Arhaus Reports Third Quarter 2024 Results
Arhaus (NASDAQ: ARHS) reported Q3 2024 results with net revenue of $319 million, down from $326 million in Q3 2023, showing comparable growth of -9.2%. Net income was $10 million, compared to $20 million in Q3 2023, while Adjusted EBITDA reached $23 million. The company updated its 2024 outlook, projecting net revenue between $1.23-1.25 billion and comparable growth of -12% to -11%. Despite challenging market conditions, Arhaus maintains a strong debt-free balance sheet with $178 million in cash and continues expanding with 10 new showrooms opened in 2024.
Arhaus (NASDAQ: ARHS) ha riportato i risultati per il terzo trimestre del 2024 con un fatturato netto di 319 milioni di dollari, in calo rispetto ai 326 milioni di dollari del terzo trimestre del 2023, mostrando una crescita comparabile di -9,2%. L'utile netto è stato di 10 milioni di dollari, rispetto ai 20 milioni di dollari del terzo trimestre del 2023, mentre l'EBITDA rettificato ha raggiunto i 23 milioni di dollari. L'azienda ha aggiornato le sue previsioni per il 2024, prevedendo un fatturato netto compreso tra 1,23 e 1,25 miliardi di dollari e una crescita comparabile dal -12% all -11%. Nonostante le difficoltà del mercato, Arhaus mantiene un bilancio solido e privo di debiti con 178 milioni di dollari in contante e continua ad espandersi con 10 nuovi showroom aperti nel 2024.
Arhaus (NASDAQ: ARHS) reportó los resultados del tercer trimestre de 2024 con un ingreso neto de 319 millones de dólares, por debajo de los 326 millones de dólares del tercer trimestre de 2023, mostrando un crecimiento comparable de -9,2%. La utilidad neta fue de 10 millones de dólares, en comparación con los 20 millones de dólares en el tercer trimestre de 2023, mientras que el EBITDA ajustado alcanzó los 23 millones de dólares. La compañía actualizó su pronóstico para 2024, proyectando ingresos netos entre 1.23 y 1.25 mil millones de dólares y un crecimiento comparable de -12% a -11%. A pesar de las difíciles condiciones del mercado, Arhaus mantiene un sólido balance libre de deuda con 178 millones de dólares en efectivo y continúa expandiéndose con 10 nuevos showrooms abiertos en 2024.
Arhaus (NASDAQ: ARHS)는 2024년 3분기 실적을 보고하며 순매출이 3억 1900만 달러로, 2023년 3분기 3억 2600만 달러에서 감소하여 -9.2%의 비교 가능한 성장을 보였습니다. 순이익은 1000만 달러로, 2023년 3분기 2000만 달러와 비교되며, 조정된 EBITDA는 2300만 달러에 도달했습니다. 회사는 2024년 전망을 업데이트하며 순매출이 12억 3000만 ~ 12억 5000만 달러 사이가 될 것으로 예상하고, 비교 가능한 성장률은 -12%에서 -11%로 전망했습니다. 어려운 시장 환경에도 불구하고 Arhaus는 1억 7800만 달러의 현금을 보유한 채 무부채 상태를 유지하며, 2024년에는 10개의 새로운 쇼룸을 개설하며 지속적으로 확장하고 있습니다.
Arhaus (NASDAQ: ARHS) a publié ses résultats pour le troisième trimestre de 2024, avec un revenu net de 319 millions de dollars, en baisse par rapport à 326 millions de dollars au troisième trimestre 2023, montrant une croissance comparable de -9,2%. Le bénéfice net a été de 10 millions de dollars, contre 20 millions de dollars au troisième trimestre 2023, tandis que l'EBITDA ajusté a atteint 23 millions de dollars. L'entreprise a mis à jour ses prévisions pour 2024, projetant un chiffre d'affaires net entre 1,23 et 1,25 milliard de dollars et une croissance comparable de -12% à -11%. Malgré des conditions de marché difficiles, Arhaus maintient un bilan solide sans dettes avec 178 millions de dollars en liquidités et continue de s'agrandir avec 10 nouvelles salles d'exposition ouvertes en 2024.
