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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

(Mark One)

 

         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended December 31, 2023

 

or

 

         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission File Number: 1-11692

image01.jpg

Ethan Allen Interiors Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

06-1275288

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

25 Lake Avenue Ext., Danbury, Connecticut

 

            06811-5286

(Address of principal executive offices)

         (Zip Code)

 

(203) 743-8000

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Common Stock, $0.01 par value

 

ETD

 

New York Stock Exchange

(Title of each class)

 

(Trading symbol)

 

 (Name of each exchange on which registered)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes         ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes          ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ☐

           Accelerated filer                    ☒

Non-accelerated filer       ☐

Smaller reporting company 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes         ☒ No

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

The number of shares outstanding of the registrant’s common stock, $0.01 par value, as of January 17, 2024, was 25,399,587.

 

 

  

 

ETHAN ALLEN INTERIORS INC.

FORM 10-Q SECOND QUARTER OF FISCAL 2024

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION  
   
Item 1. Financial Statements 2
   
CONSOLIDATED BALANCE SHEETS  2
   
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) 3
   
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 4
   
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) 5
   
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 6
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk 33
   
Item 4. Controls and Procedures 34
   
PART II - OTHER INFORMATION  
   
Item 1. Legal Proceedings 35
   
Item 1A. Risk Factors 35
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35
   
Item 3. Defaults Upon Senior Securities 35
   
Item 4. Mine Safety Disclosures 35
   
Item 5. Other Information 35
   
Item 6. Exhibits 36
   
SIGNATURES 36

 

 

 

1

  

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

 

 
   

December 31, 2023

   

June 30, 2023

 

 

 

(Unaudited)

         
ASSETS              

Current assets

               

Cash and cash equivalents

  $ 55,051     $ 62,130  

Investments

    97,679       110,577  

Accounts receivable, net

    6,831       11,577  

Inventories, net

    140,939       149,195  

Prepaid expenses and other current assets

    25,459       25,974  

Total current assets

    325,959       359,453  

Property, plant and equipment, net

    219,492       222,167  

Goodwill

    25,388       25,388  

Intangible assets

    19,740       19,740  

Operating lease right-of-use assets

    113,699       115,861  

Deferred income taxes

    832       640  

Other assets

    17,065       2,204  

TOTAL ASSETS

  $ 722,175     $ 745,453  
                 

LIABILITIES

               

Current liabilities

               

Accounts payable and accrued expenses

  $ 24,069     $ 28,565  

Customer deposits

    63,098       77,765  

Accrued compensation and benefits

    21,253       23,534  

Current operating lease liabilities

    26,649       26,045  

Other current liabilities

    5,861       7,188  

Total current liabilities

    140,930       163,097  

Operating lease liabilities, long-term

    101,314       104,301  

Deferred income taxes

    2,991       3,056  

Other long-term liabilities

    4,050       3,993  

TOTAL LIABILITIES

  $ 249,285     $ 274,447  
                 

Commitments and contingencies (see Note 19)

           

SHAREHOLDERS' EQUITY

               

Preferred stock, $0.01 par value; 1,055 shares authorized; none issued

  $ -     $ -  

Common stock, $0.01 par value, 150,000 shares authorized, 49,536 and 49,426 shares issued; 25,400 and 25,356 shares outstanding at December 31, 2023 and June 30, 2023, respectively

    495       494  

Additional paid-in capital

    387,189       386,146  

Treasury stock, at cost: 24,136 and 24,070 shares at December 31, 2023 and June 30, 2023, respectively

    (684,747 )     (682,646 )

Retained earnings

    771,052       769,819  

Accumulated other comprehensive loss

    (1,063 )     (2,785 )

Total Ethan Allen Interiors Inc. shareholders' equity

    472,926       471,028  

Noncontrolling interests

    (36 )     (22 )

TOTAL SHAREHOLDERS' EQUITY

    472,890       471,006  

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

  $ 722,175     $ 745,453  

 

See accompanying notes to consolidated financial statements.

 

2

 

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In thousands, except per share data)

 

 
   

Three months ended

   

Six months ended

 
   

December 31,

   

December 31,

 
   

2023

   

2022

   

2023

   

2022

 

Net sales

  $ 167,276     $ 203,161     $ 331,168     $ 417,691  

Cost of sales

    66,640       79,141       130,391       164,055  

Gross profit

    100,636       124,020       200,777       253,636  
                                 

Selling, general and administrative expenses

    79,183       87,147       159,481       179,109  

Restructuring and other charges, net of gains

    (235 )     (196 )     1,257       (2,192 )

Operating income

    21,688       37,069       40,039       76,719  
                                 

Interest and other income, net

    1,719       901       3,504       1,297  

Interest and other financing costs

    52       50       113       105  

Income before income taxes

    23,355       37,920       43,430       77,911  

Income tax expense

    5,944       9,754       11,080       19,865  

Net income

  $ 17,411     $ 28,166     $ 32,350     $ 58,046  
                                 

Per share data

                               

Basic earnings per common share

                               

Net income per basic share

  $ 0.68     $ 1.11     $ 1.27     $ 2.28  

Basic weighted average common shares

    25,525       25,473       25,515       25,466  

Diluted earnings per common share

                               

Net income per diluted share

  $ 0.68     $ 1.10     $ 1.26     $ 2.27  

Diluted weighted average common shares

    25,630       25,582       25,624       25,571  
                                 

Comprehensive income

                               

Net income

  $ 17,411     $ 28,166     $ 32,350     $ 58,046  

Other comprehensive income, net of tax

                               

Foreign currency translation adjustments

    636       574       84       348  

Other

    1,103       233       1,624       370  

Other comprehensive income, net of tax

    1,739       807       1,708       718  

Comprehensive income

  $ 19,150     $ 28,973     $ 34,058     $ 58,764  

 

See accompanying notes to consolidated financial statements.

