EBF 10-K & 10-Q changes, risk factors and insider trading
Ennis, Inc. · NYSE · Manifold Business Forms · CIK 33002 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our ability to protect our customer relationships, including those acquired through acquisitions, and our trademarks is important to our business, and failure to do so could adversely affect our results of operations.”
Largest changes
We are monitoring changes and potential changes to U.S. tariff and trade policies under the current Presidential administration, along with reciprocal tariffs or other countermeasures imposed or that may be imposed by other countries in response. The current environment is dynamic and uncertain, as the U.S. President has imposed, modified and paused tariffs, and granted exemptions from tariffs, on different countries and products multiple times since taking office in January 2025.see in full comparisonChanging U.S. tariff and trade policies could cause higher inflation, higher interest rates and slower economic growth or recession in the U.S. We predominantly purchase our other raw materials from domestic suppliers but may be required to source from international suppliers if our domestic suppliers are unable to meet our supply requirements. Our domestic suppliers may incur tariffs leading to increased prices. These changes and uncertainties regarding future changes could result in higher costs to our business and impact demand from our customers. These factors could have a material adverse effect on our business.
“Changing U.S. tariff and trade policies could cause higher inflation, higher interest rates and slower economic growth or recession in the U.S. Our domestic suppliers may incur tariffs leading to increased prices. These changes and uncertainties regarding future changes could result in higher costs to our business and impact demand from our customers. These factors could have a material adverse effect on our business.”see in full comparison
“Our ability to protect our customer relationships, including those acquired through acquisitions, and our trademarks is important to our business, and failure to do so could adversely affect our results of operations.”see in full comparison
“Paper and other raw materials are commodities subject to price volatility, which may be exacerbated by reduced supply capacity, inflationary pressures, tariffs and changing global market conditions. We do not have effective cost-efficient hedging mechanisms to fully mitigate these risks, and our purchase agreements provide only limited protection against price increases. While we generally seek to pass through higher input costs to customers, competitive market conditions may limit our ability to do so.”see in full comparison
Our results and financial condition are affected by global and local market conditions, competitors’ pricing strategies, including the impact of tariffs andsee in full comparisonriskstradedue to new or increased tariffs,policies, which can adversely affect our sales, margins, and net income.
“We purchase a significant portion of our paper products, a key input to our print products, from a limited number of suppliers. During fiscal year 2026, our primary domestic supplier of carbonless papers, permanently closed one of its mills, eliminating the sole U.S. source for this product. As a result, we are transitioning to alternative suppliers, including international sources, which may expose us to increased risks related to supply continuity, pricing, logistics, lead times, currency fluctuations, tariffs, and quality variability.”see in full comparison
Full comparison: every changed paragraph (22)
Our ability to protect our customer relationships, including those acquired through acquisitions, and our trademarks is important to our business, and failure to do so could adversely affect our results of operations.
We rely on customer relationships, including customer lists obtained through acquisitions, as well as our trade names and trademarks, to support our sales and brand recognition. Although we seek to protect these assets through contractual arrangements, internal controls and trademark registrations, these measures may not be sufficient to prevent unauthorized use, disclosure or misappropriation. In addition, we may incur significant costs to enforce our rights, and such efforts may not be successful. Any loss of customer information, or inability to maintain, protect or enforce our trade names and trademarks, could result in loss of customers, reputational harm and reduced revenues.
Our results and financial condition are affected by global and local market conditions, competitors’ pricing strategies, including the impact of tariffs and riskstrade due to new or increased tariffs,policies, which can adversely affect our sales, margins, and net income.
The printing industry continues to experience weakening demand for printed products. The increasing sophistication of software, internet technologies, and digital equipment combined with our customers’ general preferencepreference, digital workflow, automation and digitalelectronic substitutions,alternatives as well as governmental influences for paperless business environments will continue to reduce the number of traditional printed documents sold. Moreover, the documents that will continue to coexist with software applications will likely contain less value-added print content.
In response to the gradual obsolescence of our standardized business forms, we continue to develop our capability to provide custom and full-color products. If new printing capabilities and new product introductions do not continue to offset the obsolescence of our standardized business forms products and we are unable to increase our market share, our sales and profits will be affected. Our ability to successfully implement operational improvements, automation initiatives, and system enhancements may impact our cost structure, internal controls and efficiency if not executed effectively. Decreases in sales of our standardized business forms and products due to obsolescence could also reduce our gross margins or impact the value of our recorded goodwill and intangible assets. This reduction could in turn adversely impact our profits, unless we are able to offset the reduction through the introduction of new high margin products and services or realize cost savings in other areas.
We obtain our raw materials from a limited number of suppliers, and any disruptiondisruptions in oursupply, relationships with these suppliers, or any substantial increase inincluding the pricerecent closure of rawa materialsprimary orsupplier’s material shortagesmill, could haveadversely aaffect materialour adverse effect on us.business.
We purchase a significant portion of our paper products, a key input to our print products, from a limited number of suppliers. During fiscal year 2026, our primary domestic supplier of carbonless papers, permanently closed one of its mills, eliminating the sole U.S. source for this product. As a result, we are transitioning to alternative suppliers, including international sources, which may expose us to increased risks related to supply continuity, pricing, logistics, lead times, currency fluctuations, tariffs, and quality variability.
Historically, we have relied on suppliers that meet stringent quality and delivery standards under long-term arrangements; however the reduction in domestic capacity may limit availability and reduce our ability to obtain favorable pricing or terms. In addition, global supply conditions, transportation constraints, tariffs and geopolitical factors may further impact our ability to secure raw materials on acceptable terms or in sufficient quantities.
Paper and other raw materials are commodities subject to price volatility, which may be exacerbated by reduced supply capacity, inflationary pressures, tariffs and changing global market conditions. We do not have effective cost-efficient hedging mechanisms to fully mitigate these risks, and our purchase agreements provide only limited protection against price increases. While we generally seek to pass through higher input costs to customers, competitive market conditions may limit our ability to do so.
Any disruption in supply, inability to secure alternative sources on commercially reasonable terms, degradation in quality, or significant increases in raw material costs could have a material adverse effect on our business, financial condition and results of operations.
We currently purchase a large majority of our paper products (a significant input to our print products) from one major supplier at favorable costs based on our high volume of business with this supplier relative to our competitors. Traditionally we have purchased our paper products from a limited number of suppliers, all of which must meet stringent quality and on-time delivery standards under long-term contracts. The closing of paper mills as recently announced would reduce capacity, potentially increasing prices and require us to seek alternative suppliers. We predominantly purchase our other raw materials from domestic suppliers but may be required to source from international suppliers if our domestic suppliers are unable to meet our supply requirements. Fluctuations in the quality of our paper commodity, unexpected price changes, decline in overall distribution channels or other factors that relate to our suppliers could have a material adverse effect on our operating results.
Paper is a commodity that is subject to frequent increases or decreases in price, and these fluctuations are sometimes significant. The prices for paper and many of our raw materials have been volatile and may continue to increase due to overall inflationary pressure and global market conditions. We believe there is no effective market of derivative instruments to insulate us against unexpected changes in price of paper in a cost-effective manner and negotiated purchase contracts provide only limited protection against price increases. Generally, when paper prices increase, we attempt to recover the higher costs by raising the prices of our products to our customers. In the price-competitive marketplaces in which we operate, however, we may not always be able to pass through any or all of the higher costs. As such, any significant increase in the price of paper or shortage in its availability could have a material adverse effect on our results of operations.
Some of our customers are being absorbed by the distribution channels of some of our manufacturing competitors. However, we do not believe this will significantly impact our business model. We have continued to sell to some of these customers even after they were absorbed by our competition because of the breadth of our product line and our geographic diversity. Changes in distribution channels, including consolidation, vertical integration, or shifts in purchasing strategies by customers, may reduce volumes, compress margins, or redirect business away from us.
