Q4 2024 Ethan Allen Interiors Inc Earnings Call

Operator: Good afternoon, and welcome to the Ethan Allen Fiscal 2024 4th Quarter Analyst Conference Call. If you require operator assistance, please press star zero. Please note this conference is being recorded. It is now my pleasure to introduce your host, Mack McNulty, Senior Vice President, Chief Financial Officer, and Treasurer. Thank you, you may begin.

Operator: Good afternoon and welcome to the Ethan Allen fiscal 2024 4th quarter analyst conference call.

Speaker Change: Good afternoon and welcome to the Ethan Allen Fiscal 2024 4th Quarter Analyst Conference Call. If you require operator assistance, please press star zero.

Operator: If you require operated systems, please press star zero.

Operator: Please note this conference has been recorded.

Matthew McNulty: It is now my pleasure to introduce your host, Mack McNulty, Senior Vice President, Chief Financial Officer, and Treasurer. Thank you.

Speaker Change: Please note this conference is being recorded. It is now my pleasure to introduce your host, Mack McNulty, Senior Vice President, Chief Financial Officer, and Treasurer. Thank you. You may begin.

Matthew McNulty: You may begin. Thank you, Operator. Good afternoon and thank you for joining us today to discuss Ethan Allen fiscal 2024 4th quarter and full year results.

Matthew J. McNulty: Thank you, operator. Good afternoon, and thank you for joining us today to discuss Ethan Allen's Fiscal 2024 fourth quarter and full year results. With me today is Paroop Kethwari, our Chairman, President, and CEO. Mr. Kethwari will open and close our prepared remarks, while I'll speak to our financial performance midway through. After our prepared remarks, we will then open the call for your questions. Before we begin, I'd like to remind the audience that this call is being recorded and webcast live under the News and Events tab on the Investor Relations page of our website.

Matthew J. McNulty: Thank you, operator. Good afternoon and thank you for joining us today to discuss Ethan Allen's fiscal 2024 fourth quarter and full year results.

Matthew McNulty: With me today is Peru Kethwari, our Chairman, President, and CEO. Mr. Kethwari will open and close our prepared remarks, while I will speak to our financial performance midway through. After our prepared remarks, you will then open the call for your questions.

Speaker Change: With me today is Bharu Kethwari, our Chairman, President, and CEO . Mr. Kethwari will open and close our prepared remarks while I will speak to our financial performance midway through. After our prepared remarks, we will then open the call for your questions.

Matthew McNulty: Before we begin, I'd like to remind the audience that this call is being recorded and webcast live under the News and Events tab on the Investor Relations page of our website. A reply of today's call will also be made available on our Investor Relations website. Terry will find a copy of our press release, which contains recommendations of non-GAAP financial measures referred to on this call and in the press release. We believe the non-GAAP presentation better reflects underlying operating trends and performance of the business.

Matthew J. McNulty: A replay of today's call will also be made available on our Investor Relations website. There you will find a copy of our press release, which contains reconciliations of non-GAAP financial measures referred to on this call and in the press release. We believe the non-GAAP presentation better reflects underlying operating trends and performance of the business.

Speaker Change: Before we begin, I'd like to remind the audience that this call is being recorded and webcast live under the News and Events tab on the Investor Relations page of our website.

Speaker Change: A replay of today's call will also be made available on our Investor Relations website. There you will find a copy of our press release, which contains reconciliations of non-GAAP financial measures referred to on this call and in the press release. We believe the non-GAAP presentation better reflects underlying operating trends and performance of the business.

Matthew McNulty: Our comments today may include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. The most significant risk factors that could affect our future results are described in our annual report on Form 10-K. Please refer to our FUN filing for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking matters discussed during this call.

Matthew J. McNulty: Our comments today may include overlooking statements that are subject to risk and uncertainties that could cause actual results to differ materially. The most significant risk factors that could affect our future results are described in our annual report on Form 10-K. Please refer to our SVP filing for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking matters discussed during this call. With that said, I am pleased to now turn the call over to Mr. Kefwari.

Speaker Change: Our comments today may include overlooking statements that are subject to risk and uncertainties that could cause actual results to differ materially. The most significant risk factors that could affect our future results are described in our annual report on Form 10-K .

Speaker Change: Please refer to our SEC filings for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking matters discussed during this call. With that, I am pleased to now turn the call over to Mr. Cafuari.

Peru Kethwari: With that, I'm pleased to now turn the call over to Mr. Kethwari. Well, thank you, Matt. Thanks for participating in our fourth quarter and fiscal year June 30, 2020 for meeting. As stated in our press release, we are pleased to report strong performance in this post-pandemic period. Despite low demand and reduction in high backlogs, we did well. We had strong gross margins of 60.9%, and despite lower sales, it had an adjusted operating margin of 13.1%. We continue to generate strong cash and ended with cash and equivalent of $195.8 million, up from $172.7 million last year.

Paroop Kethwari: Well, thank you, Matt. And thanks for participating in our fourth quarter and fiscal year, June 30, 2024, meeting. As stated in our press release, we are pleased to report strong performance in this post-pandemic period. Despite lower demand and a reduction in high backlogs, we did well. We had strong gross margins of 60.9%. And despite lower sales, it had an adjusted operating margin of 13.1%.

Mr. Cafuari: Well, thank you, Matt.

Mr. Cafuari: and thanks for participating in our fourth quarter and fiscal year June 30 2024 meeting.

Mr. Cafuari: As stated in our press release, we are pleased to report strong performance in this post-pandemic period.

Speaker Change: Despite lower demand and reduction in high backlogs, we did well.

Speaker Change: We had strong gross margins of 60.9%, and despite lower sales, had an adjusted operating margin of 13.1%.

Paroop Kethwari: We continue to generate strong cash and end the year with cash an equivalent of $195.8 million, up from 172.7 million last year. Our inventories have been reduced by 12.5% since June 30, 2019, and the headcount also reduced by 28% on June 30, 2019. June 2019. Now we know this after multiple years of high demand during the pandemic period, the consumer is much more focused on quality, value, and service, and it provides an opportunity for enterprises like us that have relevant products, strong talent, provide services, and also to have good, healthy cash positions. After Matt provides an overview of our financial results, I will review our initiatives going forward. Matt, thank you.

Speaker Change: We continue to generate strong cash and end it with cash and equivalent of $195.8 million.

Speaker Change: up from 172.7 million last year.

Peru Kethwari: Our inventories have been reduced by 12.5% since June 30, 2019, and the headcount also reduced by 28% June 2019. Now we know this after multiple years of high demand during the pandemic period; consumer is much more focused on quality, value, and service. And provides an opportunity for enterprises like us that have relevant products, strong talent, providing service, and also to have good, healthy cash.

Speaker Change: Our inventory has been reduced by 12.5% since June 30, 2019, and the headcount also reduced by 28% June 2019.

Speaker Change: Now, we know this after multiple years of high demand during the pandemic period, consumer is much more focused on quality, value, and service.

Speaker Change: and provides an opportunity for enterprises like us that have relevant products, strong talent, providing service and also to have good healthy cash positions.

Matthew McNulty: I will review our initiatives going forward, Matt?

Speaker Change: After Matt provides an overview of our financial results, I will review our initiatives going forward.

Matthew J. McNulty: Thank you, Mr. Kevwaria. Our financial results for the full year and fourth quarter ended June 30, 2024, were highlighted by double-digit operating margins, disciplined expense management, strong operating cash flow, and a robust balance sheet. As we operate in a post-pandemic period defined by challenges within the home furnishings industry, our operations produced positive financial results, which I will now discuss. Our fiscal 2024 consolidated net sales totaled $646.2 million, which included fourth quarter sales of $168.6 million, our highest level of quarterly delivered sales during the fiscal year.

