(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: | ||||||||
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Exhibit No. | Description | |||||||
Press release dated November 10, 2022 announcing the release of third quarter 2022 results. | ||||||||
104 | Cover Page with Interactive Data File (embedded within the Inline XBRL document). |
ARHAUS, INC. | |||||
By: | /s/ Dawn Phillipson | ||||
Name: | Dawn Phillipson | ||||
Title: | Chief Financial Officer |
Full Year 2022 | Current Guidance | Previous Guidance | Implied 4Q 2022 | ||||||||
Net revenue | unchanged | $1,173 to $1,193 million | $300 to $320 million | ||||||||
Comparable growth(1) | unchanged | 43% to 48% | 24% to 32% | ||||||||
Net income(4) | $109 to $115 million | $92 to $98 million | $19 to $25 million | ||||||||
Adjusted EBITDA(5) | $185 to $192 million | $173 to $180 million | $36.5 to $43.5 million | ||||||||
Other estimates: | |||||||||||
Company-funded capital expenditures(3) | $40 to $50 million | $55 to $65 million | |||||||||
Fully diluted shares | unchanged | ~141 million | |||||||||
Effective tax rate | unchanged | ~26% | |||||||||
Arhaus, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited, amounts in thousands, except share and per share data) |
September 30, 2022 | December 31, 2021 | ||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 145,737 | $ | 123,777 | |||||||
Restricted cash equivalents | 6,345 | 7,131 | |||||||||
Accounts receivable, net | 1,778 | 228 | |||||||||
Merchandise inventory, net | 292,571 | 208,343 | |||||||||
Prepaid and other current assets | 35,867 | 28,517 | |||||||||
Total current assets | 482,298 | 367,996 | |||||||||
Operating right-of-use assets | 224,921 | — | |||||||||
Financing right-of-use assets | 39,062 | — | |||||||||
Property, furniture and equipment, net | 128,783 | 179,631 | |||||||||
Deferred tax asset | 20,948 | 27,684 | |||||||||
Goodwill | 10,961 | 10,961 | |||||||||
Other noncurrent assets | 235 | 278 | |||||||||
Total assets | $ | 907,208 | $ | 586,550 | |||||||
Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | 58,455 | $ | 51,429 | |||||||
Accrued taxes | 12,706 | 7,302 | |||||||||
Accrued wages | 17,498 | 16,524 | |||||||||
Accrued other expenses | 33,756 | 61,047 | |||||||||
Client deposits | 261,801 | 264,929 | |||||||||
Current portion of operating lease liabilities | 39,248 | — | |||||||||
Current portion of financing lease liabilities | 522 | — | |||||||||
Total current liabilities | 423,986 | 401,231 | |||||||||
Operating lease liabilities, long-term | 263,753 | — | |||||||||
Financing lease liabilities, long-term | 51,908 | — | |||||||||
Capital lease obligation | — | 50,525 | |||||||||
Deferred rent and lease incentives | 2,353 | 63,037 | |||||||||
Other long-term liabilities | 4,413 | 1,992 | |||||||||
Total liabilities | $ | 746,413 | $ | 516,785 | |||||||
Commitments and contingencies | |||||||||||
Stockholders' equity | |||||||||||
Class A shares, par value $0.001 per share (600,000,000 shares authorized, 51,437,348 and 50,427,390 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively) | 51 | 50 | |||||||||
Class B shares, par value $0.001 per share (100,000,000 shares authorized, 87,115,600 and 86,519,002 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively) | 87 | 87 | |||||||||
Accumulated Deficit | (26,948) | (116,581) | |||||||||
Additional Paid-in Capital | 187,605 | 186,209 | |||||||||
Total Arhaus, Inc. stockholders' equity | 160,795 | 69,765 | |||||||||
Total liabilities and stockholders' equity | $ | 907,208 | $ | 586,550 |
Arhaus, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (Unaudited, amounts in thousands, except share and per share data) |
Nine months ended September 30, | Three months ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net revenue | $ | 872,595 | $ | 558,690 | $ | 320,030 | $ | 203,333 | |||||||||||||||
Cost of goods sold | 505,561 | 325,710 | 183,739 | 118,522 | |||||||||||||||||||
Gross margin | 367,034 | 232,980 | 136,291 | 84,811 | |||||||||||||||||||
