ETHAN ALLEN REPORTS FISCAL 2018
FIRST QUARTER RESULTS
DANBURY, CT -
October 25, 2017 - Ethan Allen Interiors Inc. ("Ethan Allen" or
the "Company") (NYSE: ETH) today reported operating results for the
fiscal 2018 first quarter ended September 30, 2017. Please refer to
the accompanying financial statements and reconciliation to
non-GAAP measures discussed below.
Farooq Kathwari, Chairman and CEO,
commented, "As stated in our press release of October 12, 2017,
that despite the challenges of the hurricanes during the quarter
and first-run production of new products, our total written orders
in our Company-operated retail division increased 1.7%, which
followed an 8.1% increase in the prior year first quarter. Our
balance sheet continues to strengthen and we distributed $5.2
million in dividends during the quarter, an increase of 10.6%
compared to the prior year quarter. Our total order backlogs
increased 61.6% at wholesale and increased 11.6% for the retail
division compared to June 30, 2017. The wholesale backlog increase
also reflects $12.4 million of orders we have received from the US
Department of State, including $10.4 million during our fiscal 2018
first quarter." Mr. Kathwari continued, "Last week we
celebrated our 85th anniversary
with 550 of our team members attending our conference. We
discussed our many initiatives to strengthen our talent, offerings,
marketing, combining technology with personal service and our
vertical integration, which includes manufacturing about 75% of our
products in our North American workshops."
Two major hurricanes, Harvey and
Irma, disrupted several key markets in which the Company operates:
15 Design Centers in Florida, including 11 company-operated
locations, plus five company-operated Design Centers in the coastal
Carolinas were affected by Hurricane Irma; and 11 Design Centers in
Texas, with five independently operated locations in the Houston
market, were impacted by Hurricane Harvey. Design Centers and
delivery centers were closed anywhere from a couple of days to more
than a week, with an effect on both written orders and net
delivered sales. Hurricane Harvey also disrupted the Company's
wholesale logistics, as the temporary shutdown of railway shipping
through Houston impacted shipments from the Company's upholstery
plant in Mexico, and ocean freight arrivals were delayed into the
Port of Houston. First production runs of floor samples for our
Passport collection, which is launching in November and strong
orders and first run production of products for the Department of
State Worldwide Residential Furniture Program during the quarter
also resulted in production and shipping delays.
FISCAL 2018 FIRST QUARTER
FINANCIAL RESULTS:
Consolidated
Net sales for
the three months ended September 30, 2017 were $181.3 million which
decreased 6.2% compared to $193.3 million in the comparable prior
year period.
Gross profit
was $100.3 million for the three months ended September 30, 2017
compared to $108.5 million and gross margin was 55.3% compared to
56.1% in the comparable prior year period. The reduction in gross
profit was primarily due to the hurricanes and disruptions in the
manufacturing operations by first production runs. Retail sales as
a percent of total consolidated sales decreased to 78.1% from 78.8%
decreasing our consolidated gross margin due to mix.
Operating
expenses for the three months ended September 30, 2017 were
$88.8 million or 49.0% of sales compared to $90.1 million or 46.6%
of sales in the comparable prior year period. This was primarily
due to decreased costs in the current year for marketing, and a
loss on the sale of real estate in our retail segment in the prior
year.
Operating income for the
three months ended September 30, 2017 was $11.5 million or 6.4% of
sales compared to $18.3 million or 9.5% of sales in the comparable
prior year period. Adjusted operating income for the three
months ended September 30, 2017 was $12.4 million or 6.8% of sales
compared to $19.0 million or 9.8% of sales in the comparable prior
year period. The primary causes for the decrease in operating
income were the negative effects of the hurricanes and first
production runs, which resulted in lower sales in the current year
quarter. (See Exhibit 1 for a reconciliation of GAAP to non-GAAP
presentation).
Net income
was $7.4 million or $0.27 per diluted share for the three months
ended September 30, 2017 and $11.5 million or $0.41 per diluted
share in the prior year comparable period. Adjusted net income was
$7.8 million or $0.28 per diluted share for the three months ended
September 30, 2017 and $11.9 million or $0.43 per diluted share in
the prior year comparable period. (See Exhibit 1 for a
reconciliation of GAAP to non-GAAP presentation)
Retail
Segment
Net sales for
the three months ended September 30, 2017 were $141.6 million
compared to $152.3 million in the prior year comparable period, a
decrease of 7.0% compared to the prior year. Comparative net sales
were $138.1 million compared to $151.4 million in the prior year
period. Comparable design centers are those which have been
operating for at least 15 months, including relocated design
centers provided the original and relocated design center location
had been operating for at least 15 months on a combined basis.