Matthew McNulty: Thank you, Mr. Kentwarya. Our financial results for the full year and fourth quarter ended June 30, 2024, were highlighted by double-digit operating margins, discipline and expense management, strong operating cash flow, and a robust balance sheet. After we operate in a post-pandemic period defined by challenges within the home furnishing industry, our operations produced positive financial results, which I will now discuss. Our fiscal 2024 consolidated net sales totaled 646.2 million, which included fourth quarter sales of 168.6 million, our highest level quarterly delivered sales during the fiscal year. The reduction in net sales, when compared to the prior year, is reflective of low-res delivered unit volumes, lower backlog, and a strong prior year comparable.

Mr. Casuario: Thank you, Mr. Casuario.

Matt: Our financial results for the full year and fourth quarter ended June 30, 2024, were highlighted by double-digit operating margins, disciplined expense management, strong operating cash flow, and a robust balance sheet.

Speaker Change: As we operate in a post-pandemic period defined by challenges within the home furnishings industry, our operations produce positive financial results, which I will now discuss.

Matt: Our fiscal 2024 consolidated net sales totaled $646.2 million, which included fourth quarter sales of $168.6 million, our highest level of quarterly delivered sales during the fiscal year.

Matthew J. McNulty: The reduction in net sales when compared to the prior year is reflective of lower delivered unit volumes, lower backlog, and a strong prior year comparable. Overall, demand patterns began to show signs of improvement during the just-completed fourth quarter. Retail segment orders for the quarter were down 1.3%, while wholesale written orders increased 0.4% as our wholesale segment benefited from improving orders within our contract business. We ended the fiscal year with a wholesale backlog of $53.5 million, nearing historical norms and pre-pandemic levels. We improved customer lead times and reduced the number of weeks of backlog.

Matt: The reduction in nest sales when compared to the prior year are reflective of lower delivered unit volumes, lower backlog, and a strong prior year comparable.

Matthew McNulty: Overall demand patterns began to show signs of improvement during the just completed fourth quarter. Retail segment orders for the quarter were down 1.3 percent, while wholesale Britain orders increased 0.4 percent as our wholesale segment benefited from improving orders within our contract business. We ended the fiscal year with a wholesale backlog of 53.5 million, nearing historical norms and pre-pandemic levels. We improved customer lead times and reduced the number of weeks of backlog. For the fiscal 2024 year, our consolidated gross margin was 60.8 percent, a 10 basis point improvement over last year. In the just completed fourth quarter, consolidated gross margin was also 60.8 percent; our 13th consecutive quarter that gross margin has exceeded 58 percent.

Matt: Overall demand patterns began to show signs of improvement during the just completed fourth quarter. Retail segment orders for the quarter were down 1.3% while wholesale written orders increased 0.4% as our wholesale segment benefited from improving orders within our contract business.

Matt: We ended the fiscal year with wholesale backlog of $53.5 million, nearing historical norms and pre-pandemic levels. We improved customer lead times and reduced the number of weeks of backlog.

Matthew J. McNulty: For the fiscal 2024 year, our consolidated gross margin was 60.8%, a 10 basis point improvement over last year. In the just completed fourth quarter, our consolidated gross margin was also 60.8%, our 13th consecutive quarter that gross margin has exceeded 58%. When compared to last year, our quarterly consolidated gross margin was impacted by fewer delivered sales and higher inbound freight, partially offset by a change in sales mix, lower raw material input costs, reduced headcount, and a disciplined promotional level.

Matt: For the fiscal 2024 year, our consolidated gross margin was 60.8%, a 10 basis point improvement over last year. In the just completed fourth quarter, consolidated gross margin was also 60.8%. Our 13th consecutive quarter, that gross margin has exceeded 58%.

Matthew McNulty: When compared to last year, our quarterly consolidated gross margin was impacted by fewer delivered sales and higher inbound rate, partially offset by change in sales mix, lower raw material input costs, reduced headcount, and a disciplined promotional level. For the 2024 fiscal year, our adjusted operating margin was 12.1 percent, down from 16.9 percent last year. Improved fourth quarter adjusted operating margin of 13.1 percent reflects lower headcounts and strong expense management. Our SGA expenses decreased 4.9 percent and equal 47.7 percent of net sales, up from 45.1 percent last year due to lower sales volume relative to six cost.

Matt: When compared to last year, our quarterly consolidated gross margin was impacted by fewer delivered sales and higher inbound freight, partially offset by change in sales mix, lower raw material input costs, reduced headcount, and a disciplined promotional level.

Matthew J. McNulty: For the 2024 fiscal year, our adjusted operating margin was 12.1%, down from 16.9% last year. The improved fourth quarter adjusted operating margin of 13.1% reflects lower headcounts and strong expense management. Our SG&A expenses decreased 4.9% and equaled 47.7% of net sales, up from 45.1% last year due to lower sales volume relative to fixed costs.

Matt: For the 2024 fiscal year, our adjusted operating margin was 12.1%, down from 16.9% last year.

Matt: Improved fourth quarter adjusted operating margin of 13.1% reflects lower headcount and strong expense of management.

Matt: Our SG&A expenses decreased 4.9% and equaled 47.7% of net sales, up from 45.1% last year due to lower sales volume relative to fixed costs.

Matthew McNulty: Compared to our pre-pandemic 2019 fourth quarter, our adjusted operating margin improved 450 basis points due to our focus on streamlining our vertically integrated enterprise. On a full year basis, adjusted EPS was $2.49. For the quarter, our adjusted EPS was $0.70. Our effective tax rate was 25.3 percent for the full year and 25.1 percent for the quarter, which varies from the 21 percent federal statutory rate primarily due to state taxes. Now, turning to our liquidity, we ended our fiscal year with a robust balance sheet, including cash and investments of $195.8 million and no outstanding debt. We generated $26.2 million of cash from operating activities during the just completed quarter, bringing our full year amount up to $80.2 million.

Matt: Compared to our pre-pandemic 2019 fourth quarter, our adjusted operating margin improved 450 basis points due to our focus on streamlining our vertically integrated enterprise.

Matthew J. McNulty: Compared to our pre-pandemic 2019 fourth quarter, our adjusted operating margin improved 450 basis points due to our focus on streamlining our vertically integrated enterprise. On a full year basis, adjusted EPF was $2.49. For the quarter, our adjusted EPS was $0.70. Our effective tax rate was 25.3% for the full year and 25.1% for the quarter, which varies from the 21% federal statutory rate primarily due to state taxes.

Matt: On a full year basis, adjusted EPF was $2.49.

Matt: For the quarter, our adjusted EPS was $0.70. Our effective tax rate was 25.3% for the full year and 25.1% for the quarter, which varies from the 21% federal statutory rate primarily due to state taxes.

Matthew J. McNulty: Now turning to our liquidity, we ended our fiscal year with a robust balance sheet, including cash and investments of $195.8 million and no outstanding debt. We generated $26.2 million of cash from operating activities during the just-completed quarter, bringing our full-year amount up to $80.2 million. We also reduced our inventory levels by $7.2 million.

Matt: Now turning to our liquidity.

Matt: We ended our fiscal year with a robust balance sheet, including cash and investments of $195.8 million and no outstanding debt. We generated $26.2 million of cash from operating activities during the just-completed quarter, bringing our full year amount up to $80.2 million.

Matthew McNulty: We also reduced our inventory levels by $7.2 million. Capital expenditures were $9.6 million for the full fiscal year, including $2.1 million during the fourth quarter, as we continue to invest in capital manufacturing, retail, technology, and infrastructure.

Matt: We also reduced our inventory levels by 7.2 million.

Matthew J. McNulty: Capital expenditures were $9.6 million for the full fiscal year, including $2.1 million during the fourth quarter as we continue to invest capital in manufacturing, retail, technology, and infrastructure. We also continued our practice of returning capital to shareholders in the form of cash dividends. This past April, our board increased the regular quarterly cash dividends by 8.3% to $0.39 per share, which was subsequently paid in May and brought our total fiscal 2024 dividends paid to $50.3 million.

