Quarterly Report for Quarter Ending August 31, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Statements

The following "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read together with the unaudited consolidated financial statements and related notes of Ennis, Inc. (collectively with its subsidiaries, the "Company," "Registrant," "Ennis," or "we," "us," or "our"), included in Part 1, Item 1 of this report, and with the audited consolidated financial statements and the related notes of the Company included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2025.

All of the statements in this report, other than historical facts, are forward-looking statements, including, without limitation, the statements made in this "Management's Discussion and Analysis of Financial Condition and Results of Operations." As a general matter, forward-looking statements are those focused upon anticipated events or trends, expectations, and beliefs relating to matters that are not historical in nature. The words "could," "should," "feel," "anticipate," "aim," "preliminary," "expect," "believe," "estimate," "intend," "intent," "plan," "will," "foresee," "project," "forecast," or the negative thereof or variations thereon, and similar expressions identify forward-looking statements.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for these forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that forward-looking statements are subject to known and unknown risks, uncertainties and other factors relating to its operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company. These known and unknown risks, uncertainties and other factors could cause actual results to differ materially from those matters expressed in, anticipated by or implied by such forward-looking statements.

These statements reflect the current views and assumptions of management with respect to future events. The Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, even though its situation and circumstances may change in the future. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. The inclusion of any statement in this report does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

We believe these forward-looking statements are based upon reasonable assumptions. All such statements involve risks and uncertainties, and as a result, actual results could differ materially from those projected, anticipated or implied by these statements. Such forward-looking statements involve known and unknown risks, including but not limited to: general economic, business and labor conditions and the potential adverse effects of potential recessionary concerns, inflationary issues, U.S. import tariffs and supply chain disruptions and the potential impact on our operations; our ability to implement our strategic initiatives and control our operational costs; dependence on a limited number of key suppliers; our ability to recover the rising cost of raw materials and other costs (including energy, freight, labor and benefit costs) in markets that are highly price competitive and volatile; uninsured losses, including those from natural disasters, catastrophes, pandemics, theft, sabotage; the impact of future pandemics on the U.S. and local economies, our business operations, our workforce, our supply chain and our customer base; our ability to timely or adequately respond to technological changes in the industry; cybersecurity risks, the impact of the internet and other electronic media on the demand for forms and printed materials; the impact of foreign competition, tariffs, trade regulations and import restrictions; customer credit risk; competitors' pricing strategies; a decline in business volume and profitability could result in an impairment in our reported goodwill negatively impacting our operational results; our ability to retain key management personnel; our ability to identify, manage or integrate acquisitions.; In addition to the factors indicated above, you should carefully consider the risks described in and incorporated by reference herein and in the risk factors in our Annual Report on Form 10-K for the fiscal year ended February 28, 2025 before making an investment in our common stock.

Overview

Ennis, Inc. (formerly Ennis Business Forms, Inc.) (collectively with its subsidiaries, "the "Company," "Registrant," Ennis," or "we," "us," or "our") was organized under the laws of Texas in 1909. We print and manufacture a broad line of business forms and other business products. We distribute business products and forms throughout the United States primarily through independent distributors. This distributor channel encompasses independent print distributors, commercial printers, direct mail, fulfillment companies, payroll and accounts payable software companies, and advertising agencies, among others. We also sell products to many of our competitors to satisfy their customers' needs.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2025

Business Overview

Our management believes we are the largest provider of business forms, pressure-seal forms, labels, tags, envelopes, and presentation folders to independent distributors in the United States.

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 August 31, 2025, we operate 55 manufacturing plants throughout the United States in 20 strategically located states as one reportable segment: printing services. Approximately 96% 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.

