Ethan Allen Interiors Inc. (NYSE: ETH) today reported operating results for the fiscal year and three months ended June 30, 2013. Please refer to the accompanying financial statements and reconciliations to non-GAAP measures discussed below.
Fiscal 2013 Highlights:
- Adjusted net income per diluted share of $1.31 grew 39% with flat sales compared to the prior fiscal year
- Adjusted operating profits were $69 million, a 33% increase
- Gross margin improved by 110 basis points to 54.6%
- Company Retail division adjusted operating profit increased to $14.5 million, a positive change of $24.1 million from the previous year and net sales increased 3.4%
- Cash dividends to stockholders of $22 million, an increase of 176%
- Cash and securities at June 30, 2013 totaled $104 million
Fourth Quarter Highlights:
- Adjusted net income per diluted share of $0.34 grew 26% with 1.7% lower net sales
- Adjusted operating income of $17.5 million grew 23%
- Gross margin of 54.0% compared to 53.9% the prior year
- Company Retail division adjusted operating profit increased to $4.2 million from a loss of $1.0 million with a net sales increase of 1.1%
- Repurchased $24 million of bonds bringing outstanding balance to $129 million
- Retail division written orders decreased 1.9% including a decline of 0.9% in comparable design center written orders
Farooq Kathwari, Chairman and CEO commented, "We are gratified with our strong performance in earnings due to major improvements in all areas but especially in the operations of the Retail division. This major increase took place despite flat sales. Written and delivered sales were impacted by several factors including significant reductions in clearance events, lower international shipments, and timing of events."
Mr. Kathwari concluded, "Our many initiatives in fiscal 2013 positioned us for the opportunity to increase sales in fiscal 2014 and to continue improving our profitability. We are cautiously optimistic regarding our growth opportunities in fiscal 2014."
Financial Results:
Net sales for the twelve months ended June 30, 2013 remained stable at $729.1 million. The Company's Retail division net sales increased 3.4% to $578.3 million including comparable design center net sales growth of 3.3%. Net income for the year ended June 30, 2013 was $32.5 million or $1.11 per diluted share compared with $49.7 million or $1.71 per diluted share in the prior year. The prior year results included $23.9 million in non-cash tax benefits. Adjusted net income for the year grew 39% to $1.31 per diluted share or $38.4 million from $0.94 per diluted share or $27.5 million in the prior year quarter.
Net sales for the quarter ended June 30, 2013 decreased 1.7% over the prior year to $182.3 million. The Company's Retail division net sales increased 1.1% to $145.3 million including comparable design center net sales growth of 2.5%. Retail division written orders recorded during the fourth quarter decreased 1.9% including a decline of 0.9% in comparable design center written orders. Net income for the quarter ended June 30, 2013 was $8.2 million or $0.28 per diluted share compared with $7.3 million or $0.25 per diluted share in the prior year quarter. Adjusted earnings for the quarter grew 26% to $0.34 per diluted share or $9.9 million from $0.27 per diluted share or $7.8 million in the prior year quarter.
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.
