Ethan Allen Interiors (ETD) 28 Jan 212021 Q2 Earnings call transcript

Greetings, and welcome to the Ethan Allen Fiscal 2021 Second Quarter Analyst Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow this formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to our host Matt McNulty, Vice President of Finance. you. Thank

begin. may You

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

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

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

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

all the back also had all also to about furlough $X. changes months last manufacturing have we price XXXX challenging results. to most months our This closed like and and our close strong enterprises achieving stock know bottomed As strengthen our traumatic, amazing most an rewarding Nine journey. been important many of and in XX to enterprise has retail, associates, been about

previous quarter. ending December have sales is from quarter know, XX, previous grow As XX% news you the to written good XXXX year increased year continued

per earnings increased XXX.X%. adjusted share XX% Our of

I provides and retail division will for brief overview backlog XXX% after our initiatives. Corey? review Our Corey increased a

Farooq. you Thank

our focused workplaces During teams the serving and clients our quarter fiscal on safe. keeping our remain XXXX of second

to orders written segment continued year. growth accelerate the to XX.X% prior retail achieving Our compared

for reflected the XXX% e-commerce quarter. growth orders Our

increase orders written our Wholesale trend. sales pre-COVID-XX improved levels. our for in year steadily during We peak weeks were net Wholesale January sales quarter are orders matched are the increased throughout retail the increased production Consolidated X.X% XX.X%. the upward quarter quarter. continuing pleased the production production levels manufacturing that to a prior the segment as million written XX.X% our net $XXX.X

Excluding and XX.X%. orders orders government GSA other wholesale grew segment

We continue of other disruptions issuance government are new to COVID-XX see pandemic related GSA and delaying orders. that

caught retail order increased had quarter, the X.X% Our net sales and wholesale over quarters. up June the get we March At for retail backlogs the high of and quarter. the that to end expect both

operating Adjusted other and expenses. X.X% corporate X.X% for primarily reduction compared gross to profit a a ago, actions to due the XX.X% adjusted expenses in were quarter in than expense to of and prior including selling reductions we points period. lower adjusted as and margin higher increase manufacturing in was increased Our sales the our a mix. Retail sales to margin in basis gross as XX in consolidated a consolidated change margin, which restructuring productivity to XX.X%. initiatives the due The impacted percentage sales year compared with the costs expenses year operating XX% headcount gross were efficiently of to in advertising which due total consolidated ago with impact XX.X% after the pretax impairments year margin. of increase positively an Adjusted excludes and XX.X% operating increased a in more reduced XX% charges from gross are compensation operating

in quarter. compared prior the Our year was GAAP to $X.XX EPS $X.XX

XXX.X% EPS to the to increased adjusted $X.XX year Our diluted in quarter. second compared prior $X.XX

of cash with balance on of inventory December $XXX.X and As strong sheet remain hand million million, of our no outstanding $XX XX, borrowings.

dividends XXX.X% year during from increase $X.X paid During In the the operating on turn from the reflecting the to regular activities, XX% and half, by generated share the With increased I $X.XX per increased was prior our over dividend January just million Farooq. back November million quarter. dividend. regular XX.X will million XX regular in call cash first we We fiscal we $X.X that period. a of dividends paid

to also previously you focuses provide brief a we Thank I as have pleased important discussed initiatives overview right. which All our on of areas. Corey. am five

The key in continuing finance, vertically regional in an technology review other talent. strengthen merchandising, is the areas manufacturing, create our we our of integrated and our opportunity Crisis enterprise. process. first does Talent to our is leadership development talent, greatly pleased I'm marketing, in our and and have network,

area marketing. is second The

potential our increase to more digital invest refine in Digital various in reach while enabled most and continue the our costs. to reducing marketing mediums importantly We have us clients to mediums. mediums

area is third The service.

of We due challenges continue transportation product the east COVID-XX, and to make raw from shortage material. Asia, many to progress issues getting despite

However, months XX% is our of in in investing American in workshop our about our to making North manufacturing. our advantage we also next few and we products and as advantage catch an reported, North of the American are expect up

and glove advantage in-house strong continue written refine. service retail. at with America fourth increasing North technology white of talented service is in Combining products X,XXX is delivering about interior business been designers of has The to network across key logistics we technology. area personal professional to Our a a

as also, Corey increase We on we e-commerce. said, our major have also

always and operations. We’ve external the because social this in associates We is are network, clients. in technology it's areas our in responsibility. thing of welfare do the front including our and because fifth investing in but various been for of retail the right full not to And pressures area manufacturing area

in to I'm January in release trend. the with press come for any and to open were pleased Now and written that the we Also, continue as our we up orders in brief questions have government orders upward comments. the overview that January see indicated this postponed started

we session. state with be this [Operator a and your Instructions] comes first Please conducting from time answer Thank Our question you. question. KeyBanc will question At Markets. Thomas Capital Brad

Brad. Hello

world the revenues, that I of seeing mean these because this is that just that logistical Corey Hi good Thanks was in been you. but of a we recall sounds might and able know work particularly you like about given talk that third covering into that so about afternoon unusual I a through. It you'll is order topic in. my rate the company. taking the revenue There could Farooq, your extraordinary be here orders I ask you progress challenges. trend fiscal bit this afternoon hoping little for I Matt. some what be are important question. over Farooq, best strong good are quarter, to the backlog can to to have growth this make converting are in reasonable Thank an a you've decade

overall have to important of all a don't event. mention that. been very about have a It's say the I raw of issues challenge. and of heard all it’s Brad issues Yes, issue. transportation, that materials sure every of the you I am would I all

