![](https://hugin.info/159909/I/2222006/131958.jpg)
DANBURY, CT -
October 24, 2018 - Ethan Allen Interiors Inc. ("Ethan Allen" or
the "Company") (NYSE: ETH) today reported operating results for its
fiscal 2019 first quarter ended September 30, 2018. Please refer to
the accompanying financial statements and reconciliation to
non-GAAP measures discussed below.
Fiscal 2019 first
quarter compared to fiscal 2018 first quarter:
-
Consolidated net sales of $187.8 million
increased 3.6%
-
GAAP diluted earnings per share of $0.33
compared to $0.27 and adjusted diluted earnings per share of $0.33
compared to $0.28, an increase of 17.9%
-
Wholesale net sales of $118.1 increased 5.8%;
Retail net sales of $145.2 increased 2.6%
-
GAAP Operating margin of 6.3% compared to 6.4%
and adjusted operating margin of 6.3% compared to 6.8%
-
Paid $5.1 million in dividends
"We are pleased with our results,
and most importantly with the company's current position for
growth," said Farooq Kathwari, Ethan Allen's Chairman, President,
and CEO. "Our focus on positioning ourselves as a leading interior
design company differentiates us in a rapidly changing retail
environment. Our approximately 1,500 in-house interior designers
provide complimentary design service to clients around the world
through our roughly 300 Design Centers, 200 of which are in North
America. We have also made significant product improvements,
repositioning about 70% of our line in the last three years and
strengthened our North American-based manufacturing and logistics
divisions as about 75% of our products are made in our own
workshops."
Mr. Kathwari continued, "During
the first quarter, we increased our advertising spend by 12.8% as
we introduced a new assortment of artisan-inspired furnishings. In
September, we mailed a 116-page magazine and supported it with
aggressive advertising in digital, print, and other mediums. We
will continue our strong marketing initiatives throughout Fiscal
2019."
FISCAL 2019 FIRST
QUARTER FINANCIAL RESULTS:
Consolidated
Net sales
were $187.8 million for the three months ended September 30, 2018
compared to $181.3 million for the same period in the prior year,
an increase of 3.6%.
Gross profit
was $101.5 million for the three months ended September 30, 2018
compared to $100.3 million in the comparable prior year period.
Consolidated gross margin for the quarter was 54.0% compared to
55.3%. Our consolidated gross margin decreased due to a reduction
in the percentage of retail sales to total sales and increased raw
materials costs. Retail sales as a percent of total consolidated
sales was 77.3% for the quarter compared to 78.1% in the prior year
quarter.
Operating
expenses for the three months ended September 30, 2018 were
$89.7 million or 47.7% of sales compared to $88.8 million or 49.0%
of sales in the comparable prior year period. The 1.0% increase in
operating expenses was primarily due to an increase in variable
costs on increased sales, and higher advertising costs, which
increased 12.8%, partly offset by prior year organizational changes
and other exit costs that did not recur this year.
Operating
income for the three months ended September 30, 2018 was $11.8
million or 6.3% of sales compared to $11.5 million or 6.4% of sales
in the comparable prior year period. Adjusted operating
income for the three months ended September 30, 2018 was $11.8
million or 6.3% of sales compared to $12.4 million or 6.8% of sales
in the comparable prior year period. The primary causes for the
2.2% increase in operating income were the increased sales, and
prior year organizational changes that did not recur, partly offset
by increased variable costs due to increased sales, and raw
material costs. (See Exhibit 1 for a reconciliation of GAAP to
non-GAAP presentation)
Income taxes
were $2.9 million for the three months ended September 30, 2018 and
$4.0 million in the comparable prior year period. The effective
rate this quarter was 24.9% compared to 35.1%. The effective tax
rate for the quarter was lower due to the 2017 tax act.
