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What changed in ENNIS, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ENNIS, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+137 added−147 removedSource: 10-K (2024-05-10) vs 10-K (2023-05-12)

Top changes in ENNIS, INC.'s 2024 10-K

137 paragraphs added · 147 removed · 115 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe 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®, Block Graphics®, 360º Custom Labels SM , ColorWorx®, Enfusion®, Uncompromised Check Solutions®, VersaSeal®, Ad Concepts SM , FormSource Limited SM , Star Award Ribbon Company®, Witt Printing®, B&D Litho®, Genforms®, PrintGraphics®, Calibrated Forms®, PrintXcel®, Printegra®, Forms Manufacturers SM , Mutual Graphics®, TRI-C Business Forms SM , Major Business Systems SM , Independent Printing SM , Hoosier Data Forms®, Hayes Graphics®, Wright Business Graphics SM , Wright 360 SM , Integrated Print & Graphics SM , the Flesh Company SM , Impressions Direct SM and AmeriPrint SM ; 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 & Label SM (which provides custom printed, high performance labels and custom and stock tags); Allen-Bailey Tag & Label SM , Atlas Tag & Label®, Kay Toledo Tag®, and Special Service Partners® (SSP) (which provides custom and stock tags and labels); Trade Envelopes®, Block Graphics®, Wisco®, and National Imprint Corporation® (which provide custom and imprinted envelopes) and Northstar® and General Financial Supply® (which provide financial and security documents); Infoseal SM and PrintXcel® (which provide custom and stock pressure seal documents).
Biggest changeThe 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®, Block Graphics®, 360º Custom Labels SM , ColorWorx®, Enfusion®, Uncompromised Check Solutions®, VersaSeal®, Ad Concepts SM , FormSource Limited SM , Star Award Ribbon Company®, Witt Printing®, B&D Litho®, Genforms®, PrintGraphics®, Calibrated Forms®, PrintXcel®, Printegra®, Forms Manufacturers SM , Mutual Graphics®, TRI-C Business Forms SM , Major Business Systems SM , Independent Printing SM , Hoosier Data Forms®, Hayes Graphics®, Wright Business Graphics SM , Wright 360 SM , Integrated Print & Graphics SM , the Flesh Company SM , Impressions Direct SM , AmeriPrint SM ; Stylecraft SM , UMC Print SM ; Eagle Graphics SM and Diamond Graphics SM .
Research and Development While we seek new products to sell through our distribution channel, there have been no material amounts spent on research and development in fiscal years 2023, 2022 or 2021. Environment We are subject to various federal, state, and local environmental laws and regulations concerning, among other things, wastewater discharges, air emissions and solid waste disposal.
Research and Development While we seek new products to sell through our distribution channel, there have been no material amounts spent on research and development in fiscal years 2024, 2023 or 2022. Environment We are subject to various federal, state, and local environmental laws and regulations concerning, among other things, wastewater discharges, air emissions and solid waste disposal.
We have registered trademarks in the United States for Ennis®, EnnisOnline SM , B&D Litho of AZ®, B&D Litho®, ACR®, Block Graphics®, Enfusion®, 360º Custom Labels SM , Admore®, CashManagementSupply.com SM , Securestar®, Northstar®, MICRLink®, MICR Connection TM , Ennisstores.com TM , General Financial Supply®, Calibrated Forms®, PrintXcel®, Printegra®, Trade Envelopes®, Witt Printing®, Genforms®, Royal Business Forms®, Crabar/GBF SM , BF&S SM, Adams McClure®, Advertising Concepts TM , ColorWorx®, Allen-Bailey Tag & Label SM , Atlas Tag & Label®, Printgraphics SM , Uncompromised Check Solutions®, VersaSeal®, VersaSeal SecureX®, Folder Express®, Wisco®, National Imprint Corporation®, Star Award Ribbon®, Kay Toledo Tag®, Falcon Business Forms SM , Forms Manufacturers SM , Mutual Graphics®, TRI-C Business Forms SM , SSP®, EOSTouchpoint®, Printersmall®, Check Guard®, Envirofolder®, Independent®, Independent Checks®, Independent Folders®, Independent Large Format Solutions®, Wright Business Graphics SM , Wright 360 SM , Integrated Print & Graphics SM , the Flesh Company SM , Impressions Direct SM , Megaform SM , Safe®, Infoseal SM , and variations of these brands as well as other trademarks.
We have registered trademarks in the United States for Ennis®, EnnisOnline SM , B&D Litho of AZ®, B&D Litho®, Block Graphics®, Enfusion®, 360º Custom Labels SM , Admore®, CashManagementSupply.com SM , Securestar®, Northstar®, MICRLink®, MICR Connection TM , General Financial Supply®, Calibrated Forms®, PrintXcel®, Printegra®, Trade Envelopes®, Witt Printing®, Genforms®, Royal Business Forms®, Crabar/GBF SM , BF&S SM, Adams McClure®, Advertising Concepts TM , ColorWorx®, Allen-Bailey Tag & Label SM , Atlas Tag & Label®, Printgraphics SM , Uncompromised Check Solutions®, VersaSeal®, VersaSeal SecureX®, Folder Express®, Wisco®, National Imprint Corporation®, Star Award Ribbon®, Kay Toledo Tag®, Falcon Business Forms SM , Forms Manufacturers SM , Mutual Graphics®, TRI-C Business Forms SM , SSP®, EOSTouchpoint®, Printersmall®, Check Guard®, Envirofolder®, Independent®, Independent Checks®, Independent Folders®, Independent Large Format Solutions®, Wright Business Graphics SM , Wright 360 SM , Integrated Print & Graphics SM , the Flesh Company SM , Impressions Direct SM , Megaform SM , Safe®, Infoseal SM , Stylecraft SM , UMC Print SM , Eagle Graphics SM , Diamond Graphics SM and variations of these brands as well as other trademarks.
Given the low and de minimus use of these potentially hazardous materials, our plants generally fit in the lowest category of reporting standards to various state and local environmental agencies. The Company requires facility managers to minimize the use or site storage of any hazardous chemicals.
Given the low and de minimis use of these potentially hazardous materials, our plants generally fit in the lowest category of reporting standards to various state and local environmental agencies. The Company requires facility managers to minimize the use or site storage of any hazardous chemicals.
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.
Approximately 96% 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.
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. We operate 54 manufacturing plants throughout the United States in 20 strategically located states as one reportable segment.
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. We operate 59 manufacturing plants throughout the United States in 20 strategically located states as one reportable segment.
We have similar trademark registrations internationally for certain trademarks. Customers No single customer accounts for as much as five percent of our consolidated net sales or accounts receivable. Backlog At February 28, 2023, our backlog of firm orders was approximately $46.7 million, compared to approximately $38.4 million at February 28, 2022.
We have similar trademark registrations internationally for certain trademarks. Customers No single customer accounts for as much as five percent of our consolidated net sales or accounts receivable. Backlog At February 29, 2024, our backlog of firm orders was approximately $33.7 million, compared to approximately $46.7 million at February 28, 2023.
Our goal of operating in an environmentally responsible manner aligns with our goals of operating a profitable and responsible business. For example, we recycle waste material generated in our printing processes to generate income from selling the scrap material. We recycled 23.1 million pounds of paper and 2.2 million pounds of cardboard and cores in 2023.
Our goal of operating in an environmentally responsible manner aligns with our goals of operating a profitable and responsible business. For example, we recycle waste material generated in our printing processes to generate income from selling the scrap material. We recycled 20.9 million pounds of paper and 1.7 million pounds of cardboard and cores in 2024.
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 Sons, Staples, Inc., Standard Register Co. (a subsidiary of Taylor Corporation), and Cenveo, Inc., or, like the Company, through a variety of independent distributors and distributor groups.
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.
Human Capital At February 28, 2023, we had 1,919 employees. 167 employees are represented by labor unions under collective bargaining agreements, which are subject to periodic negotiations. We believe we have a good working relationship with all of the unions that represent our employees.
Human Capital At February 29, 2024, we had 1,941 employees. 156 employees are represented by labor unions under collective bargaining agreements, which are subject to periodic negotiations. We believe we have a good working relationship with all of the unions that represent our employees.
General economic conditions and contraction of the traditional business forms industry are the predominant factors in quarterly volume fluctuations. Recent Acquisitions We have completed a number of acquisitions in recent years.
General economic conditions and contraction of the traditional business forms industry are the predominant factors in quarterly volume fluctuations. Recent Acquisitions We have completed a number of acquisitions in recent years. On October 11, 2023, we acquired the assets and business of Eagle Graphics, Inc. (" Eagle ") in Annville, Pennsylvania, and Diamond Graphics, Inc.
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. 4 There are a number of competitors that operate in this segment, ranging in size from single employee-owned operations to multi-plant organizations.
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.
We and our subsidiaries 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.
Ennis is primarily a “trade printer” that manufactures a broad range of printed products that are resold throughout the United States through a network of 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 believe our strategic locations and buying power permit us to compete on a favorable basis within the distributor market on competitive factors, such as service, quality, and price.
We believe our strategic locations and buying power permit us to compete on a favorable basis within the distributor market on competitive factors, such as service, quality, and price. 4 Distribution of business forms and other business products throughout the United States is primarily done through independent distributors, including business forms distributors, resellers, direct mail, commercial printers, software companies, and advertising agencies.