Arhaus (NASDAQ: ARHS) hat die Ergebnisse für das dritte Quartal 2024 veröffentlicht mit einem Nettoumsatz von 319 Millionen Dollar, was einen Rückgang von 326 Millionen Dollar im dritten Quartal 2023 darstellt, was ein vergleichbares Wachstum von -9,2% zeigt. Der Nettogewinn betrug 10 Millionen Dollar, verglichen mit 20 Millionen Dollar im dritten Quartal 2023, während das bereinigte EBITDA 23 Millionen Dollar erreichte. Das Unternehmen hat seine Prognose für 2024 aktualisiert und erwartet einen Nettoumsatz zwischen 1,23 und 1,25 Milliarden Dollar und ein vergleichbares Wachstum von -12% bis -11%. Trotz der schwierigen Marktsituation hält Arhaus eine starke bilanzielle Situation ohne Schulden mit 178 Millionen Dollar in bar und setzt die Expansion mit 10 neuen Showrooms, die 2024 eröffnet wurden, fort.
- Debt-free balance sheet with $178 million cash on hand
- Continued showroom expansion with 10 new locations in 2024
- Strong client deposits increase of $50 million to $224 million
- Operating cash flow of $115 million for the first nine months
- Net revenue declined to $319 million from $326 million YoY
- Net income dropped 50% to $10 million from $20 million YoY
- Comparable growth declined 9.2% in Q3 2024
- Reduced full-year guidance for revenue and EBITDA
- Higher selling, general and administrative expenses at $112 million vs $107 million YoY
Insights
The Q3 results reveal significant headwinds for Arhaus, with
However, the company maintains a strong balance sheet with
BOSTON HEIGHTS, Ohio, Nov. 07, 2024 (GLOBE NEWSWIRE) -- Arhaus, Inc. (“Arhaus” or the “Company”) (NASDAQ: ARHS), a rapidly growing lifestyle brand and omni-channel retailer of premium artisan-crafted home furnishings, today reported third quarter 2024 results for the period ended September 30, 2024. Highlights include:
Third Quarter 2024
- Net revenue of
$319 million - Comparable growth(1) of (9.2)%
- Net and comprehensive income of
$10 million - Adjusted EBITDA of
$23 million
Year-to-Date 2024, through September 30
- Net revenue of
$924 million - Comparable growth of (8.6)%
- Net and comprehensive income of
$47 million - Adjusted EBITDA of
$92 million
2024 Outlook (Updated)
- Net revenue of
$1.23 billion to$1.25 billion - Comparable growth of (12.0)% to (11.0)%
- Net and comprehensive income of
$55 million to$60 million - Adjusted EBITDA(5) of
$115 million to$125 million
John Reed, Co-Founder and Chief Executive Officer, said, “Our third-quarter results demonstrate our team’s commitment to operational excellence in a challenging environment. We remain focused on our long-term growth strategy grounded in our premium, livable luxury offerings and exceptional client experience. With ten new showrooms opened already this year and an eleventh opening tomorrow in Corte Madera, California, we remain committed to expanding our presence in key markets.
“While demand trends improved throughout the third quarter, we’re adjusting our full-year sales and earnings outlook to reflect a continued tempered consumer environment, which we believe is temporary given our innovative product offerings and compelling marketing campaigns. Despite near term headwinds, our strong, debt-free balance sheet enables us to continue prudent investment in strategic priorities.
“Our long-term success is driven by our teams’ dedication to delivering the best products and an inspiring showroom experience. I want to thank each of them for their ongoing commitment, which highlights the resilience of our growth strategy and our commitment to creating value for our shareholders.”
Results and Highlights
Net revenue in the third quarter was
Comparable growth(1) was (9.2)% and demand comparable growth(2) was (11.3)% in the third quarter of 2024.
Gross margin was
Selling, general and administrative expenses were
Net and comprehensive income was
Adjusted EBITDA was
Balance Sheet and Liquidity
As of September 30, 2024, the Company reported the following:
Cash and cash equivalents totaled
For the nine months ended September 30, 2024, net cash provided by operating activities was
For the nine months ended September 30, 2024, net cash used in investing activities was approximately
For the nine months ended September 30, 2024, net cash used in financing activities was
The Company ended the third quarter with 101 total Showrooms across 29 states.
2024 Outlook
The table below presents our updated expectations for selected full year 2024 financial operating results and sets out our expectations for selected fourth quarter 2024 operating results.
Full Year | Current Guidance | Previous Guidance | Q4 Guidance |
Net revenue | |||
Comparable growth(1) | (12)% to (11)% | (11)% to (8)% | (22)% to (16)% |
Net income (4) | |||
Adjusted EBITDA(5) | |||
Other estimates: | |||
Company-funded capital expenditures(3) | ~ | ||
Depreciation & amortization | ~ | ||
Fully diluted shares | Unchanged | ~ | |
Effective tax rate | Unchanged | ~ |
(1) Comparable growth is a key performance indicator and is defined as the year-over-year percentage change of the dollar value of orders delivered (based on purchase price), net of the dollar value of returns (based on amount credited to client), from our comparable Showrooms and eCommerce, including through our catalogs and other mailings.
