UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended ~~November~~May 3031, ~~2023~~2024

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from to

Commission File Number 1-5807

ENNIS, INC.

(Exact Name of Registrant as Specified in Its Charter)


Texas		75-0256410
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

2441 Presidential Pkwy., Midlothian, Texas		76065
(Address of Principal Executive Offices)		(Zip code)

Registrant’s Telephone Number, Including Area Code: (972) 775-9801

Securities registered pursuant to Section 12(b) of the Act:

    Title of each class

    Trading
Symbol(s)

    Name of each exchange on which registered

    Common Stock, par value $2.50 per share

    EBF

    New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~December~~June 2924, ~~2023~~2024, there were 25,~~874~~984,~~699~~014 shares of the Registrant’s common stock outstanding.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION
	Item 1. Condensed Consolidated Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets at November 30, 2023 and February 28, 2023	3
	Condensed Consolidated Balance Sheets at May 31, 2024 and February 29, 2024	3
	Condensed Consolidated Statements of Operations for the three and nine months ended November 30, 2023 and November 30, 2022	5
	Condensed Consolidated Statements of Operations for the three months ended May 31, 2024 and May 31, 2023	5
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended November 30, 2023 and November 30, 2022	6
	Condensed Consolidated Statements of Comprehensive Income for the three months ended May 31, 2024 and May 31, 2023	6
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and nine ended November 30, 2023 and November 30, 2022	7
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended May 31, 2024 and May 31, 2023	7
	Condensed Consolidated Statements of Cash Flows for the nine months ended November 30, 2023 and November 30, 2022	8
	Condensed Consolidated Statements of Cash Flows for the three months ended May 31, 2024 and May 31, 2023	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	3028
	Item 4. Controls and Procedures	3028
PART II: OTHER INFORMATION
	Item 1. Legal Proceedings	3028
	Item 1A. Risk Factors	3028
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3129
	Item 3. Defaults Upon Senior Securities	3129
	Item 4. Mine Safety Disclosures	3129
	Item 5. Other Information	3129
	Item 6. Exhibits	3129
SIGNATURES		3230

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	November 30,		February 28,
	May 31,		February 29,
	2023		2023
	2024		2024
Assets
Current assets
Cash	$	8391,~~902~~363	$	9381,~~968~~597
Short-term investments		1832,~~495~~326		-29,325
Accounts receivable, net		4843,~~140~~909		5347,~~507~~209
Inventories, net		4241,~~325~~003		4640,~~834~~037
Prepaid expenses		2,~~818~~537		2,~~317~~168
Prepaid income taxes		~~3,640~~-		-1,046
Total current assets		~~199~~211,~~320~~138		~~196~~201,~~626~~382
Property, plant and equipment
Plant, machinery and equipment		~~159~~162,~~092~~200		~~153~~160,~~074~~305
Land and buildings		6667,~~980~~019		5967,~~163~~121
Computer equipment and software		10,~~691~~644		1810,~~832~~680
Other		4,~~124~~055		4,~~292~~124
Total property, plant and equipment		~~240~~243,~~887~~918		~~235~~242,~~361~~230
Less accumulated depreciation		~~184~~188,~~923~~812		187,~~572~~265
Property, plant and equipment, net		55,~~964~~106		4754,~~789~~965
Operating lease right-of-use assets, net		118,~~188~~836		139,~~133~~827
Goodwill		9294,~~391~~349		9194,~~819~~349
Intangible assets, net		4236,~~075~~398		4438,~~088~~327
Other assets		272		380
Net pension asset		80		80
Total assets	$	401,210	$	393,835
Other assets		260		260
Total assets	$	406,167	$	399,190

See accompanying notes to condensed consolidated financial statements.

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS-Continued

(unaudited, in thousands, except for par value and share amounts)

	November 30,			February 28,
	May 31,			February 29,
	2023			2023
	2024			2024
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	1015,~~860~~542		$	1811,~~333~~846
Accrued expenses		1817,~~617~~176			1817,~~067~~541
Current portion of operating lease liabilities		4,~~811~~075			4,~~847~~414
Total current liabilities		3436,~~288~~793			4133,~~247~~801
Liability for pension benefits		646			646
Deferred income taxes		9,429			9,305
Deferred income taxes		11,458			11,098
Operating lease liabilities, net of current portion		4,489			5,160
Operating lease liabilities, net of current portion		6,140			8,162
Other liabilities		1,083			1,083
Other liabilities		1,051			1,250
Total liabilities		51,794			49,349
Total liabilities		53,583			62,403
Shareholders’ equity
Common stock $2.50 par value, authorized 40,000,000 shares; issued 30,053,443 shares at November 30, 2023 and February 28, 2023		75,134			75,134
Common stock $2.50 par value, authorized 40,000,000 shares; issued 30,053,443 shares at May 31, 2024 and February 29, 2024		75,134			75,134
Additional paid-in capital		~~127~~123,~~135~~948			~~125~~126,~~887~~253
Retained earnings		~~232~~240,~~519~~423			~~219~~236,~~459~~196
Accumulated other comprehensive loss:
Minimum pension liability, net of taxes		(1312,~~024~~647	)		(1413,~~104~~019	)
Treasury stock		(7472,~~137~~485	)		(74,~~944~~723	)
Total shareholders’ equity		~~347~~354,~~627~~373			~~331~~349,~~432~~841
Total liabilities and shareholders' equity	$	~~401~~406,~~210~~167		$	~~393~~399,~~835~~190

See accompanying notes to condensed consolidated financial statements.

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share and per share amounts)

Three months ended

~~Nine months ended~~

November 30,

May 31,

2023

2022

2023

2022

2024

2023

Net sales

~~104~~103,~~621~~108

~~110~~111,~~245~~294

~~322,675~~

~~329,145~~

Cost of goods sold

7472,~~090~~204

7677,~~768~~253

~~225,004~~

~~226,445~~

Gross profit

30,~~531~~904

3334,~~477~~041

~~97,671~~

~~102,700~~

Selling, general and administrative

17,~~410~~170

1718,~~292~~343

~~54,094~~

~~52,916~~

Loss from disposal of assets

15—

Income from operations

13,~~120~~730

1615,~~170~~698

~~43,524~~

~~49,769~~

Other income (expense)

Interest income

1,~~020~~359

~~232~~816

~~2,714~~

~~317~~

Other, net

(~~324~~348

)

(~~728~~354

)

~~(979~~

)

~~(1,327~~

)

Total Other income (expense)

696

(496

)

1,735

(1,010

)

Total other income (expense)

1,011

462

Earnings before income taxes

1314,~~816~~741

1516,~~674~~160

~~45,259~~

~~48,759~~

Income tax expense

34,~~910~~054

4,~~388~~525

~~12,808~~

~~13,652~~

Net earnings

910,~~906~~687

11,~~286~~635

~~32,451~~

~~35,107~~

Weighted average common shares outstanding

Basic

2526,~~894~~156,~~578~~928

25,~~809~~839,~~581~~651

~~25,826,691~~

~~25,812,216~~

Diluted

26,~~083~~279,~~301~~646

25,~~888~~979,~~815~~533

~~25,991,567~~

~~25,892,873~~

Earnings per share

Basic

0.3841

0.4445

~~1.26~~

~~1.36~~

Diluted

0.3841

0.4445

~~1.25~~

~~1.36~~

See accompanying notes to condensed consolidated financial statements.

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)

	Three months ended				~~Nine months ended~~
	November 30,				November 30,
	May 31,
	2023		2022		2023		2022
	2024		2023
Net earnings	$	910,~~906~~687	$	11,~~286~~635	$	~~32,451~~	$	~~35,107~~
Adjustment to pension, net of taxes		~~360~~372		~~717~~387		~~1,080~~		~~1,501~~
Comprehensive income	$	1011,~~266~~059	$	12,~~003~~022	$	~~33,531~~	$	~~36,608~~

See accompanying notes to condensed consolidated financial statements.

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(unaudited, in thousands, except share and per share amounts)

											Accumulated
					Additional						Other
	Common Stock				Paid-in			Retained			Comprehensive			Treasury Stock
	Shares		Amount		Capital			Earnings			Income (Loss)			Shares			Amount			Total
Balance August 31, 2023		30,053,443	$	75,134	$	126,440		$	229,082		$	(13,384	)		(4,220,210	)	$	(74,126	)	$	343,146
Balance February 29, 2024		30,053,443	$	75,134	$	126,253		$	236,196		$	(13,019	)		(4,250,226	)	$	(74,723	)	$	349,841
Net earnings		—		—		—			910,~~906~~687			—			—			—			910,~~906~~687
Adjustment to pension, net of deferred tax of $120		—		—		—			—			360			—			—			360
Adjustment to pension, net of deferred tax of $124		—		—		—			—			372			—			—			372
Dividends paid ($0.25 per share)		—		—		—			(6,~~469~~460	)		—			—			—			(6,~~469~~460	)
Stock based compensation		—		—		1,~~041~~760			—			—			—			—			1,~~041~~760
Exercise of stock options and restricted stock		—		—		(~~346~~4,065	)		—			—			~~(666~~231,216	)		~~(11~~4,065	)		~~(357~~—	)
Balance November 30, 2023		30,053,443	$	75,134	$	127,135		$	232,519		$	(13,024	)		(4,220,876	)	$	(74,137	)	$	347,627
Common stock repurchases		—		—		—			—			—			(91,883	)		(1,827	)		(1,827	)
Balance May 31, 2024		30,053,443	$	75,134	$	123,948		$	240,423		$	(12,647	)		(4,110,893	)	$	(72,485	)	$	354,373
Balance February 28, 2023		30,053,443	$	75,134	$	125,887		$	219,459		$	(14,104	)		(4,266,835	)	$	(74,944	)	$	331,432
Net earnings		—		—		—			3211,~~451~~635			—			—			—			3211,~~451~~635
Adjustment to pension, net of deferred tax of $359		—		—		—			—			1,080			—			—			1,080
Adjustment to pension, net of deferred tax of $129		—		—		—			—			387			—			—			387
Dividends paid ($0.75 per share)		—		—		—			(19,391	)		—			—			—			(19,391	)
Stock based compensation		—		—		2,055			—			—			—			—			2,055
Exercise of stock options and restricted stock		—		—		(807	)		—			—			45,959			807			—
Balance November 30, 2023		30,053,443	$	75,134	$	127,135		$	232,519		$	(13,024	)		(4,220,876	)	$	(74,137	)	$	347,627
Balance August 31, 2022		30,053,443	$	75,134	$	124,031		$	208,898		$	(17,803	)		(4,266,835	)	$	(74,944	)	$	315,316
Net earnings		—		—		—			11,286			—			—			—			11,286
Adjustment to pension, net of deferred tax of $179		—		—		—			—			717			—			—			717
Dividends paid ($0.25 per share)		—		—		—			(6,459	)		—			—			—			(6,459	)
Stock based compensation		—		—		~~562~~686			—			—			—			—			~~562~~686
Balance November 30, 2022		30,053,443	$	75,134	$	124,593		$	213,725		$	(17,086	)		(4,266,835	)	$	(74,944	)	$	321,422
Exercise of stock options and restricted stock		—		—		(472	)		—			—			26,906			472			—
Balance February 28, 2022		30,053,443	$	75,134	$	123,990		$	197,998		$	(18,587	)		(4,253,824	)	$	(74,720	)	$	303,815
Balance May 31, 2023		30,053,443	$	75,134	$	126,101		$	224,635		$	(13,717	)		(4,239,929	)	$	(74,472	)	$	337,681
Net earnings		—		—		—			35,107			—			—			—			35,107
Adjustment to pension, net of deferred tax of $375		—		—		—			—			1,501			—			—			1,501
Dividends paid ($0.75 per share)		—		—		—			(19,380	)		—			—			—			(19,380	)
Stock based compensation		—		—		1,497			—			—			—			—			1,497
Exercise of stock options and restricted stock		—		—		(894	)		—			—			51,071			894			—
Common stock repurchases		—		—		—			—			—			(64,082	)		(1,118	)		(1,118	)
Balance November 30, 2022		30,053,443	$	75,134	$	124,593		$	213,725		$	(17,086	)		(4,266,835	)	$	(74,944	)	$	321,422

See accompanying notes to condensed consolidated financial statements.

ENNIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Nine months ended
	Three months ended
	November 30,
	May 31,
		2023			2022
	2024		2023
Cash flows from operating activities:
Net earnings	$10,687	~~32,451~~	$11,635	$	~~35,107~~
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	2,314	~~7,465~~	2,450		~~7,766~~
Amortization of intangible assets	1,929	~~5,830~~	1,894		~~5,280~~
Loss from disposal of assets	4	53	—		15
Accrued interest on short-term investments	(408)	~~(102~~	)—		—
Bad debt expense, net of recoveries	110	~~373~~	135		~~585~~
Stock based compensation	1,760	~~2,055~~	686		~~1,497~~
Net pension expense		1,439			1
Deferred income taxes	56		—
Changes in operating assets and liabilities, net of current assets and liabilities of acquired businesses:
Net pension expense	496		462
Accounts receivable		8,228			(5,898	)
Changes in operating assets and liabilities, net of the effects of acquisitions
Prepaid expenses and income taxes		(4,126	)		(487	)
Accounts receivable	3,190		7,299
Inventories		6,828			(10,921	)
Prepaid expenses and income taxes	677		384
Other assets		81			(570	)
Inventories	(966)		(365)
Accounts payable and accrued expenses		(7,763	)		1,471
Other assets	—		71
Other liabilities		(312	)		151
Accounts payable and accrued expenses	3,275		(2,698)
Net cash provided by operating activities		52,500			33,997
Other liabilities	(19)		(227)
Cash flows from investing activities:
Net cash provided by operating activities	23,105		21,726
Capital expenditures		(4,884	)		(3,338	)
Cash flows from investing activities:
Purchase of businesses, net of cash acquired		(19,907	)		(8,767	)
Capital expenditures	(2,510)		(2,101)
Purchase of short-term investments		(18,393	)		—
Purchase of businesses, net of cash acquired	—		(5,028)
Proceeds from disposal of plant and property		9			—
Purchase of short-term investments	(10,093)		—
Net cash used in investing activities		(43,175	)		(12,105	)
Maturity of short-term investments	7,500		—
Cash flows from financing activities:
Proceeds from disposal of plant and property	51		—
Dividends paid		(19,391	)		(19,380	)
Net cash used in investing activities	(5,052)		(7,129)
Common stock repurchases		—			(1,118	)
Cash flows from financing activities:
Net cash used in financing activities		(19,391	)		(20,498	)
Dividends paid	(6,460)		(6,459)
Net change in cash		(10,066	)		1,394
Common stock repurchases	(1,827)		—
Cash at beginning of period		93,968			85,606
Net cash used in financing activities	(8,287)		(6,459)
Cash at end of period	$	83,902		$	87,000
Net change in cash	9,766		8,138
Cash at beginning of period	81,597		93,968
Cash at end of period	$91,363		$102,106

See accompanying notes to condensed consolidated financial statements.

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024(unaudited)

1. Significant Accounting Policies and General Matters

Basis of Presentation

These unaudited condensed consolidated financial statements of Ennis, Inc. and its subsidiaries (collectively referred to as the “Company,” “Registrant,” “Ennis,” or “we,” “us,” or “our”) for the period ended ~~November~~May 3031, ~~2023~~2024 have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP') and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 2829, ~~2023~~2024, from which the accompanying consolidated balance sheet at February 2829, ~~2023~~2024 was derived. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial information have been included and are of a normal recurring nature. The preparation of the condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the disclosure and reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates these estimates and judgments on an ongoing basis, including those related to bad debts, inventory valuations, property, plant and equipment, intangible assets, pension plan, accrued liabilities, and income taxes. The Company bases estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of operations for any interim period are not necessarily indicative of the results of operations for a full year.

Recent Accounting Pronouncements

~~Recently~~ Issued ~~Accounting~~accounting ~~Updates~~standards not yet adopted

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which ~~expands~~aims to improve disclosures about a public entity’s reportable segments. This ~~and~~update ~~requires~~addresses requests from investors for more ~~enhanced~~detailed information about a reportable segment’s expenses, ~~interim~~in ~~segment~~order ~~profit~~to orimprove ~~loss,~~understanding ~~and~~of ~~how~~ a public entity’s business activities, overall performance, and potential future cash flows. The amendments in this ASU include a requirement for public business entities to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker ~~uses~~("CODM") ~~reported~~and ~~segment~~are ~~profit~~included orwithin ~~loss~~each ~~information~~reported inmeasure ~~assessing~~of segment ~~performance~~profit ~~and~~or ~~allocating resources~~loss. ~~The~~This update ~~will~~is be effective for ~~annual~~fiscal ~~periods~~years beginning after December 15, 2023, (and interim periods within those fiscal ~~2025~~years ~~for~~starting ~~the~~after ~~Company).~~December We15, ~~are~~2024. ~~assessing~~This ~~the~~ASU ~~effect~~must ofbe ~~this~~applied ~~update~~retrospectively onto ~~our~~all ~~consolidated~~prior ~~financial~~periods ~~statements~~presented. ~~and~~Management ~~believe~~expects the adoption of ~~this~~the ~~standard~~pronouncement iswill ~~likely~~result toin ~~add material~~ additional segment disclosures in its Consolidated Financial Statements for fiscal year 2025.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in a public entity’s income tax rate reconciliation table and other disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. ~~The~~This ~~update~~ASU ~~will~~is be effective for annual periods beginning after December 15, 2024 (fiscal 2026 for the ~~company~~Company), but early adoption is permitted. WeThis ~~are~~ASU should be applied on a prospective basis, although retrospective application is permitted. The Company is assessing the effect of this update on ~~our~~its ~~consolidated~~Consolidated ~~financial~~Financial ~~statements~~Statements and related disclosures.

Proposed accounting standards

In July 2023, the FASB issued Proposed ASU No. 2023-ED500, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which aims to provide investors with more useful information about an entity’s expenses by improving disclosures on income statement expenses. The amendments in this Proposed ASU would require public business entities to disclose disaggregated information about specific categories underlying certain income statement expense line items. The Company is evaluating this proposed accounting standard.

2. Revenue

Nature of Revenues

Substantially all of the Company'’s revenue ~~from~~is ~~contracts~~derived ~~with~~from ~~customers consists of~~ the sale of commercial printing products in the continental United States of America and is primarily recognized at a point in time in an amount that reflects the consideration the Company expects to be ~~entitled~~provided to in exchange for those goods. Revenue from the sale of commercial printing products, including shipping and handling fees billed to customers, is recognized upon the transfer of control to the customer, which is generally upon shipment to the customer when the terms of the sale are freight on board ("FOB") shipping point, or, to a lesser extent, upon delivery to the customer if the terms of the sale are FOB destination. Net sales represent gross sales invoiced to customer, less certain related charges, including sale tax, discounts, returns and other allowances. Returns, discounts and other allowances have historically been insignificant.

In a small number of cases and upon customer request, the Company prints and stores commercial printing product for customer specified future delivery, generally within the same year as the product is manufactured. In this case, revenue is recognized upon the transfer of control when manufacturing is complete and title and risk of ownership is passed to the customer. Storage revenue for certain customers may be recognized over time rather than at a point in time. As of the date of this report, the amount of storage revenue is not significant to the Company’s condensed consolidated financial statements. The output method for measure of progress is determined to be appropriate. The Company recognizes storage revenue in the amount for which it has the right to invoice for

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024(unaudited)

~~revenue~~billed ~~that~~to customers, is recognized ~~over~~upon ~~time~~the ~~and~~transfer ~~for~~of control to the customer, which itis ~~demonstrates~~generally ~~that~~upon shipment to the ~~invoiced~~customer ~~amount~~when ~~corresponds~~the ~~directly~~terms ~~with~~of the ~~value~~sale are freight on board ("FOB") shipping point, or, to a lesser extent, upon delivery to the customer ~~for~~if the ~~performance~~terms ~~completed~~of the sale are FOB destination. Net sales represent gross sales invoiced to ~~date~~customers, less certain related charges, including sales tax, discounts, returns and other allowances. Returns, discounts and other allowances have historically been insignificant.

~~The~~In ~~Company~~a ~~does~~small ~~not~~number ~~disaggregate~~of ~~revenue~~cases and ~~operates~~upon incustomer ~~one~~request, ~~sales~~the ~~category~~Company ~~consisting~~prints ofand stores commercial ~~printed~~printing product ~~revenue~~for customer specified future delivery, ~~which~~generally iswithin ~~reported~~the same year as ~~net~~the ~~sales~~product onis manufactured. In this case, revenue is recognized upon the transfer of control when manufacturing is complete and title and risk of ownership is passed to the customer. Storage revenue for certain customers may be recognized over time rather than at a point in time. As of the date of this report, the amount of storage revenue is not significant to the Company’s condensed consolidated financial statements. The output method for measure of ~~operations.~~progress is determined to be appropriate. The Company ~~does~~recognizes ~~not~~storage ~~have~~revenue ~~material~~in ~~contract~~the ~~assets~~amount for which it has the right to invoice for revenue that is recognized over time and ~~contract~~for ~~liabilities~~which asit ofdemonstrates ~~November~~that ~~30,~~the ~~2023~~invoiced amount corresponds directly with the value to the customer for the performance completed to date.

The Company does not disaggregate revenue and operates in one sales category consisting of commercial printed product revenue, which is reported as net sales on the condensed consolidated statements of operations. The Company does not have material contract assets and contract liabilities as of May 31, 2024.

Significant Judgments

Generally, the Company’s contracts with customers are comprised of a written quote and customer purchase order or statement of work, and governed by the Company’s trade terms and conditions. In certain instances, it may be further supplemented by separate pricing agreements and customer incentive arrangements, which typically only affect the contract’s transaction price. Contracts do not contain a significant financing component as payment terms on invoiced amounts are typically between 30 to 6090 days, based on the Company’s credit assessment of individual customers, as well as industry expectations. Product returns are not significant as the bulk of our sales are custom in nature.

From time to time, the Company may offer incentives to its customers considered to be variable consideration including volume-based rebates or early payment discounts. Customer incentives considered to be variable consideration are recorded as a reduction to revenue as part of the transaction price at contract inception when there is a basis to reasonably estimate the amount of the incentive and only to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Customer incentives are allocated entirely to the single performance obligation of transferring printed product to the customer and are not considered material.

For customers with terms of FOB shipping point, the Company accounts for shipping and handling activities performed after the control of the printed product has been transferred to the customer as a fulfillment cost. The Company accrues for the costs of shipping and handling activities if revenue is recognized before contractually agreed shipping and handling activities occur.

The Company’s contracts with customers are generally short-term in nature. Accordingly, the Company does not disclose the value of unsatisfied performance obligations nor the timing of revenue recognition.

3. Short-term Investments and Fair Value Measurements

Short-term investments are securities with original maturities of greater than three months but less than twelve months and are comprised of U.S. Treasury Bills. The Company determines the classification of these securities as trading, available for sale or held to maturity at the time of purchase and re-evaluates these determinations at each balance sheet date. The Company's short-term investments are classified as held-to-maturity for the period presented as it has the positive intent and ability to hold these investments to maturity. The Company's held-to-maturity investments are stated at amortized cost, which approximated fair value, and are periodically assessed for other-than-temporary impairment..

Amortized cost and estimated fair value of investment securities classified as held-to-maturity were as follows at November 30, 2023 (in thousands):

	November 30, 2023
		Gross	Gross
	Cost or	Unrealized	Unrealized	Estimated
	Amortized	Holding	Holding	Fair
	Cost	Gains	Losses	Value
November 30, 2023
Investment securities due in less than one year	$18,495	$-	$4	$18,491
February 28, 2023
Investment securities due in less than one year	$-	$-	$-	$-

The Company’s short-term investments in investment securities are Level 1 fair value measure. The Company did not hold any Level 2 or 3 financial assets or liabilities measured at fair value on a recurring basis. There were no transfers between levels during the three and nine months ended November 30, 2023.

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024(unaudited)

43. ~~Accounts~~Short-term ~~Receivable~~Investments and ~~Allowance~~Fair ~~for~~Value ~~Doubtful Receivables~~Measurements

~~Accounts~~Short-term ~~receivable~~investments are ~~reduced~~securities bywith anoriginal ~~allowance~~maturities ~~for an estimate~~ of ~~amounts~~greater ~~that~~than ~~are~~three ~~uncollectible.~~months ~~Substantially~~but ~~all~~less ofthan ~~the~~twelve ~~Company’s~~months ~~receivables~~and are ~~due~~comprised ~~from~~of ~~customers~~U.S. inTreasury ~~the United States~~Bills. The Company ~~extends~~determines ~~credit~~the toclassification ~~its~~of ~~customers~~these ~~based~~securities ~~upon~~as ~~its~~trading, ~~evaluation~~available offor ~~the~~sale ~~following~~or ~~factors:~~held ~~(i)~~to ~~the~~maturity ~~customer’s~~at ~~financial condition, (ii)~~ the ~~amount~~time of ~~credit~~purchase ~~the customer requests,~~ and ~~(iii)~~re-evaluates ~~the~~these ~~customer’s~~determinations ~~actual~~at ~~payment~~each ~~history~~balance ~~(which~~sheet ~~includes disputed invoice resolution)~~date. The Company's ~~does~~short-term ~~not~~investments ~~typically~~are ~~require~~classified ~~its~~as ~~customers~~ held-to-maturity ~~post a deposit or supply collateral. The Company’s allowance~~ for ~~doubtful~~the ~~receivables~~period ispresented ~~based~~as onit anhas ~~analysis that estimates~~ the ~~amount~~positive ofintent ~~its~~and ~~total~~ability ~~customer~~to ~~receivable~~hold ~~balance~~these ~~that~~investments isto ~~not collectible~~maturity. ~~This~~The ~~analysis~~Company's ~~includes~~held-to-maturity ~~the~~investments ~~pooling~~are ofstated ~~receivables~~at ~~based~~amortized oncost ~~risk~~with ~~assessment and then assessing~~ a ~~default~~zero ~~probability~~credit toloss ~~these~~allowance ~~pooled~~because ~~balances,~~the ~~which~~probability ~~can~~of bedefault ~~influenced~~is byvirtually ~~several~~zero ~~factors~~due ~~including~~to ~~(i)~~the ~~current~~high ~~market~~credit ~~conditions~~rating, ~~(ii)~~long ~~historical~~history ~~experience,~~of ~~(iii)~~no ~~reasonable~~credit ~~forecast,~~losses and ~~(iv)~~the ~~review~~widely ofrecognized ~~customer~~risk ~~receivable~~free ~~aging~~nature ~~and~~of ~~payment~~these ~~trends~~investments.

