ETHAN ALLEN REPORTS RESULTS FOR QUARTER ENDED MARCH 31, 2014

GlobeNewswire Europe

DANBURY, CT - April 22, 2014 - Ethan Allen Interiors Inc. (ETH) today reported operating results for the three and nine months ended March 31, 2014. Please refer to the accompanying financial statements and reconciliation to non-GAAP measures discussed below.


Fiscal 2014 Third Quarter Highlights:

  • Net sales of $173.1 million increased 2.9% compared to third quarter of fiscal 2013
     
  • Adjusted diluted earnings per share (EPS) grew 4.8% to $0.22; GAAP EPS increased 20.0% to $0.18 compared to $0.15 in the prior year period
     
  • Adjusted Operating Income of $12.0 million increased 1.7% compared to third quarter of fiscal 2013; GAAP Operating Income increased 10.3% compared to third quarter of fiscal 2013
     
  • Cash and securities increased 6.5% to $124.8 million compared to period ended March 31, 2013
     
  • Ending backlogs remain strong including a 10.1% increase in the retail segment backlog over the prior year

Farooq Kathwari, Chairman and CEO commented, "While we are pleased with the strong financial results, the severe winter weather negatively impacted sales for the third quarter, notably during the January and February months. January comparable written orders were down by 13.4% to prior year, February was down by 1.7%.  We did see good order growth in March as the weather improved with a 15.6% increase in comparable written orders. We are positioned with stronger backlogs going into the fourth quarter."


Mr. Kathwari concluded, "Our competitive advantages include our variety of styles from contemporary to casual, a strong retail network, a focus on quality products with approximately 70% made in our own North American workshops and our major focus on adding technology. We remain cautiously optimistic about increasing our sales and profitability." 


Fiscal 2014 Third Quarter Financial Results:

Consolidated net sales for the quarter ended March 31, 2014 increased 2.9% over the prior year to $173.1 million. The Company`s wholesale segment net sales increased 2.8%. The Company`s retail segment net sales decreased 0.2% to $131.8 million including a comparable design center net sales increase of 2.1%. Retail division written orders recorded during the third quarter decreased 2.4% including a decrease of 0.5% in comparable design center written orders. Net income for the quarter ended March 31, 2014 was $5.3 million or $0.18 per diluted share compared with $4.4 million or $0.15 per diluted share in the prior year quarter. Adjusted earnings for the quarter were $0.22 per diluted share or $6.5 million compared to $0.21 per diluted share or $6.1 million in the prior year quarter.


Fiscal 2014 Year-to-Date Financial Results:

Year to date net sales were $547.8 million, up 0.2% from $546.8 million the prior year. Gross margin and adjusted operating profit margin were 54.4% and 9.0% respectively compared with 54.9% and 9.4% respectively the prior year. Adjusted net income year to date of $27.9 million compares with $28.5 million the prior year period and our adjusted earnings per diluted share for the nine months to date is $0.95 compared with $0.98 the prior year to date period.


Analyst Conference Call


Ethan Allen will conduct a conference call at 11:00 AM (Eastern) on Wednesday, April 23rd to discuss the financial results and its business initiatives. The live webcast and replay are accessible via the Company`s website at http://ethanallen.com/investors. To participate on the call, dial 866-814-8476 with conference ID# 1635000.


About Ethan Allen

Ethan Allen Interiors Inc. is a leading interior design company and manufacturer and retailer of quality home furnishings. The company offers free interior design service to its clients and sells a full range of furniture products and decorative accessories through ethanallen.com and a network of approximately 300 Design Centers in the United States and abroad. Ethan Allen owns and operates eight manufacturing facilities including five manufacturing plants and one sawmill in the United States plus two plants in Mexico and Honduras. Approximately seventy percent of its products are made in its North American plants. For more information on Ethan Allen`s products and services, visit ethanallen.com.


Non-GAAP Financial Information

This press release is intended to supplement, rather than to supersede, the Company`s condensed consolidated financial statements. It contains references to the Company`s (i) consolidated operating income/operating margin, (ii) wholesale operating income/operating margin, (iii) retail operating income/operating margin, (iv) net income, (v) earnings per share, and (vi) earnings before interest, taxes, depreciation and amortization ("EBITDA"), all excluding the effects of restructuring charges as a result of the Company`s previous decision to consolidate facilities, and also excluding certain transition costs and non-operating income adjustments in both fiscal 2014 and fiscal 2013. A reconciliation of these financial measures to the most directly comparable financial measure reported in accordance with generally accepted accounting principles ("GAAP") is also provided at the end of this press release.

Management believes that excluding items which are deemed to be non-recurring in nature from financial measures such as operating income, operating margin, net income, and earnings per share, allows investors to more easily compare and evaluate the Company`s financial performance relative to prior periods and industry comparables.  These adjusted measures also aid investors in understanding the operating results of the Company absent such non-recurring or unusual events.

