ENNIS, INC. (Form: 10-Q, Received: 10/06/2017 12:38:14)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended August 31, 2017

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from to

Commission File Number 1-5807

ENNIS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Texas		75-0256410
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

2441 Presidential Pkwy., Midlothian, Texas		76065
(Address of Principal Executive Offices)		(Zip code)

(972) 775-9801

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐		Accelerated filer	☒

Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☐

			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of September 29, 2017, there were 25,417,035 shares of the Registrant’s common stock outstanding.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2017

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION

	Item 1. Financial Statements	3

	Unaudited Consolidated Balance Sheets at August 31, 2017 and February 28, 2017	3

	Unaudited Consolidated Statements of Operations for the three and six months ended August 31, 2017 and August 31, 2016	5

	Unaudited Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended August 31, 2017 and August 31, 2016	6

	Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the six months ended August 31, 2017	7

	Unaudited Consolidated Statements of Cash Flows for the six months ended August 31, 2017 and August 31, 2016	8

	Notes to Unaudited Consolidated Financial Statements	9

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	26

	Item 4. Controls and Procedures	26

PART II: OTHER INFORMATION

	Item 1. Legal Proceedings	27

	Item 1A. Risk Factors	27

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	27

	Item 3. Defaults Upon Senior Securities	27

	Item 4. Mine Safety Disclosures	27

	Item 5. Other Information	27

	Item 6. Exhibits	28

SIGNATURES		29

PART I. FINANCI AL INFORMATION

Item 1. FINANCIAL STATEMENTS

ENNIS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands )

	August 31,		February 28,
	2017		2017
Assets
Current assets
Cash and cash equivalents	$	83,865	$	80,466
Accounts receivable, net of allowance for doubtful receivables of $1,318 at August 31, 2017 and $1,674 at February 28, 2017		38,171		37,368
Prepaid expenses		819		1,351
Prepaid income taxes		1,513		855
Inventories		29,228		27,965
Assets held for sale		1,320		1,245
Total current assets		154,916		149,250
Property, plant and equipment
Plant, machinery and equipment		135,476		136,584
Land and buildings		53,559		53,821
Other		23,548		23,644
Total property, plant and equipment		212,583		214,049
Less accumulated depreciation		164,822		164,054
Net property, plant and equipment		47,761		49,995
Goodwill		70,603		70,603
Intangible assets, net		52,235		53,927
Other assets		385		510
Total assets	$	325,900	$	324,285

See accompanying notes to consolidated financial statements.

ENNIS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except for par value and share amounts )

	August 31,			February 28,
	2017			2017
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	10,753		$	14,202
Accrued expenses
Employee compensation and benefits		13,125			13,515
Taxes other than income		668			225
Other		1,750			2,026
Total current liabilities		26,296			29,968
Long-term debt		30,000			30,000
Liability for pension benefits		4,846			4,846
Deferred income taxes		7,257			6,953
Other liabilities		1,521			1,163
Total liabilities		69,920			72,930
Commitments and contingencies
Shareholders’ equity
Preferred stock $10 par value, authorized 1,000,000 shares; none issued		—			—
Common stock $2.50 par value, authorized 40,000,000 shares; issued 30,053,443 shares at August 31 and February 28, 2017		75,134			75,134
Additional paid-in capital		120,675			121,525
Retained earnings		157,457			150,685
Accumulated other comprehensive income (loss):
Minimum pension liability, net of taxes		(14,765	)		(15,261	)
Total accumulated other comprehensive income (loss)		(14,765	)		(15,261	)
Treasury stock		(82,521	)		(80,728	)
Total shareholders’ equity		255,980			251,355
Total liabilities and shareholders' equity	$	325,900		$	324,285

See accompanying notes to consolidated financial statements.

ENNIS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

( Dollars in thousands, except share and per share amounts )

	Three months ended						Six months ended
	August 31,						August 31,
	2017			2016			2017			2016
Net sales	$	94,887		$	91,246		$	189,477		$	181,656
Cost of goods sold		64,100			64,208			128,771			127,924
Gross profit margin		30,787			27,038			60,706			53,732
Selling, general and administrative		17,096			16,057			34,468			32,128
(Gain) loss from disposal of assets		48			(4	)		63			2
Income from operations		13,643			10,985			26,175			21,602
Other income (expense)
Interest expense		(204	)		(231	)		(394	)		(233	)
Other, net		117			11			130			4
		(87	)		(220	)		(264	)		(229	)
Earnings from continuing operations before income taxes		13,556			10,765			25,911			21,373
Provision for income taxes		5,016			3,981			9,587			7,906
Earnings from continuing operations		8,540			6,784			16,324			13,467
Income from discontinued operations, net of tax		—			—			—			2,481
Loss on sale of discontinued operations, net of tax		—			—			—			(26,042	)
Loss from discontinued operations, net of tax		—			—			—			(23,561	)
Net earnings (loss)	$	8,540		$	6,784		$	16,324		$	(10,094	)
Weighted average common shares outstanding
Basic		25,342,747			25,893,218			25,388,292			25,847,051
Diluted		25,366,001			25,910,375			25,405,863			25,868,799
Earnings (loss) per share - basic and diluted
Continuing operations	$	0.34		$	0.26		$	0.64		$	0.52
Discontinued operations	$	—		$	—		$	—		$	(0.91	)
Net earnings (loss)	$	0.34		$	0.26		$	0.64		$	(0.39	)

Cash dividends per share	$	0.20		$	1.675		$	0.375		$	1.85

See accompanying notes to consolidated financial statements.

ENNIS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

( Dollars in thousands )

	Three months ended				Six months ended
	August 31,				August 31,
	2017		2016		2017		2016
Net earnings (loss)	$	8,540	$	6,784	$	16,324	$	(10,094	)
Foreign currency translation adjustment, net of deferred taxes		—		—		—		9,940
Adjustment to pension, net of deferred taxes		248		—		496		—
Comprehensive income (loss)	$	8,788	$	6,784	$	16,820	$	(154	)

See accompanying notes to consolidated financial statements.

ENNIS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Dollars in thousands, except share and per share amounts)

											Accumulated
					Additional						Other
	Common Stock				Paid-in			Retained			Comprehensive			Treasury Stock
	Shares		Amount		Capital			Earnings			Income (Loss)			Shares			Amount			Total
Balance March 1, 2017		30,053,443	$	75,134	$	121,525		$	150,685		$	(15,261	)		(4,686,821	)	$	(80,728	)	$	251,355
Net earnings		—		—		—			16,324			—			—			—			16,324
Adjustment to pension, net of deferred tax of $304		—		—		—			—			496			—			—			496
Dividends paid ($0.375 per share)		—		—		—			(9,552	)		—			—			—			(9,552	)
Stock based compensation		—		—		667			—			—			—			—			667
Exercise of stock options and restricted stock		—		—		(1,517	)		—			—			88,105			1,517			—
Stock repurchases		—		—		—			—			—			(191,033	)		(3,310	)		(3,310	)
Balance August 31, 2017		30,053,443	$	75,134	$	120,675		$	157,457		$	(14,765	)		(4,789,749	)	$	(82,521	)	$	255,980

See accompanying notes to consolidated financial statements.

ENNIS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

	Six months ended
	August 31,
		2017			2016
Cash flows from operating activities:
Net earnings (loss)	$	16,324		$	(10,094	)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation		3,996			4,002
Amortization of deferred finance charges		57			9
Amortization of intangible assets		3,077			2,321
Pre-tax loss on sale of discontinued operations		—			36,775
Operating cash flows of discontinued operations		—			538
Loss from disposal of assets		63			2
Bad debt expense, net of recoveries		(248	)		103
Stock based compensation		667			679
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable		(555	)		(426	)
Prepaid expenses and income taxes		(126	)		(4,199	)
Inventories		(1,182	)		(373	)
Other assets		67			(281	)
Accounts payable and accrued expenses		(4,122	)		(1,265	)
Other liabilities		358			9
Liability for pension benefits		800			1,278
Net cash provided by operating activities		19,176			29,078
Cash flows from investing activities:
Capital expenditures		(1,590	)		(927	)
Purchase of businesses, net of cash acquired		(1,350	)		(907	)
Proceeds from sale of discontinued operations		—			107,354
Investing cash flows of discontinued operations		—			(279	)
Proceeds from disposal of plant and property		25			12
Net cash provided by (used in) investing activities		(2,915	)		105,253
Cash flows from financing activities:
Repayment of debt		—			(10,000	)
Dividends		(9,552	)		(48,187	)
Purchase of treasury stock		(3,310	)		(1,786	)
Proceeds from exercise of stock options		—			2,910
Net cash used in financing activities		(12,862	)		(57,063	)
Net change in cash and cash equivalents		3,399			77,268
Cash and cash equivalents at beginning of period		80,466			7,957
Cash and cash equivalents at end of period	$	83,865		$	85,225

See accompanying notes to consolidated financial statements.

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2017

1. Significant Accounting Policies and General Matters

Basis of Presentation

These unaudited consolidated financial statements of Ennis, Inc. and its subsidiaries (collectively referred to as the “Company,” “Registrant,” “Ennis,” or “we,” “us,” or “our”) for the period ended August 31, 2017 have been prepared in accordance with generally accepted accounting principles for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2017, from which the accompanying consolidated balance sheet at February 28, 2017 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. In preparing the financial statements, the Company is required to make estimates and assumptions that affect the disclosure and reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates these estimates and judgments on an ongoing basis, including those related to bad debts, inventory valuations, property, plant and equipment, intangible assets, pension plan, accrued liabilities, and income taxes. The Company bases estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of operations for any interim period are not necessarily indicative of the results of operations for a full year.

On May 25, 2016, the Company sold Alstyle Apparel, LLC and its subsidiaries, which constituted the Company’s apparel segment (the “Apparel Segment”), to Gildan Activewear Inc. As a result of this action, the current year and prior year disclosures reflect these operations as discontinued operations and prior year financial information has been restated to reflect this accounting treatment.

Recent Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“ FASB ”) issued Accounting Standards Update (“ ASU ”) No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ ASU 2017-04 ”) , which simplifies how an entity is required to measure goodwill impairment. The amendments in ASU 2017-04 require that goodwill impairment will be measured using the difference between the carrying amount and the fair value of the reporting unit and the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments in ASU 2017-04 should be applied on a prospective basis and are effective for annual or any interim goodwill impairment tests in annual reporting periods beginning after December 15, 2019. The Company adopted ASU 2017-04 on June 1, 2017, which had no impact on the Company’s consolidated financial statements at the time of adoption.

