Good morning, and welcome to Arhaus' Third Quarter 2022 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. Thank you. You may begin. Good morning, and thank you for joining Arhaus' Third Quarter 2022 Earnings Call. On with me today are John Reed, Co-Founder, Chairman, and Chief Executive Officer, and Dawn 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. Dawn will cover our financial performance and outlook for the remainder of 2022, and then they will be joined by Jen Porter, our Chief Marketing Officer, for the Q&A session. During Q&A, please limit to one question and one follow-up. If you have additional questions, please return to the queue. We issued our earnings press release and our 10-Q for the quarter ended September 30th, 2022, before market open today. Those documents are available on our investor relations website at ir.arhaus.com. A replay of the call will 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 and subsequent 10-Q, as such factors may be updated from time to time in our filings with the SEC. The forward-looking statements are made as of today's date, and except 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. Good morning, everyone, and thank you for joining us today. We are pleased to report another strong quarter with record net revenue and significant year-over-year earnings growth. Our team once again executed extremely well in a very dynamic macro environment, satisfying our clients, supporting our growth strategies, and managing our profitability. Turning to some highlights for the third quarter results. One, net revenue of $320 million, a 57% increase over Q3 last year, with our retail channel up 61% and our e-commerce channel up 40% in the quarter. Comp growth of 54.3% and demand comp growth of 15.8%. Net and comprehensive income increased 160%, and adjusted EBITDA increased 87%. Our net revenue performance for the quarter was better than expected from both demand in the quarter and continued delivery of our backlog. Our net income and adjusted EBITDA were also much better than expected, primarily driven by the strong net revenue and leverage on fixed costs. Demand comp growth in the third quarter was a robust 15.8%, significantly exceeding our expectations. In the early part of the fourth quarter, we are continuing to see solid demand with mid-single-digit demand comp growth off of strong prior year Q4 demand comps. This is consistent with our longer-term expectations for comp growth and demand comp growth. Turning to our operational developments in the quarter. Our product and marketing continues to resonate with our clients. We are pleased with the fall campaign and just launched our new holiday campaign last week. Regarding supply chain, on the inbound side, we continue to see moderation of the bottlenecks that have impacted our industry since the start of the pandemic, and our lead times are coming down steadily. We are seeing lower freight costs persist, although fuel prices remain volatile. On the outbound side, as we discussed in the last quarter's call, our Dallas distribution center is now open, and we have started delivering product out of that facility. While we continue to slowly ramp the operation to ensure a seamless transition and client experience, we are making great progress. We are also on track with the expansion of the Ohio distribution center expected to be completed by the end of this year. As a reminder, we believe our new distribution capacity will help alleviate our backlog, reduce our lead times to support our growth over the next seven to 10 years. Turning to showroom growth. We are opening a new design studio in Park City, Utah, later this month as we expand our testing of that concept, which has been very successful, and we plan to open two more design studios over the next several months. Looking ahead, our real estate pipeline is very robust. We will share our showroom opening plans for 2023 early next year. We continue to target adding five to seven new traditional showrooms annually. Given our performance over the third quarter of 2022 and the strength of our backlog, we are reaffirming our full year net revenue and comparable growth outlook and raising our full year net income and adjusted EBITDA outlook that Dawn will cover next. As we look to the future, we remain confident in our strategy and our focus on delivering long-term growth. In closing, I want to reiterate how pleased we are with our performance in the third quarter and truly thank our team for stepping up to the every challenge. I'm incredibly proud of each and every one of you. Now, I'll turn it over to Dawn. Thank you. As John described, our business continues to be resilient, and we are pleased with our operational and financial performance in the third quarter. Key items from our third quarter 2022 income statement include net revenue of $320 million, comp growth of 54.3%, and demand comp growth of 15.8% on a one-year basis, 44.1% on a two-year stacked basis, and 87.8% on a three-year stacked basis. During the quarter, we saw strong demand in both showroom and e-commerce channels. Our net revenue growth was driven by both demand and the continued delivery of orders in our backlog related to our increased distribution capacity and continued improvement in product lead time. Our third quarter gross margin increased 61% to $136 million in the quarter, driven by our higher net revenue, partially offset by higher variable costs related to the increase in net revenue, including product, transportation, and variable rent expense, as well as higher credit card fees related to increased interest rates and demand. Gross margin as a percent of net revenue increased a better-than-expected 90 basis points to 43%, reflecting our ability to leverage our fixed showroom occupancy costs over the higher net revenue, partially offset by higher variable rent and transportation expense. Third quarter SG&A expense increased 31% to $89 million. The increase was primarily driven by investments to support the growth