Earnings call transcript Q4 2023

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Operator

Good afternoon, and welcome to the Ethan Allen Fiscal 2023 Fourth Quarter Analyst Conference Call. A question-and-answer session will follow the prepared remarks. [Operator Instructions] Please note this conference is being recorded.

It is now my pleasure to introduce your host, Matt McNulty, Senior Vice President, Chief Financial Officer and Treasurer. Thank you.

begin. may You

Matt McNulty

close will through. Chairman, while midway I prepared Good today Kathwari Darryl. call prepared our fourth thank for Kathwari, you results. Thank discuss remarks, afternoon Ethan to Mr. then our us financial our for Farooq is to me and open questions. and speak the our Allen's remarks, and joining open CEO. performance After will With we you, will today and President, fiscal quarter XXXX your

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

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

pleased With Mr. to that, to I'm now turn over the Kathwari. call

Farooq Kathwari

our and quarter fourth operating in XXXX for fiscal Matt. participating you Thanks Thank financial and results.

for financial fiscal XXXX. quarter strong we and results June our reported, had we As XX, ended year fourth

and per of $X.XX previous of million, is income year. $XXX.X to year, For which earnings in XX.X%, gross $XXX.X share sales adjusted of sales the operating compared the margin of million, $X.XX XX.X% of adjusted

an XX.X%. with quarter million was income margin also of Our operating operating $XX.X adjusted fiscal fourth strong of for

had have and of to debt. investments million cash XXXX of cash XX, strong and as no We $XXX.X and June continued generate

per yesterday, a approved share, quarterly cash dividend our also a share $X.XX and cash of We August XXst. special $X.XX of Board per that regular both are payable pleased dividend

As pandemic on demand very focus of the during COVID-XX moderated. expected, has and consumers the high the home

We continue progress. are well-positioned our to

of provides After strong focus Matt results, our financial Matt? to provide an financial of a brief I our continue results. our overview operating overview and will

Matt McNulty

Kathwari. you, Mr. Thank

results and Non-GAAP reminder, the restructuring corporate GAAP better we actions believe financial non-GAAP impairments, our are in release. a operating basis. and performance a initiatives, the of results our presentation present We on both and trends and non-GAAP include further detailed reflects underlying press As business. other

improving strong for XXXX quarter sheet. and operating in financial margins, controls, the decreasing a and backlog, strong June disciplined and cost growth fiscal year full lead-times fourth highlighted are balance ended cash Our robust from by results XXth flow, operating expense

in a operations now produced will operate we As era, I financial results, discuss. our strong post-COVID-XX which

fiscal by last of were Our $XXX.X than X.X%. lower net year XXXX million consolidated sales

of net consolidated and due manufacturing delivered sales quarter lower to a million, fourth production Our order lower demand volume unit decrease XX.X% backlog. reduced $XXX.X totaled from from softening

of record Sales to in comparison. historical quarter fiscal which reflective norms, difficult and pre-pandemic a ago to a up is X.X%. set quarter year consolidated the were XXXX, of pace near Compared the a leading sales our net more fourth fourth

Wholesale only lower X.X% segment to written fiscal lower X% fiscal XXXX. XXXX orders compared last year, than during were but

were X.X% For year quarter, orders XX.X% our XXXX. pre-pandemic of last down fourth wholesale the to than were and quarter lower our

X.X%. orders year, XXXX, compared a orders last our X.X%, the to and comparable to in were strong prior primarily the XX.X% while home. were lower a orders fiscal were of when consumer quarter, and for down segment the due full retail year XX.X% for When XXXX focus up Retail compared to down reduction quarterly on year

of million, wholesale weeks backlog reduce as ago we year to fiscal year down We XXXX XX.X% number were able a with ended of the the $XX of from backlog.

than higher and pre-pandemic remains business wholesale are our service order to to this our levels, backlog customers. managing still teams work our and However, the through effectively backlog

year, gross fiscal XX.X%, XX%. consolidated the quarter gross XX.X%, just our consolidated our XXX-basis gross a consolidated the XXXX fourth margin margin full ninth last point was was completed consecutive quarter, For year. margin that improvement In exceeded over

compared When material sales volume. and gross up inbound XX.X% our to Retail consolidated gross disciplined which costs partially up of delivered last carries margin unit by and year, costs, margin a higher last activity promotional sales, increased to due XXX points from including to fourth quarterly reduced basis was input favorable consolidated lower year. offset freight quarter mix, sales, lower raw XX.X%

was expenses a in over point fiscal we operating declining the year our XXXX adjusted XX.X%, year, improvement net as XX last basis the sales margin managed For carefully environment.