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718) (“ ASU 2016-09 ”) , which makes several modifications to the accounting for employee share-based payment transactions, including the requirement to recognize the income tax effects of awards that vest or settle as income tax expense. The amendments in ASU 2016-09 also clarify the presentation of certain components of share-based awards in the statement of cash flows. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016. The Company adopted ASU 2016-09 in fiscal year 2018 beginning in March of 2017. The adoption of ASU 2016-09 did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ ASU 2016-02 ”) , which requires lessees to put most leases on the balance sheet but recognize expense on the income statement in a manner similar to current accounting. For lessors, ASU 2016-02 also modifies the classification criteria and the accounting for sales-type and direct financing leases. The standard requires a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements and is effective in the first quarter of fiscal year 2019. Early adoption of ASU 2016-02 is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ ASU 2016-01 ”), which institutes a number of modifications to the reporting of financial assets and liabilities. These modifications include: (i) measurement of non-equity method assets and liabilities at fair value, with changes to fair value recognized through net income, (ii) performance of qualitative impairment assessments of equity investments without readily determinable fair values at each reporting period, (iii) elimination of the requirement to disclose methods and significant assumptions used in calculating the fair value of financial instruments measured at amortized cost, (iv) measurement of

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2017

the fair value of financial instruments measured at amortized cost using the exit price notion consistent with Topic 820, Fair Value Measurement, (v) separate presentation in other comprehensi ve income of the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk, (vi) separate presentation of financial assets and financial liabilities by measurement category and form of fin an cial asset, and (vii) evaluation of the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. This ASU is effective for financial statements issued with f iscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the impact the adoption of ASU 2016-01 will have on its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ ASU 2014-09 ”), which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. ASU 2014-09 supersedes most existing revenue recognition guidance in U.S. GAAP. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ ASU 2015-14 ”), which defers the effective date of ASU 2014-09 to March 1, 2018 for the Company. Early adoption of ASU 2014-09 became permitted in the first quarter of fiscal year 2017. The Company expects to adopt ASU 2014-09 in the first quarter of fiscal year 2019. The guidance permits the use of either the retrospective or cumulative effect transition method. We have not yet selected a transition method, and we continue to evaluate the effect that the updated standard will have on our consolidated financial condition, results of operations and cash flows; however, we do not expect adoption of the guidance to have a material impact on our financial results. We primarily earn our revenue by made to order business forms, as required by our customers primarily through purchase orders. We generally do not have significant customer contracts and do not provide post-delivery services. As such, adoption of the new guidance is not expected to result in a significant change in the amount of revenue recognized or the timing of when such revenue is recognized.

2. Accounts Receivable and Allowance for Doubtful Receivables

Accounts receivable are reduced by an allowance for an estimate of amounts that are uncollectible. Substantially all of the Company’s receivables are due from customers in the United States. The Company extends credit to its customers based upon its evaluation of the following factors: (i) the customer’s financial condition, (ii) the amount of credit the customer requests, and (iii) the customer’s actual payment history (which includes disputed invoice resolution). The Company does not typically require its customers to post a deposit or supply collateral. The Company’s allowance for doubtful receivables is based on an analysis that estimates the amount of its total customer receivable balance that is not collectible. This analysis includes assessing a default probability to customers’ receivable balances, which is influenced by several factors including (i) current market conditions, (ii) periodic review of customer creditworthiness, and (iii) review of customer receivable aging and payment trends.

The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance in the period the payment is received. Credit losses from continuing operations have consistently been within management’s expectations.

The following table presents the activity in the Company’s allowance for doubtful receivables (in thousands):

	Three months ended						Six months ended
	August 31,						August 31,
	2017			2016			2017			2016
Balance at beginning of period	$	1,442		$	1,787		$	1,674		$	2,041
Bad debt expense, net of recoveries		(82	)		101			(248	)		103
Accounts written off		(42	)		(68	)		(108	)		(324	)
Balance at end of period	$	1,318		$	1,820		$	1,318		$	1,820

3. Inventories

The Company uses the lower of last-in, first-out (“ LIFO ”) cost or market to value certain of its business forms inventories and the lower of first-in, first-out (“ FIFO ”) cost or market to value its remaining forms inventories. The Company regularly reviews inventories on hand, using specific aging categories, and writes down the carrying value of its inventories for excess and potentially obsolete inventories based on historical usage and estimated future usage. In assessing the ultimate realization of its inventories, the Company is required to make judgments as to future demand requirements. As actual future demand or market conditions may vary from those projected by the Company, adjustments to inventories may be required.

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2017

The following table summarizes the components of inventories at the different stages of production as of the dates indicated (in thousands):

	August 31,		February 28,
	2017		2017
Raw material	$	16,696	$	16,130
Work-in-process		3,676		3,199
Finished goods		8,856		8,636
	$	29,228	$	27,965

4. Acquisitions

On July 7, 2017, the Company acquired the assets of a tag operation located in Ohio, for $1.4 million in cash plus the assumption of certain accrued liabilities. Management considers this acquisition immaterial.

On January 27, 2017, the Company completed the acquisition of Independent Printing Company, Inc. and its related entities (collectively “ Independent ”) for $17.7 million in cash consideration, in a stock purchase transaction. Independent has 4 locations in Wisconsin, with its main facility located in DePere, Wisconsin. The business produces presentation folders, checks, wide format and commercial printing. Independent, which generated approximately $37.0 million in unaudited sales during calendar year 2016, will continue to operate under its respective brand names. Independent sells mainly through distributors and resellers. The Company will now have 4 folder facilities in Michigan, Kansas, California and Wisconsin, as well as wide format capabilities in Colorado and Wisconsin.

The following is a summary of the final purchase price allocations for Independent (in thousands):

Accounts receivable	$	4,252
Inventories		1,539
Other assets		575
Property, plant & equipment		5,526
Customer lists		3,390
Trademarks		2,408
Goodwill		6,066
Accounts payable and accrued liabilities		(6,079	)
	$	17,677

The results of operations for Independent are included in the Company’s consolidated financial statements from the date of acquisition. The following table represents certain operating information on a pro forma basis as though all Independent operations had been acquired as of March 1, 2016, after the estimated impact of adjustments such as amortization of intangible assets, interest expense, interest income, and related tax effects (in thousands, except per share amounts):

	Three months ended		Six months ended
	August 31, 2016		August 31, 2016
Pro forma net sales	$	100,389	$	199,942
Pro forma net earnings		7,034		13,967
Pro forma earnings per share - diluted		0.27		0.54

The pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been in effect for the periods presented.

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2017

5. Discontinued Operations

On May 25, 2016 the Company sold its Apparel Segment to Gildan Activewear Inc. for an all-cash purchase price of $110.0 million, subject to a working capital adjustment, customary indemnification arrangements, and the other terms of the Unit Purchase Agreement dated May 4, 2016.

The operating results of these discontinued operations only reflect revenues and expenses that are directly attributable to the Apparel Segment and that have been eliminated from continuing operations. The following tables show the key components on the sale and discontinued operations related to the Apparel Segment that was completed on May 25, 2016 (in thousands):

Sales price	$	110,000
Carrying value of disposed business		(130,174	)
Expenses related to sales (1)		(4,365	)
Loss on sale before write-off of foreign currency translation adjustment		(24,539	)
Write-off of foreign currency translation adjustments
recorded in other comprehensive income		(16,109	)
Loss on sale of sale of discontinued operations	$	(40,648	)

(1)	Includes the termination fee, in the amount of $3.0 million, paid as a result of the termination of a prior purchase agreement for the sale of the Apparel Segment to Alstyle Operations, LLC.

	Six months ended
	August 31, 2016
Net sales	$	41,038
Income from discontinued operations before income taxes		3,873
Loss on sale of discontinued operations before income taxes		(40,648	)
Loss on discontinued operations before income taxes		(36,775	)
Income tax benefit		(13,214	)
Net loss from discontinued operations	$	(23,561	)

6. Goodwill and Intangible Assets

Beginning March 1, 2017, given the general declining trend line of print sales, and its expected continuance into the foreseeable future, the Company elected to treat the recorded value of trademarks/trade names as no longer being an indefinite-lived asset. As such, as of March 1, 2017, the Company began amortizing the carrying value of these assets over their estimated remaining useful life, approximately 17 - 19 years. The amortization expense associated with this election is expected to impact the Company’s selling, general and administrative expense line by approximately $830,000 during fiscal year 2018.

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2017

The carrying amount and accumulated amortization of the Company’s intangible assets at each balance sheet date are as follows (in thousands):

	Weighted
	Average
	Remaining		Gross
	Life		Carrying		Accumulated
As of August 31, 2017	(in years)		Amount		Amortization		Net
Amortized intangible assets
Trademarks and trade names		16.4	$	19,625	$	1,809	$	17,816
Customer lists		8.5		58,040		23,742		34,298
Noncompete		0.3		175		116		59
Patent		0.5		783		721		62
Total		11.2	$	78,623	$	26,388	$	52,235

As of February 28, 2017
Amortized intangible assets
Trademarks and trade names		8.0	$	3,642	$	1,234	$	2,408
Customer lists		8.9		57,347		21,336		36,011
Noncompete		0.8		175		86		89
Patent		1.0		783		655		128
Total		8.8	$	61,947	$	23,311	$	38,636

	August 31,		February 28,
	2017		2017
Non-amortizing intangible assets
Trademarks and trade names	$	—	$	15,291

Aggregate amortization expense for the six months ended August 31, 2017 and August 31, 2016 was $3.1 million and $2.3 million, respectively.

The Company’s estimated amortization expense for the next five fiscal years ending in February of the stated fiscal year is as follows (in thousands):

2018	$	5,992
2019		5,558
2020		5,476
2021		5,406
2022		5,363

Changes in the net carrying amount of goodwill as of the dates indicated are as follows (in thousands):

Balance as of March 1, 2016	$	64,537
Goodwill acquired		6,066
Goodwill impairment		—
Balance as of February 28, 2017		70,603
Goodwill acquired		—
Goodwill impairment		—
Balance as of August 31, 2017	$	70,603

During the fiscal year ended February 28, 2017, $6.1 million was added to goodwill related to the acquisition of Independent.

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2017

7. Other Accrued Expenses

The following table summarizes the components of other accrued expenses as of the dates indicated (in thousands):

	August 31,		February 28,
		2017		2017
Accrued taxes	$	42	$	329
Accrued legal and professional fees		441		414
Accrued interest		176		98
Accrued utilities		90		90
Accrued acquisition related obligations		792		789
Accrued credit card fees		122		119
Other accrued expenses		87		187
	$	1,750	$	2,026

8. Long-Term Debt

Long-term debt consisted of the following as of the dates indicated (in thousands):

	August 31,		February 28,
	2017		2017
Revolving credit facility	$	30,000	$	30,000

The Company has entered into a Second Amended and Restated Credit Agreement, which has been amended from time to time, pursuant to which a credit facility has been extended to the Company (the “ Credit Facility ”) until August 11, 2020 that provides the Company and its subsidiaries with up to $100.0 million in revolving credit, as well as a $20.0 million sublimit for the issuance of letters of credit and a $15.0 million sublimit for swing-line loans. Under the Credit Facility, the Company or any of its subsidiaries also can request up to three increases in the aggregate commitments in an aggregate amount not to exceed $50.0 million. Under the Credit Facility: (i) the Company’s net leverage ratio may not exceed 3.00:1.00, (ii) the Company’s fixed charge coverage ratio may not be less than 1.25:1.00, and (iii) the Company may make dividends or distributions to shareholders so long as (a) no event of default has occurred and is continuing and (b) the Company’s net leverage ratio both before and after giving effect to any such dividend or distribution is equal to or less than 2.50:1.00. As of August 31, 2017, the Company was in compliance with all terms and conditions of the Credit Facility.

The Credit Facility bears interest at the LIBOR rate plus a spread ranging from 1.0% to 2.0%, which rate was 2.3% (3 month LIBOR + 1.0%) at August 31, 2017 and 1.86% (2 month LIBOR + 1.0%) at February 28, 2017. The rate is determined by our fixed charge coverage ratio of total funded debt to earnings before interest, taxes, depreciation and amortization (“ EBITDA ”). As of August 31, 2017, we had $30.0 million of borrowings under the revolving credit line and $1.2 million outstanding under standby letters of credit arrangements, leaving approximately $68.8 million available in borrowing capacity. The Credit Facility is secured by substantially all of our assets (other than real property), as well as all capital securities of each of our subsidiaries.

9. Shareholders’ Equity

The Board has authorized the repurchase of up to an aggregate of $40.0 million of the Company’s outstanding common stock through a stock repurchase program. Under the repurchase program, share 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.

