ETD - Earnings call transcript Q4 2024 | Ethan Allen Interiors Inc.

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Operator

Good afternoon, and welcome to the Ethan Allen Fiscal 2024 Fourth Quarter Analyst Conference Call. [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.

You may begin.

Matthew McNulty

operator. you, Thank thank Ethan and Year joining today us Good fiscal you XXXX discuss Allen's Full Fourth to afternoon, for Quarter Results. and

and our open for today our to remarks, the our me Farooq call midway CEO. your we speak President Mr. through. will performance After open With while I'll Kathwari remarks, close and is will financial our prepared prepared questions. Chairman, Kathwari, then

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

presentation the trends non-GAAP operating better underlying the believe business. We reflects of performance and

today may cause actual Our could are differ materially. risks to that include to that comments uncertainties results and forward-looking statements subject

could those significant assumes obligation Please our SEC matters forward-looking factors to call. for our this or refer that review Form in affect report company most The described to future results XX-K. complete a revise any filings risks. our annual The risk of are on update no discussed during

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

M. Kathwari

and fiscal XX, Well, thank June quarter you, Matt, participating year fourth and thanks meeting. our for XXXX in

gross And sales did adjusted well. margin post-pandemic pleased high we reduction Despite had of and report an As strong lower in our stated strong performance we in period. had margins in despite this release, to operating press XX.X%. are backlogs, XX.X%. lower of We demand

and year. cash and to equivalents last up million, generate cash continue from We $XXX.X million of with ended $XXX.X strong

been by also Our XXXX, reduced the June June XX, XX% since by reduced and have XX.X% XXXX. inventory headcount

on more consumer talent, service. cash service quality, also for I strong Matt? our pandemic Matt like know products, initiatives this healthy high financial and relevant provides demand the have an during good our opportunity much to review of After forward. have we going is And Now will providing provides an overview years results, focused of period, enterprises value that after positions. multiple us and

Matthew McNulty

Mr. you, Thank Kathwari.

results full financial quarter flow the ended management, strong XX, margins, sheet. fourth expense by Our were June double-digit for highlighted and and year balance a disciplined cash operating robust XXXX, operating

As discuss. challenges results, produced we our operate a home operations financial within furnishings defined by positive now will in I post-pandemic industry, period the which

$XXX.X reduction year prior quarter when a sales and XXXX net fiscal net million, year million, totaled are fourth lower the backlog year. Our unit of of reflective $XXX.X volumes, which in sales level lower fiscal delivered included sales prior to comparable. compared sales delivered consolidated of highest The strong our during quarterly the

historical norms reduced improving times the We Overall demand We of pre-pandemic $XX.X X.X% show from wholesale lead orders to nearing weeks X.X%, and segment improvement for backlog. with of ended the increased within our year orders the benefited and signs orders fourth patterns backlog Retail while were during business. wholesale began million levels. number written of quarter. contract segment just quarter of Wholesale down as customer improved fiscal completed our the

also and sales costs, by levels. When reduced mix, inbound fewer partially fourth has last quarter last margin gross margin disciplined consecutive offset lower margin our gross XX year, a over XXXX and fiscal the was delivered improvement was promotional the In input point gross margin raw XX%. XX.X%, to year. quarter, For impacted consolidated XXth consolidated year, our a a XX.X%, completed consolidated by our sales compared gross basis change headcount was higher exceeded just that freight, quarterly in material

XX.X% last strong fourth expense from our year, fiscal of quarter reflects XXXX headcount operating margin adjusted the For year. operating XX.X% and XX.X%, Improved down management. adjusted was lower margin

from sales, pre-pandemic year Our our XXXX due points improved our XX.X% adjusted basis net fourth equaled on quarter, relative to integrated focus XX.X% our last of lower costs. and our operating decreased SG&A to X.X% fixed margin to vertically enterprise. expenses due Compared XXX up sales to streamlining volume

year $X.XX. a adjusted full On basis, was EPS

For the EPS quarter, our was $X.XX. adjusted

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

balance and $XX.X to outstanding debt. million. of turning ended bringing completed year our investments year just million our sheet, from generated our Now operating robust cash $XXX.X activities We $XX.X amount fiscal and with liquidity. the no during of quarter, full cash We a including to million up

also our by million. $X.X levels inventory reduced We

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

We our shareholders practice capital to also cash returning dividends. the form continued of of in

to our be Board cash This our and paid of regular in per dividend, brought XXXX declared paid This just by fiscal paid quarterly addition our share to in August. release, special Also, cash total cash dividend. both action which marks have recent dividend a the $X.XX year a million. fourth past special April, dividends share, of our quarterly $X.XX consecutive paid the regular cash dividend we increased which will our subsequently was Board $XX.X as announced X.X% in per May earnings in to

cash industry-wide margin operating positive investments In summary, strong execution. period and business our gains XXXX protecting disciplined these challenging solid generated achieved our fiscal and marked by results integrated demand and the flows we soft while during through results delivered vertically headwinds,

are stronger protecting our building enhancing fundamentally and a We our company, profitability efficiencies. operational

well expense initiatives to we business. We growth further will our our carefully we in us believe XXXX, that as remain move cautiously optimistic balance positioned. sheet structure has we As fiscal manage our continue into investing while will

