ETHAN ALLEN REPORTS FISCAL 2017 THIRD QUARTER RESULTS
(Thomson Reuters ONE) -
ETHAN ALLEN REPORTS FISCAL 2017 THIRD QUARTER RESULTS
DANBURY, CT - April 26, 2017 - Ethan Allen Interiors Inc. ("Ethan Allen" or the
"Company") (NYSE: ETH) today reported operating results for the fiscal 2017
third quarter ended March 31, 2017. Please refer to the accompanying financial
statements and reconciliation to non-GAAP measures discussed below.
Summary Financial Information for Third Fiscal Quarter Ended March 31, 2017:
* Consolidated net sales of $180.5 million, lower by 5.3% from previous year
when consolidated net sales increased by 10.0%
* Diluted earnings per share ("EPS") of $0.08 compared to previous year of
$0.36; adjusted EPS of $0.23 compared to previous year adjusted EPS of $0.34
when adjusted EPS increased 88.9% (See Exhibit 1 for a reconciliation of
GAAP to non-GAAP EPS)
* Paid dividends of $5.3 million, an increase of 34.6%
* Gross margin of 52.5% compared to 55.5%. Excluding a special charge in the
current quarter, adjusted gross margin was 56.0% compared to 55.5% (See
Exhibit 1 for a reconciliation of GAAP to non-GAAP gross margin)
* Operating income of $3.9 million, compared to $16.0 million; adjusted
operating income of $10.3 million compared to $15.5 million in previous year
when adjusted operating income increased 55.0% (See Exhibit 1 for a
reconciliation of GAAP to non-GAAP operating income)
* Operating margin of 2.2%, compared to previous year of 8.4%; adjusted
operating margin of 5.7%, compared to previous year of 8.2% (See Exhibit 1
for a reconciliation of GAAP to non-GAAP operating margin)
* Retail net sales lower by 6.7% from an increase of 17.5% in the previous
year period, and comparable store sales lower by 8.2% from an increase of
18.6% in the previous year period
Farooq Kathwari, Chairman and CEO, stated, "We are well positioned to grow with
our many initiatives including refreshed and relevant product offerings, the
strengthening of our North American manufacturing, logistics and retail network
of 200 design centers staffed by 1,500 interior design professionals,
investments in technology and increased spend on advertising."
Mr. Kathwari further stated, "We are also strengthening our distribution
channels including collaboration with Amazon to be launched this summer, the
recent launch of Ethan Allen | Disney offerings on disneystore.com, the U.S.
State Department contract, additional important contract initiatives and
increased business opportunity with our collaboration in China where we are
launching Ethan Allen | Disney this summer."
Mr. Kathwari concluded, "The third quarter results were impacted with very
strong prior year comparisons when sales increased 10% and EPS increased 89%. In
addition, the uncertain political environment and customer expectations of
higher discounting contributed to lowering sales. During the quarter, we
increased advertising by 21% and plan to increase by about the same amount in
our fourth quarter. During this quarter, we also made a decision to reduce
clearance and discontinued inventory at both our wholesale and retail segments
through donation within the next three months, resulting in a pre-tax charge of
$6.4 million in the quarter."
FISCAL 2017 THIRD QUARTER FINANCIAL RESULTS:
Consolidated
Net sales for the three months ended March 31, 2017 were $180.5 which decreased
5.3% compared to $190.6 in the comparable prior year period.
Gross profit was $94.7 million for the three months ended March 31, 2017
compared to $105.7 million and gross margin was 52.5% compared to 55.5% in the
comparable prior year period. Adjusted gross margin was 56.0% compared to 55.5%
in the comparable prior year period. Included in gross profit was a $6.4 million
charge for write-down of inventory. Retail sales as a percent of total
consolidated sales decreased to 78.6% from 79.8% decreasing our consolidated
gross margin due to mix, partially offset by improved manufacturing
efficiency.(See Exhibit 1 for a reconciliation of GAAP to non-GAAP presentation)
Operating expenses for the three months ended March 31, 2017 were $90.8 million
or 50.3% of sales compared to $89.7 million or 47.1% of sales in the comparable
prior year period. This was primarily due to increased costs in the current year
for advertising costs, which increased 21% over the prior year quarter, costs
associated with new retail design centers, and a prior year gain on the sale of
real estate in our retail segment, which were partially offset by other
operating expenses which decreased $3.2 million during the quarter.