We are subject to extensive and changing federal, state and foreign laws and regulations establishing health and environmental quality standards, concerning, among other things, wastewater discharges, air emissions and solid waste disposal, and may be subject to liability or penalties for violations of those standards. We are also subject to laws and regulations governing remediation of contamination at facilities currently or formerly owned or operated by us or to which we have sent hazardous substances or wastes for treatment, recycling or disposal. We may be subject to future liabilities or obligations as a result of new or more stringent interpretations of existing laws and regulations. In addition, we may have liabilities or obligations in the future if we discover any environmental contamination or liability at any of our facilities, or at the facilities we may acquire. In addition, increasing focus by customers, investors, and regulators on sustainability and environmental practices may influence product demand, sourcing requirements and cost structures.
We are monitoring changes and potential changes to U.S. tariff and trade policies under the current Presidential administration, along with reciprocal tariffs or other countermeasures imposed or that may be imposed by other countries in response. The current environment is dynamic and uncertain, as the U.S. President has imposed, modified and paused tariffs, and granted exemptions from tariffs, on different countries and products multiple times since taking office in January 2025. Changing U.S. tariff and trade policies could cause higher inflation, higher interest rates and slower economic growth or recession in the U.S. We predominantly purchase our other raw materials from domestic suppliers but may be required to source from international suppliers if our domestic suppliers are unable to meet our supply requirements. Our domestic suppliers may incur tariffs leading to increased prices. These changes and uncertainties regarding future changes could result in higher costs to our business and impact demand from our customers. These factors could have a material adverse effect on our business.
Changing U.S. tariff and trade policies could cause higher inflation, higher interest rates and slower economic growth or recession in the U.S. Our domestic suppliers may incur tariffs leading to increased prices. These changes and uncertainties regarding future changes could result in higher costs to our business and impact demand from our customers. These factors could have a material adverse effect on our business.
Income, sales or other tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are applied. Most recently, on July 4, 2025, legislation commonly known as the One Big Beautiful Bill Act ("OBBBA") was enacted into law. Key tax components of the OBBBA include extension of certain expiring tax provisions from the 2017 Tax Cuts and Jobs Act, reinstatement of immediate expensing of qualifying business property and modifications to interest expense limitations and certain production-related investments, including manufacturing facilities. On August 16, 2022, legislation commonly known as the Inflation Reduction Act (the "IRA") was signed into law. Among other things, the IRA includes a 1% excise tax on certain corporate stock repurchases, applicable to repurchases after December 31, 2022, and also a new minimum tax based on book income. Following the 2018 U.S. Supreme Court decision in South Dakota v Wayfair, states may require an out-of-state seller with no physical presence in the state to collect and remit sales tax on goods the seller ships to consumers in the state. While the company now collects, remits and reports sales tax in states that it does business in, the adoption of new laws by taxing authorities could create significant increases in internal cost necessary to capture data, collect and remit tax. All of these factors and uncertainties may adversely affect our results of operations, financial position and cash flows.
We incur transportation expenses to ship our products to our customers. Significant increases in the costs of freightfreight, fuel and transportationtransportation, as well as capacity constraints, could have a material adverse effect on our results of operations, as there can be no assurance that we could pass on these increased costs to our customers. Government regulations can and have impacted the availability of drivers, which will be a significant challenge to the transportation industry. Costs to employ drivers have increased and transportation shortages have become more prevalent. Additionally, the challenge of employing new drivers for the increasingly larger web-based economy could create shortages in trucks and drivers which could impact our sales.
We depend on IT and data processing systems to operate our business, and a significant malfunction or disruption in the operation of our systems may disrupt our business and adversely affect our ability to operate and compete in the markets we serve. This could take various forms, including through the injection of ransomware on our IT infrastructure rendering it inoperable without the payment of some form of cyber currency. These systems include systems that we own and operate, as well as systems of our vendors or other third parties. Such systems are susceptible to ransomware attacks, malfunctions, interruptions and phishing scams, for example. We also periodically upgrade and install new systems, which if installed or programmed incorrectly, may cause significant disruptions. These disruptions could interrupt our operations and adversely affect our results of operations, financial condition and cash flows.
These systems include systems that we own and operate, as well as systems of our vendors or other third parties. Such systems are susceptible to ransomware attacks, malfunctions, interruptions and phishing scams. Failures or disruptions, including those involving third-party providers, could result in operational downtime, including interruptions to manufacturing, order processing, or financial reporting.
We also periodically upgrade and install new systems, and implementation or configuration errors could cause operational disruptions and adversely affect our results of operations, financial condition and cash flows.
As previously disclosed, the Company was targeted with an encryption ransomware attack on November 30, 2022. The Company eliminated the ransomware and restored its systems. Since then, the Company has implemented additional security measures to make it more difficult for an outside agent to gain access to our network, such as a multifactor authentication (MFA) protocol and a robust firewall to strengthen the Company's network. Despite us improving our information technology general controls, we cannot give any assurances that the Company will not become the subject of a future more sophisticated,sophisticated or more harmful attack.attacks.
Management's Discussion & Analysis (MD&A)
Largest changes
Transformation of our portfolio of products – While traditional business documentssee in full comparisonareremain essentialin ordertoconductconducting business, many are being replaced through the use ofcheaperlower-cost paper grades or importedpaper,products, or are being devaluedwithby advances in digital technologies,causingresultingsteadyin continued declines in demand for a portion of ourcurrentproduct line. Transforming our product offerings in order tocontinue toprovide innovative,valuablevalue-added solutionsthrough lower labor and fixed charges to our customerson a proactive basiswillrequiresrequire us to makeongoing investments in new and existingtechnologytechnologies,andastowelldevelopas the development of key strategic business relationships,such asincluding print-on-demand services and product offerings thatassistsupport customersin their transitiontransitioning to digital business environments.In addition, we willWe continue tolook forevaluate new market opportunities andnichesniches, including through acquisitions, and to expand our offerings in areas such astheenvelopes,additiontags,of our envelope offerings, tag offerings, folder offerings,folders, healthcare wristbands, specialty packaging, direct mail, pressure seal products, securedocument solutions, innovativedocument, in-moldlabel offeringslabels, and long-run integratedproducts withhigh color webprinting,print, which provideus with an opportunityopportunities for growth and further differentiate us from our competition.TheOur ability to make such investmentsin new and existing technology and/orto acquire new market opportunities throughpursue acquisitions is dependent ontheourCompany’sliquidity,liquiditycapital resources, andoperationaloperating results.
