Ennis(US:EBF)2026-01-07 14:13Acquisitions and Business Growth - Ennis, Inc. acquired CFC Print & Mail for approximately $3.9 million, which generated about $7.1 million in sales for the fiscal year ended December 31, 2024[130]. - The acquisition of NEC and ESS strengthened production capabilities, with these companies generating approximately $26.0 million in sales for the fiscal year ended December 31, 2024[131]. Manufacturing and Operations - Approximately 95% of the business products manufactured are custom and semi-custom, tailored to customer specifications[124]. - The company operates around 50 manufacturing plants across 20 states in the U.S., focusing on printing services[124]. - The company continues to manage operational costs through forecasting, production models, and strengthening supplier relationships[135]. Industry Challenges - The printing industry is facing challenges such as product obsolescence and increased pricing due to supply-demand imbalances[134]. - Margins are under pressure from weak volumes, elevated input costs, and ongoing pricing competition in the market[135]. - Customer consolidation among distributors may impact sales volumes and margins in the future[136]. Financial Performance - Net sales for the three months ended November 30, 2025, were $100.2 million, an increase of $0.4 million or 0.4% compared to $99.8 million in the same quarter of the prior year[144]. - Cost of goods sold decreased by $2.3 million or 3.3%, from $70.5 million to $68.2 million, resulting in a gross profit margin increase to 31.9% from 29.3%[145]. - Selling, general, and administrative expenses rose by $0.7 million or 4.3%, totaling $17.0 million, which is 17.0% of net sales compared to 16.4% in the prior year[146]. - Income from operations for the three months ended November 30, 2025, was $15.0 million, or 15.0% of net sales, up from $13.0 million or 13.1%[147]. - Net earnings for the three months ended November 30, 2025, were $10.8 million, an increase from $10.2 million in the same quarter last year, with diluted earnings per share rising to $0.42 from $0.39[151]. - For the nine months ended November 30, 2025, net sales were $296.0 million, a decrease of $5.9 million or 2.0% compared to $301.9 million in the prior year[152]. - Gross profit for the nine months ended November 30, 2025, was $92.3 million, with a gross profit margin increase to 31.2% from 29.8%[153]. Cash Flow and Capital Expenditures - Cash provided by operating activities was $34.9 million for the nine months ended November 30, 2025, down from $53.1 million in the prior-year period[164]. - Cash used in investing activities was $36.7 million, primarily due to business acquisitions totaling $38.9 million during the nine months ended November 30, 2025[165]. - Working capital decreased by $21.9 million or 18.3%, from $119.4 million at February 28, 2025, to $97.6 million at November 30, 2025[163]. - Capital expenditures for the current fiscal year are expected to be between $4.0 million and $7.0 million, with approximately $3.5 million spent in the nine months ended November 30, 2025[173]. - The company expects to generate sufficient cash flows from operating activities to cover normal capital requirements for the foreseeable future[173]. Risk Management - The company anticipates volatility in paper pricing and supply availability due to disruptions at the sole U.S. mill producing rolls of carbonless paper[170]. - The company has increased inventory levels to mitigate risks of shortages and ensure continuity of supply, supported by long-term supply agreements with key paper vendors[172]. - The company is exposed to interest rate risk on financial instruments with variable interest rates and may utilize interest rate swaps to manage borrowing costs[177]. - As of November 30, 2025, the company had no outstanding debt, but future borrowing will expose it to interest rate risk[177]. - The market risk discussion includes forward-looking statements, indicating that actual results may differ based on market conditions[178].