SPM provides printing, yearbook publishing and marketing related services to over 1,400 school and sports photographers servicing schools around the country.
On November 30, 2022, we acquired the School Photo Marketing (“ SPM ”) assets from SPM Marketing, Inc. in, which had approximately $10 million in sales in the twelve-month period preceding the acquisition. SPM provides printing, yearbook publishing and marketing related services to over 1,400 school and sports photographers servicing schools around the country.
On November 30, 2022, the Company acquired the assets and business from School Photo Marketing (" SPM ") in Morganville, New Jersey, which prior to the acquisition generated approximately $5.9 million in sales for its fiscal year ended December 31, 2021.
On May 23, 2023 we acquired the real estate and operations of Stylecraft Printing Company (" Stylecraft ") in Canton, Michigan, which prior to the acquisition generated approximately $7.0 million in sales for its fiscal year ended December 31, 2022. Stylecraft is a trade only printer since 1967 specializing in business forms, integrated products and commercial printing.
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Distribution of business forms and other business products throughout the United States is primarily done through independent distributors, including business forms distributors, resellers, direct mail, commercial printers, payroll and accounts payable software companies, and advertising agencies.
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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 & Label SM (which provides custom printed, high performance labels and custom and stock tags); Allen-Bailey Tag & Label SM , Atlas Tag & Label®, Kay Toledo Tag®, and Special Service Partners® (SSP) (which provides custom and stock tags and labels); Trade Envelopes®, Block Graphics®, Wisco®, and National Imprint Corporation® (which provide custom and imprinted envelopes) and Northstar® and General Financial Supply® (which provide financial and security documents); Infoseal SM and PrintXcel® (which provide custom and stock pressure seal documents).
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On June 1, 2021, the Company acquired the assets and business from AmeriPrint Corporation (" AmeriPrint ") in Harvard, Illinois, which prior to the acquisition generated approximately $6.5 million in sales for its fiscal year ended December 31, 2020, adding capabilities and expertise to our expanding product offering including barcoding and variable imaging.
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There are a number of competitors that operate in this segment.
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On December 31, 2020, we acquired the assets of Infoseal LLC (“ Infoseal ”) in Roanoke, Virginia. The acquisition of Infoseal, which prior to the acquisition generated approximately $19.2 million in sales for its fiscal year ended December 31, 2020, creates additional capabilities and expertise to our product offering including our existing VersaSeal pressure seal product line.
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(" Diamond ") in Bensalem, Pennsylvania. In the last full year preceding the acquisition, Eagle and Diamond generated approximately $8.7 million in combined sales. The acquisition of these facilities strengthens our production capabilities to serve our large and growing customer base in the Northeast part of the country.
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On June 2, 2023, we acquired the assets and business of UMC Print (" UMC ")in Overland Park, Kansas, which reported approximately $16.1 million in 2022. The addition of UMC added new commercial printing capabilities, expanded our distributor customer base and provided our existing distributors with new product offerings to further drive their growth.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks related to our securities Because of the volatility in the stock market in general, the market price of our Common Stock will also likely be volatile. The stock markets have historically experienced price and volume fluctuations that at times have been extreme and have affected, and continue to affect, the market prices of equity securities of many companies.
Biggest changeThe stock markets have historically experienced price and volume fluctuations that at times have been extreme and have affected, and continue to affect, the market prices of equity securities of many companies. These fluctuations have often been unrelated or disproportionate to the operating performance of those companies.
In addition, as our Pension Plan assets are invested in marketable securities, fluctuations in market values can negatively impact our funded status, recorded pension liability, and future required minimum contribution levels. A decline in long-term debt interest rates puts downward pressure on the discount rate used by plan sponsors to determine their pension liabilities.
In addition, as our Pension Plan assets are invested in marketable securities, fluctuations in market values can negatively impact our funded status, recorded pension liability, and future required minimum contribution levels. A decline in long-term interest rates puts downward pressure on the discount rate used by plan sponsors to determine their pension liabilities.
The increasing sophistication of software, internet technologies, and digital equipment combined with our customers’ general preference, as well as governmental influences for paperless business environments will continue to reduce the number of traditional printed documents sold. Moreover, the documents that will continue to coexist with software applications will likely contain less value-added print content.
The increasing sophistication of software, internet technologies, and digital equipment combined with our customers’ general preference and digital substitutions, as well as governmental influences for paperless business environments will continue to reduce the number of traditional printed documents sold. Moreover, the documents that will continue to coexist with software applications will likely contain less value-added print content.
Most recently, on August 16, 2022, legislation commonly known as the Inflation Reduction Act (the " IRA ") was signed into law. Among other things, the IRA includes a 1% excise tax on corporate stock repurchases, applicable to repurchases after December 31, 2022, and also a new minimum tax based on book income.
Most recently, on August 16, 2022, legislation commonly known as the Inflation Reduction Act (the " IRA ") was signed into law. Among other things, the IRA includes a 1% excise tax on certain corporate stock repurchases, applicable to repurchases after December 31, 2022, and also a new minimum tax based on book income.
We currently purchase the majority of our paper products from one major supplier at favorable costs based on the volume of business, and traditionally we have purchased our paper products from a limited number of suppliers, all of which must meet stringent quality and on-time delivery standards under long-term contracts.
We currently purchase a large majority of our paper products from one major supplier at favorable costs based on the volume of business, and traditionally we have purchased our paper products from a limited number of suppliers, all of which must meet stringent quality and on-time delivery standards under long-term contracts.
Although we maintain third party insurance against various liability risks and risks of property loss for items we believe are economically reasonable to insure, we could incur uninsured losses and liabilities arising from such events which would adversely affect our results of operations and financial condition.
Although we maintain third party 11 insurance against various liability risks and risks of property loss for items we believe are economically reasonable to insure, we could incur uninsured losses and liabilities arising from such events which would adversely affect our results of operations and financial condition.
The attack resulted in a brief disruption to the operation of our systems as we took our servers offline to eradicate the ransomware and restore our data and applications from secure backups. The Company did not 12 communicate with the ransomware threat actor and never considered paying any ransom demand.
The attack resulted in a brief disruption to the operation of our systems as we took our servers offline to eradicate the ransomware and restore our data and applications from secure backups. The Company did not communicate with the ransomware threat actor and never considered paying any ransom demand.
Challenging financial market conditions and changes in long-term interest rates could adversely impact the funded status of our pension plan. We maintain a noncontributory defined benefit retirement plan (the “ Pension Plan ”) covering approximately 13% of our employees.
Challenging financial market conditions and changes in long-term interest rates could adversely impact the funded status of our pension plan. We maintain a noncontributory defined benefit retirement plan (the “ Pension Plan ”) covering approximately 12% of our employees.
Each 10 basis point change in the discount rate impacts our computed pension liability by 9 approximately $525,000. Similar to fluctuations in market values, a drop in the discount rate can negatively impact our funded status, recorded pension liability and future contribution levels. Also, continued changes in the mortality assumptions can impact our funded status.
Each 10 basis point change in the discount rate impacts our computed pension liability by approximately $505,000. Similar to fluctuations in market values, a drop in the discount rate can negatively impact our funded status, recorded pension liability and future contribution levels. Also, continued changes in the mortality assumptions can impact our funded status.
We depend on the reliability of our IT and network infrastructure as well as those of third parties. If these systems fail, our operations may be adversely affected.
We depend on the reliability of our information technology ("IT") and network infrastructure as well as those of third parties. If these systems fail, our operations may be adversely affected.
We depend on information technology and data processing systems to operate our business, and a significant malfunction or disruption in the operation of our systems may disrupt our business and adversely affect our ability to operate and compete in the markets we serve.
We depend on IT and data processing systems to operate our business, and a significant malfunction or disruption in the operation of our systems may disrupt our business and adversely affect our ability to operate and compete in the markets we serve.
The occurrence of one or more unexpected events, including war, acts of terrorism or violence, civil unrest, epidemics or pandemics, fires, tornadoes, hurricanes, earthquakes, floods and other forms of severe weather in the United States could adversely affect our operations and financial performance.
A natural disaster, catastrophe, pandemic or other unexpected events could adversely affect our operations. The occurrence of one or more unexpected events, including war, acts of terrorism or violence, civil unrest, epidemics or pandemics, fires, tornadoes, hurricanes, earthquakes, floods and other forms of severe weather in the United States could adversely affect our operations and financial performance.
Additionally, as we experienced in recent months, the number of retirees taking lump sum distributions could be sufficiently high as to cause a settlement charge, which would impact current earnings of the Pension Plan. We may be unable to identify or to complete acquisitions or to successfully integrate the businesses we acquire.
Additionally, as we experienced in recent years, the number of participants 9 taking lump sum distributions at retirement could be sufficiently high as to cause a settlement charge, which would impact current earnings of the Pension Plan. We may be unable to identify or to complete acquisitions or to successfully integrate the businesses we acquire.
As of February 28, 2023, approximately 8% of our employees are represented by labor unions under collective bargaining agreements, which are subject to periodic negotiations.
As of February 29, 2024, approximately 8% of our employees are represented by labor unions under collective bargaining agreements, which are subject to periodic negotiations.
As of February 28, 2023, the Pension Plan was 99% funded on a projected benefit obligation (PBO) basis and 105% on an accumulated benefit obligation (ABO) basis. Included in our financial results are Pension Plan costs that are measured using actuarial valuations. The actuarial assumptions used may differ from actual results.
