Ennis Inc. Reports Operating Results (10-Q)
Ennis Inc. has a market cap of $462.4 million; its shares were traded at around $17.84 with a P/E ratio of 10.4 and P/S ratio of 0.9. The dividend yield of Ennis Inc. stocks is 3.5%. Ennis Inc. had an annual average earning growth of 7.4% over the past 10 years. GuruFocus rated Ennis Inc. the business predictability rank of 4-star.EBF is in the portfolios of Chuck Royce of Royce& Associates.
Highlight of Business Operations:Completion of our new manufacturing facility We are building a state-of-the art manufacturing facility in Agua Prieta, Mexico (the Project) and expect operations to begin at this facility over the next couple of quarters. Total expected expenditures associated with this facility are expected to be in the range of $50.0 million to $54.0 million ($26.0 million for the building and $24.0 million $28.0 million for machinery and equipment), with approximately $45.3 million expended to date. At the completion of Phase 1 of the Project, we continue to expect this facility to be able to process 1 million pounds of fabric per week, and eventual capacity, after Phase 2 implementation, will be between 2.6 million to 2.8 million pounds per week. This compares to our current capacity of approximately 1.6 million to 1.8 million pounds per week.
$6.0 million to $8.0 million. To date the negative impact associated with this facility was $838,000 during the current quarter and $1.9 million for the nine months ended November 30, 2010. The success of this plan continues to be dependent on meeting key targets and any delay in the start-up/wind-down schedule could add significantly to these costs. Once fully operational and the transition complete, with sell-through levels of 2.6 million pounds to 2.8 million pounds per week, we continue to anticipate significant manufacturing efficiencies will be realized. The original estimate of the annualized cost savings associated with this facility was between $10.0 million to $15.0 million per annum. However, a certain portion of the savings associated with the conversion of our dye machines have already been realized in our current manufacturing facility, hence part of the reason for the improvement in our operating margins this fiscal year. Nonetheless, we continue to anticipate a substantial savings in costs associated with this facility once fully operational and the transition has been completed and the production levels have been obtained.
When we acquire a business, a portion of the purchase price of the acquisition may be allocated to goodwill and other identifiable intangible assets. The amount of the purchase price which is allocated to goodwill and other intangible assets is the excess of the purchase price over the net identifiable tangible assets acquired. The annual impairment test is based on several factors requiring judgment. A decline in market conditions may indicate potential impairment of goodwill. An impairment test was completed for our fiscal year ended February 28, 2010, and we concluded that no impairment charge was necessary. At November 30, 2010, our goodwill and other intangible assets were approximately $117.3 million and $76.9 million, respectively.
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