EBF 10-Q
Ennis, Inc. (EBF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the Quarterly Period Ended
OR
For the Transition Period from to
Commission File Number
(Exact Name of Registrant as Specified in Its Charter)
|
||
(State or Other Jurisdiction of |
|
(I.R.S. Employer |
|
|
|
|
||
(Address of Principal Executive Offices) |
|
(Zip code) |
Registrant’s Telephone Number, Including Area Code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
|
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.
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).
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 |
☐ |
|
|
|
|
☒ |
|
|
|
|
|
|
|
|
|
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of September 25, 2026, there were
ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED AUGUST 31, 2026
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
Item 1. Condensed Consolidated Financial Statements (unaudited) |
|
3 |
|
|
|
|
|
Condensed Consolidated Balance Sheets at August 31, 2026 and February 28, 2026 |
|
3 |
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
5 |
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
7 |
|
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (unaudited) |
|
8 |
|
|
|
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
23 |
|
|
|
|
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
|
30 |
|
|
|
|
|
|
30 |
|
|
|
|
|
PART II: OTHER INFORMATION |
|
|
|
|
|
|
|
|
|
30 |
|
|
|
|
|
|
|
31 |
|
|
|
|
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
|
31 |
|
|
|
|
|
|
31 |
|
|
|
|
|
|
|
31 |
|
|
|
|
|
|
|
31 |
|
|
|
|
|
|
|
32 |
|
|
|
|
|
|
33 |
||
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
ENNIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share and per share amounts)
|
|
August 31, |
|
|
February 28, |
|
||
|
|
2026 |
|
|
2026 |
|
||
Assets |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Accounts receivable, net |
|
|
|
|
|
|
||
Other receivables |
|
|
|
|
|
|
||
Inventories, net |
|
|
|
|
|
|
||
Prepaid expenses |
|
|
|
|
|
|
||
Prepaid income taxes |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
|
|
|
|
|
||
Operating lease right-of-use assets, net |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Pension asset, net |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued expenses |
|
|
|
|
|
|
||
Current portion of operating lease liabilities |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Operating lease liabilities, net of current portion |
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
Shareholders’ equity |
|
|
|
|
|
|
||
Common stock $ |
|
|
|
|
|
|
||
Additional paid-in capital |
|
|
|
|
|
|
||
Retained earnings |
|
|
|
|
|
|
||
Accumulated other comprehensive loss: |
|
|
|
|
|
|
||
Minimum pension liability, net of taxes |
|
|
( |
) |
|
|
( |
) |
Treasury stock |
|
|
( |
) |
|
|
( |
) |
Total shareholders’ equity |
|
|
|
|
|
|
||
Total liabilities and shareholders' equity |
|
$ |
|
|
$ |
|
||
See accompanying notes to condensed consolidated financial statements.
3
ENNIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share amounts)
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
August 31, |
|
|
August 31, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain from disposal of assets |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Income from operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss (gain) from legal settlements |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Other expense, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total other income (expense) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Earnings before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
See accompanying notes to condensed consolidated financial statements.
4
ENNIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in thousands)
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
August 31, |
|
|
August 31, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net earnings |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Adjustment to pension, net of taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Comprehensive income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
See accompanying notes to condensed consolidated financial statements.
5
ENNIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(unaudited, 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 May 31, 2026 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
Net earnings |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Adjustment to pension, net of deferred tax of $ |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Dividends paid ($ |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Stock based compensation |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Exercise of stock options and restricted stock |
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Balance August 31, 2026 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance February 28, 2026 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
Net earnings |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Adjustment to pension, net of deferred tax of $ |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Dividends paid ($ |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Stock based compensation |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Modification of share-based awards |
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Exercise of stock options and restricted stock |
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
||
Balance August 31, 2026 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance May 31, 2025 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
Net earnings |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Adjustment to pension, net of deferred tax of $ |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Dividends paid ($ |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Stock based compensation |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Exercise of stock options and restricted stock |
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
||
Common stock repurchases |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance August 31, 2025 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance February 28, 2025 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
Net earnings |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Adjustment to pension, net of deferred tax of $ |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Dividends paid ($ |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Stock based compensation |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Exercise of stock options and restricted stock |
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Common stock repurchases |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance August 31, 2025 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
See accompanying notes to condensed consolidated financial statements.
6
ENNIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
|
|
Six months ended |
|
|||||
|
|
August 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net earnings |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
|
||
Amortization of intangible assets |
|
|
|
|
|
|
||
(Gain) loss from disposal of assets |
|
|
( |
) |
|
|
|
|
Amortization of discount on short-term investments |
|
|
|
|
|
( |
) |
|
Credit losses |
|
|
|
|
|
|
||
Stock based compensation |
|
|
|
|
|
|
||
Net pension expense |
|
|
|
|
|
|
||
Changes in operating assets and liabilities, net of the effects of acquisitions |
|
|||||||
Accounts and other receivables |
|
|
|
|
|
( |
) |
|
Prepaid expenses and income taxes |
|
|
( |
) |
|
|
( |
) |
Inventories |
|
|
|
|
|
( |
) |
|
Other assets |
|
|
|
|
|
|
||
Accounts payable and accrued expenses |
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Purchase of businesses, net of cash acquired |
|
|
|
|
|
( |
) |
|
Maturity of short-term investments |
|
|
|
|
|
|
||
Proceeds from disposal of plant and property |
|
|
|
|
|
|
||
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Dividends paid |
|
|
( |
) |
|
|
( |
) |
Common stock repurchases |
|
|
|
|
|
( |
) |
|
Proceeds from exercise of stock options |
|
|
|
|
|
|
||
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Net change in cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosure of non-cash items: |
|
|
|
|
|
|
||
Modification of share-based awards from equity to liability |
|
$ |
|
|
$ |
|
||
See accompanying notes to condensed consolidated financial statements.
7
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
1. Significant Accounting Policies and General Matters
Basis of Presentation
These unaudited condensed consolidated financial statements of Ennis, Inc. and its subsidiaries (collectively referred to as the “Company,” “Registrant,” “Ennis,” or “we,” “us,” or “our”) for the six months ended August 31, 2026 have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2026, from which the accompanying consolidated balance sheet at February 28, 2026 was derived. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial information have been included and are of a normal recurring nature. The preparation of the condensed consolidated financial statements ("Consolidated Financial Statements") in conformity with GAAP requires the Company to make estimates and assumptions that affect the disclosure and reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates these estimates and judgments on an ongoing basis, including those related to credit losses, inventory valuations, property, plant and equipment, intangible assets, pension plan, accrued liabilities, and income taxes. The Company bases estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of operations for any interim period are not necessarily indicative of the results of operations for a full year.
