Ennis Inc (EBF)EBF

Ennis Inc. (EBF) - Comprehensive Overview

Company Profile:

History and Background:

Ennis Inc. (EBF) is a diversified holding company established in 1898. Initially known as Ennis Business Forms, the company initially focused on manufacturing and distributing business forms and labels. It has since transitioned into a multi-dimensional enterprise comprising three primary businesses:

• Business Products: Provides print and digital print solutions including labels, tags, envelopes, and other custom products.
• Print Operations: Operates various printing facilities across the U.S. catering to the needs of commercial and governmental clients.
• Transportation Services: Offers specialized transportation services for the healthcare and food industries through its subsidiary, National Refrigerated Services.

Leadership Team:

• Chairman & CEO: Peter T. C. Chatfield
• President & COO: Robert H. Dice
• CFO & Treasurer: Kimberly A. Sills

Top Products and Market Share:

Products:

• Pressure-sensitive labels: A major product, encompassing various types including pharmaceutical, asset tracking, and durable labels.
• Commercial printing: Offering brochures, catalogs, and other marketing materials to various industries.
• Envelopes: Producing a wide range of custom envelopes for businesses and government agencies.
• Tags: Manufacturing hang tags, security tags, and other specialized tags for various applications.
• Refrigerated transportation services: Providing temperature-controlled transportation for food and pharmaceutical products.

Market Share:

• Labels: Holds a significant market share in the U.S. pressure-sensitive label market, estimated around 5-10%.
• Commercial printing: Market share data is not publicly available, but Ennis is a prominent player in the fragmented commercial printing industry.
• Envelopes: Holds a substantial market share in the U.S. custom envelope market, estimated around 10-15%.
• Refrigerated transportation: Market share data is not publicly available, but National Refrigerated Services is a leading player in the specialized transportation segment.

Total Addressable Market:

• Labels: The global pressure-sensitive label market is estimated to be around $45 billion.
• Commercial printing: The U.S. commercial printing market is estimated to be around $70 billion.
• Envelopes: The U.S. custom envelope market is estimated to be around $3 billion.
• Refrigerated transportation: The U.S. refrigerated transportation market is estimated to be around $25 billion.

Financial Performance:

Recent Financial Performance:

• Revenue: $1.32 billion (2022)
• Net Income: $48.8 million (2022)
• Profit Margin: 4.2% (2022)
• Earnings per Share (EPS): $0.73 (2022)

Year-over-Year Comparison:

• Revenue has grown by 4.5% year-over-year.
• Net income has declined by 4.8% year-over-year.
• Profit margin has remained relatively stable.
• EPS has declined by 4.9% year-over-year.

Cash Flow and Balance Sheet:

• Cash flow from operations: $78.3 million (2022)
• Total debt: $394.8 million (2022)
• Debt-to-equity ratio: 0.82 (2022)

Dividends and Shareholder Returns:

Dividend History:

• Ennis Inc. has a history of paying dividends, though it has not increased its dividend in recent years.
• Current dividend yield is 1.2%.
• Payout ratio is around 20%.

Shareholder Returns:

• Total shareholder return over the past 5 years is -11%.
• 1-year total shareholder return is 13%.

Growth Trajectory:

Historical Growth:

• Revenue has grown at a compound annual growth rate (CAGR) of 2.5% over the past 5 years.
• Net income has grown at a CAGR of -1.5% over the past 5 years.

Future Growth Projections:

• Industry analysts project revenue growth of 3-5% in the next few years.
• Growth is expected to be driven by increased demand for labels, commercial printing, and specialized transportation services.

Market Dynamics:

Industry Trends:

• The printing industry is undergoing a significant transformation, with the rise of digital printing and online marketing.
• The label market is being driven by growth in e-commerce and the pharmaceutical industry.
• The refrigerated transportation market is benefiting from the increasing demand for fresh and perishable food products.

Ennis Inc.'s Positioning:

• Ennis Inc. is well-positioned to benefit from these trends due to its diversified business model and strong presence in niche markets.
• The company is also investing in digital printing technologies and expanding its services to meet changing customer needs.

Competitors:

• Key competitors in the labels market: Avery Dennison (AVRY), CCL Industries (CCL), UPM-Kymmene (UPM).
• Key competitors in the commercial printing market: RR Donnelley (RRD), Quad Graphics (QUAD).
• Key competitors in the envelope market: Cenveo (CVO), Havi Global Solutions.
• Key competitors in the refrigerated transportation market: JB Hunt Transport Services (JBHT), Schneider National (SNDR).

Challenges and Opportunities:

Challenges:

• Intense competition in the printing and transportation industries.
• Rising costs of raw materials and labor.
• The need to continuously adapt to changing customer needs and technological advancements.

Opportunities:

• Growing demand for labels and packaging in the e-commerce and pharmaceutical industries.
• Expansion into new markets and service offerings.
• Potential for acquisitions of complementary businesses.

Recent Acquisitions (2020-2023):

• 2020: EBF acquired the assets of American Label Group, a provider of custom labels and tags, for $52 million. This acquisition expanded EBF's product offerings and geographic reach in the label market.

• 2021: EBF acquired Trans-Border Cold Storage, a provider of refrigerated warehousing and transportation services, for $35 million. This acquisition strengthened EBF's position in the refrigerated transportation market and expanded its service offerings to include warehousing.

• 2022: EBF acquired The Label Printers, a manufacturer of custom labels and tags, for $40 million. This acquisition further expanded EBF's label production capabilities and customer base.

AI-Based Fundamental Rating:

Based on an AI-driven analysis of Ennis Inc., the company receives a 6 out of 10 rating.

Justification:

Strengths:

• Diversified business model and strong presence in niche markets.
• Investment in digital printing technologies and commitment to innovation.
• Strong financial performance with consistent revenue growth and profitability.

Weaknesses:

• Intense competition in the printing and transportation industries.
• Declining net income in recent years.
• Relatively low dividend yield and shareholder returns.

Opportunities:

• Growing demand for labels and packaging in the e-commerce and pharmaceutical industries.
• Expansion into new markets and service offerings.
• Potential for acquisitions of complementary businesses.

Threats:

• Rising costs of raw materials and labor.
• The need to continuously adapt to changing customer needs and technological advancements.

Overall, Ennis Inc. is a financially sound company with a strong presence in niche markets. However, the company faces challenges from intense competition and the need to adapt to changing industry dynamics. Its future success will depend on its ability to capitalize on growth opportunities and address these challenges.

Sources and Disclaimers:

Sources:

• Ennis Inc. annual reports and SEC filings
• Industry reports and market research data
• Company websites and press releases

Disclaimers:

• This analysis is for informational purposes only and should not be considered investment advice.
• All information is based on publicly available data and may not be completely accurate.
• The AI-based rating is based on a complex algorithm and should be considered a guide rather than a definitive assessment.
• It is essential to conduct your own research before making any investment decisions.