ENNIS, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

Caution Regarding Forward-Looking Statements

The following "Management's Discussion and Analysis of Financial Condition and
Results of Operations" should be read together with the unaudited consolidated
financial statements and related notes of Ennis, Inc. (collectively with its
subsidiaries, the "Company," "Registrant," "Ennis," or "we," "us," or "our"),
included in Part 1, Item 1 of this report, and with the audited consolidated
financial statements and the related notes of the Company included in our Annual
Report on Form 10-K for the fiscal year ended February 28, 2022.

All of the statements in this report, other than historical facts, are
forward-looking statements, including, without limitation, the statements made
in this "Management's Discussion and Analysis of Financial Condition and Results
of Operations." As a general matter, forward-looking statements are those
focused upon anticipated events or trends, expectations, and beliefs relating to
matters that are not historical in nature. The words "could," "should," "feel,"
"anticipate," "aim," "preliminary," "expect," "believe," "estimate," "intend,"
"intent," "plan," "will," "foresee," "project," "forecast," or the negative
thereof or variations thereon, and similar expressions identify forward-looking
statements.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for these forward-looking statements. In order to comply with the terms of the
safe harbor, the Company notes that forward-looking statements are subject to
known and unknown risks, uncertainties and other factors relating to its
operations and business environment, all of which are difficult to predict and
many of which are beyond the control of the Company. These known and unknown
risks, uncertainties and other factors could cause actual results to differ
materially from those matters expressed in, anticipated by or implied by such
forward-looking statements.

These statements reflect the current views and assumptions of management with
respect to future events. The Company does not undertake, and hereby disclaims,
any duty to update these forward-looking statements, even though its situation
and circumstances may change in the future. Readers are cautioned not to place
undue reliance on forward-looking statements, which speak only as of the date of
this report. The inclusion of any statement in this report does not constitute
an admission by the Company or any other person that the events or circumstances
described in such statement are material.

We believe these forward-looking statements are based upon reasonable
assumptions. All such statements involve risks and uncertainties, and as a
result, actual results could differ materially from those projected, anticipated
or implied by these statements. Such forward-looking statements involve known
and unknown risks, including but not limited to: general economic, business and
labor conditions and the potential impact on our operations; our ability to
implement our strategic initiatives and control our operational costs;
dependence on a limited number of key suppliers; our ability to recover the
rising cost of raw materials and other costs (including energy, freight, labor
and benefit costs) in markets that are highly price competitive and volatile;
uninsured losses, including those from natural disasters, catastrophes,
pandemics, theft or sabotage; the impact of the COVID-19 pandemic or future
pandemics on the U.S. and local economies, our business operations, our
workforce, our supply chain and our customer base; our ability to timely or
adequately respond to technological changes in the industry; the impact of the
internet and other electronic media on the demand for forms and printed
materials; the impact of foreign competition, tariffs, trade regulations and
import restrictions; customer credit risk; competitors' pricing strategies; a
decline in business volume and profitability could result in an impairment in
our reported goodwill negatively impacting our operational results; our ability
to retain key management personnel; our ability to identify, manage or integrate
acquisitions; and changes in government regulations including measures intended
to minimize the impact of COVID-19. In addition to the factors indicated above,
you should carefully consider the risks described in and incorporated by
reference herein and in the risk factors in our Annual Report on Form 10-K for
the fiscal year ended February 28, 2022 before making an investment in our
common stock.

Insight

Ennis, Inc. (formerly Ennis Business Forms, Inc.) (collectively with its
subsidiaries, "the "Company," "Registrant," Ennis," or "we," "us," or "our") was
organized under the laws of Texas in 1909. 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. We also sell products to many of our competitors to
satisfy their customers' needs.

For a discussion regarding the impact of the ongoing COVID-19 pandemic on our business, please see Business Challenges – COVID-19 Pandemic and Operating Results, below.

                                       19
--------------------------------------------------------------------------------

                          ENNIS, INC. AND SUBSIDIARIES
                                   FORM 10-Q
                      FOR THE PERIOD ENDED AUGUST 31, 2022


Business Overview

Our management believes that we are the largest supplier of business forms, pressure sealed forms, labels, tags, envelopes and presentation folders to independent distributors in United States.

