Deep Dive: Ennis, Inc. 10-K Analysis

Ennis, Inc. (NYSE: EBF), founded in 1909, is a leading U.S. trade printer that manufactures a broad range of printed business products—forms, labels, envelopes, folders, tags and more—primarily for resale through independent distributors. With 56 strategically located plants, Ennis is the largest provider of business forms, pressure-seal documents, labels, tags, envelopes, and presentation folders to independent distributors across the United States.

Warren.AI 💰 6.5 / 10

This comprehensive review covers Ennis’s 2025 10-K, including:

• Business Overview (Item 1)
• Risk Factors (Item 1A)
• MD&A and Financial Condition (Items 7, 7A, 8)
• Cash Flow Analysis (Item 8)
• Legal and Regulatory Matters (Item 1A, Item 3)

Based on our analysis, we assign Ennis, Inc. an investment score of 6.5/10.

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1. Business Model & Strategy (Item 1)

Core activities. Ennis operates as a “trade printer,” manufacturing customized and semi-custom printed products for independent distributors: print resellers, commercial printers, software vendors, direct mail and fulfillment companies, advertising agencies and more. Approximately 94% of sales are custom, allowing higher margins than commodity printing.

Product lines. Key product categories include:

• Snap sets & continuous forms
• Laser cut sheets, tags & labels
• Pressure-seal documents
• Presentation folders & envelopes
• Integrated print solutions & jumbo rolls

Distribution. Ennis sells primarily through over 1,200 independent distributors, as well as direct to large end-users (in limited cases) and to many competitors. Its 56 plants in 20 states provide rapid service and local presence.

Recent acquisitions. Ennis has bolstered its capabilities through these 2023–24 acquisitions:

• Printing Technologies, Inc. (PTI), Indianapolis
• Eagle & Diamond Graphics, Pennsylvania
• UMC Print, Kansas
• Stylecraft Printing, Michigan

These acquisitions add $45M–$50M in annualized sales, expand commercial print and envelope converting capabilities, and enhance customer reach in key regions.

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2. Market & Risk Factors (Item 1A)

Industry headwinds. Demand for traditional printed forms continues to erode due to digital transformation, electronic billing, web portals and paperless initiatives. Competitive pressures from large in-house printers, web-based services, offshore suppliers and office superstores constrain pricing power. Postal rate increases further depress demand for direct mail.

Key risk factors. (Highlights from Item 1A)

1. Digital obsolescence. Business forms face substitution by electronic alternatives and software process automation.
2. Raw materials. Heavy reliance (42% of 2025 paper purchases) on one major supplier; carbonless paper capacity tight.
3. Customer concentration. One key distributor accounts for 5.3% of receivables; several distributors are consolidating under competitor ownership.
4. Labor & union risk. 8% of employees represented by unions; tight labor markets and rising wages pressure margins.
5. Tariffs & trade. U.S. import tariffs on paper and materials could raise costs.
6. Cybersecurity & controls. Infrastructure disrupted by a ransomware attack in 2022; enhanced protocols implemented but threat remains.

Legal contingencies. The Company faces an Arizona lease dispute (estimated reserve $0.4M), and is appealing a $5.8M favorable judgment (subject to appeal bond) in Pennsylvania litigation. Management believes resolutions won’t materially affect results.

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3. Financial Highlights & Trends (Items 7, 8, 7A)

3.1 Income Statement & Profitability

Sales. Net sales dropped 6.1% in 2025 to $394.6M, after an 11.7M (2.7%) decline in 2024. Volume weakness (-$38.7M) outweighed $13.2M benefits from acquisitions.

Gross margin. Held steady at 29.7% in 2025 vs. 29.8% in 2024, reflecting modest price cost pass-through on paper and productivity improvements.

Operating margin. Income from operations fell to $52.0M (13.2%) in 2025 vs. $56.5M (13.4%) in 2024, weighed by lower volume. SG&A declined from $68.8M to $65.4M but non-volume leverage was limited.

