ETHAN ALLEN INTERIORS INC.
Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") is designed to provide a reader of our financial statements
with a narrative from the perspective of our management on our financial
condition, results of operations, liquidity and certain other factors that may
affect our future results and should be read in conjunction with our 2019 Annual
Report on Form 10-K, Current Reports on Form 8-K and other filings with the
Securities and Exchange Commission (the "SEC"), and the consolidated financial
statements and related notes included in this Quarterly Report on Form 10-Q.
Unless otherwise noted, all comparisons in the following discussion are from the
three and six month periods ended December 31, 2019 to the three and six month
periods in the prior year.
Our MD&A is presented in the following sections:
- Forward-Looking Statements
- Executive Overview
- Key Operating Metrics
- Results of Operations
- Reconciliation of Non-GAAP Financial Measures
- Liquidity
- Capital Resources
- Share Repurchase Program
- Contractual Obligations
- Dividends
- Off-Balance Sheet Arrangements and Other Commitments and Contingencies
- Foreign Currency
- Significant Accounting Policies and Critical Accounting Estimates
- Recent Accounting Pronouncements
- Business Outlook
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ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES Forward-Looking Statements This Quarterly Report on Form 10-Q, including this MD&A, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors found in 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"). All statements other than statements of historical facts are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industry in which we operate and the beliefs and assumptions of our management. Words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "will," "may," "continue," "project," "target," "outlook," "forecast," "guidance," variations of such words, and similar expressions and the negatives of such forward-looking words are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our business, and other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are subject to management decisions and various assumptions about future events and are not guarantees of future performance. Actual results could differ materially from those anticipated in the forward-looking statements due to a number of risk factors and uncertainties including, but not limited to the following: a volatile retail environment and changing economic conditions may further adversely affect consumer demand and spending; global and local economic uncertainty may materially adversely affect our manufacturing operations or sources of merchandise and international operations; disruptions of our supply chain; changes inUnited States trade and tax policy; competition from overseas manufacturers and domestic retailers; failure to successfully anticipate or respond to changes in consumer tastes and trends in a timely manner; our ability to maintain and enhance our brand; our number of manufacturing and logistics sites may increase our exposure to business disruptions and could result in higher transportation costs; fluctuations in the price, availability and quality of raw materials could result in increased costs or cause production delays; our current and former manufacturing and retail operations and products are subject to increasingly stringent environment, health and safety requirements; the use of emerging technologies as well as unanticipated changes in the pricing and other practices of competitors; reliance on information technology systems to process transactions, summarize results, and manage our business and that of certain independent retailers; disruptions in both our primary and back-up systems; product recalls or product safety concerns; successful cyber-attacks and the ability to maintain adequate cyber-security systems and procedures; loss, corruption and misappropriation of data and information relating to customers; loss of key personnel; additional asset impairment charges that could reduce our profitability; access to consumer credit could be interrupted as a result of conditions outside of our control; 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; changes to fiscal and tax policies; our operations present hazards and risks which may not be fully covered by insurance; possible failure to protect our intellectual property; failure to successfully transition from a promotional to a membership model; and other factors disclosed in Part I, Item 1A. Risk Factors in our 2019 Annual Report on Form 10-K, and elsewhere here in this Quarterly Report on Form 10-Q. 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 Quarterly Report on Form 10-Q. 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. Executive Overview We are a leading interior design company and manufacturer and retailer of quality home furnishings. Founded over 88 years ago, today we are a leading international home fashion brand doing business inNorth America ,Europe ,Asia and theMiddle East . We are vertically integrated from design through delivery, affording our customers a value proposition of style, quality and price. We offer complementary interior design service to our clients and sell a full range of furniture products and decorative accents through ethanallen.com and a network of approximately 300 design centers inthe United States and abroad. The design centers represent a mix of independent licensees and our own Company operated retail segment. We own and operate nine manufacturing facilities including six manufacturing plants inthe United States , two manufacturing plants inMexico and one manufacturing plant inHonduras . Our business model is to maintain continued focus on (i) capitalizing on the strength of our interior design professionals and management in our retail design centers, (ii) communicating our messages with effective advertising and marketing campaigns, (iii) utilizing ethanallen.com as a key marketing tool to drive traffic to our design centers, (iv) investing in new technologies across key aspects of our vertically integrated business, and (v) leveraging the benefits of our vertical integration by maintaining manufacturing capacity inNorth America where we manufacture approximately 75% of our products.
