Exhibit 99.1
ETHAN ALLEN REPORTS RESULTS FOR
QUARTER ENDED DECEMBER 31, 2013
DANBURY, CT - January 22, 2014 – Ethan Allen Interiors Inc. (NYSE: ETH) today reported operating results for the three and six months ended December 31, 2013. Please refer to the accompanying financial statements and reconciliations to non-GAAP measures discussed below.
Highlights:
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Second quarter net sales of $193.1 million increased 1% over the prior year | |
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Adjusted EPS in the second quarter was $0.41, up 5% on improved gross margin and adjusted operating profit margin | |
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Year to date comparable retail written business is 6.6% higher than the prior year including a 1.8% decline in the seasonally slower second quarter | |
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Ending backlogs are strong including a 14% increase in the Retail backlog over the prior year | |
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Cash and securities increased 24% to $113 million from one year ago |
Farooq Kathwari, Chairman and CEO commented, “While we are pleased with the strong financial results in what is our seasonally slower quarter, our greatest opportunity to leverage our vertically integrated structure is to increase our written sales. Written orders and deliveries were affected in the quarter by several external and internal factors including: the government shutdown, challenging weather in many parts of the US, and an increase in back ordered import products.“
Mr. Kathwari concluded, “We remain cautiously optimistic about increasing our sales and profitability. We continue to aggressively implement marketing programs to improve our competitive differentiation. Starting from February 2014, we are introducing an “On Demand” initiative reflecting a focus on greater in-stock products for faster delivery to our clients. This coupled with our strong custom order programs further expands our commitment to personal service.”
Financial Results:
Net sales for the quarter ended December 31, 2013 increased 1.0% over the prior year to $193.1 million. The Company’s Retail division net sales decreased 0.2% to $151.5 million including a comparable design center net sales increase of 3.4%. Retail division written orders recorded during the second quarter decreased 4.0% including a decrease of 1.8% in comparable design center written orders. Net income for the quarter ended December 31, 2013 was $11.6 million or $0.39 per diluted share compared with $9.8 million or $0.34 per diluted share in the prior year quarter. Adjusted earnings for the quarter were $0.41 per diluted share or $11.9 million compared to $0.39 per diluted share or $11.4 million in the prior year quarter.
Year to date net sales were $374.8 million, down 1.0% from $378.7 million the prior year. Gross margin and adjusted operating profit margin were healthy at 54.6% and 10.0% respectively compared with 55.0% and 10.5% respectively the prior year. Adjusted net income year to date of $21.5 million compares with $22.5 million the prior year period and our adjusted earnings per diluted share for the six months to date is $0.73 compared with $0.77 the prior year to date period.
Analyst Conference Call - - - - PLEASE NOTE THE CHANGE IN SCHEDULED TIME - - - -
The Ethan Allen conference call has been moved up to 9:30 AM (Eastern) from 11:00 AM previously scheduled. We apologize for any inconvenience this change may have caused. The call will still be held on Thursday, January 23rd 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. To participate on the call, dial 866-814-8476 with conference ID# 1630164.
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, 2013 (the “2013 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 2013 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.
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Ethan Allen Interiors Inc.