 

3

 

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

 

 
   

Six months ended

 
   

   December 31,

 

 

 

2023

   

2022

 
Cash Flows from Operating Activities            

Net income

  $ 32,350     $ 58,046  

Adjustments to reconcile net income to net cash provided by operating activities

               

Depreciation and amortization

    8,007       7,695  

Share-based compensation expense

    721       763  

Non-cash operating lease cost

    15,818       14,984  

Deferred income taxes

    (257 )     (1,888 )

Restructuring and other charges, net of gains

    1,257       (2,192 )

Payments on restructuring and other charges, net of proceeds

    (1,183 )     (801 )

Loss on disposal of property, plant and equipment

    14       42  

Other

    (29 )     290  

Change in operating assets and liabilities:

               

Accounts receivable, net

    4,746       6,323  

Inventories, net

    7,295       16,630  

Prepaid expenses and other current assets

    (205 )     5,419  

Customer deposits

    (14,667 )     (37,429 )

Accounts payable and accrued expenses

    (4,969 )     (6,927 )

Accrued compensation and benefits

    (2,332 )     (1,455 )

Operating lease liabilities

    (16,071 )     (15,710 )

Other assets and liabilities

    (205 )     (2,851 )

Net cash provided by operating activities

    30,290       40,939  
                 

Cash Flows from Investing Activities

               

Proceeds from sale of property, plant and equipment

    22       8,105  

Capital expenditures

    (5,241 )     (8,473 )

Purchases of investments

    (39,970 )     (94,953 )

Proceeds from sales of investments

    40,818       51,504  

Net cash used in investing activities

    (4,371 )     (43,817 )
                 

Cash Flows from Financing Activities

               

Payment of cash dividends

    (31,117 )     (20,879 )

Proceeds from employee stock plans

    322       9  

Taxes paid related to net share settlement of equity awards

    (2,101 )     (765 )

Payments on financing leases

    (263 )     (265 )

Other financing costs

    -       28  

Net cash used in financing activities

    (33,159 )     (21,872 )
                 

Effect of exchange rate changes on cash and cash equivalents

    56       (128 )
                 

Net decrease in cash, cash equivalents and restricted cash

    (7,184 )     (24,878 )

Cash, cash equivalents and restricted cash at beginning of period

    62,622       110,871  

Cash, cash equivalents and restricted cash at end of period

  $ 55,438     $ 85,993  

 

See accompanying notes to consolidated financial statements.

 

4

 

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (Unaudited)

(In thousands)

 

 
                                           

Accumulated

                         
                   

Additional

                   

Other

           

Non-

         
   

Common Stock

   

Paid-in

   

Treasury Stock

   

Comprehensive

   

Retained

   

Controlling

   

Total

 
   

Shares

   

Par Value

   

Capital

   

Shares

   

Amount

   

Loss

   

Earnings

   

Interests

   

Equity

 

Balance at June 30, 2023

    49,426     $ 494     $ 386,146       24,070     $ (682,646 )   $ (2,785 )   $ 769,819     $ (22 )   $ 471,006  

Net income

    -       -       -       -       -       -       14,939       -       14,939  

Common stock issued on share-based awards

    12       -       313       -       -       -       -       -       313  

Share-based compensation expense

    -       -       357       -       -       -       -       -       357  

Restricted stock vesting

    97       1       -       66       (2,101 )     -       -       -       (2,100 )

Cash dividends declared

    -       -       -       -       -       -       (21,928 )     -       (21,928 )

Other comprehensive income (loss)

    -       -       -       -       -       (25 )     -       (6 )     (31 )

Balance at September 30, 2023

    49,535     $ 495     $ 386,816       24,136     $ (684,747 )   $ (2,810 )   $ 762,830     $ (28 )   $ 462,556  

Net income

    -       -       -       -       -       -       17,411       -       17,411  

Common stock issued on share-based awards

    1       -       9       -       -       -       -       -       9  

Share-based compensation expense

    -       -       364       -       -       -       -       -       364  

Cash dividends declared

    -       -       -       -       -       -       (9,189 )     -       (9,189 )

Other comprehensive income (loss)

    -       -       -       -       -       1,747       -       (8 )     1,739  

Balance at December 31, 2023

    49,536     $ 495     $ 387,189       24,136     $ (684,747 )   $ (1,063 )   $ 771,052     $ (36 )   $ 472,890  

 

                                           

Accumulated

                         
                   

Additional

                   

Other

           

Non-

         
   

Common Stock

   

Paid-in

   

Treasury Stock

   

Comprehensive

   

Retained

   

Controlling

   

Total

 
   

Shares

   

Par Value

   

Capital

   

Shares

   

Amount

   

Loss

   

Earnings

   

Interests

   

Equity

 

Balance at June 30, 2022

    49,360     $ 494     $ 384,782       24,037     $ (681,834 )   $ (6,462 )   $ 710,369     $ (26 )   $ 407,323  

Net income

    -       -       -       -       -       -       29,880       -       29,880  

Share-based compensation expense

    -       -       268       -       -       -       -       -       268  

Restricted stock vesting

    55       -       1       31       (765 )     -       -       -       (764 )

Cash dividends declared

    -       -       -       -       -       -       (20,879 )     -       (20,879 )

Other comprehensive income (loss)