Operating income for the three months ended March 31, 2017 was $3.9 million or
2.2% of sales compared to $16.0 million or 8.4% of sales in the comparable prior
year period. Adjusted operating income for the three months ended March
31, 2017 was $10.3 million or 5.7% of sales compared to $15.5 million or 8.2% of
sales in the comparable prior year period. The lower operating income and
margin in the current quarter was driven primarily by increased expenses in the
current year due to the inventory write-down, and the impact of reduced current
year sales. (See Exhibit 1 for a reconciliation of GAAP to non-GAAP
presentation)
Net income was $2.3 million or $0.08 per diluted share for the three months
ended March 31, 2017 and $10.2 million or $0.36 per diluted share in the prior
year comparable period. Adjusted net income was $6.3 million or $0.23 per
diluted share for the three months ended March 31, 2017 and $9.6 million or
$0.34 per diluted share in the prior year comparable period. (See Exhibit 1 for
a reconciliation of GAAP to non-GAAP presentation)
Retail Segment
Net sales for the three months ended March 31, 2017 were $141.9 million compared
to $152.2 million in the prior year comparable period, a decrease of 6.7%
compared to the prior year.
Total written orders for the retail division of $152.7 million for the third
quarter of fiscal 2017 were down 7.7% compared to the same prior year period,
and comparable Design Center written orders of $141.3 million were down 10.9%
over the same period.
Operating income reflected an operating loss of $7.3 million for the three
months ended March 31, 2017, a decrease of $7.9 million from operating income of
$0.6 million over the same prior year period. The lower operating income in the
current quarter was driven primarily by the inventory write-down, the prior year
income on the sale of real estate, and the impact of reduced current year sales.
Additionally, during the current and previous year quarter incurred $1.4 million
and $1.0 million respectively in losses due to new design centers.
Wholesale Segment
Net sales of $110.8 million decreased 5.4% compared to $117.2 million in the
prior year quarter, with decreased sales to our retail and independent dealers
in the United States, partly offset by an increase in international sales.
Operating income of $9.7 million decreased 38.3% compared to $15.8 million in
the prior year quarter. The current year was impacted by the inventory write-
down, increased advertising and lower sales by retail.
FISCAL 2017 YEAR-TO-DATE FINANCIAL RESULTS:
Net sales for the nine months ended March 31, 2017 were $568.5 million, a
decrease of 3.4% compared to $588.5 million, due to lower sales in the second
and third quarters, primarily in the wholesale segment.
Gross profit was $311.3 million for the nine months ended March 31, 2017
compared to $326.4 million and gross margin was 54.8%, compared to 55.5%.
Adjusted gross margin was 55.9% compared to 55.5% in the comparable prior year
period. Included in gross profit was the $6.4 million charge for write-down of
inventory recognized during the current quarter. Partially offsetting the
inventory write-down was an increase in retail sales mix, and a year-to-date
reduction in clearance activity. Retail sales accounted for 79.2% of sales in
the current year compared to 78.7% in the prior year. (See Exhibit 1 for a
reconciliation of GAAP to non-GAAP presentation)
Operating expenses for the nine months ended March 31, 2017 were $272.0 million
or 47.8% of sales compared to $263.0 million or 44.7% of sales in the comparable
prior year period. This was primarily due to a prior year gain versus a current
year loss on the sale of real estate in our retail segment, increased costs in
the current year for advertising, occupancy and warehouse costs on a net
increase of five design centers, and expenses associated with the Ethan Allen |
Disney launch.
