Exhibit 99.1
Ethan Allen Announces First Quarter Sales and Earnings
DANBURY, Conn.--(BUSINESS WIRE)--October 23, 2008--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 | ||
CONTACT:
Ethan Allen Interiors Inc.
Investor/ Media:
Peg Lupton, 203-743-8234