Selected Financial Information
Unaudited
(in millions)
Selected Consolidated Financial Data:
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Three Months Ended |
Six Months Ended |
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12/31/13 |
12/31/12 |
12/31/13 |
12/31/12 |
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Net sales |
$ | 193.1 | $ | 191.3 | $ | 374.8 | $ | 378.7 | ||||||||
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Gross margin |
54.9 | % | 54.4 | % | 54.6 | % | 55.0 | % | ||||||||
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Operating margin |
10.3 | % | 9.1 | % | 9.6 | % | 9.3 | % | ||||||||
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Operating margin (excluding special items*) |
10.7 | % | 10.5 | % | 10.0 | % | 10.5 | % | ||||||||
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Net income |
$ | 11.6 | $ | 9.8 | $ | 20.6 | $ | 19.9 | ||||||||
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Net income (excluding special items* and unusual income tax effects) |
$ | 11.9 | $ | 11.4 | $ | 21.5 | $ | 22.5 | ||||||||
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Operating cash flow |
$ | 1.5 | $ | 11.5 | $ | 22.6 | $ | 18.2 | ||||||||
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Capital expenditures |
$ | 5.3 | $ | 5.2 | $ | 8.6 | $ | 13.6 | ||||||||
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Acquisitions |
$ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.6 | ||||||||
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Treasury stock repurchases |
$ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | ||||||||
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EBITDA |
$ | 24.2 | $ | 21.7 | $ | 44.4 | $ | 44.2 | ||||||||
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EBITDA as % of net sales |
12.5 | % | 11.3 | % | 11.8 | % | 11.7 | % | ||||||||
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EBITDA (excluding special items*) |
$ | 25.0 | $ | 24.4 | $ | 46.0 | $ | 48.5 | ||||||||
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EBITDA as % of net sales (excluding special items*) |
12.9 | % | 12.7 | % | 12.3 | % | 12.8 | % | ||||||||
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Selected Financial Data by Business Segment: |
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Three Months Ended |
Six Months Ended |
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12/31/13 |
12/31/12 |
12/31/13 |
12/31/12 |
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Retail |
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Net sales |
$ | 151.5 | $ | 151.8 | $ | 293.3 | $ | 300.9 | ||||||||
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Operating margin |
2.8 | % | 4.0 | % | 1.4 | % | 2.3 | % | ||||||||
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Operating margin (excluding special items*) |
3.3 | % | 4.6 | % | 1.9 | % | 3.2 | % | ||||||||
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Wholesale |
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Net sales |
$ | 113.1 | $ | 108.2 | $ | 226.3 | $ | 219.6 | ||||||||
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Operating margin |
12.7 | % | 8.2 | % | 13.5 | % | 11.3 | % | ||||||||
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Operating margin (excluding special items*) |
12.7 | % | 9.9 | % | 13.5 | % | 12.1 | % | ||||||||
* 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 Statements of Comprehensive Income
Unaudited
(in thousands)
|
Three Months Ended |
Six Months Ended |
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12/31/13 |
12/31/12 |
12/31/13 |
12/31/12 |
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Net sales |
$ | 193,104 | $ | 191,251 | $ | 374,763 | $ | 378,688 | ||||||||
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Cost of sales |
87,105 | 87,284 | 170,021 | 170,468 | ||||||||||||
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Gross profit |
105,999 | 103,967 | 204,742 | 208,220 | ||||||||||||
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Selling, general and administrative expenses |
86,149 | 86,610 | 168,948 | 172,909 | ||||||||||||
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Operating income |
19,850 | 17,357 | 35,794 | 35,311 | ||||||||||||
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Interest and other income |
43 | 128 | 125 | 202 | ||||||||||||
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Interest expense |
1,871 | 2,198 | 3,744 | 4,397 | ||||||||||||
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Income before income taxes |
18,022 | 15,287 | 32,175 | 31,116 | ||||||||||||
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Income tax expense |
6,467 | 5,441 | 11,586 | 11,206 | ||||||||||||
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Net income |
$ | 11,555 | $ | 9,846 | $ | 20,589 | $ | 19,910 | ||||||||
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Basic earnings per common share: |
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Net income per basic share |
$ | 0.40 | $ | 0.34 | $ | 0.71 | $ | 0.69 | ||||||||
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Basic weighted average shares outstanding |
28,916 | 28,846 | 28,913 | 28,841 | ||||||||||||
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Diluted earnings per common share: |
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Net income per diluted share |
$ | 0.39 | $ | 0.34 | $ | 0.70 | $ | 0.68 | ||||||||
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Diluted weighted average shares outstanding |
29,292 | 29,223 | 29,290 | 29,182 | ||||||||||||
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Comprehensive income: |
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Net income |
$ | 11,555 | $ | 9,846 | $ | 20,589 | $ | 19,910 | ||||||||
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Other comprehensive income |
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Currency translation adjustment |
(71 | ) | (20 | ) | (16 | ) | 140 | |||||||||
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Other |
42 | 15 | 60 | 40 | ||||||||||||
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Other comprehensive income (loss) net of tax |
(29 | ) | (5 | ) | 44 | 180 | ||||||||||
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Comprehensive income |
$ | 11,526 | $ | 9,841 | $ | 20,633 | $ | 20,090 | ||||||||
Ethan Allen Interiors Inc.
