ETH - Earnings call transcript Q4 2020 | Ethan Allen Interiors Inc.

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Operator

Hello, and welcome to the Ethan Allen Fiscal 2020 Fourth Quarter Analyst Conference call. [Operator Instructions]. It's now my pleasure to turn the call over to Matt McNulty, Vice President of Finance. Please go ahead, sir.

Matthew McNulty

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

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

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

Farooq Kathwari

thank participating XXXX you call. Thank XX, you, all June fourth Matt. in quarter fiscal ending for And year and our

we few X been of COVID-XX, growth. challenging. The out recent months to has years know, last a As very according last economic economic have study the all wiped

gratified business of our and have pleased are closure fourth to retail generate we We quarter. able despite network been the for that part of major most

and Due many $XX able generate marketing maintaining quality, Adding the in and initiatives, we quarter. strong last great been during combined social initiatives positive with responsibility. have brand, and our in major years, talent vertically of technology a to and client for number able in a safety interaction our integrated a personal cash including during fourth our service quarter; the We to emphasizing the was the designers strong factors, were maintain a million to business service, to fifth, technology. of focus few interior structure, trust combining due value

our from $XXX of decided drawn we precautionary purposes. for back million $XX had line to pay of million also the credit We

strong pleased most the written the design period, are were time orders for when that June closed. our ending We of for were of especially our centers X months most

previous reflect Our April, sales And also of from XX%; year the online were wholesale XX XXX%. June, compared ended these during as and year XXX%; May, doubling numbers July, previous June orders XX%; to quarter. for quarter

the questions. are Board We overview, a pleased, be financial for Corey give of information, per we'll then be open to today more after happy the share. dividend reinstated And able $X.XX quarterly detail, to comments and I'll some and any more provides

So Corey?

Corey Whitely

operations The the Farooq. our crisis quarter. you, COVID-XX fourth during challenged Thank

our preserving mentioned, Farooq teams in did As well through challenges. these

focus was primary operating and for Our manner safe our associates in clients. our a

disinfectant began established We guidelines As we design and supplies, dispensers, nitro to hand logistics facilities. for gloves implemented sanitizer our cleaning of and reopen, operating design centers related for cleaning and and the masks centers increased we businesses our the supply of the CDC safely. frequency other

For and associates our the clients all require centers, we to design safety our wear masks. of associates and

been of very throughout COVID-XX So cases fortunate our far, enterprise. have we with few

company-operated design shutdowns also June. were our in and Canada the impacted announced and to American during 'XX, centers due our orders, all orders. of stay-at-home COVID-XX we requiring manufacturing with previously various May governmental temporarily U.S. March we the governmental As operations Each closed April, periods temporary North on and various for

with quarter logistics operating our were fashion, to a on operations, in-home white continuing Our the restrictions glove especially in while limited deliveries. operate throughout

segment prior about to $XXX.X primarily at due American Retail COVID-XX net centers the manufacturing million North negatively net shut our million prior the XXX related were to $XXX.X for lower periods. our impacted company-operated quarter period. compared retail the sales full sales for in both with in logistics million shutdowns an American XX.X% a the $XX.X downs margin consolidated prior sales network the of prior quarter. the to current million margin, $XX.X $XXX.X compared million of to in consolidated the COVID-XX-related adjusted and on sales North the which quarter, sales net the gross disruption sales manufacturing XX.X%. There design year to were basis the crisis. XX.X% decreased Wholesale and with compared segment and gross half $XX.X net of fiscal were As year result, prior for year year. And and net in year, were the adjusted million was

approximately The including up April announced senior his plan all of XX, took by employees on we through salary to workforce. furlough salary our to XX% salaried June CEO up XX. our of XX% global the management of and action forgo June our XX% COVID-XX XXXX, the decision for As X, reduction for through we under and many other steps to

with reduce XX% of design by June eliminated expenses. negotiated for compensation Board Our reduced cash Directors abatements to We our and cash nonessential all or deferrals receive to other then our capital disbursements. operating landlords took through their rent We delayed XX. our nonessential lease steps centers. And we expenditures

million costs controls, regimes supplies cleaning loss sales million expenses. are quarter, with $XX.X of expenses business the quarter SG&A We adjusted million. included year decreased costs With adjusted associated These on was operating quarter for and which operating these advertising based $X.X costs, protocols. fourth our million. XX.X% decline prior by $X margin, the primarily a reflected from to gross the were expense and wholesale our than Impacted in for fourth lower additional within fourth safe $X the incurred some CDC the the less which incremental net

