DANBURY, CT - Ethan Allen Interiors Inc. ETH +0.07% today reported operating results for the three and six months ended December 31, 2013. Please refer to the accompanying financial statements and reconciliations to non-GAAP measures discussed below.

Highlights:

- Second quarter net sales of $193.1 million increased 1% over the prior year

- Adjusted EPS in the second quarter was $0.41, up 5% on improved gross margin and adjusted operating profit margin

- Year to date comparable retail written business is 6.6% higher than the prior year including a 1.8% decline in the seasonally slower second quarter

- Ending backlogs are strong including a 14% increase in the Retail backlog over the prior year

- Cash and securities increased 24% to $113 million from one year ago

Farooq Kathwari, Chairman and CEO commented, "While we are pleased with the strong financial results in what is our seasonally slower quarter, our greatest opportunity to leverage our vertically integrated structure is to increase our written sales. Written orders and deliveries were affected in the quarter by several external and internal factors including: the government shutdown, challenging weather in many parts of the US, and an increase in back ordered import products."

Mr. Kathwari concluded, "We remain cautiously optimistic about increasing our sales and profitability. We continue to aggressively implement marketing programs to improve our competitive differentiation. Starting from February 2014, we are introducing an "On Demand" initiative reflecting a focus on greater in-stock products for faster delivery to our clients. This coupled with our strong custom order programs further expands our commitment to personal service."

Financial Results:

Net sales for the quarter ended December 31, 2013 increased 1.0% over the prior year to $193.1 million. The Company's Retail division net sales decreased 0.2% to $151.5 million including a comparable design center net sales increase of 3.4%. Retail division written orders recorded during the second quarter decreased 4.0% including a decrease of 1.8% in comparable design center written orders. Net income for the quarter ended December 31, 2013 was $11.6 million or $0.39 per diluted share compared with $9.8 million or $0.34 per diluted share in the prior year quarter. Adjusted earnings for the quarter were $0.41 per diluted share or $11.9 million compared to $0.39 per diluted share or $11.4 million in the prior year quarter.

Year to date net sales were $374.8 million, down 1.0% from $378.7 million the prior year. Gross margin and adjusted operating profit margin were healthy at 54.6% and 10.0% respectively compared with 55.0% and 10.5% respectively the prior year. Adjusted net income year to date of $21.5 million compares with $22.5 million the prior year period and our adjusted earnings per diluted share for the six months to date is $0.73 compared with $0.77 the prior year to date period.

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.

        Ethan Allen Interiors Inc.
        Selected Financial Information
        Unaudited
        (in millions)
        Selected Consolidated Financial Data:
                                                            Three Months Ended                               Six Months Ended
                                                            12/31/13                12/31/12                 12/31/13            12/31/12
        Net sales                                           $193.1                  $191.3                   $374.8              $378.7
        Gross margin                                        54.9%                   54.4%                    54.6%               55.0%
        Operating margin                                    10.3%                   9.1%                     9.6%                9.3%
        Operating margin (excluding special items*)         10.7%                   10.5%                    10.0%               10.5%
        Net income                                          $11.6                   $9.8                     $20.6               $19.9
        Net income (excluding special items* and
        unusual income tax effects)                         $11.9                   $11.4                    $21.5               $22.5
        Operating cash flow                                 $1.5                    $11.5                    $22.6               $18.2
        Capital expenditures                                $5.3                    $5.2                     $8.6                $13.6
        Acquisitions                                        $0.0                    $0.0                     $0.0                $0.6
        Treasury stock repurchases                          $0.0                    $0.0                     $0.0                $0.0
        EBITDA                                              $24.2                   $21.7                    $44.4               $44.2
        EBITDA as % of net sales                            12.5%                   11.3%                    11.8%               11.7%
        EBITDA (excluding special items*)                   $25.0                   $24.4                    $46.0               $48.5
        EBITDA as % of net sales (excluding special items*) 12.9%                   12.7%                    12.3%               12.8%
        Selected Financial Data by Business Segment:
                                                            Three Months Ended                               Six Months Ended
                                         12/31/13                12/31/12                 12/31/13            12/31/12
        Retail
        Net sales                                           $151.5                  $151.8                   $293.3              $300.9
        Operating margin                                    2.8%                    4.0%                     1.4%                2.3%
        Operating margin (excluding special items*)         3.3%                    4.6%                     1.9%                3.2%
         
