DANBURY, CN -- Ethan Allen Interiors Inc. today reported operating results for the three months ended Dec. 31, 2012. Net sales in the quarter increased 4.4% over the prior year to $191.3 million. The Company’s Retail division net sales increased 6.1% to $151.8 million including comparable design center growth of 4.9%. Retail division written orders recorded during the second quarter increased 1.2% over the 10.3% growth the prior year second quarter. Comparable design center written orders increased 0.1% over the 6.7% growth the prior year.
Excluding special items in both periods, net income for the quarter ended Dec. 31, 2012 was $11.4 million or $0.39 per diluted share compared with $8.6 million or $0.30 per diluted share in the prior year period. US GAAP net income for the quarter ended December 31, 2012 was $9.8 million or $0.34 per diluted share compared with the prior year of $8.1 million or $0.28 per diluted share. A reconciliation of this GAAP to non-GAAP measure is provided in the attached table.
Farooq Kathwari, chairman and CEO commented, “We are pleased with our results for the quarter ended December 31, 2012. Despite the challenging economic / political environment and the impact of Hurricane Sandy, our adjusted earnings per share increased 30%. Hurricane Sandy negatively impacted our written orders, delivered sales, and our manufacturing margins during the quarter. Twenty eight of our Retail division design centers and eight independent retailer locations were affected. No adjustment to earnings per share was made to reflect the impact of Hurricane Sandy which we estimate may have been approximately $0.02 to $0.03 per diluted share.”
Kathwari said, “During the quarter we expanded our international operations by entering the European and Montreal markets. We opened design centers in Brussels, Belgium and in Montreal, Canada and invested in start up costs which negatively impacted earnings by $0.02 per diluted share. We also wrote down the carrying value of two vacant manufacturing plants which resulted in a charge of $0.03 per diluted share. We expect to exit both these vacant properties during our third fiscal quarter. These start up costs and write down charges are treated as special items in the adjusted results for the quarter.
| Ethan Allen Interiors Inc. | |||||||||||||||||||||||
| Selected Financial Information | |||||||||||||||||||||||
| Unaudited | |||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
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Selected Consolidated Financial Data: |
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Three Months Ended |
Six Months Ended |
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12/31/12 |
12/31/11 |
12/31/12 |
12/31/11 |
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| Net sales | $ | 191.3 | $ | 183.3 | $ | 378.7 | $ | 368.2 | |||||||||||||||
| Gross margin | 54.4 | % | 53.6 | % | 55.0 | % | 53.3 | % | |||||||||||||||
| Operating margin | 9.1 | % | 7.6 | % | 9.3 | % | 7.5 | % | |||||||||||||||
| Operating margin (excluding special items*) | 10.5 | % | 8.5 | % | 10.5 | % | 7.9 | % | |||||||||||||||
| Net income | $ | 9.8 | $ | 8.1 | $ | 19.9 | $ | 14.8 | |||||||||||||||
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Net income (excluding special items* and unusual income tax effects) |
$ | 11.4 | $ | 8.6 | $ | 22.5 | $ | 15.8 | |||||||||||||||
| Operating cash flow | $ | 11.5 | $ | 4.7 | $ | 18.2 | $ | 11.0 | |||||||||||||||
| Capital expenditures | $ | 5.2 | $ | 8.0 | $ | 13.6 | $ | 11.4 | |||||||||||||||
| Acquisitions | $ | 0.0 | $ | 0.0 | $ | 0.6 | $ | 0.0 | |||||||||||||||
