Ethan Allen Interiors (ETD) 28 Jan 222022 Q2 Earnings call transcript

Good afternoon and welcome to the Ethan Allen Fiscal 2022, Second Quarter analyst conference call. At this time, all participants are in a listen-only mode, a question-and-answer session will follow the presentation. Please note that 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

Good Analyst Diego. welcome Ethan to Thank Call afternoon. for 's Conference our Allen you, And fiscal XXXX.

December Second ended XX, quarter XXXX.

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

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

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

afternoon. Thank overview to forward. provide as joined. of focus you, a our Matt. you've good that I'm move we brief And pleased I'm happy results and

from adjusted Sales $X.XX results. and adjusted strong margins to XX.X% of per in $XXX.X to XX.X% XX.X%, share increase. had at increased we reported, As margin XX.X%, earnings rose resulting Gross increased XX.X% operating to million.

our celebrate years accounting of VP a part serving to to and with we Matt strong Matt of our conveyed have very, continue as growth be promoted as after Off profitability. I'm earnings sales Matt. you very no of a cash recently And Treasurer, of have debt. and review strong to We that, Matt are finance innovation Matt our initiatives our I million pleased team continued provides as XX with $XXX.X the CFO and to -- we Finance and communications, strong and will results. was background. overview also as maintained has know, pleased various in and financial private brief in position of to also to very him and dividends done, Also public

Thank Mr. you, Kathwari.

acceleration XX celebrate net during we sales, innovation margin EPS As retail of both well operating an diluted sales fiscal in as wholesale with saw throughout reporting double-digit we and XXXX, years net growth, and as quarter. the our

quarter flat orders second quarter year, last year, XX% Similarly, written orders our last were up XX% two of to compared were up but from second written the of While wholesale retail till up for XXXX. X.X% ago. was segment orders fiscal the years

ongoing sales points year XX% retail impacted import mix, to higher grew favorable offset compared our ago, receipts than year but partially consolidated net XXX material were mix order XX% Our more XX, get expect approximately during and up are at and higher primarily gross The higher ago, wholesale mix, margin. a increased project, and the optimization and change of finished consolidated to The material to products. a we increase and the supply December becoming sales XX.X%. a XX% XXXX margin imported increased in realized disruptions production manufacturing to Retail raw sales being to negatively delays. net benefits partially impacted sales prior continued by XX% COVID-XX by in combined up gross current caught by positively Consolidated backlog from which impacted manufacturing negatively year deliveries Consolidated basis a due cost. chain production the product sales logistics up increased that to calendar XX.X% raw which led XX.X% from sales with production were was offset net

the sales last While national due the pleased operating the our combined sales to mediums, near our and last rising along X.X% material, overall in to return due margin our sales to we our approximately to to quarter, reduced and of return the year. were thereby XX.X%, of X% of Adjusted historical we mix reducing term more leverage, radio costs, advertising TV XX.X% of compared and selling norms. net with our to to for operational expenses down XX% reductions our XX.X% advertising margins in with from freight certain consolidated were We of impact including expenses, with gross expect markets, raw regional various year labor spend costs. including

EPS we our ability of For $X.XX, diluted corporate the and other growth, to restructuring production actions, Adjusted year approximately an operating increase fiscal the to current primarily last gross XX.X% increased consolidated improved partially year, margin, margins, the material cost by in and Adjusted X%. was and growth operating minimize freight and higher measures. to of to due XX.X% and X% containment expense excludes to expanded strong retail, XXXX, initiatives from offset due net and be of delivery costs. rest products, gross expect to advertising margins XX.X% sales which raw

turning from operating Now, on quarter from capital X sale of of increase last $XX.X the $X.X in two the an million. properties resources. of $X total primarily activities million million to months, cash ended liquidity with cash $XXX cash We proceeds hand, a million in for and our the of of

in XXXX, sheet increased also cash dividend our quarterly strong by returning balance our of history and regular the shareholders. November board strength of capital XX% reflecting Our

improved credit provide the existing facility to million of the pricing on over the and With the just to credit the extends of over addition, Mr. turn provides borrowings, call to the our the amended [Indiscernible] January $XXX facility five will transition Kathwari. company XXXX. enhanced The flexibility I that, credit In with maturity yesterday, future we a -- and revolving line also years. next back of amended agreement

