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04.08.2010 23:27:00
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Ethan Allen Reports Results for Quarter and Fiscal Year Ended June 30, 2010
Ethan Allen Interiors Inc. ("Ethan Allen” or the "Company”) (NYSE:ETH) reported operating results for the three and twelve months ended June 30, 2010.
Farooq Kathwari, Chairman, President and CEO commented, "We are gratified that our positive operating results reflect the impact of the many major initiatives undertaken during this ‘Great Recession’. Net income excluding restructuring, impairment, and related transition costs as well as benefits primarily from deferred commissions and a non-cash $34 million tax asset valuation charge during the quarter was $4.6 million or $0.16 per diluted share compared to a loss of $6.8 million or $0.23 per diluted share the prior year also excluding similar charges.”
Mr. Kathwari further stated, "Our focus has been to position the Company for growth in sales and profitability. Our initiatives in our vertically integrated structure have helped us to reduce costs, improve the efficiency of our manufacturing, logistics and retail while at the same time improving quality and personal service. While pleased with the recent results, we remain cautious due to uncertain economic times.”
Three Months Ended June 30, 2010
Net delivered sales for the quarter ended June 30, 2010 were $163.3 million, up 17.8% from the prior year quarter. The Company’s Retail division delivered net sales of $121.2 million increased 18.5% from the prior year quarter. Total written orders booked for the Retail division increased 23.5% while comparable design center orders were 31.3% higher than the prior year quarter.
The net loss for the quarter ended June 30, 2010 was $26.5 million or a loss of $0.91 per diluted share. This compares with a net loss the prior year quarter of $16.9 million or $0.58 per diluted share. Net income excluding restructuring, impairment, and related transition costs as well as benefits primarily from deferred commissions and a non-cash $34 million tax asset valuation was $4.6 million or $0.16 per diluted share compared to a loss of $6.8 million or $0.23 per diluted share in the prior year quarter also excluding similar charges.
Twelve Months Ended June 30, 2010
For the twelve months ended June 30, 2010, net delivered sales totaled $590.1 million as compared to $674.3 million the prior year. Net delivered sales for the Company’s Retail division were $438.5 million versus $508.6 million the prior year. Wholesale net sales were $362.5 million versus $403.4 million the prior year.
The fiscal year loss was $44.3 million or $1.53 per diluted share compared with a loss the prior year of $52.7 million or $1.83 per diluted share. The net loss excluding restructuring, impairment, and related transition costs as well as deferred commission impacts and tax asset valuation charges from both years was $4.2 million or $0.15 per diluted share compared to $4.5 million or $0.16 per diluted share in the prior year.
Analyst Conference Call
The Company will conduct a Conference Call at 11:00 AM (Eastern) on Thursday, August 5th. The live webcast and replay are accessible via the Company’s website at http://ethanallen.com/investors.
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 280 Design Centers in the United States and abroad. Ethan Allen owns and operates seven manufacturing facilities in North America, including five manufacturing plants and one sawmill in the United States and one manufacturing plant in Mexico. Approximately seventy percent of its products are made in its United States plants. For more information on Ethan Allen’s products and services, visit ethanallen.com.
This press release should be read in conjunction with the Company’s Annual Report on Form 10-K/A for the year ended June 30, 2009 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. 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.
