Ethan Allen(US:ETD)2025-05-05 21:00Financial 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]