This press release should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended June 30, 2012 (the "2012 Form 10-K") 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 including specifically, and without limitation, those set forth in Part I, Item 1A "Risk Factors" of the 2012 Form 10-K. 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 millions) | ||||||||||||||||||
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Selected Consolidated Financial Data: |
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Three Months Ended |
Twelve Months Ended |
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06/30/13 |
06/30/12 |
06/30/13 |
06/30/12 |
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| Net sales | $ | 182.3 | $ | 185.3 | $ | 729.1 | $ | 729.4 | ||||||||||
| Gross margin | 54.0 | % | 53.9 | % | 54.6 | % | 53.5 | % | ||||||||||
| Operating margin | 9.0 | % | 7.7 | % | 8.3 | % | 6.8 | % | ||||||||||
| Operating margin (excluding special items*) | 9.6 | % | 7.7 | % | 9.4 | % | 7.1 | % | ||||||||||
| Net income | $ | 8.2 | $ | 7.3 | $ | 32.5 | $ | 49.7 | ||||||||||
| Net income (excluding special items* and | ||||||||||||||||||
| unusual income tax effects) | $ | 9.9 | $ | 7.8 | $ | 38.4 | $ | 27.5 | ||||||||||
| Operating cash flow | $ | 16.9 | $ | 9.9 | $ | 61.3 | $ | 37.7 | ||||||||||
| Capital expenditures | $ | 2.5 | $ | 3.0 | $ | 19.0 | $ | 22.9 | ||||||||||
| Acquisitions | $ | 0.2 | $ | 0.0 | $ | 0.8 | $ | 0.5 | ||||||||||
| Treasury stock repurchases | $ | 0.0 | $ | 0.5 | $ | 0.0 | $ | 1.4 | ||||||||||
| EBITDA | $ | 19.2 | $ | 18.9 | $ | 76.4 | $ | 68.3 | ||||||||||
| EBITDA as % of net sales | 10.5 | % | 10.2 | % | 10.5 | % | 9.4 | % | ||||||||||
| EBITDA (excluding special items*) | $ | 22.1 | $ | 18.8 | $ | 86.7 | $ | 70.4 | ||||||||||
| EBITDA as % of net sales (excluding special items*) | 12.1 | % | 10.1 | % | 11.9 | % | 9.6 | % | ||||||||||
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Selected Financial Data by Business Segment: |
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Three Months Ended |
Twelve Months Ended |
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06/30/13 |
06/30/12 |
06/30/13 |
06/30/12 |
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Retail |
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| Net sales | $ | 145.3 | $ | 143.7 | $ | 578.3 | $ | 559.4 | ||||||||||
| Operating margin | 2.2 | % | -0.7 | % | 1.4 | % | -2.1 | % | ||||||||||
| Operating margin (excluding special items*) | 2.9 | % | -0.7 | % | 2.5 | % | -1.7 | % | ||||||||||
|
Wholesale |
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| Net sales | $ | 106.7 | $ | 112.8 | $ | 434.4 | $ | 456.9 | ||||||||||
| Operating margin | 12.4 | % | 13.2 | % | 11.7 | % | 14.1 | % | ||||||||||
| Operating margin (excluding special items*) | 12.4 | % | 13.2 | % | 12.1 | % | 14.1 | % | ||||||||||
| * 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 |
Twelve Months Ended |
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06/30/13 |
06/30/12 |
06/30/13 |
06/30/12 |
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| Net sales | $ | 182,251 | $ | 185,316 | $ | 729,083 | $ | 729,373 | ||||||||||
| Cost of sales | 83,907 | 85,407 | 330,734 | 339,085 | ||||||||||||||
| Gross profit | 98,344 | 99,909 | 398,349 | 390,288 | ||||||||||||||
| Selling, general and administrative expenses | 81,878 | 85,575 | 337,912 | 340,591 | ||||||||||||||
| Operating income | 16,466 | 14,334 | 60,437 | 49,697 | ||||||||||||||
| Interest and other income | (1,677 | ) | 200 | (1,485 | ) | 562 | ||||||||||||
| Interest expense | 2,186 | 2,206 | 8,778 | 9,020 | ||||||||||||||
| Income before income taxes | 12,603 | 12,328 | 50,174 | 41,239 | ||||||||||||||