| Ethan Allen Interiors Inc. | ||||||||
| Selected Financial Information | ||||||||
| Unaudited | ||||||||
| (in thousands) | ||||||||
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Selected Consolidated Financial Data: |
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Three Months Ended |
Twelve Months Ended |
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|
06/30/10 |
06/30/09 |
06/30/10 |
06/30/09 |
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| Net sales | $163.3 | $138.7 | $590.1 | $674.3 | ||||
| Gross margin | 49.5% | 48.7% | 47.5% | 51.5% | ||||
| Operating margin | 7.6% | -14.7% | -2.0% | -10.8% | ||||
| Operating margin (excluding special charges*) | 5.6% | -5.4% | 0.2% | 0.2% | ||||
| Net income (loss) | ($26.5) | ($16.9) | ($44.3) | ($52.7) | ||||
| Net income (loss) (excluding special charges* and | ||||||||
| unusual income tax impacts) | $4.6 | ($6.8) | ($4.2) | ($4.5) | ||||
| Operating cash flow | $17.7 | $8.1 | $51.3 | $21.9 | ||||
| Capital expenditures | $2.3 | $2.1 | $9.9 | $22.5 | ||||
| Acquisitions | $0.1 | $0.6 | $0.1 | $1.4 | ||||
| Treasury stock repurchases (settlement | ||||||||
| date basis) | $0.0 | $0.0 | $0.0 | $0.0 | ||||
| EBITDA | $19.8 | ($13.9) | $21.5 | ($45.1) | ||||
| EBITDA as % of net sales | 12.2% | -10.0% | 3.6% | -6.7% | ||||
| EBITDA (excluding special charges*) | $15.5 | ($1.0) | $27.0 | $28.9 | ||||
| EBITDA as % of net sales (excluding special charges*) | 9.5% | -0.7% | 4.6% | 4.3% | ||||
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Selected Financial Data by Business Segment: |
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Three Months Ended |
Twelve Months Ended |
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|
06/30/10 |
06/30/09 |
06/30/10 |
06/30/09 |
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Retail |
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| Net sales | $121.2 | $102.3 | $438.5 | $508.6 | ||||
| Operating margin | 2.3% | -13.6% | -6.6% | -18.1% | ||||
| Operating margin (excluding special charges*) | -1.6% | -12.3% | -7.1% | -7.0% | ||||
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Wholesale |
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| Net sales | $100.1 | $85.2 | $362.5 | $403.4 | ||||
| Operating margin | 11.1% | -9.1% | 3.9% | 1.7% | ||||
| Operating margin (excluding special charges*) | 12.5% | 4.5% | 8.2% | 6.0% | ||||
| * Special charges consist of restructuring, impairment, transition charges and impact from commission plan | ||||||||
| changes. Related tax effects are calculated using a normalized income tax rate. | ||||||||
| Ethan Allen Interiors Inc. | ||||||||||||||||
| Condensed Consolidated Income Statements | ||||||||||||||||
| Unaudited | ||||||||||||||||
| (in thousands) | ||||||||||||||||
|
Three Months Ended |
Twelve Months Ended |
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06/30/10 |
06/30/09 |
06/30/10 |
06/30/09 |
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| Net sales | $ | 163,304 | $ | 138,657 | $ | 590,054 | $ | 674,277 | ||||||||
| Cost of sales | 82,387 | 71,107 | 309,777 | 326,935 | ||||||||||||
| Gross profit | 80,917 | 67,550 | 280,277 | 347,342 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling | 33,021 | 36,526 | 142,562 | 182,800 | ||||||||||||
| General and administrative | 34,989 | 38,506 | 147,013 | 170,312 | ||||||||||||
| Restructuring and impairment charge | 448 | 12,880 | 2,437 | 67,001 | ||||||||||||
| Total operating expenses | 68,458 | 87,912 | 292,012 | 420,113 | ||||||||||||
| Operating income (loss) | 12,459 | (20,362 | ) | (11,735 | ) | (72,771 | ) | |||||||||
| Interest and other income | 2,161 | 336 | 4,872 | 3,355 | ||||||||||||
| Interest expense | 2,986 | 2,946 | 11,924 | 11,764 | ||||||||||||
| Income (loss) before income taxes | 11,634 | (22,972 | ) | (18,787 | ) | (81,180 | ) | |||||||||
| Income tax expense (benefit) | 38,178 | (6,049 | ) | 25,529 | (28,493 | ) | ||||||||||