During the six months ended August 31, 2017 the Company, under the program, repurchased 191,033 shares of common stock at an average price of $17.33 per share. Since the program’s inception in October 2008, there have been 1,442,236 common shares repurchased at an average price of $14.99 per share. As of August 31, 2017 there was $18.4 million available to repurchase shares of the Company’s common stock under the program.

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2017

10 . Stock Option Plan and Stock Based Compensation

The Company grants stock options and restricted stock to key executives and managerial employees and non-employee directors. At August 31, 2017, the Company had one stock option plan, the 2004 Long-Term Incentive Plan of Ennis, Inc., as amended and restated as of June 30, 2011, formerly the 1998 Option and Restricted Stock Plan amended and restated as of May 14, 2008 (the “ Plan ”). The Company has 529,408 shares of unissued common stock reserved under the Plan for issuance as of August 31, 2017. The exercise price of each stock option granted under the Plan equals a referenced price of the Company’s common stock as reported on the New York Stock Exchange on the date of grant, and an option’s 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 on a straight-line basis over the requisite service period. For the three months ended August 31, 2017 and August 31, 2016, the Company included compensation expense related to share-based compensation of $0.4 million ($0.2 million net of tax), and $0.4 million ($0.2 million net of tax), respectively, in selling, general, and administrative expenses. For the six months ended August 31, 2017 and August 31, 2016, the Company included compensation expense related to share-based compensation of $0.7 million ($0.4 million net of tax), and $0.7 million ($0.4 million net of tax), respectively, in selling, general, and administrative expenses.

Stock Options

The Company had the following stock option activity for the six months ended August 31, 2017:

					Weighted
			Weighted		Average		Aggregate
	Number		Average		Remaining		Intrinsic
	of Shares		Exercise		Contractual		Value(a)
	(exact quantity)		Price		Life (in years)		(in thousands)
Outstanding at March 1, 2017		172,496	$	15.95		4.2	$	223
Granted		—		—
Terminated		—		—
Exercised		—		—
Outstanding at August 31, 2017		172,496	$	15.95		3.7	$	543
Exercisable at August 31, 2017		170,880	$	15.97		3.7	$	534

(a)	Intrinsic value is measured as the excess of fair market value of the Company’s common stock as reported on the New York Stock Exchange over the applicable exercise price.

No stock options were granted during the six months ended August 31, 2017 and August 31, 2016.

A summary of the stock options exercised and tax benefits realized from stock based compensation is presented below (in thousands):

	Three months ended				Six months ended
	August 31,				August 31,
	2017		2016		2017		2016
Total cash received	$	—	$	—	$	—	$	2,910
Income tax benefits		—		—		—		—
Total grant-date fair value		—		—		—		532
Intrinsic value		—		—		—		969

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2017

A summary of the Company’s unvested stock options at August 31, 2017 and the changes during the six months ended August 31, 2017 are presented below:

				Weighted
				Average
	Number			Grant Date
	of Options			Fair Value
Unvested at March 1, 2017		5,073		$	2.41
New grants		—			—
Vested		(3,457	)		2.48
Forfeited		—			—
Unvested at August 31, 2017		1,616		$	2.24

As of August 31, 2017, there was approximately $1,400 of unrecognized compensation cost related to unvested stock options granted under the Plan. The weighted average remaining requisite service period of the unvested stock options was 0.6 years.

Restricted Stock

The Company had the following restricted stock grant activity for the six months ended August 31, 2017:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Outstanding at March 1, 2017		166,546		$	16.35
Granted		74,900			16.30
Terminated		—			—
Vested		(88,105	)		15.91
Outstanding at August 31, 2017		153,341		$	16.58

As of August 31, 2017, the total remaining unrecognized compensation cost related to unvested restricted stock granted under the Plan was approximately $2.1 million. The weighted average remaining requisite service period of the unvested restricted stock awards was 1.9 years.

11. Pension Plan

The Company and certain subsidiaries have a noncontributory defined benefit retirement plan (the “ Pension Plan ”), covering approximately 20% of aggregate employees. Benefits are based on years of service and the employee’s average compensation for the highest five compensation years preceding retirement or termination.

Pension expense is composed of the following components included in cost of goods sold and selling, general, and administrative expenses in the Company’s consolidated statements of earnings (in thousands):

	Three months ended						Six months ended
	August 31,						August 31,
	2017			2016			2017			2016
Components of net periodic benefit cost
Service cost	$	270		$	292		$	541		$	583
Interest cost		567			593			1,135			1,186
Expected return on plan assets		(948	)		(916	)		(1,897	)		(1,832	)
Amortization of:
Unrecognized net loss		511			670			1,021			1,341
Net periodic benefit cost	$	400		$	639		$	800		$	1,278

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2017

The Company is required to make contributions to the Pension Plan. These contributions are required under the minimum funding requirements of ERISA. Due to the enactment of the Highway and Transportation Funding Act (HATFA) in August 2014, plan sponsors can calculate the discount rate used to measure the Pension Plan liability using a 25-year average of interest rates plus or minus a corridor. The Company’s min imum required contribution to the Pension Plan is zero for the Pension Plan year ending February 28, 2018. However, the Company expects to make a cash contribution to the Pension Plan of between $2.0 million and $3.0 million during fiscal year 2018. The Company contributed $3.0 million to the Pension Plan during fiscal year 2017.

12. Earnings (loss) per Share

Basic earnings (loss) per share have been computed by dividing net earnings by the weighted average number of common shares outstanding during the applicable period. Diluted earnings (loss) per share reflect the potential dilution that could occur if stock options or other contracts to issue common shares were exercised or converted into common stock.

For the three and six months ended August 31, 2017, 42,500 and 95,692 shares, respectively, related to stock options were not included in the diluted earnings per share computation because the exercise price exceeded the average fair market value of the Company’s stock. For the three months ended August 31, 2016, 42,500 shares related to stock options were not included in the diluted earnings per share computation because the exercise price exceeded the average fair market value of the Company’s stock. For the six months ended August 31, 2016, all options were included in the diluted earnings (loss) per share computation because their average fair market value exceeded the exercise price of the Company’s stock. The following table sets forth the computation for basic and diluted earnings (loss) per share for the periods indicated:

	Three months ended				Six months ended
	August 31,				August 31,
	2017		2016		2017		2016
Basic weighted average common shares outstanding		25,342,747		25,893,218		25,388,292		25,847,051
Effect of dilutive options		23,254		17,157		17,571		21,748
Diluted weighted average common shares outstanding		25,366,001		25,910,375		25,405,863		25,868,799
Earnings (loss) per share - basic and diluted
Earnings per share on continuing operations	$	0.34	$	0.26	$	0.64	$	0.52
Earnings per share on discontinued operations		—		—		—		0.10
Loss per share on sale of discontinued operations		—		—		—		(1.01	)
Loss on discontinued operations		—		—		—		(0.91	)
Net earnings (loss)	$	0.34	$	0.26	$	0.64	$	(0.39	)
Cash dividends	$	0.20	$	1.675	$	0.375	$	1.85

ENNIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AUGUST 31, 2017

13 . Concentrations of Risk

Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash and trade receivables. Cash is placed with high-credit quality financial institutions. The Company believes its credit risk with respect to trade receivables is limited due to industry and geographic diversification. As disclosed on the Consolidated Balance Sheets, the Company maintains an allowance for doubtful receivables to cover the Company’s estimate of credit losses associated with accounts receivable.

The Company, for quality and pricing reasons, purchases its paper products from a limited number of suppliers. While other sources may be available to the Company to purchase these products, they may not be available at the cost or at the quality the Company has come to expect.

For the purposes of the Consolidated Statements of Cash Flows, the Company considers cash to include cash on hand and in bank accounts. The Federal Deposit Insurance Corporation insures accounts up to $250,000. At August 31, 2017, cash balances included $84.1 million that was not federally insured because it represented amounts in individual accounts above the federally insured limit for each such account. This at-risk amount is subject to fluctuation on a daily basis. While management does not believe there is significant risk with respect to such deposits, we cannot be assured that we will not experience losses on our deposits.

14. Subsequent Events

On September 22, 2017, the Board declared a quarterly cash dividend of 20 cents per share, which will be paid on November 10, 2017 to the shareholders of record on October 13, 2017.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2017

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Ennis, Inc. (formerly Ennis Business Forms, Inc.) (“ we ” or the “ Company ”) was organized under the laws of Texas in 1909. The Company and its subsidiaries 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 dealers. 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.

On January 27, 2017, we completed the acquisition of Independent Printing Company, Inc. and its related entities (collectively “ Independent ”) for $17.7 million in cash consideration, in a stock purchase transaction. Independent has 4 locations in Wisconsin, with its main facility located in DePere, Wisconsin. The business produces presentation folders, checks, wide format and commercial printing. Independent, which generated approximately $37.0 million in unaudited sales during calendar year 2016, will continue to operate under its brand names. Independent sells mainly through distributors and resellers. With this acquisition, we now have 4 folder facilities located in Michigan, Kansas, California and Wisconsin, as well as wide format capabilities in Colorado and Wisconsin.

On May 25, 2016 the Company sold its apparel operations conducted by Alstyle Apparel, LLC and its subsidiaries (the “ Apparel Segment ”) to Gildan Activewear Inc. for an all-cash purchase price of $110.0 million, subject to a working capital adjustment, customary indemnification arrangements, and the other terms of the Unit Purchase Agreement dated May 4, 2016.

During the fourth quarter of fiscal year 2016, we moved our folder operations from Omaha, Nebraska to Columbus, Kansas, due to the landlord’s desire to sell the facility. The move and inefficiencies associated with starting-up and training new employees had a negative impact on revenues and operational margins over the first half of fiscal year 2017. However, during the second half of fiscal year 2017 we saw a turnaround and the operations were marginally profitable. We expect these operations to be even more profitable during this fiscal year. In addition, our medical claims during fiscal year 2017 exceeded historical levels, which resulted in us incurring an additional $4.3 million in increased medical charges that had a negative impact on our earnings. To mitigate further medical charges, we implemented a new cost reimbursement program, as well as other changes to our health plan, as of the start of the calendar year 2017. Initial indications through the first half of fiscal year 2018 have been positive. While we are still in the early stages of this program and actual cost savings may vary from anticipated levels, we continue to believe that our future medical claims expenses will trend more in line with historical levels.

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. We operate 59 manufacturing plants throughout the United States in 21 strategically located states. Approximately 95% of the business products manufactured 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 sold 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®, Specialized Printed Forms®, 360º Custom Labels ^SM , ColorWorx®, Enfusion®, Uncompromised Check Solutions®, VersaSeal®, Ad Concepts ^SM , FormSource Limited ^SM , Star Award Ribbon Company®, Witt Printing®, B&D Litho®, Genforms®, PrintGraphics ^SM , Calibrated Forms®, PrintXcel ^SM , Printegra®, Curtis Business Forms ^SM , Falcon Business Forms ^SM , Forms Manufacturers ^SM , Mutual Graphics ^SM , TRI-C Business Forms ^SM , Major Business Systems ^SM , and Hoosier Data Forms®. We also sell the Adams McClure® brand (which provides Point of Purchase advertising for large franchise and fast food chains, as well as kitting and fulfillment); the Admore® and Folder Express® brands (which provide presentation folders and document folders); Ennis Tag & Label ^SM (which provides custom printed, high performance labels and custom and stock tags); Atlas Tag & Label®, Kay Toledo Tag ^SM , and Special Service Partners ^SM (SSP) (which provides custom and stock tags and labels); Trade Envelopes®, Block Graphics®, Wisco®, and National Imprint Corporation® (which provide custom and imprinted envelopes) and Northstar® and General Financial Supply® (which provide financial and security documents).

