DANBURY, CT - January 27, 2015 - Ethan Allen Interiors Inc. ("Ethan Allen" or the "Company") (NYSE: ETH) today reported operating results for the fiscal 2015 three and six month periods ended December 31, 2014. Please refer to the accompanying financial statements and reconciliation to non-GAAP measures discussed below.

 Second Quarter and First Half Highlights:

  • Consolidated net sales of $197.1 million for the second quarter ending December 31, 2014 increased 2.1% compared to the prior year second quarter. Net sales of $387.8 for the first half fiscal 2015 increased 3.5% compared to first half of fiscal 2014.
     
  • Comparable written sales for the Retail Division increased 8.4% for the second quarter of fiscal 2015 compared to the prior year second quarter, and total written sales for the Retail Division increased 7.8% over the same prior year period. Comparable written sales for the first half fiscal 2015 increased 4.1% compared to first half of fiscal 2014. Total written sales for the first half iof fiscal 2015 ncreased 3.0%.
     
  • Consolidated adjusted operating income for the second quarter was $18.7 million or 9.5% of sales compared to $20.6 million or 10.7% of sales in the prior year second quarter. Adjusted operating income for the first half of fiscal 2015 was $40.6 million or 10.5% of sales compared to $37.4 million or 10.0% in the prior year period.
     
  • Adjusted earnings per diluted share (EPS) was $0.37 for the second quarter of fiscal 2015 compared with EPS of $0.41 in second quarter of fiscal 2014. EPS increased 9.6% to $0.80 for the first half of fiscal 2015 compared with EPS of $0.73 in the first half of fiscal 2014;  GAAP earnings per share for the quarter was $0.34 compared with $0.39 in the comparable prior year period. GAAP earnings per share for the first half of fiscal 2015 was $0.75 compared with $0.70 in the comparable prior year period.
     
  • Cash and securities of $129.8 million increased $17.1 million or 15.2% from December 31, 2013.
     
  • Capital Expenditures were $13.1 million year to date at December 31, 2014 compared to $8.6 million prior year and inventories of $151.7 million increased $11.8 million as planned from December 31, 2013 in support of our new product launch and marketing initiatives.

Regular Cash Dividend:

  • The Company announced today that its Board of Directors has declared a regular quarterly cash dividend of $0.12 per share which will be payable to shareholders of record as of Friday, April 10, 2015 and will be paid on Monday, April 27, 2015.

First half highlights on marketing and operations:

  • Product Offerings: Completed major introduction of over 600 new product offerings. While the selloff of floor inventory impacted retail sales and gross margins, the new product launch which is now on the floors has been well received and helped to drive the strong 8.4% comparable written sales growth in the second quarter.
  •  
  • Design Centers: Major effort well underway to renovate design centers to project a fashionable and relaxed attitude. During the second quarter new design centers opened in Redding, CA, Las Vegas, NV, Dubai, UAE and six new locations in China.
     
  • Our Message:  Started accelerating our message during the second quarter spending 15% more in advertising over the prior year quarter. Strong marketing plan in place for the second half.
     
  • Technology:  During the quarter launched our new website and continuing to fine tune and add new features.
     
  • Manufacturing and Logistics: Major focus to manage the transition to the new product offerings. Continued to invest in technology in our manufacturing operations.

Farooq Kathwari, Chairman and CEO commented, "We are continuing to make major changes in repositioning our offerings, advertising, technology and North American manufacturing. Despite the disruption caused by these changes we increased our adjusted EPS by 9.6% for the six month period compared to last year and increased our cash by 15.2% to $129.8 million compared to same period last year."

Mr. Kathwari concluded, "Looking ahead we have another six months of major changes as we further update our offerings and continue to strengthen our advertising and manufacturing. We remain cautiously optimistic as we move forward."

Fiscal 2015 Second Quarter Financial Results:

Consolidated net sales for the quarter ended December 31, 2014 increased 2.1% over the prior year to $197.1 million. The Company's wholesale segment net sales increased 2.7%. The Company's retail segment net sales increased 1.1% to $153.2 million including a comparable design center net sales increase of 1.8%. Net income for the quarter ended December 31, 2014 was $10.0 million or $0.34 per diluted share compared with $11.6 million or $0.39 per diluted share in the prior year quarter. Excluding special items in both periods, adjusted earnings for the quarter were $0.37 per diluted share or $10.8 million compared to $0.41 per diluted share or $11.9 million in the prior year quarter.

