year to be between $3.0 million and $6.0 million[172]. - The company purchased approximately $18.4 million of U.S. government treasury bills with staggered maturities during the current period[166]. Working Capital and Liabilities - The company reported a working capital increase of $9.7 million or 6.2%, from $155.4 million at February 28, 2023, to $165.0 million at November 30, 2023[164]. - As of November 30, 2023, the company had an unfunded pension liability of $0.6 million recorded on its balance sheet[170]. - The company expects future contributions to its Pension Plan to be between $1.0 million and $3.0 million per year, with a required contribution of approximately $1.2 million anticipated before the end of the current fiscal year[170]. - The company had no outstanding long-term debt as of November 30, 2023, and anticipates sufficient cash and operating cash flows to fund future expenses[168]. Tax and Interest Rate - The effective tax rate for the three months ended November 30, 2023, was 28.3%, compared to 28.0% for the same period in 2022[149]. - The company is exposed to interest rate risk on financial instruments with variable interest rates, although it had no outstanding debt at the end of the reporting period[176].

PART I: FINANCIAL INFORMATION Overview of Ennis, Inc.'s unaudited condensed consolidated financial statements and management's discussion for the periods ended August 31, 2023 [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Presents Ennis, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income statements, and cash flows, with accompanying notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$398.9 million**, liabilities decreased, and shareholders' equity grew to **$343.1 million** as of August 31, 2023 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | August 31, 2023 | February 28, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $100,340 | $93,968 | | Total current assets | $198,939 | $196,626 | | Property, plant and equipment, net | $51,988 | $47,789 | | Goodwill | $92,217 | $91,819 | | **Total assets** | **$398,870** | **$393,835** | | **Liabilities & Equity** | | | | Total current liabilities | $35,613 | $41,247 | | Total liabilities | $55,724 | $62,403 | | Total shareholders' equity | $343,146 | $331,432 | | **Total liabilities and shareholders' equity** | **$398,870** | **$393,835** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales decreased to **$106.8 million** for Q2 and were flat at **$218.1 million** for H1, with net earnings declining in both periods Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Aug 31, 2023 | Three Months Ended Aug 31, 2022 | Six Months Ended Aug 31, 2023 | Six Months Ended Aug 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $106,760 | $111,233 | $218,054 | $218,900 | | Gross profit | $33,099 | $35,219 | $67,140 | $69,223 | | Income from operations | $14,706 | $17,277 | $30,404 | $33,599 | | Net earnings | $10,910 | $12,194 | $22,545 | $23,821 | | Diluted EPS | $0.42 | $0.47 | $0.87 | $0.92 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly increased to **$34.9 million**, while investing cash outflow rose due to acquisitions, leading to a **$6.4 million** cash increase Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended Aug 31, 2023 | Six Months Ended Aug 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $34,934 | $21,755 | | Net cash used in investing activities | ($15,640) | ($1,801) | | Net cash used in financing activities | ($12,922) | ($14,040) | | **Net change in cash** | **$6,372** | **$5,914** | | **Cash at end of period** | **$100,340** | **$91,520** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revenue recognition, and significant events including 2023 acquisitions, stock repurchase program status, and dividend declarations - On June 2, 2023, the Company acquired UMC Print for approximately **$7.7 million** in cash, adding **$0.2 million** to goodwill[43](index=43&type=chunk) - On May 23, 2023, the Company acquired Stylecraft Printing Company for **$5.0 million**, adding **$0.2 million** to goodwill[46](index=46&type=chunk) - As of August 31, 2023, **$23.9 million** remained available under the company's stock repurchase program, with no shares repurchased during the six-month period[73](index=73&type=chunk) - On September 15, 2023, the Board declared a quarterly dividend of **$0.25 per share**, payable on November 3, 2023[103](index=103&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 net sales decrease, gross profit margin decline, and the company's strong liquidity position with **$100.3 million** cash and no debt [Business Overview and