Ethan Allen Announces Strong Sales and Record Earnings for the Fiscal 2022 Fourth Quarter and Full Year

Ethan Allen Interiors Inc. (“Ethan Allen” or the “Company”) today reported its financial and business results for its fiscal 2022 fourth quarter and full year ended June 30, 2022. Fourth quarter sales were $229.7 million, an increase of 28.8% over the prior year while diluted EPS increased 73.2% to a quarterly record of $1.23. For the full fiscal year ended June 30, 2022, sales rose 19.4% to $817.8 million and diluted EPS increased 70.9% to $4.05.

Farooq Kathwari, Ethan Allen’s Chairman, President and CEO commented, “In what was a dynamic and volatile fiscal year marked by rising costs and global supply chain challenges, we delivered strong sales growth and record earnings for the full fiscal year. We are pleased with the strong results showing the strength of our vertical integration, strong order backlogs, increased production capacity and the excellent work of our interior designers combining personal service and technology. We continue to develop relevant product offerings, of which about 75% are made in our North American manufacturing workshops.”

Mr. Kathwari continued, “Yesterday we announced a special cash dividend of $0.50 per share and our regular quarterly cash dividend of $0.32 per share, both payable on August 30, 2022. We have increased our regular quarterly cash dividend each of the past three years. We ended the quarter with a strong balance sheet, including cash and investments of $121.1 million as of June 30, 2022 and no debt.”

“As we celebrate 90 years of innovation, we remain focused on constant reinvention and maintaining an entrepreneurial attitude. In the near-term, we remain focused on managing the business to work through higher backlog at the end of our fiscal year and to service our customers. We believe we are well-positioned with our relevant product offerings, a major advantage of vertical integration including our North American manufacturing, our interior design focused retail network, a strong logistics network and a healthy balance sheet to maximize our opportunities during fiscal 2023, while recognizing the impact of a slower economy and continued inflation,” concluded Mr. Kathwari.

Fiscal 2022 Fourth Quarter Highlights*

• Consolidated net sales increased 28.8% to $229.7 million
  • Retail net sales of $188.6 million increased 25.2%
  • Wholesale net sales of $137.4 million increased 29.2%
• Written order trends
  • Wholesale segment written orders decreased 10.7%; up 14.2% from the pre-pandemic fourth quarter of fiscal 2019
  • Retail segment written orders declined 19.5%; up 12.9% compared with the fourth quarter of fiscal 2019
• Consolidated gross margin of 58.2% compared with 58.7% a year ago due to a change in sales mix and higher input costs partially offset by strong retail segment sales, product pricing actions taken and higher manufacturing production
• Operating margin of 18.3%; adjusted operating margin grew from 14.1% last year to 18.5% due to strong net sales growth, wholesale and retail gross margin expansion and controlling costs by leveraging cost reductions; selling, general and administrative expenses decreased from 44.7% of net sales to 39.8%, reflecting the Company’s operating leverage
• Diluted EPS of $1.23 compared with $0.71; adjusted diluted EPS of $1.25 increased 68.9% compared with $0.74
• Generated $29.4 million of cash from operating activities; cash and investments of $121.1 million
• Increased the regular quarterly dividend by 10% to $0.32 per share on April 26, 2022; paid on May 25, 2022, to shareholders of record at the close of business on May 10, 2022
• Opened the Company’s 16^th location in California, with the grand opening of a new concept design center in Walnut Creek, CA
• Celebrated the Company’s 90 Years of Innovation by holding a Virtual Convention on June 23, 2022 under the theme of “Vertical Integration: the Key to Our Service” which highlighted key areas of manufacturing, logistics, retail, merchandising and marketing
• Launched the state-of-the-art immersive 3D Ethan Allen Virtual Design Center which showcases the timeless aesthetic of Ethan Allen’s vast product portfolio while fostering collaboration between interior designers and clients, furthering the Company’s commitment to combining personal service and technology

Full Fiscal Year 2022 Highlights*

• Consolidated net sales increased 19.4% to $817.8 million
  • Retail net sales of $689.9 million increased 24.3%
  • Wholesale net sales of $483.8 million increased 17.1%
• Written order trends
  • Wholesale segment written orders decreased 0.5%
  • Retail segment written orders declined 4.6%
• Consolidated gross margin rose to 59.3%; Operating margin improved to 16.9%
• Diluted EPS of $4.05 compared with $2.37; adjusted diluted EPS of $3.93 increased 65.8%
• Generated $69.4 million of cash from operating activities
• Paid cash dividends of $48.3 million, an increase from $43.3 million last year
• Strengthened the Company’s Board of Directors through the election of four new directors in the past 12 months
• Expanded manufacturing capacity in North Carolina through the purchase of certain property, plant and equipment of Dimension Wood Products, Inc. on February 17, 2022
• Opened multiple new design centers during fiscal 2022 that showcase the Company’s unique vision of American style while combining complimentary interior design services with technology
• Reaffirmed the Company’s commitment to maintain and grow its North American manufacturing where customization helps create relevant and quality products; steps taken included new job openings and increases in wages

* See reconciliation of U.S. GAAP to adjusted key financial measures in the back of this press release. Comparisons are to the fourth quarter and full fiscal 2021 year.