Our competitive advantages arise from:
? providing fashionable high-quality products of the finest craftsmanship;
? offering complimentary design service through approximately 2,000 motivated
interior design professionals network-wide;
? offering a wide array of custom products across our upholstery, case goods,
and accent product categories;
? enhancing our technology in all aspects of the business; and
? leveraging our vertically integrated structure.
We assess the performance of our wholesale and retail segments based on total
net sales on a comparable period basis. We also measure wholesale orders booked
on a comparable period basis. Wholesale orders booked reflect new orders placed
with our wholesale segment from all sales channels, including our retail
segment, independent retailers and contract customers. Wholesale orders booked
vary depending upon a variety of factors, including our product offerings, store
openings, shifts in the timing of holidays, promotional events and the timing
and extent of our realization of the costs and benefits of our numerous
strategic initiatives, including the recent transition to a membership model,
among other things. As a result of these factors, comparability of our wholesale
orders booked during any period to period comparison may be affected.
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--------------------------------------------------------------------------------ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES Introduction of Membership Model - InOctober 2019 we introduced the Ethan Allen Member Program, an exclusive membership program providing our customers a new way to make furnishing their home easier and more affordable. For an annual fee of$100 , the Ethan Allen Member Program offers special members-only pricing, free shipping and white glove in-home delivery, and in ourUnited States design centers, access to preferred financing plans. We believe that transitioning our business from a promotional to membership model will benefit our customers, enhance our brand and enable our team of about 1,500 North American interior designers and vertically integrated operations to operate more efficiently in order to improve our operating margins. The Member Program allows our interior designers to create design solutions that best satisfy the customer's needs using our entire selection of product offerings at special member savings, as compared to our promotional model which focused on just those items that were on sale. The Member Program was launched in October with a strong advertising campaign utilizing direct mail, television and digital mediums. Specifically, we believe some of the benefits of the membership model will include:
? Improved customer experience - our interior design professionals can now work
with customers based on their timeline and project deadlines, as opposed to
our prior promotional calendar. We believe this has the potential to lead to
larger overall sales transactions for individual customer design projects.
? Improved operational costs - the volume of sales, orders and shipments in our
business under the prior promotional model was characterized by large spikes
in customer orders based upon promotional events followed by lower orders and
sales after the end of an event. This buying pattern also affected numerous
other aspects of our business, including retail staffing and costs to service
the increased number of customers during peak sales events. Likewise,
significant fluctuations in sales had downstream implications for our
manufacturing and production, shipment to the distribution centers and final
delivery to customers. All of these aspects of our operations are experiencing
improved efficiencies as a result of the membership model whereby sales are
more evenly distributed throughout the year compared to the prior model.
During this initial year of transition into the Member Program, we expect net sales and related operating income to be negatively impacted due to the selling cycle with members being longer without the urgency created by promotional deadlines, the reduction of delivery fee revenue and the timing of recognizing membership fees over a one-year period. Fiscal 2020 Second Quarter in Review - Our vertical structure continues to provide strong operating leverage that allows us to consistently return value to our shareholders through our regular quarterly dividend, periodic special cash dividends and share repurchases. During the second quarter endedDecember 31, 2019 , we paid$5.6 million in cash dividends and repurchased 545,727 shares, representing 2.1% of our outstanding shares. We were pleased with the favorable customer response to the Ethan Allen Member Program, which launched inOctober 2019 . As expected, sales and operating income during the second quarter were negatively impacted during the transition period as we moved from a promotional to a membership model. While our wholesale orders, which reflects sales through all our channels, decreased 21.8% from a year ago, we realized sequential improvement in orders each month during the second quarter, with October reflecting a decrease to the prior year, November reflecting a lesser decrease and December orders increasing year over year. As the Member Program continues to gain momentum, we have a strong marketing program planned, starting with a direct mail magazine being distributed inJanuary 2020 to 2.5 million households. Consolidated net sales decreased 11.5% due to lower wholesale sales and a 12.2% decrease in retail net sales. For the three months endedDecember 31, 2019 , gross margin was 55.9%, up from 55.2% a year ago, due to improved retail and wholesale gross margin. Operating expenses, as a percentage of sales, increased to 50.6% compared with 47.0% a year ago primarily due to net sales decreasing 11.5% while operating expenses declined 4.8%. The effective income tax rate was 23.5% in the current quarter compared with 25.1% a year ago. 20 --------------------------------------------------------------------------------
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES Key Operating Metrics
A summary of our key operating metrics is presented in the following table ($ in millions, except per share amounts).