~~The~~Amortized ~~following~~cost ~~table~~and ~~summarizes~~estimated ~~the~~fair ~~components~~value of ~~accounts~~investment ~~receivables~~securities classified as ofheld-to-maturity ~~the~~were ~~dates~~as ~~indicated~~follows at May 31, 2024 and February 29, 2024 (in thousands):

	November 30,	February 28,
		Gross	Gross
	2023	2023
	Cost or	Unrealized	Unrealized	Estimated
Trade Receivables, net of allowance for doubtful receivables	$40,452	$44,645
	Amortized	Holding	Holding	Fair
Vendor Rebates	3,239	4,354
	Cost	Gains	Losses	Value
Notes Receivable	4,449	4,508
May 31, 2024
	$48,140	$53,507
Investment securities due in less than one year	$32,326	$-	$59	$32,267
February 29, 2024
Investment securities due in less than one year	$29,325	$-	$45	$29,280

~~Accounts~~The ~~receivable~~Company’s atshort-term ~~November~~investments ~~30,~~in ~~2023~~investment ~~and~~securities ~~February~~are ~~28,~~Level ~~2023~~1 ~~includes~~fair avalue $4measure.4 The ~~million~~Company ~~receivable~~did ~~related~~not tohold ~~the~~any ~~sale~~Level of2 anor ~~unused~~3 ~~manufacturing~~financial ~~facility. The~~assets ~~note~~or ~~has~~liabilities ameasured ~~one-year~~at ~~maturity~~fair ~~but~~value ~~the payments are calculated based~~ on a ~~30-year~~recurring ~~amortization~~basis. There ~~schedule~~were ~~with~~no ~~monthly~~transfers ~~payments~~between ~~until~~levels ~~maturity,~~during ~~at which point~~ the ~~remaining~~three ~~balance~~months ~~will~~ended beMay ~~due~~31, ~~and owing~~2024. ~~The note has a fixed interest rate of 5.9% per annum.~~

4. Accounts Receivable and Allowance for Credit Losses

Accounts receivable are reduced by an allowance for an estimate of amounts that are uncollectible. Substantially all of the Company’s receivables are due from customers in North America. The Company extends credit to its customers based upon its evaluation of the following factors: (i) the customer’s financial condition, (ii) the amount of credit the customer requests, and (iii) the customer’s actual payment history (which includes disputed invoice resolution). The Company does not typically require its customers to post a deposit or supply collateral. The Company’s allowance for credit losses is based on an analysis that estimates the amount of its total customer receivable balance that is not collectible. This analysis includes assessing a default probability to customers’ receivable balances, which is influenced by several factors including (i) current market conditions, (ii) periodic review of customer credit worthiness, and (iii) review of customer receivable aging and payment trends.

The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance in the period the payment is received. Credit losses from continuing operations have consistently been within management’s expectations.

The following table presents the activity in the Company’s allowance for ~~doubtful~~credit ~~receivables~~losses (in thousands):

	Three months ended						~~Nine months ended~~
	November 30,						November 30,
	May 31,
	2023			2022			2023			2022
	2024		2023
Balance at beginning of period	$1,707	~~1,866~~	$1,709	$	~~1,523~~		$	~~1,710~~		$	~~1,200~~
Bad debt expense, net of recoveries	110	~~138~~	135		~~192~~			~~373~~			~~585~~
Accounts written off	(97)	~~(46~~	(25)		~~(23~~	)		~~(125~~	)		~~(93~~	)
Balance at end of period	$1,720	~~1,958~~	$1,819	$	~~1,692~~		$	~~1,958~~		$	~~1,692~~

The following table summarizes the components of accounts receivables as of the dates indicated (in thousands):


	May 31,	February 29,
	2024	2024
Trade Receivables, net of allowance for credit losses	$37,635	$39,665
Vendor Rebates	1,850	3,109
Notes Receivable	4,424	4,435
	$43,909	$47,209

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024(unaudited)

The note receivable related to the sale of an unused manufacturing facility and was structured to be paid in 12 consecutive monthly installments, with a fixed interest rate of 5.95% per annum and a balloon payment due upon completion of the final payment. By mutual agreement, the note has been extended beyond the one-year maturity date due to regulatory delays in clearing the facility for third-party financing. The note is classified as current as the Company believes the regulatory delays will be resolved in the next twelve months.

5. Inventories

With the exception of approximately 87.49% and 67.10% of its inventories valued at the lower of last-in first-out ("LIFO") for the periods ended ~~November~~May 3031, ~~2023~~2024 and February 2829, ~~2023~~2024, respectively, the Company values its inventories at the lower of first-in, first-out ("FIFO") cost or net realizable value. The Company regularly reviews inventories on hand, using specific aging categories, and writes down the carrying value of its inventories for excess and potentially obsolete inventories based on historical usage and estimated future usage. In assessing the ultimate realization of its inventories, the Company is required to make judgments as to future demand requirements. As actual future demand or market conditions may vary from those projected by the Company, adjustments to inventories may be required. Reserves for excess and obsolete inventory at ~~November~~May 3031, ~~2023~~2024 and fiscal year ended February 2829, ~~2023~~2024 were $1.93 million and $1.68 million, respectively.

The following table summarizes the components of inventories at the different stages of production as of the dates indicated (in thousands):

	November 30,		February 28,
	May 31,		February 29,
	2023		2023
	2024		2024
Raw material	$	2422,~~176~~000	$	3021,~~308~~764
Work-in-process		5,~~601~~244		65,~~174~~621
Finished goods		1213,~~548~~759		1012,~~352~~652
	$	4241,~~325~~003	$	4640,~~834~~037

6. Acquisitions

The Company applies the acquisition method of accounting for business combinations. Under the acquisition method, the acquiring entity in a business combination recognizes 100% of the assets acquired and liabilities assumed at their acquisition date fair values, with certain limited exceptions permitted under US GAAP. Management utilizes valuation techniques appropriate for the asset or liability being measured in determining these fair values. Any excess of the purchase price over amounts allocated to assets acquired, including identifiable intangible assets and liabilities assumed, is recorded as goodwill. Where amounts allocated to assets acquired and liabilities assumed is greater than the purchase price, a bargain purchase gain is recognized. Acquisition-related costs are expensed in the period incurred.

Acquisition of Eagle Graphics and Diamond Graphics

On October 11, 2023, the Company acquired the assets and business of Eagle Graphics, Inc. ("Eagle"), which is based in Annville, Pennsylvania, and Diamond Graphics, Inc. ("~~Eagle~~Diamond"), which is based in Bensalem, Pennsylvania, for approximately $87.09 million in cash. The Company performed aan ~~preliminary~~ allocation of the total estimated consideration and recorded the underlying assets acquired (including certain identified intangible assets) and liabilities assumed based on the estimated fair values prepared by management using the information available as of the acquisition date. ~~This allocation is preliminary and subject to change, which may be material.~~ All goodwill of $0.2 million recognized as a part of this acquisition is deductible for tax purposes. The Company also recorded intangible assets with definite lives of approximately $0.8 million in connection with the transaction, which are also deductible for tax purposes. The acquisition of Eagle and Diamond strengthens our production capabilities to serve our customers in the Northeast United States.

The following table summarizes the Company's preliminary purchase price allocation for Eagle as of the acquisition date (in thousands):

Accounts receivable		$841
Inventories		917
Other assets		15
Property, plant and equipment		5,304
Goodwill and intangibles		942
Accounts payable and accrued liabilities		(41)
Acquisition price		$7,978

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024(unaudited)

The following table summarizes the Company's purchase price allocation for Eagle and Diamond as of the acquisition date (in thousands):


Accounts receivable		$838
Inventories		917
Property, plant and equipment		5,304
Goodwill and intangibles		971
Accounts payable and accrued liabilities		(159)
Acquisition price		$7,871

Acquisition of UMC Print

On June 2, 2023, the Company acquired the assets and business of UMC Print ("UMC"), which is based in Overland Park, Kansas, for approximately $7.75 million in cash plus the assumption of trade payables of approximately $0.8 million. The Company performed aan ~~preliminary~~ allocation of the total estimated consideration and recorded the underlying assets acquired (including certain identified intangible assets) and liabilities assumed based on the estimated fair values prepared by management using the information available as of the acquisition date. ~~This~~In ~~allocation~~January is2024, ~~preliminary~~the ~~and~~Company ~~subject~~received an indemnity claim from escrow related to ~~change,~~a ~~which~~piece ~~may~~of beequipment ~~material~~in the amount of $0.2 million. All goodwill of $0.2 million recognized as a part of this acquisition is deductible for tax purposes. The Company also recorded intangible assets with definite lives of approximately $2.7 million in connection with the transaction, which are also deductible for tax purposes. The acquisition of UMC brings the Company expanded commercial print capabilities serving customers throughout the Midwest United States.

The following table summarizes the Company's ~~preliminary~~ purchase price allocation for UMC as of the acquisition date (in thousands):

Cash		$758
Accounts receivable		1,839
Inventories		553
Property, plant and equipment		2,~~356~~137
Goodwill and intangibles		2,~~970~~971
Accounts payable and accrued liabilities		(789)
Acquisition price		$7,~~687~~469

Acquisition of Stylecraft Printing

On May 23, 2023, the Company acquired the real estate and operations of Stylecraft Printing Company ("Stylecraft"), which is based in Canton, Michigan, for $5.0 million plus the assumption of trade payables. The Company performed aan ~~preliminary~~ allocation of the total estimated consideration and recorded the underlying assets acquired (including certain identified intangible assets) and liabilities assumed based on their estimated fair values using the information available as of the acquisition date. ~~This allocation is preliminary and subject to change, which may be material.~~ All goodwill of $0.2 million recognized as a part of this acquisition is deductible for tax purposes. The Company also recorded intangible assets with definite lives of approximately $0.3 million in connection with the transaction, which are also deductible for tax purposes. The acquisition of

The following table summarizes the Company's purchase price allocation for Stylecraft as of the acquisition date (in thousands):

Accounts receivable		$554
Inventories		849
Right-of-use asset		28
Property, plant and equipment		3,161
Goodwill and intangibles		476
Operating lease liability		(12)
Accounts payable and accrued liabilities		(28)
Acquisition price		$5,028

Acquisition of School Photo Marketing

On November 30, 2022, the Company acquired the assets and business from School Photo Marketing ("SPM"), which is based in Morganville, New Jersey, for $8.8 million (with additional potential earn-out consideration of up to $1,000,000 over a four-year period upon the attainment of specified financial benchmarks) plus the assumption of trade payables, subject to certain adjustments. At November 30, 2023 and February 28, 2023, the contingent earn-out liability amounted to $0.8 million and zero, respectively. The seller shall receive fifty percent (50%) of Purchaser's annual earnings from the business, before interest and taxes in excess of $1.4 million. Goodwill of $3.1 million recognized as a part of this acquisition is deductible for tax purposes. The Company also recorded

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024(unaudited)

~~intangible~~Stylecraft ~~assets~~expands ~~with~~the ~~definite~~Company's ~~lives~~product oflines ~~approximately~~and ~~$5.1~~footprint ~~million~~specializing in ~~connection~~business ~~with the transaction~~forms, ~~which~~integrated ~~are~~products ~~also deductible for tax purposes. The acquisition of SPM brings printing, yearbook publishing~~ and ~~marketing~~commercial ~~related services to over 1,400 school and sports photographers servicing schools around the country~~printing.

The following table summarizes the Company's purchase price allocation for ~~SPM~~Stylecraft as of the acquisition date (in thousands):

Accounts receivable		$~~1,403~~554
Inventories		~~516~~849
Other assets		84
Right-of-use asset		28
Right-of-use asset		487
Property, plant and equipment		3,160
Property, plant and equipment		250
Goodwill and intangibles		476
Goodwill and intangibles		8,262
Operating lease liability		(28)
Operating lease liability		(487)
Accounts payable and accrued liabilities		(12)
Accounts payable and accrued liabilities		(1,748)
Acquisition price		$5,027
Acquisition price		$8,767

The results of operations for ~~SPM,~~ Stylecraft, UMC and Eagle are included in the Company’s consolidated financial statements from the respective dates of acquisition. The following table sets forth certain operating information on a pro forma basis as though each acquisition had occurred as of the beginning of the comparable prior period (that is, March 1, ~~2022~~2023). The following pro forma information includes the estimated impact of adjustments such as amortization of intangible assets, depreciation expense and interest expense and related tax effects (in thousands, except per share amounts).

