Loading...
Docoh

Ethan Allen Interiors (ETD)

Participants
Matt McNulty Vice President, Finance
Farooq Kathwari Chairman & Chief Executive Officer
Corey Whitely Chief Financial Officer
Brad Thomas KeyBanc Capital Markets
Bobby Griffin Raymond James
Cristina Fernández Telsey
Call transcript
Due to licensing restrictions, you must log in to view earnings call transcripts.
Operator

Greetings, and welcome to the Ethan Allen Fiscal 2021 First Quarter Analyst Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow this formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Matt McNulty, VP of Finance. Mr. you Thank begin. may McNulty, you

Matt McNulty

webcast on Thank you, conference September to Allen's our recorded and XXXX. find where a copy Good for our afternoon of and being call is ended release, conference welcome on fiscal ethanallen.com, This you'll which Ethan press call Victor. live first XX, quarter call. our made financial today's call of remarks, non-GAAP of in available reconciliations open to replay phone referred to the After the questions. also A be our release we will contains information and prepared via and on website. this call will

our today any differ complete forward-looking assumes those call. risks. could reminder, cause a revise SEC Please forward-looking no As that this to review of obligation to results our comments a materially. statements subject that for company are or actual uncertainties matters The refer include update and during to risks discussed to will filings

is Chief I'm Farooq on CEO, our the and me now to Farooq pleased Officer, Joining Financial over Kathwari. turn the call today to Chairman call our Corey and Kathwari; Whitely.

Farooq Kathwari

all Yes. participating And Matt. thank for Thank you in our you, call.

six increased ended of $XXX September Sales strengthening believe advised balance Sales important quarter we XXXX. quarter XX XXXX. release, in lower the million months. the September our our XX% and making from A our year XX.X% are good sheet. and have were last also delivered in from in in XX, results I COVID this we compare the the ended sales XX, June growing new impact sales, by fourth for in highlights. to profits we And progress few our last As very press our world, to

and from XX% at XX, retail quarter increased division September XX.X% Our also fourth June from XXXX. written business increased ended XX, XXXX

major due and XX, are faced pleased COVID-XX positioning XX, quarters the March June we challenges to XXXX in ended well after XXXX. that are We

strong backlogs have We as follows.

increased XX% from increased from retail and XX, September X/XX/XXXX. XX, June backlog XXXX at For XXXX division XX% our

We At XXXX of from September gross achieved optimum of XXXX. margins. manufacturing below September XX.X% gross XX.X% was at operating XX, our June and margin increased XX, during quarter. XX, from the XX.X% gross our despite also improved from margins XX.X% levels The

income negative of X/XX/XXXX June in XX% manufacturing. at previous lower operating gross XXXX adjusted quarter and by margin margin and a XX, production X.X% also our to the compares Our year in at ended X/XX/XXXX impacted of X%

of We have focus continued strengthening $XX debt at paying our to ended cash million X/XX/XXXX sheet million down balance debt-free. on with of with $XX and and

overview grow provide our Now our some and initiatives will profits. on provides of after financials, brief I a information to Corey our sales Corey?

Corey Whitely

you, Thank Farooq.

quarter clients first and focused XXXX, the workplaces safe. remained our our serving During on teams our keeping fiscal of

$XXX.X backlogs net which written Our design to both prior retail levels pandemic are and million pre-COVID-XX the e-commerce. fundamentals our term. to backlogs Production quarter to the and with in million, and from $XXX.X sales getting continue expect order in within with levels, orders were times for quarter near prior compared reduce the the year increased quarter. be the reduce undelivered and delivery high Consolidated our compared growth throughout manufacturing back double-digit the reporting year will lead during strong, centers steadily we

orders September. in August were sales growth XX.X% segment orders net the written XX.X% the including in Retail during prior While decreased, quarter. XX.X% accelerated written year, up and over growth

to the prior have the orders we quarter, e-commerce clients. our for digital reflected as on to focus XXX% quarter, growth experience our compared year Our for continued refining

were while strong are retail trends to very expected see of negatively prior the by continue timing retail the issuance months. new benefiting disruptions orders issued Wholesale delayed that for year. the impacted be month-to-date due Farooq government to October other to quarter strong COVID-XX to mentioned, are pandemic-related growth orders we in delaying of written the for and orders. over up with coming GSA The orders, orders As order XX% segment from

and GSA other segment orders X.X% orders, wholesale Excluding quarter. increased government for the

