ENNIS, INC. (EBF) FY 2022 MD&A

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis provides material historical and prospective disclosures intended to enable investors and other users to assess our financial condition and results of operations. Statements that are not historical are forward-looking and involve risk and uncertainties, including those discussed under the caption “Risk Factors” in Item 1A of this Annual Report on Form 10-K and elsewhere in this Report. You should read this discussion and analysis in conjunction with our Consolidated Financial Statements and the related notes appearing elsewhere in this Report. The words “anticipate,” “preliminary,” “expect,” “believe,” “intend” and similar expressions identify forward-looking statements. 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.

In view of such uncertainties, investors should not place undue reliance on our forward-looking statements since such statements may prove to be inaccurate and speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This Management’s Discussion and Analysis covers the continuing operations of the Company, which are comprised of the production and sale of business forms and other business products. This Management’s Discussion and Analysis includes the following sections:

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Overview – An overall discussion regarding our Company, the business challenges and opportunities we believe are key to our success, and our plans for facing these challenges relating to our continuing operations.

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Critical Accounting Policies and Estimates – A discussion of the accounting policies that require our most critical judgments and estimates relating to our continuing operations. This discussion provides insight into the level of subjectivity, quality, and variability involved in these judgments and estimates. This section also provides a summary of recently adopted and recently issued accounting pronouncements that have or may materially affect our business.

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Results of Operations – An analysis of our consolidated results of operations and segment results for the three years presented in our consolidated financial statements. This analysis discusses material trends within our continuing business and provides important information necessary for an understanding of our continuing operating results.

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Liquidity and Capital Resources – An analysis of our cash flows and a discussion of our financial condition and contractual obligations. This section provides information necessary to evaluate our ability to generate cash and to meet existing and known future cash requirements over both the short and long term.

References to 2022, 2021 and 2020 refer to the fiscal years ended February 28, 2022, February 28, 2021 and February 29, 2020, respectively.

Overview

The Company – 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.

Our Business Challenges – Our industry is currently experiencing consolidation of traditional supply channels, product obsolescence, paper supplier capacity adjustments, and increased pricing and potential supply allocations due to demand/supply curve imbalance. Technology advances have made electronic distribution of documents, internet hosting, digital printing and print-on-demand valid, cost-effective alternatives to traditional custom-printed documents and customer communications. Improved equipment has become more accessible to our competitors. We face highly competitive conditions throughout our supply chain in an already over-supplied, price-competitive print industry. In addition to the risk factors discussed under the caption “Risk Factors” in Item 1A of this Annual Report, some of the key challenges of our business include the following:

COVID-19 Pandemic – The global spread of the novel strain of COVID-19 has significantly impacted health and economic conditions throughout the United States and the world, including the markets in which we operate.

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Although the U.S. economy has gained in recovery, it continues to be significantly impacted by supply-chain disruptions, labor shortages, and shifting demand. Certain economic indicators, such as the improvement in the job market, reflect the continued resumption of economic activity that had been curtailed due to the COVID-19 pandemic. Even so, there continue to be significant uncertainties associated with the COVID-19 pandemic. The full extent of the impact of COVID-19 on our financial condition, liquidity, operations, suppliers, industry, workforce and operational results is currently uncertain and will depend on many factors outside the Company’s control, including without limitation the timing, extent, trajectory and duration of the pandemic and the impact of the pandemic on the global economy including labor market conditions, economic activity, supply chain shortages and disruptions, inflationary pressure and demand for the Company’s products. While the impacts of the pandemic have been significant, our results of operations were within our forecasted parameters for the period ended February 28, 2022.

The following is a summary of our recent and anticipated actions in response to COVID-19 and its impact on our business.