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Treasury stock repurchases (settlement date basis) |
$ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.8 | |||||||||||||||
| EBITDA | $ | 21.7 | $ | 18.5 | $ | 44.2 | $ | 37.1 | |||||||||||||||
| EBITDA as % of net sales | 11.3 | % | 10.1 | % | 11.7 | % | 10.1 | % | |||||||||||||||
| EBITDA (excluding special items*) | $ | 24.4 | $ | 20.2 | $ | 48.5 | $ | 38.8 | |||||||||||||||
| EBITDA as % of net sales (excluding special items*) | 12.7 | % | 11.0 | % | 12.8 | % | 10.5 | % | |||||||||||||||
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Selected Financial Data by Business Segment: |
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Three Months Ended |
Six Months Ended |
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12/31/12 |
12/31/11 |
12/31/12 |
12/31/11 |
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Retail |
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| Net sales | $ | 151.8 | $ | 143.1 | $ | 300.9 | $ | 284.3 | |||||||||||||||
| Operating margin | 4.0 | % | -1.8 | % | 2.3 | % | -1.4 | % | |||||||||||||||
| Operating margin (excluding special items*) | 4.6 | % | -0.3 | % | 3.2 | % | -0.7 | % | |||||||||||||||
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Wholesale |
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| Net sales | $ | 108.2 | $ | 106.6 | $ | 219.6 | $ | 223.0 | |||||||||||||||
| Operating margin | 8.2 | % | 14.7 | % | 11.3 | % | 14.1 | % | |||||||||||||||
| Operating margin (excluding special items*) | 9.9 | % | 14.4 | % | 12.1 | % | 13.9 | % | |||||||||||||||
| * 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) | |||||||||||||||||||||||
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Three Months Ended |
Six Months Ended |
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12/31/12 |
12/31/11 |
12/31/12 |
12/31/11 |
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| Net sales | $ | 191,251 | $ | 183,275 | $ | 378,688 | $ | 368,196 | |||||||||||||||
| Cost of sales | 87,284 | 85,056 | 170,468 | 172,092 | |||||||||||||||||||
| Gross profit | 103,967 | 98,219 | 208,220 | 196,104 | |||||||||||||||||||
| Selling general and administrative expenses | 86,610 | 84,281 | 172,909 | 168,528 | |||||||||||||||||||
| Operating income | 17,357 | 13,938 | 35,311 | 27,576 | |||||||||||||||||||
| Interest and other income | 128 | 145 | 202 | 205 | |||||||||||||||||||
| Interest expense | 2,198 | 2,274 | 4,397 | 4,625 | |||||||||||||||||||
| Income before income taxes | 15,287 | 11,809 | 31,116 | 23,156 | |||||||||||||||||||
| Income tax expense | 5,441 | 3,732 | 11,206 | 8,309 | |||||||||||||||||||
| Net income | $ | 9,846 | $ | 8,077 | $ | 19,910 | $ | 14,847 | |||||||||||||||
| Basic earnings per common share: | |||||||||||||||||||||||
| Net income per basic share | $ | 0.34 | $ | 0.28 | $ | 0.69 | $ | 0.52 | |||||||||||||||
| Basic weighted average shares outstanding | 28,846 | 28,823 | 28,841 | 28,791 | |||||||||||||||||||
| Diluted earnings per common share: | |||||||||||||||||||||||
| Net income per diluted share | $ | 0.34 | $ | 0.28 | $ | 0.68 | $ | 0.51 | |||||||||||||||
| Diluted weighted average shares outstanding | 29,223 | 29,069 | 29,182 | 29,010 | |||||||||||||||||||
| Comprehensive income: | |||||||||||||||||||||||
| Net income | $ | 9,846 | $ | 8,077 | $ | 19,910 | $ | 14,847 | |||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||
| Currency translation adjustment | (20 | ) | (543 | ) | 140 | (2,241 | ) | ||||||||||||||||
| Other | 15 | (10 | ) | 40 | (1 | ) | |||||||||||||||||
| Other comprehensive income (loss) net of tax | (5 | ) | (553 | ) | 180 | (2,242 | ) | ||||||||||||||||