Three months ended Six months ended
December 31, December 31,
2019 % of Sales 2018 % of Sales 2019 % of Sales 2018 % of SalesNet sales$ 174.6 $ 197.2 $ 348.5 $ 384.9 Gross profit$ 97.5 55.9 %$ 108.9 55.2 %$ 191.3 54.9 %$ 210.3 54.6 % Adjusted gross profit(1)$ 97.9 56.1 %$ 108.9 55.2 %$ 195.8 56.2 %$ 210.3 54.6 % Operating income$ 9.2 5.3 %$ 16.1 8.2 %$ 27.8 8.0 %$ 27.9 7.3 % Adjusted operating income(1)$ 9.5 5.4 %$ 16.4 8.3 %$ 21.7 6.2 %$ 28.2 7.3 % Net income$ 7.1 4.1 %$ 12.2 6.2 %$ 21.2 6.1 %$ 21.0 5.5 % Adjusted net income(1)$ 7.3 4.2 %$ 12.4 6.3 %$ 16.6 4.7 %$ 21.3 5.5 % Diluted EPS$ 0.26 $ 0.45 $ 0.79 0.2 %$ 0.78 Adjusted diluted EPS(1)$ 0.27 $ 0.46 $ 0.62 0.2 %$ 0.79 Cash flow from operating activities$ (0.0 ) $ 7.0 $ 23.4 $ 31.5
(1) Refer to the Reconciliation of Non-GAAP Financial Measures section within
this MD&A for the reconciliation of U.S. GAAP to adjusted key financial
metrics.
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ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
A summary of changes from the applicable periods in the preceding fiscal year is presented in the following table.
Three months ended Six months ended
December 31, December 31,
2019 2018 2019 2018
Net sales (11.5 %) (0.7 %) (9.5 %) 1.4 %
Gross profit (10.4 %) 1.0 % (9.0 %) 1.1 %
Adjusted gross profit(1) (10.1 %) 1.0 % (6.9 %) 1.1 %
Operating income (42.9 %) (8.0 %) (0.3 %) (4.0 %)
Adjusted operating income(1) (42.2 %) (4.6 %) (23.1 %) (4.7 %)
Net income (41.9 %) (18.0 %) 0.8 % (5.6 %)
Adjusted net income(1) (41.2 %) (15.2 %) (22.1 %) (6.3 %)
Diluted EPS (40.0 %) (16.7 %) 1.3 % (2.5 %)
Adjusted diluted EPS(1) (41.3 %) (13.2 %) (21.5%) (3.7 %) Cash flow from operating activities (100.1 %) 302.3 % (25.7 %) 122.4 %
(1) Refer to the Reconciliation of Non-GAAP Financial Measures section within
this MD&A for the reconciliation of U.S. GAAP to adjusted key financial
metrics.
The components of consolidated net sales and operating income by business segment is presented in the following table ($ in millions).
Three months ended Six months ended
December 31, December 31,
2019 2018 % Chg 2019 2018 % Chg
Net sales
Wholesale segment $ 91.9 $ 107.7 (14.6 %) $ 193.2 $ 225.7 (14.4 %)
Retail segment 139.1 158.5 (12.2 %) 276.4 303.7 (9.0 %)
Elimination of
intersegment sales (56.4 ) (69.0 ) (121.1 ) (144.5 )
Consolidated net
sales $ 174.6 $ 197.2 (11.5 %) $ 348.5 $ 384.9 (9.5 %)
Operating income
(loss)
Wholesale segment $ 5.7 $ 8.8 (35.0 %) $ 22.7 $ 23.1 (2.1 %)
Retail segment (0.1 ) 3.3 (104.1 %) 1.4 1.8 (18.4 %)
Elimination of
intercompany profit
(1) 3.6 4.0 3.8 3.0
Consolidated
operating income $ 9.2 $ 16.1 (42.9 %) $ 27.8 $ 27.9 (0.3 %)
(1) Represents the change in wholesale profit contained in the retail segment
inventory existing at the end of the period.
