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].
Ennis(EBF) - 2025 Q1 - Quarterly Report