The products we sell include snap sets, continuous forms, laser cut sheets, tags, labels, envelopes, integrated products, jumbo rolls and pressure sensitive products in short, medium and long runs under the following labels: Ennis®, Royal Business Forms®, Block Graphics®, ColorWorx®, Enfusion®, Uncompromised Check Solutions®, VersaSeal®, Ad ConceptsSM, FormSource LimitedSM, Star Award Ribbon Company®, Witt Printing®, Genforms®, PrintGraphics®, Calibrated Forms®, PrintXcel®, Printegra®, Forms ManufacturersSM, Mutual Graphics®, TRI-C Business FormsSM, Major Business SystemsSM, Independent PrintingSM, Hayes Graphics®, Wright Business GraphicsSM, Wright 360SM, Integrated Print & GraphicsSM, the Flesh CompanySM, AmeriPrintSM; StylecraftSM, UMC PrintSM; Eagle GraphicsSM, Diamond GraphicsSM and Printing TechnologiesSM. We also sell the Adams McClure® brand (which provides Point of Purchase advertising); the Admore®, Folder Express®, and Independent Folders® brands (which provide presentation folders and document folders); Ennis Tag & LabelSM (which provides custom printed, high performance labels and custom and stock tags); Allen-Bailey Tag & LabelSM, Atlas Tag & Label®, Kay Toledo Tag®, and Special Service Partners® (SSP) (which provides custom and stock tags and labels); Trade Envelopes®, Block Graphics®, Wisco®, Northeastern Envelope CompanySM, Envelope SuperstoreSM and National Imprint Corporation® (which provide custom and imprinted envelopes); Northstar® and General Financial Supply® (which provide financial and security documents); InfosealSM and PrintXcel® (which provide custom and stock pressure seal documents). School Photo Marketing and National School Forms are a one-stop shop for over 1,400 school portrait photographers and professional photo labs nationwide, providing them with a complete array of products and services that reach over 15 million families and 30,000 schools, primarily in the K-8 market. We sell predominantly through independent distributors, as well as to many of our competitors. Northstar Computer Forms, Inc., one of our wholly-owned subsidiaries, also sells direct to a small number of customers, generally large banking organizations (where a distributor is not acceptable or available to the end-user). Adams McClure, LP, a wholly-owned subsidiary, also sells direct to a small number of customers, where sales are generally through advertising agencies.

The printing industry generally sells its products either predominantly to end users, a market dominated by a few large manufacturers, such as R.R. Donnelley and Taylor Corporation, or, like the Company, through a variety of independent distributors and distributor groups. While it is not possible, because of the lack of adequate public statistical information, to determine the Company's share of the total business products market, management believes the Company is the largest producer of business forms, pressure-seal forms, labels, tags, envelopes, and presentation folders in the United States distributing primarily through independent distributors.

There are a number of competitors that operate in this segment. We believe our strategic locations and buying power permit us to compete on a favorable basis within the distributor market on factors such as service, quality and price.

Our products are sold throughout the United States primarily by independent distributors, including business forms distributors, resellers, direct mail, commercial printers, software companies, and advertising agencies.

Raw materials principally consist of a wide variety of weights, widths, colors, sizes, and qualities of paper for business products purchased primarily from one major supplier at favorable prices based on our high volume of business with that supplier relative to our competitors.

Business products usage in the printing industry is generally not seasonal. Acquisitions of new business, general economic conditions and contraction of the traditional business forms industry are the predominant factors in quarterly volume fluctuations.

Recent Acquisitions

On April 11, 2025, the Company acquired the net assets and business of NEC, which is based in Old Forge, Pennsylvania and ESS, which is based in Hiram, Georgia. The acquisition of NEC and ESS, which prior to the acquisition generated approximately $26.0 million in sales for its fiscal year ended December 31, 2024, strengthens our production capabilities to serve our customers in the Northeast United States

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FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2025

Our Business Challenges

Our industry is currently experiencing consolidation of traditional supply channels, product obsolescence, paper supplier capacity adjustments, and increased pricing and potential supply allocations due to demand/supply curve imbalance. Technology advances have made electronic distribution of documents, internet hosting, digital printing and print-on-demand valid, cost-effective alternatives to traditional custom-printed documents and customer communications. Improved equipment has become more accessible to our 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 are essential in order to conduct business, many are being replaced through the use of cheaper paper grades or imported paper, or devalued with advances in digital technologies, causing steady declines in demand for a portion of our current product line. Transforming our product offerings in order to continue to provide innovative, valuable solutions through lower labor and fixed charges to our customers on a proactive basis will require us to make investments in new and existing technology and to develop key strategic business relationships, such as print-on-demand services and product offerings that assist customers in their transition to digital business environments. In addition, we will continue to look for new market opportunities and niches through acquisitions, such as the addition of our envelope offerings, tag offerings, folder offerings, healthcare wristbands, specialty packaging, direct mail, pressure seal products, secure document solutions, innovative in-mold label offerings and long-run integrated products with high color web printing, which provide us with an opportunity for growth and differentiate us from our competition. The ability to make investments in new and existing technology and/or to acquire new market opportunities through acquisitions is dependent on the Company's liquidity and operational results.

