Keith S. Walters
Chairman of the Board, CEO and President of Ennis, Inc.
John R. Blind
Retired and Former Vice President of the Printing and Carbonless
Division of the Specialty Papers Business Unit of Glatfelter
Aaron Carter
Assistant Regional Vice President for Ross Stores, Inc.
Barbara T. Clemens
Retired and Former Vice President of Sales and Customer Service
for Boise Paper, a division of Packaging Corporation of America
Gary S. Mozina
Chief Executive Officer of Stevenson Holdings, Inc.
Troy L. Priddy
President of Troy Priddy Custom Homes
Alejandro Quiroz
Chairman of the Board, President and CEO of InveStore
Michael J. Schaefer
Retired and Former Executive Vice President, CFO and Treasurer of
Methodist Health Systems
Margaret A. Walters
Retired Educator
Keith S. Walters
Chairman of the Board, CEO and President
Vera Burnett
Chief Financial Officer and Treasurer
Wade Brewer
Chief Operating Officer
Dan Gus
General Counsel and Secretary
Ronald M. Graham
Vice President – Administration
Terry Pennington
Chief Revenue Officer
ENNIS CORPORATE EXECUTIVE OFFICERS
3 Message to Shareholders
8 Financial Highlights
Form 10-K
Corporate Info
CONTENTS
ENNIS BOARD OF DIRECTORS
ennis.com | 3
Ennis is celebrating our 115th year in business. We believe this long
tenure is a testament to the strength and reputation of our company.
We continue to focus on fundamentals such as conservative
financials, and business integrity. Those principals have allowed us
to deliver a dividend to our shareholders two hundred and three
quarters (203) in a row. Our successful acquisition program has
brought us four new companies the past year. We are continually
looking for new acquisition opportunities and there appear to still
be many opportunities as smaller printers look to exit the business.
Our positive reputation in the marketplace is very key to our success
rate. It is not unusual for a past seller to offer a recommendation
to a future seller in Ennis’ behalf. I’ll expand on these acquisitions
later in my letter.
This past fiscal year has challenged us to adjust to the softening
of our market. There was excess inventory in the market from
customers overstocking during the paper supply shortages. We
started seeing a softening of orders in some of our product lines
in the fourth quarter of FY 2023. That unfortunately foreshadowed
the trends we would see for FY 2024. The anticipated decline of
our backlogs during the year required a refocused level of attention
on our fundamental operating practices such as inventory costs,
labor costs and pricing accuracy. We will share some of the
operational accomplishments to offset the impacts caused by the
market imbalances.
Market Conditions
The largest impact on sales this past year was the destocking or
reduction of inventories by a majority of customers in our segments.
The main cause of this was the industry’s inability to predict where
the paper market was going. The changing ownership in many of the
paper mills will make this an evolving story for the foreseeable future.
“
”
Ennis is celebrating our 115th year in
business. We believe this long tenure
is a testament to the strength and
reputation of our company.
LETTER TO
SHAREHOLDERS
Keith S. Walters
Chairman, CEO & President
We expected this to occur as we witnessed
many distributors in 2022 placing orders for
1.5 to 2 times their normal order patterns due
to concerns of running out of product. We
certainly had concerns they were hoarding
compared to their 2022 volumes. Those
apprehensions became reality as distributors’
ordering behavior started to change in the
fourth quarter as the lead times and prices
on paper leveled. The lack of reorders
impacted our first and second quarters of
2023. This slowdown then induced some of
our customers to move any work they could
produce in-house to fill open capacities
in their plants. Of course, these actions
impacted our overall demand. Fortunately,
we continue to have many products that are
unique to Ennis and those orders remained.
This volume will shift back to Ennis we believe
as the market normalizes as it has in the past
market ups and downs. The price of paper
has remained elevated from the high level
of the paper shortages. This continues to
be a risk factor in driving some customers
to alternatives such as electronic solutions
versus paper-based options. One example
is the Internal Revenue Service no longer
offers printed tax forms to individuals and
small businesses since the beginning of
2023. This decision negatively impacted our
past year’s sales due to our supply contract
with the IRS. These are certainly not new risk
factors but a slowly developing reality. We
are well aware and try to use the acquisition
of less threatened product lines to slow
this decline.
Ennis was able to generate
gains of more than $11 million in
sales growth with our expanded
market share.
4
ennis.com | 5
Ennis was able to generate gains of more than
$11 million in sales growth with our expanded
market share with many distributors and the
acquisition program. Such a contract signed
this year was with one of the largest U.S.-based
insurance companies. The contract is for pre-
printed data roll products. Another contract
was with a customer who provides critical
communication documents both domestic
and internationally. Our broad geographic
footprint of manufacturing locations, ability
to utilize existing equipment, willingness
to invest in new capital, and our industry
expertise are the primary reasons these
customers selected to partner with Ennis.
Leveraging our technology systems gives
us a significant advantage compared to our
smaller competitors. End-use companies
often require their suppliers to support an
electronic transfer of orders and the return
of pertinent order data. Ennis offers our
distributors a technology advantage that
makes transactions seamless and increases
efficiencies. This advantage allowed us to
capture additional business through our
more advanced distributor customers.
Operational
Our fiscal year saw the continuation of our
backlog decline from the highs of 2022 and
2023. Our backlogs for tag, label and pressure
seal products held steady for the first half of
the past year but have softened since then.
Other product backlogs declined but are still
in line with our historical averages.
We saw some stabilization of the labor
market during the past year, allowing us to
fill critical positions. There continues to be
upward pressure on wages at most of our
locations. We will continue to monitor these
trends as demand softens.
A goal last year was returning our inventory
levels back to our historic level of nine turns.
Yes, even our General Managers caught the
panic of buying paper in excess of needs
from fear of running out of paper! We have
accomplished this goal which certainly put
us in a better situation as the market slowed.
Our goal now is to maintain this level of
inventory through our real-time information
system. Our operating management team
did a good job of bringing this back under
control and our goal is to avoid a reoccurrence
in the future.
Acquisitions
During this past year, Ennis acquired four
companies. On May 23, 2023, we acquired the
assets of StyleCraft Printing, located in Canton,
Michigan. StyleCraft is a trade-only printer since
1967 specializing in business forms, integrated
products and commercial printing.
On June 2, 2023, we acquired the assets of
UMC Print in Overland Park, Kansas. UMC
Print has been a leading trade-only printer
and provider of commercial printing services
since 1936. This was not an operation with
many of the basic systems and procedures
we are used to seeing in a printing plant.
We actually passed on this a couple of times
in the past but the price became attractive
as the numbers were presented. It has been
more troublesome than expected but it is
small enough to not have a major impact.
As they say, “sometimes you get what you
pay for”. We will get this turned around and
Ennis offers our distributors a
technology advantage that
makes transactions seamless
and increases efficiencies.
6
brought into the current printing era. We are
installing our system currently.
On October 13, 2023, we acquired the assets of
Eagle Graphics, Inc. in Annville, Pennsylvania,
and the assets of Diamond Graphics, Inc. in
Bensalem, Pennsylvania. Eagle Graphics has
specialized in fulfilling commercial printing
needs since 1976. Capabilities include 8-color
UV web printing, digital printing, security
printing, jumbo rolls, traditional forms and
direct mail. Diamond Graphics was founded
in 1999 and specializes in direct mail printing.
All of these companies add to Ennis’ products
and geographic capabilities. We’ve already
started the process of integrating them into
Ennis and our systems. Our ERP has already
been installed at StyleCraft and UMC giving
the managers further insight into their
businesses and the implementation team
is currently working on the rollout at Eagle
and Diamond. We are delighted to welcome
these employees to the Company.
Financial Results
The Company’s net sales for the fourth
quarter ended February 29, 2024, were $97.4
million compared to $102.7 million for the
same quarter last year, a decrease of 5.2%.
Our gross profit margin was $27.7 million,
or 28.4% as compared to $28.4 million, or
27.6% for the same quarter last year. Net
earnings for the quarter were $10.1 million,
or $0.39 per diluted share as compared to
$12.2 million, or $0.47 per diluted share for
the same quarter last year.
The Company’s net sales for the fiscal year
ended February 29, 2024, were $420.1 million
compared to $431.8 million for fiscal year
2023, a decrease of 2.7%. Gross profit margin
was $125.3 million, or 29.8% as compared to
$131.1 million, or 30.3% for the prior fiscal
year. Net earnings for the fiscal year were
$42.6 million or $1.64 per diluted share,
compared to $47.3 million, or $1.82 per
diluted share for the prior fiscal year.
The print market overall continues to be
fairly soft with competitive pricing, resulting
in a decline in the volume of products
sold and downward pressure on operating
margin. Our acquisitions partially offset the
sales volume decline by $21.2 million and
positively impacted $0.03 per diluted share
for the year. We are in the early stages of
completing the implementations of our ERP
systems of our recent acquisitions and when
fully implemented, we believe the margins
of the acquired businesses will improve to
expected levels. During the prior year’s fourth
quarter, we sold an unused manufacturing
facility and recognized a $5.8 million gain,
which increased the Company's prior year’s
diluted earnings per share by $0.17.
We continue to maintain a strong financial
position with $110.9 million in cash and
short-term investments, Working Capital
of $167.6 million and no debt. Our current
ratio, calculated by dividing our current
assets by our current liabilities, increased
from 4.8 to 1.0 for fiscal year 2023 to 6.1
to 1.0 for fiscal year 2024. We strategically
reduced inventory by $6.8 million improving
With our culture and our systems, I
am confident in our people’s ability
to meet these challenges.
We continue to maintain a strong
financial position with $110.9
million in cash and short-term
investments, Working Capital
of $167.6 million and no debt.
our cash flow and repurchased over 29,000
shares of our common stock in the market
at an average price of $19.96 per share
during the fourth quarter ended February
29, 2024. Our profitability and strong financial
condition will allow us to continue operations
and take advantage of acquisitions without
incurring debt. Given those strengths, we
also anticipate timely access to credit should
larger acquisition opportunities materialize.
We continue to focus on returning value to
shareholders by delivering profitability and
through our quarterly dividends.
Closing Comments
Fiscal 2023 was an outstanding year for our
Company. Demand was strong and we had
the capacity, material and labor to service
customers. With demand declining and costs
escalating, fiscal 2024 was a different story.
We had to be responsive to these changes to
accomplish the results reported. We continue
to be challenged by inflation on both the
supply side and the selling side. With our
culture and our systems, I am confident in
our people’s ability to meet these challenges.
This is a presidential election year with
the potential to create distractions in the
marketplace. We will maintain our focus and
vigilance in our duty to the shareholders
to accomplish our goals. We appreciate
your continued confidence and support for
our Company.
We hope to see some of you at our Annual
Meeting in July.
7
8
Fiscal Year Ended
(Dollars and shares in thousands, except per share amounts)
2024
2023
2022
Net Sales
$420,109
$431,837
$400,014
Gross profit margin
125,342
131,050
114,723
Earnings before taxes
59,123
64,930
41,944
Net earnings
42,597
47,300
28,982
Earnings and dividends per share:
Basic
1.65
1.83
1.11
Diluted
1.64
1.82
1.11
Dividends
1.00
1.00
.975
Weighted average common shares outstanding:
Basic
25,843
25,819
26,026
Diluted
25,940
25,951
26,109
WORKING CAPITAL
— in millions —
LONG-TERM DEBT
— in millions —
CURRENT RATIO
— to 1.0 —
LONG-TERM DEBT TO EQUITY RATIO
— to 1.0 —
FINANCIAL HIGHLIGHTS
SELECTED CONSOLIDATED FINANCIAL DATA
mt
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended February 29, 2024
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
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 Data 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, a 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 has filed a report on and attestation to its management’s assessment of the effectiveness of internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant's executive officers during the relevant recovery period pursuant to §240.10D-a(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of voting stock held by non-affiliates of the Registrant as of August 31, 2023 was approximately $536 million. Shares of voting stock held
by executive officers, directors and holders of more than 10% of the outstanding voting stock have been excluded from this calculation because such persons may be
deemed to be affiliates. Exclusion of such shares should not be construed to indicate that any of such persons possesses the power, direct or indirect, to control the
Registrant, or that any such person is controlled by or under common control with the Registrant.
The number of shares of the Registrant’s Common Stock, par value $2.50, outstanding at May 9, 2024 was 25,984,014.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement for the 2024 Annual Meeting of Shareholders are incorporated by reference into Part III of this Report.
ENNIS, INC. AND SUBSIDIARIES
FORM 10-K
FOR THE PERIOD ENDED FEBRUARY 29, 2024
TABLE OF CONTENTS
PART I:
Item 1
Business ..........................................................................................................................................
4
Item 1A Risk Factors ....................................................................................................................................
8
Item 1B Unresolved Staff Comments ...........................................................................................................
13
Item 1C Cybersecurity ..................................................................................................................................
13
Item 2
Properties ........................................................................................................................................
13
Item 3
Legal Proceedings ...........................................................................................................................
16
Item 4
Mine Safety Disclosures .................................................................................................................
16
PART II:
Item 5
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities ...................................................................................................
16
Item 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations .........
19
Item 7A Quantitative and Qualitative Disclosures about Market Risk .........................................................
26
Item 8
Consolidated Financial Statements and Supplementary Data ........................................................
26
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ........
26
Item 9A Controls and Procedures .................................................................................................................
26
Item 9B Other Information ...........................................................................................................................
27
Item 9C Disclosure Regarding Foreign Jurisdiction that Prevent Inspections .............................................
27
PART III:
Item 10
Directors, Executive Officers and Corporate Governance .............................................................
28
Item 11
Executive Compensation ................................................................................................................
28
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters ...................................................................................................................
28
Item 13
Certain Relationships and Related Transactions, and Director Independence ...............................
28
Item 14
Principal Accountant Fees and Services .........................................................................................
28
PART IV:
Item 15
Exhibits and Financial Statement Schedules ..................................................................................
29
Signatures .......................................................................................................................................
30
3
Cautionary Statements Regarding Forward-Looking Statements
All of the statements in this Annual Report on Form 10-K, other than historical facts, are forward-looking statements,
including, without limitation, the statements made in the “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” particularly under the caption “Overview.” As a general matter, forward-
looking statements are those focused upon anticipated events or trends, expectations, and beliefs relating to matters
that are not historical in nature. The words “could,” “should,” “feel,” “anticipate,” “aim,” “preliminary,” “expect,”
“believe,” “estimate,” “intend,” “intent,” “plan,” “will,” “foresee,” “project,” “forecast,” or the negative thereof or
variations thereon, and similar expressions identify forward-looking statements.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for these forward-looking statements.
In order to comply with the terms of the safe harbor, Ennis, Inc. notes that forward-looking statements are subject to
known and unknown risks, uncertainties and other factors relating to its operations and business environment, all of
which are difficult to predict and many of which are beyond the control of Ennis, Inc. These known and unknown
risks, uncertainties and other factors could cause actual results to differ materially from those matters expressed in,
anticipated by or implied by such forward-looking statements.
These statements reflect the current views and assumptions of management with respect to future events. Ennis, Inc.
does not undertake, and hereby disclaims, any duty to update these forward-looking statements, even though its
situation and circumstances may change in the future. Readers are cautioned not to place undue reliance on forward-
looking statements, which speak only as of the date of this report. The inclusion of any statement in this report does
not constitute an admission by Ennis, Inc. or any other person that the events or circumstances described in such
statement are material.
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 the impact of the internet and other electronic media on the demand for forms and printed materials; general
economic, business and labor conditions, including 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 or sabotage; 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
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; and our ability to
identify, manage or integrate acquisitions.
4
PART I
ITEM 1. BUSINESS
Overview
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. Ennis is primarily a “trade printer”
that manufactures a broad range of printed products that are resold throughout the United States through a network of
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.
Business Overview
Our management believes we are the largest provider of business forms, pressure-seal forms, labels, tags,
envelopes, and presentation folders to independent distributors in the United States.
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. We operate 59 manufacturing plants throughout the United States
in 20 strategically located states as one reportable segment. 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.
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 LabelsSM, ColorWorx®, Enfusion®,
Uncompromised Check Solutions®, VersaSeal®, Ad ConceptsSM, FormSource LimitedSM, Star Award Ribbon
Company®, Witt Printing®, B&D Litho®, Genforms®, PrintGraphics®, Calibrated Forms®, PrintXcel®,
Printegra®, Forms ManufacturersSM, Mutual Graphics®, TRI-C Business FormsSM, Major Business SystemsSM,
Independent PrintingSM, Hoosier Data Forms®, Hayes Graphics®, Wright Business GraphicsSM, Wright 360SM,
Integrated Print & GraphicsSM, the Flesh CompanySM, Impressions DirectSM, AmeriPrintSM; StylecraftSM, UMC
PrintSM; Eagle GraphicsSM and Diamond GraphicsSM. 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®, 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.
The printing industry generally sells its products either predominantly to end users, a market dominated by a few
large manufacturers, such as R.R. Donnelley and Taylor Corporation, or, like the Company, through a variety of
independent distributors and distributor groups. While it is not possible, because of the lack of adequate public
statistical information, to determine the Company’s share of the total business products market, management believes
the Company is the largest producer of business forms, pressure-seal forms, labels, tags, envelopes, and presentation
folders in the United States distributing primarily through independent distributors.
There are a number of competitors that operate in this segment. We believe our strategic locations and buying
power permit us to compete on a favorable basis within the distributor market on competitive factors, such as service,
quality, and price.
5
Distribution of business forms and other business products throughout the United States is primarily done through
independent distributors, including business forms distributors, resellers, direct mail, commercial printers, software
companies, and advertising agencies.
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.
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.
Recent Acquisitions
We have completed a number of acquisitions in recent years.
On October 11, 2023, we acquired the assets and business of Eagle Graphics, Inc. ("Eagle") in Annville,
Pennsylvania, and Diamond Graphics, Inc. ("Diamond") in Bensalem, Pennsylvania. In the last full year preceding
the acquisition, Eagle and Diamond generated approximately $8.7 million in combined sales. The acquisition of these
facilities strengthens our production capabilities to serve our large and growing customer base in the Northeast part
of the country.
On June 2, 2023, we acquired the assets and business of UMC Print ("UMC")in Overland Park, Kansas, which
reported approximately $16.1 million in 2022. The addition of UMC added new commercial printing capabilities,
expanded our distributor customer base and provided our existing distributors with new product offerings to further
drive their growth.
On May 23, 2023 we acquired the real estate and operations of Stylecraft Printing Company ("Stylecraft") in
Canton, Michigan, which prior to the acquisition generated approximately $7.0 million in sales for its fiscal year ended
December 31, 2022. Stylecraft is a trade only printer since 1967 specializing in business forms, integrated products
and commercial printing.
On November 30, 2022, we acquired the School Photo Marketing (“SPM”) assets from SPM Marketing, Inc. in,
which had approximately $10 million in sales in the twelve-month period preceding the acquisition. SPM provides
printing, yearbook publishing and marketing related services to over 1,400 school and sports photographers servicing
schools around the country.
Patents, Licenses, Franchises and Concessions
Other than the patent for our VersaSeal® product, we do not have any significant patents, licenses, franchises, or
concessions.
6
Intellectual Property
We market our products under a number of trademarks and trade names. The protection of our trademarks is
important to our business. We believe that our registered and common law trademarks have significant value and
these trademarks are important to our ability to create and sustain demand for our products. We have registered
trademarks in the United States for Ennis®, EnnisOnlineSM, B&D Litho of AZ®, B&D Litho®, Block Graphics®,
Enfusion®, 360º Custom LabelsSM, Admore®, CashManagementSupply.comSM, Securestar®, Northstar®,
MICRLink®, MICR ConnectionTM, General Financial Supply®, Calibrated Forms®, PrintXcel®, Printegra®, Trade
Envelopes®, Witt Printing®, Genforms®, Royal Business Forms®, Crabar/GBFSM, BF&SSM, Adams McClure®,
Advertising ConceptsTM, ColorWorx®, Allen-Bailey Tag & LabelSM, Atlas Tag & Label®, PrintgraphicsSM,
Uncompromised Check Solutions®, VersaSeal®, VersaSeal SecureX®, Folder Express®, Wisco®, National Imprint
Corporation®, Star Award Ribbon®, Kay Toledo Tag®, Falcon Business FormsSM, Forms ManufacturersSM, Mutual
Graphics®, TRI-C Business FormsSM, SSP®, EOSTouchpoint®, Printersmall®, Check Guard®, Envirofolder®,
Independent®, Independent Checks®, Independent Folders®, Independent Large Format Solutions®, Wright
Business GraphicsSM, Wright 360SM, Integrated Print & GraphicsSM, the Flesh CompanySM, Impressions DirectSM,
MegaformSM, Safe®, InfosealSM, StylecraftSM, UMC PrintSM, Eagle GraphicsSM, Diamond GraphicsSM and variations
of these brands as well as other trademarks. We have similar trademark registrations internationally for certain
trademarks.