Condensed Consolidated Balance Sheets
Unaudited
(in thousands)
|
December 31, |
June 30, |
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2013 |
2013 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 77,603 | $ | 72,601 | ||||
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Marketable securities |
20,157 | 15,529 | ||||||
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Accounts receivable, net |
10,754 | 12,277 | ||||||
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Inventories |
139,964 | 137,256 | ||||||
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Prepaid expenses & other current assets |
21,474 | 22,907 | ||||||
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Total current assets |
269,952 | 260,570 | ||||||
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Property, plant and equipment, net |
290,388 | 291,672 | ||||||
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Intangible assets, net |
45,128 | 45,128 | ||||||
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Restricted cash and investments |
14,935 | 15,433 | ||||||
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Other assets |
4,878 | 4,482 | ||||||
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Total Assets |
$ | 625,281 | $ | 617,285 | ||||
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Liabilities and Shareholders' Equity |
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Current liabilities: |
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Current maturities of long-term debt |
490 | 480 | ||||||
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Customer deposits |
52,178 | 59,098 | ||||||
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Accounts payable |
21,911 | 22,995 | ||||||
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Accrued expenses & other current liabilities |
49,512 | 50,366 | ||||||
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Total current liabilities |
124,091 | 132,939 | ||||||
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Long-term debt |
130,613 | 130,809 | ||||||
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Other long-term liabilities |
20,617 | 19,180 | ||||||
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Total liabilities |
275,321 | 282,928 | ||||||
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Shareholders' equity |
349,960 | 334,357 | ||||||
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Total Liabilities and Shareholders' Equity |
$ | 625,281 | $ | 617,285 | ||||
Ethan Allen Interiors Inc.
GAAP Reconciliation
Three and Six Months Ended December 31, 2013 and 2012
Unaudited
(in thousands, except per share amounts)
|
Three Months Ended |
Six Months Ended |
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December 30, |
December 30, |
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|
2013 |
2012 |
2013 |
2012 |
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Net Income / Earnings Per Share |
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Net income |
$ | 11,555 | $ | 9,846 | $ | 20,589 | $ | 19,910 | ||||||||
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Special items net of related tax effects * |
489 | 1,693 | 1,022 | 2,715 | ||||||||||||
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Unusual income tax effects |
(111 | ) | (139 | ) | (158 | ) | (151 | ) | ||||||||
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Net income (excluding special items* and unusual income tax effects) |
$ | 11,933 | $ | 11,400 | $ | 21,453 | $ | 22,474 | ||||||||
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Basic weighted average shares outstanding |
28,916 | 28,846 | 28,913 | 28,841 | ||||||||||||
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Earnings per basic share |
$ | 0.40 | $ | 0.34 | $ | 0.71 | $ | 0.69 | ||||||||
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Earnings per basic share (excluding special items* and unusual income tax effects) |
$ | 0.41 | $ | 0.40 | $ | 0.74 | $ | 0.78 | ||||||||
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Diluted weighted average shares outstanding |
29,292 | 29,223 | 29,290 | 29,182 | ||||||||||||
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Earnings per diluted share |
$ | 0.39 | $ | 0.34 | $ | 0.70 | $ | 0.68 | ||||||||
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Earnings per diluted share (excluding special items* and unusual income tax effects) |
$ | 0.41 | $ | 0.39 | $ | 0.73 | $ | 0.77 | ||||||||
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Consolidated Operating Income / Operating Margin |
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Operating income |
$ | 19,850 | $ | 17,357 | $ | 35,794 | $ | 35,311 | ||||||||
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Add: special items * |
770 | 2,666 | 1,610 | 4,276 | ||||||||||||