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Cash/Liquidity:

We believe our strong liquidity position will help us mitigate the ongoing adverse impacts of COVID-19. On February 28, 2022 we had $85.6 million in cash. During the period, our cash position increased by $10.4 million and our working capital position increased by $14.8 million from February 28, 2021. In addition, our liquidity and debt ratios have all improved since the start of the pandemic, with our current ratio (calculated by dividing our current assets by our current liabilities) increasing from 4.22 to 4.44, our quick ratio (calculated by dividing our current assets less inventories by our current liabilities) increasing from 3.29 to 3.35, and our net debt to equity ratio (after application of cash) decreasing from -0.04 to -0.20.

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Receivable and Inventory Management:

We continue to closely monitor and manage our outstanding trade receivables and inventories. During the period, our days’ sales in our receivables decreased slightly to 35 days from 39 days (February 28, 2021), and our days’ sales of inventory increased slightly to 37 days from February 28, 2021 (34 days). The Company continues to monitor incoming orders and is adjusting its raw material purchases accordingly.

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Supply Chain:

Most of our products are sourced domestically from suppliers deemed “essential” by the government, and therefore currently remain in operation, and we have been able to switch from impacted suppliers to non-impacted suppliers in several instances since the outbreak of COVID-19. While the availability of paper in the North American market is tighter than it has been in a long time, our strong vendor relationship with our paper supplier allows us to meet customer demand for our business product needs. However, if one or more of our major suppliers are negatively impacted by the COVID-19 pandemic, through plant closures, deteriorating financial condition, or otherwise, it could adversely affect our operational results and financial condition.

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Cost Savings:

We consolidated a few of our underperforming manufacturing facilities into existing locations with excess capacity to reduce future costs and improve our operational efficiencies. We believe the modifications to our cost structure in response to the sales impact of the COVID-19 pandemic will not impact our ability to service increased customer demand when economic conditions improve.

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Capital Expenditures:

We continue to make capital expenditures for operational maintenance purposes, as may be required. Additionally, we will carefully review and make new capital expenditures for equipment to the extent such

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expenditures make economic sense by improving our operations and not jeopardizing our strong liquidity position.

The ultimate impact of COVID-19 is difficult to predict, including due to factors discussed under the caption “Risk Factors” in Item 1A of this Annual Report on Form 10-K.

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. In addition, the impact of COVID-19 on the speed of this transformation is unknown, but it is expected to accelerate the decline for some of our products. Transforming our product offerings in order to continue to provide innovative, valuable solutions through lower labor and fixed charges to our customers on a proactive basis will require us to make investments in new and existing technology and to develop key strategic business relationships, such as print-on-demand services and product offerings that assist customers in their transition to digital business environments. In addition, we will continue to look for new market opportunities and niches through acquisitions, such as the addition of our envelope offerings, tag offerings, folder offerings, healthcare wristbands, specialty packaging, direct mail, pressure seal products, secure document solutions, innovative in-mold label offerings and long-run integrated products with high color web printing, which provide us with an opportunity for growth and differentiate us from our competition. The ability to make investments in new and existing technology and/or to acquire new market opportunities through acquisitions is dependent on the Company’s liquidity and operational results. While currently the pandemic has not materially impacted our liquidity and it is not currently expected to, a protracted delay or reversal in the economy recovering could have a negative impact on our continued ability to make the aforementioned investments or to consummate acquisitions.

Production capacity and price competition within our industry – Changes in the value of the U.S. dollar can have a significant impact on the pricing and supply of paper. The weakening of the U.S. dollar will usually result in the dissipation of any pricing advantage that foreign imports have over domestic suppliers, which typically results in lower levels of imported papers and an increase in domestic exports. With increased pricing power, domestic paper producers can better control the supply of paper by eliminating capacity or changing the products produced on their large paper machines. The strengthening of the U.S. dollar usually has the opposite effect: more cheap imported paper; less domestic exports; and lower pricing power in the hands of domestic paper producers. Domestic paper suppliers typically seek to balance supply and demand, including by (if possible) taking capacity out of the market, whether by taking production off-line or switching production to alternative paper products. Generally, if mills are running at high capacity, suppliers are able to raise prices. Paper supply has grown more limited and due to tight demand and supply, there has been a tremendous amount of upward pressure on prices. As such, pricing into fiscal 2023 is currently expected to increase.