Fiscal 2015 Year-to-Date Financial Results:

Year to date net sales were $387.8 million, up 3.5% from $374.8 million the prior year. Gross margin and adjusted operating profit margin were 54.4% and 10.5% respectively compared with 54.6% and 10.0% respectively the prior year. Net income for the six months ended December 31, 2014 was $21.9 million or $0.75 per diluted share compared with $20.6 million or $0.70 per diluted share in the prior year comparable period. Adjusted net income year to date of $23.5 million increased 9.7% compared with $21.5 million the prior year period and our adjusted earnings per diluted share increased 9.6% for the six months to date at $0.80 compared with $0.73 the prior year to date period.

About Ethan Allen

Ethan Allen Interiors Inc. (NYSE: ETH) is a leading interior design company and manufacturer and retailer of quality home furnishings. The company offers complimentary 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 one plant in each of 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
  12/31/14 12/31/13   12/31/14 12/31/13
           
Net sales $197.1 $193.1   $387.8 $374.8
Gross margin 53.8% 54.9%   54.4% 54.6%
Operating margin 9.0% 10.3%   9.8% 9.6%
Operating margin (excluding special items*) 9.5% 10.7%   10.5% 10.0%
Net income $10.0 $11.6   $21.9 $20.6
Net income (excluding special items* and          
unusual income tax effects) $10.8 $11.9   $23.5 $21.5
Operating cash flow $3.7 $1.5   $10.5 $22.6
Capital expenditures $7.7 $5.3   $13.1 $8.6
Acquisitions $0.0 $0.0   $2.0 $0.0
Treasury stock repurchases $0.0 $0.0   $0.0 $0.0
           
EBITDA $22.3 $24.2   $47.5 $44.4
EBITDA as % of net sales 11.3% 12.5%   12.3% 11.8%
           
EBITDA (excluding special items*) $23.4 $25.0   $50.0 $46.0
EBITDA as % of net sales (excluding special items*) 11.9% 12.9%   12.9% 12.3%
           
           
           
           
Selected Financial Data by Business Segment:          
  Three Months Ended   Six Months Ended
  12/31/14 12/31/13   12/31/14 12/31/13
Retail          
Net sales $153.2 $151.5   $298.3 $293.3
Operating margin 1.9% 2.8%   1.6% 1.4%
Operating margin (excluding special items*) 2.0% 3.3%   1.9% 1.9%
           
           
Wholesale          
Net sales $116.2 $113.1   $240.8 $226.3
Operating margin 11.3% 12.7%   14.4% 13.5%
Operating margin (excluding special items*) 12.1% 12.7%   15.0% 13.5%
           
* 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
  12/31/14 12/31/13   12/31/14 12/31/13
           
Net sales  $  197,067  $  193,104    $  387,773  $  374,763
Cost of sales   90,993   87,105     176,896   170,021
Gross profit   106,074   105,999     210,877   204,742
Selling, general and administrative expenses   88,414   86,149     172,747   168,948
Operating income   17,660   19,850     38,130   35,794
Interest and other income   89   43     232   125
Interest expense   1,882   1,871     3,771   3,744
Income before income taxes   15,867   18,022     34,591   32,175
Income tax expense   5,829   6,467     12,674   11,586
Net income  $  10,038  $  11,555    $  21,917  $  20,589
           
Basic earnings per common share:          
Net income per basic share  $  0.35  $  0.40    $  0.76  $  0.71
Basic weighted average shares outstanding 28,930 28,916   28,929 28,913
           
Diluted earnings per common share:          
Net income per diluted share  $  0.34  $  0.39    $  0.75  $  0.70
Diluted weighted average shares outstanding 29,295 29,292   29,272 29,290
           
Comprehensive income:          
Net income  $  10,038  $  11,555    $  21,917  $  20,589
Other comprehensive income          
Currency translation adjustment   (1,231)   (71)     (2,086)   (16)
Other   22   42     38   60
Other comprehensive income (loss) net of tax   (1,209)   (29)     (2,048)   44
Comprehensive income  $  8,829  $  11,526    $  19,869  $  20,633

 

Ethan Allen Interiors Inc.
Condensed Consolidated Balance Sheets
Unaudited
(in thousands)
       
  December 31, June 30,  
  2014 2014  
       
Assets      
Current assets:      
  Cash and cash equivalents  $  112,942  $  109,176  
  Marketable securities   8,865   18,153  
  Accounts receivable, net   10,626   12,426  
  Inventories   151,749   146,275  
  Prepaid expenses & other current assets   23,023   19,599  
  Total current assets   307,205   305,629  
       
Property, plant and equipment, net   284,789   288,156  
Intangible assets, net   45,128   45,128  
Restricted cash and investments   8,008   8,507  
Other assets   6,937   7,014  
       