As of February 29, 2024, the Pension Plan was 100% funded on a projected benefit obligation ("PBO") basis and 107% on an accumulated benefit obligation ("ABO") basis. Included in our financial results are Pension Plan costs that are measured using actuarial valuations. The actuarial assumptions used may differ from actual results.
Costs to employ drivers have increased and transportation shortages have become more prevalent. Additionally, the challenge of employing new drivers for the increasingly larger web-based economy could create shortages in trucks and drivers which could impact our sales.
Government regulations can and have impacted the availability of drivers, which will be a significant challenge to the transportation industry. Costs to employ drivers have increased and transportation shortages have become more prevalent. Additionally, the challenge of employing new drivers for the increasingly larger web-based economy could create shortages in trucks and drivers which could impact our sales.
Even if this strategy is successful, the results may be offset by reductions in demand or price declines due to competitors’ pricing strategies or other micro or macro-economic factors.
Our marketing strategy is to differentiate ourselves by providing quality service and quality products to our customers. Even if this strategy is successful, the results may be offset by reductions in demand or price declines due to competitors’ pricing strategies or other micro or macro-economic factors.
While the Company has various cost control measures in place and employs an outside oversight review on larger claims, employee health benefits have been and are expected to continue to be a significant cost to us and may increase due to factors outside the Company’s control.
While the Company has various cost control measures in place and employs an outside oversight review on larger claims, employee health benefits have been and are expected to continue to be a significant cost to us and may increase due to factors outside the Company’s control. 12 Risks related to our securities Because of the volatility in the stock market in general, the market price of our Common Stock will also likely be volatile.
Significant increases in the costs of freight and transportation could have a material adverse effect on our results of operations, as there can be no assurance that we could pass on these increased costs to our customers. Government regulations can and have impacted the availability of drivers, which will be a significant challenge to the transportation industry.
Our business incurs significant freight and transportation costs. We incur transportation expenses to ship our products to our customers. Significant increases in the costs of freight and transportation could have a material adverse effect on our results of operations, as there can be no assurance that we could pass on these increased costs to our customers.
We monitor our credit risk exposure by periodically obtaining credit reports and updated financials on our customers. We generally see a heightened amount of bankruptcies by our customers during economic downturns. In particular, the COVID-19 pandemic, and its impact on our customers, could have a negative impact on our collection efforts.
We monitor our credit risk exposure by periodically obtaining credit reports and updated financials on our customers. We generally see a heightened amount of bankruptcies by our customers during economic downturns.
While we maintain an allowance for doubtful receivables for potential credit losses based upon our historical trends and other available information, in times of economic turmoil, there is heightened risk that our historical indicators may prove to be inaccurate.
While we maintain an allowance for credit losses based upon our historical trends and other available information, in times of economic turmoil, there is heightened risk that our historical indicators may prove to be inaccurate. The inability to collect on sales to significant customers or a group of customers could have a material adverse effect on our results of operations.
We may be the target of this type of litigation in the future, which could result in substantial costs and divert our management's attention.
In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in the future, which could result in substantial costs and divert our management's attention.
Certain macroeconomic events, such as crises in the financial markets, could have a more wide-ranging and prolonged impact on the general business environment, which could also adversely affect us. In particular, the COVID-19 pandemic negatively impacted local, national and worldwide economies, and introduced market volatility.
Certain macroeconomic events, such as crises in the financial markets, inflation, high interest rates and recessionary concerns, cost and labor pressures, distribution challenges and the availability of paper could have a more wide-ranging and prolonged impact on the general business environment, which could also adversely affect us.
These fluctuations have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may negatively impact the market price of our common stock.
Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may negatively impact the market price of our common stock. If the market price of our Class A common stock falls below your investment price, you may lose some or all of your investment.
Conditions caused by the COVID-19 pandemic and other economic factors have contributed to tightening and increased competitiveness in the labor market, increasing labor costs. A prolonged labor shortage could potentially adversely affect our business operations and further increase labor costs.
Economic factors have contributed to tightening and increased competitiveness in the labor market, increasing labor costs. A prolonged labor shortage could potentially adversely affect our business operations and further increase labor costs. We face intense competition to gain market share, which may lead some competitors to sell substantial amounts of goods at prices against which we cannot profitably compete.
Fluctuations in the quality of our paper, unexpected price changes or other factors that relate to our suppliers could have a material adverse effect on our operating results. In particular, the COVID-19 pandemic made it more expensive or more difficult to source raw materials for our products, whether from our existing suppliers or new suppliers.
Fluctuations in the quality of our paper, unexpected price changes, decline in overall distribution channels or other factors that relate to our suppliers could have a material adverse effect on our operating results. Paper is a commodity that is subject to frequent increases or decreases in price, and these fluctuations are sometimes significant.
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Paper supply and other raw materials were limited, and due to tight demand and supply there was a significant amount of upward pressure on prices. Paper is a commodity that is subject to frequent increases or decreases in price, and these fluctuations are sometimes significant.
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We face intense competition to gain market share, which may lead some competitors to sell substantial amounts of goods at prices against which we cannot profitably compete. Our marketing strategy is to differentiate ourselves by providing quality service and quality products to our customers.
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The inability to collect on sales to significant customers or a group of customers could have a material adverse effect on our results of operations. Our business incurs significant freight and transportation costs. We incur transportation expenses to ship our products to our customers.
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During fiscal year 2023, we experienced significantly higher freight and transportation costs as a result of overall inflationary pressures, and transportation and logistics constraints resulting from the COVID-19 pandemic. 11 A natural disaster, catastrophe, pandemic or other unexpected events could adversely affect our operations.
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The COVID-19 pandemic has had and may continue to have adverse effects on our results of operations, financial condition and stock price. The COVID-19 pandemic caused a significant downturn in global economic activity and subsequently caused significant market volatility and operational challenges.
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The COVID-19 pandemic and the measures taken by many countries in response have adversely affected and could in the future have a material adverse effect on our business, results of operations, financial condition and stock price.
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Our sales were significantly impacted by economic conditions driven by the COVID-19 pandemic and resulted in a decrease in sales volume and earnings in fiscal year 2021.
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While the demand for our products appears to have recovered in 2022 and 2023, economic uncertainties could continue to affect customer demand for our products and services, and the longer term effects of the pandemic, including supply chain disruptions and inflationary pressures are unknown and could have a material adverse effect on our results of operations.
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Additionally, the COVID-19 pandemic may result in temporary or permanent healthcare reform measures, would could result in significant cost increases and other negative impacts to our business.
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If the market price of our Class A common stock falls below your investment price, you may lose some or all of your investment. In the past, companies that have experienced volatility in the marker price of their securities have been subject to securities class action litigation.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeApproximate Square Footage Location General Use Owned Leased Fairhope, Alabama Manufacturing 65,000 — Chino, California Manufacturing — 63,016 Sun City, California Two Manufacturing Facilities 52,617 — Denver, Colorado One Manufacturing Facility 60,000 Lithia Springs, Georgia Manufacturing — 40,050 Harvard, Illinois Manufacturing and Warehouse 42,000 South Elgin, Illinois Manufacturing — 70,500 Indianapolis, Indiana Two Manufacturing Facilities — 38,000 DeWitt, Iowa Two Manufacturing Facilities 95,000 — Nevada, Iowa Two Manufacturing Facilities 232,000 — Columbus, Kansas Two Manufacturing Facilities and Warehouse 174,089 — Ft.
Biggest changeGenerally, we are able to maintain or renew leases as they expire without significant difficulty, but leases in certain markets may be subject to significant rent increases that necessitate consolidating operations to maintain profitability. 14 Approximate Square Footage Location General Use Owned Leased Fairhope, Alabama Manufacturing 65,000 — Sun City, California Two Manufacturing Facilities and Warehouse 52,617 1,911 Denver, Colorado One Manufacturing Facility 60,000 — Lithia Springs, Georgia Manufacturing — 40,050 Harvard, Illinois Manufacturing and Warehouse 42,000 — South Elgin, Illinois Manufacturing — 70,500 Indianapolis, Indiana Two Manufacturing Facilities — 38,000 DeWitt, Iowa Two Manufacturing Facilities 95,000 — Nevada, Iowa Two Manufacturing Facilities 232,000 — Columbus, Kansas Two Manufacturing Facilities and Warehouse 174,089 — Ft.
Equipment is added as existing machinery becomes obsolete or not repairable, and as new equipment becomes necessary to meet market 13 demands; however, at any given time, these additions and replacements are not considered to be material additions to property, plant and equipment, although such additions or replacements may increase a plant’s efficiency or capacity.
Equipment is added as existing machinery becomes obsolete or not repairable, and as new equipment becomes necessary to meet market demands; however, at any given time, these additions and replacements are not considered to be material additions to property, plant and equipment, although such additions or replacements may increase a plant’s efficiency or capacity.
All of our facilities are believed to be in good condition. We do not anticipate that substantial expansion, refurbishing, or re-equipping of our facilities will be required in the near future. All of our rented property is held under leases with original terms of one or more years, expiring at various times through August 2028.
All of our facilities are believed to be in good condition. We do not anticipate that substantial expansion, refurbishing, or re-equipping of our facilities will be required in the near future. All of our rented property is held under leases with original terms of one or more years, expiring at various times through November 2028.