from Fourth expense control. approach and offset by sales, gross cost XX.X% down consolidated to product savings and disciplined and year maintain margin last health net merchandising costs income and partially operating lower sample to quarter expansion retail new XX.X%, to higher insurance and was our costs, display, ability a delivery and due adjusted margin

expenses equaled lower deleveraging SG&A fixed net which and Our of on due decreased XX.X% is from XX.X% increase to year an X.X% sales, sales. cost last

year diluted X.X% On adjusted rose basis, EPS a full to $X.XX.

quarter, For last diluted to EPS adjusted $X.XX was year. compared $X.XX our the fourth

taxes. Our state due effective XX% year the was tax for rate statutory the fourth to the which full primarily federal quarter, XX% varies XX.X% and for from rate

$XXX.X and We sheet, Now, investments cash ended with strong a our our of outstanding as including and no balance resources. liquidity fiscal June debt. turning to million of and capital year XX

from by a and operating levels receivable, total generated bringing $XXX.X partially and to the profit by $XX.X accounts during growth increase up fiscal our was strong deposits. reduction a XX.X% over cash in customer performance carrying offset activities last a inventory year. decline This quarter, million, of in million amount driven year We

fiscal levels on while norms amounts service as levels Our of the of inventory also restore operating year decreases since appropriate historical to million decreased are $XX.X start the ensuring inventory more inventory our as backlog hand we our to customers.

we continue fourth invest to in infrastructure. technology, as for $XX.X manufacturing, were quarter $X.X million during including expenditures million retail, Capital the year, capital the and

the which was returning dividends. subsequently in April, fiscal shareholders of to quarterly Board to cash dividends May In share, continued per cash XX.X% capital form our the by to paid paid our increased in XXXX dividend $X.XX our million. and brought $XX.X total of regular We also practice

just to earnings in August Also, our $X.XX per regular declared which share quarterly on cash both release, our will addition of special announced of Board per dividend our in of be a cash paid as share, XXst. dividend $X.XX

years past dividend We of cash year cash have three each annual paid a an have paid dividend XXXX. special every since the and

softer In summary, strong results operating challenging and vertically fiscal by delivered business during our marked period XXXX industry-wide demand headwinds. integrated a

gains while execution. solid these investments margin protecting results We and generated through and positive disciplined cash achieved strong flows our

into continue expense carefully initiatives must that move we will XXXX, our manage growth investing we As in fiscal further believe our to structure business. while we

call over to the turn will I that, Mr. back Kathwari. With

Farooq Kathwari

Matt. you, Thank

on As consumer and greatly industry now I focus and is as the as we other during benefited well. consumer from COVID-XX pandemic mentioned, the expected, focus areas our on the many home

As we our press noted positioned. release, in we well very are

years, strengthened During the areas, greatly important strengthening we three several including talent. following; enterprise in last the our have

retail, strong have development, our product We and logistics, in talent various technology, from marketing, operations. areas manufacturing,

been and Our have marketing enhanced. product offerings

umbrella a being classics the network. to under programs with are product perspective our modern Our of introduced

been greatly especially utilizing expanded, has marketing mediums. digital Our

network. of our repositioning retail The

Interior process the of of Design in refreshed umbrella Destination. under are launching projections the We our

our months. complete also motivation XXX opportunity next interior us launch This to in reach strong design and design to a for plan clients great during Our is our provides North team. American the is six our centers the

you interior network. the we have As know, largest design

retailer number pleased a Retailers, one Top America's and including that furniture in we are as XX Newsweek, honored week named recognition We last category. premium in were by study One of the

our strengthening Continued manufacturing of and logistics.