(2) Demand comparable growth is a key performance indicator and is defined as the year-over-year percentage change of demand from our comparable Showrooms and eCommerce, including through our catalogs and other mailings.
(3) Company-funded capital expenditures is defined as total net cash used in investing activities less landlord contributions.
(4) U.S. GAAP net income (loss).
(5) We have not reconciled guidance for Adjusted EBITDA to the corresponding GAAP financial measure because we do not provide guidance for the various reconciling items. These items include, but are not limited to, future share-based compensation expense, income taxes, interest income, and transaction costs. We are unable to provide guidance for these reconciling items because we cannot determine their probable significance, as certain items are outside of our control and cannot be reasonably predicted due to the fact that these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measure is not available without unreasonable effort.
Conference Call
You are invited to listen to Arhaus’ conference call to discuss the third quarter 2024 financial results scheduled for today, November 7, 2024, at 8:30 a.m. Eastern Time. The call will be available over the Internet on our website (http://ir.arhaus.com) or by dialing (877) 407-3982 within the U.S., or 1 (201) 493-6780, outside the U.S. The conference ID is: 13741050.
A recorded replay of the conference call will be available within approximately three hours of the conclusion of the call and can be accessed online at http://ir.arhaus.com for approximately twelve months.
About Arhaus
Founded in 1986, Arhaus is a rapidly growing lifestyle brand and omni-channel retailer of premium home furnishings. Through a differentiated proprietary model that directly designs and sources products from leading manufacturers and artisans around the world, Arhaus offers an exclusive assortment of heirloom quality products that are sustainably sourced, lovingly made, and built to last. With more than 100 showrooms and design center locations across the United States, a team of interior designers providing complimentary in-home design services, and robust online and eCommerce capabilities, Arhaus is known for innovative design, responsible sourcing, and client-first service. For more information, please visit www.arhaus.com.
Investor Contact:
Tara Louise Atwood
Vice President, Investor Relations
(440) 439-7700
invest@arhaus.com
Non-GAAP Financial Measures
In addition to the results provided in accordance with U.S. GAAP, this press release and related tables include adjusted EBITDA and adjusted EBITDA as a percentage of net revenue which present operating results on an adjusted basis.
We use non-GAAP measures to help assess the performance of our business, identify trends affecting our business, formulate business plans and make strategic decisions. In addition to our results determined in accordance with U.S. GAAP, we believe that providing these non-GAAP financial measures is useful to our investors as they present an informative supplemental view of our results from period to period by removing the effect of non-recurring items. However, our inclusion of these adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items or that the items for which we have made adjustments are unusual or infrequent or will not recur. These non-U.S. GAAP measures are not a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. These measures should only be read together with the corresponding U.S. GAAP measures. Please refer to the reconciliation of adjusted EBITDA to net income, the most directly comparable financial measure prepared in accordance with U.S. GAAP, below.
Forward-Looking Statements
Certain statements contained herein, including statements under the headings “2024 Outlook (Updated)” and “2024 Outlook”, are not based on historical fact and are “forward-looking statements” within the meaning of applicable securities laws.
Forward-looking statements can generally be identified by the use of forward-looking terminology, including, but not limited to, “may,” “could,” “seek,” “guidance,” “predict,” “potential,” “likely,” “believe,” “will,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “forecast,” or variations of these terms and similar expressions, or the negative of these terms or similar expressions. Past performance is not a guarantee of future results or returns and no representation or warranty is made regarding future performance. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond our control that could cause our actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: our ability to manage and maintain the growth rate of our business; our ability to obtain quality merchandise in sufficient quantities; disruption in our receiving and distribution system, including delays in the integration of our distribution centers and the possibility that we may not realize the anticipated benefits of multiple distribution centers; the possibility of cyberattacks and our ability to maintain adequate cybersecurity systems and procedures; loss, corruption and misappropriation of data and information relating to clients and employees; changes in and compliance with applicable data privacy rules and regulations; risks as a result of constraints in our supply chain; a failure of our vendors to meet our quality standards; declines in general economic conditions that affect consumer confidence and consumer spending that could adversely affect our revenue; our ability to anticipate changes in consumer preferences; risks related to maintaining and increasing showroom traffic and sales; our ability to compete in our market; our ability to adequately protect our intellectual property; compliance with applicable governmental regulations; effectively managing our eCommerce business and digital marketing efforts; our reliance on third-party transportation carriers and risks associated with increased freight and transportation costs; and compliance with SEC rules and regulations as a public reporting company. These factors should not be construed as exhaustive. Further information on potential factors that could affect the financial results of the Company and its forward-looking statements is included in the Company’s filings with the Securities and Exchange Commission. The Company assumes no obligation to update any forward-looking statement, except as may be required by law. These forward-looking statements speak only as of the date of this release. All forward-looking statements are qualified in their entirety by this cautionary statement.