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2017

We sell predominantly through private printers and independent di stributors, as well as to many of our competitors. Northstar 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 also sells direct to a small number of customers, where sales are generally through advertising agencies.

The printing industry generally sells its products either through sales made predominantly to end users, a market dominated by a few large manufacturers, such as R.R. Donnelley and Sons, Staples, Inc., Standard Register Co. (a subsidiary of Taylor Corporation), and Cenveo, Inc., 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 dealers.

There are a number of competitors that operate in this segment, ranging in size from single employee-owned operations to multi-plant organizations. We believe our strategic locations and buying power permit us to compete on a favorable basis within the distributor market on competitive factors, such as service, quality, and price.

Distribution of business forms and other business products throughout the United States is primarily done through independent dealers, including business forms distributors, resellers, direct mail, commercial printers, payroll and accounts payable 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 from generally one major supplier at favorable prices based on the volume of business.

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

Business Challenges

We are engaged in an industry undergoing significant changes, including consolidation of some of our traditional channels, product obsolescence, and expansion of commodity materials to our competition, as well as cheaper material imports due to the strong dollar. 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 due to the continued low interest rate environment. We face highly competitive conditions throughout the 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, 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.

Excess production capacity and price competition within our industry – Due to the number of paper mills worldwide, some paper pricing has been and is expected to remain fairly weak. The strong dollar has attracted cheaper material into the United States notwithstanding the trade tariffs imposed, which has impaired the price advantage larger suppliers have held over smaller competitors. We will continue to focus our efforts on effectively managing and controlling our product costs to minimize these effects on our operational results, primarily through the use of forecasting, production and costing models, as well as working closely with our domestic suppliers to reduce our procurement costs. We will continue to look for ways to reduce as well as leverage our fixed costs. As always, some of these negative factors are cyclical and we will continue to focus on maintaining our margins when the inevitable currency swings go the other way.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2017

Continued consolidation of our customers – Our customers, who are distributors, are consolidating or are being acquired by competitors. As such, they demand better pricing and services, or they are required to relocate their business to their new parent company’s manufacturing facilities. While we continue to maintain a majority of this business, it is possible that these consolidations and acquisitions will impact our margins and our sales.

Cautionary Statements Regarding Forward Looking Statements

You should read this discussion and analysis in conjunction with our Consolidated Financial Statements and the related notes appearing elsewhere in this Report. All of the statements in this Report, other than historical facts, are forward-looking statements, including, without limitation, the statements made in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” particularly under the caption “Overview.” 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. Ennis 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 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 (i.e., energy, freight, labor, benefit costs, etc.) in markets that are highly price competitive and volatile; our ability to timely or adequately respond to technological changes in the industry; the impact of the Internet and other electronic media on the demand for forms and printed materials; the impact of foreign competition; changes in economic conditions; 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; and changes in government regulations. 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, 2017 before making an investment in our common stock.

Critical Accounting Policies and Estimates

In preparing our consolidated financial statements, we are required to make estimates and assumptions that affect the disclosures and reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates and judgments on an ongoing basis, including those related to allowance for doubtful receivables, inventory valuations, property, plant and equipment, intangible assets, pension plan obligations, accrued liabilities and income taxes. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We believe our accounting policies related to the aforementioned items are the most critical due to their effect on our more significant estimates and judgments used in preparation of our consolidated financial statements. For additional information, reference is made to the Critical Accounting Policies and Estimates section of our Annual Report on Form 10-K for the fiscal year ended February 28, 2017.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2017

Results of Operations

The discussion that follows provides information which we believe is relevant to an understanding of our results of operations and financial condition. The discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto, which are incorporated herein by reference. Unless otherwise indicated, this financial overview is for the continuing operations of the Company, which are comprised of the production and sales of business forms and other business products, and exclude the discontinued operations of the Apparel Segment. The operating results of the Company for the three and six months ended August 31, 2017 and the comparative periods for 2016 are set forth in the unaudited consolidated financial information included in the tables below.

Consolidated Summary

Unaudited Consolidated Statements of	Three Months Ended August 31,										Six Months Ended August 31,
Operations - Data ( Dollars in thousands )	2017					2016					2017					2016
Net sales	$	94,887		100.0	%	$	91,246		100.0	%	$	189,477		100.0	%	$	181,656		100.0	%
Cost of goods sold		64,100		67.6			64,208		70.4			128,771		68.0			127,924		70.4
Gross profit margin		30,787		32.4			27,038		29.6			60,706		32.0			53,732		29.6
Selling, general and administrative		17,096		18.0			16,057		17.6			34,468		18.2			32,128		17.7
(Gain) loss from disposal of assets		48		0			(4	)	—			63		—			2		—
Income from operations		13,643		14.4			10,985		12.0			26,175		13.8			21,602		11.9
Other expense, net		(87	)	(0.1	)		(220	)	(0.2	)		(264	)	(0.1	)		(229	)	(0.1	)
Earnings from continuing operations before income taxes		13,556		14.3			10,765		11.8			25,911		13.7			21,373		11.8
Provision for income taxes		5,016		5.3			3,981		4.4			9,587		5.1			7,906		4.4
Earnings from continuing operations		8,540		9.0	%		6,784		7.4	%		16,324		8.6	%		13,467		7.4	%
Income from discontinued operations, net of tax		—		—			—		—			—		—			2,481		1.3
Loss on sale of discontinued operations, net of tax		—		—			—		—			—		—			(26,042	)	(14.3	)
Earnings (loss) from discontinued operations, net of tax		—		—			—		—			—		—			(23,561	)	(13.0	)
Net earnings (loss)	$	8,540		9.0	%	$	6,784		7.4	%	$	16,324		8.6	%	$	(10,094	)	-5.6	%
Earnings (loss) per share - diluted
Continuing operations	$	0.34				$	0.26				$	0.64				$	0.52
Discontinued operations		—					—					—					0.10
		0.34					0.26					0.64					0.62
Sale of discontinued operations		—					—					—					(1.01	)
Net earnings (loss)	$	0.34				$	0.26				$	0.64				$	(0.39	)

Three months ended August 31, 2017 compared to three months ended August 31, 2016

Net Sales. Our net sales were $94.9 million for the quarter ended August 31, 2017, compared to $91.2 million for the same quarter last year, or an increase of $3.7 million, or 4.1%. The market continues to be fairly soft and competitive pricing pressures have intensified with the influx of cheaper off-shore paper coming into the United States, although this has abated to some extent with the recent weakening of the dollar. The acquisition of Independent, which was completed in January 2017 and which is an integral part of our strategy to offset normal industry revenue declines due to print attrition and other changes, contributed $10.4 million in sales during the second quarter of this fiscal year.

Cost of Goods Sold. Our cost of goods sold decreased by $0.1 million from $64.2 million for the three months ended August 31, 2016 to $64.1 million for the three months ended August 31, 2017, or 0.2%. Our gross profit margin (“ margin ”) was $30.8 million for the quarter, or 32.4%, compared to 29.6% for the same quarter last year. During the second quarter of fiscal 2017 our margin was negatively impacted by increased medical expenses of approximately $1.6 million as well as $1.3 million associated with the move of a folder operation from Omaha, Nebraska, to Columbus, Kansas. This operation saw a turnaround in the last two quarters of fiscal year 2017 and now is realizing margins more in line with historical levels, although sales levels still remain below historical norms.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2017

Selling, general, and administrative expense. For the three months ended August 31, 2017, our selling, general, and administrative (“ SG&A ”) expenses were $17.1 million compared to $16.1 million for the three months ended August 31, 2016, or an increase of 6.2 %. As a percentage of sales, the SG&A expenses were 18.0 % and 17.6% for the three months ended August 31, 2017 and August 31, 2016, respectively. The acquisition of Indepen dent added $2.0 million in SG&A expe nses during the quarter, or 19.0 % of its respective sales. As we continue to integrate this acquisition into our culture and systems, we will continue to look for ways to r educe these expenses to be more in line with Ennis’ historical SG&A percentage. In addition to the foregoing, the Company changed its accounting practice for handling its trademarks /trade names from an indefinite life to a finite life method. This change in accounting method added approximately $0.2 million to SG&A expense during the current quarter.

Loss from disposal of assets. The $48,000 loss from disposal of assets during the quarter related primarily to the sale of manufacturing equipment. The gain of $4,000 during the same quarter last year related primarily to the sale of a vehicle.

Income from operations. As a result of the above factors, our income from operations for the three months ended August 31, 2017 was $13.6 million, or 14.4% of net sales, as compared to $11.0 million, or 12.0% of net sales, for the three months ended August 31, 2016. The acquisition of Independent contributed approximately $1.7 million of income during the second quarter of this fiscal year.

Other expense. Other expense for the three months ended August 31, 2017 was $0.1 million as compared to $0.2 million for the three months ended August 31, 2016 due to increased interest income earned.

Provision for income taxes. Our effective tax rate for operations was 37.0% for the three months ended August 31, 2017 and August 31, 2016.

Net earnings. Earnings from operations were $8.5 million for the three months ended August 31, 2017 as compared to $6.8 million for the comparable quarter last year, an increase of 25.0%. Earnings from operations per diluted share for the three months ended August 31, 2017 was $0.34, compared to $0.26 for the same quarter last year. There were no discontinued operations during the three months ended August 31, 2017 and August 31, 2016.

Six months ended August 31, 2017 compared to six months ended August 31, 2016

Net Sales. Our net sales were $189.5 million for the six month period ended August 31, 2017, compared to $181.7 million for same period last year, or an increase of 4.3%. Although the market continues to be fairly soft and competitive pricing pressures have intensified with the influx of cheaper off-shore paper coming into the United States, the acquisition of Independent in January of 2017, which is an integral part of our strategy to offset normal industry revenue declines, contributed $20.1 million in sales during the six months ended August 31, 2017.

Cost of Goods Sold. Our cost of goods sold was $128.8 million for the six months ended August 31, 2017, compared to $127.9 million for the same period last year, a slight increase of $0.9 million, or 0.7%. Our margin was $60.7 million for the six month period ended August 31, 2017, or 32.0%. This compares to 29.6% for the same six month same period last year. For the same six month period last year, our margin was negatively impacted by the costs associated with the move of our folder operations in Nebraska to Kansas. The start-up training process for the labor force decreased efficiencies, thereby decreasing our sales and negatively impacting our margins for the six months ended August 31, 2016 by an estimated $2.9 million for the period. In addition, we incurred additional medical expenses due to our medical claims exceeding our historical levels; this impacted our margin for the six months ended August 31, 2016 by approximately $1.6 million.

Selling, general, and administrative expense. Our SG&A expenses were $34.5 million for the six months ended August 31, 2017, compared to $32.1 million for the same period last year, or an increase of 7.5%. As a percentage of sales, the SG&A expenses were 18.2% and 17.7% for the six months ended August 31, 2017 and August 31, 2016, respectively. The acquisition of Independent added $4.4 million in SG&A expenses during the six month period ended August 31, 2017, or 21.6% of its respective sales. As we continue to integrate this acquisition into our culture and systems, we will continue to look for ways to reduce these expenses to be more in line with Ennis’ historical SG&A percentage. In addition to the foregoing, the Company changed its accounting practice for handling its trademarks/trade names from an indefinite life to a finite life method. This change in accounting method added approximately $0.4 million to SG&A expense during the six month period ended August 31, 2017.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2017

(Gain) loss from disposal of assets. The $63,000 net loss from disposal of assets during the six months ended A ugust 31, 2017 related primarily to the sale of manu facturing equipment . The $2,000 net loss from d isposal of assets during the six months ended August 31, 2016 resulted pri marily from the sale of manufacturing equipment offset by a $4,000 gain from the sale of a vehicle.