Matt: Capital expenditures were $9.6 million for the full fiscal year, including $2.1 million during the fourth quarter as we continue to invest capital in manufacturing, retail, technology, and infrastructure.

Matthew McNulty: Sure. We also continued our practice of returning capital to shareholders in the form of cash dividends. This past April, our board increased the regular quarterly cash dividend by 8.3% to 39 cents per share, which was subsequently paid in May and brought our total fiscal 2024 dividend paid to 50.3 million. Also, as just announced in our earnings release, our board declared a special cash dividend of 40 cents per share in addition to a regular quarterly cash dividend, both of which will be paid in August. This recent action marks the fourth consecutive year we have made a special cash dividend.

Matt: We also continued our practice of returning capital to shareholders in the form of cash dividends. This past April , our board increased the regular quarterly cash dividends by 8.3% to 39 cents per share.

Matt: which was subsequently paid in May and brought our total fiscal 2024 dividends paid to $50.3 million.

Matthew J. McNulty: Also, as just announced in our earnings release, our board declared a special cash dividend of $0.40 per share in addition to our regular quarterly cash dividend, both of which will be paid in August. This recent action marks the fourth consecutive year we have paid a special cash dividend.

Matt: Also, as just announced in our earnings release, our board declared a special cash dividend of $0.40 per share in addition to our regular quarterly cash dividend, both of which will be paid in August . This recent action marks the fourth consecutive year we have paid a special cash dividend.

Peru Kethwari: In summary, our vertically integrated business delivered positive fiscal 2024 operating results during a period marked by industry-wide soft demand and challenging headwinds. We achieved these results in generated strong cash flows while protecting our margin gains through discipline investment and solid execution. We are building a fundamentally stronger company, protecting our profitability and enhancing our operational efficiency. As we move into fiscal 2025, we will continue to carefully manage our expense structure while investing in growth initiatives that we believe will further our business. We remain cautiously optimistic as our balance sheet has as well positioned.

Matthew J. McNulty: In summary, our vertically integrated business delivered positive fiscal 2024 operating results during a period marked by industry-wide soft demand and challenging headwinds. We achieved these results and generated strong cash flows while protecting our margin gains through disciplined investments and solid execution. We are building a fundamentally stronger company, protecting our profitability and enhancing our operational efficiency. As we move into fiscal 2025, we will continue to carefully manage our expense structure while investing in growth initiatives that we believe will further our business. We remain cautiously optimistic as our balance sheet has us well-positioned. With that, I will now turn the call back over to Mr. Kethwari.

Matt: In summary, our vertically integrated business delivered positive fiscal 2024 operating results during a period marked by industry-wide soft demand and challenging headwinds.

Matt: We achieved these results and generated strong cash flows while protecting our margin gains through discipline, investment, and solid execution.

Matt: We are building a fundamentally stronger company, protecting our profitability, and enhancing our operational efficiency.

Matt: As we move into fiscal 2025, we will continue to carefully manage our expense structure while investing in growth initiatives that we believe will further our business. We remain cautiously optimistic as our balance sheet has us well positioned. With that, I will now turn the call back over to Mr. Kethwari.

Peru Kethwari: With that, I will now turn the call back over to Mr. Kepler. Thank you, Matt. Matt provided a good overview of our financial results for the fiscal fourth quarter and year ended June 30, 2024.

Mr. Kethwari: All right, thank you, Matt.

Mr. Kethwari: Matt provided a good overview of our financial results for the fiscal fourth quarter and year ended June 30, 2024.

Peru Kethwari: I will now briefly discuss our strategic priorities as follows. First is talent. Continuous development of strong talent is critical to our vertically integrated structure. We are pleased with strong leadership talent in all areas of our enterprise, which includes manufacturing, retail, logistics, marketing, merchandising, technology, and finance. In marketing, we continue to provide innovative marketing both in content as well as the mediums we utilize. While overall marketing expenditure is equal to 2.8% of sales, much lower than the 4% of sales we had 5 years back. The ability to utilize technology in marketing is a game changer. For example, we now reach over 9 million households every two weeks with our 36-page digital magazine.

Paroop Kethwari: All right. Thank you, Matt, for providing a good overview of our financial results for the fiscal year. 4th quarter and year ended June 30, 2024. I will now briefly discuss our strategic priorities as follows. [inaudible] Continued development of strong talent is critical to our vertically integrated structure. We are pleased with strong leadership talent in all areas of our enterprise, which includes manufacturing, retail, logistics, marketing, merchandising, technology, and finance. In marketing, we continue to provide innovative marketing both in content as well as the mediums we utilize. However, overall marketing expenditure is equal to 2.8% of sales, much lower than the 4% of sales we had five years ago.

Mr. Kethwari: I will now briefly discuss our strategic priorities as follows.

Speaker Change: Person's talent, continued development of strong talent is critical to our vertically integrated structure.

Speaker Change: We are pleased with strong leadership talent in all areas of our enterprise, which includes manufacturing, retail, logistics, marketing, merchandising, technology, and finance.

Speaker Change: In marketing, we continue to provide innovative marketing, both in content as well as the mediums we utilize.

Mr. Kethwari: While overall marketing expenditures equal to 2.8% of sales, much lower than the 4% of sales we had five years back.

Paroop Kethwari: The ability to utilize technology in marketing is a game-changer. For example, we now reach over 9 million households every two weeks with our 36-page Digital Magazine. We also continue to mail our printed magazines quarterly, and this past quarter we also mailed our 2024 style.

Mr. Kethwari: The ability to utilize technology in marketing is a game-changer.

Mr. Kethwari: For example, we now reach over 9 million households every two weeks with our 36-page

Operator: We also continue to quarterly mail our printed magazines, and this past quarter also mailed our 2024 Style Folk. The interaction on social media by our interior designers is extremely important. Using technology at all levels is key to our virtual integration, which involves manufacturing, producing efficiently about 75% of our products in our North American facilities. Also, many years back, we have operated over 30 manufacturing times. In the United States and today the number is 10 in North America. Now technology has helped us retain strong talent in all areas of our business and especially in manufacturing, where we have reduced headcount by 28% since 2019. Our national and retail logistics is very important for our vertically integrated company. We are unique as we deliver our products, what we call a white glove service, to our clients in North America at one delivered price. Many years back we operated 10 national distribution centers for our North American retail and now one major facility with a smaller backup provides the service. Our retail logistics has also been greatly made smaller and more efficient. Today we have 22 service centers that deliver great service to our clients throughout North America. Now combining technology with talented associates has been critical, resulting in very professional service in all areas of our business. It has also resulted in lower headcount. For example, 10 years back we had a total headcount of 5,000 associates and now it is 3,400, a reduction of 32%. Now providing superior service is key to our vertical integration. We are an interior design based network and last year we further enhanced by a number of initiatives, including the launch of what we call the interior design destination concept. This initiative provides great projection throughout our enterprise due to the size of our design and health provides superior service by interior design. Having consistent offerings shown in our design centers has helped productivity and service at all levels from retail to manufacturing to logistics. Now since our start over 92 years back, we continue to be a socially responsible enterprise. That is all areas of our enterprise, whether it is from manufacturing to logistics to retail and other areas as well. Now finally we have a very pleased that we were recently named again as America's premier retailer by a study conducted by NINZWIC. With that good news, I would like to open it up for any questions or comments. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. The confirmation to indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start. Thank you.

Mr. Kethwari: Digital Magazine. We also continue to quarterly mail our printed magazines.

Mr. Kethwari: And this past quarter also mailed our 2024 style book.

Paroop Kethwari: The interaction on social media by our interior designers is extremely important. Utilizing technology at all levels is key to our workflow integration, which involves manufacturing, and producing efficiently about 75% of our products in our North American facilities. Also, many years ago, we operated over 30 manufacturing plants in the United States, and today the number is 10 in North America. Now, technology has helped us retain strong talent in all areas of our business, and especially in manufacturing, where we have reduced headcount by 28 percent since 2019.