        Wholesale
        Net sales                                           $113.1                  $108.2                   $226.3              $219.6
        Operating margin                                    12.7%                   8.2%                     13.5%               11.3%
        Operating margin (excluding special items*)         12.7%                   9.9%                     13.5%               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                                                                                                                                                                                                                                                                                                                 Six Months Ended
                                                     12/31/13                                                                                                                                               12/31/12                                                                                                                                                                    12/31/13                                                                                                                                                                  12/31/12
        Net sales                                     $   193,104                                                                                                      $   191,251                                                                                                                           $    374,763                                                                                                     $    378,688
        Cost of sales                                        87,105                                                                     87,284                                                                                         170,021                                                                                       170,468
        Gross profit                                       105,999                                                                                       103,967                                                                                                             204,742                                                                                       208,220
        Selling, general and administrative expenses         86,149                                                                     86,610                                                                                         168,948                                                                                       172,909
        Operating income                                     19,850                                                                     17,357                                                                                           35,794                                                                     35,311
        Interest and other income                                  43              128                                                        125                                  202
        Interest expense                                       1,871                                                   2,198                                                                        3,744                                                                      4,397
        Income before income taxes                           18,022                                                                     15,287                                                                                           32,175                                                                     31,116
        Income tax expense                                     6,467                                                   5,441                                                                       11,586                                                                     11,206
        Net income                                    $     11,555                                                                                  $       9,846                                                                                   $      20,589                                                                                 $      19,910
        Basic earnings per common share:
        Net income per basic share                    $         0.40                                          $         0.34                                                               $         0.71                                                             $         0.69
        Basic weighted average shares outstanding    28,916                                                                                                                                                 28,846                                                                                                                                                                      28,913                                                                                                                                                                    28,841
        Diluted earnings per common share:
        Net income per diluted share                  $         0.39                                          $         0.34                                                               $         0.70                                                             $         0.68
        Diluted weighted average shares outstanding  29,292                                                                                                                                                 29,223                                                                                                                                                                      29,290                                                                                                                                                                    29,182
        Comprehensive income:
        Net income                                    $     11,555                                                                                  $       9,846                                                                                   $      20,589                                                                                 $      19,910
        Other comprehensive income
        Currency translation adjustment                           (71)              (20)                                    (16)                                140
        Other                                                      42                15                                      60                40
        Other comprehensive income (loss) net of tax              (29)                (5)                 44              180
        Comprehensive income                          $     11,526                                                                                  $       9,841                                                                                   $      20,633                                                                                 $      20,090
        




        Ethan Allen Interiors Inc.
        Condensed Consolidated Balance Sheets
        Unaudited
        (in thousands)
                                                                                                                                      December 31,                                                                                                                                                                                    June 30,
                                                                                                                                      2013                                                                                                                                                                                            2013
        Assets
        Current assets:
          Cash and cash equivalents                                                                                 $          77,603                                                             $          72,601
          Marketable securities                                                                                                20,157                                                                        15,529
          Accounts receivable, net                                                                                             10,754                                                                        12,277
          Inventories                                                                                                         139,964                                                                       137,256
          Prepaid expenses & other current assets                                                                              21,474                                                                        22,907
             Total current assets                                                       269,952                                                                       260,570
        Property, plant and equipment, net                                                                                                       290,388                                                                       291,672
        Intangible assets, net                                                                                                                    45,128                                                                        45,128
        Restricted cash and investments                                                                                                           14,935                                                                        15,433
        Other assets                                                                                                                                4,878                                                      4,482
               Total Assets                                $        625,281                                                                                 $        617,285
        Liabilities and Shareholders' Equity
        Current liabilities:
          Current maturities of long-term debt                                                                                      490                  480
          Customer deposits                                                                                                    52,178                                                                        59,098
          Accounts payable                                                                                                     21,911                                                                        22,995
          Accrued expenses & other current liabilities                                                                         49,512                                                                        50,366
             Total current liabilities                                                  124,091                                                                       132,939
        Long-term debt                                                                                                                           130,613                                                                       130,809
        Other long-term liabilities                                                                                                               20,617                                                                        19,180
             Total liabilities                                                          275,321                                                                       282,928
        Shareholders' equity                                                                                                                     349,960                                                                       334,357
               Total Liabilities and Shareholders' Equity  $        625,281                                                                                 $        617,285
        




