DANBURY, CT - Ethan Allen Interiors Inc. ETH +0.07% today reported operating results for the three and six months ended December 31, 2013. Please refer to the accompanying financial statements and reconciliations to non-GAAP measures discussed below.
Highlights:
- Second quarter net sales of $193.1 million increased 1% over the prior year
- Adjusted EPS in the second quarter was $0.41, up 5% on improved gross margin and adjusted operating profit margin
- Year to date comparable retail written business is 6.6% higher than the prior year including a 1.8% decline in the seasonally slower second quarter
- Ending backlogs are strong including a 14% increase in the Retail backlog over the prior year
- Cash and securities increased 24% to $113 million from one year ago
Farooq Kathwari, Chairman and CEO commented, "While we are pleased with the strong financial results in what is our seasonally slower quarter, our greatest opportunity to leverage our vertically integrated structure is to increase our written sales. Written orders and deliveries were affected in the quarter by several external and internal factors including: the government shutdown, challenging weather in many parts of the US, and an increase in back ordered import products."
Mr. Kathwari concluded, "We remain cautiously optimistic about increasing our sales and profitability. We continue to aggressively implement marketing programs to improve our competitive differentiation. Starting from February 2014, we are introducing an "On Demand" initiative reflecting a focus on greater in-stock products for faster delivery to our clients. This coupled with our strong custom order programs further expands our commitment to personal service."
Financial Results:
Net sales for the quarter ended December 31, 2013 increased 1.0% over the prior year to $193.1 million. The Company's Retail division net sales decreased 0.2% to $151.5 million including a comparable design center net sales increase of 3.4%. Retail division written orders recorded during the second quarter decreased 4.0% including a decrease of 1.8% in comparable design center written orders. Net income for the quarter ended December 31, 2013 was $11.6 million or $0.39 per diluted share compared with $9.8 million or $0.34 per diluted share in the prior year quarter. Adjusted earnings for the quarter were $0.41 per diluted share or $11.9 million compared to $0.39 per diluted share or $11.4 million in the prior year quarter.
Year to date net sales were $374.8 million, down 1.0% from $378.7 million the prior year. Gross margin and adjusted operating profit margin were healthy at 54.6% and 10.0% respectively compared with 55.0% and 10.5% respectively the prior year. Adjusted net income year to date of $21.5 million compares with $22.5 million the prior year period and our adjusted earnings per diluted share for the six months to date is $0.73 compared with $0.77 the prior year to date period.
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.
Ethan Allen Interiors Inc. Selected Financial Information Unaudited (in millions) Selected Consolidated Financial Data: Three Months Ended Six Months Ended 12/31/13 12/31/12 12/31/13 12/31/12 Net sales $193.1 $191.3 $374.8 $378.7 Gross margin 54.9% 54.4% 54.6% 55.0% Operating margin 10.3% 9.1% 9.6% 9.3% Operating margin (excluding special items*) 10.7% 10.5% 10.0% 10.5% Net income $11.6 $9.8 $20.6 $19.9 Net income (excluding special items* and unusual income tax effects) $11.9 $11.4 $21.5 $22.5 Operating cash flow $1.5 $11.5 $22.6 $18.2 Capital expenditures $5.3 $5.2 $8.6 $13.6 Acquisitions $0.0 $0.0 $0.0 $0.6 Treasury stock repurchases $0.0 $0.0 $0.0 $0.0 EBITDA $24.2 $21.7 $44.4 $44.2 EBITDA as % of net sales 12.5% 11.3% 11.8% 11.7% EBITDA (excluding special items*) $25.0 $24.4 $46.0 $48.5 EBITDA as % of net sales (excluding special items*) 12.9% 12.7% 12.3% 12.8% Selected Financial Data by Business Segment: Three Months Ended Six Months Ended 12/31/13 12/31/12 12/31/13 12/31/12 Retail Net sales $151.5 $151.8 $293.3 $300.9 Operating margin 2.8% 4.0% 1.4% 2.3% Operating margin (excluding special items*) 3.3% 4.6% 1.9% 3.2% Wholesale Net sales $113.1 $108.2 $226.3 $219.6 Operating margin 12.7% 8.2% 13.5% 11.3% Operating margin (excluding special items*) 12.7% 9.9% 13.5% 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 Six Months Ended 12/31/13 12/31/12 12/31/13 12/31/12 Net sales $ 193,104 $ 191,251 $ 374,763 $ 378,688 Cost of sales 87,105 87,284 170,021 170,468 Gross profit 105,999 103,967 204,742 208,220 Selling, general and administrative expenses 86,149 86,610 168,948 172,909 Operating income 19,850 17,357 35,794 35,311 Interest and other income 43 128 125 202 Interest expense 1,871 2,198 3,744 4,397 Income before income taxes 18,022 15,287 32,175 31,116 Income tax expense 6,467 5,441 11,586 11,206 Net income $ 11,555 $ 9,846 $ 20,589 $ 19,910 Basic earnings per common share: Net income per basic share $ 0.40 $ 0.34 $ 0.71 $ 0.69 Basic weighted average shares outstanding 28,916 28,846 28,913 28,841 Diluted earnings per common share: Net income per diluted share $ 0.39 $ 0.34 $ 0.70 $ 0.68 Diluted weighted average shares outstanding 29,292 29,223 29,290 29,182 Comprehensive income: Net income $ 11,555 $ 9,846 $ 20,589 $ 19,910 Other comprehensive income Currency translation adjustment (71) (20) (16) 140 Other 42 15 60 40 Other comprehensive income (loss) net of tax (29) (5) 44 180 Comprehensive income $ 11,526 $ 9,841 $ 20,633 $ 20,090
