ENNIS, INC.

Previous wording

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 adverse effects of potential recessionary concerns, inflationary issues and supply chain disruptions 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 (including energy, freight, labor and benefit costs) in markets that are highly price competitive and volatile; uninsured losses, including those from natural disasters, catastrophes, pandemics, theft, sabotage; the impact of 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; cybersecurity risks, 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.; 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 29, 2024 before making an investment in our common stock.

Current wording

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 adverse effects of potential recessionary concerns, inflationary issues, U.S. import tariffs and supply chain disruptions 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 (including energy, freight, labor and benefit costs) in markets that are highly price competitive and volatile; uninsured losses, including those from natural disasters, catastrophes, pandemics, theft, sabotage; the impact of 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; cybersecurity risks, 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.; 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, 2025 before making an investment in our common stock.

Previous wording

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 many of our competitors to satisfy their customers’ needs.

Current wording

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 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 many of our competitors to satisfy their customers’ needs.

Previous wording

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. As of November 30, 2024, we operate 57 manufacturing plants throughout the United States in 20 strategically located states as one reportable segment. Approximately 94% 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.

Current wording

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. As of May 31, 2025, we operate 57 manufacturing plants throughout the United States in 20 strategically located states as one reportable segment: printing services. Approximately 96% 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.

Previous wording

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®, 360º Custom Labels SM, ColorWorx®, Enfusion®, Uncompromised Check Solutions®, VersaSeal®, Ad Concepts SM, FormSource Limited SM, Star Award Ribbon Company®, Witt Printing®, B&D Litho®, Genforms®, PrintGraphics®, Calibrated Forms®, PrintXcel®, Printegra®, Forms Manufacturers SM, Mutual Graphics®, TRI-C Business Forms SM, Major Business Systems SM, Independent Printing SM, Hoosier Data Forms®, Hayes Graphics®, Wright Business Graphics SM, Wright 360 SM, Integrated Print & Graphics SM, the Flesh Company SM, Impressions Direct SM, AmeriPrint SM; Stylecraft SM, UMC Print SM; Eagle Graphics SM, Diamond Graphics SM, Printing Technologies SM, Paper Solutions SM and Partek Solutions SM We also sell the Adams McClure® brand (which provides Point of Purchase advertising); the Admore®, Folder Express®, and Independent Folders® brands (which provide presentation folders and document folders); Ennis Tag & Label SM (which provides custom printed, high performance labels and custom and stock tags); Allen-Bailey Tag & Label SM, 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). School Photo Marketing is a one-stop shop for over 1,400 school portrait photographers and professional photo labs nationwide, providing them with a complete array of products and services that reach over 15 million families and 30,000 schools, primarily in the K-8 market. 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.

Current wording

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®, ColorWorx®, Enfusion®, Uncompromised Check Solutions®, VersaSeal®, Ad ConceptsSM, FormSource LimitedSM, Star Award Ribbon Company®, Witt Printing®, Genforms®, PrintGraphics®, Calibrated Forms®, PrintXcel®, Printegra®, Forms ManufacturersSM, Mutual Graphics®, TRI-C Business FormsSM, Major Business SystemsSM, Independent PrintingSM, Hayes Graphics®, Wright Business GraphicsSM, Wright 360SM, Integrated Print & GraphicsSM, the Flesh CompanySM, AmeriPrintSM; StylecraftSM, UMC PrintSM; Eagle GraphicsSM, Diamond GraphicsSM and Printing TechnologiesSM. We also sell the Adams McClure® brand (which provides Point of Purchase advertising); 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®, Northeastern Envelope CompanySM, Envelope SuperstoreSM and National Imprint Corporation® (which provide custom and imprinted envelopes); Northstar® and General Financial Supply® (which provide financial and security documents); InfosealSM and PrintXcel® (which provide custom and stock pressure seal documents). School Photo Marketing and National School Forms are a one-stop shop for over 1,400 school portrait photographers and professional photo labs nationwide, providing them with a complete array of products and services that reach over 15 million families and 30,000 schools, primarily in the K-8 market. 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.

Previous wording

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.

Current wording

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 our high volume of business with that supplier relative to our competitors.

Previous wording

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.

Current wording

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

Previous wording

Production capacity and price competition within our industry – Industry supply of paper products is subject to fluctuation as changing industry conditions influence producers to idle or permanently close individual machines or mills, and/or convert them to different product lines, such as packaging to offset a decline in demand. Paper mill shipments were down across the board through the first half of 2023 as buyers worked through elevated inventories of their products. Producers responded to the sluggish demand conditions with heavy downtime rather than permanent closures keeping prices mostly stable. While our supply of paper during the current fiscal year to date has remained stable, margins remain under pressure due to the resulting weak volumes and competitive pricing, 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 reduce our procurement 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 and focus on maintaining our margins.