Three months ended

~~Nine months ended~~

November 30, 2023

November 30, 2022

November 30, 2023

November 30, 2022

May 31, 2024

May 31, 2023

Pro forma net sales

~~105~~103,~~233~~108

~~120~~118,~~446~~975

~~333,036~~

~~360,101~~

Pro forma net earnings

910,~~975~~687

12,~~275~~756

~~33,847~~

~~38,974~~

Pro forma earnings per share - diluted

0.3841

0.4749

~~1.30~~

~~1.51~~

The pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been in effect for the full duration of the comparative periods presented.

7. Leases

The Company leases certain of its facilities and equipment under operating leases, which are recorded as right-of-use assets and lease liabilities. The Company’s leases generally have terms of 1 – 5 years, with certain leases including renewal options to extend the leases for additional periods at the Company’s discretion. At lease inception, all renewal options reasonably certain to be exercised are considered when determining the lease term. The Company currently does not have ~~financing~~ leases that include options to purchase or provisions that would automatically transfer ownership of the leased property to the Company.

Operating lease expense is recognized on a straight-line basis over the lease term, and variable lease payments are expensed as incurred. The Company had no variable lease costs for the ~~nine~~three months ended ~~November~~May 3031, ~~2023~~2024 and ~~November~~May 3031, ~~2022~~2023.

The Company determines whether a contract is or contains a lease at the inception of the contract. A contract will be deemed to be or contain a lease if the contract conveys the right to control and directs the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from the use of the property, plant, and equipment.

Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates based on the ~~BBB~~information ~~Corporate~~available ~~Bond Rate~~ at lease commencement date, as rates are not implicitly stated in most leases.

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024(unaudited)

Components of lease expense for the three ~~and nine~~ months ended ~~November~~May 3031, ~~2023~~2024 and ~~November~~May 3031, ~~2022~~2023 were as follows (in thousands):

Three months ended

~~Nine months ended~~

November 30, 2023

November 30, 2022

November 30, 2023

November 30, 2022

May 31, 2024

May 31, 2023

Operating lease cost

1,~~390~~347

1,~~517~~433

~~4,241~~

~~4,545~~

Supplemental cash flow information related to leases was as follows:

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating leases

1,~~394~~369

1,~~522~~441

~~4,256~~

~~4,550~~

Right-of-use assets obtained in exchange for lease obligations

Operating leases

~~214~~648

~~2,042~~—

~~993~~

~~2,848~~

Weighted Average Remaining Lease Terms
Operating leases	32.4 Years			2.8 Years
Weighted Average Discount Rate
Operating leases		4.0316	%		3.85	%

Future minimum lease commitments under non-cancelable operating leases for each of the fiscal years ending are as follows (in thousands):

	Operating
	Lease
	Commitments
2024 (remaining 3 months)	$	901
2025 (remaining 9 months)	$	3,246
2025		5,177
2026		3,391
2026		3,355
2027		1,709
2027		1,487
2028		516
2028		496
2029		167
Total future minimum lease payments	$	119,~~583~~029
Less imputed interest		~~632~~465
Present value of lease liabilities	$	108,~~951~~564

8. Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets of acquired businesses and is not amortized. Goodwill and other intangible assets are tested for impairment at a reporting unit level. The annual impairment test of goodwill and intangible assets is performed as of December 1 of each fiscal year.

The Company uses qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the fair value of a reporting unit exceeds its carrying amount, including goodwill. Some of the qualitative factors ~~used~~considered in applying this test include consideration of macroeconomic conditions, industry and market conditions, cost factors affecting the business, overall financial performance of the business, and performance of the share price of the Company.

If qualitative factors are not deemed sufficient to conclude that the fair value of the reporting unit more likely than not exceeds its carrying value, then a one-step approach is applied in making an evaluation. 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 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. 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 goodwill for the reporting unit being lower than the carrying value, an impairment charge is recorded.

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024(unaudited)

selection of comparable publicly traded companies, the discount rate applied to future earnings reflecting a weighted average cost of capital, and earnings growth assumptions. 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 goodwill for the reporting unit being lower than the carrying value, an impairment charge is recorded.

Definite-lived intangible assets are amortized over their estimated useful lives and tested for impairment if events or changes in circumstances indicate that the asset may be impaired.

The carrying amount and accumulated amortization of the Company’s intangible assets at each balance sheet date are as follows (in thousands):

Weighted

Average

Remaining

Gross

Life

Carrying

Accumulated

As of November 30, 2023

(in years)

Amount

Amortization

Net

As of May 31, 2024

(in years)

Amount

Amortization

Net

Definite-lived intangible assets

Trademarks and trade names

7.64

3029,~~654~~817

1314,~~883~~892

1614,~~771~~925

Customer lists

5.4.9

8281,~~844~~753

5860,~~168~~844

2420,~~676~~909

Non-compete

1.94

238

~~167~~185

7153

Technology

65.05

650

93139

~~557~~511

Total

65.39

~~114~~112,~~386~~458

7276,~~311~~060

4236,~~075~~398

As of February 28, 2023

As of February 29, 2024

Definite-lived intangible assets

Trademarks and trade names

107.16

2829,~~977~~817

1214,~~294~~366

1615,~~683~~451

Customer lists

5.41

8081,~~733~~753

5459,~~020~~473

2622,~~713~~280

Non-compete

21.76

~~210~~238

~~145~~176

6562

Technology

65.78

650

23116

~~627~~534

Total

76.21

~~110~~112,~~570~~458

6674,~~482~~131

4438,~~088~~327

Aggregate amortization expense was $1.9 million ~~and $5.8 million~~ for the three ~~and nine~~ months ended ~~November~~May 3031, 2023, ~~respectively~~ and ~~$1.8~~May ~~million and $5.3 million for the three and nine months ended November 30~~31, ~~2022, respectively~~2024.

The Company’s estimated amortization expense for the current and next ~~four~~five fiscal years is as follows (in thousands):

2024	$	7,810
2025 (remaining)	$	5,640
2025		7,772
2026	$	6,945
2026		7,148
2027	$	5,856
2027		6,059
2028	$	4,360
2028		4,562
2029	$	3,725
2030	$	2,510

Changes in the net carrying amount of goodwill as of the dates indicated are as follows (in thousands):

Balance as of March 1, 2022		88,677
Balance as of March 1, 2023		91,819
Goodwill acquired		32,~~142~~530
Balance as of February 28, 2023		91,819
Balance as of February 29, 2024		94,349
Goodwill acquired		~~572~~—
Balance as of November 30, 2023	$	92,391
Balance as of May 31, 2024	$	94,349

During fiscal year 2024, $0.2.5 million was added to goodwill related to the acquisition of Stylecraft, ~~$0.2 million was added to goodwill related to the acquisition of~~ UMC ~~and $0.2 million was added to goodwill related to the acquisition of~~ Eagle and Diamond. ~~During~~ ~~fiscal year 2023, $3.1 million was added to goodwill related to the acquisition of SPM.~~

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024(unaudited)

9. Accrued Expenses

The following table summarizes the components of accrued expenses as of the dates indicated (in thousands):

	November 30, 2023		February 28, 2023
	May 31,		February 29,
Employee compensation and benefits	$	14,240	$	14,823
	2024		2024
Taxes other than income		1,555		1,154
Employee compensation and benefits	$	9,855	$	13,714
Accrued legal and professional fees		527		376
Taxes other than income		1,731		1,341
Accrued utilities		108		129
Accrued legal and professional fees		331		510
Contingent earn-out liability related to acquisition of SPM		200		-
Accrued utilities		108		108
Income taxes payable		757		552
Accrued acquisition related obligations		200		200
Other accrued expenses		1,230		1,033
Income taxes payable		3,364		626
	$	18,617	$	18,067
Other accrued expenses		1,587		1,042
	$	17,176	$	17,541

10. ~~Long-Term~~Credit ~~Debt~~Facility

As of ~~November~~May 3031, ~~2023~~2024, the Company had $0.3 million outstanding under a standby letters of credit arrangement secured by a cash collateral bank account.

11. Shareholders’ Equity

The Company’s board of directors (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. 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. Such purchases, if any, will be made in accordance with applicable insider trading and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice.

~~There~~During ~~were~~the nothree-month ~~repurchases~~period ended May 31, 2024, the Company repurchased 91,883 shares of common stock ~~during~~under the ~~nine-month~~program ~~period~~at an average price of $19.79. The Company did not repurchase any shares for the three months ended ~~November~~May 3031, 2023. Since the program’s inception in October 2008, there have been 2,~~213~~334,~~111~~344 common shares repurchased at an average price of $16.2947 per share. As of ~~November~~May 3031, ~~2023~~2024, $2321.95 million remained available to repurchase shares of the Company’s common stock under the program.

12. Stock Based Compensation

The Company grants stock options, restricted stock and restricted stock units ("RSUs") to key executives and managerial employees and non-employee directors. Prior to June 30, 2021, the Company had one stock incentive plan, the 2004 Long-Term Incentive Plan of Ennis, Inc., as amended and restated as of May 18, 2008 and was further amended on June 30, 2011 (the "Old Plan"). The Old Plan expired June 30, 2021 and all remaining unused shares expired. Subject to the affirmative vote of the shareholders, the Board adopted the 2021 Long-Term Incentive Plan of Ennis, Inc. (the "New Plan") on April 16, 2021 authorizing 1,033,648 shares of common stock for awards. The New Plan was approved by the shareholders at the Annual Meeting on July 15, 2021 by a majority vote. The New Plan expires June 30, 2031 and all unissued stock will expire on that date. At ~~November~~May 3031, ~~2023~~2024, the Company has ~~815~~265,~~872~~887 shares of unissued common stock reserved under the New Plan for issuance and uses treasury stock to satisfy option exercises and restricted stock awards.

The Company recognizes compensation expense for stock options and restricted stock grants based on the grant date fair value of the award for stock options, restricted stock grants and RSUs on a straight-line basis over the requisite service period. The estimated number of shares to be achieved for performance based RSUs is updated each reporting period. For the three months ended ~~November~~May 3031, 2023 and November 30, 2022, the Company included in selling, general and administrative expenses, compensation expense related to stock-based compensation of $0.7 million and $0.6 million, respectively. For the nine months ended November 30, 2023

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024(unaudited)

2024 and ~~November~~May 3031, ~~2022~~2023, the Company included in selling, general and administrative expenses, compensation expense related to stock-based compensation of $21.08 million and $10.57 million, respectively.

Stock Options

The Company had the following stock option activity for the ~~nine~~three months ended ~~November~~May 3031, ~~2023~~2024. ~~No stock options were outstanding during the nine months ended November 30, 2022.~~

					Weighted
			Weighted		Average		Aggregate
	Number		Average		Remaining		Intrinsic
	of Shares		Exercise		Contractual		Value(a)
	(exact quantity)		Price		Life (in years)		(in thousands)
Outstanding at March 1, 2023		—	$	—		—		—
Outstanding at March 1, 2024		52,500	$	19.88		10.0		—
Granted		~~52,500~~—		~~19.88~~—
Terminated		—		—
Exercised		—		—
Outstanding at November 30, 2023		52,500	$	19.88		9		71
Outstanding at May 31, 2024		52,500	$	19.88		8.9	$	60.4
Exercisable at November 30, 2023		—		—		—		—
Exercisable at May 31, 2024		17,497	$	19.88		8.9	$	20.1

~~The~~A ~~following is a~~ summary of the ~~assumptions~~status ~~used~~of ~~and~~ the ~~weighted~~Company’s ~~average~~unvested ~~grant-date~~stock ~~fair~~options ~~value~~at ofMay ~~the~~31, ~~stock~~2024 ~~options~~and ~~granted~~the changes during the ~~nine~~three months ended ~~November~~May 3031, ~~2023.~~2024 are presented below:

	November 30,
		Weighted
	2023
		Average
Expected volatility	19.55%
	Number	Grant Date
Expected term (years)	3
	of Options	Fair Value
Risk free interest rate	3.87%
Unvested at March 1, 2024	52,500	2.47
Dividend Yield	4.94%
New grants	—	—
Weighted average grant-date fair value	$2.47
Vested	(17,497)	2.47
Forfeited	—	—
Unvested at May 31, 2024	35,003	2.47

AAs ~~summary~~ of ~~the~~May ~~status~~31, 2024, there was $0.1 million of ~~the~~unrecognized ~~Company’s~~compensation cost related to unvested stock options atgranted ~~November~~under ~~30,~~the ~~2023~~Plan. The ~~and~~weighted ~~the~~average ~~changes~~remaining ~~during~~requisite ~~the~~service ~~nine~~period ~~months~~of ~~ended~~the ~~November~~unvested ~~30,~~stock ~~2023~~options ~~are~~was ~~presented~~1.9 ~~below:~~years.