Mr. Kethwari: The interaction on social media by our interior designers is extremely important.

Speaker Change: Utilizing technology at all levels is key to our vertical integration, which involves manufacturing, producing efficiently about 75% of our products in our North American facilities.

Mr. Kethwari: Also many years back, we've upgraded over 30 manufacturing plants.

Mr. Kethwari: in the United States and today the number is 10 in North America.

Mr. Kethwari: Now, technology has helped us retain strong talent.

Mr. Kethwari: in all areas of our business, and especially in manufacturing, where we have reduced head count by 28% since 2019.

Paroop Kethwari: Our national and retail logistics is very important for our vertically integrated companies. We are unique as we deliver our products, what we call a white glove service, to our clients in North America at one delivered price. Many years ago, we operated 10 national distribution centers for our North American retail business. And now

Mr. Kethwari: Our national and retail logistics is very important for our vertically integrated company.

Mr. Kethwari: We are unique as we deliver our products, what we call a white glove service, to our clients in North America at one delivered price.

Mr. Kethwari: Many years back we operated 10 national distribution centers for our North American retail and now one major facility with a smaller backup provides this service.

Paroop Kethwari: One major facility with a smaller backup provides this service. Our retail logistics has also been greatly made smaller and more efficient. Today we have 22 service centers that deliver great service to apply throughout North Carolina. Now combining technology with talented associates has been critical, resulting in very professional service in all areas of public service. It has also resulted in lower head counts. For example, 10 years ago, we had a total headcount of 5,000 associates, and now it is 3,400, a reduction of 32%.

Mr. Kethwari: Our retail logistics has also been greatly made smaller, more efficient. Today, we have 22 service centers that deliver.

Speaker Change: Great service.

Mr. Kethwari: to our clients throughout North America.

Mr. Kethwari: Now combining technology with talented associates has been critical.

Mr. Kethwari: resulting in very professional service in all areas. It has also resulted in lower headcount.

Mr. Kethwari: For example, 10 years back, we had a total headcount of 5,000 associates, and now it is 3,400, a reduction of 32%.

Paroop Kethwari: Now providing superior service is key to our vertical integration. We are an interior design-based network, and last year we further enhanced it by a number of initiatives, including the launch of what we call the interior design destination.

Mr. Kethwari: Now, providing superior service is key to our vertical integration.

Speaker Change: We are an interior design-based network and last year we further enhanced by a number of initiatives.

Mr. Kethwari: including the launch of what we call the interior design destination concept.

Speaker Change: This initiative provides great projection to other enterprises.

Mr. Kethwari: Reviews show the size of our interior designers and helps provide superior service to our interior designers.

Mr. Kethwari: having consistent offerings shown in our design centers.

Mr. Kethwari: has helped productivity and service at all levels, from retail to manufacturing to logistics.

Paroop Kethwari: This initiative provides great projections to other enterprises, reviews the size of our interior designers, and helps provide superior service to our interior designers. Having consistent offerings shown in our design centers has helped productivity and service at all levels, from retail to manufacturing to logistics. Now, since our start over 92 years ago, we continue to be a socially responsible enterprise. That applies to all areas of our enterprise, whether it is from manufacturing to logistics to retail and other areas as well.

Mr. Kethwari: Now, since I started over 92 years back, we continue to be a socially responsible enterprise.

Mr. Kethwari: That is in all areas of our enterprise, whether it is from manufacturing to logistics to retail and other areas as well.

Mr. Kethwari: Now finally, we are very pleased that we were recently named again.

Mr. Kethwari: and America's premier retailer by a study conducted by Newsweek.

Paroop Kethwari: Now finally, we are very pleased that we were recently named again as America's premier retailer by a study conducted by Newsweek. And with that, good news, I'd like to open it up for any questions or comments. Thank you; we will now

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 2. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Taylor Zicks with KeyBank Capital Markets.

Taylor Zick: Our first question comes from a line of Taylor Zick with Key Bank Capital Markets. Please proceed with your question. Hi there. How are you? I'm doing well. How are you, Frug? Thanks very much.

Speaker Change: Thank you. Our first question comes from the line of Taylor Zicks with Key Bank Capital Markets. Please proceed with your question.

Taylor Zicks: Hi there, how are you? I'm doing well. How are you? Thanks very much.

Paroop Kethwari: I just wanted to start and ask about the cadence of written orders during the quarter. You obviously saw some pretty strong sequential improvement in 3Q and 4Q. So could you talk a little bit more about what led to that improvement? And then, maybe, if you have any comments on how July is trending so far? All right, well... We had, I think, somewhat consistent business throughout the quarter, and obviously, somewhat stronger towards the end, and uh... I think it also reflects, to a great degree, the work of our interior designers.

Taylor Zick: I just wanted to start and ask about the cadence of written orders during the quarter. You obviously saw some pretty strong sequential improvement in 3, 2, and 4 cues, so could you talk a bit more about what led to that improvement? And then maybe, if you have any comments on how July is trending so far?

Taylor Zicks: I just wanted to start and ask about the cadence of written orders during the quarter.

Peru Kethwari: All right. Well, you're talking about Fourth quarter. Now, fourth quarter, we have, I think, somewhat consistent business throughout the quarter. And obviously, somewhat stronger towards the end. And I think it's also reflected to a great degree our, the work of our interior designers. They make a tremendous amount of contacts, and then the social media is tremendously important. So I would say that math is correct with our business, or somewhat consistent throughout the quarter.

Speaker Change: All right. Well, um...

Speaker Change: You're talking about fourth quarter. Now, fourth quarter, we had, I think, somewhat consistent business throughout the quarter and obviously somewhat stronger towards the end.

Speaker Change: and I think it also...

Speaker Change: It reflected to a great degree the work of our interior designers. They make a tremendous amount of contacts.

Paroop Kethwari: They make a tremendous amount of contact. And then social media is tremendously important. So I would say that Matt is correct about our business being somewhat consistent throughout the quarter. Yes, that is correct. It was fairly consistent.

Speaker Change: and then the social media is tremendously important so I would say that Matt is correct with our business was somewhat consistent throughout the quarter. Yes that is correct it was fairly consistent with the little bit of a heightened around the Memorial Day week that in May there was a little bit of elevated written.

Matthew J. McNulty: Yes, that is correct. It was fairly consistent with a little bit of a heightened risk around the Memorial Day week, so in May, there was a little bit of elevated risk.

Matthew McNulty: Yes, that is correct. It was fairly consistent with the little bit of height around the memorial that we, that in May, there was a little bit of elevated written.

Taylor Zick: Gotcha. And there may be just one on the cause side as well. You, you, Frug, and that you've done a great job kind of controlling the costs and structurally reducing the overhead over the past three years.

Taylor Zicks: Gotcha. And then maybe just one on the cost side as well, you, Farouk, and Matt, you've done a great job kind of controlling the costs and structurally reducing the overhead over the past three years. But, you know, I'm curious what kind of levers you have left if demand does stay any more challenging. Obviously, we've seen an improvement, but what else can you do on the cost side to kind of maintain some of these margins?

Speaker Change: Gotcha.

Speaker Change: And then maybe just one on the cost side as well. You, Farouk, and Matt, you've done a great job kind of controlling the cost.

Peru Kethwari: But, you know, curious what kind of libraries you have, have laughed at the man. Does say any more challenge, obviously, and improvement. But what else can you do on the cause side to kind of maintain some of these margins? Well, you know, this is, you know, this question about. Constantly invention, that is, it is something that you've got to get into the system, everybody's mind. So it starts with that mindset. And then technology has played an important role in all areas of our business. As we mentioned, you know, today we have about, you know, our headcount is at two and a half percent versus four percent four or five years back. Tremendous reduction in headcount, but more qualified people.