Current wording

Production capacity and price competition within our industry – Industry supply of paper products is subject to fluctuation as changing industry conditions have and will continue to influence producers to idle or permanently close individual machines or mills, and or convert them to different product lines, such as packaging to offset a decline in demand. Recently, there have been consolidations of paper suppliers and mill closure announcements which may cause the paper prices to fluctuate substantially in the future. The sole mill in the United States that produces rolls of carbonless paper announced that it would be closing this calendar year. In preparation for that supply disruption, we invested in and are continuing to purchase additional inventory as buffer stock in response to the transition to alternative sources of carbonless paper. While margins remain under pressure due to the resulting weak volumes, we 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 suppliers to reduce our procurement 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 and focus on maintaining our margins.

Previous wording

The following discussion provides information which we believe is relevant to understanding our results of operations and financial condition. The discussion and analysis should be read in conjunction with the accompanying interim unaudited consolidated financial statements and notes included in this filing. The operating results of the Company for the three and nine months ended November 30, 2024 and the comparative period for 2023 are set forth in the tables below.

Current wording

The following discussion provides information which we believe is relevant to understanding our results of operations and financial condition. The discussion and analysis should be read in conjunction with the accompanying interim unaudited consolidated financial statements and notes included in this filing. The operating results of the Company for the three months ended May 31, 2025 and the comparative period for 2024 are set forth in the tables below.

Previous wording

Net Sales. Our net sales were $99.8 million for the quarter ended November 30, 2024, compared to $104.6 million for the same quarter in the prior year, a decrease of $4.8 million, or -4.6%. Sales from legacy plants decreased $8.4 million due to weaker volume demand and was partially offset by an approximately $3.6 million increase in revenues generated from our recent acquisitions. We face increased competition with respect to certain product lines which is exerting downward pressure on prices and production volumes. We also observe softening demand in some markets as customers transition from print to digital products.

Current wording

Net Sales. Our net sales were $97.2 million for the quarter ended May 31, 2025, compared to $103.1 million for the same quarter in the prior year, a decrease of $5.9 million, or -5.7%. Sales from legacy plants decreased $11.4 million due to weaker volume demand and was partially offset by an approximately $5.5 million increase in revenues generated from our recent acquisitions. We face increased competition with respect to certain product lines which is exerting downward pressure on prices and production volumes. We also observe softening demand in some markets as customers transition from print to digital products.

Previous wording

Cost of Goods Sold and Gross Profit Margin. As a result of decreased sales volume, our cost of goods sold decreased $3.6 million, or -4.8%, from $74.1 million for the three months ended November 30, 2023 to $70.5 million for the three months ended November 30, 2024. Our gross profit was $29.2 million or 29.3% of revenue for the quarter ended November 30, 2024 compared to $30.5 million or 29.2% of revenue for the same quarter in the prior year. Our gross profit margin for the quarter of 29.3% showed an 80 basis-point decline compared to the immediately preceding quarter ending August 31, 2024 at 30.1% and remained relatively flat compared to 29.2% in the same prior year quarter. Softening demand and more competitive pricing in some of our markets put downward pressure on operating margins. We continue to take mitigating actions through our cost management and pricing strategies to maintain our margins and offset continued pressure from soft market conditions and increased competition on price.

Current wording

Cost of Goods Sold and Gross Profit Margin. As a result of decreased sales volume, our cost of goods sold decreased $5.2 million, or -7.2%, from $72.2 million for the three months ended May 31, 2024 to $67.0 million for the three months ended May 31, 2025. Our gross profit was $30.2 million or 31.1% of revenue for the quarter ended May 31, 2025 compared to $30.9 million or 30.0% of revenue for the same quarter in the prior year. We continue to take mitigating actions through our cost management and pricing strategies to maintain our margins and offset continued pressure from soft market conditions and increased competition on price.

Previous wording

Selling, general, and administrative expense. For the three months ended November 30, 2024, our selling, general, and administrative ("SG&A") expenses were $16.3 million compared to $17.4 million for the three months ended November 30, 2023, a decrease of $1.1 million, or -6.1%. As a percentage of net sales, SG&A expenses for the current quarter were 16.4% and 16.6% for the three months ended November 30, 2024 and November 30, 2023, respectively. Our SG&A expense decreased as a result of operational efficiencies.

