Financial Analysis

"6. Acquisitions The Company applies the acquisition method of accounting for business combinations. Under the acquisition method, the acquiring entity in a business combination recognizes 100 % of the assets acquired and liabilities assumed at their acquisition date fair values with certain limited exceptions permitted under US GAAP. Management utilizes valuation techniques appropriate for the asset or liability being measured in determining these fair values. Any excess of the purchase price over amounts allocated to assets acquired, including identifiable intangible assets and liabilities assumed, is recorded as goodwill. Where amounts allocated to assets acquired and liabilities assumed are greater than the purchase price, a bargain purchase gain is recognized. Acquisition-related costs are expensed in the period incurred. During the three months ended May 31, 2026 and 2025, the acquisition related costs were not significant to the Company's Condensed Consolidated Financial Statements. Acquisition of CFC Print & Mail On November 14, 2025, the Company acquired the assets and business of CFC Print & Mail (""CFC""), which is based in Grand Prairie, TX for approximately $ 3.9 million in cash. The Company performed an allocation of the total consideration and recorded the underlying assets acquired (including certain identified intangible assets, consisting primarily of customer lists and trade names) and liabilities assumed based on the estimated fair values using the …

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18. Commitments and Contingencies In the ordinary course of business, the Company also enters into real property leases, which require the Company as lessee to indemnify the lessor from liabilities arising out of the Companys occupancy of the properties. The Companys indemnification obligations are generally covered under the Companys general insurance policies. From time to time, the Company is involved in various litigation matters arising in the ordinary course of business. The Company does not believe the disposition of any current matter will have a material adverse effect on its consolidated financial position or results of operations. Ennis and one of its subsidiaries are defendants in a lawsuit in Arizona concerning the lease of the former B&D Litho facility that was closed in 2019. The plaintiff landlord generally alleges that the defendants failed to maintain the leased premises in good condition. The landlord sought more than $ 4.0 million in repair costs and other consequential damages even though the landlord sold the facility without making the supposedly necessary repairs. The Company has denied the landlords allegations and is vigorously contesting the landlords unreasonable claim. The Court has made a preliminary ruling that defendants failed to maintain the facilitys air conditioning equipment, paved surfaces and roof in good condition even though the landlord had assumed responsibility for some of those maintenance obligations. There was a non-jury tria …

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12. Stock Based Compensation The Company grants stock options, restricted stock and restricted stock units (RSUs) to key executives and managerial employees and non-employee directors. At May 31, 2026, the Company had one stock compensation plan, the 2021 Long-Term Incentive Plan of Ennis, Inc., adopted by the Board April 16, 2021 and affirmed by vote of the shareholders July 15, 2021 (the Plan). The Plan authorized 1,033,648 shares of common stock for awards and expires June 30, 2031 and all unissued stock will expire on that date. As of May 31, 2026 , the Company has 441 ,493 shares of unissued common stock reserved under the Plan for issuance. The exercise price of each stock option granted under the Plan equals a referenced price of the Companys common stock as reported on the New York Stock Exchange on the date of grant, and an options maximum term is ten years . Stock options and restricted stock may be granted at different times during the year and vest ratably over various periods, from grant date up to five years . The Company uses treasury stock to satisfy option exercises and restricted stock awards. The Company recognizes compensation expense for stock options and restricted stock grants based on the grant date fair value of the award for stock options, restricted stock grants and RSUs on a straight-line basis over the requisite service period. The estimated number of shares to be achieved for performance based RSUs is updated each reporting period. For the three …

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8. Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the fair value of net assets of acquired businesses and is not amortized. Goodwill and other intangible assets are tested for impairment at the reporting unit level. The annual impairment test of goodwill and intangible assets is performed as of December 1 of each fiscal year. The Company uses qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the fair value of a 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 business, overall financial performance of the business, and performance of the share price of the Company. If qualitative factors are not deemed sufficient to conclude that the fair value of the reporting unit more likely than not exceeds its carrying value, then a one-step approach is applied in making an evaluation. The 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, the discount rate applied to future earnings reflecting a weighted average …

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17. Income Taxes The Company is subject to U.S. federal income tax as well as income taxes of multiple state jurisdictions. The quarterly income tax provision was computed based on the Company's estimated annualized effective tax rate and the full-year forecasted income or loss plus the tax impact of unusual, infrequent, or nonrecurring significant items during the period. The Company's effective tax rate for the three months ended May 31, 2026 and 2025 was 28.0 % and 27.5 %, respectively. The Company made cash payments for income taxes, net of income tax refunds of approximately $ 0.1 million and $ 0.2 million for the three months ended May 31, 2026 and 2025, respectively.

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7. Leases The Company leases certain of its facilities and equipment under operating leases, which are recorded as right-of-use assets and lease liabilities. The Companys leases generally have terms of 1 5 years, with certain leases including renewal options to extend the leases for additional periods at the Companys discretion. At lease inception, all renewal options reasonably certain to be exercised are considered when determining the lease term. The Company currently does not have leases that include options to purchase or provisions that would automatically transfer ownership of the leased property to the Company. Operating lease expense is recognized on a straight-line basis over the lease term, and variable lease payments are expensed as incurred. The Company had no material variable lease costs for the three months ended May 31, 2026 and 2025. The Company determines whether a contract is or contains a lease at the inception of the contract. A contract will be deemed to be or contain a lease if the contract conveys the right to control and directs the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from the use of the property, plant, and equipment. Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. To determine the prese …

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10. Credit Facility As of May 31, 2026 , the Company had approximately $ 0.2 million outstanding under a standby letters of credit arrangement secured by a cash collateral bank account.