Adjusted less Our a which pre-tax a primarily and the reduction in expansion expenses to to margins operating XX from margin excludes the adjusted to by in the of adjusted are we selling the initiatives gross COVID-XX-related with quarter. restructuring offset impact a for charges wholesale disruptions. as in expenses diluted ago, reductions Adjusted due other compared first the XX% increased and expenses. year X.X% $X.XX containment decrease asset corporate points primarily manufacturing gross in due prior partially compared basis operating was cost impairments within to compared to sales and margin Adjusted margin, lower X% more XX.X%, from to efficiently increased were due mix actions year operating expense to in XX.X% strong as gross with and compensation reduced quarter headcount operating EPS resulting lower September XXXX. $X.XX production

$X.XX compared prior year to $X.XX quarter. GAAP was the Our in EPS

of our New a million, last Passaic QX net may from net As activities. property $X.X year $X.XX one-time of the restructuring EPS recall, Jersey share gain per sale our GAAP pre-tax for you included results or of

our of cash remains inventory strong with As XXXX, and million balance and $XXX of of $XX million. sheet XX, cash September equivalents

we debt as in XXXX, During the on remaining hand. and outstanding cash months With available over call I'll first operating mentioned, using the $XX.X three paid Farooq. from Farooq of to that turn back million generated activities, cash we the million $XX fiscal of

Farooq Kathwari

Corey. you, Thank Yes.

have remains important our sheet. one balance sales initiatives our focus and the and on to to Number grow is focus to continue profits on following a strong talent. Our strengthening

integrated enterprise. managing team strong a have vertically We our

have During and the our teams. strengthened product development year, retail, marketing we last

focus critical. service. It's is on Second

provides our XX% advantage times. our a of competitive these during furniture challenging Our making North especially about of American in advantage facilities

to adding are We technology. in capacity and plant investing

end early we indicated, of and of on quarter. we As by up this expect to quarter most some our next backlog catch

marketing direct digital mail, television, maintained print. have strong We initiatives and including

our seen the next an rugs increase competitive in combining strong in technology with have continue advantage. We outdoor, and of digital magazines this We have categories. in strong lighting quarters these is Fourth also introduced such business marketing mattresses, is as fiscal service three a year. in plan to personal categories and

such of release, as investments staff Program. This last with open to augmented with comments. safety, as continued year remain focus. Web making We protocols, the forward fifth, our degree have are services by our product our happy for increasing finally have a following business interact to it an that even store, for month-to-date standards introduction periods. written designers business progress October providing in of and important is for and Operator? CDC safe, possible important and Our logistics operating the strong XD personal look is floor during to technology. guidelines Number AR planner, result operations clients and Also was of the by our our it reality, for impacted interior high pleased and tools in XXXX. very to XX% And October customers and programs, strong advised orders press optimistic. helped are Member compared we -- and to any manufacturing our cautiously we're With to this is continue written was now -- some pandemic

Operator

comes Markets. Please from [Operator Capital Brad with with KeyBanc Instructions] question. your proceed first Thomas Our question

Farooq Kathwari

Brad. Hello,

Brad Thomas

GAAP Could Thanks bit backlog about should talk upcoming for written afternoon. and help convert a my the strong us to through your more wanted working trends you you've taking these reported we into written how think strong little triangulate strong going Hi, orders to revenues in Farooq. this question. quarter to and forward generated. orders about try revenues here? ability Good I to that these

Farooq Kathwari

Brad. Yes,

important. Of course is critically that

to at close almost operating is manufacturing Our pre-COVID the levels.

fabrics, having we issues but And said we from as I are today I relating give that would to even had have say materials be said, just more up. catching quarter Now XX%, this, some able XX% backlog it that raw believe if in that of and the I would still some I we of or to estimate, the quarter. an next of this perhaps that produce to

issue that another customers' we is to see that Now ability products. we also take have to have

We have products.

centers there are the on some are too. see them country. in and we it would the working I by of February. side issues them most because now by take December are January that as this all And We our getting that service know you say to across that customers But into and

Brad Thomas

us Farooq. of that about the broadly in you industry, Can is and little inventory competitive of because many what And industry out availability many competitors bit about talk strong you get of and I are some landscape? stronger in the of to think here? we're the a on this your ahead seeing the dialing That's quarter promotional helpful, talk demand ability because promotion. could margins of the in your back

Farooq Kathwari

Yes.

So question. Brad, an that's important

in That's close what of a almost we difference. say I XX% Now would to sell custom. is our big

excess of lot a have don't inventory. we So

homes. their are Now a in period and tomorrow. They products want people been in it they in They've want hurry. sitting this

cannot of it sell got of compete can with folks we they right warehouses. their we that, and Now from some do on who lots hand but inventories

also of workshops. ability So has In or they're plus an have now they been have is more but said people out an what commodity seen for who as impact. waiting own And is in I hear many that XX% business running who had the our I overseas. people inventories we've a made to are we ability case, they're and our containers sold, of it have from that coming have now

plants. quarter. have because in it asked were don't We of we March to a to all plants. have COVID our up We overhead had We our to back And the gear they all retailer had typical had unlike plants. close the close the

an you retail operating operating our margins. the is the have opportunity there of a to other positive because in margins. as at done where we maintain But We our can logistics capacity, we right service. times level operating margin. operating the right we've margins, volumes, that we the a hand, And of our the get at our all now at will it's that able great when not see are of benefit benefit plants when impact kind our of it when have operating margins past at that years of produce on get has is full are higher on are a We

has focus is cash continuing this our are right good to operating. of opportunity. increase of fulfilling we opportunity backlog, our That So We that that manufacturing the good a news margins. have opportunity is have and we'll do an so now