Net income
was $8.8 million or $0.33 per diluted share for the three months
ended September 30, 2018 and $7.4 million or $0.27 per diluted
share in the prior year comparable period. Adjusted net income was
$8.8 million or $0.33 per diluted share for the three months ended
September 30, 2018 and $7.8 million or $0.28 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, 2018 were $145.2 million
compared to $141.6 million in the prior year comparable period, an
increase of 2.6% compared to the prior year. Comparative net sales
were $141.0 million compared to $139.9 million in the prior year
period. Increased domestic sales were partly offset by decreased
sales in Canada.
Total written
orders for the retail division for the first quarter of fiscal
2019 were down 0.2% compared to the same prior year period, and
comparable Design Center written orders were down 2.1% over the
same period. Decreases were driven by decreased orders in
Canada.
Operating
income was a loss of $1.6 million for the three months ended
September 30, 2018, an improvement of $1.2 million from a loss of
$2.8 million over the same prior year period, driven by increased
sales in the current year period.
Wholesale
Segment
Net sales of
$118.1 million compared to $111.6 million in the prior year
quarter, an increase of 5.8%. The increase in sales is primarily
due to increased contract sales, primarily the GSA, partly offset
by reductions to international independent retailers.
Operating
income of $14.3 million compared to $13.5 million in the prior
year quarter. The increase was largely due to the increase in
current period income, partly offset by increased raw material
costs.
Balance Sheet and
Cash Flow
Total debt of
$1.5 million decreased $0.2 million from June 30, 2018.
Total cash and
cash equivalents of $39.6 million increased $17.2 million from
June 30, 2018, paying out $5.1 million in dividends.
Inventories
of $165.7 million increased by $2.7 million from June 30, 2018.
Capital
expenditures were $2.8 million fiscal year to date at September
30, 2018 compared to $2.7 million for the same prior year period.
Expenditures were primarily at retail design centers.
Dividends
During the year to date period ended September 30, 2018, we paid
$5.1 million of dividends, maintaining our $0.19 quarterly dividend
rate with the prior fiscal year.
Analyst
Conference Call
Ethan Allen will conduct an
analyst conference call at 5:00 PM (Eastern) on Wednesday, October
24 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# 50728596. 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, 2018 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;
potentially negative or unexpected tax consequences of changes to
fiscal and tax policies; 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; disruptions 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;
additional impairment charges that could reduce our profitability;
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; results of operations for any
quarter are not necessarily indicative of our results of operations
for a full year; possible failure to protect our intellectual
property; and those matters discussed in "Item 1A - Risk Factors"
of our Annual Report on Form 10-K for the year ended June 30, 2018,
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 |
|
09/30/18 |
09/30/17 |
Net
sales |
$187.8 |
$181.3 |
Gross
margin |
54.0% |
55.3% |
Operating
margin |
6.3% |
6.4% |
Adjusted
operating margin * |
6.3% |
6.8% |
Net
income |
$8.8 |
