“As we celebrate Ethan Allen’s 90th year in business, our second quarter results demonstrate the success of our strategies, innovation and operating leverage. We were able to achieve strong margins despite an environment with escalating commodity and freight costs, product shortages, price increases and shipping delays. We are working to expand our North American manufacturing, whereby 75% of our products are made. We also continued to address the many challenges arisen due to the COVID-19 pandemic, including the health and safety of our associates and rising freight and raw material costs. We are taking selective price increases to counter these rising costs. We remain cautiously optimistic to continue our growth due to the strength of our offerings and our strong interior design professionals, who increasingly utilize technology with their personal services,” concluded
FISCAL 2022 SECOND QUARTER HIGHLIGHTS*
- Consolidated net sales increased 16.4% to
$208.1 million - Retail net sales of
$179.6 million increased 24.0% - Wholesale net sales of
$115.9 million increased 14.2%
- Retail net sales of
- Strong customer demand
- Wholesale segment written orders growth of 1.7%; up 30.3% compared with the second quarter two years ago
- Retail segment written orders declined 0.2%; up 44.6% from the second quarter of fiscal 2020
- Consolidated gross margin increased to 58.8%
- Operating margin of 17.4%; adjusted operating margin grew to 15.7% due to strong net sales growth and controlling costs by leveraging cost reductions; selling, general and administrative expenses decreased from 43.8% to 43.0% of net sales, on an adjusted basis, reflecting the Company’s operating leverage
- Diluted EPS of
$1.05 compared with$0.67 ; adjusted diluted EPS of$0.95 increased 37.7% compared with$0.69 - Generated
$5.7 million of cash from operating activities; cash on hand of$105.2 million and no bank debt outstanding - Increased the regular quarterly dividend by 16% to
$0.29 per share onNovember 30, 2021 ; paid onJanuary 5, 2022 , to shareholders of record at the close of business onDecember 14, 2021 - Announced strengthening of leadership team through the promotion of
Amy Franks to Executive Vice President, Retail Network & Business Development andMatt McNulty to Senior Vice President, Chief Financial Officer and Treasurer - Held a Virtual Celebration in
December 2021 to kick-off and celebrate 90 years of innovation, which included presentations from manufacturing, logistics, retail, merchandising, marketing and leadership teams, as well as awards to congratulate associates for exceptional interior design work
* See reconciliation of
KEY FINANCIAL MEASURES*
(Unaudited) | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||||||
Net sales | $ | 208,093 | $ | 178,826 | 16.4 | % | $ | 390,420 | $ | 329,884 | 18.4 | % | ||||
GAAP gross profit | $ | 122,269 | $ | 101,332 | 20.7 | % | $ | 231,461 | $ | 187,102 | 23.7 | % | ||||
Adjusted gross profit* | $ | 122,269 | $ | 101,721 | 20.2 | % | $ | 231,461 | $ | 187,491 | 23.5 | % | ||||
GAAP gross margin | 58.8 | % | 56.7 | % | 59.3 | % | 56.7 | % | ||||||||
Adjusted gross margin* | 58.8 | % | 56.9 | % | 59.3 | % | 56.8 | % | ||||||||
GAAP operating income | $ | 36,292 | $ | 22,555 | 60.9 | % | $ | 63,652 | $ | 34,236 | 85.9 | % | ||||
Adjusted operating income* | $ | 32,772 | $ | 23,367 | 40.3 | % | $ | 60,500 | $ | 35,671 | 69.6 | % | ||||
GAAP operating margin | 17.4 | % | 12.6 | % | 16.3 | % | 10.4 | % | ||||||||
Adjusted operating margin* | 15.7 | % | 13.1 | % | 15.5 | % | 10.8 | % | ||||||||
GAAP net income | $ | 26,894 | $ | 16,883 | 59.3 | % | $ | 47,047 | $ | 26,236 | 79.3 | % | ||||
Adjusted net income* | $ | 24,257 | $ | 17,496 | 38.6 | % | $ | 44,686 | $ | 26,451 | 68.9 | % | ||||
Effective tax rate | 25.7 | % | 23.9 | % | 26.0 | % | 21.5 | % | ||||||||
GAAP diluted EPS | $ | 1.05 | $ | 0.67 | 56.7 | % | $ | 1.85 | $ | 1.04 | 77.9 | % | ||||
Adjusted diluted EPS* | $ | 0.95 | $ | 0.69 | 37.7 | % | $ | 1.75 | $ | 1.05 | 66.7 | % | ||||
Cash flows from operating activities | $ | 5,712 | $ | 23,728 | (75.9 | %) | $ | 22,701 | $ | 65,918 | (65.6 | %) |
* See reconciliation of
BALANCE SHEET and CASH FLOW
Total cash and cash equivalents were
Cash from operating activities totaled
Cash dividends paid were
Inventories, net increased to
Customer deposits from written orders decreased
No debt outstanding as of
CONFERENCE CALL
Ethan Allen will host an analyst conference call today,
The following information is provided for those who would like to participate:
U.S. Participants: 877-705-2976- International Participants: 201-689-8798
- Meeting Number: 13725490
For those unable to listen live, an archived recording of the call will be made available on the Company’s website referenced above for at least 60 days.