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, or convert them to different product lines, such as packaging to offset a decline in demand. Recently, there have been several major mill closures and consolidations, which could lead to substantial paper price fluctuations in the near future. The only mill located in the United States that produces rolls of carbonless paper has ceased production on a permanent basis. In response to this supply disruption, we have invested in additional inventory as buffer stock in response to the transition to alternative sources of carbonless paper. Margins remain under pressure due to weak volumes in parts of the market as well as rising input costs. To protect results, we continue to manage and control product costs through the use of forecasting, production and costing models; strengthening supplier relationships; negotiating favorable procurement terms; and increasing operational efficiency. 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 distributors, many of which are consolidating or are being acquired by competitors. We continue to maintain a high volume of the business with our customers but it is possible that these consolidations and acquisitions, which we expect to continue in the future, ultimately will impact our margins and sales.

For further information, please see "Cautionary Statement Regarding Forward-Looking Statements," above and "Risk Factors" contained within our Annual Report on Form 10-K for the fiscal year ended February 28, 2025.

Critical Accounting Estimates

Our Annual Report on Form 10-K for the year ended February 28, 2025, 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 August 31, 2025, 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, 2025.

Recent Accounting Pronouncements

See Note 1 of the accompanying unaudited condensed consolidated financial statements for a discussion of recent accounting pronouncements.

Results of Operations

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

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FOR THE PERIOD ENDED AUGUST 31, 2025

financial statements and notes included in this filing. The operating results of the Company for the three and six months ended August 31, 2025 and the comparative period for 2024 are set forth in the tables below.

Consolidated Summary

Three months ended August 31, 2025 compared to three months ended August 31, 2024

Net Sales. Our net sales were $98.7 million for the quarter ended August 31, 2025, compared to $99.0 million for the same quarter in the prior year, a decrease of $0.3 million, or -0.3%. Sales volume decreased $5.9 million due to weaker volume demand and was offset by an approximately $5.5 million increase in revenues generated from our recent acquisitions.

Cost of Goods Sold and Gross Profit Margin. As a result of decreased sales volume, our cost of goods sold decreased $0.7 million, or -1.0%, from $69.3 million for the three months ended August 31, 2024 to $68.6 million for the three months ended August 31, 2025. Our gross profit was $30.1 million or 30.5% of revenue for the quarter ended August 31, 2025 compared to $29.8 million or 30.1% of revenue for the same quarter in the prior year. We continue to pursue cost management measures and target pricing actions intended to mitigate the effects of persistent market weakness and increased price competition on our results.

Selling, general, and administrative expense. For the three months ended August 31, 2025, our selling, general, and administrative ("SG&A") expenses were $17.7 million compared to $16.6 million for the three months ended August 31, 2024, an increase of $1.1 million, or 6.6%. As a percentage of net sales, SG&A expenses for the current quarter were 18.0% and 16.7% for the three months ended August 31, 2025 and August 31, 2024, respectively. The increase in SG&A expenses primarily reflects higher variable incentive compensation tied to profitability and inclusion of SG&A expenses from our recent acquisition.

Gain and loss from disposal of assets. The $39,000 net loss from disposal of assets during the three month period ended August 31, 2024, was primarily attributed to the sale of equipment. There was no gain or loss in the three month period ended August 31, 2025.

Income from operations.Primarily due to factors described above, our income from operations for the three months ended August 31, 2025 was $12.4 million, or 12.5% of net sales, as compared to $13.2 million, or 13.3% of net sales, for the three months ended August 31, 2024.

