Ennis Reports Results for Quarter Ended November 30
Printer and promotional products company Ennis Inc., Midlothian, Texas, today reported financial results for the three- and nine-month periods ended November 30, 2011. The company's net sales were $121.8 million for the quarter, down 9.6 percent from $134.8 million for the same quarter last year. For the nine month period, net sales decreased from $418.6 million to $395.5 million, a 5.5 percent change.
"Overall the operational results delivered for the quarter were as expected from both the print and apparel perspective," said Keith Walters, chairman, chief executive officer and president of Ennis Inc. "Our print operations continued to deliver steady revenue levels and operational results, while our apparel margins continued to be compressed as expected by higher raw material costs."
Print sales for Ennis were basically flat for both the three- and nine-month periods. Sales were $69.2 million and $205.5 million respectively, compared to $69.5 and $206.5 million in the same periods last year. Apparel sales for Ennis, which include supplier Alstyle Apparel, were $52.6 million for the quarter, down $12.7 million for the quarter, a nearly 20 percent drop from 2010. For the nine month period, sales decreased 10.5 percent to $189.9 million.
In a statement, Walters said the apparel figures were as the company expected, and attributed the change primarily to the year's volatile cotton market.
"While the spot price of cotton has dropped significantly over the past quarter, this unfortunately does not represent the cost of cotton in most large apparel manufacturers' finished goods inventory. Most large apparel manufacturers lock in cotton contracts in order to guarantee an uninterrupted supply of cotton and price stability," he explained. "Unfortunately, these locked-in contract prices are now significantly higher than the current spot price. With the recent influx of cotton supply from India and other global impacts which soften cotton demand, many of the smaller manufacturers who didn't have the financial capacity to enter into longer-term contracts are now able to compete on a favorable basis. We view this as a short term event. The larger manufacturers, such as Alstyle, will have to navigate through this issue over the next few quarters, until the lower cotton pricing makes its way into their finished goods inventory."
Overall gross profit margins for the three-month period were 24.8 percent, as compared to 27.1 percent for the same period last year. The nine-month period margins decreased from 28.3 percent to 26.3 percent. The company generated $14.5 million in earnings before interest, taxes, depreciation and amortization for the quarter and $55.3 million for the nine-month period.
"Many challenges have been negotiated to date, but uncertainties continue to mark the short term landscape," Walters said. "We will remain vigilant to the task at hand."
For more information, read the full results report on Ennis Inc.'s website.