DANBURY, CT - Ethan Allen Interiors Inc. (NYSE: ETH) today reported operating results for the three and twelve months ended June 30, 2014. Please refer to the accompanying financial statements and reconciliation to non-GAAP measures discussed below.

Fourth Quarter Highlights:

Net sales of $198.8 million increased 9.1% compared to fourth quarter of fiscal 2013

Adjusted EPS grew 47.1% to $0.50 compared to fourth quarter of fiscal 2013; GAAP EPS increased 107.1% to $0.58

Gross margin increased 60 basis points to 54.6% compared to fourth quarter of fiscal 2013

Adjusted Operating Income of $24.9 million increased 42.4% compared to fourth quarter of fiscal 2013; GAAP Operating Income increased 47.5%.

Retail division net sales increased 7.1%, and generated adjusted operating income of $8.7 million for an adjusted operating margin of 5.6% compared to 2.9% for the fourth quarter of fiscal 2013.

Cash and securities of $135.8 million increased $32.3 million or 31.2% over June 30, 2013.

Capital Expenditures were $19.3 million year to date at June 30, 2014 compared to $19.0 million prior year and inventories of $146.3 million increased as planned by $9.0 million over June 30, 2013.

Retail division Written Sales decreased 5.5% compared to fourth quarter of fiscal 2013, Comparable Written Sales decreased 4.1% during the same time period.

Regular quarterly cash dividend of $0.12 per share declared; an increase of 20%

Fiscal Year ending June 30, 2014 Highlights:

Net sales of $746.7 million increased 2.4% compared to fiscal 2013

Adjusted diluted earnings per share (EPS) grew 10.7% to $1.45 compared to 1.31 for fiscal 2013; GAAP EPS increased 32.4% to $1.47 compared to $1.11 in fiscal 2013

Adjusted Operating Income of $74.3 million increased 7.9% compared to fiscal 2013; GAAP Operating Income increased 15.2%

Adjusted Net Income of $42.6 million increased 10.8% compared with fiscal 2013; GAAP Net Income increased 32.2%

Farooq Kathwari, Chairman and CEO commented, "We are pleased with our strong performance reflecting continued improvement to our vertically integrated enterprise and the performance of the Company's retail division. These results reflect the leverage of our vertical structure. While our written business in the retail division for the fourth quarter was lower compared to last year, it was impacted by several factors including our decision to shift the end date of the June sale to July 7th to take advantage of timing of the July 4th holiday and the July 8th price increase which resulted in some of the end of sale written orders to shift into July, the somewhat sluggish retail environment and the timing of Easter falling in the fourth quarter this year. We are also pleased to have increased our quarterly dividend by 20%."

Mr. Kathwari continued "As we have stated previously, we are in the process of a major re-positioning of our brand including a major introduction of new products, improving the projection of our design centers, continued relocation and opening of new design centers, introduction of an improved website this coming Fall and a major focus of expansion of our North American manufacturing".

Mr. Kathwari concluded "July through September will be a period of transition with the sale of floor samples and inventory to make room for new products, remodeling to improve the projection of our design centers and producing new products most of which are made in our North American workshops. We plan to accelerate our marketing in the second quarter of fiscal 2015 and further accelerate in the third and fourth quarter. We remain cautiously optimistic."

Fiscal 2014 Fourth Quarter Financial Results:

Consolidated net sales for the quarter ended June 30, 2014 increased 9.1% over the prior year to $198.8 million. The Company's wholesale segment net sales increased 8.8%. The Company's retail segment net sales increased 7.1% to $155.6 million including a comparable design center net sales increase of 9.7%. Net income for the quarter ended June 30, 2014 was $17.1 million or $0.58 per diluted share compared with $8.2 million or $0.28 per diluted share in the prior year quarter. Earnings per diluted share reflect the Company's reversal of deferred tax asset valuation allowances and certain other tax adjustments resulting in a net tax effect of $2.8 million recognized during the quarter. Excluding these benefits and other special items in both periods, adjusted earnings for the quarter were $0.50 per diluted share or $14.6 million compared to $0.34 per diluted share or $9.9 million in the prior year quarter. In addition, the Company's Board of Directors declared a regular quarterly cash dividend of $0.12 per share, an increase of 20%, which will be payable to shareholders of record as of October 9, 2014 and will be paid on October 24, 2014..