ABOUT ETHAN ALLEN
For more information on Ethan Allen's products and services, visit www.ethanallen.com.
Investor / Media 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,” “COVID-19 impact,” 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 following: the global COVID-19 pandemic has, and could continue to have, a materially adverse effect on the Company’s business and its results of operations; a resurgence of COVID-19 and resulting containment measures could negatively impact its ability to fulfill existing order backlog or cause changes in consumer demand; a resurgence of COVID-19 could lead to temporary closures, including distribution centers; the Company may require additional funding from external sources, which may not be available at the levels required, or may cost more than expected; declines in certain economic conditions, which impact consumer confidence and spending; financial or operational difficulties due to competition in the residential home furnishings industry; a significant shift in consumer preference toward purchasing products online; an overall decline in the health of the economy and consumer spending may reduce consumer purchases of discretionary items; inability to maintain and enhance the Ethan Allen brand; failure to successfully anticipate or respond to changes in consumer tastes and trends in a timely manner; inability to maintain current design center locations at current costs; failure to select and secure appropriate retail locations; disruptions in the supply chain and supply chain management; fluctuations in the price, availability and quality of raw materials resulting in increased costs and production delays, and which could result in a decline in sales; competition from overseas manufacturers and domestic retailers; the number of manufacturing and distribution sites may increase exposure to business disruptions and could result in higher transportation costs; current and former manufacturing and retail operations and products are subject to increasingly stringent environmental, health and safety requirements; product recalls or product safety concerns; extensive reliance on information technology systems to process transactions, summarize results, and manage the business and that of certain independent retailers; disruptions in both primary and back-up systems; 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; global and local economic uncertainty may materially adversely affect manufacturing operations or sources of merchandise and international operations; changes in
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 presss 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 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.
Consolidated Statements of Comprehensive Income | ||||||||||
(Unaudited) | ||||||||||
(In thousands, except per share data) | ||||||||||
Three months ended | Six months ended | |||||||||
2021 | 2020 | 2021 | 2020 | |||||||
Net sales | $ | 208,093 | $ | 178,826 | $ | 390,420 | $ | 329,884 | ||
Cost of sales | 85,824 | 77,494 | 158,959 | 142,782 | ||||||
Gross profit | 122,269 | 101,332 | 231,461 | 187,102 | ||||||
Selling, general and administrative expenses | 89,610 | 78,354 | 171,187 | 151,820 | ||||||
Restructuring and other impairment charges, net of gains | (3,633 | ) | 423 | (3,378 | ) | 1,046 | ||||
Operating income | 36,292 | 22,555 | 63,652 | 34,236 | ||||||
Other expenses Interest and other financing costs Other income (expense), net | 48 (26) | 47 (330) | 96 2 | 382 (435) | ||||||
Income before income taxes | 36,218 | 22,178 | 63,558 | 33,419 | ||||||
Income tax expense | 9,324 | 5,295 | 16,511 | 7,183 | ||||||
Net income | $ | 26,894 | $ | 16,883 | $ | 47,047 | $ | 26,236 | ||
Per share data | ||||||||||
Diluted earnings per common share: | ||||||||||
Net income per diluted share | $ | 1.05 | $ | 0.67 | $ | 1.85 | $ | 1.04 | ||
Diluted weighted average common shares | 25,513 | 25,309 | 25,482 | 25,257 | ||||||
Condensed Consolidated Balance Sheets | ||||||
(Unaudited) | ||||||
(In thousands) | ||||||
ASSETS | 2021 | 2021 | ||||
Current assets: | ||||||
Cash and cash equivalents | $ | 105,207 | $ | 104,596 | ||
Accounts receivable, net | 7,495 | 9,026 | ||||
Inventories, net | 164,550 | 143,978 | ||||
Prepaid expenses and other current assets | 38,992 | 37,679 | ||||
Total current assets | 316,244 | 295,279 | ||||
Property, plant and equipment, net | 222,195 | 231,446 | ||||
25,388 | 25,388 | |||||
Intangible assets | 19,740 | 19,740 | ||||
