Ethan Allen Interiors Inc. (�Ethan Allen� or the �Company�)
(NYSE:ETH) today reported operating results for the three and nine
months ended March 31, 2009.
Three Months Ended March 31,
2009
Net delivered sales for the quarter ended March 31, 2009
amounted to $140.2 million as compared to $235.9 million in the
prior year quarter. Net delivered sales for the Company�s Retail
division were $103.3 million as compared to $172.8 million in the
prior year quarter. Retail division comparable delivered sales were
down 41.8% as compared to the prior year quarter. Wholesale sales
were $88.1 million, as compared to $156.3 million in the prior year
quarter.
For the quarter ended March 31, 2009, diluted loss per share
amounted to $1.69 on a loss of $48.7 million, which includes a
goodwill impairment charge based on our best estimate of $30.6
million net of tax ($1.06 per diluted share), and $4.6 million in
restructuring and impairment charges net of tax ($0.16 per diluted
share) due to previously announced actions. Excluding these
impairment and restructuring charges, diluted loss per share was
$0.46 on $13.4 million in net loss. This compares to diluted
earnings per share and net income of $0.30 and $8.8 million,
respectively, in the prior year comparable period ($0.39 and $11.4
million, respectively, excluding restructuring and impairment
charges).
Nine Months Ended March 31,
2009
For the nine months ended March 31, 2009, net delivered sales
totaled $535.6 million as compared to $744.1 million in the prior
year comparable period. Net delivered sales for the Company�s
Retail division were $406.4 million as compared to $548.1 million
in the prior year. Retail division comparable delivered sales were
down 28.9% as compared to the prior year comparable period.
Wholesale sales were $318.2 million as compared to $468.5 in the
prior year.
For the nine months ended March 31, 2009, diluted loss per share
amounted to $1.24 on a net loss of $35.8 million, which includes a
goodwill impairment charge based on our best estimate of $30.6
million net of tax, and $3.5 million in restructuring and
impairment charges net of tax due to previously announced actions.
Excluding these impairment and restructuring charges, diluted loss
per share was $0.06 on $1.6 million in net loss. This compares to
diluted earnings per share and net income of $1.58 and $47.0
million, respectively, in the prior year comparable period ($1.67
and $49.5 million, respectively, excluding restructuring and
impairment charges).
Revolver Termination
The Company announced that it has initiated the termination of
the $100 million cash flow based revolving credit facility. It
expects to complete an asset based revolving credit facility in the
coming weeks that is expected to provide greater flexibility,
though the Company has no plans to use the facility in the near
term.
Farooq Kathwari, Chairman and CEO, commented, �This was a
challenging quarter, with major declines in sales and
profitability. As stated in our April 21st press release, during
this period of sharp decline in consumer confidence and major
competitive home furnishings liquidations, we improved many aspects
of our business. We introduced new products � many with
eco-friendly finishes; maintained a strong national advertising
presence; launched a cutting-edge new website; created a Membership
Rewards program, and offered strong finance options. We also took
major steps to reduce our costs and expenses, and on an annual
basis, reduced over $100 million from our underlying cost
structure. We have reduced our inventories during the quarter by
$13.5 million and ended with a $51 million cash balance. We
maintained a cash dividend, although at a reduced level.�
Mr. Kathwari continued, �Our decision to terminate the $100
million unsecured revolving credit facility expiring July 2010 and
replace it in the coming weeks with a secured three-year facility
of about $60 million, stems from our desire to have in place a
revolver that provides greater flexibility. We have also recorded
this quarter a charge for our best estimate of the impairment
against the recorded value of goodwill. This goodwill has
accumulated over many years. With this non-cash charge, we have
eliminated entirely the goodwill in the Retail side of the
business. However, no impairment charge was warranted for the
wholesale division or our trade name.�
Commenting further, Mr. Kathwari stated, �Although the economic
environment remains very difficult, we are pleased that the Retail
environment seems to show some indications of improvement.
Accordingly, we have launched aggressive new initiatives to build
sales. On April 23rd, we introduced a major marketing campaign
entitled �Celebrating American Innovation� to showcase the key
elements that combine to create the unique Ethan Allen value
proposition. �Celebrating American Innovation� will encompass a
number of important initiatives. Last week we kicked off the
campaign by reintroducing new, eco-friendly, and other selected
products at special �celebration� pricing through June 15, 2009. A
list of celebration products can be found at ethanallen.com. In the next nine months,
�Celebrating American Innovation� will highlight the many ways we
are innovating today, including maintaining an American
manufacturing base � with about 65% of our products made in
America. The campaign will focus on our quality and craftsmanship.
It will also communicate the distinctive nature of our professional
design service, which is free to our clients and includes visits to
their home. In addition, the campaign will draw attention to our
uncommon � and valuable -- free local white glove delivery and
set-up service. And the campaign will vigorously project an Ethan
Allen that has aggressively introduced technology to provide better
and faster service of all kinds.�
�We are also continuing aggressively to refine and grow our
retail presence, making sure that we have the right locations and
the right size Design Center for each location. This fiscal year we
and our licensees have opened 14 Design Centers, including three in
our Design Studio format, and plan to open an additional 14 Design
Centers in the next nine months.�
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 290 design centers in the United States and abroad, of
which 159 are Company owned. Ethan Allen owns eight manufacturing
facilities in the United States, which include two sawmills, and
one cut and sew factory in Mexico.