Recent Accounting Pronouncements
Issued Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", that requires entities to disclose additional information in the notes to the financial statements about prescribed categories underlying any relevant income statement expense caption. The new standard is effective for annual reporting periods beginning after December 15, 2026 (fiscal year 2028) for the Company and interim periods within annual reporting periods beginning after December 15, 2027. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements but will result in some disaggregation of the Company’s income statement expenses in the notes to the Consolidated Financial Statements.
In July 2025, the FASB issued ASU 2025-05, "Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses for Accounts Receivable and Contract Assets" ("ASU 2025-05"). The amendments in this update provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under FASB Accounting Standards Codification 606. Under ASU 2025-05, an entity is required to disclose whether it has elected to use the practical expedient. An entity that elects this accounting policy must disclose the date through which subsequent cash collections are evaluated. ASU 2025-05 is effective for the Company beginning in the fiscal year ending February 28, 2027. The Company is currently evaluating the impacts of the adoption of ASU 2025-05 on the Consolidated Financial Statements. The Company does not currently expect this adoption to have a material impact on its Consolidated Financial Statements.
8
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
2. Revenue
Nature of Revenues
Substantially all of the Company’s revenue is derived from the sale of printed 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 provided in exchange for those goods. Revenue from the sale of commercial printing products, including shipping and handling fees billed to customers, is recognized when the performance obligation is met upon the transfer of control to the customer, which is generally upon shipment to the customer when the terms of the sale are freight on board ("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 printed 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 warehouse. Revenue recognized under these arrangements was approximately $
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 Condensed 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 reportable segment consisting of printed product revenue, which is reported as net sales on the condensed consolidated statements of operations. See Note 18. The Company does not have material contract assets or contract liabilities as of August 31, 2026.
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 contract’s transaction price. Contracts do not contain a significant financing component as payment terms on invoiced amounts are typically between
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.
9
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
3. Receivables
Accounts Receivable and Allowance for Credit Losses
Accounts receivables 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. Accounts receivable relates to credit extended directly to customers in the ordinary course of business.
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. Recoveries for the three and six months ended August 31, 2026 and 2025 were not significant to the Condensed Consolidated Financial Statements. Credit losses from continuing operations have consistently been within management’s expectations.
The following table presents the activity in the Company’s allowance for credit losses (in thousands):
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
August 31, |
|
August 31, |
|
|||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Balance at beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Credit losses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts written off |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other Receivables
10
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
4. Inventories
The Company values its inventories at the lower of first-in, first out (“FIFO”) cost or market cost, with the exception of approximately
The following table summarizes the components of inventories at the different stages of production as of the dates indicated (in thousands):
|
|
August 31, |
|
|
February 28, |
|
||
|
|
2026 |
|
|
2026 |
|
||
Raw material, net |
|
$ |
|
|
$ |
|
||
Work-in-process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Total inventory, net |
|
$ |
|
|
$ |
|
||
5. Property, Plant and Equipment
The following table presents a summary of property, plant and equipment, net:
|
August 31, |
|
|
February 28, |
|
||
|
2026 |
|
|
2026 |
|
||
Plant, machinery and equipment |
$ |
|
|
$ |
|
||
Land and buildings |
|
|
|
|
|
||
Computer equipment and software |
|
|
|
|
|
||
Other |
|
|
|
|
|
||
Property, plant and equipment |
|
|
|
|
|
||
Less accumulated depreciation |
|
|
|
|
|
||
Property, plant and equipment, net |
$ |
|
|
$ |
|
||
6. Acquisitions
The Company applies the acquisition method of accounting for business combinations. Under the acquisition method, the acquiring entity in a business combination recognizes
11
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
Acquisition of CFC Print & Mail
On November 14, 2025, the Company acquired the assets and business of CFC Print & Mail ("CFC"), which is based in Grand Prairie, Texas for approximately $
The following table summarizes the Company's purchase price allocation for CFC as of the acquisition date (in thousands):
Accounts receivable |
$ |
|
|
Inventories |
|
|
|
Other assets |
|
|
|
Right-of-use asset |
|
|
|
Property, plant and equipment |
|
|
|
Intangibles |
|
|
|
Operating lease liability |
|
( |
) |
Accounts payable and accrued liabilities |
|
( |
) |
Acquisition price |
$ |
|
Acquisition of Northeastern Envelope Company and Envelope Superstore
On April 11, 2025 the Company acquired the net assets and business of Northeastern Envelope Company ("NEC"), which is based in Old Forge, Pennsylvania, and Envelope Superstore ("ESS") which is based in Hiram, Georgia, for approximately $
The following table summarizes the Company's purchase price allocation for NEC and ESS as of the acquisition date (in thousands):
Accounts receivable |
$ |
|
|
Inventories |
|
|
|
Right-of-use asset |
|
|
|
Property, plant and equipment |
|
|
|
Goodwill |
|
|
|
Intangibles |
|
|
|
Operating lease liability |
|
( |
) |
Accounts payable and accrued liabilities |
|
( |
) |
Acquisition price |
$ |
|
The results of operations for NEC, ESS, and CFC are included in the Company’s condensed consolidated financial statements from the respective dates of acquisition. The following table sets forth certain operating information on a pro forma basis as though each acquisition had occurred as of the beginning of the comparable prior period (that is, March 1, 2025). The following 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).
12
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
August 31, 2026 |
|
|
August 31, 2025 |
|
|
August 31, 2026 |
|
|
August 31, 2025 |
|
||||
Pro forma net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Pro forma net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pro forma earnings per share - diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been in effect for the full duration of the comparative periods presented.
7. Leases
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
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 directs 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 Company's Condensed Consolidated Statements of Operations, based on the underlying nature of the leased asset.
Components of lease expense for the three and six months ended August 31, 2026 and 2025 were as follows (in thousands):
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
August 31, 2026 |
|
|
August 31, 2025 |
|
|
August 31, 2026 |
|
|
August 31, 2025 |
|
||||
Operating lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Supplemental cash flow information related to leases was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating cash flows from operating leases |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Right-of-use assets obtained in exchange for lease obligations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating leases |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Weighted Average Remaining Lease Terms |
|
|
|
|
Operating leases |
|
|
||
|
|
|
|
|
Weighted Average Discount Rate |
|
|
|
|
Operating leases |
|
|
13
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
Future minimum lease commitments under non-cancelable operating leases for the current and next five fiscal years are as follows (in thousands):
|
|
Operating |
|
|
|
|
Lease |
|
|
|
|
Commitments |
|
|
2027 (remaining) |
|
$ |
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
2031 |
|
|
|
|
2032 |
|
|
|
|
Total future minimum lease payments |
|
$ |
|
|
Less imputed interest |
|
|
|
|
Present value of lease liabilities |
|
$ |
|
|
8. 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 the 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
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.