Customers
No single customer accounts for as much as five percent of our consolidated net sales or accounts receivable.
Backlog
At February 29, 2024, our backlog of firm orders was approximately $33.7 million, compared to approximately
$46.7 million at February 28, 2023.
Research and Development
While we seek new products to sell through our distribution channel, there have been no material amounts spent
on research and development in fiscal years 2024, 2023 or 2022.
Environment
We are subject to various federal, state, and local environmental laws and regulations concerning, among other
things, wastewater discharges, air emissions and solid waste disposal. Our manufacturing processes do not emit
substantial foreign substances into the environment. We do not believe that our compliance with federal, state, or local
statutes or regulations relating to the protection of the environment has any material effect upon capital expenditures,
earnings or our competitive position. There can be no assurance, however, that future changes in federal, state, or local
regulations, interpretations of existing regulations or the discovery of currently unknown problems or conditions will
not require substantial additional expenditures. Similarly, the extent of our liability, if any, for past failures to comply
with laws, regulations, and permits applicable to our operations cannot be determined.
Environmental Stewardship
Ennis respects the environment and makes all attempts to protect our natural resources. We believe we comply
with all laws and regulations regarding the use and preservation of our land, air, and water. This principle has been
part of our Code of Conduct since 2005. Our goal of operating in an environmentally responsible manner aligns
with our goals of operating a profitable and responsible business. For example, we recycle waste material generated
in our printing processes to generate income from selling the scrap material. We recycled 20.9 million pounds of
paper and 1.7 million pounds of cardboard and cores in 2024. Additionally, the use of soy based inks allows us to
avoid cleaning solutions that may pose environmental hazards. We use environmentally friendly cleaning agents
to insure that our waste water is not contaminated and does not require special disposal.
Many of our plants engage with local energy suppliers to ask for recommendations on lowering energy usage.
Participation in these energy audits generally results in replacing old lighting with more efficient LED lighting.
Additionally, newer digital technology, which we have implemented in several of our locations, relies on less
energy than older web-based presses due to shorter runs and ink jet technology.
7
Another aspect of our business model which reduces carbon emissions is the reduction in transportation costs
for our employees, as well as our customers. Approximately 80% of our facilities are located in small towns where
the employees are less than 10 miles from the plant, and travel time is minimal. Our geographical dispersion
reduces the amount of transportation time and distance associated with delivering our products to our customers.
Likewise we use third party transportation and logistical companies to pick up and deliver our products. Partnering
with larger shipping organizations that have the scale to be more resourceful and implement more energy efficient
delivery methods enables us to ship our products in an efficient and effective manner.
Our primary supplier of paper is vital to our business as they supply raw materials that are minimally altered
during the production process. Our primary supplier is SFI, FSC and PEFC certified. The SFI Forest Management
Standard covers key values such as protection of biodiversity, species at risk and wildlife habitat; sustainable
harvest levels; protection of water quality; and prompt regeneration. FSC certification ensures that products come
from responsibly-managed forests that provide environmental, social and economic benefits. PEFC cares for
forests globally and locally. They work to protect our forests by promoting sustainable forest management through
certification. This means that all can benefit from the many products that forests provide now, while ensuring these
forests will be around for generations to come. The Company’s primary paper supplier ensures that all of their
supply chain materials are sourced with similar accredited suppliers allowing for more transparency and a more
trustworthy supplier commitment to quality, safety and the protection of our natural resources.
Additionally, we use material safety sheets which outline potential hazardous materials so as to minimize the
use of more hazardous materials. Given the low and de minimis use of these potentially hazardous materials, our
plants generally fit in the lowest category of reporting standards to various state and local environmental agencies.
The Company requires facility managers to minimize the use or site storage of any hazardous chemicals. Two
thirds of our facilities are categorized as Very Small Quantity Generators and one third are considered Small
Quantity Generators under the Environmental Protection Agency’s (“EPA”) hazardous waste regulations. Any
hazardous waste generated is stored and properly disposed of in compliance with all EPA regulations and permits.
Two of our largest facilities have solvent recovery systems which allows recovery of press plate washing
solutions for re-use. These systems result in a substantial reduction of any hazardous waste. The Company ensures
that we are in compliance with applicable state and federal environmental laws on hazardous materials including
Proposition 65 in California and federal Conflict Minerals compliance.
Attention to choice of material suppliers, transportation partners, energy usage and avoidance of hazardous
wastes that might impact waste water disposal, are part of the business model that improves or avoids damage to
the environment we live and work in.
Human Capital
At February 29, 2024, we had 1,941 employees. 156 employees are represented by labor unions under collective
bargaining agreements, which are subject to periodic negotiations. We believe we have a good working relationship
with all of the unions that represent our employees.
Social Responsibility
Equal Employment Opportunity: Ennis promotes a cooperative and productive work environment by
supporting the cultural and ethnic diversity of its workforce and is committed to providing equal employment
opportunity to all qualified employees and applicants. Pursuant to our Code of Conduct adopted in 2005 and
reviewed at least annually, we do not unlawfully discriminate on the basis of race, color, sex, sexual orientation,
religion, national origin, marital status, age, disability, or veteran status in any personnel practice, including
recruitment, hiring, training, promotion, and discipline. We are an Equal Opportunity Employer and we comply
with all employment laws including Title VII of the Civil Rights Act of 1964, Immigration and Nationality Act,
and the Immigration Reform and Control Act. We take allegations of harassment and unlawful discrimination
seriously and address all such concerns that are raised regarding our Code of Conduct.
Safety and Health: A safe and clean work environment is important to the well-being of all Ennis employees.
Ennis complies with applicable safety and health regulations and appropriate practices. Throughout the year
facilities are reviewed monthly to determine if the accidents/injuries that occurred could have been avoided.
Incidents are reviewed to determine measures that can be taken to prevent reoccurrence of claims at that facility
or another facility. A monthly Facility Report is sent to all facilities reminding them about safety issues and certain
claims that have occurred in other locations. Annually, facilities are required to submit an audit of compliance
8
with mandated OSHA safety programs. Facilities that have higher than normal claims are worked with directly or
visited by a business director or a representative from our workers’ compensation carrier. Protocols and trainings
are in place to protect the health and safety of all our employees. Safety audits are completed throughout the
organization. The Company strictly monitors safety issues in all of our facilities, and each facility has someone in
charge of review and training of employees on safety issues. Consistent with our culture of promoting workplace
safety, our plants take pride in detailing the amount of time since the last safety incident and strive to maintain the
lack of an occurrence.
Ennis is dedicated to ensuring that business is conducted ethically. All Ennis management must read, agree
with, and sign a Code of Conduct and Ethics policy at least annually.
Each of our locations support local non-profit organizations, educational institutions and youth sport teams
based on their local community needs. The majority of our locations are located in suburban or rural communities
where the plant is a major employer and supporter of the local economy. Some examples include Midlothian
Educational Foundation (Ennis is a founding member), Project Graduation, Toys for Tots, Angel Trees, United
Way fundraisers, and youth sport team sponsorships. Additional support includes in-kind donations, volunteer
hours and financial support for various local organizations.
Available Information
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments
to reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available
free of charge under the Investors Relations page on our website, www.ennis.com, as soon as reasonably practicable
after such reports are electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”).
Information on our website is not included as a part of, or incorporated by reference into, this report. Our SEC filings
are also available through the SEC’s website, www.sec.gov.
ITEM 1A. RISK FACTORS
You should carefully consider the risks described below, as well as the other information included or incorporated
by reference in this Annual Report on Form 10-K, before making an investment in our common stock. The risks
described below are not the only ones we face in our business. Additional risks and uncertainties not presently known
to us or that we currently believe to be immaterial may also impair our business operations. If any of the following
risks occur, our business, financial condition or operating results could be materially harmed. In such an event, our
common stock could decline in price and you may lose all or part of your investment.
Risks related to our business and operations
Our results and financial condition are affected by global and local market conditions, and competitors’ pricing
strategies, which can adversely affect our sales, margins, and net income.
Our results of operations can be affected by local, national and worldwide market conditions. The consequences
of domestic and international economic uncertainty or instability, volatility in commodity markets, and domestic or
international policy uncertainty, all of which we have seen in the past, can all impact economic activity. Unfavorable
conditions can depress the demand for our products and thus sales in a given market and may prompt competitor’s
pricing strategies that adversely affect our margins or constrain our operating flexibility. Certain macroeconomic
events, such as crises in the financial markets, inflation, high interest rates and recessionary concerns, cost and labor
pressures, distribution challenges and the availability of paper could have a more wide-ranging and prolonged impact
on the general business environment, which could also adversely affect us. Whether we can manage these risks
effectively depends on several factors, including (i) our ability to manage movements in commodity prices and the
impact of government actions to manage national economic conditions such as consumer spending, inflation rates and
unemployment levels, particularly given the past volatility in the global financial markets, (ii) the impact on our
margins of labor costs given our labor-intensive business model, the trend toward higher wages in both mature and
developing markets and the potential impact of union organizing efforts on day-to-day operations of our manufacturing
facilities and (iii) other factors, which may be beyond our control.
9
Digital technologies will continue to erode the demand for our printed business documents.
The increasing sophistication of software, internet technologies, and digital equipment combined with our
customers’ general preference and digital substitutions, as well as governmental influences for paperless business
environments will continue to reduce the number of traditional printed documents sold. Moreover, the documents
that will continue to coexist with software applications will likely contain less value-added print content.
Many of our custom-printed documents help companies control their internal business processes and facilitate the
flow of information. These applications will increasingly be conducted over the internet or through other electronic
payment systems. The predominant method of our customers’ communication to their customers is by printed
information. As their customers become more accepting of internet communications, our clients may increasingly opt
for what is perceived to be a less costly electronic option, which would reduce our revenue. The pace of these trends
is difficult to predict. These factors will tend to reduce the industry-wide demand for printed documents and require
us to gain market share to maintain or increase our current level of print-based revenue which could place pressure on
our operating margins.
In response to the gradual obsolescence of our standardized forms business, we continue to develop our capability
to provide custom and full-color products. If new printing capabilities and new product introductions do not continue
to offset the obsolescence of our standardized business forms products, and we are unable to increase our market
share, our sales and profits will be affected. Decreases in sales of our standardized business forms and products due
to obsolescence could also reduce our gross margins or impact the value of our recorded goodwill and intangible
assets. This reduction could in turn adversely impact our profits, unless we are able to offset the reduction through the
introduction of new high margin products and services or realize cost savings in other areas.
We obtain our raw materials from a limited number of suppliers, and any disruption in our relationships with these
suppliers, or any substantial increase in the price of raw materials or material shortages could have a material
adverse effect on us.
We currently purchase a large majority of our paper products from one major supplier at favorable costs based on
the volume of business, and traditionally we have purchased our paper products from a limited number of suppliers,
all of which must meet stringent quality and on-time delivery standards under long-term contracts. Fluctuations in
the quality of our paper, unexpected price changes, decline in overall distribution channels or other factors that relate
to our suppliers could have a material adverse effect on our operating results.
Paper is a commodity that is subject to frequent increases or decreases in price, and these fluctuations are
sometimes significant. The prices for paper and many of our raw materials have been volatile and may continue to
increase due to overall inflationary pressure and global market conditions. We believe there is no effective market of
derivative instruments to insulate us against unexpected changes in price of paper in a cost-effective manner, and
negotiated purchase contracts provide only limited protection against price increases. Generally, when paper prices
increase, we attempt to recover the higher costs by raising the prices of our products to our customers. In the price-
competitive marketplaces in which we operate, however, we may not always be able to pass through any or all of the
higher costs. As such, any significant increase in the price of paper or shortage in its availability could have a material
adverse effect on our results of operations.
Challenging financial market conditions and changes in long-term interest rates could adversely impact the funded
status of our pension plan.
We maintain a noncontributory defined benefit retirement plan (the “Pension Plan”) covering approximately 12%
of our employees. As of February 29, 2024, the Pension Plan was 100% funded on a projected benefit obligation
("PBO") basis and 107% on an accumulated benefit obligation ("ABO") basis. Included in our financial results are
Pension Plan costs that are measured using actuarial valuations. The actuarial assumptions used may differ from actual
results. In addition, as our Pension Plan assets are invested in marketable securities, fluctuations in market values can
negatively impact our funded status, recorded pension liability, and future required minimum contribution levels. A
decline in long-term interest rates puts downward pressure on the discount rate used by plan sponsors to determine
their pension liabilities. Each 10 basis point change in the discount rate impacts our computed pension liability by
approximately $505,000. Similar to fluctuations in market values, a drop in the discount rate can negatively impact
our funded status, recorded pension liability and future contribution levels. Also, continued changes in the mortality
assumptions can impact our funded status. Additionally, as we experienced in recent years, the number of participants
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taking lump sum distributions at retirement could be sufficiently high as to cause a settlement charge, which would
impact current earnings of the Pension Plan.
We may be unable to identify or to complete acquisitions or to successfully integrate the businesses we acquire.
We have evaluated, and may continue to evaluate, potential acquisition transactions. We attempt to address the
potential risks inherent in assessing the attractiveness of acquisition candidates, as well as other challenges such as
retaining the employees and integrating the operations of the businesses we acquire. Integrating acquired operations
involves significant risks and uncertainties, including maintenance of uniform standards, controls, policies and
procedures; diversion of management’s attention from normal business operations during the integration process;
unplanned expenses associated with integration efforts; and unidentified issues not discovered in due diligence,
including legal contingencies. Due to these risks and others, there can be no guarantee that the businesses we acquire
will lead to the cost savings or increases in net sales that we expect or desire. Additionally, there can be no assurance
that suitable acquisition opportunities will be available in the future, which could harm our strategic business plan as
acquisitions are part of our strategy to offset normal print attrition.
Our distributor customers may be acquired by other manufacturers who redirect business within their plants.
Some of our customers are being absorbed by the distribution channels of some of our manufacturing competitors.
However, we do not believe this will significantly impact our business model. We have continued to sell to some of
these customers even after they were absorbed by our competition because of the breadth of our product line and our
geographic diversity.
Our distributors face increased competition from various sources, such as office supply superstores. Increased
competition may require us to reduce prices or to offer other incentives in order to enable our distributors to attract
new customers and retain existing customers.
Low price, high value office supply chain stores offer standardized business forms, checks and related products.
Because of their size, these superstores have the buying power to offer many of these products at competitive prices.
These superstores also offer the convenience of “one-stop” shopping for a broad array of office supplies that our
distributors do not offer. In addition, superstores have the financial strength to reduce prices or increase promotional
discounts to expand market share. This could result in us reducing our prices or offering incentives in order to enable
our distributors to attract new customers and retain existing customers, which could reduce our profits.
We could experience labor disputes, labor shortages and increases in cost of labor that could disrupt our business
in the future and impact operating results.
As of February 29, 2024, approximately 8% of our employees are represented by labor unions under collective
bargaining agreements, which are subject to periodic negotiations. While we believe we have a good working
relationship with all of the unions, there can be no assurance that any future labor negotiations will prove successful,
which may result in a significant increase in the cost of labor, or may break down and result in the disruption of our
business or operations.
Economic factors have contributed to tightening and increased competitiveness in the labor market, increasing
labor costs. A prolonged labor shortage could potentially adversely affect our business operations and further increase
labor costs.
We face intense competition to gain market share, which may lead some competitors to sell substantial amounts of
goods at prices against which we cannot profitably compete.
Our marketing strategy is to differentiate ourselves by providing quality service and quality products to our
customers. Even if this strategy is successful, the results may be offset by reductions in demand or price declines due
to competitors’ pricing strategies or other micro or macro-economic factors. We face the risk of our competition
following a strategy of selling its products at or below cost in order to cover some amount of fixed costs, especially
in stressed economic times.
11
Environmental regulations may impact our future operating results.
We are subject to extensive and changing federal, state and foreign laws and regulations establishing health and
environmental quality standards, concerning, among other things, wastewater discharges, air emissions and solid
waste disposal, and may be subject to liability or penalties for violations of those standards. We are also subject to
laws and regulations governing remediation of contamination at facilities currently or formerly owned or operated by
us or to which we have sent hazardous substances or wastes for treatment, recycling or disposal. We may be subject
to future liabilities or obligations as a result of new or more stringent interpretations of existing laws and regulations.
In addition, we may have liabilities or obligations in the future if we discover any environmental contamination or
liability at any of our facilities, or at facilities we may acquire.
We are subject to taxation related risks.
We are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. Applicable tax
rates and the jurisdictions within which we operate can vary and therefore our effective tax rate may be adversely
affected by changes in the mix of our earnings by jurisdiction. We may be subject to audits of our income, sales and
other transaction taxes by U.S. federal and state authorities. Outcomes from these audits could have an adverse effect
on our financial condition and results of operations.
Income, sales or other tax laws are dynamic and subject to change as new laws are passed and new interpretations
of the law are applied. Most recently, on August 16, 2022, legislation commonly known as the Inflation Reduction
Act (the "IRA") was signed into law. Among other things, the IRA includes a 1% excise tax on certain corporate
stock repurchases, applicable to repurchases after December 31, 2022, and also a new minimum tax based on book
income. The Tax Cuts and Jobs Act enacted on December 22, 2017 resulted in changes in our federal corporate tax
rate, our deferred income taxes and limitations on the deductibility of interest expense and executive compensation
and the transition of U.S. international taxation from a worldwide tax system to a modified territorial tax system. There
may be changes in tax legislation, including a repeal or modification of the Tax Cuts and Jobs Act of 2017, changes
in tax rates and tax base such as limiting, phasing-out or eliminating deductions, revising tax law interpretations in
jurisdictions, and changes in other tax laws. The U.S. government has proposed changes to increase the tax rates on
corporations. All of these factors and uncertainties may adversely affect our results of operations, financial position
and cash flows.
We are exposed to the risk of non-payment by our customers on a significant amount of our sales.
Our extension of credit involves considerable judgment and is based on an evaluation of each customer’s financial
condition and payment history. We monitor our credit risk exposure by periodically obtaining credit reports and
updated financials on our customers. We generally see a heightened amount of bankruptcies by our customers during
economic downturns. While we maintain an allowance for credit losses based upon our historical trends and other
available information, in times of economic turmoil, there is heightened risk that our historical indicators may prove
to be inaccurate. The inability to collect on sales to significant customers or a group of customers could have a material
adverse effect on our results of operations.
Our business incurs significant freight and transportation costs.
We incur transportation expenses to ship our products to our customers. Significant increases in the costs of freight
and transportation could have a material adverse effect on our results of operations, as there can be no assurance that
we could pass on these increased costs to our customers. Government regulations can and have impacted the
availability of drivers, which will be a significant challenge to the transportation industry. Costs to employ drivers
have increased and transportation shortages have become more prevalent. Additionally, the challenge of employing
new drivers for the increasingly larger web-based economy could create shortages in trucks and drivers which could
impact our sales.
A natural disaster, catastrophe, pandemic or other unexpected events could adversely affect our operations.
The occurrence of one or more unexpected events, including war, acts of terrorism or violence, civil unrest,
epidemics or pandemics, fires, tornadoes, hurricanes, earthquakes, floods and other forms of severe weather in the
United States could adversely affect our operations and financial performance. Although we maintain third party
12
insurance against various liability risks and risks of property loss for items we believe are economically reasonable to
insure, we could incur uninsured losses and liabilities arising from such events which would adversely affect our
results of operations and financial condition.
We depend on the reliability of our information technology ("IT") and network infrastructure as well as those of
third parties. If these systems fail, our operations may be adversely affected.
We depend on IT and data processing systems to operate our business, and a significant malfunction or disruption
in the operation of our systems may disrupt our business and adversely affect our ability to operate and compete in
the markets we serve. This could take various forms, including through the injection of ransomware on our IT
infrastructure rendering it inoperable without the payment of some form of cyber currency. These systems include
systems that we own and operate, as well as systems of our vendors or other third parties. Such systems are susceptible
to ransomware attacks, malfunctions, interruptions and phishing scams, for example. We also periodically upgrade
and install new systems, which if installed or programmed incorrectly, may cause significant disruptions. These
disruptions could interrupt our operations and adversely affect our results of operations, financial condition and cash
flows.
Increasing global cybersecurity attacks and regulatory focus on privacy and security issues could impact our
business, expose us to increased liability, subject us to lawsuits, investigations and other liabilities and restrictions
on our operations that could significantly and adversely affect our business.
Along with our own data and information in the normal course of our business, we and our customers and partners
collect and retain significant volumes of certain types of data, some of which are subject to specific laws and
regulations. Complying with varying jurisdictional requirements is becoming increasingly complex and could increase
the costs and difficulty of compliance, and violations of applicable data protection laws. Many of our clients provide
us with information they consider confidential or sensitive, and many of our client’s industries have established
standards for safeguarding the confidentiality, integrity and availability of information relating to their businesses and
customers. Data stored in our systems or available through web portals is susceptible to cybercrime or intentional
disruption, which have increased globally across all industries in terms of sophistication and frequency. Disclosure
of data maintained on our network, a security breach of our systems or other similar events may damage our reputation,
subject us to regulatory enforcement action, third party litigation and cause significant reputational or financial harm
for our clients and partners. Any of these outcomes may adversely affect our results of operations, financial condition
and cash flows.
