Ethan Allen(US:ETD)2025-10-29 20:31Financial Performance - Consolidated net sales for the first quarter of fiscal 2026 were $147.0 million, a decrease of 4.8% compared to $154.3 million in the prior year quarter[124] - Gross profit was $90.2 million, representing a gross margin of 61.4%, compared to $93.9 million and 60.8% in the prior year[127] - Adjusted operating income decreased to $10.6 million (7.2% margin) from $17.8 million (11.5% margin) year-over-year, a decline of 40.6%[127] - Consolidated gross profit decreased by $3.7 million for the three months ended September 30, 2025, driven by lower net sales and increased promotional activity[137] - Consolidated operating income decreased by $7.6 million to $10.0 million for the three months ended September 30, 2025, representing 6.8% of net sales compared to 11.4% in the prior year[144] - Net income was $10.5 million for the three months ended September 30, 2025, down 29.0% from $14.7 million in the same prior year period[151] - Diluted EPS decreased to $0.41 for the three months ended September 30, 2025, compared to $0.57 in the same prior year period, a decline of 28.1%[152] - GAAP operating income fell by 43.3% to $9.97 million in Q1 2026 compared to $17.57 million in Q1 2025[157] - Adjusted diluted EPS decreased by 25.9% to $0.43 in Q1 2026 from $0.58 in Q1 2025[157] Cash Flow and Dividends - Cash flow from operating activities increased to $16.8 million, up from $15.1 million a year ago, reflecting an 11.6% increase[127] - The company paid a special dividend of $0.25 per share and a regular quarterly cash dividend of $0.39 per share[124] - The company paid $16.4 million in dividends during Q1 2026, down from $20.2 million in the same period last year[169] - The company paid a special dividend of $0.25 per share and a regular quarterly dividend of $0.39 per share during the first three months of fiscal 2026, totaling cash dividends of $16.4 million[177] Operational Metrics - Retail written orders increased by 5.2%, while wholesale orders declined by 7.1% in the same period[124] - Employee count as of September 30, 2025, was 3,189, with a reduction of 4.7% in headcount over the last 12 months[123] - Retail written orders for the three months ended September 30, 2025 increased by 5.2% compared to the same prior year period due to improved order conversion and increased promotional activities[136] - Wholesale operating income was $7.9 million for the three months ended September 30, 2025, down 33.2% from $11.9 million in the same prior year period[145] - Retail operating income decreased by 81.2% to $1.4 million for the three months ended September 30, 2025, representing 1.1% of net sales compared to 5.6% in the prior year[146] Assets and Liabilities - The company ended the quarter with total cash and investments of $193.7 million and no outstanding debt[124] - Total available liquidity as of September 30, 2025, was $314.88 million, slightly down from $317.12 million at June 30, 2025[161] - Working capital decreased to $141.8 million at September 30, 2025, from $157.1 million at June 30, 2025[161] - As of September 30, 2025, the company had total contractual obligations of $182.8 million, including $146.3 million related to operating and finance lease commitments[179] - The fair market value of cash and cash equivalents was $73.6 million, while total investments amounted to $120.0 million as of September 30, 2025[188] Capital Expenditures and Investments - Capital expenditures in Q1 2026 were $2.4 million, a decrease from $3.6 million in the prior year[168] - The company has a remaining authorization to repurchase 2,007,364 shares of common stock under its Share Repurchase Program as of September 30, 2025[178] Market Conditions and Risks - The wholesale backlog decreased by 16.3% to $53.5 million at September 30, 2025, primarily due to lower contract business[134] - The company has been able to reduce certain manufacturing input costs by identifying lower-cost alternatives and implementing operational efficiencies to mitigate inflation impacts[197] - The company is exposed to tariff risks on imported raw materials and finished goods, which have negatively impacted wholesale and consolidated margins[195] - A hypothetical 10% weaker U.S. dollar against all foreign currencies would have had an immaterial impact on the company's consolidated results of operations[193] - The company had no fixed or variable rate borrowings outstanding as of September 30, 2025, but could be exposed to market risk from future variable rate debt[187] - The company has not engaged in any foreign currency hedging activity and does not plan to do so in the foreseeable future[193] Expansion and Development - New design centers were opened in Colorado Springs, Concord, and Webster, bringing the total to 188 retail design centers[124] - New design centers were opened in Colorado Springs, CO, and Concord, Canada, during Q1 2026[175] - The company operates 143 retail design centers, with 48 owned and 95 leased, which could be impacted by conditions in the commercial real estate market[198]