DANBURY, Conn. -- Ethan Allen Interiors Inc. (“Ethan Allen” or the “Company”) (NYSE: ETD) today reported its operating results for its fiscal 2022 first quarter ended September 30, 2021.
Farooq Kathwari, Ethan Allen’s Chairman, President and CEO commented, “We are pleased to report sales growth of 20.7%, gross margin increasing to 59.9% and operating margin of 15.0%, resulting in diluted EPS of $0.79 and adjusted EPS of $0.80 compared with an adjusted EPS of $0.36 in the prior year, an increase of 122.2%. During the quarter we paid a special cash dividend of $0.75 per share and a regular quarterly cash dividend of $0.25 per share and ended the quarter with cash on hand of $93.7 million and no bank debt.”
Mr. Kathwari continued, “Our vertically integrated structure, including 75% of our products being made in our North American manufacturing workshops, provides us a unique opportunity to grow and better serve our clients. The combination of the personal service of our in-house interior designers and the increasing use of technology is a major factor in our growth.”
FISCAL 2022 FIRST QUARTER HIGHLIGHTS
-- Consolidated net sales increased 20.7% to $182.3 million
-- Retail net sales of $155.0 million increased 31.3%
Wholesale net sales of $109.4 million increased 12.4%
-- Strong written orders
-- Retail segment written orders growth of 6.1%
-- Wholesale segment written orders growth of 8.1%
-- Consolidated gross margin increased to 59.9%
-- Operating margin grew to 15.0% due to net sales growth and controlling costs by leveraging cost reductions; selling, general and administrative expenses decreased to 44.7% of net sales from 48.6%, reflecting the Company’s operating leverage
-- Diluted EPS of $0.79 compared with $0.37; adjusted diluted EPS of $0.80 increased 122.2% compared with $0.36
-- Generated $17.0 million of cash from operating activities; cash on hand of $93.7 million and no bank debt outstanding
-- Paid special cash dividends and regular quarterly cash dividends totaling $25.4 million
-- Announced plans to further expand manufacturing production, including new job openings and increases in wages to reaffirm the Company’s commitment to its North American manufacturing
BALANCE SHEET AND CASH FLOW
Total cash and cash equivalents were $93.7 million at September 30, 2021 compared with $104.6 million at June 30, 2021. Cash decreased $10.9 million due to $25.4 million in cash dividends paid and capital expenditures of $1.5 million partially offset by net cash provided by operating activities of $17.0 million.
Cash from operating activities totaled $17.0 million, a decrease from $42.2 million in the prior year period primarily due to an increase in working capital and restructuring payments partially offset by higher net income generated during the period. The increase in working capital was led by higher inventory to ensure input material availability to support increased manufacturing capacity to meet written order growth and the timing of accounts payable.
Cash dividends paid were $25.4 million during the first quarter of fiscal 2022, which included a special cash dividend of $19.0 million paid in August 2021. No cash dividends were paid in the prior year first quarter as the Company’s Board of Directors had previously suspended the cash dividend due to the COVID-19 impact.
Inventories, net increased to $158.7 million at September 30, 2021 compared with $144.0 million at June 30, 2021 as the Company continues to increase its manufacturing productivity and service center inventory. The higher inventory levels will continue to support increased production and delivered sales as well as help protect against future supply chain disruptions.
Customer deposits from written orders increased $9.6 million during the quarter and totaled $140.2 million at September 30, 2021. Retail written orders growth continues to outpace net sales delivered, which led to higher customer deposits and backlog at the end of the quarter. While written orders exceed current production and import product flow, the Company’s ongoing effort to increase capacity should help work through existing backlog.
No debt outstanding as of September 30, 2021.
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 approximately 300 design centers in the United States and abroad as well as online at ethanallen.com. Ethan Allen owns and operates nine 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.