Our is advantage in that American North our have XX% the fact made workshops and is our capacities. increased we

get have which instance very created for our issues some workshops. make worked we to business our is own XXX% category raw like have in the make hard materials the don't upholstery like We our largest products, in fabrics. which We of

we'll this So improving. Brad. more it's into flow goes I would quarter quarter in we fourth that the might see how but it see coming would maybe and say increases

revenue frame up Okay. sort for March need you can your because reasonable this growth in year a if a what rate range any or Is quarter there way might help normalized revenue quarter. reasonable would seeing be your you think us that quarter? reasonable double-digit would this what help factories we on be any XXX% were chain Can growth growth for supply revenue one might this give perspective of

in No retail our we in have mean backlog Brad, I division. our obviously a increase XXX%

so would I many the you quarter. range control. that would now - anywhere sales. in - is We XX% have that in thinking about should say wholesale. I would delivered like to increase beyond major factors our sales at delivered least a increase XX% our XX% that right between loud are talking I'm what there just again I are say that would I our this us we because say that

very costs, in prices to Farooq. quarters some you bubble here? increasing, deal inflation sense give are lastly some etc. Ethan of was to transportation How the That's you're starting position could if up. managing do we me the material Allen’s us with how some feel you those are Obviously of And like of ahead raw see for some that of just the helpful I curious

I Yes. you costs especially that to we of XX%, even short than the are somewhat fortunately, a major we also premium that book we fact increasing we would do container. business were but everybody obviously the in most saw thing pay a a have issue. asked in would of be am own sure We is is our import a related If aware have less see are lumber say mill. transportation go They and external sourcing I that being fact the there it, term that it I even all our to exposure to forest. our big-big think increase of to our

okay do We we over are the XX% more there. imported do of we is products the see increases see and fabric. of on really the Where course some,

an would the few what we Brad is that So is -- increase at price next there small considering in I a in that are say months increase retail.

Thank so helpful. you much Very Farooq.

Brad. right Thanks. All

Please Feldman go with Advisory Group. your Group Advisory comes question Telsey ahead next Joe with Our from question.

Joe. Hello

helped? demand behind that? wanted it how that I ask or Was is think all? you what's you strongly seeing did did that January at the you with What stimulus much, up backlog all so come Are driving customers help do the Hi, it So to to guys? in? marketing are the adjusted new so

great Joe company. we got have a

have We got great products.

and reason it. our is the savings And sales our XX% clients we home people to there interested interested though can had do. come Even the and increased is in sure that's taking at people given also Brad people. But great of home and interest result our up that given all have and one. looking to lot would that savings got become say that we normally home. We number the and up, margins are I have to have wanted is people make wanted deliver new place. been would also goes we that than held we the in also more to have our have to also have That's is quality. discounts the and it There reason is, or back a have product certainly We are a us for where the result we asked brand that I then in

the say increasing and our would I helped us also increase our has client marketing, our of savings clients all the this So course, start through base, of through business. name benefit

out round Got side is to, it high mean just was the on and months the and I ask so have promotional given this you fiscal about was how promotions I in had you topic do another scaled coming the environment that six you demand the year. to period back the then to you wanted had the envision

a take a when done this take Joe at more have look what look have discounts. we we you at that given

had less We have production. somewhat

home our have We been the our all has retails with all of but at margins faced this. and margins sale increased increased issues with at

efficiency level has business retail So manufacturing about but lot the increase behind of all given of margins stage I us in operating without reasons in level, greater have sales. at with our it the challenges this talked our at terms at

Now I am talking gross margins.

with also lot Our expenses. just of course, we our increased reasons a operating mentioned and, Corey as have margins reduced of have

reach giving, have spending been from costly. all digital X%, helping that today it's expenses the less, to people tools not to we has it But We reduced is and marketing than X% effective. spending us less our even and less less marketing are close because more using to

guess to people what these assume, days? days? Understood. are and walk I I buy sneak week If time are in giving a just Is these XX XX them frame I weeks. more if can it today sofa you in. Like one the what's new I week, telling X were you

are The approximately reduced X-X we is it's weeks news the is being good time and giving.

Okay.

custom. it's And weeks. we ship also which element an are less Keep X in call we made but we which custom all now quick is still in there than have mind shipping

thank you. this quarter. Good luck That's great. for

right. All

Thank remarks. no to at this time. further back are will There it management you. for Thank I you. closing questions turn

and lot really know we operate of results of to understand questions out information I is thank course and objective a we of we to reason lot continue very you of and because good. have information Well The the a have the are is the business. don't have I given much given course

levels people in important thing our earlier, it people pleased this The first at As have I done safely. job managing all tremendously health the is are for really said very-very terms welfare is we of do crisis. an important and amazing that

going So proactive. very to to be we are continue

believe we offerings our increasing in base very us. is consumer focus a major-major to a have reach much We that to relevant

our are to We technology. going increase

are of capacities upholstery manufacturing invested our the are are We service. we our terms our We wood America. in our grow capacities going increase already in last of had in to to the in production we North greatly double to so few instance business products in ready years our some manufacturing doubling are and to our facility we for ready and of

thanks again our of being for stockholders for everybody much. and associates very all Ethan our listening. So to to to of also all part Thank Allen and you

This concludes this conference.

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