“Capital Expenditures – We continue to make capital expenditures for operational maintenance purposes, as required. Additionally, we will carefully evaluate capital expenditures for additional equipment to the extent such investments improve our operations and do not jeopardize our strong liquidity position. We expect our capital requirements for fiscal year 2027, exclusive of capital required for possible acquisitions, to be within our historical range of between $4.0 million and $7.0 million.”see in full comparison
“Production capacity and price competition within our industry – Industry supply of paper products is subject to fluctuation as changing industry conditions have and will continue to influence producers to idle or permanently close individual machines or mills, and or convert them to different product lines, such as packaging to offset a decline in demand. Recently, there have been consolidations of paper suppliers and mill closure announcements which may cause the paper prices to fluctuate substantially in the future. …”see in full comparison
“Production capacity and price competition within our industry – Industry supply of paper products continues to fluctuate as changing market conditions influence producers to idle or permanently close individual machines or mills, or convert capacity to alternative product lines, including packaging, to offset declines in demand for certain paper grades. Recent industry activity has included temporary idling of machines, permanent closures and limited increases in specialty paper capacity, reflecting ongoing adjustments in response to shifts in demand. …”see in full comparison
“Net Sales. Our net sales were $392.4 million for fiscal year 2026, compared to $394.6 million for fiscal year 2025, a decrease of $2.2 million, or 0.6%. The decrease was primarily driven by lower organic volumes of approximately $25.0 million, reflecting continued softness in portions of the print market and ongoing pricing competition. The decline was largely offset by approximately $22.8 million increase in revenues generated from our recent acquisitions. …”see in full comparison
“These dynamics may result in continued supply constraints and input cost volatility for certain paper grades. Margins remain under pressure due to volume variability in certain markets, elevated input costs and ongoing pricing competition. To mitigate these impacts, we continue to manage product costs through forecasting, production and costing models, strengthening supplier relationships; negotiating procurement terms; and improving operational efficiency, while evaluating opportunities to better leverage our fixed cost structure.”see in full comparison
Full comparison: every changed paragraph (49)
Our Business Challenges – Our industry iscontinues currentlyto experiencingexperience consolidation of traditional supply channels, ongoing product obsolescence, paper supplier capacity adjustments, and increasedperiodic pricing volatility and potential supply allocations dueresulting tofrom demand/ and supply curve imbalance. Technology advances have madeenabled electronic distributiondocument ofdistribution, documents, internetweb-based hosting, digital printing and print-on-demand valid,as viable and cost-effective alternatives to traditional custom-printed documents and customer communications. Improved equipment has become more accessible to ourboth existing and new competitors. WeAs a result, we face highly competitive conditions throughout our supply chain in an already over-supplied,mature, price-competitive print industry. In addition to the risk factors discussed under the caption “Risk Factors” in Item 1A of this Annual Report, some of the key challenges of our business include the following:
In addition to the risk factors discussed under the caption “Risk Factors” in Item 1A of this Annual Report, some of the key challenges of our business include the following:
Transformation of our portfolio of products – While traditional business documents areremain essential in order to conductconducting business, many are being replaced through the use of cheaperlower-cost paper grades or imported paper,products, or are being devalued withby advances in digital technologies, causingresulting steadyin continued declines in demand for a portion of our current product line. Transforming our product offerings in order to continue to provide innovative, valuablevalue-added solutions through lower labor and fixed charges to our customers on a proactive basis willrequires require us to makeongoing investments in new and existing technologytechnologies, andas towell developas the development of key strategic business relationships, such asincluding print-on-demand services and product offerings that assistsupport customers in their transitiontransitioning to digital business environments. In addition, we willWe continue to look forevaluate new market opportunities and nichesniches, including through acquisitions, and to expand our offerings in areas such as theenvelopes, additiontags, of our envelope offerings, tag offerings, folder offerings,folders, healthcare wristbands, specialty packaging, direct mail, pressure seal products, secure document solutions, innovativedocument, in-mold label offeringslabels, and long-run integrated products with high color web printing,print, which provide us with an opportunityopportunities for growth and further differentiate us from our competition. TheOur ability to make such investments in new and existing technology and/or to acquire new market opportunities throughpursue acquisitions is dependent on theour Company’sliquidity, liquiditycapital resources, and operationaloperating results.
Production capacity and price competition within our industry – Industry supply of paper products continues to fluctuate as changing market conditions influence producers to idle or permanently close individual machines or mills, or convert capacity to alternative product lines, including packaging, to offset declines in demand for certain paper grades. Recent industry activity has included temporary idling of machines, permanent closures and limited increases in specialty paper capacity, reflecting ongoing adjustments in response to shifts in demand. During the current fiscal year, the only domestic producer of carbonless paper permanently closed its mill which has contributed to ongoing supply constraints for this product. As previously reported, we increased inventory levels to provide buffer stock while transitioning to alternative sources of carbonless paper.
These dynamics may result in continued supply constraints and input cost volatility for certain paper grades. Margins remain under pressure due to volume variability in certain markets, elevated input costs and ongoing pricing competition. To mitigate these impacts, we continue to manage product costs through forecasting, production and costing models, strengthening supplier relationships; negotiating procurement terms; and improving operational efficiency, while evaluating opportunities to better leverage our fixed cost structure.
Production capacity and price competition within our industry – Industry supply of paper products is subject to fluctuation as changing industry conditions have and will continue to influence producers to idle or permanently close individual machines or mills, and or convert them to different product lines, such as packaging to offset a decline in demand. Recently, there have been consolidations of paper suppliers and mill closure announcements which may cause the paper prices to fluctuate substantially in the future. The only domestic source of carbonless paper announced that it is closing its factory. We intend to build a surplus of inventory as buffer inventory until we transition to other sources. While margins remain under pressure due to the resulting weak volumes, we 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 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.
Continued consolidation of our customers – Our customers are primarily distributors, many of which are consolidating or are being acquired by competitors. We continue to maintain a majority of the businessWhile we have hadhistorically maintained a significant share of business with these customers, continued consolidation may affect our customerssales historically,volume, but it is possible that these consolidationspricing, and acquisitions, which we expect to continue in the future, ultimately will impact our margins and sales.margins.
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity's effective tax rate reconciliation. Refer to Note 14, Income taxes.
As our Pension Plan assets are invested in marketable securities, fluctuations in market values could potentially impact our Pension Plan funding status and associated liability recorded. The expected rate of return on assets was 5.50% and 6.00% at February 28, 20252026 and February 29,28, 2024, respectively.2025.
Similar to fluctuations in market values, a drop in the discount rate could potentially negatively impact our Pension Plan's funded status, recorded pension liability and future contribution levels with the opposite impact occurring for an increase in the discount rate. During fiscal years 20242026 and 2025, the discount rate used to determine the net pension obligations for purposes of our Consolidated Financial Statements was 5.15%. The discount rate is reviewed by management annually and is adjusted to reflect movements in the average Mercer and FTSE (formerly Citigroup) pension yield curves for mature pension plans with duration of about 12-1510 years. The Company estimated the duration of its pension benefit obligation ("PBO") to be approximately 12-15 years. Each 10-basis point change in the discount rate impacts our computed pension liability by about $0.5 million.
We assess goodwill for impairment annually as of December 1, or more frequently if impairment indicators are present. The Company uses qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the fair value of its single reporting unit exceeds its carrying amount, including goodwill. Some of the qualitative factors considered in applying this test include consideration of macroeconomic conditions, industry and market conditions, cost factors affecting the reporting unit’s business, overall financial performance of the business, and performance of the common share price of the Company. If qualitative factors are not deemed sufficient to conclude that it is more likely than not that the fair value of the reporting unit exceeds its carrying value, then a one-step quantitative approach is applied in making an evaluation. The quantitative 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, an appropriate 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 quantitative evaluation results in the fair value of the reporting unit being lower than the carrying value, an impairment charge is recorded. A goodwill impairment charge was not required for the fiscal years ended February 28,2026, 2025 or February 29, 2024.
Allowance for Excess and Obsolete Inventories – With the exception of approximately 7.1%5.6% and 7.0%7.1% of inventories valued using the lower of last-in, first-out ("LIFO") cost flow assumption for fiscal years 20252026 and 2024,2025, respectively, our inventories are valued at the lower of cost or net realizable value as is required under U.S. GAAP when we follow the first-in-first-out cost flow assumption (“FIFO”). We regularly review inventory values on hand, using specific aging categories, and write down inventory deemed obsolete and/or slow-moving based on historical usage and estimated future usage to its estimated net realizable value. As actual future demand or market conditions may vary from those projected by management, adjustments to inventory valuations may be required. The allowance for excess and obsolete inventory at fiscal years ended 20252026 and 20242025 were $1.8$1.9 million and $1.7$1.8 million, respectively. The aged inventory allowance is recorded primarily to account for the decrease in market value of general stock inventory that is not manufactured to specific customer order. Inventory write offs were less than $0.1 million in fiscal year ended 2026 and $0.1 million in each of the fiscal years ended 2025, 2024,2025 and 2023.2024.
Net Sales. Our net sales were $392.4 million for fiscal year 2026, compared to $394.6 million for fiscal year 2025, a decrease of $2.2 million, or 0.6%. The decrease was primarily driven by lower organic volumes of approximately $25.0 million, reflecting continued softness in portions of the print market and ongoing pricing competition. The decline was largely offset by approximately $22.8 million increase in revenues generated from our recent acquisitions. Industry demand continues to be influenced by the long-term shift toward digital alternatives, although print remains an essential component in many of our customers’ operations. We continue to focus on, and maintain our pricing discipline, while optimizing our product mix to mitigate volume-related pressures.
Net Sales. Our net sales were $394.6 million for fiscal year 2025,2025 compared to $420.1 million for fiscal year 2024, a decrease of $25.5 million,million or -6.1%,6.1%, primarily due to a $38.7 million decrease in volume demand, partially offset by an approximately $13.2 million increase in revenues generated from our recent acquisitions.acquisitions Theduring printfiscal marketyear overall2024 continuesand to be fairly soft with competitive pricing pressures resulting in reduced volume.2025.
Our net sales were $420.1 million for fiscal year 2024 compared to $431.8 million for fiscal year 2023, a decrease of $11.7 million or -2.7%, primarily due to a $32.9 million decrease in volume demand, partially offset by an approximately $21.2 million increase in revenues generated from three acquisitions during fiscal year 2024.
