Ethan Allen Files Stockholder Presentation and Letter to Stockholders
(Thomson Reuters ONE) -
Ethan Allen Files Stockholder Presentation and Letter to Stockholders
Highlights Proven Track Record of Delivering Stockholder Value
Ethan Allen Board Urges Stockholders to Vote for ALL of Highly Qualified
Nominees
on the WHITE Proxy Card Today
DANBURY, CT, November 9, 2015 (GLOBE NEWSWIRE) - Ethan Allen Interiors Inc.
("Ethan Allen" or the "Company") (NYSE:ETH ) today filed a stockholder
presentation and letter to stockholders with the Securities and Exchange
Commission in connection with the Company's 2015 Annual Meeting of Stockholders,
which will be held on November 24, 2015. Ethan Allen's presentation and other
materials regarding the Ethan Allen Board's recommendation for the 2015 Annual
Meeting can be found on the Investor Relations section of the Company's website
at www.ethanallen.com/investors.
Ethan Allen believes that electing the entire Ethan Allen slate of director
nominees at the 2015 Annual Meeting is in the best interests of all Ethan Allen
stockholders. Ethan Allen's Board's nominees on the WHITE proxy card include
James B. Carlson, Clinton A. Clark, John J. Dooner, Jr., Domenick J. Esposito,
M. Farooq Kathwari, James W. Schmotter and Tara I. Stacom.
Highlights of the stockholder presentation and letter to stockholders include:
WE ARE POSITIONED TO CONTINUE OUR GROWTH IN EARNINGS, CASH FLOW AND SALES
* Our fiscal first quarter ended September 30, 2015 had industry leading gross
margin of 55% and operating margin of 11%, and the Company increased cash
dividends by 38% over the prior year quarter.
* In October 2015, following receipt by our Design Centers of the phase 3 new
product offerings, we accelerated our advertising and had record written
orders for the month of October 2015 that exceeded any prior month of
October. Total written orders in the Company's Retail Division for the month
of October increased 33.9% and comparable written orders increased 32.3%,
compared to the previous year October. On an annualized basis, October
written order results indicate that Ethan Allen can generate revenues at the
$1 billion level within its current structure - our retail network in North
America is equipped to service annual sales more than $1 billion.
* Over the last five years, our sales have grown at a 5% compound annual
growth rate (CAGR), our adjusted operating income by a 119% CAGR and our
adjusted EPS by a 25% CAGR. During this period, we generated $277 million of
cash, reduced $210 million of debt, paid $61 million in dividends, and
increased our regular dividend by 127%.
* Our "Opportunity Scenarios" (page 16 of our November 9, 2015 stockholder
presentation at ethanallen.com/investors) model the operating leverage that
our vertically integrated structure provides. At revenues of $1.1 billion,
we have the opportunity to achieve gross margin of 56% and operating margin
of 15%, resulting in a significant increase to earnings per share.
WE HAVE REPOSITIONED MAJOR ELEMENTS OF OUR VERTICALLY INTEGRATED ENTERPRISE
* Founded in 1932, Ethan Allen has become an iconic brand with unparalleled
name recognition for quality, service, and value. The Company has constantly
reinvented its product offerings and its structure to stay relevant.
* We are the world's leading interior design company. We have approximately
1,500 interior designers in our North American Design Centers. More than
50% have joined Ethan Allen since 2011, bringing with them entrepreneurial
backgrounds and previous professional interior design experience.
* The majority of our 300 Design Centers worldwide are either new or have been
relocated in the last 10 years. Recently, most have been renovated to create
a stronger projection and reflect our new product offerings. We are
confident we can further increase sales beyond $1 billion through our growth
initiatives that include developing Design Centers in 40 new U.S. markets,
with seven currently underway, as well as international markets.
* We have refreshed our product offerings to reflect classic American design.
Three phases of products were introduced, with phase 3 delivered to Design
Centers in September and October of 2015. New products have been well
received as October written orders reflect. Over 70% of what we sell is
manufactured in our own North American workshops, and 80% of our furniture
products are custom-made to order. Our vertically integrated model provides
a distinct differentiation for the brand, strong operating leverage
reflected in our gross margins and operating margins, and a lower inventory
requirement.