		Weighted
		Average
	Number	Grant Date
	of Options	Fair Value
Unvested at March 1, 2023	—	—
New grants	52,500	2.47
Vested	—	—
Forfeited	—	—
Unvested at November 30, 2023	52,500	2.47

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED NOVEMBER 30, 2023(unaudited)

As of November 30, 2023, there was $0.1 million of unrecognized compensation cost related to unvested stock options granted under the Plan. The weighted average remaining requisite service period of the unvested stock options was 2.4 years.

Restricted Stock

The following activity occurred with respect to the Company’s restricted stock awards for the ~~nine~~three months ended ~~November~~May 3031, ~~2023~~2024:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Outstanding at March 1, 2023		49,783		$	18.99
Outstanding at March 1, 2024		42,131		$	20.11
Granted		~~21,672~~—			~~20.31~~—
Terminated		—			—
Vested		(~~29,324~~667	)		1817.3658
Outstanding at November 30, 2023		42,131		$	20.11
Outstanding at May 31, 2024		41,464		$	20.15

~~The~~As ~~total fair value~~ of ~~shares~~May ~~vested~~31, ~~during~~2024, the ~~nine~~total ~~months~~remaining ~~ended~~unrecognized ~~November~~compensation ~~30,~~cost ~~2023~~related ~~and~~to ~~November~~unvested ~~30,~~restricted ~~2022~~stock was approximately $0.65 million. The ~~and~~weighted ~~$0.7~~average ~~million,~~remaining ~~respectively~~requisite service period of the unvested restricted stock awards was 1.5 years.

As of November 30, 2023, the total remaining unrecognized compensation cost related to unvested restricted stock was approximately $0.7 million. The weighted average remaining requisite service period of the unvested restricted stock awards was 2.0 years.

Restricted Stock Units

During the ~~nine~~three months ended ~~November~~May 3031, ~~2023~~2024, no238,494 performance-based RSUs and 122,303 time-based RSUs were granted under the New Plan. The fair value of the time-based RSUs was estimated based on the fair market value of the Company’s stock on the date of grant of $19.43 per unit. The fair value of the performance-based RSUs, using a Monte Carlo valuation model, was $2320.1737 per unit. The performance measures include a threshold, target and maximum performance level providing the grantees an opportunity to receive more or less shares than targeted depending on actual financial performance. The award will be based on the Company’s return on equity, EBITDA and adjusted for the Company’s Relative Shareholder Return as measured against a defined peer group.

The performance-based RSUs will vest no later than March 15, 2024, which is the deadline for the Compensation Committee to determine the extent of the Company’s attainment of the Performance Goals during the Performance Period that ends on February 29, 2024. The time-based RSUs vest ratably over two to three years from the date of grant.18

The following activity occurred with respect to the Company’s restricted stock units for the nine months ended November 30, 2023:

	Time-based					Performance-based
				Weighted				Weighted
				Average				Average
	Number of			Grant Date		Number of		Grant Date
	Shares			Fair Value		Shares		Fair Value
Outstanding at March 1, 2023		33,274		$	20.11		233,819	$	23.17
Granted		—			—		—		—
Terminated		—			—		—		—
Vested		(16,635	)		20.11		—		—
Outstanding at November 30, 2023		16,639		$	20.11		233,819	$	23.17

The total fair value of shares vested during the nine months ended November 30, 2023 and November 30, 2022 was $0.3 million and $0.2 million, respectively.

As of November 30, 2023, the total remaining unrecognized compensation cost of time-based RSUs was approximately $0.1 million over a weighted average remaining requisite service period of 0.8 years. As of November 30, 2023, the total remaining unrecognized compensation of performance-based RSUs was approximately $0.7 million over a weighted average remaining requisite service period of 1.0 years.

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024(unaudited)

receive more or less shares than targeted depending on actual financial performance of the Company. The award will be based on the Company’s return on equity, EBITDA and adjusted for the Company’s Relative Shareholder Return as measured against a defined peer group.

The performance-based RSUs vest on the third anniversary from the date of grant and the time-based RSUs vest ratably over three years from the date of grant.

The following activity occurred with respect to the Company’s restricted stock units for the three months ended May 31, 2024:


	Time-based					Performance-based
				Weighted					Weighted
				Average					Average
	Number of			Grant Date		Number of			Grant Date
	Shares			Fair Value		Shares			Fair Value
Outstanding at March 1, 2024		16,639		$	20.11		152,572		$	23.17
Granted (1)		122,303			19.43		238,494			20.37
Change due to performance achievement							61,337
Terminated		—			—		—			—
Vested		(16,639	)		20.11		(213,909	)		22.72
Outstanding at May 31, 2024		122,303		$	19.43		238,494		$	20.37

(1) The number of shares of time-based grants may, upon vesting, convert 50% into common stock and the remaining 50% into two incentive stock options for each RSU with an exercise price equal to the closing price of the Company's stock on that date for employees who have not met their stock ownership requirements. The number of shares of performance-based grants represents awards granted by the Company at the maximum achievement level of 130% of target payout. Actual shares that may be issued can range from 0% to 130% of target.

As of May 31, 2024, the total remaining unrecognized compensation cost of time-based RSUs was approximately $2.3 million over a weighted average remaining requisite service period of 2.9 years. As of May 31, 2024, the total remaining unrecognized compensation of performance-based RSUs was approximately $4.7 million over a weighted average remaining requisite service period of 2.9 years.

13. Pension Plan

The Company and certain subsidiaries have a noncontributory defined benefit retirement plan (the "Pension Plan"), covering approximately 12% of the Company’s aggregate employees. Benefits are based on years of service and the employee’s average compensation for the highest five compensation years preceding retirement or termination.

Pension expense is composed of the following components included in cost of goods sold and selling, general, and administrative expenses in the Company’s consolidated statements of earnings (in thousands):

	Three months ended						~~Nine months ended~~
	November 30,						November 30,
	May 31,
	2023			2022			2023			2022
	2024			2023
Components of net periodic benefit cost
Service cost	$	~~168~~166		$	~~236~~182		$	~~504~~		$	~~708~~
Interest cost		~~614~~649			~~492~~605			~~1,841~~			~~1,475~~
Expected return on plan assets		(~~776~~755	)		(~~924~~792	)		~~(2,328~~	)		~~(2,774~~	)
Amortization of:
Unrecognized net loss		~~474~~436			~~601~~467			~~1,422~~			~~1,806~~
Settlement charges		-			786			-			786
Net periodic benefit cost	$	496		$	462
Net periodic benefit cost	$	480		$	1,191		$	1,439		$	2,001

The Company is required to make contributions to the Pension Plan. These contributions are required under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 ("ERISA"). The ~~assumption~~assumptions used to calculate the pension funding deficit are different from the ~~assumption~~assumptions used to determine the net pension obligation for purposes of our condensed consolidated financial statements. Due to the enactment of the American Rescue Plan ("ARP") Act of 2021, plan sponsors can calculate the discount rate used to measure the Pension Plan liability using a 25-year average of interest rates plus or minus a corridor. Assuming a stable funding status, the Company would expect to make a cash contribution to the Pension Plan of between $1.5 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 November 30, 2023, we had an unfunded pension liability recorded on our balance sheet of approximately $0.6 million.

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED MAY 31, 2024
(unaudited)

Assuming a stable funding status, the Company would expect to make a cash contribution to the Pension Plan of 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. The Company made a $1.2 million contribution to the Pension Plan during the fiscal year 2024. 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 May 31, 2024, we had an unfunded pension asset recorded on our balance sheet of approximately $0.1 million.

14. Earnings Per Share

Basic earnings per share have been computed by dividing net earnings by the weighted average number of common shares outstanding during the applicable period. Diluted earnings per share reflect the potential dilution that could occur if stock options, performance-based RSUs or other contracts to issue common shares were exercised or converted into common stock. This is calculated using the treasury stock method.

The following table sets forth the computation for basic and diluted earnings per share for the periods indicated:

	Three months ended				~~Nine months ended~~
	November 30,				November 30,
	May 31,
	2023		2022		2023		2022
	2024		2023
Basic weighted average common shares outstanding		2526,~~894~~156,~~578~~928		25,~~809~~839,~~581~~651		~~25,826,691~~		~~25,812,216~~
Effect of dilutive stock options, restricted stock and RSUs		188,723		79,234		164,876		80,657
Effect of dilutive stock options, restricted stock, time-based RSUs and performance-based RSUs		122,718		139,882
Diluted weighted average common shares outstanding		26,~~083~~279,~~301~~646		25,~~888~~979,~~815~~533		~~25,991,567~~		~~25,892,873~~
Earnings per share
Net earnings - basic	$	0.3841	$	0.4445	$	~~1.26~~	$	~~1.36~~
Net earnings - diluted	$	0.3841	$	0.4445	$	~~1.25~~	$	~~1.36~~
Cash dividends per share	$	0.25	$	0.25	$	~~0.75~~	$	~~0.75~~

The Company treats unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities, which are included in the computation of earnings per share. Our unvested restricted shares participate on an equal basis with common shares; therefore, there is no difference in undistributed earnings allocated to each participating security. Accordingly, the presentation above is prepared on a combined basis. At May 31, 2024, 52,500 shares related to outstanding stock options were not included in the computation of earnings per diluted share as they were considered anti-dilutive. No options were outstanding for the three months ended May 31, 2023.

15. Concentrations of Risk

Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash and trade receivables. Cash is placed with high-credit quality financial institutions. For the purposes of the condensed consolidated statements of cash flows, the Company considers cash to include cash on hand and in bank accounts. The Federal Deposit Insurance Corporation insures accounts up to $250,000. At May 31, 2024, cash balances included $90.6 million that was not federally insured because it represented amounts in individual accounts above the federally insured limit for each such account. This at-risk amount is subject to fluctuation on a daily basis. While management does not believe there is significant risk with respect to such deposits, no assurance can be made that the Company will not experience losses on the Company’s deposits.

The Company believes its credit risk with respect to trade receivables is limited due to industry and geographic diversification. As disclosed on the condensed consolidated balance sheets, the Company maintains an allowance for credit losses to cover the Company’s estimate of credit losses associated with accounts receivable.

The Company, for quality and pricing reasons, purchases its paper products from a limited number of suppliers. While other sources may be available to the Company to purchase these products, they may not be available at the cost or at the quality the Company has come to expect.

ENNIS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024(unaudited)

to each participating security. Accordingly, the presentation above is prepared on a combined basis. At November 30, 2023, 52,500 shares related to outstanding stock options were not included in the computation of earnings per diluted share as they were considered anti-dilutive. No options were outstanding for the nine months ended November 30, 2022.

15. Concentrations of Risk

Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash and trade receivables. Cash is placed with high-credit quality financial institutions. For the purposes of the condensed consolidated statements of cash flows, the Company considers cash to include cash on hand and in bank accounts. The Federal Deposit Insurance Corporation insures accounts up to $250,000. At November 30, 2023, cash balances included $82.8 million that was not federally insured because it represented amounts in individual accounts above the federally insured limit for each such account. This at-risk amount is subject to fluctuation on a daily basis. While management does not believe there is significant risk with respect to such deposits, no assurance can be made that the Company will not experience losses on the Company’s deposits.

The Company believes its credit risk with respect to trade receivables is limited due to industry and geographic diversification. As disclosed on the condensed consolidated balance sheets, the Company maintains an allowance for doubtful receivables to cover the Company’s estimate of credit losses associated with accounts receivable.

16. Related Party Transactions

The Company leases a facility and sells product to an entity controlled by a member of the Board. The total right-of-use asset and related lease liability as of ~~November~~May 3031, ~~2023~~2024 was $0.53 million and $0.53 million, respectively. The total right-of-use asset and related lease liability as of ~~November~~May 3031, ~~2022~~2023 was $0.87 million and $0.97 million, respectively. During the three ~~and nine~~ months ended ~~November~~May 3031, ~~2023~~2024, total lease payments and sales made to the related party were approximately $0.21 million and $20.47 million, respectively. During the three ~~and nine~~ months ended ~~November~~May 3031, ~~2022~~2023, total lease payments and sales made to the related party were approximately $0.21 million and $10.98 million, respectively.

17. Income Taxes

The Company is subject to U.S. federal income tax as well as income taxes of multiple state jurisdictions. The quarterly income tax provision was computed based on our estimated annualized effective tax rate and the full-year forecasted income or loss plus the tax impact of unusual, infrequent, or nonrecurring significant items during the period.

Our effective tax rate for the ~~nine~~three months ended ~~November~~May 3031, ~~2023~~2024 and ~~2022~~2023 was 2827.35% and 28.0%, respectively. The Company made cash payments for income taxes of $160.23 million and $131.1 million, respectively, for the ~~nine~~three months ended ~~November~~May 3031, ~~2023~~2024 and ~~2022~~2023.

18. Other Contingencies

We are subject to a variety of claims and suits that arise from time to time in the ordinary course of our business. Although management currently believes that resolving claims against us, individually or in the aggregate, will not have a material adverse impact in our consolidated financial statements, these matters are subject to inherent uncertainties and management's view of these matters may change in the future.