Other income (expense). Other income was $5.8 million for the three months ended August 31, 2025 compared to $1.0 million for the three months ended August 31, 2024. During the quarter we received cash proceeds of $5.7 million in actual damages, exemplary damages and attorney's fees in a case against Wright Printing Company its owners Mark Wright, and CEO Mardra Sikora. This amount included $0.4 million of interest income. Interest income for the three months ended August 31, 2025 and 2024 were $0.8 and $1.4 million. Our decrease in interest income was primarily from lower cash, cash equivalent, and investment balances.

Provision for income taxes. Our effective income tax rate was 27.5% for the three months ended August 31, 2025 and remained flat compared to the three months ended August 31, 2024.

Net earnings. Net earnings, due to the factors above, were $13.2 million for the three months ended August 31, 2025 as compared to $10.3 million for the comparable quarter in the prior year. After-tax earnings per diluted share for the three months ended August 31, 2025 were $0.51, compared to $0.40 for the same quarter last year. Diluted earnings per share for the current quarter were positively impacted $0.03 per diluted share from our recent acquisition and approximately $0.14 per diluted share from the lawsuit settlement proceeds.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2025

Six months ended August 31, 2025 compared to six months ended August 31, 2024

Net Sales. Our net sales were $195.9 million for the six month period ended August 31, 2025, compared to $202.1 million for the same period last year, a decrease of $6.2 million, or -3.1%. Sales volume decreased $17.3 million due to weaker volume demand and was partially offset by an approximately $11.0 million increase in revenues generated from our recent acquisitions.

Cost of Goods Sold and Gross Profit Margin. Our cost of goods sold decreased $6.0 million, or -4.2%, from $141.5 million for the six months ended August 31, 2024 to $135.5 million for the six months ended August 31, 2025. Our gross profit was $60.3 million for the six month period ended August 31, 2025 compared to $60.7 million for the same period in the prior year. Our gross profit margin of 30.8% for the current six month period, increased from the prior year six month period of 30.0%. We continue to pursue cost management measures and target pricing actions intended to mitigate the effects of persistent market weakness and increased price competition on our results.

Selling, general, and administrative expense. For the six months ended August 31, 2025, our SG&A expenses were $34.7 million compared to $33.7 million for the six months ended August 31, 2024, an increase of $1.0 million, or 3.0%. As a percentage of net sales, SG&A expenses for the period were 17.7% and 16.7% for the six months ended August 31, 2025 and 2024, respectively. The increase in SG&A expenses reflects higher variable incentive compensation tied to profitability and inclusion of SG&A expenses from our recent acquisitions.

Gain and loss from disposal of assets. The $43,000 net loss from disposal of assets during the six month period ended August 31, 2024, respectively, was primarily attributed to the sale of equipment. There was no gain or loss in the six month period ended August 31, 2025.

Income from operations.Primarily due to factors described above, our income from operations for the six months ended August 31, 2025 was $25.7 million, or 13.1% of net sales, as compared to $26.9 million, or 13.3% of net sales, for the six months ended August 31, 2024.

Other income (expense). Other income was $6.0 million for the six months ended August 31, 2025 compared to $2.0 million for the six months ended August 31, 2024. During the period we received cash proceeds of $5.7 million in actual damages, exemplary damages and attorney's fees in a case against Wright Printing Company, its owners Mark Wright, and CEO Mardra Sikora. This amount included $0.4 million of interest income. Interest income for the period ended August 31, 2025 and 2024 were $1.3 million and $2.7 million. Our decrease in interest income was primarily from lower cash, cash equivalent and investment balances.

Provision for income taxes. Our effective tax rate was 27.5% for the six months ended August 31, 2025 and remained flat compared to the period ended August 31, 2024.

Net earnings. Net earnings, due to the factors above, were $23.0 million for the six months ended August 31, 2025 as compared to $21.0 million for the comparable period in the prior year, an increase of $2.0 million. Net earnings per diluted share for the six months ended August 31, 2025 was $0.89, compared to $0.80 for the same period in the prior year. Diluted earnings per share for the current quarter were positively impacted $0.03 per diluted share from our recent acquisition and approximately $0.14 per diluted share from the lawsuit settlement proceeds.