Cost of Goods Sold. As a result of decreased sales volume, our manufacturing costs decreased $17.4 million, or -5.9% from $294.8 million for fiscal year 2024 to $277.3 million for fiscal year 2025. Our gross profit was $117.3 million or 29.7% of sales for fiscal year 2025, compared to $125.3 million or 29.8% of sales for fiscal year 2024.
OurCost manufacturingof Goods Sold. Manufacturing costs decreased $6.0$5.3 million, or -2.0%,1.9% from $300.8$277.3 million for fiscal year 20232025 to $294.8$272.0 million for fiscal year 2024.2026, primarily reflecting lower sales volumes, partially offset by higher input costs in certain categories. Our gross profit was $125.3$120.4 million or 29.8%30.7% of sales for fiscal year 2024,2026, compared to $131.1$117.3 million or 30.3%29.7% of sales for fiscal year 2023.2025. The improvement in gross margin was driven by pricing discipline, product mix, and ongoing cost management initiatives, including procurement strategies and manufacturing efficiencies.
Manufacturing costs decreased $17.5 million, or 5.9%, from $294.8 million for fiscal year 2024 to $277.3 million for fiscal year 2025 primarily as a result of decreased sales volume. Our gross profit was $117.3 million or 29.7% of sales for fiscal year 2025, compared to $125.3 million or 29.8% for fiscal year 2024.
Selling, general, and administrative expenses. For fiscal year 2025,2026, our selling, general and administrative (“SG&A”) expenses were $65.4$67.7 million compared to $68.8$65.4 million for fiscal year 2024,2025, aan decreaseincrease of $3.5$2.3 million, or -5.0%3.5%. The increase was primarily asdriven aby result of reduction in executivehigher incentive compensation expense.reflecting Ourimproved SG&Anet expenseearnings, alsoincreased decreasedmedical ascosts, aand resulthigher ofamortization operationalexpense, efficiencies.partially offset by lower consolidation-related expenses. As a percentage of sales, SG&A increased slightly from 16.4% in fiscal year 2024 to 16.6% in fiscal year 2025.2025 to 17.3% in fiscal year 2026, reflecting the impact of lower organic volumes and higher operating costs.
Our SG&A expenses decreased approximately $2.0$3.4 million or -2.8%,5.0%, from $70.8 million for fiscal year 2023 to $68.8 million for fiscal year 2024 to $65.4 million for fiscal year 2025 primarily as a result of reduction in executive incentive compensation expense.expense and operational efficiencies. As a percentage of sales, SG&A expenses remainedincreased flatslightly atfrom 16.4% to 16.6% in fiscal yearsyear 2024 and 2023.2025.
(Gain) loss from disposal of assets. Our gain from disposal of assets was less than $0.1 million in 2026. The $0.1 million gain from disposal of assets for fiscal 2025 is primarily from the sale of unused manufacturing equipment. The $0.1 million loss from disposal of assets for fiscal 2024 is primarily from the sale of unused manufacturing equipment. The $5.9 million gain from disposal of assets for fiscal 2023 is primarily from the sale of an unused manufacturing facility, $5.8 million, and $0.1 million of manufacturing equipment.
Income from operations. Primarily due to factors described above, our income from operations for fiscal year 2026 increased $0.7 million to $52.7 million or 13.4% of net sales from $52.0 million or 13.2% of net sales for fiscal year 2025. Income from operations for fiscal year 2025 decreased $4.5 million to $52.0 million or 13.2% of net sales from $56.5 million or 13.4% of net sales for fiscal year 2024. Income from operations for fiscal year 2024 decreased $9.7 million to $56.5 million or 13.4% of net sales from $66.2 million or 15.3% of net sales for fiscal year 2023.
Other income (expense). Other income was $5.9 million in 2026 compared to $3.5 million in 2025. The increase was primarily attributable to the recognition of $5.3 million related to proceeds received in connection with a legal matter against Wright Printing Company, its owners Mark Wright, and CEO Mardra Sikora, which includes $0.4 million of interest income.
Interest income decreased to $1.9 million in fiscal year 2026 from $4.9 million in 2025 and $4.0 million in 2024 primarily due to lower average cash balances following the special dividend paid in the fourth quarter of fiscal year 2025, an increase in inventory levels, and acquisition of NEC in fiscal year 2026. Other expense for fiscal year 2026 was $1.3 million compared to $1.4 million for fiscal year 2025 and $1.3 million for fiscal year 2024.
Other income (expense). Interest income for fiscal year 2025 was $4.9 million compared to $4.0 million in 2024 and $0.8 million in 2023. Our increase in interest income in 2025 was due to a higher average cash and investment balances in 2025 compared to 2024 and higher interest rates compared to 2023.
Our interest income is offset by other expense. Other expense for fiscal year 2025 was $1.4 million compared to $1.3 million for fiscal year 2024. Our increase in expense was from higher non-service cost components of net periodic benefit costs relating to pension expense in fiscal year 2024.
Other expense was $1.3 million for fiscal year 2024 compared to $2.0 million for fiscal year 2023. The decrease in expense was from lower non-service cost components of net periodic benefit costs relating to pension expense in fiscal year 2024.
Provision for income taxes. Our effective tax rates for fiscal years 2025, 2024 and 2023 were 27.5%, 28.0%, and 27.2%, respectively. The change in effective tax rate for fiscal year2026, 2025 and 2024 waswere primarily27.3%, the27.5%, resultand of28.0%, change in state apportionment.respectively.
Net earnings. Net earnings were $42.6 million, or $1.66 per diluted share for fiscal year 2026 compared to $40.2 million or $1.54 per diluted share for fiscal year 2025. The increase was primarily driven by improved gross margins and higher other income, including proceeds from the settlement of a legal matter, partially offset by lower revenues.
Net earnings. Net earnings were $40.2 million, or $1.54 per diluted share for fiscal year 2025 as compared to $42.6 million or $1.64 per diluted share for fiscal year 2024. Net earnings were impacted by decreased revenues in fiscal year 2025. Net earnings were $42.6 million, or $1.64 per diluted share for fiscal year 2024 as compared to $47.3 million or $1.82 per diluted share for fiscal year 2023. Net earnings were impacted by decreased revenues in fiscal year 2024. Net earnings in fiscal year 2023 were impacted by a $5.8 million gain from disposal of assets that added $0.17 per share.
We fund our operations primarily through cash generated from operating activities. Our principal cash requirements include payments to vendors in the ordinary course of business, capital expenditures, compensation and benefits, and dividends to shareholders. As of February 28, 2026, we had a cash and cash equivalents balance of $34.6 million. We expect operating cash flows to be consistent with prior years, and we anticipate reduced purchasing needs over the next few quarters due to our recent strategic stockpiling of carbonless paper inventory. Based on these factors, we believe our cash on hand, together with anticipated cash flows from operations, will be sufficient to meet our operating and capital requirements for the next twelve months. Our capital expenditures to maintain our manufacturing facilities are expected to range between $4.0 million and $7.0 million over the next twelve months, consistent with historical spending levels. For the year ended February 2026, we spent approximately $3.7 million on capital expenditures and purchased a leased building for $8.0 million.
Working Capital. Our working capital decreased $23.0 million or 19.3% from $119.4 million at February 28, 2025 to $96.4 million at February 28, 2026 primarily due to cash used for the acquisition of NEC, ESS and CFC totaling $38.9 million, stock repurchases of $14.5 million, dividends paid of $26.1 million, capital expenditures of $11.7 million and inventory purchases of $15.9 million, partially offset by cash collections on receivables. Our current ratio, calculated by dividing our current assets by our current liabilities, decreased from 4.6 to 1.0 for fiscal year 2025 to 3.7 to 1.0 for fiscal year 2026.
We rely on our cash flows generated from operations to meet 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 and benefits for employees and the payment of dividends to our shareholders. We believe that our current cash balance of $67.0 million at February 28, 2025, short-term investments of $5.5 million and cash flows from operations are expected to be similar to prior years which should be adequate to cover the next twelve months and beyond of our operating and capital requirements. Our annual capital requirements to maintain our manufacturing property are expected to be within our historical levels of between $4.0 million and $7.0 million.
