Core Insights - Ethan Allen Interiors Inc. reported its fiscal 2025 results, highlighting a strong performance despite economic challenges, with a focus on its vertically integrated business model and operational efficiency [2][3] Financial Performance - For the fourth quarter ended June 30, 2025, consolidated net sales were $160.4 million, down from $168.6 million in the prior year, reflecting a 4.9% decrease [6][23] - Gross margin for the fourth quarter was 59.9%, compared to 60.8% in the previous year, indicating a slight decline [6][23] - Adjusted operating income for the fourth quarter was $15.6 million, with an adjusted operating margin of 9.7%, down from 13.1% a year ago [6][29] - The company generated $24.8 million in operating cash flow during the fourth quarter, compared to $26.2 million in the prior year [6][10] Dividends and Shareholder Returns - The company paid a total of $10.0 million in cash dividends during the fourth quarter, with a regular quarterly cash dividend of $0.39 per share and a special cash dividend of $0.25 per share approved for payment on August 28, 2025 [2][13] - Total cash dividends paid during fiscal 2025 amounted to $50.1 million, including a special cash dividend of $0.40 per share paid in August 2024 [11][13] Operational Highlights - The company has reduced its headcount by 5.7% year-over-year and 32.2% since 2019, reflecting a focus on operational efficiency [2][8] - Retail segment written orders increased by 1.6% in the fourth quarter, while wholesale segment written orders decreased by 6.8% [6][12] - The company opened four new design centers during fiscal 2025 and plans to open additional locations in fiscal 2026 [8][12] Recognition and Brand Strength - Ethan Allen was named America's 1 Premium Furniture Retailer by Newsweek for the third consecutive year, underscoring its commitment to quality and customer service [3][15] - The company celebrated its 93-year heritage and was recognized for its sustainable wood-sourcing policies [8][12]

Core Insights - Ethan Allen has been recognized as America's 1 Premium Furniture Retailer for three consecutive years, according to surveys conducted by Newsweek and Statista [2][7] - The ranking is based on consumer recommendations and ratings across various categories, including product quality, customer service, and store atmosphere [2] Company Performance - The company's President and CEO, Farooq Kathwari, attributes the success to dedicated associates, a commitment to North American manufacturing, and a blend of personal service with technology [3] - Ethan Allen manufactures approximately 75% of its products in its own workshops, ensuring high quality and competitive pricing [3] Service and Offerings - The company provides complimentary interior design services at its Design Centers, where professional designers assist clients from concept to delivery [3] - Services include guidance on furniture selection, décor, color schemes, and room layouts, enhanced by advanced 3D imaging and 4K animations [3] Company Background - Ethan Allen is a vertically integrated company, managing the entire process from product design to logistics, and has been recognized for its craftsmanship since 1932 [4] - The company operates a mix of company-operated and independent licensee locations, offering a full range of home furnishings [4]

Group 1 - Ethan Allen Interiors Inc. will release its financial and operating results for the fiscal 2025 fourth quarter and full year on July 30, 2025, after market close [1] - A conference call to discuss the results will be held at 5:00 p.m. Eastern Time on the same day, which will be webcast live [2] - An archived recording of the conference call will be available for six months on the Company's Investor Relations website, with a telephone replay available for one month [2] Group 2 - Ethan Allen is recognized as America's 1 Premium Furniture Retailer by Newsweek and is a leading interior design destination [3] - The Company offers complimentary interior design services and a full range of home furnishings, including custom furniture and artisan-crafted accents [3] - Approximately 75% of Ethan Allen's custom-crafted furniture is manufactured in its own North American facilities, highlighting its vertical integration from product design to logistics [3]