Liquidity and Capital Resources

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 August 31, 2025, we had a cash balance of $31.9 million. We expect operating cash flows to be consistent with prior periods, and we anticipate reduced purchasing needs over the next several quarters. 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 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.

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FOR THE PERIOD ENDED AUGUST 31, 2025

Working Capital. During the six months ended August 31, 2025, our working capital decreased $21.6 million or -18.1%, from $119.4 million at February 28, 2025 to $97.8 million at August 31, 2025. The decline was due primarily to our acquisition of NEC and ESS for approximately $34.9 million, as well as our strategic decision to increase inventory levels in response to the closure of the only domestic producer of carbonless paper. Our current ratio, calculated by dividing current assets by current liabilities, decreased from 4.6 to 1.0 at February 28, 2025 to 3.4 to 1.0 at August 31, 2025. The decrease in working capital primarily reflects a reduction in cash, cash equivalents and short-term investments of $40.6 million, an increase in other receivables of $8.8 million, and an increase in inventory of $23.3 million, partially offset by the increase in accounts payable of $5.8 million.

Cash flows from operating activities. Cash provided by operating activities was $18.4 million in the six months ended August 31, 2025 compared to $34.9 million in the comparative period ended August 31, 2024. Our net earnings increased $2.0 million for the six months ended August 31, 2025 compared to the six months ended August 31, 2024. An increase in accounts receivable used cash of $2.0 million in the current period compared to cash provided by a decrease in accounts receivable of $4.6 million in the prior year. An increase in inventories used cash of $20.8 million in the six months ended August 31, 2025 compared to a decrease in inventory providing cash of $0.2 million in the prior year. An increase in accounts payable and accrued expenses provided cash of $7.3 million in the six months ended August 31, 2025 compared to a decrease in accounts payable and accrued expenses using cash of $0.1 million in the six months ended August 31, 2024. The increase in inventory, accounts payable and accrued expenses during the current period was primarily due to an increase in purchasing activities as stated above. The increase in receivables is primarily from vendor rebates.

Cash flows from investing activities. Cash used in investing activities was $32.0 million in the six months ended August 31, 2025 compared to cash used in investing activities of $1.8 million in the six months ended August 31, 2024. Capital expenditures primarily of equipment was $2.8 million and $3.6 million for the six months ended August 31, 2025 and August 31, 2024, respectively. In the six months ended August 31, 2025, $34.9 million was used to acquire a business compared to $5.6 million in the same period last year. During the current period, approximately $5.5 million of U.S. government treasury bills matured and invested in money market funds. During the six months ended August 31, 2024 we purchased approximately $10.1 million of U.S. government treasury bills, which was partially offset by $17.5 million in matured treasury bills and invested in money market funds.

Cash flows from financing activities. We used $6.8 million more cash in financing activities during the six months ended August 31, 2025 compared to the same period in the prior year. During the six months ended August 31, 2025 and August 31, 2024, we purchased $8.6 million and $1.8 million, respectively in common stock under our stock repurchase program. We made dividend payments of $13.1 million and $13.0 million for the six months ended August 31, 2025 and August 31, 2024, respectively.

Credit Facility - As of August 31, 2025, 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, the level of market interest rates and the level of funding. We are not required to make a contribution to the pension plan for fiscal year 2026. We made a contribution of $1.2 million to the pension plan for fiscal year 2025. As our pension assets are invested in marketable securities, changes in actual investment returns or in discount rates could change funding status and requirements significantly. At August 31, 2025, we had a funded pension asset of $1.4 million.

Inventories - We believe our inventory levels are sufficient to satisfy customer demand, and we expect to maintain adequate access to raw materials to support future business requirements. Recent consolidation within the paper industry and the closure of the

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2025

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 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, exclusive of capital required for possible acquisitions, will be within our historical levels of between $4.0 million and $7.0 million. For the six months ended August 31, 2025, we spent approximately $2.8 million on capital expenditures that was 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.

Contractual Obligations -There have been no significant changes in our contractual obligations since February 28, 2025 that have, or are reasonably likely to have, a material impact on our results of operations or financial condition. We do not have off-balance sheet arrangements or special-purpose entities.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2025