of our business, including higher corporate and warehouse expenses as new showrooms open and we expand distribution capacity, as well as public company related costs. We expect incremental expense from our expanded distribution center footprint in the near term to be approximately $40 million on an annualized basis. SG&A expense as a percentage of net revenue decreased 570 basis points to 28%, driven by leverage on fixed costs on the 57% net revenue increase and the non-recurrence of prior year IPO expenses. Third quarter 2022 net income increased 160% to $37 million. Adjusted net income in the third quarter of 2022 increased a better-than-expected 97% to $38 million compared to adjusted net income of $20 million in the third quarter of 2021, driven by higher revenue. Adjusted EBITDA in the quarter increased 87% to $57 million from $30 million in the third quarter of 2021. Net income and adjusted EBITDA in the quarter exceeded our internal expectations, primarily due to continued container and product cost stabilization, positive impact from price increases, which offset higher fuel costs and lower than expected warehouse expenses. I want to again thank our team for working diligently to control expenses and drive operational efficiencies in what is still a highly inflationary environment. Turning to the balance sheet and cash flow, as of September 30th, 2022, cash and cash equivalents were $146 million and the company had no long-term debt. Net merchandise inventory was $293 million, up 40% from December 31st, 2021, and up 72% year-over-year as we continue to build inventory in response to client demand and as inventory value increased due to higher freight and product costs. As I mentioned last quarter, while our inventory dollars are growing due to inflationary conditions, our inventory units are growing at a lesser rate. We remain comfortable with our inventory levels. For the nine months ended September 30th, 2022, net cash provided by operating activities was $58 million, and net cash used in investing activities was $37 million, with landlord contributions of $11 million. As a result, total capital expenditures, net of landlord contributions, were approximately $26 million in the first nine months of 2022. Finally, as we announced this morning, we are affirming our full year net revenue and comparable growth outlook for 2022, and we are raising our full year net income and adjusted EBITDA outlook. We now expect full year net revenue of $1.173 billion-$1.193 billion, full year comparable growth in the range of 43%-48%, net income of $109 million-$115 million, and adjusted EBITDA of $185 million-$192 million. This implies fourth quarter net revenue of $300 million-$320 million, comp growth of 24%-32%, net income of $19 million-$25 million, and adjusted EBITDA of $36.5 million-$43.5 million. Our outlook reflects the expectation that we will continue delivering our backlog through the balance of 2022 and into mid-2023, and carefully manage our expenses even as we continue to invest in growth, including distribution, marketing, and product development. Our outlook continues to assume year-over-year inflation in product and transportation costs. We have further lowered our full year expectation for capital expenditures, net of landlord contribution, to range from $40 million-$50 million due to lower than expected capital expenditures for the Dallas distribution center and delays in new showroom construction and permitting. For all other details related to our updated 2022 outlook, please refer to our press release. In closing, we are pleased with our third quarter performance and despite an ever-changing macro environment, we believe our strong debt-free balance sheet coupled with a strategic growth plan to build on our share gains in the highly fragmented $60 billion premium home furniture market position us to weather any economic cycle and emerge in an even stronger position, poised to deliver on our longer-term growth plans and drive value for all stakeholders. Thank you for your attention, and we would now like to open the call up for questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Curtis Nagle with Bank of America. Please proceed. Good morning. Thanks very much for taking the question. I just wanted to talk about setup, I guess, into next year. You guys are way outperforming the industry in terms of demand, products resonating, right? That's in the face of all sorts of macro uncertainty. What do you think keeps positive demand going? Is it just the momentum you have now? You know, what are the biggest headwinds? Do you think you can keep up that mid-single digit demand comp growth, you know, in line with 4 Q and your long-term targets for next year? Good morning, Curtis. John here, John Reed. We are sticking with our original plan, which was, during COVID, we focused on working on new great products, rolling out collections. They've now gotten fully in the stores. We've gotten inventory behind them and it seems like our product is resonating with our customers. You know, that's what retail is about. If you have the right product at the right price that your customers want, they're gonna buy. We're gonna stay focused on that, and we think we'll be okay going into 2023. Oh, okay. Understood. Just as a follow-up, yeah, I guess kind of a similar question around just how to think about transportation costs for next year, right? You know, still elevated. I guess fuel surcharges are still an issue. You know, as contracts reset and, you know, freight costs have gone down, I think shipping too. You know, should that not be a tailwind for gross margins into next year? Morning, Curtis. This is Dawn. You know, we'll provide a little further context on 2023 when we report the fourth quarter. I would just remind you that you know, container costs, while they are coming down this year, will take some time to flow through our P&L, just given the timing. We use our inventory as that landed cost, which includes those container costs. More