Ethan Allen Announces First Quarter Sales and Earnings
October 23 2008 - 7:25AM
Business Wire
Ethan Allen Interiors Inc. (�Ethan Allen� or the �Company�)
(NYSE:ETH) today reported operating results for the three months
ended September 30, 2008. Net delivered sales for the quarter ended
September 30, 2008 were $205.8 million, representing a decline of
17.2% compared with $248.7 million in the prior year quarter. Net
delivered sales for the Company�s Retail division were $155.9
million representing a decline of 14.7% from the prior year period.
Wholesale sales were $121.3 million representing a decline of 22.4%
from the prior year period. Comparable Ethan Allen design center
delivered sales were down 19.0% compared to the prior year quarter.
As of September 30, 2008 there were a total of 292 retail location
design centers of which 160 were Company owned compared with a
total of 311 of which 159 were Company owned as of September 30,
2007. For the quarter ended September 30, 2008, diluted earnings
per share amounted to $0.26 on net income of $7.4 million,
including a restructuring benefit of $1.0 million net of tax due to
the gain on the sale of one of the properties closed last fiscal
year. Excluding this net restructuring benefit, diluted earnings
per share was $0.22 on $6.4 million in net income. This compares to
diluted earnings per share and net income of $0.57 and $17.5
million, respectively, in the prior year comparable period. During
the quarter, the Company implemented the �Team Concept� in the
Retail division whereby design associates are paid a base salary
with an opportunity for the team to earn a bonus. There was an
incremental one-time overlap of selling expenses as prepaid
commissions of $4.6 million (or $0.10 per diluted share) were
expensed. Also during the quarter, historical tax exposures were
resolved resulting in a one-time tax benefit to the income
statement of $0.8 million (or $0.03 per diluted share). Farooq
Kathwari, Chairman and CEO, commented, "We have been able to
maintain decent profitability during these challenging times. While
our sales have decreased, our gross margins increased due to many
factors including maintaining our every day best price policy. In
addition, our many initiatives during the last several years are
also a major factor in reducing costs and improving our
performance. These initiatives have included developing
knowledgeable and motivated associates, the repositioning of our
brand to project a modern attitude with a classic perspective,
maintaining a consistent strong national advertising program, and
continued structural changes in our retail, manufacturing and
logistics network." Mr. Kathwari added, �Our focus has also been to
maintain liquidity. We are pleased that during the quarter we
increased our cash position by $5.5 million with an ending balance
of about $80 million. As we indicated previously, we have completed
most of the repositioning of the retail network and expect a major
reduction in capital expenditures in this fiscal year which should
further help strengthen our cash position.� Mr. Kathwari continued,
�While the overall economic environment remains uncertain, we
believe that we are well positioned during this period and also
ready to grow our business as conditions improve.� 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 a network of 292 design
centers in the United States and abroad, of which 160 are Company
owned. Ethan Allen owns eight manufacturing facilities in the
United States, which include 2 sawmills, and one cut and sew
factory in Mexico. The Company will conduct a Conference Call at
11:00 AM (Eastern) on Thursday, October 23th. 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, 2008 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. and Subsidiaries Selected
Financial Information (Unaudited) (In millions) � Selected
Consolidated Financial Data: Three Months Ended September 30, 2008
2007 Net Sales $ 205.8 $ 248.7 Gross Margin 54.4% 53.7% Operating
Margin 5.9% 11.2% Operating Margin (ex restructuring &
impairment charge (credit)) 5.1% 11.2% Net Income $ 7.4 $ 17.5 Net
Income (ex restructuring & impairment charge (credit)) $ 6.4 $
17.5 � Operating Cash Flow $ 18.1 $ 41.5 Capital Expenditures $
11.1 $ 12.5 Acquisitions $ 0.4 $ 0.7 Treasury Stock Repurchases
(settlement date basis) $ - $ 41.7 � EBITDA $ 19.2 $ 35.1 EBITDA as
% of Net Sales 9.3% 14.1% EBITDA (ex restructuring & impairment
Charge (credit) ) $ 17.6 $ 35.1 EBITDA as % of Net Sales (ex
restructuring & impairment charge (credit)) 8.6% 14.1% �
Selected Financial Data by Business Segment: � Three Months Ended
September 30, Retail 2008 2007 Net Sales $ 155.9 $ 182.8 Operating
Margin (2.0%) 0.5% Operating Margin (ex restructuring &
impairment charge (credit) ) (3.3%) 0.5% � � Three Months Ended
September 30, Wholesale 2008 2007 Net Sales $ 121.3 $ 156.3
Operating Margin 9.8% 17.1% Operating Margin (ex restructuring
& impairment charge ) 10.1% 17.1% Ethan Allen Interiors Inc.
and Subsidiaries Condensed Consolidated Statements of Operations
(Unaudited) (In thousands, except per share amounts) � � Three
Months Ended September 30, 2008 2007 Net sales $ 205,841 $ 248,727
Cost of sales � 93,900 � 115,270 Gross profit � 111,941 � 133,457
Operating expenses: Selling 55,302 57,578 General &
administrative 46,058 48,082 Restructuring & impairment charges
(credit) � (1,630) � - Total operating expenses � 99,730 � 105,660
Operating income 12,211 27,797 Interest & other miscellaneous
income 1,100 2,922 Interest & other related financing costs �
2,901 � 2,935 Income before income tax expense 10,410 27,784 Income
tax expense � 2,988 � 10,280 Net income $ 7,422 $ 17,504 � Basic
earnings per common share: Net income per basic share $ 0.26 $ 0.58
Basic weighted average common shares 28,703 30,084 � Diluted
earnings per common share: Net income per diluted share $ 0.26 $
0.57 Diluted weighted average common shares 28,847 30,464 Ethan
Allen Interiors Inc. and Subsidiaries Condensed Consolidated
Balance Sheets (In thousands) � � September 30, 2008 June 30, 2008
Assets (unaudited) Current Assets: Cash and cash equivalents $
79,917 $ 74,376 Accounts receivable, net 11,549 12,672 Inventories
187,495 186,265 Prepaid expenses and other current assets 22,016
32,860 Deferred income taxes � 4,188 � 4,005 Total current assets
305,165 310,178 � Property, plant, and equipment, net 355,036
350,432 Intangible assets, net 94,633 96,823 Other assets � 4,423 �
4,540 Total Assets $ 759,257 $ 761,973 � Liabilities and
Shareholders� Equity Current Liabilities: Current maturities of
long-term debt $ 41 $ 41 Customer deposits 42,640 47,297 Accounts
payable 25,894 26,444 Accrued expenses and other current
liabilities � 68,056 � 61,720 Total current liabilities 136,631
135,502 � Long-term debt 203,018 202,988 Other long-term
liabilities 20,661 20,383 Deferred income taxes � 22,948 � 27,327
Total liabilities 383,258 386,200 � Shareholders� equity � 375,999
� 375,773 Total Liabilities and Shareholders� Equity $ 759,257 $
761,973
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