Ennis (EBF) Tops Q1 EPS by 4c

Ennis (NYSE: EBF) reported Q1 EPS of $0.16, $0.04 better than the analyst estimate of $0.12. Revenue for the quarter came in at $89 million versus the consensus estimate of $88.42 million.

• Revenues decreased $19.0 million, or 17.6% for the comparative quarter.
• Earnings per diluted share for the current quarter were $0.16 compared to $0.37 for the comparative quarter last year.
• Our plants have been deemed essential to the supply chain and are currently operating at reduced capacities.

Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, “While our first quarter was significantly impacted by the COVID-19 pandemic, it was within our expectations. In February, the U.S. economy officially slid into a recession after the longest period of economic growth the U.S. has ever had. As Federal Reserve Chairman Powell noted recently, we went from the lowest unemployment rate in 50 years to the highest unemployment rate in 90 years, and we did it in two months. As such, we saw extreme weakness in our transactional forms sales for the quarter given a countrywide lockdown that virtually stopped the country’s economic engine. However, certain sectors of the economy did not experience a downturn, resulting in sales in several of our specialty products remaining flat which helped flatten the downward curve in our total sales. To address our cost structure, we have furloughed 320 people and several facilities, and we have exited some of our leased facilities. We will continue to monitor the incoming order volume so that we can proactively adjust our costs accordingly. All of these actions to reduce variable and fixed costs are ongoing as we evaluate our projected sales and cost structure. We believe the cost cutting measures we are implementing will not impact our ability to service increased volume when the economy improves. Although no one is sure of the exact timing of an economic recovery, the Federal Reserve recently announced its view of an economic decline of -6.5% for 2020 and a 9.3% unemployment rate at year-end. As I said in my shareholder letter in May, we will continue to stay focused during this period of economic and social unrest. We will continue to explore acquisitions that make sense and hunt for new sales in new markets and new channels. We will focus, as always, on maintaining our dividend. We expect that our strong balance sheet and strong free-cash flow position should provide us with the means to accomplish these objectives. With the Federal Reserve currently forecasting no rise in interest rates till 2023, dividend paying stocks may be one of few choices for yield seeking investors.”

For earnings history and earnings-related data on Ennis (EBF) click here.

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