The Company will conduct a Conference Call at 11:00 AM (Eastern)
on Thursday, April 30th. The live webcast and replay are accessible
via the Company�s website at http://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. Condensed Consolidated
Statements of Operations (In thousands, except per share
amounts) � � � � � � � � Three Months Nine Months
Ended March
31,
Ended March 31, �
2009 � �
2008 �
2009 � �
2008
(unaudited) (unaudited) � Net sales $ 140,221 $ 235,901 $ 535,620 $
744,138 Cost of sales �
74,171 � �
110,714 �
255,828 � �
346,041 Gross profit 66,050 125,187 279,792 398,097
Operating expenses: Selling 42,251 56,112 146,274 171,290 General
& administrative 42,781 49,502 131,806 145,940 Restructuring
& impairment charges �
55,725 � �
3,993 �
54,121 � �
3,993
Total operating expenses �
140,757 � �
109,607 �
332,201 � �
321,223 Operating income (loss) (74,707 ) 15,580
(52,409 ) 76,874 Interest & other miscellaneous income 806
1,375 3,019 6,478 Interest & other related financing costs �
2,985 � �
2,914 �
8,818 � �
8,793 Income (loss) before income tax expense (76,886
) 14,041 (58,208 ) 74,559 Income tax expense (benefit) �
(28,212 ) �
5,195 �
(22,444 ) �
27,587 Net
income (loss)
$ (48,674 )
$ 8,846 $
(35,764 ) $
46,972 �
Basic earnings per share:
Net income (loss) per share
$ (1.69
) $ 0.31 $
(1.24 ) $ 1.59
Basic weighted average shares outstanding 28,861 28,909 28,768
29,461
�
Diluted earnings per share:
Net income per (loss) share
$ (1.69
) $ 0.30 $
(1.24 ) $ 1.58
Diluted weighted average shares outstanding 28,861 29,049 28,768
29,685 �
Ethan Allen Interiors Inc. Condensed
Consolidated Balance Sheets Unaudited (In thousands) � �
� � March 31, June 30,
Assets 2009
2008 Current Assets: Cash and cash equivalents $
51,159 $ 74,376 Accounts receivable, net 10,434 12,672 Inventories
174,310 186,265 Prepaid expenses and other current assets 28,425
32,860 Deferred income taxes �
4,865 �
4,005 Total current assets 269,193 310,178 � Property,
plant, and equipment, net 347,744 350,432 Intangible assets, net
45,156 96,823 Other assets �
3,945 �
4,540 Total Assets
$ 666,038
$ 761,973 �
Liabilities and
Shareholders� Equity Current Liabilities: Current maturities of
long-term debt $ 42 $ 41 Customer deposits 31,200 47,297 Accounts
payable 19,621 26,444 Accrued expenses and other current
liabilities �
60,307 �
61,720 Total
current liabilities 111,170 135,502 � Long-term debt 203,077
202,988 Other long-term liabilities 21,059 20,383 Deferred income
taxes �
6,579 �
27,327 Total liabilities
341,885 386,200 � Shareholders� equity �
324,153 �
375,773 Total Liabilities and Shareholders� Equity
$ 666,038 $
761,973 �
Ethan Allen Interiors Inc.
Selected Financial Information Unaudited (In
millions) �
Selected Consolidated Financial Data:
� �
Three Months Ended
� �
Nine Months Ended
3/31/09
�
3/31/08
3/31/09
�
3/31/08
Net Sales $ 140.2 $ 235.9 $ 535.6 $ 744.1 Gross Margin 47.1% 53.1%
52.2% 53.5% Operating Margin -53.3% 6.6% -9.8% 10.3% Operating
Margin (ex restructuring & impairment charge ) -13.5% 8.3% 0.3%
10.9% Net Income (loss) $ (48.7) $ 8.8 $ (35.8) 47.0 Net Income
(loss)(ex restructuring & impairment charge) $ (13.4) $ 11.4 $
(1.6) $ 49.5 � Operating Cash Flow $ (1.9) $ 19.9 $ 13.8 $ 67.3
Capital Expenditures $ 4.3 $ 16.0 $ 20.5 $ 46.3 Acquisitions $ 0.1
$ - $ 0.7 $ 6.8 Treasury Stock Repurchases (settlement date basis)
$ - $ 8.4 $ - $ 73.2 � EBITDA $ (67.7) $ 22.2 $ (31.1) $ 97.9
EBITDA as % of Net Sales -48.3% 9.4% -5.8% 13.2% EBITDA (ex
restructuring & impairment charge ) $ (12.0) $ 26.2 $ 23.0 $
101.9 EBITDA as % of Net Sales (ex restructuring & impairment
charge ) -8.5% 11.1% 4.3% 13.7%
Selected Financial Data by Business
Segment:
� � � � � � � � � �
Three Months Ended Nine
Months Ended
Retail
�
3/31/09 �
3/31/08 �
3/31/09 �
3/31/08 Net Sales $ 103.3 $
172.8 $ 406.4 $ 548.1 Operating Margin -69.6% -4.9% -19.2% -0.2%
Operating Margin (ex restructuring & impairment charge ) -21.0%
-2.6% -7.4% 0.5% �
Three Months Ended Nine
Months Ended
Wholesale
�
3/31/09 �
3/31/08 �
3/31/09 �
3/31/08 Net Sales $ 88.1 $
156.3 $ 318.2 $ 468.5 Operating Margin -6.9% 17.1% 4.5% 17.0%
Operating Margin (ex restructuring & impairment charge ) -0.7%
17.1% 6.4% 17.0% �
Ethan Allen Interiors
Inc.