Arhaus, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited, amounts in thousands, except share and per share data) | |||||
September 30, 2024 | December 31, 2023 | ||||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | $ | 177,722 | $ | 223,098 | |
Restricted cash | 3,216 | 3,207 | |||
Accounts receivable, net | 1,196 | 2,394 | |||
Merchandise inventory, net | 294,596 | 254,292 | |||
Prepaid and other current assets | 32,530 | 26,304 | |||
Total current assets | 509,260 | 509,295 | |||
Operating right-of-use assets | 348,612 | 302,157 | |||
Financing right-of-use assets | 37,129 | 38,835 | |||
Property, furniture and equipment, net | 285,292 | 220,248 | |||
Deferred tax assets | 15,358 | 19,127 | |||
Goodwill | 10,961 | 10,961 | |||
Other noncurrent assets | 2,699 | 4,525 | |||
Total assets | $ | 1,209,311 | $ | 1,105,148 | |
Liabilities and Stockholders’ Equity | |||||
Current liabilities | |||||
Accounts payable | $ | 73,559 | $ | 63,699 | |
Accrued taxes | 5,998 | 9,638 | |||
Accrued wages | 11,753 | 15,185 | |||
Accrued other expenses | 47,567 | 46,062 | |||
Client deposits | 224,138 | 173,808 | |||
Current portion of operating lease liabilities | 51,669 | 33,051 | |||
Current portion of financing lease liabilities | 991 | 904 | |||
Total current liabilities | 415,675 | 342,347 | |||
Operating lease liabilities, long-term | 415,410 | 362,598 | |||
Financing lease liabilities, long-term | 53,453 | 53,870 | |||
Deferred rent and lease incentives | — | 1,952 | |||
Other long-term liabilities | 4,128 | 4,143 | |||
Total liabilities | $ | 888,666 | $ | 764,910 | |
Commitments and contingencies | |||||
Stockholders’ equity | |||||
Class A shares, par value | 53 | 52 | |||
Class B shares, par value | 87 | 87 | |||
Retained earnings | 121,600 | 145,292 | |||
Additional paid-in capital | 198,905 | 194,807 | |||
Total stockholders’ equity | 320,645 | 340,238 | |||
Total liabilities and stockholders’ equity | $ | 1,209,311 | $ | 1,105,148 |
Arhaus, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (Unaudited, amounts in thousands, except share and per share data) | |||||||||||||||
Nine months ended | Three months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Net revenue | $ | 924,096 | $ | 943,696 | $ | 319,133 | $ | 326,229 | |||||||
Cost of goods sold | 561,598 | 544,481 | 196,061 | 195,372 | |||||||||||
Gross margin | 362,498 | 399,215 | 123,072 | 130,857 | |||||||||||
Selling, general and administrative expenses | 304,085 | 275,890 | 112,401 | 106,977 | |||||||||||
Income from operations | $ | 58,413 | $ | 123,325 | $ | 10,671 | $ | 23,880 | |||||||
Interest income, net | (2,582 | ) | (1,731 | ) | (544 | ) | (1,080 | ) | |||||||
Other income | (447 | ) | (738 | ) | (250 | ) | (78 | ) | |||||||
Income before taxes | 61,442 | 125,794 | 11,465 | 25,038 | |||||||||||
Income tax expense | 14,186 | 31,771 | 1,542 | 5,297 | |||||||||||
Net and comprehensive income | $ | 47,256 | $ | 94,023 | $ | 9,923 | $ | 19,741 | |||||||
Net and comprehensive income per share, basic | |||||||||||||||
Weighted-average number of common shares outstanding, basic | 139,990,522 | 139,365,870 | 140,166,990 | 139,628,776 | |||||||||||
Net and comprehensive income per share, basic | $ | 0.34 | $ | 0.67 | $ | 0.07 | $ | 0.14 | |||||||
Net and comprehensive income per share, diluted | |||||||||||||||
Weighted-average number of common shares outstanding, diluted | 140,732,337 | 140,021,670 | 140,722,915 | 140,140,899 | |||||||||||
Net and comprehensive income per share, diluted | $ | 0.34 | $ | 0.67 | $ | 0.07 | $ | 0.14 |
Arhaus, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited, amounts in thousands) | |||||||
Nine months ended | |||||||
September 30, | |||||||