As previously disclosed, the Company was targeted with an encryption ransomware attack on November 30, 2022.
The attack was discovered while it was in process and immediate action was taken to isolate our network to limit the
scope of any damage. The attack resulted in a brief disruption to the operation of our systems as we took our servers
offline to eradicate the ransomware and restore our data and applications from secure backups. The Company did not
communicate with the ransomware threat actor and never considered paying any ransom demand. Instead, the
Company eliminated the ransomware and immediately proceeded to restore its critical files and functions. The
Company incurred no material expense in connection with the ransomware attack. Based on the information currently
known to date, the incident has not had a significant financial impact and the Company does not believe the incident
will have a material impact on its business, results of operations or financial condition. Despite us improving our
Information Technology General Controls, we cannot give any assurances that the Company will not become the
subject of a future more sophisticated, or more harmful attack.
Increases in the cost of employee benefits could impact our financial results and cash flow.
Our expenses relating to employee health benefits are significant. Unfavorable changes in the cost of such benefits
could impact our financial results and cash flow. Healthcare costs have risen significantly in recent years, and recent
legislative and private sector initiatives regarding healthcare reform could result in significant changes to the U.S.
healthcare system. While the Company has various cost control measures in place and employs an outside oversight
review on larger claims, employee health benefits have been and are expected to continue to be a significant cost to
us and may increase due to factors outside the Company’s control.
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Risks related to our securities
Because of the volatility in the stock market in general, the market price of our Common Stock will also likely be
volatile.
The stock markets have historically experienced price and volume fluctuations that at times have been extreme
and have affected, and continue to affect, the market prices of equity securities of many companies. These fluctuations
have often been unrelated or disproportionate to the operating performance of those companies. Broad market and
industry fluctuations, as well as general economic, political, regulatory and market conditions, may negatively impact
the market price of our common stock. If the market price of our Class A common stock falls below your investment
price, you may lose some or all of your investment. In the past, companies that have experienced volatility in the
market price of their securities have been subject to securities class action litigation. We may be the target of this type
of litigation in the future, which could result in substantial costs and divert our management's attention.
ITEM 1B. UNRESOLVED STAFF COMMENTS
There are no unresolved SEC staff comments.
ITEM 1C. CYBERSECURITY
We believe that cybersecurity is important to maintaining the trust of our customers and employees. We have
implemented a cybersecurity risk management program that is designed to identify, assess, manage, mitigate, and
respond to cybersecurity threats which could adversely affect the confidentiality of our data and the integrity of our
business operations and financial systems. Our cybersecurity program is based on best practices and guidelines of the
National Institute of Standards and Technology Cybersecurity Framework. We have company-wide policies and
procedures in place that further enhance our ability to identify and manage cybersecurity risk.
Annual risk assessments and penetration testing are performed by independent third party consultants. These tests
are useful tools for maintaining a robust cybersecurity program to protect our investors, customers, employees,
vendors, and intellectual property. The results of these tests are presented annually to the Board of Directors ("Board"),
Audit Committee, and senior management for review to ensure compliance with cybersecurity standards.
During the fiscal year ended February 29, 2024, we have not identified any risks from cybersecurity threats that
have materially affected our business operations or financial conditions.
Governance
Our Board of Directors, Audit Committee and senior management oversee risk management to ensure that the
Company's policies and procedures are functioning as intended to protect the Company’s information systems from
cybersecurity threats. The Audit Committee performs an annual review and discussion of the Company’s
cybersecurity program, which includes planned actions in the event of a threat or recovery situation.
Our IT team is led by the Vice President of Administration and the Director of Information Technology. The latter
is responsible for regular assessment and management of cybersecurity risks. The Director of Information Technology
has constant access to the Audit Committee to provide regular updates as necessary regarding any new developments.
We view cybersecurity as a shared responsibility of the Audit Committee and the IT team led by the Director of
Information Technology, and we incorporate external resources and advisors as needed to conduct evaluations of our
security controls through penetration testing, independent audits and consulting on best practices. The results of those
tests are presented annually to the Board.
ITEM 2. PROPERTIES
Our corporate headquarters are located in Midlothian, Texas, and we operate manufacturing facilities throughout
the United States. See the table below for additional information regarding our locations.
All of our properties are used for the production, warehousing and shipping of business products, including the
following: business forms, flexographic printing, and advertising specialties (Wolfe City, Texas); presentation
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products (Macomb, Michigan; De Pere, Wisconsin and Columbus, Kansas); printed and electronic promotional media
(Columbus, Kansas); envelopes (Portland, Oregon; Columbus, Kansas; Tullahoma, Tennessee and Claysburg,
Pennsylvania); financial forms (Minneapolis/St. Paul, Minnesota; Nevada, Iowa and Bridgewater, Virginia); and
pressure seal products (Visalia, California; Chino, California; Roanoke, Virginia and Clarksville, Tennessee).
Our plants are operated at production levels required to meet our forecasted customer demands. Production levels
fluctuate with market demands and depend upon the product mix at any given point in time. Equipment is added as
existing machinery becomes obsolete or not repairable, and as new equipment becomes necessary to meet market
demands; however, at any given time, these additions and replacements are not considered to be material additions to
property, plant and equipment, although such additions or replacements may increase a plant’s efficiency or capacity.
All of our facilities are believed to be in good condition. We do not anticipate that substantial expansion,
refurbishing, or re-equipping of our facilities will be required in the near future.
All of our rented property is held under leases with original terms of one or more years, expiring at various times
through November 2028. Generally, we are able to maintain or renew leases as they expire without significant
difficulty, but leases in certain markets may be subject to significant rent increases that necessitate consolidating
operations to maintain profitability.
15
Approximate Square Footage
Location
General Use
Owned
Leased
Fairhope, Alabama
Manufacturing
65,000
—
Sun City, California
Two Manufacturing Facilities and Warehouse
52,617
1,911
Denver, Colorado
One Manufacturing Facility
60,000
—
Lithia Springs, Georgia
Manufacturing
—
40,050
Harvard, Illinois
Manufacturing and Warehouse
42,000
—
South Elgin, Illinois
Manufacturing
—
70,500
Indianapolis, Indiana
Two Manufacturing Facilities
—
38,000
DeWitt, Iowa
Two Manufacturing Facilities
95,000
—
Nevada, Iowa
Two Manufacturing Facilities
232,000
—
Columbus, Kansas
Two Manufacturing Facilities and Warehouse
174,089
—
Ft. Scott, Kansas
Manufacturing
86,660
—
Girard, Kansas
Manufacturing
69,474
—
Overland Park, Kansas
Two Manufacturing Facilities
—
26,750
Parsons, Kansas
Manufacturing & One Warehouse
122,740
40,000
Canton, Michigan
Two Manufacturing Facilities and Warehouse
32,958
13,490
Macomb, Michigan
Manufacturing
56,350
—
Brooklyn Park, Minnesota
Manufacturing
94,800
—
El Dorado Springs, Missouri
Manufacturing
70,894
—
Fenton, Missouri
Manufacturing
—
26,847
Marlboro, New Jersey
Manufacturing and Warehouse
—
7,450
Caledonia, New York
Manufacturing and one vacant
191,730
—
Fairport, New York
Two Manufacturing Facilities
40,800
—
Coshocton, Ohio
Manufacturing
24,750
—
Toledo, Ohio
Three Manufacturing Facilities
120,947
—
Portland, Oregon
Two Manufacturing Facilities
—
261,765
Annville, Pennsylvania
Manufacturing
37,000
—
Bensalem, Pennsylvania
Manufacturing
—
16,600
Claysburg, Pennsylvania
Manufacturing
—
69,000
Clarksville, Tennessee
Manufacturing
51,900
—
Powell, Tennessee
Manufacturing
43,968
—
Tullahoma, Tennessee
Two Manufacturing Facilities
142,061
—
Arlington, Texas
Two Manufacturing Facilities
69,935
—
Ennis, Texas
Three Manufacturing Facilities *
325,118
—
Houston, Texas
Manufacturing
—
29,668
Wolfe City, Texas
Two Manufacturing Facilities
119,259
—
Bridgewater, Virginia
Manufacturing
—
25,730
Chatham, Virginia
Two Manufacturing Facilities
127,956
—
Roanoke, Virginia
Manufacturing
—
110,000
DePere, Wisconsin
Manufacturing
—
123,187
Mosinee, Wisconsin
Manufacturing
—
5,400
Neenah, Wisconsin
Two Manufacturing Facilities & One Warehouse
72,354
97,161
2,622,360
1,003,509
Corporate Offices
Ennis, Texas
Administrative Offices
9,300
—
Midlothian, Texas
Executive and Administrative Offices
28,000
—
37,300
—
Totals
2,659,660
1,003,509
* 22,000 square feet of Ennis, Texas location leased
16
ITEM 3. LEGAL PROCEEDINGS
From time to time we are involved in various litigation matters arising in the ordinary course of our business. We
do not believe the disposition of any current matter will have a material adverse effect on our consolidated financial
position or results of operations.
In October 2023, Crabar/GBF, Inc., a subsidiary of Ennis, was awarded $5.8 million in actual damages, exemplary
damages and attorney’s fees in a case against Wright Printing Company, its owner Mark Wright, and CEO Mardra
Sikora. Given the defendants’ pending appeal, we have not yet recognized revenue from the judgment. Nevertheless,
the defendants have posted cash bonds that total approximately $5.1 million, which should be recoverable by the
Company if defendants’ appeal is unsuccessful.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the New York Stock Exchange (“NYSE”) under the trading symbol “EBF”. The
following table sets forth the high and low sales prices, the common stock trading volume as reported by the NYSE
and dividends per share paid by the Company for the periods indicated:
Common Stock Dividends
Trading Volume per share of
Common Stock Price Range (number of shares Common
High
Low
in thousands)
Stock
Fiscal Year Ended February 29, 2024
First Quarter
$
22.19 $
18.94
7,812 $
0.250
Second Quarter
22.46
19.38
5,412 $
0.250
Third Quarter
21.99
20.55
4,317 $
0.250
Fourth Quarter
23.17
19.75
6,288 $
0.250
Fiscal Year Ended February 28, 2023
First Quarter
$
19.24 $
16.94
6,424 $
0.250
Second Quarter
22.67
16.55
7,768 $
0.250
Third Quarter
23.44
19.81
6,238 $
0.250
Fourth Quarter
23.48
20.55
6,131 $
0.250
On May 9, 2024, the last reported sale price of our common stock on the NYSE was $20.71, and there were
approximately 622 shareholders of record. Cash dividends may be paid, or repurchases of our common stock may be
made, from time to time as our Board deems appropriate, after considering our growth rate, operating results, financial
condition, cash requirements, restrictive lending covenants, and such other factors as the Board may deem appropriate.
A dividend of $0.225 per share of our common stock was paid in the first quarter of fiscal year 2022. A dividend
of $0.25 per share of our common stock was paid in each subsequent quarter of fiscal year 2022 and in each quarter
of fiscal years 2023 and 2024.
Dividends are declared at the discretion of the Board and future dividends will depend on our future earnings, cash
flow, financial requirements and other factors. The Board does view the dividend as an important aspect of owning
Ennis stock and continues to rank it high in priority in allocating the Company's earnings.
Our Board has authorized the repurchase of the Company’s outstanding common stock through a stock repurchase
program, which authorized amount is currently up to $60.0 million in the aggregate. Under the repurchase program,
purchases may be made from time to time in the open market or through privately-negotiated transactions, depending
on market conditions, share price, trading volume and other factors. Repurchases may be commenced or suspended
at any time or from time to time without prior notice, provided that any purchases must be made in accordance with
17
applicable insider trading rules and securities laws and regulations. Since the program’s inception in October 2008,
we have repurchased 2,242,461 common shares under the program at an average price of $16.34 per share. During
our fiscal year 2024, we repurchased 29,350 shares of common stock at an average price of $19.96 per share. As of
February 29, 2024, $23.4 million remained available to repurchase shares of common stock under the program.
Total Number
Total
of Shares
Maximum Amount
Number
Average
Purchased as
that May Yet Be Used
of Shares
Price Paid
Part of Publicly
to Purchase Shares
Period
Purchased
per Share
Announced Programs Under the Program
December 1, 2023 - December 31, 2023
— $
—
— $
23,948,822
January 1, 2024 - January 31, 2024
— $
—
— $
23,948,822
February 1, 2024 - February 29, 2024
29,350 $
19.96
29,350 $
23,362,850
Total
29,350 $
19.96
29,350 $
23,362,850
18
Stock Performance Graph
The graph below matches Ennis, Inc.'s cumulative 5-Year total shareholder return on common stock with the
cumulative total returns of the S&P 500 index and the Russell 2000 index. The graph tracks the performance of a $100
investment in our common stock and in each index (with the reinvestment of all dividends) from 2/28/2019 to
2/29/2024.
2019
2020
2021
2022
2023
2024
Ennis, Inc.
$ 100.00 $ 99.08 $ 102.67 $ 102.13 $ 124.28 $ 121.81
S&P 500
100.00 108.19 142.05 165.33 152.61 199.09
Russell 2000
100.00
95.08
143.56
134.93
126.82
139.56
The stock price performance included in this graph is not necessarily indicative of future stock price performance.
19
ITEM 6. [Reserved]
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Management’s Discussion and Analysis provides material historical and prospective disclosures intended to
enable investors and other users to assess our financial condition and results of operations. Statements that are not
historical are forward-looking and involve risk and uncertainties, including those discussed under the caption “Risk
Factors” in Item 1A of this Annual Report on Form 10-K and elsewhere in this Report. You should read this discussion
and analysis in conjunction with our Consolidated Financial Statements and the related notes appearing elsewhere in
this Report. The words “anticipate,” “preliminary,” “expect,” “believe,” “intend” and similar expressions identify
forward-looking statements. 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.
In view of such uncertainties, investors should not place undue reliance on our forward-looking statements since
such statements may prove to be inaccurate and speak only as of the date when made. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise.
This Management’s Discussion and Analysis covers the continuing operations of the Company, which are
comprised of the production and sale of business forms and other business products. This Management’s Discussion
and Analysis includes the following sections:
•
Overview – An overall discussion regarding our Company, the business challenges and opportunities we
believe are key to our success, and our plans for facing these challenges relating to our continuing operations.
•
Critical Accounting Estimates – A discussion of the accounting policies that require our most critical
judgments and estimates relating to our continuing operations. This discussion provides insight into the level
of subjectivity, quality, and variability involved in these judgments and estimates. This section also provides
a summary of recently adopted and recently issued accounting pronouncements that have or may materially
affect our business.
•
Results of Operations – An analysis of our consolidated results of operations and segment results for the three
years presented in our Consolidated Financial Statements. This analysis discusses material trends within our
continuing business and provides important information necessary for an understanding of our continuing
operating results.
•
Liquidity and Capital Resources – An analysis of our cash flows and a discussion of our financial condition
and contractual obligations. This section provides information necessary to evaluate our ability to generate
cash and to meet existing and known future cash requirements over both the short and long term.
References to 2024, 2023 and 2022 refer to the fiscal years ended February 29, 2024, February 28, 2023 and
February 28, 2022, respectively.
Overview
The Company – Our management believes we are the largest provider of business forms, pressure-seal forms,
labels, tags, envelopes, and presentation folders to independent distributors in the United States.
Our Business Challenges – Our industry is currently experiencing consolidation of traditional supply channels,
product obsolescence, paper supplier capacity adjustments, and increased pricing and potential supply allocations due
to demand/supply curve imbalance. Technology advances have made electronic distribution of documents, internet
hosting, digital printing and print-on-demand valid, cost-effective alternatives to traditional custom-printed documents
and customer communications. Improved equipment has become more accessible to our competitors. We face highly
competitive conditions throughout our supply chain in an already over-supplied, price-competitive print industry. In
20
addition to the risk factors discussed under the caption “Risk Factors” in Item 1A of this Annual Report, some of the
key challenges of our business include the following:
Transformation of our portfolio of products – While traditional business documents are essential in order to
conduct business, many are being replaced through the use of cheaper paper grades or imported paper, or devalued
with advances in digital technologies, causing steady declines in demand for a portion of our current product line.
Transforming our product offerings in order to continue to provide innovative, valuable solutions through lower labor
and fixed charges to our customers on a proactive basis will require us to make investments in new and existing
technology and to develop key strategic business relationships, such as print-on-demand services and product offerings
that assist customers in their transition to digital business environments. In addition, we will continue to look for new
market opportunities and niches through acquisitions, such as the addition of our envelope offerings, tag offerings,
folder offerings, healthcare wristbands, specialty packaging, direct mail, pressure seal products, secure document
solutions, innovative in-mold label offerings and long-run integrated products with high color web printing, which
provide us with an opportunity for growth and differentiate us from our competition. The ability to make investments
in new and existing technology and/or to acquire new market opportunities through acquisitions is dependent on the
Company’s liquidity and operational results.
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. In 2022 there
was a build-up of paper mill’s customer inventory, and 2023 data showed an inventory correction in reduced spending.
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 margins remain under pressure due to the resulting weak
volumes, 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.
Continued consolidation of our customers – Our customers are distributors, many of which are consolidating
or are being acquired by competitors. We continue to maintain a majority of the business we have had with our
customers historically, but it is possible that these consolidations and acquisitions, which we expect to continue in the
future, ultimately will impact our margins and sales.
Critical Accounting Estimates
In preparing our Consolidated Financial Statements, we are required to make estimates and assumptions that affect
the disclosures and reported amounts of assets and liabilities at the date of the Consolidated Financial Statements and
the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates and judgments
on an ongoing basis, including those related to allowance for credit losses, inventory valuations, property, plant and
equipment, intangible assets, pension plan obligations, accrued liabilities and income taxes. We base our estimates
and judgments on historical experience and on various other factors that we believe to be reasonable under the
circumstances. Actual results may differ materially from these estimates under different assumptions or conditions.
We believe the following accounting policies are the most critical due to their effect on our more significant estimates
and judgments used in preparation of our Consolidated Financial Statements.
21
Pension Plan – We maintain the Pension Plan for certain eligible employees. Included in our financial results are
Pension Plan costs that are measured using actuarial valuations and require the use of a number of significant
assumptions. Changes in these assumptions can result in different expense and liability amounts and future actual
pension cost experience and funding requirements may differ materially from current estimates.
As our Pension Plan assets are invested in marketable securities, fluctuations in market values could potentially
impact our Pension Plan funding status and associated liability recorded. The expected rate of return on assets was
6.00% and 6.50% at February 29, 2024 and February 28, 2023, respectively.
Similar to fluctuations in market values, a drop in the discount rate could potentially negatively impact our Pension
Plan's funded status, recorded pension liability and future contribution levels with the opposite impact occurring for
an increase in the discount rate. During fiscal year 2024, the discount rate used to determine the net pension obligations
for purposes of our Consolidated Financial Statements increased to 5.15% from 5.00% in fiscal year 2023. The
discount rate is reviewed by management annually and is adjusted to reflect movements in the average Mercer and
FTSE (formerly Citigroup) pension yield curves for mature pension plans with duration of about 12-15 years. The
Company estimated the duration of its pension benefit obligation (PBO) to be approximately 12-15 years. Each 10
basis point change in the discount rate impacts our computed pension liability by about $0.5 million.
Also, continued changes in the mortality assumptions could potentially impact our Pension Plan's funded status.
For the February 29, 2024 measurement, no change was made to the mortality assumption. While U.S. mortality has
been higher in the last couple of years due to the COVID-19 pandemic and other related factors, the mortality
assumption is used to estimate the future lifetime of plan participants. Any actual impact on the Pension Plan from
the higher than expected mortality has already been recognized in the underlying participant data used to measure the
pension liability. The impact on future longevity is still being studied, and there is a general expectation that the current
population is a healthier cohort such that mortality rates may return to pre-pandemic levels. This assumption will
continue to be monitored.
Impairment Assessments on Goodwill and Other Intangible Assets – Amounts allocated to intangibles and
goodwill are determined based on valuation analyses for our acquisitions. Amortizable intangibles are amortized over
their expected useful lives. We evaluate these amounts periodically (at least once a year) to determine whether a
triggering event has occurred during the year that would indicate potential impairment.