Income from operations. Our income from continuing operations for the six months ended August 31, 2017 was $26.2 million, or 13.8% of sales, as compared to $21.6 million, or 11.9% of sales, for the six months ended August 31, 2016. The acquisition of Independent contributed approximately $2.9 million of income during the current six month period.

Other expense. Other expense for the six months ended August 31, 2017 was $0.3 million as compared to $0.2 million for the six months ended August 31, 2016 due to increased interest expense attributable to the print operations.

Provision for income taxes. Our effective tax rate for continuing operations was 37.0% for both the six months ended August 31, 2017 and the six months ended August 31, 2016.

Net earnings. Earnings from continuing operations were $16.3 million for the six months ended August 31, 2017 as compared to $13.5 million for the comparable period last year, an increase of $2.9 million. Earnings from continuing operations per diluted share for the six months ended August 31, 2017 was $0.64, compared to $0.52 for the same six month period last year. There were no discontinued operations during the six months ended August 31, 2017, compared to a net loss from discontinued operations of ($0.91) per diluted share in the same six month period last year. Overall, the Company realized a net profit of $0.64 per diluted share for the six months ended August 31, 2017 compared to a net loss of ($0.39) per diluted share for the six months ended August 31, 2016.

Liquidity and Capital Resources

We rely on our cash flows generated from operations and the borrowing capacity under our Credit Facility 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, debt repayments and related interest payments, contributions to our pension plan and the payment of dividends to our shareholders. We expect to generate sufficient cash flows from operations supplemented by our Credit Facility as required to cover our operating and capital requirements for the foreseeable future.

	August 31,		February 28,
(Dollars in thousands)	2017		2017
Working Capital	$	128,620	$	119,282
Cash and cash equivalents	$	83,865	$	80,466

Working Capital. Our working capital increased $9.3 million or 7.8%, from $119.3 million at February 28, 2017 to $128.6 million at August 31, 2017. Our working capital was impacted primarily by an increase in our cash of $3.4 million, an increase in our inventories of $1.3 million and a reduction of our accounts payable of approximately $3.4 million. Our current ratio, calculated by dividing our current assets by our current liabilities, increased from 5.0 to 1.0 at February 28, 2017 to 5.9 to 1.0 at August 31, 2017.

	Six months ended August 31,
(Dollars in thousands)	2017			2016
Net cash provided by operating activities	$	19,176		$	29,078
Net cash provided by (used in) investing activities	$	(2,915	)	$	105,253
Net cash used in financing activities	$	(12,862	)	$	(57,063	)

Cash flows from operating activities. Cash provided by operating activities decreased by $9.9 million from $29.1 million for the six months ended August 31, 2016 to $19.2 million for the six months ended August 31, 2017. Our decreased operational cash flows in comparison to the comparable period last year was primarily the result of five factors: (i) a decrease in operating cash flows from the recognition of a pre-tax loss of $36.8 million of our former Apparel Segment that was sold in the first quarter of last fiscal year, (ii) increased earnings of $26.4 million, (iii) an increase of $4.1 million in our prepaid expenses and income taxes, (iv) an increase in our inventories by $0.8 million, and (v) a decrease in account payable and accrued expenses of $2.9 million.

Cash flows from investing activities. Cash provided by (used in) investing activities decreased $108.2 million from $105.3 million provided to $2.9 million used for the six months ended August 31, 2016 and August 31, 2017, respectively. This was primarily due to the net proceeds of $107.4 million from the sale of the Apparel Segment which took place on May 25, 2016, offset by $0.4 million more in cash used for the acquisition of businesses. In addition, during the six months ended August 31, 2107 we used $1.6 million in cash on capital expenditures, compared to $0.9 million during the same period last year.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2017

Cash flows from financing activities. We used $44.2 million less in cash from financing activities this period than during the same period last year. We used $10.0 million in cash during the comparable period last year to pay down our debt, compared to no repayment o f debt in this period. We used $48.2 million last year to pay dividends which included a special one-time dividend of $1.50 per share that was paid as a result of the sale of the Apparel Segment, whereas we used $9.6 million to pay dividends this year. We used $3.3 million to repurchase our common stock under our stock repurchase program during the six months ended August 31, 2017, whereas we used $1.8 million to repurchase sh ares of our common stock during the six months ended August 31, 2016. In addition, we received $2.9 million from the exercise of stock options in the comparable period last year, whereas in this period no stock options were exercised.

Credit Facility. The Company’s Credit Facility, extended to the Company until August 11, 2020, provides the Company and its subsidiaries with up to $100.0 million in revolving credit, as well as a $20.0 million sublimit for the issuance of letters of credit and a $15.0 million sublimit for swing-line loans. Under the Credit Facility, the Company or any of its subsidiaries also can request up to three increases in the aggregate commitments in an aggregate amount not to exceed $50.0 million. The terms and conditions of the Credit Facility impose certain restrictions on our ability to incur additional debt, make capital expenditures, acquisitions and asset dispositions, as well as impose other customary covenants, such as requiring that our fixed charge coverage ratio not be less than 1.25:1.00 and our total leverage ratio not exceed 3.00:1:00. The Company may make dividends or distributions to shareholders so long as (a) no event of default has occurred and is continuing and (b) the Company’s net leverage ratio both before and after giving effect to any such dividend or distribution is equal to or less than 2.50:1.00.

The Credit Facility bears interest at the LIBOR rate plus a spread ranging from 1.0% to 2.0%, which rate was 2.3% (3 month LIBOR + 1.0%) at August 31, 2017 and 1.86% (2 month LIBOR + 1.0%) at February 28, 2017. The rate is determined by our fixed charge coverage ratio of total funded debt to EBITDA. As of August 31, 2017, we had $30.0 million of borrowings under the revolving credit line and $1.2 million outstanding under standby letters of credit arrangements, leaving approximately $68.8 million available in borrowing capacity. The Credit Facility is secured by substantially all of our assets (other than real property), as well as all capital securities of each of our subsidiaries.

It is anticipated that the available line of credit is sufficient to cover the Company’s working capital requirements for the foreseeable future, should it be required.

Pension Plan – We are required to make contributions to our Pension Plan. These contributions are required under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (“ ERISA ”). Due to the enactment of the Highway and Transportation Funding Act (HATFA) in August 2014, which effectively raises the discount rates mandated for determining the value of a plan’s benefit liability and annual cost of accruals, our minimum required contribution to the Pension Plan is zero for the Pension Plan year ending February 28, 2018. However, we expect to make a cash contribution to the Pension Plan of between $2.0 million and $3.0 million during fiscal year 2018. We made contributions totaling $3.0 million to our Pension Plan during fiscal 2017. As our Pension Plan assets are invested in marketable securities, fluctuations in market values could potentially impact our funding status, associated liabilities recorded and future required minimum contributions. At August 31, 2017, we had an unfunded pension liability recorded on our balance sheet of $4.8 million.

Inventories – We believe our inventory levels are sufficient to satisfy our customer demands and we anticipate having adequate sources of raw materials to meet future business requirements. We have long-term contracts in effect with paper suppliers that govern prices, but do not require minimum purchase commitments. Certain of our rebate programs do, however, require minimum purchase volumes. Management anticipates meeting the required volumes.

Capital Expenditures – 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 $3.0 million and $5.0 million. To date we have spent approximately $1.6 million on capital expenditures. We expect to fund these expenditures through existing cash flows.

Contractual Obligations & Off-Balance Sheet Arrangements – There have been no significant changes in our contractual obligations since February 28, 2017 that have, or are reasonably likely to have, a material impact on our results of operations or financial condition. We had no off-balance sheet arrangements in place as of August 31, 2017.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2017

Item 3. QUANTITATIVE AND QUALITA TIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Interest Rates

We are exposed to interest rate risk on short-term and long-term financial instruments carrying variable interest rates. We may from time to time utilize interest rate swaps to manage overall borrowing costs and reduce exposure to adverse fluctuations in interest rates. We do not use derivative instruments for trading purposes. Our variable rate financial instruments, consisting of the outstanding loans under the Credit Facility, totaled $30.0 million at August 31, 2017. The annual impact on our results of operations of a one-point interest rate change on the outstanding balance of the variable rate financial instruments as of August 31, 2017 would be approximately $0.3 million.

This market risk discussion contains forward-looking statements. Actual results may differ materially from this discussion based upon general market conditions and changes in domestic and global financial markets.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. A review and evaluation were carried out under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our “disclosure controls and procedures” (as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) as of the end of the period covered by this Quarterly Report on Form 10-Q, pursuant to Exchange Act Rules 13a-15 and 15d-15. Based upon that review and evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures as of August 31, 2017 are effective to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive and financial officers as appropriate to allow timely decisions regarding required disclosure. Due to the inherent limitations of control systems, not all misstatements may be detected. Those inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls could be circumvented by the individual acts of some persons or by collusion of two or more people. Our controls and procedures can only provide reasonable, not absolute, assurance that the above objectives have been met.

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15 that occurred during our fiscal quarter ended August 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2017

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of their property is subject.

Item 1A. 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, 2017.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In the 2016 calendar year, the Board authorized the repurchase of up to an aggregate of $40.0 million of the Company’s stock through the Company’s stock repurchase program. Under the repurchase program, share 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.

During the six months ended August 31, 2017, the Company, under the program, repurchased 191,033 shares of common stock at an average price of $17.33 per share. Since the program’s inception in October 2008, there have been 1,442,236 common shares repurchased at an average price of $14.99 per share. As of August 31, 2017 there was $18.4 million available to repurchase shares of the Company’s common stock under the program.

					Total Number
	Total				of Shares		Maximum Amount
	Number		Average		Purchased as		that May Yet Be Used
	of Shares		Price Paid		Part of Publicly		to Purchase Shares
Period	Purchased		per Share		Announced Programs		Under the Program
June 1, 2017 - June 30, 2017		—	$	—		—	$	18,377,146
July 1, 2017 - July 31, 2017		—	$	—		—	$	18,377,146
August 1, 2017 - August 31, 2017		—	$	—		—	$	18,377,146
Total		—	$	—		—	$	18,377,146

Items 3, 4 and 5 are not applicable and have been omitted

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2017

Item 6. Exhibits

The following exhibits are filed as part of this report.

Exhibit Number		Description

Exhibit 3.1(a)		Restated Articles of Incorporation, as amended through June 23, 1983 with attached amendments dated June 20, 1985, July 31, 1985, June 16, 1988 and November 4, 1998.*

Exhibit 3.1(b)		Amendment to Articles of Incorporation, dated June 17, 2004, incorporated herein by reference to Exhibit 3.1(b) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended February 28, 2007 filed on May 9, 2007(File No. 001-05807).

Exhibit 3.2		Fourth Amended and Restated Bylaws of Ennis, Inc., dated July 10, 2017, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on July 10, 2017 (File No. 001-05807).

Exhibit 10.1		Amended and Restated Executive Employment Agreement between Ennis, Inc. and Michael D. Magill, effective as of July 31, 2017, herein incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on August 3, 2017 (File No. 001-05807).

Exhibit 10.2		Amended and Restated Executive Employment Agreement between Ennis, Inc. and Ronald M. Graham, effective as of July 31, 2017, herein incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed on August 3, 2017 (File No. 001-05807).

