ETH Ethan Allen Interiors Inc

Ethan Allen Interiors Inc. ("Ethan Allen" or the "Company") (NYSE:ETH) today reported sales and earnings for the three and nine months ended March 31, 2006. Three and Nine Month Results Net delivered sales for the quarter ended March 31, 2006 increased 15.5% to $267.1 million from $231.2 million in the prior year quarter. Net delivered sales for the Company's Retail division increased 22.6% to $168.2 million, while Wholesale sales increased 13.9% to $192.2 million during that same period. Comparable Ethan Allen store delivered sales increased 15.2% over the prior year quarter. During that same period, Retail division written sales increased 19.5% while comparable store written sales increased 12.3%. For the nine months ended March 31, 2006, net delivered sales increased 12.4% to $794.4 million from $706.8 million in the prior year comparable period. Net delivered sales for the Company's Retail division increased 16.5% to $506.6 million, while Wholesale sales increased 13.6% to $558.2 million during that same period. Comparable Ethan Allen store delivered sales increased 12.2% over the prior year comparable period. During that same period, Retail division written sales increased 16.1% while comparable store written sales increased 11.4%. For the quarter ended March 31, 2006, earnings per share increased 18.0% to $0.59 on net income of $20.0 million. This compares to earnings per share and net income of $0.50 and $17.9 million, respectively, in the prior year comparable period. For the nine months ended March 31, 2006, earnings per share, which includes a pre-tax restructuring and impairment charge of $4.2 million related to the Company's planned conversion of one of its existing manufacturing facilities into a regional distribution center, amounted to $1.85 on net income of $63.3 million. This compares to earnings per share and net income of $1.63 and $59.8 million, respectively, in the prior year comparable period. Excluding the impact of the restructuring and impairment charge, earnings per share for the current nine-month period amounted to $1.93 on net income of $65.9 million. Farooq Kathwari, Chairman and CEO, commented: "We are pleased with the continued progress at Ethan Allen and believe that our results reflect the positive effects of initiatives undertaken in recent years, including: the relocation of our stores to larger and more prominent locations; major investments at retail to increase the professionalism of our management team; the impact of new product introductions - over 80% of our product offerings are new within the last three years; enhanced advertising and marketing programs; and faster delivery of our products to our customers." Mr. Kathwari continued: "All of these initiatives, particularly the development of a more professional Company-operated retail division, have entailed major investment and cost. Still, despite these expenditures and additional cost increases associated with selected raw materials, fuel, utilities, and health insurance, we have been able to report significant improvements in both profitability and operating cash flow." Commenting on the outlook for the remainder of the fiscal year, Mr. Kathwari stated: "So far this fiscal year we have experienced considerable increases in both sales and earnings and, at this stage, we believe that the analyst estimates for the fourth quarter ended June 30, 2006 are within reach." Ethan Allen Interiors Inc. is a leading manufacturer and retailer of quality home furnishings. The Company sells a full range of furniture products and decorative accessories through an exclusive network of 311 retail stores in the United States and abroad, of which 134 are Company-owned. Ethan Allen has 10 manufacturing facilities, which include 2 sawmills, located throughout the United States. The Company will conduct a Conference Call at 11:00 AM (Eastern) on Monday, April 24th. The live webcast and replay are accessible via the Company's website at www.ethanallen.com/investors. This press release should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended June 30, 2005 and other reports filed with the Securities and Exchange Commission. This press release and related discussions contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect management's current expectations concerning future events and results of the Company, and are subject to various assumptions, risks and uncertainties. Accordingly, actual future events or results could differ materially from those contemplated by the forward-looking