GAAP Reconciliation Three and Nine Months Ended March 31,
2009 and 2008 (in thousands, except per share amounts) �
� �
Three Months Ended Nine Months Ended March
31, March 31, 2009 �
2008 2009 �
2008
Net Income / Earnings Per
Share
Net income (loss)
$
(48,674)
$ 8,846
$
(35,764)
$ 46,972 Add: restructuring and impairment charge, net of related
tax effect
35,278 �
2,516
34,156 �
2,516 Net income (loss)
excluding restructuring and impairment charge
$
(13,396)
$ 11,362
$
(1,608)
$ 49,488 � Earnings (loss) per basic
share
$
(1.69)
$ 0.31
$
(1.24)
$ 1.59 Earnings (loss) per basic share
excluding restructuring and impairment charge
$
(0.46)
$ 0.39
$
(0.06)
$ 1.68 Basic weighted average shares
outstanding 28,861 28,909 28,768 29,461 � Earnings (loss) per
diluted share
$
(1.69)
$ 0.30
$
$ (1.24) $ 1.58 Earnings
(loss) per diluted share excluding restructuring and impairment
charge
$
(0.46)
$ 0.39
$
(0.06)
$ 1.67 Diluted weighted average shares
outstanding 28,861 29,046 28,768 29,685 �
Consolidated Operating Income / Operating
Margin
Operating income (loss)
$
(74,707)
$ 15,580
$
(52,409)
$ 76,874 Add: restructuring and impairment charge
55,725 �
3,993 54,121 �
3,993 Operating income (loss) (excluding restructuring
and impairment charge
$
(18,982)
$ 19,573
$
1,712
$ 80,867 � Net sales
$
140,221
$ 235,901
$
535,620
$ 744,138 Operating margin
-53.3% �
6.6% -9.8% �
10.3% Operating margin excluding restructuring and
impairment charge
-13.5% �
8.3%
0.3% �
10.9% �
Wholesale Operating Income / Operating
Margin
Wholesale operating income (loss)
$
(6,068)
$ 26,676
$
14,396
$ 79,832 Add: restructuring and impairment charge
5,473 �
- 5,881 �
- Wholesale operating income (loss) excluding
restructuring and impairment charge
$
(595)
$ 26,676
$
20,277
$ 79,832 Wholesale net sales
$
88,072
$ 156,269
$
318,215
$ 468,522 Wholesale operating margin
-6.9% �
17.1% 4.5% �
17.0% Wholesale operating margin excluding
restructuring and impairment charge
-0.7% �
17.1% 6.4% �
17.0% �
Retail Operating Income / Operating
Margin
Retail operating income (loss)
$
(71,920)
$ (8,544)
$
(78,156)
$ (1,294) Add: restructuring and impairment charge
50,252 �
3,993 48,240 �
3,993 Retail operating income (loss) excluding
restructuring and impairment charge
$
(21,668)
$ (4,551)
$
(29,916)
$ 2,699 Retail net sales
$
103,305
$ 172,779
$
406,358
$ 548,112 Retail operating margin
-69.6% �
-4.9% -19.2% �
-0.2% Retail operating margin excluding restructuring
and impairment charge
-21.0% �
-2.6%
-7.4% �
0.5% �
EBITDA
Net income (loss)
$
(48,674)
$ 8,846
$
(35,764)
$ 46,972 Add: interest expense, net 2,704 2,173 7,777 5,256 Add:
income tax expense (benefit) (28,212) 5,195 (22,444) 27,587 Add:
depreciation and amortization
6,477 �
5,991 19,285 �
18,077 EBITDA
$
(67,705)
$ 22,205
$
(31,146)
$ 97,892 Net sales
$
140,221
$ 235,901
$
535,620
$ 744,138 EBITDA as % of net sales
-48.3% �
9.4% -5.8% �
13.2% � EBITDA
$
(67,705)
$ 22,205
$
(31,146)
$ 97,892 Add: restructuring and impairment charge
55,725 �
3,993 54,121 �
3,993 EBITDA excluding restructuring and impairment
charge
$
(11,980)
$ 26,198
$
22,975
$ 101,885 Net sales
$
140,221
$ 235,901
$
535,620
$ 744,138 EBITDA as % of net sales
excluding restructuring and impairment charge
-8.5% �
11.1% 4.3% �
13.7%
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