Exhibit 10.3		Amended and Restated Executive Employment Agreement between Ennis, Inc. and Richard L. Travis, Jr., effective as of July 31, 2017, herein incorporated by reference to Exhibit 10.3 to the Registrant’s Form 8-K filed on August 3, 2017 (File No. 001-05807).

Exhibit 31.1		Certification Pursuant to Rule 13a-14(a) of Chief Executive Officer.*

Exhibit 31.2		Certification Pursuant to Rule 13a-14(a) of Chief Financial Officer.*

Exhibit 32.1		Section 1350 Certification of Chief Executive Officer.**

Exhibit 32.2		Section 1350 Certification of Chief Financial Officer.**

Exhibit 101		The following information from Ennis, Inc.’s Quarterly Report on Form 10-Q for the quarter ended August 31, 2017, filed on October 6, 2017, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail.*

*	Filed herewith

**	Furnished herewith

ENNIS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE PERIOD ENDED AUGUST 31, 2017

SIGNAT URES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ENNIS, INC.

Date: October 6, 2017		/s/ Keith S. Walters
		Keith S. Walters
		Chairman, Chief Executive Officer and President

Date: October 6, 2017		/s/ Richard L. Travis, Jr.
		Richard L. Travis, Jr.
		Vice President — Finance and CFO, Treasurer and
		Principal Financial and Accounting Officer

Exhibit 3.1(a)

STATEMENT OF RESOLUTIONS

ESTABLISHING

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

ENNIS BUSINESS FORMS, INC.

FILED

In the office of the

Secretary of State of Texas

NOV 04 1998

Corporations Section

To:	The Secretary of State
	of the State of Texas:

Pursuant to the provisions of Article 2.13 of the Texas Business Corporation Act (the “TBCA”), the undersigned corporation submits the following statement for the purpose of establishing and designating a series of shares and fixing and determining the preferences, limitations and relative rights of the series:

The name of the corporation is Ennis Business Forms, Inc.

The following resolution, establishing and designating a series of shares and fixing and determining the relative rights and preferences of the series, was duly adopted by all necessary action of the corporation on November 4, 1998:

RESOLVED, that the Board of Directors of Ennis Business Forms, Inc. (the “Company”) hereby designates 25,000 shares of the Company’s Preferred Stock, $10.00 par value, as Series A Junior Participating Preferred Stock with the designation, preferences, limitations, and relative rights as follows:

Section 1. Designation and Amount. The shares of such series shall be designated as “Series A Junior Participating Preferred Stock” (the “Series A Preferred Stock”) and the number of shares constituting the Series A Preferred Stock shall be 25,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Company convertible into Series A Preferred Stock.

Section 2. Dividends and Distributions.

(A) Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock, par value $2.50 per share (the “Common Stock”), of the Company, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first (1st) day of January, April, July and October in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the Company shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B) The Company shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than fifty (50) days prior to the date fixed for the payment thereof.

Section 3. Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights:

(A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the shareholders of the Company. In the event the Company shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B) Except as otherwise provided herein, in any other Statement of Resolutions establishing a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Company having general voting rights shall vote together as one class on all matters submitted to a vote of shareholders of the Company.

(C) Except as set forth herein, or as otherwise provided by law holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

Section 4. Certain Restrictions.

(A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distribution, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Company shall not:

(i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;

(ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that the Company may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Company ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or

(iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(B) The Company shall not permit any subsidiary of the Company to purchase or otherwise acquire for consideration any shares of stock of the Company unless the Company could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

Section 5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Company in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Articles of Incorporation, or in any other Statement of Resolutions establishing a series of Preferred Stock or any similar stock or as otherwise required by law.

Section 6. Liquidation, Dissolution or Winding Up . Upon any liquidation, dissolution or winding up of the Company, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $1,000 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Company shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 7. Consolidation or Merger. In case the Company shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Company shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 8. No Redemption. The shares of Series A Preferred Stock shall not be redeemable.

Section 9. Rank. The Series A Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Company’s Preferred Stock.

Section 10. Amendment. The Articles of Incorporation of the Company shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Stock, voting together as a single class.

IN WITNESS WHEREOF, the undersigned has executed and subscribed this Statement of Resolutions and does hereby affirm the foregoing as true under the penalties of perjury this 4th day of November, 1998.

	ENNIS BUSINESS FORMS, INC.

	By:		/s/ Keith S. Walters
			Keith S. Walters, Chairman, President and CEO

	FILED
	In the Office of the
	Secretary of State of Texa
RESTATED ARTICLES OF INCORPORATION
	JUL 01 1983
	Clerk II U
	Corporations Section

ARTICLE ONE

Ennis Business Forms, Inc., pursuant to the provisions of Article 4.07 of the Texas Business Corporation Act, hereby adopts Restated Articles of Incorporation which accurately copy the Articles of Incorporation and all amendments thereto that are in effect to date and as further amended by such Restated Articles of Incorporation as hereinafter set forth and which contain no other change in any provision thereof.

ARTICLE TWO

The Articles of Incorporation of the corporation are amended by the Restated Articles of Incorporation as follows:

The Amendment alters or changes Article Two of the amended Articles of Incorporation to be and read as follows:

“Article Two

The purpose for which the Corporation is organized is the transaction of any or all lawful business for which corporations may be incorporated under the Texas Business Corporation Act.”

The Amendment alters or changes Article Three of the amended Articles of Incorporation to be and read as follows:

“Article Three

The post office address of the Corporation’ s current registered office is 107 North Sherman Street, Ennis, Texas 75119, and the name of its current registered agent at such address is Kenneth A. McCrady.”

The Amendment alters or changes Article Four of the amended Articles of Incorporation to be and read as follows:

“Article Four

The period of its duration is perpetual.”

The Amendment alters or changes Article Five of the Amended Articles of Incorporation to be and read as follows:

“Article Five

The number of directors of the Corporation shall be as set forth in the Bylaws as they shall from time to time be amended, but shall never be less than nine, At the annual meeting of shareholders subsequent to the date of adoption of these Restated Articles of Incorporation, the shareholders entitled to vote at such meeting shall elect a number of directors equal to one-third of the directors constituting the Board of Directors as set forth in Management's Proxy Statement for the annual meeting of shareholders pursuant to Section 14 of the Securities Exchange Act of 1934, as amended, each of whom shall serve on the Board of Directors for a period of three years or until the third annual meeting of shareholders following the original election; the shareholders shall elect an additional one-third of the members of the Board of Directors as set forth in the Proxy Statement to serve for a period of two years or until the second annual meeting of shareholders following the election; and the shareholders shall elect a number of directors equal to one-third of the Board of Directors as set forth in the Proxy Statement to serve for a period of one year or until the next succeeding annual meeting of shareholders. Thereafter, at each annual meeting of the shareholders, the shareholders shall elect a number of directors as nearly as shall be possible equal to one-third of the number of directors then constituting the Board of Directors. In the event that one director shall be added to the Board of Directors in any one year, that director shall be elected by the shareholders for a three-year term. In the event that two or more directors are to be added to the Board of Directors in any given year, then each director shall be elected for a term of one, two or three years, as shall be determined by a majority of the Board of Directors in office at the time of the addition of such new directors so that as nearly as practicable one-third of the total number of directors shall be reelected at each succeeding annual meeting of shareholders.”

The following amendments are additions to the original or Amended Articles of Incorporation and the full text of each provision added is as follows:

“Article Seven

No holder of any class of capital stock of the corporation shall have a preemptive right to subscribe for or purchase any shares of stock of any class, whether now or hereafter authorized, or any notes, bonds, debentures, warrants, options, rights or evidence of indebedness, whether or not convertible into or exchangeable for any such security.

Article Eight

In the event of a proposal for the merger, consolidation, or sale of all or substantially all of the assets of the Corporation with or into or to any entity which is controlled by, controlling or under common control with any person or “group” of persons, as the term “group” of persons is defined for the purposes of Section 13 of the Securities Exchange Act of 1934 as amended, and the Rules and Regulations promulgated by the United States Securities and Exchange Commission thereunder, which owns or has the power to vote and control, either through record or beneficial ownership of shares of the Corporation's voting securities, in excess of five percent of the total number of any class of voting securities then outstanding (herein referred to as a “Related Person” or “Related Group”), the proposal shall first be submitted to the entire Board of Directors and, if approved by not less than two-thirds of the then members of the Board of Directors plus one additional director, the proposal shall be submitted to the shareholders of the Corporation for the approval of the holders of not less than eighty percent of the total number of shares of voting securities then outstanding and entitled to vote on the proposal.

In the event of any proposal for the recapitalization of the Corporation that would have the effect of increasing the voting power of a Related Person or Related Group or any plan or proposal for the liquidation or dissolution of the Corporation proposed by, or on behalf of, a Related Person, Related Group, or any entity, controlled by, under common control with, or controlling the Related Person or Related Group, the proposal shall first be submitted to the Board of Directors and, if approved by not less than two-thirds of the then members of the Board of Directors plus one additional director, the proposal shall be submitted to the shareholders of the Corporation for the approval of the holders of not less than eighty percent of the total number of shares of voting securities then outstanding and entitled to vote on the proposal.

The provisions of this Article Eight shall not apply to any transaction approved by two-thirds of the then Board of Directors plus one additional director provided that the terms of such transaction will result in the related person or related group paying to the holders of all shares of each class and of each series of each class of outstanding voting stock no less than the higher of (i) the highest price per share which such person or group paid to acquire any shares of such class or series pursuant to any tender offer, cash purchase, open market transaction, or privately negotiated sale, not effected on the open market within three years prior to the record date set to determine the stockholders entitled to vote on the proposed transaction, and (ii) the fair market price as defined in the next succeeding paragraph. The consideration to be paid to the holders of shares of any particular class or series shall be in cash or such other form, including debt or equity securities, or part cash and part debt, or part equity securities, so that the aggregate value of such consideration shall be equal to the highest of the above-defined prices per share.

The term “fair market price” shall mean with respect to any class or series of voting stock, the highest closing sale price during the thirty-day period immediately preceding the date in question of a share of such stock in 100 share lots on the composite tape on the New York Stock Exchange listed stocks, or, if such stock is not quoted on such composite tape on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is then listed, or, if such stock is not listed on any such Exchange the highest closing bid quotation with respect to, a share of stock in 100 share lots during the thirty-day period preceding the date in question on the National Association of Security Dealers, Inc. Automated Quotation. Systems, or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined in good faith by the Board of Directors of the Corporation.

On all other proposals for the merger, consolidation or sale of substantially all of the assets of the Corporation, recapitalization, dissolution or liquidation the directors and shareholders votes shall be as required by Part Five of the Texas Business Corporation Act, as amended.

Upon the approval of the requisite number of shareholders, the Corporation shall file with the Secretary of State appropriate documents depending upon the nature of the transaction.

The provisions set forth in this Article Eight of the Restated Articles of Incorporation may not be repealed or amended in any respect without the affirmative vote of the holders of shares of capital stock of the Corporation having not less than eighty percent of the voting power of all classes of voting securities then outstanding.

Article Nine

The Corporation may indemnify any person (and the heirs, executors and administrators of such persons) who is, or was, a director, officer or former director, officer, employee or agent of the Corporation, or any person who may have served at its request as a director, officer, employee or agent of another corporation, foreign or domestic, or any partnership, proprietorship, trust, association or enterprise, whether a profit or non-profit business in which it owned shares of capital stock or other interest or of which it is a creditor, against expenses actually and necessarily incurred by him in connection with the defense of any claim, action, suit or proceeding whether brought by or in the right of the Corporation and whether civil, criminal, administrative or investigative in nature, or in connection with any appeal relating thereto, in which he is made a party or threatened to be made a party by reason of being or having been such director, officer, employee or agent except in relation to matters as to which he shall be adjudged in such action suit or proceeding to be liable for negligence or misconduct in the performance of duty, but such indemnification shall not be deemed exclusive of any other rights to which such person may be entitled under any bylaw, agreement, vote of shareholders or otherwise.

