Ennis, Inc.: Turning the Tide with Margin Mastery and Strategic Boldness

Let me tell you, folks, when a company can boost margins even as sales slip, that's a sign of real discipline. Ennis, Inc. (ENIS) just reported its Q1 2025 results, and while top-line revenue dipped 5.7% to $97.2 million, the story here isn't about the decline—it's about how Ennis is turning lemons into lemonade. Let me break it down.

Margin Optimization: A Masterclass in Cost Discipline
The first thing that leaps off the page is the gross profit margin, which jumped to 31.1% in Q1 2025 from 30.0% a year ago. That's not a typo. Even as sales softened, Ennis tightened its belt, squeezed out costs, and kept pricing power intact. This isn't luck—it's execution. Meanwhile, EBITDA rose to $17.7 million, or 18.2% of sales, despite headwinds.



Here's the deal: Ennis isn't just surviving—it's proving it can thrive in a shrinking market. The company's focus on operational excellence is paying off. And when you're in an industry as mature as paper products, that kind of discipline is a lifeline.

Balance Sheet Strength: A Fortress of Cash
Now, let's talk about what really matters in tough times: cash. Ennis is sitting on $32.0 million with zero debt—a position so strong it's practically bulletproof. Even after buying back 260,560 shares at an average of $19.00 (a savvy move, given where the stock is trading now) and funding acquisitions, the cash pile remains robust.

This isn't just about liquidity. It's about options. Ennis isn't shackled to lenders, so it can make moves others can't—like snapping up targets or repurchasing shares when the price is right. And with a $0.25 quarterly dividend still intact, shareholders aren't getting short-changed.

Acquisition-Driven Growth: Playing the Long Game
The Northeastern Envelope (NEC) acquisition was a stroke of genius. The $5.5 million in quarterly revenue it added might seem small, but remember: Ennis isn't chasing volume. It's buying strategic fit. NEC's integration gives Ennis a stronger foothold in specialized markets, while the PTI acquisition—now fully integrated into Ennis' systems—is a win for operational synergy.

In an industry consolidating due to digital disruption, Ennis is acting like the predator, not the prey. And with its cash-rich balance sheet, it can keep doing so.

The Bump in the Road: Navigating Supply Chain Storms
No company is immune to macro headwinds, and Ennis is no exception. The closure of its sole U.S. carbonless paper mill by year-end is a risk, but the company isn't panicking. It's stockpiling inventory and seeking alternative suppliers—a proactive approach that shows management isn't caught flat-footed.



Sure, this could pressure margins temporarily, but here's the key: Ennis has no debt to service, so it can weather this storm without sacrificing future growth.

Investment Thesis: Buy the Dip, Collect the Dividend
Here's my take: Ennis is a contrarian play in a declining market. The stock might be down on revenue fears, but its margins and cash position are bulletproof. If you're looking for a company that's not just surviving but positioning itself to win, Ennis fits the bill.

- Buy on dips: If the stock slips below $19 (where recent buybacks occurred), that's a value signal.
- Hold for dividends: The $0.25 quarterly payout gives a 1.3% yield at current prices—decent for a small-cap industrial.
- Watch for M&A: A strong balance sheet means Ennis could pounce on distressed peers, creating long-term value.

Bottom Line
Ennis, Inc. isn't a high-flying growth stock. It's a resilient cash machine in a consolidating industry. With disciplined cost controls, a fortress balance sheet, and smart acquisitions, this is a name to own when others are panicking. If you're in it for the long haul—and want dividends along the way—Ennis deserves a spot in your portfolio.

Stay hungry, stay Foolish.