Total written
orders for the retail division for the first quarter of fiscal
2018 were up 1.7% compared to the same prior year period, and
comparable Design Center written orders were up 0.5% over the same
period.
Operating
income was a loss of $2.8 million for the three months ended
September 30, 2017, a decrease of $3.8 million from $1.0 million
over the same prior year period. The lower operating income in the
current quarter was driven primarily by the decrease in sales,
partly offset by reduced operating expenses.
Wholesale
Segment
Net sales of $111.6 million
compared to $114.6 million in the prior year quarter, a decrease of
2.6%. The reduction in sales is primarily a reflection of the
production and logistics disruptions caused by hurricanes and first
production runs.
Operating
income of $13.5 million compared to $16.5 million in the prior
year quarter. The current year decrease was largely due to the
lower current period sales.
Balance Sheet and
Cash Flow
Total debt of
$0.6 million decreased $13.7 million from June 30, 2017 primarily
due to a $13.3 million early payoff of our term loan, reducing
borrowings under our credit facility to zero.
Total cash and
securities, including restricted cash, of $59.8 million
decreased $5.2 million from June 30, 2017, despite paying down
$13.3 million on debt and $5.2 million in dividends. Our cash
provided by operating activities for the September 2017 quarter was
$17.6 million from $27.5 million for the prior year September
quarter. Working capital decreased $10.3 million from June 30,
2017, primarily due to the $13.3 million paydown of debt.
Inventories
of $157.5 million decreased by $1.8 million from September 30,
2016.
Capital
expenditures were $2.7 million fiscal year to date at September
30, 2017 compared to $7.4 million for the same prior year period.
Expenditures were primarily at retail design centers.
Dividends and
share repurchases; During the year to date period ended
September 30, 2017, we paid $5.2 million of dividends, a 10.6%
increase over the prior fiscal year.
Analyst
Conference Call
Ethan Allen will conduct an
analyst conference call at 5:00 PM (Eastern) on Wednesday, October
25 to discuss its financial results and business initiatives. The
live webcast is accessible via the Company's website at
http://ethanallen.com/investors. To participate in the call, dial
844-822-0103 (or 614-999-9166 for international callers) and
provide conference ID# 50728592. An archived recording of the call
will be made available for at least 60-days on the Company's
website.
About Ethan
Allen
Ethan Allen Interiors Inc. (NYSE:
ETH) is a leading interior design company and manufacturer and
retailer of quality home furnishings. The company offers
complimentary 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 nine
manufacturing facilities including six manufacturing plants and one
sawmill in the United States plus one plant each in Mexico and
Honduras. Approximately 75% of its products are made in its North
American plants. For more information on Ethan Allen's products and
services, visit ethanallen.com.
Investor Relations Contact
Corey Whitely
Executive Vice President, Administration
Chief Financial Officer and Treasurer
IR@ethanallen.com
Non-GAAP
Financial Information
This press release is intended to
supplement, rather than to supersede, the Company's condensed
consolidated financial statements, which are prepared and presented
in accordance with U.S. Generally Accepted Accounting Principles
("GAAP"). In this press release we have included financial measures
that are not prepared in accordance with GAAP. The Company uses the
following non-GAAP financial measures: "adjusted operating
expenses", "adjusted operating income", "adjusted operating
margin", "adjusted net income", "adjusted earnings per share", and
earnings before interest, taxes, depreciation and amortization
("EBITDA") (collectively "non-GAAP financial measures"). We compute
these non-GAAP financial measures by adjusting the GAAP measures to
remove the impact of certain recurring and non-recurring charges
and gains and the tax effect of these adjustments. The
presentation of this financial information is not intended to be
considered in isolation or as a substitute for, or superior to, the
financial information prepared and presented in accordance with
GAAP. The Company uses these non-GAAP financial measures for
financial and operational decision making and as a means to
evaluate period-to-period comparisons. The Company believes that
they provide useful information about operating results, enhance
the overall understanding of past financial performance and future
prospects, and allow for greater transparency with respect to key
metrics used by management in its financial and operational
decision making. The non-GAAP financial measures used by the
Company in this press release may be different from the non-GAAP
financial measures, including similarly titled measures, used by
other companies. A reconciliation of these financial measures to
the most directly comparable financial measure reported in
accordance with GAAP is also provided at the end of this press
release.
