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.
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Ethan Allen Interiors Inc. |
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Selected Financial Information |
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Unaudited |
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(in thousands) |
||||||||
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Selected Consolidated Financial Data: |
||||||||
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Three Months Ended |
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09/30/11 |
09/30/10 |
|||||||
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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 |
% |
||||
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Net income |
$ |
6.8 |
$ |
3.8 |
||||
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Net income (excluding special items* and unusual income tax effects) |
$ |
7.2 |
$ |
3.2 |
||||
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Operating cash flow |
$ |
6.3 |
($0.9 |
) |
||||
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Capital expenditures |
$ |
3.4 |
$ |
1.5 |
||||
|
Acquisitions |
$ |
0.0 |
$ |
0.0 |
||||
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Treasury stock repurchases (settlement date basis) |
$ |
0.8 |
$ |
5.4 |
||||
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EBITDA |
$ |
18.6 |
$ |
13.9 |
||||
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EBITDA as % of net sales |
10.1 |
% |
8.4 |
% |
||||
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EBITDA (excluding special items*) |
$ |
18.6 |
$ |
13.3 |
||||
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EBITDA as % of net sales (excluding special items*) |
10.0 |
% |
8.0 |
% |
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Selected Financial Data by Business Segment: |
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Three Months Ended |
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09/30/11 |
09/30/10 |
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Retail |
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Net sales |
$ |
141.2 |
$ |
121.0 |
||||
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Operating margin |
-1.1 |
% |
-3.5 |
% |
||||
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Operating margin (excluding special items*) |
-1.1 |
% |
-3.4 |
% |
||||
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Wholesale |
||||||||
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Net sales |
$ |
116.4 |
$ |
107.6 |
||||
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Operating margin |
13.5 |
% |
11.1 |
% |
||||
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Operating margin (excluding special items*) |
13.5 |
% |
11.7 |
% |
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* Special items consist of restructuring, impairment, transition charges and other certain items. |
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Related tax effects are calculated using a normalized income tax rate. |
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Ethan Allen Interiors Inc. |
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Condensed Consolidated Income Statements |
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Unaudited |
|||||||
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(in thousands) |
|||||||
|
Three Months Ended |
|||||||
|
09/30/11 |
09/30/10 |
||||||
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Net sales |
$ |
184,921 |
$ |
164,841 |
|||
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Cost of sales |
87,036 |
82,460 |
|||||
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Gross profit |
97,885 |
82,381 |
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Operating expenses: |
|||||||
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Selling |
43,620 |
39,327 |
|||||
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General and administrative |
40,667 |
37,443 |
|||||
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Restructuring and impairment charge |
(40 |
) |
225 |
||||
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Total operating expenses |
84,247 |
76,995 |
|||||
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Operating income |
13,638 |
5,386 |
|||||
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Interest and other income |
60 |
3,157 |
|||||
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Interest expense |
2,351 |
2,974 |
|||||
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Income before income taxes |
11,347 |
5,569 |
|||||
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Income tax expense |
4,577 |
1,756 |
|||||
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Net income |
$ |
6,770 |
$ |
3,813 |
|||
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Basic earnings per common share: |
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Net income per basic share |
$ |
0.24 |
$ |
0.13 |
|||
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Basic weighted average shares outstanding |
28,760 |
28,779 |
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Diluted earnings per common share: |
|||||||
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Net income per diluted share |
$ |
0.23 |
$ |
0.13 |
|||
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Diluted weighted average shares outstanding |
28,951 |
28,950 |
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Ethan Allen Interiors Inc. |
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Condensed Consolidated Balance Sheets |
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Unaudited |
||||||
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(in thousands) |
||||||
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September 30, |
June 30, |
|||||
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2011 |
2011 |
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Assets |
||||||
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Current assets: |
||||||
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Cash and cash equivalents |
$ |
79,376 |
$ |
78,519 |
||
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Marketable securities |
11,107 |
12,909 |
||||
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Accounts receivable, net |
14,643 |
15,036 |
||||
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Inventories |
141,050 |
141,692 |
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Prepaid expenses & other current assets |
21,255 |
20,372 |
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Total current assets |
267,431 |
268,528 |
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Property, plant and equipment, net |
291,535 |
294,853 |
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Intangible assets, net |
45,128 |
45,128 |
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Restricted cash and investments |
15,395 |
16,391 |
||||
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Other assets |
3,243 |
3,425 |
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Total Assets |
$ |
622,732 |
$ |
628,325 |
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Liabilities and Shareholders' Equity |