Current wording

Selling, general, and administrative expense. For the three months ended May 31, 2025, our selling, general, and administrative ("SG&A") expenses were $16.9 million compared to $17.2 million for the three months ended May 31, 2024, a decrease of $0.3 million, or -1.7%. As a percentage of net sales, SG&A expenses for the current quarter were 17.4% and 16.7% for the three months ended May 31, 2025 and May 31, 2024, respectively. Our SG&A expense decreased as a result of operational efficiencies.

Previous wording

Gain and loss from disposal of assets. The $138,000 net gain and $1,000 net loss from disposal of assets during the three month period ended November 30, 2024 and 2023, respectively, was primarily attributed to the sale of equipment.

Current wording

Gain and loss from disposal of assets. The $4,000 net loss from disposal of assets during the three month period ended May 31, 2024, was primarily attributed to the sale of equipment. There was no gain or loss in the three month period ended May 31, 2025.

Previous wording

Income from operations. Primarily due to factors described above, our income from operations for the nine months ended November 30, 2024 was $40.0 million, or 13.2% of net sales, as compared to $43.5 million, or 13.5% of net sales, for the nine months ended November 30, 2023.

Current wording

Income from operations. Primarily due to factors described above, our income from operations for the three months ended May 31, 2025 was $13.3 million, or 13.7% of net sales, and remained relatively flat compared to $13.7 million, or 13.3% of net sales, for the three months ended May 31, 2024.

Previous wording

Other income (expense). Other income was $1.0 million for the three months ended November 30, 2024 compared to $0.7 million for the three months ended November 30, 2023. Our increase in income was primarily from an increase in interest income from the increase in balance and rates received on money market accounts and short-term investments in the current quarter, $1.4 million for the three months ended November 30, 2024 compared to $1.0 million for the three months ended November 30, 2023.

Current wording

Other income (expense). Other income was $0.2 million for the three months ended May 31, 2025 compared to $1.0 million for the three months ended May 31, 2024. Our decrease in income was primarily from a decrease in interest income from lower cash, cash equivalent, and investment balances. Interest income for the three months ended May 31, 2025 and 2024 were $0.6 and $1.4 million.

Previous wording

Provision for income taxes. Our effective tax rate was 27.5% and 28.3% for the three months ended November 30, 2024 and 2023, respectively. The decrease in our overall tax rate this period as compared to last period is due to a decrease in our overall expected state tax rate due to changes in state apportionment.

Current wording

Provision for income taxes. Our effective income tax rate was 27.5% for the three months ended May 31, 2025 and remained flat compared to the three months ended May 31, 2024.

Previous wording

Net earnings. Net earnings, due to the factors above, were $10.2 million for the three months ended November 30, 2024 as compared to $9.9 million for the comparable quarter in the prior year. Net earnings were impacted by decreased revenues for the three months ended November 30, 2024 compared to the three months ended November 30, 2023. After-tax earnings per diluted share for the three months ended November 30, 2024 were $0.39, compared to $0.38 for the same quarter last year.

Current wording

Net earnings. Net earnings, due to the factors above, were $9.8 million for the three months ended May 31, 2025 as compared to $10.7 million for the comparable quarter in the prior year. Net earnings were impacted by decreased revenues for the three months ended May 31, 2025 compared to the three months ended May 31, 2024. After-tax earnings per diluted share for the three months ended May 31, 2025 were $0.38, compared to $0.41 for the same quarter last year.

Previous wording

We rely on our cash flows generated from operations to meet all cash requirements of our business. The primary cash requirements of our business are payments to vendors in the normal course of business, capital expenditures, compensation and benefits for employees and the payment of dividends to our shareholders. We believe that our current cash balance of $55.7 million and our short-term investments of $12.9 million at November 30, 2024, as well as our anticipated cash flows from operations, which are expected to be similar to prior periods, should be adequate to cover the next twelve months and beyond of our operating and capital requirements. Our capital requirements are expected to be between $3.0 million and $6.0 million over the next twelve months. These amounts are consistent with our historical levels.

Current wording

We rely on our cash flows generated from operations to meet all cash requirements of our business. The primary cash requirements of our business are payments to vendors in the normal course of business, capital expenditures, compensation and benefits for employees and the payment of dividends to our shareholders. We believe that our current cash balance of $32.6 million at May 31, 2025, as well as our anticipated cash flows from operations, which are expected to be similar to prior periods, should be adequate to cover the next twelve months and beyond of our operating and capital requirements. Our capital requirements to maintain our manufacturing property are expected to be between $4.0 million and $7.0 million over the next twelve months. These amounts are consistent with our historical levels.

