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Ethan Allen Reports Results For Quarter And Fiscal Year Ended June 30, 2012

Stocks in this article: ETH

Twelve Months Ended June 30, 2012

Net sales for the twelve months ended June 30, 2012 increased 7.4% over the prior year to $729.4 million. The Company’s Retail division net sales increased 10.6% to $559.4 million including comparable design center net sales growth of 8.4%. Written orders booked during the twelve month period by the Retail division were 8.9% greater than the prior year quarter including comparable design center order growth of 6.4%.

Net income for the twelve months ended June 30, 2012 was $49.7 million or $1.71 per diluted share compared with the prior year of $29.3 million or $1.01 per diluted share. During the third quarter the Company reversed deferred tax asset valuation allowances and certain other tax reserves resulting in $23.9 million in non-cash tax benefits. Excluding these benefits and other special items in both periods, net income for the twelve months ended June 30, 2012 was $27.5 million or $0.94 per diluted share compared with $16.9 million or $0.58 per diluted share in the prior year period.

Mr. Kathwari concluded, “We are well positioned to grow. We have substantially strengthened the main areas of our vertically integrated structure including our product offerings, our advertising and communications, our interior design Retail network, our manufacturing and logistics operations, and in the technology employed throughout our business. We will discuss our many initiatives further on our conference call on Thursday.”

Analyst Conference Call

The Company will conduct a conference call at 11:00 AM (Eastern) on Thursday, July 26 th to discuss the financial results and its business initiatives. The live webcast and replay are accessible via the Company’s website at http://ethanallen.com/investors.

About Ethan Allen

Ethan Allen Interiors Inc. is a leading interior design company and manufacturer and retailer of quality home furnishings. The company offers free interior design service to its clients and sells a full range of furniture products and decorative accessories through ethanallen.com and a network of approximately 300 Design Centers in the United States and abroad. Ethan Allen owns and operates eight manufacturing facilities including five manufacturing plants and one sawmill in the United States plus two plants in Mexico and Honduras. Approximately seventy percent of its products are made in its North American plants. For more information on Ethan Allen's products and services, visit ethanallen.com.

This press release should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2011 (the “2011 Form 10-K”) 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 including specifically, and without limitation, those set forth in Part I, Item 1A “Risk Factors” of the 2011 Form 10-K. 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

Twelve Months Ended

06/30/12

06/30/11

06/30/12

06/30/11

 
Net sales $185.3 $178.0 $729.4 $679.0
Gross margin 53.9% 52.9% 53.5% 51.5%
Operating margin 7.7% 6.4% 6.8% 4.7%
Operating margin (excluding special items*) 7.7% 6.8% 7.1% 5.0%
Net income $7.3 $7.2 $49.7 $29.3

Net income (excluding special items* and unusual income tax effects)

$7.8 $6.1 $27.5 $16.9
Operating cash flow $9.9 $22.6 $37.7 $63.2
Capital expenditures $3.0 $3.4 $22.9 $9.1
Acquisitions $0.0 $2.3 $0.5 $3.0

Treasury stock repurchases (settlement date basis)

$0.5 $0.0 $1.4 $5.4
 
EBITDA $18.9 $15.9 $68.3 $57.3
EBITDA as % of net sales 10.2% 8.9% 9.4% 8.4%
 
EBITDA (excluding special items*) $18.8 $16.6 $70.4 $57.6
EBITDA as % of net sales (excluding special items*) 10.1% 9.4% 9.6% 8.5%
 
 
 
 

Selected Financial Data by Business Segment:

Three Months Ended

Twelve Months Ended

06/30/12

06/30/11

06/30/12

06/30/11

Retail

Net sales $143.7 $136.8 $559.4 $505.9
Operating margin -0.7% -1.9% -2.1% -3.0%
Operating margin (excluding special items*) -0.7% -1.3% -1.7% -2.8%
 
 

Wholesale

Net sales $112.8 $110.5 $456.9 $422.9
Operating margin 13.2% 13.4% 14.1% 11.8%
Operating margin (excluding special items*) 13.2% 13.4% 14.1% 12.0%
 
* Special items consist of restructuring, impairment, transition charges and other certain items.
Related tax effects are calculated using a normalized income tax rate.
 
 
Ethan Allen Interiors Inc.
Condensed Consolidated Income Statements
Unaudited
(in thousands)
       
 
 

Three Months Ended

Twelve Months Ended

06/30/12

06/30/11

06/30/12

06/30/11

 
Net sales $ 185,316 $ 177,952 $ 729,373 $ 678,960
Cost of sales   85,407     83,803   339,085     329,500  
Gross profit 99,909 94,149 390,288 349,460
Operating expenses:
Selling 43,716 43,067 173,863 161,609
General and administrative 41,949 39,034 166,813 154,792
Restructuring and impairment charge   (90 )   733   (85 )   1,126  
Total operating expenses   85,575     82,834   340,591     317,527  
Operating income 14,334 11,315 49,697 31,933
Interest and other income 200 111 562 5,564
Interest expense   2,206     2,477   9,020     11,126  
Income before income taxes 12,328 8,949 41,239 26,371
Income tax expense (benefit)   5,029     1,774   (8,455 )   (2,879 )
Net income $ 7,299   $ 7,175 $ 49,694   $ 29,250  
 
Basic earnings per common share:
Net income per basic share $ 0.25 $ 0.25 $ 1.72 $ 1.02
Basic weighted average shares outstanding 28,856 28,772 28,824 28,758
 
Diluted earnings per common share:
Net income per diluted share $ 0.25 $ 0.25 $ 1.71 $ 1.01
Diluted weighted average shares outstanding 29,179 29,007 29,109 28,966
 