19. Subsequent Events

On ~~December~~June 1314, ~~2023~~2024, the Board declared a quarterly dividend on the Company's common stock of 25.0 cents per share, which will be paid on ~~February~~August 15, 2024 to shareholders of record as of ~~January~~July 45, 2024. The expected payout for this dividend is approximately $6.5 million.

On June 25, 2024, the Company acquired the assets of Printing Technologies, Inc. and Paper Solutions, Inc. in Indianapolis, Indiana for approximately $4.9 million plus the assumption of trade payables.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement 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 2829, ~~2023~~2024.

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 adverse effects of potential recessionary concerns, inflationary issues and supply chain disruptions 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, sabotage; the impact of the novel coronavirus 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; cybersecurity risks, 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.; 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 2829, ~~2023~~2024 before making an investment in our common stock.

Overview

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.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024

Business Overview

Our management believes we are the largest provider of business forms, pressure-seal forms, labels, tags, envelopes, and presentation folders to independent distributors in the 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. WeAs of May 31, 2024, we operate 5957 manufacturing plants throughout the United States in 2019 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, AmeriPrintSM,; StylecraftSM, UMC PrintSM; Eagle GraphicsSM and Diamond GraphicsSM. 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 & 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). School Photo Marketing is a one-stop shop for over 1,400 school portrait photographers and professional photo labs nationwide, providing them with a complete array of products and services that reach over 15 million families and 30,000 schools, primarily in the K-8 market. 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~~Our ofproducts ~~business~~are ~~forms~~sold ~~and other business products~~ throughout the United States is primarily ~~done~~by ~~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.

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

~~Recent~~Our ~~Acquisitions~~Business Challenges

OnOur ~~October~~industry ~~11,~~is ~~2023,~~currently weexperiencing ~~acquired~~consolidation ~~the~~of ~~assets~~traditional ~~and~~supply ~~business~~channels, ofproduct ~~Eagle Graphics~~obsolescence, ~~Inc.~~paper insupplier ~~Annville,~~capacity ~~Pennsylvania~~adjustments, and ~~Diamond~~increased ~~Graphics,~~pricing ~~Inc.~~and inpotential ~~Bensalem,~~supply ~~Pennsylvania~~allocations due to demand/supply curve imbalance. ~~The~~Technology ~~acquisition~~advances have made electronic distribution of ~~Eagle~~documents, ~~Graphics~~internet hosting, digital printing and ~~Diamond~~print-on-demand ~~Graphics~~valid, ~~which~~cost-effective ~~prior~~alternatives to ~~the~~traditional ~~acquisition~~custom-printed documents and customer communications. Improved equipment has become more accessible to our

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024

~~generated~~competitors. ~~approximately~~We ~~$8.7~~face ~~million~~highly incompetitive ~~sales~~conditions ~~for~~throughout ~~its~~our ~~fiscal~~supply ~~year~~chain ~~ended~~in ~~December~~an ~~31,~~already ~~2022~~over-supplied, ~~strengthens~~price-competitive ~~our~~print ~~production~~industry. The ~~capabilities~~challenges toof ~~serve~~ our ~~large~~business ~~and~~include ~~growing customer base in~~ the ~~Northeast part of the country.~~following:

On June 2, 2023, we acquired the assets and business of UMC Print in Overland Park, Kansas. The acquisition of UMC Print, which prior to the acquisition generated approximately $16 million in sales for its fiscal year ended December 31, 2022, adds strategic locations and capabilities to drive growth with our distributor partners.

On May 23, 2023 we acquired the real estate and operations of Stylecraft Printing Company 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.

On November 30, 2022, we acquired the net 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. SPM provides printing, yearbook publishing and marketing related services to over 1,400 school and sports photographers servicing schools around the country.

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:

Inflation and 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. We expect that its acute impact is mostly behind us as the demand for our products strengthened in fiscal year 2022 and fiscal year 2023. Changes in macroeconomic factors, particularly high inflation and the resulting rise in interest rates could dampen business activity which could reduce demand for our products. While the markets appear to have recovered from the more direct negative impacts of the pandemic, we remain watchful as the longer term effects of the pandemic, including supply chain disruptions and inflationary pressures, are unknown. 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. 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.

Production capacity and price competition within our industry – InIndustry ~~2022~~supply ~~there was a build-up~~ of paper ~~mill’s~~products ~~customer~~is ~~inventory~~subject ~~and~~to ~~2023~~fluctuation ~~data~~as ~~showed~~changing anindustry ~~inventory~~conditions ~~correction~~influence inproducers ~~reduced~~to ~~spending.~~idle ~~Paper~~or ~~mill~~permanently ~~shipments~~close ~~were~~individual ~~down~~machines ~~across~~or ~~the~~mills, ~~board~~and/or ~~through~~convert ~~the~~them ~~first~~to ~~half~~different ofproduct ~~2023~~lines, such as ~~buyers~~packaging ~~worked~~to ~~through~~offset ~~elevated~~a ~~inventories~~decline ofin ~~their products~~demand. ~~Uncoated~~Paper ~~Free~~mill ~~Sheet~~shipments ~~and~~were ~~Coated~~down ~~Free~~across ~~Sheet~~the ~~shipments~~board through the first half of 2023 ~~sustained~~as ~~levels~~buyers ~~near~~worked ~~2020~~through ~~COVID~~elevated ~~lows~~inventories ~~when~~of ~~the~~their ~~government implemented mandatory lockdowns~~products. Producers responded to the sluggish demand conditions with heavy downtime rather than permanent closures keeping prices mostly stable. ~~Foreign~~While ~~imports~~our ~~have~~supply ~~fallen~~of ~~from~~paper ~~previous~~in ~~years~~the asfirst ~~demand levels are low. The current~~ quarter ~~reflected~~of ~~demand~~2024 ~~for North America Printing and Writing Paper~~ has ~~stabilized~~remained ~~indicating~~stable, ~~the severe destocking cycle is dissipating. While~~ margins remain under pressure due to the resulting weak volumes and competitive pricing, 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 will continue to look for ways to reduce and leverage our fixed costs and focus on maintaining our margins.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2023

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.

For further information, please see “Cautionary Statement Regarding Forward-Looking Statements,” above and “Risk Factors” contained within our Annual Report on Form 10-K for the fiscal year ended February 2829, ~~2023~~2024.

Critical Accounting Estimates

Our Annual Report on Form 10-K for the year ended February 2829, ~~2023~~2024, includes a description of certain critical accounting estimates, including those with respect to the pension plan, impairment assessments on goodwill and other intangible assets, ~~revenue~~allowance ~~recognition~~for credit losses and accounts receivable, and allowance for excess and obsolete inventories, 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. During the quarter ended ~~November~~May 3031, ~~2023~~2024, there have been no material changes to the critical accounting estimates described in our Annual Report on Form 10-K for the year ended February 2829, ~~2023~~2024.

Recent Accounting Pronouncements

See Note 1 of the accompanying unaudited condensed consolidated financial statements for a discussion of recent accounting guidance.

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 interim unaudited consolidated financial statements and notes included in this filing. The operating results of the Company for the three ~~and nine~~ months ended ~~November~~May 3031, ~~2023~~2024 and the comparative period for ~~2022~~2023 are set forth in the tables below.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED MAY 31, 2024

Consolidated Summary

Unaudited Consolidated Statements of	Three Months Ended ~~November~~May 3031,									~~Nine Months Ended November 30,~~
Operations - Data (in thousands)	~~2023~~2024				~~2022~~2023					~~2023~~				~~2022~~
Net sales	$	~~104~~103,~~621~~108	100.0	%	$	~~110~~111,~~245~~294		100.0	%	$	~~322,675~~	~~100.0~~	%	$	~~329,145~~		~~100.0~~	%
Cost of goods sold		7472,~~090~~204	70.80			7677,~~768~~253		69.64			~~225,004~~	~~69.7~~			~~226,445~~		~~68.8~~
Gross profit margin		30,~~531~~904	2930.20			3334,~~477~~041		30.46			~~97,671~~	~~30.3~~			~~102,700~~		~~31.2~~
Selling, general and administrative		17,~~410~~170	16.67			1718,~~292~~343		1516.75			~~54,094~~	~~16.8~~			~~52,916~~		~~16.1~~
Loss from disposal of assets		14	—			15—		—			53	—			15		—
Income from operations		13,~~120~~730	1213.53			1615,~~170~~698		14.71			~~43,524~~	~~13.5~~			~~49,769~~		~~15.1~~
Other income (expense)		696	0.7			(496	)	(0.4	)		1,735	0.5			(1,010	)	(0.3	)
Other income		1,011	1.0			462		0.4
Earnings before income taxes		1314,~~816~~741	1314.23			1516,~~674~~160		14.25			~~45,259~~	~~14.0~~			~~48,759~~		~~14.8~~
Provision for income taxes		34,~~910~~054	3.79			4,~~388~~525		4.01			~~12,808~~	~~4.0~~			~~13,652~~		~~4.1~~
Net earnings	$	910,~~906~~687	910.54	%	$	11,~~286~~635		10.25	%	$	~~32,451~~	~~10.0~~	%	$	~~35,107~~		~~10.7~~	%

Three months ended May 31, 2024 compared to three months ended May 31, 2023

Net Sales. Our net sales were $103.1 million for the quarter ended May 31, 2024, compared to $111.3 million for the same quarter in the prior year, a decrease of $8.2 million, or -7.4%. During the latter part of fiscal 2024, we experienced a weakened demand environment with increased competition on price, resulting in lower sales volume and revenues. Sales decreased $10.6 million due to weaker volume demand and was partially offset by an approximately $2.4 million increase in revenues generated from our recent acquisitions. While revenues were down versus the prior year, first quarter sales increased $5.7 million, or 5.8% from the sequential quarter ending February 29, 2024.

Cost of Goods Sold and Gross Profit Margin. As a result of decreased sales volume, our cost of goods sold decreased $5.1 million, or 6.6%, from $77.3 million for the three months ended May 31, 2023 to $72.2 million for the three months ended May 31, 2024. Our gross profit was $30.9 million or 30.0% of revenue for the quarter ended May 31, 2024 compared to $34.0 million or 30.6% of revenue for the same quarter in the prior year. Our gross profit margin for the quarter of 30.0% showed a 60 basis point increase from 29.4% in the immediately preceding quarter ending February 29, 2024. In the first quarter we completed the integration of our ERP system at two of our recent acquisitions and are beginning to see improved efficiencies and performance. This along with our disciplined cost management and pricing strategies contributed to our improved margins over the sequential quarter, despite continued pressure from soft market conditions and increased competition on price.

Selling, general, and administrative expense. For the three months ended May 31, 2024, our selling, general, and administrative ("SG&A") expenses were $17.2 million compared to $18.3 million for the three months ended May 31, 2023, a decrease of $1.1 million, or 6.0%. As a percentage of net sales, SG&A expenses for the current quarter remained relatively flat and were 16.7% and 16.5% for the three months ended May 31, 2024 and May 31, 2023, respectively.

Loss from disposal of assets. The $4,000 net loss from disposal of assets during the three-month period ended May 31, 2024 was primarily attributed to the sale of equipment.

Income from operations. Primarily due to factors described above, our income from operations for the three months ended May 31, 2024 was $13.7 million, or 13.3% of net sales, as compared to $15.7 million, or 14.1% of net sales, for the three months ended May 31, 2023. Income from operations increased on a sequential quarter basis by $0.8 million over the $12.9 million for the preceding quarter.

Other income (expense). Other income was $1.0 million for the three months ended May 31, 2024 compared to $0.5 million for the three months ended May 31, 2023. Our increase in income was primarily from an increase in interest income from higher interest rates in the current quarter, $1.4 million for the three months ended May 31, 2024 compared to $0.8 million for the three months ended May 31, 2023.

Provision for income taxes. Our effective tax rate was 27.5% and 28.0% for the three months ended May 31, 2024 and May 31, 2023, respectively. The slight decrease in our overall tax rate this period as compared to last period is due to a decrease in our overall expected state tax rate due to changes in state apportionment.

Net earnings. Net earnings, due to the factors above, were $10.7 million for the three months ended May 31, 2024 as compared to $11.6 million for the comparable quarter in the prior year. Net earnings were impacted by decreased revenues for the three months

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024

~~Three~~ ended May 31, 2024 compared to the three months ended ~~November~~May 3031, 2023. After-tax ~~compared~~earnings toper diluted share for the three months ended ~~November~~May 3031, ~~2022~~2024 were $0.41, compared to $0.45 for the same quarter last year.

