Arhaus, Inc. · NASDAQ:ARHS
Arhaus — Investor Presentation (September 2023)
36 slides from Arhaus's investor presentation, Sep 5, 2023
Slide 1: Investor Presentation September 2023
Slide 2: Note on Forward-Looking Statements
NOTE ON FORWARD-LOOKING STATEMENTS: Certain statements contained herein 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,
Slide 3: Our Mission
OUR MISSION We were founded in 1986 on a simple idea: furniture should be responsibly sourced, lovingly made and built to last. 1 the mium and world who share our vision, creating p lients can heirloom-quality f 1e furnishings th: use for generations We believe Retail is Theater and that furniture s
Slide 4: The Green Initiative
THE GREEN INITIATIVE TOGETHER WE WILL MAKE A DIFFERENCE COMMITMENT TO BEING RESPONSIBL ROOTED IN SUSTAINABILITY. BEAUTIFULLY MADE, SUSTAINABLY SOURCED. 10 YEARS, ONE MILLION TREES. TOGETHER FOR A CLEAN OCEAN. $10 MILLION COMMITMENT IN 2023 TO THE NATURE CONSERVANCY TO SUPPORT GLOBAL FOREST CONSERVAT
Slide 5: Company Overview
COMPANY OV RVI W 1 OUR FINANCIAL OUR COMPANY PROFILE 86 SHOWROOMS 20 STATES 2,100+ EMPLOYEES TAS of Dadeniber 31, 2022: Shoivrodme tneludes traditonakebewragms, design studios and Sutets) as o $1 ,229M FULL YEAR 2022 NET REVENUE $223M FULL YEAR 2022 ADJUSTED EBITDA’ eden DEBIEERE BALANCE SHEET’ f Au
Slide 6: Financial Overview
$176 $200 $330 $525 43% 2019 2020 2021 2022 $50 $69 $123 $223 2019 2020 2021 2022 $495 $507 $797 2019 2020 2021 2022 11% 18% 18% 17% 2019 2020 2021 2022 4% 25% 45% 14% 2019 2020 2021 2022
Slide 7: Product, showrooms, infrastructure, marketing drivers
PRODUCT ON-TREND, INNOVATIVE PRODUCT CONSISTENTLY REFRESHED SHOWROOMS INFRASTRUCTUREMARKETING INSPIRATIONAL RESONATES WITH CLIENT AESTHETIC ASPIRATIONAL TAILORED, CLIENT-FOCUSED EXPERIENCE SIGNIFICANT CAPACITY TO DRIVE GROWTH WEBSITE ENHANCEMENTS DRIVE ENGAGEMENT
Slide 8: Rapidly Growing & Highly Fragmented U.S. Premium Home Furniture Market
• Total addressable market of ~$100 billion • Highly fragmented and predominantly served by small local players • Premiumization of consumers – buyers from all income levels are shifting towards more premium purchases • Growth of digital and omni-channel favors larger players Source: Based on manage
Slide 9: Strong Industry and Market Tailwinds Driving Growth
STRONG INDUSTRY AND MARK TAILWINDS DRIVING GROWTH Three primary drivers of furniture and decor purchases': 1, In-hor cement High income households growing — disproportionately large share of wallet Higher consumer confidence among affluent customers Increase in suburbanization — larger homes support
Slide 10: Arhaus
ARHAUS
Slide 11: Investment Highlights
INVESTMENT HIGHLIGHTS Strong Product Design and Direct Global Sourcing Partnerships A Differentiated Concept Delivering Livable Luxury Highly Experiential Omni-Channel Approach Multiple Avenues for Sustainable Growth
Slide 12: Arhaus
ARHAUS
Slide 13: A differentiated concept redefining premium home furnishings
We are a differentiated concept, redefining the premium home furnishings market by offering an attractive combination of design, quality, value and convenience.
Slide 14: Livable Luxury
LIVABLE LUXURY We believe in creating beautiful and comfortable furniture made to fit your life PERFORMANCE FABRIC BUILT TO LAST SUSTAINABLE MATERIALS COMFORT ECLECTIC STYLE
Slide 15: Product Design and Direct Sourcing
ARHAUS AND DIRECT SOURCING
Slide 16: Artisan-Quality Product Offering
Arhaus is known for heirloom-quality, unique, artisan: for everyday life, believe that furniture should v THE BELL’ARTE COLLECTION ORIGIN: ITA Over 20 years ago, we discovered a small family-run artisan woodworking s! lorthern Skilled artisans use generations old techniques and the finest materials
Slide 17: Direct Sourcing Drives Competitive Advantage
DIRECT SOURCING DRIVES COMPETITIVE ADVANTAG O t sourcing model nest ing demand DEEP ROOTED RELATIONSHIPS COMPETITIVE ADVANTAGE * Over 400 vendors QUALITY AND AESTHETIC ing relationships ale markup PERSONALIZATION AND CUSTOMIZATION * Flexible speed to market * ~40% of net revenue from U.S: Pecan crem
Slide 18: Internal Manufacturing
RNAL MANU RHAUS ~12% OF 2022 NET REVENUE 2X RECENT PRODUCTION EXPANSION ENABLED US TO DOUBLE CAPACITY
Slide 19: Omni-Channel Approach
ARHAUS OMNI-CHANNEL APPROACH
Slide 20: Omni-Channel Ecosystem