As the economy has improved, demand has increased for coated and uncoated freesheet papers which has reduced the excess inventory in the market. It is unclear whether this is a temporary situation or if conditions could stretch for a more extended amount of time. Regardless of these factors, many of which are cyclical, we continue to believe paper pricing will remain in a range which will not unfavorably impact our margins. Additionally, the possibility of paper shortages in the market is not a major concern due to our primary material supplier’s commitment to the Company. Consistent with our historical practice, we intend to continue to focus on effectively managing and controlling our product costs through the use of forecasting, production and costing models, as well as working closely with our domestic suppliers to reduce our procurement costs, in order to minimize effects on our operational results. In addition, we will continue to look for ways to reduce and leverage our fixed costs.

Continued consolidation of our customers – Our customers are distributors, many of which are consolidating or are being acquired by competitors. We continue to maintain a majority of the business we have had with our customers historically, but it is possible that these consolidations and acquisitions, which we expect to continue in the future, ultimately will impact our margins and sales.

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

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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 the following accounting policies are the most critical due to their effect on our more significant estimates and judgments used in preparation of our consolidated financial statements.

Pension Plan – We maintain the Pension Plan for employees. Included in our financial results are Pension Plan costs that are measured using actuarial valuations and requires the use of a number of assumptions. Changes in these assumptions can result in different expense and liability amounts and future actual experience may differ significantly from current expectations.

As our Pension Plan assets are invested in marketable securities, fluctuations in market values could potentially impact our funding status and associated liability recorded. The expected rate of return on assets was unchanged from the 6.50% at February 28, 2021.

Similar to fluctuations in market values, a drop in the discount rate could potentially negatively impact our funded status, recorded pension liability and future contribution levels with the opposite impact occurring for an increase in the discount rate. During fiscal year 2022 the discount rate used to determine the net pension obligations for purposes of our Consolidated Financial Statements increased to 3.10% from 2.65% in fiscal year 2021. Each 10 basis point change in the discount rate impacts our computed pension liability by about $0.75 million.

Also, continued changes in the mortality tables could potentially impact our funded status. While no change was made to the base mortality table, Pri-2012, we adopted the new MP-2021 mortality improvement scale. The updated mortality improvement scale reflects slightly higher projected mortality improvement in the future compared to the previous assumption resulting in an increase in the February 28, 2022 pension liability of $0.15 million.

Goodwill and Other Intangible Assets – Amounts allocated to intangibles and goodwill are determined based on valuation analysis for our acquisitions. Amortizable intangibles are amortized over their expected useful lives. We evaluate these amounts periodically (at least once a year) to determine whether a triggering event has occurred during the year that would indicate potential impairment.

We assess goodwill for impairment annually as of December 1, or more frequently if impairment indicators are present. The Company uses qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the fair value of a reporting unit exceeds its carrying amount, including goodwill. Some of the qualitative factors considered in applying this test include consideration of macroeconomic conditions, industry and market conditions, cost factors affecting business, overall financial performance of the business, and performance of the share price of the Company. If qualitative factors are not deemed sufficient to conclude that it is more likely than not that the fair value of the reporting unit exceeds its carrying value, then a one-step approach is applied in making an evaluation. The evaluation utilizes multiple valuation methodologies, including a market approach (market price multiples of comparable companies) and an income approach (discounted cash flow analysis). The computations require management to make significant estimates and assumptions, including, among other things, selection of comparable publicly traded companies, the discount rate applied to future earnings reflecting a weighted average cost of capital, and earnings growth assumptions. A discounted cash flow analysis requires management to make various assumptions about future sales, operating margins, capital expenditures, working capital and growth rates. If the evaluation results in the fair value of the reporting unit being lower than the carrying value, an impairment charge is recorded. A goodwill impairment charge was not required for the fiscal years ended February 28, 2022 or February 28, 2021.