Working Capital. Our working capital decreased $48.1by millionapproximately $48.2 million, or -28.7%28.8%, from $167.6 million at Februaryfiscal 29,year 2024 to $119.4 million at February 28, 2025 primarily due to a special dividend of $65.0 million paid to Shareholders during the fiscal year 2025. Our current ratio, calculated by dividing our current assets by our current liabilities, decreased from 6.0 to 1.0 for fiscal year 2024 to 4.6 to 1.0 for fiscal year 2025. Our decrease in working capital primarily reflects the decrease in cash and short-term investments, $38.4 million, accounts receivable, $8.5 million, and inventory, $1.2 million. In addition, the $4.4 million note receivable was reclassified to long-term. The note receivable has been extended beyond the one-year maturity date due to regulatorya delaysspecial individend clearingof $65.0 million paid to shareholders during the soldfiscal propertyyear for2025, third-partyoffset financing.by Seecash Notecollections 2.on receivables.
Our working capital increased by approximately $12.2 million, or 7.9%, from $155.4 million at February 28, 2023 to $167.6 million at February 29, 2024. Our current ratio, calculated by dividing our current assets by our current liabilities, increased from 4.8 to 1.0 for fiscal year 2023 to 6.0 to 1.0 for fiscal year 2024. Our increase in working capital primarily reflects the increase in cash and short-term investments, $17.0 million, offset by the decrease in accounts receivable, $6.3 million, and inventory, $6.8 million, and the decrease in our accounts payable and accrued expense $7.0 million. We strategically reduced inventory levels to improve cash flow and the decrease in receivables is primarily a result of accelerating the timing of collections relative to fiscal year end.
Cash flows from operating activities. Cash provided by operating activities was $52.7 million for fiscal year 2026 (a decrease of $13.2 million compared to fiscal year 2025), $65.9 million for fiscal year 2025 (a decrease of $3.2 million compared to fiscal year 2024), and $69.1 million for fiscal year 2024 (an increase of $22.3 million compared to fiscal year 2023) and $46.7 million for fiscal year 2023.2024.
Our decreased operational cash flows in fiscal year 2026 compared to fiscal year 2025 was primarily the result of a $15.9 million increase in inventories, offset by a $2.4 million increase in earnings.
Cash flows from investing activities. Cash used in investing activities was $44.8 million in fiscal year 2026 compared to cash provided by investing activities of $13.2 million in fiscal year 2025, representing a $58.0 million decrease. During fiscal year 2026, we invested $8.0 million to purchase a facility we previously leased and paid $38.9 million for the acquisitions of NEC, ESS and CFC. During fiscal year 2025, we made acquisitions totaling $6.2 million and had net maturities of U.S. Treasury bills of $24.9 million. During fiscal year 2024, $19.6 million was used to acquire businesses and $29.9 million was used for net purchases of U.S. Treasury bills.
Our increased operational cash flows in fiscal year 2024 compared to fiscal year 2023 was primarily the result of a $16.9 million decrease from inventories, $18.1 million decrease from our accounts receivable, offset by a $4.7 decrease in earnings, $5.3 million decrease in payables and accrued expenses and a $5.9 million gain from disposal of assets during fiscal year 2023.
Cash flows from investing activities. Cash provided by investing activities was $13.2 million in fiscal year 2025 compared to $55.0 million cash used in investing activities in fiscal year 2024. During fiscal year 2025, $6.2 million was used to acquire businesses compared to $19.6 million in fiscal year 2024. During fiscal year 2025 we purchased approximately $10.1 million of U.S. government treasury bills, which was partially offset by $35.0 million in matured treasury bills and invested in money market funds. We purchased $31.4 million of U.S. government treasury bills during fiscal year 2024, which was partially offset by $2.5 million in matured treasury bills.
Cash flows from financing activities. WeCash used $67.2 million more cash in financing activities duringdecreased by $53.3 million in fiscal year 20252026 compared to fiscal year 2024.2025. The increasedecrease inwas cashprimarily useddue during fiscal year 2025 resulted fromto a one-time special dividend of $2.50 per share or $65.0 millionmillion, paid during fiscal year 2025. During fiscal years 2026, 2025 and a2024 we repurchased $14.5 million, $1.8 million and $0.6 million, respectively, of our common stock repurchase under our stock repurchase program. Cash used in financing activities was $93.7 million in fiscal year 2025 compared to $26.4 million in fiscal year 2024 and $27.0 million used in fiscal year 2023.
Stock Repurchase – The Board has authorized the repurchase of the Company’s outstanding common stock throughunder a stockprogram repurchasewith program,an whichaggregate authorizedauthorization amount is currentlyof up to $60.0 millionmillion. in the aggregate. Under the repurchase program, purchasesRepurchases may be made from time to time in the open market or through privately-negotiatedprivately negotiated transactions, depending on market conditions, share price, trading volume and other factors. RepurchasesThe program may be commencedsuspended or suspendeddiscontinued at any time or from time to time without prior notice, providedsubject thatto any purchases must be made in accordancecompliance with applicable insider trading rules and securities laws and regulations. Since the program’s inception in October 2008, we have repurchased 2,334,344 common shares under the program at an average price of $16.47 per share. During our fiscal year 2025, we repurchased 91,883 shares of common stock at an average price of $19.79 per share. As of February 28, 2025, $21.5 million remained available to repurchase shares of the Company’s common stock under the program. The Company expects to continue to repurchase its shares under the repurchase program during fiscal year 2026 provided that the Board determines such repurchases to be in the best interests of the Company and its shareholders.
Since the program’s inception in October 2008, we have repurchased 3,127,900 common shares at an average price of $16.87 per share. During our fiscal year 2026, we repurchased 793,556 shares at an average price of $18.04 per share. As of February 28, 2026, $7.2 million remained available under the program. We may repurchase shares from time to time under the program, subject to Board authorization, market conditions and other factors.
Credit Facility – As of February 28, 2025,2026, we had $0.3$0.2 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.expenditures for at least the next twelve months from the date of this filing.
Pension Plan – The funded status of our Pension Plan is dependent on many factors, including returns on invested assets, the level of market interest rates and the level of funding. The assumptions used to calculate the pension funding deficit are different from the assumption used to determine the net pension obligations for purposes of our Consolidated Financial Statements. The funding of our Pension Plan is governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, and the Internal Revenue Code and is also subject to the Moving Ahead for Progress in the 21st Century Act, the Highway and Transportation Funding Act of 2014, the Bipartisan Budget Act of 2015, and the American Rescue Plan Act of 2021. Under these regulations, the liabilities are discounted using 24-month average corporate bond rates within a specified corridor around the 25-year average. For the remainder of 2025,2026, the effective discount rate is expected to be between 5.30% and 5.40%. We madewere not required to make, and did not make a contribution of $1.2 million to our Pension Plan in fiscal year 2026; however, we contributed $1.2 million in each of fiscal years 2025 and 2024, and a $2.0 million contribution in fiscal year 2023.2024. Given our fundingfunded status as of February 28, 2025,2026, and absent any significant negative event, we anticipate that our future contributions will be between $1.0 million and $1.2 million per year, depending on our Pension Plan’s funding.
Inventories – We believe our current inventory levels are sufficient to satisfy our customer demandsdemand, and we anticipateexpect havingto maintain adequate sourcesaccess ofto raw materials to meetsupport future business requirements. Recent consolidation within the paper industry and the closure of the sole U.S. mill producing rolls of carbonless paper are expected to create volatility in paper pricing and supply availability. In anticipation of this disruption, we made a strategic decision to increase inventory levels to mitigate the risk of shortages and ensure continuity of supply. We havemaintain long-term contractssupply in effectagreements with key paper suppliersvendors that governestablish prices,pricing parameters but do not requireimpose minimum purchase commitments.obligations. Certain of our rebate programs do,programs, however, requireare contingent on achieving minimum purchase volumes.volumes Managementand anticipatesmanagement meetingcurrently expects to meet those requirements. During the requiredcurrent volumes.fiscal Theyear, onlyour primary domestic sourcesupplier of carbonless paperpapers announcedpermanently thatclosed itone is closingof its factory.mills, Weand intendwe are in the process of identifying and transitioning to buildalternative suppliers on a surplusgo-forward of inventory as buffer inventory until we transition to other sources.basis.
