Arhaus(US:ARHS)2025-08-07 10:40Financial Performance - For the six months ended June 30, 2025, Arhaus generated $669.8 million in net revenue, with a gross margin of $263.8 million and net income of $39.9 million[82]. - For the three months ended June 30, 2025, net revenue was $358.4 million, gross margin was $148.2 million, and net income was $35.1 million[82]. - Net revenue increased by $64.8 million, or 10.7%, to $669.8 million for the six months ended June 30, 2025, compared to $605.0 million for the same period in 2024[101]. - Gross margin rose by $24.4 million, or 10.2%, to $263.8 million for the six months ended June 30, 2025, with a gross margin percentage of 39.4%[102][103]. - Net and comprehensive income increased by $2.6 million to $39.9 million for the six months ended June 30, 2025, compared to $37.3 million for the same period in 2024[108]. Showroom Operations - As of June 30, 2025, Arhaus operated 103 Showrooms, maintaining the same number as December 31, 2024, with an increase in Showrooms featuring in-home interior designers from 89 to 93[81]. - The total square footage of Showroom locations increased from 1,676 thousand square feet at December 31, 2024, to 1,718 thousand square feet by June 30, 2025[82]. - The company opened 7 new Showrooms from January 1, 2024, to June 30, 2025, while closing 1 permanently and relocating 6[97]. - The company opened new Showrooms contributing $36.9 million to revenue growth in the six months ended June 30, 2025[101]. - Total Showrooms at the end of the period increased to 103 as of June 30, 2025, up from 97 in the previous year[100]. Expenses and Income - Selling, general and administrative (SG&A) expenses increased by $19.8 million, or 10.3%, to $211.5 million for the six months ended June 30, 2025, representing 31.6% of net revenue[104][105]. - Selling, general and administrative expenses (SG&A) are expected to increase as new Showrooms are opened and new product categories are developed[91]. - Interest income, net decreased to $1.3 million for the six months ended June 30, 2025, down from $2.0 million for the same period in 2024[106]. - The effective tax rate was 25.7% for the six months ended June 30, 2025, compared to 25.3% for the same period in 2024[107]. Cash Flow and Capital Expenditures - Cash and cash equivalents as of June 30, 2025, totaled $234.8 million, with operating cash flows expected to meet working capital requirements for at least the next 12 months[117][118]. - Net cash provided by operating activities was $81.4 million for the six months ended June 30, 2025, compared to $84.3 million for the same period in 2024[124]. - For the six months ended June 30, 2025, net cash provided by operating activities was $81.4 million, consisting of net income of $39.9 million adjusted for non-cash items of $60.3 million[126]. - Net cash used in investing activities for the six months ended June 30, 2025, was $41.6 million, a decrease from $62.2 million in the same period of 2024[129][130]. - Total capital expenditures, net of landlord contributions, decreased by $9.7 million to $30.5 million for the six months ended June 30, 2025, compared to $40.2 million for the same period in 2024[132]. - The company anticipates total capital expenditures, net of landlord contributions, to be between $80 million and $100 million in fiscal year 2025, primarily for opening new Showrooms[133]. - Net cash used in financing activities for the six months ended June 30, 2025, was $2.3 million, significantly lower than $71.1 million in the same period of 2024[134]. Risk Management and Inflation - The company has no borrowings under the 2021 Credit Facility as of June 30, 2025, except for a $5.1 million irrevocable standby letter of credit issued in May 2025[139]. - The company does not currently use derivative instruments to manage foreign currency exchange risk or interest rate risk[138][139]. - Inflation has historically been managed through price increases, but the company cannot estimate future recovery of cost increases due to inflation[140]. Performance Metrics - Adjusted EBITDA for the six months ended June 30, 2025, was $78.9 million, compared to $69.0 million for the same period in 2024[95]. - Demand comparable growth is a key performance indicator, measuring year-over-year percentage change in demand from comparable Showrooms and eCommerce[87].