* We have enhanced our marketing efforts by combining technology and personal
service. Ethan Allen's website is a key marketing and branding medium. The
website provides a rich branding experience for the consumer while
introducing them to Ethan Allen's interior design services and product
offerings that reflect today's focus on fashion for the home. Ethan Allen's
digital strategy is two-fold. The first objective is to drive traffic into
Ethan Allen's expansive brick and mortar network. With 200+ Design Centers
in North America, about 70% of Ethan Allen's target demographic is within
close proximity to an Ethan Allen Design Center. Approximately 90% of
clients who visit Design Centers have visited our website. When clients come
into a Design Center and experience personal design service, it results in
higher average tickets, fewer returns and more repeat sales. The second
objective is to increase ecommerce sales through our website redesign, the
remerchandising of our online product assortment with streamlined custom
options, easy to buy "as shown" products and through expanded digital
marketing. These initiatives make ecommerce sales accretive to our brick and
mortar sales.
* We consolidated from 30 manufacturing facilities to 6 in the U.S. and opened
two new major manufacturing operations within the last 7 years in North
America. Our manufacturing facilities make 70% of our products, and with the
support of other partners, we are now in a position to service $1 billion in
sales. We are in the process of building a new 300,000-square-foot
manufacturing plant for future positioning.
WE HAVE A STRONG LEADERSHIP TEAM IN PLACE TO GROW AND MANAGE
OUR VERTICALLY INTEGRATED STRUCTURE
* Our strong management team has deep expertise across product development,
manufacturing, merchandising, marketing, company-operated retail, business
development, licensee relations and operations.
* Our strong Retail Division is comprised of approximately 200 management
associates, including five vice presidents, most of who have come up through
the ranks and are deeply experienced with Ethan Allen products and services.
* We have a strong base of independent licensees in the U.S. with average
associations of more than 30 years. We also have strong partners
internationally, with our largest independent retailer located in China.
* Stability of leadership and management are important aspects of our
associations.
STRONG CORPORATE GOVERNANCE - CORNERSTONE OF OUR ENTERPRISE
* Ethan Allen has an experienced and engaged board with diversified talent,
which is continually refreshed. 83% of the six independent directors are new
in the past five years, 50% are new in the past three years and two are new
in the past year. Directors received +93% of "For" voting support at the
2014 annual stockholder meeting.
* The Company's Chairman and CEO, M. Farooq Kathwari, is the only non-
independent director; however, he is the Company's largest shareholder,
owning more than 11% of the Company's outstanding common stock, and his
interests are fully aligned with the interests of all shareholders.
* The CEO voluntary reduced his compensation by $533,000, $622,656, and
$525,204 for fiscal years 2013, 2014, and 2015, respectively. The Company
received 95% vote in support on "Say on Pay" at the 2014 annual meeting. The
new CEO employment agreement maintains the base salary of 2011 and ties 70%
of total compensation to the Company's future performance.
LEVERAGING OUR REAL ESTATE TO CREATE ADDITIONAL VALUE
* We currently own 53 Design Centers after selling and repositioning 38
properties, realizing about $67.2 million in net sale proceeds.
* We own 8 manufacturing facilities and 2 national distribution centers after
consolidating and selling 20 facilities, realizing about $10.5 million in
net sale proceeds.
* The new $250 million debt offering we plan to complete this quarter, the
proceeds of which will be used to return capital to stockholders and help
grow our business, sensibly utilizes the value of our owned real estate.
* Utilizing owned properties as collateral permits us to continue the
strategic repositioning of our real estate footprint.
* Real estate used as collateral for debt allows debt that can be repaid.
Subsequently, our real estate can be collateralized again for future debt
issuances.
* Ethan Allen plans to monetize its real estate to return capital to
stockholders and to maintain the flexibility required for our repositioning
strategies while also maintaining prudent total leverage at about 2.8x.
OUR PERSPECTIVES ON SANDELL INVOLVEMENT
* Sandell is seeking control of the Board without a defined path to implement
its ideas. Sandell has thrown out a number of ideas to 'see what sticks,'
but has presented no credible path for how it will implement any of its
ideas to create value.
* Sandell has not presented an ecommerce strategy and none of its nominees
have an ecommerce background.
* Sandell's idea of switching from a manufacturer to an importer and moving
towards a more commodity-based selling model, reflects a serious lack of
understanding of our business as a vertically integrated leading interior
design company.
* On the one hand, Sandell states that Ethan Allen has "unparalleled brand
recognition" and on the other hand suggests short-term strategies to utilize
other personality names to market products, diluting the Ethan Allen brand.
This is a short-term thinking strategy.
* Sandell's new store-opening ideas reflect a lack of understanding of retail
real estate optimization based on customer geodemographic and psychographic
segmentation data.
* Sandell's financially engineered sale-leaseback type transactions would
significantly restrict Ethan Allen from continuing its strategic
repositioning of its retail footprint and place $25-$35 million of
additional cash rent burden on the Company.