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

M. Kathwari

our provided briefly you, XX, the All I financial Matt. priorities XXXX. good of strategic fourth as results follows. ended discuss right. Thank year and will for fiscal overview Matt quarter a June now our

talent. First is

is talent our to vertically critical integrated strong of development structure. Continued

enterprise, strong marketing, logistics, manufacturing, retail, of and We merchandising, all leadership includes finance. which pleased technology with are talent our areas in

In marketing, provide mediums content to both as we in we the as innovative marketing, continue well utilize.

of sales years utilize of back. changer. in equaled lower game sales expenditures marketing technology to X% X a the much than X.X% marketing ability The is had overall to we While

example, XX-page we over digital X magazine. weeks households reached with million now every X our For

to We printed mail quarterly also this also magazines. And Style continue our XXXX Book. past our quarter mailed

Utilizing integration, the XX in operated The manufacturing And of is number our about media Also designers products to vertical North efficiently by plants social involves on our interaction key producing XX facilities. in the our North important. is America. extremely XX% interior in over back, levels our at manufacturing, today, is we American all States. which years many United technology

XX% XXXX. has retain Now and manufacturing, all in business technology reduced strong since especially helped in have us talent our areas we headcount by where of

and national integrated important very our retail Our vertically company. is for logistics

We our service as deliver clients price. delivered products, we are unique North we to America one at a white our what in glove call

Many for with national distribution backup a we years one smaller retail major service. back, operated provides American our facility XX North this centers and now

Our also smaller, centers that Today, more been made America. greatly our had service throughout had retail efficient. North deliver clients to logistics we great XX service

talented in critical, of our also professional has with areas in lower technology It resulted been very combining business. has resulting all in Now associates headcount. service

associates, now headcount had of For is of total X,XXX X,XXX, example, it years XX a and back, reduction XX%. a we

Now our providing superior service integration. is key vertical to

launch by concept. number a manufacturing design network. has uses projection what consistent we further the interior design size of interior the we logistics. to of an centers enhanced offerings last design enterprise, provides superior in initiative levels throughout are shown year, And of including great helps to our based our inter helped This designers. provide initiatives our service We call and all and Having designers interior at service retail by from destination productivity

enterprise. a is our to in from back, enterprise, all Now retail areas it and we manufacturing, responsible other logistics, as since XX our That areas socially over start whether years to is continue be well. of

that it questions pleased retailer very America's open And were to for we conducted comments. with up any a news, are good or we as by I'd finally, premier again like Newsweek. recently named by study that Now,

Operator

with Markets. first the of [Operator question Zick Instructions] from Our Taylor Capital comes KeyBanc line

Taylor Zick

ask and written cadence about quarter. during the the I of to just orders wanted start

You obviously improvement and strong in XQ. sequential saw XQ some pretty the

more any if then improvement? So so about July trending is can what And far? talk led have how maybe a little on bit you you comments to that

M. Kathwari

Well, the our end. of towards quarter. somewhat Fourth think, fourth business degree, I then we somewhat it's about They And contacts. it work tremendous I obviously, important. -- of amount talking consistent make is right. had, think stronger quarter, And And the media also, our you're throughout interior tremendously designers. a All the the social great to quarter. reflected

Matt, say correct would that somewhat I was throughout quarter? So business, consistent with our that the is

Matthew McNulty

there May, a of is -- was that the of a Memorial bit Day correct. the little It Yes, that's fairly consistent week in bit was heightened around a elevated... with little

Taylor Zick

well. the then one as And just maybe you. on Got side cost

any You, if reducing the some kind and stay maintain the an of curious a structurally great of overhead have else kind the you've of kind I'm and demand left now years. more to But leverage be you over Farooq what margins? past But challenged. -- cost on the seen can improvement. Obviously, X does what of you've you done job cost side these controlling

M. Kathwari

about system, question -- something is got get mind. the to reinvention that it you've this constant Well, is, that this is everybody's into

our then role starts an has of So areas And that it played important technology all mindset. with in business.