| Comprehensive income | $ | 9,841 | $ | 7,524 | $ | 20,090 | $ | 12,605 | |||||||||||||||
| Ethan Allen Interiors Inc. | |||||||||||||
| Condensed Consolidated Balance Sheets | |||||||||||||
| Unaudited | |||||||||||||
| (in thousands) | |||||||||||||
| December 31, | June 30, | ||||||||||||
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2012 |
2012 |
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| Assets | |||||||||||||
| Current assets: | |||||||||||||
| Cash and cash equivalents | $ | 57,267 | $ | 79,721 | |||||||||
| Marketable securities | 17,869 | 9,005 | |||||||||||
| Accounts receivable, net | 11,137 | 14,919 | |||||||||||
| Inventories | 142,385 | 155,739 | |||||||||||
| Prepaid expenses & other current assets | 20,258 | 23,408 | |||||||||||
| Total current assets | 248,916 | 282,792 | |||||||||||
| Property, plant and equipment, net | 299,153 | 295,695 | |||||||||||
| Intangible assets, net | 45,128 | 45,128 | |||||||||||
| Restricted cash and investments | 15,427 | 15,416 | |||||||||||
| Other assets | 6,752 | 5,757 | |||||||||||
| Total Assets | $ | 615,376 | $ | 644,788 | |||||||||
| Liabilities and Shareholders' Equity | |||||||||||||
| Current liabilities: | |||||||||||||
| Current maturities of long-term debt | 466 | 250 | |||||||||||
| Customer deposits | 46,676 | 65,465 | |||||||||||
| Accounts payable | 16,334 | 27,315 | |||||||||||
| Accrued expenses & other current liabilities | 52,882 | 58,047 | |||||||||||
| Total current liabilities | 116,358 | 151,077 | |||||||||||
| Long-term debt | 154,871 | 154,250 | |||||||||||
| Other long-term liabilities | 18,486 | 17,593 | |||||||||||
| Total liabilities | 289,715 | 322,920 | |||||||||||
| Shareholders' equity | 325,661 | 321,868 | |||||||||||
| Total Liabilities and Shareholders' Equity | $ | 615,376 | $ | 644,788 | |||||||||
| Ethan Allen Interiors Inc. | ||||||||||||||||||||
| GAAP Reconciliation | ||||||||||||||||||||
| Three and Six Months Ended December 31, 2012 and 2011 | ||||||||||||||||||||
| Unaudited | ||||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||
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Net Income / Earnings Per Share |
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| Net income | $ | 9,846 | $ | 8,077 | $ | 19,910 | $ | 14,847 | ||||||||||||
| Special items net of related tax effects * | 1,693 | 1,073 | 2,715 | 1,048 | ||||||||||||||||
| Unusual income tax effects | (139 | ) | (568 | ) | (151 | ) | (133 | ) | ||||||||||||
|
Net income (excluding special items* and unusual income tax effects) |
$ | 11,400 | $ | 8,582 | $ | 22,474 | $ | 15,762 | ||||||||||||
| Basic weighted average shares outstanding | 28,846 | 28,823 | 28,841 | 28,791 | ||||||||||||||||
| Earnings per basic share | $ | 0.34 | $ | 0.28 | $ | 0.69 | $ | 0.52 | ||||||||||||
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Earnings per basic share (excluding special items* and unusual income tax effects) |
$ | 0.40 | $ | 0.30 | $ | 0.78 | $ | 0.55 | ||||||||||||
| Diluted weighted average shares outstanding | 29,223 | 29,069 | 29,182 | 29,010 | ||||||||||||||||
| Earnings per diluted share | $ | 0.34 | $ | 0.28 | $ | 0.68 | $ | 0.51 | ||||||||||||
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Earnings per diluted share (excluding special items* and unusual income tax effects) |
$ | 0.39 | $ | 0.30 | $ | 0.77 | $ | 0.54 | ||||||||||||
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Consolidated Operating Income / Operating Margin |
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| Operating income | $ | 17,357 | $ | 13,938 | $ | 35,311 | $ | 27,576 | ||||||||||||
| Add: special items * | 2,666 | 1,690 | 4,276 | 1,650 | ||||||||||||||||