We believe a significant majority of Sandell's ideas are misguided and
uninformed. Additionally, they are simply repackaging many of the strategies
already underway at Ethan Allen as part of the Company's transformation
strategy, which we believe underscores why Sandell's nominees would not be
additive to the Ethan Allen Board.
Sandell's nominees have no experience or limited expertise in a number of key
areas critical to Ethan Allen's business, even those where Sandell is seeking
change, including:
* No experience managing a vertically integrated business, which presents
unique challenges and requires specialized strategies and operating
expertise - in fact, only one Sandell nominee has CEO-level experience.
Further, Ken Pilot is the only Sandell nominee with a background in
retailing, and Ethan Allen interviewed him for a senior merchandising
position. However, we did not believe he was suited for the position;
* Limited marketing and ecommerce expertise, despite Sandell's focus on Ethan
Allen's
ecommerce strategy;
* Finance-focused experience that would not be additive to the Ethan Allen
Board where all of the incumbent directors have finance experience; and
* Limited real estate experience, despite Sandell's focus on the Company's
real estate assets. In fact, Sandell's only nominee with real estate
expertise , Annelise Osborne, is a senior analyst at Moody's. We are
concerned this raises concerns around confidentiality of information and
potential conflict of interest with respect to a Moody's officer being
nominated on a "dissident" slate, while at the same time Moody's is retained
by the Company to provide for a credit rating of our proposed $250 million
debt offering.
Despite just becoming a shareholder in February 2015, and only owning
approximately 5.5% of Ethan Allen shares, Sandell is seeking control of the
Board through nominees lacking important and relevant experience in Ethan
Allen's global, vertically integrated business. These nominees have no
experience in areas critical to the execution of the Company's strategy, and we
strongly urge you to disregard any gold proxy cards from Sandell that you may
receive.
About Ethan Allen
Ethan Allen Interiors Inc. (NYSE: ETH) is a leading interior design Company and
manufacturer and retailer of quality home furnishings. The Company offers
complimentary 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 one plant each 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.
Forward Looking Statements
This press release should also be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended June 30, 2015 (the "2015 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 include statements about such matters as:
our capital structure; future or targeted operational and financial performance;
liquidity, capital and debt levels; strategic plans; the pending proxy contest,
the impacts thereof and other possible changes in the composition of the
Company's board of directors; stock repurchase and dividend plans; our inability
to secure debt or other forms of financing; demand for our products; our
position in markets we serve; regional and global economic and industry market
conditions and changes therein. 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 2015 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.
Additional Information
The Company and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the Company`s stockholders in
respect of the 2015 annual meeting. Ethan Allen has filed with the U.S.
Securities and Exchange Commission a definitive proxy statement and an
accompanying white proxy card in connection with the 2015 annual meeting (the
"2015 proxy materials"). The 2015 proxy materials contain important information
about the Company, its directors and executive officers, the 2015 annual meeting
and related matters. Stockholders are strongly urged to read the 2015 proxy
materials, any amendments and supplements thereto, and the accompanying white
proxy card carefully. Stockholders will be able to obtain free copies of the
2015 proxy materials and other documents filed with the SEC by the Company
through the web site maintained by the SEC at www.sec.gov and on the company`s
web site at http://www.ethanallen.com/en_us/investor-relations1.html.
Information regarding the identity of potential participants, and their direct
or indirect interests, by security holdings or otherwise, are set forth in the
2015 proxy materials.
Ethan Allen Interiors Inc.
Investor / Media Contact:
Corey Whitely
Executive Vice President, Administration
Chief Financial Officer and Treasurer
cwhitely(at)ethanalleninc.com
Non-GAAP reconciliation
2015 2011 2010
Operating income $ 65.9 $ 31.9 $ (11.7)
Special items 4.6 1.8 13.1
Adjusted Operating income $ 70.5 $ 33.7 $ 1.4
EPS $ 1.27 $ 1.01 $ (1.53)
Special items 0.14 (0.43) 1.38
Adjusted EPS $ 1.41 $ 0.58 $ (0.15)
Special items consist of restructuring, transition charges and certain other
items.
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Ethan Allen Interiors Inc. via GlobeNewswire
[HUG#1965685]
Unternehmensinformation / Kurzprofil:
Datum: 10.11.2015 - 00:57 Uhr
Sprache: Deutsch
News-ID 433188
Anzahl Zeichen: 20173
contact information:
Town:
DANBURY
Kategorie:
Business News
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