“For our first quarter ended
“We are proud to celebrate our culture of constant reinvention, excited to start the next phase of Ethan Allen’s journey, and pleased to welcome both present and future clients to the Interior Design Destination. While we understand and navigate the challenges of a slower economy and the reduction of consumer focus on the home, we remain cautiously optimistic,” concluded
FISCAL 2024 FIRST QUARTER HIGHLIGHTS*
- Consolidated net sales of
$163.9 million were lower by 23.6%- Retail net sales of
$133.6 million were lower by 27.3% - Wholesale net sales of
$99.4 million were lower by 13.3%
- Retail net sales of
- Written order trends
- Retail segment written orders decreased 13.2%
- Wholesale segment written orders decreased 15.6%
- Consolidated gross margin increased to 61.1%, up from 60.4% a year ago due to favorable product mix and lower input costs including reduced inbound freight and raw material costs, partially offset by lower delivered unit volume and change in sales mix
- Operating margin of 11.2%; adjusted operating margin of 12.1% compared with 17.6% last year due to fixed costs deleveraging from lower consolidated net sales and expenses incurred with the launch of the Interior Design Destination initiative including projection, new product display, merchandising and sample costs partially offset by gross margin expansion, lower headcount and the Company’s ability to maintain a disciplined approach to cost savings and expense control
- Advertising expenses were equal to 2.0% of net sales compared to 2.5% in the prior year first quarter; promotional activity remained disciplined and was comparable to the prior year
- Diluted EPS of
$0.58 compared with$1.17 ; adjusted diluted EPS decreased to$0.63 from$1.11 ; adjusted diluted EPS for the three months endedSeptember 30, 2019 (pre-pandemic) was$0.35 - Generated
$16.7 million of cash from operating activities compared with$38.4 million a year ago - Paid cash dividends totaling
$21.9 million , which included a$0.50 per share special cash dividend and the regular quarterly cash dividend of$0.36 per share - Ended the quarter with
$163.2 million in cash and investments with no debt outstanding - Reduced inventory carrying levels to
$149.6 million as ofSeptember 30, 2023 , down$18.0 million or 10.8% from a year ago - Named one of America’s Top 10 Retailers by Newsweek, including recognition as the #1 retailer of
Premium Furniture - Celebrated the launch of Ethan Allen’s next reinvention as the Interior Design Destination with several design center grand reopenings during the quarter, with many more scheduled to occur in the coming months
- New state-of-the-art design centers in
The Villages, FL ,Avon, OH andNew York, NY were opened - The Company’s wood furniture manufacturing plant in
Orleans, Vermont sustained significant flooding inJuly 2023 that lowered shipments by approximately$15 million and resulted in total expenditures of$3.6 million less$1.5 million in insurance recoveries and grant proceeds received from theState of Vermont for a pre-tax charge of$2.1 million ; as ofSeptember 30, 2023 , the majority of associates are back at work and operating capacity is improving with an expected recovery from the delayed shipments in the second and third quarters of fiscal 2024
* See reconciliation of GAAP to adjusted key financial measures in the back of this press release. Comparisons are to the first quarter of fiscal 2023.
KEY FINANCIAL MEASURES*
(Unaudited) | |||||||||||
(In thousands, except per share data) | |||||||||||
Three months ended | |||||||||||
September 30, | |||||||||||
2023 | 2022 | % Change | |||||||||
Net sales | $ | 163,892 | $ | 214,530 | (23.6 | %) | |||||
Gross profit | $ | 100,141 | $ | 129,616 | (22.7 | %) | |||||
Gross margin | 61.1 | % | 60.4 | % | |||||||
GAAP operating income | $ | 18,351 | $ | 39,650 | (53.7 | %) | |||||
Adjusted operating income* | $ | 19,843 | $ | 37,692 | (47.4 | %) | |||||
GAAP operating margin | 11.2 | % | 18.5 | % | |||||||
Adjusted operating margin* | 12.1 | % | 17.6 | % | |||||||
GAAP net income | $ | 14,939 | $ | 29,880 | (50.0 | %) | |||||
Adjusted net income* | $ | 16,054 | $ | 28,417 | (43.5 | %) | |||||
Effective tax rate | 25.6 | % | 25.3 | % | |||||||
GAAP diluted EPS | $ | 0.58 | $ | 1.17 | (50.4 | %) | |||||
Adjusted diluted EPS* | $ | 0.63 | $ | 1.11 | (43.2 | %) | |||||
Cash flows from operating activities | $ | 16,700 | $ | 38,422 | (56.5 | %) |
* See reconciliation of GAAP to adjusted key financial measures in the back of this press release
BALANCE SHEET and CASH FLOW
Cash and investments totaled
Cash dividends paid were
Cash from operating activities totaled
Inventories, net totaled
Customer deposits from written orders totaled
No debt outstanding at
DIVIDENDS
On
CONFERENCE CALL
Ethan Allen will host a conference call with investors and analysts today,
The following information is provided for those who would like to participate in the conference call:
U.S. Participants: 877-705-2976- International Participants: 201-689-8798
- Meeting Number: 13740818
For those unable to listen live, an archived recording of the call will be made available on the Company’s website referenced above for up to six months.