$7.4 |
Adjusted
net income * |
$8.8 |
$7.8 |
Operating
cash flow |
$24.4 |
$17.6 |
Capital
expenditures |
$2.8 |
$2.7 |
Company
stock repurchases (trade date) |
$0.0 |
$0.0 |
|
|
|
EBITDA |
$16.8 |
$16.5 |
EBITDA as
% of net sales |
8.9% |
9.1% |
|
|
|
Adjusted
EBITDA * |
$16.8 |
$17.4 |
Adjusted
EBITDA as % of net sales * |
8.9% |
9.6% |
|
|
|
Selected
Financial Data by Business Segment: |
|
|
|
Three Months Ended |
Retail |
09/30/18 |
09/30/17 |
Net
sales |
$145.2 |
$141.6 |
Operating
margin |
-1.1% |
-2.0% |
Adjusted
operating margin * |
-1.1% |
-2.0% |
|
|
|
Wholesale |
|
|
Net
sales |
$118.1 |
$111.6 |
Operating
margin |
12.1% |
12.1% |
Adjusted
operating margin * |
12.1% |
12.8% |
|
|
|
Ethan Allen Interiors Inc. |
|
|
Condensed Consolidated Statements of
Comprehensive Income |
Unaudited |
|
|
(in
thousands) |
|
|
|
Three Months Ended |
|
09/30/18 |
09/30/17 |
Net
sales |
$187,785 |
$181,302 |
Cost of
sales |
86,335 |
80,979 |
Gross
profit |
101,450 |
100,323 |
Selling,
general and administrative expenses |
89,651 |
88,774 |
Operating
income |
11,799 |
11,549 |
Interest
and other income |
26 |
56 |
Interest
expense |
53 |
185 |
Income
before income taxes |
11,772 |
11,420 |
Income
tax expense |
2,932 |
4,005 |
Net
income |
$8,840 |
$7,415 |
|
|
|
Basic
earnings per common share: |
|
|
Net
income per basic share |
$0.33 |
$0.27 |
Basic
weighted average shares outstanding |
26,539 |
27,459 |
|
|
|
Diluted
earnings per common share: |
|
|
Net
income per diluted share |
$0.33 |
$0.27 |
Diluted
weighted average shares outstanding |
26,940 |
27,756 |
|
|
|
Comprehensive income: |
|
|
Net
income |
$8,840 |
$7,415 |
Other
comprehensive income |
|
|
Currency
translation adjustment |
1,247 |
(130) |
Other |
(26) |
(14) |
Other
comprehensive income (loss) net of tax |
1,221 |
(144) |
Comprehensive income |
$10,061 |
$7,271 |
Ethan Allen Interiors Inc. |
|
|
Condensed Consolidated Balance Sheets |
|
|
Unaudited |
|
|
(in
thousands) |
|
|
|
September 30, |
June 30, |
Assets |
2018 |
2018 |
Current
assets: |
|
|
Cash and cash equivalents |
$39,590 |
$22,363 |
Accounts receivable, net |
12,772 |
12,364 |
Inventories |
165,719 |
163,012 |
Prepaid expenses & other current assets |
18,211 |
16,686 |
Total current assets |
236,292 |
214,425 |
|
|
|
Property,
plant and equipment, net |
266,650 |
267,903 |
Intangible assets, net |
45,128 |
45,128 |
Other
assets |
2,884 |
2,977 |
Total Assets |
$550,954 |
$530,433 |
Liabilities and Shareholders' Equity |
|
|
Current
liabilities: |
|
|
Current maturities of long-term debt |
552 |
584 |
Customer deposits |
67,576 |
61,248 |
Accounts payable |
18,807 |
18,768 |
Accrued expenses & other current liabilities |
49,190 |
40,660 |
Total current liabilities |
136,125 |
121,260 |
|
|
|
Long-term
debt |
927 |
1,096 |
Other
long-term liabilities |
23,915 |
24,207 |
Total liabilities |
160,967 |
146,563 |
Shareholders' equity: |
|
|
Common stock |
490 |
490 |
Additional paid-in-capital |
378,078 |
376,950 |
Less: Treasury stock |
-656,551 |
-656,551 |
Retained earnings |
672,781 |
669,013 |
Accumulated other comprehensive income |
-4,924 |
-6,171 |
Total
Ethan Allen Interiors Inc. shareholders' equity |
389,874 |
383,731 |
Noncontrolling interests |
113 |
139 |
Total
shareholders' equity |
389,987 |
383,870 |
Total Liabilities and Shareholders' Equity |
$550,954 |
$530,433 |
Ethan Allen Interiors Inc. |
|
|
|
Design Center Activity |
|
|
|
First Quarter Fiscal 2019 |
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
|
Company |