Operating income for the nine months ended March 31, 2017 was $39.4 million or
6.9% of sales compared to $63.4 million or 10.8% of sales in the comparable
prior year period. Operating margin of 6.9% compared to 10.8%, while adjusted
operating margin of 8.2% compared to 10.5% in the prior year. Adjusted operating
income for the nine months ended March 31, 2017 was $46.4 million compared to
$61.8 million. The lower operating income and margin was driven primarily by
increased expenses in the current year due to the inventory write-down, and the
impact of reduced current year sales. (See Exhibit 1 for a reconciliation of
GAAP to non-GAAP presentation)
Net income of $24.5 million compared to $39.9 million, and excluding special
items, net income of $29.0 million compared to $38.5 million. Earnings per
diluted of $0.88 compared to $1.40, and excluding special items, EPS of $1.04
compared to $1.35. (See Exhibit 1 for a reconciliation of GAAP to non-GAAP
presentation)
Balance Sheet and Cash Flow
Total debt of $30.0 million decreased $11.8 million from June 30, 2016 due to
scheduled repayments and a $10 million payment on our revolving credit facility.
Total cash and securities, including restricted cash, of $71.0 million increased
$10.5 million from June 30, 2016, and working capital increased $5.3 million
during the same period.
Inventories of $154.2 million decreased by $8.1 million from June 30, 2016,
primarily from our inventory write down of $6.4 million.
Capital expenditures, including acquisitions, were $15.1 million fiscal year to
date at March 31, 2017 compared to $13.8 million for the same prior year period.
Dividends and share repurchases; During the quarter ended March 31, 2017, we
paid $5.3 million of dividends, a 34.6% increase over the same prior year
quarter.
Analyst Conference Call
Ethan Allen will conduct an analyst conference call at 5:00 PM (Eastern) on
Wednesday, April 26 to discuss its financial results and business initiatives.
The live webcast is accessible via the Company's website at
http://ethanallen.com/investors. To participate in the call, dial 844-822-0103
(or 614-999-9166 for international callers) and provide conference ID#
50728502. An archived recording of the call will be made available for at least
60-days on the Company's website.
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 nine manufacturing facilities including six
manufacturing plants and one sawmill in the United States plus one plant each in
Mexico and Honduras. Approximately seventy five percent of its products are made
in its North American plants. For more information on Ethan Allen's products and
services, visit ethanallen.com.
Investor Relations Contact
Corey Whitely
Executive Vice President, Administration
Chief Financial Officer and Treasurer
IR(at)ethanallen.com
Non-GAAP Financial Information
This press release is intended to supplement, rather than to supersede, the
Company's condensed consolidated financial statements, which are prepared and
presented in accordance with U.S. Generally Accepted Accounting Principles
("GAAP"). In this press release we have included financial measures that are not
prepared in accordance with GAAP. The Company uses the following non-GAAP
financial measures: "adjusted operating expenses", "adjusted operating income",
"adjusted operating margin", "adjusted net income", "adjusted earnings per
share", and earnings before interest, taxes, depreciation and amortization
("EBITDA") (collectively "non-GAAP financial measures"). We compute these non-
GAAP financial measures by adjusting the GAAP measures to remove the impact of
certain recurring and non-recurring charges and gains and the tax effect of
these adjustments. The presentation of this financial information is not
intended to be considered in isolation or as a substitute for, or superior to,
the financial information prepared and presented in accordance with GAAP. The
Company uses these non-GAAP financial measures for financial and operational
decision making and as a means to evaluate period-to-period comparisons. The
Company believes that they provide useful information about operating results,
enhance the overall understanding of past financial performance and future
prospects, and allow for greater transparency with respect to key metrics used
by management in its financial and operational decision making. The non-GAAP
financial measures used by the Company in this press release may be different
from the non-GAAP financial measures, including similarly titled measures, used
by other companies. A reconciliation of these financial measures to the most
directly comparable financial measure reported in accordance with GAAP is also
provided at the end of this press release.
Forward-Looking Information
This press release and any related webcasts, conference calls and other related
discussions should also be read in conjunction with the Company's Annual Report
on Form 10-K for the year ended June 30, 2016 and other reports filed with the
Securities and Exchange Commission.
