DANBURY, CT -- Ethan Allen Interiors Inc. ("Ethan Allen", the "Company", "We", or "Our") (NYSE:ETH) reported operating results for the three months ended September 30, 2011.

Net sales for the quarter ended September 30, 2011 increased 12.2% over the prior year to $184.9 million. The Company's Retail division net sales increased 16.7% to $141.2 million including comparable design center net sales growth of 14.9%. Written orders booked during the quarter by the Retail division were 13.2% greater than the prior year quarter including comparable design center order growth of 11.4%.

Farooq Kathwari, Chairman and CEO commented, "We are gratified to see continued improvements in our sales and profitability. Our focus of providing 'aspirational and attainable' offerings with complimentary design services is helping us differentiate in a very positive manner."

Net income for the quarter ended September 30, 2011 was $6.8 million or $0.23 per diluted share compared with the prior year of $3.8 million or $0.13 per diluted share. Excluding special items in both periods, net income for the quarter ended September 30, 2011 was $7.2 million or $0.25 per diluted share compared with $3.2 million or $0.11 per diluted share in the prior year period.

Mr. Kathwari continued, "Many major changes we undertook in the last three years demonstrate the impact of our vertically integrated structure. Our adjusted operating income grew 116% and our adjusted net income grew 127%. We also continued to maintain strong liquidity with $105.9 million of cash and securities while continuing to invest in our operations and also reducing our debt."

Mr. Kathwari concluded, "We plan to continue with our marketing and operational initiatives including introduction of a major product program reaching a larger consumer base and a strong adverting program getting across our total value proposition of style, quality, value, and personal service. While the economic environment remains challenging, we remain cautiously optimistic primarily due to the implementation of our various initiatives. However, we are also preparing for contingencies if the overall economic conditions were to deteriorate."

Analyst Conference Call

The Company will conduct a conference call at 11:00 AM (Eastern) on Tuesday October 25th to discuss the financial results and its business initiatives. 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 a manufacturer and retailer of quality home furnishings. Ethan Allen offers free interior design service to its clients and sells a full range of furniture products and decorative accessories through ethanallen.com and through a network of approximately 300 Design Centers in the United States and abroad. Ethan Allen owns and operates seven manufacturing facilities in North America, including five manufacturing plants and one sawmill in the United States and one manufacturing plant in Mexico. Approximately seventy percent of its products are made 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 for the year ended June 30, 2011 (the "2011 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 2011 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 thousands)

Selected Consolidated Financial Data:

Three Months Ended

09/30/11

09/30/10

Net sales

$

184.9

$

164.8

Gross margin

52.9

%

50.0

%

Operating margin

7.4

%

3.3

%

Operating margin (excluding special items*)

7.4

%

3.8

%

Net income

$

6.8

$

3.8

Net income (excluding special items* and unusual income tax effects)

$

7.2

$

3.2

Operating cash flow

$

6.3

($0.9

)

Capital expenditures

$

3.4

$

1.5

Acquisitions

$

0.0

$

0.0

Treasury stock repurchases (settlement date basis)

$

0.8

$

5.4

EBITDA

$

18.6

$

13.9

EBITDA as % of net sales

10.1

%

8.4

%

EBITDA (excluding special items*)

$

18.6

$

13.3

EBITDA as % of net sales (excluding special items*)

10.0

%

8.0

%

Selected Financial Data by Business Segment:

Three Months Ended

09/30/11

09/30/10

Retail

Net sales

$

141.2

$

121.0

Operating margin

-1.1

%

-3.5

%

Operating margin (excluding special items*)

-1.1

%

-3.4

%

Wholesale

Net sales

$

116.4

$

107.6

Operating margin

13.5

%

11.1

%

Operating margin (excluding special items*)

13.5

%

11.7

%

* 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 Income Statements

Unaudited

(in thousands)

Three Months Ended

09/30/11

09/30/10

Net sales

$

184,921

$

164,841

Cost of sales

87,036

82,460

Gross profit

97,885

82,381

Operating expenses:

Selling

43,620

39,327

General and administrative

40,667

37,443

Restructuring and impairment charge

(40

)

225

Total operating expenses

84,247

76,995

Operating income

13,638

5,386

Interest and other income

60

3,157

Interest expense

2,351

2,974

Income before income taxes

11,347

5,569

Income tax expense

4,577

1,756

Net income

$

6,770

$

3,813

Basic earnings per common share:

Net income per basic share

$

0.24

$

0.13

Basic weighted average shares outstanding

28,760

28,779

Diluted earnings per common share:

Net income per diluted share

$

0.23

$

0.13

Diluted weighted average shares outstanding

28,951

28,950

 

Ethan Allen Interiors Inc.