Revenue Recognition – We recognize revenues from product sales upon shipment to the customer if the terms of the sale are freight on board (“FOB”) shipping point (and therefore title and all risks of ownership, including risk of loss, passes to the customer upon shipping) or, to a lesser extent, upon delivery to the customer if the terms of the sale are FOB destination (and therefore title and all risks of ownership, including risk of loss, passes to the customer upon delivery). Net sales consist of gross sales invoiced to customers, less certain related charges, including discounts, returns and other allowances. Returns, discounts and other allowances have historically been insignificant. In some cases and upon customer request, we print and store custom print product for customer specified future delivery, generally within twelve months. In this case, risk of loss from obsolescence passes to the customer, the customer is

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invoiced under normal credit terms and revenue is recognized when manufacturing is complete. Approximately $14.6 million, $12.5 million, and $11.0 million of revenue were recognized under these agreements during fiscal years ended 2022, 2021 and 2020, respectively.

We maintain an allowance for doubtful receivables to reflect estimated losses resulting from the inability of customers to make required payments. On an on-going basis, we evaluate the collectability of accounts receivable based upon historical collection trends, current economic factors, and the assessment of the collectability of specific accounts. We evaluate the collectability of specific accounts using a combination of factors, including the age of the outstanding balances, evaluation of customers’ current and past financial condition and credit scores, recent payment history, current economic environment, discussions with our sales managers, and discussions with the customers directly.

Inventories – Our inventories are valued at the lower of cost or net realizable value. We regularly review inventory values on hand, using specific aging categories, and write down inventory deemed obsolete and/or slow-moving based on historical usage and estimated future usage to its estimated net realizable value. As actual future demand or market conditions may vary from those projected by management, adjustments to inventory valuations may be required.

Income Taxes – As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each jurisdiction in which we operate. This process involves estimating our actual current tax exposure together with assessing temporary differences resulting from different treatment of items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. We must then assess the likelihood that our deferred tax assets will be recovered based on our history of earnings expectations for future taxable income including taxable income in prior carry-back years, as well as future taxable income. To the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance, we must include an expense within the tax provision in the consolidated statements of operations. In the event that actual results differ from these estimates, our provision for income taxes could be materially impacted.

Results of Operations

The following discussion provides information which we believe is relevant to understanding our results of operations and financial condition. The discussion and analysis should be read in conjunction with the accompanying 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. The operating results of the Company for fiscal year 2022 and the comparative fiscal years 2021 and 2020 are included in the tables below.

Consolidated Summary

Net Sales. Our net sales increased from $358.0 million for fiscal year 2021 to $400.0 million for fiscal year 2022, an increase of 11.7%. Our sales for the period partially rebounded from the impact on economic conditions driven by the COVID-19 pandemic and resulted in an increase in sales volume. The acquisition of Ameriprint, which was completed in June 2021, is an integral part of our strategy to offset normal industry revenue declines due to print

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attrition and other changes. Our acquisitions during fiscal years 2021 and 2022 positively impacted our net sales by approximately $23.9 million during fiscal year 2022 compared to 2021.

Our net sales decreased from $438.4 million for fiscal year 2020 to $358.0 million for fiscal year 2021, a decrease of 18.3%. Our sales for the period were significantly impacted by economic conditions driven by the COVID-19 pandemic and resulted in a decrease in sales volume. The acquisition of Infoseal, which was completed in December 2020, is an integral part of our strategy to offset normal industry revenue declines due to print attrition and other changes. Our acquisitions during fiscal years 2021 and 2020 positively impacted our net sales by approximately $12.5 million during fiscal year 2021 compared to 2020.

Cost of Goods Sold. Our manufacturing costs increased from $254.2 million for fiscal year 2021 to $285.3 million for fiscal year 2022, or 12.2%. Our gross profit margin (“margin”) decreased slightly from 29.0% for fiscal year 2021 to 28.7% for fiscal year 2022. Paper supply has grown more limited and due to tight demand and supply, there has been a tremendous amount of upward pressure on prices. We have been adjusting our pricing to cover paper inflation during the year, but the increasing backlog of unproduced orders creates timing issues which has an impact on our gross profit margins.