14
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
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 August 31, 2026 |
|
(in years) |
|
|
Amount |
|
|
Amortization |
|
|
Net |
|
||||
Definite-lived intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trademarks and trade names |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Customer lists |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-compete |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Technology |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of February 28, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Definite-lived intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trademarks and trade names |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Customer lists |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-compete |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Technology |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Aggregate amortization expense was $
The Company’s estimated amortization expense for the current and next five fiscal years is as follows (in thousands):
2027 (remaining) |
|
$ |
|
|
2028 |
|
$ |
|
|
2029 |
|
$ |
|
|
2030 |
|
$ |
|
|
2031 |
|
$ |
|
|
2032 |
|
$ |
|
Changes in the net carrying amount of goodwill as of the dates indicated are as follows (in thousands):
Balance as of March 1, 2025 |
|
$ |
|
|
Goodwill acquired |
|
|
|
|
Balance as of February 28, 2026 |
|
|
|
|
Goodwill acquired |
|
|
|
|
Balance as of August 31, 2026 |
|
$ |
|
15
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
9. Accrued Expenses
The following table summarizes the components of accrued expenses as of the dates indicated (in thousands):
|
|
August 31, |
|
|
February 28, |
|
||
|
|
2026 |
|
|
2026 |
|
||
Employee compensation and benefits (1) |
|
$ |
|
|
$ |
|
||
Taxes other than income |
|
|
|
|
|
|
||
Accrued legal and professional fees |
|
|
|
|
|
|
||
Accrued utilities |
|
|
|
|
|
|
||
Income taxes payable |
|
|
|
|
|
|
||
Other accrued expenses |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
(1) As of August 31, 2026, accrued compensation liabilities related to the modified share-based awards described in Note 11 were $
10. Shareholders’ Equity
The Company’s board of directors (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 $
The Company did
11. 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. At August 31, 2026, the Company had one stock compensation plan, the 2021 Long-Term Incentive Plan of Ennis, Inc., adopted by the Board April 16, 2021 and affirmed by vote of the shareholders July 15, 2021 (the “Plan”). The Plan authorized
The Company recognizes compensation expense for stock options and restricted stock grants based on the grant date fair value of the award for stock options, restricted stock grants and RSUs on a straight-line basis over the requisite service period. The estimated number of shares to be achieved for performance based RSUs is updated each reporting period. For the three months ended August 31, 2026 and 2025, the Company included in selling, general and administrative expenses, compensation expense related to stock-based compensation of $
16
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
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 six months ended August 31, 2026 and 2025.
|
|
August 31, |
|
|
August 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Expected volatility |
|
|
% |
|
|
% |
||
Expected term (years) |
|
|
|
|
|
|
||
Risk free interest rate |
|
|
% |
|
|
% |
||
Dividend Yield |
|
|
% |
|
|
% |
||
Weighted average grant-date fair value |
|
$ |
|
|
$ |
|
||
The Company had the following stock option activity for the six months ended August 31, 2026.
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
||||
|
|
|
|
|
Weighted |
|
|
Average |
|
|
Aggregate |
|
||||
|
|
Number |
|
|
Average |
|
|
Remaining |
|
|
Intrinsic |
|
||||
|
|
of Shares |
|
|
Exercise |
|
|
Contractual |
|
|
Value(a) |
|
||||
|
|
(exact quantity) |
|
|
Price |
|
|
Life (in years) |
|
|
(in thousands) |
|
||||
Outstanding at March 1, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exercised |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outstanding at August 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Exercisable at August 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
A summary of the status of the Company’s unvested stock options at August 31, 2026 and the changes during the six months ended August 31, 2026 are presented below:
|
|
|
|
Weighted |
|
|
|
|
Average |
|
|
Number |
|
Grant Date |
|
|
of Options |
|
Fair Value |
Unvested at March 1, 2026 |
|
|
||
New grants |
|
|
||
Vested |
|
( |
|
|
Forfeited |
|
|
||
Unvested at August 31, 2026 |
|
|
As of August 31, 2026, there was
Restricted Stock
The following activity occurred with respect to the Company’s restricted stock awards for the six months ended August 31, 2026:
|
|
|
|
Weighted |
|
||
|
|
|
|
Average |
|
||
|
Number of |
|
|
Grant Date |
|
||
|
Shares |
|
|
Fair Value |
|
||
Unvested at March 1, 2026 |
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
||
Terminated |
|
|
|
|
|
||
Vested |
|
( |
) |
|
|
|
|
Unvested at August 31, 2026 |
|
|
|
$ |
|
||
17
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
As of August 31, 2026, the total remaining unrecognized compensation cost related to unvested restricted stock was approximately $
Restricted Stock Units
During the six months ended August 31, 2026,
The following activity occurred with respect to the Company’s restricted stock units for the six months ended August 31, 2026:
|
Time-based |
|
|
Performance-based |
|
||||||||||
|
|
|
|
Weighted |
|
|
|
|
|
Weighted |
|
||||
|
|
|
|
Average |
|
|
|
|
|
Average |
|
||||
|
Number of |
|
|
Grant Date |
|
|
Number of |
|
|
Grant Date |
|
||||
|
Shares |
|
|
Fair Value |
|
|
Shares |
|
|
Fair Value |
|
||||
Unvested at March 1, 2026 (1) |
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
||||
Terminated |
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Modified (2) |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Vested |
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Unvested at August 31, 2026 |
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
(2) During April 2026, the Compensation Committee approved the settlement of certain outstanding RSU awards in cash rather than shares of common stock. As a result, the awards were modified from equity-classified to liability-classified awards under Accounting Standards Codification (“ASC”) Topic 718, Compensation-Stock Compensation (“ASC 718”). The Company reclassified approximately $
As of August 31, 2026, the total remaining unrecognized compensation cost of time-based RSUs was approximately $
12. Pension Plan
The Company and certain subsidiaries have a noncontributory defined benefit retirement plan (the "Pension Plan"), covering approximately
18
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
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.
Pension expense is composed of the following components, included in cost of goods sold and selling, general, and administrative expenses in the Company’s condensed consolidated statements of operations (in thousands):
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
August 31, |
|
|
August 31, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Components of net periodic benefit cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Service cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
net loss |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net periodic benefit cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company is required to make contributions to the Pension Plan. These contributions are required under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 ("ERISA"). The assumptions used to calculate the pension funding deficit are different from the assumptions used to determine the net pension obligation for purposes of our condensed consolidated financial statements. Due to the enactment of the American Rescue Plan ("ARP") Act of 2021, plan sponsors can calculate the discount rate used to measure the Pension Plan liability using a
13. 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, performance-based RSUs or other contracts to issue common shares were exercised or converted into common stock. This is calculated using the treasury stock method.