Forward-Looking
Information
This press release and any related
webcasts, conference calls and other related discussions should
also be read in conjunction with the Company's Annual Report on
Form 10-K for the year ended June 30, 2017 and other reports filed
with the Securities and Exchange Commission.
This press release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
which represent our management's beliefs and assumptions concerning
future events based on information currently available to us
relating to our future results. Such forward-looking statements are
identified in this press release and any related webcasts,
conference calls and other related discussions or documents
incorporated herein by reference by use of forward-looking words
such as "anticipate", "believe", "plan", "estimate", "expect",
"intend", "will", "may", "continue", "project", "target",
"outlook", "forecast", "guidance", and similar expressions and the
negatives of such forward-looking words. These forward-looking
statements are subject to management decisions and various
assumptions about future events, and are not guarantees of future
performance. Actual results could differ materially from those
anticipated in the forward-looking statements due to a number of
risks and uncertainties including, but not limited to: competition
from overseas manufacturers and domestic retailers; our
anticipating or responding to changes in consumer tastes and trends
in a timely manner; our ability to maintain and enhance our brand,
marketing and advertising efforts and pricing strategies; changes
in global and local economic conditions that may adversely affect
consumer demand and spending, our manufacturing operations or
sources of merchandise and international operations; changes in
U.S. policy related to imported merchandise; an economic downturn;
our limited number of manufacturing and logistics sites;
fluctuations in the price, availability and quality of raw
materials; environmental, health and safety requirements; product
safety concerns; disruption to our technology infrastructure
(including cyber-attacks); increasing labor costs, competitive
labor markets and our continued ability to retain high-quality
personnel and risks of work stoppages; loss of key personnel; our
ability to obtain sufficient external funding to finance our
operations and growth; access to consumer credit; the effect of
operating losses on our ability to pay cash dividends; our ability
to locate new design center sites and/or negotiate favorable lease
terms for additional design centers or for the expansion of
existing design centers; the effects of terrorist attacks or
conflicts or wars involving the United States or its allies or
trading partners; and those matters discussed in "Item 1A - Risk
Factors" of our Annual Report on Form 10-K for the year ended June
30, 2017, and elsewhere in this press release and our SEC filings.
Accordingly, actual circumstances and results could differ
materially from those contemplated by the forward-looking
statements.
Given the risks and uncertainties
surrounding forward-looking statements, you should not place undue
reliance on these statements. Many of these factors are beyond our
ability to control or predict. Our forward-looking statements speak
only as of the date of this press release. Other than as required
by law, we undertake no obligation to update or revise
forward-looking statements, whether as a result of new information,
future events, or otherwise.
Ethan Allen Interiors Inc. |
|
|
Selected Financial Information |
|
|
Unaudited |
|
|
(in
millions) |
|
|
Selected
Consolidated Financial Data: |