    -       -       -       -       -       (82 )     -       (7 )     (89 )

Balance at September 30, 2022

    49,415     $ 494     $ 385,051       24,068     $ (682,599 )   $ (6,544 )   $ 719,370     $ (33 )   $ 415,739  

Net income

    -       -       -       -       -       -       28,166       -       28,166  

Common stock issued on share-based awards

    1       -       9       -       -       -       -       -       9  

Share-based compensation expense

    -       -       495       -       -       -       -       -       495  

Cash dividends declared

    -       -       -       -       -       -       (8,152 )     -       (8,152 )

Other comprehensive income (loss)

    -       -       -       -       -       795       -       12       807  

Balance at December 31, 2022

    49,416     $ 494     $ 385,555       24,068     $ (682,599 )   $ (5,749 )   $ 739,384     $ (21 )   $ 437,064  

 

See accompanying notes to consolidated financial statements.

 

   

5

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

 

(1)

Organization and Nature of Business

 

Ethan Allen Interiors Inc., through its wholly owned subsidiary, Ethan Allen Global, Inc., and Ethan Allen Global, Inc.’s subsidiaries (collectively, “we,” “us,” “our,” “Ethan Allen” or the “Company”), is a Delaware corporation and leading interior design destination combining technology with personal service. Our design centers, which represent a mix of independent licensees and Company-owned and operated locations, offer complimentary interior design service, and sell a full range of home furnishings, including custom furniture and artisan-crafted accents for every room in the home. Vertically integrated from product design through logistics, we manufacture about 75% of our custom-crafted products in our North American manufacturing facilities and have been recognized for product quality and craftsmanship since our founding in 1932.

 

As of December 31, 2023, the Company operated 141 retail design centers with 137 located in the United States and four in Canada. Our independently operated design centers are located in the United States, Asia, the Middle East and Europe. We also own and operate ten manufacturing facilities, including four manufacturing plants, one sawmill, one rough mill and one kiln dry lumberyard in the United States, two manufacturing plants in Mexico and one manufacturing plant in Honduras.

 

 

(2)

Interim Basis of Presentation

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Our consolidated financial statements also include the accounts of an entity in which we are a majority shareholder with the power to direct the activities that most significantly impact the entity’s performance. Noncontrolling interest amounts in the entity are immaterial and included in the consolidated statements of comprehensive income within Interest and other income, net.

 

All intercompany activity and balances, including any related profit on intercompany sales, have been eliminated from the consolidated financial statements. In our opinion, all adjustments, consisting only of normal recurring adjustments necessary for fair presentation, have been included in the consolidated financial statements. The results of operations for the three and six months ended December 31, 2023 are not necessarily indicative of results that may be expected for the entire fiscal year. The interim consolidated financial statements were prepared on a basis consistent with those reflected in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 (the “2023 Annual Report on Form 10-K”), but does not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”). We derived the June 30, 2023 consolidated balance sheet from our audited financial statements included in our 2023 Annual Report on Form 10-K.

 

Use of Estimates

 

We prepare our consolidated financial statements in accordance with GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of net sales and expenses during the reporting period. Due to the inherent uncertainty involved in making those estimates, actual results could differ from those estimates. Areas in which significant estimates have been made include, but are not limited to, goodwill and indefinite-lived intangible asset impairment analyses, recoverability and useful lives for property, plant and equipment, inventory obsolescence, tax valuation allowances, the evaluation of uncertain tax positions and business insurance reserves.

 

Restricted Cash

 

We present restricted cash as a component of total cash and cash equivalents on our consolidated statement of cash flows and within Other Assets on our consolidated balance sheets. At December 31, 2023 and June 30, 2023, we held $0.4 million and $0.5 million, respectively, of restricted cash related to our Ethan Allen insurance captive.

 

We have evaluated subsequent events through the date of issuance of the financial statements included in this Quarterly Report on Form 10-Q.

 

6

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

  

 

(3)

Recent Accounting Pronouncements

 

The Company evaluates all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”) for consideration of their applicability to our consolidated financial statements.

 

New Accounting Standards or Updates Adopted in Fiscal 2024

 

Business Combinations. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606) rather than adjust them to fair value at the acquisition date. The adoption of this accounting standard in the first quarter of fiscal 2024 did not have an impact on our consolidated financial statements.

 

Derivatives and Hedging. In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 801): Fair Value Hedging – Portfolio Layer Method, which expands the current single-layer hedging model to allow multiple-layer hedges of a single closed portfolio of prepayable financial assets or one or more beneficial interests secured by a portfolio of prepayable financial instruments under the method. The adoption of this accounting standard in the first quarter of fiscal 2024 did not have an impact on our consolidated financial statements.

 

Recent Accounting Standards or Updates Not Yet Effective

 

Disclosure Improvements. In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendment in Response to the SECs Disclosure Update and Simplification Initiative. The ASU incorporates several disclosure and presentation requirements currently residing in the SEC Regulations S-X and S-K. The amendments will be applied prospectively and are effective when the SEC removes the related requirements from Regulations S-X or S-K. Any amendments the SEC does not remove by June 30, 2027 will not be effective. As we are currently subject to these SEC requirements, this ASU is not expected to have a material impact on our consolidated financial statements or related disclosures.

 

Segment Reporting. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires all public entities to provide enhanced disclosures about significant segment expenses. The amendments in this ASU are to be applied retrospectively and are effective for our annual financial statements starting in fiscal 2025 and interim periods starting in fiscal 2026, with early adoption permitted. We are currently evaluating the impact of this accounting standard, but do not expect it to have a material impact on our consolidated financial statements.