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Operating income (excluding special items*) |
$ | 20,620 | $ | 20,023 | $ | 37,404 | $ | 39,587 | ||||||||
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Net sales |
$ | 193,104 | $ | 191,251 | $ | 374,763 | $ | 378,688 | ||||||||
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Operating margin |
10.3 | % | 9.1 | % | 9.6 | % | 9.3 | % | ||||||||
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Operating margin (excluding special items*) |
10.7 | % | 10.5 | % | 10.0 | % | 10.5 | % | ||||||||
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Wholesale Operating Income / Operating Margin |
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Wholesale operating income |
$ | 14,366 | $ | 8,892 | $ | 30,498 | $ | 24,897 | ||||||||
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Add: special items |
- | 1,774 | - | 1,774 | ||||||||||||
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Wholesale operating income (excluding special items*) |
$ | 14,366 | $ | 10,666 | $ | 30,498 | $ | 26,671 | ||||||||
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Wholesale net sales |
$ | 113,133 | $ | 108,172 | $ | 226,331 | $ | 219,589 | ||||||||
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Wholesale operating margin |
12.7 | % | 8.2 | % | 13.5 | % | 11.3 | % | ||||||||
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Wholesale operating margin (excluding special items*) |
12.7 | % | 9.9 | % | 13.5 | % | 12.1 | % | ||||||||
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Retail Operating Income / Operating Margin |
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Retail operating income |
$ | 4,206 | $ | 6,017 | $ | 4,002 | $ | 7,065 | ||||||||
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Add: special items |
770 | 892 | 1,610 | 2,502 | ||||||||||||
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Retail operating income (excluding special items*) |
$ | 4,976 | $ | 6,909 | $ | 5,612 | $ | 9,567 | ||||||||
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Retail net sales |
$ | 151,496 | $ | 151,827 | $ | 293,323 | $ | 300,906 | ||||||||
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Retail operating margin |
2.8 | % | 4.0 | % | 1.4 | % | 2.3 | % | ||||||||
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Retail operating margin (excluding special items*) |
3.3 | % | 4.6 | % | 1.9 | % | 3.2 | % | ||||||||
* Special items consist of restructuring, impairment, transition charges and certain other items.
Related tax effects are calculated using a normalized income tax rate.
Ethan Allen Interiors Inc.
GAAP Reconciliation
Three and Six Months Ended December 31, 2013 and 2012
Unaudited
(in thousands, except per share amounts)
|
Three Months Ended |
Six Months Ended |
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December 30, |
December 30, |
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2013 |
2012 |
2013 |
2012 |
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EBITDA |
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Net income |
$ | 11,555 | $ | 9,846 | $ | 20,589 | $ | 19,910 | ||||||||
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Add: interest expense, net |
1,750 | 2,056 | 3,500 | 4,111 | ||||||||||||
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income tax expense |
6,467 | 5,441 | 11,586 | 11,206 | ||||||||||||
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depreciation and amortization |
4,410 | 4,360 | 8,699 | 8,966 | ||||||||||||
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EBITDA |
$ | 24,182 | $ | 21,703 | $ | 44,374 | $ | 44,193 | ||||||||
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Net sales |
$ | 193,104 | $ | 191,251 | $ | 374,763 | $ | 378,688 | ||||||||
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EBITDA as % of net sales |
12.5 | % | 11.3 | % | 11.8 | % | 11.7 | % | ||||||||
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EBITDA |
$ | 24,182 | $ | 21,703 | $ | 44,374 | $ | 44,193 | ||||||||
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Add: special items* |
770 | 2,666 | 1,610 | 4,276 | ||||||||||||
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EBITDA (excluding special items) |
$ | 24,952 | $ | 24,369 | $ | 45,984 | $ | 48,469 | ||||||||
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Net sales |
$ | 193,104 | $ | 191,251 | $ | 374,763 | $ | 378,688 | ||||||||
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EBITDA as % of net sales (excluding special items) |
12.9 | % | 12.7 | % | 12.3 | % | 12.8 | % | ||||||||
* Special items consist of restructuring, impairment, transition charges and certain other items.
Related tax effects are calculated using a normalized income tax rate.
Contact:
Ethan Allen Interiors Inc.
Investor / Media:
David R. Callen, 203-743-8305
Vice President Finance & Treasurer
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