Ethan Allen Interiors Inc, a manufacturer and retailer of high-end furniture, has reported a fall in sales and a loss in operating results for the three and six months ended December 31, 2009. Some of the loss is attributable to restructuring, including the closing of the manufacturing operations in its Beecher Falls, Vermont, plant, which resulted in the loss of 260 employees last summer. The Orleans plant was not affected.
Net delivered sales for the quarter ended December 31, 2009 amounted to $143.3 million as compared to $189.6 million in the prior year quarter. Net delivered sales for the Company s Retail division were $107.1 million compared with $147.2 million the prior year quarter. Wholesale net sales were $84.5 million versus $108.8 million the prior year quarter. Comparable Ethan Allen design center net delivered sales were 25.3% lower than the prior year quarter while comparable written orders were 6.1% lower. The Company s Retail backlog has increased 34% and the Wholesale backlog is up 54% from the prior year second quarter.
For the quarter ended December 31, 2009, diluted loss per share amounted to $0.12 on a loss of $3.3 million, which includes $3.9 million in transition costs and a $0.8 million restructuring and impairment charge for previously announced actions. This compares to diluted earnings per share and net income of $0.19 and $5.5 million, respectively, for the prior year. Excluding the impact of the transition costs and restructuring and impairment charges and the impact of tax valuation allowances recorded, diluted loss per share amounted to $0.06 for the current quarter.
Six Months Ended December 31, 2009
For the six months ended December 31, 2009, net delivered sales totaled $279.5 million as compared to $395.4 million in the prior year comparable period. Net delivered sales for the Company s Retail division were $210.3 million compared with $303.1 million the prior year. Wholesale net sales were $165.8 million versus $230.1 million the prior year.
For the six months ended December 31, 2009, diluted loss per share amounted to $0.58 on a loss of $16.9 million, which includes $12.4 million in transition costs and a $1.6 million restructuring and impairment charges for previously announced actions. This compares to diluted earnings per share and net income of $0.45 and $12.9 million, respectively, for the prior year, which included a restructuring benefit of $1.6 million due to the gain on the sale of properties closed in fiscal 2008. Excluding the impact of the transition costs and restructuring and impairment charges in both periods and the impact of tax valuation allowances recorded, diluted loss per share amounted to $0.25 in the current period compared to diluted earnings per share of $0.41 in the prior year comparable period.
Farooq Kathwari, Chairman, President and CEO commented, The challenges of the past year have provided us an opportunity to significantly strengthen many elements of our vertically integrated enterprise while at the same time increasing our cash position from June 30 by 44% to $76 million at December 31, 2009.
Kathwari continued, The consolidation and restructuring initiatives did result in lower delivered sales in the December quarter while increasing our backlogs. Our plants, retail and logistics have absorbed most of the operational changes and transition costs during the last six months. This includes the training of 274 new upholstery associates and the conversion of our case goods products to custom. We expect to significantly lower these costs in the third and fourth quarters of this fiscal year."
Kathwari added, We have strong marketing initiatives in place. While we need to remain cautious, we are continuing with our plans to increase production in both our domestic wood and upholstery products. We will discuss these efforts as well as our other initiatives in detail during our conference call.
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 six manufacturing facilities in the United States, which includes one sawmill, and one manufacturing facility in Mexico, and manufactures approximately sixty-five percent of its products in its United States plants. For more information on Ethan Allen s products and services, visit ethanallen.com.
At A Glance
Ethan Allen Interiors Inc.
Headquarters:
Danbury, Connecticut
Website:
http://www.ethanallen.com
CEO:
Farooq Kathwari
Employees:
6,400
Ticker:
ETH (NYSE)
Revenues:
$980 million (2008)
Net Income:
$58 million (2008)
Source: via Business Wire
Updated 08/04/2008 by company
Ethan Allen Interiors Inc.
