Ethan Allen(US:ETD)2021-05-01 19:37Financial Data and Key Metrics Changes - During Q3 fiscal 2021, consolidated net sales increased to $177 million, representing an 18.2% increase compared to the prior year quarter [6] - GAAP earnings per share for the quarter was $0.61, compared to a loss of $0.01 per share in the prior year quarter [9] - Adjusted diluted EPS increased to $0.58 from $0.02 in the prior year quarter [9] - Adjusted gross margin increased by 130 basis points to 57.3% due to higher productivity and a favorable sales mix [7] - Adjusted operating margin rose to 11.1%, primarily driven by improved gross margin and a reduction in adjusted operating expenses by 2.1% [8] Business Line Data and Key Metrics Changes - Retail segment written orders grew by 58.1% compared to the prior year third quarter, with a sequential growth of 23.9% compared to the second quarter [5] - Wholesale segment written orders increased by 39%, and excluding government orders, the growth was 48.3% [6] - Retail net sales increased by 22.2%, while wholesale net sales rose by 15.8% [6] Market Data and Key Metrics Changes - Retail sales accounted for 79.9% of total consolidated sales, up from 77.2% a year ago, positively impacting gross margin [7] - E-commerce orders reflected 100% growth compared to the prior year quarter [5] Company Strategy and Development Direction - The company is focused on strengthening its manufacturing in North America, producing about 75% of its products, with 70% made to order [13] - The introduction of new custom programs in case goods and upholstery is aimed at enhancing product offerings [15] - Investments in technology have enabled virtual assistance for interior design services, differentiating the company in the market [16] Management's Comments on Operating Environment and Future Outlook - Management noted improvements in raw material availability, particularly foam, which had previously caused production delays [14][29] - The company expects to increase production in the upcoming quarters, contingent on receiving necessary materials [22] - Management expressed confidence in maintaining a strong backlog and anticipated continued growth despite industry challenges [33] Other Important Information - The company ended the quarter with $109 million in cash and no outstanding borrowings, reflecting a strong balance sheet [9] - A special cash dividend of $0.75 per share was declared, alongside a regular cash dividend of $0.25 [10] Q&A Session Summary Question: Financial outlook based on strong order trends and backlog - Management acknowledged the strong backlog and indicated that production increases are expected, contingent on raw material availability [21][22] Question: Future SG&A expenses and advertising investments - Management indicated that SG&A expenses would increase proportionately with business growth, with a shift towards more digital advertising reducing overall costs [24][26] Question: Raw material shortages and delivery delays - Management confirmed that foam shortages have impacted operations but noted improvements in production days and expected to meet requirements by the end of May [29] Question: Business performance in April compared to previous months - Management reported strong performance in April, although it may be slightly weaker than March due to a price increase implemented on April 1 [32]