Operating lease right-of-use assets | 102,912 | 108,730 | ||||
Deferred income taxes | 489 | 1,078 | ||||
Other assets | 2,360 | 1,584 | ||||
Total ASSETS | $ | 689,328 | $ | 683,245 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable and accrued expenses | $ | 37,451 | $ | 37,786 | ||
Customer deposits and deferred revenue | 124,196 | 130,635 | ||||
Accrued compensation and benefits | 21,487 | 23,866 | ||||
Current operating lease liabilities | 26,766 | 27,395 | ||||
Other current liabilities | 12,917 | 4,220 | ||||
Total current liabilities | 222,817 | 223,902 | ||||
Operating lease liabilities, long-term | 91,769 | 97,911 | ||||
Deferred income taxes | 5,899 | 5,028 | ||||
Other long-term liabilities | 3,106 | 4,986 | ||||
Total LIABILITIES | $ | 323,591 | $ | 331,827 | ||
Shareholders’ equity: | ||||||
$ | 365,769 | $ | 351,443 | |||
Noncontrolling interests | (32 | ) | (25 | ) | ||
Total shareholders’ equity | $ | 365,737 | $ | 351,418 | ||
Total LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 689,328 | $ | 683,245 |
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 gross profit and margin, 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 | Six months ended | |||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||
Consolidated Adjusted Gross Profit / Gross Margin | |||||||||||||||||
GAAP Gross profit | $ | 122,269 | $ | 101,332 | 20.7 | % | $ | 231,461 | $ | 187,102 | 23.7 | % | |||||
Adjustments (pre-tax) * | - | 389 | - | 389 | |||||||||||||
Adjusted gross profit * | $ | 122,269 | $ | 101,721 | 20.2 | % | $ | 231,461 | $ | 187,491 | 23.5 | % | |||||
Adjusted gross margin * | 58.8 | % | 56.9 | % | 59.3 | % | 56.8 | % | |||||||||
Consolidated Adjusted Operating Income / Operating Margin | |||||||||||||||||
GAAP Operating income | $ | 36,292 | $ | 22,555 | 60.9 | % | $ | 63,652 | $ | 34,236 | 85.9 | % | |||||
Adjustments (pre-tax)* | (3,520 | ) | 812 | (3,152 | ) | 1,435 | |||||||||||
Adjusted operating income* | $ | 32,772 | $ | 23,367 | 40.3 | % | $ | 60,500 | $ | 35,671 | 69.6 | % | |||||
Consolidated Net sales | $ | 208,093 | $ | 178,826 | 16.4 | % | $ | 390,420 | $ | 329,884 | 18.4 | % | |||||
GAAP Operating margin | 17.4 | % | 12.6 | % | 16.3 | % | 10.4 | % | |||||||||
Adjusted operating margin* | 15.7 | % | 13.1 | % | 15.5 | % | 10.8 | % | |||||||||
Consolidated Adjusted Net Income / Adjusted Diluted EPS | |||||||||||||||||
GAAP Net income | $ | 26,894 | $ | 16,883 | 59.3 | % | $ | 47,047 | $ | 26,236 | 79.3 | % | |||||
Adjustments, net of tax* | (2,637 | ) | 613 | (2,361 | ) | 215 | |||||||||||
Adjusted net income | $ | 24,257 | $ | 17,496 | 38.6 | % | $ | 44,686 | $ | 26,451 | 68.9 | % | |||||
Diluted weighted average common shares | 25,513 | 25,309 | 25,482 | 25,257 | |||||||||||||
GAAP Diluted EPS | $ | 1.05 | $ | 0.67 | 56.7 | % | $ | 1.85 | $ | 1.04 | 77.9 | % | |||||
Adjusted diluted EPS* | $ | 0.95 | $ | 0.69 | 37.7 | % | $ | 1.75 | $ | 1.05 | 66.7 | % |
* Adjustments to reported GAAP financial measures including gross profit and margin, operating income and margin, net income, and diluted EPS have been adjusted by the following: | ||||||||||||
(Unaudited) | Three months ended | Six months ended | ||||||||||
(In thousands) | ||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Inventory reserves and write-downs (wholesale) | $ | - | $ | 389 | $ | - | $ | 389 | ||||
Adjustments to gross profit | $ | - | $ | 389 | $ | - | $ | 389 | ||||
Inventory reserves and write-downs (wholesale) | $ | - | $ | 389 | $ | - | $ | 389 | ||||
(Gain) on sale of property, plant and equipment (wholesale) | (3,913 | ) | - | (3,913 | ) | - | ||||||
Loss on sale of property, plant and equipment (retail) | - | 273 | - | 273 | ||||||||
Severance and other charges (wholesale) | 179 | - | 357 | - | ||||||||
Severance and other charges (retail) | 101 | 150 | 178 | 150 | ||||||||
Impairment of long-lived assets and lease exit costs (retail) | 113 | - | 226 | 623 | ||||||||
Adjustments to operating income | $ | (3,520 | ) | $ | 812 | $ | (3,152 | ) | $ | 1,435 | ||
Adjustments to income before income taxes | $ | (3,520 | ) | $ | 812 | $ | (3,152 | ) | $ | 1,435 | ||
Related income tax effects on non-recurring items(1) | 883 | (199 | ) | 791 | (352 | ) | ||||||
Income tax benefit from valuation allowance change | - | - | - | (868 | ) | |||||||
Adjustments to net income | $ | (2,637 | ) | $ | 613 | $ | (2,361 | ) | $ | 215 |
(1) Calculated using a tax rate of 25.1% in the current year and 24.5% in the prior year.
Source:
2022 GlobeNewswire, Inc., source