North manufacturing products XX We in operations, with of American of have continued about invest XX% which them produced our to custom. XX% our

at price excellent our throughout to retail to national continue delivered North enhanced. Our service consistent one We logistics and America. provide customers be and

and combined the providing interior in game-changer continued logistics technology having focus of efficiency our and manufacturing both in a operations. with Technology, our service, technology, investments design excellent in and

And which to finally, remain an on our communities we serve of the in operate and in. is we it being and important socially responsible as our focused business, culture part

remain As we press we mentioned in release, cautiously optimistic. our

and call now Operator, any for comments. questions we to the are pleased open

Operator

Thank you.

be proceed now your a from first conducting of come with Brad question-and-answer Thomas Our session. Instructions] with the line KeyBanc questions. Please Markets. will We [Operator questions Capital

Farooq Kathwari

you? it is Brad, Hello,

Brad Thomas

and afternoon is afternoon It hi good here. you'll? Matt. are good How Farooq me Yes,

Farooq Kathwari

doing you, some Good And after hear time. Brad, are well? you to

Brad Thomas

today. I'm thrilled to I'm doing call have well, not this another conflict here during earnings

you talk a of with March to could a hear you the of I commentary. for bit So, Farooq. a little posted Well, you perspective, live, business the all the prepared little good about from from the in quarter. written wondering what slowdown a if thanks cadence bit was

seem consumers the you getting forward behind were? I orders the could that? of about you're more as thinking was talk if wondering to about promotional how all? Did just of How some it Is were look Did dynamics competitive? pause we and you the change at cadence here? you

Farooq Kathwari

Yes.

COVID. were at we And fiscal it year last as at normal, high levels interest the tremendously operating the also which was of has in. great. As prior Consumers coming three look back might we in is, say, mentioned base come that somewhat, XXXX now to years very, we you to Matt orders mentioned, very as our the

pretty based holding still are on up we good. that, And

And and been And amazing also productivity of of levels. all backlogs efficiency efficient instance, Our we has the both has had our brought than has to what higher where technology that in it more been at are at positive become role the levels. manufacturing just in the the in XXXX. able brought have still we been has thing retail our and that at it for

have technology. much business less the likely -- fact they're XX we less of combination have operating XX we Similarly, have manufacturing, doing plants. also obviously of the most years you Today, good -- of Today, designers talent, we with and go to of -- many manufacturing efficiently our because back but XXXX, many when XX back more XX, extremely technology. effectively because interior and

margins we obviously would I But improved. can fiscal as our year, our income the operating despite moderated. is business also and fact see, gross you sales had that last lower our than say improved, So,

a the effectively, operate level will see level. and we continue gross to So, income us both operating efficiently margin more and at

Brad Thomas

and about gross and segue strong. are come is follow-up obviously, about And from. know that's sales But thinking margin channel some I the how there. on mix to margin, great think we The question takes where year? that the on next all very a function puts the as my you a of gross of

Farooq Kathwari

that -- production think amount are we is run margin by gross integrated company. We vertically and -- a obviously, sales. the impacted the of I the

had have We obviously, the benefits if and impact volumes the manufacturing on our hand, on volumes, a margins. gross other lower does negative have manufacturing And manufacturing. higher with

gross the from issues are margins. those perspective of So,

at remain Having that -- are -- to we that's to are, we the have the of more that our because we where said we all less in. level remain or those efficiencies of expect I think expectation what are things, brought we is

Brad Thomas

appreciate Got it. I it. much Farooq. Thanks so

Farooq Kathwari

right. much. hear Thanks Good very All to voice. your

tell don't company Now, were you years we you folks but is took it, correct? I think completely know I this back the -- this when there that XX public,

Brad Thomas

that Quite far.

great Going quite that financial through not crisis, far. the Yes. but

Farooq Kathwari

right. young. Okay, All still you're

Brad Thomas

right. That’s

Farooq Kathwari

Darryl, All please right, go ahead.

Operator

you. Thank

come questions with next your Fernández Our Please line proceed of Group. Telsey Advisory from with the question. Cristina

Farooq Kathwari

Hello Cristina, you? how are

Cristina Fernández

week-to-week around Hi, wanted afternoon. in the outpacing comment I also is versus traffic? up ticket good. was to lot seeing there these guess, you demand. Can I I doing similar volatility what on, is curious from Good -- Or I'm And trends you seeing question volatile are trends? Are you're like follow on ticket how or of are Brad's month-to-month? traffic, in a market?