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 55 manufacturing plants throughout the United States
in 20 strategically located states as one reportable segment. 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.

The 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 LabelsSM, ColorWorx®,
Enfusion®, Uncompromised Check Solutions®, VersaSeal®, Ad ConceptsSM, FormSource
LimitedSM, Star Award Ribbon Company®, Witt Printing®, B&D Litho®, Genforms®,
PrintGraphics®, Calibrated Forms®, PrintXcel®, Printegra®, Forms
ManufacturersSM, Mutual Graphics®, TRI-C Business FormsSM, Major Business
SystemsSM, Independent PrintingSM, Hoosier Data Forms®, Hayes Graphics®, Wright
Business GraphicsSM, Wright 360SM, Integrated Print & GraphicsSM, the Flesh
CompanySM, Impressions DirectSM and AmeriprintSM. We also sell the Adams
McClure® brand (which provides Point of Purchase advertising for large franchise
and fast food chains as well as kitting and fulfillment); the Admore®, Folder
Express®, and Independent Folders® brands (which provide presentation folders
and document folders); Ennis Tag & LabelSM (which provides custom printed, high
performance labels and custom and stock tags); Allen-Bailey Tag & LabelSM, 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); InfosealSM and PrintXcel® (which provide custom and
stock pressure seal documents). We sell predominantly through independent
distributors, as well as to many of our competitors. Northstar Computer Forms,
Inc., one of our wholly-owned subsidiaries, also sells direct to a small number
of customers, generally large banking organizations (where a distributor is not
acceptable or available to the end-user). Adams McClure, LP, a wholly-owned
subsidiary, also sells direct to a small number of customers, where sales are
generally through advertising agencies.

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. 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.

There are a number of competitors that operate in this segment, ranging in size
from single employee-owned operations to multi-plant organizations. 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.

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.

Raw materials principally consist of a wide variety of weights, widths, colors,
sizes, and qualities of paper for business products purchased primarily from one
major supplier at favorable prices based on the volume of business.

The use of commercial products in the printing industry is generally not seasonal. General economic conditions and the contraction of the traditional business forms industry are the predominant factors for quarterly volume fluctuations.

Recent acquisitions

On June 1, 2021, we acquired the assets and business of AmeriPrint in Harvard,
Illinois. The acquisition of AmeriPrint, which prior to the acquisition
generated approximately $6.5 million in sales for its fiscal year ended December
31, 2020, brings added capabilities and expertise to our expanding product
offering including barcoding and variable imaging.

                                       20
--------------------------------------------------------------------------------

                          ENNIS, INC. AND SUBSIDIARIES
                                   FORM 10-Q
                      FOR THE PERIOD ENDED AUGUST 31, 2022

Our business challenges

Our industry is currently experiencing consolidation of traditional supply
channels, product obsolescence, paper supplier capacity adjustments, and
increased pricing and potential supply allocations due to demand/supply curve
imbalance. Technology advances have made electronic distribution of documents,
internet hosting, digital printing and print-on-demand valid, cost-effective
alternatives to traditional custom-printed documents and customer
communications. Improved equipment has become more accessible to our
competitors. We face highly competitive conditions throughout our supply chain
in a price-competitive print industry. The challenges of our business include
the following:

COVID-19 Pandemic - The global spread of the novel strain of COVID-19 has
significantly impacted health and economic conditions throughout the United
States and the world, including the markets in which we operate. Beginning in
March 2020 in response to the sales impact of the COVID-19 pandemic, we made
modifications to our cost structure by reducing employee cost, ceasing
operations at an under-utilized facility, as well as exiting two facilities with
expiring leases and moving production to our other facilities. The Company saw
economic improvement during fiscal year ending February 28, 2022 and we continue
to see strong demand for our product. Although the U.S. economy has gained in
recovery, it continues to be significantly impacted by supply chain disruptions,
labor shortages, and shifting demand.

There continue to be significant uncertainties associated with the COVID-19
pandemic. And the full extent of the impact of the COVID-19 pandemic on the
Company's operational and financial performance is currently uncertain and will
depend on many factors outside the Company's control discussed under the
caption, "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the
fiscal year ended February 28, 2022. For further information, please see
"Cautionary Note Regarding Forward-Looking Statements," above and "Risk Factors"
contained within our Annual Report on Form 10-K for the fiscal year ended
February 28, 2022.