X headcount X.X% years have versus As Tremendous reduction is but X qualified in we about mentioned back. more our people. we X%, or headcount, -- today, at

got So but initiatives -- good people. is if only of you this technology good technology

used technology I mentioned. network, have we as people, retail So less in our

manufacturing, our have We our logistics. technology in in

less tremendously been has technology people. So which has less, resulted also in important,

I lower, Our as is head mentioned. count

have you've So -- people to with with I starts that the to you've would to technology. and attitude, people say, it stronger fact got have so got then first starts an have

Taylor Zick

kind thoughts continue on in most can quarter. orders? think in Has refocus Is anything increased? back if you else fourth I'll seen this you improvement us And written head Have handicap recent on Any pretty last I the Understood. thing. the help good the can improvement? And I the towards on to like there the home or conversion that share orders. squeeze financing? And of anything one written traffic

M. Kathwari

Yes.

you a I take look orders, think that discussed. our at written we when

written do written orders? just you a when it, take orders and Our look share we at the

Matthew McNulty

Yes...

M. Kathwari

Okay. They down... were

Matthew McNulty

percentage... the Yes,

M. Kathwari

business. going really up holding are to though relating I but the challenges as I we're all challenges, previous we have down year, being with retail that opportunity. that problems forward, And it challenges, that we challenges, political think X.X%. of country so economic and a again, -- held to we be by our lot the That were is up even the go there that to like believe incredible challenges looks They faced

Operator

the of Our line next Group. Telsey Cristina Advisory question from comes Fernández with

Cristina Fernandez

specific the about to demand, industry and I guess Taylor's -- a take about lot than has Or Ethan product up past allow bottomed? -- follow overall, yes, do reached some think to with do where getting or other know step have and but you you on a don't question I you point you designers if said, I if as Allen of couple your do this -- to you the it's think it's more furniture a mean, or particularly, players better we've I of like, I the back demand that marketing demand. better some see like months?

Matthew McNulty

I Well, that of a mean, industry, will companies likely lot and many there well, are factor well. most and think also would do in it's a I -- of our great

workshops XX% been made one program, of North level one America. here brand, Our in focus right we have to own and whereby quality focused one our has close on in

those amazing, last back. of certainly headcount have we X of than years our have we been affected It's or for profitability. All had less in year even -- have terms things

at we talent look I let products at in -- great North when this North manufacture So cost we the We think us deliver naturally. for is one of where America. product. say, question America combining our instance,

and that time, people, our area less important a network. has there people, network very people. been other qualified less The the been but period fact because interior of design design very That critical have of has stable. interior It's is very talented been over of

integration vertical products. from that those manufacturing, delivering of our elements making So is -- that

and of done, thought integration people to was York fact, product can't our it when can it Think Francisco, happen. at Well, you and 'XX that crazy in be in It did deliver in ] New this, Miami vertical have be I San make same [ the but done. a this price we Texas. I will in

So factors I of think important. those are all

less a is designers think Combining I and that is, talented with interior network designer qualified. technology our as but game said I earlier, very changer. interior it's

So those us. things differentiate that

they're tougher. years is was and We who's back, the the of have buy X, more we one X that level careful consumer from. In produce They're programs, case. last not that quality, much products the

likely have talking some companies well. would about, say I'm [ premiums ] do those I most of the So that will

Cristina Fernandez

your my particularly, fiscal fiscal guide think your sales also And the upcoming good relates I Do second to we if strategic could X% as the of see a for plan for should to you showrooms? to it And you on in of wanted expand being year? expand sort question, showroom. like about plan 'XX, of year number marketing, post

M. Kathwari

So in our it has terms centers, of design consistent. remained retail pretty

have today We we centers design we have were that we and Pre-COVID operate XXX. XXX -- we own.

when a had we it, take you at So we design look have, centers. overall,

association by XX that XX of -- years about our are have an families. We average independent are operated XX us, that with operated with by our retailers

where to that we're that in. I So careful very think going bring we are

only design or brought X think So in centers. we this year, new last X I

going think likely be a number. most large will not to forward, X it but I X,

is focus know, year, improve size our XX,XXX reduced what in the centers this our above. centers. design feet some square we sure you we design reduced of to were as -- of But and also Our have. make we last We

and is the the size from feet. anywhere we're -- newer X,XXX no, ones I or X,XXX XX,XXX, X,XXX to we is getting max said, are square

we really all focus Design and our that our was might did we one great then with you think other I call design we Concept, the look. having say, So redesigned is Interior we re- the centers them -- thing

All or design different centers years X California, they Florida. especially people company very Island -- Long in one thought in image. XX our the one guess New today, operated back, Jersey, are have than

our that only to cautious It's bring thing Again, are be we it developing product. other else. product been the is, we don't have that anybody but we in Now April, lot have been we through network, also now. of the have adding time, doing other now sell new because make all by we a are developing products, to we major centers. we own to have would new products. right -- product ability around new design it And we coming have next our And is as the into of introduction that we which

Cristina Fernandez

progress any And you little administration? that department would potentially Do guess, pause how talk bid, change did last about this state I it here seeing be Are demand? a bit contract can you in question, more quarter? a to the expect you of

M. Kathwari

an X Middle good Yes, have on conflict other that's was But it lot State impact Department this we East, the home. is back the on question. where X a of a X focus with factors, the in What starting to or last did focus months, have the security. seen in --

So starting now. orders good to get we're

in looks a State that we it this the So fiscal business have good like will Department with year.