Farooq Kathwari

than good interesting people -- their not have time this staying it's that in living home, summer, question. the past an on back. seen in, a this we of a are going different vacations, impact we year quite Yes, It's

fact a we're what other an look buy seen we also think seeing lot people their the at of And impact think this of that we I things. people did of So, if more products it, for summer I -- have home. doing remains

this the people that I So, centers, normal that better perspective to time go -- summer expect we traffic I the in would would saw should the not years. area. say three back into of say to will high design coming that do ends as perhaps is we pre-COVID our is as we our we levels did people our expectation But last as in than in that

Cristina Fernández

gross a are had costs, much it's on whether on how seeing And materials input the you then and also raw year-over-year? the freight I transportation, another of question benefit from -- margin,

Farooq Kathwari

we margins deliver in, mind, Yes, the Keep are our I important mean, that our in mentioned, -- operating by Canada. the impacted areas, price are and products. two both margins also throughout our States also one as I gross the our of and the throughout impact -- freight and products both -- of delivery United which coming at

extremely years, United from to the or cost $XX,XXX. last from gone States say, the had of of It's the $X,XXX come of East let delivery a in Indonesia The United in was delivery us transportation cost container, three So, Asia States the to high. back.

Our of the high costs very were the domestic transportation. level at States also the United in because retail

Our the sending east normal had trailer the to tripled, of back a to it's coming cost from levels. west

To come having Then a both Also, are Lumber costs we I'll up answer that of margins gone manufacturing and as manufacturer. high. positive to due have levels. are on think very your pre-COVID reduction a a level I the the question, retail we costs. to impact at our -- back our very,

deliveries. going from whether lowering the But we one hand, is it on with raw somewhat costs, the materials we are or are benefiting to freight. of impact the impacted lower of hand, other the on be So, of

and lot operating Both to -- manufacturing of into some as a goes goods manufacturing you freight portion of goes -- because it to side. to expenses; our retail that into our goes our our that part our our cost

Cristina Fernández

helpful I chain the was been are store the question refreshes, had And those did last That's far? I And know how you that how done they and then so have you been performing have that store have the the Danbury to touched? headquarters. the many ones relative you. not Thank the your rest of at completed, color. on

Farooq Kathwari

saw I Danbury important and Yes, you the center; question. design believe it's a to it. very, came you very good

process the in right are We now.

not completed completed. but all getting any process completely, yet have in of they're We as the

it some That done centers, electrical And say now. design the things. those in completed because being and I of work kinds of needed is also work, them needed It would process the getting of needed all the products. painting, right each

say, the are of getting they to start is we the design in ready. being of our which products, getting and exteriors and about, would in four phase, interiors cases, starting six this in weeks, process centers At updating the some I and made will

XXX months, you So, that which of going four have five the most the said centers in And design the as product. the projection I that is is in years said, is, the within design something to we centers. to back that have interior that that received we're nationally saw three couldn't objective would Danbury projection have

role. able see. are a the played The that have it we in other design reason In had do for has past, the the today center that the product to is we to technology store tremendously important or to people

develop Today, technology and designs our designers develop and of do for products. a digital with with can game-changer. and consumer and is design they That our the colors kinds virtual reality, all

of our six to start be two So, most to you'll I will think it your is objective three question, seeing the months, answer the next start, and in about in them process completed will months.

Cristina Fernández

Great. you. Thank

Farooq Kathwari

questions All right. any or very other comments? And much. Thanks

Operator

Thank further you. queue. in I see the no questions

closing comments. Kathwari back I'll any for hand Farooq over call to the So

Farooq Kathwari

Darryl, for and good and are very on we we All call. the very, everybody, the these thank progress is continuing and interesting right. you, to our forward times, are growth. being our that you, We -- news look and well-positioned thank

So, in thank you much call. very this for participating

Operator

Thank you. We appreciate does conclude That your today's participation. teleconference.

You your lines may Enjoy of this disconnect rest at day. your the time.

Ethan Allen Interiors (ETD) 2 Aug 232023 Q4 Earnings call transcript