Ethan Allen Reports Results for Quarter Ended September 30, 2009
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DANBURY, Conn.--(BUSINESS WIRE)-- Ethan Allen Interiors Inc. ("Ethan Allen" or the "Company") (NYSE: ETH) today reported operating results for the three months ended September 30, 2009.
Net delivered sales for the quarter ended September 30, 2009 amounted to $136.2 million as compared to $205.8 million in the prior year quarter. Net delivered sales for the Company's Retail division were $103.2 million compared with $155.9 million the prior year quarter. Wholesale sales were $81.3 million versus $121.3 million the prior year quarter. Comparable Ethan Allen design center delivered sales were down 35.3% as compared to the prior year quarter.
For the quarter ended September 30, 2009, diluted loss per share amounted to $0.47 on a loss of $13.6 million, which includes $8.5 million in plant transition costs and a $0.8 million restructuring and impairment charge for previously announced actions. This compares to diluted earnings per share and net income of $0.26 and $7.4 million, respectively, for the prior year, which included a restructuring benefit of $1.6 million due to the gain on the sale of properties closed in fiscal 2008. Excluding the impact of the plant transition costs and restructuring and impairment charges in both periods and the impact of tax valuation allowances recorded in the current quarter, diluted loss per share amounted to $0.20 in the current period compared to diluted earnings per share of $0.22 in the prior year comparable period.
Farooq Kathwari, Chairman and CEO, commented, "The downturn has enabled us to reposition our business in all major areas. We have consolidated our US manufacturing and logistics to make it more efficient while we have reduced our cost structure in all areas of our enterprise during the last year. We have now started to selectively increase our associates both at manufacturing and at retail."
Mr. Kathwari further stated, "Our focus during this period has been to increase our cash position, implement initiatives to help increase sales and also position us well as the economy starts to improve. We increased our cash by $19.5 million to $72.5 million during the quarter. In addition, we announced this week that we added an additional $20 million to our secured revolving credit facility increasing the line to $60 million."
Commenting on the business, Mr. Kathwari continued, "While we have increased our written backlog by 19% during the quarter and reduced the decline in booked written orders by half to 19.5% in the quarter from a 38% decline from January to June 2009, we still remain cautious for the near term. As I mentioned earlier, we are well positioned as the economy improves to grow our sales and profitability."
Analyst Conference Call
The Company will conduct a Conference Call at 11:00 AM (Eastern) on Thursday, October 29th. 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 300 Design Centers in the United States and abroad. Ethan Allen owns and operates six manufacturing facilities in the United States, which includes one sawmill, and one manufacturing facility in Mexico, and manufactures approximately sixty-five percent of its products 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, except per share amounts)
Three Months Ended
09/30/09 09/30/08
Net sales $ 136,190 $ 205,841
Cost of sales 77,881 93,900
Gross profit 58,309 111,941
Operating expenses:
Selling 33,605 55,302
General and administrative 39,980 46,058
Restructuring and impairment charge 812 (1,630 )
Total operating expenses 74,397 99,730
Operating income (loss) (16,088 ) 12,211
Interest and other miscellaneous income 797 1,100
Interest expense and other related financing costs 2,981 2,901
Income (loss) before income taxes (18,272 ) 10,410
Income tax expense (benefit) (4,693 ) 2,988
Net income (loss) $ (13,579 ) $ 7,422
Basic earnings per common share:
Net income (loss) per basic share $ (0.47 ) $ 0.26
Basic weighted average shares outstanding 28,926 28,703
Diluted earnings per common share:
Net income (loss) per diluted share $ (0.47 ) $ 0.26
Diluted weighted average shares outstanding 28,926 28,847
Ethan Allen Interiors Inc.
Condensed Consolidated Balance Sheets
Unaudited
(in thousands)
September 30, June 30,
2009 2009
Assets
Current assets:
Cash and cash equivalents $ 72,452 $ 52,960
Accounts receivable, net 13,053 13,086
Inventories 146,661 156,519
Prepaid expenses & other current assets 12,075 21,060
Deferred income taxes 7,750 8,077
Total current assets 251,991 251,702
Property, plant and equipment, net 320,184 333,599
Intangible assets, net 45,128 45,128
Other assets 21,262 16,056
Total Assets $ 638,565 $ 646,485
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debt $ 42 $ 42
Customer deposits 38,885 31,691
Accounts payable 21,077 22,199
Accrued expenses & other current liabilities 58,192 58,531
Total current liabilities 118,196 112,463
Long-term debt 203,136 203,106
Other long-term liabilities 25,449 24,993
Total liabilities 346,781 340,562
Shareholders' equity 291,784 305,923
Total Liabilities and Shareholders' Equity $ 638,565 $ 646,485
Ethan Allen Interiors Inc.