All of our properties are used for the production, warehousing and shipping of business products, including the following: business forms, flexographic printing, and advertising specialties (Wolfe City, Texas); presentation products (Macomb, Michigan; De Pere, Wisconsin and Columbus, Kansas); printed and electronic promotional media (Denver, Colorado); envelopes (Portland, Oregon; Columbus, Kansas; Tullahoma, Tennessee and Claysburg, Pennsylvania); financial forms (Minneapolis/St.
All of our properties are used for the production, warehousing and shipping of business products, including the following: business forms, flexographic printing, and advertising specialties (Wolfe City, Texas); presentation 13 products (Macomb, Michigan; De Pere, Wisconsin and Columbus, Kansas); printed and electronic promotional media (Columbus, Kansas); envelopes (Portland, Oregon; Columbus, Kansas; Tullahoma, Tennessee and Claysburg, Pennsylvania); financial forms (Minneapolis/St.
Scott, Kansas Manufacturing 86,660 — Girard, Kansas Manufacturing 69,474 — Parsons, Kansas Manufacturing & One Warehouse 122,740 40,000 Macomb, Michigan Manufacturing 56,350 — Brooklyn Park, Minnesota Manufacturing 94,800 — Coon Rapids, Minnesota Warehouse — 4,800 El Dorado Springs, Missouri Manufacturing 70,894 — Fenton, Missouri Manufacturing — 26,847 Marlboro, New Jersey Manufacturing and Warehouse 7,450 Caledonia, New York Manufacturing and one vacant 191,730 — Fairport, New York Two Manufacturing Facilities 40,800 — Coshocton, Ohio Manufacturing 24,750 — Toledo, Ohio Three Manufacturing Facilities 120,947 — Portland, Oregon Two Manufacturing Facilities — 261,765 Claysburg, Pennsylvania Manufacturing — 69,000 Clarksville, Tennessee Manufacturing 51,900 — Powell, Tennessee Manufacturing 43,968 — Tullahoma, Tennessee Two Manufacturing Facilities 142,061 — Arlington, Texas Two Manufacturing Facilities 69,935 — Ennis, Texas Three Manufacturing Facilities * 325,118 — Houston, Texas Manufacturing — 29,668 Wolfe City, Texas Two Manufacturing Facilities 119,259 — Bridgewater, Virginia Manufacturing — 25,730 Chatham, Virginia Two Manufacturing Facilities 127,956 — Roanoke, Virginia Manufacturing 110,000 DePere, Wisconsin Manufacturing & One Warehouse — 142,347 Mosinee, Wisconsin Manufacturing — 5,400 Neenah, Wisconsin Two Manufacturing Facilities & One Warehouse 72,354 97,161 2,552,402 1,031,734 Corporate Offices Ennis, Texas Administrative Offices 9,300 — Midlothian, Texas Executive and Administrative Offices 28,000 — 37,300 — Totals 2,589,702 1,031,734 * 22,000 square feet of Ennis, Texas location leased 14
Scott, Kansas Manufacturing 86,660 — Girard, Kansas Manufacturing 69,474 — Overland Park, Kansas Two Manufacturing Facilities — 26,750 Parsons, Kansas Manufacturing & One Warehouse 122,740 40,000 Canton, Michigan Two Manufacturing Facilities and Warehouse 32,958 13,490 Macomb, Michigan Manufacturing 56,350 — Brooklyn Park, Minnesota Manufacturing 94,800 — El Dorado Springs, Missouri Manufacturing 70,894 — Fenton, Missouri Manufacturing — 26,847 Marlboro, New Jersey Manufacturing and Warehouse — 7,450 Caledonia, New York Manufacturing and one vacant 191,730 — Fairport, New York Two Manufacturing Facilities 40,800 — Coshocton, Ohio Manufacturing 24,750 — Toledo, Ohio Three Manufacturing Facilities 120,947 — Portland, Oregon Two Manufacturing Facilities — 261,765 Annville, Pennsylvania Manufacturing 37,000 — Bensalem, Pennsylvania Manufacturing — 16,600 Claysburg, Pennsylvania Manufacturing — 69,000 Clarksville, Tennessee Manufacturing 51,900 — Powell, Tennessee Manufacturing 43,968 — Tullahoma, Tennessee Two Manufacturing Facilities 142,061 — Arlington, Texas Two Manufacturing Facilities 69,935 — Ennis, Texas Three Manufacturing Facilities * 325,118 — Houston, Texas Manufacturing — 29,668 Wolfe City, Texas Two Manufacturing Facilities 119,259 — Bridgewater, Virginia Manufacturing — 25,730 Chatham, Virginia Two Manufacturing Facilities 127,956 — Roanoke, Virginia Manufacturing — 110,000 DePere, Wisconsin Manufacturing — 123,187 Mosinee, Wisconsin Manufacturing — 5,400 Neenah, Wisconsin Two Manufacturing Facilities & One Warehouse 72,354 97,161 2,622,360 1,003,509 Corporate Offices Ennis, Texas Administrative Offices 9,300 — Midlothian, Texas Executive and Administrative Offices 28,000 — 37,300 — Totals 2,659,660 1,003,509 * 22,000 square feet of Ennis, Texas location leased 15
Removed
Generally, we are able to maintain or renew leases as they expire without significant difficulty, but leases in certain markets may be subject to significant rent increases that necessitate consolidating operations to maintain profitability.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+1 added−0 removed1 unchanged
Biggest changeIn April 2023, Crabar/GBF, Inc., a subsidiary of Ennis, was awarded $5.0 million in actual and punitive damages in a case against Wright Printing Company, its owner Mark Wright, and CEO Mardra Sikora. The impact of the Judgment has not been reflected in the accompanying consolidated financial statements as of February 28, 2023.
Biggest changeIn October 2023, Crabar/GBF, Inc., a subsidiary of Ennis, was awarded $5.8 million in actual damages, exemplary damages and attorney’s fees in a case against Wright Printing Company, its owner Mark Wright, and CEO Mardra Sikora. Given the defendants’ pending appeal, we have not yet recognized revenue from the judgment.
Added
Nevertheless, the defendants have posted cash bonds that total approximately $5.1 million, which should be recoverable by the Company if defendants’ appeal is unsuccessful.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−0 removed2 unchanged
Biggest changeAs of February 28, 2023, $23.9 million remained available to repurchase shares of common stock under the program. Stock Performance Graph The graph below matches Ennis, Inc.'s cumulative 5-Year total shareholder return on common stock with the cumulative total returns of the S&P 500 index and the Russell 2000 index.
Biggest changeTotal Number Total of Shares Maximum Amount Number Average Purchased as that May Yet Be Used of Shares Price Paid Part of Publicly to Purchase Shares Period Purchased per Share Announced Programs Under the Program December 1, 2023 - December 31, 2023 — $ — — $ 23,948,822 January 1, 2024 - January 31, 2024 — $ — — $ 23,948,822 February 1, 2024 - February 29, 2024 29,350 $ 19.96 29,350 $ 23,362,850 Total 29,350 $ 19.96 29,350 $ 23,362,850 17 Stock Performance Graph The graph below matches Ennis, Inc.'s cumulative 5-Year total shareholder return on common stock with the cumulative total returns of the S&P 500 index and the Russell 2000 index.
Repurchases may be commenced or suspended at any time or from time to time without prior notice, provided that any purchases must be made in accordance with applicable insider trading rules and securities laws and regulations.
Repurchases may be commenced or suspended at any time or from time to time without prior notice, provided that any purchases must be made in accordance with 16 applicable insider trading rules and securities laws and regulations.
Our Board has authorized the repurchase of the Company’s outstanding common stock through a stock repurchase program, which authorized amount is currently up to $40.0 million in the aggregate. 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.
Our Board has authorized the repurchase of the Company’s outstanding common stock through a stock repurchase program, which authorized amount is currently up to $60.0 million in the aggregate. 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.
Cash dividends may be paid, or repurchases of our common stock may be made, from time to time as our Board of Directors (“ Board ”) deems appropriate, after considering our growth rate, operating results, financial condition, cash requirements, restrictive lending covenants, and such other factors as the Board may deem appropriate.
Cash dividends may be paid, or repurchases of our common stock may be made, from time to time as our Board deems appropriate, after considering our growth rate, operating results, financial condition, cash requirements, restrictive lending covenants, and such other factors as the Board may deem appropriate.
A dividend of $0.225 per share of our common stock was paid in each quarter of fiscal year 2021 and in the first quarter of fiscal year 2022. A dividend of $0.25 per share of our common stock was paid in each subsequent quarter of fiscal year 2022 and in each quarter of fiscal year 2023.
A dividend of $0.225 per share of our common stock was paid in the first quarter of fiscal year 2022. A dividend of $0.25 per share of our common stock was paid in each subsequent quarter of fiscal year 2022 and in each quarter of fiscal years 2023 and 2024.
The following table sets forth the high and low sales prices, the common stock trading volume as reported by the NYSE and dividends per share paid by the Company for the periods indicated: Common Stock Dividends Trading Volume per share of Common Stock Price Range (number of shares Common High Low in thousands) Stock Fiscal Year Ended February 28, 2023 First Quarter $ 19.24 $ 16.94 6,424 $ 0.250 Second Quarter 22.67 16.55 7,768 $ 0.250 Third Quarter 23.44 19.81 6,238 $ 0.250 Fourth Quarter 23.48 20.55 6,131 $ 0.250 Fiscal Year Ended February 28, 2022 First Quarter $ 22.24 $ 19.99 2,703 $ 0.225 Second Quarter 21.85 19.26 2,842 $ 0.250 Third Quarter 20.08 17.65 5,703 $ 0.250 Fourth Quarter 20.26 18.07 5,685 $ 0.250 On May 9, 2023, the last reported sale price of our common stock on the NYSE was $19.44, and there were approximately 655 shareholders of record.