~~Net~~Liquidity Sales. Our net sales were $104.6 million for the quarter ended November 30, 2023, compared to $110.2 million for the same quarter in the prior year, a decrease of $5.6 million, or -5.1%. Sales decreased $11.6 million due to weaker volume demand and ~~stock~~Capital rebalancing by legacy customers, as well as some of our print partners experiencing slowness in their sales and reducing their outsourced work to us. These decreases were offset by approximately $6.0 million in revenues from our recent acquisitions for the quarter ended November 30, 2023 compared to the quarter ended November 30, 2022.Resources

~~Cost~~We ofrely ~~Goods~~on ~~Sold~~our ~~and~~cash ~~Gross~~flows ~~Profit~~generated ~~Margin. As~~from aoperations ~~result~~to ofmeet ~~decreased~~all ~~sales~~cash ~~volume,~~requirements ~~our cost~~ of ~~goods~~our ~~sold decreased $2~~business.7 The ~~million,~~primary orcash ~~3.5%,~~requirements ~~from~~of ~~$76.8~~our ~~million~~business ~~for~~are ~~the~~payments ~~three months ended November 30, 2022~~ to ~~$74.1~~vendors ~~million~~in ~~for~~ the ~~three~~normal ~~months~~course ~~ended~~of ~~November 30~~business, ~~2023. Our~~capital ~~gross~~expenditures, ~~profit~~compensation ~~was~~and ~~$30.5~~benefits ~~million~~for oremployees ~~29.2%~~and ~~of revenue for~~ the ~~quarter~~payment ~~ended~~of ~~November~~dividends ~~30, 2023 compared~~ to ~~$33.5~~our ~~million or 30~~shareholders.~~4% of revenue for the same quarter in the prior year.~~ ~~Our~~We ~~gross~~believe ~~profit~~that ~~margin~~our ~~for~~current ~~the~~cash ~~quarter~~balance of 29$91.2%4 ~~showed~~million aat ~~180~~May ~~basis point decline from~~ 31~~.0%~~, in2024, ~~the~~short-term ~~immediately~~investments ~~preceding~~of ~~quarter~~$32.3 ~~ending~~million ~~August~~and ~~31,~~anticipated ~~2023~~cash ~~and~~flows ~~declined~~from ~~120~~operations ~~basis~~are ~~points~~expected to ~~29.2%~~be ~~compared~~similar to ~~30.4% in the same~~ prior ~~year~~periods ~~quarter.~~which ~~Our~~should ~~gross~~be ~~profit~~adequate ~~margin~~to ascover athe ~~percentage~~next oftwelve ~~sales~~months ~~was~~and ~~impacted~~beyond ~~by our recent acquisitions, which had a dilutive impact~~ of ~~approximately 40 basis points on~~ our ~~margin~~operating ~~for~~and ~~the~~capital ~~third quarter~~requirements. WeOur ~~believe~~capital ~~once~~requirements weare ~~have~~expected ~~fully~~to ~~analyzed~~be ~~the~~within ~~acquired business’ cost structures and implemented~~ our ~~ERP~~historical ~~system,~~levels ~~the margins~~ of ~~the~~between ~~acquired~~$3.0 ~~businesses~~million ~~will~~and ~~improve~~$6.0 ~~to expected levels~~million.

Selling, general, and administrative expense. For the three months ended November 30, 2023, our selling, general, and administrative ("SG&A") expenses were $17.4 million compared to $17.3 million for the three months ended November 30, 2022, a slight increase of $0.1 million, or 0.6%. As a percentage of net sales, SG&A expenses for the current quarter were 16.6% and 15.7% for the three months ended November 30, 2023 and November 30, 2022, respectively. Our recent acquisitions added $0.9 million in SG&A expenses during the quarter which was offset by lower expenses related to lower product volume.


	May 31,		February 29,
(Dollars in thousands)	2024		2024
Working capital	$	174,345	$	167,581
Cash	$	91,363	$	81,597
Short-term investments	$	32,326	$	29,325

~~Gain~~Working Capital. Our working capital increased $6.8 million or 4.0%, from ~~disposal~~$167.6 ofmillion ~~assets~~at February 29, 2024 to $174.3 million at May 31, 2024. ~~The~~Our $1current ratio,~~000~~ ~~net~~calculated ~~loss~~by ~~from~~dividing ~~disposal~~our ofcurrent assets ~~during~~by ~~the~~our ~~three-month~~current ~~period~~liabilities, ~~ended~~decreased ~~November~~from 306.0 to 1.0 at February 29, ~~2023~~2024 ~~and~~to ~~the~~5.7 ~~$15~~to 1.0 at May 31,~~000~~ ~~net~~2024. Our ~~loss~~increase ~~from~~in ~~disposal~~working ofcapital ~~assets~~primarily ~~during~~reflects the ~~three-month~~increase ~~period~~in ~~ended~~cash ~~November~~and 30short-term investments, ~~2022~~$12.8 ~~was~~million, ~~primarily~~offset ~~attributed~~by tothe decrease in accounts receivable, $3.3 million and the ~~sale~~increase ofin ~~equipment~~our accounts payable and accrued expense, $3.7 million.

Income from operations. Primarily due to factors described above, our income from operations for the three months ended November 30, 2023 was $13.1 million, or 12.5% of net sales, as compared to $16.2 million, or 14.7 % of net sales, for the three months ended November 30, 2022. Income from operations declined on a sequential quarter basis by $1.6 million and was $14.7 million for the quarter ended August 31, 2023.


	Three months ended May 31,
(Dollars in thousands)	2024			2023
Net cash provided by operating activities	$	23,105		$	21,726
Net cash used in investing activities	$	(5,052	)	$	(7,129	)
Net cash used in financing activities	$	(8,287	)	$	(6,459	)

~~Other~~Cash ~~income~~flows ~~(expense)~~from operating activities. ~~Other~~Cash ~~income~~provided by operating activities was $023.71 million ~~for~~in the three months ended ~~November~~May 3031, ~~2023~~2024 compared to ~~other expense of~~ $021.57 million ~~for~~in the ~~three~~comparative ~~months~~period ended ~~November~~May 3031, ~~2022~~2023. ~~Our~~ ~~increase~~A decrease in ~~income~~accounts ~~was~~receivable, ~~primarily~~net of accounts receivable from anacquired ~~increase~~business insince ~~interest~~the ~~income~~prior ~~from~~fiscal ~~higher~~year ~~interest~~end ~~rates~~provided cash of $3.2 million in the current ~~quarter~~year three-month period, and $7.3 million in the comparable three-month period of the prior year. An increase in inventories used cash of $1.0 million ~~for~~in the three-month ~~months~~period ended ~~November~~May 3031, 2024 and $0.4 million in the same period of 2023. ~~compared~~An toincrease in accounts payable and accrued expenses provided cash of $03.3 million in the current year three-month period and a decrease in accounts payable and accrued expenses used cash of $2.8 million ~~for~~in the prior year comparable three-month ~~months~~period. The ~~ended~~decrease ~~November~~in ~~30,~~accounts ~~2022~~receivable in the current period was primarily due to decreased sales. The increase in accounts payable and accrued expenses during the current period was primarily due to an increase in purchasing activities and inflationary pressures. We continue to monitor incoming orders and adjust raw material purchases accordingly.

~~Provision~~Cash ~~for~~flows ~~income~~from ~~taxes~~investing activities. Cash ~~Our~~used ~~effective~~in ~~tax~~investing ~~rate~~activities was 28$5.3%0 million in the three months ended May 31, 2024 compared to $7.1 million in the three months ended May 31, 2023. Capital expenditures primarily of equipment was $2.5 million and 28$2.0%1 million for the three months ended ~~November~~May 3031, ~~2023~~2024 and ~~November~~May 3031, ~~2022~~2023, respectively. In the three months ended May 31, 2023, $5.0 million was used to acquire businesses. During the current period, we purchased approximately $10.1 million of U.S. government treasury bills, which was partially offset by $7.5 million in matured treasury bills.

~~Net~~Cash ~~earnings~~flows from financing activities. ~~Net~~We ~~earnings,~~used ~~due~~$1.8 tomillion ~~the~~more ~~factors~~cash ~~above,~~in ~~were~~financing ~~$9.9~~activities ~~million~~during ~~for~~ the three months ended ~~November~~May 3031, ~~2023~~2024 as compared to ~~$11.3 million for~~ the ~~comparable~~same ~~quarter~~period in the prior year. ~~Net~~The ~~earnings~~increase ~~per~~in ~~diluted~~cash ~~share~~used ~~for~~during the three months ended ~~November~~May 3031, ~~2023~~2024 ~~were~~resulted ~~$0.38,~~from ~~compared to~~ $01.448 ~~for~~million ~~the~~common ~~same~~stock ~~quarter~~repurchased inunder ~~the~~our ~~prior~~stock ~~year. Diluted~~repurchase ~~earnings~~program ~~per~~in ~~share were negatively impacted approximately $0.02 per diluted earnings per share. Additional expense related to~~ the ~~recent~~three ~~acquisitions~~months ~~negatively~~ended ~~impacted~~May ~~the~~31, ~~quarter earnings~~2024.

Credit Facility – As of May 31, 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, including acquisitions.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024

~~Nine~~Pension ~~months~~Plan ~~ended~~– ~~November~~The 30funded status of our Pension Plan is dependent on many factors, ~~2023~~including ~~compared~~returns on invested assets, the level of market interest rates and the level of funding. Assuming a stable funding status, we would expect that future required contributions would be between $1.0 million and $3.0 million per year. As our pension assets are invested in marketable securities, changes in actual investment returns or in discount rates could change funding status and requirements significantly. We made a contribution of $1.2 million to ~~nine~~our ~~months~~Pension ~~ended~~Plan ~~November~~in 30fiscal year 2024 and anticipate making a required contribution of approximately $1.2 million prior to the end of the current fiscal year. At May 31, ~~2022~~2024, we had a funded pension asset of $0.1 million.

~~Net~~Inventories ~~Sales. Our~~– ~~net~~We ~~sales~~believe ~~were~~our ~~$322.7~~inventory ~~million~~levels ~~for~~are ~~the~~sufficient ~~nine-month period ended November 30, 2023, compared~~ to ~~$329.1~~satisfy ~~million~~our ~~for~~customer ~~the~~demands ~~same~~and ~~period~~we ~~last~~anticipate ~~year,~~having aadequate ~~decrease~~sources of ~~$6.5~~raw ~~million,~~materials orto ~~2.0%. Sales~~meet ~~decreased~~future ~~approximately~~business ~~$23~~requirements.2 ~~million~~We ~~due~~have tolong-term ~~weaker~~contracts ~~volume~~in ~~demand~~effect ~~and~~with ~~customers~~paper ~~stock~~suppliers ~~rebalancing~~that bygovern ~~legacy customers~~prices, asbut ~~well~~do asnot ~~some~~require ofminimum ~~our~~purchase ~~print partners experiencing slowness in their sales and reducing their outsourced work to us~~commitments. ~~This~~Certain ~~decrease~~of ~~was offset by approximately $16.7 million in revenues from~~ our ~~recent~~rebate ~~acquisitions~~programs ~~for~~do, ~~the~~however, ~~nine-month~~require ~~period~~minimum ~~ended~~purchase ~~November~~volumes. Management ~~30,~~anticipates ~~2023~~meeting ~~compared to~~ the ~~nine-month~~required ~~period ended November 30, 2022~~volumes.

~~Cost~~Capital ofExpenditures ~~Goods~~– ~~Sold~~We ~~and~~continue ~~Gross~~to ~~Profit~~make ~~Margin. Our~~capital ~~cost~~expenditures offor ~~goods~~operational ~~sold~~maintenance ~~decreased~~purposes, ~~$1.4~~as ~~million,~~may orbe -0required.6% Additionally, ~~from~~we ~~$226.4~~will ~~million~~carefully ~~for~~review ~~the~~and ~~nine~~make ~~months~~capital ~~ended~~expenditures ~~November~~for ~~30,~~additional ~~2022~~equipment to ~~$225.0~~the ~~million~~extent ~~for~~such ~~the~~additions ~~nine~~make ~~months~~economic ~~ended~~sense ~~November~~by ~~30,~~improving ~~2023. Our~~our ~~gross~~operations ~~profit~~and ~~was~~not ~~$97.7~~jeopardizing ~~million~~our ~~for~~strong ~~the~~liquidity ~~nine-month~~position. ~~period~~We ~~ended~~expect ~~November~~our ~~30,~~capital ~~2023~~requirements ~~compared~~for toour ~~$102.7~~current ~~million~~fiscal ~~for~~year, ~~the~~exclusive ~~same~~of ~~period~~capital inrequired ~~the~~for ~~prior~~possible ~~year. Our~~acquisitions, ~~gross~~will ~~profit~~be ~~margin~~within ofour ~~30.3%~~historical ~~for~~levels ~~the~~of ~~current~~between ~~nine-month~~$3.0 ~~period,~~million ~~decreasing~~and ~~from~~$6.0 million. For the ~~prior~~three ~~year~~months ~~nine-month~~ended ~~period~~May of 31~~.2%~~, is2024, ~~within~~we ~~our~~spent ~~target~~approximately ~~range~~$2. ~~Our~~5 ~~gross~~million ~~profit~~on ~~margin~~capital asexpenditures athat ~~percentage~~was offunded ~~sales~~out ~~was~~of ~~higher~~our incash ~~the~~balance. We ~~prior~~expect ~~year~~to ~~nine-month~~generate ~~period~~sufficient ~~ending~~cash ~~November~~flows ~~30,~~from ~~2022~~our ~~due~~operating activities to acover ~~higher~~our ~~absorption~~operating ofand ~~fixed~~other ~~costs~~normal ~~driven~~capital ~~from~~requirements ~~greater~~for ~~volumes~~the ~~shipped~~foreseeable future.

