EXHIBIT 99.1

 

 

 

ETHAN ALLEN ANNOUNCES FIRST QUARTER SALES AND EARNINGS

 

DANBURY, CT., October 24, 2007 – Ethan Allen Interiors Inc. (“Ethan Allen” or the “Company”) (NYSE:ETH) today reported operating results for the three months ended September 30, 2007.

 

Net delivered sales for the quarter ended September 30, 2007 increased 2.4% to $248.7 million as compared to $242.8 million in the prior year quarter. Net delivered sales for the Company’s Retail division increased 10.1% to $182.8 million. Wholesale sales increased 0.4% to $156.3 million during that same period. Comparable Ethan Allen design center delivered sales increased 0.2% as compared to the prior year quarter.

 

For the quarter ended September 30, 2007, earnings per share amounted to $0.57 on net income of $17.5 million. This compares to earnings per share and net income of $0.26 and $8.5 million, respectively, in the prior year comparable period which included a September 2006 restructuring and impairment charge. Excluding the impact of this charge, prior period earnings per share amounted to $0.53 on net income of $17.2 million.

 

Farooq Kathwari, Chairman and CEO, commented: "We are pleased with our results for the first quarter ended September 30, 2007. Despite continued uncertainty with respect to the economy, concerns with respect to the consumer credit situation, and a softer overall environment for home furnishings retail, sales and net income for the quarter improved. Our quarterly earnings per share increased 7.5% to $0.57 from $0.53, ex-restructuring, in the prior year period, reflecting a higher gross margin, continued cost containment efforts and the benefit of share repurchases. The consolidated operating margin reflects the addition of 17 Company-owned design centers since September 2006 and continued implementation of our project management initiative, including related investments in recruiting and training programs. For the quarter ended September 30, 2007, the Company generated $41.5 million in operating cash, utilizing $12.5 million to fund capital expenditures associated, primarily, with the opening of new design centers and $38.3 million to repurchase 1.1 million shares of our common stock in the open market at an average cost per share of approximately $33.50. As previously announced, the Company’s Board of Directors increased the then remaining share repurchase authorization to 2.5 million shares in July. As of September 30, 2007, the Company had remaining authorization available to repurchase an additional 2.1 million shares.”

 

EXHIBIT 99.1

 

Mr. Kathwari continued: “We continue to make progress in our efforts to position Ethan Allen as a leading interior design company focused on providing solutions and service. As I have stated previously, our plan to achieve this objective involves: the strengthening of our recruiting and training programs in order to increase the professionalism of our retail management team; the development of stylish, high-quality products at good value; the continued repositioning of our retail network to more prominent locations; further enhancements to our advertising and marketing programs; and process improvements to enable faster delivery of our products to our customers. We believe it is these initiatives that provide us a distinct competitive advantage and an opportunity to grow our business.”

 

Commenting on current business trends, Mr. Kathwari stated: "While our first quarter results were promising, we are aware of the difficult economic environment that still exists. However, we remain cautiously optimistic with regard to our ability to continue to do relatively well as we move forward.”

 

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 310 design centers in the United States and abroad, of which 158 are Company-owned. Ethan Allen has 9 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, October 24^th. The live webcast and replay are accessible via the Company’s website at www.ethanallen.com/investors.

 

In addition, on October 29^th, the Company will host an investor conference at its headquarters in Danbury, Connecticut. In connection with this event, management will share its new style projections, products and marketing plan, all of which were recently introduced to the Company’s retail network. A live webcast of the event will also be available 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, 2007 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.

#######

 

EXHIBIT 99.1

 

Ethan Allen Interiors Inc.

Selected Financial Information

Unaudited

(In millions)

 

Selected Consolidated Financial Data:

 

			Three Months Ended
			9/30/07			9/30/06
Net Sales			$	248	.7	$	242	.8
Gross Margin				53	.7%		52	.0%
Operating Margin				11	.2%		5	.9%
Operating Margin (ex restructuring & impairment charges)				11	.2%		11	.6%
Net Income			$	17	.5	$	8	.5
Net Income (ex restructuring & impairment charges)			$	17	.5	$	17	.2
Operating Cash Flow			$	41	.5	$	36	.9
Capital Expenditures			$	12	.5	$	15	.7
Treasury Stock Repurchases (settlement date basis)			$	41	.7	$	17	.7
EBITDA			$	35	.1	$	20	.0
EBITDA as % of Net Sales				14	.1%		8	.2%
EBITDA (ex restructuring & impairment charges)			$	35	.1	$	33	.9
EBITDA as % of Net Sales (ex restructuring & impairment charges)				14	.1%		14	.0%

 

Selected Financial Data by Business Segment:

 

			Three Months Ended
Retail			9/30/07			9/30/06
Net Sales			$	182	.8	$	166	.0
Operating Margin				0	.5%		1	.7%

			Three Months Ended
Wholesale			9/30/07			9/30/06
Net Sales			$	156	.3	$	155	.6
Operating Margin				17	.1%		7	.3%
Operating Margin (ex restructuring & impairment charges)				17	.1%		16	.3%

 

 

EXHIBIT 99.1

 

Ethan Allen Interiors Inc.

Condensed Consolidated Statements of Operations

Unaudited

(In thousands, except per share amounts)

 

			Three Months Ended September 30,
			2007			2006
Net sales			$	248,727		$	242,823
Cost of sales				115,270			116,494
Gross Profit				133,457			126,329
Operating Expenses:
Selling				57,578			55,038
General and administrative				48,082			43,125
Restructuring and impairment charge				--			13,936
Total operating expenses				105,660			112,099
Operating Income				27,797			14,230
Interest and other miscellaneous income				2,922			2,232
Interest and other related financing costs				2,935			2,938
Income before income tax expense				27,784			13,524
Income tax expense				10,280			5,072
Net Income			$	17,504		$	8,452
Basic earnings per share:
Net income per share			$	0.58		$	0.27
Basic weighted average shares outstanding				30,084			31,815
Diluted earnings per share:
Net income per share			$	0.57		$	0.26
Diluted weighted average shares outstanding				30,464			32,631

 

 

EXHIBIT 99.1

 

Ethan Allen Interiors Inc.

Condensed Consolidated Balance Sheets

Unaudited

(In thousands)

 

			September 30, 2007			June 30, 2007
Assets
Current Assets:
Cash and cash equivalents			$	133,484		$	147,879
Accounts receivable, net				14,255			14,602
Inventories				181,297			181,884
Prepaid expenses and other current assets				29,572			33,104
Deferred income taxes				4,464			4,960
Total current assets				363,072			382,429
Property, plant, and equipment, net				326,460			322,185
Intangible assets, net				92,656			92,500
Other assets				5,246			5,484
Total Assets			$	787,434		$	802,598
Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of long-term debt			$	40		$	40
Customer deposits				56,216			52,072
Accounts payable				25,184			26,650
Accrued expenses and other current liabilities				68,125			68,677
Total current liabilities				149,565			147,439
Long-term debt				202,899			202,868
Other long-term liabilities				21,144			12,003
Deferred income taxes				30,199			30,646
Total liabilities				403,807			392,956
Shareholders' equity				383,627			409,642
Total Liabilities and Shareholders' Equity			$	787,434		$	802,598