We will continue to monitor incoming order volume as well as rising raw material
and other input costs so that we can proactively adjust our pricing and costs
accordingly.

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 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. Transforming our product offerings in order to
continue to provide innovative, valuable solutions through lower labor and fixed
charges to our customers on a proactive basis will require us to make
investments in new and existing technology and to develop key strategic business
relationships, such as print-on-demand services and product offerings that
assist customers in their transition to digital business environments. In
addition, we will continue to look for new market opportunities and niches
through acquisitions, such as the addition of our envelope offerings, tag
offerings, folder offerings, healthcare wristbands, specialty packaging, direct
mail, pressure seal products, secure document solutions, innovative in-mold
label offerings and long-run integrated products with high color web printing,
which provide us with an opportunity for growth and differentiate us from our
competition. 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. While currently the pandemic
has not materially impacted our liquidity and it is not currently expected to, a
protracted delay or reversal in the economy recovering could have a negative
impact on our continued ability to make the aforementioned investments or to
consummate acquisitions.

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 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. 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. 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.

As the economy has improved, demand has increased for coated and uncoated
freesheet papers which has reduced the excess inventory in the market. It is
unclear whether this is a temporary situation or if conditions could stretch for
a more extended amount of time. Regardless of these factors, many of which are
cyclical, we continue to believe paper pricing will remain in a range which will
not unfavorably impact our margins. Additionally, the possibility of paper
shortages in the market is not a major concern due to our primary material
supplier's commitment to the Company. Consistent with our historical practice,
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. In addition, we

                                       21
--------------------------------------------------------------------------------

                          ENNIS, INC. AND SUBSIDIARIES
                                   FORM 10-Q
                      FOR THE PERIOD ENDED AUGUST 31, 2022

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. We continue to
maintain a majority of the business we have had with our customers historically,
but it is possible that these consolidations and acquisitions, which we expect
to continue in the future, ultimately will impact our margins and sales.

Significant Accounting Policies and Estimates

In preparing our consolidated financial statements, we are required to make
estimates and assumptions that affect the disclosures and reported amounts of
assets and liabilities at the date of the consolidated financial statements and
the reported amounts of revenues and expenses during the reporting period. 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. Actual results may differ materially from these estimates
under different assumptions or conditions. Our Annual Report on Form 10-K for
the year ended February 28, 2022, includes a description of certain critical
accounting policies, including those with respect to the pension plan, goodwill
and other intangible assets, revenue recognition, inventories and income taxes,
which we believe are critical to understanding our historical and future
performance, as these policies relate to the more significant areas involving
management's judgments and estimates. There have been no material changes to the
critical accounting policies, significant judgements and estimates described in
our Annual Report on Form 10-K for the year ended February 28, 2022.

Recent accounting pronouncements

No recent accounting pronouncements are expected to have a material impact on our consolidated financial statements.

Operating results

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, which are incorporated herein by
reference. The operating results of the Company for the three and six months
ended August 31, 2022 and the comparative period for 2021 are set forth in the
unaudited consolidated financial information included in the tables below.

Consolidated summary

Unaudited Consolidated Statements of            Three Months Ended August 31,                        Six Months Ended August 31,
Operations - Data (in thousands)               2022                      2021                      2022                      2021
Net sales                              $ 111,233       100.0 %   $ 100,451       100.0 %   $ 218,900       100.0 %   $ 197,381       100.0 %
Cost of goods sold                        76,014        68.3        71,550        71.2       149,677        68.4       139,294        70.6
Gross profit margin                       35,219        31.7        28,901 

28.8 69,223 31.6 58,087 29.4 Sales, general and administrative 17,942 16.1 18,095

18.0 35,624 16.3 37,010 18.8 (Gain) loss on disposal of assets

            -           -             1           -             -           -          (276 )      (0.1 )
Income from operations                    17,277        15.5        10,805        10.8        33,599        15.3        21,353        10.8
Other expense                               (342 )      (0.3 )        (148 )      (0.1 )        (514 )      (0.2 )        (262 )      (0.1 )
Earnings before income taxes              16,935        15.2        10,657        10.6        33,085        15.1        21,091        10.7
Provision for income taxes                 4,741         4.3         3,197         3.2         9,264         4.2         6,327         3.2
Net earnings                           $  12,194        11.0 %   $   7,460         7.4 %   $  23,821        10.9 %   $  14,764         7.5 %




