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 November 30, 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 December 30, 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 NOVEMBER 30, 2022

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION
	Item 1. Condensed Consolidated Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets at November 30, 2022 and February 28, 2022	3
	Condensed Consolidated Statements of Operations for the three and nine months ended November 30, 2022 and November 30, 2021	5
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended November 30, 2022 and November 30, 2021	6
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and nine ended November 30, 2022 and November 30, 2021	7
	Condensed Consolidated Statements of Cash Flows for the nine months ended November 30, 2022 and November 30, 2021	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	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	27
	Item 1A. Risk Factors	27
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	27
	Item 3. Defaults Upon Senior Securities	28
	Item 4. Mine Safety Disclosures	28
	Item 5. Other Information	28
	Item 6. Exhibits	28
SIGNATURES		29

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	November 30,		February 28,
	2022		2022
Assets
Current assets
Cash	$	87,000	$	85,606
Accounts receivable, net of allowance for doubtful receivables of $1,692 at November 30, 2022 and $1,200 at February 28, 2022		45,738		39,022
Inventories, net		49,922		38,538
Prepaid expenses		2,434		1,863
Total current assets		185,094		165,029
Property, plant and equipment
Plant, machinery and equipment		153,504		151,126
Land and buildings		59,987		59,642
Computer equipment and software		18,430		18,368
Other		4,321		4,275
Total property, plant and equipment		236,242		233,411
Less accumulated depreciation		186,802		179,778
Net property, plant and equipment		49,440		53,633
Operating lease right-of-use assets, net		14,214		15,544
Goodwill		93,438		88,677
Intangible assets, net		44,078		45,569
Other assets		386		392
Total assets	$	386,650	$	368,844

See accompanying notes to condensed consolidated financial statements.

3

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS-Continued

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

	November 30,			February 28,
	2022			2022
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	15,361		$	16,678
Accrued expenses		19,117			15,422
Current portion of operating lease liabilities		4,914			5,090
Total current liabilities		39,392			37,190
Liability for pension benefits		3,729			5,729
Deferred income taxes		11,905			11,405
Operating lease liabilities, net of current portion		9,215			10,241
Other liabilities		987			464
Total liabilities		65,228			65,029
Shareholders’ equity
Common stock $2.50 par value, authorized 40,000,000 shares; issued 30,053,443 shares at November 30, 2022 and February 28, 2022		75,134			75,134
Additional paid-in capital		124,593			123,990
Retained earnings		213,725			197,998
Accumulated other comprehensive loss:
Minimum pension liability, net of taxes		(17,086	)		(18,587	)
Treasury stock		(74,944	)		(74,720	)
Total shareholders’ equity		321,422			303,815
Total liabilities and shareholders' equity	$	386,650		$	368,844

See accompanying notes to condensed 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						Nine months ended
	November 30,						November 30,
	2022			2021			2022			2021
Net sales	$	110,245		$	102,968		$	329,145		$	300,349
Cost of goods sold		76,768			73,768			226,445			213,062
Gross profit		33,477			29,200			102,700			87,287
Selling, general and administrative		17,292			17,513			52,916			54,523
(Gain) loss from disposal of assets		15			1			15			(275	)
Income from operations		16,170			11,686			49,769			33,039
Other expense
Interest expense		—			(3	)		-			(7	)
Other, net		(496	)		(878	)		(1,010	)		(1,136	)
Total other expense		(496	)		(881	)		(1,010	)		(1,143	)
Earnings before income taxes		15,674			10,805			48,759			31,896
Income tax expense		4,388			3,242			13,652			9,569
Net earnings	$	11,286		$	7,563		$	35,107		$	22,327
Weighted average common shares outstanding
Basic		25,809,581			26,020,210			25,812,216			26,053,898
Diluted		25,888,815			26,020,210			25,892,873			26,151,480
Earnings per share
Basic	$	0.44		$	0.29		$	1.36		$	0.86
Diluted	$	0.44		$	0.29		$	1.36		$	0.85
Cash dividends per share	$	0.250		$	0.250		$	0.750		$	0.725

See accompanying notes to condensed consolidated financial statements.

5

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)

	Three months ended				Nine months ended
	November 30,				November 30,
	2022		2021		2022		2021
Net earnings	$	11,286	$	7,563	$	35,107	$	22,327
Adjustment to pension, net of taxes		717		885		1,501		1,482
Comprehensive income	$	12,003	$	8,448	$	36,608	$	23,809

See accompanying notes to condensed 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, August 31, 2022		30,053,443	$	75,134	$	124,031		$	208,898		$	(17,803	)		(4,266,835	)	$	(74,944	)	$	315,316
Net earnings		—		—		—			11,286			—			—			—			11,286
Adjustment to pension, net of deferred tax of $179		—		—		—			—			717			—			—			717
Dividends paid ($0.25 per share)		—		—		—			(6,459	)		—			—			—			(6,459	)
Stock based compensation		—		—		562			—			—			—			—			562
Balance, November 30, 2022		30,053,443	$	75,134	$	124,593		$	213,725		$	(17,086	)		(4,266,835	)	$	(74,944	)	$	321,422
Balance, February 28, 2022		30,053,443	$	75,134	$	123,990		$	197,998		$	(18,587	)		(4,253,824	)	$	(74,720	)	$	303,815
Net earnings		—		—		—			35,107			—			—			—			35,107
Adjustment to pension, net of deferred tax of $375		—		—		—			—			1,501			—			—			1,501
Dividends paid ($0.75 per share)		—		—		—			(19,380	)		—			—			—			(19,380	)
Stock based compensation		—		—		1,497			—			—			—			—			1,497
Exercise of stock options and restricted stock		—		—		(894	)		—			—			51,071			894			—
Common stock repurchases		—		—		—			—			—			(64,082	)		(1,118	)		(1,118	)
Balance, November 30, 2022		30,053,443	$	75,134	$	124,593		$	213,725		$	(17,086	)		(4,266,835	)	$	(74,944	)	$	321,422
Balance, August 31, 2021		30,053,443	$	75,134	$	123,116		$	196,809		$	(19,685	)		(4,006,268	)	$	(70,053	)	$	305,321
Net earnings		—		—		—			7,563			—			—			—			7,563
Adjustment to pension, net of deferred tax of $295		—		—		—			—			885			—			—			885
Dividends paid ($0.25 per share)		—		—		—			(6,525	)		—			—			—			(6,525	)
Stock based compensation		—		—		642			—			—			—			—			642
Exercise of stock options and restricted stock		—		—		(14	)		—			—			826			14			—
Common stock repurchases		—		—		—			—			—			(102,757	)		(1,942	)		(1,942	)
Balance, November 30, 2021		30,053,443	$	75,134	$	123,744		$	197,847		$	(18,800	)		(4,108,199	)	$	(71,981	)	$	305,944
Balance, February 28, 2021		30,053,443	$	75,134	$	123,017		$	194,436		$	(20,282	)		(4,103,630	)	$	(71,756	)	$	300,549
Net earnings		—		—		—			22,327			—			—			—			22,327
Adjustment to pension, net of deferred tax of $494		—		—		—			—			1,482			—