We assess goodwill for impairment annually as of December 1, or more frequently if impairment indicators are
present. The Company uses qualitative factors to determine whether it is more likely than not (likelihood of more than
50%) that the fair value of a reporting unit exceeds its carrying amount, including goodwill. Some of the qualitative
factors considered in applying this test include consideration of macroeconomic conditions, industry and market
conditions, cost factors affecting the reporting unit’s business, overall financial performance of the business, and
performance of the common share price of the Company. If qualitative factors are not deemed sufficient to conclude
that it is more likely than not that the fair value of the reporting unit exceeds its carrying value, then a one-step
quantitative approach is applied in making an evaluation. The quantitative evaluation utilizes multiple valuation
methodologies, including a market approach (market price multiples of comparable companies) and an income
approach (discounted cash flow analysis). The computations require management to make significant estimates and
assumptions, including, among other things, selection of comparable publicly traded companies, an appropriate
discount rate applied to future earnings reflecting a weighted average cost of capital, and earnings growth assumptions.
A discounted cash flow analysis requires management to make various assumptions about future sales, operating
margins, capital expenditures, working capital and growth rates. If the quantitative evaluation results in the fair value
of the reporting unit being lower than the carrying value, an impairment charge is recorded. A goodwill impairment
charge was not required for the fiscal years ended February 29, 2024 or February 28, 2023.
Allowance for Credit Losses and Accounts Receivable – Net sales consist of gross sales invoiced to customers,
less certain related charges, including discounts, returns and other allowances. Our allowance for credit losses is based
on an analysis that estimates the amount of our total customers receivable balance that is not collectible. This analysis
includes assessing a default probability to customers’ receivable balances, which is influenced by several factors
including (i) current market conditions, (ii) periodic review of customer credit worthiness, and (iii) review of customer
receivable aging and payment trends. While we believe we have exercised prudent judgment and applied reasonable
assumptions, there can be no assurance that in the future, changes in economic conditions or other factors would not
cause changes in the financial health of our customers. If the financial health of our customers deteriorates, the timing
22
and level of payments received could be impacted and therefore, could result in a change to our estimated losses.
Returns, discounts and other allowances have historically been insignificant.
Allowance for Excess and Obsolete Inventories – With the exception of approximately 7.0% and 6.1% of
inventories valued using the lower of last-in, first-out ("LIFO") cost flow assumption for fiscal years 2024 and 2023,
respectively, our inventories are valued at the lower of cost or net realizable value. We regularly review inventory
values on hand, using specific aging categories, and write down inventory deemed obsolete and/or slow-moving based
on historical usage and estimated future usage to its estimated net realizable value. As actual future demand or market
conditions may vary from those projected by management, adjustments to inventory valuations may be required. The
allowance for excess and obsolete inventory at fiscal years ended 2024 and 2023 were $1.3 million and $1.6 million,
respectively.
Results of Operations
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
Consolidated Financial Statements and notes thereto. Unless otherwise indicated, this financial overview is for the
continuing operations of the Company, which are comprised of the production and sales of business forms and other
business products. The operating results of the Company for fiscal year 2024 and the comparative fiscal years 2023
and 2022 are included in the tables below.
Consolidated Summary
Consolidated Statements of
Fiscal years ended
Operations - Data (in thousands)
2024
2023
2022
Net sales
$ 420,109
100.0 % $ 431,837
100.0 % $ 400,014
100.0 %
Cost of goods sold
294,767
70.2
300,787
69.7
285,291
71.3
Gross profit margin
125,342
29.8
131,050
30.3
114,723
28.7
Selling, general and administrative
68,830
16.4
70,793
16.4
71,410
17.9
Loss (gain) from disposal of assets
53
—
(5,896 )
(1.4 )
(271 )
(0.1 )
Income from operations
56,459
13.4
66,153
15.3
43,584
10.9
Other income (expense)
2,664
0.6
(1,223 )
(0.3 )
(1,640 )
(0.4 )
Earnings before income taxes
59,123
14.1
64,930
15.0
41,944
10.5
Provision for income taxes
16,526
3.9
17,630
4.1
12,962
3.2
Net earnings
$ 42,597
10.1 % $ 47,300
11.0 % $ 28,982
7.2 %
Net Sales. Our net sales were $420.1 million for fiscal year 2024, compared to $431.8 million for fiscal year 2023,
a decrease of $11.7 million, or 2.7%, primarily due to a $32.9 million decrease in volume demand, partially offset by
an approximately $21.2 million increase in revenues generated from our recent acquisitions. The print market overall
continues to be fairly soft with competitive pricing as well as some of our print partners have experienced slowness
in their sales and reduced their outsourced work to us during the current fiscal year.
Our net sales increased from $400.0 million for fiscal year 2022 to $431.8 million for fiscal year 2023, an increase
of 8%. The increase was attributable to $3.3 million in revenues from our 2023 acquisitions of School Photo
Marketing as well as price and volume increases that were partially offset by reduced volumes in the fourth quarter.
Cost of Goods Sold. As a result of decreased sales volume, our manufacturing costs decreased $6.0 million, or
2.0% from $300.8 million for fiscal year 2023 to $294.8 million for fiscal year 2024. Our gross profit was $125.3
million or 29.8% of sales for fiscal year 2024, compared to $131.1 million or 30.3% of sales for fiscal year
2023. The print market overall was fairly soft during fiscal year 2024 with competitive pricing from similar situated
vendors as us, resulting in downward pressure on operating margin.
Our manufacturing costs increased $15.5 million, or 5.4%, from $285.3 million for fiscal year 2022 to $300.8
million for fiscal year 2023. Our gross profit was $131.1 million or 30.3% of sales for fiscal year 2023, compared to
$114.7 million or 28.7% for fiscal year 2022. Improved operational efficiencies and pricing adjustments to cover
inflationary costs, primarily of paper, supplies and labor, contributed to improve our gross profit margin as a
percentage of sales.
23
Selling, general, and administrative expenses. For fiscal year 2024, our selling, general and administrative
(“SG&A”) expenses were $68.8 million compared to $70.8 million for fiscal year 2023, a decrease of $2.0 million, or
2.8% primarily as a result of reduction in executive incentive compensation expense. As a percentage of sales, SG&A
expenses remained flat at 16.4% in fiscal year 2024 and 2023.
Our SG&A expenses decreased approximately 0.9%, from $71.4 million for fiscal year 2022 to $70.8 million for
fiscal year 2023. As a percentage of sales, SG&A expenses declined from 17.9% in fiscal year 2022 to 16.4% for
fiscal year 2023. Our SG&A expense decreased as a result of operational efficiencies and intangible assets fully
amortized in fiscal year 2022 partially offset by increased executive incentive compensation expense.
(Gain) loss from disposal of assets. The $0.1 million loss from disposal of assets for fiscal 2024 is primarily from
the sale of unused manufacturing equipment. The $5.9 million gain from disposal of assets for fiscal 2023 is primarily
from the sale of an unused manufacturing facility, $5.8 million, and $0.1 million of manufacturing equipment. The
$0.3 million gain from disposal of assets for fiscal year 2022 is primarily related to the sale of an unused manufacturing
facility and manufacturing equipment.
Income from operations. Primarily due to factors described above, our income from operations for fiscal year 2024
decreased $9.7 million to $56.5 million or 13.4% of net sales from $66.2 million or 15.3% of net sales for fiscal year
2023. Income from operations for fiscal year 2023 increased 51.8% to $66.2 million, or 15.3% of net sales, from $43.6
million, or 10.9% of net sales in 2022.
Other income (expense). Interest income for fiscal year 2024 was $4.0 million compared to $0.8 million in 2023
and $0.1 million in 2022. Our increase in interest income in 2024 was from higher interest rates in 2024 compared to
2023 and higher interest rates compared to 2002.
Other expense for fiscal year 2024 was $1.3 million compared to $2.0 million for fiscal year 2023. Our decrease
in expense was from lower non-service cost components of net periodic benefit costs relating to pension expense in
fiscal year 2024.
Other expense was $2.0 million for fiscal year 2023 compared to $1.6 million for fiscal year 2022. The increase
in expense was primarily from higher non-service cost components of net periodic benefit costs relating to pension
expense in fiscal year 2023.
Provision for income taxes. Our effective tax rates for fiscal years 2024, 2023 and 2022 were 28.0%, 27.2%, and
30.9%, respectively. The higher effective tax rate for fiscal year 2022 was primarily the result of distributions during
the year from our deferred compensation plan which was terminated in fiscal year 2021.
Net earnings. Net earnings were $42.6 million, or $1.64 per diluted share for fiscal year 2024 as compared to $47.3
million of $1.82 per diluted share for fiscal year 2023. Net earnings were impacted by decreased revenues in fiscal
year 2024. Net earnings in fiscal year 2023 were impacted by a $5.8 million gain from disposal of assets that added
$0.17 per share. Net earnings were $47.3 million, or $1.82 per diluted share for fiscal year 2023, as compared to $29.0
million, or $1.11 per diluted share for fiscal year 2022. Net earnings were impacted by increased revenues in fiscal
year 2023.
Liquidity and Capital Resources
We rely on our cash flows generated from operations to meet 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 $81.6 million at February 29, 2024, short-term investments of $29.3 million and cash flows
from operations are expected to be similar to prior years which should be adequate to cover the next twelve months
24
and beyond of our operating and capital requirements. Our annual capital requirements are expected to be within our
historical levels of between $3.0 million and $6.0 million.
Fiscal Years Ended
(Dollars in thousands)
2024
2023
2022
Working Capital
$
167,581
$
155,379
$
127,839
Cash
$
81,597
$
93,968
$
85,606
Short-term Investments
$
29,325
$
-
$
-
Working Capital. Our working capital increased by approximately $12.2 million, or 7.9%, from $155.4 million at
February 28, 2023 to $167.6 million at February 29, 2024. Our current ratio, calculated by dividing our current assets
by our current liabilities, increased from 4.8 to 1.0 for fiscal year 2023 to 6.0 to 1.0 for fiscal year 2024. Our increase
in working capital primarily reflects the increase in cash and short-term investments, $17.0 million, offset by the
decrease in accounts receivable, $6.3 million, and inventory, $6.8 million, and the decrease in our accounts payable
and accrued expense, $7.0 million. We strategically reduced inventory levels to improve cash flow and the decrease
in receivables is primarily a result of accelerating the timing of collections relative to fiscal year end.
Our working capital increased by approximately $27.5 million, or 21.5%, from $127.8 million at February 28,
2022 to $155.4 million at February 2023. Our current ratio, calculated by dividing our current assets by our current
liabilities, increased from 4.4 to 1.0 for fiscal year 2022 to 4.8 to 1.0 for fiscal year 2023. Our increase in working
capital primarily reflects the increase in cash, $8.4 million, accounts receivable, $14.5 million, and inventory, $8.3
million, offset by the increase in our accounts payable and accrued expense.
Cash Flow Components
Fiscal years ended
(Dollars in thousands)
2024
2023
2022
Net cash provided by operating activities
$ 69,069 $ 46,776 $ 50,678
Net cash used in investing activities
$ (54,994 ) $ (11,457 ) $ (10,052 )
Net cash used in financing activities
$ (26,446 ) $ (26,957 ) $ (30,210 )
Cash flows from operating activities. Cash provided by operating activities was $69.1 million for fiscal year 2024
(an increase of $22.3 million compared to fiscal year 2023), $46.8 million for fiscal year 2023 (a decrease of $3.9
million compared to fiscal year 2022) and $50.7 million for fiscal year 2022.
Our increased operational cash flows in fiscal year 2024 compared to fiscal year 2023 was primarily the result of
a $16.9 million decrease from inventories, $18.1 million decrease from our accounts receivable, offset by a $4.7
decrease in earnings, $5.3 million decrease in payables and accrued expenses and a $5.9 million gain from disposal
of assets during fiscal year 2023.
Our decreased operational cash flows in fiscal year 2023 compared to fiscal year 2022 was primarily the result of
a $3.4 million decrease from inventories, $8.2 million decrease from our accounts receivable, $5.9 million gain from
disposal of assets and a $5.0 million decrease from deferred tax liability offset by $18.3 million in increased earnings.
Cash flows from investing activities. Cash used in investing activities was $55.0 million in fiscal year 2024
compared to $11.5 million in fiscal year 2023, and $10.1 million in fiscal year 2022. The increase in cash used in
fiscal year 2024 compared to 2023 was primarily due to net purchase and maturity of short-term investments of $28.9
million and a $10.8 million increase in costs to acquire businesses. During fiscal year 2024, we purchased
approximately $31.4 million of U.S. government treasury bills with staggered maturities of between three months and
twelve months. The $1.4 million decrease in cash used in fiscal year 2023 compared to fiscal year 2022 was primarily
due to a $2.2 million decrease in capital expenditures and $0.8 million increase in proceeds from disposal of plant and
property, offset by a $4.4 million increase in costs to acquire businesses.
Cash flows from financing activities. Cash used in financing activities was $26.4 million in fiscal year 2024
compared to $27.0 million in fiscal year 2023 and $30.2 million used in fiscal year 2022.
25
The decrease in our cash used in financing activities in fiscal year 2024 was primarily due to a $0.5 million decrease
of common stock repurchases. The decrease in our cash used in financing activities in fiscal year 2023 was primarily
due to a $3.7 million decrease of common stock repurchases.
Stock Repurchase – The Board has authorized the repurchase of the Company’s outstanding common stock
through a stock repurchase program, which authorized amount is currently up to $60.0 million in the aggregate. Under
the repurchase program, purchases may be made from time to time in the open market or through privately-negotiated
transactions, depending on market conditions, share price, trading volume and other factors. Repurchases may be
commenced or suspended at any time or from time to time without prior notice, provided that any purchases must be
made in accordance with applicable insider trading rules and securities laws and regulations. Since the program’s
inception in October 2008, we have repurchased 2,242,461 common shares under the program at an average price of
$16.34 per share. During our fiscal year 2024, we repurchased 29,350 shares of common stock at an average price of
$19.96 per share. As of February 29, 2024, $23.4 million remained available to repurchase shares of the Company’s
common stock under the program. The Company expects to continue to repurchase its shares under the repurchase
program during fiscal year 2025 provided that the Board determines such repurchases to be in the best interests of the
Company and its shareholders.
Credit Facility – As of February 29, 2024, we had $0.3 million outstanding under a standby letter of credit
arrangement secured by a cash collateral bank account. It is anticipated that our cash, short-term investments and
funds from operating cash flows will be sufficient to fund anticipated future expenditures.
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. The assumptions used to calculate the pension
funding deficit are different from the assumption used to determine the net pension obligations for purposes of our
Consolidated Financial Statements. The funding of our Pension Plan is governed by the Employee Retirement Income
Security Act of 1974 (“ERISA”), as amended, and the Internal Revenue Code and is also subject to the Moving Ahead
for Progress in the 21st Century Act, the Highway and Transportation Funding Act of 2014, the Bipartisan Budget Act
of 2015, and the American Rescue Plan Act of 2021. Under these regulations, the liabilities are discounted using 25-
year average corporate bond rates within a specified corridor. For the period ended February 29, 2024, the specified
corridor around the 25-year average was 5%. We made a contribution of $1.2 million to our Pension Plan in fiscal
year 2024, $2.0 million in fiscal year 2023 and $1.0 million in fiscal year 2022. Given our funding status as of
February 29, 2024, and absent any significant negative event, we anticipate that our future contributions will be
between $1.0 million and $3.0 million per year, depending on our Pension Plan’s funding.
Inventories – We believe our current 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.
Capital Expenditures – We expect our capital expenditure requirements for fiscal year 2024, exclusive of capital
required for possible acquisitions, will be in line with our historical levels of between $3.0 million and $5.0 million.
We expect to fund these expenditures through existing cash flows. We expect to generate sufficient cash flows from
our operating activities to cover our operating and other normal capital requirements for the foreseeable future.
Contractual Obligations – There have been no significant changes in our contractual obligations since February
29, 2024 that have, or that are reasonably likely to have, a material impact on our results of operations or financial
condition. The following table represents our contractual commitments as of February 29, 2024 (in thousands).
Due in less
Due in
Due in
Due in more
Total
than 1 year
1-3 years
4-5 years
than 5 years
Estimated pension benefit payments to
Pension Plan participants
$
38,700 $
3,200 $
7,700 $
7,700 $
20,100
Letters of credit
318
318
—
—
—
Operating leases
10,098
4,593
4,842
663
—
Total
$
49,116 $
8,111 $
12,542 $
8,363 $
20,100
26
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
Interest Rates
From time to time, we are exposed to interest rate risk on short-term and long-term financial instruments carrying
variable interest rates. We may from time to time utilize interest rate swaps to manage overall borrowing costs and
reduce exposure to adverse fluctuations in interest rates. We do not use derivative instruments for trading purposes.
While we had no outstanding debt at February 29, 2024, we will be exposed to interest rate risk if we borrow under a
credit facility in the future.
This market risk discussion contains forward-looking statements. Actual results may differ materially from this
discussion based upon general market conditions and changes in domestic and global financial markets.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our Consolidated Financial Statements and Supplementary Data required by this Item 8 are set forth following the
signature page of this report and are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
A review and evaluation was carried out under the supervision and with the participation of our management,
including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation
of our “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) as of February 29, 2024. Based upon that review and
evaluation, we have concluded that our disclosure controls and procedures were effective as of February 29, 2024.
Management’s Report on Internal Control over Financial Reporting
The Consolidated Financial Statements, financial analysis and all other information in this Annual Report on Form
10-K were prepared by management, who is responsible for their integrity and objectivity and for establishing and
maintaining adequate internal controls over financial reporting.
The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of Consolidated Financial Statements for external purposes in
accordance with accounting principles generally accepted in the United States of America. The Company’s internal
control over financial reporting includes those policies and procedures that:
i.
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of assets of the Company;
ii. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of
Consolidated Financial Statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the Company are being made only in accordance with authorizations of
management and directors of the Company; and
iii. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the Company’s assets that could have a material effect on the financial statements.
There are inherent limitations in the effectiveness of any internal control, including the possibility of human error
and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only
reasonable assurances with respect to financial statement preparation. Further, because of changes in conditions, the
effectiveness of internal controls may vary over time.
27
Management assessed the design and effectiveness of the Company’s internal control over financial reporting as
of February 29, 2024. In making this assessment, management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) in the 2013 Internal Control—Integrated
Framework (“2013 COSO framework”). Based on management’s assessment using those criteria, we believe that, as
of February 29, 2024, the Company’s internal control over financial reporting is effective.
In conducting our evaluation, we excluded the assets and liabilities and results of operations of our acquisitions,
Stylecraft, UMC, Eagle and Diamond, during fiscal year ended 2024, in accordance with the SEC staff's interpretive
guidance concerning management's reporting on internal controls over financial reporting in connection with
acquisitions. The assets and revenues resulting from these acquisitions constituted approximately 3.8% and 5.0%,
respectively, of the related consolidated financial statement amounts as of and for the year ended February 29, 2024.
Changes in Internal Controls
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-
15(f) under the Exchange Act) that has materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting. Management believes that the Consolidated Financial Statements included in this
Annual Report on Form 10-K present fairly in all material respects our consolidated position, results of operations and
cash flows for the period presented.
CohnReznick LLP, an independent registered public accounting firm, has audited the Consolidated Financial
Statements of the Company for the fiscal year ended February 29, 2024 and February 28, 2023 and has attested to the
effectiveness of the Company’s internal control over financial reporting as of February 29, 2024. Their report on the
effectiveness of internal control over financial reporting is presented on page F-3 of this Annual Report on Form 10-
K.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENT INSPECTIONS
Not Applicable.
28
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Except as set forth below, the information required by Item 10 is incorporated herein by reference to the definitive
Proxy Statement for our 2024 Annual Meeting of Shareholders, including “Election of Directors”, “Corporate
Governance”, “Executive Officers” and “Delinquent Section 16(a) Reports.”
The SEC and the NYSE have issued multiple regulations requiring policies and procedures in the corporate
governance area. In complying with these regulations, it has been the goal of the Company’s Board and senior
leadership to do so in a way which does not inhibit or constrain the Company’s unique culture, and which does not
unduly impose a bureaucracy of forms and checklists. Accordingly, formal, written policies and procedures have been
adopted in the simplest possible way, consistent with legal requirements, including a Code of Ethics applicable to the
Company’s principal executive officer, principal financial officer, and principal accounting officer or controller. The
Company’s Corporate Governance Guidelines, its charters for each of its Audit, Compensation, Nominating and
Corporate Governance Committees and its Code of Ethics covering all employees are available on the Company’s
website, www.ennis.com, and a copy will be mailed upon request to Investor Relations at 2441 Presidential Parkway,
Midlothian, TX 76065. If we make any substantive amendments to the Code of Ethics, or grant any waivers to the
Code of Ethics for any of our senior officers or directors, we will disclose such amendment or waiver on our website
and in a report on Form 8-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is hereby incorporated herein by reference to the definitive Proxy Statement
for our 2024 Annual Meeting of Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by Item 12, as to certain beneficial owners and management, is hereby incorporated by
reference to the definitive Proxy Statement for our 2024 Annual Meeting of Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by Item 13 is hereby incorporated herein by reference to the definitive Proxy Statement
for our 2024 Annual Meeting of Shareholders.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Item 14 is hereby incorporated herein by reference to the definitive Proxy Statement
for our 2024 Annual Meeting of Shareholders.
