US: Charges push Ennis to Q4 net loss
- Q4 net loss of US$14.5m
- Gross margin flat
- Sales climb to $132.1m
Diversified apparel business Ennis fell to a net loss in the fourth quarter on the back of one-off apparel-related costs.
For the three months ended 28 February, the company recorded a net loss of US$14.5m. This compared to earnings of $7.1m a year earlier. The drop was due to a goodwill and trademark impairment charge of $24.2m relating to the apparel division.
Consolidated gross profit margin during the quarter remained flat at 25.4%, while the group's apparel margin continued to improve due to lower input costs and higher production levels, it said.
Consolidated net sales climbed to $132.1m from $123.6m in the same quarter last year.
Ennis, Inc. Reports Results for the Year and Quarter Ended February 28, 2014 and Sets Record Date for Annual Shareholder Meeting
April 21, 2014 12:07 PM Eastern Daylight Time
MIDLOTHIAN, Texas--(BUSINESS WIRE)--Ennis, Inc. (the "Company"), (NYSE: EBF), today reported financial results for the quarter and fiscal year ended February 28, 2014. Highlights for the year include:
Consolidated sales increased 1.7%
Print sales increased $5.2 million
Apparel sales increased $3.7 million
Consolidated gross profit margin increased 320 basis points
Print gross profit margin increased 50 basis points
Apparel gross profit margin increased 790 basis points
Non-GAAP diluted EPS increased 42.1% to $1.35 per share, before impairment charge of $0.85 per share resulting in GAAP diluted EPS of $0.50 per share.
The Company's consolidated net sales for the quarter were $132.1 million compared to $123.6 million for the same quarter last year. Print sales increased 12.7% on a comparable quarter basis, from $79.8 million to $89.9 million. Apparel sales decreased 3.6% for the comparable quarter, from $43.9 million to $42.3 million. Consolidated gross profit margin ("margin") during the quarter remained level at 25.4% in comparison to last year's quarter. On a quarter comparison basis, print margin decreased 120 basis points, from 29.6% to 28.4%, while apparel margin increased 140 basis points, from 17.6% to 19.0%. Apparel margin continued to improve due to lower input costs and higher production levels. Net earnings (loss) for the quarter decreased from $7.1 million, or 5.7% of net sales, for the quarter ended February 28, 2013 to ($14.5) million for the quarter ended February 28, 2014, due to a goodwill and trademark impairment charge of $24.2 million relating to the apparel division. Diluted earnings (loss) per share decreased from $0.27 for the quarter ended February 28, 2013 to ($0.55) for the quarter ended February 28, 2014. Excluding the impairment charge, non-GAAP earnings for the quarter would have been approximately $7.7 million, or approximately $0.30 per share.
For the fiscal year, consolidated net sales increased from $533.5 million for the year ended February 28, 2013 to $542.4 million for the year ended February 28, 2014, or an increase of 1.7%. Print sales for the year increased $5.2 million or 1.6%, from $334.7 million to $339.9 million, while apparel sales for the year increased $3.7 million or 1.9%, from $198.8 million to $202.5 million. Consolidated margin increased from 23.3% to 26.5% for the fiscal years ended 2013 and 2014, respectively. For the fiscal year by segment, print margin increased from 29.2% to 29.7%, and apparel margin increased from 13.2% to 21.1% due to lower input costs and increased production levels. Net earnings for the period decreased from $24.7 million, or 4.6% of net sales for the fiscal year ended February 28, 2013, to $13.2 million, or 2.4% of net sales for the fiscal year ended February 28, 2014, due to the goodwill and trademark impairment charge of $24.2 million in the fourth quarter. Diluted earnings per share decreased from $0.95 to $0.50 for each year, respectively. Excluding the impairment charge, non-GAAP net earnings for the year would have been approximately $35.3 million, or approximately $1.35 per diluted share.
The Company believes the non-GAAP financial measures of net earnings and diluted earnings per share on a proforma basis, excluding impairment, and EBITDA (EBITDA is calculated as net earnings before interest, taxes, depreciation, amortization, and impairment charge) provide important supplemental information to both management and investors regarding financial and business trends used in assessing its results of operations. The Company believes adding back the specified items to net earnings provides a more meaningful comparison to the corresponding reported periods and internal budgets and forecasts, provides management with a more relevant measurement of operating performance and is more useful in assessing management performance. In addition, EBITDA is a component of the financial covenants and an interest rate metric in the Company's credit facility. While management believes this non-GAAP financial measure is useful in evaluating Ennis, this information should be considered as supplemental in nature and not as a substitute for, or superior to, the related financial information prepared in accordance with GAAP.
Original source: Ennis Inc
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