Ethan Allen Interiors (ETD)

Matt McNulty Vice President of Finance
Farooq Kathwari Chairman and CEO
Corey Whitely Chief Financial Officer
Andrew Efimoff KeyBanc Capital Markets
Cristina Fernández Telsey Advisory Group
Call transcript
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Good afternoon. Welcome to the Ethan Allen Fiscal 2021 Fourth Quarter Analyst Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Matt McNulty, Vice President of Finance. Thank you.

begin. may You

Matt McNulty

Good Conference Kevin. Year welcome Ethan to June Thank for afternoon, our Analyst Call XXXX. Fiscal Fourth Allen's XX, you, and Quarter ended and

and Kathwari, Joining prepared is open remarks, After open to and while then Officer. our the Corey call, will Whitely, the the we questions. will Chairman Mr. me will Kathwari our Farooq call our and Corey today close financials Financial Chief through. CEO; to speak midway

the audience where Before this I'd in be also copy of we information to remind in release webcast via contains ethanallen.com, available begin, being made referred is on of which the replay and today's financial and you'll that call website. recorded of release, like our phone call a non-GAAP on will reconciliations to A our this live press find call.

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

Farooq Kathwari

all Thank call. you, you Matt, and our for earnings in participating thank

and a the Corey? the results, to profitability provides cash While discuss for stockholders. Corey We and our great and quarter to believe fourth sales, June I fiscal XXXX have cash. plans began we XXXX. and with sales, growth a year After heightened levels fiscal grow continue opportunity of our of to strong overview uncertainty, strong profits and will we performance have the XX, were ended continue brief able flow financial returns our to increase

Corey Whitely

you, Farooq. Thank

XX yet challenging, June performed year fiscal we well. ended Our was

the fiscal segment XX.X% fourth quarter. prior XXXX the achieving to retail quarter growth growth year and fourth continued the to during quarter, order accelerate compared compared written demand Our XXX% to fourth

order our written to that was July when orders to and demand demand. written reopening are We are Wholesale segment strong year's holding retail positive our positive XX.X%. July retail our pleased order XXXX also orders high the prior increased are

Consolidated the segment quarter Excluding GSA orders were prior XX%. $XXX.X other fourth orders, sales XX.X% increase the for government million, wholesale grew year net a and to quarter.

for Our increased retail sales sales XXX.X%. XXX% and quarter the increased wholesale

for increased in while X.X% X.X%, sales order Total decrease. recently fourth orders. sales impact has caught contract contract. high quarter, and order the GSA during both international a we expect fourth XXXX. up increased to demand fiscal produce wholesale of net sales backlogs and expect demand upcoming Our quarter, the end this the to fiscal especially trend wholesale and positively segments Contract these retail the during quarters had our contract started we our we to or government as rebound, get had XX.X% that At ship

optimization consolidated of benefits which to grew a impacted year sales to compared production Retail XX.X% years. of from ago, and consolidated levels past improved logistic operating Our a quarter was our XX.X%, XX.X%. wholesale the sales in shift leverage GAAP to adjusted increased margin within gross in retail our mix, sales our our due the over XX.X% margin the margin. gross and gross higher consolidated with gross margin growth initiatives due was while The to to manufacturing manufacturing for positively

high operating backlogs. expenses retail lower of XXXX in expense compared from margin as sales our the sales due of to due prior term Adjusted we segment increased mix order expect near margin in to the impact approximately $X.X more rate higher headcount Adjusted fiscal in XX.X%, operating and selling growth, period. strong reduced XX.X%. historical and quarter costs for they reductions excludes costs leveraging G&A impairments primarily Adjusted announced other related certain or order net were asset of growth retail expenses actions, in of action despite the including taken the million of were less and strong year a X%. to are to and sales of X.X% result by gross were percentage previously in controlling sales to corporate less as were operating than efficiently to the COVID-XX cost and advertising We in pretax charges at run from plan. fourth Operating written performance sales X% restructuring quarter. part costs operating net with initiatives, consolidated the continue corporate this our retail the fourth was improvement measures retail than level reductions margin, as expenses, the Advertising compensation quarter our the in which

We advertising X% X% XXXX. return expect in fiscal costs to the to to range

year per Fourth quarter. the for $X.XX $X.XX to increased diluted earnings in GAAP a per share Our per loss to compared adjusted share quarter share quarter $X.XX. $X.XX was compared with prior of EPS the loss

and fiscal fiscal for the year, $X.XX compared compared of $X.XX full For fiscal adjusted XXXX. $X.XX XXXX to to EPS in

