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].
Ennis(EBF) - 2025 Q2 - Quarterly Report