Condensed Consolidated Balance Sheets

Unaudited

(in thousands)

September 30,

June 30,

2011

2011

Assets

Current assets:

Cash and cash equivalents

$

79,376

$

78,519

Marketable securities

11,107

12,909

Accounts receivable, net

14,643

15,036

Inventories

141,050

141,692

Prepaid expenses & other current assets

21,255

20,372

Total current assets

267,431

268,528

Property, plant and equipment, net

291,535

294,853

Intangible assets, net

45,128

45,128

Restricted cash and investments

15,395

16,391

Other assets

3,243

3,425

Total Assets

$

622,732

$

628,325

Liabilities and Shareholders' Equity

Current liabilities:

Current maturities of long-term debt

-

19

Customer deposits

57,742

62,649

Accounts payable

23,061

26,958

Accrued expenses & other current liabilities

68,438

64,990

Total current liabilities

149,241

154,616

Long-term debt

162,861

165,013

Other long-term liabilities

18,542

18,975

Deferred income taxes

7,932

8,034

Total liabilities

338,576

346,638

Shareholders' equity

284,156

281,687

Total Liabilities and Shareholders' Equity

$

622,732

$

628,325

 

Ethan Allen Interiors Inc.

GAAP Reconciliation

Three Months Ended September 30, 2011 and 2010

Unaudited

(in thousands, except per share amounts)

Three Months Ended

September 30,

2011

2010

Net Income / Earnings Per Share

Net income

$

6,770

$

3,813

Special items net of related tax effects *

(25

)

(378

)

Unusual income tax effects

435

(277

)

Net income (excluding special items* and unusual income tax effects)

$

7,180

$

3,158

Basic weighted average shares outstanding

28,760

28,779

Earnings per basic share

$

0.24

$

0.13

Earnings per basic share (excluding special items* and unusual income tax effects)

$

0.25

$

0.11

Diluted weighted average shares outstanding

28,951

28,950

Earnings per diluted share

$

0.23

$

0.13

Earnings per diluted share (excluding special items* and unusual income tax effects)

$

0.25

$

0.11

Consolidated Operating Income / Operating Margin

Operating income

$

13,638

$

5,386

Add: special items *

(40

)

904

Operating income (excluding special items*)

$

13,598

$

6,290

Net sales

$

184,921

$

164,841

Operating margin

7.4

%

3.3

%

Operating margin (excluding special items*)

7.4

%

3.8

%

Wholesale Operating Income / Operating Margin

Wholesale operating income

$

15,691

$

11,939

Add: special items

-

679

Wholesale operating income (excluding special items*)

$

15,691

$

12,618

Wholesale net sales

$

116,394

$

107,555

Wholesale operating margin

13.5

%

11.1

%

Wholesale operating margin (excluding special items*)

13.5

%

11.7

%

Retail Operating Income / Operating Margin

Retail operating income (loss)

$

(1,497

)

$

(4,290

)

Add: special items

(40

)

225

Retail operating income (loss) (excluding special items*)

$

(1,537

)

$

(4,065

)

Retail net sales

$

141,181

$

121,023

Retail operating margin

-1.1

%

-3.5

%

Retail operating margin (excluding special items*)

-1.1

%

-3.4

%

* 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 Months Ended September 30, 2011 and 2010

Unaudited

(in thousands, except per share amounts)

Three Months Ended

September 30,

2011

2010

EBITDA

Net income

$

6,770

$

3,813

Add: interest expense, net

2,258

2,675

Less: income tax expense

4,577

1,756

Add: depreciation and amortization

4,989

5,607

EBITDA

$

18,594

$

13,851

Net sales

$

184,921

$

164,841

EBITDA as % of net sales

10.1

%

8.4

%

EBITDA

$

18,594

$

13,851

Add: special items*

(40

)

(596

)

Adjusted EBITDA

$

18,554

$

13,255

Net sales

$

184,921

$

164,841

Adjusted EBITDA as % of net sales

10.0

%

8.0

%

* 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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