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Ennis’ Former Executive Sells Shares Following the Sale of Division He Oversaw

Ennis Inc. (NYSE:EBF) has also witnessed high insider trading activity on the sell side in recent weeks. Irshad Ahmad, who no longer serves as an officer of Ennis following the company’s sale of its Apparel Division to Alstyle Operations LLC on April 1, sold 19,867 shares on Thursday for $19.97 each, trimming his overall holding to 11,474 shares. Mr. Ahmad, who served as Vice President of the Apparel Division and Chief Technology of Ennis, will continue to serve as an employee of the Apparel Division at Alstyle following the closing of the aforementioned transaction, with his employment having been transferred to A and G Inc, an affiliate of Alstyle’s. Ennis sold its apparel division for approximately $88 million, which included $76 million in cash and $12 million paid under a capital lease that is set to cover certain retained equipment utilized by the Apparel Division.

Ennis prints and manufactures a wide line of business forms and business products through the Print segment, as well as formerly manufacturing a line of activewear through the aforementioned Apparel Division. The Print segment distributes business products and forms in the United States mainly through independent dealers, while the Apparel Division produced and sold activewear, including T-shirts, fleece goods and other wearables. The company’s net consolidated sales for the nine months that ended November 30 totaled $440.8 million, up slightly from $440.0 million reported for the same period of the prior year. Print sales increased by 3.8% year-over-year to $294.7 million, mainly due to the impact of recent acquisitions. Meanwhile, apparel sales decreased by 6.5% to $146.0 million due to a weak lower-end domestic retail environment and stricter adherence to selling price preservation. Ennis decided to sell the Apparel Division because it was seen as a non-core asset. The proceeds from the sale will be channeled into expanding the Print Segment through strategic acquisitions.

Shares of Ennis have advanced by 42% in the past 12 months, which may serve as yet another reason behind Mr. Ahmad’s recent sales. The stock is priced at around 15.0-times expected earnings, below the forward P/E ratio of 18.5 for the S&P 500 Index. There were 16 hedge funds in our system with stakes in the company at the end of December, with them having accumulated 6% of its outstanding shares. Jim Simons’ Renaissance Technologies owned 481,000 shares of Ennis Inc. (NYSE:EBF) on December 31.