The following table sets forth the computation for basic and diluted earnings per share for the periods indicated:
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
August 31, |
|
August 31, |
|
|||||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Basic weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive stock options, restricted stock, time-based RSUs and performance-based RSUs |
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings - basic |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Net earnings - diluted |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cash dividends per share |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
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. The Company's 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.
19
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
14. Concentrations of Risk
Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash, cash equivalents and accounts receivable. Cash is placed with high-credit quality financial institutions. For the purposes of the condensed 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 $
The Company believes its credit risk with respect to accounts receivable is limited due to industry and geographic diversification. As disclosed on the condensed consolidated balance sheets, the Company maintains an allowance for credit losses to cover the Company’s estimate of credit losses associated with accounts receivable.
The Company, for quality and pricing reasons, purchases its paper products from a limited number of suppliers. 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.
15. Related Party Transactions
The Company leases a facility and sells products to entities controlled by a member of the Board. The total right-of-use asset and related lease liability as of August 31, 2026 was $
16. Income Taxes
The Company is subject to U.S. federal income tax as well as income taxes of multiple state jurisdictions. The quarterly income tax provision was computed based on the Company's estimated annualized effective tax rate and the full-year forecasted income or loss plus the tax impact of unusual, infrequent, or nonrecurring significant items during the period.
The Company's effective tax rate for the three and six months ended August 31, 2026 and 2025 was approximately
17. 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.
20
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
Ennis and one of its subsidiaries are defendants in a lawsuit in Arizona concerning the lease of the former B&D Litho facility that was closed in 2019. The plaintiff landlord generally alleges that the defendants failed to maintain the leased premises in good condition. The landlord sought more than $
There was a non-jury trial of the case in March 2026 at which the judge dismissed the landlord’s claim that the Company failed to maintain the premises during the tenancy due to a lack of damages. The landlord’s other breach of contract claim that the Company failed to surrender the property in good condition remains pending, and Ennis has claimed that most of the surrender conditions of which the landlord complains existed prior to the tenancy commenced.
On September 9, 2026, the trial court issued preliminary findings that the Ennis subsidiary had failed to repair and maintain the premises during the tenancy even though the court had already dismissed the repair and maintenance claim at trial. The Court then made a preliminary finding that the landlord should recover $
Due to what the Company believes are significant legal and factual errors in the Court’s preliminary findings, Ennis will seek further review in the trial court and, if necessary, pursue appellate remedies. Based on consultation with outside legal counsel, management concluded that the $
During the prior year quarter, the Company recognized $
18. Segment Reporting
The Company’s Chief Operating Decision Maker ("CODM") is its .
The operating segment is also the Company's reportable segment called “Print” and derives its operating revenues from the manufacturing of mostly custom or semi-custom printed products sold mostly to independent distributors in the United States. Independent distributors are responsible for selling the printed product to the end consumer. The single reportable segment derives its revenues by manufacturing print products at the Company's printing plants dispersed throughout the United States.
The accounting policies of this single reportable segment are the same as those described in the summary of significant accounting policies to the condensed consolidated financial statements.
The CODM assesses the performance of this reportable segment using the entity-wide revenue and expense information reported on the Statement of Operations and the more detailed expense categories disclosed in the table below. The primary measure of segment profit
21
ENNIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2026
(unaudited)
(loss) is consolidated net income (loss) as reported on the condensed consolidated statement of operations. In addition,
|
Three months ended August 31, |
|
|
Six months ended |
|
||||||||||
(Dollars in thousands) |
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Segment operating net sales |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment operating expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
Product purchases |
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Product supplies |
|
|
|
|
|
|
|
|
|
|
|
||||
Manufacturing depreciation |
|
|
|
|
|
|
|
|
|
|
|
||||
Other product cost (1) |
|
|
|
|
|
|
|
|
|
|
|
||||
Segment cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment SG&A expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Other expense (2) |
|
|
|
|
|
|
|
|
|
|
|
||||
Segment SG&A expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment items |
|
|
|
|
|
|
|
|
|
|
|
||||
(Gain) loss from disposal of assets |
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Interest income |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other (income) expense |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated net earnings |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(1)
(2)
19. Subsequent Events
On
22
ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED AUGUST 31, 2026
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read together with the unaudited consolidated financial statements and related notes of Ennis, Inc. (collectively with its subsidiaries, the “Company,” “Registrant,” “Ennis,” or “we,” “us,” or “our”), included in Part 1, Item 1 of this report, and with the audited consolidated financial statements and the related notes of the Company included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2026.
All of the statements in this report, other than historical facts, are forward-looking statements, including, without limitation, the statements made in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 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, the Company 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 the Company. 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. The Company 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 the Company 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: general economic, business and labor conditions and the potential adverse effects of potential recessionary concerns, inflationary issues, U.S. import tariffs and supply chain disruptions and the potential impact on our operations; our ability to implement our strategic initiatives and control our operational costs; dependence on a limited number of key suppliers; our ability to recover the rising cost of raw materials and other costs (including energy, freight, labor and benefit costs) in markets that are highly price competitive and volatile; uninsured losses, including those from natural disasters, catastrophes, pandemics, theft, sabotage; the impact of future pandemics on the U.S. and local economies, our business operations, our workforce, our supply chain and our customer base; our ability to timely or adequately respond to technological changes in the industry; cybersecurity risks, the impact of the internet and other electronic media on the demand for forms and printed materials; the impact of foreign competition, tariffs, trade regulations and import restrictions; customer credit risk; competitors’ pricing strategies; a decline in business volume and profitability could result in an impairment in our reported goodwill negatively impacting our operational results; our ability to retain key management personnel; our ability to identify, manage or integrate acquisitions.; In addition to the factors indicated above, you should carefully consider the risks described in and incorporated by reference herein and in the risk factors in our Annual Report on Form 10-K for the fiscal year ended February 28, 2026 before making an investment in our common stock.
Overview
Ennis, Inc. (collectively with its subsidiaries, “the “Company,” “Registrant,” Ennis,” or “we,” “us,” or “our”) was organized under the laws of Texas in 1909. We print and manufacture a broad line of business forms and other business products. We distribute business products and forms throughout the United States primarily through independent distributors. This distributor channel encompasses independent print distributors, commercial printers, direct mail, fulfillment companies, payroll and accounts payable software companies, and advertising agencies, among others. We also sell products to many of our competitors to satisfy their customers’ needs.