For to noncash during quarter million represented $XX.X asset and $X.XX, $X.X compared loss was adjusted quarter. million the the prior of restructuring GAAP million. totaled was earnings of the impairment for $X.XX in operating and for with a the year, Adjustments which of EPS year fourth charges income primarily charges. $X.X income Adjusted quarter operating quarter the adjusted full were

million COVID-XX to reduce the cash. of was year, from with conserve during A element and EPS adjusted $XX $XX fiscal action full year. of year. was $X.XX the last We have were $X.XX the quarter cash generated full for and plan compared operating million fiscal expenses pleased to For our activities key

we purposes, quarter And facility total while ended and the million as year with fiscal $XXX.X I businesses year June call we month. our of from the We by $XX called million XXXX started precautionary in turn that, $XXX.X a still XX, the inventory ending to our do our of strong, will With pleased of company orders back million, million of with Farooq. we as $XX.X June rebound, March. inventories XX% For cash paid XX. with over managed each improving $XXX to compared credit the have carefully million. the our believe And are back We remain sequentially ago. fundamentals of furloughed workers to with

Farooq Kathwari

Corey. you, Thank Yes.

positioned While believe many unknowns, are were that strong many is vertically we of again, The of we earlier, with our to talent we some main external the challenges, in integrated them of pleased still stated a focus, areas maintaining now grow. And results quarter. well one the I structure.

have in quarter. personal the as maintaining year. to we the previous Our the done had great changes business, will we saw did the fourth with in June while amount they combining and Today, the increase increasing in of still productivity quarter really teams business make fact, technology in job July service it way and help in from a us

to service of logistics. and we products ability our the With well in efficiency North our American in made our our our service XX% critical. Our manufacturing is ability have to workshops, clients clients increase and

into have -- others, to we like manufacturing. back have had we get Now

a make to had months have an sure service materials production this on have We are is supplies that some able our next also to backlog. to basis, opportunity the with increasing. backlogs, And timely get but of in increased raw we few we

to our important. extremely in XXX XXX design is internationally. America over initiatives have expand Now strengthen, North we and Currently, design network centers center

join a campaign many also network present. attract in We are to we our to are launch planning currently retail that not markets entrepreneurs to

growth. product critical. our Our marketing contract forward remains programs government look and development promising, and continued Enhancing to and is business we

country program a X and modern perspective, in classics modern. Our focus product remains define with on our we important that attitudes coastal as

Our bedroom by clients. inspired in extremely program well is the American recent month, products introducing our and a made introduction North received this of custom called facilities farmhouse

including various We and and digital retail have strong level. grassroots marketing regional national mediums at television, mediums, direct mail, the maintained in

is Finally, on managing remains focus like I'd focus all that business this, our With always comments. questions a across our enterprise. for And or with any and social open responsibility. safety to

Operator

[Operator Instructions].

Our from from question Bobby James. is today Griffin Raymond coming

Robert Griffin

the cuts base. cost ask cash. The of quarter during to lot I A want thing Farooq about first conserve is to the

to June coming be seen terms permanent back? coming it some in that reductions? cost you've July, kind cost? are is there Or demand of and here back going all Is in As of what's return

Farooq Kathwari

been and X of the people create does an we crisis question, in our to approximately able good rethink during at operate doing With operate, level. months last to a while Bobby, approximately have how the -- more can less enterprise, It's with the because retail opportunity quarter, rethink business. we this last

that online. demand, the it the fact design were that most is of best the them, the in our They best as some I is pent-up due buying, clients this motivated. as but some Now in in is And so -- some interested to came brought with of think well interacted centers it person our people. perhaps best we were in of of

much that do So with business more substantially approximately less network, I we business believe think associates. going retail forward, same in or the we can XX%

manufacturing, Now made good is America, news. focus have in brought the because we which on fact of there much in the North most more of people products is back

to to had are previously. technology America, North is close areas, how in us. operations help again, our Mexico, So we think, Honduras, is going In what learning Vermont almost other in we I

be XX% approximately think more going less to do able operate XX% associates to I we're and business. with to

Robert Griffin

Okay. secondly normal? year an the as the more the fiscal Can a the about of bit you state talk year for the of have I And little year what maybe of contract guess, returned ends I from time helpful. know important this government. business things me, is the That's as for that you're towards side seeing for time department very usually

Farooq Kathwari

important is August September X Yes. It's, fiscal XX. and as our you government said, year-end The months. September

we indicated, next And strong take that's been and business will that what months. So has expect place. believe the we X

Operator

Brad Next Capital is KeyBanc today Markets. from from Thomas coming question

Brad Thomas

that it to side was was I in versus press hoping My recent And trends. about could bit side. was talks then gone up, the you July and year. a release going retail indicated question seeing wholesale retail year-over-year. around on talk up about of and things, months orders you first been the little had you've prior The be recent

Farooq Kathwari

very very, vast represents majority. retail the Brad,

In business. the significant almost fact, of majority our

retail. is numbers are result these see happening at what direct a that So of you

Brad Thomas

you. Got

have Farooq, press numbers the that about of you track in So trends outlined retail sort that the directionally, would say pattern in prefer the that to you wholesale?

