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Ethan Allen Reports Strong Fiscal 2023 First Quarter Results

General News
Ethan Allen Interiors Logo - Furniture Manufacturer

Ethan Allen Interiors Inc. (“Ethan Allen” or the “Company”) reported its financial and business results for its fiscal 2023 first quarter ended September 30, 2022.

Farooq Kathwari, Ethan Allen’s Chairman, President and CEO commented, “We are pleased with our fiscal 2023 first quarter results. Our sales increased 17.7% to $214.5 million and our diluted earnings per share increased by 48.1% to $1.17. We are also pleased to generate strong operating cash flow of $38.4 million during the quarter and returned $20.9 million to shareholders through cash dividends. We benefited from efficiencies throughout our vertically integrated structure and a higher backlog of orders.”

Mr. Kathwari continued, “Moving forward we are well-positioned to manage the challenging trends within the global economy. As we celebrate 90 years of innovation, our focus is on the continued strengthening of our vertically integrated structure. This includes our interior design network with major advancements in technology, accelerating introductions of relevant offerings, expanding our marketing and continuing to invest in our North American manufacturing and logistics. About 75% of our products are made in our North American workshops.”

Fiscal 2023 First Quarter Highlights*

  • Consolidated net sales growth of 17.7% to $214.5 million
    • Retail net sales of $183.7 million increased 18.5%
    • Wholesale net sales of $114.7 million increased 4.8%
  • Written order trends
    • Retail segment written orders increased 7.4% compared with the pre-pandemic first quarter of fiscal 2020; down 8.6% compared with the first quarter of fiscal 2022
    • Wholesale segment written orders were 0.1% lower than the first quarter of fiscal 2020; declined 7.2% from a year ago
  • Consolidated gross margin increased to 60.4%, up from 59.9% a year ago due to a change in sales mix with the Retail segment becoming a larger portion, a favorable product mix, product pricing actions taken and higher manufacturing productivity and efficiency
  • Operating margin of 18.5%; adjusted operating margin of 17.6% compared with 15.2% last year due to strong net sales growth, retail and wholesale gross margin expansion and controlling costs by leveraging cost reductions partially offset by higher delivery, freight and marketing costs; selling, general and administrative expenses decreased from 44.7% of net sales to 42.9%, reflecting the Company’s operating leverage
  • Diluted EPS of $1.17 compared with $0.79; adjusted diluted EPS of $1.11 increased 38.8%
  • Generated $38.4 million of cash from operating activities; cash and short-term investments totaled $142.4 million with no debt outstanding
  • Paid special cash dividends and regular quarterly cash dividends totaling $20.9 million
  • Ended the quarter with $167.7 million in inventory, down $8.8 million from June 30, 2022

* See reconciliation of U.S. GAAP to adjusted key financial measures in the back of this press release. Comparisons are to the first quarter of fiscal 2022.

Balance Sheet and Cash Flow

Cash and short-term investments totaled $142.4 million at September 30, 2022, compared with $121.1 million at June 30, 2022. The increase of $21.3 million during the quarter was primarily due to $38.4 million in cash generated from operating activities and $8.1 million in proceeds received from a sale-leaseback transaction completed in August 2022 partially offset by $20.9 million in cash dividends paid and capital expenditures of $3.2 million as the Company continues to return capital to shareholders and reinvest back into the business.

Cash from operating activities totaled $38.4 million, an increase from $17.0 million in the prior year period due to an improvement in working capital and higher net income. The increase in working capital was primarily from a reduction in customer deposits as net shipments outpaced written orders and improved collections on accounts receivable partially offset by a reduction in inventory levels. 

Cash dividends paid were $20.9 million, which included a special cash dividend of $12.7 million, or $0.50 per share. Ethan Allen has a long history of returning capital to shareholders and is pleased to have paid the special cash dividend in August 2022, which highlights the Company’s strong balance sheet and operating results.

Inventories, net decreased to $167.7 million at September 30, 2022, compared with $176.5 million at June 30, 2022, as the Company restores its operating inventory levels to more historical norms as backlog declines.

Customer deposits from written orders decreased $12.2 million during the quarter and totaled $108.9 million at September 30, 2022. Increased manufacturing capacity and related deliveries combined with the pace of written orders led to the reduction in customer deposits.

No debt outstanding at September 30, 2022.

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 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.


Matt McNulty – Senior Vice President, CFO and Treasurer –

Source: Ethan Allen Interiors Inc.