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.
23
ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED AUGUST 31, 2026
We are in the business of manufacturing, designing, and selling business forms and other printed business products primarily to distributors located in the United States. As of August 31, 2026, we operate approximately 50 manufacturing plants throughout the United States in 20 strategically located states as one reportable segment: printing services. Approximately 95% 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®, CFC Print & MailSM, Block Graphics®, ColorWorx®, Enfusion®, Uncompromised Check Solutions®, VersaSeal®, Ad ConceptsSM, FormSource LimitedSM, Star Award Ribbon Company®, Witt Printing®, Genforms®, PrintGraphics®, Calibrated Forms®, PrintXcel®, Printegra®, Forms ManufacturersSM, Mutual Graphics®, TRI-C Business FormsSM, Major Business SystemsSM, Independent PrintingSM, Hayes Graphics®, Wright Business GraphicsSM, Wright 360SM, Integrated Print & GraphicsSM, the Flesh CompanySM, AmeriPrintSM; StylecraftSM, UMC PrintSM; Eagle GraphicsSM, Diamond GraphicsSM and Printing TechnologiesSM. We also sell the Adams McClure® brand (which provides Point of Purchase advertising); the Admore®, Folder Express®, and Independent Folders® brands (which provide presentation folders and document folders); Ennis Tag & LabelSM (which provides custom printed, high performance labels and custom and stock tags); Allen-Bailey Tag & LabelSM, Atlas Tag & Label®, Kay Toledo Tag®, and Special Service Partners® (SSP) (which provides custom and stock tags and labels); Trade Envelopes®, Block Graphics®, Wisco®, Northeastern Envelope CompanySM, Envelope SuperstoreSM and National Imprint Corporation® (which provide custom and imprinted envelopes); Northstar® and General Financial Supply® (which provide financial and security documents); InfosealSM and PrintXcel® (which provide custom and stock pressure seal documents). School Photo Marketing and National School Forms are a one-stop shop for over 1,400 school portrait photographers and professional photo labs nationwide, providing them with a complete array of products and services that reach over 15 million families and 30,000 schools, primarily in the K-8 market. We sell predominantly through independent distributors, as well as to many of our competitors. Northstar Computer Forms, Inc., one of our wholly-owned subsidiaries, also sells direct to a small number of customers, generally large banking organizations (where a distributor is not acceptable or available to the end-user). Adams McClure, LP, a wholly-owned subsidiary, also sells direct to a small number of customers, where sales are generally through advertising agencies.
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 factors such as service, quality and price.
Our products are sold throughout the United States primarily by 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 our high volume of business with that supplier relative to our competitors.
Business products usage in the printing industry is generally not seasonal. Acquisitions of new business, general economic conditions and contraction of the traditional business forms industry are the predominant factors in quarterly volume fluctuations.
Recent Acquisitions
On November 14, 2025, we acquired the assets and business of CFC Print & Mail ("CFC"), which is based in Grand Prairie, Texas. In the last full year preceding the acquisition, CFC generated approximately $7.1 million in sales. CFC specializes in serving a national distributor network with business-document printing and mailing services, offering industry-leading turnaround times and automation. The acquisition of CFC further strengthens our leading position in business products and the commercial print sector.
On April 11, 2025, we acquired the assets and business of Northeastern Envelope Company ("NEC"), which is based in Old Forge, Pennsylvania and Envelope Superstore ("ESS") which is based in Hiram, Georgia. In the last full year preceding the acquisition, NEC and ESS generated approximately $26.0 million in sales. The acquisition of NEC and ESS strengthens our envelope converting and printing capabilities to serve our customers in the Northeast United States.
24
ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED AUGUST 31, 2026
Our Business Challenges
Our industry is currently experiencing consolidation of traditional supply channels, product obsolescence, paper supplier capacity adjustments, volatility in raw material availability and pricing, and changes in international trade conditions. Technology advances have made electronic distribution of documents, internet hosting, digital printing and print-on-demand solutions 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. The 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 displaced by 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, including through acquisitions, and to expand our offerings in areas such as envelopes, tags, folders, healthcare wristbands, specialty packaging, direct mail, pressure seal products, secure document, in-mold labels, and long-run integrated high color web print, which provide opportunities for growth and further 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, capital resources, and operating results.
Production capacity and price competition within our industry – Industry supply of paper products is subject to fluctuation as changing industry conditions have and will continue to influence producers to idle or permanently close individual machines or mills, convert them to different product lines, or otherwise adjust production capacity in response to changes in demand, operating costs and market conditions. These actions can affect the availability and pricing of certain grades of paper and other raw materials we purchase.
The only mill located in the United States that produced rolls of carbonless paper ceased production on a permanent basis. In response to this supply disruption, we increased inventory as buffer stock while transitioning to alternative sources of carbonless paper. We have received shipments from alternative suppliers and continue to expect no disruption to customer service, product availability or product quality. Changes in tariff policies, trade regulations and transportation costs may also increase the costs of raw materials, freight and other products we source.
Margins remain under pressure due to weak volumes in parts of the market, volatile input costs and price competition. To protect results, we continue to manage and control product costs through forecasting, production and costing models; strengthening supplier relationships; negotiating favorable procurement terms; and increasing operational efficiency.
Continued consolidation of our customers – Our customers are primarily distributors, many of which are consolidating or are being acquired by competitors. We continue to maintain a high volume of the business with our customers but it is possible that these consolidations and acquisitions, which we expect to continue in the future, ultimately will impact our margins and sales.
For further information, please see “Cautionary Statement Regarding Forward-Looking Statements,” above and “Risk Factors” contained within our Annual Report on Form 10-K for the fiscal year ended February 28, 2026.
Critical Accounting Estimates
Our Annual Report on Form 10-K for the year ended February 28, 2026, includes a description of certain critical accounting estimates, including those with respect to the pension plan, impairment assessments on goodwill and other intangible assets, allowance for credit losses and accounts receivable, and allowance for excess and obsolete inventories, which we believe are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management's judgments and estimates. During the quarter ended August 31, 2026, there have been no material changes to the critical accounting estimates described in our Annual Report on Form 10-K for the year ended February 28, 2026.
Recent Accounting Pronouncements
See Note 1 of the accompanying unaudited condensed consolidated financial statements for a discussion of recent accounting pronouncements.
25
ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED AUGUST 31, 2026
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 interim unaudited consolidated financial statements and notes included in this filing. The operating results of the Company for the three and six months ended August 31, 2026 and the comparative period for 2025 are set forth in the tables below.