ABOUT ETHAN ALLEN
For more information on Ethan Allen's products and services, visit www.ethanallen.com.
Investor Relations Contact:
Senior Vice President, Chief Financial Officer and Treasurer
IR@ethanallen.com
ABOUT NON-GAAP FINANCIAL MEASURES
This press release is intended to supplement, rather than to supersede, the Company's consolidated financial statements, which are prepared and presented in accordance with
FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Generally, forward-looking statements represent management’s beliefs and assumptions concerning current expectations, projections or trends relating to results of operations, financial results, financial condition, strategic objectives and plans, expenses, dividends, share repurchases, liquidity, use of cash and cash requirements, investments, future economic performance, business and industry and the effect of the COVID-19 pandemic on the business operations and financial results. Such forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. These forward-looking statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “continue,” “may,” “will,” “short-term,” “target,” “outlook,” “forecast,” “future,” “strategy,” “opportunity,” “would,” “guidance,” “non-recurring,” “one-time,” “unusual,” “should,” “likely,” “pandemic,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. The Company derives many of its forward-looking statements from operating budgets and forecasts, which are based upon many detailed assumptions. While the Company believes that its assumptions are reasonable, it cautions that it is very difficult to predict the impact of known factors and it is impossible for the Company to anticipate all factors that could affect actual results and matters that are identified as “short term,” “non-recurring,” “unusual,” “one-time,” or other words and terms of similar meaning may in fact recur in one or more future financial reporting periods.
Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that are expected. Actual results could differ materially from those anticipated in the forward-looking statements due to a number of risks and uncertainties including, but not limited to, the risks and uncertainties disclosed in Part I, Item 1A. Risk Factors, in the Company’s 2023 Annual Report on Form 10-K and other factors identified in its reports filed with the
All forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by these cautionary statements, as well as other cautionary statements. A reader should evaluate all forward-looking statements made in this press release in the context of these risks and uncertainties. Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. Many of these factors are beyond the Company’s ability to control or predict. The Company is including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as otherwise required by law.
Condensed Consolidated Statements of Comprehensive Income | |||||||
(Unaudited) | |||||||
(In thousands, except per share data) | |||||||
Three months ended | |||||||
2023 | 2022 | ||||||
Net sales | $ | 163,892 | $ | 214,530 | |||
Cost of sales | 63,751 | 84,914 | |||||
Gross profit | 100,141 | 129,616 | |||||
Selling, general and administrative expenses | 80,298 | 91,962 | |||||
Restructuring and other charges, net of gains | 1,492 | (1,996 | ) | ||||
Operating income | 18,351 | 39,650 | |||||
Interest and other income, net | 1,724 | 341 | |||||
Income before income taxes | 20,075 | 39,991 | |||||
Income tax expense | 5,136 | 10,111 | |||||
Net income | $ | 14,939 | $ | 29,880 | |||
Net income per diluted share | $ | 0.58 | $ | 1.17 | |||
Diluted weighted average common shares | 25,618 | 25,560 |
Condensed Consolidated Balance Sheets | ||||||
(Unaudited) | ||||||
(In thousands) | ||||||
ASSETS | 2023 | 2023 | ||||
Current assets | ||||||
Cash and cash equivalents | $ | 56,888 | $ | 62,130 | ||
Investments | 106,284 | 110,577 | ||||
Accounts receivable, net | 11,053 | 11,577 | ||||
Inventories, net | 149,623 | 149,195 | ||||
Prepaid expenses and other current assets | 28,950 | 25,974 | ||||
Total current assets | 352,798 | 359,453 | ||||
Property, plant and equipment, net | 221,504 | 222,167 | ||||
25,388 | 25,388 | |||||
Intangible assets | 19,740 | 19,740 | ||||