Selling, general and administrative expenses | 246,767 | 196,443 | 89,145 | 68,266 | |||||||||||||||||||
Loss on disposal of assets | — | 466 | — | 452 | |||||||||||||||||||
Income from operations | 120,267 | 36,071 | 47,146 | 16,093 | |||||||||||||||||||
Interest expense, net | 3,367 | 4,091 | 751 | 1,365 | |||||||||||||||||||
Other income | (584) | — | (109) | — | |||||||||||||||||||
Income before taxes | 117,484 | 31,980 | 46,504 | 14,728 | |||||||||||||||||||
Income tax expense | 27,851 | 1,704 | 9,568 | 500 | |||||||||||||||||||
Net and comprehensive income | $ | 89,633 | $ | 30,276 | $ | 36,936 | $ | 14,228 | |||||||||||||||
Less: Net income attributable to noncontrolling interest | — | $ | 17,499 | $ | — | $ | 8,231 | ||||||||||||||||
Net and comprehensive income attributable to Arhaus, Inc. | $ | 89,633 | $ | 12,777 | $ | 36,936 | $ | 5,997 | |||||||||||||||
Net and comprehensive income per share, basic | |||||||||||||||||||||||
Weighted-average number of common shares outstanding, basic | 137,939,577 | 112,058,742 | 138,484,495 | 112,058,742 | |||||||||||||||||||
Net and comprehensive income per share, basic | $ | 0.65 | $ | 0.11 | $ | 0.27 | $ | 0.05 | |||||||||||||||
Net and comprehensive income per share, diluted | |||||||||||||||||||||||
Weighted-average number of common shares outstanding, diluted | 139,545,802 | 112,058,742 | 139,845,333 | 112,058,742 | |||||||||||||||||||
Net and comprehensive income per share, diluted | $ | 0.64 | $ | 0.11 | $ | 0.26 | $ | 0.05 | |||||||||||||||
Arhaus, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited, amounts in thousands) | |||||||||||
Nine months ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | 89,633 | $ | 30,276 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
Depreciation and amortization | 18,319 | 17,206 | |||||||||
Amortization of operating lease right-of-use asset | 21,976 | — | |||||||||
Amortization of deferred financing fees and interest on finance lease in excess of principal paid | 8,731 | 839 | |||||||||
Equity based compensation | 2,613 | 1,135 | |||||||||
Deferred tax assets | 5,458 | — | |||||||||
Derivative expense | — | 29,905 | |||||||||
Loss on disposal of property, furniture and equipment | — | 466 | |||||||||
Amortization and write-off of lease incentives | (224) | (5,889) | |||||||||
Changes in operating assets and liabilities | |||||||||||
Accounts receivable | (1,550) | 240 | |||||||||
Merchandise inventory | (84,228) | (62,533) | |||||||||
Prepaid and other current assets | (11,249) | (715) | |||||||||
Other noncurrent liabilities | 456 | (732) | |||||||||
Accounts payable | 10,334 | 1,698 | |||||||||
Accrued expenses | 23,682 | 16,259 | |||||||||
Operating lease liabilities | (22,586) | — | |||||||||
Deferred rent and lease incentives | — | 6,959 | |||||||||
Client deposits | (3,128) | 106,076 | |||||||||
Net cash provided by operating activities | 58,237 | 141,190 | |||||||||
Cash flows from investing activities | |||||||||||
Purchases of property, furniture and equipment | (36,950) | (29,533) | |||||||||
Net cash used in investing activities | (36,950) | (29,533) | |||||||||
Cash flows from financing activities | |||||||||||
Issuance of related party notes | — | (1,000) | |||||||||
Proceeds from related party notes | — | 1,000 | |||||||||
Principal payments under capital leases | — | (106) | |||||||||
Principal payments under finance leases | (113) | — | |||||||||
Shareholder distributions | — | (12,350) | |||||||||
Distributions to noncontrolling interest holders | — | (7,865) | |||||||||
Net cash used in financing activities | (113) | (20,321) | |||||||||
Net increase in cash, cash equivalents and restricted cash equivalents | 21,174 | 91,336 | |||||||||
Cash, cash equivalents and restricted cash equivalents | |||||||||||
Beginning of period | 130,908 | 64,002 | |||||||||
End of period | $ | 152,082 | $ | 155,338 | |||||||
Arhaus, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (continued) (Unaudited, amounts in thousands) | |||||||||||
Nine months ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Supplemental disclosure of cash flow information | |||||||||||