                                       22

--------------------------------------------------------------------------------

                          ENNIS, INC. AND SUBSIDIARIES
                                   FORM 10-Q
                      FOR THE PERIOD ENDED AUGUST 31, 2022

Three months completed August 31, 2022 compared to the three months ended August 31, 2021

Net Sales. Our net sales were $111.2 million for the quarter ended August 31,
2022, compared to $100.5 million for the same quarter in the prior year, an
increase of $10.7 million, or 10.6%. Our net sales increased $3.5 million or
3.2% on a sequential quarter basis as well, from $107.7 million for the quarter
ended May 31, 2022 to $111.2 million for the current quarter. Our net sales
increased due to continued strong customer demand for our products and increased
pricing to cover inflationary costs.

Cost of Goods Sold and Gross Profit Margin. Our cost of goods sold increased
$4.4 million, or 6.1%, from $71.6 million for the three months ended August 31,
2021 to $76.0 million for the three months ended August 31, 2022. Our gross
profit was $35.2 million for the quarter ended August 31, 2022 compared to $28.9
million for the same quarter in the prior year. We made pricing adjustments to
cover inflationary costs and improved operational efficiencies all of which
contributed to improve our gross profit margin to 31.7% in the second quarter of
2022 compared to 31.6% from our sequential quarter and improved from the prior
year's second quarter of 28.8%.

Selling, general, and administrative expense. For the three months ended August
31, 2022, our selling, general, and administrative ("SG&A") expenses were $17.9
million compared to $18.1 million for the three months ended August 31, 2021, a
decrease of $0.2 million, or 1.1%. As a percentage of net sales, SG&A expenses
for the current quarter were 16.1% and 18.0% for the three months ended August
31, 2022 and August 31, 2021, respectively. The decrease in SG&A costs were a
result of savings from operational efficiencies and the consolidation of our
underperforming manufacturing facilities in the prior year.

Gain from disposal of assets. The $1,000 the net loss on disposal of assets in the prior year quarter is mainly attributable to the sale of equipment.

Income from operations. Primarily due to factors described above, our income
from operations for the three months ended August 31, 2022 was $17.3 million, or
15.5% of net sales, as compared to $10.8 million, or 10.8% of net sales, for the
three months ended August 31, 2021. Income from operations increased on a
sequential quarter basis by $1.0 million from $16.3 million for the quarter
ended May 31, 2022.

Other expense. Other expense was $0.3 million for the three months ended August
31, 2022 compared to other expense of $0.1 million for the three months ended
August 31, 2021.

Provision for income taxes. Our effective tax rate was 28.0% for the three
months ended August 31, 2022 as compared to 30.0% for the three months ended
August 31, 2021. The primary reason for the decrease in the effective tax rate
is permanent non-deductible expense resulting from final distributions in the
prior year from our deferred compensation plan which was terminated in November
2020.

Net earnings. Net earnings, due to the factors above, were $12.2 million for the
three months ended August 31, 2022 as compared to $7.5 million for the
comparable quarter in the prior year, an increase of $4.7 million. Net earnings
per diluted share for the three months ended August 31, 2022 was $0.47, compared
to $0.29 for the same quarter in the prior year.



                                       23
--------------------------------------------------------------------------------

                          ENNIS, INC. AND SUBSIDIARIES
                                   FORM 10-Q
                      FOR THE PERIOD ENDED AUGUST 31, 2022

Six months ended August 31, 2022 compared to the six months ended August 31, 2021

Net Sales. Our net sales were $218.9 million for the six-month period ended
August 31, 2022, compared to $197.4 million for the same period last year, an
increase of $21.5 million, or 10.9%. We attribute approximately 40% of the
increased revenues to additional volume and 60% to price increases to cover
inflation. AmeriPrint, our acquisition completed on June 1, 2021, positively
impacted our net sales by approximately $1.9 million during the current period
compared to the same period last year. Our net sales increased due to continued
strong customer demand for our products and increase in pricing to cover
inflationary costs.