 
Ethan Allen Interiors Inc.
Condensed Consolidated Balance Sheets
Unaudited
(in thousands)
 
 
  June 30,   June 30,

2012

2011

 
Assets
Current assets:
Cash and cash equivalents $ 79,721 $ 78,519
Marketable securities 9,005 12,909
Accounts receivable, net 14,919 15,036
Inventories 155,739 141,692
Prepaid expenses & other current assets 21,261 20,372
Deferred income taxes   2,147   -
Total current assets 282,792 268,528
 
Property, plant and equipment, net 295,695 294,853
Intangible assets, net 45,128 45,128
Restricted cash and investments 15,416 16,391
Other assets   5,757   3,425
 
Total Assets $ 644,788 $ 628,325
 
 
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debt 250 19
Customer deposits 65,465 62,649
Accounts payable 27,315 26,958
Accrued expenses & other current liabilities   58,047   64,990
Total current liabilities 151,077 154,616
 
Long-term debt 154,250 165,013
Other long-term liabilities 17,593 18,975
Deferred income taxes   -   8,034
Total liabilities 322,920 346,638
 
Shareholders' equity   321,868   281,687
 
Total Liabilities and Shareholders' Equity $ 644,788 $ 628,325
 
 
Ethan Allen Interiors Inc.
GAAP Reconciliation
Three and Twelve Months Ended June 30, 2012 and 2011

Unaudited

(in thousands, except per share amounts)
 
  Three Months Ended   Twelve Months Ended
June 30, June 30,
2012   2011 2012   2011

Net Income / Earnings Per Share

   
Net income $ 7,299 $ 7,175 $ 49,694 $ 29,250
Special items net of related tax effects * (57 ) 465 1,318 194
Unusual income tax effects   529       (1,492 )   (23,508 )     (12,505 )

Net income (excluding special items* and unusual income tax effects)

$ 7,771     $ 6,148   $ 27,504     $ 16,939  
Basic weighted average shares outstanding 28,856 28,772 28,824 28,758
Earnings per basic share $ 0.25     $ 0.25   $ 1.72     $ 1.02  

Earnings per basic share (excluding special items* and unusual income tax effects)

$ 0.27     $ 0.21   $ 0.95     $ 0.59  
 
Diluted weighted average shares outstanding 29,179 29,007 29,109 28,966
Earnings per diluted share $ 0.25     $ 0.25   $ 1.71     $ 1.01  
Earnings per diluted share (excluding special
items* and unusual income tax effects) $ 0.27     $ 0.21   $ 0.94     $ 0.58  
 
 

Consolidated Operating Income / Operating Margin

Operating income $ 14,334 $ 11,315 $ 49,697 $ 31,933
Add: special items *   (90 )     733     2,075       1,805  
Operating income (excluding special items*) $ 14,244     $ 12,048   $ 51,772     $ 33,738  
 
Net sales $ 185,316     $ 177,952   $ 729,373     $ 678,960  
Operating margin   7.7 %     6.4 %   6.8 %     4.7 %
Operating margin (excluding special items*)   7.7 %     6.8 %   7.1 %     5.0 %
 

Wholesale Operating Income / Operating Margin

Wholesale operating income $ 14,852 $ 14,822 $ 64,436 $ 49,898
Add: special items   -       -     131       679  
Wholesale operating income (excluding special items*) $ 14,852     $ 14,822   $ 64,567     $ 50,577  
Wholesale net sales $ 112,846     $ 110,479   $ 456,915     $ 422,946  
Wholesale operating margin   13.2 %     13.4 %   14.1 %     11.8 %
Wholesale operating margin (excluding special items*)   13.2 %     13.4 %   14.1 %     12.0 %
 

Retail Operating Income / Operating Margin

Retail operating income (loss) $ (944 ) $ (2,577 ) $ (11,522 ) $ (15,344 )
Add: special items   (90 )     733     1,944       1,126  
Retail operating income (loss) (excluding special items*) $ (1,034 )   $ (1,844 ) $ (9,578 )   $ (14,218 )
Retail net sales $ 143,730     $ 136,844   $ 559,417     $ 505,910  
Retail operating margin   -0.7 %     -1.9 %   -2.1 %     -3.0 %
Retail operating margin (excluding special items*)   -0.7 %     -1.3 %   -1.7 %     -2.8 %
 
 
Ethan Allen Interiors Inc.
GAAP Reconciliation
Three and Twelve Months Ended June 30, 2012 and 2011
Unaudited
(in thousands, except per share amounts)
 
  Three Months Ended   Twelve Months Ended
June 30, June 30,
2012   2011 2012   2011
   

EBITDA

Net income $ 7,299 $ 7,175 $ 49,694 $ 29,250
Add: interest expense, net 2,059 2,269 8,478 10,076
Add: income tax expense (benefit) 5,029 1,774 (8,455 ) (2,879 )
Add: depreciation and amortization   4,489       4,696     18,581       20,816  
EBITDA $ 18,876     $ 15,914   $ 68,298     $ 57,263  
Net sales $ 185,316     $ 177,952   $ 729,373     $ 678,960  
EBITDA as % of net sales   10.2 %     8.9 %   9.4 %     8.4 %
 
EBITDA $ 18,876 $ 15,914 $ 68,298 $ 57,263
Add: special items*   (90 )     733     2,075       305  
Adjusted EBITDA $ 18,786     $ 16,647   $ 70,373     $ 57,568  
Net sales $ 185,316     $ 177,952   $ 729,373     $ 678,960  
Adjusted EBITDA as % of net sales   10.1 %     9.4 %   9.6 %     8.5 %
 
* Special items consist of restructuring, impairment, transition charges and certain other items.
Related tax effects are calculated using a normalized income tax rate.




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