| Net income (loss) | $ | (26,544 | ) | $ | (16,923 | ) | $ | (44,316 | ) | $ | (52,687 | ) | ||||
| Basic earnings per common share: | ||||||||||||||||
| Net income (loss) per basic share | $ | (0.91 | ) | $ | (0.58 | ) | $ | (1.53 | ) | $ | (1.83 | ) | ||||
| Basic weighted average shares outstanding | 29,069 | 28,954 | 28,982 | 28,814 | ||||||||||||
| Diluted earnings per common share: | ||||||||||||||||
| Net income (loss) per diluted share | $ | (0.91 | ) | $ | (0.58 | ) | $ | (1.53 | ) | $ | (1.83 | ) | ||||
| Diluted weighted average shares outstanding | 29,069 | 28,954 | 28,982 | 28,814 | ||||||||||||
| Ethan Allen Interiors Inc. | ||||||
| Condensed Consolidated Balance Sheets | ||||||
| Unaudited | ||||||
| (in thousands) | ||||||
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June 30, |
June 30, |
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| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 73,852 | $ | 52,960 | ||
| Marketable securities | 11,075 | - | ||||
| Accounts receivable, net | 17,105 | 13,086 | ||||
| Inventories | 134,040 | 156,519 | ||||
| Prepaid expenses & other current assets | 23,620 | 21,060 | ||||
| Deferred income taxes | - | 8,077 | ||||
| Total current assets | 259,692 | 251,702 | ||||
| Property, plant and equipment, net | 305,747 | 333,599 | ||||
| Intangible assets, net | 45,128 | 45,128 | ||||
| Restricted cash and investments | 17,318 | - | ||||
| Other assets | 3,892 | 16,056 | ||||
| Total Assets | $ | 631,777 | $ | 646,485 | ||
| Liabilities and Shareholders' Equity | ||||||
| Current liabilities: | ||||||
| Current maturities of long-term debt | 3,898 | 42 | ||||
| Customer deposits | 52,605 | 31,691 | ||||
| Accounts payable | 23,952 | 22,199 | ||||
| Accrued expenses & other current liabilities | 60,062 | 58,531 | ||||
| Total current liabilities | 140,517 | 112,463 | ||||
| Long-term debt | 199,369 | 203,106 | ||||
| Other long-term liabilities | 19,123 | 24,993 | ||||
| Deferred income taxes | 14,309 | - | ||||
| Total liabilities | 373,318 | 340,562 | ||||
| Shareholders' equity | 258,459 | 305,923 | ||||
| Total Liabilities and Shareholders' Equity | $ | 631,777 | $ | 646,485 | ||
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Ethan Allen Interiors Inc. GAAP Reconciliation Three and Twelve Months Ended June 30, 2010 and 2009 Unaudited (in thousands, except per share amounts) |
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Three Months Ended June 30, |
Twelve Months Ended June 30, |
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| 2010 | 2009 | 2010 | 2009 | |||||||||||||
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Net Income / Earnings Per Share |
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| Net income (loss) | $ | (26,544 | ) | $ | (16,923 | ) | $ | (44,316 | ) | $ | (52,687 | ) | ||||
| Special charges net of related tax effects * | (2,756 | ) | 10,150 | 7,722 | 48,161 | |||||||||||
| Unusual income tax impacts | 33,932 | - | 32,386 | - | ||||||||||||
| Net income (loss) (excluding special charges* and | ||||||||||||||||
| unusual income tax impacts) | $ | 4,632 | $ | (6,773 | ) | $ | (4,208 | ) | $ | (4,526 | ) | |||||
| Earnings (loss) per basic share | $ | (0.91 | ) | $ | (0.58 | ) | $ | (1.53 | ) | $ | (1.83 | ) | ||||
| Earnings (loss) per basic share (excluding special charges* | ||||||||||||||||
| and unusual income tax impacts) | $ | 0.16 | $ | (0.23 | ) | $ | (0.15 | ) | $ | (0.16 | ) | |||||
| Basic weighted average shares outstanding | 29,069 | 28,954 | 28,982 | 28,814 | ||||||||||||
| Earnings (loss) per diluted share | $ | (0.91 | ) | $ | (0.58 | ) | $ | (1.53 | ) | $ | (1.83 | ) | ||||
| Earnings (loss) per diluted share (excluding special | ||||||||||||||||
| charges* and unusual income tax impacts) | $ | 0.16 | $ | (0.23 | ) | $ | (0.15 | ) | $ | (0.16 | ) | |||||
| Diluted weighted average shares outstanding | 29,069 | 28,954 | 28,982 | 28,814 | ||||||||||||
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Consolidated Operating Income / Operating Margin |