Management considers EBITDA an important indicator of the operational strength and performance of its business, including the ability of the Company to pay interest, service debt and fund capital expenditures. Given the nature of the Company`s operations, including the tangible assets necessary to carry out its production and distribution activities, depreciation and amortization represent Ethan Allen`s largest non-cash charges. As these non-cash charges do not affect the Company`s ability to service debt or make capital expenditures, it is important to consider EBITDA in addition to, but not as a substitute for, operating income, net income and other measures of financial performance reported in accordance with GAAP, including cash flow measures such as operating cash flow. 

This press release should also be read in conjunction with the Company`s Annual Report on Form 10-K for the year ended June 30, 2013 (the "2013 Form 10-K") and other reports filed with the Securities and Exchange Commission. This press release and related discussions contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect management`s current expectations concerning future events and results of the Company, and are subject to various assumptions, risks and uncertainties including specifically, and without limitation, those set forth in Part I, Item 1A "Risk Factors" of the 2013 Form 10-K. Accordingly, actual future events or results could differ materially from those contemplated by the forward-looking statements. The Company assumes no obligation to update or provide revision to any forward-looking statement at any time for any reason.

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Ethan Allen Interiors Inc.
Selected Financial Information
Unaudited
(in millions)
      
      
Selected Consolidated Financial Data:      
      
  Three Months Ended   Nine Months Ended
  03/31/14 03/31/13   03/31/14 03/31/13
      
Net sales $173.1 $168.1   $547.8 $546.8
Gross margin 53.8% 54.6%   54.4% 54.9%
Operating margin 5.5% 5.2%   8.3% 8.0%
Operating margin (excluding special items*) 6.9% 7.0%   9.0% 9.4%
Net income $5.3 $4.4   $25.8 $24.3
Net income (excluding special items* and      
unusual income tax effects) $6.5 $6.1   $27.9 $28.5
Operating cash flow $17.4 $26.3   $40.0 $44.4
Capital expenditures $4.0 $3.0   $12.6 $16.5
Acquisitions $0.0 $0.0   $0.0 $0.6
      
EBITDA $14.1 $13.1   $58.5 $57.3
EBITDA as % of net sales 8.1% 7.8%   10.7% 10.5%
      
EBITDA (excluding special items*) $16.5 $16.2   $62.5 $64.6
EBITDA as % of net sales (excluding special items*) 9.5% 9.6%   11.4% 11.8%
      
      
      
      
Selected Financial Data by Business Segment:      
  Three Months Ended   Nine Months Ended
  03/31/14 03/31/13   03/31/14 03/31/13
Retail      
Net sales $131.8 $132.1   $425.1 $433.0
Operating margin -1.2% -1.7%   0.6% 1.1%
Operating margin (excluding special items*) 0.6% 0.6%   1.5% 2.4%
      
      
Wholesale      
Net sales $111.1 $108.1   $337.5 $327.7
Operating margin 11.7% 11,8%   12.9% 11.5%
Operating margin (excluding special items*) 11.7% 11.9%   12.9% 12.1%
      
* Special items consist of restructuring, impairment, transition charges and other certain items.  
Related tax effects are calculated using a normalized income tax rate.    

Ethan Allen Interiors Inc.
Condensed Consolidated Statements of Comprehensive Income
Unaudited
(in thousands)
      
      
      
  Three Months Ended   Nine Months Ended
  03/31/14 03/31/13   03/31/14 03/31/13
      
Net sales  $   173,061  $   168,144    $    547,824  $    546,832
Cost of sales         79,931 76,359          249,952        246,827
Gross profit         93,130 91,785          297,872        300,005
Selling, general and administrative expenses         83,578 83,125          252,526        256,034
Operating income           9,552           8,660            45,346          43,971
Interest and other income             103              (10)   228 192
Interest expense           1,870 2,195   5,614 6,592
Income before income taxes           7,785 6,455            39,960          37,571
Income tax expense           2,527 2,081   14,113 13,287
Net income  $       5,258  $       4,374    $      25,847  $      24,284
      
Basic earnings per common share:      
Net income per basic share  $         0.18  $         0.15    $          0.89  $          0.84
Basic weighted average shares outstanding 28,920 28,869   28,916 28,850
      
Diluted earnings per common share:      
Net income per diluted share  $         0.18  $         0.15    $          0.88  $          0.83
Diluted weighted average shares outstanding 29,271 29,273   29,284 29,213
      
Comprehensive income:      
Net income  $       5,258  $       4,374  $      25,847  $      24,284
Other comprehensive income      
Currency translation adjustment 142 300 126 440
Other 31 7   91 47
Other comprehensive income net of tax 173 307 217 487
Comprehensive income  $        5,431  $        4,681  $       26,064  $       24,771

Ethan Allen Interiors Inc.
Condensed Consolidated Balance Sheets
Unaudited
(in thousands)
    
  March 31, June 30,  
  2014 2013  
    
Assets    
Current assets:    
  Cash and cash equivalents  $          95,804  $          72,601  
  Marketable securities 20,138 15,529  
  Accounts receivable, net 16,003 12,277  
  Inventories 145,055 137,256  
  Prepaid expenses & other current assets 20,914 22,907  
     Total current assets 297,914 260,570  
    