|
|
Independent |
Owned |
Total |
Balance
at beginning of period |
148 |
148 |
296 |
Additions
(includes Relocations) (1) |
6 |
0 |
6 |
Closings
(includes Relocations) (1) |
(1) |
(1) |
(2) |
Transfers |
0 |
0 |
0 |
Balance
at end of period |
153 |
147 |
300 |
|
|
|
|
United
States |
43 |
141 |
184 |
International |
110 |
6 |
116 |
|
|
|
|
(1)
Relocations in additions & closing |
0 |
0 |
0 |
Ethan Allen Interiors Inc. |
|
|
GAAP Reconciliation |
|
|
Three Months Ended September 30, 2018 and 2017 |
|
|
Unaudited |
|
|
(in
thousands, except per share amounts) |
|
|
|
Three Months
Ended |
|
September
30, |
|
2018 |
2017 |
Net Income / Earnings Per Share |
|
|
Net
income |
$8,840 |
$7,415 |
Adjustments net of related tax effects * |
0 |
580 |
Normalized income tax effects * |
0 |
-163 |
Adjusted
net income |
$8,840 |
$7,832 |
Diluted
weighted average shares outstanding |
26,940 |
27,756 |
Earnings
per diluted share |
$0.33 |
$0.27 |
Adjusted
earnings per diluted share |
$0.33 |
$0.28 |
|
|
|
Consolidated Operating Income / Operating Margin |
|
|
Operating
income |
$11,799 |
$11,549 |
Add:
adjustments * |
0 |
847 |
Adjusted
operating income * |
$11,799 |
$12,396 |
|
|
|
Net
sales |
$187,785 |
$181,302 |
Operating
margin |
6.3% |
6.4% |
Adjusted
operating margin * |
6.3% |
6.8% |
|
|
|
Wholesale Operating Income / Operating Margin |
|
|
Wholesale
operating income |
$14,315 |
$13,462 |
Add:
adjustments * |
0 |
847 |
Adjusted
wholesale operating income * |
$14,315 |
$14,309 |
Wholesale
net sales |
$118,072 |
$111,587 |
Wholesale
operating margin |
12.1% |
12.1% |
Adjusted
wholesale operating margin * |
12.1% |
12.8% |
Retail Operating Income / Operating Margin |
|
|
Retail
operating income |
-$1,559 |
-$2,773 |
Add:
adjustments * |
0 |
0 |
Adjusted
retail operating income * |
-$1,559 |
-$2,773 |
Retail
net sales |
$145,214 |
$141,575 |
Retail
operating margin |
-1.1% |
-2.0% |
Adjusted
retail operating margin * |
-1.1% |
-2.0% |
Ethan Allen Interiors Inc. |
|
|
GAAP Reconciliation |
|
|
Three Months Ended September 30, 2018 and 2017 |
|
|
Unaudited |
|
|
(in
thousands, except per share amounts) |
|
|
|
Three Months
Ended |
|
September
30, |
|
2018 |
2017 |
EBITDA |
|
|
Net
income |
$8,840 |
$7,415 |
Add: interest expense, net |
-18 |
26 |
income
tax expense |
2,932 |
4,005 |
depreciation and amortization |
5,000 |
5,086 |
EBITDA |
$16,754 |
$16,532 |
Net
sales |
$187,785 |
$181,302 |
EBITDA as
% of net sales |
8.9% |
9.1% |
|
|
|
EBITDA |
$16,754 |
$16,532 |
Add:
adjustments * |
0 |
914 |
Adjusted
EBITDA |
$16,754 |
$17,446 |
Net
sales |
$187,785 |
$181,302 |
Adjusted
EBITDA as % of net sales |
8.9% |
9.6% |
|
|
|
|
|
|
|
|
|
|
|
|
*
Adjustments consist of the following: |
|
|
|
Three Months
Ended |
|
September
30, |
|
2018 |
2017 |
Adjustments net of related income tax effects: |
|
|
Real
estate losses |
$0 |
$0 |
Organizational changes and other exit costs |
0 |
847 |
Adjustments to operating income |
0 |
847 |
Early
debt extinguishment |
0 |
67 |
Adjustments to EBITDA |
0 |
914 |
Related
tax effects |
0 |
-334 |
Adjustments net of related income tax effects |
$0 |
$580 |
|
|
|
Related tax effects are calculated using a normalized tax
rate of 24.5% in the current fiscal year and 36.5% in the prior
fiscal year |
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This
announcement is distributed by West Corporation on behalf of West
Corporation 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
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