to come when we report the fourth quarter. We feel like we have a decent handle on what that'll look like next year. Okay. Thank you. Our next question is from Simeon Gutman with Morgan Stanley. Please proceed. Hi, this is Jackie Sussman on for Simeon. Thanks for taking our question. Just quickly on the kind of discounting and promotional environment, what are you guys seeing? Can you please talk about your assumptions, I guess, for the fourth quarter and the beginning of 2023? Yeah. Hi, Jackie, this is Jen Porter. As we've been saying, we're definitely seeing promotional activity pick up within the market. Looking at our strategy through Q3, we were in line with where we were last year, which is much lower promotional activity versus 2019, and we continue to feel very strong with the results of that, as you heard today. Going into the peak November holiday sales period, we're definitely seeing promotional activity pick up even further within the market. We are a bit more promotional than we were last year, which is really in a proactive effort to pull forward some of that promotional activity earlier in the month, in line with the trends that we're seeing with other retailers. Looking forward, we aren't really seeing this as a shift in our promotional strategy for a long-term basis. This is more of a reaction to what's happening in this, you know, peak holiday sales period. We're gonna be monitoring very closely, obviously as we move forward. Right now, our plan is to stay in line promotionally with where we've been, year to date as we look forward, into next year. One thing I will note is just the promotion that we did turn on and have been running. We've seen a really nice reaction to that, which we think in part is, you know, we have been so quiet all year, and as John mentioned, we have the product. We have all cylinders firing on that side. You know, it's really nice for us just to see that we do have this great lever if we ever need it in the future. For now, looking into next year, we still feel really good about focusing on getting the product into the stores, having our marketing hit, and paying our attention there. Gotcha. That's really helpful. Just quickly, one more on the completion of the 54.3% comp. Is there any color you can give as to, like, price versus underlying transaction growth in the quarter? Were underlying transactions positive, and how did that compare maybe to 2019 levels? Jackie, this is Dawn. 54% percent is on a you know, delivered basis. As we think about the components of the demand comp in the third quarter, that's where we would talk more about average order number of transactions. Both of those were up really nicely. Units per transaction was also up really nicely. Still seeing some nice strength from the consumer base as it pertains to our product offerings in the market in the third quarter. We're really pleased. Got it. Thanks, and congrats on a good quarter. Our next question is from Jonathan Matuszewski with Jefferies. Please proceed. Hey, good morning and great quarter. First question is on market share. You guys comp 54% this quarter. The premium furniture market is not growing near that pace. Just wanted to get your updated thoughts on where you think that share is coming from. You know, is there evidence of elevated challenges at some of your smaller players that you think is driving market share gains, or do you think it's more of a function of certain larger competitors moving more upmarket? Just wanted your updated thoughts there. That's my first question. Thanks. Good morning, Jonathan. I can start this up if Jen wants to pitch in. I guess my answer is, you know, we really don't focus on what our competitors are doing. I mean, we certainly know what they're doing, but you know, we focus on our business and executing everything that is planned in our business right. We seem to be hitting on all cylinders. You know, everything's working from getting the product in here to getting it delivered, to having the right product that customers obviously want, at fantastic value, credible quality. I don't have any clue what, you know, smaller people are doing or the big guys are doing. We know what we're doing is working, and we're gonna keep doing it. Gotcha. That's helpful. I guess just my follow-up, Dawn, on the 4Q comp guide. Would be great just to get any sense of kind of the macro and housing assumptions underlying that forecast in terms of what you guys are expecting to drive the midpoint of the 4Q guide. Thanks so much. Sure. Keep in mind that 4Q guide is on the delivered side versus the demand side. Just wanna clarify there. You know, we continue to see that we don't have an incredibly strong correlation with the housing market. It is a factor, but it's not the driving factor. Stock volatility continues to be kind of what we've seen historically as a driving factor of the demand comp. You know, that being said, we're really pleased with what we're seeing from the consumer response, like we said, in the third quarter and fourth quarter to date as continuing just to invest in our marketing programs, which we know are resonating really well with clients and making sure that the product is on point. You know, just continuing to execute on those key core strategies that we have and not deviating. Gotcha. Best of luck. Thank you. Our next question is from Steven Forbes with Guggenheim Partners. Please proceed. Good morning, John, Dawn, Jen. I just wanted to follow up on a couple of questions before. I think it was John around the company's performance. I don't know if you can sort of comment, John, high level, you know, sort of what you're seeing in your customer demographic profile that may help explain the outperformance, if there's any changes in AOV trends or, you know, the typical trade area, right, that the store pulls from. I think we're just looking at the performance here and trying to find sort of an explanation for what's driving the strength. I think this acceleration in the multi-year