Cost of Goods Sold and Gross Profit Margin. Our cost of goods sold increased
$10.4 million, or 7.5%, from $139.3 million for the six months ended August 31,
2021 to $149.7 million for the six months ended August 31, 2022. Our gross
profit was $69.2 million for the six-month period ended August 31, 2022 compared
to $58.1 million for the same period in the prior year. We made pricing
adjustments to cover inflationary costs and improved operational efficiencies
all of which contributed to improve our gross profit margin to 31.6% from the
prior year six-month period of 29.4%.

Selling, general, and administrative expense. For the six months ended August
31, 2022, our SG&A expenses were $35.6 million compared to $37.0 million for the
six months ended August 31, 2021, a decrease of $1.4 million, or 3.8%. As a
percentage of net sales, SG&A expenses for the period were 16.3% and 18.8% for
the six months ended August 31, 2022 and August 31, 2021, respectively. The
decrease in SG&A costs was a result of savings from operational efficiencies and
the consolidation of our underperforming manufacturing facilities in the prior
year.

Gain from disposal of assets. The $0.3 million net gain from disposal of assets
during the six-month period ended August 31, 2021 was primarily attributed to
the sale of a previously held-for-sale facility that had transferred its
operations to another facility.

Income from operations. Primarily due to factors described above, our income
from operations for the six months ended August 31, 2022 was $33.6 million, or
15.3% of net sales, as compared to $21.4 million, or 10.8% of net sales, for the
six months ended August 31, 2021.

Other expense. Other expense was $0.5 million for the six months ended August
31, 2022 compared to expense of $0.3 million for the six months ended August 31,
2021.

Provision for income taxes. Our effective tax rate was 28.0% for the six months
ended August 31, 2022 as compared to 30.0% for the six months ended August 31,
2021. The primary reason for the decrease in the effective tax rate is permanent
non-deductible expense resulting from final distributions in the prior year from
our deferred compensation plan which was terminated in November 2020.

Net earnings. Net earnings, due to the factors above, were $23.8 million for the
six months ended August 31, 2022 as compared to $14.8 million for the comparable
period in the prior year, an increase of $9.0 million. Net earnings per diluted
share for the six months ended August 31, 2022 was $0.92, compared to $0.57 for
the same period in the prior year.

Cash and capital resources

We rely on our cash flows generated from operations to meet cash requirements of
our business. The primary cash requirements of our business are payments to
vendors in the normal course of business, capital expenditures, compensation
obligations and the payment of dividends to our shareholders. We expect to
generate sufficient cash flows from operations necessary to cover our operating
and capital requirements for the foreseeable future. We believe our strong
liquidity position will help us mitigate the ongoing adverse impacts of
COVID-19.


                          August 31,       February 28,

(Dollars in thousands)       2022              2022
Working capital          $    146,369     $      127,839
Cash                     $     91,520     $       85,606






Working Capital. On August 31, 2022, we had $91.5 million in cash. During the
period, our cash position increased by $5.9 million and our working capital
increased $18.6 million or 14.5%, from $127.8 million at February 28, 2022 to
$146.4 million at August 31, 2022. Our current ratio, calculated by dividing our
current assets by our current liabilities, increased from 4.4 to 1.0 at February
28, 2022 to 4.7 to 1.0 at August 31, 2022. Our working capital and current ratio
were positively impacted primarily by an increase in our cash and inventories
offset by an increase in our income taxes payable.

                                       24
--------------------------------------------------------------------------------

                          ENNIS, INC. AND SUBSIDIARIES
                                   FORM 10-Q
                      FOR THE PERIOD ENDED AUGUST 31, 2022



                                                Six months ended August 31,
(Dollars in thousands)                           2022                 2021
Net cash provided by operating activities   $       21,755       $       24,507
Net cash used in investing activities       $       (1,801 )     $       (5,205 )
Net cash used in financing activities       $      (14,040 )     $      (12,391 )