Brad Thomas

you helpful, and luck. so Farooq. Thank Very good much

Farooq Kathwari

Thanks. Brad. right, All

Operator

Thank you.

with Griffin with Bobby comes Our James. from question. Raymond next Please your question proceed

Farooq Kathwari

Bob. Hello

Bobby Griffin

Good afternoon, Hope well? Farooq, you are Corey. doing

Farooq Kathwari

too. Great, you

Bobby Griffin

equation? the orders on reference October in the mean the that the the question a model. is get it But versus about which to ask maybe Understanding to September September, talk So would October see I help with business about membership the That the guess us different trends. business? -- takes and stronger comparison the little strength just year want I was I comparison Did first maybe you prior sequentially? September of October way think and out you weird in of can

Farooq Kathwari

I Yes. that's October Bobby, I October? Corey. mean we've this talking we I to to but and -- people likely are these membership. of most the not this and impact increased this to XX% this fact a I got is it the due membership is -- XX% I of I year. of Corey's what of to that big doing -- to How just would again And of business say the we mean, going I only the but actually that say year well we the give little say are yesterday not to going about mean estimates included sort come or which let XX% and reflective if question you factors by to due not doing were is know would COVID, enough. is last just the were that say I we this impact up. had this is XX% This current and is And said impact Matt's, in XX% initially, year so are And the increase. and increase to X impacted last so my a COVID had

Bobby Griffin

the just with message appreciate in That's marketing at September, or coming change or more versus Did that you helpful. Farooq. anything the Okay. I interesting customer August, all, October strength? back is very

Farooq Kathwari

had factors We did in all which a closed is right that almost quarter March number centers. onwards know to of in we mind June, design up June keep -- our we actually that from were

bringing still brought that was in. need it we October back all September people in we're So in. in bring and in to We actually haven't the even people

marketing. So only is of a Yes, strong it not marketing. factor maintain we

direct strong very maintained have We mail.

see -- Keep We from instance a and we we do have to factor in have But also time centers. a buy in is But model for it. our mind in operating people in come retail television. business maintained digital what are bringing is advertising. design than more we where a and now people that typical our time different

homes. operated from designers Our

the still in week. October days was a many in In situation Chicago and fact, bigger cities a But have all and now, greater, not November, -- will in in design were Seattle design like seven centers for in days and not I our centers almost many operating finally been. where still operating COVID starting X week. cities then We instance think be we

October, more So maintain in we our of added we can more We sales. increased marketing days people. and

All of those things happened in October.

Bobby Griffin

on? then last SG&A And buildup to operating and able headcount you more next year, pretty still about I year. back going have less in bring it's to clearly, how do delta understand But that we you for kind I this Do much still Farooq, think with Okay. next year? guys mean, mean, of some be going to I costs recovery. the less you are forward? big How think of fiscal versus SG&A that maintain early dollars, do business you're

Farooq Kathwari

We if our people. at at our are prior approximately is of if the stage still manufacturing. you less would is going we we're And with that for I still our of headcount. that to look move It at now, a retail. And to -- back it down say talking instance last compared total of most of in a retail a as -- we are year, September the the this really total at down in look is folks in manufacturing year, lot end headcount operating take you at forward XX% as I'm about take are

Our shortage we more of can back adding to we're you we And more how Vermont. know with less in a caught people to little we're were. looking there's going increase fact, it, people in manufacturing are this coming or there. is up of where because we new to all what And -- see in business bit

people more Honduras. adding and We're are adding Mexico We in people in Carolina. more North

at So it of increase. the continues say were the to business also this The I end it's stage, business. If XX%. at that depends on to day,

XX% and between the with this have end XX% likely, will right down might this to last the now be I XX% what quarter business. it's but We I had on But business quarter by so more -- and of say it we XX% year, we'll end most would of mean previous XX% year. compared operate the that or or based by

Bobby Griffin

Its helpful. in Okay. I of appreciate Best very the luck details. the quarter.

Farooq Kathwari

All right, Bobby take care.