Farooq Kathwari

close because to correct the most business. pretty but stage, what, to and this XXX%, Matt at the retail between Not close our XX% total close business the Almost. XX%, Yes. is -- Corey of me,

Corey Whitely

Yes, yes.

a in So directionally, are step. almost they step

Brad Thomas

Yes.

Okay, in could mind we great. and the starts this sales today? timing as come the What talk about business, should any you as we nuances keep to about you've backlog back current is that here? the And is reopened to orders modeling quarter in demand fulfill the as think where

Farooq Kathwari

including teams Well, many, of were business to to our quarter, do Brad, July. even in this we've July. already business able we of was the And July a That done this July. than exceedingly generate to -- in last last us, amount more July well we've last surprising been did strong some

using is also said, we -- the pent-up our due maintain are I decent that we I are this, of we we'll pretty part that say would Now perhaps also continue would demand. good Part gave the that as say, is to clients. of to it savings I having fact terminology, this. I'm it optimistic cautiously as said to

our getting done especially we this, that about external and other Georgia even But are of factors, able up, gone about -- -- also to we had we just especially like, the all despite the in last country, careful. the in states said well started. -- Carolinas, say, the we rest have and of I many our Seattle, challenges that, fortunate in been has to but it where held has parts country, COVID. factors, that keep some the still of of where do just to been have have in slow, than very But in New mind though England. very and people that up In many Florida cautious in Texas in were those be have of we designers COVID some have business other having Now external that been and the I Manhattan think the all have we're think in well. even

us. do also come your to Our let calls. them homes clients backlog. question, have other now to into do their going a house we But have trusted They have

capacities. now We are the process increasing our in of

and in the have of impacted received out overall, control. is raw is with I some and to able Some But be our this following of expand we'll issues, in think that business material quarter some challenges this quarter. that we meet the which

Brad Thomas

squeeze how If website, backdrop That's can talk in COVID in that Clearly, the seeing what BXC I Can one side enhance you're about accelerated in and very the you business to investments helpful, exported the on world. further Farooq. from [indiscernible] has share one opportunities make last market bit Ethan's you the BXC of the a little here? do in. presence

Farooq Kathwari

I you it in Maybe, big storm. huge Corey, understand. where was completely Rochelle, a New I had we Brad, Brad, to completely am not if because, able heard

out, XXX-year the house. old Our fell in big on Internet other a our and right is huge out fortunately, side of electricity tree front, was

little So by this that. please impacted It respond? all I'm a happened afternoon. you Corey, question, you that bit heard could if But

Corey Whitely

Yes.

Brad, online were has you we're and just it continue that kind think going really been. up questioning than focus you even what presence, grow our bit, and did how to think, a to I so but more I little break of

doubled was over online. Even the what July, As we it year. it than Farooq was business the XXX% prior more mentioned, in of

right consultants things. centers. these exponentially that they the people chat our are design and home a crisis great of that So have chat, more more We shut really the website. of it, reflect they our And there, also our the could as a where today, of generator the tool feature, ability appointment processes works could on And then, as said point-of-sales it's page. and people we on a designer's business off could the -- on live in where those the our out sales. and at designer even same those design private and in-store continuing People And a do system quarter. to see like design many local growth use our strong a safely. course, sales. do is was really usually the driving the feature And then, do to every and seeing the areas throughout really is time, live freely. of really page, that to to it design with much regulations. they doing took we're course, to make design work consultants center appointment great we we've with of sales web when great In started, an make when had page, their design of the of go even a then appointment or we before, design into through center's the a They is through a appointment don't two due centers portfolio find shop with down store in added on It's but government virtual X our one make could

designers need website business, that does So go to there presenting that But the than and and sales for forward. personal at we'll did well opportunity our brand it the continue does the great with very yes, driving of customers. because as more we to online, a is service double grow we see the conduct the

Farooq Kathwari

interior service years lot to help them I'll in and more utilizing they've in the focused products personal making Brad, to think that train, of adding move completing I it of Yes. but technology as amazing to get our been in as and by also also because lot doing efficiently. do And we question, fortunately knowledgeable have about has in a that better, going last efficiencies forward, us it's manufacturing, and the mention also technology few And designers our efficient. it very really centers, again, become off-line, also the much not Bobby's design only in also We've projects. a move helped And in working beneficial. forward able that it. is added technology business been how a not it about our we brings to we has answering add, do more we

Operator

today coming Telsey Our from question Fernández Group. Cristina from is next Advisory

Cristina Fernández

through? flow help follow-up backlog. sense question that's I you May delay to placed And a to hit, this year? of understand time to it's let's how when going on the prior changed the wanted compared early when to to what order Brad's want Can were us get the to delivered the customer, an has today Just versus already the much like about better of say, the delivered how how June between is and that orders when COVID in time and is quarter?

