ETD - Earnings call transcript Q2 2025 | Ethan Allen Interiors Inc.

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Operator

Good afternoon, and welcome to the Ethan Allen Fiscal 2025 Second Quarter Analyst Conference Call. [Operator Instructions] As a reminder, 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 be.

Matthew McNulty

operator. you, Thank thank Ethan and joining today us Good fiscal you XXXX discuss Allen's second to afternoon, for quarter results.

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

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

review our no our SEC The risks. discussed Form call. this or comments differ in to that matters results results affect described refer during risks future actual that could significant cause to may and XX-Q. a to revise are complete quarterly update report subject our assumes include Please of obligation filings on to Our those The factors for that uncertainties company most are risk any could forward-looking materially. forward-looking statements today

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

M. Kathwari

participating of and ended XX, loss December thanks life, and results for communities. XXXX. many Matt, in our you, quarter second Thank devastated In

pay clients and our and impacted members we team for this safety. been Our have

the our fires, all in fire center the in is design center major and Pasadena Fortunately, a of centers operations, in and service escape retail along our to area. back closer the with X design

with of net and had book financial of of in quarter, reported XX.X% income and had flow $XX.X yesterday, mentioned our regular $XX Board million $XX.X presents detailed operating ago. We margin dividends consolidated of per in paid and year After our of in EPS release, economic of We million progress. XXXX. cash Matt? margin I review operating in our an will especially ongoing press that February million, and $X.XX orders. We math strong gross diluted our $XXX.X continue results cash we on cash XX.X% strong more approved environment, critical sales my $XXX.X a of our despite operating challenging ended we from initiatives second pleased $X.XX. share dividend million million increase to a financial information. a As XX, our a payable

Matthew McNulty

Kathwari. Mr. you, Thank

Our demand, financial margins second completed cash results flow. in strong by were quarter highlighted operating and just the

with Our up sales a at unit XXX concluded segment price quarter financing company-operated year The retail design early December improvement the independently sequentially segment operated December quarter Ethan the ended X% America, backlog compared XXX elevated fewer to Allen a in centers by North strong orders home lower consolidated Retail November. We driven U.S. lower XX.X%. by wholesale lower and totaled ago. delivered sales strong a order backlog, volume. locations. higher aided from and million XX throughout offset orders Written our net and million $XXX.X with the Demand promotion. retail including Wholesale the by owned improved and while promotional grew in up and special XX.X%, levels a ticket were held activity, million, XX $XX.X were post was with average elections in programs sales as contract and increased ago year $XXX.X helped interest

X state incoming orders. the months in wholesale backlog apartment delivered declined the our outpaced As past sales our as expected,

to a thankful the and higher helped driven headcount, input price. Helene in change Carolina and price gross retail center in distribution Hurricane us a XX.X% North mix, by selective Strong previously recover. sustained have was Our and material resumed lower we're average flooding who costs raw sales ticket from lower favorable those margin in operations, consolidated September of increases,

count XX, integrated XXXX. a X.X% streamline as throughout operational consolidated December And identify X,XXX technology continue of efficiencies leverage from associates our Our a totaled at of and use head the to we ago decrease workflows year vertically to enterprise.

margin XX.X% was with XX.X% compared Adjusted a ago. year operating

December double-digit XX, margin our Adjusted diluted improved $X.XX points compared tightly a to ago. $X.XX manage due adjusted to operating EPS quarter prepandemic expenses. ability reflects to margin has XXXX, XXX our integrated Our was operating basis Compared our with year enterprise. our streamlining vertically ended

adjusted ended XX.X% from for months rate due varies was effective For was the diluted our rate state XXXX, XX, The the X historical taxes. context, which statutory December primarily federal tax XX% EPS $X.XX. quarter, to for -- the

$XX.X center ended Now turning cash and expenditures while complementary technology, debt. interior including and with relocated showcase million activities and from design -- in remodeling design fiscal cash XXXX our levels technology. in -- centers and state-of-the-art sheet, retail of balance associated services and million million inventory and Peoria, to a combining with our robust with ago. quarter improvements generated and investments no design outstanding liquidity relocations unique new we New $X.X the of consistent a kept Capital Watchung, year with Arizona, operating $XXX.X were additional We investments during that and opened hotel. costs were style included Jersey our

dividend $X.XX to dividends just November per of our a also yield form share, in and returning capital our a have We declared be release, on share, cash Board our of of practice as Board XX. will current of earnings declared Also, paid this which quarterly quarterly February. the regular per $X.XX paid regular a In our continued which October, dividend cash X.X%. shareholders of announced in cash was

operating written interest pleased performance vertically flow and produced operating consumer home. positive to our back double-digit our summary, with we demand, investments saw cash that are the business a execution Disciplined and In incremental throughout solid margin. integrated return strong

move positioned to year. continue well calendar sheet Our through we as has the robust balance us

