Arhaus, Inc.

Good morning and welcome to the R House fourth quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal remarks. Please note that this call is being recorded and the reproduction of any part of this call is not permitted without written authorization from the company. I will now turn the call over to your host, Wendy Watson, Senior Vice President of Investor Relations.

Good morning. And thank you for joining our house's fourth quarter and full year 2021 earnings call. On with me today are John Reed, co-founder, chairman, and chief executive officer, Jen Porter, chief marketing officer, and Don Phillipson, chief financial officer. John will start with a summary of the main points we made in this morning's press release, along with operational details. Jim will discuss the status of marketing initiatives, and Don will cover our financial performance, and our outlook for 2022. After their formal remarks, we will open the call for questions. For Q&A, please limit to one question and one follow-up. If you have additional questions, you may return to the queue. We issued our earnings press release and our 10-K for the year ended December 31, 2021, before market opened today. These documents are available on our investor relations website at ir.rhouse.com. A replay of the call will also be available on our website within 24 hours. As a reminder, remarks today concerning future expectations, events, objectives, strategies, trends, or results constitute forward-looking statements. Actual results or events may differ materially, due to a number of risks and uncertainties. For a summary of these risk factors and additional information, please refer to this morning's press release and the cautionary statements and risk factors described in our annual report on Form 10-K, as such factors may be updated from time to time in our other filings with the SEC. The forward-looking statements are made as of today's date and accept as may be required by law The company undertakes no obligation to update or revise these statements. We will also refer to certain non-GAAP financial measures, and this morning's press release includes the relevant non-GAAP reconciliations. I will now turn the call over to John.

All right. Thank you. Good morning, everyone, and thank you for taking the time to join our fourth quarter and full year 2021 earnings call. We were very pleased with our record fourth quarter and full year performance. For the full year of 2021, here are some facts. Net revenue increased 57% to $797 million, with our retail channel up over 56% and our e-com channel up over 60%. Comp growth increased 51%. Net and comprehensive income increased 117%. Adjusted net income increased 118% and adjusted EBITDA increased a notable 77%. We ended the year with 79 showrooms across 28 states. Don will cover our fourth quarter and full year 2021 financial performance and outlook for 2022 in a more detail later in the call, but we continue to be very encouraged by the trends of our business. 2021 was a monumental year for our house. In addition to our record financial performance, we made some key investments that will support our long-term growth. First, we opened a nearly 500,000 square foot distribution center and upholstery production facility in North Carolina. We began our 230,000 square foot expansion of distribution and corporate offices here at home in Ohio, and we launched a new website to enhance our client experience and analytic capabilities. In addition, we transitioned to a public company with the initial public offering of our stock in early November. Our results and accomplishments required a tremendous amount of work and execution by our over 1,700 associates. I want to personally thank them for all their hard work in growing our house, as well as building our brand and being true to our mission and values, and delivering an incredible product and client service experience. We have tremendous white space to grow our showrooms, footprints across the United States, and in 2021, we opened seven new showrooms. Three traditional showrooms in Boca Raton, Florida, Salem, New Hampshire, Short Hills, New Jersey, as well as four design studios in Burlingame, California, Princeton, New Jersey, Miramar Beach, Florida, and Aspen, Colorado. As part of our efforts to continuously optimize our retail footprint, we also relocated three showrooms in Oak Brook, Illinois, Charlotte, North Carolina, and McLean, Virginia, and converted these showrooms to our new format and closed two older format stores in redundant locations as their leases expired. To update you on current supply chain and dynamics and the expansion of our distribution and production capabilities, our inbound product supply chain is improving tremendously. Lead times continue to be a bit longer than historic, averages, but we expect lead times to continue to improve throughout 2022. Further, we expect the recent and upcoming additions to our outbound capacity to help alleviate constraints over the course of 2022. Our new North Carolina upholstery production and distribution center is open. It's operating and it's really exceeding our expectations. The expansion of our Ohio distribution and corporate office facilities is progressing and we expect it to be operational later this year. We are extremely excited about a third distribution center in Texas that we expect to open in the second half of 2022. In closing, we have never been more excited about our business and the trends of our business. Demand remains strong across all channels, and we are very focused on delivering our incredible product to our clients. We operate in a fast-growing $60 billion premium home furnishings market in the United States. Our clients, who are predominantly from high-income households, continue to invest in their homes, and we continue to execute our growth strategy by opening showrooms and making the investments to build our brand awareness and grow our omni-channel footprint. With our market share today of less than 2% of this large fragmented market, we have a long and exciting runway for growth. Now I'll pass this over to Jen to review our current marketing initiatives in more detail.