Challenges](index=24&type=section&id=Business%20Overview%20and%20Challenges) Ennis operates 57 plants, serving distributors, facing industry consolidation, digital shifts, and competition, while pursuing growth through strategic acquisitions - The company operates **57 manufacturing plants** across **20 states**, primarily serving independent distributors in the U.S[113](index=113&type=chunk) - Acquired UMC Print on June 2, 2023, which had prior fiscal year sales of approximately **$16 million**[119](index=119&type=chunk) - Acquired Stylecraft Printing Company on May 23, 2023, which had prior fiscal year sales of approximately **$7.0 million**[121](index=121&type=chunk) - Key business challenges include industry consolidation, product obsolescence due to digital technology, and intense price competition within the print industry[123](index=123&type=chunk)[125](index=125&type=chunk)[127](index=127&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Q2 net sales decreased **4.0%** to **$106.8 million**, and H1 net sales decreased **0.4%** to **$218.1 million**, both impacted by legacy business declines Q2 FY2024 vs Q2 FY2023 Performance (in millions) | Metric | Q2 FY2024 | Q2 FY2023 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $106.8 | $111.2 | -4.0% | | Gross Profit | $33.1 | $35.2 | -6.0% | | Gross Profit Margin | 31.0% | 31.7% | -70 bps | | Income from Operations | $14.7 | $17.3 | -15.0% | | Net Earnings | $10.9 | $12.2 | -10.7% | | Diluted EPS | $0.42 | $0.47 | -10.6% | - For Q2, recent acquisitions contributed approximately **$6.5 million** in revenue, but this was offset by a **$10.9 million** decline in legacy business volume[134](index=134&type=chunk) H1 FY2024 vs H1 FY2023 Performance (in millions) | Metric | H1 FY2024 | H1 FY2023 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $218.1 | $218.9 | -0.4% | | Gross Profit | $67.1 | $69.2 | -3.0% | | Gross Profit Margin | 30.8% | 31.6% | -80 bps | | Income from Operations | $30.4 | $33.6 | -9.5% | | Net Earnings | $22.5 | $23.8 | -5.5% | | Diluted EPS | $0.87 | $0.92 | -5.4% | - For H1, recent acquisitions added approximately **$10.6 million** in revenue, offset by an **$11.4 million** reduction from the legacy business[144](index=144&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$100.3 million** cash, no debt, increased operating cash flow, and projected capital expenditures - The company has no debt and believes its cash balance of **$100.3 million** and operating cash flows are adequate for the next twelve months[151](index=151&type=chunk) Key Liquidity Metrics (in thousands) | Metric | August 31, 2023 | February 28, 2023 | | :--- | :--- | :--- | | Cash | $100,340 | $93,968 | | Working Capital | $163,326 | $155,379 | - Net cash provided by operating activities was **$34.9 million** for the six months ended August 31, 2023, a significant increase from **$21.8 million** in the prior-year period[155](index=155&type=chunk) - Capital expenditures for fiscal year 2024 are expected to be between **$3.0 million** and **$6.0 million**[161](index=161&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk on financial instruments but has no outstanding debt as of August 31, 2023, mitigating current exposure - The company had no outstanding debt as of August 31, 2023, but would be exposed to interest rate risk if it borrows in the future[166](index=166&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) CEO and CFO concluded disclosure controls and procedures were effective as of August 31, 2023, with no material changes to internal controls - Management, including the CEO and CFO, concluded that as of August 31, 2023, the company's disclosure controls and procedures were effective[168](index=168&type=chunk) - No changes in internal control over financial reporting occurred during the six months ended August 31, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[169](index=169&type=chunk) PART II: OTHER INFORMATION Provides details on legal proceedings, risk factors, equity sales, and exhibits for the reporting period [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course litigation, with a subsidiary awarded an unrecorded **$5.85 million** judgment - In April 2023, a subsidiary was awarded **$5.0 million** in damages in a legal case, with the court later amending the total judgment to **$5.85 million**, including attorney's fees, which has not yet been recorded in the financial statements[172](index=172&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) No material changes in risk factors have occurred since the February 28, 2023 Annual Report on Form 10-K - No material changes in Risk Factors have occurred