        Ethan Allen Interiors Inc.
        GAAP Reconciliation
        Three and Six Months Ended December 31, 2013 and 2012
        Unaudited
        (in thousands, except per share amounts)
                                                                                                                                      Three Months Ended                                                                                                                                                                                                                                                                      Six Months Ended
                                                                                                                                      December 30,                                                                                                                                                                                                                                                                            December 30,
                                                                                                                                      2013                                                                                                                                                                     2012                                                                                                           2013                                                                                                                                                                      2012
        Net Income / Earnings Per Share
        Net income                                                                                                                     $   11,555                                                                                                                         $    9,846                                            $    20,589                                                                                                      $     19,910
               Special items net of related tax effects *            489                                                1,693                                1,022                                                                      2,715
               Unusual income tax effects                           (111)                                                                    (139)             (158)                                                   (151)
        Net income (excluding special items* and
         unusual income tax effects)                                                                                $   11,933                                                                                                                         $  11,400                                                                $    21,453                                                                                                      $     22,474
        Basic weighted average shares outstanding                                                                                           28,916                                                                                                         28,846                                                  28,913                                                                                        28,841
        Earnings per basic share                                                                                                       $       0.40                                                                                 $      0.34                        $        0.71                                                              $        0.69
        Earnings per basic share (excluding special items*
         and unusual income tax effects)                                                                            $       0.41                                                                                 $      0.40                        $        0.74                                                              $        0.78
        Diluted weighted average shares outstanding                                                                                         29,292                                                                                                         29,223                                                  29,290                                                                                        29,182
        Earnings per diluted share                                                                                                     $       0.39                                                                                 $      0.34                        $        0.70                                                              $        0.68
        Earnings per diluted share (excluding special
        items* and unusual income tax effects)                                                                                         $       0.41                                                                                 $      0.39                        $        0.73                                                              $        0.77
        Consolidated Operating Income / Operating Margin
        Operating income                                                                                                               $   19,850                                                                                                                         $  17,357                                                                $    35,794                                                                                                      $     35,311
        Add: special items *                                                                                                                     770                                                2,666                                1,610                                                                      4,276
        Operating income (excluding special items*)                                                                                    $   20,620                                                                                                                         $  20,023                                                                $    37,404                                                                                                      $     39,587
        Net sales                                                                                                                      $  193,104                                                                                                                         $ 191,251                                                                                   $   374,763                                                                                                                         $   378,688
        Operating margin                                                                                                              10.3%                                                                                                                                                                    9.1%                                                                                                           9.6%                                                                                                                                                                      9.3%
        Operating margin (excluding special items*)                                                                                   10.7%                                                                                                                                                                    10.5%                                                                                                          10.0%                                                                                                                                                                     10.5%
        Wholesale Operating Income / Operating Margin
        Wholesale operating income                                                                                                     $   14,366                                                                                                                         $    8,892                                            $    30,498                                                                                                      $     24,897
        Add: special items                                                                                                                         -          1,774                                     -            1,774
        Wholesale operating income (excluding special items*)                                                                          $   14,366                                                                                                                         $  10,666                                                                $    30,498                                                                                                      $     26,671
        Wholesale net sales                                                                                                            $  113,133                                                                                                                         $ 108,172                                                                                   $   226,331                                                                                                                         $   219,589
        Wholesale operating margin                                                                                                    12.7%                                                                                                                                                                    8.2%                                                                                                           13.5%                                                                                                                                                                     11.3%
        Wholesale operating margin (excluding special items*)                                                                         12.7%                                                                                                                                                                    9.9%                                                                                                           13.5%                                                                                                                                                                     12.1%
        Retail Operating Income / Operating Margin
        Retail operating income                                                                                                        $     4,206                                                                                                     $    6,017                                            $      4,002                                                                                  $      7,065
        Add: special items                                                                                                                       770                                                   892            1,610                                                                      2,502
        Retail operating income (excluding special items*)                                                                             $     4,976                                                                                                     $    6,909                                            $      5,612                                                                                  $      9,567
        Retail net sales                                                                                                               $  151,496                                                                                                                         $ 151,827                                                                                   $   293,323                                                                                                                         $   300,906
        Retail operating margin                                                                                                       2.8%                                                                                                                                                                     4.0%                                                                                                           1.4%                                                                                                                                                                      2.3%
        Retail operating margin (excluding special items*)                                                                            3.3%                                                                                                                                                                     4.6%                                                                                                           1.9%                                                                                                                                                                      3.2%
        * 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 Six Months Ended December 31, 2013 and 2012
        Unaudited
        (in thousands, except per share amounts)
                                                           Three Months Ended                                                                                                                                                                                                         Six Months Ended
                                                           December 30,                                                                                                                                                                                                               December 30,
                                                           2013                                                                                                                             2012                                                                                      2013                                                                                                          2012
        EBITDA
        Net income                                          $   11,555                                                                                 $    9,846                       $    20,589                                          $     19,910
        Add:  interest expense, net             1,750                                               2,056           3,500          4,111
        income tax expense                                         6,467                                               5,441         11,586                            11,206
        depreciation and amortization                              4,410                                               4,360           8,699          8,966
        EBITDA                                              $   24,182                                                                                 $  21,703                                           $    44,374                                          $     44,193
        Net sales                                           $  193,104                                                                                 $ 191,251                                                              $   374,763                                                             $   378,688
        EBITDA as % of net sales                           12.5%                                                                                                                            11.3%                                                                                     11.8%                                                                                                         11.7%
        EBITDA                                              $   24,182                                                                                 $  21,703                                           $    44,374                                          $     44,193
        Add: special items*                                           770        2,666           1,610          4,276
        EBITDA (excluding special items)                    $   24,952                                                                                 $  24,369                                           $    45,984                                          $     48,469
        Net sales                                           $  193,104                                                                                 $ 191,251                                                              $   374,763                                                             $   378,688
        EBITDA as % of net sales (excluding special items) 12.9%                                                                                                                            12.7%                                                                                     12.3%                                                                                                         12.8%
        * 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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