Ennis (EBF), engaged in the production and sale of business forms, has announced a 2.19 percent rise in profit for the quarter ended Aug. 31, 2014. The company earned $10.02 million or $0.39 a share in the second-quarter compared with $9.80 million or $0.38 a share a year ago. Analysts on average had predicted net income of $0.37 a share. Revenue during the second-quarter climbed 12.24 percent to $151.84 million from $135.29 million in the last year period.
Gross margin contracted by 195 basis points over the last year period to 25.15 percent. Total expenses as a percentage of revenues increased to 89.22 percent from 88.30 percent in the same period last year. That has resulted in contraction of 92 basis points in operating margins to 10.78 percent. The company reported operating income of $16.37 million compared with $15.82 million in the previous year period.
Keith Walters, chairman, chief executive officer and president, commented by stating, ''Overall we are pleased with the results for the second quarter. Our print margins improved as we continue to make operational improvements at our recent acquisitions. Our apparel margins and operating results continue to be impacted by a challenging domestic retail environment. The market appeared to improve both from a volume and pricing perspective during the quarter, with apparel sales on a linked quarter basis up 2.3%, volume up 1.1% and price up 1.2%. However, the overall domestic retail market continues to be rather lethargic.''
Cash Flow
Ennis has generated cash of $32.34 million from operating activities during the first half, down 19.36 percent or $7.77 million when compared with the last year period. The company has generated 11.04 cents of operating cash flow in every sales dollar for the first half, down from 14.65 cents in the same period last year.
The company has spent $11.41 million cash to meet investing activities during the first half, as against cash outgo of $1.20 million in the last year period. It has spent $12.64 million cash to meet financing activities during the first half, as against cash outgo of $27.04 million in the last year period.
As on Aug. 31, 2014, the company's cash balance stood at $13.78 million, down 22.05 percent or $3.90 million from Aug. 31, 2013.
Working Capital
Ennis has witnessed an increase in the working capital over the last one year. The company's working capital stood at $179.33 million as at Aug. 31, 2014, up $31.50 million or 21.31 percent from $147.82 million on Aug. 31, 2013. It registered an increase in current ratio to 5.08 as at Aug. 31, 2014 from 4.40 on Aug. 31, 2013.
The company's cash conversion cycle (CCC) was decreased to 73 days for second quarter from 114 days for the last year period. CCC is a liquidity metric which expresses the length of time (in days) that a company uses to sell inventory, collect receivables and pay its accounts payable. Decreasing or steady CCCs are good for business.
Days' sales outstanding moved down to 40 days for second quarter compared with 42 days for the last year period. This indicates the company has shortened credit period to clients for making payment.
The company's days' inventory outstanding decreased to 51 days for second quarter compared with 93 days for the last year period. This suggests the company took less time to convert the inventory into sales.
The company's days' payable outstanding went down to 18 days for second quarter from 20 days for the last year period. This reflects that the company has made early payment to vendors compared to prior year period.
Debt Position
The company has witnessed an increase in long-term debt over the last one year. As on Aug. 31, 2014, long-term debt stood at $104 million, up $69 million from Aug. 31, 2013. The company's total debt was 19.05 percent of total assets as on Aug. 31, 2014, compared with 7.18 percent on Aug. 31, 2013.