 

Income Taxes. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid and to improve the effectiveness of income tax disclosures. This accounting standards update will be effective for us for fiscal year 2026 and interim periods beginning in the first quarter of fiscal 2027, with early adoption permitted. We are currently evaluating the impact of this accounting standard, but do not expect it to have a material impact on our consolidated financial statements.

 

No other new accounting pronouncements issued or effective as of December 31, 2023 have had or are expected to have a material impact on our consolidated financial statements.

 

 

(4)

Revenue Recognition

 

Our reported revenue (net sales) consists substantially of product sales. We report product sales net of discounts and recognize them at the point in time when control transfers to the customer. For sales to our customers in our wholesale segment, control typically transfers when the product is shipped. The majority of our shipping agreements are freight-on-board shipping point and risk of loss transfers to our wholesale customer once the product is out of our control. Accordingly, revenue is recognized for product shipments on third-party carriers at the point in time that our product is loaded onto the third-party container or truck. For sales in our retail segment, control generally transfers upon delivery to the customer. We recognize the promised amount of consideration without adjusting for the effects of a significant financing component if the contract has a duration of one year or less. As our contracts typically are less than one year in length and do not have significant financing components, we have not adjusted consideration.

 

Shipping and Handling. Our practice has been to sell our products at the same delivered cost to all retailers and customers nationwide, regardless of shipping point. Costs incurred by the Company to deliver finished goods are expensed and recorded in selling, general and administrative (“SG&A”) expenses. We recognize shipping and handling expense as fulfillment activities (rather than as a promised good or service) when the activities are performed even if those activities are performed after the control of the good has been transferred. Accordingly, we record the expenses for shipping and handling activities at the same time we recognize net sales.

 

7

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

 

Sales Taxes. We exclude from the measurement of the transaction price all taxes imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). Sales tax collected is not recognized as revenue but is included in Accounts payable and accrued expenses on the consolidated balance sheets as it is ultimately remitted to governmental authorities.

 

Returns and Allowances. Estimated refunds for returns and allowances are based on our historical return patterns. We record these estimated sales refunds on a gross basis rather than on a net basis and have recorded an asset for product we expect to receive back from customers in Prepaid expenses and other current assets and a corresponding refund liability in Other current liabilities on our consolidated balance sheets. At December 31, 2023 and June 30, 2023, these amounts were immaterial.

 

Allowance for Doubtful Accounts. Accounts receivable arise from the sale of products on trade credit terms and is presented net of allowance for doubtful accounts. We maintain an allowance for estimated losses resulting from the inability of our customers to make required payments. The allowance for doubtful accounts is based on a review of specifically identified accounts in addition to an overall aging analysis. At December 31, 2023 and June 30, 2023, the allowance for doubtful accounts was immaterial.

 

Commissions. We capitalize commission fees paid to our associates as contract assets within Prepaid expenses and other current assets on our consolidated balance sheets. These prepaid commissions are subsequently recognized as a selling expense upon delivery (when we have transferred control of our product to our customer). At December 31, 2023, we had prepaid commissions of $10.3 million, which we expect to recognize to selling expense during the remainder of fiscal 2024 as Selling, general and administrative expenses within our consolidated statements of comprehensive income.

 

Customer Deposits. We collect deposits from customers on a portion of the total purchase price at the time a written order is placed, but before we have transferred control of our product to our customers, resulting in contract liabilities. These customer deposits are reported as a current liability in Customer deposits on our consolidated balance sheets. As of December 31, 2023, we had customer deposits of $63.1 million. At June 30, 2023 we had customer deposits of $77.8 million, of which we recognized $71.9 million of revenue related to our contract liabilities during the six months ended December 31, 2023. Revenue recognized during the three months ended December 31, 2023 which was previously included in Customer deposits as of September 30, 2023 was $17.7 million, compared to $30.9 million of revenue recognized during the three months ended December 31, 2022, which was previously included in Customer deposits as of September 30, 2022. We expect that substantially all of the customer deposits as of December 31, 2023 will be recognized as revenue within the next twelve months as the performance obligations are satisfied.

 

The following table disaggregates our net sales by product category by segment (in thousands):

 

   

Three months ended December 31, 2023

   

Three months ended December 31, 2022

 
   

Wholesale

   

Retail

   

Eliminations(1)

   

Total

   

Wholesale

   

Retail

   

Eliminations(1)

   

Total

 

Upholstery(2)

  $ 44,619     $ 66,919     $ (31,209 )   $ 80,329     $ 53,661     $ 82,893     $ (38,921 )   $ 97,633  

Case goods(3)

    29,183       35,513       (17,579 )     47,117       35,803       45,890       (20,958 )     60,735  

Accents(4)

    17,851       28,794       (13,760 )     32,885       18,215       34,150       (14,970 )     37,395  

Other(5)

    (1,026 )     7,971       -       6,945       (1,432 )     8,830       -       7,398  

Total

  $ 90,627     $ 139,197     $ (62,548 )   $ 167,276     $ 106,247     $ 171,763     $ (74,849 )   $ 203,161  

 

   

Six months ended December 31, 2023

    Six months ended December 31, 2022  
   

Wholesale

   

Retail

   

Eliminations(1)

   

Total

    Wholesale    

Retail

   

Eliminations(1)

   

Total

 

Upholstery(2)

  $ 93,884     $ 132,112     $ (67,161 )   $ 158,835     $ 112,283     $ 173,875     $ (82,486 )   $ 203,672  

Case goods(3)

    59,518       67,814       (35,555 )     91,777       73,973       95,144       (44,416 )     124,701  

Accents(4)

    38,639       57,619       (28,971 )     67,287       37,836       68,355       (31,726 )     74,465  

Other(5)

    (1,984 )     15,253       -       13,269       (3,194 )     18,047       -       14,853  

Total

  $ 190,057     $ 272,798     $ (131,687 )   $ 331,168     $ 220,898     $ 355,421     $ (158,628 )   $ 417,691  

 

 

(1)

The Eliminations column in the tables above represents the elimination of all intercompany wholesale segment sales to the retail segment in each period presented.