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| Operating income (loss) | $ | 12,459 | $ | (20,362 | ) | $ | (11,735 | ) | $ | (72,771 | ) | |||||
| Special charges * | (3,340 | ) | 12,880 | 13,161 | 74,001 | |||||||||||
| Operating income (loss) (excluding special charges*) | $ | 9,119 | $ | (7,482 | ) | $ | 1,426 | $ | 1,230 | |||||||
| Net sales | $ | 163,304 | $ | 138,657 | $ | 590,054 | $ | 674,277 | ||||||||
| Operating margin | 7.6 | % | -14.7 | % | -2.0 | % | -10.8 | % | ||||||||
| Operating margin (excluding special charges*) | 5.6 | % | -5.4 | % | 0.2 | % | 0.2 | % | ||||||||
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Wholesale Operating Income / Operating Margin |
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| Wholesale operating income (loss) | $ | 11,102 | $ | (7,726 | ) | $ | 14,201 | $ | 6,670 | |||||||
| Special charges | 1,374 | 11,539 | 15,661 | 17,420 | ||||||||||||
| Wholesale operating income (excluding special charges*) | $ | 12,476 | $ | 3,813 | $ | 29,862 | $ | 24,090 | ||||||||
| Wholesale net sales | $ | 100,094 | $ | 85,163 | $ | 362,468 | $ | 403,378 | ||||||||
| Wholesale operating margin | 11.1 | % | -9.1 | % | 3.9 | % | 1.7 | % | ||||||||
| Wholesale operating margin (excluding special charges*) | 12.5 | % | 4.5 | % | 8.2 | % | 6.0 | % | ||||||||
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Retail Operating Income / Operating Margin |
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| Retail operating income (loss) | $ | 2,743 | $ | (13,944 | ) | $ | (28,764 | ) | $ | (92,100 | ) | |||||
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Special charges |
(4,714 | ) | 1,341 | (2,500 | ) | 56,581 | ||||||||||
| Retail operating income (loss) (excluding special charges*) | $ | (1,971 | ) | $ | (12,603 | ) | $ | (31,264 | ) | $ | (35,519 | ) | ||||
| Retail net sales | $ | 121,153 | $ | 102,263 | $ | 438,539 | $ | 508,621 | ||||||||
| Retail operating margin | 2.3 | % | -13.6 | % | -6.6 | % | -18.1 | % | ||||||||
| Retail operating margin (excluding special charges*) | -1.6 | % | -12.3 | % | -7.1 | % | -7.0 | % | ||||||||
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Ethan Allen Interiors Inc. GAAP Reconciliation Three and Twelve Months Ended June 30, 2010 and 2009 Unaudited (in thousands, except per share amounts) |
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Three Months Ended June 30, |
Twelve Months Ended June 30, |
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| 2010 | 2009 | 2010 | 2009 | |||||||||||||
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EBITDA |
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| Net income (loss) | $ | (26,544 | ) | $ | (16,923 | ) | $ | (44,316 | ) | $ | (52,687 | ) | ||||
| Add: interest expense (income), net | 2,665 | 2,703 | 10,907 | 10,480 | ||||||||||||
| Add: income tax expense (benefit) | 38,178 | (6,049 | ) | 25,529 | (28,493 | ) | ||||||||||
| Add: depreciation and amortization (including | ||||||||||||||||
| accelerated depreciation) | 5,549 | 6,350 | 29,398 | 25,635 | ||||||||||||
| EBITDA | $ | 19,848 | $ | (13,919 | ) | $ | 21,518 | $ | (45,065 | ) | ||||||
| Net sales | $ | 163,304 | $ | 138,657 | $ | 590,054 | $ | 674,277 | ||||||||
| EBITDA as % of net sales | 12.2 | % | -10.0 | % | 3.6 | % | -6.7 | % | ||||||||
| EBITDA | $ | 19,848 | $ | (13,919 | ) | $ | 21,518 | $ | (45,065 | ) | ||||||
| Add: special charges* | (4,340 | ) | 12,880 | 5,531 | 74,001 | |||||||||||
| Adjusted EBITDA | $ | 15,508 | $ | (1,039 | ) | $ | 27,049 | $ | 28,936 | |||||||
| Net sales | $ | 163,304 | $ | 138,657 | $ | 590,054 | $ | 674,277 | ||||||||
| Adjusted EBITDA as % of net sales | 9.5 | % | -0.7 | % | 4.6 | % | 4.3 | % | ||||||||
| * Special charges consist of restructuring, impairment, transition charges and impact from commission plan | ||||||||||||||||
| changes. Special charges net of related tax effects are calculated using a normalized income tax rate. | ||||||||||||||||
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