The following table sets forth the high and low sales prices, the common stock trading volume as reported by the NYSE and dividends per share paid by the Company for the periods indicated: Common Stock Dividends Trading Volume per share of Common Stock Price Range (number of shares Common High Low in thousands) Stock Fiscal Year Ended February 29, 2024 First Quarter $ 22.19 $ 18.94 7,812 $ 0.250 Second Quarter 22.46 19.38 5,412 $ 0.250 Third Quarter 21.99 20.55 4,317 $ 0.250 Fourth Quarter 23.17 19.75 6,288 $ 0.250 Fiscal Year Ended February 28, 2023 First Quarter $ 19.24 $ 16.94 6,424 $ 0.250 Second Quarter 22.67 16.55 7,768 $ 0.250 Third Quarter 23.44 19.81 6,238 $ 0.250 Fourth Quarter 23.48 20.55 6,131 $ 0.250 On May 9, 2024, the last reported sale price of our common stock on the NYSE was $20.71, and there were approximately 622 shareholders of record.
Since the program’s inception in October 2008, 15 we have repurchased 2,213,111 common shares under the program at an average price of $16.25 per share. During our fiscal year 2023, we repurchased 64,082 shares of common stock at an average price of $17.46 per share.
Since the program’s inception in October 2008, we have repurchased 2,242,461 common shares under the program at an average price of $16.34 per share. During our fiscal year 2024, we repurchased 29,350 shares of common stock at an average price of $19.96 per share.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 2/28/2018 to 2/28/2023. 2018 2019 2020 2021 2022 2023 Ennis, Inc. $ 100.00 $ 104.14 $ 114.43 $ 104.91 $ 114.56 $ 135.05 S&P 500 100.00 97.69 118.87 139.37 171.83 157.71 Russell 2000 100.00 96.48 105.36 137.15 135.50 130.92 The stock price performance included in this graph is not necessarily indicative of future stock price performance. 16
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 2/28/2019 to 2/29/2024. 2019 2020 2021 2022 2023 2024 Ennis, Inc. $ 100.00 $ 99.08 $ 102.67 $ 102.13 $ 124.28 $ 121.81 S&P 500 100.00 108.19 142.05 165.33 152.61 199.09 Russell 2000 100.00 95.08 143.56 134.93 126.82 139.56 The stock price performance included in this graph is not necessarily indicative of future stock price performance. 18
Added
As of February 29, 2024, $23.4 million remained available to repurchase shares of common stock under the program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

58 edited+16 added−18 removed29 unchanged
Biggest changeOur current ratio, calculated by dividing our current assets by our current liabilities, increased from 4.2-to-1.0 for fiscal year 2021 to 4.4-to-1.0 for fiscal year 2022. Our increase in working capital primarily reflects the increase in cash, $10.4 million, accounts receivable $1.1 million and inventory $5.6 million offset by the increase in our accounts payable, $1.9 million.
Biggest changeOur working capital increased by approximately $12.2 million, or 7.9%, from $155.4 million at February 28, 2023 to $167.6 million at February 29, 2024. Our current ratio, calculated by dividing our current assets by our current liabilities, increased from 4.8 to 1.0 for fiscal year 2023 to 6.0 to 1.0 for fiscal year 2024.
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 reporting unit being lower than the carrying value, an impairment charge is recorded.
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 quantitative evaluation results in the fair value of the reporting unit being lower than the carrying value, an impairment charge is recorded.
If qualitative factors are not deemed sufficient to conclude that it is more likely than not that the fair value of the reporting unit exceeds its carrying value, then a one-step approach is applied in making an evaluation.
If qualitative factors are not deemed sufficient to conclude that it is more likely than not that the fair value of the reporting unit exceeds its carrying value, then a one-step quantitative approach is applied in making an evaluation.
While we believe we have exercised prudent judgment and applied reasonable assumptions, there 19 can be no assurance that in the future, changes in economic conditions or other factors would not cause changes in the financial health of our customers.
While we believe we have exercised prudent judgment and applied reasonable assumptions, there can be no assurance that in the future, changes in economic conditions or other factors would not cause changes in the financial health of our customers.
If the financial health of our customers deteriorates, the timing and level of payments received could be impacted and therefore, could result in a change to our estimated losses. Returns, discounts and other allowances have historically been insignificant.
If the financial health of our customers deteriorates, the timing 21 and level of payments received could be impacted and therefore, could result in a change to our estimated losses. Returns, discounts and other allowances have historically been insignificant.
Similar to fluctuations in market values, a drop in the discount rate could potentially negatively impact our funded status, recorded pension liability and future contribution levels with the opposite impact occurring for an increase in the discount rate.
Similar to fluctuations in market values, a drop in the discount rate could potentially negatively impact our Pension Plan's funded status, recorded pension liability and future contribution levels with the opposite impact occurring for an increase in the discount rate.
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 quantitative evaluation utilizes multiple valuation methodologies, including a market approach (market price multiples of comparable companies) and an income approach (discounted cash flow analysis).
Our decreased operational cash flows in fiscal year 2023 compared to fiscal year 2022 was primarily the result of a $3.4 million decrease from inventories, $8.2 million decrease from our accounts receivable, $5.9 million gain from disposal of assets and a $5.0 million decrease from deferred tax liability offset by $18.3 million in increased earnings.
Our decreased operational cash flows in fiscal year 2023 compared to fiscal year 2022 was primarily the result of a $3.4 million decrease from inventories, $8.2 million decrease from our accounts receivable, $5.9 million gain from disposal of assets and a $5.0 million decrease from deferred tax liability offset by $18.3 million in increased earnings. Cash flows from investing activities.
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.
The computations require management to make significant estimates and assumptions, including, among other things, selection of comparable publicly traded companies, an appropriate discount rate applied to future earnings reflecting a weighted average cost of capital, and earnings growth assumptions.
This assumption will continue to be monitored. Goodwill and Other Intangible Assets – Amounts allocated to intangibles and goodwill are determined based on valuation analyses for our acquisitions. Amortizable intangibles are amortized over their expected useful lives.
This assumption will continue to be monitored. Impairment Assessments on Goodwill and Other Intangible Assets – Amounts allocated to intangibles and goodwill are determined based on valuation analyses for our acquisitions. Amortizable intangibles are amortized over their expected useful lives.
The $5.9 million gain from disposal of assets for fiscal 2023 is primarily from the sale of an unused manufacturing facility, $5.8 million, and $0.1 million of manufacturing equipment. The $0.3 million gain from disposal of assets for fiscal year 2022 is primarily related to the sale of an unused manufacturing facility and manufacturing equipment.
The $5.9 million gain from disposal of assets for fiscal 2023 is primarily from the sale of an unused manufacturing facility, $5.8 million, and $0.1 million of manufacturing equipment. The $0.3 million gain from disposal of assets for fiscal year 2022 is primarily related to the sale of an unused manufacturing facility and manufacturing equipment. Income from operations.
While U.S. mortality has been higher in the last couple of years due to the pandemic and other related factors, the mortality assumption is used to estimate the future lifetime of plan participants.
While U.S. mortality has been higher in the last couple of years due to the COVID-19 pandemic and other related factors, the mortality assumption is used to estimate the future lifetime of plan participants.
This section provides information necessary to evaluate our ability to generate cash and to meet existing and known future cash requirements over both the short and long term. References to 2023, 2022 and 2021 refer to the fiscal years ended February 28, 2023, February 28, 2022 and February 28, 2021, respectively.
This section provides information necessary to evaluate our ability to generate cash and to meet existing and known future cash requirements over both the short and long term. References to 2024, 2023 and 2022 refer to the fiscal years ended February 29, 2024, February 28, 2023 and February 28, 2022, respectively.
Actual results may differ materially from these estimates under different assumptions or conditions. 18 We believe the following accounting policies are the most critical due to their effect on our more significant estimates and judgments used in preparation of our consolidated financial statements. Pension Plan – We maintain the Pension Plan for employees.
Actual results may differ materially from these estimates under different assumptions or conditions. We believe the following accounting policies are the most critical due to their effect on our more significant estimates and judgments used in preparation of our Consolidated Financial Statements. 20 Pension Plan – We maintain the Pension Plan for certain eligible employees.
We evaluate our estimates and judgments on an ongoing basis, including those related to allowance for doubtful receivables, inventory valuations, property, plant and equipment, intangible assets, pension plan obligations, accrued liabilities and income taxes. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances.
We evaluate our estimates and judgments on an ongoing basis, including those related to allowance for credit losses, inventory valuations, property, plant and equipment, intangible assets, pension plan obligations, accrued liabilities and income taxes. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances.
Some of the qualitative factors considered in applying this test include consideration of macroeconomic conditions, industry and market conditions, cost factors affecting business, overall financial performance of the business, and performance of the share price of the Company.
Some of the qualitative factors considered in applying this test include consideration of macroeconomic conditions, industry and market conditions, cost factors affecting the reporting unit’s business, overall financial performance of the business, and performance of the common share price of the Company.