29
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this report.
1. Index to Consolidated Financial Statements of the Company
An “Index to Consolidated Financial Statements” has been filed as a part of this Report beginning on page F-1
hereof.
2. All schedules for which provision is made in the applicable accounting regulation of the SEC have been omitted
because of the absence of the conditions under which they would be required or because the material information
required is included in the Consolidated Financial Statements of the Registrant or the notes thereto.
3. Exhibits
Exhibit Number
Description
Exhibit 3.1(a)
Restated Articles of Incorporation, as amended through June 23, 1983 with attached amendments dated June 20, 1985, July 31,
1985, June 16, 1988 and November 4, 1998, incorporated herein by reference to Exhibit 3.1(a) to the Registrant’s Form 10-Q
filed on October 6, 2017 (File No. 001-05807).
Exhibit 3.1(b)
Amendment to Articles of Incorporation, dated June 17, 2004, incorporated herein by reference to Exhibit 3.1(b) to the
Registrant’s Annual Report on Form 10-K for the fiscal year ended February 28, 2007 filed on May 9, 2007(File No. 001-
05807).
Exhibit 3.2
Fourth Amended and Restated Bylaws of Ennis, Inc., dated July 10, 2017, incorporated herein by reference to Exhibit 3.1 to the
Registrant’s Current Report on Form 8-K filed on July 10, 2017 (File No. 001-05807).
Exhibit 4.1
Description of Ennis, Inc. Securities Registered under Section 12 of the Exchange Act of 1934.*
Exhibit 10.1
Amended and Restated Chief Executive Officer Employment Agreement between Ennis, Inc. and Keith S. Walters, effective as
of December 19, 2008, herein incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on January 20, 2009
(File No. 001-05807).+
Exhibit 10.2
Amended and Restated Executive Employment Agreement between Ennis, Inc. and Ronald M. Graham, effective as of May 15,
2019, herein incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed on May 16, 2019 (File No. 001-
05807).+
Exhibit 10.3
2021 Long-Term Incentive Plan effective on July 15, 2021, incorporated herein by reference to Appendix A of the Registrant's
Form DEF 14A filed on June 3, 2021.
Exhibit 21
Subsidiaries of Registrant*
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm*
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm*
Exhibit 31.1
Certification Pursuant to Rule 13a-14(a) of Chief Executive Officer.*
Exhibit 31.2
Certification Pursuant to Rule 13a-14(a) of Chief Financial Officer.*
Exhibit 32.1
Section 1350 Certification of Chief Executive Officer.**
Exhibit 32.2
Section 1350 Certification of Chief Financial Officer.**
Exhibit 97
Compensation Clawback Policy effective as of September 15, 2023.**
Exhibit 101
The following information from Ennis, Inc.’s Annual Report on Form 10-K for the year ended February 29, 2024, filed on May
10, 2024, formatted as Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii)
Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v)
Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text and
in detail.
Exhibit 104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*
Filed herewith.
**
Furnished herewith.
+
Represents a management contract or a compensatory plan or arrangement.
30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ENNIS, INC.
Date: May 10, 2024
/s/ KEITH S. WALTERS
Keith S. Walters, Chairman of the Board,
Chief Executive Officer and President
Date: May 10, 2024
/s/ VERA BURNETT
Vera Burnett
Chief Financial Officer, Treasurer and Principal
Financial and Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Date: May 10, 2024
/s/ KEITH S. WALTERS
Keith S. Walters, Chairman of the Board,
Chief Executive Officer and President
Date: May 10, 2024
/s/ JOHN R. BLIND
John R. Blind, Director
Date: May 10, 2024
/s/ AARON CARTER
Aaron Carter, Director
Date: May 10, 2024
/s/ BARBARA T. CLEMENS
Barbara T. Clemens, Director
Date: May 10, 2024
/s/ MARGARET A. WALTERS
Margaret A. Walters, Director
Date: May 10, 2024
/s/ GARY S. MOZINA
Gary S. Mozina, Director
Date: May 10, 2024
/s/ TROY L. PRIDDY
Troy L. Priddy, Director
Date: May 10, 2024
/s/ ALEJANDRO QUIROZ
Alejandro Quiroz, Director
Date: May 10, 2024
/s/ MICHAEL J. SCHAEFER
Michael J. Schaefer, Director
Date: May 10, 2024
/s/ VERA BURNETT
Vera Burnett, Principal Financial and Accounting
Officer
F-1
ENNIS, INC. AND SUBSIDIARIES
Index to Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 596) ................................................... F-2
Report of Independent Registered Public Accounting Firm (PCAOB ID: 248) ..................................................... F-5
Consolidated Balance Sheets — February 29, 2024 and February 28, 2023 .......................................................... F-6
Consolidated Statements of Operations — Fiscal years ended 2024, 2023 and 2022 ............................................ F-8
Consolidated Statements of Comprehensive Income — Fiscal years ended 2024, 2023 and 2022 ....................... F-9
Consolidated Statements of Changes in Shareholders’ Equity — Fiscal years ended 2024, 2023 and 2022 ......... F-10
Consolidated Statements of Cash Flows — Fiscal years ended 2024, 2023 and 2022 ........................................... F-11
Notes to Consolidated Financial Statements ........................................................................................................... F-12
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Ennis, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Ennis, Inc. and subsidiaries (the “Company”) as
of February 29, 2024 and February 28, 2023, and the related consolidated statements of operations, comprehensive
income, changes in shareholders’ equity, and cash flows for each of the two years in the period ended February 29,
2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of
February 29, 2024 and February 28, 2023, and the results of its operations and its cash flows for each of the two years
then ended in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the Company’s internal control over financial reporting as of February 29, 2024, based on criteria
established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”), and our report dated May 10, 2024 expressed an unqualified opinion.
Basis for opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on the Company’s consolidated financial statements based on our audits. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matter
Critical audit matters are matters arising from the current period audit of the consolidated financial statements that
were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging,
subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ CohnReznick LLP
We have served as the Company’s auditor since November 2022.
Dallas, Texas
May 10, 2024
F-3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Ennis, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited the internal control over financial reporting of Ennis, Inc. and subsidiaries (the “Company”) as of
February 29, 2024, based on criteria established in Internal Control—Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of February 29, 2024, based
on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s
assessment of and conclusion on the effectiveness of internal control over financial reporting excluded the internal
controls of Stylecraft, Inc. (“Stylecraft”), UMC Print, LLC (“UMC”), and Eagle Graphics, Inc. (“Eagle”) and Diamond
Graphics, Inc. (“Diamond”), which are consolidated starting their respective acquisition dates May 23, 2023, June 2,
2023, and October 11, 2023 in the consolidated financial statements of the Company and constituted approximately
3.8% of assets and 5% of net sales as of and for the year then ended February 29, 2024. Our audit of internal control
over financial reporting of the Company also did not include an evaluation of the internal control over financial
reporting of Stylecraft, UMC, Eagle or Diamond at February 29, 2024.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the consolidated balance sheet and the related consolidated statements of operations,
comprehensive income, changes in shareholders’ equity, and cash flows of the Company and our report dated May
10, 2024 expressed and unqualified opinion.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting, and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
entity’s internal control over financial reporting based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also
included performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
An entity’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with accounting principles generally accepted in the United States of America. An entity’s internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with accounting principles generally accepted in the United States of America, and that receipts and
expenditures of the entity are being made only in accordance with authorizations of management and directors of the
entity; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the entity’s assets that could have a material effect on the financial statements.
F-4
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ CohnReznick LLP
Dallas, Texas
May 10, 2024
F-5
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Ennis, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheet of Ennis, Inc. (a Texas corporation) and subsidiaries
(the “Company”) as of February 28, 2022 (not presented herein), and the related consolidated statements of operations
and comprehensive income, changes in shareholders’ equity, and cash flows for the year then ended, and the related
notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in
all material respects, the financial position of the Company as of February 28, 2022, and the results of its operations
and its cash flows for the year ended February 28, 2022, in conformity with accounting principles generally accepted
in the United States of America.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audit also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. We believe that our
audit provides a reasonable basis for our opinion.
/s/ GRANT THORNTON LLP
We served as the Company’s auditor from 2005 to 2022.
Dallas, Texas
May 9, 2022
F-6
ENNIS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
February 29,
February 28,
2024
2023
Assets
Current assets
Cash
$
81,597 $
93,968
Short-term investments
29,325
-
Accounts receivable, net
47,209
53,507
Inventories, net
40,037
46,834
Prepaid expenses
2,168
2,317
Prepaid income taxes
1,046
-
Total current assets
201,382
196,626
Property, plant and equipment
Plant, machinery and equipment
160,305
153,074
Land and buildings
67,121
59,163
Computer equipment and software
10,680
18,832
Other
4,124
4,292
Total property, plant and equipment
242,230
235,361
Less accumulated depreciation
187,265
187,572
Property, plant and equipment, net
54,965
47,789
Operating lease right-of-use assets, net
9,827
13,133
Goodwill
94,349
91,819
Intangible assets, net
38,327
44,088
Net pension asset
80
—
Other assets
260
380
Total assets
$ 399,190 $ 393,835
See accompanying notes to Consolidated Financial Statements.
F-7
ENNIS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS-continued
(in thousands, except for par value and share amounts)
February 29,
February 28,
2024
2023
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable
$
11,846 $
18,333
Accrued expenses
17,541
18,067
Current portion of operating lease liabilities
4,414
4,847
Total current liabilities
33,801
41,247
Liability for pension benefits
—
646
Deferred income taxes
9,305
11,098
Operating lease liabilities, net of current portion
5,160
8,162
Other liabilities
1,083
1,250
Total liabilities
49,349
62,403
Shareholders’ equity
Common stock $2.50 par value, authorized 40,000,000 shares; issued 30,053,443
shares at February 29, 2024 and February 28, 2023
75,134
75,134
Additional paid-in capital
126,253
125,887
Retained earnings
236,196
219,459
Accumulated other comprehensive loss:
Minimum pension liability, net of taxes
(13,019 )
(14,104 )
Treasury stock
(74,723 )
(74,944 )
Total shareholders’ equity
349,841
331,432
Total liabilities and shareholders' equity
$ 399,190 $ 393,835
See accompanying notes to Consolidated Financial Statements.
F-8
ENNIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
Fiscal Years Ended
2024
2023
2022
Net sales
$
420,109 $
431,837 $
400,014
Cost of goods sold
294,767
300,787
285,291
Gross profit
125,342
131,050
114,723
Selling, general and administrative
68,830
70,793
71,410
Loss (gain) from disposal of assets
53
(5,896 )
(271 )
Income from operations
56,459
66,153
43,584
Other income (expense)
Interest income (expense)
3,973
771
(9 )
Other, net
(1,309 )
(1,994 )
(1,631 )
Total other income (expense)
2,664
(1,223 )
(1,640 )
Earnings before income taxes
59,123
64,930
41,944
Income tax expense
16,526
17,630
12,962
Net earnings
$
42,597 $
47,300 $
28,982
Weighted average common shares outstanding
Basic
25,842,798 25,818,737 26,026,477
Diluted
25,940,076 25,951,141 26,109,341
Earnings per share
Basic
$
1.65 $
1.83 $
1.11
Diluted
$
1.64 $
1.82 $
1.11
See accompanying notes to Consolidated Financial Statements.
F-9
ENNIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Fiscal Years Ended
2024
2023
2022
Net earnings
$
42,597 $
47,300 $
28,982
Adjustment to pension, net of taxes
1,085
4,483
1,695
Comprehensive income
$
43,682 $
51,783 $
30,677
See accompanying notes to Consolidated Financial Statements.
F-10
ENNIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE FISCAL YEARS ENDED 2022, 2023, AND 2024
(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 March 1, 2021
30,053,443 $ 75,134 $ 123,017 $ 194,436 $
(20,282 )
(4,103,630 ) $ (71,756 ) $ 300,549
Net earnings
—
—
—
28,982
—
—
—
28,982
Adjustment to pension, net of deferred tax of
$565
—
—
—
—
1,695
—
—
1,695
Dividends paid ($0.975 per share)
—
—
— (25,420 )
—
—
— (25,420 )
Stock based compensation
—
—
2,799
—
—
—
—
2,799
Exercise of stock options and restricted stock
—
—
(1,826 )
—
—
104,485
1,826
—
Common stock repurchases
—
—
—
—
—
(254,679 )
(4,790 )
(4,790 )
Balance February 28, 2022
30,053,443 $ 75,134 $ 123,990 $ 197,998 $
(18,587 )
(4,253,824 ) $ (74,720 ) $ 303,815
Net earnings
—
—
—
47,300
—
—
—
47,300
Adjustment to pension, net of deferred tax of
$1,494
—
—
—
—
4,483
—
—
4,483
Dividends paid ($1.00 per share)
—
—
— (25,839 )
—
—
— (25,839 )
Stock based compensation
—
—
2,791
—
—
—
—
2,791
Exercise of stock options and restricted stock
—
—
(894 )
—
—
51,071
894
—
Common stock repurchases
—
—
—
—
—
(64,082 )
(1,118 )
(1,118 )
Balance February 28, 2023
30,053,443 $ 75,134 $ 125,887 $ 219,459 $
(14,104 )
(4,266,835 ) $ (74,944 ) $ 331,432
Net earnings
—
—
—
42,597
—
—
—
42,597
Adjustment to pension, net of deferred tax of
$362
—
—
—
—
1,085
—
—
1,085
Dividends paid ($1.00 per share)
—
—
— (25,860 )
—
—
— (25,860 )
Stock based compensation
—
—
1,173
—
—
—
—
1,173
Exercise of stock options and restricted stock
—
—
(807 )
—
—
45,959
807
—
Common stock repurchases
—
—
—
—
—
(29,350 )
(586 )
(586 )
Balance February 29, 2024
30,053,443 $ 75,134 $ 126,253 $ 236,196 $
(13,019 )
(4,250,226 ) $ (74,723 ) $ 349,841
See accompanying notes to Consolidated Financial Statements.
F-11
ENNIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Fiscal Years Ended
2024
2023
2022
Cash flows from operating activities:
Net earnings
$42,597
$47,300
$28,982
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation
9,863
10,180
10,396
Amortization of intangible assets
7,649
7,176
8,381
(Gain) loss from disposal of assets
53
(5,896)
(271)
Accrued interest on short-term investments
(431)
—
—
Bad debt expense, net of recoveries
693
663
429
Stock based compensation
1,173
2,791
2,799
Deferred income taxes
(2,153)
(1,801)
3,162
Net pension expense
719
894
1,690
Changes in operating assets and liabilities, net of the effects
of acquisitions:
Accounts receivable
8,836
(9,245)
(1,036)
Prepaid expenses and income taxes
(271)
(370)
(257)
Inventories
9,116
(7,780)
(4,400)
Other assets
120
(563)
(19)
Accounts payable and accrued expenses
(8,599)
3,334
1,533
Other liabilities
(296)
93
(711)
Net cash provided by operating activities
69,069
46,776
50,678
Cash flows from investing activities:
Capital expenditures
(6,500)
(4,332)
(6,537)
Purchase of businesses, net of cash acquired
(19,609)
(8,767)
(4,340)
Purchase of investment securities
(31,394)
—
—
Maturity of investment securities
2,500
—
—
Proceeds from disposal of plant and property
9
1,642
825
Net cash used in investing activities
(54,994)
(11,457)
(10,052)
Cash flows from financing activities:
Dividends paid
(25,860)
(25,839)
(25,420)
Common stock repurchases
(586)
(1,118)
(4,790)
Net cash used in financing activities
(26,446)
(26,957)
(30,210)
Net change in cash
(12,371)
8,362
10,416
Cash at beginning of year
93,968
85,606
75,190
Cash at end of year
$81,597
$93,968
$85,606
See accompanying notes to Consolidated Financial Statements.
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-12
(1) Significant Accounting Policies and General Matters
Nature of Operations. Ennis, Inc. and its wholly owned subsidiaries (collectively, the “Company”) are principally
engaged in the production of and sale of business forms and other printed products to customers primarily located in
the United States.
Basis of Consolidation. The Consolidated Financial Statements include the accounts of the Company and its wholly
owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Company’s
last three fiscal years ended on the following days: February 29, 2024, February 28, 2023 and February 28, 2022
(fiscal years ended 2024, 2023 and 2022, respectively).
Segment Reporting. The Company operates as one operating segment, in which management uses one measure of
profitability, and all of the Company’s assets are located in the United States of America. The Company does not
operate separate lines of business or separate business entities and its single operating segment comprises the entire
reporting entity. Accordingly, the Company does not have separately reportable segments.
Accounts Receivable and allowance for credit losses. Trade receivables are uncollateralized customer obligations
due under normal trade terms requiring payment generally within 30 days from the invoice date. The Company has
established procedures to monitor credit risk and has not experienced significant credit losses in prior years. Accounts
receivable have been reduced by an allowance for amounts that may be uncollectible in the future. This estimated
allowance is based on an analysis that estimates the amount of its total customer receivable balance that is not
collectible. This analysis includes assessing a default probability to customers’ receivable balances, which is
influenced by several factors including (i) current market conditions, (ii) periodic review of customer credit
worthiness, and (iii) review of customer receivable aging and payment trends. Write-offs are recorded at the time a
customer receivable is deemed uncollectible. In accordance with Accounting Standards Update ("ASU") 2016-13,
Financial Instruments – Credit Losses, Measurement of Credit Losses on Financial Instruments the Company
recognizes expected credit losses based on a broader range of reasonable and supportable information to inform credit
loss estimates.
Inventories. With the exception of approximately 7.0% and 6.1% of its inventories valued at the lower of last-in, first-
out ("LIFO") for fiscal years 2024 and 2023, respectively, the Company values its inventories at the lower of first-in,
first-out ("FIFO") cost or net realizable value. The Company regularly reviews inventories on hand, using specific
aging categories, and writes down the carrying value of its inventories for excess and potentially obsolete inventories
based on historical usage and estimated future usage. In assessing the ultimate realization of its inventories, the
Company is required to make judgments as to future demand requirements. As actual future demand or market
conditions may vary from those projected by the Company, adjustments to inventories may be required. The Company
provides reserves for excess and obsolete inventory when necessary based upon analysis of quantities on hand, recent
sales volumes and reference to market prices.
Long-Lived Assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be
generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is based upon
the fair value of assets.
Property, Plant and Equipment. Depreciation and amortization of property, plant and equipment is calculated
using the straight-line method over a period considered adequate to amortize the total cost over the useful lives
of the assets, which range from 3 to 11 years for machinery and equipment and 10 to 33 years for buildings and
improvements. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful
life of the improvements. Repairs and maintenance are expensed as incurred. Renewals and betterments are
capitalized and depreciated over the remaining life of the specific property unit. The Company capitalizes all
leases that are in substance acquisitions of property.
Goodwill and Other Intangible Assets. Goodwill is the excess of the purchase price paid over the value of net
assets of businesses acquired and is not amortized. Intangible assets consist of trademarks and trade names,
customer lists, non-compete agreements and technology, and are amortized on a straight-line basis over their
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-13
estimated useful lives. Goodwill is evaluated for impairment on an annual basis, or more frequently if
impairment indicators arise, using a quantitative or qualitative fair-value-based test that compares the fair value
of the related business unit to its carrying value.
Fair Value of Financial Instruments. Certain assets and liabilities are required to be recorded at fair value on a
recurring basis. Fair value is determined based on the exchange price that would be received for an asset or transferred
for a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly
transaction between market participants. The carrying amounts of cash, accounts receivables, and accounts payable
approximate fair value because of the short maturity and/or variable rates associated with these instruments. The
Company categorizes each of its fair value measurements in one of these three levels based on the lowest level input
that is significant to the fair value measurement in its entirety. These levels are:
Level 1 - Inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the
Company has the ability to access.
Level 2 - Inputs utilize data points that are observable such as quoted prices, interest rates and yield curves.
Level 3 - Inputs are unobservable data points for the asset or liability, and include situations where there is little,
if any, market activity for the asset or liability.
Treasury Stock. The Company accounts for repurchases of common stock using the cost method with common stock
in treasury classified in the consolidated balance sheets as a reduction of shareholders’ equity.
Revenue Recognition.
Nature of Revenues
Substantially all of the Company’s revenue from contracts with customers consist of the sale of commercial printing
products in the continental United States of America and is primarily recognized at a point in time in an amount that
reflects the consideration the Company expects to be entitled to in exchange for those goods. Revenue from the sale
of commercial printing products, including shipping and handling fees billed to customers, is recognized upon the
transfer of control to the customer, which is generally upon shipment to the customer when the terms of the sale are
FOB shipping point, or, to a lesser extent, upon delivery to the customer if the terms of the sale are FOB destination.
Net sales represent gross sales invoiced to customers, less certain related charges, including sales tax, discounts,
returns and other allowances. Returns, discounts and other allowances have historically been insignificant.