Speaker Change: and structurally reducing the overhead over the past three years. But, you know, I'm curious what kind of leverage you have left if demand does stay any more challenged. Obviously, you've seen an improvement, but what else can you do on the cost side to kind of maintain some of these margins?

Paroop Kethwari: Uh, well, you know, this is, you know, this question about... Constant reinvention, that is.

Speaker Change: Well, this is, you know, this question about...

Paroop Kethwari: It is something that you've got to do.

Speaker Change: constant reinvention that is.

Paroop Kethwari: It is something that you've got to get into the system, everybody's mind. So it starts with that mindset, and then technology has played an important role in all areas of our lives. As we mentioned, you know, today we have about, um, you know, our headcount is at 2.5% versus 4% four or five years ago. Tremendous increase in headcount, but more qualified people, initiatives of this technology, but technology is only good if you've got good people.

Speaker Change: It is something that you've got to get into the system, everybody's mind.

Speaker Change: So it starts with that mindset and then technology has played an important role in all areas of our business.

Speaker Change: As we mentioned, today we have about, our headcount is at 2.5% versus 4% four or five years back.

Peru Kethwari: So initiatives of this technology, but technology is only good because good people. So we have used technology in our retail network, less people as I mentioned. We have technology in our manufacturing, in our logistics. So technology has been tremendously important, which has also resulted in less people. Our headcount is lower as I mentioned. So I would say the first task of an attitude, then it starts with the fact that people have, you got a stronger. and you got to have technology. I understand.

Speaker Change: initiatives of this technology.

Paroop Kethwari: So we have used technology in our retail network by employing fewer people. As I mentioned, we have technology in our manufacturing, in our logistics. So technology has been tremendously important, which has also resulted in fewer, fewer people. Our headcount is lower, as I mentioned. So I would say if the first starts with attitude, then it starts with the fact that people have to have, you've got to have stronger people, and you've got to have technology.

Speaker Change: But technology is only good if you've got good people. So we have used technology in our

Speaker Change: retail network, less people as I mentioned, we have technology in our manufacturing

Speaker Change: in our logistics. So technology has been tremendously important, which has also resulted in

Speaker Change: less people, our headcount is lower as I mentioned. So I would say if the first starts with attitude then it starts with the fact that people have to have, you've got to have stronger people and you've got to have technology.

Taylor Zicks: I'll squeeze one last in, and I think I'll head back towards written orders. Is there anything else you can share about, you know, the improvement in written orders? Have you seen, you know, the refocus on the home continue in the most recent fourth quarter? Has traffic increased? You know, any thoughts on conversion or financing, anything like that, to kind of help us, you know, handicap this.

Taylor Zick: And if I could squeeze one last minute, I think I'll head back towards the written orders. Is everything else you can share on, you know, the improvement in written orders? Have you seen, you know, the refocus on the home continue in the most recent fourth quarter? His traffic increased, you know, anything itself on conversion or financing and anything like that to kind of help us, you know, handicap this, this pretty good improvement. Yes, I think that, you know, when you take a look at our written orders, we may, we discuss it, our written orders and just when you take a look at it, do we share the written orders?

Speaker Change: Understood and if I could squeeze one last in and I think I'll

Speaker Change: I'll head back towards the written orders.

Speaker Change: Is there anything else you can share on, you know, the improvement in written orders? Have you seen, you know, the refocus on the home continue in the most recent fourth quarter? Has traffic increased?

Speaker Change: Thank you.

Paroop Kethwari: Yes, I think that, you know, when you take a look at our written orders. We discussed it. Our written orders, when you take a look at it, do we share the written orders? Yes, we do. Okay.

Speaker Change: Yes, I think that, you know, when you take a look at our

Speaker Change: [inaudible]

Matthew McNulty: Yes, we do. Okay, they were down. Yeah, they're present. They were down 1.3%.

Paroop Kethwari: They were down. Yeah, the percentage. They were down at 1.3%. That is really incredible that with all the challenges being faced by the country and problems, we held up our retail business, and I think as we go forward, it looks like we're going to be holding it up to the previous year even though there are a lot of challenges again, challenges relating to economic challenges, political challenges, but I believe that we have that opportunity.

Peru Kethwari: That is really incredible that with all the challenges being faced by the country and problems. So we were, we held up our retail business, and I think that we go forward, looks like we're going to be holding it up to the previous year, even though, you know, there are a lot of challenges, again, challenges relating to economic challenges, political challenges, but I believe that we have that opportunity.

Speaker Change: Incredible that with all the challenges being faced by the country and problems

Speaker Change: So we held up our retail business, and I think as we go forward, it looks like we're going to be holding it up.

Speaker Change: to the previous year, even though, you know, there are a lot of challenges, again, challenges relating to economic challenges, political challenges. But I believe that we have that opportunity.

Taylor Zick: Great, thank you.

Taylor Zicks: Great, thank you. All right, thanks very much.

Taylor Zick: Thanks for any months.

Speaker Change: Great, thank you.

Cristina Fernandez: Thank you. Our next question comes from the line of Christina Fernandez with Kelsey Advisory Group. Please proceed with your question. Hello, Christina, how are you? Good, how are you, Jennifer Rook? Hi, Matt. I, yeah, I'm going to follow up on Karen's question about demand.

Speaker Change: Alright, thanks very much.

Operator: Thank you. Our next question comes from the line of Cristina Fernandez with Kelsey Advisory Group. Please proceed with your question.

Speaker Change: Thank you. Our next question comes from the line of Cristina Fernandez with Telsey Advisory Group.

Cristina Fernndez: Hello Cristina, how are you?

Speaker Change: Please proceed with your question.

Cristina Fernndez: Good, how are you, Farouk? Hi, Matt. Yeah, I wanted to follow up on Taylor's question about demand. I guess if you take a step back and think about the industry and particularly furniture demand, I mean, do you think overall it's getting better, like we've reached a point where demand has bottomed, or do you see this more specific to Ethan Allen and some of the, I don't know if it's like, as you said, product or marketing or your designers that allow you to do a lot better than some of the players the past couple of months?

Speaker Change: Hello Cristina, how are you?

Cristina Fernndez: Good, how are you, Farouk? Hi, Matt. I wanted to follow up on Taylor's question about

Cristina Fernandez: I guess if you take a step back and think about the industry and particularly for an assured demand, I mean, do you think overall it's getting better? Like we've reached a point where the man has bought them, or do you see this more specific to Ethan Allen? Some of the, I don't know if it's like as you said, you know, product or marketing or your designers that allow you to do a lot better than some of the players this the past couple of months. Well, you know, it's also a factor that I mean, there are a lot of many great companies in our industry, and I think they do well and what's likely to do well.

Speaker Change: I guess if you take a step back and think about

Cristina Fernndez: The industry and particularly furniture demand. I mean, do you think overall it's getting better like we've reached a point where Demand has bottom or do you see it as more specific to Ethan Allen some of the

Speaker Change: I don't know if it's like as you said you know product or marketing or your designers that allow you to do a lot better than some other players this the past couple of months.

Paroop Kethwari: Well, you know, it's also a factor that there are a lot of great companies in our industry. They do well and, most likely, will do well.

Speaker Change: Well, you know, it's also a factor that, I mean, there are a lot of, a lot of factors.

Speaker Change: Many great companies in our industry and I think...

Peru Kethwari: Our focus has been whereby we have focused on one brand, one program, one level of quality, and you know, close to 70% made in our own workshops right here in North America. All of those things have been affected in terms of for our profitability. We have been; it's amazing. We have less headcount than we have had last year or even four years back. So I think this question of combining great talent in when we look at first let us say North America. North America is where we manufacture the product. We deliver our product at one cost nationally.