The Corporation shall have the power to purchase and maintain insurance on behalf of any such person, or any person who is a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any capacity arising out of his status as such whether or not the Corporation would have the power to indemnify him against such liabilities under the provisions of the Texas Business Corporation Act.

Article Ten

The Board of Directors of the Corporation is expressly authorized and empowered to make, alter, amend or repeal the bylaws of the Corporation or to adopt new bylaws.

Article Eleven

The names and addresses of the current Directors of the Corporation are:

McCluer Brewster		107 North Sherman Street
		Ennis, Texas 75119

Harry M. Cornell, Jr.		Leggett & Platt, Inc.
		Carthage, Missouri

James B. Gardner		Mercantile National Bank at Dallas
		Dallas, Texas

Harold W. Hartley		Tenneco Financial Services, Inc.
		Houston, Texas

J. C. McCormick		Eppler Guerin & Turner, Inc.
		2001 Bryan Tower
		Dallas, Texas 75201

Kenneth A. McCrady		107 North Sherman Street
		Ennis, Texas 75119

Joseph J. Pinto		EXCO, Inc.
		437 Madison Avenue
		New York, New York 10022

R. E. Roberts		Rangaire Corporation
		Cleburne, Texas

Pat G. Sorrells		American Business Equipment, Inc.

		3415 Brentwood
		Odessa, Texas 79762

ARTICLE THREE

Each such amendment made by these Restated Articles of Incorporation has been effected in conformity with the provisions of the Texas Business Corporation Act and such Restated Articles of Incorporation and each such amendment made by the Restated Articles of Incorporation were duly adopted by the shareholders of the Corporation on the 16th day of June, 1983.

ARTICLE FOUR

The number of shares outstanding was 1,803,665; the number of shares entitled to vote on the Restated Articles of Incorporation as so amended was 1,803,665; the number of shares voted for, the number of shares voted against, and the number of shares abstaining with respect to each such Amendment are as follows:

	For	Against	Abstain

Amendment to Article Two	1,462,699	618	9,614
Amendment to Article Three	1,509,038	3,338	3,660
Amendment to Article Four	1,464,153	3,611	5,153
Amendment to Article Five	1,289,576	70,860	12,162
To add Article Seven	1,292,210	19,648	17,640
To add Article Eight	1,233,008	88,378	8,312
To add Article Nine	1,454,587	11,895	8,064
To add Article Ten	1,295,466	20,479	13,553
To add Article Eleven	1,503,504	7,637	6,363

ARTICLE FIVE

The Articles of Incorporation and all amendments and supplements thereto are hereby superseded by the following Restated Articles of Incorporation which accurately copy the entire text thereof and as amended as above set forth:

Restated Articles of Incorporation

Ennis Business Forms, Inc.

(adopted by the Shareholders on June 16, 1983)

Article One

The name of the Corporation is Ennis Business Forms, Inc.

Article Two

The purpose for which the Corporation is organized is the transaction of any or all lawful business for which corporations may be incorporated under the Texas Business Corporation Act.

Article Three

The post office address of the Corporation's current registered office is 107 North Sherman Street, Ennis, Texas 75119, and the name of its current registered agent at such address is Kenneth A. McCrady.

Article Four

The period of its duration is perpetual.

Article Five

The number of directors of the Corporation shall be as set forth in the Bylaws as they shall from time to time be amended, but shall never be less than nine. At the first annual meeting of shareholders subsequent to the date of adoption of these Restated Articles of Incorporation, the shareholders entitled to vote at such meeting shall elect a number of directors equal to one-third of the directors constituting the Board of Directors as set forth in Management's Proxy Statement for the annual meeting of shareholders pursuant to Section 14 of the Securities Exchange Act of 1934, as amended, each of whom shall serve on the Board of Directors for a period of three years or until the third annual meeting of shareholders following the original election; the shareholders shall elect an additional one-third of the members of the Board of Directors as set forth in the Proxy Statement to serve for a period of two years or until the second annual meeting of shareholders following the election; and the shareholders shall elect a number of directors equal to one-third of the Board of Directors as set forth in the Proxy Statement to serve for a period of one year or until the next succeeding annual meeting of shareholders. Thereafter, at each annual meeting of the shareholders, the shareholders shall elect a number of directors as nearly as shall be possible equal to one-third of the number of directors then constituting the Board of Directors. In the event that one director shall be added to the Board of Directors in any one year, that director shall be elected by the shareholders for a three-year term. In the event that two or more directors are to be added to the Board of Directors in any given year, then each director shall be elected for a term of one, two or three years, as shall be determined by a majority of the Board of Directors in office at the time of the addition of such new directors so that as nearly as practicable one-third of the total number of directors shall be reelected at each succeeding annual meeting of shareholders.

Article Six

The maximum number of shares of capital stock which this Corporation is authorized to issue or to have outstanding at any time shall be six million (6,00,000) shares, of which five million (5,000,000) shares shall be common stock of the par value of $2.50 each (hereinafter called the “Common Stock”), and of which one million (1,000,000) shares shall be preferred stock of the par value of $10.00 each (hereinafter called the “Preferred Stock”).

Shares of Preferred Stock may be issued from time to time in one or more series, each such series to have such designation as may be fixed by the Board of Directors prior to the issuance of any shares thereof. Each such series shall have such preferences and relative, participating, optional or other special rights, qualifications, limitations or restrictions thereof as shall be stated in the resolution or resolutions providing for the issue of such series of Preferred Stock. The Preferred Stock of any series shall or may be (a) entitled to have such voting powers, full or limited, or be without voting powers, (b) subject to redemption at such time or times and at such price or prices (c) entitled to receive dividends (which may be cumulative or noncumulative) at such rates, on such conditions and at such times; (d) entitled to such rights upon the dissolution of, or upon the distribution of the assets of, the Corporation, and (e) made convertible into, or exchangeable for, shares of any other series of the same or any other class or classes of stock of the Corporation, at such price or prices or at such rates of exchange and with such adjustments as shall or may be provided, stated, expressed in the resolution or resolutions adopted by the Board of Directors of the Corporation providing for the issue of such series.

The Common Stock of the Corporation shall be subject to the prior rights of the Preferred Stock as may be set forth in the resolution or resolutions by the Board of Directors providing for the issuance of the Preferred Stock. Except for such voting rights as may be provided for in the resolution or resolutions creating any one or more series of Preferred Stock, sole voting rights shall be in the Common Stock.

Article Seven

Article Eight

In the event of a proposal for the merger, consolidation, or sale of all or substantially all of the assets of the. Corporation with or into or to any entity which is controlled by, controlling or under common control with any person or “group” of persons, as the term “group” of persons is defined for the purposes of Section 13 of the Securities Exchange Act of 1934 as amended, and the Rules and Regulations promulgated by the United States Securities and Exchange Commission thereunder, which owns or has the power to vote and control, either through record or beneficial ownership of shares of the Corporation's voting securities, in excess of five percent of the total number of any class of voting securities then outstanding (herein referred to as a “Related Person” or “Related Group”), the proposal shall first be submitted to the entire Board of Directors and, if approved by not less than two-thirds of the then members of the Board of Directors plus one additional director, the proposal shall be submitted to the shareholders of the Corporation for the approval of the holders of not less than eighty percent of the total number of shares of voting securities then outstanding and entitled to vote on the proposal.

The provisions of this Article Eight shall not apply to any transaction approved by two-thirds of the then Board of Directors plus one additional director provided that the terms of such transaction will result in the related person or related group paying to the holders of all shares of each class and of each series of each class of outstanding voting stock no less than the higher of (i) the highest price per share which such person or group paid to acquire any shares of such class or series pursuant to any tender offer, cash purchase, open market transaction, or privately negotiated sale, not effected on the open market within three years prior to the record date set to determine the stockholders entitled to vote on the proposed transaction, and (ii) the fair market price as defined in the next succeeding paragraph. The consideration to be paid to the holders of shares of any particular class or series shall be in cash or such other form, including debt or equity securities, or part cash and part debt, or part equity securites, so that the aggregate value of such consideration shall be equal to the highest of the above-defined prices per share.

The term “fair market price” shall mean with respect to any class or series of voting stock, the highest closing sale price during the thirty-day period immediately preceding the date in question of a share of such stock in 100 share lots on the composite tape on the New York Stock Exchange listed stocks, or, if such stock is not quoted on such composite tape on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is then listed, or, if such stock is not listed on any such Exchange the highest closing bid quotation with respect to a share of stock in 100 share lots during the thirty-day period preceding the date in question on the National Association of Security Dealers, Inc. Automated Quotation Systems, or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined in good faith by the Board of Directors of the Corporation.

Upon the approval of the requisite number of shareholders, the Corporation shall file with the Secretary of State appropriate documents depending upon the nature of the transaction.

Article Nine

The Corporation may indemnify any person (and the heirs, executors and administrators of such persons) who is, or was, a director, officer or former director, officer, employee or agent of the Corporation, or any person who may have served at its request as a director, officer, employee or agent of another corporation, foreign or domestic, or any partnership, proprietorship, trust, association or enterprise, whether a profit or non-profit business in which it owned shares of capital stock or other interest or of which it is a creditor, against expenses actually and necessarily incurred by him in connection with the defense of any claim, action, suit or proceeding whether brought by or in the right of the Corporation and whether civil, criminal, administrative or investigative in nature, or in connection with any appeal relating-thereto, in which he is made a party or threatened to be made a party by reason of being or having been such director, officer, employee or agent except in relation to matters as to which he shall be adjudged in such action suit or proceeding to be liable for negligence or misconduct in the performance of duty, but such indemnification shall not be deemed exclusive of any other rights to which such person may be entitled under any bylaw, agreement, vote of shareholders or otherwise.

Article Ten

The Board of Directors of the Corporation is expressly authorized and empowered to make, alter, amend or repeal the bylaws of the Corporation or to adopt new bylaws.

Article Eleven

The names and addresses of the current Directors of the Corporation are:

McCluer Brewster		107 North Sherman Street
		Ennis, Texas 75119

Harry M. Cornell, Jr.		Leggett & Platt, Inc.
		Carthage, Missouri

James B. Gardner		Mercantile National Bank at Dallas
		Dallas, Texas

Harold W. Hartley		Tenneco Financial Services, Inc.
		Houston, Texas

J. C. McCormick		Eppler Guerin & Turner, Inc.
		2000 Bryan Tower
		Dallas, Texas 75201

Kenneth A. McCrady		107 North Sherman Street
		Ennis, Texas 75119

Joseph J. Pinto		EXCO, Inc.
		437 Madison Avenue
		new York, New York 10022

R. E. Roberts		Rangaire Corporation
		Cleburne, Texas

Pat G. Sorrells		American Business Equipment, Inc.
		3415 Brentwood

Odessa, Texas 79762

Dated June 23 , 1983
	ENNIS BUSINESS FORMS, INC.

	By:	/s/ Kenneth A. McCrady
		President
		/s/ Paul Math
	And:	Secretary

STATE OF TEXAS	§
	§
COUNTY OF ELLIS	§

Before me, a notary public, on this day personally appeared Kenneth A. McCrady, known to me to be the person whose name is subscribed to the foregoing document and, being by me first duly sworn, declared that the statements therei contained are true and correct.

Given under my hand and seal of office this 23rd day of June, A.D., 1983.

