Success That Doesn't Wear Thin
Ennis’
Alstyle Apparel deal gives the
firm a new niche.
In most
printing industry acquisitions, a larger company buys
a smaller firm that produces similar products. Keith
Walters, chairman, CEO and president of Midlothian,
Texas-based Ennis Inc., pursues those kinds of deals
when he deems them profitable for the company and its
shareholders. But that’s just one part of Ennis’
2-pronged acquisition strategy.
The other
part focuses on customers, not consolidation. “We
look to buy companies that make different products than
we do but that could be sold through the same distribution
channel,” says Walters, a DMIA Board member. The
strategy is rooted in a reality many print manufacturers
face: Ennis once made only business forms because its
customers sold only such forms. Because distributors
now offer commercial printing, labels, promotional items
and other growth products, Ennis is evolving with its
clients.
Big Deals for a Growing Firm
Ennis now
makes or imports T-shirts, fleece shirts, pants, hats
and other apparel distributors can sell, thanks to its
June 2004 merger with activewear manufacturer Alstyle
Apparel, Anaheim, Calif. Alstyle began in Chicago in
1976 as a small importer of T-shirts for local screenprinters
and grew to become the largest distributor of Fruit
of the Loom and Hanes products. In 1990, the firm started
producing its own line of T-shirts under the Murina
label. Today, it operates distribution centers in California,
Chicago, Atlanta, Texas, Philadelphia, Canada and Mexico.
Ennis’ deal was mammoth—$242 million—but
still in line with its goal of satisfying the distributor
channel’s needs, Walters says. Immediately, Ennis
became a major player in the wearables market and had
a profitable complement to its forms, promotional and
financial products. “The distributors I talk to,
including all of our best customers, either have an
apparel line or are moving into apparel,” Walters
says. Alstyle now operates as an Ennis subsidiary, and
Todd Scarborough is its president. “We’re
investing in products we think distributors are going
to sell today and into the future,” Walters says.
“That’s how Ennis intends to make it to
our 100-year anniversary.”
Thanks to the Alstyle deal, Ennis virtually doubled
it size overnight. And it made another move in June
2004, buying Dayton, Ohio-based manufacturer Crabar/GBF
for $18 million. The transactions were separate, but
completed at the same time because the same person,
Roger Brown, was president of Alstyle and president
and CEO of Crabar/GBF. Walters had met with Brown during
dinner May 13, 2004, at DMIA’s Spring Management
Conference, to discuss the potential deals. Both men’s
careers began outside the printing industry, and both
had been involved in major acquisitions before. “Our
experience bases matched a little better than if one
of us had always been involved in printing,” Walters
says. “These deals definitely wouldn’t have
happened if Roger and I hadn’t met and developed
a relationship.” As part of the merger deal, Brown
remained president of Alstyle until earlier this year,
when Scarborough succeeded him.
The deals paid off quickly for Ennis. During its third
quarter ended Nov. 30, 2004—the quarter it finalized
the Alstyle merger—the company increased net sales
38.2 percent to $91.8 million, and increased quarterly
earnings 29.6 percent to $6.1 million. Also, in November
2004, Ennis acquired Royal Business Forms Inc., a privately
held company headquartered in Arlington, Texas, for
$3.7 million in Ennis stock. The deal increased Ennis’
short run printing and financial document capabilities.
In 2003, Ennis generated nearly $260 million in sales,
ranking them on Forbes magazine’s list of “200
Best Small Companies” and No. 2 on Print Solutions’
Top 100 Manufacturers list. This year, Ennis is the
No. 1 company on the Top 100 list.
Paying Dividends, Adding Technology
The Motley
Fool (www.fool.com),
a popular web site for investors, praised Ennis in a
July 9, 2004 story entitled “Beautiful, Not Boring,”
saying: “Although Ennis offers little in the way
of tantalizing press releases or bleeding-edge technology,
it offers plenty for investors who prefer their portfolio
companies to pound out cash and pay dividends.”
This year, Ennis is rolling out a business-to-business
storefront project called EnnisStores.com. It operates
on the ChangingInc™ platform that allows customers
to make purchases online. Here’s what makes the
store different: At each distributor’s request,
the company provides access to partnering manufacturers’
products. Current partners include Highland Computer
Forms, based in Hillsboro, Ohio, and Maggio Data Forms
Printing Ltd., Hauppauge, N.Y. Other manufacturers will
be added soon, says Steve Osterloh, Ennis’ director
of marketing. Each partnering firm can take its own
approach to marketing and selling the solution to customers.
“We understand that distributors need choices
and that they will not shop at a store where they don’t
have choice,” Osterloh says. “We think we
have a competitive advantage with our name and brand,
and we think the customer will see our value and we
will earn their business.” He anticipates that
Ennis will connect hundreds or possibly thousands of
clients by the end of the year. (Distributors can sign
up for Ennis’ current order-management tool by
clicking on “Digital Dealer” at www.ennis.com.
For details on the new system, visit www.changinginc.com.)
“Buying and selling online is becoming more important
to our customer base,” says Zack Smith, Ennis’
marketing supervisor. “This project represents
both the capabilities and culture of Ennis in that we
have the resources, relationships and knowledge to make
it a success for our distributors.”
Darin Painter is managing editor of Print Solutions.
Email him your comments at dpainter@PSDA.org.
“We’re
investing back into the distributor market, into products
we think distributors are going to sell in the future.
That’s how Ennis intends to make it to our 100-year
anniversary.”
Keith Walters
Chairman,
CEO and President
Ennis Inc.,
Midlothian, Texas
THE FILE
ON ENNIS INC.
Company:
Ennis Inc.
Founded:
1909
Location:
Midlothian, Texas
Principal:
Keith S. Walters, chairman, CEO and president
Business
in Brief: Ennis primarily produces and sells business
forms, apparel and other business products. One of the
largest private-label printed business product suppliers
in the United States, it has 42 production and distribution
facilities in 17 states, Mexico and Canada. Ennis operates
four business segments: Forms Solutions Group, Promotional
Solutions Group, Financial Solutions Group and Apparel
Group. The firm’s subsidiaries include 360°
Custom Labels, Adams McClure, Admore, Calibrated Forms
Co., General Financial Supply, GenForms, Northstar,
Star Award Ribbon Co., Witt Printing and Alstyle Apparel.