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

M. Kathwari

you, Matt. thank Well,

design and We with high-quality are enterprise, provide both that positioned team. a state-of-the-art very ability products a offer relevant, services dedicated strong The vertically includes offering to technology, design well as integrated X interior which classic important, a with this is XX% perspective facilities. very of our North design attitudes. these And a a is and in perspective. with classic American modern modern a our furniture made

glove unique our in X to Our say national clients. and great North at what is cost us America delivery we to products logistics and retail advantage, competitive enabling deliver white a our with

internationally additional Our of network centers centers retail are design positioned. in North America and well XXX design

our X relocated with and our We the last the attitudes. network to design and interiors especially new centers years, During have with all freshening with of strengthen and continued products

due locations continue We to to centers. relocate stronger new our COVID, to add we introducing to After been have offerings. strengthen the new pause products design and

advertising. magazines, Our direct website, regional marketing get initiatives magazines, local This across. continue and mail digital to our includes our message

During than X% the able last down X,XXX years, December in and our our also important headcount. our and Technology has retail ago reduce that. our was very a few we a manufacturing, offerings, XXXX. have played while XX, network, less been December our from marketing to XX% year XXXX, strengthening technologies logistics, At role

our positioned ahead. continue to strengthen manufacturing, and During national integrated this we repositioned various the challenges to our the of network. In are meet opportunities we areas also vertically enterprise summary, our logistics well period, retail our and and

any or would up I like it this, to With questions comments. for open

Operator

First Thomas Capital Instructions] [Operator Markets. from is question Brad KeyBanc from

Bradley Thomas

front. and And on the first I or strong quarter, say, the very -- of calendar congratulations Afternoon. on foremost, order the end the end the on of should year

M. Kathwari

It was you. -- Yes. Thank very it to encouraging see that. is

Bradley Thomas

the to the in that . It my we're the question think We've point a was going hopeful to of and company and is. I for here have really industry? all that waiting first what's turn guess degree that what's industry, fruition was is turning the for the this that, Farooq is been here. that confidence you coming be I for

M. Kathwari

can also I as mentioned there to this are Well, well. factors that led that

So enterprise, a did fact network, this our the it that reflected during quarter, our certainly, which product obviously, it programs, also our but we helped. strong savings special give reflected

all other happened would have factors. it not Now -- without but the

So those that quarter, helped written make very business, on very, factors think I this strong. the all of especially

well. forward, for we had very tough can so, weak, Now parts the week weather. first we more very of we your X see positioned question, of are weeks. programs. your start But last when the feel activity. or weather -- in good we next strong mostly the improved move We many To because robust question the answer have it. in about about very, -- weather we did January country as

Our retail repositioned. network has been

said, -- extremely logistics. all efficient. manufacturing making we And we this have able have Our as it while do strong to of I been

designer strong the I really have network product So technology. programs, strong with brought in combined efficiency the the of think we and a of opportunity opportunity and that having

effect do that, is As to decrease talent feel we combining of in the continue good And progress. I technology. mostly the mentioned, with major with as keep this I we'll headcount think due -- that we'll confident we

Bradley Thomas

seem clearly, normalized . promotions more you That's intend you going great. the And will Do keeping up to promotions? these be incremental for on here. a incremental you be positive Or forward?

M. Kathwari

holidays, timing, It depends special use of place that. do events, take timing as gives an there We'll certain opportunities are us both. to the opportunity certain of on as opportunities

So as forward. both we'll combine we go

Bradley Thomas

in incremental be September that customers just for terms It from the just a or different there December orders you might highlight? the in interesting. this or last your in? would again, Farooq. other is maybe terms products customers impressive really nuances types quarter X happening And types coming was or of such of average new other your Great. me here, ticket X detail quarter -- all customers any any of acceleration of Or more anything to the Is

M. Kathwari

introducing so had our we -- position we would because Yes cautious new very good to very again, were we we that backlogs more to service. aggressive do want or and new year in products that high being service -- at prior now of are new the also that we're because I product because, to introducing right is before now have last been continue didn't products. we introduce that, will so, we say

we other our The one also increasing are marketing. that is

technology terms new In utilizing quarter, bring customers of marketing -- our this marketing, getting last terms is terms to more the of people in lot in new we in increased a of will and spend. in. marketing, And of and that fact, we are forms in in of doing we --

increase our So $X.X million? about marketing we by

Matthew McNulty

Correct.