Matt. you, Thank

logistics, on with us in from strong one brand, to to focused constant structure, has of retail provided design, very returns challenging to integrated environment. a vertically unique, idea Our and very manufacture,

continues I'm to of pleased talent, and the technology, five continued area make talent, areas of focus Our great service, progress. we social on In marketing, responsibility.

have Importantly, Board member, our (ph) welcome with elected our on Gina a us Gina background this in call. Casar, Gina newest directors joined (ph). strong week, strengthened finance, ESG. has I of our this Directors, we and management, early

strong of quarter, were last And the Clark, in we Taras finance, we our by who to since new and management and About John background Duda, finance, here. goals. career, estate background a background. as John Dooner a University company, leading our Jon Sable, and a a the Directors Stacom distinguished of During real enterprise. advertising strengthened has is of President and Tara the lead in David background Taken, manages a leading director in of including and in director, our and entrepreneurship a joined a CEO CEO number marketing marketing addition

to very directors. of have a pleased board strong very So

consultant. development. for I decided CFO. mentioned to to his number years as we work this like in During of a period. about of executives. promoted Vice dedicated an Executive Matt XX Retail mention a the -- throughout our Franks, as XX XX and to our for McNulty being work also of about thank him We years advisor after Corey us Amy promoted service, quarter Whitely Business of President enterprise I'd years veteran

part maintaining of orders custom and an the clients. almost our of The second when to manufacturing in are made all serves area from strategy of North is XX% XX% about service America, important received is

We in to addition including our a continue in strong investing to and manufacturing, our invest workforce, technology. plans

advantage, great, cost Our great years at This service national retail logistics one with our nationally. is products and close started delivers which a to XX white glove we back.

increases freight service and impacted While domestically, to clients. major provide we have enable been to we have internationally with our good

relevant continues convey to Third differences. area is strong and marketing our

to a consumer fourth digital, help area enhancements base at us enterprise. print, sales years mediums times with environmental And help or and technology. during throughout reach so our maintaining responsibility We last utilized which focus is larger The of and strong we care improve continue lower these our other up in especially have been on social challenging programs. finally, strong have XX includes focus associates, Technology taking to on and costs. strong efficiency critical

this, to I'm or for any open with Now questions very pleased comments.

you. question-and-answer we Thank at gentlemen, session. will be ladies time, And this and conducting our

a your queue. [Operator like line One in question moment, poll for would question, ask that confirmation while the Instructions] Instructions] a you is will tone we please, questions. [Operator indicate to If

Our first ahead. question comes from go Brad Thomas KeyBanc, with please

Brad. Hello,

are two Matt, you doing? how Hi, Farooq. Hi,

Brad, and good Very yourself?

I'm promotions. your and Matt, my let congratulations, Congratulations. add on doing well record me for year the

you Thank very much.

cadence wanted the of levels Well, first company really running from I've outlook from the the the standpoint historic the at couple business. perspective. think And been you've of bit had more really, curious, the questions how quarters and about ahead just Still a an But a what about I a order ask seeing perspective industry. orders? exciting furniture I a in lately plan was Farooq, for business you and for to

its challenges increased substantial course last Yes, on we year as resulted and have the created and of increase course amount in own in of have a great was -- opportunities resulted it we Brad. profitability. exceptional, our with declared, also in and of that sales -- as this our backlogs increase written impact tremendous That also

orders, we really the our fact while side, and the which else. in on cost impacted retail was the have in -- very delivery had side, the everybody on impact which strong impact the Now, we really very, -- structure industry on everybody

able were it deliver manage on because we took wholesale to some of the side. care the So high the of that that to major that we were of sales we saw increases able

it we been was strong been margins have our think very we are have impacted. wholesales Our would I side severely impacted. in if that all business fact had really the our a retail, business would we wholesale, -- wasn't If

you year, a somewhat ordered last able we years to at can you our that two year. how Matt? compared have up much back, last to flat can it quarter, the think as last be -- much take pretty -- previous fact, in this see, was and But there, were orders it, if look I

XX%.