June remains to of fiscal orders 'XX on As cash doubled from stock June and during for levels no led high third million our reflecting totaled retail increased deposits. net $XXX strong backlogs. retail production of and sequentially our of quarter, service XX.X% borrowings. outstanding Strong XX, outpaced hand Customer growth increasing our of million X.X% to focus XX.X% our sales deposits our with on Inventory at more delivered $XXX.X order written than balance sheet customer XX. from and segment growth and

cash generated we full During year, million. the And $XXX.X of generated million activities. the quarter, we fiscal fourth from for $XX.X operating

we and XXXX, spend We we special expect special in fiscal centers $XX dividends. full returned design million reaccelerate and $XX.X to dividends increase of shareholders continuing our during as range and regular cash capital invest while for to manufacturing million $XX total million million paid XXXX, we expenditures design And centers technology, our quarter. to open $XX.X fiscal all a relocated the between or For in in further new improving the projection. also regular and capacity

special Board XX. between declaration Directors both time Farooq. the the the shareholders declared to the XX regular August We on of a shortened payment also turn record cash to intend along to to and period the as payable August dividend, dividends. that X regular dividend continue over are X for on We $X.XX past the date cash $X.XX that, of with pleased August announce done I'll date dividend, our call with back we've With on

Farooq Kathwari

Corey. you, Thank

services, vertically technology logistics and to XX% North interior white our service in-home cloud network, We are what combined a a about integrated uniquely we enterprise the positioned American increasingly products providing with developing clients. strong of in focusing offerings, on design making as relevant our from call workshops,

provide cash We dividends very continue to cash generate shareholders. and our to strong strong flow

Since you and for many price, $X.XX. As of dividends, off I $XXX million of continued was stock strong dividends, of repurchasing debt we public XXXX stock. $XXX to involved taking in our and million in adjusted our know, million paying cash generate $XXX splits company have a share at then, paying in flow, of

of our logistics million, enterprise We strengthening with also technology. invested in capital expenditures $XXX and manufacturing, retail, and our acquisitions

on and years, XX acquisitions. capital June price of invested repurchase share XX, million and since our past $XX.XX from the paid adjusted to cash million $XX.XX increased dividends For $XXX $XXX used million expenditures XXXX, of shares, to in about cash XX, our XXXX. We $XXX June

are Our of beyond to fiscal is provide to and in to is our for areas focus manage continued us reason in generation. profitability The main our business saying and this strong and all our XXXX I'm sales, that -- to focus the returns focus shareholders. continue of growth cash

our July strong increased X% orders July year. your a over written we by retail For information, at last very

up X U.S. ago Corey to government in year-over-year just contract business, orders from July strong Our up wholesale written XX% orders were over mentioned. due XX% years and as

second on is focus Our supply objective a chain.

exceedingly need are to delivered. be and backlogs Our high

and in of our impacted positioned, have of better America, shortages. in are products positioned investments overseas manufacturing North by raw say, for costs. are from major workshops in we transportation I logistics, XX% have to by would better we increases been been Due impacted countries some in making growth. XX% North well, we While our The in products material coming American and COVID-XX our

America are To product around to offerings any that At the to and business products we maintain our to plans retail four, internationally. it in Number major strong reported, not also area quarter of total well again, by business, greater adjusted a our pleased reflected are been is XX% had objective actively XXXX. the to XX.X%. is negative. watch finally, North our as gross And strong close questions. in keeping we has that we it fourth Third stage, positioned managing early this we answer And gross we percentage new of and date, variant very delta introduce are margin and margin. believe


[Operator Markets. coming KeyBanc Thomas Instructions] from Bradley is first Our Capital question from

Andrew Efimoff

wanted raw I about This start is material Brad. Andrew to by on talking delays. for these

on But and which raw your situation how talk more delays facing the of into has you're specifically materials raw including You material the supply August? seeing from? gave state that And some you're helpful most particular chain. could detail delays the evolved on July you

Farooq Kathwari


are upholstery goods. wood materials case products raw the So or in in are as both we business, and manufacturing

of instance, to the things upholstery, of in raw we like foam, nature. issues relates related, it course, the As industry, heard, material that to for have springs, from

the in impacted have, Mexico, been in one course, We which operations also have less the of than States. United

a where happened a In lumber improvement caught on because a problems side. up, high been that needs see in of more of be, had That orders. major these about are. a improving. we foam think but Texas initially procurement know, this is upholstery I but question the As there has to It's lot catching we We of not really issues sort has every we week. have It's and caught it is wood the area, on lot to not factories issue. -- the our where it products, still up of some the gradual

Andrew Efimoff

impact margin quarters? you costs those into it's you're see And increases or costs? then quarters the product price rising about costs about to great about your how strategy quarter And talk next could promotional talked strong higher seeing. the how ways the despite how to gross about thinking you here? could the few these the it we this and to in mitigate discount as But changes go few about are next I past. you're freight talk know you may thinking But and you Great.

