8-K: Ennis Q3 Earnings Rise, Gross Margin Expands, Dividend Declared

Ennis, Inc. reported increased revenues and diluted earnings per share for the third quarter, driven by improved gross profit margins and contributions from recent acquisitions, while also declaring a quarterly cash dividend.

Summary

• Quarterly revenues increased by 0.4% to $100.2 million for the three months ended November 30, 2025, compared to $99.8 million in the prior year.
• Diluted earnings per share for the quarter rose to $0.42, up from $0.39 in the comparative quarter last year.
• Gross profit margin for the quarter improved significantly to 31.9% from 29.3% in the same period last year.
• Nine-month revenues decreased by 2.0% to $296.0 million, compared to $301.9 million for the same period last year.
• Nine-month diluted earnings per share increased to $1.31 from $1.19 year-over-year.
• EBITDA for the quarter was $19.2 million, representing 19.2% of sales, showing year-over-year growth from $18.2 million (18.2% of sales).
• A quarterly cash dividend of 25.0 cents per share was declared, payable on February 5, 2026, to shareholders of record on January 8, 2026.
• Completed the acquisition of CFC Print & Mail, which contributed approximately $5.8 million in revenues for the quarter and positively impacted diluted EPS by $0.05.
• Successfully reduced inventory from $62.1 million to $60.8 million during the third quarter.
• Repurchased approximately 793,000 shares of company stock year-to-date, contributing an estimated $0.01 to current quarter EPS.

Sentiment

Score: 7

Explanation: The company reported solid quarterly earnings growth and significant gross margin expansion, met expectations, and maintained a strong balance sheet with no debt. While nine-month revenues declined, the positive quarterly trends, strategic acquisitions, and shareholder returns (dividend, share repurchases) indicate a healthy operational and financial position. Cash flow was negative for the nine months, but management expects improvement.

Positives

• Quarterly revenues increased by $0.4 million or 0.4% year-over-year to $100.2 million.
• Diluted earnings per share for the quarter increased to $0.42 from $0.39 in the prior year.
• Gross profit margin significantly improved to 31.9% for the quarter, up from 29.3% in the comparative quarter last year and 30.5% in the prior quarter, driven by operational efficiencies and favorable acquisition margins.
• Net earnings for the quarter increased to $10.8 million from $10.2 million year-over-year.
• EBITDA for the quarter grew year-over-year to $19.2 million (19.2% of sales) from $18.2 million (18.2% of sales).
• Nine-month diluted earnings per share increased to $1.31 from $1.19 year-over-year.
• Successful acquisition of CFC Print & Mail, which contributed $5.8 million in revenues for the quarter and positively impacted diluted EPS by $0.05.
• Effective inventory management, reducing inventory from $62.1 million to $60.8 million in the quarter.
• Maintains a strong balance sheet with no debt and ample cash reserves.
• Declaration of a quarterly cash dividend of 25.0 cents per share, demonstrating commitment to shareholder returns.
• Strategic share repurchases of approximately 793,000 shares year-to-date, positively impacting EPS.

Negatives

• Revenues for the nine-month period decreased by $5.9 million or 2.0% to $296.0 million compared to the same period last year.
• Cash at the end of the period decreased to $31.283 million from $67.000 million at the beginning of the period.
• Cash provided by operating activities for the nine-month period decreased to $34.859 million from $53.097 million in the prior year.
• Cash used in investing activities for the nine-month period was $36.653 million, a significant outflow compared to $7.919 million provided in the prior year, primarily due to acquisitions.

Risks

• Erosion of demand for printer business documents as a result of digital technologies.
• Risks or uncertainties related to the completion and integration of acquisitions.
• Limited number of available suppliers and variability in the prices of paper and other raw materials.

Future Outlook

Management expects cash flow to improve in coming periods as purchasing requirements decline, supporting the rebuilding of the cash position. They do not anticipate any supply disruptions as they transition to alternative sources of carbonless paper. Future share repurchases will be evaluated based on market conditions and capital allocation priorities.

Management Comments

• "Our performance for the quarter met our expectations."
• "We achieved an increase in gross profit margin as a percentage of sales, supported by continued operational efficiencies and the favorable margin profile of our recent acquisitions."
• "Our EBITDA performance reflects continued year-over-year growth."
• "As we transition to alternative sources of carbonless paper, we do not anticipate any supply disruptions."
• "We maintain a strong balance sheet, with no debt and ample cash reserves."
• "We expect cash flow to improve in the coming periods. With our inventory levels now enhanced, purchasing requirements are expected to decline over the next several quarters, supporting the rebuilding of our cash position."
• "Our profitability and financial strength allows us to operate and pursue acquisitions without reliance on debt, while retaining access to credit for larger initiatives if needed."
• "We remain focused on sustaining profitability and delivering returns to our shareholders."

Industry Context

The company operates in the private-label printed business product supply industry, which faces challenges from the erosion of demand due to digital technologies. The acquisition of CFC Print & Mail indicates a strategy to expand offerings in business-document printing, mailing, and commercial print solutions, potentially diversifying or strengthening its position in related print services. The issue with carbonless paper supply highlights raw material dependency common in manufacturing sectors.

Stakeholder Impact

• Shareholders: Positive impact from increased diluted EPS, declared quarterly cash dividend of 25.0 cents per share, and strategic share repurchases.
• Employees: Implied stability and potential growth through acquisitions.
• Customers: Continued supply of carbonless paper assured despite supplier changes.
• Suppliers: Transition to alternative carbonless paper suppliers.

Next Steps

• Evaluation of future share repurchases based on market conditions, capital allocation priorities, and other relevant factors.
• Continued focus on sustaining profitability and delivering returns to shareholders.
• Transition to alternative sources of carbonless paper.

Key Dates

Recommendation

The company delivered a strong quarter with increased earnings and significant gross margin expansion, meeting management expectations. The acquisition of CFC Print & Mail and ongoing share repurchases demonstrate strategic capital allocation. A strong balance sheet with no debt and a consistent dividend payout are attractive. However, the nine-month revenue decline and negative cash flow from operations and investing activities for the nine-month period warrant a 'hold' rather than a 'buy' until sustained revenue growth and positive cash flow trends are clearly established, especially given the industry's long-term challenges from digital transformation. The stock is performing as expected, but there are no immediate catalysts for a strong buy, nor significant red flags for a sell.

Keywords

Ennis Inc, EBF, Financial Results, Earnings, Dividend, Gross Margin, Acquisition, CFC Print & Mail, Share Repurchase, Business Forms, Printed Products, SEC Filing, 8-K, Q3 2025