of quarter the the from year. XX% previous

So point a as flat of bit view, very lower, I even forward is little because very, Brad. flat in, substantial orders had coming if good orders move strong an very still I see maintain a or orders. from we have we think we we

great. That's

you and the is what more on question capacity, think of your capacity in Can were some how just this an could ahead? with share on expected encouraging the execution you do quarters quarter, Just for us to to deliver we outlook the much you than able you generate part. would've

has our are made cause our in of XX% fact the to The products that help. Yes. plants North that of great America, been a in

by we've increases. COVID, employees impacted some in -- Brad, out, we Although case have an been being impacted by by cost

the our Vermont, we plans last visiting was we over North the fall, to what actually And get people. we had in decided saw year, towards of in America, there. did that So middle -- I we was

base wages -- well, people in. our increase our while then have in to we still, and we manufacturing, So our COVID. it started impacted decided by we getting But produced but

to the technology So going forward, we wood continue in that we because I If a us. technology. not great manufacturing in in have manufacturing newest opportunity we believe side, and talk helped on deal capacities upholstery too, a Technology with our that technology increase that, little the our have the about in side the had to. retail I'll we really our invested continue manufacturing, to on our done but has bit

have as -- stage, do continue COVID we products XX% we know from production. increase do major we to is impacted major come they a COVID offshore. this and heading. at course, our think costs. not in to capacities have and know, opportunity where the issue our of of And transportation But I our of this

we of a number large coming very, very have strong in. containers And partners. the that Fortunately, is we thing fairly have interesting

XX% had as bit I only know. So a It folks do, -- have our well really be if overseas because XX%-- too would bad XX% it which would but as -- still is it of we is major problem. of not we a our most don't large,

Very my thanks on helpful. and taking Congrats great for the quarter question.

Brad. Thanks, right. All

your And you. our Appoma question. with KeyBanc. say Please comes next Thank question from Andrew

Andrew. Hello,

question. taking Farooq I by up afternoon, my wanted on to Brad's you start for and capacity Matt, following Good Hi. thank questions. off

capacity you this saw time, that the quarters time plan at saw to mentioned for revenue outpaced increases same But ahead. delivered you in for the continue significant revenue. You the written first -- quarter

do magnitude translates more bit the little delivered expect a for ahead, you should you doing the on to a expect slow you delivered in revenue? or, how significant, $XX example, finally, of of think million to quarter, that slow quarters or of are the expect to see pretty to think how In coming increases this capacity about about down a we about wondering basis. revenue last level just down? should Do about that I'm sequential that you growth you that that for saw magnitude so we And Do clarity. quarter? rate how And

factors. two There's

Andrew, have do First, strong backlog. is still we that a

in The us to there increase have, quarter in in to business so is we backlog for increase increased don't to and enable strong products major we perspective any provided quarter issues have going maintain course, and this that to of our always the be but any will grow strong that plan the capacities should have business. that maybe in then grow very that mind. So shipments, our also we on of I we continue that able and be that programs cover we marketing way to to backlogs capacities course, and to keep us to so, into we think don't following supply have side. have

mentioned disruption that you given next labor give makes I a the wondered could wave you correctly, side, that COVID if a that Omicron if those impact But the you're revenue seeing if for more or the for increased little sense disruption you delivered we're how on -- in bit may us currently. COVID and so? And quarter heard heightened Understood. sense

we it's see Andrew. impact. some do Right good Yes, now, question

than I production fairly that maintain had others. that some However, to more to areas close in the think the be will looks they levels impacting second like it's able quarter. in That we

written gave wanted but Okay. that That's commentary, very some sales, just follow know On up helpful. here. I to I you

years a see about that two-year least at the talk the the sales you would written color retail written the of of Just more was because on basis, the was what to ago? quarter, Or While acceleration for there action for flattish for orders. you drove acceleration? Could -- few it good any great. that be were about if the timing membership-model a had

year. yes, not last number had previous You're it factors. quarter, And talking the increase about the the from of but the

strong. the Of And continued factor. me course, first is the be to home to that has main interest in is consumer that

technology in in had be in that work with we the to and is are second Andrew years eight to close been designers, our home, with network The center, last XX able to our technology. advantage about tell would not virtually invested the designers our that design interior working I having from you, them of if competitive who who have XXXX from clients. training with empowered --

combining of very is critical And critical the the work technology our I only think have not designers, business as not will We we be with will we have. done, what to Today, we move professional have important forward. future. but to that the