Operator

line next of Research. the Bugatch Water Budd Our comes with from Tower question

Beryl Bugatch

between about the wholesale about retail Let's between parse talk they of internationally? bit sales do The a little out still and sales down dichotomy retail. domestic How XX%. and

M. Kathwari

period, during news good Matt we're get to last much is back. starting that impacted the was say COVID is this here, but would international more I The year.

our have design world. been -- also all they're of Interior and centers of the over this Design cuttings repositioned many having international with Concept ribbon many in fact, In parts

XX%, is think most it? So the well, down our that to international only a while it last close I'm but written quarter, Retail you it, -- was it what at if business right? I at take likely our in here, this was look X.X% looking down were division, down, In Yes.

degree, coming So issues. kinds It in the impacted But COVID back. back, of Budd... international period. good they're coming news is is this was Great all

Matthew McNulty

Matt just is Budd, and to add, here. Yes, this

difference on and lot that XX%, X%. contract are retail that down business business. right You or for down -- of is international -- it were our drive the while wholesale A sales was

was to, Mr. purchases. the East and Kathwari the As quarters, Middle second alluded State fiscal factors and third other conflict our Department slow, delayed the in that

So quarter didn't orders the the fourth fast delivery subsequent us. happen as those of for as

things. So side weaker that's of than lot definitely was the sales retail division a

there, Department as in seeing talked the some on we're about Now improvement business. we State

those or should numbers sales wholesale see metrics, sales we X more aligned. retail So and

M. Kathwari

we those of problems considering talking were But having wholesale X%, about. down that orders said that, all are all this really,

So it's Budd, not back. they'll too think come I bad,

Beryl Bugatch

impacts Well, right. you're as I first quarters the couple of it I'm it over the Asia, side year. And was, weakness stores. the the the think, about partner we're that's international the of most the international? in concerned is wholesale of of mean And week I that seeing

M. Kathwari

Yes, that's right. Yes.

Beryl Bugatch

I at the Okay. quarter gave miss you're retail us And I you of, the us million. $XX.X backlog Did backlog think, the end? of giving wholesale

Matthew McNulty

Xx on sheet. deposits We publicly the a do under not balance backlog, but it's disclose our retail typically, customer the little

Beryl Bugatch

I last told to was to I opportunity wanted a giving it... think you well. what make me if the change quarter as to you see that's you

M. Kathwari

we But, given to give we you go else. ahead... have Budd, more anybody than information

Beryl Bugatch

you that I'm not $XX you of conversation. you deal what do or investment business amount and a you that, but so with are the so, about an is of talk a bit into the agree of discipline, sure are? with another little incredible great side you or that's the and of topic agree million I included Can Farooq. I I think, that of information, businessman those that cash the what a run The investments investments, with investments business.

Matthew McNulty

about or talking [U.S. Treasuries You're what? ]

M. Kathwari

Budd, we [indiscernible] extra any million we strictly, in to have Treasuries. our, cash, put cash close all in Yes, U.S.

Beryl Bugatch

the luck year, good good the on Well, Okay. upcoming to luck year our upcoming and as well. society for

M. Kathwari

you, from hear to good Always Budd.

Operator

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

M. Kathwari

through this very We've but felt you opportunities. thanks on the always I gone challenges lot challenges, right. have All much. call. of Well, to creates all Well, a good

well. positioned are We

introduce the to because in year, new And programs. products now we we're held have back. We strong next a more that product going

network retail -- has strengthened. have We

our have repositioned all design centers. We

in has as important responsible technology then earlier, and continuing both manufacturing then finally, America. be it's a strong We And technology service, socially move product forward, said providing about. North initiatives, with company. strong I And great talent played -- talent, our with what have this a think programs, as all a Combining role. strong great base, we I tremendously is these

Retailer have questions, the America's I us been in time us retailer. know. We organizations, Thanks And recognized second said, as I'm much. named furniture many the any and #X let Newsweek as for by please happy very that, --

Operator

teleconference. today's concludes This

You may time. for your disconnect your lines this you at Thank participation.

Ethan Allen Interiors (ETD) 31 Jul 242024 Q4 Earnings call transcript