10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended August 31, 2021

OR

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from to

Commission File Number 1-5807

ENNIS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Texas	75-0256410
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
2441 Presidential Pkwy., Midlothian, Texas	76065
(Address of Principal Executive Offices)	(Zip code)

Registrant’s Telephone Number, Including Area Code: (972) 775-9801

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $2.50 per share	EBF	New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of September 24, 2021, there were 26,121,463 shares of the Registrant’s common stock outstanding.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2021

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION
	Item 1. Financial Statements	3
	Unaudited Consolidated Balance Sheets at August 31, 2021 and February 28, 2021	3
	Unaudited Consolidated Statements of Operations for the three and six months ended August 31, 2021 and August 31, 2020	5
	Unaudited Consolidated Statements of Comprehensive Income for the three and six months ended August 31, 2021 and August 31, 2020	6
	Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended August 31, 2021 and August 31, 2020	7
	Unaudited Consolidated Statements of Cash Flows for the six months ended August 31, 2021 and August 31, 2020	8
	Notes to Unaudited Consolidated Financial Statements	9
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	28
	Item 4. Controls and Procedures	28
PART II: OTHER INFORMATION
	Item 1. Legal Proceedings	29
	Item 1A. Risk Factors	29
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	29
	Item 3. Defaults Upon Senior Securities	29
	Item 4. Mine Safety Disclosures	29
	Item 5. Other Information	29
	Item 6. Exhibits	30
SIGNATURES		31

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

ENNIS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands)

	August 31,		February 28,
	2021		2021
Assets
Current assets
Cash and cash equivalents	$	82,101	$	75,190
Accounts receivable, net of allowance for doubtful receivables of $1,016 at August 31, 2021 and $961 at February 28, 2021		37,928		37,891
Prepaid expenses		1,689		1,605
Inventories		40,151		32,906
Assets held for sale		—		482
Total current assets		161,869		148,074
Property, plant and equipment
Plant, machinery and equipment		157,800		157,737
Land and buildings		57,166		56,185
Computer equipment and software		18,792		19,336
Other		4,521		4,808
Total property, plant and equipment		238,279		238,066
Less accumulated depreciation		183,987		182,682
Net property, plant and equipment		54,292		55,384
Operating lease right-of-use assets		18,382		19,187
Goodwill		88,661		88,647
Intangible assets, net		49,656		52,712
Other assets		385		384
Total assets	$	373,245	$	364,388

See accompanying notes to consolidated financial statements.

3

ENNIS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS-Continued

(in thousands, except for par value and share amounts)

	August 31,			February 28,
	2021			2021
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	18,827		$	14,759
Accrued expenses		16,017			14,955
Current portion of operating lease liabilities		5,599			5,338
Total current liabilities		40,443			35,052
Liability for pension benefits		6,299			6,299
Deferred income taxes		7,877			7,677
Operating lease liabilities, net of current portion		12,572			13,567
Other liabilities		733			1,244
Total liabilities		67,924			63,839
Commitments and contingencies
Shareholders’ equity
Preferred stock $10 par value, authorized 1,000,000 shares; none issued		—			—
Common stock $2.50 par value, authorized 40,000,000 shares; issued 30,053,443 shares at August 31, 2021 and February 28, 2021		75,134			75,134
Additional paid-in capital		123,116			123,017
Retained earnings		196,809			194,436
Accumulated other comprehensive income (loss):
Minimum pension liability, net of taxes		(19,685	)		(20,282	)
Total accumulated other comprehensive income (loss)		(19,685	)		(20,282	)
Treasury stock		(70,053	)		(71,756	)
Total shareholders’ equity		305,321			300,549
Total liabilities and shareholders' equity	$	373,245		$	364,388

See accompanying notes to consolidated financial statements.

4

ENNIS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

	Three months ended		Six months ended
	August 31,		August 31,
	2021	2020	2021	2020
Net sales	$100,451	$86,612	$197,381	$175,608
Cost of goods sold	71,550	61,457	139,294	126,546
Gross profit margin	28,901	25,155	58,087	49,062
Selling, general and administrative	18,095	16,535	37,010	34,658
(Gain) loss from disposal of assets	1	(300)	(276)	(412)
Income from operations	10,805	8,920	21,353	14,816
Other expense
Interest expense	(2)	(3)	(4)	(6)
Other, net	(146)	(240)	(258)	(478)
Total other expense	(148)	(243)	(262)	(484)
Earnings before income taxes	10,657	8,677	21,091	14,332
Income tax expense	3,197	2,256	6,327	3,726
Net earnings	$7,460	$6,421	$14,764	$10,606
Weighted average common shares outstanding
Basic	26,080,121	25,974,412	26,055,056	25,965,370
Diluted	26,170,396	25,974,412	26,146,421	25,965,370
Earnings per share
Basic	$0.29	$0.25	$0.57	$0.41
Diluted	$0.29	$0.25	$0.57	$0.41
Cash dividends per share	$0.250	$0.225	$0.475	$0.450

See accompanying notes to consolidated financial statements.

5

ENNIS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Three months ended				Six months ended
	August 31,				August 31,
	2021		2020		2021		2020
Net earnings	$	7,460	$	6,421	$	14,764	$	10,606
Adjustment to pension, net of taxes		298		433		597		866
Comprehensive income	$	7,758	$	6,854	$	15,361	$	11,472

See accompanying notes to consolidated financial statements.

6

ENNIS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands, except share and per share amounts)

							Accumulated
			Additional				Other
	Common Stock			Paid-in		Retained		Comprehensive		Treasury Stock
	Shares	Amount	Capital		Earnings		Income (Loss)		Shares		Amount	Total
Balance May 31, 2021	30,053,443	$75,134	$122,746		$195,874		$(19,983)		(4,021,466)		$(70,319)	$303,452
Net earnings	—	—	—		7,460		—		—		—	7,460
Adjustment to pension, net of deferred tax of $95	—	—	—		—		298		—		—	298
Dividends paid ($0.25 per share)	—	—	—		(6,525)		—		—		—	(6,525)
Stock based compensation	—	—	636		—		—		—		—	636
Exercise of stock options and restricted stock	—	—	(266)		—		—		15,198		266	—
Balance August 31, 2021	30,053,443	$75,134	$123,116		$196,809		$(19,685)		(4,006,268)		$(70,053)	$305,321
Balance February 28, 2021	30,053,443	$75,134	$123,017		$194,436		$(20,282)		(4,103,630)		$(71,756)	$300,549
Net earnings	—	—	—		14,764		—		—		—	14,764
Adjustment to pension, net of deferred tax of $199	—	—	—		—		597		—		—	597
Dividends paid ($0.475 per share)	—	—	—		(12,391)		—		—		—	(12,391)
Stock based compensation	—	—	1,802		—		—		—		—	1,802
Exercise of stock options and restricted stock	—	—	(1,703)		—		—		97,362		1,703	—
Balance August 31, 2021	30,053,443	$75,134	$123,116		$196,809		$(19,685)		(4,006,268)		$(70,053)	$305,321
Balance May 31, 2020	30,053,443	$75,134	$122,266		$192,130		$(24,773)		(4,098,607)		$(71,759)	$292,998
Net earnings	—	—	—		6,421		—		—		—	6,421
Adjustment to pension, net of deferred tax of $145	—	—	—		—		433		—		—	433
Dividends paid ($0.225 per share)	—	—	—		(5,866)		—		—		—	(5,866)
Stock based compensation	—	—	326		—		—		—		—	326
Exercise of stock options and restricted stock	—	—	(162)		—		—		9,262		162	—
Common stock repurchases	—	—	—		—		—		—		—	—
Balance August 31, 2020	30,053,443	$75,134	$122,430		$192,685		$(24,340)		(4,089,345)		$(71,597)	$294,312
Balance February 29, 2020	30,053,443	$75,134	$123,052		$193,809		$(25,206)		(4,136,286)		$(72,460)	$294,329
Net earnings	—	—	—		10,606		—		—		—	10,606
Adjustment to pension, net of deferred tax of $289	—	—	—		—		866		—		—	866
Dividends paid ($0.45 per share)	—	—	—		(11,730)		—		—		—	(11,730)
Stock based compensation	—	—	664		—		—		—		—	664
Exercise of stock options and restricted stock	—	—	(1,286)		—		—		73,413		1,286	—
Common stock repurchases	—	—	—		—		—		(26,472)		(423)	(423)
Balance August 31, 2020	30,053,443	$75,134	$122,430		$192,685		$(24,340)		(4,089,345)		$(71,597)	$294,312

See accompanying notes to consolidated financial statements.

7

ENNIS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Six months ended
	August 31,
		2021			2020
Cash flows from operating activities:
Net earnings	$	14,764		$	10,606
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		5,132			4,897
Amortization of intangible assets		4,164			3,924
Gain from disposal of assets		(276	)		(412	)
Bad debt expense, net of recoveries		159			780
Stock based compensation		1,802			664
Net pension expense		797			1,155
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable		221			8,783
Prepaid expenses and income taxes		(84	)		(736	)
Inventories		(6,013	)		1,519
Other assets		(15	)		1
Accounts payable and accrued expenses		4,296			(2,906	)
Other liabilities		(440	)		(121	)
Net cash provided by operating activities		24,507			28,154
Cash flows from investing activities:
Capital expenditures		(2,108	)		(1,289	)
Purchase of businesses, net of cash acquired		(3,922	)		—
Proceeds from disposal of plant and property		825			936
Net cash used in investing activities		(5,205	)		(353	)
Cash flows from financing activities:
Dividends paid		(12,391	)		(11,730	)
Common stock repurchases		—			(423	)
Net cash used in financing activities		(12,391	)		(12,153	)
Net change in cash		6,911			15,648
Cash at beginning of period		75,190			68,258
Cash at end of period	$	82,101		$	83,906

See accompanying notes to consolidated financial statements.

8

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2021

1. Significant Accounting Policies and General Matters

Basis of Presentation

These unaudited consolidated financial statements of Ennis, Inc. and its subsidiaries (collectively referred to as the “Company,” “Registrant,” “Ennis,” or “we,” “us,” or “our”) for the period ended August 31, 2021 have been prepared in accordance with generally accepted accounting principles for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2021, from which the accompanying consolidated balance sheet at February 28, 2021 was derived. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial information have been included and are of a normal recurring nature. In preparing the financial statements, the Company is required to make estimates and assumptions that affect the disclosure and reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates these estimates and judgments on an ongoing basis, including those related to bad debts, inventory valuations, property, plant and equipment, intangible assets, pension plan, accrued liabilities, and income taxes. The Company bases estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of operations for any interim period are not necessarily indicative of the results of operations for a full year, especially in light of the uncertainties surrounding the impact of the novel coronavirus (COVID-19) pandemic.

Recent Accounting Pronouncements

Recently Adopted Accounting Updates

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU” No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Amendments include removal of certain exceptions to the general principles of Topic 740, Income Taxes, and simplification in several other areas. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020, and interim periods therein. The Company adopted ASU 2019-12 as of March 1, 2021, and the adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Updates

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides companies with optional guidance, including expedients and exceptions for applying generally accepted accounting principles to contracts and other transactions affected by reference rate reform, such as the London Interbank Offered Rate (“LIBOR”). This new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company is currently evaluating ASU 2020-04, but does not expect it to have a significant impact on its consolidated financial statements. 

2. Revenue

Nature of Revenues

Substantially all of the Company’s revenue is generated from contracts with customers for the sale of commercial printing products in the continental United States and is primarily recognized at a point in time in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Revenue from the sale of commercial printing products, including shipping and handling fees billed to customers, is recognized upon the transfer of control to the customer, which is generally upon shipment to the customer when the terms of the sale are freight on board (“FOB”) shipping point, or, to a lesser extent, upon delivery to the customer if the terms of the sale are FOB destination.

In a small number of cases and upon customer request, the Company prints and stores commercial printing product for customer specified future delivery, generally within the same year as the product is manufactured. In this case, revenue is recognized upon the transfer of control when manufacturing is complete and title and risk of ownership is passed to the customer. Storage revenue for certain customers may be recognized over time rather than at a point in time. As of the date of this report, the amount of storage revenue is immaterial to the Company’s financial statements. The output method for measure of progress is determined to be appropriate. The Company recognizes storage revenue in the amount for which it has the right to invoice for revenue that is

9

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2021

recognized over time and for which it demonstrates that the invoiced amount corresponds directly with the value to the customer for the performance completed to date.

The Company does not disaggregate revenue and operates in one sales category consisting of commercial printed product revenue, which is reported as net sales on the consolidated statements of operations. The Company does not have material contract assets and contract liabilities as of August 31, 2021.

Significant Judgments

Generally, the Company’s contracts with customers are comprised of a written quote and customer purchase order or statement of work, and governed by the Company’s trade terms and conditions. In certain instances, it may be further supplemented by separate pricing agreements and customer incentive arrangements, which typically only affect the contract’s transaction price. Contracts do not contain a significant financing component as payment terms on invoiced amounts are typically between 30 to 60 days, based on the Company’s credit assessment of individual customers, as well as industry expectations. Product returns are not significant.

From time to time, the Company may offer incentives to its customers considered to be variable consideration including volume-based rebates or early payment discounts. Customer incentives considered to be variable consideration are recorded as a reduction to revenue as part of the transaction price at contract inception when there is a basis to reasonably estimate the amount of the incentive and only to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Customer incentives are allocated entirely to the single performance obligation of transferring printed product to the customer.

For customers with terms of FOB shipping point, the Company accounts for shipping and handling activities performed after the control of the printed product has been transferred to the customer as a fulfillment cost. The Company accrues for the costs of shipping and handling activities if revenue is recognized before contractually agreed shipping and handling activities occur.

The Company’s contracts with customers are generally short-term in nature. Accordingly, the Company does not disclose the value of unsatisfied performance obligations nor the timing of revenue recognition. 

3. Accounts Receivable and Allowance for Doubtful Receivables

Accounts receivable are reduced by an allowance for an estimate of amounts that are uncollectible. Substantially all of the Company’s receivables are due from customers in the United States. The Company extends credit to its customers based upon its evaluation of the following factors: (i) the customer’s financial condition, (ii) the amount of credit the customer requests, and (iii) the customer’s actual payment history (which includes disputed invoice resolution). The Company does not typically require its customers to post a deposit or supply collateral. The Company’s allowance for doubtful receivables is based on an analysis that estimates the amount of its total customer receivable balance that is not collectible. This analysis includes the pooling of receivables based on risk assessment and then assessing a default probability to these pooled balances, which can be influenced by several factors including (i) current market conditions, (ii) historical experience, (iii) reasonable forecast, and (iv) review of customer receivable aging and payment trends.

The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance in the period the payment is received.

The following table presents the activity in the Company’s allowance for doubtful receivables (in thousands):

	Three months ended						Six months ended
	August 31,						August 31,
	2021			2020			2021			2020
Balance at beginning of period	$	954		$	940		$	961		$	715
Bad debt expense, net of recoveries		121			132			159			780
Accounts written off		(59	)		(198	)		(104	)		(621	)
Balance at end of period	$	1,016		$	874		$	1,016		$	874

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ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2021

4. Inventories

With the exception of approximately 13.6% and 12.6% of its inventories valued at the lower of last-in first-out (“LIFO”) for the periods ended August 31, 2021 and February 28, 2021, respectively, the Company values its inventories at the lower of first-in, first-out (“FIFO”) cost or net realizable value. The Company regularly reviews inventories on hand, using specific aging categories, and writes down the carrying value of its inventories for excess and potentially obsolete inventories based on historical usage and estimated future usage. In assessing the ultimate realization of its inventories, the Company is required to make judgments as to future demand requirements. As actual future demand or market conditions may vary from those projected by the Company, adjustments to inventories may be required.

The following table summarizes the components of inventories at the different stages of production as of the dates indicated (in thousands):

	August 31,		February 28,
	2021		2021
Raw material	$	26,036	$	19,699
Work-in-process		5,332		3,762
Finished goods		8,783		9,445
	$	40,151	$	32,906

5. Acquisitions

The Company applies the acquisition method of accounting for business combinations. Under the acquisition method, the acquiring entity in a business combination recognizes 100% of the assets acquired and liabilities assumed at their acquisition date fair values. Management utilizes valuation techniques appropriate for the asset or liability being measured in determining these fair values. Any excess of the purchase price over amounts allocated to assets acquired, including identifiable intangible assets and liabilities assumed, is recorded as goodwill. Where amounts allocated to assets acquired and liabilities assumed is greater than the purchase price, a bargain purchase gain is recognized. Acquisition-related costs are expensed as incurred.

On December 31, 2020, the Company acquired the assets of Infoseal LLC (“Infoseal”), which is based in Roanoke, Virginia, for $19.2 million in cash plus the assumption of trade payables, subject to certain adjustments. Since the acquisition, the Company has incurred approximately $0.4 million of costs (including legal and accounting fees) related to the acquisition. Goodwill of $5.6 million recognized as a part of the acquisition is deductible for tax purposes. The Company also recorded intangible assets with definite lives of approximately $4.3 million in connection with the transaction. The acquisition of Infoseal, which prior to the acquisition generated approximately $19.2 million in sales for its fiscal year ended December 31, 2020, creates additional capabilities within our pressure seal and tax form products.

The following is a summary of the purchase price allocation for Infoseal (in thousands):

Accounts receivable	$	1,966
Inventories		1,758
Right-of-use asset		3,865
Property, plant & equipment		7,000
Goodwill and intangibles		9,889
Accounts payable and accrued liabilities		(1,411	)
Operating lease liability		(3,865	)
	$	19,202

On June 1, 2021, the Company acquired the assets and business from AmeriPrint Corporation ("AmeriPrint"), which is based in Harvard, Illinois, for $3.9 million in cash plus the assumption of trade payables, subject to certain adjustments. Goodwill of $0.5 million recognized as a part of the acquisition is deductible for tax purposes. The Company also recorded intangible assets with definite lives of approximately $1.1 million in connection with the transaction. The acquisition of AmeriPrint which prior to the acquisition generated approximately $6.5 million in sales for its fiscal year ended December 31, 2020, brings added capabilities and expertise to our expanding product offering including barcoding and variable imaging.