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ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
The following table shows selected design center location information.
Fiscal 2020 Fiscal 2019
Independent Company- Independent Company-
retailers operated Total retailers operated Total
Retail Design
Center activity:
Balance at July
1 158 144 302 148 148 296
New locations 9 5 14 13 1 14
Closures (8 ) (6 ) (14 ) (1 ) (4 ) (5 )
Transfers (1 ) 1 - (1 ) 1 -
Balance at
December 31 158 144 302 159 146 305
Relocations (in
new and
closures) 1 4 5 - 1 1
Retail Design Center geographic
locations:
United States 36 138 174 42 140 182
Canada - 6 6 - 6 6
China 104 - 104 98 - 98
Other Asia 11 - 11 11 - 11
Europe 1 - 1 1 - 1
Middle East 6 - 6 7 - 7
Total 158 144 302 159 146 305
Results of Operations
Second Quarter ended
Consolidated net sales were$174.6 million , a decrease of 11.5% compared to the same prior year period. Net sales decreased by 14.6% for our wholesale segment and by 12.2% for our retail segment. Net sales in the second quarter endedDecember 31, 2019 were negatively impacted as a result of our ongoing transition from a promotional to a membership model as evidenced by a 21.8% decrease in wholesale orders, which led to lower wholesale shipments. In addition, there was a$4.2 million decrease in international sales primarily related to lower sales inChina andCanada due to a challenging global economy. Wholesale net sales decreased 14.6% to$91.9 million primarily due to a 45.1% decrease in sales toChina and a 24.6% decline in sales to our North American retail network. Partially offsetting these declines was growth in contract sales, which grew 66.9% year over year. The year over year increase in contract sales was attributable to continued growth in sales fromthe United States governmentGeneral Services Administration ("GSA") contract. Wholesale orders booked, which represents orders booked through all of our channels, was down 21.8% compared with the second quarter last year. Wholesale orders fromChina declined 69.3% from a year ago mainly due to global economic uncertainty. Excluding orders fromChina , our total wholesale orders decreased 17.9%, which was primarily the result of the transition to the membership model. Retail net sales from Ethan Allen operated design centers decreased by$19.4 million , or 12.2%, to$139.1 million . There was a 12.3% decrease in net sales inthe United States , while net sales from Canadian design centers decreased 11.8%. These decreases were primarily due to the transition to the membership model combined with softer order trends as consumers have been cautious with discretionary spending. There were 144 Company operated design centers at the end of the second quarter of fiscal 2020, compared to 146 in the prior year period as we continue to relocate and open new locations while closing older locations. Gross profit decreased 10.4% to$97.5 million compared with the prior year period due to lower sales volumes in both our wholesale and retail segments combined with a change in product mix, partially offset by improved gross margins. Retail sales, as a percentage of total consolidated sales, was 79.7% in the current year second quarter compared with 80.4% a year ago, which change in mix negatively impacted our consolidated gross margin. Our fiscal 2020 gross margin improved to 55.9%, up from 55.2% in the prior year, primarily due to retail gross margin increasing from improved retail price optimization and wholesale gross margin expansion due to realizing efficiencies from our previously announced restructuring initiatives. Restructuring charges of$0.4 million negatively impacted our consolidated gross margin by 20 basis points. 23
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ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES Operating expenses decreased to$88.3 million , or 50.6% of net sales, compared with$92.7 million , or 47.0% of net sales, for the prior year period. The 4.8% decrease was primarily due to lower retail selling costs and lower general and administrative costs partially offset by higher wholesale advertising costs. Retail selling expenses decreased due to warehouse and delivery expenses decreasing, along with other reduced variable selling expenses, from the 12.2% reduction in retail net sales. General and administrative expenses decreased primarily due to lower wholesale compensation costs coupled with lower depreciation, occupancy costs and regional management charges within the retail segment. Wholesale selling costs increased due to television advertising costs during the quarter. Operating income totaled$9.2 million , or 5.3% of net sales, compared with$16.1 million , or 8.2% of net sales, for the prior year second quarter. The decrease in operating income was driven by the 11.5% decline in consolidated net sales, which negatively impacted gross profit by 10.4% combined with a decrease in the retail/wholesale product mix and higher selling costs from television advertising spend. These decreases were partially offset by improved expense management and a gross margin improvement, which rose 70 basis points year over year.