Net earnings. $40.2M in 2025 (10.2% margin) vs. $42.6M in 2024 (10.1%). EPS of $1.54 diluted (vs. $1.64). The 2025 special dividend and modest share repurchases drove lower retained earnings.

3.2 Balance Sheet Strength

Liquidity & working capital.

• Cash & equivalents: $67.0M (2025), $81.6M (2024)
• Short-term investments: $5.5M (2025), $29.3M (2024)
• Working capital: $119.4M vs. $167.6M, reflecting $65M one-time special dividend and $1.8M stock buyback.

Debt & leverage. No long-term debt; $0.3M standby letters of credit; leverage ratio effectively zero. Pension surplus ~$1.4M.

Inventory. $38.8M vs. $40.0M; obsolete reserve $1.7M–$1.8M. LIFO layer liquidation modestly benefited cost of goods sold by $0.7M in 2025.

3.3 Cash Flow Analysis (Item 8)

Operating cash flow. $65.9M in 2025 vs. $69.1M in 2024 and $46.8M in 2023. Working capital movements (inventory, receivables, payables) drove year-over-year fluctuations.

Investing cash flow. $13.2M provided in 2025, driven by $35M maturities of Treasuries and $6.2M spent on PTI acquisition (offset by $10.1M new Treasuries). FY24 used $55M, including Stycraft, UMC, Eagle & Diamond.

Financing cash flow. $(93.7M) in 2025 vs. $(26.4M) in 2024. FY25 includes $65M special dividend, $1.8M share repurchases, and $27.2M ordinary dividends.

Capital expenditures. $5.9M in 2025; cyclical funding of digital presses, automation and site upkeep. Guidance: $4M–$7M annually ahead.

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4. Pension & Benefit Plans (Note 12)

Pension Plan.

• Funded status: 103% (PBO) / 109% (ABO) at 2025.
• Net asset: $1.4M vs. $0.1M.
• 2025 pension expense: $2.0M (vs. $1.9M) including $1.7M non-service cost.
• Target asset allocation: ~35% equity / 65% fixed income with 5.5% long-term expected return.
• 2025 contribution: $1.2M; guidance $1.0–$1.2M in FY26.

401(k) plan. Company match contributions of $1.7M in 2025.

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5. Critical Accounting Judgments & Controls

Credit loss allowance. Based on customer aging, payment history and forward-looking information; reserve ~0. 1% of receivables.

Inventory obsolescence. Reserve $1.8M; periodically tested by aging analysis and net realizable values.

Goodwill impairment. Single reporting unit; qualitative and quantitative tests show no impairment.

Lease accounting. $9.5M ROU assets and liabilities for operating leases. Lease expense $5.6M.

Tax reserves. $0.2M of uncertain tax positions; full valuation allowance on foreign credits; effective tax rate ~27.5%.

Controls. Management concluded disclosure controls and internal controls over financial reporting were effective as of 2/28/25. No material weaknesses.

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6. Outlook & Investment Thesis

Challenges. Core print volumes remain in secular decline. Paper pricing and availability are volatile. Customers continue to migrate digital. Profit margins under pressure.

Growth drivers. Ennis has offset declines through acquisitions ($45M+ sales added in 2023–24), geographic expansion, new product lines (envelopes, high-value labels, commercial print), and web-based low-volume digital prints.

Financial strength. Cash-rich (net cash ~$70M+), no debt, strong working capital. Commitment to dividends ($3.50/share annually plus special distributions) and opportunistic buybacks.

Valuation & score. At current price ~19, shares trade at ~12x FY25 EPS. Modest free cash flow yield (~5%) and dividend yield ~6%. Balanced by stable cash generation, but limited growth rescue from print decline.

Risk/Reward verdict (6.5/10). Ennis offers an attractive high-yield income stream supported by predictable cash flows and prudent capital allocation, but faces headline risks from print obsolescence and narrow growth paths. Investors seeking income and value with moderate growth exposure may find Ennis attractive; growth-oriented investors should look elsewhere.

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Net profit (FY25): $40.2 million (EPS $1.54 diluted)

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