Consolidated Summary
Unaudited Condensed Consolidated Statements of |
|
Three months ended August 31, |
|
|
Six months ended August 31, |
|
||||||||||||||||||||||||||
Operations - Data (in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||||
Net sales |
|
$ |
102,006 |
|
|
|
100.0 |
% |
|
$ |
98,676 |
|
|
|
100.0 |
% |
|
$ |
200,619 |
|
|
|
100.0 |
% |
|
$ |
195,872 |
|
|
|
100.0 |
% |
Cost of goods sold |
|
|
71,514 |
|
|
|
70.1 |
|
|
|
68,574 |
|
|
|
69.5 |
|
|
|
139,045 |
|
|
|
69.3 |
|
|
|
135,541 |
|
|
|
69.2 |
|
Gross profit margin |
|
|
30,492 |
|
|
|
29.9 |
|
|
|
30,102 |
|
|
|
30.5 |
|
|
|
61,574 |
|
|
|
30.7 |
|
|
|
60,331 |
|
|
|
30.8 |
|
Selling, general and administrative |
|
|
16,913 |
|
|
|
16.6 |
|
|
|
17,719 |
|
|
|
18.0 |
|
|
|
34,419 |
|
|
|
17.2 |
|
|
|
34,665 |
|
|
|
17.7 |
|
Gain from disposal of assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Income from operations |
|
|
13,579 |
|
|
|
13.3 |
|
|
|
12,383 |
|
|
|
12.5 |
|
|
|
27,165 |
|
|
|
13.5 |
|
|
|
25,666 |
|
|
|
13.1 |
|
Other income (expense) |
|
|
(535 |
) |
|
|
(0.5 |
) |
|
|
5,761 |
|
|
|
5.8 |
|
|
|
(398 |
) |
|
|
(0.2 |
) |
|
|
5,993 |
|
|
|
3.1 |
|
Earnings before income taxes |
|
|
13,044 |
|
|
|
12.8 |
|
|
|
18,144 |
|
|
|
18.4 |
|
|
|
26,767 |
|
|
|
13.3 |
|
|
|
31,659 |
|
|
|
16.2 |
|
Provision for income taxes |
|
|
3,652 |
|
|
|
3.6 |
|
|
|
4,989 |
|
|
|
5.1 |
|
|
|
7,495 |
|
|
|
3.7 |
|
|
|
8,706 |
|
|
|
4.4 |
|
Net earnings |
|
$ |
9,392 |
|
|
|
9.2 |
% |
|
$ |
13,155 |
|
|
|
13.3 |
% |
|
$ |
19,272 |
|
|
|
9.6 |
% |
|
$ |
22,953 |
|
|
|
11.7 |
% |
Three months ended August 31, 2026 compared to three months ended August 31, 2025
Net Sales. Our net sales were $102.0 million for the quarter ended August 31, 2026, compared to $98.7 million for the same quarter in the prior year, an increase of $3.3 million, or 3.3%. Our acquisitions completed during fiscal year 2026 contributed approximately $2.3 million in revenue during the quarter for the ownership periods not included in the comparable prior-year quarter. Sales from the remaining business increased approximately $1.0 million, reflecting the combined impact of pricing actions, sales volume and product mix.
Cost of Goods Sold and Gross Profit Margin. Our cost of goods sold increased $2.9 million, or 4.2%, from $68.6 million for the three months ended August 31, 2025 to $71.5 million for the three months ended August 31, 2026. Our gross profit was $30.5 million or 29.9% of revenue for the quarter ended August 31, 2026 compared to $30.1 million or 30.5% of revenue for the same quarter in the prior year. The decrease in gross profit margin primarily reflected higher carbonless paper costs recognized in cost of sales compared with the prior-year quarter. We continue to pursue cost management measures and targeted pricing actions intended to mitigate the effects of market weakness, input cost increases and price competition on our results.
Selling, general, and administrative expense. For the three months ended August 31, 2026, our selling, general, and administrative ("SG&A") expenses were $16.9 million compared to $17.7 million for the three months ended August 31, 2025, a decrease of $0.8 million, or 4.5%. The decrease was primarily attributable to lower incentive compensation expense and other changes in operating expenses. As a percentage of net sales, SG&A expenses for the current quarter were 16.6% compared to 18.0% for the same quarter in the prior year.
Gain and loss from disposal of assets. There were no gains or losses from the disposal of Company assets during the three months ended August 31, 2026.
Income from operations. Primarily due to the factors described above, income from operations was $13.6 million, or 13.3% of net sales, for the three months ended August 31, 2026 compared to $12.4 million, or 12.5% of net sales, for the three months ended August 31, 2025, an increase of $1.2 million or 9.7%.
Other income (expense). Other expense was $0.5 million for the three months ended August 31, 2026 compared to other income of $5.8 million for the same quarter in the prior year. The prior-year quarter included a $5.3 million favorable litigation judgment, while the current quarter included an unrelated $0.7 million litigation charge. Interest income was $0.4 million for the current quarter compared to $0.8 million for the prior-year quarter.
Provision for income taxes. Our effective income tax rate was approximately 28.0% for the three months ended August 31, 2026 compared to approximately 27.5% for the three months ended August 31, 2025. The effective tax rate for the three months ended August 31, 2026 was higher than the prior-year period primarily due to changes in state income taxes and nondeductible executive compensation.
26
ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED AUGUST 31, 2026
Net earnings. Net earnings were $9.4 million, or $0.37 per diluted share, for the three months ended August 31, 2026 compared to $13.2 million, or $0.51 per diluted share, for the same quarter in the prior year. The decrease primarily reflected the favorable litigation judgment recognized in the prior-year quarter and the litigation charge recognized in the current quarter, partially offset by improved income from operations.
Six months ended August 31, 2026 compared to six months ended August 31, 2025
Net Sales. Our net sales were $200.6 million for the six months ended August 31, 2026, compared to $195.9 million for the same period in the prior year, an increase of $4.7 million, or 2.4%. Our acquisitions completed during fiscal year 2026 contributed approximately $6.8 million in revenue during the six-month period for the ownership periods not included in the comparable prior-year. Sales from the remaining business decreased approximately $2.1 million primarily reflecting weaker customer demand and ongoing industry-wide pressure in the U.S. printing market.
Cost of Goods Sold and Gross Profit Margin. Our cost of goods sold increased $3.5 million, or 2.6%, from $135.5 million for the six months ended August 31, 2025 to $139.0 million for the six months ended August 31, 2026. Our gross profit was $61.6 million or 30.7% of revenue for the six months ended August 31, 2026 compared to $60.3 million or 30.8% of revenue, for the same period in the prior year. The year-to-date gross profit margin remained relatively consistent despite higher carbonless paper costs recognized during the second quarter.