Interest paid in cash | $ | 3,858 | $ | 4,006 | |||||||
Interest received in cash | 316 | — | |||||||||
Income taxes paid in cash | 20,579 | 1,394 | |||||||||
Noncash operating activities: | |||||||||||
Lease incentives | 7,532 | 4,253 | |||||||||
Noncash investing activities: | |||||||||||
Purchase of property, furniture and equipment in accounts payable | 2,661 | (428) | |||||||||
Noncash financing activities: | |||||||||||
Adjustment to deferred tax asset impact of Reorganization from partnership to a corporation | (1,278) | — | |||||||||
Derecognition of build-to-suit assets as a result of ASC 842 adoption | (31,017) | — | |||||||||
Property, furniture and equipment additions due to build-to-suit lease transactions | — | 1,040 | |||||||||
Capital contributions | 62 | — | |||||||||
Capital lease obligation | — | 2,591 |
Arhaus, Inc. and Subsidiaries Reconciliation of Net and Comprehensive Income to Adjusted Net Income (Unaudited, amounts in thousands, except share and per share data) |
Nine months ended September 30, | Three months ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net and comprehensive income | $ | 89,633 | $ | 30,276 | $ | 36,936 | $ | 14,228 | |||||||||||||||
Adjustments (pre-tax): | |||||||||||||||||||||||
Derivative expense (1) | — | 29,905 | — | 100 | |||||||||||||||||||
Other expenses (2) | 6,567 | 5,806 | 1,909 | 5,188 | |||||||||||||||||||
Total non-GAAP adjustments pre-tax | 6,567 | 35,711 | 1,909 | 5,288 | |||||||||||||||||||
Less: Tax effect of adjustments (3)(4) | 1,556 | — | 395 | — | |||||||||||||||||||
Adjusted net income | $ | 94,644 | $ | 65,987 | $ | 38,450 | $ | 19,516 | |||||||||||||||
Adjusted net income per share, basic | |||||||||||||||||||||||
Weighted-average number of common shares outstanding, basic | 137,939,577 | 112,058,742 | 138,484,495 | 112,058,742 | |||||||||||||||||||
Adjusted net income per share, basic | $ | 0.69 | $ | 0.59 | $ | 0.28 | $ | 0.17 | |||||||||||||||
Adjusted net income per share, diluted | |||||||||||||||||||||||
Weighted-average number of common shares outstanding, diluted | 139,545,802 | 112,058,742 | 139,845,333 | 112,058,742 | |||||||||||||||||||
Adjusted net income per share, diluted | $ | 0.68 | $ | 0.59 | $ | 0.27 | $ | 0.17 | |||||||||||||||
Arhaus, Inc. and Subsidiaries Reconciliation of Net and Comprehensive Income to Adjusted EBITDA (Unaudited, amounts in thousands) |
Nine months ended September 30, | Three months ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net and comprehensive income | $ | 89,633 | $ | 30,276 | $ | 36,936 | $ | 14,228 | |||||||||||||||
Interest expense, net | 3,367 | 4,091 | 751 | 1,365 | |||||||||||||||||||
Income tax expense | 27,851 | 1,704 | 9,568 | 500 | |||||||||||||||||||
Depreciation and amortization | 18,319 | 17,206 | 6,324 | 8,297 | |||||||||||||||||||
EBITDA | 139,170 | 53,277 | 53,579 | 24,390 | |||||||||||||||||||
Equity based compensation | 2,613 | 1,135 | 1,224 | 708 | |||||||||||||||||||
Derivative expense (1) | — | 29,905 | — | 100 | |||||||||||||||||||
Other expenses (2) | 6,567 | 5,806 | 1,909 | 5,188 | |||||||||||||||||||
Adjusted EBITDA | $ | 148,350 | $ | 90,123 | $ | 56,712 | $ | 30,386 | |||||||||||||||
Cover |
Nov. 10, 2022 |
---|---|
Cover [Abstract] | |
Document Type | 8-K |
Document Period End Date | Nov. 10, 2022 |
Entity Registrant Name | Arhaus, Inc. |
Entity Incorporation, State or Country Code | DE |
Entity File Number | 001-41009 |
Entity Tax Identification Number | 87-1729256 |
Entity Address, Address Line One | 51 E. Hines Hill Road |
Entity Address, City or Town | Boston Heights |
Entity Address, State or Province | OH |
Entity Address, Postal Zip Code | 44236 |
City Area Code | 440 |
Local Phone Number | 439-7700 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Title of 12(b) Security | Class A common stock, $0.001 par value per share |
Trading Symbol | ARHS |
Security Exchange Name | NASDAQ |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Central Index Key | 0001875444 |
Amendment Flag | false |
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