Capital Expenditures – We continue to make capital expenditures for operational maintenance purposes, as required. Additionally, we will carefully evaluate capital expenditures for additional equipment to the extent such investments improve our operations and do not jeopardize our strong liquidity position. We expect our capital requirements for fiscal year 2027, exclusive of capital required for possible acquisitions, to be within our historical range of between $4.0 million and $7.0 million.
For the year ended February 2026, we spent approximately $3.7 million on capital expenditures and purchased a leased building for $8.0 million. We expect to generate sufficient cash flows from our operating activities to cover our operating and other normal capital requirements for the foreseeable future.
Capital Expenditures – We expect our capital expenditure requirements for fiscal year 2025, exclusive of capital required for possible acquisitions, will be in line with our historical levels of between $4.0 million and $7.0 million. We expect to fund these expenditures through existing cash flows. We expect to generate sufficient cash flows from our operating activities to cover our operating and other normal capital requirements for the foreseeable future. We evaluate acquisitions and consider cash flow availability in executing our growth strategy.
What changed in the latest 10-Q
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 28, 2026.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Six months ended August 31, 2026 compared to six months ended August 31, 2025”
Largest changes
“Six months ended August 31, 2026 compared to six months ended August 31, 2025”see in full comparison
“Margins continue to be affected by volume variability in certain markets, input cost inflation and pricing competition. We seek to mitigate these impacts through disciplined pricing practices, strategic sourcing initiatives, operational efficiency improvements and effective management of our manufacturing cost structure.”see in full comparison
Net earnings. Netsee in full comparisonearnings, due to the factors above,earnings were$9.9$9.4millionmillion, or $0.37 per diluted share, for the three months endedMayAugust 31, 2026ascompared to$9.8$13.2millionmillion, or $0.51 per diluted share, for thecomparablesame quarter in the prior year.EarningsTheperdecreasedilutedprimarilyshare forreflected thethreefavorablemonthslitigationendedjudgmentMayrecognized31, 2026 were $0.39, compared to $0.38 forin thesameprior-year quarterlastandyear.theDilutedlitigationearningschargeperrecognizedshare forin the currentquarterquarter,werepartiallypositivelyoffsetimpactedby$0.02improvedper diluted shareincome fromour recent acquisitions.operations.
“Other income (expense). Other expense was $0.4 million for the six months ended August 31, 2026 compared to other income of $6.0 million for the same period in the prior year. The change primarily reflected the $5.3 million favorable litigation judgment recognized in the prior-year period and the $0.7 million litigation charge recognized in the current period. Interest income was $0.8 million for the current six-month period compared to $1.3 million for the prior-year period.”see in full comparison
“Net earnings. Net earnings were $19.3 million, or $0.76 per diluted share for the six months ended August 31, 2026 compared to $23.0 million, or $0.89 per diluted share for the same period in the prior year. The decrease primarily reflected the litigation items described above, partially offset by higher income from operations. Our recent acquisitions contributed approximately $0.03 per diluted share for the ownership periods not included in the comparable prior-year period.”see in full comparison
“Other income (expense). Other expense was $0.5 million for the three months ended August 31, 2026 compared to other income of $5.8 million for the same quarter in the prior year. The prior-year quarter included a $5.3 million favorable litigation judgment, while the current quarter included an unrelated $0.7 million litigation charge. Interest income was $0.4 million for the current quarter compared to $0.8 million for the prior-year quarter.”see in full comparison
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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. As of MayAugust 31, 2026, we operate approximately 50 manufacturing plants throughout the United States in 20 strategically located states as one reportable segment: printing services. Approximately 95% 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.
On November 14, 2025, the Companywe acquired the net assets and business of CFC Print & Mail ("CFC"), which is based in Grand Prairie, Texas. PriorIn tothe last full year preceding the acquisition, CFC generated approximately $7.1 million in sales for its fiscal year ended December 31, 2024.sales. CFC specializes in serving a national distributor network with business-document printing and mailing services, offering industry-leading turnaround times and automation. The acquisition of CFC further strengthens our leading position in business products and the commercial print sector.
On April 11, 2025, the Companywe acquired the net assets and business of NEC,Northeastern Envelope Company ("NEC"), which is based in Old Forge, Pennsylvania and ESS,Envelope Superstore ("ESS") which is based in Hiram, Georgia. TheIn acquisitionthe oflast full year preceding the acquisition, NEC and ESS, which prior to the acquisitionESS generated approximately $26.0 million in salessales. forThe itsacquisition fiscalof yearNEC endedand December 31, 2024,ESS strengthens our productionenvelope converting and printing capabilities to serve our customers in the Northeast United States.
Our industry is currently experiencing consolidation of traditional supply channels, ongoing product obsolescence, paper supplier capacity adjustments, andvolatility increasedin pricingraw material availability and potential supply allocations resulting from demandpricing, and supplychanges imbalance.in Technologicalinternational trade conditions. Technology advances have enabledmade electronic documentdistribution distribution,of web-baseddocuments, internet hosting, digital printing and print-on-demand solutions to serve as viable andvalid cost-effective alternatives to traditional custom-printed documents and customer communications. Improved equipment has become more accessible to both existing and newour competitors. We face highly competitive conditions throughout our supply chain in an already over-supplied, price-competitive print industry. The challenges of our business include the following:
Transformation of our portfolio of products – While traditional business documents remainare essential in order to conductingconduct business, many are being replaced through the use of lower-costcheaper paper grades or imported products,paper, or are being devalueddisplaced by advances in digital technologies, resultingcausing in continuedsteady declines in demand for a portion of our current product line. Transforming our product offerings in order to continue to provide innovative, value-addedvaluable solutions through lower labor and fixed charges to our customers on a proactive basis requireswill ongoingrequire us to make investments in new and existing technologies,technology asand wellto as the development ofdevelop key strategic business relationships, includingsuch as print-on-demand services and product offerings that supportassist customers transitioningin their transition to digital business environments. WeIn addition, we will continue to evaluatelook for new market opportunities and niches, including through acquisitions, and to expand our offerings in areas such as envelopes, tags, folders, healthcare wristbands, specialty packaging, direct mail, pressure seal products, secure document, in-mold labels, and long-run integrated high color web print, which provide opportunities for growth and further differentiate us from our competition. OurThe ability to make such investments in new and existing technology and/or pursueto acquire new market opportunities through acquisitions is dependent on ourthe Company’s liquidity, capital resources, and operating results.
Production capacity and price competition within our industry – Industry supply of paper products continuesis subject to fluctuatefluctuation as marketchanging industry conditions have and will continue to influence producers to idle,idle or permanently close,close individual machines or mills, convert paperthem machinesto different product lines, or otherwise adjust production capacity in response to changes in demand, operating costs and millsmarket to alternative product lines.conditions. These actions,actions togethercan withaffect ongoingthe demand declines in certain paper grades, have contributed to supply constraintsavailability and pricing volatilityof acrosscertain portionsgrades of thepaper industry.and other raw materials we purchase.
DuringThe fiscalonly yearmill 2026,located in the soleUnited domesticStates producerthat produced rolls of carbonless paper permanentlyceased closedproduction itson manufacturinga facility.permanent basis. In response,response to this supply disruption, we increased inventory levelsas andbuffer developedstock while transitioning to alternative supplysources sources.of Whilecarbonless wepaper. continueWe tohave transitionreceived toshipments thesefrom alternative suppliers and docontinue notto currentlyexpect anticipateno disruptionsdisruption to customer service, product availability or product quality,quality. changes in industry supply conditions could result in continued supply constraints and input cost volatility for certain paper grades. In addition, changesChanges in tariff policies, trade regulations and transportation costs may also increase the costs of raw material,materials, freight and productother sourcingproducts costs.we Industry conditions continue to reflect ongoing capacity rationalization and pricing actions within certain paper grades.source.
Margins remain under pressure due to weak volumes in parts of the market, volatile input costs and price competition. To protect results, we continue to manage and control product costs through forecasting, production and costing models; strengthening supplier relationships; negotiating favorable procurement terms; and increasing operational efficiency.