Our manufacturing costs decreased from $309.5 million for fiscal year 2020 to $254.2 million for fiscal year 2021, or 17.9%. Our margin decreased slightly from 29.4% for fiscal year 2020 to 29.0% for fiscal year 2021. Sales for the fiscal year 2021 were significantly impacted by reduced economic activity due to COVID-19. As such, our reduced production levels adversely impacted our factory utilization and efficiency during the first and second quarters of fiscal year 2021. Our modification to our cost structure in response to the sales impact of the COVID-19 pandemic and the integration of our acquisitions last fiscal year resulted in improvements in our margin as a percentage of sales during the fourth quarter

Selling, general, and administrative expenses. Our selling, general, and administrative (“SG&A”) expenses increased approximately 4.5%, from $68.3 million for fiscal year 2021 to $71.4 million for fiscal year 2022. As a percentage of sales, SG&A expenses declined from 19.1% in fiscal year 2021 to 17.9% for fiscal year 2022. Our acquisitions negatively impacted our SG&A expenses by approximately $2.3 million during fiscal year 2022.

Our SG&A expenses decreased approximately 12.7%, from $78.2 million for fiscal year 2020 to $68.3 million for fiscal year 2021. As a percentage of sales, SG&A expenses increased from 17.8% in fiscal year 2020 to 19.1% for fiscal year 2021. We continue to seek ways to more fully leverage our SG&A expenses, and to reduce SG&A expenses following acquisitions through the implementation of our systems and processes, which allows us to integrate many of our acquired companies’ back-office processes.

(Gain) loss from disposal of assets. The $0.3 million gain from disposal of assets for fiscal year 2022 is primarily related to the sale of an unused manufacturing facility and manufacturing equipment. The $0.4 million gain from disposal of assets for fiscal year 2021 is primarily attributed to the $.5 million gain on the sale of land and manufacturing facilities offset by approximately a $0.1 million loss in the sale of manufacturing equipment. The $0.1 million gain from disposal of assets for fiscal year 2020 is primarily attributed to the sale of a manufacturing facility and manufacturing equipment.

Income from operations. Primarily due to factors described above, our income from operations for fiscal year 2022 was $43.6 million, or 10.9% of net sales, compared to $35.9 million, or 10.0% of net sales, for fiscal year 2021.

Our income from operations for fiscal year 2021 was $35.9 million, or 10.0% of net sales, compared to $50.8 million, or 11.6% of net sales, for fiscal year 2020. Our acquisitions contributed approximately $2.9 million to our operational income during fiscal year 2021.

Other income (expense). Other expense was $1.6 million for fiscal year 2022 compared to expense of $2.6 million for fiscal year 2021. The decrease in expense was primarily related to decrease in pension expense. Other expense was $2.6 million for fiscal year 2021 compared to income of $0.4 million for fiscal year 2020. The increase in expense was primarily the result of an increase in our pension expense of $2.7 million, of which $1.6 million was a settlement charge as a result of the lump sums paid out from our Pension Plan in fiscal year 2021 that were greater than the service cost and interest cost for the fiscal year.

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Provision for income taxes. Our effective tax rates for fiscal years 2022, 2021 and 2020 were 30.9%, 27.6%, and 25.3%, respectively. The higher effective tax rate for fiscal year 2022 was primarily the result of distributions this year from our deferred compensation plan which was terminated last fiscal year (2.3%) and a prior year audit assessment primarily attributable to our discontinued operations of the Apparel Segment sold in 2016 (1%). The higher effective tax rate for fiscal year 2021 was primarily impacted by permanent nondeductible expenses and settlement of certain state and local tax matters.

