Ennis, Inc. :EBF-US: Earnings Analysis: Q3, 2018 By the Numbers : January 19, 2018

Ennis, Inc. reports financial results for the quarter ended November 29, 2017.


  • Summary numbers: Revenues of USD 93.61 million, Net Earnings of USD 8.27 million.
  • Gross margins widened from 28.53% to 31.93% compared to the same period last year, operating (EBITDA) margins now 17.84% from 13.88%.
  • Change in operating cash flow of 8.60% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-11-29 2017-08-30 2017-05-30 2017-02-27 2016-11-29
Relevant Numbers (Quarterly)
Revenues (mil) 93.61 94.89 94.59 86.57 88.66
Revenue Growth (%YOY) 5.58 3.99 4.62 -5.08 -9.08
Earnings (mil) 8.27 8.54 7.78 7.21 5.74
Earnings Growth (%YOY) 44.15 25.88 16.47 36.32 -33.22
Net Margin (%) 8.84 9 8.23 8.33 6.47
EPS 0.33 0.34 0.31 0.28 0.22
Return on Equity (%) 3.21 3.36 3.09 2.89 2.3
Return on Assets (%) 10.08 10.51 9.6 8.97 7.14

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, EBF-US’s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if EBF-US’s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by -1.35% and earnings by -3.11% compared to the previous period.

Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 28.53% to 31.93% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 13.88% to 17.84% compared to the same period last year. For comparison, gross margins were 32.45% and EBITDA margins were 18.12% in the last reporting period.

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

EBF-US’s improvement in gross margin has been accompanied by an improvement in its balance sheet as well. This suggests that gross margin improvements are likely from operating decisions and not accounting gimmicks. Its working capital days are now 128.42 days compared to 136.93 days for the same period last year.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

EBF-US’s year-on-year change in operating cash flow of 8.60% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 10.37% to 14.09% and (2) one-time items. The company’s pretax margins are now 14.03% compared to 10.28% for the same period last year.

EBIT Margin History
PreTax Margin History

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Company Profile

Ennis, Inc. and its subsidiaries are engaged in the production and sale of printed business products, business forms and other business products. The Company operates through Print segment, which is engaged in printing, manufacturing and selling a range of business forms and other business products to distributors located throughout the United States primarily through independent dealers. The Print Segment sells products, including snap sets, continuous forms, laser cut sheets, checks, commercial printing, multimedia packaging, tags, labels, envelopes, integrated products, jumbo rolls and pressure sensitive products in short, medium and long runs. The Company has network of 56 facilities across 21 states.

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