Cash flows from operating activities. Cash provided by operating activities was
$21.8 million in the six months ended August 31, 2022 compared to $24.5 million
in the comparative period ended August 31, 2021. Our operational earnings
increased $9.0 million for the six months ended August 31, 2022 compared to the
six months ended August 31, 2021. An increase in accounts receivable used cash
of $5.3 million in the current period compared to a decrease in accounts
receivable providing cash of $0.2 million in the prior year. An increase in
inventories used cash of $9.9 million in the six months ended August 31, 2022
compared to $6.0 million in the six months ended August 31, 2021. An increase in
accounts payable provided cash of $2.8 million in the six months ended August
31, 2022 compared to an increase in accounts payable providing cash of $4.3
million in the six months ended August 31, 2021. We continue to closely monitor
and manage our outstanding trade receivables and inventories. The Company
continues to monitor incoming orders and is adjusting its raw material purchases
accordingly.


Cash flows from investing activities. Cash used in investing activities was $1.8
million in the six months ended August 31, 2022 compared to $5.2 million in the
six months ended August 31, 2021. Capital expenditures primarily of equipment
was $1.8 million and $2.1 million for the six months ended August 31, 2022 and
August 31, 2021, respectively. In the six months ended August 31, 2021, $3.9
million was used to acquire businesses and $0.8 million was provided from the
sale of a building that had transferred its operations to another facility.


Cash flows from financing activities. We used $1.6 million more cash in
financing activities during the six months ended August 31, 2022 compared to the
same period in the prior year. The increase in cash used during the six months
ended August 31, 2022 compared to the six months ended August 31, 2021 resulted
from $1.1 million of common stock repurchased under our stock repurchase program
in the prior quarter compared to no repurchases of our common stock during the
six months ended August 31, 2021 and the payment of $0.5 million more in
dividends in the current period.


Credit Facility. We did not renew our Credit Agreement, which expired November
11, 2021. We have had no outstanding long-term debt under the revolving credit
line since paid in full in August 2019. As of August 31, 2022, we had $0.6
million outstanding under a standby letters of credit arrangement secured by a
cash collateral bank account. It is anticipated that our cash and funds from
operating cash flows will be sufficient to fund anticipated future expenses.

Pension Plan - We are required to make contributions to our Pension Plan. These
contributions are required under the minimum funding requirements of ERISA. Due
to the enactment of HATFA in August 2014, which effectively raises the discount
rates mandated for determining the value of a plan's benefit liability and
annual cost of accruals, our minimum required contribution to the Pension Plan
is zero for the Pension Plan year ending February 28, 2023. Assuming a stable
funding status, we would expect that our future contributions to be between $1.0
million and $3.0 million per year. However, changes in actual investment returns
or in discount rates could change this amount significantly. There was a $2.0
million contribution made in September 2022 to avoid a Pension Benefit Guaranty
Corporation variable premium. As our Pension Plan assets are invested in
marketable securities, fluctuations in market values could potentially impact
our funding status, associated liabilities recorded and future required minimum
contributions. At August 31, 2022, we had an unfunded pension liability recorded
on our balance sheet of $5.7 million.

Inventories - We believe our inventory levels are sufficient to satisfy our
customer demands and we anticipate having adequate sources of raw materials to
meet future business requirements. We have long-term contracts in effect with
paper suppliers that govern prices, but do not require minimum purchase
commitments. Certain of our rebate programs do, however, require minimum
purchase volumes.

Capital Expenditures - We continue to make capital expenditures for operational
maintenance purposes, as may be required. Additionally, we will carefully review
and make new capital expenditures for equipment to the extent such expenditures
make economic sense by improving our operations and not jeopardizing our strong
liquidity position. We expect our capital requirements for our current fiscal
year, exclusive of capital required for possible acquisitions, will be within
our historical levels of between $3.0 million and $5.0 million. For the six
months ended August 31, 2022, we have spent approximately $1.8 million on
capital expenditures. We expect to fund these expenditures through existing cash
flows.

Contractual Obligations – There have been no material changes to our contractual obligations since February 28, 2022 that have, or are reasonably likely to have, a material effect on our results of operations or financial condition.

                                       25
--------------------------------------------------------------------------------
                          ENNIS, INC. AND SUBSIDIARIES
                                   FORM 10-Q
                      FOR THE PERIOD ENDED AUGUST 31, 2022

© Edgar Online, source Previews