Ethan Allen(US:ETD)2020-11-01 14:42Financial Data and Key Metrics Changes - Sales for the quarter ended September 30, 2020, were $151 million, a 65% increase from the fourth quarter ended June 30, 2020, but a 13.1% decrease from September 30, 2019 [7] - Gross margins improved to 56.8%, up from 56.3% in the prior year and 53.3% from the previous quarter [9] - Adjusted operating income margin was 8.1%, compared to 7% in the previous year [14] - Adjusted diluted EPS was $0.36, slightly up from $0.35 in the prior year [15] - GAAP EPS was $0.37, down from $0.53 in the prior year due to a one-time gain in the previous year [16] Business Line Data and Key Metrics Changes - Retail division written business increased by 79% from the fourth quarter ended June 30, 2020, and 10.8% from September 30, 2019 [8] - Retail division backlog increased by 43% from June 30, 2020, and 39% from September 30, 2019 [9] - Ecommerce orders grew by 112% compared to the prior year quarter [12] - Wholesale segment orders increased by 9.2% excluding government orders, which were delayed due to COVID-19 [13] Market Data and Key Metrics Changes - October written orders were up over 50% compared to the prior year, indicating strong demand [22] - Retail traffic was lower than last year but more qualified, leading to higher conversion rates [41] Company Strategy and Development Direction - The company is focusing on strengthening talent and enhancing service, leveraging its vertically integrated manufacturing capabilities [18][19] - Investments in technology, such as augmented reality and 3D floor planners, are aimed at improving customer interaction and service [21] - The company plans to maintain strong marketing initiatives across various channels [20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the future, expecting to catch up on backlogs by the end of the current quarter [20] - There are challenges related to raw material availability, but manufacturing is close to pre-COVID levels [24] - The company anticipates that it can convert 60% to 70% of its backlog into sales in the upcoming quarter [24][37] Other Important Information - The company paid down $50 million of debt and ended the quarter debt-free with cash of $62 million [10][17] - Total headcount is down approximately 23% compared to the previous year, primarily in retail [35] Q&A Session Summary Question: How will the company convert strong backlog into revenues? - Management indicated that manufacturing is nearly back to pre-COVID levels and expects to convert 60% to 70% of the backlog into sales this quarter [24] Question: What is the competitive landscape regarding margins? - Management noted that most of their products are custom-made, which limits excess inventory and allows for better margins when operating at full capacity [26][29] Question: How did October trends compare to September? - October saw a 50% increase in orders compared to the previous year, attributed to both increased demand and the impact of last year's membership model [32] Question: Are there differences in performance by market? - Management observed that suburban markets are performing well, while urban areas like Manhattan are weaker due to various factors including COVID-19 [44][46]