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which
represent our management's beliefs and assumptions concerning future events
based on information currently available to us relating to our future results.
Such forward-looking statements are identified in this press release and in
documents incorporated herein by reference by use of forward-looking words such
as "anticipate", "believe", "plan", "estimate", "expect", "intend", "will",
"may", "continue", "project", "target", "outlook", "forecast", "guidance", and
similar expressions and the negatives of such forward-looking words. These
forward-looking statements are subject to management decisions and various
assumptions about future events, and are not guarantees of future performance. A
number of risks and uncertainties could cause actual results to differ
materially from those anticipated in the forward-looking statements, including,
but not limited to: changes in global or regional political or economic
conditions, including changes in governmental and central bank policies; our
ability to secure debt or other forms of financing; the effect of operating
losses on our ability to pay cash dividends; changes in business conditions in
the furniture industry, including changes in consumer spending patterns, tastes
and demand for home furnishings; competition from overseas manufacturers and
domestic retailers and competitive factors such as changes in products or
marketing efforts of others; effects of our brand awareness and marketing
programs, including changes in demand for our existing and new products; our
ability to locate new design center sites and/or negotiate favorable lease terms
for additional design centers or for the expansion of existing design centers;
fluctuations in interest rates and the cost, availability and quality of raw
materials; pricing pressures; the effects of labor strikes; weather conditions
that may affect sales; volatility in fuel, utility, transportation and security
costs; the potential effects of natural disasters affecting our suppliers or
trading partners; the effects of terrorist attacks or conflicts or wars
involving the United States or its allies or trading partners; and those matters
discussed in "Item 1A - Risk Factors" of our Annual Report on Form 10-K for the
year ended June 30, 2016, and elsewhere in this press release and our SEC
filings. Accordingly, actual circumstances and results could differ materially
from those contemplated by the forward-looking statements.
Given the risks and uncertainties surrounding forward-looking statements, you
should not place undue reliance on these statements. Many of these factors are
beyond our ability to control or predict. Our forward-looking statements speak
only as of the date of this press release. Other than as required by law, we
undertake no obligation to update or revise forward-looking statements, whether
as a result of new information, future events, or otherwise.
Ethan Allen Interiors Inc.
Selected Financial Information
Unaudited
(in millions)
Selected Consolidated Financial Data:
Three Months
Ended Nine Months Ended
03/31/17 03/31/16 03/31/17 03/31/16
Net sales $180.5 $190.6 $568.5 $588.5
Gross margin 52.5% 55.5% 54.8% 55.5%
Adjusted gross margin * 56.0% 55.5% 55.9% 55.5%
Operating margin 2.2% 8.4% 6.9% 10.8%
Adjusted operating margin * 5.7% 8.2% 8.2% 10.5%
Net income $2.3 $10.2 $24.5 $39.9
Adjusted net income * $6.3 $9.6 $29.0 $38.5
Operating cash flow $26.3 $17.6 $53.8 $38.6
Capital expenditures $3.9 $6.5 $15.1 $13.8
Company stock repurchases (trade date) $0.0 $7.1 $3.4 $19.3
EBITDA $8.8 $20.9 $54.3 $77.9
EBITDA as % of net sales 4.9% 11.0% 9.5% 13.2%
Adjusted EBITDA * $15.2 $20.4 $61.3 $76.2
Adjusted EBITDA as % of net sales * 8.4% 10.7% 10.8% 12.9%
Selected Financial Data by Business
Segment:
Three Months
Ended Nine Months Ended
03/31/17 03/31/16 03/31/17 03/31/16
Retail
Net sales $141.9 $152.2 $450.5 $462.9
Operating margin -5.2% 0.4% -0.9% 1.9%
Adjusted operating margin * -1.0% 0.1% 0.5% 1.6%
Wholesale
Net sales $110.8 $117.2 $339.1 $364.0
Operating margin 8.8% 13.5% 11.9% 15.4%
Adjusted operating margin * 10.8% 13.5% 12.6% 15.4%
Ethan Allen Interiors Inc.