Company Overview - Ethan Allen is a manufacturer and retailer of home furnishings, founded in Vermont and headquartered in Danbury, Connecticut [1] - The company was established in 1932 and opened its first sawmill in 1936 in Beecher Falls, Vermont [2] - Ethan Allen manufactures approximately 75% of its furniture in North America, with production facilities in Vermont, North Carolina, Mexico, and Honduras [2] Commitment to Local Manufacturing - The company has maintained a commitment to local manufacturing, producing most of its furniture close to home, contrasting with many competitors who have moved production overseas [3] - This dedication to local craftsmanship has been a core value for the company over its 93-year history [3] Retail and Community Engagement - Ethan Allen operates over 170 retail Design Centers across North America, providing complimentary interior design services and a full range of home furnishings [4] - To support local communities, many Design Centers will conduct food drives in partnership with local charities, starting on June 23 and continuing through July [3] Recognition and Quality - Ethan Allen has been recognized as America's 1 Premium Furniture Retailer by Newsweek, highlighting its status as a leading interior design destination [4] - The company emphasizes quality and craftsmanship in its products, which have been a hallmark since its inception [4]

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Core Viewpoint - Ethan Allen Interiors Inc experienced a 2.5% decline in fiscal third-quarter sales, attributed to significant drops in order intake during January and February, with an 11% decline in order intake following a 14% increase in the previous quarter [1][2]. Group 1: Financial Performance - The company reported earnings of 38 cents per share, which fell short of the consensus estimate of 46 cents per share [2]. - Fiscal 2025 earnings estimates have been reduced from $2.32 per share to $2.00 per share, which is lower than the current consensus of $2.36 per share [2]. - Sales are expected to decline by 6.6%, an increase from the previous estimate of 3.5% [2]. Group 2: Analyst Insights - Telsey Advisory Group's Cristina Fernández maintained a Market Perform rating and lowered the price target from $32 to $30 [1]. - Concerns were raised regarding deteriorating traffic and sales trends, despite confidence in managing incremental costs from tariffs [3]. Group 3: Market Reaction - Shares of Ethan Allen fell by 9.82% to $26.27 at the time of publication [3].

分组1 - Ethan Allen reported quarterly earnings of $0.38 per share, missing the Zacks Consensus Estimate of $0.45 per share, and down from $0.48 per share a year ago, representing an earnings surprise of -15.56% [1] - The company posted revenues of $142.7 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 2.13%, and down from $146.42 million year-over-year [2] - Over the last four quarters, Ethan Allen has surpassed consensus EPS estimates only once and has topped consensus revenue estimates just once [2] 分组2 - The current consensus EPS estimate for the coming quarter is $0.71 on revenues of $166.4 million, and for the current fiscal year, it is $2.32 on revenues of $623.8 million [7] - The Zacks Industry Rank indicates that the Retail - Home Furnishings sector is currently in the bottom 10% of over 250 Zacks industries, which may negatively impact stock performance [8] - The estimate revisions trend for Ethan Allen is mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6]

Financial Data and Key Metrics Changes - Consolidated net sales were $142.7 million, reflecting lower delivered unit volume, partially offset by higher average ticket price and improved contract sales [11] - Gross margin was strong at 61.2%, driven by lower raw material input costs and reduced headcount [13] - Adjusted operating margin was 8%, down from 10% a year ago, but improved by 180 basis points compared to the pre-pandemic quarter ended March 2019 [14] - Adjusted diluted EPS was $0.38 compared to $0.48 a year ago, but 23% higher than in 2019 [14] - Generated $10.2 million of cash from operating activities, ending with total cash and investments of $183 million and no outstanding debt [15] Business Line Data and Key Metrics Changes - Retail segment written orders were down 13.2%, while wholesale orders decreased by 11.2% [12] - Wholesale backlog was $54.6 million at March 31, representing a decline in the last three months [13] Market Data and Key Metrics Changes - Current demand levels reflect an industry facing tariffs, economic uncertainty, elevated interest rates, and a challenging housing market [12] - The company has a limited exposure to tariffs, with most manufacturing occurring in North America [18][20] Company Strategy and Development Direction - The company focuses on continual reinvention, leveraging technology to improve operations and reduce headcount by 36% since 2019 [8][10] - Plans to introduce new products throughout the next twelve months and maintain a strong marketing presence [21] - Emphasizes the importance of a vertically integrated enterprise, with 75% of furniture made in North America [18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism, noting a positive trend in demand in May after a softer April [34] - The company remains disciplined in managing expenses and executing strategies amidst a challenging environment [17] Other Important Information - The company opened new design centers in Middleton, Wisconsin, and Toronto, Canada, combining interior design services with technology [15] - The current dividend yield is 5.4%, one of the highest in the industry [16] Q&A Session Summary Question: How do tariffs affect Ethan Allen's relative positioning in the industry? - Management indicated that Ethan Allen is less impacted by tariffs due to most manufacturing being in North America, with limited exposure to China [27][29] Question: Will the company need to raise prices due to current cost pressures? - Management stated that so far, there have been no price increases, but they will monitor the situation for potential small adjustments [30] Question: Can you comment on recent demand trends in April and early May? - Management noted that while April saw continued softness, May has shown a more positive trend with increased customer purchases [34] Question: How does the company plan to use promotions to drive better order intake? - Management believes that increasing discounts is not necessary as customers who visit the store are already making purchases [41] Question: What is the status of the State Department contract? - Management reported that while there has been cautious buying recently, the contract remains in place [43] Question: How is the company managing SG&A expenses and marketing investments? - Management highlighted improved efficiency in marketing, with advertising expenses down as a percentage of sales, while reaching more customers [45]

Financial Data and Key Metrics Changes - Consolidated net sales were $142.7 million, reflecting lower delivered unit volume, partially offset by higher average ticket price and improved contract sales [9][10] - Gross margin was strong at 61.2%, driven by lower raw material input costs and leveraging investments in technology [12] - Adjusted diluted EPS was $0.38 compared to $0.48 a year ago, but was 23% higher than in 2019 [13] - The effective tax rate was 23.4%, down 170 basis points from a year ago due to recent audit settlements [13] - Cash generated from operating activities was $10.2 million, with total cash and investments at $183 million and no outstanding debt [14] Business Line Data and Key Metrics Changes - Retail segment written orders were down 13.2%, while wholesale orders decreased by 11.2% [11] - Wholesale backlog was $54.6 million at March 31, representing a decline in the last three months [12] - Adjusted operating margin was 8%, compared to 10% a year ago, but improved by 180 basis points compared to pre-pandemic levels [12] Market Data and Key Metrics Changes - Current demand levels reflect challenges from tariffs, economic uncertainty, elevated interest rates, and a challenging housing market [11] - The month of January and February faced challenges due to weather and reduced traffic, but March saw modest demand growth [11] Company Strategy and Development Direction - The company focuses on continual reinvention, utilizing technology to improve operations across various areas [8][17] - Plans to introduce new products over the next twelve months, emphasizing classic and modern design [21] - The company operates 75% of its furniture manufacturing in North America, which helps mitigate tariff impacts [18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about demand trends, noting a positive trend in May after a softer April [33][34] - The company remains disciplined in managing expenses and executing strategies despite the challenging environment [16] Other Important Information - The company opened new design centers in Middleton, Wisconsin, and Toronto, Canada, combining interior design services with technology [14] - The current dividend yield is 5.4%, one of the highest in the industry, with regular quarterly cash dividends being paid [15] Q&A Session Summary Question: How do tariffs affect Ethan Allen's positioning in the industry? - Management indicated that the company is less impacted by tariffs due to its North American manufacturing, with limited exposure to China [26][27] Question: Will price increases be necessary due to current cost pressures? - Management stated that so far, no price increases have been necessary, but they will monitor the situation [29][30] Question: How have demand trends changed in April and early May? - Management noted continued softness in April but observed a positive trend in May, with customers making good purchases when they visited [33][34] Question: How does the company plan to use promotions to drive traffic? - Management believes that increasing discounts is not necessary, as customers who visit are already