 

(2)

Upholstery includes fabric-covered items such as sleepers, recliners and other motion furniture, chairs, ottomans, custom pillows, sofas, loveseats, cut fabrics and leather.

 

8

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

 

 

(3)

Case goods includes items such as beds, dressers, armoires, tables, chairs, buffets, entertainment units, home office furniture and wooden accents.

 

(4)

Accents includes items such as window treatments and drapery hardware, wall décor, florals, lighting, clocks, mattresses, bedspreads, throws, pillows, decorative accents, area rugs, flooring, wall coverings and home and garden furnishings.

 

(5)

Other includes product delivery sales, the Ethan Allen Hotel revenues, sales of third-party furniture protection plans and other miscellaneous product sales less prompt payment discounts, sales allowances and other incentives.

 

 

(5)

Fair Value Measurements

 

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the use of various valuation methodologies, including market, income and cost approaches is permissible. We consider the principal or most advantageous market in which it would transact and assumptions that market participants would use when pricing the asset or liability.

 

Fair Value Hierarchy. The accounting guidance for fair value measurements establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value based on the reliability of inputs. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect their placement within the fair value hierarchy levels.

 

We have categorized our cash equivalents and investments within the fair value hierarchy as follows: 

 

Level 1 – applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. These Level 1 assets include our corporate money market funds that are classified as cash equivalents. We have categorized our cash equivalents as Level 1 assets as there are quoted prices in active markets for identical assets or liabilities.

 

Level 2 – applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. At December 31, 2023 and June 30, 2023, we have categorized our investments as Level 2 assets. 

 

Level 3 – applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. We held no Level 3 assets or liabilities as of December 31, 2023 or June 30, 2023.

 

Assets and Liabilities Measured at Fair Value on a Recurring Basis. The following tables show, by level within the fair value hierarchy, our assets and liabilities that are measured at fair value on a recurring basis at December 31, 2023 and June 30, 2023. There were no transfers between levels of fair value measurements during the periods presented.

 

     

Fair Value Measurements at December 31, 2023

 

Financial Assets

Balance Sheet Location

 

Level 1

   

Level 2

   

Level 3

   

Total

 

Corporate money market funds (1)

Cash and cash equivalents

  $ 16,363     $ -     $ -     $ 16,363  

U.S. Treasury bills (2)

Investments

    -       97,679       -       97,679  

U.S. Treasury notes (2)

Other Assets

    -       15,064       -       15,064  

Total

  $ 16,363     $ 112,743     $ -     $ 129,106  

 

     

Fair Value Measurements at June 30, 2023

 

Financial Assets

Balance Sheet Location

 

Level 1

   

Level 2

   

Level 3

   

Total

 

Corporate money market funds (1)

Cash and cash equivalents

  $ 23,923     $ -     $ -     $ 23,923  

U.S. Treasury bills (2)

Investments

    -       110,577       -       110,577  

Total

  $ 23,923     $ 110,577     $ -     $ 134,500  

 

 

(1)

Our corporate money market funds are readily convertible into cash and the net asset value of each fund on the last day of the quarter is used to determine its fair value.

 

9

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

 

 

(2)

We have current and non-current debt securities (U.S. Treasury bills and notes) intended to enhance returns on our cash as well as to fund future obligations. All unrealized gains and losses were included in Accumulated other comprehensive loss within the consolidated balance sheets. There were no material gross unrealized gains or losses on the investments at December 31, 2023 or June 30, 2023.

 

Debt securities are presented below in accordance with their stated maturities. A portion of these investments are classified as non-current as they have stated maturities of more than one year from the balance sheet date. However, these investments are generally available to meet short-term liquidity needs.

 

   

December 31, 2023

 

Due within one year

  $ 97,679  

Due within one and two years

    15,064  

Total

  $ 112,743  

 

There were no investments that have been in a continuous loss position for more than one year, and there have been no other-than-temporary impairments recognized.

 

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis. We did not record any other-than-temporary impairments on assets required to be measured at fair value on a non-recurring basis during fiscal 2024 or 2023.

 

Assets and Liabilities Measured at Fair Value for Disclosure Purposes Only. We had no outstanding bank borrowings as of December 31, 2023 and June 30, 2023. We have historically categorized our outstanding bank borrowings as a Level 2 liability.

 

 

(6)

Leases

 

We recognize substantially all leases on our balance sheet as a right-of-use (“ROU”) asset and a lease liability. We have operating leases for many of our design centers that expire at various dates through fiscal 2040. We also lease certain tangible assets, including computer equipment and vehicles, with initial lease terms ranging from three to five years. We determine if a contract contains a lease at inception based on our right to control the use of an identified asset and our right to obtain substantially all of the economic benefits from the use of that identified asset. For purposes of measuring our ROU asset and lease liability, we determine our incremental borrowing rate by computing the rate of interest that we would have to pay to (i) borrow on a collateralized basis (ii) over a similar term (iii) at an amount equal to the total lease payments and (iv) in a similar economic environment. 