| Income tax expense (benefit) | 4,409 | 5,029 | 17,696 | (8,455 | ) | |||||||||||||
| Net income | $ | 8,194 | $ | 7,299 | $ | 32,478 | $ | 49,694 | ||||||||||
| Basic earnings per common share: | ||||||||||||||||||
| Net income per basic share | $ | 0.28 | $ | 0.25 | $ | 1.13 | $ | 1.72 | ||||||||||
| Basic weighted average shares outstanding | 28,905 | 28,856 | 28,864 | 28,824 | ||||||||||||||
| Diluted earnings per common share: | ||||||||||||||||||
| Net income per diluted share | $ | 0.28 | $ | 0.25 | $ | 1.11 | $ | 1.71 | ||||||||||
| Diluted weighted average shares outstanding | 29,319 | 29,179 | 29,239 | 29,109 | ||||||||||||||
| Comprehensive income: | ||||||||||||||||||
| Net income | $ | 8,194 | $ | 7,299 | $ | 32,478 | $ | 49,694 | ||||||||||
| Other comprehensive income | ||||||||||||||||||
| Currency translation adjustment | (946 | ) | (687 | ) | (506 | ) | (1,154 | ) | ||||||||||
| Other | 9 | (3 | ) | 56 | (38 | ) | ||||||||||||
| Other comprehensive income (loss) net of tax | (937 | ) | (690 | ) | (450 | ) | (1,192 | ) | ||||||||||
| Comprehensive income | $ | 7,257 | $ | 6,609 | $ | 32,028 | $ | 48,502 | ||||||||||
| Ethan Allen Interiors Inc. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| Unaudited | ||||||||
| (in thousands) | ||||||||
| June 30, | June 30, | |||||||
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2013 |
2012 |
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| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents |
$ |
72,601 |
$ |
79,721 | ||||
| Marketable securities | 15,529 | 9,005 | ||||||
| Accounts receivable, net | 12,277 | 14,919 | ||||||
| Inventories | 137,256 | 155,739 | ||||||
| Prepaid expenses & other current assets | 22,907 | 23,408 | ||||||
| Total current assets | 260,570 | 282,792 | ||||||
| Property, plant and equipment, net | 291,672 | 295,695 | ||||||
| Intangible assets, net | 45,128 | 45,128 | ||||||
| Restricted cash and investments | 15,433 | 15,416 | ||||||
| Other assets | 4,482 | 5,757 | ||||||
| Total Assets | $ | 617,285 | $ | 644,788 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Current maturities of long-term debt | 480 | 250 | ||||||
| Customer deposits | 59,098 | 65,465 | ||||||
| Accounts payable | 22,995 | 27,315 | ||||||
| Accrued expenses & other current liabilities | 50,366 | 58,047 | ||||||
| Total current liabilities | 132,939 | 151,077 | ||||||
| Long-term debt | 130,809 | 154,250 | ||||||
| Other long-term liabilities | 19,180 | 17,593 | ||||||
| Total liabilities | 282,928 | 322,920 | ||||||
| Shareholders' equity | 334,357 | 321,868 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 617,285 | $ | 644,788 | ||||
| Ethan Allen Interiors Inc. | ||||||||||||||||
| GAAP Reconciliation | ||||||||||||||||
| Three and Twelve Months Ended June 30, 2013 and 2012 | ||||||||||||||||
| Unaudited | ||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
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Net Income / Earnings Per Share |
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| Net income | $ | 8,194 |
$ |
7,299 | $ | 32,478 | $ | 49,694 | ||||||||
| Special items net of related tax effects * | 1,861 | (57 | ) | 6,544 | 1,318 | |||||||||||
| Unusual income tax effects | (191 | ) | 529 | (617 | ) | (23,508 | ) | |||||||||
| Net income (excluding special items* and | ||||||||||||||||
| unusual income tax effects) | $ | 9,864 | $ | 7,771 | $ | 38,405 | $ | 27,504 | ||||||||
| Basic weighted average shares outstanding | 28,905 | 28,856 | 28,864 | 28,824 | ||||||||||||
| Earnings per basic share | $ | 0.28 | $ | 0.25 | $ | 1.13 | $ | 1.72 | ||||||||
| Earnings per basic share (excluding special items* | ||||||||||||||||
| and unusual income tax effects) | $ | 0.34 | $ | 0.27 | $ | 1.33 | $ | 0.95 | ||||||||