The your And for counter, you costs additional increases that know you discounts prepared implemented Understood. tracking forward, average price versus pre wondering plan higher you higher much expect the much here. to you levels. increases. could you going that if some fully have guess how you was the increase you your a take impact. I it, are noted my some how I reduced do cost seeing. remarks, inflation offset prices And question more In share, that to some But -pandemic further previously. rising are selective to prices if if you already I but share and have could offset to last price currently

a our materials, transportation taken we of we really done a Both that of which that's of excellent company one our else. of you that many from Anywhere our in have, delivered all say it I price which our cost especially helps independents, because especially products First from and at them. haven't to that of Those fairly has programs a coming selectively, to to increased increases large. the $XX,XXX. $X,XXX into increases from mentioned, setup sense gone first, of upon the also are to our our I increases, or product of unique Texas, operated, retailers. Whether wherever. which had be product the container values is cost is are Seattle have we XX% very to to based offshore would did. XX% from were we in -- all, what the of take everything care our really raw we

have at international, to We of in cost high, also maybe level still the X% being while the absorb not increases bit or XX%. domestic which transportation, a had

So their fact to in high retail margins, that. country. is think we've have retail why increase the cost other any addition did sales, any the absorbed like very is That face we but the not would I -- in

integration. maintain So of we'll this have we going advantage our I be forward, able vertical to think that

We price have will selected it I take if it's out, about a that increase increases. to more would price But some XX% average say you

Thank to Understood. That's and hear. you. great helpful

Alright, Andrew.

you. Thank

Please Cristina from with Our comes next question Group. Fernandez ahead. Advisory Telsey go

Cristina. Hello,

Good I as wanted goods, of seeing questions. increase congratulations times it on you've a have and Matt, about able talk manufacturing been -- early? see I a shorter to and if well. afternoon. is and as could Farooq too good more customers Hi. to to order or quarter you couple delivery deliver are

our -- -- good Not our business. fact represents let for of which XX% advantage is good about our upholstery, a that's a really comment take That's total the because that us. us

Silao upholstery it average little I about we some North lower our when products, backlog Seattle bit Mexico. bases or have And is in products it's the XX our thing in of XX to weeks, Same is North XX time. we time. we made industry to larger if custom now lead the Wood Carolina and this because be And custom, of again, much to wood upholstery lower than made delivery keep to that mind, XXX% larger received would ranges a much, other a our or folks from would I that most weeks. we is goes goes have. upholstery in what much the it it almost Our is order. in from that think Mexico, Products time because have larger a would little And our a the in eight might America bit has. still think because which much, anywhere -- I say delivery in is

delays That's going on, helpful. bringing your North Then, categories the any chain capacity, you back there consider that and supply with product America? to might manufacturing other are

we looking against the border. a North move of It's south mind, back. in we but odds, XX question. go maintain XX in or manufacturing Honduras, all also we good decided America, went then both in We're of keep States. yes. very we, United that But had to that the we course Well, XX it, went to years so, about In us. important Mexico, a for And was years we back. about at

over be. we've say a we great not $XXX otherwise, So invested to million would we facilities I in would be those where a deal. are

have we So but non-furniture products furniture, certainly more we're on America. looking the North also at opportunity in made being opportunity in

this Then about or had $XX higher step-up to SG&A been for I more They help it is us the by wages costs last Maybe higher going lower. Is due sales? can trending maybe just this Matt, SG&A to question have had, more think driven this you quarter, about a the and million. structural forward.

the I it smart a this, our because news. good say you this. is will upon written most up, It retail. is of pretty But is I Matt on can follow that sales in based Matt tell

in fairly have designers one, they Matt, a some excellent and most rewarded it of ahead. done job fair money. transportation. Come have That's amount Our go been an and of with

dollar percentage XX, increased the sales, sales, Mr. overall as freight what's higher You're our it's little And XX what from actually a -- by of bit driven job Kathwari most exactly costs. lot right SG&A to flat. overall easier. though By increase said a of down X% my a making

included in as So interior there, to our designers. delivery compensation are well as fees

more see going there's up and want on. to we sales designer So comp more going means that written

that So that to is you saw come about why up $XX million.

you. Thank

to are no further back There closing for will time. Mr. I at you. this Thank questions the turn Kathwari remarks. floor

our have the very you. done. people that gratified thank Well, I'm at work

an job. done teams Our amazing have

network. on great also Plus, our providing our maintain continue our to in sure net continue and great maintain improve make we We maintain and retail service, America. focus manufacturing focus, North quality, to to that

very much. thanks again, So

Thank concludes Have disconnect. you. may a All parties today's This evening. conference. great