 

The Company's lease terms and discount rates are as follows:

 

   

December 31,

 
   

2023

   

2022

 

Weighted average remaining lease term (in years)

               

Operating leases

    5.7       6.1  

Financing leases

    2.5       2.3  

Weighted average discount rate

               

Operating leases

    5.7 %     5.0 %

Financing leases

    4.4 %     3.2 %

 

The following table discloses the location and amount of our operating and financing lease costs within our consolidated statements of comprehensive income (in thousands):

 

     

Three months ended

December 31,

   

Six months ended

December 31,

 
 

Statements of Comprehensive Income Location

 

2023

   

2022

   

2023

   

2022

 

Operating lease cost(1)

SG&A expenses

  $ 7,893     $ 7,182     $ 15,818     $ 14,984  

Financing lease cost

                                 

Depreciation of property

SG&A expenses

    124       127       248       256  

Interest on lease liabilities

Interest and other financing costs

    4       7       8       15  

Short-term lease cost(2)

SG&A expenses

    2       325       59       580  

Variable lease cost(3)

SG&A expenses

    2,365       2,303       4,791       4,513  

Less: Sublease income

SG&A expenses

    (288 )     (293 )     (575 )     (587 )

Total lease expense

  $ 10,100     $ 9,651     $ 20,349     $ 19,761  

 

 

(1)

Operating lease costs include costs associated with fixed lease payments and index-based variable payments that qualified for lease accounting under ASC 842, Leases and complied with the practical expedients we elected. Expense related to fixed lease payments are recognized on a straight-line basis over the lease term.

 

10

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

 

 

(2)

Leases with an initial term of 12 months or less are not recorded on the balance sheet and instead expensed on a straight-line basis over the lease term.

 

(3)

Variable lease costs include costs that were not fixed at the lease commencement date and are not dependent on an index or rate. Variable lease payments are generally expensed as incurred, where applicable, and include certain non-lease components, such as maintenance, utilities, real estate taxes, insurance and other services provided by the lessor, and other charges included in the lease. In addition, certain of our equipment lease agreements include variable lease payments, which are based on the usage of the underlying asset. The variable portion of payments are not included in the initial measurement of the asset or lease liability due to uncertainty of the payment amount and are recorded as expense in the period incurred.

 

The following table reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable leases with terms of more than one year to the total lease liabilities recognized on the consolidated balance sheets as of December 31, 2023 (in thousands):

 

Fiscal Year

 

Operating Leases

   

Financing Leases

 

2024 (remaining six months)

  $ 16,742     $ 120  

2025

    31,805       80  

2026

    27,654       72  

2027

    21,191       66  

2028

    18,560       -  

Thereafter

    34,609       -  

Total undiscounted future minimum lease payments

    150,561       338  

Less: imputed interest

    (22,598 )     (20 )

Total present value of lease obligations(1)

  $ 127,963     $ 318  

 

(1)

There were no future commitments under short-term operating lease agreements as of December 31, 2023.

 

We have one operating lease for a new retail service center which had not yet commenced as of December 31, 2023. This operating lease is not part of the tables above nor in the lease ROU assets and liabilities. This lease will commence when we obtain possession of the underlying leased asset, which is expected to occur during the third quarter of fiscal 2024. The operating lease is for a period of 62 months and has aggregate undiscounted future lease payments of $1.8 million. As of December 31, 2023, we did not have any financing leases that had not yet commenced.

 

Other supplemental information for our leases is as follows (in thousands):

 

   

Six months ended
December 31,

 
   

2023

   

2022

 

Cash paid for amounts included in the measurement of lease liabilities

               

Operating cash flows from operating leases

  $ 16,071     $ 15,710  

Operating cash flows from financing leases

  $ 263     $ 265  

Operating lease assets obtained in exchange for operating lease liabilities

  $ 10,092     $ 15,765  

 

There were no financing lease obligations obtained in exchange for new financing lease assets during the six months ended December 31, 2023 or 2022.

 

Sale-leaseback transaction. On August 1, 2022, we completed a sale-leaseback transaction with an independent third party for the land, building and related fixed assets of a retail design center. The design center was leased back to Ethan Allen via a multi-year operating lease agreement. As part of the transaction, we received net proceeds of $8.1 million, which resulted in a pre-tax gain of $1.8 million recorded within Restructuring and other charges, net of gains and $5.2 million deferred as a liability to be amortized to Restructuring and other charges, net of gains over the term of the related lease. For the six months ended December 31, 2023, we amortized an additional $1.3 million of this deferred liability as a gain within Restructuring and other charges, net of gains. As of December 31, 2023, the deferred liability balance was $1.5 million recorded in Other current liabilities on our consolidated balance sheet.

 

11

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

  

 

(7)

Inventories

 

Inventories are summarized as follows (in thousands):

 

   

December 31,

   

June 30,

 
   

2023

   

2023

 

Finished goods

  $ 105,344     $ 108,873  

Work in process

    11,964       12,606  

Raw materials

    25,522       29,653  

Inventory reserves

    (1,891 )     (1,937 )

Inventories, net

  $ 140,939     $ 149,195  

  

 

(8)

Property, Plant and Equipment

 

Property, plant and equipment are summarized as follows (in thousands):

 

   

December 31,

   

June 30,

 
   

2023

   

2023

 

Land and improvements

  $ 77,951     $ 77,940  

Building and improvements

    358,191       352,582  

Machinery and equipment

    125,005       126,203  

Property, plant and equipment, gross

    561,147       556,725  

Less: accumulated depreciation and amortization

    (341,655 )     (334,558 )

Property, plant and equipment, net

  $ 219,492     $ 222,167  

 

We recorded depreciation and amortization expense of $4.1 million and $3.8 million for the three months ended December 31, 2023 and 2022, respectively. Depreciation expense was $8.0 million and $7.7 million for the six months ended December 31, 2023 and 2022, respectively.