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ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2021

The following is a summary of the purchase price allocation for AmeriPrint (in thousands):

Accounts receivable	$	417
Inventories		732
Property, plant & equipment		2,000
Goodwill and intangibles		1,607
Accounts payable and accrued liabilities		(834	)
	$	3,922

The results of operations for Infoseal and AmeriPrint are included in the Company’s consolidated financial statements from the date of acquisition. The following table sets forth certain operating information on a pro forma basis as though all Infoseal and AmeriPrint operations had been acquired as of March 1, 2020, after the estimated impact of adjustments such as amortization of intangible assets, depreciation expense and interest expense and related tax effects (in thousands, except per share amounts).
 

	Three months ended		Six months ended
	Aug 31, 2021	Aug 31, 2020	Aug 31, 2021	Aug 31, 2020
Pro forma net sales	$100,451	$93,040	$199,049	$188,465
Pro forma net earnings	7,460	6,642	14,727	11,049
Pro forma earnings per share - diluted	$0.29	$0.26	$0.56	$0.43

The pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been in effect for the period presented.

6. Leases

The Company leases certain of its facilities and equipment under operating leases, which are recorded as right-of-use assets and lease liabilities. The Company’s leases generally have terms of 1 – 5 years, with certain leases including renewal options to extend the leases for additional periods at the Company’s discretion. At lease inception, all renewal options reasonably certain to be exercised are considered when determining the lease term. The Company currently does not have leases that include options to purchase or provisions that would automatically transfer ownership of the leased property to the Company.

Operating lease expense is recognized on a straight-line basis over the lease term, and variable lease payments are expensed as incurred. The Company had no variable lease costs for the six months ended August 31, 2021 and August 31, 2020.

The Company determines whether a contract is or contains a lease at the inception of the contract. A contract will be deemed to be or contain a lease if the contract conveys the right to control and direct the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from the use of the property, plant, and equipment.

Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates based on the BBB Corporate Bond Rate at lease commencement date as rates are not implicitly stated in most leases.

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ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2021

Components of lease expense for the three and six months ended August 31, 2021 and August 31, 2020 were as follows (in thousands):

	Three months ended				Six months ended
	August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Operating lease cost	$	1,595	$	1,574	$	3,234	$	3,201
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,586	$	1,563	$	3,216	$	3,175
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	838	$	56	$	3,441	$	56

Weighted Average Remaining Lease Terms
Operating leases	4 Years
Weighted Average Discount Rate
Operating leases		3.66	%

Future minimum lease commitments under non-cancelable operating leases for each of the fiscal years ending are as follows (in thousands):

	Operating
	Lease
	Commitments
2022 (remaining 6 months)	$	2,598
2023		5,816
2024		4,423
2025		3,655
2026		2,164
2027		765
Thereafter		3
Total future minimum lease payments	$	19,424
Less imputed interest		1,253
Present value of lease liabilities	$	18,171

7. Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets of acquired businesses and is not amortized. Goodwill and other intangible assets are tested for impairment at a reporting unit level. The annual impairment test of goodwill and intangible assets is performed as of December 1 of each fiscal year.

The Company uses qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the fair value of a reporting unit exceeds its carrying amount, including goodwill. Some of the qualitative factors used in applying this test include consideration of macroeconomic conditions, industry and market conditions, cost factors affecting the business, overall financial performance of the business, and performance of the share price of the Company.

If qualitative factors are not deemed sufficient to conclude that the fair value of the reporting unit more likely than not exceeds its carrying value, then a one-step approach is applied in making an evaluation. The evaluation utilizes multiple valuation methodologies, including a market approach (market price multiples of comparable companies) and an income approach (discounted cash flow analysis). The computations require management to make significant estimates and assumptions, including, among other things,

13

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2021

selection of comparable publicly traded companies, the discount rate applied to future earnings reflecting a weighted average cost of capital, and earnings growth assumptions. A discounted cash flow analysis requires management to make various assumptions about future sales, operating margins, capital expenditures, working capital, and growth rates. If the evaluation results in the fair value of the goodwill for the reporting unit being lower than the carrying value, an impairment charge is recorded.

Definite-lived intangible assets are amortized over their estimated useful lives and tested for impairment if events or changes in circumstances indicate that the asset may be impaired.

The carrying amount and accumulated amortization of the Company’s intangible assets at each balance sheet date are as follows (in thousands):

	Weighted
	Average
	Remaining		Gross
	Life		Carrying		Accumulated
As of August 31, 2021	(in years)		Amount		Amortization		Net
Amortized intangible assets
Trademarks and trade names		11.4	$	28,107	$	9,313	$	18,794
Customer lists		6.4		76,424		45,695		30,729
Non-compete		3.5		877		744		133
Patent		—		783		783		—
Total		8.3	$	106,191	$	56,535	$	49,656
As of February 28, 2021
Amortized intangible assets
Trademarks and trade names		11.9	$	27,561	$	8,194	$	19,367
Customer lists		6.8		75,862		42,726		33,136
Non-compete		3.1		877		668		209
Patent		—		783		783		—
Total		8.7	$	105,083	$	52,371	$	52,712

Aggregate amortization expense for the six months ended August 31, 2021 and August 31, 2020 was $4.2 million and $3.9 million, respectively.

The Company’s estimated amortization expense for the current and next four fiscal years is as follows (in thousands):

2022	$	8,077
2023		7,052
2024		7,010
2025		6,835
2026		6,221

Changes in the net carrying amount of goodwill as of the dates indicated are as follows (in thousands):

Balance as of March 1, 2020	$	82,527
Goodwill acquired		6,120
Balance as of February 28, 2021		88,647
Goodwill acquired		14
Balance as of August 31, 2021	$	88,661

During fiscal year 2021, $6.1 million was added to goodwill related to the acquisition of Infoseal.

14

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2021

8. Accrued Expenses

The following table summarizes the components of accrued expenses as of the dates indicated (in thousands):

	August 31,		February 28,
		2021		2021
Employee compensation and benefits	$	11,861	$	11,742
Taxes other than income		1,465		467
Accrued legal and professional fees		329		272
Accrued interest		84		79
Accrued utilities		108		90
Accrued acquisition related obligations		92		164
Income taxes payable		1,005		1,528
Other accrued expenses		1,073		613
	$	16,017	$	14,955

9. Long-Term Debt

The Company is party to a Second Amended and Restated Credit Agreement, which has been amended from time to time, pursuant to which a credit facility has been extended to the Company until November 11, 2021 (the “Credit Facility”). The Credit Facility provides the Company and its subsidiaries with up to $100.0 million in revolving credit, as well as a $20.0 million sublimit for the issuance of letters of credit and a $15.0 million sublimit for swing-line loans. Under the Credit Facility, the Company or any of its subsidiaries can request up to three increases in the aggregate commitments in an aggregate amount not to exceed $50.0 million. Under the Credit Facility: (i) the Company’s consolidated net leverage ratio may not exceed 3.00:1.00, (ii) the Company’s fixed charge coverage ratio may not be less than 1.25:1.00, and (iii) the Company may make dividends or distributions to shareholders so long as (A) no event of default has occurred and is continuing and (B) the Company’s net leverage ratio both before and after giving effect to any such dividend or distribution is equal to or less than 2.50:1.00. All calculations are made based on U.S. Generally Accepted Accounting Principles existing at the time the Credit Facility was entered into. As of August 31, 2021, the Company was in compliance with all terms and conditions of the Credit Facility.

The Credit Facility bears interest at LIBOR plus a spread ranging from 1.85% to 2.5%. The Company had no outstanding long-term debt under the revolving credit line as of August 31, 2021. The rate is determined by the Company’s fixed charge coverage ratio of total funded debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”). As of August 31, 2021, the Company had $0.6 million outstanding under standby letters of credit arrangements, leaving approximately $99.4 million in available borrowing capacity. The Credit Facility is secured by substantially all of the Company’s assets (other than real property), as well as all capital securities of each of the Company’s subsidiaries. The Company is considering the nonrenewal of the credit facility or renewing with a smaller line of credit limit

10. Shareholders’ Equity

The Company’s board of directors (the “Board”) has authorized the repurchase of the Company’s outstanding common stock through a stock repurchase program, which authorized amount is currently up to $40.0 million in the aggregate. Under the repurchase program, purchases may be made from time to time in the open market or through privately negotiated transactions depending on market conditions, share price, trading volume and other factors. Such purchases, if any, will be made in accordance with applicable insider trading and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice.

During the six months ended August 31, 2021, the Company did not repurchase any shares of common stock under the program. Since the program’s inception in October 2008, there have been 1,894,350 common shares repurchased at an average price of $15.91 per share. As of August 31, 2021, $9.9 million remained available to repurchase shares of the Company’s common stock under the program.

11. Stock Based Compensation

The Company grants stock options, restricted stock and restricted stock units (“RSUs”) to key executives, managerial employees and non-employee directors. Prior to June 30, 2021, the Company had one stock incentive plan, the 2004 Long-Term Incentive Plan of Ennis, Inc., as amended and restated as of May 18, 2008 and was further amended on June 30, 2011 (the “Old Plan”). The Company

15

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2021

had 177,436 shares of unissued common stock reserved under the Old Plan for issuance as of May 31, 2021. The Old Plan expired June 30, 2021 and all remaining unused shares expired. Subject to the affirmative vote of the shareholders, the Board adopted the 2021 Long-Term Incentive Plan of Ennis, Inc. (the “New Plan”) on April 16, 2021 authorizing 1,033,648 shares of common stock for awards. The New Plan was approved by the shareholders at the Annual Meeting on July 15, 2021 by a majority vote. The New Plan expires June 30, 2031 and all unissued stock will expire on that date.

The exercise price of each stock option granted under either plan equals a referenced price of the Company’s common stock as reported on the New York Stock Exchange on the date of grant, and an option’s maximum term is ten years. Stock options and restricted stock may be granted at different times during the year and vest ratably over various periods, from grant date up to five years. RSUs can be either time vested or vested based upon the attainment of certain performance metrics over a certain time period. Performance conditions generally are tied to attainment of certain financial targets such as return on invested capital, EBITDA or other similar measures. Awards granted under the Old Plan generally have a performance or vesting period of three years from the date of grant. RSUs are eligible to receive tandem dividend equivalent rights that will allow the award holder to receive dividends at the same time other shareholders receive dividends. The Company uses treasury stock to satisfy option exercises and restricted stock awards.

The Company recognizes compensation expense based on the grant date fair value of the award for stock options, restricted stock grants and RSUs on a straight-line basis over the requisite service period. The estimated number of shares to be achieved for performance based RSUs is updated each reporting period. For the three months ended August 31, 2021 and August 31, 2020, the Company included in selling, general and administrative expenses, compensation expense related to share-based compensation of $0.6 million and $0.4 million, respectively. For the six months ended August 31, 2021 and August 31, 2020, the Company included in selling, general and administrative expenses, compensation expense related to share-based compensation of $1.8 million and $0.7 million, respectively.

Stock Options

The Company had no outstanding vested or unvested stock options at any time during the six months ended August 31, 2021 and August 31, 2020. No stock options were granted during the six months ended August 31, 2021 and August 31, 2020.

Restricted Stock

The following activity occurred with respect to the Company’s restricted stock awards for the six months ended August 31, 2021 of which 18,179 shares were granted under the New Plan:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Outstanding at March 1, 2021		119,729		$	18.90
Granted		51,920			20.31
Terminated		—			—
Vested		(97,362	)		19.77
Outstanding at August 31, 2021		74,287		$	18.73

As of August 31, 2021, the total remaining unrecognized compensation cost related to unvested restricted stock granted under the Old Plan was approximately $1.2 million. The weighted average remaining requisite service period of the unvested restricted stock awards was 1.7 years.

Restricted Stock Units

During the six months ended August 31, 2021, 177,977 performance-based RSUs and 44,494 time-based RSUs were granted under the Old Plan. The fair value of the time-based RSUs was estimated based on the fair market value of the Company’s stock on the date of grant of $20.38 per unit. The fair value of the performance-based RSUs, using a Monte Carlo valuation model was $23.17 per unit. The performance measures include a threshold, target and maximum performance level providing the grantees an opportunity to receive more or less shares than targeted depending on actual financial performance. The award will be based on the Company’s return on equity, EBITDA and adjusted for the Company’s Relative Shareholder Return as measured against a defined peer group.

16

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2021

The performance-based RSUs vest on the third anniversary from the date of grant and the time-based RSUs vest ratably over three years from the date of grant.

The following activity occurred with respect to the Company’s restricted stock units for the six months ended August 31, 2021:

	Time-based				Performance-based
			Weighted				Weighted
			Average				Average
	Number of		Grant Date		Number of		Grant Date
	Shares		Fair Value		Shares		Fair Value
Outstanding at March 1, 2021		—	$	—		—	$	—
Granted		44,494		20.38		177,977		23.17
Terminated		—		—		—		—
Vested		—		—		—		—
Outstanding at August 31, 2021		44,494	$	20.38		177,977	$	23.17

As of August 31, 2021, the total remaining unrecognized compensation cost of time-based RSUs was approximately $0.8 million over a weighted average remaining requisite service period of 2.6 years. The total remaining unrecognized compensation of performance-based RSUs was approximately $3.6 million over a weighted average remaining requisite service period of 2.6 years.

12. Pension Plan

The Company and certain subsidiaries have a noncontributory defined benefit retirement plan (the “Pension Plan”), covering approximately 12% of the Company’s aggregate employees. Benefits are based on years of service and the employee’s average compensation for the highest five compensation years preceding retirement or termination.

Pension expense is composed of the following components included in cost of goods sold and selling, general, and administrative expenses in the Company’s consolidated statements of earnings (in thousands):

	Three months ended						Six months ended
	August 31,						August 31,
	2021			2020			2021			2020
Components of net periodic benefit cost
Service cost	$	268		$	318		$	537		$	636
Interest cost		421			439			841			877
Expected return on plan assets		(930	)		(1,018	)		(1,861	)		(2,037	)
Amortization of:
Unrecognized net loss		640			839			1,280			1,679
Net periodic benefit cost	$	399		$	578		$	797		$	1,155

The Company is required to make contributions to the Pension Plan. These contributions are required under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”). Due to the enactment of the Highway and Transportation Funding Act (HATFA) in August 2014, plan sponsors can calculate the discount rate used to measure the Pension Plan liability using a 25-year average of interest rates plus or minus a corridor. The Company’s minimum required contribution to the Pension Plan is zero for the Pension Plan year ending February 28, 2022. Assuming a stable funding status, the Company would expect to make a cash contribution to the Pension Plan of between $1.5 million and $3.0 million per year. However, changes in actual investment returns or in discount rates could change this amount significantly. At August 31, 2021, we had an unfunded pension liability recorded on our balance sheet of $6.3 million. Management estimates the future lump-sum payments will exceed the settlement threshold resulting in a probable pension settlement charge of approximately $2.3 million. The settlement charges are non-cash charges that accelerate the recognition of unrecognized pension benefit costs, that would have been incurred in subsequent periods, when lump sum payments exceed a threshold of service and interest cost for the period.

17

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2021

13. Earnings Per Share

Basic earnings per share have been computed by dividing net earnings by the weighted average number of common shares outstanding during the applicable period. Diluted earnings per share reflect the potential dilution that could occur if stock options or other contracts to issue common shares were exercised or converted into common stock.

The following table sets forth the computation for basic and diluted earnings per share for the periods indicated:

	Three months ended		Six months ended
	August 31,		August 31,
	2021	2020		2021	2020
Basic weighted average common shares outstanding	26,080,121	25,974,412		26,055,056	25,965,370
Effect of dilutive RSUs	90,275	—		91,365	—
Diluted weighted average common shares outstanding	26,170,396	25,974,412		26,146,421	25,965,370
Earnings per share
Net earnings - basic	$0.29	$0.25		$0.57	$0.41
Net earnings - diluted	$0.29	$0.25		$0.57	$0.41
Cash dividends	$0.250	$0.225		$0.475	$0.450

The Company treats unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities, which are included in the computation of earnings per share. Our unvested restricted shares participate on an equal basis with common shares; therefore, there is no difference in undistributed earnings allocated to each participating security. Accordingly, the presentation above is prepared on a combined basis. No options were outstanding for the six months ended August 31, 2021 and August 31, 2020.

14. Concentrations of Risk

Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash and trade receivables. Cash is placed with high-credit quality financial institutions. The Company believes its credit risk with respect to trade receivables is limited due to industry and geographic diversification. As disclosed on the consolidated balance sheets, the Company maintains an allowance for doubtful receivables to cover the Company’s estimate of credit losses associated with accounts receivable.

The Company, for quality and pricing reasons, purchases its paper products from a limited number of suppliers. While other sources may be available to the Company to purchase these products, they may not be available at the cost or at the quality the Company has come to expect.

For the purposes of the consolidated statements of cash flows, the Company considers cash to include cash on hand and in bank accounts. The Federal Deposit Insurance Corporation insures accounts up to $250,000. At August 31, 2021, cash balances included $81.0 million that was not federally insured because it represented amounts in individual accounts above the federally insured limit for each such account. This at-risk amount is subject to fluctuation on a daily basis. While management does not believe there is significant risk with respect to such deposits, no assurance can be made that the Company will not experience losses on the Company’s deposits.

