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, 2022

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 23, 2022, there were 25,836,392 shares of the Registrant’s common stock outstanding.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2022

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION
	Item 1. Condensed Consolidated Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets at August 31, 2022 and February 28, 2022	3
	Condensed Consolidated Statements of Operations for the three and six months ended August 31, 2022 and August 31, 2021	5
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended August 31, 2022 and August 31, 2021	6
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and six ended August 31, 2022 and August 31, 2021	7
	Condensed Consolidated Statements of Cash Flows for the six months ended August 31, 2022 and August 31, 2021	8
	Condensed Notes to Unaudited Consolidated Financial Statements	9
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	26
	Item 4. Controls and Procedures	26
PART II: OTHER INFORMATION
	Item 1. Legal Proceedings	26
	Item 1A. Risk Factors	26
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	26
	Item 3. Defaults Upon Senior Securities	27
	Item 4. Mine Safety Disclosures	27
	Item 5. Other Information	27
	Item 6. Exhibits	27
SIGNATURES		28

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	August 31,		February 28,
	2022		2022
Assets
Current assets
Cash	$	91,520	$	85,606
Accounts receivable, net of allowance for doubtful receivables of $1,523 at August 31, 2022 and $1,200 at February 28, 2022		43,887		39,022
Inventories, net		48,391		38,538
Prepaid expenses		2,078		1,863
Total current assets		185,876		165,029
Property, plant and equipment
Plant, machinery and equipment		152,318		151,126
Land and buildings		59,819		59,642
Computer equipment and software		18,439		18,368
Other		4,321		4,275
Total property, plant and equipment		234,897		233,411
Less accumulated depreciation		184,657		179,778
Net property, plant and equipment		50,240		53,633
Operating lease right-of-use assets, net		13,571		15,544
Goodwill		88,677		88,677
Intangible assets, net		42,631		45,569
Other assets		477		392
Total assets	$	381,472	$	368,844

See accompanying notes to consolidated financial statements.

3

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS-Continued

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

	August 31,			February 28,
	2022			2022
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	15,777		$	16,678
Accrued expenses		19,128			15,422
Current portion of operating lease liabilities		4,602			5,090
Total current liabilities		39,507			37,190
Liability for pension benefits		5,729			5,729
Deferred income taxes		11,666			11,405
Operating lease liabilities, net of current portion		8,790			10,241
Other liabilities		464			464
Total liabilities		66,156			65,029
Shareholders’ equity
Common stock $2.50 par value, authorized 40,000,000 shares; issued 30,053,443 shares at August 31, 2022 and February 28, 2022		75,134			75,134
Additional paid-in capital		124,031			123,990
Retained earnings		208,898			197,998
Accumulated other comprehensive loss:
Minimum pension liability, net of taxes		(17,803	)		(18,587	)
Treasury stock		(74,944	)		(74,720	)
Total shareholders’ equity		315,316			303,815
Total liabilities and shareholders' equity	$	381,472		$	368,844

See accompanying notes to consolidated financial statements.

4

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share and per share amounts)

	Three months ended						Six months ended
	August 31,						August 31,
	2022			2021			2022			2021
Net sales	$	111,233		$	100,451		$	218,900		$	197,381
Cost of goods sold		76,014			71,550			149,677			139,294
Gross profit		35,219			28,901			69,223			58,087
Selling, general and administrative		17,942			18,095			35,624			37,010
(Gain) loss from disposal of assets		—			1			—			(276	)
Income from operations		17,277			10,805			33,599			21,353
Other expense
Interest expense		—			(2	)		-			(4	)
Other, net		(342	)		(146	)		(514	)		(258	)
Total other expense		(342	)		(148	)		(514	)		(262	)
Earnings before income taxes		16,935			10,657			33,085			21,091
Income tax expense		4,741			3,197			9,264			6,327
Net earnings	$	12,194		$	7,460		$	23,821		$	14,764
Weighted average common shares outstanding
Basic		25,797,097			26,080,121			25,805,419			26,055,056
Diluted		25,858,811			26,170,396			25,867,504			26,146,421
Earnings per share
Basic	$	0.47		$	0.29		$	0.92		$	0.57
Diluted	$	0.47		$	0.29		$	0.92		$	0.57
Cash dividends per share	$	0.250		$	0.250		$	0.500		$	0.475

See accompanying notes to consolidated financial statements.

5

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)

	Three months ended				Six months ended
	August 31,				August 31,
	2022		2021		2022		2021
Net earnings	$	12,194	$	7,460	$	23,821	$	14,764
Adjustment to pension, net of deferred taxes		480		298		784		597
Comprehensive income	$	12,674	$	7,758	$	24,605	$	15,361

See accompanying notes to consolidated financial statements.

6

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(unaudited, 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, 2022		30,053,443	$	75,134	$	123,862		$	203,158		$	(18,283	)		(4,283,874	)	$	(75,244	)	$	308,627
Net earnings		—		—		—			12,194			—			—			—			12,194
Adjustment to pension, net of deferred tax of $160		—		—		—			—			480			—			—			480
Dividends paid ($0.25 per share)		—		—		—			(6,454	)		—			—			—			(6,454	)
Stock based compensation		—		—		469			—			—			—			—			469
Exercise of stock options and restricted stock		—		—		(300	)		—			—			17,039			300			—
Balance August 31, 2022		30,053,443	$	75,134	$	124,031		$	208,898		$	(17,803	)		(4,266,835	)	$	(74,944	)	$	315,316
Balance February 28, 2022		30,053,443	$	75,134	$	123,990		$	197,998		$	(18,587	)		(4,253,824	)	$	(74,720	)	$	303,815
Net earnings		—		—		—			23,821			—			—			—			23,821
Adjustment to pension, net of deferred tax of $261		—		—		—			—			784			—			—			784
Dividends paid ($0.50 per share)		—		—		—			(12,921	)		—			—			—			(12,921	)
Stock based compensation		—		—		936			—			—			—			—			936
Exercise of stock options and restricted stock		—		—		(895	)		—			—			51,071			895			—
Common stock repurchases		—		—		—			—			—			(64,082	)		(1,119	)		(1,119	)
Balance August 31, 2022		30,053,443	$	75,134	$	124,031		$	208,898		$	(17,803	)		(4,266,835	)	$	(74,944	)	$	315,316
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		$