  Total Assets  $  652,067  $  654,434  
       
       
Liabilities and Shareholders' Equity      
Current liabilities:      
  Current maturities of long-term debt   56,282   501  
  Customer deposits   52,779   59,684  
  Accounts payable   19,501   24,320  
  Accrued expenses & other current liabilities   46,374   51,542  
  Total current liabilities   174,936   136,047  
       
Long-term debt   75,751   130,411  
Other long-term liabilities   20,393   20,509  
  Total liabilities   271,080   286,967  
       
Shareholders' equity:      
  Common stock   486   486  
  Additional paid-in-capital   366,358   365,733  
  Less: Treasury stock   (584,041)   (584,041)  
  Retained earnings   599,338   584,395  
  Accumulated other comprehensive income   (1,438)   642  
Total Ethan Allen Interiors Inc. shareholders' equity   380,703   367,215  
  Noncontrolling interests   284   252  
Total shareholders' equity   380,987   367,467  
       
  Total Liabilities and Shareholders' Equity  $  652,067  $  654,434  


 

Ethan Allen Interiors Inc.
GAAP Reconciliation
Three and Six Months Ended December 31, 2014 and 2013
Unaudited
(in thousands, except per share amounts)
  Three Months Ended   Six Months Ended
  December 31,   December 31,
  2014 2013   2014 2013
Net Income / Earnings Per Share          
Net income  $  10,038  $  11,555    $  21,917  $  20,589
  Special items net of related tax effects *   681   489     1,578   1,022
  Unusual income tax effects   37   (111)     48   (158)
Net income (excluding special items* and          
 unusual income tax effects)  $  10,756  $  11,933    $  23,543  $  21,453
Diluted weighted average shares outstanding   29,295   29,292     29,272   29,290
Earnings per diluted share  $  0.34  $  0.39    $  0.75  $  0.70
Earnings per diluted share (excluding special          
items* and unusual income tax effects)  $  0.37  $  0.41    $  0.80  $  0.73
           
Consolidated Operating Income / Operating Margin          
Operating income  $  17,660  $  19,850    $  38,130  $  35,794
Add: special items *   1,072   770     2,485   1,610
Operating income (excluding special items*)  $  18,732  $  20,620    $  40,615  $  37,404
           
Net sales  $  197,067  $ 193,104    $  387,773  $  374,763
Operating margin 9.0% 10.3%   9.8% 9.6%
Operating margin (excluding special items*) 9.5% 10.7%   10.5% 10.0%
           
Wholesale Operating Income / Operating Margin          
Wholesale operating income  $  13,155  $  14,366    $  34,697  $  30,498
Add: special items   925   -      1,419   - 
Wholesale operating income (excluding special items*)  $  14,080  $  14,366    $  36,116  $  30,498
Wholesale net sales  $  116,210  $ 113,133    $  240,810  $  226,331
Wholesale operating margin 11.3% 12.7%   14.4% 13.5%
Wholesale operating margin (excluding special items*) 12.1% 12.7%   15.0% 13.5%
Retail Operating Income / Operating Margin          
Retail operating income  $  2,953  $  4,206    $  4,715  $  4,002
Add: special items   147   770     1,066   1,610
Retail operating income (excluding special items*)  $  3,100  $  4,976    $  5,781  $  5,612
Retail net sales  $  153,207  $ 151,496    $  298,250  $  293,323
Retail operating margin 1.9% 2.8%   1.6% 1.4%
Retail operating margin (excluding special items*) 2.0% 3.3%   1.9% 1.9%
* Special items consist of restructuring,  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, 2014 and 2013
Unaudited
(in thousands, except per share amounts)
  Three Months Ended   Six Months Ended
  December 31,   December 31,
  2014 2013   2014 2013
           
EBITDA          
Net income  $  10,038  $  11,555    $  21,917  $  20,589
Add:  interest expense, net   1,761   1,750     3,519   3,500
income tax expense   5,829   6,467     12,674   11,586
depreciation and amortization   4,675   4,410     9,394   8,699
EBITDA  $  22,303  $  24,182    $  47,504  $  44,374
Net sales  $  197,067  $ 193,104    $  387,773  $  374,763
EBITDA as % of net sales 11.3% 12.5%   12.3% 11.8%
           
EBITDA  $  22,303  $  24,182    $  47,504  $  44,374
Add: special items*   1,072   770     2,485   1,610
EBITDA (excluding special items)  $  23,375  $  24,952    $  49,989  $  45,984
Net sales  $  197,067  $ 193,104    $  387,773  $  374,763
EBITDA as % of net sales (excluding special items) 11.9% 12.9%   12.9% 12.3%
* Special items consist of restructuring,  transition charges and certain other items.
Related tax effects are calculated using a normalized income tax rate.

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