EXHIBIT 99.1
| FOR IMMEDIATE RELEASE | Ethan Allen Interiors Inc. |
| Investor/Media Contact: Peg Lupton | |
| (203) 743-8234 | |
DANBURY, CT., January 18, 2006 -- Ethan Allen Interiors Inc. (“Ethan Allen” or the “Company”) (NYSE:ETH) today reported sales and earnings for the three and six months ended December 31, 2005.
Three and Six Month Results
Net delivered sales for the quarter ended December 31, 2005 increased 12.5% to $276.0 million from $245.3 million in the prior year quarter. Net delivered sales for the Company’s Retail division increased 15.5% to $180.0 million, while Wholesale sales increased 16.2% to $187.5 million during that same period. Comparable Ethan Allen store delivered sales increased 12.5% over the prior year quarter. During that same period, Retail division written sales increased 10.2% while comparable store written sales increased 6.3%.
For the six months ended December 31, 2005, net delivered sales increased 10.9% to $527.3 million from $475.6 million in the prior year comparable period. Net delivered sales for the Company’s Retail division increased 13.7% to $338.4 million, while Wholesale sales increased 13.4% to $366.0 million during that same period. Comparable Ethan Allen store delivered sales increased 10.8% over the prior year comparable period. During that same period, Retail division written sales increased 14.2% while comparable store written sales increased 10.9%.
For the quarter ended December 31, 2005, earnings per share increased 22.2% to $0.77 on net income of $26.2 million. This compares to earnings per share and net income of $0.63 and $23.1 million, respectively, in the prior year comparable period.
For the six months ended December 31, 2005, earnings per share, which includes a pre-tax restructuring and impairment charge of $4.2 million related to the Company’s planned conversion of one of its existing manufacturing facilities into a regional distribution center, amounted to $1.26 on net income of $43.3 million. This compares to earnings per share and net income of $1.14 and $41.9 million, respectively, in the prior year comparable period. Excluding the impact of the restructuring and impairment charge, earnings per share for the current period amounted to $1.34 on net income of $45.9 million.
EXHIBIT 99.1
Farooq Kathwari, Chairman and CEO, commented: “We are very pleased with our results for the quarter. We believe that the structural changes undertaken within our business during the past three years, including initiatives to enhance our product offerings, our manufacturing, sourcing and logistics activities, our retail network, and our marketing efforts, played an important role in our ability to increase sales more than 12%, increase operating income 21%, and increase earnings per share 22%. In addition, during the quarter, we generated $20 million of operating cash, returning that same amount to our shareholders through the repurchase of stock and the payment of quarterly dividends.”
Mr. Kathwari continued: “In addition to the factors mentioned above, delivered sales and earnings for the quarter were favorably impacted by the continued implementation of one of our strategic plans, referred to as “Mission Possible”, the objective of which is to reduce the lead time associated with the delivery of our products to the consumer. As a result of this initiative, we were able to substantially reduce our delivery time and backlog during the quarter, including orders that, if not for this initiative, would have likely resulted in delivered sales during the March fiscal quarter.”
Commenting on the outlook for the remainder of the fiscal year, Mr. Kathwari stated: “As mentioned previously, the quarter ended December 31, 2005 was a transitional quarter during which we made considerable progress with respect to a number of key initiatives, enabling us to reduce delivery times and increase shipments. While it has not been our practice to provide specific comments regarding quarterly earnings estimates, we have made an exception for next quarter in light of the effect that our initiatives had on second quarter results. For the fiscal third quarter ended March 31, 2006, we currently estimate that earnings per share will increase 8-12% over the prior year comparable period. Further, at this time, we believe that the current range of analyst estimates for the fiscal fourth quarter ended June 30, 2006 is within reach.”
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 an exclusive network of 313 retail stores in the United States and abroad, of which 132 are Company-owned. Ethan Allen has 11 manufacturing facilities, which include 2 sawmills, located throughout the United States.
The Company will conduct a Conference Call at 11:00 AM (Eastern) on Wednesday, January 18th. The live webcast and replay are accessible via the Company’s website at www.ethanallen.com/investors.
EXHIBIT 99.1
This press release should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2005 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.
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EXHIBIT 99.1
Ethan Allen Interiors
Inc.