Operator

Thank you.

from comes question. Telsey. with with Fernández Next question Cristina Please proceed your

Cristina Fernández

and Brad's Farooq afternoon, wanted I to follow-up good converting to Hi, sales. about Corey. question on backlog the

So imply being does you backlog that sales or still in having the -- about you XX% of should think to a still the we to XX% capacity can up that quarter December be can convert that limited and decline? sales by year-over-year if year-over-year, can

Farooq Kathwari

Yes.

you they somewhat other going different products that do Corey, furniture the in for may mentioned would is product say? a it of are sure In objective. products, and be quarter again that and the our factors store. that taking this all here. delivered. make product last who all into for who all take should as folks are, -- than chances you buying be we'll it. large and our I it the struggle there Corey, they've about we ordered perspective say yesterday. they next think the board a what in question in I are would how is that consumers interesting because also custom. is My It's this year. That pretty And the want the did There it. -- people buy somewhat across coming are also I this they is that that want perhaps that up what are case be But to it it's for our But this close wait. chime But we the to to is

Corey Whitely

do will Farooq. there's just for agree I at ramped some bit. And out Yes. but a our with it, we or is getting quarter, where meet year No, up. were we exceed little back that manufacturing likely somewhat there this And unknowns last obviously looking

Cristina Fernández

And you seeing you that's the that remind I are to last you different, or better And October are is have or I are different? or traffic was I what Like what guess really to strong trend you think getting Yes, e-commerce? order that number? accelerated to centers, you year? going still very the trends helpful. you're us number -- then is design then it seeing trends are back can the what conversion the Okay. are how was business that. don't How October seeing October, in which

Farooq Kathwari

don't numbers. think we don't I order I know. monthly give Cristina any

minute, let's traffic. an interesting will -- that hold in So, are Matt as trends look and up that as at for people that. that Corey far it's a coming less But there's

also much that traffic but the service us, very very they we designs show are and done are plans. And are they There homework And come And for -- -- mentioned them amazing work technology are all is to year it's already productive in and virtually Our good. our their designers them. of is tools lower than combining which qualified. it's they're are when with they've last more as making have technology. appointments. working all by personal with today doing able I how They their designers

traffic qualified. our still is yes, more lower, but So,

Cristina Fernández

year-over-year Well, from a or August similar picked has still like decline? up is September, and it trending it is pretty

Farooq Kathwari

year? to last compared You

Cristina Fernández

of months. Well, just the past over couple

Farooq Kathwari

to year, it month. is no, No, every it is lower. up picking last Compared

Cristina Fernández

it. Got

Other example between New speaking differences performance would one -- past centers months, any across to your by one Are of share market or couple you the trends continue over of some we stores can markets you then weak. you retail And is for meaningful or Okay. between be seeing question. helpful. are hear? very like broadly urban any suburban York centers design and there last

Farooq Kathwari

interesting that doing the of COVID challenge because sort month-to-month. again saw back mean degree little also varied it for month some to well. where and course order what or I of carefully. watch in There's it far instance of now. and is with at. months Florida -- it of guess extremely very bit it reflects how that -- really Yes, after few question Like it's has I -- I stage it a was and is A it's thing an last we very, even a

instance holding New people is issues And other strong. West Jersey business this A for up COVID. year. the lot very last And but somewhat is to impacted know I is when area had this Long Manhattan Francisco from strong. Connecticut you affected have in factors. mean the And our We all Island Seattle more lot a -- still factors are very been of suburbs. I is is to the than very the moving COVID. we go say by A is weaker lot good. of course, weaker. that other of have would and Coast. so been there's wildfires, by San like of

good. And very what's business Connecticut taking in very Long reflects business Washington our because so is our area New is that our Island also business in in and good place Jersey,

we're in So, areas doing I would say well. that most

some It's a has well it so that have -- well well. also more but difficult, South better Manhattan than specific. Seattle And in In like In would areas results. is Francisco say in has doing I other been done Carolina North great doing I been got to been you've be fact difficult. we've reflects situation. in interesting. -- would San would I others. that areas some are tough -- say areas not say that in Ohio Carolina, extremely Like

Cristina Fernández

and quarter. questions. pretty broad Those based. Okay, this my all that's seems It were good helpful. luck Thanks

Farooq Kathwari

Cristina, thank you.

Operator

are There over I'd back further time. turn any Kathwari at to no you. Mr. like this for remarks. Thank to questions floor the closing

Farooq Kathwari

of of expense, the that. of see to the we under when have Good I as every that a people integrated said listening. our very, we're helps gratified you every of Well, business and vertically everything all terms done focus circumstances. participating in participating strengthening looking building our balance associates business the for our sheet, work and forward we it these increase backlogs. really for great and Thanks are very to in thank all It's you and call. element watching And are in the And very our is news is trying with this much company. are increase who working,

Operator

Ladies gentlemen, conference. concludes and this today's web

participation and You may time. lines day. Thank have disconnect your now a great at this your you for