Ennis, Inc. reported financial results for the quarter ended August 31, 2026, showing revenue growth alongside lower reported earnings. The company generated $102 million in sales, representing a 3.3% increase from the prior-year quarter’s $98.7 million. However, net earnings fell to $9.4 million from $13.2 million in the comparable period.
The earnings decline reflects the impact of litigation items that differed between periods. The prior-year quarter benefited from a $5.3 million favorable litigation judgment, while the current quarter included a $700,000 litigation charge. When these non-GAAP adjustments were applied to both periods, diluted earnings per share increased by $0.02, suggesting underlying operational performance was more stable than headline numbers indicated. Gross profit expanded to $30.5 million from $30.1 million despite gross margin declining 60 basis points to 29.9%, primarily due to higher carbonless-paper costs.
Acquisitions accounted for approximately $2.3 million of the $3.3 million quarterly revenue increase, meaning organic sales growth was roughly 1% after removing the acquisition contribution. The company has navigated supply challenges following the closure of the sole domestic carbonless-paper producer by securing shipments from alternative suppliers, and management stated it expects to maintain uninterrupted product availability.
Ennis generated $34.1 million of operating cash flow in the first half, compared with $18.4 million in the prior-year period. The company maintained a cash position of $54 million as of August 31 with no debt outstanding, providing financial flexibility for operations and potential acquisitions. The cash flow improvement was supported by inventory reduction during the quarter following earlier buildup for supply assurance.
Management faces the challenge of addressing margin pressure from elevated input costs through pricing adjustments, product mix optimization, or productivity improvements. The sustainability of cash flow improvement will depend on whether strong generation persists once inventory levels normalize. Insider Monkey’s data indicated 15 hedge funds held positions in the company at the end of the second quarter, up from 14 funds three months prior.
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