15. Related Party Transactions

The Company leases a facility and sells product to an entity controlled by a member of the Board who was the former owner of Integrated Print & Graphics, a business that the Company acquired. The total right-of-use asset and related lease liability as of August 31, 2021 was $1.3 million and $1.3 million, respectively. During the six months ended August 31, 2021, total lease payments made to, and sales made to, the related party were approximately $0.2 million and $1.5 million, respectively.

16. COVID-19 Pandemic

On March 11, 2020, the World Health Organization declared the ongoing COVID-19 outbreak to be a global pandemic. In response to the rapid spread of COVID-19 within the United States, federal, state and local governments have imposed varying degrees of restrictions on social and commercial activity to promote social distancing in an effort to slow the spread of the illness. Due to the Company’s involvement in healthcare, government, food and beverage and banking, the Company’s plants have been deemed “essential” and, as such, the Company has continued to operate most of its manufacturing facilities, albeit at reduced production

18

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2021

levels. Due to reduced demand for our products during the pandemic, particularly in our transactional forms, the Company has reduced its workforce by 353 employees, ceased operating in two of its owned under-utilized facilities and exited two facilities with expiring leases.

While economic activity has picked up significantly, the Company will continue to monitor projected sales and proactively adjust costs as necessary depending on the impact of surges in the Delta variant to the COVID-19 pandemic. The Company believes the cost cutting measures it has previously implemented will not materially impact its ability to service the increased customer demand as economic conditions continue to improve. As a recent indicator, according to the Bureau of Labor Statistics (“BLS”) total nonfarm payroll employment rose by 235,000 in August, and the unemployment rate declined by 0.2 percentage point to 5.2 percent. So far this year, monthly job growth has averaged 586,000. In August, notable job gains occurred in professional and business services, transportation and warehousing, private education, manufacturing, and other services. Employment in retail trade declined over the month.

17. Subsequent Events

On September 17, 2021 the Board declared a quarterly dividend on the Company's common stock of 25.0 cents per share, which will be paid on November 5, 2021 to shareholders of record as of October 8, 2021. The expected payout for this dividend is approximately $6.5 million.

19

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2021

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Statements

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read together with the unaudited consolidated financial statements and related notes of Ennis, Inc. (collectively with its subsidiaries, the “Company,” “Registrant,” “Ennis,” or “we,” “us,” or “our”), included in Part 1, Item 1 of this report, and with the audited consolidated financial statements and the related notes of the Company included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2021.

All of the statements in this report, other than historical facts, are forward-looking statements, including, without limitation, the statements made in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As a general matter, forward-looking statements are those focused upon anticipated events or trends, expectations, and beliefs relating to matters that are not historical in nature. The words “could,” “should,” “feel,” “anticipate,” “aim,” “preliminary,” “expect,” “believe,” “estimate,” “intend,” “intent,” “plan,” “will,” “foresee,” “project,” “forecast,” or the negative thereof or variations thereon, and similar expressions identify forward-looking statements.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for these forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that forward-looking statements are subject to known and unknown risks, uncertainties and other factors relating to its operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company. These known and unknown risks, uncertainties and other factors could cause actual results to differ materially from those matters expressed in, anticipated by or implied by such forward-looking statements.

These statements reflect the current views and assumptions of management with respect to future events. The Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, even though its situation and circumstances may change in the future. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. The inclusion of any statement in this report does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

We believe these forward-looking statements are based upon reasonable assumptions. All such statements involve risks and uncertainties, and as a result, actual results could differ materially from those projected, anticipated or implied by these statements. Such forward-looking statements involve known and unknown risks, including but not limited to: general economic, business and labor conditions and the potential impact on our operations; our ability to implement our strategic initiatives and control our operational costs; dependence on a limited number of key suppliers; our ability to recover the rising cost of raw materials and other costs (i.e., energy, freight, labor, benefit costs, etc.) in markets that are highly price competitive and volatile; uninsured losses, including those from natural disasters, catastrophes, pandemics, theft or sabotage; the impact of the novel coronavirus (COVID-19) pandemic or future pandemics on the U.S. and local economies, our business operations, our workforce, our supply chain and our customer base; our ability to timely or adequately respond to technological changes in the industry; the impact of the Internet and other electronic media on the demand for forms and printed materials; the impact of foreign competition, tariffs, trade regulations and import restrictions; customer credit risk; competitors’ pricing strategies; a decline in business volume and profitability could result in an impairment in our reported goodwill negatively impacting our operational results; our ability to retain key management personnel; our ability to identify, manage or integrate acquisitions; and changes in government regulations including measures intended to minimize the impact of COVID-19. In addition to the factors indicated above, you should carefully consider the risks described in and incorporated by reference herein and in the risk factors in our Annual Report on Form 10-K for the fiscal year ended February 28, 2021 before making an investment in our common stock.

Overview

Ennis, Inc. (formerly Ennis Business Forms, Inc.) (collectively with its subsidiaries, “the “Company,” “Registrant,” Ennis,” or “we,” “us,” or “our”) was organized under the laws of Texas in 1909. We and our subsidiaries print and manufacture a broad line of business forms and other business products. We distribute business products and forms throughout the United States primarily through independent distributors. This distributor channel encompasses independent print distributors, commercial printers, direct mail, fulfillment companies, payroll and accounts payable software companies, and advertising agencies, among others. We also sell products to our competitors, from time to time, to satisfy their customers’ needs.

For a discussion regarding the impact of the ongoing novel coronavirus (COVID-19) pandemic on our business, please see Business Challenges—COVID-19 Pandemic and Results of Operations, below.

20

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2021

Business Overview

Our management believes we are the largest provider of business forms, pressure-seal forms, labels, tags, envelopes, and presentation folders to independent distributors in the United States.

We are in the business of manufacturing, designing, and selling business forms and other printed business products primarily to distributors located in the United States. We operate 57 manufacturing plants throughout the United States in 20 strategically located states as one reportable segment. Approximately 92% of the business products we manufacture are custom and semi-custom products, constructed in a wide variety of sizes, colors, number of parts, and quantities on an individual job basis, depending upon the customers’ specifications.

The products we sell include snap sets, continuous forms, laser cut sheets, tags, labels, envelopes, integrated products, jumbo rolls and pressure sensitive products in short, medium and long runs under the following labels: Ennis®, Royal Business Forms®, Block Graphics®, Specialized Printed Forms®, 360º Custom LabelsSM, ColorWorx®, Enfusion®, Uncompromised Check Solutions®, VersaSeal®, Ad ConceptsSM, FormSource LimitedSM, Star Award Ribbon Company®, Witt Printing®, B&D Litho®, Genforms®, PrintGraphics®, Calibrated Forms®, PrintXcel®, Printegra®, Falcon Business FormsSM, Forms ManufacturersSM, Mutual Graphics®, TRI-C Business FormsSM, Major Business SystemsSM, Independent PrintingSM, Hoosier Data Forms®, Hayes Graphics®, Wright Business GraphicsSM, Wright 360SM, Integrated Print & GraphicsSM, the Flesh CompanySM, Impressions DirectSM, Ace FormsSM, and AmeriPrintSM. We also sell the Adams McClure® brand (which provides Point of Purchase advertising for large franchise and fast food chains as well as kitting and fulfillment); the Admore®, Folder Express®, and Independent Folders® brands (which provide presentation folders and document folders); Ennis Tag & LabelSM (which provides custom printed, high performance labels and custom and stock tags); Allen-Bailey Tag & LabelSM, Atlas Tag & Label®, Kay Toledo Tag®, and Special Service Partners® (SSP) (which provides custom and stock tags and labels); Trade Envelopes®, Block Graphics®, Wisco®, and National Imprint Corporation® (which provide custom and imprinted envelopes) and Northstar® and General Financial Supply® (which provide financial and security documents); InfosealSM and PrintXcel® (which provide custom and stock pressure seal documents). We sell predominantly through independent distributors, as well as to many of our competitors. Northstar Computer Forms, Inc., one of our wholly-owned subsidiaries, also sells direct to a small number of customers, generally large banking organizations (where a distributor is not acceptable or available to the end-user). Adams McClure, LP, a wholly-owned subsidiary, also sells direct to a small number of customers, where sales are generally through advertising agencies.

The printing industry generally sells its products either predominantly to end users, a market dominated by a few large manufacturers, such as R.R. Donnelley and Sons, Staples, Inc., Standard Register Co. (a subsidiary of Taylor Corporation), and Cenveo, Inc., or, like the Company, through a variety of independent distributors and distributor groups. While it is not possible, because of the lack of adequate public statistical information, to determine the Company’s share of the total business products market, management believes the Company is the largest producer of business forms, pressure-seal forms, labels, tags, envelopes, and presentation folders in the United States distributing primarily through independent distributors.

There are a number of competitors that operate in this segment, ranging in size from single employee-owned operations to multi-plant organizations. We believe our strategic locations and buying power permit us to compete on a favorable basis within the distributor market on competitive factors, such as service, quality, and price.

Distribution of business forms and other business products throughout the United States is primarily done through independent distributors, including business forms distributors, resellers, direct mail, commercial printers, payroll and accounts payable software companies, and advertising agencies.

Raw materials principally consist of a wide variety of weights, widths, colors, sizes, and qualities of paper for business products purchased primarily from one major supplier at favorable prices based on the volume of business.

Business products usage in the printing industry is generally not seasonal. General economic conditions and contraction of the traditional business forms industry are the predominant factors in quarterly volume fluctuations.

Recent Acquisitions

We have completed a number of acquisitions in recent years. In the prior year on December 31, 2020, we acquired the assets of Infoseal LLC (“Infoseal”) in Roanoke, Virginia. The acquisition of Infoseal, which prior to the acquisition generated approximately $19.2 million in sales for its fiscal year ended December 31, 2020, creates additional capabilities and expertise to our product offering including our existing VersaSeal pressure seal product line.

21

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2021

On June 1, 2021, we acquired the assets and business of AmeriPrint in Harvard, Illinois. The acquisition of Ameriprint, which prior to the acquisition generated approximately $6.5 million in sales for its fiscal year ended December 31, 2020, brings added capabilities and expertise to our expanding product offering including barcoding and variable imaging.

Our Business Challenges

Our industry is currently experiencing consolidation of traditional supply channels, product obsolescence, paper supplier capacity adjustments, and increased pricing and potential supply allocations due to demand/supply curve imbalance. Technology advances have made electronic distribution of documents, internet hosting, digital printing and print-on-demand valid, cost-effective alternatives to traditional custom-printed documents and customer communications. Improved equipment has become more accessible to our competitors due to the continued low interest rate environment. We face highly competitive conditions throughout our supply chain in an already over-supplied, price-competitive print industry. The challenges of our business include the following:

COVID-19 Pandemic – The global spread of the novel strain of COVID-19 has significantly impacted health and economic conditions throughout the United States and the world, including the markets in which we operate. The U.S. economy continues to be significantly impacted by the COVID-19 pandemic and parts of the economy have started to re-open as vaccinations become more prevalent, but remain subject to ongoing surges and local shutdowns, creating a very fluid economic environment. Current governmental statistics have indicated an increase in economic activity that had previously been curtailed due to the COVID-19 pandemic and efforts to contain it. These statistics provide evidence that various sectors continue to improve, while others have not, which we believe was reflected in our sequential sales increase and improvements in our gross profit margin and operational margin during the first quarter. While the impacts of the pandemic have been significant, our results of operations were within our forecasted parameters for the period ended August 31, 2021.

The following is a summary of our recent and anticipated actions in response to COVID-19 and its impact on our business.

Cash/Liquidity:

We believe our strong liquidity position will help us mitigate the ongoing adverse impacts of COVID-19. On August 31, 2021, we had $82.1 million in cash, in addition to $99.4 million available under our credit facility, if needed. During the period, our cash position increased by $6.9 million and our working capital position increased by $8.4 million from February 28, 2021. In addition, our liquidity and debt ratios have remained stable throughout the pandemic with our current ratio (calculated by dividing our current assets by our current liabilities) of 4.0 at August 31, 2021 and 4.20 at February 28, 2021, and our quick ratio (calculated by dividing our current assets less inventories by our current liabilities) of 3.01 at August 31, 2021 and 3.29 at February 28, 2021. Our net debt to equity ratio (after application of cash) -.05 at August 31, 2021 and -.04 at February 28, 2021.

Receivable and Inventory Management:

We continue to closely monitor and manage our outstanding trade receivables and inventories. During the current quarter, our days’ sales in our receivables decreased from 39 days to 35 days, while our days’ sales of inventory increased from 34 to 37 days. The Company continues to monitor incoming orders and is adjusting its raw material purchases accordingly.

Supply Chain:

To date, COVID-19 has not materially impacted, nor do we currently expect it to materially impact, the supply chain for the products we sell. Most of our products are sourced domestically from suppliers deemed “essential” by the government, and therefore currently remain in operation. However, if one or more of our major suppliers are negatively impacted by the COVID-19 pandemic, through plant closures, deteriorating financial condition, or otherwise, it could adversely affect our operational results and financial condition.

Cost Savings:

COVID-19 has severely impacted global economic activity, including the printing industry in the United States. In response to the sales impact of the COVID-19 pandemic, we made modifications to our cost structure by reducing employee cost, ceasing operations at an under-utilized facility, as well as exiting two facilities with expiring leases and moving production to our other facilities. We are in the process of consolidating three underperforming manufacturing facilities into existing

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ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2021

locations with excess capacity to reduce future costs and improve our operational efficiency. We will continue to monitor incoming order volume so that we can proactively adjust our costs accordingly. We believe the modifications to our cost structure in response to the sales impact of the COVID-19 pandemic will not materially impact our ability to service increased customer demand as economic conditions improve. During the six months ended August 31, 2021, our gross profit margin improved to 29.4% from the prior year’s period of 27.9% and our operating margin improved to 10.8% from the prior year’s period of 8.4%.

Capital Expenditures:

We continue to make capital expenditures for operational maintenance purposes, as may be required. Additionally, we will carefully review and make new capital expenditures for equipment to the extent such expenditures make economic sense by improving our operations and not jeopardizing our strong liquidity position.

There continue to be many uncertainties regarding the impact of the COVID-19 pandemic, including the scope of scientific and health issues. We continue to closely monitor the impact of the COVID-19 pandemic, including emerging variants, on all aspects of our business, including how it is affecting our employees, customers, supply chain and distribution network. The overall magnitude of the impact of the pandemic on our operating and financial results remains uncertain and will largely depend on the duration of the pandemic and the measures implemented in response, as well as the effect on our customers and suppliers. Given these factors, we are unable to reliably forecast the ultimate impact of COVID-19 on our business, including due to factors discussed under the caption “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended February 28, 2021. For further information, please see “Cautionary Note Regarding Forward Looking Statements,” above and “Risk Factors” contained within our Annual Report on Form 10-K for the fiscal year ended February 28, 2021.

Transformation of our portfolio of products – While traditional business documents are essential in order to conduct business, many are being replaced through the use of cheaper paper grades or imported paper, or devalued with advances in digital technologies, causing steady declines in demand for a portion of our current product line. In addition, the impact of COVID-19 on the speed of this transformation is unknown, but it is expected to accelerate the decline for some of our products. Transforming our product offerings in order to continue to provide innovative, valuable solutions through lower labor and fixed charges to our customers on a proactive basis will require us to make investments in new and existing technology and to develop key strategic business relationships, such as print-on-demand services and product offerings that assist customers in their transition to digital business environments. In addition, we will continue to look for new market opportunities and niches through acquisitions, such as the addition of our envelope offerings, tag offerings, folder offerings, healthcare wristbands, specialty packaging, direct mail, pressure seal products, secure document solutions, innovative in-mold label offerings and long-run integrated products with high color web printing, which provide us with an opportunity for growth and differentiate us from our competition. The ability to make investments in new and existing technology and/or to acquire new market opportunities through acquisitions is dependent on the Company’s liquidity and operational results. While currently the pandemic has not materially impacted our liquidity and it is not currently expected to, a protracted delay in the economy recovering could have a negative impact on our continued ability to make the aforementioned investments or to consummate acquisitions.

Production capacity and price competition within our industry – Changes in the value of the U.S. dollar can have an impact on the pricing and supply of paper. The weakening of the U.S. dollar will usually result in the dissipation of any pricing advantage that foreign imports have over domestic suppliers, which typically results in lower levels of imported papers and an increase in domestic exports. With increased pricing power, domestic paper producers can better control the supply of paper by eliminating capacity or changing the products produced on their large paper machines. The strengthening of the U.S. dollar usually has the opposite effect: more cheap imported paper; less domestic exports; and lower pricing power in the hands of domestic paper producers. Domestic paper suppliers typically seek to balance supply and demand, including by (if possible) taking capacity out of the market, whether by taking production off-line or switching production to alternative paper products. Generally, if mills are running at high capacity, suppliers are able to raise prices.

Paper production declined last year due to the pandemic and, as the economy improved, increased demand initially was satisfied with existing inventory at the paper mills. While paper mills now are operating at a very high capacity, they are basically producing to fill orders rather than stock inventory, which is contributing to the tight market in some grades of paper. Paper prices have also increased due to global logistics issues that have delayed and reduced imports that have typically filled gaps in domestic supply. While the availability of paper in the North American market is very low, our strong vendor relationship with our paper supplier allows us to meet customer demand for their business product needs. We have been adjusting our pricing to cover paper inflation during the year, but the impact of inflation with most of our other vendors, as well as the labor market, has had a slight impact on gross profit margin. We

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ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2021

anticipate additional pricing adjustments to cover all aspects of our supply chain and our labor force to maintain our gross profit margins at their historical levels. As such, pricing during the second half of fiscal 2022 is currently expected to increase.