Repurchases may be commenced or suspended at any time or from time to time without prior notice, provided that any purchases must be made in accordance with applicable insider trading rules and securities laws and regulations. Since the program’s inception in October 2008, we have repurchased 2,213,111 common shares under the program at an average price of $16.25 per share.
Repurchases may be commenced or suspended at any time or from time to time without prior notice, provided that any purchases must be made in accordance with applicable insider trading rules and securities laws and regulations. Since the program’s inception in October 2008, we have repurchased 2,242,461 common shares under the program at an average price of $16.34 per share.
Contractual Obligations – There have been no significant changes in our contractual obligations since February 28, 2023 that have, or that are reasonably likely to have, a material impact on our results of operations or financial condition. The following table represents our contractual commitments as of February 28, 2023 (in thousands).
Contractual Obligations – There have been no significant changes in our contractual obligations since February 29, 2024 that have, or that are reasonably likely to have, a material impact on our results of operations or financial condition. The following table represents our contractual commitments as of February 29, 2024 (in thousands).
In addition, we will continue to look for ways to reduce and leverage our fixed costs. Continued consolidation of our customers – Our customers are distributors, many of which are consolidating or are being acquired by competitors.
In addition, we will continue to look for ways to reduce and leverage our fixed costs and focus on maintaining our margins. Continued consolidation of our customers – Our customers are distributors, many of which are consolidating or are being acquired by competitors.
The higher effective tax rate for fiscal year 2022 was primarily the result of distributions during the year from our deferred compensation plan which was terminated in fiscal year 2021. Net earnings. Net earnings were $47.3 million, or $1.82 per diluted share for fiscal year 2023, as compared to $29.0 million, or $1.11 per diluted share for fiscal year 2022.
The higher effective tax rate for fiscal year 2022 was primarily the result of distributions during the year from our deferred compensation plan which was terminated in fiscal year 2021. Net earnings. Net earnings were $42.6 million, or $1.64 per diluted share for fiscal year 2024 as compared to $47.3 million of $1.82 per diluted share for fiscal year 2023.
Our selling, general, and administrative (“ SG&A ”) expenses decreased approximately 0.9%, from $71.4 million for fiscal year 2022 to $70.8 million for fiscal year 2023. As a percentage of sales, SG&A expenses declined from 17.9% in fiscal year 2022 to 16.4% for fiscal year 2023.
Our SG&A expenses decreased approximately 0.9%, from $71.4 million for fiscal year 2022 to $70.8 million for fiscal year 2023. As a percentage of sales, SG&A expenses declined from 17.9% in fiscal year 2022 to 16.4% for fiscal year 2023.
Each 10 basis point change in the discount rate impacts our computed pension liability by about $0.53 million. Also, continued changes in the mortality assumptions could potentially impact our funded status. For the February 28, 2023 measurement, no change was made to the mortality assumption.
Each 10 basis point change in the discount rate impacts our computed pension liability by about $0.5 million. Also, continued changes in the mortality assumptions could potentially impact our Pension Plan's funded status. For the February 29, 2024 measurement, no change was made to the mortality assumption.
The $1.4 million decrease in cash used in fiscal year 2023 compared to fiscal year 2022 was primarily due to a $2.2 million decrease in capital expenditures and $0.8 million increase in proceeds from disposal of plant and property, offset by a $4.4 million increase in costs to acquire businesses The $11.1 million increase in cash used in fiscal year 2022 compared to fiscal year 2021 was primarily due to a $14.9 million decrease in costs to acquire businesses offset by $2.9 million increase in capital expenditures.
The $1.4 million decrease in cash used in fiscal year 2023 compared to fiscal year 2022 was primarily due to a $2.2 million decrease in capital expenditures and $0.8 million increase in proceeds from disposal of plant and property, offset by a $4.4 million increase in costs to acquire businesses. Cash flows from financing activities.
During fiscal year 2023, the discount rate used to determine the net pension obligations for purposes of our Consolidated Financial Statements increased to 5.00% from 3.10% in fiscal year 2022.
During fiscal year 2024, the discount rate used to determine the net pension obligations for purposes of our Consolidated Financial Statements increased to 5.15% from 5.00% in fiscal year 2023.
As our Pension Plan assets are invested in marketable securities, fluctuations in market values could potentially impact our funding status and associated liability recorded. The expected rate of return on assets was unchanged from the 6.50% at February 28, 2022.
As our Pension Plan assets are invested in marketable securities, fluctuations in market values could potentially impact our Pension Plan funding status and associated liability recorded. The expected rate of return on assets was 6.00% and 6.50% at February 29, 2024 and February 28, 2023, respectively.
We intend to continue to focus on effectively managing and controlling our product costs through the use of forecasting, production and costing models, as well as working closely with our domestic suppliers to reduce our procurement costs, in order to minimize effects on our operational results.
While margins remain under pressure due to the resulting weak volumes, we intend to continue to focus on effectively managing and controlling our product costs through the use of forecasting, production and costing models, as well as working closely with our domestic suppliers to reduce our procurement costs, in order to minimize effects on our operational results.
Included in our financial results are Pension Plan costs that are measured using actuarial valuations and requires the use of a number of assumptions. Changes in these assumptions can result in different expense and liability amounts and future actual experience may differ significantly from current expectations.
Included in our financial results are Pension Plan costs that are measured using actuarial valuations and require the use of a number of significant assumptions. Changes in these assumptions can result in different expense and liability amounts and future actual pension cost experience and funding requirements may differ materially from current estimates.
A goodwill impairment charge was not required for the fiscal years ended February 28, 2023 or February 28, 2022. Revenue Recognition – Net sales consist of gross sales invoiced to customers, less certain related charges, including discounts, returns and other allowances.
A goodwill impairment charge was not required for the fiscal years ended February 29, 2024 or February 28, 2023. Allowance for Credit Losses and Accounts Receivable – Net sales consist of gross sales invoiced to customers, less certain related charges, including discounts, returns and other allowances.
Cash flows from financing activities. Cash used in financing activities was $27.0 million in fiscal year 2023 compared to $30.2 million in fiscal year 2022 and $24.7 million used in fiscal year 2021. The decrease in our cash used in financing activities in fiscal year 2023 was primarily due to a $3.7 million decrease of common stock repurchases.
Cash used in financing activities was $26.4 million in fiscal year 2024 compared to $27.0 million in fiscal year 2023 and $30.2 million used in fiscal year 2022. 24 The decrease in our cash used in financing activities in fiscal year 2024 was primarily due to a $0.5 million decrease of common stock repurchases.
Cash provided by operating activities was $46.8 million for fiscal year 2023 (a decrease of $3.9 million compared to fiscal year 2022), $50.7 million for fiscal year 2022 (a decrease of $2.1 million compared to fiscal year 2021) and $52.8 million for fiscal year 2021.
Cash provided by operating activities was $69.1 million for fiscal year 2024 (an increase of $22.3 million compared to fiscal year 2023), $46.8 million for fiscal year 2023 (a decrease of $3.9 million compared to fiscal year 2022) and $50.7 million for fiscal year 2022.
Cash used in investing activities was $11.5 million in fiscal year 2023 compared to $10.1 million in fiscal year 2022, and $21.2 million in fiscal year 2021.
Cash used in investing activities was $55.0 million in fiscal year 2024 compared to $11.5 million in fiscal year 2023, and $10.1 million in fiscal year 2022.
Cash Flow Components Fiscal years ended (Dollars in thousands) 2023 2022 2021 Net cash provided by operating activities $ 46,776 $ 50,678 $ 52,817 Net cash used in investing activities $ (11,457 ) $ (10,052 ) $ (21,183 ) Net cash used in financing activities $ (26,957 ) $ (30,210 ) $ (24,702 ) Cash flows from operating activities.
Cash Flow Components Fiscal years ended (Dollars in thousands) 2024 2023 2022 Net cash provided by operating activities $ 69,069 $ 46,776 $ 50,678 Net cash used in investing activities $ (54,994 ) $ (11,457 ) $ (10,052 ) Net cash used in financing activities $ (26,446 ) $ (26,957 ) $ (30,210 ) Cash flows from operating activities.
Consolidated Summary Consolidated Statements of Fiscal years ended Operations - Data ( in thousands) 2023 2022 2021 Net sales $ 431,837 100.0 % $ 400,014 100.0 % $ 357,973 100.0 % Cost of goods sold 300,787 69.7 285,291 71.3 254,207 71.0 Gross profit margin 131,050 30.3 114,723 28.7 103,766 29.0 Selling, general and administrative 70,793 16.4 71,410 17.9 68,270 19.1 Gain from disposal of assets (5,896 ) (1.4 ) (271 ) (0.1 ) (405 ) (0.1 ) Income from operations 66,153 15.3 43,584 10.9 35,901 10.0 Other expense (1,223 ) (0.3 ) (1,640 ) (0.4 ) (2,614 ) (0.7 ) Earnings before income taxes 64,930 15.0 41,944 10.5 33,287 9.3 Provision for income taxes 17,630 4.1 12,962 3.2 9,193 2.6 Net earnings $ 47,300 11.0 % $ 28,982 7.2 % $ 24,094 6.7 % Net Sales.