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"13. Pension Plan The Company and certain subsidiaries have a noncontributory defined benefit retirement plan (the ""Pension Plan""), covering approximately 12 % of the Companys aggregate employees. Benefits are based on years of service and the employees average compensation for the highest five compensation years preceding retirement or termination. Effective January 1, 2009, the Company amended the Pension Plan to exclude any new employees from participation in the Pension Plan. Eligible employees who were hired before January 1, 2009 are still eligible to participate and participating employees continue to accrue benefit service. Pension expense is composed of the following components, included in cost of goods sold and selling, general, and administrative expenses in the Companys consolidated statements of operations (in thousands): Three months ended May 31, 2026 2025 Components of net periodic benefit cost Service cost $ 149 $ 151 Interest cost 659 650 Expected return on plan assets ( 732 ) ( 710 ) Amortization of: Unrecognized net loss 281 366 Net periodic benefit cost $ 357 $ 457 The Company is required to make contributions to the Pension Plan. These contributions are required under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 ("" ERISA ""). The assumptions used to calculate the pension funding deficit are different from the assumptions used to determine the net pension obligation for purposes of our condensed consolidated …

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16. Related Party Transactions The Company leases a facility and sells products to entities controlled by a member of the Board. The total right-of-use asset and related lease liability as of May 31, 2026 was $ 1.2 million and $ 1.2 million, respectively. The total right-of-use asset and related lease liability as of May 31, 2025 was $ 1.6 million and $ 1.6 million, respectively. During the three months, ended May 31, 2026, total lease payments and product sales made to the director-controlled entities were approximately $ 0.1 million and $ 0.7 million, respectively. During the three months, ended May 31, 2025, total lease payments and product sales made to the director-controlled entities were approximately $ 0.1 million and $ 1.1 million, respectively. The accounts receivable balances as of May 31, 2026 and 2025 were approximately $ 0.1 and $ 0.2 million, respectively.

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"2. Revenue Nature of Revenues Substantially all of the Companys revenue is derived from the sale of printed products in the continental United States of America and is primarily recognized at a point in time in an amount that reflects the consideration the Company expects to be provided in exchange for those goods. Revenue from the sale of commercial printing products, including shipping and handling fees billed to customers, is recognized when the performance obligation is met upon the transfer of control to the customer, which is generally upon shipment to the customer when the terms of the sale are freight on board (""FOB"") shipping point, or, to a lesser extent, upon delivery to the customer if the terms of the sale are FOB destination. Net sales represent gross sales invoiced to customers, less certain related charges, including sales tax, discounts, returns and other allowances. Returns, discounts and other allowances have historically been insignificant. In a small number of cases and upon customer request, the Company prints and stores printed product for customer specified future delivery, generally within the same year as the product is manufactured. In this case, revenue is recognized upon the transfer of control when manufacturing is complete and title and risk of ownership is passed to the customer while the inventory remains in the Companys warehouse. Approximately $ 3.5 million and $ 3.0 million of revenue was recognized under these arrangements during the th …

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"19. Segment Reporting The Companys Chief Operating Decision Maker (""CODM"") is its Chairman, President, and Chief Executive Officer . The CODM evaluates performance and allocates resources on a consolidated basis using consolidated net income, earnings releases, investor presentations, and the Companys SEC filings, as well as through the approval of the Companys annual budget and forecast. The single operating segment is also the Company's single reportable segment called Print and derives its operating revenues from the manufacturing of mostly custom or semi-custom printed products sold mostly to independent distributors in the United States. Independent distributors are responsible for selling the printed product to the end consumer. The single reportable segment derives its revenues by manufacturing print products at the Company's printing plants dispersed throughout the United States. The accounting policies of this single reportable segment are the same as those described in the summary of significant accounting policies to the condensed consolidated financial statements. The CODM assesses the performance of this reportable segment using the entity-wide revenue and expense information reported on the Statement of Operations and the more detailed expense categories disclosed in the table below. The primary measure of segment profit (loss) is consolidated net income (loss) as reported on the Condensed Consolidated Statement of Operations. In addition, segment assets revi …

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"1. Significant Accounting Policies and General Matters Basis of Presentation These unaudited condensed consolidated financial statements of Ennis, Inc. and its subsidiaries (collectively referred to as the Company, Registrant, Ennis, or we, us, or our) for the three months ended May 31, 2026 have been prepared in accordance with generally accepted accounting principles in the United States of America (""GAAP"") and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended February 28, 2026, from which the accompanying consolidated balance sheet at February 28, 2026 was derived. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial information have been included and are of a normal recurring nature. The preparation of the condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the disclosure and reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and …

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"11. Shareholders Equity The Companys board of directors (the ""Board"") has authorized the repurchase of the Companys outstanding common stock through a stock repurchase program, which authorized amount is currently up to $ 60.0 million in the aggregate. Under the repurchase program, purchases may be made from time to time in the open market or through privately negotiated transactions depending on market conditions, share price, trading volume and other factors. Such purchases, if any, will be made in accordance with applicable insider trading and other securities laws and regulations. These repurchases may be commenced or suspended at any time or from time to time without prior notice. The Company did no t repurchase shares of common stock during the three months ended May 31, 2026. During the three months ended May 31, 2025, the Company repurchased 260,560 shares of common stock under the program at an average price of $19.04. Since the programs inception in October 2008, there have been 3,127,900 common shares repurchased at an average price of $ 16.87 per share. As of May 31, 2026, approximately $ 7.2 million remained available to repurchase shares of the Companys common stock under the program." …

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20. Subsequent Events On June 19, 2026 the Board declared a quarterly cash dividend on the Company's common stock of $ 0.25 per share. The dividend is payable on August 10, 2026 to shareholders of record as of July 10, 2026 . The expected payout for this dividend is approximately $ 6.4 million.

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