2024 | 2023 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 47,256 | $ | 94,023 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Depreciation and amortization | 27,895 | 21,439 | |||||
Amortization of operating lease right-of-use asset | 27,432 | 24,733 | |||||
Amortization of deferred financing fees, interest on finance lease in excess of principal paid and interest on operating leases | 19,859 | 16,037 | |||||
Equity based compensation | 5,352 | 5,752 | |||||
Deferred tax assets | 3,769 | 256 | |||||
Amortization of cloud computing arrangements | 1,206 | 386 | |||||
Amortization and write-off of lease incentives | (80 | ) | (241 | ) | |||
Insurance proceeds | — | 60 | |||||
Changes in operating assets and liabilities | |||||||
Accounts receivable | 1,198 | (228 | ) | ||||
Merchandise inventory | (40,304 | ) | 17,399 | ||||
Prepaid and other assets | (6,527 | ) | (4,363 | ) | |||
Other noncurrent liabilities | 224 | 273 | |||||
Accounts payable | 8,983 | (10,141 | ) | ||||
Accrued expenses | (8,096 | ) | 3,502 | ||||
Operating lease liabilities | (23,071 | ) | (30,836 | ) | |||
Client deposits | 50,330 | 9,819 | |||||
Net cash provided by operating activities | 115,426 | 147,870 | |||||
Cash flows from investing activities | |||||||
Purchases of property, furniture and equipment | (88,686 | ) | (58,808 | ) | |||
Insurance proceeds | — | 333 | |||||
Net cash used in investing activities | (88,686 | ) | (58,475 | ) | |||
Cash flows from financing activities | |||||||
Principal payments under finance leases | (686 | ) | (503 | ) | |||
Repurchase of shares for payment of withholding taxes for equity based compensation | (1,277 | ) | (1,024 | ) | |||
Cash dividend payments | (70,144 | ) | — | ||||
Net cash used in financing activities | (72,107 | ) | (1,527 | ) | |||
Net (decrease) increase in cash, cash equivalents and restricted cash | (45,367 | ) | 87,868 | ||||
Cash, cash equivalents and restricted cash | |||||||
Beginning of period | 226,305 | 152,527 | |||||
End of period | $ | 180,938 | $ | 240,395 | |||
Supplemental disclosure of cash flow information | |||||||
Interest paid in cash | $ | 3,402 | $ | 3,962 | |||
Interest received in cash | 7,068 | 5,395 | |||||
Income taxes paid in cash | 16,001 | 28,856 | |||||
Noncash investing activities: | |||||||
Purchase of property, furniture and equipment in current liabilities | 12,650 | 13,210 | |||||
Noncash financing activities: | |||||||
Capital contributions | 24 | 42 |
Arhaus, Inc. and Subsidiaries Reconciliation of Net Income to Adjusted EBITDA (Unaudited, amounts in thousands) | |||||||||||||||
Nine months ended | Three months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Net and comprehensive income | $ | 47,256 | $ | 94,023 | $ | 9,923 | $ | 19,741 | |||||||
Interest income, net | (2,582 | ) | (1,731 | ) | (544 | ) | (1,080 | ) | |||||||
Income tax expense | 14,186 | 31,771 | 1,542 | 5,297 | |||||||||||
Depreciation and amortization | 27,895 | 21,439 | 10,186 | 7,299 | |||||||||||
EBITDA | 86,755 | 145,502 | 21,107 | 31,257 | |||||||||||
Equity based compensation | 5,352 | 5,752 | 2,001 | 1,848 | |||||||||||
Other expenses (1) | — | 992 | — | 555 | |||||||||||
Adjusted EBITDA | $ | 92,107 | $ | 152,246 | $ | 23,108 | $ | 33,660 | |||||||
Net revenue | $ | 924,096 | $ | 943,696 | $ | 319,133 | $ | 326,229 | |||||||
Net and comprehensive income as a % of net revenue | 5.1 | % | 10.0 | % | 3.1 | % | 6.1 | % | |||||||
Adjusted EBITDA as a % of net revenue | 10.0 | % | 16.1 | % | 7.2 | % | 10.3 | % |
_______________________
(1) Other expenses represent costs and investments not indicative of ongoing business performance, such as public offering costs, severance and recruiting costs. For the nine and three months ended September 30, 2023, these expenses consisted largely of
FAQ
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