 

 

(9)

Other Assets

 

The following table summarizes the nature of the amounts within Other assets (in thousands):

 

   

December 31,

   

June 30,

 
   

2023

   

2023

 

U.S. Treasury notes (1)

  $ 15,064     $ -  

Restricted cash

    387       492  

Other assets

    1,614       1,712  

Other assets

  $ 17,065     $ 2,204  

 

 

(1)

Our investments in U.S. Treasury notes as of December 31, 2023 have maturities between one and two years.

 

 

(10)

Goodwill and Intangible Assets

 

Our goodwill and intangible assets are comprised of goodwill, which represents the excess of cost over the fair value of net assets acquired, and our Ethan Allen trade name and related trademarks. Both goodwill and indefinite-lived intangible assets are not amortized as they are estimated to have an indefinite life. At December 31, 2023 and June 30, 2023, we had $25.4 million of goodwill and $19.7 million of indefinite-lived intangible assets, all of which is assigned to our wholesale reporting unit. Our wholesale reporting unit is principally involved in the development of the Ethan Allen brand and encompasses all aspects of design, manufacturing, sourcing, marketing, sale and distribution of the Company’s broad range of home furnishings and accents.

 

We test our wholesale goodwill and indefinite-lived intangibles for impairment on an annual basis in the fourth quarter of each fiscal year, and more frequently if events or changes in circumstances indicate that it might be impaired. Consistent with the timing of prior years, we performed our annual goodwill and indefinite-lived intangible asset impairment tests during the fourth quarter of fiscal 2023 utilizing a qualitative analysis and concluded it was more likely than not the fair value of our trade name was greater than its carrying value and no impairment charge was required.

 

12

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

  

 

(11)

Other Current Liabilities

 

The following table summarizes the nature of the amounts within Other current liabilities (in thousands):

 

   

December 31,

   

June 30,

 
   

2023

   

2023

 
                 

Income taxes payable

  $ 629     $ 266  

Deferred liability, short-term (1)

    1,528       2,620  

Financing lease liabilities, short-term

    154       378  

Customer financing program rebate

    333       433  

Other current liabilities

    3,217       3,491  

Other current liabilities

  $ 5,861     $ 7,188  

 

 

(1)

As of December 31, 2023, the deferred liability balance associated with the sale-leaseback transaction completed on August 1, 2022 was $1.5 million which was all recorded in Other current liabilities on our consolidated balance sheet. Refer to Note 6, Leases, for further disclosure on the transaction.

 

 

(12)

Income Taxes

 

The Company's process for determining the provision for income taxes involves using an estimated annual effective tax rate which is based on expected annual income and statutory tax rates across the various jurisdictions in which we operate. We recorded a provision for income tax expense of $5.9 million and $11.1 million, respectively, for the three and six months ended December 31, 2023 compared with $9.8 million and $19.9 million in the prior year comparable periods. Our consolidated effective tax rate was 25.5% for both the three and six months ended December 31, 2023 compared with 25.7% and 25.5% in the prior year comparable periods. Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.

 

We recognize interest and penalties related to income tax matters as a component of income tax expense. As of December 31, 2023, we had $3.5 million of unrecognized tax benefits compared with $3.0 million as of June 30, 2023. It is reasonably possible that various issues relating to $0.4 million of the total gross unrecognized tax benefits as of December 31, 2023 will be resolved within the next 12 months as exams are completed or statutes expire. If recognized, $0.3 million of unrecognized tax benefits would reduce our income tax expense in the period realized.

 

 

(13)

Credit Agreement

 

On January 26, 2022, the Company and most of its domestic subsidiaries (the “Loan Parties”) entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent and syndication agent and Capital One, National Association, as documentation agent. The Credit Agreement amends and restates the Second Amended and Restated Credit Agreement, dated as of December 21, 2018, as amended. The Credit Agreement provides for a $125 million revolving credit facility (the “Facility”), subject to borrowing base availability, with a maturity date of January 26, 2027. The Credit Agreement also provides the Company with an option to increase the size of the facility up to an additional amount of $60 million. We incurred financing costs of $0.5 million during fiscal 2022, which are being amortized as interest expense within Interest and other financing costs in the consolidated statements of comprehensive income over the remaining life of the Credit Agreement using the effective interest method.

 

Availability. The availability of credit at any given time under the Facility will be constrained by the terms and conditions of the Credit Agreement, including the amount of collateral available, a borrowing base formula based upon numerous factors including the value of eligible inventory and eligible accounts receivable, and other restrictions contained in the Facility. All obligations under the Facility are secured by assets of the Loan Parties including inventory, receivables and certain types of intellectual property. Total borrowing base availability under the Facility was $121.0 million at both December 31, 2023 and June 30, 2023.

 

Borrowings. At the Company’s option, borrowings under the Facility bear interest, based on the average quarterly availability, at an annual rate of either (a) Adjusted Term SOFR Rate (defined as the Term SOFR Rate for such interest period plus 0.10%) plus 1.25% to 2.0%, or (b) Alternate Base Rate (defined as the greatest of (i) the prime rate, (ii) the Federal Reserve Bank of New York (NYRFB) rate plus 0.5%, or (iii) the Adjusted Term SOFR Rate for a one-month interest period plus 1.0%) plus 0.25% to 1.0%. We had no outstanding borrowings under the Facility as of December 31, 2023, June 30, 2023, or at any time during fiscal 2024 and 2023. Since we had no outstanding borrowings during fiscal 2024 and 2023, there was no related interest expense during these periods.

