Ennis, Inc. reported financial results for the quarter ended August 31, 2026, showing mixed performance. Revenue increased to $102 million from $98.7 million, representing 3.3% growth compared to the prior-year period. However, net earnings declined to $9.4 million from $13.2 million, creating an apparent disconnect between top-line and bottom-line performance.
The earnings comparison was affected by litigation-related items in both periods. The prior-year quarter included a $5.3 million favorable litigation judgment, while the current quarter contained a $700,000 litigation charge. When excluding these specified items from both periods for non-GAAP comparison purposes, management reported that diluted earnings per share increased by $0.02, suggesting the underlying business held up better than headline figures indicated.
Acquisitions accounted for approximately $2.3 million of the $3.3 million revenue increase, meaning organic growth was approximately $1 million or roughly 1% of prior-year revenue on a rounded basis. Gross profit improved to $30.5 million from $30.1 million, but gross margin contracted to 29.9% from 30.5%, a decline of 60 basis points that management attributed primarily to higher carbonless-paper costs. The company faced supply-chain considerations after the closure of the sole domestic carbonless-paper producer but reported receiving shipments from alternative suppliers with expectations of uninterrupted product availability.
The company’s financial position showed strength in certain areas. Operating cash flow for the first half reached $34.1 million compared with $18.4 million a year earlier, while cash on hand totaled $54 million as of August 31 with no debt outstanding. However, inventory declines during the quarter reflected prior-period buildup to address supply concerns, suggesting that normalized working-capital levels may impact future cash-flow comparisons.
Looking forward, the company faces headwinds from elevated input costs that will require offsetting improvements in pricing, product mix, or operational productivity. Analysts noted that acquisition contributions explain most of the reported sales growth, while margin pressure from paper costs and the need for sustainable organic growth remain key metrics to monitor. The data available showed 15 hedge funds holding the stock at the end of the second quarter, up from 14 funds three months earlier.
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