Arhaus(US:ARHS)2024-08-08 10:41Financial Performance - For the six months ended June 30, 2024, the company generated $605.0 million in net revenue, with a gross margin of $239.4 million and a net income of $37.3 million[106]. - For the three months ended June 30, 2024, net revenue was $309.8 million, gross margin was $124.4 million, and net income was $22.2 million[106]. - Net revenue decreased by $12.5 million, or 2.0%, to $605.0 million for the six months ended June 30, 2024, compared to $617.5 million for the same period in 2023[126]. - Gross margin decreased by $29.0 million, or 10.8%, to $239.4 million for the six months ended June 30, 2024, with a gross margin percentage of 39.6% compared to 43.5% in 2023[127][128]. - Net and comprehensive income decreased by $37.0 million to $37.3 million for the six months ended June 30, 2024, compared to $74.3 million in 2023[132]. - For the three months ended June 30, 2024, net revenue decreased by $3.1 million, or 1.0%, to $309.8 million compared to $312.9 million in 2023[133]. Showroom Operations - As of June 30, 2024, the company operated 97 Showrooms, an increase from 92 Showrooms at December 31, 2023[105]. - The total square footage of Showroom locations increased to 1,550 thousand square feet as of June 30, 2024, compared to 1,438 thousand square feet at December 31, 2023[106]. - Total showrooms increased from 92 at the beginning of the period to 97 at the end of the period[124]. Expenses and Costs - Selling, general and administrative (SG&A) expenses increased by $22.8 million, or 13.5%, to $191.7 million for the six months ended June 30, 2024, representing 31.7% of net revenue[129]. - SG&A expenses for the three months ended June 30, 2024, increased by $8.9 million, or 10.3%, to $95.0 million, representing 30.7% of net revenue[135][136]. - Selling, general and administrative expenses are expected to increase as the company opens new Showrooms and develops new product categories[114]. Cash Flow and Investments - For the six months ended June 30, 2024, net cash provided by operating activities was $84.3 million, an increase of 31.5% compared to $64.2 million for the same period in 2023[148][149]. - The net cash used in investing activities for the six months ended June 30, 2024, was $62.2 million, up from $34.9 million in the same period of 2023, reflecting increased investments in Showrooms and supply chain[150][151]. - Total capital expenditures, net of landlord contributions, increased by $16.0 million to $40.2 million for the six months ended June 30, 2024, compared to $24.3 million in 2023[153]. - Net cash used in financing activities was $71.1 million for the six months ended June 30, 2024, primarily due to the payment of a special dividend, compared to $0.5 million in 2023[155]. - The company anticipates total company-funded capital expenditures to be between $80 million and $100 million in fiscal year 2024, primarily for opening new Showrooms[154]. Financial Position and Risks - As of June 30, 2024, the company had cash and cash equivalents of $174.2 million[140]. - The company faces risks including supply chain constraints, competition, and changes in consumer preferences that could impact future performance[101]. - The company has not drawn upon the 2021 Credit Facility as of June 30, 2024, indicating a stable financial position regarding interest rate risk[160]. - The company does not currently use derivative instruments to manage foreign currency exchange or interest rate risks, which may expose it to potential cost increases[159][160]. Other Financial Metrics - Adjusted EBITDA for the six months ended June 30, 2024, was $68.999 million, down from $118.586 million for the same period in 2023[118]. - Interest income, net increased to $2.0 million for the six months ended June 30, 2024, compared to $0.7 million in 2023[130]. - Income tax expense decreased to $12.6 million for the six months ended June 30, 2024, compared to $26.5 million in 2023[131]. - The increase in cash from operating activities was driven by a net income of $37.3 million and an increase in non-cash items of $57.6 million for the six months ended June 30, 2024[148]. - Cash used from working capital for the six months ended June 30, 2024, was primarily due to a $19.3 million increase in merchandise inventory and a $11.5 million increase in prepaid and other assets[148]. - The company experienced a significant increase in client deposits of $36.5 million and accounts payable of $4.6 million during the six months ended June 30, 2024[148].