Operating lease right-of-use assets | 117,332 | 115,861 | ||||
Deferred income taxes | 655 | 640 | ||||
Other assets | 2,146 | 2,204 | ||||
Total ASSETS | $ | 739,563 | $ | 745,453 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current liabilities | ||||||
Accounts payable and accrued expenses | $ | 29,633 | $ | 28,565 | ||
Customer deposits | 77,928 | 77,765 | ||||
Accrued compensation and benefits | 20,579 | 23,534 | ||||
Current operating lease liabilities | 26,530 | 26,045 | ||||
Other current liabilities | 10,272 | 7,188 | ||||
Total current liabilities | 164,942 | 163,097 | ||||
Operating lease liabilities, long-term | 105,102 | 104,301 | ||||
Deferred income taxes | 3,066 | 3,056 | ||||
Other long-term liabilities | 3,897 | 3,993 | ||||
Total LIABILITIES | $ | 277,007 | $ | 274,447 | ||
Shareholders’ equity | ||||||
$ | 462,584 | $ | 471,028 | |||
Noncontrolling interests | (28 | ) | (22 | ) | ||
Total shareholders’ equity | $ | 462,556 | $ | 471,006 | ||
Total LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 739,563 | $ | 745,453 |
Reconciliation of Non-GAAP Financial Measures
To supplement the financial measures prepared in accordance with GAAP, the Company uses non-GAAP financial measures, including adjusted 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 with GAAP are shown in tables below.
These non-GAAP measures are derived from the consolidated financial statements but are not presented in accordance with GAAP. The Company believes these non-GAAP measures provide a meaningful comparison of its results to others in its industry and prior year results. Investors should consider these non-GAAP financial measures in addition to, and not as a substitute for, its financial performance measures prepared in accordance with 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 with GAAP. Other companies may calculate similarly titled non-GAAP financial measures differently than the Company does, limiting the usefulness of those measures for comparative purposes. Despite the limitations of these non-GAAP financial measures, the Company believes these adjusted financial measures and the information they provide are useful in viewing its performance using the same tools that management uses to assess progress in achieving its goals. Adjusted measures may also facilitate comparisons to historical performance.
The following tables below provide a reconciliation of non-GAAP financial measures used in this release to the most directly comparable GAAP financial measures.
(Unaudited) | |||||||||||||
(In thousands, except per share data) | Three months ended | ||||||||||||
2023 | 2022 | % Change | |||||||||||
Consolidated Adjusted Operating Income / Operating Margin | |||||||||||||
GAAP Operating income | $ | 18,351 | $ | 39,650 | (53.7 | %) | |||||||
Adjustments (pre-tax)* | 1,492 | (1,958 | ) | ||||||||||
Adjusted operating income* | $ | 19,843 | $ | 37,692 | (47.4 | %) | |||||||
Consolidated Net sales | $ | 163,892 | $ | 214,530 | (23.6 | %) | |||||||
GAAP Operating margin | 11.2 | % | 18.5 | % | |||||||||
Adjusted operating margin* | 12.1 | % | 17.6 | % | |||||||||
Consolidated Adjusted Net Income / Adjusted Diluted EPS | |||||||||||||
GAAP Net income | $ | 14,939 | $ | 29,880 | (50.0 | %) | |||||||
Adjustments, net of tax* | 1,115 | (1,463 | ) | ||||||||||
Adjusted net income | $ | 16,054 | $ | 28,417 | (43.5 | %) | |||||||
Diluted weighted average common shares | 25,618 | 25,560 | |||||||||||
GAAP Diluted EPS | $ | 0.58 | $ | 1.17 | (50.4 | %) | |||||||
Adjusted diluted EPS* | $ | 0.63 | $ | 1.11 | (43.2 | %) |
* Adjustments to reported GAAP financial measures including operating income and margin, net income and diluted EPS have been adjusted by the following: | ||||||||
(Unaudited) | Three months ended | |||||||
(In thousands) | ||||||||
2023 | 2022 | |||||||
$ | 2,096 | $ | - | |||||
Gain on sale-leaseback transaction | (655 | ) | (2,257 | ) | ||||
Severance and other charges | 51 | 299 | ||||||
Adjustments to operating income | $ | 1,492 | $ | (1,958 | ) | |||
Related income tax effects on non-recurring items(1) | (377 | ) | 495 | |||||
Adjustments to net income | $ | 1,115 | $ | (1,463 | ) |
(1) Calculated using the marginal tax rate for each period presented
Source: Ethan Allen
2023 GlobeNewswire, Inc., source