Ennis 2025 Q4 Earnings Misses Targets with Net Income Down 11.1%

Ennis (EBF) reported its fiscal 2025 Q4 earnings on May 13th, 2025. The results missed market expectations, with revenues and net income both declining year-over-year. Despite the revenue shortfall, the company affirmed its guidance for the upcoming fiscal year, maintaining its outlook for revenue and earnings. Ennis plans to continue strategic investments and focus on operational efficiencies to navigate current market challenges. The company remains committed to shareholder returns, including regular dividends, even as it adjusts to competitive pressures and industry shifts.

Revenue

Ennis's total revenue decreased by 4.9% to $92.70 million in Q4 2025, reflecting a downturn from the $97.43 million reported in Q4 2024.

Earnings/Net Income

Ennis's EPS fell 23.7% to $0.30 in 2025 Q4 from $0.39 in 2024 Q4, with net income declining by 11.1% to $9.02 million. This marks a challenging quarter for Ennis's earnings performance.

Post-Earnings Price Action Review

The strategy of buying EBF shares following a revenue miss and holding for 30 days presents a potential investment opportunity, despite inherent risks. Historical performance suggests that EBF has often outperformed its sector in earnings and sales forecasts, indicating resilience despite revenue declines. The company's strategic acquisitions and emphasis on cost control may alleviate the impact of revenue misses. However, the initial market reaction to a revenue miss could lead to short-term price declines, affecting the strategy's success within the first 30 days. Additionally, if revenue shortfalls stem from structural issues or competitive pressures, the stock may not recover swiftly. Backtesting this strategy could demonstrate positive returns if EBF's historical performance and strategic initiatives prove effective in navigating revenue misses. Nevertheless, the outcome is uncertain, particularly in the short term, and investors should evaluate their risk tolerance and current market conditions before proceeding.

CEO Commentary

Keith Walters, Chairman, Chief Executive Officer and President, highlighted the company's performance challenges, noting competitive pricing pressures on revenues but an improved gross profit margin of 29.5% due to operational efficiencies. Walters emphasized the positive impact of recent acquisitions, which added approximately $2.5 million to quarterly revenues, and the integration of ERP systems to boost profitability. Despite one acquisition underperforming, Walters expressed confidence in Ennis's financial strength and potential for future acquisitions without debt, underscoring the company's commitment to shareholder value through dividends.

Guidance

Ennis projects a robust financial position for the upcoming fiscal year, anticipating revenues around $395 million and diluted earnings per share between $1.50 and $1.60. The company plans to continue strategic investments and focus on enhancing operational efficiencies while exploring acquisition opportunities. Despite current market challenges, Ennis remains dedicated to shareholder returns, including regular dividends.

Additional News

Ennis recently announced that Director Michael Schaefer will not be nominated for re-election at the upcoming annual shareholders meeting following his decision to sell shares in the company. This move was attributed to personal family circumstances rather than concerns about the company's financial condition. Additionally, Ennis confirmed a $65 million special dividend payment, significantly impacting its working capital and cash reserves, but signaling confidence in its intrinsic value and commitment to shareholders. Furthermore, Ennis completed the acquisition of Northeastern Envelope, expanding its presence in the envelope manufacturing sector and enhancing its product offerings.