Condensed Consolidated Statements of
Comprehensive Income
Unaudited
(in thousands)
Three Months Ended Nine Months Ended
03/31/17 03/31/16 03/31/17 03/31/16
Net sales $180,501 $190,583 $568,460 $588,509
Cost of sales 85,766 84,866 257,134 262,061
Gross profit 94,735 105,717 311,326 326,448
Selling, general and administrative
expenses 90,815 89,708 271,975 263,032
Operating income 3,920 16,009 39,351 63,416
Interest and other income (expense) -77 149 248 324
Interest expense 302 580 949 1,467
Income before income taxes 3,541 15,578 38,650 62,273
Income tax expense 1,259 5,400 14,139 22,414
Net income $2,282 $10,178 $24,511 $39,859
Basic earnings per common share:
Net income per basic share $0.08 $0.37 $0.89 $1.41
Basic weighted average shares
outstanding 27,691 27,827 27,694 28,181
Diluted earnings per common share:
Net income per diluted share $0.08 $0.36 $0.88 $1.40
Diluted weighted average shares
outstanding 27,953 28,061 27,970 28,424
Comprehensive income:
Net income $2,282 $10,178 $24,511 $39,859
Other comprehensive income
Currency translation adjustment 1,998 166 (213) (1,229)
Other 3 6 (20) 20
Other comprehensive income (loss) net
of tax 2,001 172 (233) (1,209)
Comprehensive income $4,283 $10,350 $24,278 $38,650
Ethan Allen Interiors Inc.
Condensed Consolidated Balance Sheets
Unaudited
(in thousands)
March 31, June 30,
2017 2016
Assets
Current assets:
Cash and cash equivalents $63,677 $52,659
Accounts receivable, net 10,444 9,467
Inventories 154,225 162,323
Prepaid expenses & other current assets 24,602 23,755
Total current assets 252,948 248,204
Property, plant and equipment, net 272,122 273,615
Intangible assets, net 45,128 45,128
Restricted cash and investments 7,317 7,820
Other assets 2,388 2,642
Total Assets $579,903 $577,409
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debt 2,870 3,001
Customer deposits 60,527 60,958
Accounts payable 15,617 15,437
Accrued expenses & other current liabilities 43,766 43,951
Total current liabilities 122,780 123,347
Long-term debt 27,196 38,837
Other long-term liabilities 28,818 23,023
Total liabilities 178,794 185,207
Shareholders' equity:
Common stock 490 489
Additional paid-in-capital 378,261 374,972
Less: Treasury stock -628,300 -624,932
Retained earnings 655,533 646,315
Accumulated other comprehensive income -5,059 -4,846
Total Ethan Allen Interiors Inc. shareholders' equity 400,925 391,998
Noncontrolling interests 184 204
Total shareholders' equity 401,109 392,202
Total Liabilities and Shareholders' Equity $579,903 $577,409
Ethan Allen Interiors Inc.
Design Center Activity
Third Quarter Fiscal 2017
Unaudited
Company
Independent Owned Total
Balance at beginning of period 155 146 301
Additions (includes Relocations) ((1)) 2 2 4
Closings (includes Relocations) ((1)) (2) (2) (4)
Transfers 0 0 0
Balance at end of period 155 146 301
United States 49 140 189
International 106 6 112
((1) ) Relocations in additions & closing 1 2 3
Ethan Allen Interiors Inc.