Paroop Kethwari: Our focus has been where we have focused on one brand, one program, one level of quality, you know, close to 70% made in our own workshops right here in North America. All of those things have been a factor in terms of our profitability. It's amazing we have less headcount than we did last year or even certainly four years ago. So I think this question of combining great talent in. When we look at, for instance, North America, where we manufacture the products. We deliver our products at one cost nationally.

Speaker Change: They do well and most likely will do well. Our focus has been, whereby we have focused on one brand, one program, one level of quality.

Cristina Fernndez: close to 70 percent.

Cristina Fernndez: made in our own workshops right here in North America. All of those things have been a factor in terms of for our profitability. We have, you know, it's amazing we have less headcount than than we have had.

Cristina Fernndez: last year or even certainly four years back. So I think this question of combining great talent

Cristina Fernndez: When we look at, for instance, let's say North America, North America is where we manufacture the product.

Paroop Kethwari: The other area that has been very important and critical has been our interior design network, which in TA Design Network is very stable, is less because of the fact that, over a period of time, we have fewer people but very qualified people, and talented people. So those elements, that is, vertical integration from making, manufacturing, and delivering our product. Think of this. When I did this 20 years ago, people thought I was crazy, that we would deliver our product at the same price in New York and San Francisco, Miami, and Texas. It can't be done.

Peru Kethwari: Other areas that have been really important and critical has been our interior. is a very stable design network. That interior design network is very stable, is less because of the fact of over a period of time we have less people but very qualified people, talented people. So that those elements of that is vertical integration, making manufacturing, delivering our product.

Cristina Fernndez: We deliver our products at one cost nationally. The other area that has been very important and critical has been our interior design network.

Cristina Fernndez: That interior design network is very stable. It's less because of the fact of, you know, over a period of time we have less people, but very qualified people, talented people.

Cristina Fernndez: So that those

Cristina Fernndez: Elements of that is vertical integration from making, manufacturing...

Peru Kethwari: Think of this. When I did this, 20 years back, people thought I was crazy that we will deliver our product at the same price in New York and in San Francisco. So I think all of those factors are important. I think that our interior designer network is less, but very talented and qualified. Combining interior designers with technology is, as I've said earlier, the game changer. So those things are different. We have one level of policy. We produce a program, some products. And I think that we have a lot of things to do with the technology.

Cristina Fernndez: Delivering our product. Think of this, when I did this 20 years back, people thought I was crazy. That we will deliver our product at the same price in New York, and in San Francisco, Miami, and Texas. It can't be done. Well, it can be done, but you have to have a vertical integration to make it happen.

Paroop Kethwari: Well, it can be done, but you have to have vertical integration. So I think all of those factors are important. I think that our interior designer network is smaller, but very talented and qualified. Combining interior designers with technology is, as I've said earlier, it's a game changer. And those things that differentiate us.

Speaker Change: So I think all of those factors are important. I think that our interior designer network is less, but very talented and qualified. Combining interior designers with technology is, as I've said earlier, is a game changer.

Paroop Kethwari: We have one level of quality; we produce the programs, the products. And consumers are tougher; they're much more careful about who they buy from. The last two, three years ago, that was not the case. So I would say those companies that have some of the ingredients I'm talking about will most likely do well.

Speaker Change: So those things differentiate us. We have one level of quality, we produce the programs, the products, and the consumer is tougher. They're much more careful who they buy from.

Peru Kethwari: So I think all of those factors are important. I think that our interior designer network is less, but very talented and qualified. Combining interior designers with technology is, as I've said earlier, the game changer. So those things are different. We have one level of policy. We produce a program, some products. And consumerist stuff, they're much more careful who they're buying from. The last two years back, that was not the case. So I would say those companies that have some of the ingredients I'm talking about most likely will do well.

Speaker Change: You know, the last two, three years back, that was not the case. So I would say those companies that have some of the ingredients I'm talking about most likely will do well.

Cristina Fernandez: Thanks. And my second question, I wanted to see if you could expand on your strategic plans for fiscal year 25, particularly as it relates to that.

Cristina Fernndez: Thanks. And my second question, I wanted to see if you could expand on your strategic plan for fiscal year 25, particularly as it relates to your showroom. Do you plan to expand the number of showrooms? And also, in marketing, should we think about, you know, sort of like 3% of sales being a good guidepost for the upcoming fiscal year?

Speaker Change: Thanks. And my second question, I wanted to see if you could expand on your...

Speaker Change: Strategic Plans for Fiscal Year 25

Peru Kethwari: So your showroom, do you plan to expand the number of showrooms and also in marketing, should we think about not sort of like 3% of sales being a good guide post for the upcoming fiscal year. Thanks. In terms of our retail design centers, we have remained pretty consistent. We have today, we have 142 design centers that we operate and we own. Pre-core would be 144. So we have overall, when you take a look at it, we have design centers; we have about 40 that are operated by our, 30 that are operated by our independent retailers with an average association of 40 years with us, families.

Speaker Change: Particularly as it relates to your showroom, do you plan to expand the number of showrooms? And also, in marketing, should we think about, you know, sort of like 3% of sales being a good guidepost for the upcoming fiscal year? Thanks.

Paroop Kethwari: In terms of our retail design centers, you know, it has remained pretty consistent. We have today, you know, 142 design centers that we operate and we own. Pre-COVID, we were 144.

Speaker Change: In terms of our retail design centers, you know, it has remained...

Speaker Change: Pretty consistent, we have today.

Speaker Change: You know, we have 142 design centers that we operate and we own. Pre-COVID, we were 144. So, we have overall, when you take a look at it, we have design centers, you know.

Paroop Kethwari: So overall, when you take a look at it, we have design centers, you know. We have about 40 that are operated by our, 30 that are operated by our independent retailers with an average association of 40 years with us, and families. So I think that we are very careful about where we are going to bring in. So this last year, I think we only brought in two or three new design centers. I think going forward, it will be most likely three to five, but not a large number.

Speaker Change: We have about 30 that are operated by our independent retailers with an average association of 40 years with us, families. So I think that we are very careful.

Peru Kethwari: So I think that we're very careful in where we going to bring in. So this last year, I think we only brought in two or three new design centers. I think going forward will be most likely three to five, but not on large numbers. Our focus is to make sure we improve what we have. And also in this last year, as you know, we reduced the size of our design centers. We reduced some of our design centers or 20,000 square feet in the bomb. I said, no, the max size is 12,500, and we are the newer ones we're getting is anywhere from six to eight or 9,000 square feet.

Speaker Change: Where are we going to bring it?

Speaker Change: So this last year, I think we only brought in two or three new design centers. I think going forward, it will be most likely three to five, but not a large number. Our focus...

Paroop Kethwari: Our focus is to make sure we improve what we have. But also this last year, as you know, we reduced the size of our design centers. We reduced some of our design centers to 20,000 square feet and above. I said, no, the max size is 12,500, and the newer ones we're getting are anywhere from 6,000 to 8,000 or 9,000 square feet. So I think that our focus really is on... And then the other thing we did was, you might say we call them the interior design concept; we redesigned all our design centers with one great look. Five years ago, people in New Jersey thought they were very different from Long Island. Forget California or Florida.

Speaker Change: is to make sure we improve what we have. And also in this last year, as you know, we reduced the size of our design centers.

Speaker Change: May I introduce...

Speaker Change: Some of our design centers were 20,000 square feet and above. I said, no, the max size is 12,500 and the newer ones we're getting is anywhere from 6 to 8 or 9,000 square feet.

Peru Kethwari: So I think that our focus really is having, and then the other thing we did was we read, you might say, we call them the interior design concept. We redesigned all our design centers with one great look. Now, you know, if any five years back, people in New Jersey thought they were very different than in Long Island; forget California, Florida. All our design centers today, especially the company-operated one, have one image. Now, other thing that we are doing is now we've been developing a lot of also new products. Again, we have to be cautious that we only bring in products because we don't sell it to anybody else.

