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, 2007. Three Month Results Net delivered sales for the quarter ended March 31, 2007 amounted to $246.5 million as compared to $267.1 million in the prior year quarter. Net delivered sales for the Company�s Retail division decreased 0.3% to $167.7 million, while Wholesale sales decreased 10.6% to $171.9 million during that same period. Comparable Ethan Allen design center delivered sales decreased 8.6% as compared to the prior year quarter. For the quarter ended March 31, 2007, earnings per share amounted to $0.54 on net income of $17.5 million. This compares to earnings per share and net income of $0.59 and $20.0 million, respectively, in the prior year comparable period. Nine Month Results For the nine months ended March 31, 2007, net delivered sales totaled $746.8 million as compared to $794.4 million in the prior year comparable period. Net delivered sales for the Company�s Retail division increased 0.9% to $511.1 million, while Wholesale sales decreased 11.6% to $493.2 million during that same period. Comparable Ethan Allen design center delivered sales decreased 6.4% as compared to the prior year comparable period. For the nine months ended March 31, 2007, earnings per share, which includes a previously announced September 2006 restructuring and impairment charge, amounted to $1.50 on net income of $48.7 million. This compares to earnings per share and net income of $1.85 and $63.3 million, respectively, in the prior year comparable period which included a September 2005 restructuring and impairment charge. Excluding the impact of these charges in both periods, earnings per share amounted to $1.76 on net income of $57.2 million in the current year period as compared to earnings per share and net income of $1.93 and $65.9 million, respectively, in the prior year comparable period. Farooq Kathwari, Chairman and CEO, commented: "We are pleased to report quarterly operating earnings of 11.4% of sales despite continued softness within the home furnishings retail environment and a 7.7% decline in sales. As we have stated previously, results for the March 2006 quarter were favorably impacted by stronger economic conditions and our initiative to reduce lead times associated with the delivery of our products to the consumer, thereby substantially reducing our backlog during that period. As a result, we experienced a 15.5% increase in sales during the prior year period, making for very challenging year-over-year comparisons. For the nine months ended March 2007, we generated nearly $70 million in operating cash, utilizing approximately $59 million for capital expenditures and acquisitions. In addition, we�ve repurchased $40 million of our common stock, including 581,200 shares during the recent quarter at a cost of approximately $20 million, or $35.00 per share.� Mr. Kathwari further stated: �Our goal remains the positioning of Ethan Allen as a leading provider of interior design solutions. In order to achieve this objective, we continue to focus on service within all facets of our business, including improving the caliber of our associates at retail; developing stylish, high-quality products that reflect good value; and opening and/or relocating new design centers in key markets. We believe that these efforts, along with our comprehensive and coordinated marketing programs, provide us a distinct competitive advantage and an opportunity to grow our business.� Commenting on business trends, Mr. Kathwari continued: �While we recognize that the home furnishings retail environment remains uncertain, some positive trends have emerged in recent weeks. In addition, we continue to believe that our strategic initiatives provide us stronger positioning as conditions improve. As a result, we believe that we have the opportunity to generate earnings per share for the quarter ended June 30, 2007 in line with the current range of analyst estimates.