~~Selling,~~Contractual ~~general,~~Obligations ~~and~~– ~~administrative~~There ~~expense. For~~have ~~the~~been ~~nine~~no ~~months~~significant ~~ended~~changes ~~November~~in ~~30, 2023,~~ our ~~SG&A~~contractual ~~expenses~~obligations ~~were~~since ~~$54.1~~February ~~million compared to $52.9 million for the nine months ended November 30~~29, ~~2022,~~2024 anthat ~~increase of $1.2 million~~have, or ~~2.2%. As~~are areasonably ~~percentage~~likely ofto ~~net sales~~have, ~~SG&A~~a ~~expenses~~material ~~for~~impact ~~the~~on ~~period~~our ~~were~~results ~~16.8%~~of ~~and~~operations ~~16.1%~~or ~~for~~financial ~~the nine months ended November 30, 2023 and November 30, 2022, respectively~~condition. ~~Our~~We ~~recent~~do ~~acquisitions~~not ~~added~~have ~~$2.4 million in SG&A expenses during the current nine~~off-~~month~~balance ~~period. We~~sheet ~~continue~~arrangements toor look for ways to more fully leverage our SG&A expenses, and to reduce SG&A expenses following acquisitions through the implementation of our systems and processes, which allows us to integrate many of the acquired companies’ backspecial-~~office~~purpose ~~processes~~entities.

Gain from disposal of assets. The $53,000 net loss from disposal of assets during the nine-month period ended November 30, 2023 and the $15,000 net loss from disposal of assets during the nine-month period ended November 30, 2022 was primarily attributed to the sale of equipment.

Income from operations. Primarily due to factors described above, our income from operations for the nine months ended November 30, 2023 was $43.5 million, or 13.5% of net sales, as compared to $49.8 million, or 15.1% of net sales, for the nine months ended November 30, 2022.

Other income (expense). Other income was $1.7 million for the nine months ended November 30, 2023 compared to expense of $1.0 million for the nine months ended November 30, 2022. Our increase in income was primarily from an increase in interest income from higher interest rates in the current period, $2.7 million for the nine months ended November 30, 2023 compared to $0.3 million for the nine months ended November 30, 2022.

Provision for income taxes. Our effective tax rate was 28.3% and 28.0% for the nine months ended November 30, 2023 and November 30, 2022, respectively.

Net earnings. Net earnings, due to the factors above, were $32.5 million for the nine months ended November 30, 2023 as compared to $35.1 million for the comparable period in the prior year, a decrease of $2.7 million. Net earnings per diluted share for the nine months ended November 30, 2023 was $1.25, compared to $1.36 for the same period in the prior year. Our recent acquisitions added approximately $0.04 in diluted earnings per share for the nine-month period offset by sales volume decline.

Liquidity and Capital Resources

We rely on our cash flows generated from operations to meet all 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 to employees and the payment of dividends to our shareholders. We have no debt and anticipate timely access to credit should larger acquisition opportunities materialize. We believe that our current cash balance of $83.9 million and cash flows from operations should be adequate to cover the

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024

next twelve months and beyond of our operating and capital requirements. Our capital requirements are expected to be within our historical levels of between $3.0 million and $6.0 million.

	November 30,		February 28,
(Dollars in thousands)	2023		2023
Working capital	$	165,032	$	155,379
Cash	$	83,902	$	93,968
Short-term investments	$	18,495	$	-

Working Capital. On November 30, 2023, we had $83.9 million in cash and $18.5 million in short-term investments. During the period, our cash position decreased by $10.1 million and our working capital increased $9.7 million or 6.2%, from $155.4 million at February 28, 2023 to $165.0 million at November 30, 2023. Our current ratio, calculated by dividing our current assets by our current liabilities, increased from 4.8 to 1.0 at February 28, 2023 to 5.8 to 1.0 at November 30, 2023. Our working capital and current ratio were positively impacted primarily by an increase in our cash and inventories offset by a decrease in our accounts payable and accrued expenses.

	Nine months ended November 30,
(Dollars in thousands)	2023			2022
Net cash provided by operating activities	$	52,500		$	33,997
Net cash used in investing activities	$	(43,175	)	$	(12,105	)
Net cash used in financing activities	$	(19,391	)	$	(20,498	)

Cash flows from operating activities. Cash provided by operating activities was $52.5 million in the nine months ended November 30, 2023 compared to $34.0 million in the comparative period ended November 30, 2022. A decrease in accounts receivable, net of accounts receivable from acquired business since the prior fiscal year end provided cash of $8.2 million in the current year nine-month period, while an increase in accounts receivable used cash of $5.9 million in the comparable nine-month period of the prior year. A decrease in inventories provided cash of $6.8 million in the nine-month period ended November 30, 2023 and used cash of $10.9 million in the same period of 2022. A decrease in accounts payable and accrued expenses used cash of $7.8 million in the current year nine-month period and an increase in accounts payable and accrued expenses provided cash of $1.5 million in the prior year comparable nine-month period. The decrease in accounts receivable in the current period was primarily due to decreased sales. The decrease in inventory, accounts payable and accrued expenses during the current period was primarily due to a decrease in purchasing activities and improved predictability in the supply chain conditions. We continue to monitor incoming orders and adjust raw material purchases accordingly.

Cash flows from investing activities. Cash used in investing activities was $43.2 million in the nine months ended November 30, 2023 compared to $12.1 million in the nine months ended November 30, 2022. Capital expenditures primarily of equipment was $4.9 million and $3.3 million for the nine months ended November 30, 2023 and November 30, 2022, respectively. In the nine months ended November 30, 2023, $19.9 million was used to acquire businesses, compared to $8.8 million used to acquire businesses for the first nine months of the prior year. During the current period, we purchased approximately $18.4 million of U.S. government treasury bills with staggered maturities of between three months and twelve months.

Cash flows from financing activities. We used $1.1 million less cash in financing activities during the nine months ended November 30, 2023 compared to the same period in the prior year. The decrease in cash used during the nine months ended November 30, 2023 resulted from $1.1 million common stock repurchased under our stock repurchase program in the nine months ended November 30, 2022.

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 November 30, 2023, we had $0.3 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.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2023

Pension Plan – The funded status of our Pension Plan and funding requirements is dependent on many factors, including returns on invested assets, the level of market interest rates and the level of funding. 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 and we anticipate making a required contribution of approximately $1.2 million prior to the end of the current fiscal year. 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 November 30, 2023, we had an unfunded pension liability recorded on our balance sheet of $0.6 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 $6.0 million. For the nine months ended November 30, 2023, we have spent approximately $4.9 million on capital expenditures. We expect to fund these expenditures through existing cash on the November 30, 2023 balance sheet.

Contractual Obligations – There have been no significant changes in our contractual obligations since February 28, 2023 that have, or are reasonably likely to have, a material impact on our results of operations or financial condition. We do not have off-balance sheet arrangements or special-purpose entities.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED NOVEMBER 30, 2023

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Interest Rates

From time to time, we are exposed to interest rate risk on short-term and long-term financial instruments carrying variable interest rates. We may from time to time utilize interest rate swaps to manage overall borrowing costs and reduce exposure to adverse fluctuations in interest rates. We do not use derivative instruments for trading purposes. While we had no outstanding debt at ~~November~~May 3031, ~~2023~~2024, we will be exposed to interest rate risk if we borrow in the future.

This market risk discussion contains forward-looking statements. Actual results may differ materially from this discussion based upon general market conditions and changes in domestic and global financial markets.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosures. Our controls and procedures are tested and evaluated at regular intervals to confirm that they are adequate and followed by our personnel to prevent misstatement of the Company’s financial statements. Due to the inherent limitations of control systems, not all misstatements may be detected. Those inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls could be circumvented by the individual acts of some persons or by collusion of two or more people. Our controls and procedures can only provide reasonable, not absolute, assurance that the above objectives have been met. Our management, with the participation of our Chairman of the Board, President and Chief Executive Officer (“CEO”) and Chief Financial Officer and Treasurer (“CFO”), has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our CEO and CFO have concluded that, as of ~~November~~May 3031, ~~2023~~2024, our disclosure controls and procedures are effective to provide reasonable assurance that information relating to us (including our consolidated subsidiaries), which is required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting (as defined in Rule 13a–15(f) or Rule 15d–15(f) of the Exchange Act) that occurred during the ~~nine~~three months ended ~~November~~May 3031, ~~2023~~2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are involved in various litigation matters arising in the ordinary course of our business. We do not believe the disposition of any current matter will have a material adverse effect on our consolidated financial position or results of operations.

In ~~April,~~October 2023, Crabar/GBF, Inc., a subsidiary of Ennis, was awarded $5.08 million in actual ~~and~~damages, ~~punitive~~exemplary damages and attorney’s fees in a case against Wright Printing Company, its owner Mark Wright, and CEO Mardra Sikora. OnGiven ~~September 19, 2023,~~ the ~~Court vacated the jury~~defendants’s ~~$1.0~~pending ~~million~~appeal, ~~breach~~we ofhave ~~contract~~not ~~award~~yet ~~against~~recognized ~~Mark~~the ~~Wright~~proceeds ~~because~~from ~~Crabar~~the ~~had~~judgment ~~not~~in ~~asserted~~the aaccompanying ~~contract~~condensed ~~claim~~consolidated ~~against~~financial ~~him. The~~statements ~~Court~~as ~~also~~of ~~awarded~~May ~~Crabar~~31, $12024.85 ~~million~~In inaddition, ~~attorney’s~~the ~~fees~~defendants ~~for~~have aposted ~~total~~cash ~~amended~~bonds ~~judgment~~that oftotal approximately $5.851 million~~. The~~, ~~impact~~which ofshould ~~the~~be ~~judgment~~recoverable ~~has~~by ~~not been reflected in~~ the ~~accompanying~~Company ~~consolidated~~if ~~financial~~defendants’ ~~statements~~appeal ~~as of November 30, 2023 and will be reflected when the judgment~~ is ~~collected~~unsuccessful.

Item 1A. Risk Factors

There have been no material changes in our Risk Factors as previously discussed in our Annual Report on Form 10-K for the year ended February 2829, ~~2023~~2024.

3028

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

At its July 14, 2022 meeting, the Ennis, Inc. Board of Directors authorized an additional $20 million in funding for the Company’s share repurchase program that was first implemented in 2008. With this latest funding authorization, the cumulative funds authorized for share repurchases totals $60 million. 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. Such purchases, if any, will be made in accordance with applicable insider trading rules and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice.

During the ~~nine~~three months ended ~~November~~May 3031, ~~2023~~2024, the Company ~~did~~repurchased ~~not~~91,883 ~~purchase any~~ shares of common stock under the program at an average price of $19.79. Since the program’s inception in October 2008, there have been 2,334,344 common shares repurchased at an average price of $16.47 per share. As of ~~November~~May 3031, ~~2023~~2024, $2321.95 million remained available to repurchase shares of the Company’s common stock under the program.

Items 3, 4 and 5 are not applicable and have been omitted

Item 6. Exhibits

The following exhibits are filed as part of this report.

Exhibit Number		Description
Exhibit 3.1(a)		Restated Articles of Incorporation, as amended through June 23, 1983 with attached amendments dated June 20, 1985, July 31, 1985, June 16, 1988 and November 4, 1998, incorporated herein by reference to Exhibit 3.1(a) to the Registrant’s Form 10-Q filed on October 6, 2017 (File No. 001-05807).
Exhibit 3.1(b)		Amendment to Articles of Incorporation, dated June 17, 2004, incorporated herein by reference to Exhibit 3.1(b) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended February 28, 2007 filed on May 9, 2007 (File No. 001-05807).
Exhibit 3.2		Fourth Amended and Restated Bylaws of Ennis, Inc., dated July 10, 2017, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on July 10, 2017 (File No. 001-05807).
Exhibit 31.1		Certification Pursuant to Rule 13a-14(a) of Chief Executive Officer.*
Exhibit 31.2		Certification Pursuant to Rule 13a-14(a) of Chief Financial Officer.*
Exhibit 32.1		Section 1350 Certification of Chief Executive Officer.**
Exhibit 32.2		Section 1350 Certification of Chief Financial Officer.**
Exhibit 101		The following information from Ennis, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~November~~May 3031, ~~2023~~2024, filed on ~~January~~June 526, ~~2023~~2024, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail.*
Exhibit 104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith

** Furnished herewith

3129

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED ~~NOVEMBER~~MAY 3031, ~~2023~~2024

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ENNIS, INC.
Date: January 5, 2023		/s/ Keith S. Walters
Date: June 26, 2024		/s/ Keith S. Walters
		Keith S. Walters
		Chairman, Chief Executive Officer and President
Date: January 5, 2023		/s/ Vera Burnett
Date: June 26, 2024		/s/ Vera Burnett
		Vera Burnett
		Chief Financial Officer, Treasurer and
		Principal Financial and Accounting Officer

3230

Filing Compare · ENNIS, INC.