	MARILYN LINSTEADT
	(Printed or stamped name)
(Notarial Seal)	Notary Public, State of Texas
	My commission expires:

	July 22, 1986
4216v

		FILED
		In The Office of the
		Secretary of State of Texas
		JUN 24 1985
	ARTICLES OF AMENDMENT	Clerk U.S
	TO THE	Corporation Section
	RESTATED ARTICLES OP INCORPORATION
	OF ENNIS BUSINESS FORMS, INC.

Pursuant to the provisions of Article 4.04 of the Texas Business Corporation Act, the undersigned corporation adopts the following Articles of Amendment to its Restated Articles of Incorporation.

ARTICLE ONE

The name of the corporation is Ennis Business Forms, Inc.

ARTICLE TWO

The following amendment to the Articles of Incorporation was adopted by the shareholders of the corporation on June 20, 1985:

Article Six of the Restated Articles of Incorporation is hereby amended so as to be and read as follows:

ARTICLE SIX

The maximum number of shares of capital stock which this Corporation is authorized to issue or to have outstanding at any time shall be eleven million (11,000,000) shares, of which ten million (10,000,000) shares shall be common stock of the par value of $2.50 each (hereinafter called the “Common Stock”), and of which one million (1,000,000) shares shall be preferred stock of the par value of $10.00 each (hereinafer called the “Preferred Stock”).

Shares of Preferred Stock may be issued from time to time in one or more series, each such series to have such designation as may be fixed by the Board of Directors prior to the issuance of any shares thereof. Each such series shall have such preferences and relative, participating, optional or other special rights, qualifications, limitations or restrictions thereof as shall be stated in the resolution or resolutions providing for the issue of such series of Preferred Stock. The Preferred Stock of any series shall or may be (a) entitled to have such voting powers, full or limited, or be without voting powers, (b) subject to redemption at such time or times and at such price or prices, (c) entitled to receive dividends (which may be cumulative or noncumulative) at such rates, on such conditions and at such times, (d) entitled to such rights upon the dissolution of, or upon the distribution of the assets of, the Corporation, and (e) made convertible into, or exchangeable for, shares of any other series of the same or any other class or classes of stock of the Corporation, at such price or prices, or at such rates of exchange and with such adjustments as shall or may be provided, stated, or expressed in the resolution or resolutions adopted by the Board of Directors of the Corporation providing for the issue of such series.

The Common Stock of the corporation shall be subject to the prior rights of the Preferred Stock as may be set forth in the resolution or resolutions by the Board of Directors providing for the issuance of the Preferred Stock. Except for such voting rights as may be provided for in the resolution or resolutions creating any one or more series of Preferred Stock, sole voting rights shall be in the Common Stock.

ARTICLE THREE

The number of shares of the Corporation outstanding at the time of such adoption was 3,431,629; and the number of shares entitled to vote thereon was 3,431,629.

ARTICLE FOUR

The number of shares voted for such amendment was 3,184,175 and the number of shares voted against such amendment was 77,855.

Dated June 20, 1985

	ENNIS BUSINESS FORMS, INC.
	By:	/s/ Robert L. Mitchell
		Robert L. Mitchell, Its President

	And:	/s/ Harve Cathey
		Harve Cathey, Its Secretary

STATE OF TEXAS	§
	§
COUNTY OF DALLAS	§

I, Paul L. Wright, a Notary Public, do hereby certify that on this 20th day of June, 1985, personally appeared before me Robert L. Mitchell, who declared he is President of the corporation executing the foregoing document, and being first duly sworn, acknowledged that he signed the foregoing document in the capacity therein set forth and declared that the statements therein contained are true and correct.

IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year above written.

		/s/ Paul L. Wright
My Commission Expires:		Notary Public in and For
		State of Texas
May 31, 1989
		Paul L. Wright
		Name of Notary Printed

[Notarial Seal ]

ARTICLES OF CORRECTION

ARTICLES OF AMENDMENT TO

RESTATED ARTICLES OF INCORPORATION

ENNIS BUSINESS FORMS, INC.

FILED

In the Office of the

Secretary of State of Texas

AUG 16 1985

Clerk II-I

Corporations Section

Pursuant to the provisions of Part Seven, Texas Miscellaneous Corporation Laws Act, the undersigned organization submits the following Articles of Correction to the Articles of Amendment to Restated Articles of Incorporation:

ARTICLE ONE

The name of the corporation is Ennis Business Forms, Inc.

ARTICLE TWO

On June 20, 1985, Ennis Business Forms, Inc. submitted and on June 24, 1985, the Secretary of State of the State of Texas filed Articles of Amendment to the Restated Articles of Incorporation of Ennis Business Forms, Inc. which are to be corrected.

ARTICLE THREE

The Articles of Amendment so submitted erroneously stated that the total number of shares authorized to be issued was Eleven Million (11,000,000) of which Ten Million (10,000,000) shall be Common Stock of the par value of $2.50 each) and of which One Million (1,000,000) shall be preferred stock of the par value of $10.00 each. The total number of shares which are authorized to be issued by vote of the shareholders at the annual meeting of shareholders on June 20, 1985, was Sixteen Million (16,000,000) shares of which Fifteen Million (15,000,000) shares shall be Common Stock of the par value of $2.50 each, and of which One Million (1,000,000) shares shall be preferred stock of the par value of $10.00 each.

ARTICLE FOUR

The portion of the Articles of Amendment to Restated Articles of Incorporation of Ennis Business Forms, Inc. as corrected, is as follows:

ARTICLE SIX

The maximum number of shares of capital stock which this Corporation is authorized to issue or to have outstanding at any time shall be sixteen million (16,000,000) shares, of which fifteen million (15,000,000) shares shall be common stock of the par value of $2.50 each (hereinafter called the “Common Stock”), and of which one million (1,000,000) shares shall be preferred stock of the par value of $10.00 each (hereinafter called the “Preferred Stock”).

	ENNIS BUSINESS FORMS, INC.
July 31, 1985
	By:	/s/ Robert L. Mitchell
		Robert L. Mitchell,
		Its President

	And:	/s/ Harve Cathey
		Harve Cathey,
		Its Secretary

STATE OF TEXAS	§
	§
COUNTY OF DALLAS	§

I, Paul L. Wright, a Notary Public, do hereby certify that on this 31 ^st day of July, 1985, personally appeared before me Robert L. Mitchell, who declared he is President of the corporation executing the foregoing document, and being first duly sworn, acknowledged that he signed the foregoing document in the capacity therein set forth and declared that the statements therein contained are true and correct.

IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year above written.

		/s/ Paul L . Wright
My Commission Expires:		Notary Public in and For
		State of Texas
May 31, 1989
		Paul L . Wright
		Name of Notary Printed

[Notarial Seal]

8796v

	ARTICLES OF AMENDMENT	FILED
	TO THE	In the Office of the
	RESTATED ARTICLES OF INCORPORATION	Secretary of State of Texas
	OF ENNIS BUSINESS FORMS, INC.
		JUL 19 1988

		Corporations Section

Pursuant to the provisions of Article 4.04 of the Texas Business Corporation Act, the undersigned corporation adopts the following Articles of Amendment to its Restated Articles of Incorporation.

ARTICLE ONE

The name of the corporation is Ennis Business Forms, Inc.

ARTICLE TWO

The following amendment to the Articles of Incorporation was adopted by the shareholders of the corporation on June 16, 1988:

Article Six of the Restated Articles of Incorporation is hereby amended so as to be and read as follows:

ARTICLE SIX

The maximum number of shares of capital stock which this Corporation is authorized to issue or to have outstanding at any time shall be forty-one million (41,000,000) shares, of which forty million (40,000,000) shares shall be common stock of the par value of $2.50 each (hereinafter called the “Common Stock”), and of which one million (1,000,000) shares shall be preferred stock of the par value of $10.00 each (hereinafter called the “Preferred Stock”).

Shares of Preferred Stock may be issued from time to time in one or more series, each such series to have such designation as may be fixed by the Board of Directors prior to the issuance of any shares thereof. Each such series shall have such preferences and relative, participating, optional or other special rights, qualifications, limitations or restrictions thereof as shall be stated in the resolution or resolutions providing for the issue of such series of Preferred Stock. The Preferred Stock of any series shall or may be (a) entitled to have such voting powers, full or limited, or be without voting powers, (b) subject to redemption at such time or times and at such price or prices, (c) entitled to receive dividends (which may be cumulative or noncumulate) at such rates, on such conditions and at such times, (d) entitled to such rights upon the dissolution of, or upon the distribution of the assets of, the Corporation, and (e) made convertible into, or exchange able for, shares of any other series of the same or any other class or classes of stock of the Corporation, at such price or prices or at such rates of exchange and with such adjustments as shall or may be provided, stated, or expressed in the resolution or resolutions adopted by the Board of Directors of the Corporation providing for the issue of such series.

ARTICLE THREE

The number of shares of the Corporation outstanding at the time of such adoption was 9,183,913 ; and the number of shares entitled to vote thereon was 9,183,913 .

ARTICLE FOUR

The number of shares voted for such amendment was 6,983,683 and the number of shares voted against such amendment was 511,477 .

Dated: June 16, 1988

	ENNIS BUSINESS FORMS, INC.
	By :	/s/ Robert L. Mitchell
		Its president

	And:	Harve Cathey
		Its Secretary

STATE OF TEXAS	)

COUNTY OF ELLIS	)

1, Marilyn Linsteadt, a Notary Public, do hereby certify that on this 16th day of June, 1988, personally appeared before me Robert L. Mitchell, who declared he is President of the corporation executing the foregoing document, and being first duly sworn, acknowledged that he signed the foregoing document in the capacity therein set forth and declared that the statements therein contained are true and correct.

IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year above written.

		Marilyn Linsteadt
		Notary Public in and For State of Texas

My Commission Expires:

7-22-90		Marilyn Linsteadt
(Notarial Seal)		Name of Notary Printed

Exhibit 31.1

RULE 13a-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Keith S. Walters, Chief Executive Officer of Ennis, Inc., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Ennis, Inc.;

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s second fiscal quarter) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Keith S. Walters

Keith S. Walters

Chief Executive Officer

October 6, 2017

Exhibit 31.2

RULE 13a-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Richard L. Travis, Jr., Chief Financial Officer of Ennis, Inc., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Ennis, Inc.;

3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Richard L. Travis, Jr.

Richard L. Travis, Jr.

Chief Financial Officer

October 6, 2017

EXHIBIT 32.1

SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Keith S. Walters, Chairman of the Board and Chief Executive Officer of Ennis, Inc. (the “ Company ”), certify, that pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code:

(1)	The Quarterly Report on Form 10-Q of the Company for the period ended August 31, 2017, as filed with the Securities Exchange Commission on the date hereof (the “ Report ”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company as of the dates and for the periods expressed in the Report.

	/s/ Keith S. Walters
	Keith S. Walters
	Chairman of the Board and
	Chief Executive Officer
	Date: October 6, 2017

The foregoing Certification is being furnished solely pursuant to 18 U.S.C. Section 1350; it is not being filed for purposes of Section 18 of the Securities Exchange Act, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation languages in such filing.

EXHIBIT 32.2

SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Richard L. Travis, Jr., Chief Financial Officer of Ennis, Inc. (the “ Company ”), certify, that pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code:

(1)	The Quarterly Report on Form 10-Q of the Company for the period ended August 31, 2017, as filed with the Securities Exchange Commission on the date hereof (the “ Report ”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company as of the dates and for the periods expressed in the Report.

		/s/ Richard L. Travis, Jr.
		Richard L. Travis, Jr.
		Chief Financial Officer
		Date: October 6, 2017