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Current liabilities: |
||||||
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Current maturities of long-term debt |
- |
19 |
||||
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Customer deposits |
57,742 |
62,649 |
||||
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Accounts payable |
23,061 |
26,958 |
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Accrued expenses & other current liabilities |
68,438 |
64,990 |
||||
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Total current liabilities |
149,241 |
154,616 |
||||
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Long-term debt |
162,861 |
165,013 |
||||
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Other long-term liabilities |
18,542 |
18,975 |
||||
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Deferred income taxes |
7,932 |
8,034 |
||||
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Total liabilities |
338,576 |
346,638 |
||||
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Shareholders' equity |
284,156 |
281,687 |
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Total Liabilities and Shareholders' Equity |
$ |
622,732 |
$ |
628,325 |
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Ethan Allen Interiors Inc. |
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GAAP Reconciliation |
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Three Months Ended September 30, 2011 and 2010 |
||||||||
|
Unaudited |
||||||||
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(in thousands, except per share amounts) |
||||||||
|
Three Months Ended |
||||||||
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September 30, |
||||||||
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2011 |
2010 |
|||||||
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Net Income / Earnings Per Share |
||||||||
|
Net income |
$ |
6,770 |
$ |
3,813 |
||||
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Special items net of related tax effects * |
(25 |
) |
(378 |
) |
||||
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Unusual income tax effects |
435 |
(277 |
) |
|||||
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Net income (excluding special items* and unusual income tax effects) |
$ |
7,180 |
$ |
3,158 |
||||
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Basic weighted average shares outstanding |
28,760 |
28,779 |
||||||
|
Earnings per basic share |
$ |
0.24 |
$ |
0.13 |
||||
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Earnings per basic share (excluding special items* and unusual income tax effects) |
$ |
0.25 |
$ |
0.11 |
||||
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Diluted weighted average shares outstanding |
28,951 |
28,950 |
||||||
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Earnings per diluted share |
$ |
0.23 |
$ |
0.13 |
||||
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Earnings per diluted share (excluding special items* and unusual income tax effects) |
$ |
0.25 |
$ |
0.11 |
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Consolidated Operating Income / Operating Margin |
||||||||
|
Operating income |
$ |
13,638 |
$ |
5,386 |
||||
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Add: special items * |
(40 |
) |
904 |
|||||
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Operating income (excluding special items*) |
$ |
13,598 |
$ |
6,290 |
||||
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Net sales |
$ |
184,921 |
$ |
164,841 |
||||
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Operating margin |
7.4 |
% |
3.3 |
% |
||||
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Operating margin (excluding special items*) |
7.4 |
% |
3.8 |
% |
||||
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Wholesale Operating Income / Operating Margin |
||||||||
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Wholesale operating income |
$ |
15,691 |
$ |
11,939 |
||||
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Add: special items |
- |
679 |
||||||
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Wholesale operating income (excluding special items*) |
$ |
15,691 |
$ |
12,618 |
||||
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Wholesale net sales |
$ |
116,394 |
$ |
107,555 |
||||
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Wholesale operating margin |
13.5 |
% |
11.1 |
% |
||||
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Wholesale operating margin (excluding special items*) |
13.5 |
% |
11.7 |
% |
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Retail Operating Income / Operating Margin |
||||||||
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Retail operating income (loss) |
$ |
(1,497 |
) |
$ |
(4,290 |
) |
||
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Add: special items |
(40 |
) |
225 |
|||||
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Retail operating income (loss) (excluding special items*) |
$ |
(1,537 |
) |
$ |
(4,065 |
) |
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Retail net sales |
$ |
141,181 |
$ |
121,023 |
||||
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Retail operating margin |
-1.1 |
% |
-3.5 |
% |
||||
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Retail operating margin (excluding special items*) |
-1.1 |
% |
-3.4 |
% |
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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. |
||||||||
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GAAP Reconciliation |
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Three Months Ended September 30, 2011 and 2010 |
||||||||
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Unaudited |
||||||||
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(in thousands, except per share amounts) |
||||||||
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Three Months Ended |
||||||||
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September 30, |
||||||||
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2011 |
2010 |
|||||||
|
EBITDA |
||||||||
|
Net income |
$ |
6,770 |
$ |
3,813 |
||||
|
Add: interest expense, net |
2,258 |
2,675 |
||||||
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Less: income tax expense |
4,577 |
1,756 |
||||||
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Add: depreciation and amortization |
4,989 |
5,607 |
||||||
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EBITDA |
$ |
18,594 |
$ |
13,851 |
||||
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Net sales |
$ |
184,921 |
$ |
164,841 |
||||
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EBITDA as % of net sales |
10.1 |
% |
8.4 |
% |
||||
|
EBITDA |
$ |
18,594 |
$ |
13,851 |
||||
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Add: special items* |
(40 |
) |
(596 |
) |
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Adjusted EBITDA |
$ |
18,554 |
$ |
13,255 |
||||
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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. |
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|
Related tax effects are calculated using a normalized income tax rate. |
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SOURCE: Ethan Allen Interiors Inc.
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