M. Kathwari

Increased this million, about quarter our which was last Think in by $X.X X.X%? what of marketing.

Matthew McNulty

higher. XX%

M. Kathwari

but X.X%... Yes,

Matthew McNulty

Yes.

M. Kathwari

X.X%, XX% higher to X% From Brad.

continue to also, will we to do the old do. we traditional So to to of utilize used continue but ways innovative more that than ways marketing

Bradley Thomas

certainly this late. of that out of but out That's We've heard some really heard else data the industry, we've exceeded here way anything of great. good points any

turn I'll over to and else. congratulations, So it

Operator

is question Next from from Group. Advisory Telsey Fernandez Cristina

Cristina Fernandez

mean Or I October trends. I talked through I in to demand were trying you wanted is up about on guess trends Brad's questions an special how and how how improvement in promotion much through December quarter. prior about help? to follow get already November? that to you started see the months. I'm progression the the was in what

M. Kathwari

did that improvement was of look, It December a not special Cristina, X% major improvement, was major was a take a there place it I savings. promotion. in and think but -- because that the more

the of was made it it factors combination so happen. that all And

Cristina Fernandez

that years, And through, XX% been is response I the wanting to increasing order of too the you XX%, much pretty couple haven't impetus XX%, that I of just there, the guess, it a you you've that to with what before. off steady then us decision Maybe usually saw I guess intake? over feel competition promotions? was the for accelerate that past out like walk like it done

M. Kathwari

didn't spend is much a the a It we factors. a is That the combination it's money factor. Well, a of fact that lot a service because backlogs. be were better the of we to very we Because to of I had of deliver that will important because in felt we service delays that of able and position products. number want

that that's So in in that a major was an why investing are factor and ready, marketing. felt was important we factor. We

Cristina Fernandez

has which higher And . impact promotions, margin, going the forward? the an with in we expect very quarters to past high been of couple the should gross

M. Kathwari

in to was take that not you many mind Keep on spend of historically, Yes. close that a sales look our years if back, marketing. at we X% it to used

to Now that. with took of and it all we other the technology elements, half

by our we mind, So of do. about as what we keep in time to increased XX% percentage a total We reduced than used sales by this margin almost X.X%. have

continue kind rate. And so with we'll that a of

Cristina Fernandez

how guess, in or country? are much to another the to topic all you that North it Honduras Mexico? of of I tariffs aware and to And were look to And different U.S. there we was you've talk move wanted are potential Would on of your to or then you talked I manufactured always . outcomes? about Mexico, about the tariffs from Obviously, if for manufacturing is be America. exposure that in XX% input planning how XX%

M. Kathwari

is there important an with having today, our issue. that were upholstery And is in Mexico discussion that our that made a team in No, fact, on we products Mexico. that are

in Mexico for makes major full our Carolina. operation products Mexico North We it and And then cut in And X makes operations, North fabrics the have operation X Mexico. -- and in Carolina. also products in X

is I represents say Mexico of approximately XX% manufacturing in would to total that it at of stage, approximately our this So manufacturing. our close total

possibility more made North a go possibility are both we So prices forward. we There's product flexibility some be could could we manufacturing raising in consider Carolina there's that because we places. of in a -- have that as

Cristina Fernandez

here Thank of quarter. you You, and luck this best

M. Kathwari

you Indonesia members. upon in A thank based We've and which We other North of we as And do Well, of many furniture. most make from team They're news manufacturing out America, motivated. products the are some in looking places good like have comes in accessories said, of uncertainties. I but for our some They're other North manufacturing we right Mexico, States, is Vietnam United well Italy we positioned Honduras, do China our that it to in America. countries look are includes and all -- very is forward. these But lot we working really Right got much. hard. at

AAM's

Operator

[Operator if turn further Kathwari to for Instructions] the any back Mr. closing I And questions, to have floor comments. no

M. Kathwari

very you thank much. Robert,

-- thank We are you for attending.

-- are very are teams hard. our We very, working

And it's duties we and about whatever based are We to else. the steps are and are question looking at news and all good the whether positioned is we also upon world. well events the take in a positioned anything happens

business it much for think to continue to various continue to elements all carefully. strengthen vertically the this grow structure. But and are watching very very stage, integrated our I our We is focus Thanks at main our of participating. to

Operator

today's teleconference. concludes This

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

Ethan Allen Interiors (ETD) 29 Jan 252025 Q2 Earnings call transcript