Arhaus (ARHS) investor relations material

Executive summary

• Q2 2026 net revenue reached a record $385 million, up 7.4% year-over-year, with Comparable Written Sales up 12.5% and Comparable Delivered Sales up 4.0%, driven by strong demand, showroom expansion, and high-end consumer engagement.

• Gross margin increased 16.1% to $172 million, benefiting from a $23.8 million IEEPA tariff recovery, and net income grew 13.1% to $40 million; adjusted EBITDA rose 16.8% to $70 million.

• Showroom expansion continued, with new and relocated locations performing ahead of expectations and 109 showrooms operating in 31 states at quarter-end.

• Strategic investments in technology and marketing, including accelerated POS rollout and expanded catalog distribution, are expected to support long-term growth.

• Paid a $49 million special cash dividend in March 2026, with cash and cash equivalents at $226 million as of June 30, 2026.

Financial highlights

• Gross margin for Q2 2026 was 44.7% (including tariff benefit), or 40.7% normalized, up from 41.3% in Q2 2025; adjusted EBITDA margin was 18.3% (14.3% normalized).

• SG&A expenses rose 16.1% to $118 million, reflecting investments in technology, new showrooms, and increased demand.

• Net merchandise inventory increased 4.3% to $354 million; client deposits up 11.8% to $264 million since December 2025.

• Free cash flow for the first half of 2026 was $22.9 million, with $60 million net cash from operating activities.

• No long-term debt as of June 30, 2026, and available borrowing capacity of $69.9 million.

Outlook and guidance

• Full-year 2026 net revenue expected between $1.43 billion and $1.47 billion, up 3.7% to 6.6%; net income guidance raised to $71–$80 million and adjusted EBITDA to $160–$171 million, reflecting tariff recoveries.

• Q3 2026 net revenue guidance: $355–$375 million; net income $8–$13 million; adjusted EBITDA $26–$34 million.

• Capital expenditures for 2026 projected at $70–$90 million, focused on new showrooms and IT infrastructure.

• Guidance reflects IEEPA tariff recovery, offset by $7–$10 million in strategic reinvestment and $20 million in elevated fuel and shipping costs.

• Management expects operating cash flows to be sufficient for working capital and capital needs for at least the next 12 months.