ebf-10q_20200831.htm

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.

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 28, 2020, there were 26,093,926 shares of the Registrant’s common stock outstanding.

	August 31,			February 29,
	2020			2020
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	13,768		$	17,235
Accrued expenses		15,630			15,069
Current portion of operating lease liabilities		5,210			5,665
Total current liabilities		34,608			37,969
Liability for pension benefits		8,936			8,936
Deferred income taxes		9,038			8,749
Operating lease liabilities, net of current portion		11,902			14,200
Other liabilities		1,405			1,516
Total liabilities		65,889			71,370
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, 2020 and February 29, 2020		75,134			75,134
Additional paid-in capital		122,430			123,052
Retained earnings		192,685			193,809
Accumulated other comprehensive loss:
Minimum pension liability, net of taxes		(24,340	)		(25,206	)
Treasury stock		(71,597	)		(72,460	)
Total shareholders’ equity		294,312			294,329
Total liabilities and shareholders' equity	$	360,201		$	365,699

	Three months ended						Six months ended
	August 31,						August 31,
	2020			2019			2020			2019
Net sales	$	86,612		$	108,816		$	175,608		$	216,849
Cost of goods sold		61,457			76,358			126,546			151,695
Gross profit margin		25,155			32,458			49,062			65,154
Selling, general and administrative		16,535			19,644			34,658			39,347
Gain from disposal of assets		(300	)		—			(412	)		—
Income from operations		8,920			12,814			14,816			25,807
Other income (expense)
Interest expense		(3	)		(280	)		(6	)		(597	)
Other, net		(240	)		348			(478	)		688
Total other income (expense)		(243	)		68			(484	)		91
Earnings before income taxes		8,677			12,882			14,332			25,898
Income tax expense		2,256			3,349			3,726			6,733
Net earnings	$	6,421		$	9,533		$	10,606		$	19,165
Weighted average common shares outstanding
Basic		25,974,412			26,029,359			25,965,370			26,034,122
Diluted		25,974,412			26,029,359			25,965,370			26,034,122
Earnings per share
Basic	$	0.25		$	0.37		$	0.41		$	0.74
Diluted	$	0.25		$	0.37		$	0.41		$	0.74
Cash dividends per share	$	0.225		$	0.225		$	0.450		$	0.450

											Accumulated
					Additional						Other
	Common Stock				Paid-in			Retained			Comprehensive			Treasury Stock
	Shares		Amount		Capital			Earnings			Income (Loss)			Shares			Amount			Total
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

Balance May 31, 2019		30,053,443	$	75,134	$	122,111		$	182,760		$	(16,470	)		(4,076,042	)	$	(71,271	)	$	292,264
Net earnings		—		—		—			9,533			—			—			—			9,533
Adjustment to pension, net of deferred tax of $74		—		—		—			—			222			—			—			222
Dividends paid ($0.225 per share)		—		—		—			(5,876	)		—			—			—			(5,876	)
Stock based compensation		—		—		307			—			—			—			—			307
Exercise of stock options and restricted stock		—		—		(59	)		—			—			3,381			59			—
Common stock repurchases		—		—		—			—			—			(22,013	)		(433	)		(433	)
Balance August 31, 2019		30,053,443	$	75,134	$	122,359		$	186,417		$	(16,248	)		(4,094,674	)	$	(71,645	)	$	296,017

Balance February 28, 2019		30,053,443	$	75,134	$	123,065		$	179,003		$	(16,704	)		(4,097,099	)	$	(71,371	)	$	289,127
Net earnings		—		—		—			19,165			—			—			—			19,165
Adjustment to pension, net of deferred tax of $152		—		—		—			—			456			—			—			456
Dividends paid ($0.45 per share)		—		—		—			(11,751	)		—			—			—			(11,751	)
Stock based compensation		—		—		665			—			—			—			—			665
Exercise of stock options and restricted stock		—		—		(1,371	)		—			—			86,476			1,371			—
Common stock repurchases		—		—		—			—			—			(84,051	)		(1,645	)		(1,645	)
Balance August 31, 2019		30,053,443	$	75,134

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)

PART I: FINANCIAL INFORMATION

	Item 1. Financial Statements	3

	Unaudited Consolidated Balance Sheets at August 31, 2020 and February 29, 2020	3

	Unaudited Consolidated Statements of Operations for the three and six months ended August 31, 2020 and August 31, 2019	5

	Unaudited Consolidated Statements of Comprehensive Income for the three and six months ended August 31, 2020 and August 31, 2019	6

	Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended August 31, 2020 and August 31, 2019	7

	Unaudited Consolidated Statements of Cash Flows for the six months ended August 31, 2020 and August 31, 2019	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

	August 31,		February 29,
	2020		2020
Assets
Current assets
Cash	$	83,906	$	68,258
Accounts receivable, net of allowance for doubtful receivables of $874 at August 31, 2020 and $715 at February 29, 2020		33,523		43,086
Prepaid expenses		1,630		1,541
Prepaid income taxes		2,811		2,164
Inventories		33,316		34,835
Total current assets		155,186		149,884
Property, plant and equipment
Plant, machinery and equipment		151,677		155,744
Land and buildings		57,457		57,887
Computer equipment and software		19,366		19,312
Other		4,815		4,873
Total property, plant and equipment		233,315		237,816
Less accumulated depreciation		181,045		181,414
Net property, plant and equipment		52,270		56,402
Operating lease right-of-use assets		17,325		20,068
Goodwill		82,527		82,527
Intangible assets, net		52,633		56,557
Other assets		260		261
Total assets	$	360,201	$	365,699

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