As the economy has improved, demand has increased in 2021 for coated and uncoated freesheet papers which has reduced the excess inventory in the market along with the reduction in supply from the closing of several paper mills. Regardless of these factors, many of which are cyclical, we continue to believe paper pricing will remain in a range which will not unfavorably impact our margins over the long term. Additionally, the possibility of paper shortages in the market is not a major concern due to our primary material supplier’s commitment to the Company. Consistent with our historical practice, we intend to continue to focus on effectively managing and controlling our product costs through the use of forecasting, production and costing models, as well as working closely with our domestic suppliers to manage our procurement and logistics costs, in order to minimize effects on our operational results. In addition, we will continue to look for ways to reduce and leverage our fixed costs as we consolidate plants where leases expire and sell unused real estate where we have the opportunity to relocate the business to another facility.
 

Continued consolidation of our customers – Our customers are distributors, many of which are consolidating or are being acquired by competitors. We continue to maintain a majority of the business we have had with our customers historically, but it is possible that these consolidations and acquisitions, which we expect to continue in the future, ultimately will impact our margins and sales.

Critical Accounting Policies and Estimates

In preparing our consolidated financial statements, we are required to make estimates and assumptions that affect the disclosures and reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates and judgments on an ongoing basis, including those related to allowance for doubtful receivables, inventory valuations, property, plant and equipment, intangible assets, pension plan obligations, accrued liabilities and income taxes. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We believe our accounting policies related to the aforementioned items are the most critical due to their effect on our more significant estimates and judgments used in preparation of our consolidated financial statements. For additional information, reference is made to the Critical Accounting Policies and Estimates section of our Annual Report on Form 10-K for the fiscal year ended February 28, 2021.

Results of Operations

The discussion that follows provides information which we believe is relevant to an understanding of our results of operations and financial condition. The discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto, which are incorporated herein by reference. The operating results of the Company for the three and six months ended August 31, 2021 and the comparative period for 2020 are set forth in the unaudited consolidated financial information included in the tables below.

Consolidated Summary

Unaudited Consolidated Statements of	Three Months Ended August 31,										Six Months Ended August 31,
Operations - Data (in thousands)	2021					2020					2021					2020
Net sales	$	100,451		100.0	%	$	86,612		100.0	%	$	197,381		100.0	%	$	175,608		100.0	%
Cost of goods sold		71,550		71.2			61,457		71.0			139,294		70.6			126,546		72.1
Gross profit margin		28,901		28.8			25,155		29.0			58,087		29.4			49,062		27.9
Selling, general and administrative		18,095		18.0			16,535		19.1			37,010		18.8			34,658		19.7
(Gain) loss from disposal of assets		1		—			(300	)	(0.4	)		(276	)	(0.1	)		(412	)	(0.2	)
Income from operations		10,805		10.8			8,920		10.3			21,353		10.8			14,816		8.4
Other income (expense)		(148	)	(0.1	)		(243	)	(0.3	)		(262	)	(0.1	)		(484	)	(0.3	)
Earnings before income taxes		10,657		10.6			8,677		10.0			21,091		10.7			14,332		8.1
Provision for income taxes		3,197		3.2			2,256		2.6			6,327		3.2			3,726		2.1
Net earnings	$	7,460		7.4	%	$	6,421		7.4	%	$	14,764		7.5	%	$	10,606		6.0	%

24

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2021

Three months ended August 31, 2021 compared to three months ended August 31, 2020

Net Sales. Our net sales were $100.5 million for the quarter ended August 31, 2021, compared to $86.6 million for the same quarter in the prior year, an increase of $13.9 million, or 16.0%. Our net sales increased on a sequential quarter basis as well, $3.5 million or 3.6% from $96.9 million for the quarter ended May 31, 2021 to $100.5 million for the current quarter. While our revenues continue to be impacted by the COVID-19 pandemic, some of our customers are seeing sales return to normalized levels. Infoseal, our acquisition in January of last fiscal year and AmeriPrint, our acquisition from June 1, 2021, added $6.7 million in sales for the current quarter.

Cost of Goods Sold and Gross Profit Margin. Our cost of goods sold increased $10.1 million, or 16.4%, from $61.5 million for the three months ended August 31, 2020 to $71.6 million for the three months ended August 31, 2021. Our gross profit margin was $28.9 million for the quarter ended August 31, 2021 compared to $25.2 million for the same quarter in the prior year. Our second quarter gross profit margin percentage slightly decreased from 29.0% in 2020 to 28.8% in 2021 due primarily to higher inflationary factors.

Selling, general, and administrative expense. For the three months ended August 31, 2021, our selling, general, and administrative (“SG&A”) expenses were $18.1 million compared to $16.5 million for the three months ended August 31, 2020, an increase of $1.6 million, or 9.4%. As a percentage of net sales, SG&A expenses for the current quarter were 18.0% and 19.1% for the three months ended August 31, 2021 and August 31, 2020, respectively. Our acquisition of Infoseal and AmeriPrint impacted our SG&A expenses by approximately $0.7 million. As part of our on-going corporate strategy, we continue to look for ways to reduce and more fully leverage our SG&A expenses.

Gain from disposal of assets. The $0.3 million net gain from disposal of assets during the prior year quarter is primarily attributed to the sale of underutilized land and buildings. Remaining product from these facilities was transitioned to another Company facility.

Income from operations. Primarily due to factors described above, our income from operations for the three months ended August 31, 2021 was $10.8 million, or 10.8% of net sales, as compared to $8.9 million, or 10.3% of net sales, for the three months ended August 31, 2020 and increased on a sequential quarter basis as well from $10.5 million for the quarter ended May 31, 2021.

Other expense. Other expense was $0.1 million for the three months ended August 31, 2021 compared to expense of $0.2 million for the three months ended August 31, 2020. This decrease was primarily due to a decrease in our pension expense of $0.1 million over the comparable quarter.

Provision for income taxes. Our effective tax rate was 30.0% for the three months ended August 31, 2021 as compared to 26.0% for the three months ended August 31, 2020. The primary reason for the increase in the effective tax rate is permanent non-deductible expense resulting from probable distributions this year from our deferred compensation plan which was terminated last fiscal year.

Net earnings. Net earnings, due to the factors above, were $7.5 million for the three months ended August 31, 2021 as compared to $6.4 million for the comparable quarter in the prior year, an increase of $1.0 million. Net earnings per diluted share for the three months ended August 31, 2021 was $0.29, compared to $0.25 for the same quarter in the prior year. Our acquisition of Infoseal and AmeriPrint added $0.02 to our diluted earnings per share.

25

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2021

Six months ended August 31, 2021 compared to six months ended August 31, 2020

Net Sales. Our net sales were $197.4 million for the six-month period ended August 31, 2021, compared to $175.6 million for same period last year, or an increase of 12.4%. While our revenues continue to be impacted by the COVID-19 pandemic, some of our customers are seeing sales return to normalized levels. Infoseal, our acquisition in January of last fiscal year and AmeriPrint our acquisition in June 1, 2021, added $11.9 million in sales during the six months ended August 31, 2021.

Cost of Goods Sold and Gross Profit Margin. Our cost of goods sold was $139.3 million for the six months ended August 31, 2021, compared to $126.5 million for the same period last year, a increase of $12.8 million, or 10.1%. Our margin was $58.1 million for the six-month period ended August 31, 2021, or 29.4%. In response to the sales impact of the COVID-19 pandemic, we made modifications to our cost structure by reducing employee cost, ceasing operations at an under-utilized facility, as well as exiting two facilities with expiring leases and moving production to our other facilities. These modifications to our cost structure resulted in improvements to our gross profit margin from 27.9% for the same six-month period last year.

Selling, general, and administrative expense. Our SG&A expenses were $37.0 million for the six months ended August 31, 2021, compared to $34.7 million for the same period last year, or an increase of 6.8%. As a percentage of sales, the SG&A expenses were 18.8% and 19.7% for the six months ended August 31, 2021 and August 31, 2020, respectively. As part of our ongoing corporate strategy, we continue to look for ways to reduce and more fully leverage our SG&A expenses. During the period, the Board approved a change to our “Long-Term Incentive Equity Awards” program to a three-year performance period from a one-year performance period. A bridge award of restricted stock was granted during the transition and resulted in the recognition of an additional $0.8 million in restricted stock expense. Our acquisition of Infoseal and AmeriPrint impacted our SG&A expenses by approximately $1.3 million.

Gain from disposal of assets. The $0.3 million net gain from disposal of assets during the six months ended August 31, 2021 is primarily attributed to the sale of a previously held-for-sale facility that had transferred its operations to another facility. The $0.4 million net gain from disposal of assets during the six months ended August 31, 2020 is primarily attributed to the sale of manufacturing underutilized equipment, land and buildings.

Income from operations. Our income from continuing operations for the six months ended August 31, 2021 was $21.4 million, or 10.8% of sales, as compared to $14.8 million, or 8.4% of sales, for the six months ended August 31, 2020.

Other expense. Other expense for the six months ended August 31, 2021 was $0.3 million as compared to $0.5 million expense for the six months ended August 31, 2020. This decrease was primarily due to the decrease in pension expense for the current fiscal year.

Provision for income taxes. Our effective tax rate was 30.0% for the six months ended August 31, 2021 as compared to 26.0% for the six months ended August 31, 2020. The primary reason for the increase in the effective tax rate is permanent non-deductible expense resulting from probable distributions this year from our deferred compensation plan which was terminated last fiscal year.

Net earnings. Net earnings were $14.8 million for the six months ended August 31, 2021 as compared to $10.6 million for the comparable period last year, an increase of $4.2 million. Net earnings per diluted share for the six months ended August 31, 2021 was $0.57, compared to $0.41 for the same six-month period last year. Our acquisition of Infoseal and AmeriPrint added $0.04 to our diluted earnings per share.

Liquidity and Capital Resources

We rely on our cash flows generated from operations and the borrowing capacity under our credit facility extended pursuant to our Second Amended and Restated Credit Agreement, as amended from time to time (the “Credit Facility”), to meet cash requirements of our business. The primary cash requirements of our business are payments to vendors in the normal course of business, capital expenditures, debt repayments and related interest payments, contributions to our noncontributory defined benefit retirement plan, which covers approximately 12% of our aggregate employees (the “Pension Plan”), and the payment of dividends to our shareholders. We expect to generate sufficient cash flows from operations, supplemented by our Credit Facility as necessary, to cover our operating and capital requirements for the foreseeable future.

	August 31,		February 28,
(Dollars in thousands)	2021		2021
Working capital	$	121,426	$	113,022
Cash	$	82,101	$	75,190

26

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2021

Working Capital. Our working capital increased $8.4 million or 7.4%, from $113.0 million at February 28, 2021 to $121.4 million at August 31, 2021. Our current ratio, calculated by dividing our current assets by our current liabilities, decreased from 4.2 to 1.0 at February 28, 2021 to 4.0 to 1.0 at August 31, 2021. The increase in working capital primarily reflects the increase in cash and inventory partially offset by the increase in our accounts payable.

	Six months ended August 31,
(Dollars in thousands)	2021			2020
Net cash provided by operating activities	$	24,507		$	28,154
Net cash used in investing activities	$	(5,205	)	$	(353	)
Net cash used in financing activities	$	(12,391	)	$	(12,153	)

Cash flows from operating activities. Cash provided by operating activities decreased from $28.2 million for the six months ended August 31, 2020 to $24.5 million for the six months ended August 31, 2021. Our decreased operational cash flows in comparison to the comparable period in the prior year was primarily the result of a $8.5 million increase in our accounts receivable and a $7.5 million increase in our inventories. These increases were offset by a $4.2 million increase in our operational earnings, in addition to a $7.2 million increase in our accounts payable and accrued expenses.

Cash flows from investing activities. Cash used in investing activities increased from $0.4 million cash used to $5.2 million used for the six months ended August 31, 2020 and August 31, 2021, respectively. This was primarily due to the $3.9 million cost to acquire businesses and additional capital expenditures during the six months ended August 31, 2021 as compared to the six months ended August 31, 2020.

Cash flows from financing activities. We used $0.2 million less cash from financing activities during the six months ended August 31, 2021 compared to the same period in the prior year. The decrease in cash used during the six months ended August 31, 2021 compared to the six months ended August 31, 2020 resulted from no common stock being repurchased under our stock repurchase program in the current period compared to $0.4 million to repurchase our common stock during the six months ended August 31, 2020.

Credit Facility. The Company’s Credit Facility, pursuant to which a credit facility has been extended to the Company until November 11, 2021, provides the Company and its subsidiaries with up to $100.0 million in revolving credit, as well as a $20.0 million sublimit for the issuance of letters of credit and a $15.0 million sublimit for swing-line loans. Under the Credit Facility, the Company or any of its subsidiaries can request up to three increases in the aggregate commitments in an aggregate amount not to exceed $50.0 million. The terms and conditions of the Credit Facility impose certain restrictions on our ability to incur additional debt, make capital expenditures, acquisitions and asset dispositions, as well as impose other customary covenants, such as requiring that our fixed charge coverage ratio not be less than 1.25:1.00 and our total leverage ratio not exceed 3.00:1.00. The Company may make dividends or distributions to shareholders so long as (i) no event of default has occurred and is continuing and (ii) the Company’s net leverage ratio both before and after giving effect to any such dividend or distribution is equal to or less than 2.50:1.00. All calculations are made based on U.S. Generally Accepted Accounting Principles existing at the time the Credit Facility was entered into. As of August 31, 2021, the Company was in compliance with all terms and conditions of the Credit Facility.

The Credit Facility bears interest at the LIBOR rate plus a spread ranging from 1.85% to 2.5%. The rate is determined by our fixed charge coverage ratio of total funded debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”). As of August 31, 2021, the Company had no outstanding debt, and the Company had $0.6 million outstanding under standby letters of credit arrangements, leaving approximately $99.4 million available in borrowing capacity under the Credit Facility. The Credit Facility is secured by substantially all of our assets (other than real property), as well as all capital securities of each of our subsidiaries.

It is anticipated that our cash and funds from operating cash flows will be sufficient to fund anticipated future expenditures. We are considering the nonrenewal of the facility or renewing with a smaller line of credit limit during the third quarter.

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ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2021

Pension Plan – We are required to make contributions to our Pension Plan. These contributions are required under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”). Due to the enactment of the Highway and Transportation Funding Act (HATFA) in August 2014, which effectively raises the discount rates mandated for determining the value of a plan’s benefit liability and annual cost of accruals, our minimum required contribution to the Pension Plan is zero for the Pension Plan year ending February 28, 2022. Assuming a stable funding status, we would expect that our future contributions to be between $1.0 million and $3.0 million per year. However, changes in actual investment returns or in discount rates could change this amount significantly. There was no contribution required or made to our Pension Plan in fiscal year 2021. As our Pension Plan assets are invested in marketable securities, fluctuations in market values could potentially impact our funding status, associated liabilities recorded and future required minimum contributions. At August 31, 2021, we had an unfunded pension liability recorded on our balance sheet of $6.3 million.

Inventories – We believe our inventory levels are sufficient to satisfy our customer demands and we anticipate having adequate sources of raw materials to meet future business requirements. We have long-term contracts in effect with paper suppliers that govern prices, but do not require minimum purchase commitments. Certain of our rebate programs do, however, require minimum purchase volumes. Management anticipates meeting the required volumes or to be able to get the required volumes temporarily waived given the COVID-19 pandemic.

Capital Expenditures – We expect our capital requirements for our current fiscal year, exclusive of capital required for possible acquisitions, will be within our historical levels of between $3.0 million and $5.0 million. For the quarter, we have spent approximately $2.1 million on capital expenditures. We expect to fund these expenditures through existing cash flows.

Contractual Obligations – There have been no significant changes in our contractual obligations since February 28, 2021 that have, or are reasonably likely to have, a material impact on our results of operations or financial condition.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Interest Rates

From time to time, we are exposed to interest rate risk on short-term and long-term financial instruments carrying variable interest rates. We may from time to time utilize interest rate swaps to manage overall borrowing costs and reduce exposure to adverse fluctuations in interest rates. We do not use derivative instruments for trading purposes. While we had no variable rate financial instruments outstanding at August 31, 2021 given no outstanding debt under the Credit Facility, we will be exposed to interest rate risk if we borrow under the Credit Facility in the future.

This market risk discussion contains forward-looking statements. Actual results may differ materially from this discussion based upon general market conditions and changes in domestic and global financial markets.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. A review and evaluation were carried out under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our “disclosure controls and procedures” (as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q, pursuant to Exchange Act Rules 13a-15 and 15d-15. Based upon that review and evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures as of August 31, 2021 are effective to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive and financial officers as appropriate to allow timely decisions regarding required disclosure. Due to the inherent limitations of control systems, not all misstatements may be detected. Those inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes.

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ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2021

Additionally, controls could be circumvented by the individual acts of some persons or by collusion of two or more people. Our controls and procedures can only provide reasonable, not absolute, assurance that the above objectives have been met.

There have been no changes in our internal control over financial reporting (as defined in Rule 13a–15(f) or Rule 15d–15(f) of the Exchange Act) that occurred during the six months ended August 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of their property is subject.

Item 1A. Risk Factors

There have been no material changes in our Risk Factors as previously discussed in our Annual Report on Form 10-K for the year ended February 28, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In October 2008, the Board authorized the repurchase of the Company’s outstanding common stock through a stock repurchase program, which authorized amount is currently up to $40.0 million in the aggregate. Under the repurchase program, purchases may be made from time to time in the open market or through privately negotiated transactions depending on market conditions, share price, trading volume and other factors. Such purchases, if any, will be made in accordance with applicable insider trading rules and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice.

During the six months ended August 31, 2021, the Company did not repurchase any shares of common stock under the program. As of August 31, 2021, $9.9 million remained available to repurchase shares of the Company’s common stock under the program.

Items 3, 4 and 5 are not applicable and have been omitted

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ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2021

Item 6. Exhibits

The following exhibits are filed as part of this report.