|
|
|
Three Months Ended |
|
09/30/17 |
09/30/16 |
Net
sales |
$181.3 |
$193.3 |
Gross
margin |
55.3% |
56.1% |
Operating
margin |
6.4% |
9.5% |
Adjusted
operating margin * |
6.8% |
9.8% |
Net
income |
$7.4 |
$11.5 |
Adjusted
net income * |
$7.8 |
$11.9 |
Operating
cash flow |
$17.6 |
$27.5 |
Capital
expenditures |
$2.7 |
$7.4 |
Acquisitions |
$0.0 |
$0.0 |
Company
stock repurchases (trade date) |
$0.0 |
$3.4 |
|
|
|
EBITDA |
$16.5 |
$23.4 |
EBITDA as
% of net sales |
9.1% |
12.1% |
|
|
|
Adjusted
EBITDA * |
$17.4 |
$24.0 |
Adjusted
EBITDA as % of net sales * |
9.6% |
12.4% |
|
|
|
Selected
Financial Data by Business Segment: |
|
|
|
Three Months Ended |
Retail |
09/30/17 |
09/30/16 |
Net
sales |
$141.6 |
$152.3 |
Operating
margin |
-2.0% |
0.7% |
Adjusted
operating margin * |
-2.0% |
1.1% |
|
|
|
Wholesale |
|
|
Net
sales |
$111.6 |
$114.6 |
Operating
margin |
12.1% |
14.4% |
Adjusted
operating margin * |
12.8% |
14.4% |
|
|
|
Ethan Allen Interiors Inc. |
|
|
Condensed Consolidated Statements of
Comprehensive Income |
Unaudited |
|
|
(in
thousands) |
|
|
|
Three Months Ended |
|
09/30/17 |
09/30/16 |
Net
sales |
$181,302 |
$193,287 |
Cost of
sales |
80,979 |
84,820 |
Gross
profit |
100,323 |
108,467 |
Selling,
general and administrative expenses |
88,774 |
90,130 |
Operating
income |
11,549 |
18,337 |
Interest
and other income |
56 |
143 |
Interest
expense |
185 |
323 |
Income
before income taxes |
11,420 |
18,157 |
Income
tax expense |
4,005 |
6,628 |
Net
income |
$7,415 |
$11,529 |
|
|
|
Basic
earnings per common share: |
|
|
Net
income per basic share |
$0.27 |
$0.42 |
Basic
weighted average shares outstanding |
27,459 |
27,725 |
|
|
|
Diluted
earnings per common share: |
|
|
Net
income per diluted share |
$0.27 |
$0.41 |
Diluted
weighted average shares outstanding |
27,756 |
28,012 |
|
|
|
Comprehensive income: |
|
|
Net
income |
$7,415 |
$11,529 |
Other
comprehensive income |
|
|
Currency
translation adjustment |
(130) |
(930) |
Other |
(14) |
(12) |
Other
comprehensive income (loss) net of tax |
(144) |
(942) |
Comprehensive income |
$7,271 |
$10,587 |
Ethan Allen Interiors Inc. |
|
|
Condensed Consolidated Balance Sheets |
|
|
Unaudited |
|
|
(in
thousands) |
|
|
|
September 30, |
June 30, |
Assets |
2017 |
2017 |
Current
assets: |
|
|
Cash and cash equivalents |
$52,728 |
$57,701 |
Accounts receivable, net |
10,088 |
12,293 |
Inventories |
157,505 |
149,483 |
Prepaid expenses & other current assets |
21,787 |
23,621 |
Total current assets |
242,108 |
243,098 |
|
|
|
Property,
plant and equipment, net |
267,257 |
270,198 |
Intangible assets, net |
45,128 |
45,128 |
Restricted cash and investments |
7,046 |
7,330 |
Other
assets |
2,887 |
2,468 |
|
|
|
Total Assets |
$564,426 |
$568,222 |
Liabilities and Shareholders' Equity |
|
|
Current
liabilities: |
|
|
Current maturities of long-term debt |
372 |
2,731 |
Customer deposits |
69,165 |
62,960 |
Accounts payable |
17,231 |
16,961 |
Accrued expenses & other current liabilities |
48,979 |
43,793 |
Total current liabilities |
135,747 |
126,445 |
|
|
|
Long-term
debt |
263 |
11,608 |
Other
long-term liabilities |
26,144 |
29,273 |
Total liabilities |
162,154 |
167,326 |
Shareholders' equity: |
|
|
Common stock |
490 |
490 |
Additional paid-in-capital |
376,251 |
377,550 |
Less: Treasury stock |
-634,532 |
-635,179 |
Retained earnings |
664,148 |
661,976 |
Accumulated other comprehensive income |
-4,261 |
-4,131 |
Total
Ethan Allen Interiors Inc. shareholders' equity |
402,096 |
400,706 |
Noncontrolling interests |
176 |
190 |
Total
shareholders' equity |
402,272 |
400,896 |
Total Liabilities and Shareholders' Equity |
$564,426 |