Consolidated Summary Consolidated Statements of Fiscal years ended Operations - Data ( in thousands) 2024 2023 2022 Net sales $ 420,109 100.0 % $ 431,837 100.0 % $ 400,014 100.0 % Cost of goods sold 294,767 70.2 300,787 69.7 285,291 71.3 Gross profit margin 125,342 29.8 131,050 30.3 114,723 28.7 Selling, general and administrative 68,830 16.4 70,793 16.4 71,410 17.9 Loss (gain) from disposal of assets 53 — (5,896 ) (1.4 ) (271 ) (0.1 ) Income from operations 56,459 13.4 66,153 15.3 43,584 10.9 Other income (expense) 2,664 0.6 (1,223 ) (0.3 ) (1,640 ) (0.4 ) Earnings before income taxes 59,123 14.1 64,930 15.0 41,944 10.5 Provision for income taxes 16,526 3.9 17,630 4.1 12,962 3.2 Net earnings $ 42,597 10.1 % $ 47,300 11.0 % $ 28,982 7.2 % Net Sales.
There was no contribution required or made in fiscal year 2021. Given our funding status as of February 28, 2023 and absent any significant negative event, we anticipate that our future contributions will be between $1.0 million and $3.0 million per year, depending on our Pension Plan’s funding.
Given our funding status as of February 29, 2024, and absent any significant negative event, we anticipate that our future contributions will be between $1.0 million and $3.0 million per year, depending on our Pension Plan’s funding.
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 devalued with advances in digital technologies, causing steady declines in demand for a portion of our current product line.
In 19 addition to the risk factors discussed under the caption “Risk Factors” in Item 1A of this Annual Report, some of the key 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 devalued with advances in digital technologies, causing steady declines in demand for a portion of our current product line.
During our fiscal year 2023, we repurchased 64,082 shares of common stock at an average price of $17.46 per share. As of February 28, 2023, $23.9 million remained available to repurchase shares of the Company’s common stock under the program.
During our fiscal year 2024, we repurchased 29,350 shares of common stock at an average price of $19.96 per share. As of February 29, 2024, $23.4 million remained available to repurchase shares of the Company’s common stock under the program.
Primarily due to factors described above, our income from operations for fiscal year 2023 increased 51.8% to $66.2 million, or 15.3% of net sales, from $43.6 million, or 10.9% of net sales in 2022, and increased 21.4% to $43.6 million, or 10.9% of net sales, compared to $35.9 million, or 10.0% of net sales, for fiscal year 2021.
Income from operations for fiscal year 2023 increased 51.8% to $66.2 million, or 15.3% of net sales, from $43.6 million, or 10.9% of net sales in 2022. Other income (expense). Interest income for fiscal year 2024 was $4.0 million compared to $0.8 million in 2023 and $0.1 million in 2022.
Other income (expense). Other expense was $1.2 million for fiscal year 2023 compared to $1.6 million for fiscal year 2022. The decrease in expense was primarily related to higher non-service cost components of net periodic benefit costs relating to pension expense offset by an increase in interest income from higher interest rates in fiscal year 2023.
Our decrease in expense was from lower non-service cost components of net periodic benefit costs relating to pension expense in fiscal year 2024. Other expense was $2.0 million for fiscal year 2023 compared to $1.6 million for fiscal year 2022.
The Company expects to continue to repurchase its shares under the repurchase program during fiscal year 2024 provided that the Board determines such repurchases to be in the best interests of the Company and its shareholders. Credit Facility – We did not renew our Credit Agreement, which expired November 11, 2021.
The Company expects to continue to repurchase its shares under the repurchase program during fiscal year 2025 provided that the Board determines such repurchases to be in the best interests of the Company and its shareholders.
Our increase in working capital primarily reflects the increase in cash, $8.4 million, accounts receivable $14.5 million, and inventory $8.3 million, offset by the increase in our accounts payable and accrued expense. Our working capital increased by approximately $14.8 million, or 13.1%, from $113.0 million at February 28, 2021 to $127.8 million at February 28, 2022.
Our increase in working capital primarily reflects the increase in cash, $8.4 million, accounts receivable, $14.5 million, and inventory, $8.3 million, offset by the increase in our accounts payable and accrued expense.
Our net sales increased from $400.0 million for fiscal year 2022 to $431.8 million for fiscal year 2023, an increase of 8%. The increase was attributable to $3.3 million in revenues from our recent acquisitions as well as price and volume increases that were partially offset by reduced volumes in the fourth quarter.
The increase was attributable to $3.3 million in revenues from our 2023 acquisitions of School Photo Marketing as well as price and volume increases that were partially offset by reduced volumes in the fourth quarter. Cost of Goods Sold.
Improved operational efficiencies and pricing adjustments to cover inflationary costs, primarily of paper, supplies and labor, contributed to improve our gross profit margin as a percentage of sales. 20 Our manufacturing costs increased from $254.2 million for fiscal year 2021 to $285.3 million for fiscal year 2022, or 12.2%.
Our gross profit was $131.1 million or 30.3% of sales for fiscal year 2023, compared to $114.7 million or 28.7% for fiscal year 2022. Improved operational efficiencies and pricing adjustments to cover inflationary costs, primarily of paper, supplies and labor, contributed to improve our gross profit margin as a percentage of sales. 22 Selling, general, and administrative expenses.
Our decreased operational cash flows in fiscal year 2022 compared to fiscal year 2021 was primarily the result of a $7.6 million decrease from inventories and a $7.2 million decrease from our accounts receivable offset by a $4.9 million increase from our accounts payable and accrued expenses, and a $4.9 million increase in net earnings. Cash flows from investing activities.
Our increased operational cash flows in fiscal year 2024 compared to fiscal year 2023 was primarily the result of a $16.9 million decrease from inventories, $18.1 million decrease from our accounts receivable, offset by a $4.7 decrease in earnings, $5.3 million decrease in payables and accrued expenses and a $5.9 million gain from disposal of assets during fiscal year 2023.
The assumptions used to calculate the pension funding deficit are different from the assumption used to determine the net pension obligations for purposes of our Consolidated Financial Statements.
Pension Plan – The funded status of our Pension Plan is dependent on many factors, including returns on invested assets, the level of market interest rates and the level of funding. The assumptions used to calculate the pension funding deficit are different from the assumption used to determine the net pension obligations for purposes of our Consolidated Financial Statements.
Under these regulations, the liabilities are discounted using 25-year average corporate bond rates within a specified corridor. For the period ended February 28, 2023, the specified corridor around the 25-year average was 5%. We made a contribution of $2.0 million to our Pension Plan in fiscal year 2023 and $1.0 million in fiscal year 2022.
Under these regulations, the liabilities are discounted using 25-year average corporate bond rates within a specified corridor. For the period ended February 29, 2024, the specified corridor around the 25-year average was 5%.
The increase in our cash used in financing activities in fiscal year 2022 compared to fiscal year 2021 resulted from two factors: (i) an increase of $3.6 million of common stock repurchases; and (ii) the payment of $2.0 million more in dividends in fiscal year 2022 compared to fiscal year 2021. 22 Stock Repurchase – 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 $40.0 million in the aggregate.
The decrease in our cash used in financing activities in fiscal year 2023 was primarily due to a $3.7 million decrease of common stock repurchases. Stock Repurchase – 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 $60.0 million in the aggregate.
Other expense was $1.6 million for fiscal year 2022 compared to expense of $2.6 million for fiscal year 2021. The decrease in expense was primarily related to decrease in pension expense. Provision for income taxes. Our effective tax rates for fiscal years 2023, 2022 and 2021 were 27.2%, 30.9%, and 27.6%, respectively.
The increase in expense was primarily from higher non-service cost components of net periodic benefit costs relating to pension expense in fiscal year 2023. Provision for income taxes. Our effective tax rates for fiscal years 2024, 2023 and 2022 were 28.0%, 27.2%, and 30.9%, respectively.
Net earnings were impacted by increased revenues and a $5.8 million gain from disposal of assets that added $0.17 per share. Net earnings were $29.0 million, or $1.11 per diluted share for fiscal year 2022, as compared to $24.1 million, or $0.93 per share for fiscal year 2021.
Net earnings were impacted by decreased revenues in fiscal year 2024. Net earnings in fiscal year 2023 were impacted by a $5.8 million gain from disposal of assets that added $0.17 per share.
Our acquisitions of Infoseal and AmeriPrint added $23.9 million in revenues and $0.08 in diluted earnings per share for the fiscal year compared to the corresponding prior year. Liquidity and Capital Resources We rely on our cash flows generated from operations to meet cash requirements of our business.
Net earnings were $47.3 million, or $1.82 per diluted share for fiscal year 2023, as compared to $29.0 million, or $1.11 per diluted share for fiscal year 2022. Net earnings were impacted by increased revenues in fiscal year 2023. Liquidity and Capital Resources We rely on our cash flows generated from operations to meet cash requirements of our business.
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 and operational results. Production capacity and price competition within our industry – Changes in the value of the U.S. dollar can have a significant impact on the pricing and supply of paper.
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 and operational results.
The primary cash requirements of our business are payments to vendors in the normal course of business, capital expenditures, contributions to our noncontributory defined benefit plan and the payment of dividends to our shareholders. We expect 21 to generate sufficient cash flows from operations to cover our operating and capital requirements for the foreseeable future.
The primary cash requirements of our business are payments to vendors in the normal course of business, capital expenditures, compensation and benefits for employees and the payment of dividends to our shareholders.
Unless otherwise indicated, this financial overview is for the continuing operations of the Company, which are comprised of the production and sales of business forms and other business products. The operating results of the Company for fiscal year 2023 and the comparative fiscal years 2022 and 2021 are included in the tables below.