Exhibit Number	Description
Exhibit 3.1(a)	Restated Articles of Incorporation, as amended through June 23, 1983 with attached amendments dated June 20, 1985, July 31, 1985, June 16, 1988 and November 4, 1998, incorporated herein by reference to Exhibit 3.1(a) to the Registrant’s Form 10-Q filed on October 6, 2017 (File No. 001-05807).
Exhibit 3.1(b)	Amendment to Articles of Incorporation, dated June 17, 2004, incorporated herein by reference to Exhibit 3.1(b) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended February 28, 2007 filed on May 9, 2007 (File No. 001-05807).
Exhibit 3.2	Fourth Amended and Restated Bylaws of Ennis, Inc., dated July 10, 2017, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on July 10, 2017 (File No. 001-05807).
Exhibit 31.1	Certification Pursuant to Rule 13a-14(a) of Chief Executive Officer.*
Exhibit 31.2	Certification Pursuant to Rule 13a-14(a) of Chief Financial Officer.*
Exhibit 32.1	Section 1350 Certification of Chief Executive Officer.**
Exhibit 32.2	Section 1350 Certification of Chief Financial Officer.**
Exhibit 101	The following information from Ennis, Inc.’s Quarterly Report on Form 10-Q for the quarter ended August 31, 2021, filed on October 1, 2021, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail.*
Exhibit 104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith

** Furnished herewith

30

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2021

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ENNIS, INC.
Date: October 1, 2021	/s/ Keith S. Walters
	Keith S. Walters
	Chairman, Chief Executive Officer and President
Date: October 1, 2021	/s/ Vera Burnett
	Vera Burnett
	Chief Financial Officer, Treasurer and
	Principal Financial and Accounting Officer

31

EX-31.1

Exhibit 31.1

RULE 13a-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Keith S. Walters, Chief Executive Officer of Ennis, Inc., certify that:

1.I have reviewed this quarterly report on Form 10-Q of Ennis, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Keith S. Walters

Keith S. Walters

Chief Executive Officer

October 1, 2021

EX-31.2

Exhibit 31.2

RULE 13a-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Vera Burnett, Chief Financial Officer of Ennis, Inc., certify that:

1.I have reviewed this quarterly report on Form 10-Q of Ennis, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Vera Burnett

Vera Burnett

Chief Financial Officer

October 1, 2021

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Keith S. Walters, Chairman of the Board and Chief Executive Officer of Ennis, Inc. (the “Company”), certify, that pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code:

(1)The Quarterly Report on Form 10-Q of the Company for the period ended August 31, 2021, as filed with the Securities Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/ Keith S. Walters

Keith S. Walters

Chairman of the Board and

Chief Executive Officer

Date: October 1, 2021

The foregoing Certification is being furnished solely pursuant to 18 U.S.C. Section 1350; it is not being filed for purposes of Section 18 of the Securities Exchange Act, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation languages in such filing.

EX-32.2

EXHIBIT 32.2

SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Vera Burnett, Chief Financial Officer of Ennis, Inc. (the “Company”), certify, that pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code:

(1)The Quarterly Report on Form 10-Q of the Company for the period ended August 31, 2021, as filed with the Securities Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/ Vera Burnett

Vera Burnett

Chief Financial Officer

Date: October 1, 2021

The foregoing Certification is being furnished solely pursuant to 18 U.S.C. Section 1350; it is not being filed for purposes of Section 18 of the Securities Exchange Act, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation languages in such filing.

XML

Document and Entity Information - shares	6 Months Ended
	Aug. 31, 2021	Sep. 24, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Aug. 31, 2021
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Trading Symbol	EBF
Entity Registrant Name	ENNIS, INC.
Entity Central Index Key	0000033002
Current Fiscal Year End Date	--02-28
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		26,121,463
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity File Number	1-5807
Entity Incorporation, State or Country Code	TX
Entity Tax Identification Number	75-0256410
Entity Address, Address Line One	2441 Presidential Pkwy
Entity Address, City or Town	Midlothian
Entity Address, State or Province	TX
Entity Address, Country	US
Entity Address, Postal Zip Code	76065
City Area Code	972
Local Phone Number	775-9801
Document Quarterly Report	true
Document Transition Report	false
Title of 12(b) Security	Common Stock, par value $2.50 per share
Security Exchange Name	NYSE

XML

Unaudited Consolidated Balance Sheets - USD ($) $ in Thousands	Aug. 31, 2021	Feb. 28, 2021
Current assets
Cash and cash equivalents	$ 82,101	$ 75,190
Accounts receivable, net of allowance for doubtful receivables of $1,016 at August 31, 2021 and $961 at February 28, 2021	37,928	37,891
Prepaid expenses	1,689	1,605
Inventories	40,151	32,906
Assets held for sale		482
Total current assets	161,869	148,074
Property, plant and equipment
Plant, machinery and equipment	157,800	157,737
Land and buildings	57,166	56,185
Computer equipment and software	18,792	19,336
Other	4,521	4,808
Total property, plant and equipment	238,279	238,066
Less accumulated depreciation	183,987	182,682
Net property, plant and equipment	54,292	55,384
Operating lease right-of-use assets	18,382	19,187
Goodwill	88,661	88,647
Intangible assets, net	49,656	52,712
Other assets	385	384
Total assets	373,245	364,388
Current liabilities
Accounts payable	18,827	14,759
Accrued expenses	16,017	14,955
Current portion of operating lease liabilities	5,599	5,338
Total current liabilities	40,443	35,052
Liability for pension benefits	6,299	6,299
Deferred income taxes	7,877	7,677
Operating lease liabilities, net of current portion	12,572	13,567
Other liabilities	733	1,244
Total liabilities	67,924	63,839
Commitments and contingencies
Shareholders’ equity
Preferred stock $10 par value, authorized 1,000,000 shares; none issued
Common stock $2.50 par value, authorized 40,000,000 shares; issued 30,053,443 shares at August 31, 2021 and February 28, 2021	75,134	75,134
Additional paid-in capital	123,116	123,017
Retained earnings	196,809	194,436
Accumulated other comprehensive income (loss):
Minimum pension liability, net of taxes	(19,685)	(20,282)
Total accumulated other comprehensive income (loss)	(19,685)	(20,282)
Treasury stock	(70,053)	(71,756)
Total shareholders’ equity	305,321	300,549
Total liabilities and shareholders' equity	$ 373,245	$ 364,388

XML

Unaudited Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Aug. 31, 2021	Feb. 28, 2021
Statement Of Financial Position [Abstract]
Allowance for doubtful receivables	$ 1,016	$ 961
Preferred stock, par value	$ 10	$ 10
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 2.50	$ 2.50
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	30,053,443	30,053,443

XML

Unaudited Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2021	Aug. 31, 2020	Aug. 31, 2021	Aug. 31, 2020
Income Statement [Abstract]
Net sales	$ 100,451	$ 86,612	$ 197,381	$ 175,608
Type of revenue [extensible list]	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Cost of goods sold	$ 71,550	$ 61,457	$ 139,294	$ 126,546
Type of cost, good or service [extensible list]	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Gross profit margin	$ 28,901	$ 25,155	$ 58,087	$ 49,062
Selling, general and administrative	18,095	16,535	37,010	34,658
(Gain) loss from disposal of assets	1	(300)	(276)	(412)
Income from operations	10,805	8,920	21,353	14,816
Other expense
Interest expense	(2)	(3)	(4)	(6)
Other, net	(146)	(240)	(258)	(478)
Total other expense	(148)	(243)	(262)	(484)
Earnings before income taxes	10,657	8,677	21,091	14,332
Income tax expense	3,197	2,256	6,327	3,726
Net earnings	$ 7,460	$ 6,421	$ 14,764	$ 10,606
Weighted average common shares outstanding
Basic	26,080,121	25,974,412	26,055,056	25,965,370
Diluted	26,170,396	25,974,412	26,146,421	25,965,370
Earnings per share
Basic	$ 0.29	$ 0.25	$ 0.57	$ 0.41
Diluted	0.29	0.25	0.57	0.41
Cash dividends per share	$ 0.250	$ 0.225	$ 0.475	$ 0.450

XML

Unaudited Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2021	Aug. 31, 2020	Aug. 31, 2021	Aug. 31, 2020
Statement Of Income And Comprehensive Income [Abstract]
Net earnings	$ 7,460	$ 6,421	$ 14,764	$ 10,606
Adjustment to pension, net of taxes	298	433	597	866
Comprehensive income	$ 7,758	$ 6,854	$ 15,361	$ 11,472

XML

Unaudited Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]
Beginning balance at Feb. 29, 2020	$ 294,329	$ 75,134	$ 123,052	$ 193,809	$ 25,206	$ 72,460
Beginning balance common stock, shares at Feb. 29, 2020		30,053,443
Beginning balance, treasury stock, shares at Feb. 29, 2020						(4,136,286)
Net earnings	10,606			10,606
Adjustment to pension, net of deferred tax of $95, $199, $145 and $289 respectively	866				866
Dividends paid ($0.25, $0.475, $0.225 and $0.45 per share respectively)	(11,730)			(11,730)
Stock based compensation	664		664
Exercise of stock options and restricted stock			(1,286)			$ 1,286
Exercise of stock options and restricted stock, shares						73,413
Common stock repurchases	(423)					$ (423)
Common stock repurchases, shares						(26,472)
Ending balance at Aug. 31, 2020	294,312	$ 75,134	122,430	192,685	(24,340)	$ (71,597)
Ending balance common stock, shares at Aug. 31, 2020		30,053,443
Ending balance treasury stock, shares at Aug. 31, 2020						(4,089,345)
Beginning balance at May. 31, 2020	292,998	$ 75,134	122,266	192,130	(24,773)	$ (71,759)
Beginning balance common stock, shares at May. 31, 2020		30,053,443
Beginning balance, treasury stock, shares at May. 31, 2020						(4,098,607)
Net earnings	6,421			6,421
Adjustment to pension, net of deferred tax of $95, $199, $145 and $289 respectively	433				433
Dividends paid ($0.25, $0.475, $0.225 and $0.45 per share respectively)	(5,866)			(5,866)
Stock based compensation	326		326
Exercise of stock options and restricted stock			(162)			$ 162
Exercise of stock options and restricted stock, shares						9,262
Ending balance at Aug. 31, 2020	294,312	$ 75,134	122,430	192,685	(24,340)	$ (71,597)
Ending balance common stock, shares at Aug. 31, 2020		30,053,443
Ending balance treasury stock, shares at Aug. 31, 2020						(4,089,345)
Beginning balance at Feb. 28, 2021	$ 300,549	$ 75,134	123,017	194,436	(20,282)	$ (71,756)
Beginning balance common stock, shares at Feb. 28, 2021	30,053,443	30,053,443
Beginning balance, treasury stock, shares at Feb. 28, 2021						(4,103,630)
Net earnings	$ 14,764			14,764
Adjustment to pension, net of deferred tax of $95, $199, $145 and $289 respectively	597				597
Dividends paid ($0.25, $0.475, $0.225 and $0.45 per share respectively)	(12,391)			(12,391)
Stock based compensation	$ 1,802		1,802
Exercise of stock options and restricted stock			(1,703)			$ 1,703
Exercise of stock options and restricted stock, shares						97,362
Common stock repurchases, shares	0
Ending balance at Aug. 31, 2021	$ 305,321	$ 75,134	123,116	196,809	(19,685)	$ (70,053)
Ending balance common stock, shares at Aug. 31, 2021	30,053,443	30,053,443
Ending balance treasury stock, shares at Aug. 31, 2021						(4,006,268)
Beginning balance at May. 31, 2021	$ 303,452	$ 75,134	122,746	195,874	(19,983)	$ (70,319)
Beginning balance common stock, shares at May. 31, 2021		30,053,443
Beginning balance, treasury stock, shares at May. 31, 2021						(4,021,466)
Net earnings	7,460			7,460
Adjustment to pension, net of deferred tax of $95, $199, $145 and $289 respectively	298				298
Dividends paid ($0.25, $0.475, $0.225 and $0.45 per share respectively)	(6,525)			(6,525)
Stock based compensation	636		636
Exercise of stock options and restricted stock			(266)			$ 266
Exercise of stock options and restricted stock, shares						15,198
Ending balance at Aug. 31, 2021	$ 305,321	$ 75,134	$ 123,116	$ 196,809	$ (19,685)	$ (70,053)
Ending balance common stock, shares at Aug. 31, 2021	30,053,443	30,053,443
Ending balance treasury stock, shares at Aug. 31, 2021						(4,006,268)

XML

Unaudited Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2021	Aug. 31, 2020	Aug. 31, 2021	Aug. 31, 2020
Statement Of Stockholders Equity [Abstract]
Deferred tax adjusted to pension	$ 95	$ 145	$ 199	$ 289
Dividends paid per share	$ 0.250	$ 0.225	$ 0.475	$ 0.450

XML

Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Cash flows from operating activities:
Net earnings	$ 14,764	$ 10,606
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	5,132	4,897
Amortization of intangible assets	4,164	3,924
(Gain) loss from disposal of assets	(276)	(412)
Bad debt expense, net of recoveries	159	780
Stock based compensation	1,802	664
Net pension expense	797	1,155
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable	221	8,783
Prepaid expenses and income taxes	(84)	(736)
Inventories	(6,013)	1,519
Other assets	(15)	1
Accounts payable and accrued expenses	4,296	(2,906)
Other liabilities	(440)	(121)
Net cash provided by operating activities	24,507	28,154
Cash flows from investing activities:
Capital expenditures	(2,108)	(1,289)
Purchase of businesses, net of cash acquired	(3,922)	0
Proceeds from disposal of plant and property	825	936
Net cash used in investing activities	(5,205)	(353)
Cash flows from financing activities:
Dividends paid	(12,391)	(11,730)
Common stock repurchases	0	(423)
Net cash used in financing activities	(12,391)	(12,153)
Net change in cash	6,911	15,648
Cash at beginning of period	75,190	68,258
Cash at end of period	$ 82,101	$ 83,906

XML

Significant Accounting Policies and General Matters

6 Months Ended

Aug. 31, 2021

Accounting Policies [Abstract]

Significant Accounting Policies and General Matters

1. Significant Accounting Policies and General Matters

Basis of Presentation

These unaudited consolidated financial statements of Ennis, Inc. and its subsidiaries (collectively referred to as the “Company,” “Registrant,” “Ennis,” or “we,” “us,” or “our”) for the period ended August 31, 2021 have been prepared in accordance with generally accepted accounting principles for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2021, from which the accompanying consolidated balance sheet at February 28, 2021 was derived. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial information have been included and are of a normal recurring nature. In preparing the financial statements, the Company is required to make estimates and assumptions that affect the disclosure and reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates these estimates and judgments on an ongoing basis, including those related to bad debts, inventory valuations, property, plant and equipment, intangible assets, pension plan, accrued liabilities, and income taxes. The Company bases estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of operations for any interim period are not necessarily indicative of the results of operations for a full year, especially in light of the uncertainties surrounding the impact of the novel coronavirus (COVID-19) pandemic.

Recent Accounting Pronouncements

Recently Adopted Accounting Updates

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU” No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Amendments include removal of certain exceptions to the general principles of Topic 740, Income Taxes, and simplification in several other areas. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020, and interim periods therein. The Company adopted ASU 2019-12 as of March 1, 2021, and the adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Updates

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides companies with optional guidance, including expedients and exceptions for applying generally accepted accounting principles to contracts and other transactions affected by reference rate reform, such as the London Interbank Offered Rate (“LIBOR”). This new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company is currently evaluating ASU 2020-04, but does not expect it to have a significant impact on its consolidated financial statements. 

XML

Revenue

6 Months Ended

Aug. 31, 2021

Revenue From Contract With Customer [Abstract]

Revenue

2. Revenue

Nature of Revenues

Substantially all of the Company’s revenue is generated from contracts with customers for the sale of commercial printing products in the continental United States and is primarily recognized at a point in time in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Revenue from the sale of commercial printing products, including shipping and handling fees billed to customers, is recognized upon the transfer of control to the customer, which is generally upon shipment to the customer when the terms of the sale are freight on board (“FOB”) shipping point, or, to a lesser extent, upon delivery to the customer if the terms of the sale are FOB destination.

In a small number of cases and upon customer request, the Company prints and stores commercial printing product for customer specified future delivery, generally within the same year as the product is manufactured. In this case, revenue is recognized upon the transfer of control when manufacturing is complete and title and risk of ownership is passed to the customer. Storage revenue for certain customers may be recognized over time rather than at a point in time. As of the date of this report, the amount of storage revenue is immaterial to the Company’s financial statements. The output method for measure of progress is determined to be appropriate. The Company recognizes storage revenue in the amount for which it has the right to invoice for revenue that is

recognized over time and for which it demonstrates that the invoiced amount corresponds directly with the value to the customer for the performance completed to date.

The Company does not disaggregate revenue and operates in one sales category consisting of commercial printed product revenue, which is reported as net sales on the consolidated statements of operations. The Company does not have material contract assets and contract liabilities as of August 31, 2021.

Significant Judgments

Generally, the Company’s contracts with customers are comprised of a written quote and customer purchase order or statement of work, and governed by the Company’s trade terms and conditions. In certain instances, it may be further supplemented by separate pricing agreements and customer incentive arrangements, which typically only affect the contract’s transaction price. Contracts do not contain a significant financing component as payment terms on invoiced amounts are typically between 30 to 60 days, based on the Company’s credit assessment of individual customers, as well as industry expectations. Product returns are not significant.

From time to time, the Company may offer incentives to its customers considered to be variable consideration including volume-based rebates or early payment discounts. Customer incentives considered to be variable consideration are recorded as a reduction to revenue as part of the transaction price at contract inception when there is a basis to reasonably estimate the amount of the incentive and only to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Customer incentives are allocated entirely to the single performance obligation of transferring printed product to the customer.