purchasing [40][41] Question: What is the status of the State Department contract? - Management reported cautious buying from the State Department but confirmed that the contract remains in place [42][43] Question: How is the company managing increased SG&A expenses? - Management highlighted improved efficiency in marketing, achieving better reach with lower costs due to technology [44][45]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for Q3 FY2025 reflect decreases in total assets, net income, and operating cash flow [Consolidated Balance Sheets](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2025, total assets slightly decreased to $738.7 million, with minor changes across key balance sheet items Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$738,740** | **$744,917** | | Cash and cash equivalents | $65,731 | $69,710 | | Investments, short-term | $107,202 | $91,319 | | Inventories, net | $150,384 | $142,040 | | **Total Liabilities** | **$259,588** | **$262,001** | | Customer deposits | $79,299 | $73,471 | | **Total Shareholders' Equity** | **$479,152** | **$482,916** | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20(Unaudited)) For Q3 FY2025, net sales, operating income, net income, and diluted EPS all decreased year-over-year Q3 Fiscal 2025 vs Q3 Fiscal 2024 (in thousands, except per share data) | Metric | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Net sales | $142,695 | $146,421 | | Gross profit | $87,356 | $89,824 | | Operating income | $10,997 | $15,325 | | Net income | $9,605 | $12,953 | | Diluted EPS | $0.37 | $0.50 | Nine Months Ended March 31 (in thousands, except per share data) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net sales | $454,292 | $477,589 | | Operating income | $46,719 | $55,364 | | Net income | $39,328 | $45,303 | | Diluted EPS | $1.53 | $1.77 | [Consolidated Statements of Cash Flows](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20(Unaudited)) For the nine months ended March 31, 2025, operating cash flow decreased, investing activities provided cash, and financing activities used cash Cash Flow Summary - Nine Months Ended March 31 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $36,879 | $53,954 | | Net cash provided by (used in) investing activities | $2,245 | $(10,081) | | Net cash used in financing activities | $(42,587) | $(42,300) | | **Net (decrease) increase in cash** | **$(3,839)** | **$1,649** | [Notes to the Consolidated Financial Statements](index=8&type=section&id=NOTES%20TO%20THE%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20(Unaudited)) Key notes detail the company's vertically integrated business model, revenue recognition, segment performance, and financial instruments - Ethan Allen is a vertically integrated interior design company, manufacturing approximately **75% of its furniture** in its North American plants, operating **143 company-owned design centers** and **46 independently operated locations** as of March 31, 2025[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - The company has a **$125 million revolving credit facility** maturing in January 2027, with an option to increase it by **$60 million**, and as of March 31, 2025, there were **no outstanding borrowings** and availability was **$121.0 million**[66](index=66&type=chunk)[67](index=67&type=chunk) Disaggregated Net Sales by Product Category - Q3 2025 (in thousands) | Product Category | Net Sales | % of Total | | :--- | :--- | :--- | | Upholstery | $67,647 | 47.4% | | Case goods | $43,080 | 30.2% | | Accents | $27,784 | 19.5% | | Other | $4,184 | 2.9% | | **Total** | **$142,695** | **100.0%** | Segment Operating Income - Q3 (in thousands) | Segment | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Wholesale segment | $14,331 | $11,243 | | Retail segment | $659 | $2,275 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 FY2025 results, attributing sales decline to economic factors while highlighting strong gross margin and liquidity [Executive Overview](index=28&type=section&id=Executive%20Overview) The executive overview highlights the company's vertically integrated model and its strong financial health despite a challenging economic environment - The company's business model focuses on **vertical integration**, with about **75% of furniture manufactured in North America**, providing a competitive advantage in quality and service[113](index=113&type=chunk)[114](index=114&type=chunk) - In Q3 FY2025, the company maintained a strong balance sheet with **$183.0 million in cash, cash equivalents, and investments**, and **no outstanding debt**, despite a challenging economic environment[118](index=118&type=chunk) [Key Operating Metrics](index=30&type=section&id=Key%20Operating%20Metrics) Key operating metrics for Q3 FY2025 show declines in net sales, adjusted