Selected Financial Information
Unaudited
(in thousands, except per share amounts)
Three Months Ended
Six Months Ended
12/31/09
12/31/08
12/31/09
12/31/08
Net sales
$
143,302
$
189,558
$
279,492
$
395,399
Cost of sales
74,278
87,757
152,159
181,657
Gross profit
69,024
101,801
127,333
213,742
Operating expenses:
Selling
33,801
48,721
67,406
104,023
General and administrative
39,729
42,967
79,709
89,025
Restructuring and impairment charge
777
26
1,589
(1,604
)
Total operating expenses
74,307
91,714
148,704
191,444
Operating income (loss)
(5,283
)
10,087
(21,371
)
22,298
Interest and other miscellaneous income
1,020
1,113
1,817
2,213
Interest expense and other related financing costs
2,978
2,932
5,959
5,833
Income (loss) before income taxes
(7,241
)
8,268
(25,513
)
18,678
Income tax expense (benefit)
(3,903
)
2,780
(8,596
)
5,768
Net income (loss)
$
(3,338
)
$
5,488
$
(16,917
)
$
12,910
Basic earnings per common share:
Net income (loss) per basic share
$
(0.12
)
$
0.19
$
(0.58
)
$
0.45
Basic weighted average shares outstanding
28,917
28,739
28,922
28,721
Diluted earnings per common share:
Net income (loss) per diluted share
$
(0.12
)
$
0.19
$
(0.58
)
$
0.45
Diluted weighted average shares outstanding
28,917
28,739
28,922
28,793
Ethan Allen Interiors Inc.
Condensed Consolidated Balance Sheets
Unaudited
(in thousands)
December 31,
June 30,
2009
2009
Assets
Current assets:
Cash and cash equivalents
$
76,138
$
52,960
Accounts receivable, net
12,581
13,086
Inventories
141,991
156,519
Prepaid expenses & other current assets
10,536
21,060
Deferred income taxes
14,899
8,077
Total current assets
256,145
251,702
Property, plant and equipment, net
313,528
333,599
Intangible assets, net
45,128
45,128
Other assets
17,669
16,056
Total Assets
$
632,470
$
646,485
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debt
$
43
$
42
Customer deposits
36,573
31,691
Accounts payable
23,236
22,199
Accrued expenses & other current liabilities
56,251
58,531
Total current liabilities
116,103
112,463
Long-term debt
203,165
203,106
Other long-term liabilities
25,323
24,993
Total liabilities
344,591
340,562
Shareholders' equity
287,879
305,923
Total Liabilities and Shareholders' Equity
$
632,470
$
646,485
Ethan Allen Interiors Inc.
Selected Financial Information
Unaudited
(in millions)
Selected Consolidated Financial Data:
Three Months Ended
Six Months Ended
12/31/09
12/31/08
12/31/09
12/31/08
Net sales
$
143.3
$
189.6
$
279.5
$
395.4
Gross margin
48.2%
53.7%
45.6%
54.1%
Operating margin
-3.7%
5.3%
-7.6%
5.6%
Operating margin (ex restructuring, impairment &
plant transition charges )
-0.4%
5.3%
-2.6%
5.2%
Net income (loss)
($3.3)
$
5.5
($16.9)
$
12.9
Net income (loss) (ex restructuring, impairment &
plant transition charges )
($1.6)
$
5.5
($7.3)
$
11.8
Operating cash flow
$
3.9
($2.4)
$
20.8
$
15.7
Capital expenditures
$
2.8
$
5.1
$
5.3
$
16.1
Acquisitions
$
0.0
$
0.3
$
0.0
$
0.6
Treasury stock repurchases (settlement
date basis)
$
0.0
$
0.0
$
0.0
$
0.0
EBITDA
$
1.1
$
17.3
($1.7)
$
36.6
EBITDA as % of net sales
0.8%
9.1%
-0.6%
9.2%
EBITDA (ex restructuring, impairment and
plant transition charges )
$
5.8
$
17.3
$
5.7
$
35.0
EBITDA as % of net sales (ex restructuring,
impairment and plant transition charges )
4.0%
9.2%
2.0%
8.8%
Selected Financial Data by Business Segment:
Three Months Ended
Six Months Ended
12/31/09
12/31/08
12/31/09
12/31/08
Retail
Net sales
$
107.1
$
147.2
$
210.3
$
303.1
Operating margin
-9.1%
-2.2%
-10.1%
-2.1%
Operating margin (ex restructuring, impairment &
plant transition charges )
-8.1%
-2.1%
-9.2%
-2.7%
Wholesale
Net sales
$
84.5
$
108.8
$
165.8
$
230.1
Operating margin
1.2%
7.9%
-2.2%
8.9%
Operating margin (ex restructuring, impairment &
plant transition charges )
5.4%
7.9%
5.2%
9.1%
Ethan Allen Interiors Inc.