For customers with terms of FOB shipping point, the Company accounts for shipping and handling activities performed after the control of the printed product has been transferred to the customer as a fulfillment cost. The Company accrues for the costs of shipping and handling activities if revenue is recognized before contractually agreed shipping and handling activities occur.

The Company’s contracts with customers are generally short-term in nature. Accordingly, the Company does not disclose the value of unsatisfied performance obligations nor the timing of revenue recognition. 

XML

Accounts Receivable and Allowance for Doubtful Receivables

6 Months Ended

Aug. 31, 2021

Receivables [Abstract]

Accounts Receivable and Allowance for Doubtful Receivables

3. Accounts Receivable and Allowance for Doubtful Receivables

Accounts receivable are reduced by an allowance for an estimate of amounts that are uncollectible. Substantially all of the Company’s receivables are due from customers in the United States. The Company extends credit to its customers based upon its evaluation of the following factors: (i) the customer’s financial condition, (ii) the amount of credit the customer requests, and (iii) the customer’s actual payment history (which includes disputed invoice resolution). The Company does not typically require its customers to post a deposit or supply collateral. The Company’s allowance for doubtful receivables is based on an analysis that estimates the amount of its total customer receivable balance that is not collectible. This analysis includes the pooling of receivables based on risk assessment and then assessing a default probability to these pooled balances, which can be influenced by several factors including (i) current market conditions, (ii) historical experience, (iii) reasonable forecast, and (iv) review of customer receivable aging and payment trends.

The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance in the period the payment is received.

The following table presents the activity in the Company’s allowance for doubtful receivables (in thousands):

	Three months ended						Six months ended
	August 31,						August 31,
	2021			2020			2021			2020
Balance at beginning of period	$	954		$	940		$	961		$	715
Bad debt expense, net of recoveries		121			132			159			780
Accounts written off		(59	)		(198	)		(104	)		(621	)
Balance at end of period	$	1,016		$	874		$	1,016		$	874

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Inventories

6 Months Ended

Aug. 31, 2021

Inventory Disclosure [Abstract]

Inventories

4. Inventories

With the exception of approximately 13.6% and 12.6% of its inventories valued at the lower of last-in first-out (“LIFO”) for the periods ended August 31, 2021 and February 28, 2021, respectively, the Company values its inventories at the lower of first-in, first-out (“FIFO”) cost or net realizable value. The Company regularly reviews inventories on hand, using specific aging categories, and writes down the carrying value of its inventories for excess and potentially obsolete inventories based on historical usage and estimated future usage. In assessing the ultimate realization of its inventories, the Company is required to make judgments as to future demand requirements. As actual future demand or market conditions may vary from those projected by the Company, adjustments to inventories may be required.

The following table summarizes the components of inventories at the different stages of production as of the dates indicated (in thousands):

	August 31,		February 28,
	2021		2021
Raw material	$	26,036	$	19,699
Work-in-process		5,332		3,762
Finished goods		8,783		9,445
	$	40,151	$	32,906

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Acquisitions

6 Months Ended

Aug. 31, 2021

Business Combinations [Abstract]

Acquisitions

5. Acquisitions

The Company applies the acquisition method of accounting for business combinations. Under the acquisition method, the acquiring entity in a business combination recognizes 100% of the assets acquired and liabilities assumed at their acquisition date fair values. Management utilizes valuation techniques appropriate for the asset or liability being measured in determining these fair values. Any excess of the purchase price over amounts allocated to assets acquired, including identifiable intangible assets and liabilities assumed, is recorded as goodwill. Where amounts allocated to assets acquired and liabilities assumed is greater than the purchase price, a bargain purchase gain is recognized. Acquisition-related costs are expensed as incurred.

On December 31, 2020, the Company acquired the assets of Infoseal LLC (“Infoseal”), which is based in Roanoke, Virginia, for $19.2 million in cash plus the assumption of trade payables, subject to certain adjustments. Since the acquisition, the Company has incurred approximately $0.4 million of costs (including legal and accounting fees) related to the acquisition. Goodwill of $5.6 million recognized as a part of the acquisition is deductible for tax purposes. The Company also recorded intangible assets with definite lives of approximately $4.3 million in connection with the transaction. The acquisition of Infoseal, which prior to the acquisition generated approximately $19.2 million in sales for its fiscal year ended December 31, 2020, creates additional capabilities within our pressure seal and tax form products.

The following is a summary of the purchase price allocation for Infoseal (in thousands):

Accounts receivable	$	1,966
Inventories		1,758
Right-of-use asset		3,865
Property, plant & equipment		7,000
Goodwill and intangibles		9,889
Accounts payable and accrued liabilities		(1,411	)
Operating lease liability		(3,865	)
	$	19,202

On June 1, 2021, the Company acquired the assets and business from AmeriPrint Corporation ("AmeriPrint"), which is based in Harvard, Illinois, for $3.9 million in cash plus the assumption of trade payables, subject to certain adjustments. Goodwill of $0.5 million recognized as a part of the acquisition is deductible for tax purposes. The Company also recorded intangible assets with definite lives of approximately $1.1 million in connection with the transaction. The acquisition of AmeriPrint which prior to the acquisition generated approximately $6.5 million in sales for its fiscal year ended December 31, 2020, brings added capabilities and expertise to our expanding product offering including barcoding and variable imaging.

The following is a summary of the purchase price allocation for AmeriPrint (in thousands):

Accounts receivable	$	417
Inventories		732
Property, plant & equipment		2,000
Goodwill and intangibles		1,607
Accounts payable and accrued liabilities		(834	)
	$	3,922

The results of operations for Infoseal and AmeriPrint are included in the Company’s consolidated financial statements from the date of acquisition. The following table sets forth certain operating information on a pro forma basis as though all Infoseal and AmeriPrint operations had been acquired as of March 1, 2020, after the estimated impact of adjustments such as amortization of intangible assets, depreciation expense and interest expense and related tax effects (in thousands, except per share amounts).
 

	Three months ended		Six months ended
	Aug 31, 2021	Aug 31, 2020	Aug 31, 2021	Aug 31, 2020
Pro forma net sales	$100,451	$93,040	$199,049	$188,465
Pro forma net earnings	7,460	6,642	14,727	11,049
Pro forma earnings per share - diluted	$0.29	$0.26	$0.56	$0.43

The pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been in effect for the period presented.

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Leases

6 Months Ended

Aug. 31, 2021

Leases [Abstract]

Leases

6. Leases

The Company leases certain of its facilities and equipment under operating leases, which are recorded as right-of-use assets and lease liabilities. The Company’s leases generally have terms of 1 – 5 years, with certain leases including renewal options to extend the leases for additional periods at the Company’s discretion. At lease inception, all renewal options reasonably certain to be exercised are considered when determining the lease term. The Company currently does not have leases that include options to purchase or provisions that would automatically transfer ownership of the leased property to the Company.

Operating lease expense is recognized on a straight-line basis over the lease term, and variable lease payments are expensed as incurred. The Company had no variable lease costs for the six months ended August 31, 2021 and August 31, 2020.

The Company determines whether a contract is or contains a lease at the inception of the contract. A contract will be deemed to be or contain a lease if the contract conveys the right to control and direct the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from the use of the property, plant, and equipment.

Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates based on the BBB Corporate Bond Rate at lease commencement date as rates are not implicitly stated in most leases.

Components of lease expense for the three and six months ended August 31, 2021 and August 31, 2020 were as follows (in thousands):

	Three months ended				Six months ended
	August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Operating lease cost	$	1,595	$	1,574	$	3,234	$	3,201
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,586	$	1,563	$	3,216	$	3,175
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	838	$	56	$	3,441	$	56

Weighted Average Remaining Lease Terms
Operating leases	4 Years
Weighted Average Discount Rate
Operating leases		3.66	%

Future minimum lease commitments under non-cancelable operating leases for each of the fiscal years ending are as follows (in thousands):

	Operating
	Lease
	Commitments
2022 (remaining 6 months)	$	2,598
2023		5,816
2024		4,423
2025		3,655
2026		2,164
2027		765
Thereafter		3
Total future minimum lease payments	$	19,424
Less imputed interest		1,253
Present value of lease liabilities	$	18,171

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Goodwill and Intangible Assets

6 Months Ended

Aug. 31, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

7. Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets of acquired businesses and is not amortized. Goodwill and other intangible assets are tested for impairment at a reporting unit level. The annual impairment test of goodwill and intangible assets is performed as of December 1 of each fiscal year.

The Company uses qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the fair value of a reporting unit exceeds its carrying amount, including goodwill. Some of the qualitative factors used in applying this test include consideration of macroeconomic conditions, industry and market conditions, cost factors affecting the business, overall financial performance of the business, and performance of the share price of the Company.

If qualitative factors are not deemed sufficient to conclude that the fair value of the reporting unit more likely than not exceeds its carrying value, then a one-step approach is applied in making an evaluation. The evaluation utilizes multiple valuation methodologies, including a market approach (market price multiples of comparable companies) and an income approach (discounted cash flow analysis). The computations require management to make significant estimates and assumptions, including, among other things,

selection of comparable publicly traded companies, the discount rate applied to future earnings reflecting a weighted average cost of capital, and earnings growth assumptions. A discounted cash flow analysis requires management to make various assumptions about future sales, operating margins, capital expenditures, working capital, and growth rates. If the evaluation results in the fair value of the goodwill for the reporting unit being lower than the carrying value, an impairment charge is recorded.

Definite-lived intangible assets are amortized over their estimated useful lives and tested for impairment if events or changes in circumstances indicate that the asset may be impaired.

The carrying amount and accumulated amortization of the Company’s intangible assets at each balance sheet date are as follows (in thousands):

	Weighted
	Average
	Remaining		Gross
	Life		Carrying		Accumulated
As of August 31, 2021	(in years)		Amount		Amortization		Net
Amortized intangible assets
Trademarks and trade names		11.4	$	28,107	$	9,313	$	18,794
Customer lists		6.4		76,424		45,695		30,729
Non-compete		3.5		877		744		133
Patent		—		783		783		—
Total		8.3	$	106,191	$	56,535	$	49,656
As of February 28, 2021
Amortized intangible assets
Trademarks and trade names		11.9	$	27,561	$	8,194	$	19,367
Customer lists		6.8		75,862		42,726		33,136
Non-compete		3.1		877		668		209
Patent		—		783		783		—
Total		8.7	$	105,083	$	52,371	$	52,712

Aggregate amortization expense for the six months ended August 31, 2021 and August 31, 2020 was $4.2 million and $3.9 million, respectively.

The Company’s estimated amortization expense for the current and next four fiscal years is as follows (in thousands):

2022	$	8,077
2023		7,052
2024		7,010
2025		6,835
2026		6,221

Changes in the net carrying amount of goodwill as of the dates indicated are as follows (in thousands):

Balance as of March 1, 2020	$	82,527
Goodwill acquired		6,120
Balance as of February 28, 2021		88,647
Goodwill acquired		14
Balance as of August 31, 2021	$	88,661

During fiscal year 2021, $6.1 million was added to goodwill related to the acquisition of Infoseal.

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Accrued Expenses

6 Months Ended

Aug. 31, 2021

Payables And Accruals [Abstract]

Accrued Expenses

8. Accrued Expenses

The following table summarizes the components of accrued expenses as of the dates indicated (in thousands):

	August 31,		February 28,
		2021		2021
Employee compensation and benefits	$	11,861	$	11,742
Taxes other than income		1,465		467
Accrued legal and professional fees		329		272
Accrued interest		84		79
Accrued utilities		108		90
Accrued acquisition related obligations		92		164
Income taxes payable		1,005		1,528
Other accrued expenses		1,073		613
	$	16,017	$	14,955

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Long-Term Debt

6 Months Ended

Aug. 31, 2021

Debt Disclosure [Abstract]

Long-Term Debt

9. Long-Term Debt

The Company is party to a Second Amended and Restated Credit Agreement, which has been amended from time to time, pursuant to which a credit facility has been extended to the Company until November 11, 2021 (the “Credit Facility”). The Credit Facility provides the Company and its subsidiaries with up to $100.0 million in revolving credit, as well as a $20.0 million sublimit for the issuance of letters of credit and a $15.0 million sublimit for swing-line loans. Under the Credit Facility, the Company or any of its subsidiaries can request up to three increases in the aggregate commitments in an aggregate amount not to exceed $50.0 million. Under the Credit Facility: (i) the Company’s consolidated net leverage ratio may not exceed 3.00:1.00, (ii) the Company’s fixed charge coverage ratio may not be less than 1.25:1.00, and (iii) the Company may make dividends or distributions to shareholders so long as (A) no event of default has occurred and is continuing and (B) the Company’s net leverage ratio both before and after giving effect to any such dividend or distribution is equal to or less than 2.50:1.00. All calculations are made based on U.S. Generally Accepted Accounting Principles existing at the time the Credit Facility was entered into. As of August 31, 2021, the Company was in compliance with all terms and conditions of the Credit Facility.

The Credit Facility bears interest at LIBOR plus a spread ranging from 1.85% to 2.5%. The Company had no outstanding long-term debt under the revolving credit line as of August 31, 2021. The rate is determined by the Company’s fixed charge coverage ratio of total funded debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”). As of August 31, 2021, the Company had $0.6 million outstanding under standby letters of credit arrangements, leaving approximately $99.4 million in available borrowing capacity. The Credit Facility is secured by substantially all of the Company’s assets (other than real property), as well as all capital securities of each of the Company’s subsidiaries. The Company is considering the nonrenewal of the credit facility or renewing with a smaller line of credit limit

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Shareholders' Equity

6 Months Ended

Aug. 31, 2021

Equity [Abstract]

Shareholders' Equity

10. Shareholders’ Equity

The Company’s board of directors (the “Board”) has authorized the repurchase of the Company’s outstanding common stock through a stock repurchase program, which authorized amount is currently up to $40.0 million in the aggregate. Under the repurchase program, purchases may be made from time to time in the open market or through privately negotiated transactions depending on market conditions, share price, trading volume and other factors. Such purchases, if any, will be made in accordance with applicable insider trading and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice.

During the six months ended August 31, 2021, the Company did not repurchase any shares of common stock under the program. Since the program’s inception in October 2008, there have been 1,894,350 common shares repurchased at an average price of $15.91 per share. As of August 31, 2021, $9.9 million remained available to repurchase shares of the Company’s common stock under the program.

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Stock Based Compensation

6 Months Ended

Aug. 31, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Based Compensation

11. Stock Based Compensation

The Company grants stock options, restricted stock and restricted stock units (“RSUs”) to key executives, managerial employees and non-employee directors. Prior to June 30, 2021, the Company had one stock incentive plan, the 2004 Long-Term Incentive Plan of Ennis, Inc., as amended and restated as of May 18, 2008 and was further amended on June 30, 2011 (the “Old Plan”). The Company

had 177,436 shares of unissued common stock reserved under the Old Plan for issuance as of May 31, 2021. The Old Plan expired June 30, 2021 and all remaining unused shares expired. Subject to the affirmative vote of the shareholders, the Board adopted the 2021 Long-Term Incentive Plan of Ennis, Inc. (the “New Plan”) on April 16, 2021 authorizing 1,033,648 shares of common stock for awards. The New Plan was approved by the shareholders at the Annual Meeting on July 15, 2021 by a majority vote. The New Plan expires June 30, 2031 and all unissued stock will expire on that date.

The exercise price of each stock option granted under either plan equals a referenced price of the Company’s common stock as reported on the New York Stock Exchange on the date of grant, and an option’s maximum term is ten years. Stock options and restricted stock may be granted at different times during the year and vest ratably over various periods, from grant date up to five years. RSUs can be either time vested or vested based upon the attainment of certain performance metrics over a certain time period. Performance conditions generally are tied to attainment of certain financial targets such as return on invested capital, EBITDA or other similar measures. Awards granted under the Old Plan generally have a performance or vesting period of three years from the date of grant. RSUs are eligible to receive tandem dividend equivalent rights that will allow the award holder to receive dividends at the same time other shareholders receive dividends. The Company uses treasury stock to satisfy option exercises and restricted stock awards.

The Company recognizes compensation expense based on the grant date fair value of the award for stock options, restricted stock grants and RSUs on a straight-line basis over the requisite service period. The estimated number of shares to be achieved for performance based RSUs is updated each reporting period. For the three months ended August 31, 2021 and August 31, 2020, the Company included in selling, general and administrative expenses, compensation expense related to share-based compensation of $0.6 million and $0.4 million, respectively. For the six months ended August 31, 2021 and August 31, 2020, the Company included in selling, general and administrative expenses, compensation expense related to share-based compensation of $1.8 million and $0.7 million, respectively.

Stock Options

The Company had no outstanding vested or unvested stock options at any time during the six months ended August 31, 2021 and August 31, 2020. No stock options were granted during the six months ended August 31, 2021 and August 31, 2020.

Restricted Stock

The following activity occurred with respect to the Company’s restricted stock awards for the six months ended August 31, 2021 of which 18,179 shares were granted under the New Plan:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Outstanding at March 1, 2021		119,729		$	18.90
Granted		51,920			20.31
Terminated		—			—
Vested		(97,362	)		19.77
Outstanding at August 31, 2021		74,287		$	18.73

As of August 31, 2021, the total remaining unrecognized compensation cost related to unvested restricted stock granted under the Old Plan was approximately $1.2 million. The weighted average remaining requisite service period of the unvested restricted stock awards was 1.7 years.

Restricted Stock Units

During the six months ended August 31, 2021, 177,977 performance-based RSUs and 44,494 time-based RSUs were granted under the Old Plan. The fair value of the time-based RSUs was estimated based on the fair market value of the Company’s stock on the date of grant of $20.38 per unit. The fair value of the performance-based RSUs, using a Monte Carlo valuation model was $23.17 per unit. The performance measures include a threshold, target and maximum performance level providing the grantees an opportunity to receive more or less shares than targeted depending on actual financial performance. The award will be based on the Company’s return on equity, EBITDA and adjusted for the Company’s Relative Shareholder Return as measured against a defined peer group.

