Ethan Allen Interiors (ETD) investor relations material

Executive summary

• Net sales for Q3 FY2026 were $135.8 million, down 4.8% year-over-year, mainly due to lower contract, international, and U.S. State Department sales, as well as sluggish home furnishings demand amid macroeconomic uncertainty and weather disruptions.

• Gross margin was 59.4%, supported by sales mix changes and cost controls, but pressured by higher tariffs and increased promotional activity.

• Operating margin declined to 4.8% from 7.7% a year ago; adjusted operating income was $6.8 million (5.0% margin), and adjusted diluted EPS was $0.24.

• Strong operating cash flow and robust balance sheet maintained, with $180.9 million in cash and investments and no debt at quarter-end.

• Vertically integrated operations and 172 retail design centers support resilience and efficiency.

Financial highlights

• Q3 net sales declined 4.8% year-over-year to $135.8 million; nine-month sales were $432.7 million.

• Q3 gross profit was $80.7 million (59.4% margin); nine-month gross profit $262.2 million (60.6% margin).

• Q3 operating income was $6.5 million (4.8% margin); nine-month operating income $30.7 million (7.1% margin).

• Q3 net income was $5.9 million; nine-month net income $28.1 million.

• Operating cash flow for the quarter was $15.1 million, up from $10.2 million a year ago.

Outlook and guidance

• Management expects continued macroeconomic uncertainty, sluggish demand, and ongoing tariff impacts to pressure results.

• Retail written orders in April have been positive, continuing the stability seen in the third quarter.

• Plans to open new design centers in North America, including Rancho Cucamonga, CA, and Aventura, FL, during 2026.

• Ongoing investments in talent, product, marketing, and technology are expected to support future growth.

• Awaiting outcome of State Department contract rebid, with potential for price increases to offset tariffs.