Net earnings. Net earnings were $29.0 million, or $1.11 per diluted share for fiscal year 2022, as compared to $24.1 million, or $0.93 per share for fiscal year 2021. Our acquisitions of Infoseal and AmeriPrint added $23.9 million in revenues and $0.08 in diluted earnings per share for the fiscal year compared to the corresponding prior year.

Our net earnings continue to be impacted by COVID-19 pandemic. The increase in pension expense from fiscal year 2020 to 2021 included in other expense impacted our results by $0.07 per diluted share. Net earnings were $28.9 million, or $1.11 per diluted share for fiscal year 2022. Net earnings for fiscal year 2021 was $24.1 million, or $0.93 per diluted share, and $38.3 million, or $1.47 per diluted share for fiscal year 2020.

Liquidity and Capital Resources

We rely on our cash flows generated from operations 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, contributions to our noncontributory defined benefit plan and the payment of dividends to our shareholders. We expect to generate sufficient cash flows from operations to cover our operating and capital requirements for the foreseeable future.

Working Capital. Our working capital increased by approximately $14.8 million, or 13.1%, from $113.0 million at February 28, 2021 to $127.8 million at February 28, 2022. Our current ratio, calculated by dividing our current assets by our current liabilities, increased from 4.2-to-1.0 for fiscal year 2021 to 4.4-to-1.0 for fiscal year 2022. Our increase in working capital primarily reflects the increase in cash, $10.4 million, accounts receivable $1.1 million and inventory $5.6 million offset by the increase in our accounts payable, $1.9 million.

Our working capital increased by approximately $1.1 million, or 1.0%, from $111.9 million at February 29, 2020 to $113.0 million at February 28, 2021. Our current ratio, calculated by dividing our current assets by our current liabilities, increased from 4.0-to-1.0 for fiscal year 2020 to 4.2-to-1.0 for fiscal year 2021. Our working capital and current ratio were negatively impacted by a $6.9 million increase in cash and a $3.9 million decrease in accounts payable and employee compensation and benefits. These positive increases were offset by a $5.2 million decrease in accounts receivable, a $2.2 million decrease in prepaid income taxes and a $1.9 million decrease in our inventories.

Our operations continue to be affected by the ongoing COVID-19 pandemic. The ultimate disruption that may result from the virus is uncertain, but it may result in a material adverse impact on our financial position, operations and cash flows. Possible areas that may be affected include, but are not limited to, disruption to our customers and revenue, labor workforce, and an impairment in the value of our long-lived assets, including property, plant and equipment, goodwill and other intangible assets.

Cash Flow Components

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Cash flows from operating activities. Cash provided by operating activities was $50.7 million for fiscal year 2022 (a decrease of $2.1 million compared to fiscal year 2021), $52.8 million for fiscal year 2021 (a decrease of $4.4 million compared to fiscal year 2020) and $57.2 million for fiscal year 2020.

Our decreased operational cash flows in fiscal year 2022 compared to fiscal year 2021 was primarily the result of a $7.6 million decrease from inventories and a $7.2 million decrease from our accounts receivable offset by a $4.9 million increase from our accounts payable and accrued expenses, and a $4.9 million increase in net earnings.

Our decreased operational cash flows in fiscal year 2021 compared to fiscal year 2020 was primarily the result of two factors: (i) a $14.2 million decrease in net earnings and (ii) a $0.7 million increase in our accounts payable and accrued expenses. These decreases were offset by a $4.3 million increase in our accounts receivable and a $3.6 million increase in our prepaid expenses and prepaid income taxes.

Cash flows from investing activities. Cash used in investing activities was $10.1 million in fiscal year 2022 compared to $21.2 million in fiscal year 2021 and $21.4 million in fiscal year 2020. Cash used in investing activities decreased by $11.1 million in 2022 compared to 2021. The cost to acquire businesses in fiscal year 2022 decreased by $14.9 million and proceeds from disposal of property decreased by $0.9 million. Both of these decreases were offset by a $2.9 million increase in capital expenditures. $1.8 million was used to purchase the previously leased building of one of our operations Cash used in investing activities remained level for both fiscal year 2021 and 2020. Capital expenditures increased by $0.3 million and the cost to acquire businesses increased by $0.5 million in fiscal year 2021. Both of these increases were offset by a $1.0 million increase in the proceeds from disposal of property.