The performance-based RSUs vest on the third anniversary from the date of grant and the time-based RSUs vest ratably over three years from the date of grant.

The following activity occurred with respect to the Company’s restricted stock units for the six months ended August 31, 2021:

	Time-based				Performance-based
			Weighted				Weighted
			Average				Average
	Number of		Grant Date		Number of		Grant Date
	Shares		Fair Value		Shares		Fair Value
Outstanding at March 1, 2021		—	$	—		—	$	—
Granted		44,494		20.38		177,977		23.17
Terminated		—		—		—		—
Vested		—		—		—		—
Outstanding at August 31, 2021		44,494	$	20.38		177,977	$	23.17

As of August 31, 2021, the total remaining unrecognized compensation cost of time-based RSUs was approximately $0.8 million over a weighted average remaining requisite service period of 2.6 years. The total remaining unrecognized compensation of performance-based RSUs was approximately $3.6 million over a weighted average remaining requisite service period of 2.6 years.

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Pension Plan

6 Months Ended

Aug. 31, 2021

Compensation And Retirement Disclosure [Abstract]

Pension Plan

12. Pension Plan

The Company and certain subsidiaries have a noncontributory defined benefit retirement plan (the “Pension Plan”), covering approximately 12% of the Company’s aggregate employees. Benefits are based on years of service and the employee’s average compensation for the highest five compensation years preceding retirement or termination.

Pension expense is composed of the following components included in cost of goods sold and selling, general, and administrative expenses in the Company’s consolidated statements of earnings (in thousands):

	Three months ended						Six months ended
	August 31,						August 31,
	2021			2020			2021			2020
Components of net periodic benefit cost
Service cost	$	268		$	318		$	537		$	636
Interest cost		421			439			841			877
Expected return on plan assets		(930	)		(1,018	)		(1,861	)		(2,037	)
Amortization of:
Unrecognized net loss		640			839			1,280			1,679
Net periodic benefit cost	$	399		$	578		$	797		$	1,155

The Company is required to make contributions to the Pension Plan. These contributions are required under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”). Due to the enactment of the Highway and Transportation Funding Act (HATFA) in August 2014, plan sponsors can calculate the discount rate used to measure the Pension Plan liability using a 25-year average of interest rates plus or minus a corridor. The Company’s minimum required contribution to the Pension Plan is zero for the Pension Plan year ending February 28, 2022. Assuming a stable funding status, the Company would expect to make a cash contribution to the Pension Plan of between $1.5 million and $3.0 million per year. However, changes in actual investment returns or in discount rates could change this amount significantly. At August 31, 2021, we had an unfunded pension liability recorded on our balance sheet of $6.3 million. Management estimates the future lump-sum payments will exceed the settlement threshold resulting in a probable pension settlement charge of approximately $2.3 million. The settlement charges are non-cash charges that accelerate the recognition of unrecognized pension benefit costs, that would have been incurred in subsequent periods, when lump sum payments exceed a threshold of service and interest cost for the period.

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Earnings Per Share

6 Months Ended

Aug. 31, 2021

Earnings Per Share [Abstract]

Earnings Per Share

13. Earnings Per Share

Basic earnings per share have been computed by dividing net earnings by the weighted average number of common shares outstanding during the applicable period. Diluted earnings per share reflect the potential dilution that could occur if stock options or other contracts to issue common shares were exercised or converted into common stock.

The following table sets forth the computation for basic and diluted earnings per share for the periods indicated:

	Three months ended		Six months ended
	August 31,		August 31,
	2021	2020		2021	2020
Basic weighted average common shares outstanding	26,080,121	25,974,412		26,055,056	25,965,370
Effect of dilutive RSUs	90,275	—		91,365	—
Diluted weighted average common shares outstanding	26,170,396	25,974,412		26,146,421	25,965,370
Earnings per share
Net earnings - basic	$0.29	$0.25		$0.57	$0.41
Net earnings - diluted	$0.29	$0.25		$0.57	$0.41
Cash dividends	$0.250	$0.225		$0.475	$0.450

The Company treats unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities, which are included in the computation of earnings per share. Our unvested restricted shares participate on an equal basis with common shares; therefore, there is no difference in undistributed earnings allocated to each participating security. Accordingly, the presentation above is prepared on a combined basis. No options were outstanding for the six months ended August 31, 2021 and August 31, 2020.

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Concentrations of Risk

6 Months Ended

Aug. 31, 2021

Risks And Uncertainties [Abstract]

Concentrations of Risk

14. Concentrations of Risk

Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash and trade receivables. Cash is placed with high-credit quality financial institutions. The Company believes its credit risk with respect to trade receivables is limited due to industry and geographic diversification. As disclosed on the consolidated balance sheets, the Company maintains an allowance for doubtful receivables to cover the Company’s estimate of credit losses associated with accounts receivable.

The Company, for quality and pricing reasons, purchases its paper products from a limited number of suppliers. While other sources may be available to the Company to purchase these products, they may not be available at the cost or at the quality the Company has come to expect.

For the purposes of the consolidated statements of cash flows, the Company considers cash to include cash on hand and in bank accounts. The Federal Deposit Insurance Corporation insures accounts up to $250,000. At August 31, 2021, cash balances included $81.0 million that was not federally insured because it represented amounts in individual accounts above the federally insured limit for each such account. This at-risk amount is subject to fluctuation on a daily basis. While management does not believe there is significant risk with respect to such deposits, no assurance can be made that the Company will not experience losses on the Company’s deposits.

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Related Party Transactions

6 Months Ended

Aug. 31, 2021

Related Party Transactions [Abstract]

Related Party Transactions

15. Related Party Transactions

The Company leases a facility and sells product to an entity controlled by a member of the Board who was the former owner of Integrated Print & Graphics, a business that the Company acquired. The total right-of-use asset and related lease liability as of August 31, 2021 was $1.3 million and $1.3 million, respectively. During the six months ended August 31, 2021, total lease payments made to, and sales made to, the related party were approximately $0.2 million and $1.5 million, respectively.

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Covid-19 Pandemic

6 Months Ended

Aug. 31, 2021

Extraordinary And Unusual Items [Abstract]

Covid-19 Pandemic

16. COVID-19 Pandemic

On March 11, 2020, the World Health Organization declared the ongoing COVID-19 outbreak to be a global pandemic. In response to the rapid spread of COVID-19 within the United States, federal, state and local governments have imposed varying degrees of restrictions on social and commercial activity to promote social distancing in an effort to slow the spread of the illness. Due to the Company’s involvement in healthcare, government, food and beverage and banking, the Company’s plants have been deemed “essential” and, as such, the Company has continued to operate most of its manufacturing facilities, albeit at reduced production

levels. Due to reduced demand for our products during the pandemic, particularly in our transactional forms, the Company has reduced its workforce by 353 employees, ceased operating in two of its owned under-utilized facilities and exited two facilities with expiring leases.

While economic activity has picked up significantly, the Company will continue to monitor projected sales and proactively adjust costs as necessary depending on the impact of surges in the Delta variant to the COVID-19 pandemic. The Company believes the cost cutting measures it has previously implemented will not materially impact its ability to service the increased customer demand as economic conditions continue to improve. As a recent indicator, according to the Bureau of Labor Statistics (“BLS”) total nonfarm payroll employment rose by 235,000 in August, and the unemployment rate declined by 0.2 percentage point to 5.2 percent. So far this year, monthly job growth has averaged 586,000. In August, notable job gains occurred in professional and business services, transportation and warehousing, private education, manufacturing, and other services. Employment in retail trade declined over the month.

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Subsequent Events

6 Months Ended

Aug. 31, 2021

Subsequent Events [Abstract]

Subsequent Events

17. Subsequent Events

On September 17, 2021 the Board declared a quarterly dividend on the Company's common stock of 25.0 cents per share, which will be paid on November 5, 2021 to shareholders of record as of October 8, 2021. The expected payout for this dividend is approximately $6.5 million.

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Significant Accounting Policies and General Matters (Policies)

6 Months Ended

Aug. 31, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

These unaudited consolidated financial statements of Ennis, Inc. and its subsidiaries (collectively referred to as the “Company,” “Registrant,” “Ennis,” or “we,” “us,” or “our”) for the period ended August 31, 2021 have been prepared in accordance with generally accepted accounting principles for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2021, from which the accompanying consolidated balance sheet at February 28, 2021 was derived. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial information have been included and are of a normal recurring nature. In preparing the financial statements, the Company is required to make estimates and assumptions that affect the disclosure and reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates these estimates and judgments on an ongoing basis, including those related to bad debts, inventory valuations, property, plant and equipment, intangible assets, pension plan, accrued liabilities, and income taxes. The Company bases estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of operations for any interim period are not necessarily indicative of the results of operations for a full year, especially in light of the uncertainties surrounding the impact of the novel coronavirus (COVID-19) pandemic.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recently Adopted Accounting Updates

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU” No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Amendments include removal of certain exceptions to the general principles of Topic 740, Income Taxes, and simplification in several other areas. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020, and interim periods therein. The Company adopted ASU 2019-12 as of March 1, 2021, and the adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Updates

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides companies with optional guidance, including expedients and exceptions for applying generally accepted accounting principles to contracts and other transactions affected by reference rate reform, such as the London Interbank Offered Rate (“LIBOR”). This new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company is currently evaluating ASU 2020-04, but does not expect it to have a significant impact on its consolidated financial statements. 

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Accounts Receivable and Allowance for Doubtful Receivables (Tables)

6 Months Ended

Aug. 31, 2021

Receivables [Abstract]

Allowance for Doubtful Receivables

The following table presents the activity in the Company’s allowance for doubtful receivables (in thousands):

	Three months ended						Six months ended
	August 31,						August 31,
	2021			2020			2021			2020
Balance at beginning of period	$	954		$	940		$	961		$	715
Bad debt expense, net of recoveries		121			132			159			780
Accounts written off		(59	)		(198	)		(104	)		(621	)
Balance at end of period	$	1,016		$	874		$	1,016		$	874

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Inventories (Tables)

6 Months Ended

Aug. 31, 2021

Inventory Disclosure [Abstract]

Components of Inventories

The following table summarizes the components of inventories at the different stages of production as of the dates indicated (in thousands):

	August 31,		February 28,
	2021		2021
Raw material	$	26,036	$	19,699
Work-in-process		5,332		3,762
Finished goods		8,783		9,445
	$	40,151	$	32,906

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Acquisitions (Tables)

6 Months Ended

Aug. 31, 2021

Business Acquisition [Line Items]

Summary of Operating Information on a Pro Forma Basis

The following table sets forth certain operating information on a pro forma basis as though all Infoseal and AmeriPrint operations had been acquired as of March 1, 2020, after the estimated impact of adjustments such as amortization of intangible assets, depreciation expense and interest expense and related tax effects (in thousands, except per share amounts).

	Three months ended		Six months ended
	Aug 31, 2021	Aug 31, 2020	Aug 31, 2021	Aug 31, 2020
Pro forma net sales	$100,451	$93,040	$199,049	$188,465
Pro forma net earnings	7,460	6,642	14,727	11,049
Pro forma earnings per share - diluted	$0.29	$0.26	$0.56	$0.43

Infoseal LLC [Member]

Business Acquisition [Line Items]

Summary of Purchase Price Allocation

The following is a summary of the purchase price allocation for Infoseal (in thousands):

Accounts receivable	$	1,966
Inventories		1,758
Right-of-use asset		3,865
Property, plant & equipment		7,000
Goodwill and intangibles		9,889
Accounts payable and accrued liabilities		(1,411	)
Operating lease liability		(3,865	)
	$	19,202

AmeriPrint Corporation [Member]

Business Acquisition [Line Items]

Summary of Purchase Price Allocation

The following is a summary of the purchase price allocation for AmeriPrint (in thousands):

Accounts receivable	$	417
Inventories		732
Property, plant & equipment		2,000
Goodwill and intangibles		1,607
Accounts payable and accrued liabilities		(834	)
	$	3,922

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Leases (Tables)

6 Months Ended

Aug. 31, 2021

Leases [Abstract]

Components of Lease Expense

Components of lease expense for the three and six months ended August 31, 2021 and August 31, 2020 were as follows (in thousands):

	Three months ended				Six months ended
	August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Operating lease cost	$	1,595	$	1,574	$	3,234	$	3,201
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,586	$	1,563	$	3,216	$	3,175
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	838	$	56	$	3,441	$	56

Weighted Average Remaining Lease Terms
Operating leases	4 Years
Weighted Average Discount Rate
Operating leases		3.66	%

Summary of Future Minimum Lease Commitments Under Non-cancelable Operating Leases

Future minimum lease commitments under non-cancelable operating leases for each of the fiscal years ending are as follows (in thousands):

	Operating
	Lease
	Commitments
2022 (remaining 6 months)	$	2,598
2023		5,816
2024		4,423
2025		3,655
2026		2,164
2027		765
Thereafter		3
Total future minimum lease payments	$	19,424
Less imputed interest		1,253
Present value of lease liabilities	$	18,171

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Aug. 31, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Carrying Amount and Accumulated Amortization of Intangible Assets

The carrying amount and accumulated amortization of the Company’s intangible assets at each balance sheet date are as follows (in thousands):

	Weighted
	Average
	Remaining		Gross
	Life		Carrying		Accumulated
As of August 31, 2021	(in years)		Amount		Amortization		Net
Amortized intangible assets
Trademarks and trade names		11.4	$	28,107	$	9,313	$	18,794
Customer lists		6.4		76,424		45,695		30,729
Non-compete		3.5		877		744		133
Patent		—		783		783		—
Total		8.3	$	106,191	$	56,535	$	49,656
As of February 28, 2021
Amortized intangible assets
Trademarks and trade names		11.9	$	27,561	$	8,194	$	19,367
Customer lists		6.8		75,862		42,726		33,136
Non-compete		3.1		877		668		209
Patent		—		783		783		—
Total		8.7	$	105,083	$	52,371	$	52,712

Estimated Amortization Expense

The Company’s estimated amortization expense for the current and next four fiscal years is as follows (in thousands):

2022	$	8,077
2023		7,052
2024		7,010
2025		6,835
2026		6,221

Changes in Net Carrying Amount of Goodwill

Changes in the net carrying amount of goodwill as of the dates indicated are as follows (in thousands):

Balance as of March 1, 2020	$	82,527
Goodwill acquired		6,120
Balance as of February 28, 2021		88,647
Goodwill acquired		14
Balance as of August 31, 2021	$	88,661

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Accrued Expenses (Tables)

6 Months Ended

Aug. 31, 2021

Payables And Accruals [Abstract]

Components of Accrued Expenses

The following table summarizes the components of accrued expenses as of the dates indicated (in thousands):

	August 31,		February 28,
		2021		2021
Employee compensation and benefits	$	11,861	$	11,742
Taxes other than income		1,465		467
Accrued legal and professional fees		329		272
Accrued interest		84		79
Accrued utilities		108		90
Accrued acquisition related obligations		92		164
Income taxes payable		1,005		1,528
Other accrued expenses		1,073		613
	$	16,017	$	14,955

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Stock Based Compensation (Tables)

6 Months Ended

Aug. 31, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Restricted Stock Awards and Restricted Stock Units Activity

The following activity occurred with respect to the Company’s restricted stock awards for the six months ended August 31, 2021 of which 18,179 shares were granted under the New Plan:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Outstanding at March 1, 2021		119,729		$	18.90
Granted		51,920			20.31
Terminated		—			—
Vested		(97,362	)		19.77
Outstanding at August 31, 2021		74,287		$	18.73

The following activity occurred with respect to the Company’s restricted stock units for the six months ended August 31, 2021:

	Time-based				Performance-based
			Weighted				Weighted
			Average				Average
	Number of		Grant Date		Number of		Grant Date
	Shares		Fair Value		Shares		Fair Value
Outstanding at March 1, 2021		—	$	—		—	$	—
Granted		44,494		20.38		177,977		23.17
Terminated		—		—		—		—
Vested		—		—		—		—
Outstanding at August 31, 2021		44,494	$	20.38		177,977	$	23.17

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Pension Plan (Tables)

6 Months Ended

Aug. 31, 2021

Compensation And Retirement Disclosure [Abstract]

Summary of Pension Expense Composed of Components Included in Cost of Goods Sold and Selling, General and Administrative Expenses

Pension expense is composed of the following components included in cost of goods sold and selling, general, and administrative expenses in the Company’s consolidated statements of earnings (in thousands):

	Three months ended						Six months ended
	August 31,						August 31,
	2021			2020			2021			2020
Components of net periodic benefit cost
Service cost	$	268		$	318		$	537		$	636
Interest cost		421			439			841			877
Expected return on plan assets		(930	)		(1,018	)		(1,861	)		(2,037	)
Amortization of:
Unrecognized net loss		640			839			1,280			1,679
Net periodic benefit cost	$	399		$	578		$	797		$	1,155

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Earnings Per Share (Tables)

6 Months Ended

Aug. 31, 2021

Earnings Per Share [Abstract]

Computation for Basic and Diluted Earnings Per Share

The following table sets forth the computation for basic and diluted earnings per share for the periods indicated:

	Three months ended		Six months ended
	August 31,		August 31,
	2021	2020		2021	2020
Basic weighted average common shares outstanding	26,080,121	25,974,412		26,055,056	25,965,370
Effect of dilutive RSUs	90,275	—		91,365	—
Diluted weighted average common shares outstanding	26,170,396	25,974,412		26,146,421	25,965,370
Earnings per share
Net earnings - basic	$0.29	$0.25		$0.57	$0.41
Net earnings - diluted	$0.29	$0.25		$0.57	$0.41
Cash dividends	$0.250	$0.225		$0.475	$0.450