Property, plant and equipment, net 286,797 291,672  
Intangible assets, net 45,128 45,128  
Restricted cash and investments 8,907 15,433  
Other assets 6,154 4,482  
    
       Total Assets  $        644,900  $        617,285  
    
    
    
Liabilities and Shareholders` Equity    
Current liabilities:    
  Current maturities of long-term debt 496 480  
  Customer deposits 65,200 59,098  
  Accounts payable 24,107 22,995  
  Accrued expenses & other current liabilities 51,053 50,366  
     Total current liabilities 140,856 132,939  
    
Long-term debt 130,513 130,809  
Other long-term liabilities 20,657 19,180  
     Total liabilities 292,026 282,928  
    
Shareholders` equity 352,874 334,357  
    
       Total Liabilities and Shareholders` Equity  $        644,900  $        617,285  

Ethan Allen Interiors Inc.
GAAP Reconciliation
Three and Nine Months Ended March 31, 2014 and 2013
Unaudited
(in thousands, except per share amounts)
  Three Months Ended   Nine Months Ended
  March 31,   March 31,
  2014 2013   2014 2013
Net Income / Earnings Per Share      
Net income  $    5,258  $    4,374    $   25,847  $   24,284
       Special items net of related tax effects * 1,531 1,968   2,553 4,683
       Unusual income tax effects  (315)  (275)    (472)  (426)
Net income (excluding special items* and      
 unusual income tax effects)  $    6,474  $    6,067    $   27,928 $    28,541
Basic weighted average shares outstanding 28,920 28,869   28,916 28,850
Earnings per basic share  $     0.18  $     0.15    $     0.89  $     0.84
Earnings per basic share (excluding special items*      
 and unusual income tax effects)  $     0.22  $     0.21    $     0.97  $     0.99
Diluted weighted average shares outstanding 29,271 29,273   29,284 29,213
Earnings per diluted share  $     0.18  $     0.15    $     0.88  $     0.83
Earnings per diluted share (excluding special      
items* and unusual income tax effects)  $     0.22  $     0.21    $     0.95  $     0.98
      
Consolidated Operating Income / Operating Margin      
Operating income  $    9,552  $    8,660    $   45,346  $   43,971
Add: special items * 2,411 3,099   4,021 7,375
Operating income (excluding special items*)  $   11,963  $   11,759    $   49,367  $   51,346
      
Net sales  $  173,061  $  168,144    $  547,824  $  546,832
Operating margin 5.5% 5.2%   8.3% 8.0%
Operating margin (excluding special items*) 6.9% 7.0%   9.0% 9.4%
      
Wholesale Operating Income / Operating Margin      
Wholesale operating income  $   13,009  $   12,754    $   43,507  $   37,651
Add: special items -   69   -   1,843
Wholesale operating income (excluding special items*)  $   13,009  $   12,823    $   43,507  $   39,494
Wholesale net sales $  111,143 $  108,101   $  337,474 $  327,690
Wholesale operating margin 11.7% 11.8%   12.9% 11.5%
Wholesale operating margin (excluding special items*) 11.7% 11.9%   12.9% 12.1%
Retail Operating Income / Operating Margin      
Retail operating income  $  (1,591)  $ (2,283)    $    2,411  $    4,782
Add: special items 2,411 3,030   4,021 5,532
Retail operating income (excluding special items*)  $      820  $      747    $    6,432  $   10,314
Retail net sales  $  131,813  $  132,056    $  425,136  $  432,962
Retail operating margin -1.2% -1.7%   0.6% 1.1%
Retail operating margin (excluding special items*) 0.6% 0.6%   1.5% 2.4%
* Special items consist of restructuring, impairment, transition charges and certain other items.
Related tax effects are calculated using a normalized income tax rate.
GAAP Reconciliation
Three and Nine Months Ended March 31, 2014 and 2013
Unaudited
(in thousands, except per share amounts)
  Three Months Ended   Nine Months Ended
  March 31,   March 31,
  2014 2013   2014 2013
      
EBITDA      
Net income $    5,258 $    4,374   $    25,847 $    24,284
Add:  interest expense, net 1,739 2,054   5,239 6,165
income tax expense 2,527 2,081   14,113 13,287
depreciation and amortization 4,577 4,548   13,276 13,514
EBITDA  $   14,101  $   13,057    $   58,475  $   57,250
Net sales  $  173,061  $  168,144    $  547,824  $  546,832
EBITDA as % of net sales 8.1% 7.8%   10.7% 10.5%
      
EBITDA  $   14,101  $   13,057    $   58,475  $   57,250
Add: special items* 2,411 3,099   4,021 7,375
EBITDA (excluding special items)  $   16,512  $   16,156    $   62,496  $   64,625
Net sales  $  173,061  $  168,144    $  547,824  $  546,832
EBITDA as % of net sales (excluding special items) 9.5% 9.6%   11.4% 11.8%
* Special items consist of restructuring, impairment, transition charges and certain other items.
Related tax effects are calculated using a normalized income tax rate.



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The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Ethan Allen Interiors Inc. via GlobeNewswire

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