Ennis Inc. (NYSE:EBF) has been aggressively working on acquisitions with an aim to capitalize on growth opportunities in envelope offerings, folder offerings, tag offerings, healthcare, wristbands, and secure document solutions.
Investors are applauding Ennis’ business strategies. Ennis shares soared 12% in the last twelve months. Its stock is currently trading around the highest level in the previous 52-weeks.
Growth Through Acquisitions
Ennis’ strong balance sheet, as well as its internal cash position, is allowing for investing in non-organic growth opportunities. Ennis Inc. has recently announced that it will be merging with Wright Business Graphics. Ennis claims that Wright Business Graphics could add $58M in sales in fiscal 2018.
Ennis has also completed the integration of its ERP system, and it acquired a tag company based in Caledonia in the latest quarter. Ennis believes all these investments will be beneficial to its fiscal 2018 earnings.
The company is looking to explore new growth opportunities in the days to come—which represents management confidence in Ennis’ cash generation potential. “We continue to explore strategic opportunities in the acquisition arena as a way to profitably utilize our cash,” said Keith Walters, Chairman, President, and CEO.
Low Debt and Healthy Cash Position Supports Growth Strategies
Ennis’ internal cash generation is offering room for investments in growth opportunities. The company has generated $11 million in free cash flows in the latest quarter compared to dividend payments of $5 million. Thus, the company was left with $6 million in free cash flows to fund acquisitions.
Ennis’ cash and cash equivalent were standing close to $96 million at the end of the latest quarter compared to its debt position of $30 million. The company’s unused credit facility and its ability to get new debt from financial markets strengthen Ennis’ position to fund the acquisitions.
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