Fiscal 2014 Year-to-Date Financial Results:

Year to date net sales were $746.7 million, up 2.4% from $729.1 million the prior year. Gross margin and adjusted operating profit margin were 54.4% and 9.9% respectively compared with 54.6% and 9.4% respectively the prior year. Adjusted net income year to date of $42.6 million compares with $38.4 million the prior year period and our adjusted earnings per diluted share for the twelve months to date is $1.45 compared with $1.31 the prior year to date period.

 

Ethan Allen Interiors Inc.
Selected Financial Information
Unaudited
(in millions)
Selected Consolidated Financial Data:
Three Months Ended Twelve Months Ended
06/30/14 06/30/13 06/30/14 06/30/13
Net sales $198.8 $182.3 $746.7 $729.1
Gross margin 54.6% 54.0% 54.4% 54.6%
Operating margin 12.2% 9.0% 9.3% 8.3%
Operating margin (excluding special items*) 12.5% 9.6% 9.9% 9.4%
Net income $17.1 $8.2 $42.9 $32.5
Net income (excluding special items* and
unusual income tax effects) $14.6 $9.9 $42.6 $38.4
Operating cash flow $19.9 $16.9 $59.9 $61.3
Capital expenditures $6.7 $2.5 $19.3 $19.0
Acquisitions $0.0 $0.2 $0.0 $0.8
EBITDA $28.9 $19.2 $87.3 $76.4
EBITDA as % of net sales 14.5% 10.5% 11.7% 10.5%
EBITDA (excluding special items*) $29.5 $22.1 $92.0 $86.7
EBITDA as % of net sales (excluding special items*) 14.8% 12.1% 12.3% 11.9%
Selected Financial Data by Business Segment:
Three Months Ended Twelve Months Ended
06/30/14 06/30/13 06/30/14 06/30/13
Retail
Net sales $155.6 $145.3 $580.7 $578.3
Operating margin 5.2% 2.2% 1.8% 1.4%
Operating margin (excluding special items*) 5.6% 2.9% 2.6% 2.5%
Wholesale
Net sales $116.1 $106.7 $453.6 $434.4
Operating margin 12.3% 12.4% 12.7% 11.7%
Operating margin (excluding special items*) 12.3% 12.4% 12.7% 12.1%
* 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
06/30/14 06/30/13 06/30/14 06/30/13
Net sales $198,835 $182,251 $746,659 $729,083
Cost of sales 90,211 83,907 340,163 330,734
Gross profit 108,624 98,344 406,496 398,349
Selling, general and administrative expenses 84,334 81,878 336,860 337,912
Operating income 24,290 16,466 69,636 60,437
Interest and other income (expense) 48 (1,677) 276 (1,485)
Interest expense 1,896 2,186 7,510 8,778
Income before income taxes 22,442 12,603 62,402 50,174
Income tax expense 5,358 4,409 19,471 17,696
Net income $17,084 $8,194 $42,931 $32,478
Basic earnings per common share:
Net income per basic share $0.59 $0.28 $1.48 $1.13
Basic weighted average shares outstanding 28,923 28,905 28,918 28,864
Diluted earnings per common share:
Net income per diluted share $0.58 $0.28 $1.47 $1.11
Diluted weighted average shares outstanding 29,254 29,319 29,276 29,239
Comprehensive income:
Net income $17,084 $8,194 $42,931 $32,478
Other comprehensive income
Currency translation adjustment (203) (946) (77) (506)
Other 14 9 105 56
Other comprehensive income net of tax (189) (937) 28 (450)
Comprehensive income $16,895 $7,257 $42,959 $32,028