The discussion and analysis should be read in conjunction with the accompanying Consolidated Financial Statements and notes thereto. Unless otherwise indicated, this financial overview is for the continuing operations of the Company, which are comprised of the production and sales of business forms and other business products.
Our SG&A expense decreased as a result of operational efficiencies and intangible assets fully amortized in fiscal year 2022 partially offset by increased bonus expense. Our SG&A expenses increased approximately 4.5%, from $68.3 million for fiscal year 2021 to $71.4 million for fiscal year 2022.
Our SG&A expense decreased as a result of operational efficiencies and intangible assets fully amortized in fiscal year 2022 partially offset by increased executive incentive compensation expense. (Gain) loss from disposal of assets. The $0.1 million loss from disposal of assets for fiscal 2024 is primarily from the sale of unused manufacturing equipment.
Due in less Due in Due in Due in more Total than 1 year 1-3 years 4-5 years than 5 years Estimated pension benefit payments to Pension Plan participants $ 36,100 $ 3,000 $ 6,700 $ 6,500 $ 19,900 Letters of credit 583 583 — — — Operating leases 14,174 5,349 7,504 1,321 — Total $ 50,857 $ 8,932 $ 14,204 $ 7,821 $ 19,900 23
Due in less Due in Due in Due in more Total than 1 year 1-3 years 4-5 years than 5 years Estimated pension benefit payments to Pension Plan participants $ 38,700 $ 3,200 $ 7,700 $ 7,700 $ 20,100 Letters of credit 318 318 — — — Operating leases 10,098 4,593 4,842 663 — Total $ 49,116 $ 8,111 $ 12,542 $ 8,363 $ 20,100 25
Fiscal Years Ended (Dollars in thousands) 2023 2022 2021 Working Capital $ 155,379 $ 127,839 $ 113,022 Cash $ 93,968 $ 85,606 $ 75,190 Working Capital. Our working capital increased by approximately $27.5 million, or 21.5%, from $127.8 million at February 28, 2022 to $155.4 million at February 2023.
We strategically reduced inventory levels to improve cash flow and the decrease in receivables is primarily a result of accelerating the timing of collections relative to fiscal year end. Our working capital increased by approximately $27.5 million, or 21.5%, from $127.8 million at February 28, 2022 to $155.4 million at February 2023.
Approximately $17.1 million, $14.6 million, and $12.5 million of revenue were recognized under these agreements during fiscal years ended 2023, 2022 and 2021, respectively. Inventories – Our inventories are valued at the lower of cost or net realizable value.
Allowance for Excess and Obsolete Inventories – With the exception of approximately 7.0% and 6.1% of inventories valued using the lower of last-in, first-out ("LIFO") cost flow assumption for fiscal years 2024 and 2023, respectively, our inventories are valued at the lower of cost or net realizable value.
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 consolidated financial statements and notes thereto.
The allowance for excess and obsolete inventory at fiscal years ended 2024 and 2023 were $1.3 million and $1.6 million, respectively. Results of Operations The following discussion provides information which we believe is relevant to understanding our results of operations and financial condition.
We have had no outstanding long-term debt under the revolving credit line, since paid in August 2019. As of February 28, 2023, we had $0.6 million outstanding under a standby letter of credit arrangement secured by a cash collateral bank account.
Credit Facility – As of February 29, 2024, we had $0.3 million outstanding under a standby letter of credit arrangement secured by a cash collateral bank account. It is anticipated that our cash, short-term investments and funds from operating cash flows will be sufficient to fund anticipated future expenditures.
Removed
In 17 addition to the risk factors discussed under the caption “Risk Factors” in Item 1A of this Annual Report, some of the key challenges of our business include the following: COVID-19 Pandemic – Our sales were significantly impacted by economic conditions driven by the COVID-19 pandemic and resulted in a decrease in sales volume and earnings in fiscal year 2021.
Added
Production capacity and price competition within our industry – Industry supply of paper products is subject to fluctuation as changing industry conditions influence producers to idle or permanently close individual machines or mills, and or convert them to different product lines, such as packaging to offset a decline in demand.
Removed
The demand for our products strengthened in fiscal year 2022 and fiscal year 2023, and our sales increased. We were also confronted with rising raw material and logistics costs, delayed delivery times and labor shortages. Despite these challenges, our disciplined cost management and pricing strategies contributed to our improved performance in fiscal year 2022 and 2023.
Added
In 2022 there was a build-up of paper mill’s customer inventory, and 2023 data showed an inventory correction in reduced spending. Paper mill shipments were down across the board through the first half of 2023 as buyers worked through elevated inventories of their products.
Removed
While the markets appear to have recovered from the more direct negative impacts of the pandemic, the longer term effects of the pandemic, including supply chain disruptions and inflationary pressures, are unknown and could have a material adverse effect on our business, results of operations and financial results.
Added
Producers responded to the sluggish demand conditions with heavy downtime rather than permanent closures keeping prices mostly stable.
Removed
In addition, the impact of COVID-19 on the speed of this transformation is unknown, but it is expected to accelerate the decline for some of our products.
Added
The operating results of the Company for fiscal year 2024 and the comparative fiscal years 2023 and 2022 are included in the tables below.
Removed
The weakening of the U.S. dollar will usually result in the dissipation of any pricing advantage that foreign imports have over domestic suppliers, which typically results in lower levels of imported papers and an increase in domestic exports.
Added
Our net sales were $420.1 million for fiscal year 2024, compared to $431.8 million for fiscal year 2023, a decrease of $11.7 million, or 2.7%, primarily due to a $32.9 million decrease in volume demand, partially offset by an approximately $21.2 million increase in revenues generated from our recent acquisitions.
Removed
With increased pricing power, domestic paper producers can better control the supply of paper by eliminating capacity or changing the products produced on their large paper machines. The strengthening of the U.S. dollar usually has the opposite effect: more cheap imported paper; less domestic exports; and lower pricing power in the hands of domestic paper producers.
Added
The print market overall continues to be fairly soft with competitive pricing as well as some of our print partners have experienced slowness in their sales and reduced their outsourced work to us during the current fiscal year. Our net sales increased from $400.0 million for fiscal year 2022 to $431.8 million for fiscal year 2023, an increase of 8%.
Removed
Domestic paper suppliers typically seek to balance supply and demand, including by (if possible) taking capacity out of the market, whether by taking production off-line or switching production to alternative paper products. Generally, if mills are running at high capacity, suppliers are able to raise prices.
Added
As a result of decreased sales volume, our manufacturing costs decreased $6.0 million, or 2.0% from $300.8 million for fiscal year 2023 to $294.8 million for fiscal year 2024. Our gross profit was $125.3 million or 29.8% of sales for fiscal year 2024, compared to $131.1 million or 30.3% of sales for fiscal year 2023.
Removed
Increased foreign imports and demand declines have currently stabilized price increases of North American printing & writing paper. The extent to which import pressures remain in place will likely play a major role in price stability or decreases.
Added
The print market overall was fairly soft during fiscal year 2024 with competitive pricing from similar situated vendors as us, resulting in downward pressure on operating margin. Our manufacturing costs increased $15.5 million, or 5.4%, from $285.3 million for fiscal year 2022 to $300.8 million for fiscal year 2023.
Removed
In some cases and upon customer request, we print and store custom print product for customer specified future delivery, generally within twelve months. In this case, risk of loss from obsolescence passes to the customer, the customer is invoiced under normal credit terms and revenue is recognized when manufacturing is complete.
Added
For fiscal year 2024, our selling, general and administrative (“ SG&A ”) expenses were $68.8 million compared to $70.8 million for fiscal year 2023, a decrease of $2.0 million, or 2.8% primarily as a result of reduction in executive incentive compensation expense. As a percentage of sales, SG&A expenses remained flat at 16.4% in fiscal year 2024 and 2023.
Removed
The acquisition of AmeriPrint, and School Photo Marketing, is an integral part of our strategy to offset normal industry revenue declines due to print attrition and other changes. Our net sales increased from $358.0 million for fiscal year 2021 to $400.0 million for fiscal year 2022, an increase of 11.7%.
Added
Primarily due to factors described above, our income from operations for fiscal year 2024 decreased $9.7 million to $56.5 million or 13.4% of net sales from $66.2 million or 15.3% of net sales for fiscal year 2023.
Removed
Our sales for the period partially rebounded from the impact on economic conditions driven by the COVID-19 pandemic and resulted in an increase in sales volume. The acquisition of AmeriPrint, which was completed in June 2021, is an integral part of our strategy to offset normal industry revenue declines due to print attrition and other changes.
Added
Our increase in interest income in 2024 was from higher interest rates in 2024 compared to 2023 and higher interest rates compared to 2002. Other expense for fiscal year 2024 was $1.3 million compared to $2.0 million for fiscal year 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed2 unchanged
Biggest changeWe do not use derivative instruments for trading purposes. While we had no outstanding debt at February 28, 2023, we will be exposed to interest rate risk if we borrow under a credit facility in the future. This market risk discussion contains forward-looking statements.
Biggest changeWe do not use derivative instruments for trading purposes. While we had no outstanding debt at February 29, 2024, we will be exposed to interest rate risk if we borrow under a credit facility in the future. This market risk discussion contains forward-looking statements.

Other EBF 10-K year-over-year comparisons