Selected Financial Information
Unaudited
(in millions)
Selected Consolidated Financial Data:
Three Months Ended
09/30/09 09/30/08
Net sales $ 136.2 $ 205.8
Gross margin 42.8 % 54.4 %
Operating margin -11.8 % 5.9 %
Operating margin (ex restructuring, impairment &
plant transition charges ) -5.0 % 5.1 %
Net income (loss) ($13.6 ) $ 7.4
Net income (loss) (ex restructuring, impairment &
plant transition charges ) ($5.7 ) $ 6.4
Operating cash flow $ 17.0 $ 18.1
Capital expenditures $ 2.5 $ 11.1
Acquisitions $ 0.0 $ 0.4
Treasury stock repurchases (settlement
date basis) $ 0.0 $ 0.0
EBITDA ($2.8 ) $ 19.2
EBITDA as % of net sales -2.1 % 9.3 %
EBITDA (ex restructuring, impairment and
plant transition charges ) ($0.1 ) $ 17.6
EBITDA as % of net sales (ex restructuring,
impairment and plant transition charges ) -0.1 % 8.6 %
Selected Financial Data by Business Segment:
Three Months Ended
09/30/09 09/30/08
Retail
Net sales $ 103.2 $ 155.9
Operating margin -11.0 % -2.0 %
Operating margin (ex restructuring, impairment &
plant transition charges ) -10.4 % -3.3 %
Wholesale
Net sales $ 81.3 $ 121.3
Operating margin -5.7 % 9.8 %
Operating margin (ex restructuring, impairment &
plant transition charges ) 4.9 % 10.1 %
Ethan Allen Interiors Inc.
GAAP Reconciliation
Three Months Ended September 30, 2009 and 2008
Unaudited
(in thousands, except per share amounts)
Three Months Ended
September 30,
2009 2008
Net Income / Earnings Per Share
Net income (loss) $ (13,579 ) $ 7,422
Add: restructuring, impairment and plant transition
charges (credit),
net of related tax effect 7,893 (1,037 )
Net income (loss) (excluding restructuring impairment
and
plant transition charges) $ (5,686 ) $ 6,385
Earnings (loss) per basic share $ (0.47 ) $ 0.26
Earnings (loss) per basic share (excluding
restructuring, impairment and plant transition charges $ (0.20 ) $ 0.22
(credit))
Basic weighted average shares outstanding 28,926 28,703
Earnings (loss) per diluted share $ (0.47 ) $ 0.26
Earnings (loss) per diluted share (excluding
restructuring, impairment and plant transition charges $ (0.20 ) $ 0.22
(credit))
Diluted weighted average shares outstanding 28,926 28,847
Consolidated Operating Income / Operating Margin
Operating income (loss) $ (16,088 ) $ 12,211
Add: restructuring, impairment and plant transition 9,318 (1,630 )
charges (credit)
Operating income (loss) (excluding restructuring,
impairment
and plant transition charges) $ (6,770 ) $ 10,581
Net sales $ 136,190 $ 205,841
Operating margin -11.8 % 5.9 %
Operating margin (excluding restructuring, impairment
and plant transition charges) -5.0 % 5.1 %
Wholesale Operating Income / Operating Margin
Wholesale operating income (loss) $ (4,660 ) $ 11,885
Add: restructuring, impairment and plant transition 8,656 408
charges (credit)
Wholesale operating income (excluding restructuring,
impairment
and plant transition charges) $ 3,996 $ 12,293
Wholesale net sales $ 81,281 $ 121,295
Wholesale operating margin -5.7 % 9.8 %
Wholesale operating margin (excluding restructuring,
impairment
and plant transition charges) 4.9 % 10.1 %
Retail Operating Income / Operating Margin
Retail operating income (loss) $ (11,349 ) $ (3,052 )
Add: restructuring, impairment and plant transition 662 (2,038 )
charges (credit)
Retail operating income (loss) (excluding
restructuring, impairment and plant transition charges $ (10,687 ) $ (5,090 )
(credit))
Retail net sales $ 103,150 $ 155,870
Retail operating margin -11.0 % -2.0 %
Retail operating margin (excluding restructuring,
impairment
and plant transition charges) -10.4 % -3.3 %
EBITDA
Net income (loss) $ (13,579 ) $ 7,422
Add: interest expense (income), net 2,766 2,508
Add: income tax expense (benefit) (4,693 ) 2,988
Add: depreciation and amortization (including plant 12,697 6,318
accelerated depreciation)
EBITDA $ (2,809 ) $ 19,236
Net sales $ 136,190 $ 205,841
EBITDA as % of net sales -2.1 % 9.3 %
EBITDA $ (2,809 ) $ 19,236
Add: restructuring, impairment and plant transition 2,688 (1,630 )
charges (credit)
Adjusted EBITDA $ (121 ) $ 17,606
Net sales $ 136,190 $ 205,841
Adjusted EBITDA as % of net sales -0.1 % 8.6 %
Source: Ethan Allen Interiors Inc.
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