In a small number of cases and upon customer request, the Company prints and stores commercial printing product
for customer specified future delivery, generally within the same year as the product is manufactured. In this case,
revenue is recognized upon the transfer of control when manufacturing is complete and title and risk of ownership is
passed to the customer while the inventory remains in the Company's warehouses. Approximately $15.5 million,
$17.1 million and $14.6 million of revenue was recognized under these arrangements during fiscal years 2024, 2023
and 2022, respectively.
Storage revenue for certain customers may be recognized over time rather than at a point in time. The amount of
storage revenue is immaterial to the Consolidated Financial Statements. As the output method for measure of progress
is determined to be appropriate, the Company recognizes revenue in the amount for which it has the right to invoice
for revenue that is recognized over time and for which it demonstrates that the invoiced amount corresponds directly
with the value to the customer for the performance completed to date.
The Company does not disaggregate revenue and operates in one sales category consisting of customized commercial
printed products, which is reported as net sales on the consolidated statements of operations. The Company does not
have material contract assets and contract liabilities as of February 29, 2024 and February 28, 2023.
Significant Judgments
Generally, the Company’s contracts with customers are comprised of a written quote and customer purchase order or
statement of work, and governed by the Company’s trade terms and conditions. In certain instances, it may be further
supplemented by separate pricing agreements and customer incentive arrangements, which typically only affect the
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-14
contract’s transaction price. Contracts do not contain a significant financing component as payment terms on invoiced
amounts are typically between 30 to 90 days, based on the Company’s credit assessment of individual customers, as
well as industry expectations. Product returns are not significant as the bulk of our sales are custom in nature.
From time to time, the Company may offer incentives to its customers considered to be variable consideration
including volume-based rebates or early payment discounts. Customer incentives considered to be variable
consideration are recorded as a reduction to revenue as part of the transaction price at contract inception when there
is a basis to reasonably estimate the amount of the incentive and only to the extent that it is probable that a significant
reversal of any incremental revenue will not occur. Customer incentives are allocated entirely to the single
performance obligation of transferring printed product to the customer and are not considered material.
For customers with terms of FOB shipping point, the Company accounts for shipping and handling activities
performed after the control of the printed product has been transferred to the customer as a fulfillment cost. The
Company accrues for the costs of shipping and handling activities if revenue is recognized before contractually agreed
shipping and handling activities occur.
The Company’s contracts with customers are generally short-term in nature. Accordingly, the Company does not
disclose the value of unsatisfied performance obligations nor the timing of revenue recognition.
Advertising Expenses. The Company expenses advertising costs as incurred. Catalog and brochure preparation and
printing costs, which are considered direct response advertising, are amortized to expense over the life of the catalog,
which typically ranges from three to twelve months. Advertising expense was approximately $0.5 million, $0.6 million
and $0.9 million during the fiscal years ended 2024, 2023 and 2022, respectively, and is included in selling, general
and administrative expenses in the Consolidated Statements of Operations.
Income Taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. In the event the Company determines that its deferred tax
assets, more likely than not, will not be realized in the future, the valuation adjustment to the deferred tax assets will
be charged to earnings in the period in which the Company makes such a determination.
Earnings Per Share. Basic earnings per share is computed by dividing net earnings by the weighted average number
of common shares outstanding during the period. Diluted earnings per share is computed by dividing net earnings by
the weighted average number of common shares outstanding, and then adding the number of additional shares that
would have been outstanding if potentially dilutive securities had been issued. This is calculated using the treasury
stock method. No options were outstanding at the end of fiscal years 2024, 2023 and 2022. The dilutive shares for
restricted stock grants are included in the computation for basic and diluted earnings per share.
Accumulated Other Comprehensive Loss. Accumulated other comprehensive loss is defined as the change in equity
resulting from transactions from non-owner sources. Other comprehensive income consisted of changes in the funded
status of the Company’s pension plan.
Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.
Shipping and Handling Costs. The Company records amounts billed to customers for shipping and handling costs
in net sales and related costs are included in cost of goods sold.
Stock Based Compensation. The Company recognizes stock based compensation expense over the requisite service
period of the individual grants, which generally equals the vesting period. Actual forfeitures are recorded when they
occur. The fair value of all share based awards is estimated on the date of grant.
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-15
Issued accounting standards not yet adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable
Segment Disclosures, which aims to improve disclosures about a public entity’s reportable segments. This update
addresses requests from investors for more detailed information about a reportable segment’s expenses in order to
improve understanding of a public entity’s business activities, overall performance, and potential future cash flows.
The amendments in this ASU include a requirement for public business entities to disclose, on an annual and interim
basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and are
included within each reported measure of segment profit or loss. This update is effective for fiscal years beginning
after December 15, 2023, and interim periods within those fiscal years starting after December 15, 2024. This ASU
must be applied retrospectively to all prior periods presented. Management expects the adoption of the pronouncement
will result in additional segment disclosures in its Consolidated Financial Statements for fiscal year 2025.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax
Disclosures, which expands disclosures in a public entity’s income tax rate reconciliation table and other disclosures
regarding cash taxes paid both in the U.S. and foreign jurisdictions. This ASU is effective for annual periods beginning
after December 15, 2024 (fiscal 2026 for the Company), but early adoption is permitted. This ASU should be applied
on a prospective basis, although retrospective application is permitted. The Company is assessing the effect of this
update on its Consolidated Financial Statements and related disclosures.
Proposed accounting standards
In July 2023, the FASB issued Proposed ASU No. 2023-ED500, Income Statement-Reporting Comprehensive
Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,
which aims to provide investors with more useful information about an entity’s expenses by improving disclosures on
income statement expenses. The amendments in this Proposed ASU would require public business entities to disclose
disaggregated information about specific categories underlying certain income statement expense line items. The
Company is evaluating this proposed accounting standard.
Recently adopted accounting standards
None.
(2) Accounts Receivable and Allowance for Credit Losses
Accounts receivable are reduced by an allowance for an estimate of amounts that are uncollectible. Substantially all
of the Company’s receivables are due from customers in North America. The Company extends credit to its customers
based upon its evaluation of the following factors: (i) the customer’s financial condition, (ii) the amount of credit the
customer requests, and (iii) the customer’s actual payment history (which includes disputed invoice resolution). The
Company does not typically require its customers to post a deposit or supply collateral. The Company’s allowance for
credit losses is based on an analysis that estimates the amount of its total customer receivable balance that is not
collectible. This analysis includes assessing a default probability to customers’ receivable balances, which is
influenced by several factors including (i) current market conditions, (ii) periodic review of customer credit
worthiness, and (iii) review of customer receivable aging and payment trends.
The Company writes off accounts receivable when they become uncollectible, and payments subsequently received
on such receivables are credited to the allowance in the period the payment is received. Credit losses have consistently
been within management’s expectations.
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-16
The following table represents the activity in the Company’s allowance for credit losses for the fiscal years ended (in
thousands):
2024
2023
2022
Balance at beginning of year
$
1,710 $
1,200 $
961
Bad debt expense, net of recoveries
693
663
429
Accounts written off
(696)
(153 )
(190 )
Balance at end of year
$
1,707 $
1,710 $
1,200
February 29,
February 28,
2024
2023
Trade Receivables, net of allowance for credit losses
$
39,665 $
44,645
Vendor Rebates
3,109
4,354
Notes Receivable
4,435
4,508
$
47,209 $
53,507
The note receivable related to the sale of an unused manufacturing facility and was structured to be paid in 12
consecutive monthly installments, with a fixed interest rate of 5.95% per annum and a balloon payment due upon
completion of the final payment. By mutual agreement, the note has been extended beyond the one-year maturity date
due to regulatory delays in clearing the facility for third-party financing.
(3) Short-term Investments and Fair Value Measurements
Short-term investments are securities with original maturities of greater than three months but less than twelve months
and are comprised of U.S. Treasury Bills. The Company determines the classification of these securities as trading,
available for sale or held-to-maturity at the time of purchase and re-evaluates these determinations at each balance
sheet date. The Company's short-term investments are classified as held-to-maturity for the period presented as it has
the positive intent and ability to hold these investments to maturity. The Company's held-to-maturity investments are
stated at amortized cost, which approximated fair value, and are periodically assessed for other-than-temporary
impairment.
Amortized cost and estimated fair value of investment securities classified as held-to-maturity were as follows at
February 29, 2024 (in thousands):
February 29, 2024
Gross
Gross
Cost or Unrealized
Unrealized Estimated
Amortized
Holding
Holding
Fair
Cost
Gains
Losses
Value
February 29, 2024
Investment securities due in less than one year
$ 29,325
$
-
$
45
$ 29,280
February 28, 2023
Investment securities due in less than one year
$
-
$
-
$
-
$
-
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-17
The Company’s short-term investments in investment securities are Level 1 fair value measure due to the active trading
of U.S. Treasury bills. The Company did not hold any Level 2 or 3 financial assets or liabilities measured at fair value
on a recurring basis. There were no transfers between levels during the fiscal year ended February 29, 2024.
(4) Inventories
The following table summarizes the components of inventories at the different stages of production as of February 29,
2024 and February 28, 2023 (in thousands):
2024
2023
Raw material
$
21,764 $
30,308
Work-in-process
5,621
6,174
Finished goods
12,652
10,352
$
40,037 $
46,834
Reserves for excess and obsolete inventory at fiscal years ended 2024 and 2023 were $1.3 million and $1.6 million,
respectively.
The excess of current costs at FIFO over LIFO stated values was approximately $5.9 million and $6.7 million as of
fiscal years ended 2024 and 2023, respectively. During both fiscal year 2024 and 2023, as inventory quantities were
reduced, this resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years
compared with the cost of fiscal years 2023 and 2022, as applicable. The effect decreased cost of sales by
approximately $0.6 million, $0.3 million and $0.9 million for fiscal years 2024, 2023 and 2022, respectively. Cost
includes materials, labor and overhead related to the purchase and production of inventories.
(5) Acquisitions
The Company applies the acquisition method of accounting for business combinations. Under the acquisition method,
the acquiring entity in a business combination recognizes 100% of the assets acquired and liabilities assumed at their
acquisition date fair values. Management utilizes valuation techniques appropriate for the asset or liability being
measured in determining these fair values. Any excess of the purchase price over amounts allocated to assets acquired,
including identifiable intangible assets, and liabilities assumed is recorded as goodwill. Where amounts allocated to
assets acquired and liabilities assumed is greater than the purchase price, a bargain purchase gain is recognized.
Acquisition-related costs are expensed as incurred.
Acquisition of Eagle Graphics and Diamond Graphics
On October 11, 2023, the Company acquired the assets and business of Eagle Graphics, Inc. ("Eagle"), which is based
in Annville, Pennsylvania, and Diamond Graphics, Inc. ("Diamond"), which is based in Bensalem, Pennsylvania, for
approximately $7.9 million in cash. The Company performed an allocation of the total estimated consideration and
recorded the underlying assets acquired (including certain identified intangible assets) and liabilities assumed based
on the estimated fair values prepared by management using the information available as of the acquisition date. All
goodwill of $0.2 million recognized as a part of this acquisition is deductible for tax purposes. The Company also
recorded intangible assets with definite lives of approximately $0.8 million in connection with the transaction, which
are also deductible for tax purposes. The acquisition of Eagle and Diamond strengthens our production capabilities
to serve our customers in the Northeast United States.
The following table summarizes the Company's purchase price allocation for Eagle and Diamond as of the acquisition
date (in thousands):
Accounts receivable
$
838
Inventories
917
Property, plant and equipment
5,304
Goodwill and intangibles
971
Accounts payable and accrued liabilities
(159 )
Acquisition price
$
7,871
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-18
Acquisition of UMC Print
On June 2, 2023, the Company acquired the assets and business of UMC Print ("UMC"), which is based in Overland
Park, Kansas, for approximately $7.5 million in cash plus the assumption of trade payables of approximately $0.8
million. The Company performed an allocation of the total estimated consideration and recorded the underlying assets
acquired (including certain identified intangible assets) and liabilities assumed based on the estimated fair values
prepared by management using the information available as of the acquisition date. In January 2024, the Company
received an indemnity claim from escrow related to a piece of equipment in the amount of $0.2 million. All goodwill
of $0.2 million recognized as a part of this acquisition is deductible for tax purposes. The Company also recorded
intangible assets with definite lives of approximately $2.7 million in connection with the transaction, which are also
deductible for tax purposes. The acquisition of UMC brings the Company expanded commercial print capabilities
serving customers throughout the Midwest United States.
The following table summarizes the Company's purchase price allocation for UMC as of the acquisition date (in
thousands):
Cash
$
758
Accounts receivable
1,839
Inventories
553
Property, plant and equipment
2,137
Goodwill and intangibles
2,971
Accounts payable and accrued liabilities
(789 )
Acquisition price
$
7,469
Acquisition of Stylecraft Printing
On May 23, 2023, the Company acquired the real estate and operations of Stylecraft Printing Company ("Stylecraft"),
which is based in Canton, Michigan, for $5.0 million plus the assumption of trade payables. The Company performed
an allocation of the total estimated consideration and recorded the underlying assets acquired (including certain
identified intangible assets) and liabilities assumed based on their estimated fair values using the information available
as of the acquisition date. All goodwill of $0.2 million recognized as a part of this acquisition is deductible for tax
purposes. The Company also recorded intangible assets with definite lives of approximately $0.3 million in
connection with the transaction, which are also deductible for tax purposes. The acquisition of Stylecraft expands the
Company's product lines and footprint specializing in business forms, integrated products and commercial printing.
The following table summarizes the Company's purchase price allocation for Stylecraft as of the acquisition date (in
thousands):
Accounts receivable
$
554
Inventories
849
Right-of-use asset
28
Property, plant and equipment
3,160
Goodwill and intangibles
476
Operating lease liability
(28 )
Accounts payable and accrued liabilities
(12 )
Acquisition price
$
5,027
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-19
Acquisition of School Photo Marketing
On November 30, 2022, the Company acquired the assets and business from School Photo Marketing ("SPM"), which
is based in Morganville, New Jersey, for $8.8 million (with additional potential earn-out consideration of up to
$1,000,000 over a four-year period upon the attainment of specified financial benchmarks) plus the assumption of
trade payables, subject to certain adjustments. At February 29, 2024 and February 28, 2023, the contingent earn-out
liability amounted to $0.0 million and $0.8 million, respectively. The seller shall receive fifty percent (50%) of
Company's annual earnings from the business, before interest and taxes in excess of $1.4 million. The Company
performed an allocation of the total estimated consideration and recorded the underlying assets acquired (including
certain identified intangible assets) and liabilities assumed based on their estimated fair values using our best estimates
and assumptions as of the acquisition date. All goodwill of $3.1 million recognized as a part of this acquisition is
deductible for tax purposes. The Company also recorded intangible assets with definite lives of approximately $5.1
million in connection with the transaction, which are also deductible for tax purposes. The acquisition of SPM brings
printing, yearbook publishing and marketing related services to over 1,400 school and sports photographers servicing
schools around the United States.
The following table summarizes the Company's aggregate purchase price allocation for SPM as of the acquisition date
(in thousands):
Accounts receivable
$
1,403
Inventories
516
Other assets
84
Right-of-use asset
487
Property, plant & equipment
250
Goodwill and intangibles
8,262
Accounts payable and accrued liabilities
(1,748 )
Operating lease liability
(487 )
$
8,767
The results of operations for SPM, Stylecraft, UMC, Eagle and Diamond are included in the Company’s Consolidated
Financial Statements from the respective dates of acquisition. The following table sets forth certain operating
information on a pro forma basis as though the respective acquisition had occurred as of the beginning of the
comparable prior period. The following pro forma information for fiscal year 2024 and 2023 includes Eagle,
Diamond, UMC and Stylecraft, fiscal year 2022 includes SPM. The pro forma information includes the estimated
impact of adjustments such as amortization of intangible assets, depreciation expense and interest expense and related
tax effects (in thousands, except per share amounts).
Unaudited Unaudited Unaudited
2024
2023
2022
Pro forma net sales
$ 430,470 $ 464,625 $ 408,323
Pro forma net earnings
43,994
52,088
29,549
Pro forma earnings per share - diluted
$
1.70
2.01 $
1.13
The pro forma results are not necessarily indicative of what would have occurred if the acquisition had been in effect
for the period presented.
(6) Leases
The Company leases certain of its facilities and equipment under operating leases, which are recorded as right-of-use
assets and lease liabilities. The Company’s leases generally have terms of 1 - 5 years, with certain leases including
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-20
renewal options to extend the leases for additional periods at the Company’s discretion. At lease inception, all renewal
options reasonably certain to be exercised are considered when determining the lease term. The Company currently
does not have leases that include options to purchase or provisions that would automatically transfer ownership of the
leased property to the Company.
Operating lease expense is recognized on a straight-line basis over the lease term, and variable lease payments are
expensed as incurred. The Company had no variable lease costs for the fiscal years ended 2023 and 2024.
The Company determines whether a contract is or contains a lease at the inception of the contract. A contract will be
deemed to be or contain a lease if the contract conveys the right to control and direct the use of identified property,
plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the
right to obtain substantially all of the economic benefits from the use of the property, plant, and equipment.
Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of
lease payments over the lease term. To determine the present value of lease payments not yet paid, the Company
estimates incremental borrowing rates based on the information available at lease commencement date as rates are not
implicitly stated in most leases.
Lease expense is recognized in cost of sales and selling, general and administrative expense within the consolidated
statements of operations, based on the underlying nature of the leased asset.
Components of lease expense for the three fiscal years ended (in thousands):
2024
2023
2022
Operating lease cost
$
5,632 $
5,974 $
6,217
Supplemental cash flow information related to
leases was as follows:
Cash paid for amounts included in the
measurement of operating lease liabilities
$
5,669 $
5,987 $
6,196
Right-of-use assets obtained in exchange for
operating lease obligations
$
916 $
3,065 $
3,441
Weighted Average Remaining Lease Terms
Operating leases
2.5 Years
3.0 Years
3.4 Years
Weighted Average Discount Rate
Operating leases
4.08 %
3.86 %
3.63 %
Future minimum lease commitments under non-cancelable operating leases for each of the fiscal years ending are as
follows (in thousands):
Operating
Lease
Commitments
2025
$
4,593
2026
3,355
2027
1,487
2028
496
2029
167
Thereafter
-
Total future minimum lease payments
$
10,098
Less imputed interest
524
Present values of lease liabilities
$
9,574
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-21
(7) Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of net assets of acquired businesses and is not
amortized. Goodwill and other intangible assets are tested for impairment at a reporting unit level. The annual
impairment test of goodwill and intangible assets is performed as of December 1 of each fiscal year.
The Company uses qualitative factors to determine whether it is more likely than not (likelihood of more than 50%)
that the fair value of a reporting unit exceeds its carrying amount, including goodwill. Some of the qualitative factors
considered in applying this test include consideration of macroeconomic conditions, industry and market conditions,
cost factors affecting the business, overall financial performance of the business, and performance of the share price
of the Company.
If qualitative factors are not deemed sufficient to conclude that the fair value of the reporting unit more likely than not
exceeds its carrying value, then a one-step approach is applied in making an evaluation. The evaluation utilizes
multiple valuation methodologies, including a market approach (market price multiples of comparable companies)
and an income approach (discounted cash flow analysis). The computations require management to make significant
estimates and assumptions, including, among other things, selection of comparable publicly traded companies, the
discount rate applied to future earnings reflecting a weighted average cost of capital, and earnings growth assumptions.
A discounted cash flow analysis requires management to make various assumptions about future sales, operating
margins, capital expenditures, working capital, and growth rates. If the evaluation results in the fair value of the
goodwill for the reporting unit being lower than the carrying value, an impairment charge is recorded. A goodwill
impairment charge was not required for fiscal years 2024 or 2023.
Definite-lived intangible assets are amortized over their estimated useful lives and tested for impairment if events or
changes in circumstances indicate that the asset may be impaired.
The carrying amount and accumulated amortization of the Company’s intangible assets at each balance sheet date are
as follows (in thousands):
Weighted
Average
Remaining
Gross
Life
Carrying
Accumulated
As of February 29, 2024
(in years)
Amount
Amortization
Net
Definite-lived intangible assets
Trademarks and trade names
7.6 $
29,817 $
14,366 $
15,451
Customer lists
5.1
81,753
59,473
22,280
Non-compete
1.6
238
176
62
Technology
5.8
650
116
534
Total
6.1 $
112,458 $
74,131 $
38,327
As of February 28, 2023
Definite-lived intangible assets
Trademarks and trade names
10.1 $
28,977 $
12,294 $
16,683
Customer lists
5.4
80,733
54,020
26,713
Non-compete
2.7
210
145
65
Technology
6.7
650
23
627
Total
7.2 $
110,570 $
66,482 $
44,088
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-22
Aggregate amortization expense for each of the fiscal years 2024, 2023 and 2022 was approximately $7.6 million,
$7.2 million and $8.4 million, respectively.
