Ethan Allen Provides Business Updates & Third Quarter Results

Ethan Allen Interiors, Inc. (“Ethan Allen” or the “Company”) provided several updates on its business and reported financial results for its fiscal third quarter ended March 31, 2020.

Business Update

Farooq Kathwari, Ethan Allen’s Chairman, President and CEO commented, “It has been now almost eight weeks since the Company temporarily closed the Company-operated retail design centers and some of its North American manufacturing operations. I am pleased and proud of the work and attitude of our associates throughout our vertical enterprise during this unprecedented crisis.”

“As we mentioned in our April 22, 2020 press release, our fiscal third quarter results were negatively impacted as a result of the lower order backlog entering the quarter from our transition to a membership model combined with disruptions due to COVID-19. While our third quarter revenues of $150 million were lower than forecasted, we saw strong growth in orders for the first two months of our fiscal third quarter, until the significant disruption in March. In April, with almost all our design centers closed, we were still able to generate about 35% of written orders compared to April 2019. This was due to our interior design associates working remotely utilizing technology we deployed over the last few years, including the Ethan Allen inHome augmented reality app, 3D room planner tool, Live Chat on ethanallen.com and communications tools including Skype and FaceTime,” Mr. Kathwari continued. “We are excited that our design centers are reopening in many markets around the country and we have begun a phased recall of some of our furloughed associates. We are also pleased that we have restarted most of our manufacturing in North America – again phasing in associates and keeping the safety of our teams uppermost in our decisions.”

Mr. Kathwari further stated, “Our vertical integration provides us strong gross margins and operating leverage. During the third quarter ended March 31, 2020, we returned value to stockholders through regular quarterly dividends of $5.5 million and share repurchases of $14 million representing 3.8% of our outstanding shares. In view of the COVID-19 challenges, the Company has decided to temporarily suspend its regular cash dividends and the share repurchase program. We also took other steps to conserve cash including the furlough of approximately 70% of the global workforce, reductions in salaries and elimination of all non-essential operating expenses.”

“Crisis creates opportunity. We are reviewing every aspect of our vertically integrated operations and are confident we will come out stronger. At March 31, 2020 we had cash of $117 million, which included $100 million drawn from our revolving credit facility. We believe our liquidity will be sufficient to fund our operations for at least the next twelve months,” Mr. Kathwari concluded.

COVID-19 Update

The Company has taken decisive actions to manage liquidity and costs through the challenging economic environment caused by COVID-19. The pandemic and ensuing government restrictions resulted in temporary closing of the Company’s North American design centers and manufacturing since March 19. The Company implemented its action plan in response to the COVID-19 pandemic. Measures taken included, among other things, the continued temporary closure of the Company’s design centers and most of its manufacturing facilities, the furlough of approximately 70% of the global workforce, the decision by the Company’s CEO to temporarily forego his salary through June 30, 2020, a temporary up to 40% reduction in salaries for all senior management and up to 20% for other salaried employees through June 30, 2020, a temporary reduction of 50% in cash compensation of the Company’s directors, the elimination of all non-essential operating expenses, a delay of capital expenditures, the temporary halt of the share repurchase program and a temporary suspension of the quarterly dividend. These actions are expected to result in reduced cash spending versus plan.

The Company began reopening design centers in a number of U.S. states since May 1, 2020 and began resuming production in some of its North American manufacturing plants in a limited capacity to work through existing backlog and to be in a position to service expected demand as the economy begins to reopen for business. As of May 11, 2020, Ethan Allen has reopened either fully or partially approximately 60% of its Company-operated retail design centers. Additional design centers are expected to reopen in the coming weeks when permitted based on applicable state and local guidelines. The Company’s distribution centers are open and making home deliveries.

For the full third quarter results, click here.

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.