Ethan Allen Interiors Inc. Condensed Consolidated Balance Sheets Unaudited (in thousands) December 31, June 30, 2013 2013 Assets Current assets: Cash and cash equivalents $ 77,603 $ 72,601 Marketable securities 20,157 15,529 Accounts receivable, net 10,754 12,277 Inventories 139,964 137,256 Prepaid expenses & other current assets 21,474 22,907 Total current assets 269,952 260,570 Property, plant and equipment, net 290,388 291,672 Intangible assets, net 45,128 45,128 Restricted cash and investments 14,935 15,433 Other assets 4,878 4,482 Total Assets $ 625,281 $ 617,285 Liabilities and Shareholders' Equity Current liabilities: Current maturities of long-term debt 490 480 Customer deposits 52,178 59,098 Accounts payable 21,911 22,995 Accrued expenses & other current liabilities 49,512 50,366 Total current liabilities 124,091 132,939 Long-term debt 130,613 130,809 Other long-term liabilities 20,617 19,180 Total liabilities 275,321 282,928 Shareholders' equity 349,960 334,357 Total Liabilities and Shareholders' Equity $ 625,281 $ 617,285
Ethan Allen Interiors Inc. GAAP Reconciliation Three and Six Months Ended December 31, 2013 and 2012 Unaudited (in thousands, except per share amounts) Three Months Ended Six Months Ended December 30, December 30, 2013 2012 2013 2012 Net Income / Earnings Per Share Net income $ 11,555 $ 9,846 $ 20,589 $ 19,910 Special items net of related tax effects * 489 1,693 1,022 2,715 Unusual income tax effects (111) (139) (158) (151) Net income (excluding special items* and unusual income tax effects) $ 11,933 $ 11,400 $ 21,453 $ 22,474 Basic weighted average shares outstanding 28,916 28,846 28,913 28,841 Earnings per basic share $ 0.40 $ 0.34 $ 0.71 $ 0.69 Earnings per basic share (excluding special items* and unusual income tax effects) $ 0.41 $ 0.40 $ 0.74 $ 0.78 Diluted weighted average shares outstanding 29,292 29,223 29,290 29,182 Earnings per diluted share $ 0.39 $ 0.34 $ 0.70 $ 0.68 Earnings per diluted share (excluding special items* and unusual income tax effects) $ 0.41 $ 0.39 $ 0.73 $ 0.77 Consolidated Operating Income / Operating Margin Operating income $ 19,850 $ 17,357 $ 35,794 $ 35,311 Add: special items * 770 2,666 1,610 4,276 Operating income (excluding special items*) $ 20,620 $ 20,023 $ 37,404 $ 39,587 Net sales $ 193,104 $ 191,251 $ 374,763 $ 378,688 Operating margin 10.3% 9.1% 9.6% 9.3% Operating margin (excluding special items*) 10.7% 10.5% 10.0% 10.5% Wholesale Operating Income / Operating Margin Wholesale operating income $ 14,366 $ 8,892 $ 30,498 $ 24,897 Add: special items - 1,774 - 1,774 Wholesale operating income (excluding special items*) $ 14,366 $ 10,666 $ 30,498 $ 26,671 Wholesale net sales $ 113,133 $ 108,172 $ 226,331 $ 219,589 Wholesale operating margin 12.7% 8.2% 13.5% 11.3% Wholesale operating margin (excluding special items*) 12.7% 9.9% 13.5% 12.1% Retail Operating Income / Operating Margin Retail operating income $ 4,206 $ 6,017 $ 4,002 $ 7,065 Add: special items 770 892 1,610 2,502 Retail operating income (excluding special items*) $ 4,976 $ 6,909 $ 5,612 $ 9,567 Retail net sales $ 151,496 $ 151,827 $ 293,323 $ 300,906 Retail operating margin 2.8% 4.0% 1.4% 2.3% Retail operating margin (excluding special items*) 3.3% 4.6% 1.9% 3.2% * Special items consist of restructuring, impairment, transition charges and certain other items. Related tax effects are calculated using a normalized income tax rate.
Ethan Allen Interiors Inc. GAAP Reconciliation Three and Six Months Ended December 31, 2013 and 2012 Unaudited (in thousands, except per share amounts) Three Months Ended Six Months Ended December 30, December 30, 2013 2012 2013 2012 EBITDA Net income $ 11,555 $ 9,846 $ 20,589 $ 19,910 Add: interest expense, net 1,750 2,056 3,500 4,111 income tax expense 6,467 5,441 11,586 11,206 depreciation and amortization 4,410 4,360 8,699 8,966 EBITDA $ 24,182 $ 21,703 $ 44,374 $ 44,193 Net sales $ 193,104 $ 191,251 $ 374,763 $ 378,688 EBITDA as % of net sales 12.5% 11.3% 11.8% 11.7% EBITDA $ 24,182 $ 21,703 $ 44,374 $ 44,193 Add: special items* 770 2,666 1,610 4,276 EBITDA (excluding special items) $ 24,952 $ 24,369 $ 45,984 $ 48,469 Net sales $ 193,104 $ 191,251 $ 374,763 $ 378,688 EBITDA as % of net sales (excluding special items) 12.9% 12.7% 12.3% 12.8% * Special items consist of restructuring, impairment, transition charges and certain other items. Related tax effects are calculated using a normalized income tax rate.
Source: Ethan Allen Interiors Inc.
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