Ennis reported financial results for the three and six months ended 31 August 2016.
Highlights include:
Gross profit margin on continuing operations increased slightly from 29.5% to 29.6% on a sequential quarter basis.Diluted earnings per share from continuing operations remained constant at $0.26 on a sequential quarter basis, but declined from $0.37 for the comparative quarter last year and declined from $0.72 to $0.52 for the comparable six month period.Adjusted diluted earnings per share from continuing operations (a non-GAAP financial measure) was $0.35 for the quarter and $0.64 for the six month period, compared to $0.37 and $0.72 for the comparative periods last year
Financial Overview
The Company’s net sales from continuing operations for the quarter ended August 31, 2016 were $91.2 million compared to $100.5 million for the same quarter last year, a decrease of 9.3%. Gross profit margin (“margin”) for continuing operations was $27.0 million for the quarter, or 29.6%, as compared to 29.5% for the sequential quarter and 31.2% for the same quarter last year.
Diluted earnings per share from continuing operations for the quarter were $0.26, compared to $0.37 for the same quarter last year. During the quarter our operational results continued to be impacted by the relocation costs of our Folder Express operation and a $2.3 million charge for higher than normal medical expenses incurred during the quarter. Without the impact of these items, on a non-GAAP basis, our adjusted net earnings from continuing operations would have been $9.0 million and our adjusted earnings per share from continuing operations would have been $0.35 per diluted share.
The Company’s net sales from continuing operations for the six month period were $181.7 million compared to $197.2 million for the same period last year, a decrease of 7.9%. Margin for continuing operations was $53.7 million, or 29.6%, as compared to $61.3 million, or 31.1% for the six month period ended August 31, 2016 and August 31, 2015, respectively. Diluted earnings per share from continuing operations for the six month period were $0.52, compared to $0.72 for the same period last year.
Earnings from discontinued operations during the six month period were $0.10, compared to $0.07 for the same period last year. The combined results for continued and discontinued operations were $0.62 per diluted share for the period compared to $0.79 for the same period last year.
The net loss arising from the sale of the Company’s apparel operations during the six month period, net of tax, was $26.0 million, or ($1.01) per share, which included the write-off of the balance of foreign currency translation adjustments of $16.0 million, or $10.3 million, net of taxes. As a result, the Company realized a net loss of ($10.1) million, or ($0.39) per diluted share compared to net earnings of $20.2 million, or $0.79 per diluted share for the six months ended August 31, 2016 and August 31, 2015, respectively. Without the impact of the Folder Express relocation and the higher than normal medical expenses, on a non-GAAP basis, our adjusted net earnings from continuing operations would have been $16.6 million and our adjusted earnings per share from continuing operations would have been $0.64 per diluted share.
Non-GAAP Reconciliations
The Company believes the non-GAAP financial measure of EBITDA (EBITDA is calculated as net earnings from continuing operations before interest, taxes, depreciation, and amortization) provides important supplemental information to both management and investors regarding financial and business trends used in assessing its results of operations.
The Company believes adding back the specified items to net earnings provides a more meaningful comparison to the corresponding reported periods and internal budgets and forecasts, provides management with a more relevant measurement of operating performance and yields metrics which are more useful in assessing management performance. In addition, EBITDA is a component of the financial covenants and an interest rate metric in the Company’s credit facility. While management believes this non-GAAP financial measure is useful in evaluating Ennis, this information should be considered as supplemental in nature and not as a substitute for, or superior to, the related financial information prepared in accordance with GAAP.
During the second quarter, the Company generated EBITDA from continuing operations of $14.2 million compared to $18.4 million for the comparable quarter last year. For the six month period ended August 31, 2016, the Company generated $27.9 million of EBITDA from continuing operations compared to $35.2 million for the comparable period last year.