since the company's Annual Report on Form 10-K for the year ended February 28, 2023[173](index=173&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company made no share repurchases during the period, with **$23.9 million** remaining available under its program - The company did not purchase any shares of common stock during the six months ended August 31, 2023[176](index=176&type=chunk) - As of August 31, 2023, **$23.9 million** remained available for share repurchases under the company's program[176](index=176&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including CEO/CFO certifications and Inline XBRL data - The report includes exhibits such as CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL data (Exhibit 101)[179](index=179&type=chunk)

PART I [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Unaudited financial statements for Q1 2023 show increased assets and operating cash flow, with stable net sales and earnings [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to **$396.0 million** due to higher cash, while liabilities decreased, boosting shareholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | May 31, 2023 | February 28, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $102,106 | $93,968 | | Accounts receivable, net | $46,627 | $53,507 | | Inventories, net | $48,048 | $46,834 | | Total current assets | $198,714 | $196,626 | | Total assets | $395,990 | $393,835 | | **Liabilities & Equity** | | | | Total current liabilities | $38,378 | $41,247 | | Total liabilities | $58,309 | $62,403 | | Total shareholders' equity | $337,681 | $331,432 | | Total liabilities and shareholders' equity | $395,990 | $393,835 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales rose **3.3%** to **$111.3 million**, with stable gross profit and flat net earnings of **$11.6 million** Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three months ended May 31, 2023 | Three months ended May 31, 2022 | | :--- | :--- | :--- | | Net sales | $111,294 | $107,667 | | Gross profit | $34,041 | $34,004 | | Income from operations | $15,698 | $16,322 | | Net earnings | $11,635 | $11,627 | | Diluted EPS | $0.45 | $0.45 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income slightly increased to **$12.0 million**, driven by pension liability adjustments Comprehensive Income (in thousands) | Metric | Three months ended May 31, 2023 | Three months ended May 31, 2022 | | :--- | :--- | :--- | | Net earnings | $11,635 | $11,627 | | Adjustment to pension, net of taxes | $387 | $304 | | **Comprehensive income** | **$12,022** | **$11,931** | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) Shareholders' equity grew to **$337.7 million** driven by net earnings, partially offset by dividend payments - Key activities affecting shareholders' equity in the three months ended May 31, 2023, included net earnings of **$11.6 million**, dividend payments of **$6.5 million** (**$0.25** per share), and stock-based compensation of **$0.7 million**[19](index=19&type=chunk) - In the comparable period of the prior year (three months ended May 31, 2022), the company repurchased **$1.1 million** of its common stock, with no repurchases made in the current quarter[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased to **$21.7 million**, with acquisitions impacting investing activities and cash rising by **$8.1 million** Summary of Cash Flows (in thousands) | Cash Flow Activity | Three months ended May 31, 2023 | Three months ended May 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $21,726 | $14,237 | | Net cash used in investing activities | $(7,129) | $(1,036) | | Net cash used in financing activities | $(6,459) | $(7,586) | | **Net change in cash** | **$8,138** | **$5,615** | | **Cash at end of period** | **$102,106** | **$91,221** | - Investing activities in Q1 2023 included **$2.1 million** in capital expenditures and **$5.0 million** for the purchase of businesses[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements (unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Notes detail accounting policies, recent acquisitions like Stylecraft Printing for **$5.0 million**, and the **$23.9 million** stock repurchase program - On May 23, 2023, the Company acquired Stylecraft Printing Company for **$5.0 million**, resulting in the recognition of **$0.2 million** in goodwill[44](index=44&type=chunk) - The company's stock repurchase program has **$23.9 million** remaining available as of May 31, 2023, with no shares repurchased during the quarter[68](index=68&type=chunk) - Subsequent to the quarter end, on June 2, 2023, the company acquired UMC Print for approximately **$7.7 million**, and on June 16, 2023, the Board declared a quarterly dividend of **$0.25** per share[94](index=94&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses **3.3%** revenue growth from acquisitions, a **100 basis point** gross margin decline, and strong **$102.1 million** cash liquidity [Business Overview and Recent Acquisitions](index=22&type=section&id=Business%20Overview%20and%20Recent%20Acquisitions) Ennis, Inc., a major printed products manufacturer with **55 plants**, expanded through recent strategic acquisitions to drive growth - The company operates **55** manufacturing plants in **20** states and is described as the largest provider of business forms, labels, tags, envelopes, and presentation folders to independent distributors in the U.S[104](index=104&type=chunk)[105](index=105&type=chunk) - Recent acquisitions include UMC Print (June 2023), Stylecraft Printing Company (May 2023), and School Photo Marketing (November 2022), aimed at adding strategic locations and capabilities[111](index=111&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Net sales rose **3.3%** to **$111.3 million** from acquisitions, with gross margin declining to **30.6%** and net earnings flat - Net sales increased by **$3.6 million** (**3.3%**) year-over-year, with recent acquisitions contributing approximately **$4.1 million**, offsetting a slight decline in organic sales volume[126](index=126&type=chunk) - Gross profit margin decreased by **100 basis points** to **30.6%** compared to **31.6%** in the prior year quarter, but improved by **300 basis points** sequentially from the quarter ending February 28, 2023[127](index=127&type=chunk) - Net earnings were flat at **$11.6 million**, and diluted EPS was also flat at **$0.45** compared to the prior year quarter[131](index=131&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity remains strong with cash at **$102.1 million** and no long-term debt, with capital expenditures funded by operating cash flows Key Liquidity Metrics (in thousands) | Metric | May 31, 2023 | February 28, 2023 | | :--- | :--- | :--- | | Working capital | $160,336 | $155,379 | | Cash | $102,106 | $93,968 | - Net cash from operating activities was **$21.7 million** for the quarter, a significant increase from **$14.2 million** in the prior year period, primarily due to improved collections on accounts receivable[134](index=134&type=chunk) - The company did not renew its credit facility and has no outstanding long-term debt, with future expenses expected to be funded by cash on hand and operating cash flows[137](index=137&type=chunk) - Capital expenditures for the fiscal year are expected to be between **$3.0 million** and **$6.0 million**, with approximately **$2.1 million** spent in the first quarter[140](index=140&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk exposure to interest rates is minimal due to no outstanding debt as of May 31, 2023 - The company is exposed to interest rate risk but had no outstanding debt as of May 31, 2023, mitigating current risk[143](index=143&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - Based on an evaluation as of the end of the period, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[145](index=145&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[146](index=146&type=chunk) PART II: OTHER INFORMATION [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material pending legal proceedings outside of ordinary routine litigation incidental to its business - There are no material pending legal proceedings against the company other than ordinary, routine litigation[148](index=148&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors since those disclosed in its Annual Report on Form 10-K for the fiscal year ended February 28, 2023 - No material changes in risk factors have occurred since the company's last Annual Report on Form 10-K[149](index=149&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any shares of its common stock during the three months ended May 31, 2023, with **$23.9 million** remaining available for future repurchases - The company's share repurchase program has a cumulative authorization of **$60 million**[151](index=151&type=chunk) - No shares were repurchased during the three months ended May 31, 2023, and as of this date, **$23.9 million** remained available under the program[152](index=152&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO, and financial data formatted in Inline XBRL - Exhibits filed with the report include CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and financial statements in Inline XBRL format (Exhibit 101)[154](index=154&type=chunk)