Farooq Kathwari

that -- Yes. I to about is got we And has this over this what two I I -- -- been has now that, -- the last take and that retail important, Very mention some to that by need The this make product. while has following it, to also next something it. would I'm our sorry, good, our the elements or but be which that delivering increased quarter. would quarter, that quarter will is XX%, we've a backlog retail this XX% the in increased in in increased is think at we're look XX%. going wholesale by and XX% total over backlog you

Cristina Fernández

taking And an the about to when like time made places you customer deliveries the from talk delivery, the to long it's can how be order?

Farooq Kathwari

now is taking I Yes. that instance, our it's the X custom. close have, always today Well, instance, say, all it if weeks. custom to anywhere to we for like upholstery XX products, It would for of because fact been varies is from,

a to little part a which days. we out We is now it within deliver earlier, ship bit upholstery, used quick XX coming of have

days. it's Now about XX

As are are far being custom approximately wood of the concerned, as made in they that The X taking ones that away. ones to stock, being manufacturing weeks. delivered, in our X many are products is wood right obviously, also are about our

Cristina Fernández

and ticket can customers couple of buying last And any the color demand months products you pick helpful. and changes you've seeing, that's trends seen any then are you're about over that Okay, of types up? traffic or share the shift

Farooq Kathwari

much And than say is most about would nationally, whole is about our traffic. that I'm year. last qualified our It's I the talking while higher traffic likely people in are critical. qualified is work. that more down knowledgeable, question their coming Yes. That's more And they've -- who XX%, very -- was? business more what I traffic important. sorry, are And is next think motivated, done I'm

Cristina Fernández

change any products, of in the mix what consumers... The

Farooq Kathwari

obviously, lot interesting a Yes. companies that, are selling It's of of a mattresses. lot

great doing are people is are major living What seeing are business, from that. today. we design, classic, are We are want, a mattress for but that us in not is some, increasing we products that but livable. although we They especially

So but classics livable. our country modified doing well, to be our, also so classics are our more what design, because been we is coastal design the our call has

whole line I think is. our So what that's product

we extremely In know, Lucy, coastal, addition where part third done a was of The X country perspective, and well, attitudes: you modern. too. and of more has introduced we. that, classics, which Lucy is as to modern, Have modern our

mattresses our also home has to increase been a but demand So on doubled, now smaller portion office. of have is our still going there which business, a although our

in that. extremely been We have strong not

also but developing that overall. are products, We been strong more

Cristina Fernández

That's helpful. question. And one last

seems a you trouble stores with XX%. back? XX% back said, the open associates? employees, less some brought operating that of and the the you up. of bringing those being stores them to manufacturing operate a you Is as Or with employees, little of low amount some relative less On the are can employees having function bit It back you being all

Farooq Kathwari

to home, people come back. some majority are but of there have are Well, decided people -- no, the the stay to want

are many retail should happening We watch this have major people we're is people be. of going carefully we the It how question what's because issues. in. any how doing not people is very had making bring there Because of And our are just more more a determination many the qualified business. teams to

carefully. Sundays. less should hours. degree on determine what the to lever open open our on. leaders spending with they make They're We be very some hours, time. it's be be call working -- go appointments and we very all them are our they Today, with I've retail should whether the that a given their have really they professionals. be We center Mondays, which also time to more fair But make what their And amount should well. a They're working centers. working adjustments. on modified working forward, hours of are to Whether ever homes, is that is wanted design been. We're They're model We're they spending that's much And they're on designers country to around I working much of clients. the time How and they're what watching And it as our design really we'll appointments. they'll with -- come, appointments. they as online. doing. working going in

to going do be our people less continue will So we to lot model. are new more And business. that a have

Operator

have of question-and-answer to I'd Farooq. or to back end turn the the We reached for any floor session. comments over closing like further our

Farooq Kathwari

and we very amazing. cash. reduced are been pleased it the We'll people are We'll all carefully. have times, results that on we All -- we done -- but we positive have continue the right. somewhat very for thank have call. have challenging Well, with to you what really you our watch These thank much, good being has had,

reduce will inventories Our substantially.

continue period, be going -- We our marketing in we strong to during this marketing. maintained this focus about presence quarter. because And aggressive going to are we last did. that of plans are of make and We X% to sure marketing and to on we're a sales

very Thanks very contact, Matt questions, please you to further talk thanks I Corey. Any can mean, much. again, much. So or

Operator

today's conclude teleconference. does That

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

Ethan Allen Interiors (ETD) 5 Aug 202020 Q4 Earnings call transcript