Selling, general, and administrative expense. For the six months ended August 31, 2026, SG&A expenses were $34.4 million compared to $34.7 million for the six months ended August 31, 2025, a decrease of $0.3 million, or 0.9%. As a percentage of net sales, SG&A expenses were 17.2% and 17.7% for the six month ended August 31, 2026 and 2025, respectively.
Gain and loss from disposal of assets. The $10,000 net gain from disposal of assets during the six-month period ended August 31, 2026 was primarily attributed to the sale of unused equipment.
Income from operations. Primarily due to the factors described above, income from operations was $27.2 million, or 13.5% of net sales for the six months ended August 31, 2026 compared to $25.7 million, or 13.1% of net sales, for the same period in the prior year, an increase of $1.5 million, or 5.8%.
Other income (expense). Other expense was $0.4 million for the six months ended August 31, 2026 compared to other income of $6.0 million for the same period in the prior year. The change primarily reflected the $5.3 million favorable litigation judgment recognized in the prior-year period and the $0.7 million litigation charge recognized in the current period. Interest income was $0.8 million for the current six-month period compared to $1.3 million for the prior-year period.
Provision for income taxes. Our effective income tax rate was approximately 28.0% for the six months ended August 31, 2026 compared to approximately 27.5% for the six months ended August 31, 2025. The effective tax rate for the six months ended August 31, 2026 was higher than the prior-year period primarily due to changes in state income taxes and nondeductible executive compensation.
Net earnings. Net earnings were $19.3 million, or $0.76 per diluted share for the six months ended August 31, 2026 compared to $23.0 million, or $0.89 per diluted share for the same period in the prior year. The decrease primarily reflected the litigation items described above, partially offset by higher income from operations. Our recent acquisitions contributed approximately $0.03 per diluted share for the ownership periods not included in the comparable prior-year period.
Liquidity and Capital Resources
We fund our operations primarily through cash generated from operating activities. Our principal cash requirements include payments to vendors in the ordinary course of business, capital expenditures, compensation and benefits, and dividends to shareholders. As of August 31, 2026, we had cash and cash equivalents of $54.0 million and no long-term debt. We currently maintain a significant portion of cash and cash equivalents in interest-bearing money market accounts and funds. Based on our current cash position and anticipated cash flows from operations, we believe our cash on hand and funds generated from operations will be sufficient to meet our operating and capital requirements for at least the next twelve months including anticipated expenditures and acquisition opportunities. Capital expenditures are expected to range between $4.0 million and $7.0 million over the next twelve months, consistent with historical spending levels.
27
ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED AUGUST 31, 2026
|
|
August 31, |
|
|
February 28, |
|
||
(Dollars in thousands) |
|
2026 |
|
|
2026 |
|
||
Working capital |
|
$ |
109,559 |
|
|
$ |
96,389 |
|
Cash and cash equivalents |
|
$ |
54,011 |
|
|
$ |
34,570 |
|
Working Capital. During the six months ended August 31, 2026, our working capital increased $13.2 million or 13.7%, from $96.4 million at February 28, 2026 to $109.6 million at August 31, 2026. The increase primarily reflects cash generated from operating activities, partially offset by dividends and capital expenditures. Our current ratio, calculated by dividing our current assets by our current liabilities, increased from 3.7 to 1.0 at February 28, 2026, to 3.8 to 1.0 at August 31, 2026.
|
|
Six months ended |
|
|||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
||
Net cash provided by operating activities |
|
$ |
34,126 |
|
|
$ |
18,425 |
|
Net cash used in investing activities |
|
$ |
(1,935 |
) |
|
$ |
(31,954 |
) |
Net cash used in financing activities |
|
$ |
(12,750 |
) |
|
$ |
(21,585 |
) |
Cash flows from operating activities. Cash provided by operating activities was $34.1 million for the six months ended August 31, 2026, compared to $18.4 million in the comparative period ended August 31, 2025. Net earnings decreased $3.7 million in the current period. A decrease in accounts receivable provided cash of $1.8 million in the current period compared to an increase in accounts receivable using cash of $2.0 million in the prior year period. A decrease in inventories provided cash of $0.6 million in the current period compared to an increase in inventories using cash of $20.8 million in the prior-year period. An increase in accounts payable and accrued expenses provided cash of $2.7 million in the current period compared to $7.3 million in the prior-year period. The improvement in operating cash flow primarily reflects lower inventory purchasing requirements in the current period as a result of the strategic build of buffer stock in the prior-year period.
Cash flows from investing activities. Cash used in investing activities was $1.9 million in the six months ended August 31, 2026 compared to $32.0 million in the six months ended August 31, 2025. There were no business acquisitions during the current six-month period compared to $34.9 million used to acquire businesses in the same period last year. During the prior year period, approximately $5.5 million of U.S. government treasury bills matured.
Cash flows from financing activities. Cash used in financing activities was $12.8 million in the six months ended August 31, 2026 compared to $21.6 million in the six months ended August 31, 2025. The difference is attributed to share repurchases of $8.6 million in six month ended August 31, 2025 and no share repurchases in the six months ended August 31, 2026.
Pension Plan – The funded status of our Pension Plan is dependent on many factors, including returns on invested assets and market interest rates. We are not required to make a contribution to the Pension Plan for fiscal year 2027 and did not make a contribution during the six months ended August 31, 2026. Future contributions, if any, will depend on the Pension Plan’s funded status and applicable funding requirements. Changes in investment returns or discount rates could significantly affect the Pension Plan’s funded status and future funding requirements. At August 31, 2026, we had a funded pension asset of $2.2 million.
Inventories – We believe our inventory levels are sufficient to satisfy customer demand and we anticipate having adequate sources of raw materials to support future business requirements. In fiscal year 2026, following the closure of the only U.S. mill producing rolls of carbonless paper, we increased inventory levels to mitigate potential supply shortages and maintain supply continuity while qualifying alternative sources. We have an agreement with and have received shipments from a carbonless paper supplier whom we anticipate will be a successful partnership. We maintain long-term supply agreements with key paper vendors that establish pricing parameters but do not impose minimum purchase obligations. Certain rebate programs, however, are contingent on achieving minimum purchase volumes and management currently expects to meet those requirements.