statements. The Company assumes no obligation to update or provide revision to any forward-looking statement at any time for any reason. -0- *T Ethan Allen Interiors Inc. Selected Financial Information Unaudited (In millions) Selected Consolidated Financial Data: ------------------------------------- Three Months Ended Nine Months Ended ------------------ ------------------ 3/31/06 3/31/05 3/31/06 3/31/05 -------- -------- -------- -------- Net Sales $ 267.1 $ 231.2 $ 794.4 $ 706.8 Gross Margin 50.5% 47.8% 50.5% 48.1% Operating Margin 12.5% 12.7% 13.3% 13.7% Operating Margin (ex restructuring & impairment charge) 12.5% 12.7% 13.9% 13.7% Net Income $ 20.0 $ 17.9 $ 63.3 $ 59.8 Net Income (ex restructuring & impairment charge) $ 20.0 $ 17.9 $ 65.9 $ 59.8 Operating Cash Flow $ 26.3 $ 12.4 $ 92.5 $ 79.2 Capital Expenditures $ 7.1 $ 8.8 $ 28.3 $ 24.2 Treasury Stock Repurchases (settlement date basis) $ - $ 20.5 $ 51.1 $ 59.6 EBITDA $ 40.3 $ 34.8 $ 124.6 $ 114.1 EBITDA as % of Net Sales 15.1% 15.0% 15.7% 16.1% EBITDA (ex restructuring & impairment charge) $ 40.3 $ 34.8 $ 128.8 $ 114.1 EBITDA as % of Net Sales (ex restructuring & impairment charge) 15.1% 15.0% 16.2% 16.1% Selected Financial Data by Business Segment: -------------------------------------------- Three Months Ended Nine Months Ended ------------------ ------------------ Retail 3/31/06 3/31/05 3/31/06 3/31/05 --------- -------- -------- -------- -------- Net Sales $ 168.2 $ 137.3 $ 506.6 $ 434.8 Operating Margin 0.1% -0.7% 2.2% 1.8% Three Months Ended Nine Months Ended ------------------ ------------------ Wholesale 3/31/06 3/31/05 3/31/06 3/31/05 --------- -------- -------- -------- -------- Net Sales $ 192.2 $ 168.8 $ 558.2 $ 491.4 Operating Margin 17.7% 18.7% 17.4% 17.6% Operating Margin (ex restructuring & impairment charge) 17.7% 18.7% 18.2% 17.6% Ethan Allen Interiors Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) Three Months Nine Months Ended March 31, Ended March 31, 2006 2005 2006 2005 (unaudited) (unaudited) Net sales $ 267,071 $ 231,154 $ 794,388 $ 706,752 Cost of sales 132,325 120,704 393,248 366,476 -------- -------- -------- ---------- Gross profit 134,746 110,450 401,140 340,276 Operating expenses: Selling 58,340 45,506 166,291 137,347 General and administrative 43,067 35,646 124,787 106,319 Restructuring and impairment charges - - 4,241 (219) -------- -------- -------- ---------- Total operating expenses 101,407 81,152 295,319 243,447 Operating income 33,339 29,298 105,821 96,829 Interest and other miscellaneous income 1,747 160 2,950 1,406 Interest and other related financing costs 3,095 201 6,497 488 -------- -------- -------- ---------- Income before income tax expense 31,991 29,257 102,274 97,747 Income tax expense 11,997 11,322 38,986 37,920 -------- -------- -------- ---------- Net income $ 19,994 $ 17,935 $ 63,288 $ 59,827 ========= ========= ======== ========= Basic earnings per share: Net income per share $ 0.61 $ 0.51 $ 1.90 $ 1.68 ========= ========= ======== ========= Basic weighted average shares outstanding 33,021 35,257 33,340 35,690 Diluted earnings per share: Net income per share $ 0.59 $ 0.50 $ 1.85 $ 1.63 ========= ========= ======== ========= Diluted weighted average shares outstanding 34,046 36,148 34,173 36,603 Ethan Allen Interiors Inc. Condensed Consolidated Balance Sheets (In thousands) ---------------------------------------------------------------------- March 31, June 30, 2006 2005 (unaudited) ---------------------------------------------------------------------- Assets Current Assets: Cash and cash equivalents $ 185,754 $ 3,448 Accounts receivable, net 26,724 28,019 Inventories 191,573 186,479 Prepaid expenses and other current assets 48,089 46,443 -------- --------- Total current assets 452,140 264,389 Property, plant, and equipment, net 286,797 275,211 Intangible assets, net 86,032 82,897 Other assets 5,645 5,889 -------- --------- Total Assets $ 830,614 $ 628,386 ======== ========= Liabilities and Shareholders' Equity Current Liabilities: Current maturities of long-term debt and capital lease obligations $ 212 $ 240 Customer deposits 58,220 53,654 Accounts payable 28,193 19,352 Accrued expenses and other current liabilities 59,063 60,720 -------- --------- Total current liabilities 145,688 133,966 Long-term debt 202,717 12,270 Other long-term liabilities 12,075 12,445 Deferred income taxes 36,261 35,637 -------- --------- Total liabilities 396,741 194,318 Shareholders' equity 433,873 434,068 -------- --------- Total Liabilities and Shareholders' Equity $ 830,614 $ 628,386 ======== ========= *T