The Company’s estimated amortization expense for the next five fiscal years is as follows (in thousands):
2025
$
7,569
2026
6,945
2027
5,856
2028
4,360
2029
3,725
Changes in the net carrying amount of goodwill for fiscal years 2024 and 2023 are as follows (in thousands):
Balance as of March 1, 2022
$
88,677
Goodwill acquired
3,142
Balance as of February 28, 2023
91,819
Goodwill acquired
2,530
Balance as of February 29, 2024
$
94,349
During fiscal year 2024, $2.5 million was added to goodwill related to the acquisitions of Stylecraft, UMC, Eagle and
Diamond. During fiscal year 2023, $3.1 million was added to goodwill related to the acquisition of SPM.
(8) Accrued Expenses
The following table summarizes the components of other accrued expenses for the fiscal years ended (in thousands):
February 29,
February 28,
2024
2023
Employee compensation and benefits
$13,714
$14,823
Taxes other than income
1,341
1,154
Accrued legal and professional fees
510
376
Accrued utilities
108
129
Accrued acquisition related obligations
200
-
Income taxes payable
626
552
Other accrued expenses
1,042
1,033
$17,541
$18,067
(9) Credit Facility
As of February 29, 2024, the Company has $0.3 million outstanding under a standby letters of credit arrangement
secured by a cash collateral bank account.
(10) Shareholders’ Equity
The Board has authorized the repurchase of the Company’s outstanding common stock through a stock repurchase
program, which authorized amount is currently up to $60.0 million in the aggregate. Under the repurchase program,
purchases may be made from time to time in the open market or through privately negotiated transactions depending
on market conditions, share price, trading volume and other factors. Such purchases, if any, will be made in
accordance with applicable insider trading and other securities laws and regulations. These repurchases may be
commenced or suspended at any time or from time to time without prior notice.
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-23
During the fiscal years ended February 29, 2024 and February 28, 2023, the Company repurchased 29,350 and 64,082
shares of common stock under the program at an average price of $19.96 and $17.46 per share, respectively. Since
the program’s inception in October 2008, there have been 2,242,461 common shares repurchased at an average price
of $16.34 per share. As of February 29, 2024, there was $23.4 million available to repurchase shares of the Company’s
common stock under the program.
(11) Stock Option Plan and Stock Based Compensation
The Company grants stock options, restricted stock and restricted stock units (“RSUs”) to key executives and
managerial employees and non-employee directors. Prior to June 30, 2021, the Company had one stock incentive plan,
the 2004 Long-Term Incentive Plan of Ennis, Inc., as amended and restated as of May 18, 2008 and was further
amended on June 30, 2011 (the "Old Plan"). The Old Plan expired June 30, 2021 and all remaining unused shares
expired. Subject to the affirmative vote of the shareholders, the Board adopted the 2021 Long-Term Incentive Plan
of Ennis, Inc. (the "New Plan") on April 16, 2021 authorizing 1,033,648 shares of common stock for awards. The
New Plan was approved by the shareholders at the Annual Meeting on July 15, 2021 by a majority vote. The New
Plan expires June 30, 2031 and all unissued stock will expire on that date. At fiscal year ended February 29, 2024,
the Company has 626,683 shares of unissued common stock reserved under the New Plan for issuance and uses
treasury stock to satisfy option exercises and restricted stock awards.
The Company recognizes compensation expense for stock options and restricted stock grants on a straight-line basis
over the requisite service period. For the fiscal years ended 2024, 2023 and 2022, the Company included in selling,
general and administrative expenses, compensation expense related to share based compensation of $1.2 million, $2.8
million and $2.8 million, respectively.
Stock Options
The following is a summary of the assumptions used and the weighted average grant-date fair value of the stock
options granted during the fiscal year ended February 29, 2024.
February 29,
2024
Expected volatility
19.55 %
Expected term (years)
3
Risk free interest rate
3.87 %
Dividend Yield
4.94 %
Weighted average grant-date fair value
$
2.47
A summary of the status of the Company’s unvested stock options at February 29, 2024 are presented below:
Weighted
Average
Number
Grant Date
of Options
Fair Value
Unvested at March 1, 2023
—
—
New grants
52,500
2.47
Vested
—
—
Forfeited
—
—
Unvested at February 29, 2024
52,500
2.47
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-24
As of February 29, 2024, there was $0.1 million of unrecognized compensation cost related to unvested stock options
granted under the Plan. The weighted average remaining requisite service period of the unvested stock options was
2.1 years.
Restricted Stock
The following occurred with respect to the Company’s restricted stock awards for each of the three fiscal years ended
February 29, 2024:
Weighted
Average
Number of Grant Date
Shares
Fair Value
Outstanding at March 1, 2021
119,729 $
18.90
Granted
51,920
20.30
Terminated
—
19.00
Vested
(104,485 )
19.70
Outstanding at February 28, 2022
67,164 $
18.73
Granted
22,000
19.78
Terminated
—
19.78
Vested
(39,381 )
19.00
Outstanding at February 28, 2023
49,783 $
18.99
Granted
21,672
20.31
Terminated
—
—
Vested
(29,324 )
18.36
Outstanding at February 29, 2024
42,131 $
20.11
The total fair value of restricted stock awards vested during fiscal 2024, 2023 and 2022 were $0.6 million, $0.8 million,
and $2.1 million, respectively.
As of February 29, 2024, the total remaining unrecognized compensation cost related to unvested restricted stock was
approximately $0.6 million. The weighted average remaining requisite service period of the unvested restricted stock
awards was 1.7 years. As of February 29, 2024, the Company’s outstanding restricted stock had an underlying fair
value of $0.9 million at date of grant.
Restricted Stock Units
During fiscal year 2024, no RSUs were granted under the New Plan. The fair value of the time-based RSUs are
estimated based on the fair market value of the Company’s stock on the date of grant. The fair value of the
performance-based RSUs, using a Monte Carlo valuation model, was $23.17 per unit. The performance measures
include a threshold, target and maximum performance level providing the grantees an opportunity to receive more or
less shares than targeted depending on actual financial performance. The award will be based on the Company’s
return on equity, EBITDA and adjusted for the Company’s Relative Shareholder Return as measured against a defined
peer group.
The performance-based RSUs will vest no later than March 15, 2024, which is the deadline for the Compensation
Committee to determine the extent of the Company’s attainment of the Performance Goals during the Performance
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-25
Period that ends on February 29, 2024. The time-based RSUs vest ratably over two to three years from the date of
grant.
The following occurred with respect to the Company’s restricted stock units ("RSUs") for fiscal years 2022, 2023 and
2024:
Time-based
Performance-based
Weighted
Weighted
Average
Average
Number of
Grant Date
Number of
Grant Date
Shares
Fair Value
Shares
Fair Value
Outstanding at March 1, 2021
— $
—
— $
—
Granted
44,494
20.38
177,977
23.17
Terminated
(9,423 )
20.38
(37,690 )
23.17
Vested
—
—
—
—
Outstanding at February 28, 2022
35,071 $
20.38
140,287
23.17
Granted
9,893
19.47
93,532
23.17
Terminated
—
—
—
—
Vested
(11,690 )
20.38
—
—
Outstanding at February 28, 2023
33,274 $
20.11
233,819 $
23.17
Granted
—
—
—
—
Terminated
—
—
(81,247 )
20.32
Vested
(16,635 )
20.11
—
—
Outstanding at February 29, 2024
16,639 $
20.11
152,572 $
23.17
The total fair value of restricted stock unit awards vested during fiscal 2024 and 2023 were $0.3 million, $0.2 million.
There were no restricted stock unit awards vested during fiscal 2022.
As of February 29, 2024, the total remaining unrecognized compensation cost of time-based RSUs was approximately
$43,000 over a weighted average remaining requisite service period of 0.5 years. The total remaining unrecognized
compensation of performance-based RSUs was approximately $0.2 million over a weighted average remaining
requisite service period of 0.3 years. As of February 29, 2024, the Company’s outstanding RSUs had an underlying
fair value of $3.9 million at date of grant.
(12) Benefit Plans
Pension Plan
The Company and certain subsidiaries have a noncontributory defined benefit retirement plan (the “Pension Plan”),
covering approximately 12% of aggregate employees. Benefits are based on years of service and the employee’s
average compensation for the highest five compensation years preceding retirement or termination. Effective January
1, 2009, the Company amended the Pension Plan to exclude any new employees from participation in the Pension
Plan. Eligible employees who were hired before January 1, 2009 are still eligible to participate and participating
employees continue to accrue benefit service. The Company’s funding policy is to contribute annually an amount in
accordance with the requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”).
The Company’s Pension Plan asset allocation, by asset category, is as follows for the fiscal years ended:
2024
2023
Equity securities
43 %
52 %
Debt securities
51 %
44 %
Cash and cash equivalents
6 %
4 %
Total
100 %
100 %
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-26
The Company adopted a dynamic asset allocation plan ("Glide Path") which assists in optimizing the volatility of the
Pension Plan's funded status over the long term. Glide Path is a schedule of planned asset allocation shifts, dependent
upon changes in the Pension Plan's funded status. It is expected that the allocation to Liability Hedge Assets (Fixed
Income) will increase as the funded status of the Pension Plan improves. The Company’s target asset allocation
percentage, by asset class, for the year ended February 29, 2024 is as follows:
Asset Class
Target
Allocation
Percentage
Cash
1 – 5%
Fixed Income
44 – 64%
Equity
34 – 54%
The Company estimates the long-term rate of return on Pension Plan assets will be 6.0% based upon target asset
allocation. Expected returns are developed based upon the information obtained from the Company’s investment
advisors. The advisors provide ten-year historical and five-year expected returns on the fund in the target asset
allocation. The return information is weighted based upon the asset allocation at the end of the fiscal year. The
expected rate of return at the beginning of fiscal year ended 2024 was 6.0%. The rate used in the calculation of fiscal
year ended 2023 pension expense was 6.5%.
The following tables present the Pension Plan’s fair value hierarchy for those assets measured at fair value as of
February 29, 2024 and February 28, 2023 (in thousands):
February 29, 2024
Description
Total
(Level 1)
(Level 2)
(Level 3)
Cash and cash equivalents
$
3,275 $
3,275 $
— $
—
Government bonds
10,029
—
10,029
—
Corporate bonds
16,215
—
16,215
—
Domestic equities
19,711
19,711
—
—
Foreign equities
2,586
2,586
—
—
$
51,816 $
25,572 $
26,244 $
—
February 28, 2023
Description
Total
(Level 1)
(Level 2)
(Level 3)
Cash and cash equivalents
$
2,093 $
2,093 $
— $
—
Government bonds
9,793
—
9,793
—
Corporate bonds
15,797
—
15,797
—
Domestic equities
16,833
16,833
—
—
Foreign equities
4,726
4,726
—
—
$
49,242 $
23,652 $
25,590 $
—
Fair value estimates are made at a specific point in time, based on available market information and judgments about
the financial asset, including estimates of timing, amount of expected future cash flows, and the credit standing of the
issuer. In some cases, the fair value estimates cannot be substantiated by comparison to independent markets. The
disclosed fair value may not be realized in the immediate settlement of the financial asset. In addition, the disclosed
fair values do not reflect any premium or discount that could result from offering for sale at one time an entire holding
of a particular financial asset. Potential taxes and other expenses that would be incurred in an actual sale or settlement
are not reflected in amounts disclosed.
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-27
Pension expense is composed of the following components included in cost of goods sold and selling, general and
administrative expenses in the Company’s consolidated statements of operations for fiscal years ended (in thousands):
2024
2023
2022
Components of net periodic benefit cost
Service cost
$
673 $
944 $
1,075
Interest cost
2,456
1,967
1,682
Expected return on plan assets
(3,104 )
(3,699 )
(3,723 )
Amortization of:
Unrecognized net loss
1,896
2,409
2,558
Settlement charge
—
1,273
1,097
Net periodic benefit cost
1,921
2,894
2,689
Other changes in Plan Assets and Projected
Benefit Obligation
Recognized in Other comprehensive loss (income)
Net actuarial loss (gain)
449
(2,295 )
1,396
Amortization of net actuarial loss
(1,896 )
(3,682 )
(3,655 )
(1,447 )
(5,977 )
(2,259 )
Total recognized in net periodic pension cost and
other comprehensive loss (income)
474 $
(3,083 ) $
430
The following table represents the assumptions used to determine benefit obligations and net periodic pension cost for
fiscal years ended:
2024
2023
2022
Weighted average discount rate (net periodic
pension cost)
5.00 %
3.10 %
2.65 %
Earnings progression (net periodic pension cost)
3.00 %
3.00 %
3.00 %
Expected long-term rate of return on plan assets
(net periodic pension cost)
6.00 %
6.50 %
6.50 %
Weighted average discount rate (benefit
obligations)
5.15 %
5.00 %
3.10 %
Earnings progression (benefit obligations)
3.00 %
3.00 %
3.00 %
During the fiscal year ended 2023, the Company adopted the MP-2021 improvement scale (mortality rate assumption)
to determine their benefit obligations under the Pension Plan. The accumulated benefit obligation (“ABO”), change
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-28
in projected benefit obligation (“PBO”), change in Pension Plan assets, funded status, and reconciliation to amounts
recognized in the consolidated balance sheets are as follows (in thousands):
2024
2023
Change in benefit obligation
Projected benefit obligation at beginning of year
$
49,888 $
64,752
Service cost
673
944
Interest cost
2,456
1,967
Actuarial (gain) loss
1,572
(12,824 )
Other assumption change
(122 )
69
Benefits paid
(2,731 )
(4,885 )
Settlement
—
(135 )
Projected benefit obligation at end of year
$
51,736 $
49,888
Change in plan assets:
Fair value of plan assets at beginning of year
$
49,242 $
59,023
Company contributions
1,200
2,000
Gain on plan assets
4,105
(6,896 )
Benefits paid
(2,731 )
(4,885 )
Fair value of plan assets at end of year
$
51,816 $
49,242
Funded (unfunded) status
$
80 $
(646 )
Accumulated benefit obligation at end of year
$
48,438 $
46,904
The measurement dates of actuarial valuations used to determine pension and other postretirement benefits is the
Company’s fiscal year end. In the third quarter of fiscal years 2023 and 2022, lump sum distributions of $2.1 million
and $1.9 million were made to plan participants and resulted in a non-cash settlement charge of $0.8 million and $0.8
million, respectively. The Company made a $1.2 million and $2.0 million contribution to the Pension Plan during
fiscal years 2024 and 2023, respectively. Depending on the Pension Plan’s projected funding status, the Company
expects to contribute between $1.0 million and $3.0 million to the Pension Plan during fiscal year 2025.
Estimated future benefit payments which reflect expected future service, as appropriate, are expected to be paid to the
Pension Plan participants in the fiscal years ended (in thousands):
Year
Projected
Payments
2025
$
3,200
2026
3,900
2027
3,800
2028
3,300
2029
4,400
2030 – 2034
20,100
401(k) Plan
Effective February 1, 1994, the Company adopted a Defined Contribution 401(k) Plan (the “401(k) Plan”) for its
United States employees. The 401(k) Plan covers substantially all full-time employees who have completed sixty days
of service and attained the age of eighteen. United States employees can contribute up to 100 percent of their annual
compensation, but are limited to the maximum annual dollar amount allowable under the Internal Revenue Code. The
401(k) Plan provides for employer matching contributions or discretionary employer contributions for certain
employees not enrolled in the Pension Plan for employees of the Company. Eligibility for employer contributions,
matching percentage, and limitations depends on the participant’s employment location and whether the employees
are covered by the Pension Plan, among other factors. The Company’s matching contributions are immediately vested.
The Company made matching 401(k) contributions in the amount of $1.9 million, $1.9 million and $2.0 million in
fiscal years ended 2024, 2023 and 2022, respectively.
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-29
(13) Income Taxes
The following table represents components of the provision for income taxes for fiscal years ended (in thousands):
2024
2023
2022
Current:
Federal
$
13,842 $
15,784 $
7,284
State and local
4,337
3,647
2,516
Total current
18,179
19,431
9,800
Deferred:
Federal
(1,133 )
(1,341 )
3,004
State and local
(520 )
(460 )
158
Total deferred
(1,653 )
(1,801 )
3,162
Total provision for income taxes
$
16,526 $
17,630 $
12,962
The following summary reconciles the statutory U.S. federal income tax rate to the Company’s effective tax rate for
the fiscal years ended:
2024
2023
2022
Statutory rate
21.0 %
21.0 %
21.0 %
Provision for state income taxes, net of federal
income tax benefit
4.3
3.9
5.8
Federal true-up
1.8
1.5
0.3
Stock compensation and Section 162(m) limitation
0.9
0.8
3.8
28.0 %
27.2 %
30.9 %
Deferred taxes are recorded to give recognition to temporary differences between the tax basis of assets and liabilities
and their reported amounts in the financial statements. The tax effects of these temporary differences are recorded as
deferred tax assets and deferred tax liabilities. Deferred tax assets generally represent items that can be used as a tax
deduction or credit in future years. Deferred tax liabilities generally represent items that have been deducted for tax
purposes, but have not yet been recorded in the consolidated statements of operations. To the extent there are deferred
tax assets that are more likely than not to be realized, a valuation allowance would be recorded. Management does
not expect to be able to utilize the foreign tax credit before it expires in 2026. Therefore, a full valuation allowance
was established in fiscal year 2020. IRS code Section 162(m) limits the amount of deductible compensation for tax
purposes paid to certain covered employees. The components of deferred income tax assets and liabilities are
summarized as follows (in thousands) for fiscal years ended:
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-30
Deferred tax assets
2024
2023
Allowance for credit losses
$
385 $
345
Inventories
1,128
1,170
Employee compensation and benefits
712
833
Pension and noncurrent employee compensation
benefits
952
1,009
Property tax
-
161
Operating lease liabilities
2,529
3,274
Net operating loss and foreign tax credits
878
996
Other
-
277
Total deferred tax assets
6,584
8,065
Less: valuation allowance
(408 )
(1,242 )
Total deferred tax assets, net
$
6,176 $
6,823
Deferred tax liabilities
Property, plant and equipment
$
3,137 $
4,902
Goodwill and other intangible assets
9,739
9,683
Right-of-use assets
2,466
3,204
Other
139
132
Total deferred tax liabilities
$
15,481 $
17,921
Net deferred income tax liabilities
$
9,305 $
11,098
At fiscal year ended 2024, the Company had federal net operating loss (“NOL”) carry forwards of approximately
$2.7 million. This NOL is related to the acquisitions of Flesh and Impressions Direct. The NOL is subject to a Section
382 limitation of $0.2 million per year and expiring in 2040. Based on historical earnings and expected sufficient
future taxable income, management believes it will be able to fully utilize the NOL.
Accounting standards require a two-step approach to determine how to recognize tax benefits in the financial
statements where recognition and measurement of a tax benefit must be evaluated separately. A tax benefit will be
recognized only if it meets a “more-likely-than-not” recognition threshold. For tax positions that meet this threshold,
the tax benefit recognized is based on the largest amount of tax benefit that is greater than 50 percent likely of being
realized upon ultimate settlement with the taxing authority.
At fiscal years ended 2024 and 2023, unrecognized tax benefits related to uncertain tax positions, including accrued
interest and penalties of $0.1 million and $0.1 million, respectively, are included in other liabilities on the consolidated
balance sheets and would impact the effective rate if recognized. The interest expense associated with the
unrecognized tax benefit is not material. A reconciliation of the change in the unrecognized tax benefits for fiscal
years ended 2024 and 2023 is as follows (in thousands):
2024 2023
Balance at March 1, 2023
$ 202 $ 166
Additions based on tax positions
66
66
Reductions due to lapses of statues of limitations
(30 )
(30 )
Balance at February 29, 2024
$ 238 $ 202
The Company is subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The Company
has concluded all U.S. federal income tax matters for years through 2020. All material state and local income tax
matters have been concluded for years through 2019.
The Company recognizes interest expense on underpayments of income taxes and accrued penalties related to
unrecognized non-current tax benefits as part of the income tax provision. Other than amounts included in the
unrecognized tax benefits, the Company did not recognize any interest or penalties for the fiscal years ended 2024,
2023 and 2022.
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-31
(14) Earnings per Share
Basic earnings per share have been computed by dividing net earnings by the weighted average number of common
shares outstanding during the applicable period. Diluted earnings per share reflect the potential dilution that could
occur if stock options or other contracts to issue common shares were exercised or converted into common stock.
