Ennis, Inc. — FY2024 Form 10-K
Reporting period: Fiscal year ended February 29, 2024. This is an annual report, not a standalone fourth-quarter filing; the supplied filing text does not provide standalone Q4 results. Ennis is a U.S. trade printer selling primarily through independent distributors and reports as one operating segment.
Financial performance
| Metric | FY2024 | FY2023 | Change |
|---|---|---|---|
| Net sales | $420.1 million | $431.8 million | Down 2.7% |
| Gross profit / margin | $125.3 million / 29.8% | $131.1 million / 30.3% | Margin down 0.5 percentage points |
| Operating income / margin | $56.5 million / 13.4% | $66.2 million / 15.3% | Down $9.7 million |
| Net earnings | $42.6 million | $47.3 million | Down 10.0% |
| Diluted EPS | $1.64 | $1.82 | Down $0.18 |
| Cash from operations | $69.1 million | $46.8 million | Up $22.3 million |
- FY2024 sales fell primarily because of a $32.9 million decrease in volume, partly offset by approximately $21.2 million of revenue from recent acquisitions. Management cited soft print-market demand, competitive pricing, and reduced outsourced work from some print partners.
- Gross margin declined amid weak volume and competitive pricing. SG&A fell 2.8% to $68.8 million, mainly reflecting lower executive incentive compensation; SG&A remained 16.4% of sales.
- FY2023 operating income included a $5.8 million gain from selling an unused facility; FY2024 recorded a $0.1 million loss on asset disposals. FY2024 interest income was $4.0 million, versus $0.8 million in FY2023, helping lift other income.
- Cash and short-term investments totaled $110.9 million at year-end ($81.6 million cash and $29.3 million Treasury bills). Working capital was $167.6 million and the current ratio was 6.0, compared with 4.8 a year earlier.
- Investing activities used $55.0 million, including $28.9 million net purchases of short-term investments and $19.6 million for acquisitions. Financing activities used $26.4 million, principally dividends of $25.9 million. Cash declined $12.4 million during the year.
- Ennis reported no outstanding debt at year-end; it had $0.3 million outstanding under a standby letter-of-credit arrangement secured by cash collateral. The filing says cash, investments, and operating cash flow should cover operating and capital needs. Capital spending is expected to remain within historical levels; no specific sales or earnings guidance is provided.
Material developments, outlook, and risks
- Acquisitions: Ennis acquired Stylecraft, UMC Print, Eagle Graphics, and Diamond Graphics during FY2024 for approximately $20.4 million in aggregate disclosed purchase prices. Management said these deals expanded product offerings, commercial-print capabilities, and geographic reach. The acquisitions contributed approximately $21.2 million of revenue, per management’s sales discussion.
- Demand and backlog: Firm-order backlog was approximately $33.7 million at February 29, 2024, down from $46.7 million a year earlier. Management described ongoing traditional-form obsolescence, customer consolidation, excess industry capacity, and price pressure. Digital substitution is a continuing structural risk.
- Capital returns: The company paid $1.00 per share in dividends during FY2024. It repurchased 29,350 shares at an average $19.96 per share; $23.4 million remained under its $60 million authorization. Management said repurchases may continue in FY2025 subject to the Board’s judgment.
- Pension: The defined-benefit plan was 100% funded on a projected-benefit-obligation basis and 107% funded on an accumulated-benefit-obligation basis. Management anticipated FY2025 contributions of $1.0–$3.0 million, depending on funding. A 10-basis-point discount-rate change affects the estimated pension liability by about $0.5 million.
- Concentration and operating risks: One supplier provided 40% of materials in FY2024, compared with 50% in FY2023. Paper-price and availability volatility, labor and freight costs, customer credit risk, competition, and acquisition integration remain key exposures. No customer represented 5% or more of sales or receivables.
- Cybersecurity: A November 2022 ransomware attack briefly disrupted systems; the company restored operations from backups, reported no material expense or significant financial impact, and cautioned that future attacks could be more harmful. It reported no cybersecurity threat with a material effect in FY2024.
- Contingency: A subsidiary was awarded $5.8 million in damages and fees in litigation; the defendants appealed. Ennis has not recognized the award as revenue. Cash bonds totaling approximately $5.1 million may be recoverable if the appeal is unsuccessful. Management does not expect current litigation to materially harm consolidated results or financial position.
- Other unusual item: An extended note receivable from the sale of a former manufacturing facility was $4.4 million at year-end; its extension followed regulatory delays affecting third-party financing. The company reported no goodwill impairment in FY2024 or FY2023.
Key investor verification points
- Review the audited statements and acquisition disclosures to assess the durability of earnings and how much reported sales growth or resilience depends on acquisitions.
- Check subsequent filings for backlog trends, volume recovery, pricing, and whether margin pressure continues.
- Verify collection and repayment status of the $4.4 million facility-sale note and the appealed $5.8 million legal award.
- Monitor cash deployment, Treasury-bill maturities, dividends, buybacks, and pension contributions against operating needs.
- Assess exposure to the concentrated paper supplier, digital substitution, and cyber risk; confirm acquisition integration and control procedures as acquired businesses are incorporated.