Ethan Allen(US:ETD)2025-05-05 22:02Financial 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]