GAAP Reconciliation
Three and Six Months Ended December 31, 2009 and 2008
Unaudited
(in thousands, except per share amounts)
Three Months Ended
Six Months Ended
December 31,
December 31,
2009
2008
2009
2008
Net Income / Earnings Per Share
Net income (loss)
$
(3,338)
$
5,488
$
(16,917)
$
12,910
Add: restructuring, impairment and plant transition charges
(credit), net of related tax effect
1,710
17
9,603
(1,109)
Net income (loss) (excluding restructuring impairment and
plant transition charges)
$
(1,628)
$
5,505
$
(7,314)
$
11,801
Earnings (loss) per basic share
$
(0.12)
$
0.19
$
(0.58)
$
0.45
Earnings (loss) per basic share (excluding restructuring,
impairment and plant transition charges (credit))
$
(0.06)
$
0.19
$
(0.25)
$
0.41
Basic weighted average shares outstanding
28,917
28,739
28,922
28,721
Earnings (loss) per diluted share
$
(0.12)
$
0.19
$
(0.58)
$
0.45
Earnings (loss) per diluted share (excluding restructuring,
impairment and plant transition charges (credit))
$
(0.06)
$
0.19
$
(0.25)
$
0.41
Diluted weighted average shares outstanding
28,917
28,739
28,922
28,793
Consolidated Operating Income / Operating Margin
Operating income (loss)
$
(5,283)
$
10,087
$
(21,371)
$
22,298
Add: restructuring, impairment and plant transition
charges (credit)
4,677
26
13,995
(1,604)
Operating income (loss) (excluding restructuring,
impairment and plant transition charges)
$
(606)
$
10,113
$
(7,376)
$
20,694
Net sales
$
143,302
$
189,558
$
279,492
$
395,399
Operating margin
-3.7%
5.3%
-7.6%
5.6%
Operating margin (excluding restructuring, impairment
and plant transition charges)
-0.4%
5.3%
-2.6%
5.2%
Wholesale Operating Income / Operating Margin
Wholesale operating income (loss)
$
1,022
$
8,580
$
(3,638)
$
20,465
Add: restructuring, impairment and plant transition
charges (credit)
3,523
-
12,179
408
Wholesale operating income (excluding restructuring,
impairment and plant transition charges)
$
4,545
$
8,580
$
8,541
$
20,873
Wholesale net sales
$
84,499
$
108,848
$
165,780
$
230,143
Wholesale operating margin
1.2%
7.9%
-2.2%
8.9%
Wholesale operating margin (excluding restructuring,
impairment and plant transition charges)
5.4%
7.9%
5.2%
9.1%
Retail Operating Income / Operating Margin
Retail operating income (loss)
$
(9,792)
$
(3,185)
$
(21,141)
$
(6,237)
Add: restructuring, impairment and plant transition
charges (credit)
1,154
26
1,816
(2,012)
Retail operating income (loss) (excluding restructuring,
impairment and plant transition charges (credit))
$
(8,638)
$
(3,159)
$
(19,325)
$
(8,249)
Retail net sales
$
107,123
$
147,183
$
210,273
$
303,053
Retail operating margin
-9.1%
-2.2%
-10.1%
-2.1%
Retail operating margin (excluding restructuring,
impairment and plant transition charges)
-8.1%
-2.1%
-9.2%
-2.7%
Ethan Allen Interiors Inc.
GAAP Reconciliation
Three and Six Months Ended December 31, 2009 and 2008
Unaudited
(in thousands, except per share amounts)
Three Months Ended
Six Months Ended
December 31,
December 31,
2009
2008
2009
2008
EBITDA
Net income (loss)
$
(3,338)
$
5,488
$
(16,917)
$
12,910
Add: interest expense (income), net
2,731
2,565
5,497
5,073
Add: income tax expense (benefit)
(3,903)
2,780
(8,596)
5,768
Add: depreciation and amortization (including plant
accelerated depreciation)
5,633
6,490
18,330
12,808
EBITDA
$
1,123
$
17,323
$
(1,686)
$
36,559
Net sales
$
143,302
$
189,558
$
279,492
$
395,399
EBITDA as % of net sales
0.8%
9.1%
-0.6%
9.2%
EBITDA
$
1,123
$
17,323
$
(1,686)
$
36,559
Add: restructuring, impairment and plant transition
charges (credit)
4,677
26
7,365
(1,604)
Adjusted EBITDA
$
5,800
$
17,349
$
5,679
$
34,955
Net sales
$
143,302
$
189,558
$
279,492
$
395,399
Adjusted EBITDA as % of net sales
4.0%
9.2%
2.0%
8.8%
Source: Eathan Allen. 1.28.2010. DANBURY, Conn.--(BUSINESS WIRE)--
This press release should be read in conjunction with the Company s Annual Report on Form 10-K/A for the year ended June 30, 2009 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.