Margins continue to be affected by volume variability in certain markets, input cost inflation and pricing competition. We seek to mitigate these impacts through disciplined pricing practices, strategic sourcing initiatives, operational efficiency improvements and effective management of our manufacturing cost structure.
Continued consolidation of our customers – Our customers are primarily distributors, many of which are consolidating or are being acquired by competitors. We continue to maintain a high volume of the business with theseour customers but suchit is possible that these consolidations and acquisitions, which we expect to continue,continue couldin the future, ultimately affectwill impact our sales volumesmargins and margins.sales.
Our Annual Report on Form 10-K for the year ended February 28, 2026, includes a description of certain critical accounting estimates, including those with respect to the pension plan, impairment assessments on goodwill and other intangible assets, allowance 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 MayAugust 31, 2026, 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 28, 2026.
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 six months ended MayAugust 31, 2026 and the comparative period for 2025 are set forth in the tables below.
Three months ended MayAugust 31, 2026 compared to three months ended MayAugust 31, 2025
Net Sales. Our net sales were $98.6$102.0 million for the quarter ended MayAugust 31, 2026, compared to $97.2$98.7 million for the same quarter in the prior year, an increase of $1.4$3.3 million, or 1.4%.3.3%. OrganicOur salesacquisitions volumecompleted decreasedduring $3.1fiscal year 2026 contributed approximately $2.3 million duein torevenue weaker customer demand and ongoing industry-wide pressure induring the U.S.quarter printingfor market.the This decline was offset by more than $4.5 million of incremental revenues from acquisitions, primarily reflecting revenues generated duringownership periods not ownedincluded in the comparable prior-year quarter. WeSales continuefrom tothe focusremaining onbusiness providingincreased ourapproximately customers$1.0 withmillion, qualityreflecting productsthe combined impact of pricing actions, sales volume and responsiveproduct customer service.mix.
Cost of Goods Sold and Gross Profit Margin. Our cost of goods sold increased $0.5$2.9 million, or 0.7%,4.2%, from $67.0$68.6 million for the three months ended MayAugust 31, 2025 to $67.5$71.5 million for the three months ended MayAugust 31, 2026. GrossOur gross profit was $31.1$30.5 million or 31.5%29.9% of revenue for the quarter ended MayAugust 31, 2026 compared to $30.2$30.1 million or 31.1%30.5% of revenue for the same quarter in the prior year. GrossThe decrease in gross profit margin improvement was primarily attributablereflected higher carbonless paper costs recognized in cost of sales compared with the prior-year quarter. We continue to pricingpursue discipline,cost productmanagement mixmeasures and targeted pricing actions intended to mitigate the continued integrationeffects of acquiredmarket operations.weakness, input cost increases and price competition on our results.
Selling, general, and administrative expense. For the three months ended MayAugust 31, 2026, our selling, general, and administrative ("SG&A") expenses were $17.5$16.9 million compared to $16.9$17.7 million for the three months ended MayAugust 31, 2025, ana increasedecrease of $0.6$0.8 million, or 3.6%.4.5%. The decrease was primarily attributable to lower incentive compensation expense and other changes in operating expenses. As a percentage of net sales, SG&A expenses for the current quarter were 17.8%16.6% andcompared 17.4%to 18.0% for the threesame months ended May 31, 2026 and May 31, 2025, respectively. The increasequarter in SG&A expense is primarily attributable to expenses associated withthe prior year acquisitions not yet fully integrated, along with higher incentive compensation.year.
Gain and loss from disposal of assets. TheThere $10,000were netno gaingains or losses from the disposal of Company assets during the three-monththree periodmonths ended MayAugust 31, 2026 was primarily attributed to the sale of unused equipment.2026.
Income from operations. Primarily due to the factors described above, our income from operations for the three months ended May 31, 2026 was $13.6 million, or 13.8% of net sales, as compared to $13.3 million, or 13.7%13.3% of net sales, for the three months ended MayAugust 31, 2025.2026 compared to $12.4 million, or 12.5% of net sales, for the three months ended August 31, 2025, an increase of $1.2 million or 9.7%.
Other income (expense). Other expense was $0.5 million for the three months ended August 31, 2026 compared to other income of $5.8 million for the same quarter in the prior year. The prior-year quarter included a $5.3 million favorable litigation judgment, while the current quarter included an unrelated $0.7 million litigation charge. Interest income was $0.4 million for the current quarter compared to $0.8 million for the prior-year quarter.
Other income (expense). Other income was $0.1 million for the three months ended May 31, 2026 compared to other income of $0.2 million for the three months ended May 31, 2025.
Provision for income taxes. Our effective income tax rate was approximately 28.0% andfor the three months ended August 31, 2026 compared to approximately 27.5% for the three months ended MayAugust 31, 2026 and 2025, respectively.2025. The effective tax rate for the three months ended MayAugust 31, 2026 was higher than the prior-year period primarily due to changes in state income taxes and nondeductible executive compensation.
Net earnings. Net earnings, due to the factors above,earnings were $9.9$9.4 millionmillion, or $0.37 per diluted share, for the three months ended MayAugust 31, 2026 as compared to $9.8$13.2 millionmillion, or $0.51 per diluted share, for the comparablesame quarter in the prior year. EarningsThe perdecrease dilutedprimarily share forreflected the threefavorable monthslitigation endedjudgment Mayrecognized 31, 2026 were $0.39, compared to $0.38 forin the sameprior-year quarter lastand year.the Dilutedlitigation earningscharge perrecognized share forin the current quarterquarter, werepartially positivelyoffset impactedby $0.02improved per diluted shareincome from our recent acquisitions.operations.
Six months ended August 31, 2026 compared to six months ended August 31, 2025
Net Sales. Our net sales were $200.6 million for the six months ended August 31, 2026, compared to $195.9 million for the same period in the prior year, an increase of $4.7 million, or 2.4%. Our acquisitions completed during fiscal year 2026 contributed approximately $6.8 million in revenue during the six-month period for the ownership periods not included in the comparable prior-year. Sales from the remaining business decreased approximately $2.1 million primarily reflecting weaker customer demand and ongoing industry-wide pressure in the U.S. printing market.
Cost of Goods Sold and Gross Profit Margin. Our cost of goods sold increased $3.5 million, or 2.6%, from $135.5 million for the six months ended August 31, 2025 to $139.0 million for the six months ended August 31, 2026. Our gross profit was $61.6 million or 30.7% of revenue for the six months ended August 31, 2026 compared to $60.3 million or 30.8% of revenue, for the same period in the prior year. The year-to-date gross profit margin remained relatively consistent despite higher carbonless paper costs recognized during the second quarter.
Selling, general, and administrative expense. For the six months ended August 31, 2026, SG&A expenses were $34.4 million compared to $34.7 million for the six months ended August 31, 2025, a decrease of $0.3 million, or 0.9%. As a percentage of net sales, SG&A expenses were 17.2% and 17.7% for the six month ended August 31, 2026 and 2025, respectively.
Gain and loss from disposal of assets. The $10,000 net gain from disposal of assets during the six-month period ended August 31, 2026 was primarily attributed to the sale of unused equipment.
Income from operations. Primarily due to the factors described above, income from operations was $27.2 million, or 13.5% of net sales for the six months ended August 31, 2026 compared to $25.7 million, or 13.1% of net sales, for the same period in the prior year, an increase of $1.5 million, or 5.8%.
Other income (expense). Other expense was $0.4 million for the six months ended August 31, 2026 compared to other income of $6.0 million for the same period in the prior year. The change primarily reflected the $5.3 million favorable litigation judgment recognized in the prior-year period and the $0.7 million litigation charge recognized in the current period. Interest income was $0.8 million for the current six-month period compared to $1.3 million for the prior-year period.
Provision for income taxes. Our effective income tax rate was approximately 28.0% for the six months ended August 31, 2026 compared to approximately 27.5% for the six months ended August 31, 2025. The effective tax rate for the six months ended August 31, 2026 was higher than the prior-year period primarily due to changes in state income taxes and nondeductible executive compensation.
