Ethan Allen Interiors (ETD) investor relations material

Executive summary

• Retail written orders grew 5.2% year-over-year despite macroeconomic headwinds and lower consumer confidence, while wholesale written orders declined 7.1% due to lower contract and government business.

• Consolidated net sales declined 4.8% to $147.0 million, with retail net sales at $128.6 million and wholesale net sales at $87.0 million, partially offset by higher average ticket prices and increased designer floor sample sales.

• Gross margin improved to 61.4% from 60.8% year-over-year, driven by favorable sales mix, lower input costs, and selective price increases, despite higher promotional activity and tariffs.

• Adjusted operating margin was 7.2% (down from 11.5% in the prior year), and adjusted diluted EPS was $0.43 (down from $0.58).

• Maintained a debt-free balance sheet, ending the quarter with $193.7 million in cash and investments.

Financial highlights

• Net income was $10.5 million, a 29% decrease year-over-year; adjusted net income was $10.9 million, down 26.8%.

• Diluted EPS was $0.41, down 28.1% from $0.57; adjusted diluted EPS was $0.43, down 25.9%.

• Generated $16.8 million in cash from operating activities, up from $15.1 million a year ago.

• SG&A expenses increased 4.8% to $79.7 million, mainly due to higher marketing spend and fixed cost deleveraging.

• Inventory levels reduced to $139.9 million, down 2.3% year-over-year.

Outlook and guidance

• Management remains cautiously optimistic, focusing on strategic initiatives in talent, service, marketing, technology, and social responsibility.

• Vertical integration and a robust balance sheet are expected to provide resilience amid ongoing macroeconomic challenges.

• Anticipates benefits from increased marketing spend and new product introductions in upcoming quarters.

• Sufficient resources to meet operational and capital needs for at least the next twelve months.