$568,222 |
Ethan Allen Interiors Inc. |
|
|
|
Design Center Activity |
|
|
|
First Quarter Fiscal 2018 |
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
|
Company |
|
|
Independent |
Owned |
Total |
Balance
at beginning of period |
155 |
148 |
303 |
Additions
(includes Relocations) (1) |
3 |
2 |
5 |
Closings
(includes Relocations) (1) |
(2) |
0 |
(2) |
Transfers |
0 |
0 |
0 |
Balance
at end of period |
156 |
150 |
306 |
|
|
|
|
United
States |
48 |
144 |
192 |
International |
108 |
6 |
114 |
|
|
|
|
(1)
Relocations in additions & closing |
0 |
0 |
0 |
Ethan Allen Interiors Inc. |
|
|
GAAP Reconciliation |
|
|
Three Months Ended September 30, 2017 and 2016 |
|
|
Unaudited |
|
|
(in
thousands, except per share amounts) |
|
|
|
Three Months
Ended |
|
September
30, |
|
2017 |
2016 |
Net Income / Earnings Per Share |
|
|
Net
income |
$7,415 |
$11,529 |
Adjustments net of related tax effects * |
580 |
391 |
Normalized income tax effects * |
-163 |
1 |
Adjusted
net income |
$7,832 |
$11,921 |
Diluted
weighted average shares outstanding |
27,756 |
28,012 |
Earnings
per diluted share |
$0.27 |
$0.41 |
Adjusted
earnings per diluted share |
$0.28 |
$0.43 |
|
|
|
|
|
|
Consolidated Operating Income / Operating Margin |
|
|
Operating
income |
$11,549 |
$18,337 |
Add:
adjustments * |
847 |
616 |
Adjusted
operating income * |
$12,396 |
$18,953 |
|
|
|
Net
sales |
$181,302 |
$193,287 |
Operating
margin |
6.4% |
9.5% |
Adjusted
operating margin * |
6.8% |
9.8% |
|
|
|
Wholesale Operating Income / Operating Margin |
|
|
Wholesale
operating income |
$13,462 |
$16,491 |
Add:
adjustments * |
847 |
0 |
Adjusted
wholesale operating income * |
$14,309 |
$16,491 |
Wholesale
net sales |
$111,587 |
$114,564 |
Wholesale
operating margin |
12.1% |
14.4% |
Adjusted
wholesale operating margin * |
12.8% |
14.4% |
Retail Operating Income / Operating Margin |
|
|
Retail
operating income |
-$2,773 |
$1,023 |
Add:
adjustments * |
0 |
616 |
Adjusted
retail operating income * |
-$2,773 |
$1,639 |
Retail
net sales |
$141,575 |
$152,255 |
Retail
operating margin |
-2.0% |
0.7% |
Adjusted
retail operating margin * |
-2.0% |
1.1% |
Ethan Allen Interiors Inc. |
|
|
GAAP Reconciliation |
|
|
Three Months Ended September 30, 2017 and 2016 |
|
|
Unaudited |
|
|
(in
thousands, except per share amounts) |
|
|
|
Three Months
Ended |
|
September
30, |
|
2017 |
2016 |
EBITDA |
|
|
Net
income |
$7,415 |
$11,529 |
Add: interest expense, net |
26 |
201 |
income
tax expense |
4,005 |
6,628 |
depreciation and amortization |
5,086 |
4,999 |
EBITDA |
$16,532 |
$23,357 |
Net
sales |
$181,302 |
$193,287 |
EBITDA as
% of net sales |
9.1% |
12.1% |
|
|
|
EBITDA |
$16,532 |
$23,357 |
Add:
adjustments * |
914 |
616 |
Adjusted
EBITDA |
$17,446 |
$23,973 |
Net
sales |
$181,302 |
$193,287 |
Adjusted
EBITDA as % of net sales |
9.6% |
12.4% |
|
|
|
|
|
|
*
Adjustments consist of the following: |
|
|
|
Three Months
Ended |
|
September
30, |
|
2017 |
2016 |
Adjustments net of related income tax effects: |
|
|
Real
estate losses |
$0 |
$616 |
Organizational changes and other exit costs |
847 |
0 |
Adjustments to operating income |
847 |
616 |
Early
debt extinguishment |
67 |
0 |
Adjustments to EBITDA |
914 |
616 |
Related
tax effects |
-334 |
-225 |
Adjustments net of related income tax effects |
$580 |
$391 |
|
|
|
Related tax effects are calculated using a normalized tax
rate of 36.5% |
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Ethan Allen Interiors Inc. via Globenewswire
Ethan Allen Interiors (NYSE:ETH)
Historical Stock Chart
From Jun 2024 to Jul 2024
Ethan Allen Interiors (NYSE:ETH)
Historical Stock Chart
From Jul 2023 to Jul 2024