Ethan Allen Interiors Inc.
Condensed Consolidated Balance Sheets
Unaudited
(in thousands)
June 30, June 30,
2014 2013
Assets
Current assets:
  Cash and cash equivalents $109,176 $72,601
  Marketable securities 18,153 15,529
  Accounts receivable, net 12,426 12,277
  Inventories 146,275 137,256
  Prepaid expenses & other current assets 19,599 22,907
     Total current assets 305,629 260,570
Property, plant and equipment, net 288,156 291,672
Intangible assets, net 45,128 45,128
Restricted cash and investments 8,507 15,433
Other assets 7,014 4,482
       Total Assets $654,434 $617,285
Liabilities and Shareholders' Equity
Current liabilities:
  Current maturities of long-term debt 501 480
  Customer deposits 59,684 59,098
  Accounts payable 24,320 22,995
  Accrued expenses & other current liabilities 51,542 50,366
     Total current liabilities 136,047 132,939
Long-term debt 130,411 130,809
Other long-term liabilities 20,509 19,180
     Total liabilities 286,967 282,928
Shareholders' equity 367,467 334,357
       Total Liabilities and Shareholders' Equity $654,434 $617,285


Ethan Allen Interiors Inc.
GAAP Reconciliation
Three and Twelve Months Ended June 30, 2014 and 2013
Unaudited
(in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
June 30, June 30,
2014 2013 2014 2013
Net Income / Earnings Per Share
Net income $17,084 $8,194 $42,931 $32,478
       Special items net of related tax effects * 377 1,861 2,930 6,544
       Unusual income tax effects (2,834) (191) (3,306) (617)
Net income (excluding special items* and
 unusual income tax effects) $14,627 $9,864 $42,555 $38,405
Basic weighted average shares outstanding 28,923 28,905 28,918 28,864
Earnings per basic share $0.59 $0.28 $1.48 $1.13
Earnings per basic share (excluding special items*
 and unusual income tax effects) $0.51 $0.34 $1.47 $1.33
Diluted weighted average shares outstanding 29,254 29,319 29,276 29,239
Earnings per diluted share $0.58 $0.28 $1.47 $1.11
Earnings per diluted share (excluding special
items* and unusual income tax effects) $0.50 $0.34 $1.45 $1.31
Consolidated Operating Income / Operating Margin
Operating income $24,290 $16,466 $69,636 $60,437
Add: special items * 593 1,007 4,614 8,382
Operating income (excluding special items*) $24,883 $17,473 $74,250 $68,819
Net sales $198,835 $182,251 $746,659 $729,083
Operating margin 12.2% 9.0% 9.3% 8.3%
Operating margin (excluding special items*) 12.5% 9.6% 9.9% 9.4%
Wholesale Operating Income / Operating Margin
Wholesale operating income $14,309 $13,192 $57,816 $50,843
Add: special items - 43 - 1,886
Wholesale operating income (excluding special items*) $14,309 $13,235 $57,816 $52,729
Wholesale net sales $116,133 $106,749 $453,607 $434,439
Wholesale operating margin 12.3% 12.4% 12.7% 11.7%
Wholesale operating margin (excluding special items*) 12.3% 12.4% 12.7% 12.1%
Retail Operating Income / Operating Margin
Retail operating income $8,104 $3,234 $10,515 $8,016
Add: special items 593 964 4,614 6,496
Retail operating income (excluding special items*) $8,697 $4,198 $15,129 $14,512
Retail net sales $155,603 $145,322 $580,739 $578,284
Retail operating margin 5.2% 2.2% 1.8% 1.4%
Retail operating margin (excluding special items*) 5.6% 2.9% 2.6% 2.5%
* 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, 2014 and 2013
Unaudited
(in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
June 30, June 30,
2014 2013 2014 2013
EBITDA
Net income $17,084 $8,194 $42,931 $32,478
Add:  interest expense, net 1,765 2,054 7,004 8,219
income tax expense 5,358 4,409 19,471 17,696
depreciation and amortization 4,654 4,494 17,930 18,008
EBITDA $28,861 $19,151 $87,336 $76,401
Net sales $198,835 $182,251 $746,659 $729,083
EBITDA as % of net sales 14.5% 10.5% 11.7% 10.5%
EBITDA $28,861 $19,151 $87,336 $76,401
Add: special items* 593 2,931 4,614 10,306
EBITDA (excluding special items) $29,454 $22,082 $91,950 $86,707
Net sales $198,835 $182,251 $746,659 $729,083
EBITDA as % of net sales (excluding special items) 14.8% 12.1% 12.3% 11.9%
* Special items consist of restructuring, impairment, transition charges and certain other items.
Related tax effects are calculated using a normalized income tax rate.

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