OMNI-CHANNEL ECOSYSTEM SHOWROOM eCOMMERCE CATALOG AND MARKETING
Slide 21: Theater-Like Showrooms
THEATER-LIK SHOWROOMS Our visually captivating, theater-like showrooms drive brand awareness and create meaningful marketing buzz and revenue uplift when opened in new mart * Showrooms drive in-showroom revenue as well as eCommerce revenue + Theater-like and inspirational atmosphere that helps clien
Slide 22: Adept and Knowledgeable Showroom Team
ADEPT AND KNOWLEDGEABI SHOWROOM TEAM Visual Managers work to create the “wow” showroom experience. Design Consultants are expertly trained to meet the clients’ needs and are highly knowledgeable about all products offered in-showroom Weekly meetings and routine training enable the showroom team to t
Slide 23: Omni-Channel Capabilities and Digital Tools
OMNI-CHANNEL CAPABILITI AND DIGITAL TOOLS ES eCOMMERCE IS OUR FASTEST GROWING REVENUE CHANNEL 43% 17% GROWTH IN OF 2022 NET eCOMMERCE NET REVENUE WAS REVENUE IN 2022 eCOMMERCE BASED >28M > 1.2M WEBSITE VIEWS INSTAGRAM IN 2022 FOLLOWERS JANUARY AND SEPTEMBER CATALOGS ARE MAILED TO MILLIONS OF HOUSEHO
Slide 24: Growth Strategies
ARHAUS GROWTH STRATEGIES
Slide 25: Our Growth Strategies
OUR GROWTH STRATEGIES INCREASE BRAND AWARENESS TO DRIVE SALES EXPAND OUR SHOWROOM BASE AND CAPTURE MARKET SHARE ENHANCE OMNI-CHANNEL CAPABILITIES AND TECHNOLOGY TO DRIVE GROWTH INVEST IN GROWTH TO BUILD SCALE AND ENHANCE MARGINS
Slide 26: Increase Brand Awareness to Drive Sales: Opportunity
INCREASE BRAND AWARENESS TO DRIVE SALES: OPPORTUNITY We believe Arhaus has an incredible brand awareness opportunity as compared to competitors in the U.S, Premium Home Furnishings Market.1 As we continue to grow our showroom footprint and to invest in our digital, catalog and other marketing channe
Slide 27: Brand Awareness Opportunity
BRAND AWARENESS OPPORTUNITY SHOWROOM DIGITAL DIRECT MAIL BRANDING INITIATIVES. PRODUCT ARHAUS
Slide 28: Traditional Showroom Footprint: Tremendous Whitespace Opportunity
TRADITIONAL SHOWROOM FOOTPRINT: TREMENDOUS WHITESPACE OPPORTUNITY v showrooms through analysis of specific market eristics, TRADITIONAL SHOWROOM WHITESPACE POTENTIAL" © 165+ . . o? id e oe tw” - S|) eer . .e 74 Sele o ee \e og SB . @ TRADITIONAL @ LOFT La SHOWROOM CURRENT POTENTIAL TRADITIONAL, SHOW
Slide 29: Design Studio Opportunity
"As of August 4, 2023, EPT: D ESIGN STUDIO OPPORTUNITY We are expanding our exciting smaller format concept, perfect for second home markets and locations where a lower square footage format is preferred. These stores are staffed with in-home designers and the latest high tech design tools to assist
Slide 30: Strong returns on investment
• strong returns on investment. •
Slide 31: Designer Program
DESIGNER PROGRAM nd our in-home desi ler program, expanding our coverage both in and online designers resonate with clients and drive AOV uplift TOTAL AOV YTD 2023' REALITY NO IN-HOME DESIGNER AOV IN-HOME DESIGNER AO\ Our 93 in-home designers in 71 showrooms* fer complimentary ir i These in-home o ‘
Slide 32: Enhance Omni-Channel Capabilities and Technology to Drive Growth
ENHANCE OMNI-CHANNEL CAPABILITIES AND TECHNOLOGY TO DRIVE GROWTH NEW SITE EXPERIENCE LAUNCHED Q4 2021 BENCHMARKING VS. PEERS IMPLIES ROBUST ECOMMERCE OPPORTUNITY | assisted product discovery PN rnarr aaa Enhanced analytics est and learn capabilities 43% TRAFFIC: 18% 18% 47% 11% ARHAUS ARHAUS ARHAUS
Slide 33: Investing in Growth to Build Scale and Enhance Margins
NVESTING IN GROWTH TO BUILD SCALE AND E MARGINS SUPPLY CHAIN CAPACITY Jf HEADQUARTERS - OFFICE AND DISTRIBUTION FACILITY DISTRIBUTION/MANUFACTURING FACILITY A oistrisution FaciLiTy
Slide 34: Our Long Term Growth Goals
OUR LONG TERM GROWTH GOALS' G TERM GOALS? MID-TO-HIGH SINGLE DIGIT “These are not projections or predictions of actual results; they are aspirational goals as of March 10, 2023 and are forward-looking, subject to significant business, economic, regulatory and competitive uncertainties and contingenc
Slide 35: Arhaus
ARHAUS
Slide 36: Adjusted EBITDA Reconciliation
December 31, December 31, December 31, December 31, ($ in thousands) 2022 2021 2020 2019 Net income $ 136,634 $ 36,932 $ 17,040 $ 15,842 (+) Interest expense 3,387 5,432 13,057 13,449 (+) Income tax expense (benefit) 45,944 (10,144) 783 368 (+) Depreciation and amortization 24,901 23,922 16,957 15,9