GAAP Reconciliation
Three and Nine Months Ended March 31, 2017 and 2016
Unaudited
(in thousands, except per share amounts)
Three Months
Ended Nine Months Ended
March 31, March 31,
2017 2016 2017 2016
Net Income / Earnings Per Share
Net income $2,282 $10,178 $24,511 $39,859
Adjustments net of related tax effects * 4,060 -302 4,451 -1,057
Normalized income tax effects * -33 -286 32 -315
Adjusted net income $6,309 $9,590 $28,994 $38,487
Diluted weighted average shares
outstanding 27,953 28,061 27,970 28,424
Earnings per diluted share $0.08 $0.36 $0.88 $1.40
Adjusted earnings per diluted share $0.23 $0.34 $1.04 $1.35
Consolidated Gross Profit / Gross Margin
Gross profit $94,735 $105,717 $311,326 $326,448
Add: adjustments * 6,394 0 6,394 0
Adjusted gross profit * $101,129 $105,717 $317,720 $326,448
Net sales $180,501 $190,583 $568,460 $588,509
Gross margin 52.5% 55.5% 54.8% 55.5%
Adjusted gross margin * 56.0% 55.5% 55.9% 55.5%
Consolidated Operating Income / Margin
Operating income $3,920 $16,009 $39,351 $63,416
Add: adjustments * 6,394 -476 7,010 -1,664
Adjusted operating income * $10,314 $15,533 $46,361 $61,752
Net sales $180,501 $190,583 $568,460 $588,509
Operating margin 2.2% 8.4% 6.9% 10.8%
Adjusted operating margin * 5.7% 8.2% 8.2% 10.5%
Wholesale Operating Income / Margin
Wholesale operating income $9,729 $15,764 $40,399 $56,041
Add: adjustments * 2,241 0 2,241 0
Adjusted wholesale operating income * $11,970 $15,764 $42,640 $56,041
Wholesale net sales $110,819 $117,164 $339,076 $364,032
Wholesale operating margin 8.8% 13.5% 11.9% 15.4%
Adjusted wholesale operating margin * 10.8% 13.5% 12.6% 15.4%
Retail Operating Income / Margin
Retail operating income -$7,319 $629 -$4,149 $8,958
Add: adjustments * 5,925 -476 6,541 -1,664
Adjusted retail operating income * -$1,394 $153 $2,392 $7,294
Retail net sales $141,948 $152,174 $450,495 $462,917
Retail operating margin -5.2% 0.4% -0.9% 1.9%
Adjusted retail operating margin * -1.0% 0.1% 0.5% 1.6%
Ethan Allen Interiors Inc.
GAAP Reconciliation
Three and Nine Months Ended March 31, 2017 and
2016
Unaudited
(in thousands, except per
share amounts)
Three Months Ended Nine Months Ended
March 31, March 31,
2017 2016 2017 2016
EBITDA
Net income $2,282 $10,178 $24,511 $39,859
Add: interest expense, net 195 273 604 949
income tax expense 1,259 5,400 14,139 22,414
depreciation and
amortization 5,024 5,042 15,023 14,631
EBITDA $8,760 $20,893 $54,277 $77,853
Net sales $180,501 $190,583 $568,460 $588,509
EBITDA as % of net sales 4.9% 11.0% 9.5% 13.2%
EBITDA $8,760 $20,893 $54,277 $77,853
Add: adjustments * 6,394 -476 7,010 -1,664
Adjusted EBITDA $15,154 $20,417 $61,287 $76,189
Net sales $180,501 $190,583 $568,460 $588,509
Adjusted EBITDA as % of net
sales 8.4% 10.7% 10.8% 12.9%
* Adjustments consist of the
following:
Three Months Ended Nine Months Ended
March 31, March 31,
2017 2016 2017 2016
Adjustments net of related
income tax effects:
Real estate losses (gains) $0 -$490 $616 -$1,824
Inventory write-down 6,394 0 6,394 0
Restructuring charges 0 14 0 160
6,394 (476) 7,010 (1,664)
Related tax effects -2,334 174 -2,559 607
Adjustments net of related
income tax effects $4,060 -$302 $4,451 -$1,057
Related tax effects are calculated using a
normalized tax rate of 36.5%
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Ethan Allen Interiors Inc. via GlobeNewswire
Unternehmensinformation / Kurzprofil:
Datum: 26.04.2017 - 22:03 Uhr
Sprache: Deutsch
News-ID 538628
Anzahl Zeichen: 36418
contact information:
Town:
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Kategorie:
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