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Revenue - Additional Information (Detail)	6 Months Ended
	Aug. 31, 2021
Disaggregation Of Revenue [Line Items]
Revenue unsatisfied performance obligation, practical expedient	true
Minimum [Member]
Disaggregation Of Revenue [Line Items]
Contract with customer, customer payment terms	30 days
Maximum [Member]
Disaggregation Of Revenue [Line Items]
Contract with customer, customer payment terms	60 days

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Accounts Receivable and Allowance for Doubtful Receivables - Allowance for Doubtful Receivables (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2021	Aug. 31, 2020	Aug. 31, 2021	Aug. 31, 2020
Receivables [Abstract]
Balance at beginning of period	$ 954	$ 940	$ 961	$ 715
Bad debt expense, net of recoveries	121	132	159	780
Accounts written off	(59)	(198)	(104)	(621)
Balance at end of period	$ 1,016	$ 874	$ 1,016	$ 874

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Inventories - Additional Information (Detail)	Aug. 31, 2021	Feb. 28, 2021
Inventory Disclosure [Abstract]
Percentage of Inventories valued at LIFO	13.60%	12.60%

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Inventories - Components of Inventories (Detail) - USD ($) $ in Thousands	Aug. 31, 2021	Feb. 28, 2021
Inventory Disclosure [Abstract]
Raw material	$ 26,036	$ 19,699
Work-in-process	5,332	3,762
Finished goods	8,783	9,445
Inventories	$ 40,151	$ 32,906

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Acquisitions - Additional Information (Detail) - USD ($) $ in Thousands	Dec. 31, 2020	Aug. 31, 2021	Jun. 01, 2021	Feb. 28, 2021	Feb. 29, 2020
Business Acquisition [Line Items]
Percentage of assets acquired and liabilities assumed at their acquisition date fair values		100.00%
Goodwill		$ 88,661		$ 88,647	$ 82,527
Infoseal LLC [Member]
Business Acquisition [Line Items]
Total purchase consideration	$ 19,202
Acquisition related costs incurred	400
Goodwill	5,600
Intangible assets	4,300
Net sales	19,200
AmeriPrint Corporation [Member]
Business Acquisition [Line Items]
Total purchase consideration			$ 3,922
Goodwill			500
Intangible assets			$ 1,100
Net sales	$ 6,500

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Acquisitions - Summary of Purchase Price Allocation (Detail) - USD ($) $ in Thousands	Jun. 01, 2021	Dec. 31, 2020
Infoseal LLC [Member]
Business Acquisition [Line Items]
Accounts receivable		$ 1,966
Inventories		1,758
Right-of-use asset		3,865
Property, plant & equipment		7,000
Goodwill and intangibles		9,889
Accounts payable and accrued liabilities		(1,411)
Operating lease liability		(3,865)
Total purchase consideration		$ 19,202
AmeriPrint Corporation [Member]
Business Acquisition [Line Items]
Accounts receivable	$ 417
Inventories	732
Property, plant & equipment	2,000
Goodwill and intangibles	1,607
Accounts payable and accrued liabilities	(834)
Total purchase consideration	$ 3,922

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Acquisitions - Summary of Operating Information on Pro Forma Basis (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2021	Aug. 31, 2020	Aug. 31, 2021	Aug. 31, 2020
Business Combinations [Abstract]
Pro forma net sales	$ 100,451	$ 93,040	$ 199,049	$ 188,465
Pro forma net earnings	$ 7,460	$ 6,642	$ 14,727	$ 11,049
Pro forma earnings per share - diluted	$ 0.29	$ 0.26	$ 0.56	$ 0.43

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Leases - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Lessee Lease Description [Line Items]
Leases description	The Company leases certain of its facilities and equipment under operating leases, which are recorded as right-of-use assets and lease liabilities. The Company’s leases generally have terms of 1 – 5 years, with certain leases including renewal options to extend the leases for additional periods at the Company’s discretion. At lease inception, all renewal options reasonably certain to be exercised are considered when determining the lease term. The Company currently does not have leases that include options to purchase or provisions that would automatically transfer ownership of the leased property to the Company.
Leases, renewal options, description	The Company’s leases generally have terms of 1 – 5 years, with certain leases including renewal options to extend the leases for additional periods at the Company’s discretion.
Lessee operating lease, existence of option to extend	true
Variable lease cost	$ 0	$ 0
Minimum [Member]
Lessee Lease Description [Line Items]
Leases terms	1 year
Maximum [Member]
Lessee Lease Description [Line Items]
Leases terms	5 years

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Leases - Components of Lease Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2021	Aug. 31, 2020	Aug. 31, 2021	Aug. 31, 2020
Lease Cost [Abstract]
Operating lease cost	$ 1,595	$ 1,574	$ 3,234	$ 3,201
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities, Operating cash flows from operating leases	1,586	1,563	3,216	3,175
Right-of-use assets obtained in exchange for lease obligations, Operating leases	$ 838	$ 56	$ 3,441	$ 56
Weighted Average Remaining Lease Terms, Operating leases	4 years		4 years
Weighted Average Discount Rate, Operating leases	3.66%		3.66%

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Leases - Summary of Future Minimum Lease Commitments Under Non-cancelable Operating Leases (Detail) $ in Thousands	Aug. 31, 2021 USD ($)
Operating Lease Liabilities Payments Due [Abstract]
2022 (remaining 6 months)	$ 2,598
2023	5,816
2024	4,423
2025	3,655
2026	2,164
2027	765
Thereafter	3
Total future minimum lease payments	19,424
Less imputed interest	1,253
Present value of lease liabilities	$ 18,171

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Goodwill and Intangible Assets - Carrying Amount and Accumulated Amortization of Intangible Assets (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Aug. 31, 2021	Feb. 28, 2021
Finite-Lived Intangible Assets [Line Items]
Weighted Average Remaining Life (in years)	8 years 3 months 18 days	8 years 8 months 12 days
Gross Carrying Amount	$ 106,191	$ 105,083
Accumulated Amortization	56,535	52,371
Amortized intangible assets, Net	$ 49,656	$ 52,712
Trademarks and Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Remaining Life (in years)	11 years 4 months 24 days	11 years 10 months 24 days
Gross Carrying Amount	$ 28,107	$ 27,561
Accumulated Amortization	9,313	8,194
Amortized intangible assets, Net	$ 18,794	$ 19,367
Customer Lists [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Remaining Life (in years)	6 years 4 months 24 days	6 years 9 months 18 days
Gross Carrying Amount	$ 76,424	$ 75,862
Accumulated Amortization	45,695	42,726
Amortized intangible assets, Net	$ 30,729	$ 33,136
Non-Compete [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Remaining Life (in years)	3 years 6 months	3 years 1 month 6 days
Gross Carrying Amount	$ 877	$ 877
Accumulated Amortization	744	668
Amortized intangible assets, Net	133	209
Patent [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	783	783
Accumulated Amortization	$ 783	$ 783

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Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Aug. 31, 2021	Aug. 31, 2020	Feb. 28, 2021
Finite-Lived Intangible Assets [Line Items]
Amortization of trade names, customer lists, and patent	$ 4,164	$ 3,924
Goodwill acquired	$ 14		$ 6,120
Infoseal LLC [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill acquired			$ 6,100

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Goodwill and Intangible Assets - Estimated Amortization Expense (Detail) $ in Thousands	Aug. 31, 2021 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
2022	$ 8,077
2023	7,052
2024	7,010
2025	6,835
2026	$ 6,221

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Goodwill and Intangible Assets - Changes in Net Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Aug. 31, 2021	Feb. 28, 2021
Goodwill And Intangible Assets Disclosure [Abstract]
Goodwill, Beginning balance	$ 88,647	$ 82,527
Goodwill acquired	14	6,120
Goodwill, Ending balance	$ 88,661	$ 88,647

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Accrued Expenses - Components of Accrued Expenses (Detail) - USD ($) $ in Thousands	Aug. 31, 2021	Feb. 28, 2021
Payables And Accruals [Abstract]
Employee compensation and benefits	$ 11,861	$ 11,742
Taxes other than income	1,465	467
Accrued legal and professional fees	329	272
Accrued interest	84	79
Accrued utilities	108	90
Accrued acquisition related obligations	92	164
Income taxes payable	1,005	1,528
Other accrued expenses	1,073	613
Accrued expenses, Total	$ 16,017	$ 14,955

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Long-Term Debt - Additional Information (Detail)	6 Months Ended
	Aug. 31, 2021 USD ($)
Second Amendment [Member] | Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Credit facility maturity date	Nov. 11, 2021
Revolving credit facility, maximum borrowing capacity	$ 100,000,000.0
Revolving credit facility, additional borrowing capacity	$ 50,000.0
Fixed charge coverage ratio, minimum	125
Line of credit facility, borrowing capacity description	(i) the Company’s consolidated net leverage ratio may not exceed 3.00:1.00, (ii) the Company’s fixed charge coverage ratio may not be less than 1.25:1.00, and (iii) the Company may make dividends or distributions to shareholders so long as (A) no event of default has occurred and is continuing and (B) the Company’s net leverage ratio both before and after giving effect to any such dividend or distribution is equal to or less than 2.50:1.00.
Revolving credit facility, interest rate description	LIBOR plus a spread ranging from 1.85% to 2.5%.
Second Amendment [Member] | Revolving Credit Facility [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Net leverage ratio	300.00
Revolving credit facility, variable basis spread	2.50%
Second Amendment [Member] | Revolving Credit Facility [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Revolving credit facility, variable basis spread	1.85%
Second Amendment [Member] | Revolving Credit Facility [Member] | Dividends or Distributions Effect [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Net leverage ratio	0.0250
Second Amendment [Member] | Letter of Credit [Member]
Line of Credit Facility [Line Items]
Long-term debt	$ 20,000,000.0
Second Amendment [Member] | Swing-line Loans [Member]
Line of Credit Facility [Line Items]
Revolving credit facility, additional borrowing capacity	15,000,000.0
Third Amendment [Member] | Standby Letters of Credit [Member]
Line of Credit Facility [Line Items]
Long-term debt	600,000
Revolving credit facility, remaining borrowing capacity	$ 99,400,000

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Shareholders' Equity - Additional Information (Detail) $ / shares in Units, $ in Millions	6 Months Ended	155 Months Ended
	Aug. 31, 2021 USD ($) shares	Aug. 31, 2021 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Repurchase of common stock | shares	0	1,894,350
Repurchase of common stock, average cost per share | $ / shares		$ 15.91
Total remaining amount available to repurchase of shares	$ 9.9
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program, authorized aggregate amount	$ 40.0	$ 40.0

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Stock Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Aug. 31, 2021	Aug. 31, 2020	Aug. 31, 2021	Aug. 31, 2020	May 31, 2021	Apr. 16, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unissued common stock reserved					177,436
Stock option award maximum term			10 years
Share based compensation arrangements by share based payment award vesting period maximum			5 years
Number of outstanding vested and unvested stock options	0	0	0	0
Number of stock options granted			0	0
Remaining unrecognized compensation cost	$ 1.2		$ 1.2
Weighted average remaining requisite service period			1 year 8 months 12 days
Selling, General and Administrative Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense related share based compensation before tax	0.6	$ 0.4	$ 1.8	$ 0.7
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance or vesting period			3 years
Number of stock options granted			18,179
RSUs vesting description			The performance-based RSUs vest on the third anniversary from the date of grant and the time-based RSUs vest ratably over three years from the date of grant.
Performance-based RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remaining unrecognized compensation cost	3.6		$ 3.6
Weighted average remaining requisite service period			2 years 7 months 6 days
Restricted stock units granted			177,977
Fair value of restricted stock units granted			$ 23.17
Time-based RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remaining unrecognized compensation cost	$ 0.8		$ 0.8
Weighted average remaining requisite service period			2 years 7 months 6 days
Restricted stock units granted			44,494
Fair value of restricted stock units granted			$ 20.38
2021 Long-Term Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized						1,033,648

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Stock Based Compensation - Summary of Restricted Stock Awards Activity (Detail) - Restricted Stock [Member]	6 Months Ended
	Aug. 31, 2021 $ / shares shares
Restricted stock grant activity
Outstanding at Beginning, Number of Shares | shares	119,729
Number of Shares, Granted | shares	51,920
Number of Shares, Vested | shares	(97,362)
Outstanding at Ending, Number of Shares | shares	74,287
Outstanding at Beginning, Weighted Average Grant Date Fair value | $ / shares	$ 18.90
Weighted Average Grant Date Fair Value, Granted | $ / shares	20.31
Weighted Average Grant Date Fair Value, Vested | $ / shares	19.77
Outstanding at Ending, Weighted Average Grant Date Fair value | $ / shares	$ 18.73

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Stock Based Compensation - Summary of Restricted Stock Units Activity (Detail)	6 Months Ended
	Aug. 31, 2021 $ / shares shares
Time-based RSUs [Member]
Restricted stock unit activity
Number of Shares, Granted | shares	44,494
Outstanding at Ending, Number of Shares | shares	44,494
Weighted Average Grant Date Fair Value, Granted | $ / shares	$ 20.38
Outstanding at Ending, Weighted Average Grant Date Fair value | $ / shares	$ 20.38
Performance-based RSUs [Member]
Restricted stock unit activity
Number of Shares, Granted | shares	177,977
Outstanding at Ending, Number of Shares | shares	177,977
Weighted Average Grant Date Fair Value, Granted | $ / shares	$ 23.17
Outstanding at Ending, Weighted Average Grant Date Fair value | $ / shares	$ 23.17

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Pension Plan - Additional Information (Detail) - USD ($)		6 Months Ended
	Feb. 28, 2022	Aug. 31, 2021	Feb. 28, 2021
Defined Benefit Plan Disclosure [Line Items]
Employees covered under noncontributory Pension Plan		12.00%
Compensation period preceding retirement and termination		5 years
Period used for calculating Pension Plan liability		25 years
Unfunded pension liability		$ 6,299,000	$ 6,299,000
Pension settlement charge		2,300,000
Minimum [Member]
Defined Benefit Plan Disclosure [Line Items]
Expected contributions		1,500,000
Maximum [Member]
Defined Benefit Plan Disclosure [Line Items]
Expected contributions		$ 3,000,000.0
Scenario Forecast [Member]
Defined Benefit Plan Disclosure [Line Items]
Minimum required contribution to the plan	$ 0

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Pension Plan - Summary of Pension Expense Composed of Components Included in Cost of Goods Sold and Selling, General and Administrative Expenses (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2021	Aug. 31, 2020	Aug. 31, 2021	Aug. 31, 2020
Components of net periodic benefit cost
Service cost	$ 268	$ 318	$ 537	$ 636
Interest cost	421	439	841	877
Expected return on plan assets	(930)	(1,018)	(1,861)	(2,037)
Amortization of:
Unrecognized net loss	640	839	1,280	1,679
Net periodic benefit cost	$ 399	$ 578	$ 797	$ 1,155

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Earnings Per Share - Computation for Basic and Diluted Earnings Per Share (Detail) - $ / shares	3 Months Ended		6 Months Ended
	Aug. 31, 2021	Aug. 31, 2020	Aug. 31, 2021	Aug. 31, 2020
Earnings Per Share [Abstract]
Basic weighted average common shares outstanding	26,080,121	25,974,412	26,055,056	25,965,370
Effect of dilutive RSUs	90,275		91,365
Diluted weighted average common shares outstanding	26,170,396	25,974,412	26,146,421	25,965,370
Earnings per share
Net earnings - basic	$ 0.29	$ 0.25	$ 0.57	$ 0.41
Net earnings - diluted	0.29	0.25	0.57	0.41
Common Stock Dividends Per Share Cash Paid	$ 0.250	$ 0.225	$ 0.475	$ 0.450

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Earnings Per Share - Additional Information (Detail) - USD ($)	6 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Earnings Per Share [Abstract]
Undistributed earnings	$ 0
Options outstanding	0	0

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Concentrations of Risk - Additional Information (Detail)	Aug. 31, 2021 USD ($)
Concentration Risk [Line Items]
Cash balances not federally insured	$ 81,000,000.0
Maximum [Member]
Concentration Risk [Line Items]
Maximum insurance available to depositors under the FDIC's general deposit insurance rules	$ 250,000

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Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2021	Aug. 31, 2020	Aug. 31, 2021	Aug. 31, 2020	Feb. 28, 2021
Related Party Transaction [Line Items]
Operating lease right-of-use assets	$ 18,382		$ 18,382		$ 19,187
Operating lease liability	18,171		18,171
Operating lease cost	1,595	$ 1,574	3,234	$ 3,201
Integrated Print & Graphics (Integrated) [Member]
Related Party Transaction [Line Items]
Operating lease right-of-use assets	1,300		1,300
Operating lease liability	$ 1,300		1,300
Operating lease cost			200
Sales received from lease			$ 1,500

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Covid-19 Pandemic - Additional Information (Detail) - COVID-19 [Member]	6 Months Ended
	Aug. 31, 2021 Employee Facility
Unusual Or Infrequent Item [Line Items]
Number of employees | Employee	353
Number of under-utilized facilities ceased	2
Number of facilities exited with expiring leases	2
Decrease in unemployment rate	0.20%
Unemployment rate	5.20%

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Subsequent Events - Additional Information (Detail) - Subsequent Event [Member] $ / shares in Units, $ in Millions	Sep. 17, 2021 USD ($) $ / shares
Subsequent Event [Line Items]
Dividends payable, date declared	Sep. 17, 2021
Dividend payable date	Nov. 05, 2021
Dividend payable, date of record	Oct. 08, 2021
Expected payout of dividend | $	$ 6.5
Common Stock [Member]
Subsequent Event [Line Items]
Dividend payable per share | $ / shares	$ 0.25