The following table sets forth the computation for basic and diluted earnings (loss) per share for the fiscal years ended:
2024
2023
2022
Basic weighted average common shares outstanding
25,842,798 25,818,737 26,026,477
Effect of dilutive RSUs
97,278
132,404
82,864
Diluted weighted average common shares outstanding
25,940,076 25,951,141 26,109,341
Earnings per share
Basic
$
1.65 $
1.83 $
1.11
Diluted
$
1.64 $
1.82 $
1.11
Cash dividends
$
1.000 $
1.000 $
0.975
The Company treats unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend
equivalents (whether paid or unpaid) as participating securities, which are included in the computation of earnings per
share. Our unvested restricted shares participate on an equal basis with common shares; therefore, there is no
difference in undistributed earnings allocated to each participating security. Accordingly, the presentation above is
prepared on a combined basis. At fiscal year-end 2024, 52,500 stock options were excluded from the calculation
above, as their effect would be anti-dilutive. No options were outstanding at the end of fiscal years 2023 and 2022.
(15) Commitments and Contingencies
In the ordinary course of business, the Company also enters into real property leases, which require the Company as
lessee to indemnify the lessor from liabilities arising out of the Company’s occupancy of the properties. The
Company’s indemnification obligations are generally covered under the Company’s general insurance policies.
From time to time, the Company is involved in various litigation matters arising in the ordinary course of business.
The Company does not believe the disposition of any current matter will have a material adverse effect on its
consolidated financial position or results of operations.
(16) Supplemental Cash and Non-Cash Flow Information
Net cash flows from operating activities that reflect cash payments for interest and income taxes, are as follows for
the three fiscal years ended (in thousands):
2024
2023
2022
Supplemental disclosure of cash flow information
Interest paid, net
$
- $
- $
57
Income taxes paid, net of refunds
$
19,233 $
17,966 $
11,626
In fiscal year 2023, the Company recorded a non-cash transaction of a $4.5 million note receivable in connection with
the sale of an unused manufacturing facility.
(17) Related Party Transactions
The Company leases a facility and sells product to an entity controlled by a board member who was the former owner
of a business that the Company acquired. The total right-of-use asset and related lease liability as of February 29,
2024 was $0.4 million and $0.4 million, respectively. During fiscal year 2024, total lease payments made to, and sales
made to, the related party were approximately $0.4 million and $3.0 million, respectively.
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-32
(18) Concentrations of Risk
Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash
and trade receivables. Cash is placed with high-credit quality financial institutions. The Company believes its credit
risk with respect to trade receivables is limited due to industry and geographic diversification. As disclosed on the
Consolidated Balance Sheets, the Company maintains an allowance for credit losses against its trade receivables to
cover the Company’s estimate of credit losses associated with accounts receivable.
No single customer accounts for as much as five percent of the Company’s consolidated net sales or accounts
receivable.
The Company, for quality and pricing reasons, purchases its paper products from a limited number of suppliers. For
fiscal years 2024, 2023 and 2022, the Company purchased 40%, 50%, and 51%, respectively, of its materials from
one third party vendor. As of February 29, 2024 and February 28, 2023, the net amount due to the vendor was
$1.4 million and $3.3 million, respectively. While other sources may be available to the Company to purchase these
products, they may not be available at the cost or at the quality the Company has come to expect.
For the purposes of the Consolidated Statements of Cash Flows, the Company considers cash to include cash on hand
and in bank accounts. The Federal Deposit Insurance Corporation insures accounts up to $250,000. At February 29,
2024, cash balances included $80.8 million that was not federally insured because it represented amounts in individual
accounts above the federally insured limit for each such account. This at-risk amount is subject to fluctuation on a
daily basis. While management does not believe there is significant risk with respect to such deposits as we have not
experienced any losses in such accounts and we believe that we have placed our cash on deposit with financial
institutions which are financially stable, we cannot be assured that we will not experience losses on our deposits.
Exhibit 4.1
DESCRIPTION OF ENNIS, INC. CAPITAL STOCK
The following description of the terms of Ennis’ capital stock is a summary only and is qualified by
reference to the relevant provisions of Texas law and the Ennis restated certificate of incorporation and by-
laws.
Authorized Capital Stock
Under the Ennis restated certificate of incorporation, Ennis’ authorized capital stock consists of forty
million (40,000,000) shares of common stock, with $2.50 par value, and one million (1,000,000) shares of
preferred stock, with $10 par value.
Description of Common Stock
Voting Rights. Each holder of Ennis common stock is entitled to one vote for each share of Ennis
common stock held of record on the applicable record date on all matters submitted to a vote of shareholders.
Shareholders of common stock can use cumulative voting to aggregate director votes.
Dividend Rights. Holders of Ennis common stock are entitled to receive such dividends as may be
declared from time to time by Ennis’ board of directors out of funds legally available therefor, subject to any
preferential dividend rights granted to the holders of any outstanding Ennis’ preferred stock.
Rights upon Liquidation. Holders of Ennis common stock are entitled to share pro rata, upon any
liquidation, dissolution or winding up of Ennis, in all remaining assets available for distribution to
shareholders after payment of or provision for Ennis’ liabilities and the liquidation preference of any
outstanding Ennis preferred stock.
Preemptive Rights. Holders of Ennis common stock have no preemptive rights to purchase, subscribe
for or otherwise acquire any unissued or treasury shares or other securities.
Description of Preferred Stock
Preferred Stock Outstanding. As of the date of this filing, no shares of Ennis preferred stock were
issued and outstanding.
Designation and Amount. Shares of Preferred Stock may be issued from time to time in one or more
series, each such series to have such designations as may be fixed by the Board of Directors prior to the
issuance of any shares thereof. In November of 1998 the board created a new series of Preferred Stock
pursuant to the adoption of a Shareholder Rights Plan. The shares of such series shall be designated as “Series
A Junior Participating Preferred Stock” (the “Series A Preferred Stock”) and the number of shares
constituting the Series A Preferred Stock shall be 25,000.The Series A Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all series of any other class of the
Company’s Preferred Stock. Such number of shares may be increased or decreased by resolution of the Board
of Directors; provided, that no decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities
issued by the Company convertible into Series A Preferred Stock. This Shareholders Rights Plan expired on
November 8, 2008.
Dividend Rights. Holders of Ennis Series A Preferred Stock shall be entitled to receive dividends
(which may be cumulative or noncumulative) as may be declared from time to time by Ennis’ board of
directors out of funds legally available therefor.
Transfer Agent and Registrar
Computershare Trust Company, N.A. is the transfer agent and registrar for Ennis common stock.
Exhibit 21
Subsidiaries of the Registrant
The Registrant directly or indirectly owns 100 percent of the outstanding voting securities of the following subsidiary
companies.
Name of Company
Jurisdiction
Ennis, Inc.
Texas
Ennis Business Forms of Kansas, Inc.
Kansas
Calibrated Forms Co., Inc.
Kansas
Print Your Marketing, Inc.
Delaware
Admore, Inc.
Texas
PFC Products, Inc.(1)
Delaware
Ennis Acquisitions, Inc.
Nevada
Texas EBF, LP
Texas
Ennis Sales, LP
Texas
Ennis Management, LP
Texas
Adams McClure, LP
Texas
American Forms I, LP
Texas
Northstar Computer Forms, Inc.
Minnesota
General Financial Supply, Inc. (2)
Iowa
Crabar/GBF, Inc.
Delaware
Royal Business Forms, Inc.
Texas
Tennessee Business Forms Company
Tennessee
TBF Realty, LLC (3)
Delaware
Specialized Printed Forms, Inc.
New York
SPF Realty, LLC (4)
Delaware
Block Graphics, Inc.
Oregon
B&D Litho of Arizona, Inc.
Delaware
Skyline Business Forms, Inc.
Delaware
Skyline Business Properties, LLC (5)
Delaware
Kay Toledo Tag
Ohio
Specialized Service Partners
Wisconsin
American Paper Converting LLC
Ohio
Independent Printing Company, Inc.
Delaware
Wright Business Graphics LLC
Oregon
Integrated Print and Graphics
Delaware
The Flesh Company
Missouri
Impressions Direct, Inc. (6)
Missouri
SPM Marketing LLC
Texas
(1) A wholly-owned subsidiary of Admore, Inc.
(2) A wholly-owned subsidiary of Northstar Computer Forms, Inc.
(3) A wholly-owned subsidiary of Tennessee Business Forms, Inc.
(4) A wholly-owned subsidiary of Specialized Printed Forms, Inc.
(5) A wholly-owned subsidiary of Skyline Business Forms, Inc.
(6) A wholly-owned subsidiary of The Flesh Company
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following Registration Statements:
1.
Registration Statement (Form S-8 No. 333-38100) pertaining to the Ennis, Inc. 401(k) Plan,
2.
Registration Statement (Form S-8 No. 333-44624) pertaining to the Ennis, Inc. 401(k) Plan,
3.
Registration Statement (Form S-8 No. 333-175261) pertaining to the Long-Term Incentive Plan of Ennis, Inc., and
4.
Registration Statement (Form S-8 No. 333-260034) pertaining to the Long-Term Incentive Plan of Ennis, Inc.;
of our reports dated May 10, 2024, with respect to the consolidated financial statements of Ennis, Inc. as of February 29, 2024 and
February 28, 2023 and the two fiscal years then ended and the effectiveness of internal control over financial reporting of Ennis, Inc. as
of February 29, 2024 included in this Annual Report (Form 10-K) of Ennis, Inc. for the year ended February 29, 2024.
/s/ CohnReznick LLP
Dallas, Texas
May 10, 2024
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated May 9, 2022, with respect to the consolidated financial statements included in the Annual Report of
Ennis, Inc. on Form 10-K for the year ended February 29, 2024. We consent to the incorporation by reference of said report in the
Registration Statements of Ennis, Inc. on Forms S-8 (File No. 333-38100, File No. 333-44624, File No. 333-175261 and File No. 333-
260034).
/s/ GRANT THORNTON LLP
Dallas, Texas
May 10, 2024
Exhibit 31.1
RULE 13a-14(a)/15d-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Keith S. Walters, certify that:
1. I have reviewed this annual report on Form 10-K of Ennis, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report,
fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant
as of, and for, the periods presented in this annual report;
4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13-15(f) and 15d-15(f) for the Registrant and we have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this annual report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this annual report based on such evaluation; and
d) Disclosed in this annual report any change in the Registrant’s internal control over financial reporting that
occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s
internal control over financial reporting; and
5. The Registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process,
summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the Registrant's internal control over financial reporting.
/S/ KEITH S. WALTERS
Keith S. Walters
Chairman of the Board, Chief Executive Officer and President
May 10, 2024
Exhibit 31.2
RULE 13a-14(a)/15d-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Vera Burnett, certify that:
1) I have reviewed this annual report on Form 10-K of Ennis, Inc.;
2) Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this annual report;
3) Based on my knowledge, the financial statements, and other financial information included in this annual report,
fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant
as of, and for, the periods presented in this annual report;
4) The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13-15(f) and 15d-15(f) for the Registrant and we have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this annual report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this annual report based on such evaluation; and
d) Disclosed in this annual report any change in the Registrant’s internal control over financial reporting that
occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s
internal control over financial reporting; and
5) The Registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process,
summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the Registrant's internal control over financial reporting.
/S/ VERA BURNETT
Vera Burnett
Chief Financial Officer
May 10, 2024
Exhibit 32.1
SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Keith S. Walters, Chairman of the Board and Chief Executive Officer of Ennis, Inc. (the “Company”), certify, that
pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code:
(1) The Company’s Annual Report on Form 10-K for the year ended February 29, 2024, as filed with the Securities
Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and
(2) Information contained in the Report fairly presents, in all material respects, the financial condition and result of
operations of the Company as of the dates and for the periods expressed in the Report.
/S/ KEITH S. WALTERS
Keith S. Walters
Chairman of the Board, Chief Executive Officer and President
May 10, 2024
The foregoing Certification is being furnished solely pursuant to 18 U.S.C. Section 1350; it is not being filed for
purposes of Section 18 of the Securities Exchange Act, and is not to be incorporated by reference into any filing of the
Company, whether made before or after the date hereof, regardless of any general incorporation languages in such
filing.
Exhibit 32.2
SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Vera Burnett, Chief Financial Officer of Ennis, Inc. (the “Company”), certify, that pursuant to Section 1350 of
Chapter 63 of Title 18 of the United States Code:
(1) The Company’s Annual Report on Form 10-K for the year ended February 29, 2024, as filed with the Securities
Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and
(2) Information contained in the Report fairly presents, in all material respects, the financial condition and result of
operations of the Company as of the dates and for the periods expressed in the Report.
/S/ VERA BURNETT
Vera Burnett
Chief Financial Officer
May 10, 2024
The foregoing Certification is being furnished solely pursuant to 18 U.S.C. Section 1350; it is not being filed for
purposes of Section 18 of the Securities Exchange Act, and is not to be incorporated by reference into any filing of the
Company, whether made before or after the date hereof, regardless of any general incorporation languages in such
filing.
1
COMPENSATION RECOVERY POLICY
1. Purpose and Scope. Ennis, Inc. (the “Company”) has adopted this compensation recovery policy (the
“Policy”) to comply with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection
Act of 2010 (“Dodd-Frank”), as codified by Section 10D of the Securities Exchange Act of 1934 (the
“Exchange Act”), and New York Stock Exchange Rule 5.3-E(p) (the “Listing Rule”), which require the
recovery of certain forms of executive compensation in the case of accounting restatements resulting
from a material error in an issuer’s financial statements. This Policy shall be administered by the Board
of Directors of the Company (the “Board”) or, if so designated by the Board, the Compensation
Committee
2. Effective Date. This Policy shall take effect on December 1, 2023 and shall apply to Incentive-Based
Compensation that is approved, awarded, or granted to Covered Executives on or after October 2, 2023.
3. Covered Executives. This Policy applies to all of the Company’s current and former executive officers,
and such other employees who may from time to time be deemed subject to this Policy by the Board
(each, a “Covered Executive”). For purposes of this Policy, an executive officer means an officer as
defined in Rule 10D-1(d) under the Exchange Act.
4. Incentive-Based Compensation. For purposes of this Policy, the term “Incentive-Based
Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon
the attainment of a financial reporting measure. “Financial reporting measures” are measures that are
determined and presented in accordance with the accounting principles used in preparing the issuer's
financial statements, and any measures that are derived wholly or in part from such measures, including
stock price and total shareholder return. For the avoidance of doubt, Incentive-Based Compensation
does not include annual salary, compensation awarded based on completion of a specified period of
service, or compensation awarded based on subjective standards, strategic measures, or operational
measures.
5. Recovery; Accounting Restatement. In the event the Company is required to prepare an accounting
restatement of its financial statements due to material noncompliance with any financial reporting
requirement under the federal securities laws, including any required accounting restatement to correct
an error in previously issued financial statements that is material to the previously issued financial
statements, or that would result in a material misstatement if the error were corrected in the current
period or left uncorrected in the current period (a “Restatement”), the Company shall, as promptly as it
reasonably can, recover any Incentive-Based Compensation received by a Covered Executive during the
three completed fiscal years immediately preceding the date on which the Company is required to
prepare such Restatement (the “Restatement Date”), so long as the Incentive-Based Compensation
received by such Covered Executive is in excess of what would have been awarded or vested after giving
effect to the Restatement. The Restatement Date shall be the earlier of (i) the date the Company‘s board
of directors, a board committee, or officer(s) are authorized to take such action if board action is not
2
required, concludes, or reasonably should have concluded, that the issuer is required to prepare an
accounting restatement due to the material noncompliance of the issuer with any financial reporting
requirement under the securities laws as described in Rule 10D-1(b)(1) under the Exchange Act or (ii)
the date a court, regulator, or other legally authorized body directs the issuer to prepare an accounting
restatement. The amount to be recovered will be the excess of the Incentive-Based Compensation paid
to the Covered Executive based on the erroneous data in the original financial statements over the
Incentive-Based Compensation that would have been paid to the Covered Executive had it been based
on the restated results, without respect to any taxes paid.
Subsequent changes in a Covered Executive’s employment status, including retirement or termination
of employment, do not affect the Company’s rights to recover Incentive-Based Compensation pursuant
to this Policy. For purposes of this Policy, Incentive-Based Compensation shall be deemed to have been
received during the fiscal period in which the financial reporting measure specified in the award is
attained, even if such Incentive-Based Compensation is paid or granted after the end of such fiscal
period.
No recovery shall be required in the case of a Board determination that the direct expense paid to a third
party to assist in enforcing this Policy would exceed the amount to be recovered.
Such determination shall be made after a reasonable and documented attempt to recover the Incentive-
Based Compensation, which documentation shall be provided to the New York Stock Exchange.
The Board shall determine, in its sole discretion, the method of recovering any Incentive-Based
Compensation pursuant to this Policy.
6. No Indemnification. The Company shall not indemnify any current or former Covered Executive
against the loss of erroneously awarded compensation, and shall not pay, or reimburse any Covered
Executives for premiums, for any insurance policy to fund such executive’s potential recovery
obligations.
7. Notice. Before the Board determines to seek recovery pursuant to this Policy, it shall provide the
Covered Executive with written notice and the opportunity to be heard at a meeting of the Board (either
in person or via telephone).
8. Amendment and Interpretation. The Board may amend this Policy from time to time in its discretion,
and shall amend this Policy as it deems necessary to reflect the regulations adopted by the SEC and to
comply with any rules or standards adopted by a national securities exchange on which the Company’s
securities are then listed. It is intended that this Policy be interpreted in a manner that is consistent with
the requirements of Section 10D of the Exchange Act and any applicable rules or standards adopted by
the SEC and any national securities exchange on which the Company’s securities are then listed.
I hereby certify that the foregoing Compensation Recovery Policy was unanimously approved and
adopted by the Ennis, Inc. Board of Directors at its September 15, 2023 quarterly meeting.
/s/ Dan Gus_________________________
Dan Gus, Secretary
Financial & Other Company Information
Copies of our financial information, such as this Annual
Report on Form 10-K and our Proxy Statement to our
shareholders, as filed with the Securities and Exchange
Commission (SEC), Quarterly Reports on Form 10-Q,
and other filings with the SEC may be viewed or
downloaded from the Company’s website:
www.ennis.com
Alternatively, you can order copies, free of charge,
by contacting Ms. Sharlene Reagan – Executive
Assistant to our Chief Financial Officer at:
sharlene_reagan@ennis.com
Annual Meeting of Shareholders
The Annual Meeting of Shareholders will be held on
July 18, 2024, beginning at 10:00 a.m., local time. The
meeting will take place at the Midlothian Conference
Center located at One Community Circle, Midlothian,
Texas 76065.
Common Stock
Ennis, Inc. common stock is listed on the New York
Stock Exchange under the tickler symbol “EBF.”
As of May 9, 2024, there were approximately 26.0
million shares outstanding and approximately 622
shareholders of record.
FISCAL YEAR 2024
STOCK PRICE PERFORMANCE
High:
$23.17
Low:
$18.94
Close (2/29/24):
$20.32
Number of Employees
More than 1,941 worldwide at February 29, 2024
Corporate Address
2441 Presidential Parkway
Midlothian, Texas 76065
Investor Relations
Keith S. Walters
Chairman of the Board, CEO and President
2441 Presidential Parkway
Midlothian, Texas 76065
800.752.5386
keith_walters@ennis.com
Independent Accountants
CohnReznick LLP
Outside Corporate Counsel
Shackelford, Bowen, McKinley & Norton, L.L.P.
Shareholder Services
Computershare Investor Services, LLC
Certifications
Ennis has filed with the SEC as exhibits to its Annual
Report on Form 10-K for the year ended February 29,
2024, the certification of each of its Chief Executive
Officer and Chief Financial Officer required by Section
302 of the Sarbanes-Oxley Act. In addition, Ennis has
submitted to the New York Stock Exchange the
required certification of the Chief Executive Officer with
respect to Ennis’ compliance with the New York Stock
Exchange’s corporate governance listing standards.
Caution Concerning Forward-
Looking Statements
This document includes certain forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are
based on management’s current expectation and are
subject to uncertainty and changes in circumstances.
Actual results may vary materially from the expectations
contained herein due to changes in economic,
business, competitive, technology, strategic and or
regulatory factors. More detailed information about
these factors is set forth in our Quarterly Reports on
Form 10-Q, as filed with the SEC, and in this Annual
Report on Form 10-K under the caption “Certain Risk
Factors.” Ennis is under no obligation to [and expressly
disclaims any such obligation to] update or alter its
forward-looking statements, whether as a result of new
information, subsequent events or otherwise.
Corporate Publications
Copies of Ennis, Inc.’s Annual Report on Form 10-K
(excluding exhibits) and other filings with the SEC are
available without charge upon written request to Ennis,
Inc., 2441 Presidential Parkway, Midlothian, Texas 76065,
Attn: Investor Relations, or by email: investor@ennis.
com. All such filings are also available on our website:
www.ennis.com/about/investor-relations/
Trademark Information
All trademark and service marks referenced herein
are owned by the respective trademark or service
mark owners.
TM101
Designed by Ennis National Marketing.
Printed by Independent Printing, a division of Ennis, Inc. located in De Pere, WI.
ENNIS, INC.
Corporate Headquarters
2441 Presidential Pkwy • Midlothian, TX 76065
ennis.com