| Operating income (excluding special items*) | $ | 20,023 | $ | 15,628 | $ | 39,587 | $ | 29,226 | ||||||||||||
| Net sales | $ | 191,251 | $ | 183,275 | $ | 378,688 | $ | 368,196 | ||||||||||||
| Operating margin | 9.1 | % | 7.6 | % | 9.3 | % | 7.5 | % | ||||||||||||
| Operating margin (excluding special items*) | 10.5 | % | 8.5 | % | 10.5 | % | 7.9 | % | ||||||||||||
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Wholesale Operating Income / Operating Margin |
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| Wholesale operating income | $ | 8,892 | $ | 15,702 | $ | 24,897 | $ | 31,393 | ||||||||||||
| Add: special items | 1,774 | (368 | ) | 1,774 | (368 | ) | ||||||||||||||
| Wholesale operating income (excluding special items*) | $ | 10,666 | $ | 15,334 | $ | 26,671 | $ | 31,025 | ||||||||||||
| Wholesale net sales | $ | 108,172 | $ | 106,631 | $ | 219,589 | $ | 223,025 | ||||||||||||
| Wholesale operating margin | 8.2 | % | 14.7 | % | 11.3 | % | 14.1 | % | ||||||||||||
| Wholesale operating margin (excluding special items*) | 9.9 | % | 14.4 | % | 12.1 | % | 13.9 | % | ||||||||||||
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Retail Operating Income / Operating Margin |
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| Retail operating income (loss) | $ | 6,017 | $ | (2,532 | ) | $ | 7,065 | $ | (4,029 | ) | ||||||||||
| Add: special items | 892 | 2,058 | 2,502 | 2,018 | ||||||||||||||||
| Retail operating income (loss) (excluding special items*) | $ | 6,909 | $ | (474 | ) | $ | 9,567 | $ | (2,011 | ) | ||||||||||
| Retail net sales | $ | 151,827 | $ | 143,104 | $ | 300,906 | $ | 284,285 | ||||||||||||
| Retail operating margin | 4.0 | % | -1.8 | % | 2.3 | % | -1.4 | % | ||||||||||||
| Retail operating margin (excluding special items*) | 4.6 | % | -0.3 | % | 3.2 | % | -0.7 | % | ||||||||||||
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* Special items consist of restructuring, impairment, transition charges and certain other items. |
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Related tax effects are calculated using a normalized income tax rate. |
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| Ethan Allen Interiors Inc. | ||||||||||||||||||||
| GAAP Reconciliation | ||||||||||||||||||||
| Three and Six Months Ended December 31, 2012 and 2011 | ||||||||||||||||||||
| Unaudited | ||||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||
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EBITDA |
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| Net income | $ | 9,846 | $ | 8,077 | $ | 19,910 | $ | 14,847 | ||||||||||||
| Add: interest expense, net | 2,056 | 2,124 | 4,111 | 4,382 | ||||||||||||||||
| income tax expense | 5,441 | 3,732 | 11,206 | 8,309 | ||||||||||||||||
| depreciation and amortization | 4,360 | 4,593 | 8,966 | 9,582 | ||||||||||||||||
| EBITDA | $ | 21,703 | $ | 18,526 | $ | 44,193 | $ | 37,120 | ||||||||||||
| Net sales | $ | 191,251 | $ | 183,275 | $ | 378,688 | $ | 368,196 | ||||||||||||
| EBITDA as % of net sales | 11.3 | % | 10.1 | % | 11.7 | % | 10.1 | % | ||||||||||||
| EBITDA | $ | 21,703 | $ | 18,526 | $ | 44,193 | $ | 37,120 | ||||||||||||
| Add: special items* | 2,666 | 1,690 | 4,276 | 1,650 | ||||||||||||||||
| EBITDA (excluding special items) | $ | 24,369 | $ | 20,216 | $ | 48,469 | $ | 38,770 | ||||||||||||
| Net sales | $ | 191,251 | $ | 183,275 | $ | 378,688 | $ | 368,196 | ||||||||||||
| EBITDA as % of net sales (excluding special items) | 12.7 | % | 11.0 | % | 12.8 | % | 10.5 | % | ||||||||||||
| * 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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