Previous wording

Working Capital. Due primarily to a special dividend of $65.0 million paid to Shareholders during the nine months ended November 30, 2024, our working capital decreased $47.5 million or -28.3%, from $167.6 million at February 29, 2024 to $120.1 million at November 30, 2024. Our current ratio, calculated by dividing our current assets by our current liabilities, decreased from 6.0 to 1.0 at February 29, 2024 to 4.7 to 1.0 at November 30, 2024. Our decrease in working capital primarily reflects the decrease in cash and short-term investments, $42.4 million, and net trade receivable, $7.0 million, offset by the decrease in accrued expenses, $2.0 million.

Current wording

Working Capital. Due primarily to the acquisition of NEC and ESS for approximately $34.9 million during the three months ended May 31, 2025, our working capital decreased $29.2 million or -24.4%, from $119.4 million at February 28, 2025 to $90.2 million at May 31, 2025. Our current ratio, calculated by dividing our current assets by our current liabilities, decreased from 4.6 to 1.0 at February 28, 2025 to 3.0 to 1.0 at May 31, 2025. Our decrease in working capital primarily reflects the decrease in cash, cash equivalents and short-term investments of $39.9 million, an increase in other receivables of $8.8 million, and an increase in inventory of $14.3, offset by the increase in accounts payable and accrued expenses of $12.4 million.

Previous wording

Cash flows from financing activities. We used $67.5 million more cash in financing activities during the nine months ended November 30, 2024 compared to the same period in the prior year. The increase in cash used during the nine months ended November 30, 2024 resulted from a one-time special dividend of $2.50 per share or $65.0 million and a $1.8 million common stock repurchased under our stock repurchase program in the nine months ended November 30, 2024.

Current wording

Cash flows from financing activities. We used $3.3 million more cash in financing activities during the three months ended May 31, 2025 compared to the same period in the prior year. During the three months ended May 31, 2025 and May 31, 2024, we purchased $5.0 million and $1.8 million, respectively in common stock under our stock repurchase program.

Previous wording

Pension Plan –The funded status of our Pension Plan is dependent on many factors, including returns on invested assets, the level of market interest rates and the level of funding. Assuming a stable funding status, we would expect that future required contributions would be between $1.0 million and $3.0 million per year. As our pension assets are invested in marketable securities, changes in actual investment returns or in discount rates could change funding status and requirements significantly. We made a contribution of $1.2 million to our Pension Plan during the nine months ended November 30, 2024. At November 30, 2024, we had a funded pension asset of $0.1 million.

Current wording

Pension Plan –The funded status of our Pension Plan is dependent on many factors, including returns on invested assets, the level of market interest rates and the level of funding. We are not required to make a contribution to the pension plan for fiscal year 2026. We made a contribution of $1.2 million to the pension plan for fiscal year 2025. As our pension assets are invested in marketable securities, changes in actual investment returns or in discount rates could change funding status and requirements significantly. At May 31, 2025, we had a funded pension asset of $1.4 million.

Previous wording

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.

Current wording

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. Recently, there have been consolidations of paper suppliers and mill closure announcements which may cause the paper prices to fluctuate substantially in the future. The sole mill in the United States that produces rolls of carbonless paper announced that it would be closing this calendar year. In preparation for that supply disruption, we invested in and are continuing to purchase additional inventory as buffer stock in response to the transition to alternative sources of carbonless paper. 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.

Previous wording

Capital Expenditures–We continue to make capital expenditures for operational maintenance purposes, as may be required. Additionally, we will carefully review and make capital expenditures for additional equipment to the extent such additions make economic sense by improving our operations and not jeopardizing our strong liquidity position. 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 $6.0 million. For the nine months ended November 30, 2024, we spent approximately $4.3 million on capital expenditures that was funded out of our cash balance. We expect to generate sufficient cash flows from our operating activities to cover our operating and other normal capital requirements for the foreseeable future.

Current wording

Capital Expenditures–We continue to make capital expenditures for operational maintenance purposes, as may be required. Additionally, we will carefully review and make capital expenditures for additional equipment to the extent such additions make economic sense by improving our operations and not jeopardizing our strong liquidity position. 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 $4.0 million and $7.0 million. For the three months ended May 31, 2025, we spent approximately $1.4 million on capital expenditures that was funded out of our cash balance. We expect to generate sufficient cash flows from our operating activities to cover our operating and other normal capital requirements for the foreseeable future.