� 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 310 design centers in the United States and abroad, of which 154 are Company-owned. Ethan Allen has 9 manufacturing facilities, which include 2 sawmills, located throughout the United States. The Company will conduct a Conference Call at 11:00 AM (Eastern) on Tuesday, 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, 2006 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. ��Ethan Allen Interiors Inc. Selected Financial Information Unaudited (In millions) � Selected Consolidated Financial Data: Three Months Ended Nine Months Ended 3/31/07� 3/31/06� 3/31/07� 3/31/06� Net Sales $ 246.5� $ 267.1� $ 746.8� $ 794.4� Gross Margin 52.1% 50.5% 52.0% 50.5% Operating Margin 11.4% 12.5% 10.6% 13.3% Operating Margin (ex restructuring & impairment charge (credit)) 11.3% 12.5% 12.4% 13.9% Net Income $ 17.5� $ 20.0� $ 48.7� $ 63.3� Net Income (ex restructuring & impairment charge (credit)) $ 17.4� $ 20.0� $ 57.2� $ 65.9� � Operating Cash Flow $ 13.7� $ 26.0� $ 69.9� $ 92.0� Capital Expenditures $ 12.5� $ 7.1� $ 47.4� $ 28.3� Acquisitions $ 1.8� $ 4.6� $ 11.4� $ 6.3� Treasury Stock Repurchases (settlement date basis) $ 16.9� $ -� $ 34.6� $ 51.1� � EBITDA $ 34.5� $ 38.5� $ 97.3� $ 121.2� EBITDA as % of Net Sales 14.0% 14.4% 13.0% 15.3% EBITDA (ex restructuring & impairment charge (credit)) $ 34.3� $ 38.5� $ 110.8� $ 125.5� EBITDA as % of Net Sales (ex restructuring & impairment charge (credit)) 13.9% 14.4% 14.8% 15.8% Selected Financial Data by Business Segment: � Three Months Ended Nine Months Ended Retail 3/31/07� 3/31/06� 3/31/07� 3/31/06� Net Sales $ 167.7� $ 168.2� $ 511.1� $ 506.6� Operating Margin (0.1)% 0.1% 1.7% 2.2% Three Months Ended Nine Months Ended Wholesale 3/31/07� 3/31/06� 3/31/07� 3/31/06� Net Sales $ 171.9� $ 192.2� $ 493.2� $ 558.2� Operating Margin 18.5% 17.7% 14.9% 17.4% Operating Margin (ex restructuring & impairment charge (credit)) 18.4% 17.7% 17.6% 18.2% 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, 2007� 2006� 2007� 2006� � � (unaudited) � (unaudited) � Net sales $ 246,539� $ 267,071� $ 746,781� $ 794,388� Cost of sales 118,023� 132,325� 358,186� 393,248� Gross profit 128,516� 134,746� 388,595� 401,140� Operating expenses: � Selling 54,880� 58,340� 164,093� 166,291� General & administrative 45,729� 43,067� 132,214� 124,787� Restructuring & impairment charge (credit) (180) -� 13,442� 4,241� Total operating expenses 100,429� 101,407� 309,749� 295,319� Operating income 28,087� 33,339� 78,846� 105,821� Interest & other miscellaneous income 2,339� 1,747� 7,146� 2,950� Interest & other related financing costs 2,927� 3,095� 8,780� 6,497� Income before income tax expense 27,499� 31,991� 77,212� 102,274� Income tax expense 10,000� 11,997� 28,469� 38,986� Net income $ 17,499� $ 19,994� $ 48,743� $ 63,288� � Basic earnings per share: Net income per share $ 0.55� $ 0.61� $ 1.54� $ 1.90� Basic weighted average shares outstanding 31,656� 33,021� 31,736� 33,340� � Diluted earnings per share: Net income per share $ 0.54� $ 0.59� $ 1.50� $ 1.85� Diluted weighted average shares outstanding 32,352� 34,046� 32,495� 34,173� Ethan Allen Interiors Inc. Condensed Consolidated Balance Sheets (In thousands) � March 31, June 30, 2007� 2006� � � (unaudited) � � � Assets Current Assets: Cash and cash equivalents $ 132,946� $ 173,801� Accounts receivable, net 18,811� 22,179� Inventories 180,753� 189,650� Prepaid expenses and other current assets 49,767� 31,289� Deferred income taxes 5,983� 8,696� Total current assets 388,260� 425,615� � Property, plant, and equipment, net 316,606� 294,170� Intangible assets, net 91,094� 87,899� Other assets 5,932� 6,416� Total Assets $ 801,892� $ 814,100� � Liabilities and Shareholders' Equity Current Liabilities: Current maturities of long-term debt $ 39� $ 39� Customer deposits 53,532� 53,203� Accounts payable 25,564� 28,549� Accrued expenses and other current liabilities 62,386� 65,786� Total current liabilities 141,521� 147,577� � Long-term debt 202,838� 202,748� Other long-term liabilities 12,054� 12,151� Deferred income taxes 34,250� 34,182� Total liabilities 390,663� 396,658� � Shareholders' equity 411,229� 417,442� Total Liabilities and Shareholders' Equity $ 801,892� $ 814,100