Key Financial Measures*

(Unaudited)
(In thousands, except per share data)
	Three months ended								Twelve months ended
	June 30,								June 30,
		2022			2021		% Change			2022			2021		% Change
Net sales		$229,683			$178,323		28.8 %			$817,762			$685,169		19.4 %
GAAP gross profit		$133,785			$104,596		27.9 %			$484,706			$393,107		23.3
Adjusted gross profit*		$133,785			$104,846		27.6 %			$484,706			$393,746		23.1 %
GAAP gross margin		58.2 %			58.7 %					59.3 %			57.4 %
Adjusted gross margin*		58.2 %			58.8 %					59.3 %			57.5 %
GAAP operating income		$41,945			$24,062		74.3 %			$138,250			$77,285		78.9 %
Adjusted operating income*		$42,438			$25,084		69.2 %			$134,240			$80,335		67.1 %
GAAP operating margin		18.3 %			13.5 %					16.9 %			11.3 %
Adjusted operating margin*		18.5 %			14.1 %					16.4 %			11.7 %
GAAP net income		$31,519			$18,161		73.6 %			$103,280			$60,005		72.1 %
Adjusted net income*		$31,888			$18,933		68.4 %			$100,277			$60,059		67.0 %
Effective tax rate		24.9 %			24.3 %					25.2 %			21.5 %
GAAP diluted EPS		$1.23			$0.71		73.2 %			$4.05			$2.37		70.9 %
Adjusted diluted EPS*		$1.25			$0.74		68.9 %			$3.93			$2.37		65.8 %
Cash flows from operating activities		$29,355			$27,792		5.6 %			$69,356			$129,912		(46.6 %)

* See reconciliation of U.S. GAAP to adjusted key financial measures in the back of this press release

Balance Sheet and Cash Flow

Total cash and cash equivalents were $109.9 million at June 30, 2022, compared with $104.6 million a year ago. Cash on hand increased $5.3 million during fiscal 2022 due to net cash provided by operating activities of $69.4 million and $10.6 million in proceeds received from sales of property, plant and equipment partially offset by $48.3 million in cash dividends paid, including a special dividend of $19.0 million, capital expenditures of $13.4 million and net purchases of investments of $11.2 million.

Cash from operating activities totaled $69.4 million, a decrease from $129.9 million in the prior year period primarily due to an increase in working capital partially offset by higher net income generated during the period. The increase in working capital was primarily from a reduction in customer deposits as net shipments outpaced written orders, higher inventory to increase material availability to support expanded manufacturing and distribution capacity to service the strong backlog and increased accounts receivable arising from strong sales in the Company’s wholesale segment, especially from higher contract business sales.

Inventories, net increased to $176.5 million at June 30, 2022, compared with $144.0 million a year ago, as the Company increased its manufacturing productivity and service center inventory to support higher levels of production as well as to help protect against future supply chain disruptions and price increases.

Customer deposits from written orders decreased $9.6 million during fiscal 2022 and totaled $121.1 million at June 30, 2022. Increased manufacturing capacity and related deliveries combined with the pace of written orders slowing led to the reduction in customer deposits. Wholesale order backlog is down 14.7% compared to the beginning of the fiscal 2022 year.

No debt outstanding as of June 30, 2022.

Dividends

On August 2, 2022, the Company’s Board of Directors declared a $0.50 per share special cash dividend to shareholders of record on August 16, 2022, payable on August 30, 2022. The Board also declared a regular quarterly cash dividend of $0.32 per share, payable on August 30, 2022, to shareholders of record at the close of business on August 16, 2022. Ethan Allen has a long history of returning capital to shareholders and is pleased to pay a special cash dividend, which highlights the Company’s strong balance sheet and operating results.

For the complete press release, click here.

About Ethan Allen

Ethan Allen Interiors Inc. (NYSE: ETD) is a leading interior design company, manufacturer and retailer in the home furnishings marketplace. The Company is a global luxury home fashion brand that is vertically integrated from product design through home delivery, which offers its customers stylish product offerings, artisanal quality, and personalized service. The Company provides complimentary interior design service to its clients and sells a full range of home furnishings through a retail network of design centers located throughout the United States and abroad as well as online at ethanallen.com. Ethan Allen owns and operates ten manufacturing facilities located in the United States, Mexico and Honduras, including one sawmill, one rough mill and a lumberyard. Approximately 75% of its products are manufactured or assembled in these North American facilities.

For more information on Ethan Allen’s products and services, visit www.ethanallen.com.

Contact:

Matt McNulty – Senior Vice President, CFO and Treasurer – IR@ethanallen.com

Source: Ethan Allen Interiors Inc.