Ethan Allen Provides Business Updates

Ethan Allen Interiors Inc. (“Ethan Allen” or “the Company”) provided updates on its business.

Update on Current Business Conditions

It has been over five weeks since Ethan Allen temporarily closed its Company-owned retail design centers and some of its manufacturing operations.

Farooq Kathwari, Ethan Allen’s Chairman, President and CEO commented, “The impact of the COVID-19 crisis and the closing of our North American design centers and manufacturing has had a major impact on the results of the March quarter. We had to take unprecedented steps including the furloughing of over 3,000 associates.”

“I am grateful and proud of the attitude and the efforts of our associates throughout our vertical enterprise. Our interior design associates we retained continue to create design solutions that satisfy customer needs while sheltering in their homes. The interior design associates working remotely have been utilizing technology we deployed over the past few years, including the Ethan Allen inHome augmented reality app, 3-D room planning tool, and communication tools including Skype and FaceTime. We are looking forward to the planned reopening of our design centers in a number of states starting from May 1st and have begun to increase production in some of our North American manufacturing plants. We are making good progress with our new products including Lucy, a mid-century modern inspired upholstery collection that has just launched very successfully online, and Farmhouse, a country cottage inspired furniture collection that is launching in two phases over the next few months. We are also pleased our independent retailer in China has opened most of their 105 retail locations and our U.S. government contract business remains strong,” Mr. Kathwari continued.

Mr. Kathwari concluded, “Finally, we are pleased to maintain a strong balance sheet including cash of $117 million, which includes $100 million drawn from our revolving line of credit. We believe we are well positioned for when the economy reopens and improves.”

Preliminary Financial Results

The Company expects to report the following financial results for its third quarter ended March 31, 2020:

– Consolidated net sales of $150 million
– GAAP consolidated gross margin of 56.1%; Adjusted gross margin of 56.0%
– GAAP diluted EPS in the range of ($0.80) to ($0.82) including a $25 million non-cash goodwill impairment charge
– Adjusted diluted EPS in the range of $0.01 to $0.02
– Cash on hand of $117 million as of March 31, 2020 and long-term debt of $100 million
– Generated $15 million of cash from operating activities
– Paid regular quarterly cash dividend of $5.5 million
– Share repurchases of $14.3 million, representing 992,636 shares or 3.8% of outstanding shares

The Company expects to report the following fiscal 2020 year-to-date financial results:

– Consolidated net sales of $498 million
– GAAP consolidated gross margin of 55.2%; Adjusted gross margin of 56.2%
– GAAP diluted EPS in the range of $0.01 to $0.03; Adjusted diluted EPS in the range of $0.63 to $0.65
– Generated $39 million of cash from operating activities

As previously announced on April 1, 2020, the Company implemented its action plan in response to the COVID-19 health crisis. Measures taken included, among other things, the continued temporary closure of its design centers and most of its manufacturing facilities, the furlough of approximately 70% of its global workforce, the decision by M. Farooq Kathwari, the Company’s CEO, to temporarily forego his salary, a temporary reduction in salary of up to 40% for all senior management and up to 20% for other salaried employees, the Board of Directors temporarily reduced their cash compensation by 50%, the elimination of all non-essential operating expenses, a delay of most capital expenditures, the suspension of the share repurchase program and placed future undeclared dividends under review.

Fiscal Third Quarter Analyst Conference Call

The Company also announced today that it will release its financial and operating results for the fiscal 2020 third quarter ended March 31, 2020, after the market closes on Monday, May 11, 2020. Following the release, the Company will host an analyst conference call at 5:00 PM (Eastern Time) to discuss its results. The analyst conference call will be webcast from the “Events and Presentations” page at http://www.ethanallen.com/investors. To access the conference call, dial 844-822-0103 (or 614-999-9166 for international participants), and enter conference ID 6853339. For those unable to listen live, an archived recording of the call will be made available on the Company’s website for at least 60 days.

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 in the United States, two manufacturing plants in Mexico and one manufacturing plant in Honduras. Approximately 75% of its products are made in its North American plants. For more information on Ethan Allen’s products and services, visit www.ethanallen.com.

Contact:

Matt McNulty – Vice President Finance – IR@ethanallen.com

Source: Ethan Allen Interiors, Inc.