Net earnings. Net earnings were $19.3 million, or $0.76 per diluted share for the six months ended August 31, 2026 compared to $23.0 million, or $0.89 per diluted share for the same period in the prior year. The decrease primarily reflected the litigation items described above, partially offset by higher income from operations. Our recent acquisitions contributed approximately $0.03 per diluted share for the ownership periods not included in the comparable prior-year period.
We fund our operations primarily through cash generated from operating activities. Our principal cash requirements include payments to vendors in the ordinary course of business, capital expenditures, employee compensation and benefits, and dividends to shareholders. As of MayAugust 31, 2026, we had acash and cash balanceequivalents of $49.1$54.0 million.million and no long-term debt. We expectcurrently operatingmaintain a significant portion of cash and cash equivalents in interest-bearing money market accounts and funds. Based on our current cash position and anticipated cash flows tofrom be consistent with prior periods, and we anticipate reduced purchasing needs over the next several quarters due to our recent strategic stockpiling of carbonless paper inventory. Based on these factors,operations, we believe our cash on hand,hand togetherand withfunds anticipated cash flowsgenerated from operations,operations will be sufficient to meet our operating and capital requirements for at least the next twelve months.months Ourincluding capitalanticipated expenditures toand maintainacquisition ouropportunities. manufacturingCapital facilitiesexpenditures are expected to range between $4.0 million and $7.0 million over the next twelve months, consistent with historical spending levels.
Working Capital. During the threesix months ended MayAugust 31, 2026, our working capital increased $6.4$13.2 million or 6.6%,13.7%, from $96.4 million at February 28, 2026 to $102.8$109.6 million at MayAugust 31, 2026. The increase in working capital primarily reflects an increase in cash andgenerated cashfrom equivalentsoperating ofactivities, $14.5 million,partially offset by a decrease in accounts receivables of $4.1 milliondividends and ancapital increase in income tax payable of $3.8 million.expenditures. Our current ratio, calculated by dividing our current assets by our current liabilities, increased from 3.7 to 1.0 at February 28, 2026, decreased slightly to 3.53.8 to 1.0 at MayAugust 31, 2026.
Cash flows from operating activities. Cash provided by operating activities was $34.1 million for the six months ended August 31, 2026, compared to $18.4 million in the comparative period ended August 31, 2025. Net earnings decreased $3.7 million in the current period. A decrease in accounts receivable provided cash of $1.8 million in the current period compared to an increase in accounts receivable using cash of $2.0 million in the prior year period. A decrease in inventories provided cash of $0.6 million in the current period compared to an increase in inventories using cash of $20.8 million in the prior-year period. An increase in accounts payable and accrued expenses provided cash of $2.7 million in the current period compared to $7.3 million in the prior-year period. The improvement in operating cash flow primarily reflects lower inventory purchasing requirements in the current period as a result of the strategic build of buffer stock in the prior-year period.
Cash flows from operating activities. Cash provided by operating activities was $21.2 million for the three months ended May 31, 2026, compared to $8.0 million in the prior comparative period, an increase of $13.3 million. The increase was primarily due to $10.6 million less in cash used for inventories and a favorable $11.3 million change in accounts receivables and other receivables, partially offset by an $8.5 million smaller increase in accounts payables and accrued expenses compared to the prior period.
Cash flows from investing activities. Cash used in investing activities decreased to $0.3 million in the current quarter from $30.8 million in the prior-year quarter, primarily because the prior-year quarter included $34.9 million of acquisition spending while the current quarter did not.
Cash flows from financinginvesting activities. Cash used in financinginvesting activities was $6.4$1.9 million in the threesix months ended MayAugust 31, 2026 compared to the cash used of $11.5$32.0 million in the six months ended August 31, 2025. There were no business acquisitions during the current six-month period compared to $34.9 million used to acquire businesses in the same period last year. During the prior comparativeyear period, primarilyapproximately due$5.5 to the lackmillion of shareU.S. repurchasesgovernment oftreasury $5.0bills million.matured.
Cash flows from financing activities. Cash used in financing activities was $12.8 million in the six months ended August 31, 2026 compared to $21.6 million in the six months ended August 31, 2025. The difference is attributed to share repurchases of $8.6 million in six month ended August 31, 2025 and no share repurchases in the six months ended August 31, 2026.
Credit Facility – As of May 31, 2026, we had $0.2 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.
Pension Plan – The funded status of our Pension Plan is dependent on many factors, including returns on invested assets,assets the level ofand market interest rates and the level of funding.rates. We are not required to contributemake a contribution to the pensionPension planPlan for fiscal year 2027.2027 Asand ourdid pensionnot assetsmake area investedcontribution during the six months ended August 31, 2026. Future contributions, if any, will depend on the Pension Plan’s funded status and applicable funding requirements. Changes in marketable securities, changes in actual investment returns or in discount rates could changesignificantly fundingaffect the Pension Plan’s funded status and requirementsfuture significantly.funding requirements. At MayAugust 31, 2026, we had a funded pension asset of $2.2 million.
Inventories – We believe our inventory levels are sufficient to satisfy customer demand,demand and we expectanticipate to maintainhaving adequate accesssources toof raw materials to support future business requirements. RecentIn consolidationfiscal withinyear the2026, paper industry andfollowing the closure of the soleonly U.S. mill producing rolls of carbonless paper are expected to create volatility in paper pricing and supply availability. In anticipation of this disruption,paper, we made a strategic decision to increaseincreased inventory levels to mitigate thepotential risk ofsupply shortages and ensuremaintain supply continuity ofwhile supply.qualifying alternative sources. We have an agreement with and have received shipments from a carbonless paper supplier whom we anticipate will be a successful partnership. We maintain long-term supply agreements with key paper vendors that establish pricing parameters but do not impose minimum purchase obligations. Certain rebate programs, however, are contingent on achieving minimum purchase volumes and management currently expects to meet those requirements.
Capital Expenditures – We continue to make capital expenditures for operational maintenance purposes, as may be required. Additionally, we will carefully review and make capital expenditures for additional equipment to the extent such additions make economic sense by improving our operations and not jeopardizing our strong liquidity position. We expect our capital requirements for our current fiscal year,year 2027, exclusive of capital required for possible acquisitions, will be within our historical levelsrange of between $4.0 million and $7.0 million. For the threesix months ended MayAugust 31, 2026, we spent approximately $0.4$1.9 million on capital expenditures that waswere funded out of our cash balance. We expect to generate sufficient cash flows from our operating activities to cover our operating and other normal capital requirements for the foreseeable future.
EBF insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-22 | Brewer Boyne Wade |
Conversion | 2,000 | $19.76 | $39.5K |
| 2026-09-22 | Brewer Boyne Wade |
Conversion | 1,103 | $17.27 | $19.0K |
| 2026-07-16 | Magill Michael D |
Grant/award | 887 | — | — |
| 2026-07-16 | Walters Margaret A |
Grant/award | 2,661 | — | — |
| 2026-07-16 | Quiroz Alejandro |
Grant/award | 2,661 | — | — |
| 2026-07-16 | Mozina Gary S |
Grant/award | 2,661 | — | — |
| 2026-07-16 | Priddy Troy L |
Grant/award | 2,661 | — | — |
| 2026-07-16 | Gruenes Walter D |
Grant/award | 2,661 | — | — |
| 2026-07-16 | Clemens Barbara T |
Grant/award | 2,661 | — | — |
| 2026-07-16 | Carter Aaron |
Grant/award | 2,661 | — | — |
| 2026-04-20 | Brewer Boyne Wade |
Option exercise | 1,802 | — | — |
| 2026-04-20 | Burnett Vera |
Option exercise | 1,802 | — | — |
| 2026-04-20 | Gus Daniel |
Option exercise | 1,802 | — | — |
Well-known investors holding EBF (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 1,231,546 | $26.2M | 0.04% | Reduced 6% |
| Two Sigma Investments | 2026-06-30 | 571,035 | $12.1M | 0.01% | Added 5% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 137,102 | $2.9M | 0.0% | Reduced 10% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 97,923 | $2.1M | 0.0% | Added 35% |
| D. E. Shaw & Co. | 2026-06-30 | 64,306 | $1.4M | 0.0% | Added 256% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 21,763 | $462.5K | 0.0% | Reduced 47% |
| Millennium Management (Israel Englander) | 2026-06-30 | 15,001 | $321.3K | — | Sold out |