Speaker Change: So I think that our focus really is having, and then the other thing we did was, we re, you might say, we call them the interior design concept, we redesigned all our design centers with one great look.

Speaker Change: You know, five years back, people in New Jersey thought they were very different than in Long Island. Forget California or, you know, Florida. All our design centers today, especially the company-operated one, have one image. Now,

Paroop Kethwari: All our design centers today, especially the company-operated one, have one image. Another thing that we are doing is now developing a lot of new products. Again, we have to be cautious that we only bring in products because we don't sell them to anybody else. It's all on our own network.

Speaker Change: The other thing that we are doing now is...

Speaker Change: We have been developing a lot of also new products. Again, we have to be cautious that we only bring in products because we don't sell it to anybody else. It's all to our own network. But we have been adding new products.

Peru Kethwari: So it's our own network, but we have been adding new product. And as we have the ability to make the product with it, it is coming into our design centers.

Paroop Kethwari: But we have been adding new products, and as we have the ability to make the products, they are coming into our design centers. And by next April, around that time, we will have another major introduction of new products, which we are developing right now.

Speaker Change: And as we have the ability to make the product, it is coming into our design centers. And by next April , around that time, we will have another major introduction of new products which we are developing right now.

Peru Kethwari: And by next April, around that time, we will have another major introduction of new products, which we are developing right. Now.

Peru Kethwari: And last question, can you talk about the State Department contract? I guess, how did that progress this quarter? Are you seeing any more demand? You're expected to be a little bit of a pause here with potentially a change in administration? Yeah, that's a good question. You know, but with this conflict in the Middle East, it did have an impact where the State Department focus was on a lot of other factors and security. But we've seen in the last two or three months, they're starting to focus back on the home. So we're starting to get good orders now.

Cristina Fernndez: And last question, can you talk about the state department contract? Did, I guess, how did that progress this quarter? Are you seeing any more demand? Do you expect there to be a little bit of a pause here with potentially a change in administration? That's a good question, you know.

Speaker Change: And last question, can you talk about the...

Speaker Change: The State Department contract, I guess, how did that progress this quarter? Are you seeing any more demand? Do you expect it to be a little bit of a pause here with potentially a change in administration?

Paroop Kethwari: Yeah, that's a good question, you know, about this conflict in the Middle East. It did have an impact where the State Department's focus was on a lot of other things, security.

Speaker Change: Yeah, that's a good question, you know

Speaker Change: about this conflict in the Middle East.

Speaker Change: It did have an impact where the State Department focus was on a lot of other factors, security.

Paroop Kethwari: What we have seen in the last two or three months is that they're starting to focus back on the home. So we're starting to get good orders now. So it looks like we will have good business with the State Department this fiscal year. Thank you and good luck, and Cristina, thanks very much.

Speaker Change: What we have seen in the last two or three months, they're starting to focus back on the home. So we're starting to get good orders now. So it looks like that we will have good business with the State Department this fiscal year.

Peru Kethwari: So we just look like that we will have a good business with the State Department.

Speaker Change: Thank you and good luck.

Cristina: Cristina, thanks very much.

Operator: Our next question comes from a line from Bud Bugatch with Water Tower Research. Please proceed with your question.

Budd Bugatch: Our next question comes from the line of Budd Bugatch with Water Tower Research. Please proceed with your question.

Speaker Change: Thank you. Our next question comes from the line of Bud Bugatch with Water Tower Research. Please proceed with your question.

Budd Bugatch: Hello Bud, how are you?

Budd Bugatch: Hello, Budd, how are you? I'm well. So Luke, how are you? Thank you for taking my question. Well, look at it. I've been only doing it for 30 years. 35 years now, your questions. A longer time than that for T.S. That's correct.

Budd Bugatch: I'm well. Saluk, how are you? And thank you for taking the time to answer my question.

Speaker Change: Hello Bud, how are you?

Budd Bugatch: I'm well, Saluk, how are you? Thank you for taking my question.

Paroop Kethwari: Well, look at it, I've only been doing it for 30 years. Thirty-five years now, your question... Bye-bye.

Speaker Change: Well, look at it, I've been only doing it for 30 years.

Budd Bugatch: a longer time than that. Yes, that's correct. Let's talk a little bit about the dichotomy of sales between wholesale and retail. The retail sales are still down about 20%. How do they how do they parse out between domestic and international?

Budd Bugatch: Thirty-five years now, your questions.

Saluk: A longer time than that for us. Yes, that's correct. Let's talk a little bit about the dichotomy of sales between wholesale and retail, the retail sales.

Peru Kethwari: Let's talk a little bit about the dichotomy of sales between wholesale and retail. The retail sales are still down about 20%. How do they parse up between domestic and international? Matt is here, but I would say that the international was much more impacted during this COVID period the last year. Then good news is we're starting to get back. In fact, many of our international design centers have also been repositioned with this interior design concept, and they're having ribbon cuttings all over in many parts of the world. But I think that our written business was down.

Speaker Change: still down about 20%. How do they, how do they parse out between domestic and international?

Paroop Kethwari: Matt is here, but I would say that the international business was much more impacted during the COVID period last year. The good news is they're starting to get back. In fact, many of our international design centers have also been repositioned with this interior design concept, and they're having ribbon cuttings in many parts of the world.

Budd Bugatch: Matt is here, but I would say that the international was much more impacted.

Speaker Change: During this COVID period, the last year, the good news is they're starting to get back. In fact, many of our international design centers have also been repositioned with this interior design concept, and they're having ribbon cuttings in many parts of the world.

Budd Bugatch: So, but I think that our written business was down, well if you take a look at it, this last quarter was down only 1.3% in the retail division.

Matthew McNulty: Well, if you take a look at it, the last quarter was down only 1.3% in the retail division, while our international most likely were down close to cutting. What is it in here? I'm looking at it 30%. So International is coming back. It was impacted in this COVID period, to a grade degree, all kinds of issues. What the good news is, they're coming back about.

Paroop Kethwari: But I think that our written business was down, well, if you take a look at it, this last quarter was down only 1.3% in the retail division. Our international, most likely, we're down close to 30, what is it here? I'm looking at it, 30 percent, right? So international business is coming back. It was impacted by this COVID period to a great degree with all kinds of issues. But the good news is they're coming back.

Budd Bugatch: Our international, most likely, we're down close to 30, what is it in here, I'm looking at it, 30%, right? So international is coming back. It was impacted in this COVID period.

Speaker Change: [inaudible]

Matthew J. McNulty: Yeah, and Bud, just to add, this is Matt here. You are right; wholesale sales are down 20% while retail is down 7%. A lot of the drive for that, or the difference, is in our contract business and international business. As Mr. Cafuari alluded to, in our fiscal second and third quarters, the State Department was slow, and conflict in the Middle East and other factors that delayed the purchases, so the subsequent delivery of those orders didn't happen as fast as the fourth quarter for us.

Matthew McNulty: Yeah, but just to add, this is Matt here. You are right that wholesale sales are down 20% while retail is down 7%. A lot of the strides for that or the difference is on our contract business and international business. As Mr. Keforio alluded to, our fiscal second and third quarters, the State Department was slow in conflict in the Middle East and other factors, mentally depurchases. So the subsequent delivery of those orders didn't happen as fast as the fourth quarter for us. So that definitely was a lot weaker than the retail division. Now we're seeing some improvement in there as we talk about on the State Department business, so we should see those two numbers or metrics, retail sales and wholesale sales, more aligned.

Mr. Cafuari: The difference is on our contract business and international business. As Mr. Cafuari alluded to, our fiscal second and third quarters, the State Department was slow. Conflict in the Middle East and other factors that delayed the purchases, so the subsequent delivery of those orders.

Speaker Change: didn't happen as fast as, you know, the fourth quarter for us. So that definitely was a lot weaker than the retail division.