| Diluted weighted average shares outstanding | 29,319 | 29,179 | 29,239 | 29,109 | ||||||||||||
| Earnings per diluted share | $ | 0.28 | $ | 0.25 | $ | 1.11 | $ | 1.71 | ||||||||
| Earnings per diluted share (excluding special | ||||||||||||||||
| items* and unusual income tax effects) | $ | 0.34 | $ | 0.27 | $ | 1.31 | $ | 0.94 | ||||||||
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Consolidated Operating Income / Operating Margin |
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| Operating income | $ | 16,466 | $ | 14,334 | $ | 60,437 | $ | 49,697 | ||||||||
| Add: special items * | 1,007 | (90 | ) | 8,382 | 2,075 | |||||||||||
| Operating income (excluding special items*) | $ | 17,473 | $ | 14,244 | $ | 68,819 | $ | 51,772 | ||||||||
| Net sales | $ | 182,251 | $ | 185,316 | $ | 729,083 | $ | 729,373 | ||||||||
| Operating margin | 9.0 | % | 7.7 | % | 8.3 | % | 6.8 | % | ||||||||
| Operating margin (excluding special items*) | 9.6 | % | 7.7 | % | 9.4 | % | 7.1 | % | ||||||||
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Wholesale Operating Income / Operating Margin |
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| Wholesale operating income | $ | 13,192 | $ | 14,852 | $ | 50,843 | $ | 64,436 | ||||||||
| Add: special items | 43 | - | 1,886 | 131 | ||||||||||||
| Wholesale operating income (excluding special items*) | $ | 13,235 | $ | 14,852 | $ | 52,729 | $ | 64,567 | ||||||||
| Wholesale net sales | $ | 106,749 | $ | 112,846 | $ | 434,439 | $ | 456,915 | ||||||||
| Wholesale operating margin | 12.4 | % | 13.2 | % | 11.7 | % | 14.1 | % | ||||||||
| Wholesale operating margin (excluding special items*) | 12.4 | % | 13.2 | % | 12.1 | % | 14.1 | % | ||||||||
|
Retail Operating Income / Operating Margin |
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| Retail operating income (loss) | $ | 3,234 | $ | (944 | ) | $ | 8,016 | $ | (11,522 | ) | ||||||
| Add: special items | 964 | (90 | ) | 6,496 | 1,944 | |||||||||||
| Retail operating income (loss) (excluding special items*) | $ | 4,198 | $ | (1,034 | ) | $ | 14,512 | $ | (9,578 | ) | ||||||
| Retail net sales | $ | 145,322 | $ | 143,730 | $ | 578,284 | $ | 559,417 | ||||||||
| Retail operating margin | 2.2 | % | -0.7 | % | 1.4 | % | -2.1 | % | ||||||||
| Retail operating margin (excluding special items*) | 2.9 | % | -0.7 | % | 2.5 | % | -1.7 | % | ||||||||
| * 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 Twelve Months Ended June 30, 2013 and 2012 | ||||||||||||||||
| Unaudited | ||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
|
EBITDA |
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| Net income | $ | 8,194 | $ | 7,299 | $ | 32,478 | $ | 49,694 | ||||||||
| Add: interest expense, net | 2,054 | 2,059 | 8,219 | 8,478 | ||||||||||||
| income tax expense | 4,409 | 5,029 | 17,696 | (8,455 | ) | |||||||||||
| depreciation and amortization | 4,494 | 4,489 | 18,008 | 18,581 | ||||||||||||
| EBITDA | $ | 19,151 | $ | 18,876 | $ | 76,401 | $ | 68,298 | ||||||||
| Net sales | $ | 182,251 | $ | 185,316 | $ | 729,083 | $ | 729,373 | ||||||||
| EBITDA as % of net sales | 10.5 | % | 10.2 | % | 10.5 | % | 9.4 | % | ||||||||
| EBITDA | $ | 19,151 | $ | 18,876 | $ | 76,401 | $ | 68,298 | ||||||||
| Add: special items* | 2,931 | (90 | ) | 10,306 | 2,075 | |||||||||||
| EBITDA (excluding special items) | $ | 22,082 | $ | 18,786 | $ | 86,707 | $ | 70,373 | ||||||||
| Net sales | $ | 182,251 | $ | 185,316 | $ | 729,083 | $ | 729,373 | ||||||||
| EBITDA as % of net sales (excluding special items) | 12.1 | % | 10.1 | % | 11.9 | % | 9.6 | % | ||||||||
| * 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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