Selected Financial Information
Unaudited
(In millions)
Selected Consolidated Financial Data:
| Three Months Ended |
Six Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 12/31/05 |
12/31/04 |
12/31/05 |
12/31/04 | |||||||||||
| Net Sales | $ | 276 | .0 | $ | 245 | .3 | $ | 527 | .3 | $ | 475 | .6 | ||
| Gross Margin | 50 | .7% | 48 | .7% | 50 | .5% | 48 | .3% | ||||||
| Operating Margin | 16 | .0% | 14 | .9% | 13 | .7% | 14 | .2% | ||||||
|
Operating Margin (ex restructuring & impairment charge) | 16 | .0% | 14 | .9% | 14 | .5% | 14 | .2% | ||||||
| Net Income | $ | 26 | .2 | $ | 23 | .1 | $ | 43 | .3 | $ | 41 | .9 | ||
|
Net Income (ex restructuring & impairment charge) | $ | 26 | .2 | $ | 23 | .1 | $ | 45 | .9 | $ | 41 | .9 | ||
Operating Cash Flow | $ | 20 | .5 | $ | 29 | .4 | $ | 66 | .1 | $ | 66 | .8 | ||
| Capital Expenditures | $ | 16 | .3 | $ | 7 | .9 | $ | 21 | .1 | $ | 15 | .4 | ||
| Treasury Stock Repurchases (settlement date basis) | $ | 14 | .3 | $ | 20 | .5 | $ | 51 | .1 | $ | 39 | .1 | ||
EBITDA | $ | 50 | .9 | $ | 43 | .1 | $ | 84 | .3 | $ | 79 | .4 | ||
| EBITDA as % of Net Sales | 18 | .4% | 17 | .6% | 16 | .0% | 16 | .7% | ||||||
| EBITDA (ex restructuring & impairment charge) | $ | 50 | .9 | $ | 43 | .1 | $ | 88 | .5 | $ | 79 | .4 | ||
|
EBITDA as % of Net Sales (ex restructuring & impairment charge) |
18 | .4% | 17 | .6% | 16 | .8% | 16 | .7% | ||||||
Selected Financial Data by Business Segment:
| Three Months Ended |
Six Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Retail |
12/31/05 |
12/31/04 |
12/31/05 |
12/31/04 | ||||||||||
| Net Sales | $ | 180 | .0 | $ | 155 | .8 | $ | 338 | .4 | $ | 297 | .5 | ||
| Operating Margin | 5 | .2% | 3 | .8% | 3 | .3% | 3 | .0% | ||||||
| Three Months Ended |
Six Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Wholesale |
12/31/05 |
12/31/04 |
12/31/05 |
12/31/04 | ||||||||||
| Net Sales | $ | 187 | .5 | $ | 161 | .3 | $ | 366 | .0 | $ | 322 | .7 | ||
| Operating Margin | 17 | .9% | 16 | .6% | 17 | .3% | 17 | .1% | ||||||
| Operating Margin (ex restructuring & impairment charge) | 17 | .9% | 16 | .6% | 18 | .5% | 17 | .1% | ||||||
EXHIBIT 99.1
Ethan Allen Interiors
Inc.
Condensed Consolidated Statements of Operations
(In
thousands, except per share amounts)
| Three Months Ended December 31, |
Six Months Ended December 31, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | |||||||||||
| (unaudited) |
(unaudited) | |||||||||||||
| Net sales | $ | 276,003 | $ | 245,252 | $ | 527,317 | $ | 475,598 | ||||||
Cost of sales | 136,149 | 125,808 | 260,923 | 245,772 | ||||||||||
| Gross profit | 139,854 | 119,444 | 266,394 | 229,826 | ||||||||||
Operating expenses: | ||||||||||||||
Selling | 54,511 | 47,678 | 107,951 | 91,842 | ||||||||||
General and administrative | 41,055 | 35,243 | 81,720 | 70,673 | ||||||||||
Restructuring and impairment charges | - | (52 | ) | 4,241 | (219 | ) | ||||||||
| Total operating expenses | 95,566 | 82,869 | 193,912 | 162,296 | ||||||||||
| Operating income | 44,288 | 36,575 | 72,482 | 67,530 | ||||||||||
Interest and other miscellaneous income | 1,161 | 1,301 | 1,203 | 1,246 | ||||||||||
Interest and other related financing costs | 2,974 | 138 | 3,402 | 287 | ||||||||||
| Income before income tax expense | 42,475 | 37,738 | 70,283 | 68,489 | ||||||||||
Income tax expense | 16,311 | 14,604 | 26,989 | 26,597 | ||||||||||
| Net income | $ | 26,164 | $ | 23,134 | $ | 43,294 | $ | 41,892 | ||||||
Basic earnings per share: | ||||||||||||||
Net income per share | $ | 0.79 | $ | 0.65 | $ | 1.29 | $ | 1.17 | ||||||
| Basic weighted average shares outstanding | 33,078 | 35,601 | 33,499 | 35,906 | ||||||||||
Diluted earnings per share: | ||||||||||||||
Net income per share | $ | 0.77 | $ | 0.63 | $ | 1.26 | $ | 1.14 | ||||||
| Diluted weighted average shares outstanding | 33,845 | 36,564 | 34,236 | 36,831 | ||||||||||
EXHIBIT 99.1
Ethan Allen Interiors
Inc.
Condensed Consolidated Balance Sheets
(In thousands)
| December 31, 2005 |
June 30, 2005 | |||||||
|---|---|---|---|---|---|---|---|---|
| (unaudited) |
||||||||
| Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 175,008 | $ | 3,448 | ||||
Accounts receivable, net | 22,870 | 28,019 | ||||||
Inventories | 194,491 | 186,479 | ||||||
Prepaid expenses and other current assets | 42,350 | 46,443 | ||||||
| Total current assets | 434,719 | 264,389 | ||||||
Property, plant, and equipment, net | 281,385 | 275,211 | ||||||
Intangible assets, net | 85,249 | 82,897 | ||||||
Other assets | 6,556 | 5,889 | ||||||
| Total Assets | $ | 807,909 | $ | 628,386 | ||||
| Liabilities and Shareholders' Equity | ||||||||
Current Liabilities: | ||||||||
|
Current maturities of long-term debt and capital lease obligations | $ | 221 | $ | 240 | ||||
Customer deposits | 48,618 | 53,654 | ||||||
Accounts payable | 33,999 | 19,352 | ||||||
Accrued expenses and other current liabilities | 60,462 | 60,720 | ||||||
| Total current liabilities | 143,300 | 133,966 | ||||||
Long-term debt | 202,687 | 12,270 | ||||||
Other long-term liabilities | 12,109 | 12,445 | ||||||
Deferred income taxes | 31,936 | 35,637 | ||||||
| Total liabilities | 390,032 | 194,318 | ||||||
Shareholders' equity | 417,877 | 434,068 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 807,909 | $ | 628,386 | ||||