Capital Expenditures – We continue to make capital expenditures for operational maintenance purposes, as may be required. Additionally, we will carefully review and make capital expenditures for additional equipment to the extent such additions make economic sense by improving our operations and not jeopardizing our strong liquidity position. We expect our capital requirements for fiscal year 2027, exclusive of capital required for possible acquisitions, will be within our historical range of between $4.0 million and $7.0 million. For the six months ended August 31, 2026, we spent approximately $1.9 million on capital expenditures that were funded out of our cash balance. We expect to generate sufficient cash flows from our operating activities to cover our operating and other normal capital requirements for the foreseeable future.
28
ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED AUGUST 31, 2026
Contractual Obligations – There have been no significant changes in our contractual obligations since February 28, 2026 that have, or are reasonably likely to have, a material impact on our results of operations or financial condition. We do not have off-balance sheet arrangements or special-purpose entities.
29
ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED AUGUST 31, 2026
Item 3. 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. While we had no outstanding debt at August 31, 2026, we would be exposed to interest rate risk if we borrow under a credit facility in the future. 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. In addition, a decrease in the discount rate could negatively impact our Pension Plan’s funded status.
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 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosures. Our controls and procedures are tested and evaluated at regular intervals to confirm that they are adequate and followed by our personnel to prevent misstatement of the Company’s financial statements. Due to the inherent limitations of control systems, not all misstatements may be detected. Those inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls could be circumvented by the individual acts of some persons or by collusion of two or more people. Our controls and procedures can only provide reasonable, not absolute, assurance that the above objectives have been met. Our management, with the participation of our Chairman of the Board, President and Chief Executive Officer (“CEO”) and Chief Financial Officer and Treasurer (“CFO”), has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our CEO and CFO have concluded that, as of August 31, 2026, our disclosure controls and procedures are effective to provide reasonable assurance that information relating to us (including our consolidated subsidiaries), which is required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
There have been no changes in our internal control over financial reporting (as defined in Rule 13a–15(f) or Rule 15d–15(f) of the Exchange Act) that occurred during the three and six months ended August 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. 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.
Ennis and one of its subsidiaries are defendants in a lawsuit in Arizona concerning the lease of the former B&D Litho facility that was closed in 2019. The plaintiff landlord generally alleges that the defendants failed to maintain the leased premises in good condition. The landlord sought more than $4.0 million in repair costs and other consequential damages even though the landlord sold the facility without making the supposedly necessary repairs. The Company has denied the landlord’s allegations and is vigorously contesting what the Company believes are unreasonable claims.
There was a non-jury trial of the case in March 2026 at which the judge dismissed the landlord’s claim that the Company failed to maintain the premises during the tenancy due to a lack of damages. The landlord’s other breach of contract claim that the Company failed to surrender the property in good condition remains pending, and Ennis has claimed that most of the surrender conditions of which the landlord complains existed prior to the tenancy commenced.
On September 9, 2026, the trial court issued preliminary findings that the Ennis subsidiary had failed to repair and maintain the premises during the tenancy even though the court had already dismissed the repair and maintenance claim at trial. The Court then
30
ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED AUGUST 31, 2026
made a preliminary finding that the landlord should recover $2.3 million in claimed diminished property value given the property’s condition in 2023 that the landlord had allowed to deteriorate in the four years since Ennis surrendered possession to the landlord in 2019.
Due to what the Company believes are significant legal and factual errors in the Court’s preliminary findings, Ennis will seek further review in the trial court and, if necessary, pursue appellate remedies. Based on consultation with outside legal counsel, management concluded that the $2.3 million amount reflected in the preliminary findings does not represent management's best estimate of probable loss. Accordingly, the Company increased its reserve by approximately $0.7 million during the quarter, resulting in a total reserve of approximately $1.2 million, which management believes represents its best estimate of probable loss as of August 31, 2026.
During the prior year quarter, the Company recognized $5.7 million related to a favorable judgment in an unrelated litigation matter against Wright Printing Company, consisting of actual damages, exemplary damages, attorneys’ fees and $0.4 million of interest income.
Item 1A. Risk Factors
There have been no material changes in our Risk Factors as previously discussed in our Annual Report on Form 10-K for the year ended February 28, 2026.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
At its July 14, 2022 meeting, the Ennis, Inc. Board of Directors authorized an additional $20.0 million in funding for the Company’s share repurchase program that was first implemented in 2008. With this latest funding authorization, the cumulative funds authorized for share repurchases totals $60.0 million. 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 rules and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice.
The Company did not repurchase shares of common stock during the three and six months ended August 31, 2026. During the three and six months ended August 31, 2025, the Company repurchased 196,111 and 456,671 shares of common stock under the program at an average price of $17.92 and $18.54, respectively. Since the program’s inception in October 2008, there have been 3,127,900 common shares repurchased at an average price of $16.87 per share. As of August 31, 2026, $7.2 million remained available to repurchase shares of the Company’s common stock under the program.
Items 3, 4 and 5 are
31
ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED AUGUST 31, 2026
Item 6. Exhibits
The following exhibits are filed as part of this report.
Exhibit Number |
|
Description |
|
|
|
Exhibit 3.1(a) |
|
|
|
|
|
Exhibit 3.1(b) |
|
|
|
|
|
Exhibit 3.2 |
|
|
|
|
|
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 |
|
|
|
|
|
Exhibit 32.2 |
|
|
|
|
|
Exhibit 101 |
|
The following information from Ennis, Inc.’s Quarterly Report on Form 10-Q for the quarter ended August 31, 2026, filed on October 5, 2026, formatted in 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
32
ENNIS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE PERIOD ENDED AUGUST 31, 2026
SIGNATURES
Pursuant to the requirements 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: October 5, 2026 |
|
/s/ Keith S. Walters |
|
|
Keith S. Walters |
|
|
Chairman, Chief Executive Officer and President |
|
|
|
Date: October 5, 2026 |
|
/s/ Vera Burnett |
|
|
Vera Burnett |
|
|
Chief Financial Officer, Treasurer and |
|
|
Principal Financial and Accounting Officer |
33
Exhibit 31.1
RULE 13a-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Keith S. Walters, Chief Executive Officer of Ennis, Inc., certify that:
/s/ Keith S. Walters |
Keith S. Walters |
Chief Executive Officer |
October 5, 2026 |
Exhibit 31.2
RULE 13a-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Vera Burnett, Chief Financial Officer of Ennis, Inc., certify that:
/s/ Vera Burnett |
Vera Burnett |
Chief Financial Officer |
October 5, 2026 |
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:
|
/s/ Keith S. Walters |
|
Keith S. Walters |
|
Chairman of the Board and |
|
Chief Executive Officer |
|
Date: October 5, 2026 |
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:
|
|
/s/ Vera Burnett |
|
|
Vera Burnett |
|
|
Chief Financial Officer |
|
|
Date: October 5, 2026 |
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.