Cash flows from financing activities. Cash used in financing activities was $30.2 million in fiscal year 2022 compared to $24.7 million used in fiscal year 2021 and $56.0 million used in fiscal year 2020.

The increase in our cash used in fiscal year 2022 compared to fiscal year 2021 resulted from two factors: (i) an increase of $3.6 million of common stock repurchases; and (ii) the payment of $2.0 million more in dividends in fiscal year 2022 compared to fiscal year 2021.

The decrease in our cash used in fiscal year 2021 compared to fiscal year 2020 resulted from two factors: (i) $30.0 million in long-term debt was paid in fiscal year 2020, compared to no long-term debt outstanding and paid in fiscal year 2021 and (ii) $1.2 million less used to purchase our common stock under our repurchase program in fiscal year 2021 compared to fiscal year 2020.

Stock Repurchase – The Board has authorized the repurchase of the Company’s outstanding common stock through a stock repurchase program, which authorized amount is currently up to $40.0 million in the aggregate. Under the repurchase program, 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. Repurchases may be commenced or suspended at any time or from time to time without prior notice, provided that any purchases must be made in accordance with applicable insider trading rules and securities laws and regulations. Since the program’s inception in October 2008, we have repurchased 2,149,029 common shares under the program at an average price of $16.25 per share. During our fiscal year 2022, we repurchased 254,679 shares of common stock at an average price of $18.81 per share. As of February 28, 2022, $5.1 million remained available to repurchase shares of the Company’s common stock under the program. The Company expects to continue to repurchase its shares under the repurchase program during fiscal year 2023 provided that the Board determines such repurchases to be in the best interests of the Company and its shareholders.

Credit Facility – We did not renew our Credit Agreement, which expired November 11, 2021. We have had no outstanding long term debt under the revolving credit line, since paid in August 2019. As of February 28, 2022, we had $0.6 million outstanding under a standby letter of credit arrangement secured by a cash collateral bank account. It is anticipated that our cash and funds from operating cash flows will be sufficient to fund anticipated future expenditures.

Pension Plan – The funded status of our Pension Plan is dependent on many factors, including returns on invested assets, the level of market interest rates and the level of funding. The assumptions used to calculate the pension funding deficit are different from the assumption used to determine the net pension obligations for purposes of our Consolidated Financial Statements. The funding of our Pension Plan is governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, and the Internal Revenue Code and is also subject to the Moving Ahead

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for Progress in the 21st Century Act, the Highway and Transportation Funding Act of 2014, the Bipartisan Budget Act of 2015, and the American Rescue Plan Act of 2021. Under these regulations, the liabilities are discounted using 25-year average corporate bond rates within a specified corridor. For the period ended February 28, 2022, the specified corridor around the 25-year average was 5%. We made a contribution of $3.0 million to our Pension Plan in fiscal year 2020 and $1.0 million in fiscal year 2022. There was no contribution required or made in fiscal year 2021. Given our funding status as of February 28, 2022 and absent any significant negative event, we anticipate that our future contributions will be between $1.0 million and $3.0 million per year, depending on our Pension Plan’s funding.

Inventories – We believe our current 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 expenditure requirements for fiscal year 2023, exclusive of capital required for possible acquisitions, will be in line with our historical levels of between $3.0 million and $5.0 million. We expect to fund these expenditures through existing cash flows. We expect to generate sufficient cash flows from our operating activities to cover our operating and other normal capital requirements for the foreseeable future.

Contractual Obligations – There have been no significant changes in our contractual obligations since February 28, 2022 that have, or that are reasonably likely to have, a material impact on our results of operations or financial condition. The following table represents our contractual commitments as of February 28, 2022 (in thousands).