 

13

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

 

Covenants and Other Ratios. The Facility contains various restrictive and affirmative covenants, including required financial reporting, limitations on the ability to grant liens, make loans or other investments, incur additional debt, issue additional equity, merge or consolidate with or into another person, sell assets, pay dividends or make other distributions or enter into transactions with affiliates, along with other restrictions and limitations similar to those frequently found in credit agreements of this type and size. Loans under the Facility may become immediately due and payable upon certain events of default (including failure to comply with covenants, change of control or cross-defaults) as set forth in the Facility.

 

The Facility does not contain any significant financial ratio covenants or coverage ratio covenants other than a fixed charge coverage ratio covenant based on the ratio of (a) EBITDA, plus cash Rentals, minus Unfinanced Capital Expenditures to (b) Fixed Charges, as such terms are defined in the Facility. The fixed charge coverage ratio covenant, set at 1.0 to 1.0 and measured on a trailing period of four consecutive fiscal quarters, only applies in certain limited circumstances, including when the unused availability under the Facility drops below $14.0 million. At no point during fiscal years 2024 or 2023, did the unused availability under the Facility fall below $14.0 million, thus the Fixed-Charge Coverage Ratio (FCCR) Covenant did not apply. At both December 31, 2023 and June 30, 2023, we were in compliance with all the covenants under the Facility.

 

Letters of Credit. At both December 31, 2023 and June 30, 2023, there was $4.0 million of standby letters of credit outstanding under the Facility.

 

 

(14)

Restructuring and Other Charges, Net of Gains

 

Restructuring and other charges, net of gains were as follows (in thousands):

 

   

Three months ended
December 31,

   

Six months ended
December 31,

 
   

2023

   

2022

   

2023

   

2022

 

Orleans, Vermont flood

  $ 250     $ -     $ 2,346     $ -  

Gain on sale-leaseback transaction

    (655 )     (654 )     (1,310 )     (2,911 )

Severance and other charges

    170       458       221       719  

Total Restructuring and other charges, net of gains

  $ (235 )   $ (196 )   $ 1,257     $ (2,192 )

 

Activity within restructuring and other charges, net of gains are summarized in the table below (in thousands):

 

   

Balance

   

Fiscal 2024 Activity

   

Balance

   
   

June 30, 2023

   

Expenses/(Gain)

   

Non-Cash

   

Payments

   

Receipts

   

December 31, 2023

   

Orleans, Vermont flood(1)

                                                 

Inventory write-downs and overhead manufacturing costs

  $ -     $ 1,426     $ 1,426     $ -     $ -     $ -    

Repair and remediation costs

    -       2,415       -       (2,330 )     -       85   (1) 

Insurance recoveries and grant proceeds

    -       (1,495 )     -       -       1,405       (90 ) (2)

Sub-total

  $ -     $ 2,346     $ 1,426     $ (2,330 )   $ 1,405     $ (5 )  
                                                   

Gain on sale-leaseback transaction

  $ 2,838     $ (1,310 )   $ -     $ -     $ -     $ 1,528   (3) 

Severance and other charges

    321       221       -       (258 )     -       284    

Total Restructuring and other charges, net of gains

  $ 3,159     $ 1,257     $ 1,426     $ (2,588 )   $ 1,405     $ 1,807    

 

(1)

In July 2023, our wood furniture manufacturing operations located in Orleans, Vermont sustained damage from flooding of the nearby Barton River. In addition to losses related to wood furniture inventory parts and state-of-the-art manufacturing equipment, the flooding also resulted in a temporary work stoppage for many Vermont associates and a disruption and delay of shipments. Losses incurred from the disposal of damaged inventory, inoperable machinery equipment from water damage, facility cleanup, and restoration, was $2.3 million, net of insurance recoveries and grant proceeds. The remaining amount of repair and remediation costs to be paid as of December 31, 2023 is accrued for within Accounts payable and accrued expenses.

 

(2)

The Vermont Department of Economic Development awarded Ethan Allen a $0.5 million grant through its Business Emergency Gap Assistance Program. These funds were used toward the cleanup and restoration efforts. Insurance proceeds received during fiscal 2024 totaled $1.4 million with an additional $0.1 million to be received by Ethan Allen within the next three months, which is reflected within Prepaid expenses and other current assets.

 

(3)

In August 2022, we sold and subsequently leased back a retail design center and recognized a net gain of $1.3 million for the six months ended December 31, 2023. The remaining deferred liability of $1.5 million as of December 31, 2023 is recorded within Other current liabilities on our consolidated balance sheet and will be recognized over the remaining life of the lease. Refer to Note 6, Leases, for further discussion on the sale-leaseback transaction.

 

14

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

  

 

(15)

Earnings Per Share

 

The following is a reconciliation of the numerators and denominators we used in our computations of basic and diluted earnings per share (“EPS”):

 

   

Three months ended

   

Six months ended

 
   

December 31,

   

December 31,

 

(in thousands, except per share data)

 

2023

   

2022

   

2023

   

2022

 

Numerator (basic and diluted):

                               

Net income available to common Shareholders

  $ 17,411     $ 28,166     $ 32,350     $ 58,046  
                                 

Denominator:

                               

Basic weighted average shares common shares outstanding