diluted EPS, and written orders across both segments Key Operating Metrics - Q3 FY2025 vs Q3 FY2024 (in millions, except per share data and percentage) | Metric | Q3 2025 | Q3 2024 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $142.7M | $146.4M | (2.5%) | | Adjusted operating income | $11.3M | $14.6M | (22.1%) | | Adjusted diluted EPS | $0.38 | $0.48 | (20.8%) | | Wholesale written orders | - | - | (11.2%) | | Retail written orders | - | - | (13.0%) | [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Q3 FY2025 operating results show decreased net sales and operating income due to lower demand, despite a strong gross margin - Consolidated net sales for Q3 FY2025 decreased **2.5% to $142.7 million**, attributed to lower delivered unit volume, fewer incoming written orders, and reduced designer floor sample sales[123](index=123&type=chunk) - Q3 consolidated gross margin remained stable at **61.2%** compared to **61.3% YoY**, achieved through lower raw material costs and higher ticket prices, partially offset by sales deleveraging, mix changes, and higher freight costs[129](index=129&type=chunk)[130](index=130&type=chunk) - Q3 operating income decreased **28.2% to $11.0 million**, with the operating margin falling to **7.7% from 10.5% YoY**, driven by lower sales and a **1.3% increase in SG&A expenses**[131](index=131&type=chunk)[141](index=141&type=chunk) [Regulation G Reconciliations of Non-GAAP Financial Measures](index=34&type=section&id=Regulation%20G%20Reconciliations%20of%20Non-GAAP%20Financial%20Measures) This section reconciles GAAP to non-GAAP financial measures for Q3 FY2025, with adjustments primarily related to restructuring charges Reconciliation of GAAP to Adjusted Metrics - Q3 FY2025 (in thousands) | Metric | GAAP | Adjustments | Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Operating income | $10,997 | $350 | $11,347 | | Net income | $9,605 | $260 | $9,865 | | Diluted EPS | $0.37 | $0.01 | $0.38 | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $303.9 million available, using operating cash flow for dividends and capital expenditures Available Liquidity (in thousands) | Component | March 31, 2025 | | :--- | :--- | | Cash and cash equivalents | $65,731 | | Investments (short & long-term) | $117,243 | | Availability under credit facility | $120,952 | | **Total Available Liquidity** | **$303,926** | - Cash from operating activities for the nine months ended March 31, 2025 was **$36.9 million**, a decrease from **$54.0 million** in the prior year, mainly due to changes in working capital and lower net income[161](index=161&type=chunk) - During the first nine months of fiscal 2025, the company paid **$40.1 million in cash dividends** and invested **$9.4 million in capital expenditures**, primarily for manufacturing expansion and retail design center projects[163](index=163&type=chunk)[169](index=169&type=chunk)[171](index=171&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks including interest rate, foreign currency, tariffs, and commodity price volatility - The company has **no outstanding debt**, so interest rate risk is primarily related to its cash and investment portfolio[181](index=181&type=chunk) - Foreign currency exchange risk is limited as most purchases are in U.S. dollars, but operations in Canada, Mexico, and Honduras create some exposure[184](index=184&type=chunk) - The company is exposed to risk from **tariffs on imported raw materials and finished goods**, which could increase costs and negatively impact margins or require price increases[187](index=187&type=chunk)[188](index=188&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal controls - Based on an evaluation as of the end of the quarter, the CEO and CFO concluded that the company's **disclosure controls and procedures are effective**[192](index=192&type=chunk) - No changes occurred in internal control over financial reporting during the third quarter of fiscal 2025 that have materially affected, or are reasonably likely to materially affect, these controls[193](index=193&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) No material changes to the legal matters previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to legal proceedings were reported for the first nine months of fiscal 2025[196](index=196&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to risk factors were reported for the first nine months of fiscal 2025[197](index=197&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any shares during Q3 FY2025, retaining authorization for over 2 million shares - No shares were repurchased during the third quarter of fiscal 2025[199](index=199&type=chunk) - The remaining authorization under the share repurchase program is for **2,007,364 shares** as of March 31, 2025[199](index=199&type=chunk)