Farooq Kathwari

Yes, it a course, it Andrew, keep of a efficiencies, we higher said, but about improvements also also to was will XX% in this of sales. -- sales in it retail mind reflected gross our as total margin, also I reflected, -- having percentage

move forward, the gross wholesale of percentage think what is I retail. So versus margins business as our we of reflect

say, -- operating But margins. to impact from on keep if, some operating have you an of that but impact. higher be mind, instance, gross business, margin that it's let's I also our overall we operating be possible the slightly got So could contract business margins, will higher. the in XX% margin necessarily approximately That's to in close be will that much operating higher that mean said having doesn't lower, a is Because good goal. for the why our,

Andrew Efimoff

that to X know That's perspective to quarter last do your help revenue revenue order getting and break quarters that that the given the in you've the are just connect continued week-by-week on $XXX a you perspective, large dots Okay. to a a or shy quarter in of in you of capacity raw in wanted next top a on very helpful. per Shifting material revenue rising about these basis. a million written from basis, done delays million the financial try above ahead? try strength $XXX now are backlog. what's trends, think you're in -- over capacity possible I I on level from ahead? in next think But the think quarters, your quarters moderating to do few -- outlook, to the about position a

Farooq Kathwari

million, Andrew, say still be an -- obviously, that a think, I up we say to million or about about and other material you I number up go mindful -- if $X is another that go $X again, Yes, a to we of I to have would be say good issues million, if $X But that opportunity, would the is factors. think use. possibility. -- raw


from Next Telsey question from today Fernández Cristina Group. is Advisory coming

Cristina Fernández

sort questions of us can now A on increased you've to customer they up the from previous delivery? you the Have on orders one. as the frames couple are like to of frame? compressed pre-COVID been Or still wanted over what past capacity? to are time pretty those if the couple following update meaningfully time above see of I able months

Farooq Kathwari

in pre-COVID as case, products much our you time No, that the Cristina, there's custom. North know, most made the them period. America, are above We much, of are -- XX% still of our in

then difference what average purchase big a out is and -- sell of custom. inventory, and the In who is many what others everything stock case, that's our is and average between they their us between frame time Now perhaps custom.

our why frames efficiently, time news coming down the down are don't an the come And more other inventory of excess gives impacted. it continue increase hand, lot it's other we just good sell. that's to but a slowly. And sales. have So operate is it But will us to that on to opportunity

Cristina Fernández

helpful. That's Okay.

months? did here still Another question progress? orders traffic talk quarter at trends how design we It do the next about What couple to the interior are expect of see were had you last Obviously, in July like centers? you was, over seeing why your can normalizing. But seems you're year. above

Farooq Kathwari

our had. fortunate not we lot important would not fared. buy know had we but it, technology X reality. it, If stock, in then it in of and like virtual Cristina, do and what I one a the XD, of how have we we of last business the custom people see not had that's inventory If we course, invested X, Yes. were that factors, years, done

Our amazing to about and selling yesterday and out to how events of much technology. We physically with I'm And in they clients of much least and the that actually difference it's surprised pleased at where are or personal And work is business have customer. myself XX on I week business designers every get have a service see our of virtually. the the with being on that. involved -- floor. inventory those done the stock and between that of don't That's combination

business, to interior continue our have designers, we we more less designers. as So qualified but build interior

And continue be personal the will be advantage going see in continue tools and to service we are a their in important to tremendously going invest to technology. technology, an that. And see I to giving We use to able is to factor, them us. and for that

Cristina Fernández

last few How mean, marketing? next anything in then And year seen over quarters, thinking customers about year? new and are talk had. And I this guess, bring them I X? the one also, you doing retain spend to are I differently marketing those or as the past customers you the upcoming you've try Can to about back you

Farooq Kathwari

that's factor. Cristina, Yes, important an

fact A spend. advertising we lot overall was as course, due was thing. Of of tremendous we had mentioned, did our coming Corey that did reduce of That it spend last amount the in to quarter. people to have one

we now. changed The means of is we other where factor the advertise

digital We degree, and are television. lot some using print a even to to more advertising compared

reach take continue we is that effectively. So but Having will budgeting on less is so but it X% just this, lower, -- to our money cost X% our between side, somewhat we'll we keep is purposes, if monitoring greater. said the more it lower to use try for but I'll X%, to

important. very changing, are is So mediums which our advertising

X% more We we when -- did are advertising spent people of reaching actually on X%. by our spending

be I budgeting around X%, use. to X% anywhere think good would a purposes, for thing So


in there Farooq the any turn are As or the more no queue, to for floor comments. closing further questions back I'll over

Farooq Kathwari

continue Well, thank to work us. much. said, backlogs. made, We've sure progress a to -- are we very make very We've you serve lot we that as we have with pleased of we're customers. of we high And very got have our I ahead got but the

lot a that's have. So we of that focus

to thanks soon. look to everybody So forward much to very and talking you


you. conclude teleconference today's and Thank does webcast. That

wonderful day. for you and You participation your your this may time, at We have disconnect line a thank today.

Farooq Kathwari

much. very care. Thanks right. All Take