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].
Ennis(EBF) - 2024 Q3 - Quarterly Report