Matthew J. McNulty: That definitely was a lot weaker than the retail division sales side of things now. We're seeing some improvement in there, as we talked about in the State Department business, so we should see those two numbers or metrics, retail sales and wholesale sales, more aligned. Having said all of that, really, wholesale orders are down 9% considering all those problems that we are talking about. So, it's not too bad, but I think they'll come back.

Speaker Change: on the wholesale side of things now. We're seeing some improvement in there, as we talked about on the State Department business. So we should see those two numbers or metrics, retail sales and wholesale sales, more aligned. But having said all of that, really, this wholesale orders are down 9 percent.

Matthew McNulty: But having said all of that, really this wholesale orders are down 9%. Considering all those problems that we are talking about, it's not too bad, but I think they'll come back.

Speaker Change: considering all those problems that we are talking about so it's not not too bad but I think they'll come back.

Budd Bugatch: Well, I'm concerned about wholesale as it impacts the partner stores, and you're right. I mean, the international side of it was, I think, weak over the first couple of quarters of the year, and most of that was Asia. Is that the weakness we're seeing? in the international

Budd Bugatch: I'm concerned about the wholesale as it impacts the partner stores, and you're right. I mean, the international side of it was, I think, weak over the first couple of orders of the year, and most of that's Asia. Is that the weakness we're seeing in the international? Yeah, that's right, yeah. Okay, and you gave us the wholesale backlog, I think I'm 53 and a half million.

Speaker Change: Well, I'm concerned about the wholesale as it impacts

Speaker Change: the partner stores and you're right I mean the international side of it was I think weak over the first couple of quarters of the year and most of that's Asia is that the weakness we're seeing?

Matthew J. McNulty: Yeah, that's right. Yeah.

Speaker Change: in The International.

Budd Bugatch: And you gave us the wholesale backlog of, I think, $53 and 1 12 million. Did I miss you giving us the retail backlog at the quarter end?

Speaker Change: Yeah, that's right, yeah.

Speaker Change: Okay, and you gave us the wholesale backlog of I think of 53 and a half million. Did I miss you're giving us the retail backlog at the quarter end?

Matthew McNulty: Did I miss your giving us the retail backlog at the quarter end? We do not publicly disclose the retail backlog, but typically it's a little under two times the customer deposits on our balance sheet. I think that's what you told me last quarter as well. I was giving you the opportunity to see if you wanted to make a change to it. But if I need to give you more information, then I'm not sure I do agree with that.

Matthew J. McNulty: We do not publicly disclose the retail backlog, but typically, it's a little under two times the customer deposits on our balance sheet.

Speaker Change: We do not publicly dispose the retail backlog, but typically it's a little under two times the customer deposits on our balance sheet.

Budd Bugatch: I think that's what you told me last quarter as well. I was giving you the opportunity to see if you wanted to make a change to it.

Speaker Change: I think that's what you told me last quarter as well. I was giving you the opportunity to see if you wanted to make a make a change to this. But he has given you more information than anybody else.

Matthew J. McNulty: I'm glad he has given you more information than we give to anybody else, but anyway, go ahead.

Budd Bugatch: I'm not so sure I agree with that, Farouk. I agree with you that you are an incredible businessman and you run the business with a great deal of discipline, but the amount of information, that's a topic of another conversation. The $34 million or so, I think, of investments you included that in the cash and investments side of the business. Can you talk a little bit about what that investment is or what those investments are? Bradley Thomas, Ethan Allen, Ethan Allen, Matthew McNulty, Zachary Donnelly, Ethan Allen

Budd Bugatch: I agree with you that you are an incredible businessman and you run the business with a great deal of discipline, but the amount of information. That's a topic of another conversation. The 34 million dollars or so I think of the investments. You included that into the cash and investments side of the business.

Speaker Change: I'm not so sure I do agree with that, Farouk, I agree with you that you are an incredible businessman and you run the business with a great deal of discipline, but the amount of information, that's a topic of another conversation.

Speaker Change: Um...

Speaker Change: The $34 million or so, I think, of investments, you included that in the cash and investments side of the business. Can you talk a little bit about what that investment is or what those investments are?

Matthew McNulty: Can you talk a little bit about what that investment is or what those investments are? It's all because of your strategy. Yeah, you know all of our, but we have close to 200 million dollars in cash. Particularly, any extra cash we put into your strategies. Okay.

Paroop Kethwari: You're talking about the US Treasury? Yeah, you know all of our busts. We have close to $200 million in cash. Frankly, any extra cash we put in the US Treasury...

Farouk: You're talking about the U.S. Treasuries? Yeah, you know all of our busts. We have close to $200 million in cash. Frankly, any extra cash we put in the U.S. Treasuries.

Budd Bugatch: That was good luck on the upcoming year and good luck to society. Upcoming year as well. All right, so I'm always good to hear from you by.

Budd Bugatch: Well, good luck for the upcoming year and good luck to society on the upcoming year as well. All right, Brad. Always good to hear from you, bud.

Farouk: Okay.

Speaker Change: Well good luck on the upcoming year and good luck to society on the upcoming year as well.

Budd Bugatch: It's always good to hear from you, Bud.

Matthew McNulty: Thank you. There are no further questions at this time.

Operator: Thank you. There are no further questions at this time. I'd like to turn the floor back over to Mr. Swarthy for closing comments.

Farouk: Thank you. There are no further questions at this time. I'd like to turn the floor back over to Mr. Swarthy for closing comments.

Peru Kethwari: I'd like to turn the floor back over to Mr. Carl Swarthee for closing comments. Alright man, thanks very much. Well, good to have you all on this call. You know we've gone through a lot of challenges, but I've always felt the challenges create opportunities. We are positioned well. We have a strong core product programs, and in the next year we're going to now introduce more new products because we held that back. We have regional network is strengthened. We have repositioned all our design centers. We have a strong manufacturing base both in North America. And then, as I said earlier, technology has created tremendously important growth.

Paroop Kethwari: Thanks very much. Well, it's good to have you all on this call. You know, we've gone through a lot of challenges, but I've always felt that challenges create opportunities. We are positioned well. We have a strong product program, and in the next year, we're going to introduce more new products because we held that back. We have repositioned all our design systems.

Mr. Swarthy: Thanks very much. Well, good to have you all on this call. You know, we've gone through a lot of challenges, but I've always felt that challenges create opportunities.

Speaker Change: We are positioned well. We have a strong product program and in the next year we are going to now introduce more new products because we held that back. We have, retail network is strengthened. We have repositioned all our design centers.

Paroop Kethwari: We have a strong manufacturing base, both in North America and Lovid. And then, as I said earlier, technology has played a tremendously important role. Combining great talent with technology is what it's all about. And I think as we move forward, continuing with this, these initiatives of strong product programs, strong talent, and providing great service. And then finally, be a socially responsible company. You know, we have been recognized by many organizations. And I'm happy that, as I said in Newsweek for the second time, they named us America's number one retailer for furniture. Thank you very much, and if you have any questions, please let us know.

Farouk: We have a strong manufacturing base, both in North America.

Farouk: And then, as I said earlier, technology has played a tremendously important role. Combining great talent with technology is what it's all about. And I think as we move forward, continuing with these initiatives of strong product programs.

Matthew McNulty: Combining great talent with technology is what it's all about. And I think as we move forward, continuing with these initiatives of strong product programs, strong talent, providing great service, and then finally be a socially responsible company. You know, we have been recognized by many organizations, and I'm happy that, as I said, in the Newsweek of the second time named out of the America number one retailer, Purniture retailer. Thanks very much, and any questions, please let us know.

Farouk: strong talent, providing great service.

Farouk: and then finally be a socially responsible company. You know, we have been recognized by many organizations and I'm happy that, as I said, in the Newsweek for the second time named us America's number one retailer.

Farouk: furniture retailer. Thanks very much and any questions please let us know.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Operator: This concludes today's telecom.

Operator: [inaudible]

Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Farouk: [inaudible]