Wholesale operating income decreased 35.0% to
Retail operating loss was$0.1 million compared with operating income of$3.3 million for the prior year period. Operating margin decreased 220 basis points due to the 12.2% reduction in net sales partially offset by improved gross margin and a 4.5% decrease in operating expenses. Income tax expense decreased to$2.2 million compared with$4.1 million a year ago due to the$7.0 million decrease in income before income taxes. Our effective tax rate was 23.5% in the current year second quarter compared with 25.1%. The effective tax rate of 23.5% primarily includes a provision for income tax on the current quarter's taxable income, including federal, state and local taxes and tax and interest expense on uncertain tax positions. The year ago second quarter effective tax rate of 25.1% primarily includes tax expense on that quarter's taxable income, tax expense on cancelations and exercises of stock options and tax and interest expense on uncertain tax positions. Net income was$7.1 million compared with$12.2 million for the prior year period, which resulted in$0.27 per diluted share compared with$0.45 in the prior year period. Adjusted diluted EPS of$0.27 in the current year second quarter represents a decrease of 41.3% over the prior year second quarter adjusted diluted EPS of$0.46 . This decrease was primarily from sales and operating income being negatively impacted during the quarter as we move from a promotional to membership model combined with retail consumers being cautious with discretionary spending.
Six Months ended
Consolidated net sales were$348.5 million , a decrease of 9.5% or$36.4 million compared with the same prior year period. Net sales decreased by 14.4% within our wholesale segment and by 9.0% in our retail segment. There was an$8.8 million decrease in international sales primarily related to lower sales inChina andCanada due to a challenging global economy. Net sales toChina were 47.4% lower in the current year compared with the same period last fiscal year. Softer order trends from consumers and the ongoing transition from a promotional sales model to a membership model negatively impacted our fiscal 2020 net sales. Wholesale net sales decreased 14.4% to$193.2 million . The lower net sales were primarily due to a decline in sales toChina and to our North American retail network combined with the impact from the transition to the membership model, which caused decreases in orders and subsequent shipments within our case goods, upholstery and home accents product lines. Partially offsetting these declines was growth in contract sales, which grew 64.8% year over year. The year over year increase in contract sales was attributable to continued growth in sales from the GSA contract. Wholesale orders booked during fiscal 2020 was down 10.5% compared with the same period last fiscal year. Wholesale orders fromChina declined 53.8% from a year ago mainly due to the imposition of tariffs byChina and the economic uncertainty surrounding the international trade disputes. Excluding orders fromChina , our total wholesale orders decreased 7.5%, primarily as the result of the transition to the membership model. These decreases were partially offset by continued growth in our contract business, including the GSA contract. 24 --------------------------------------------------------------------------------
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES Retail net sales from Ethan Allen operated design centers decreased by$27.4 million , or 9.0%, to$276.4 million . There was an 8.9% decrease in net sales inthe United States and a 11.3% decrease inCanada . These decreases were primarily due to softer order trends as consumers have been cautious with discretionary spending combined with the shift to the membership model. There were 144 Company operated design centers at the end of the period, two less than the 146 in the prior year period. Gross profit decreased 9.0% to$191.3 million compared with the prior year period due to declines within both our wholesale and retail segments. Wholesale gross profit was negatively impacted by lower sales volume. Retail sales, as a percentage of total consolidated sales, were 79.3% in fiscal 2020 compared with 78.9% in the prior fiscal year, which mix favorably impacted our year-to-date consolidated gross margin. Our fiscal 2020 adjusted gross margin improved to 56.2%, up from 54.6% in the prior year. Restructuring charges negatively impacted our fiscal 2020 consolidated gross margin by 130 basis points. Operating expenses decreased to$163.5 million , or 46.9% of net sales, compared with$182.4 million , or 47.4% of net sales, for the prior year period. The 10.4% decrease was primarily due to a gain of$11.5 million from the sale of the Passaic property during the first quarter of fiscal 2020. In addition to the gain on the sale, operating expenses were lower in fiscal 2020 due to lower retail depreciation expense and lower wholesale distribution costs from a lower volume of shipments. Operating income totaled$27.8 million , or 8.0% of net sales, compared with$27.9 million , or 7.3% of net sales, for the prior year period. Adjusted operating income in the first half of fiscal 2020, which excludes the$11.5 million gain on the sale of the Passaic property and$5.0 million of other restructuring charges, was$21.7 million , a decrease of 23.1% compared to last year. The adjusted operating income decrease was driven by the 9.5% decline in consolidated net sales combined with higher selling costs from television advertising spend. Wholesale operating income decreased 2.1% to$22.7 million compared with$23.1 million for the prior year period. The decrease was due to the 14.6% decrease in net sales and higher selling costs partially offset by the$11.5 million gain on the sale of the Passaic property. Adjusted wholesale operating income decreased 29.5% largely due to lower sales volume and television advertising spend.
Retail operating income was
Income tax expense was$6.7 million compared with$7.0 million a year ago. Our effective tax rate was 24.1% in the current year first half compared with 25.0%. The effective tax rate of 24.1% primarily includes a provision for income tax on the current year's taxable income and tax and interest expense on uncertain tax positions. The year ago effective tax rate of 25.0% primarily includes tax expense on that year's taxable income, tax expense on cancelations and exercises of stock options and tax and interest expense on uncertain tax positions. Net income was$21.2 million compared with$21.0 million for the prior year period, which resulted in$0.79 per diluted share compared with$0.78 in the prior year period. The gain on the sale of the Passaic property partially offset with other fiscal 2020 restructuring activities and corporate actions increased diluted EPS by$0.17 . Adjusted diluted EPS of$0.62 in the current year represents a decrease of 21.5% over the prior year.
Reconciliation of Non-GAAP Financial Measures
To supplement the financial measures prepared in accordance with generally accepted accounting principles inthe United States , orU.S. GAAP, we use non-GAAP financial measures, including adjusted gross profit and margin, adjusted operating income, adjusted retail operating income and margin, adjusted wholesale operating income and margin, adjusted net income, and adjusted diluted earnings per share. The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance withU.S. GAAP are shown in tables below. These non-GAAP measures are derived from the consolidated financial statements but are not presented in accordance withU.S. GAAP. We believe these non-GAAP measures provide a meaningful comparison of our results to others in our industry and our prior year results. Investors should consider these non-GAAP financial measures in addition to, and not as a substitute for, our financial performance measures prepared in accordance withU.S. GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance withU.S. GAAP. Other companies may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes. 25 --------------------------------------------------------------------------------
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES
Despite the limitations of these non-GAAP financial measures, we believe these adjusted financial measures and the information they provide are useful in viewing our performance using the same tools that management uses to assess progress in achieving our goals. Adjusted measures may also facilitate comparisons to our historical performance.
The following tables below show a reconciliation of non-GAAP financial measures
used in this filing to the most directly comparable
(Unaudited)
(In thousands, except
per share data) Three months ended Six months ended
December 31, December 31,
2019 2018 % Chg 2019 2018 % Chg
Consolidated Adjusted Gross Profit
/ Gross Margin
GAAP Gross profit $ 97,521 $ 108,860 (10.4 %) $ 191,315 $ 210,310 (9.0 %)
Adjustments (pre-tax)
* 389 - 4,529 -
Adjusted gross profit
* $ 97,910 $ 108,860 (10.1 %) $ 195,844 $ 210,310 (6.9 %)
Adjusted gross margin
* 56.1 % 55.2 % 56.2 % 54.6 %© Edgar Online, source