stack of comp is certainly a standout. I don't know if you have any sort of high-level thoughts on what you're seeing in your customer data that would help explain it. Yeah. Hi, Steven. This is Jen. I mean, looking at the customer data, we're continuing to see our customers really affluent and demo-wise be the same as they have been. We're paying very close attention to that. We're digging in. Honestly, we're as curious as you are looking there. But we have, you know, really strong customer demo files. So, you know, looking new versus existing, we're continuing to see that look really nice with that value still being around that 50/50 mark I've spoken before. In terms of sort of the net worth, income demos, age, all of that, we're seeing that staying consistent with where we've been for the last few years. So we're definitely paying very close attention. You know, as we've spoken to our clients are out there, they're seeing what they want, they're liking the product and they're willing and able to pay for it. We're continuing to focus on, you know, getting that message out. You know, if we see anything in the future, we'll definitely share with you. For now, nothing noteworthy to report. Maybe just a quick follow-up for Dawn. It looks like the fourth quarter EBITDA margin is being guided down year-over-year. I don't know if you could just help us better understand the anticipated margin pressure that seems like it might be in the product margin side with promotions, but anything specifically to call out in expenses and or growth we should note. Yeah. While, you know, we don't guide on a quarterly basis, you know, I think the additional context that's gonna be really helpful for you to think about is the Dallas distribution center. It's a very expensive, very large facility that, you know, is adding to our expense structure year-over-year. We feel pretty good about, you know, our strategies to execute top line out of that facility. I'd also say we, you know, we talked last quarter about the marketing investments, and we're being really thoughtful about kind of getting in front of any macro softening that might be occurring, which as you can see from our numbers in the third quarter, we feel pretty good about how those came in. There'll be a bit more marketing investment in the fourth quarter, just preemptively, staying top of mind with clients. Those are probably the two components I would call out for you to think about. Thank you. Best of luck. As a reminder, it is star one on your telephone keypad if you would like to ask a question. Our next question is from Cristina Fernandez with Telsey Advisory Group. Please proceed. Yeah, good morning and congratulations on a good quarter. I wanted to see if you could talk about inventory. With inventory building, you know, across the industry and, you know, the demand environment being a little bit more uncertain, how are you thinking about inventory flow going forward? Should we expect the inventory to increase from here or level off? Yeah. We feel pretty great about our inventory position today. Keep in mind that the inventory dollars are factoring in those higher transportation costs on the inbound side, as well as some higher product costs that we've seen, you know, from vendor price increases over the last 18 months or so. But on a unit basis, we're pretty confident with where we're at. I'd also say, you know, we have a pretty nice pipeline of backlog orders to deliver, which should gives us good visibility into where we need the inventory levels to be for, you know, really the next, eight months or so. We feel confident in our inventory strategy, and we feel good about where the inventory is positioned today. Going back to the demand in the quarter, any more color you can share about how the quarter progressed and any product categories that outperformed relative to the, you know, to the overall company? Yeah, I think it's been pretty steady. We didn't see any pop in any categories or anything. It's, you know, the core products and again, you know, the products that resonated with our customers are the ones that are selling. It's been pretty steady, you know, all year for that matter on what the best sellers are, you know, what our clients are buying. We're seeing a nice lift in some of the categories that are add-ons to the core products. In other words, rugs, lighting, so forth, which give us a great additional sale because as people are buying, say, a sectional, if we can add on the lights, the rugs, it can literally almost double the average sale. We've done a really nice job, our team has on expanding those categories, and we've seen some great growth in those categories. As well as the outdoor category, we've seen some nice growth throughout the summers. That of course is winding down now, but it'll be picking back up soon way after the first of the year again. Cristina, just on the dispersion of the comp within the quarter. We saw some moderation in September, but it was still up really nicely year-over-year. So nothing really notable there, but very, very pleased with how the quarter performed and how it trended throughout the quarter as well. Thank you. Our final question is from Peter Keith with Piper Sandler. Please proceed. Hi. Thanks. Good morning, everyone. I happened to call a little bit late, so I apologize if these are repetitive. I want to just think about pricing going forward. There's a lot of discussion in the furniture industry around excess inventory and, you know, markdowns, prices coming down over the next six to 12 months. Obviously, you guys are a bit of a different animal out there, but how do you think about your pricing going forward as you've taken pricing here a couple times over the last 18 months? Do you anticipate maintaining price, or do you think there'll probably be some moderation in your overall pricing? Good morning, Peter. Yeah, we certainly, as everybody has, as we've seen, cost increase over the last 18 months or so. We've adjusted our prices. We don't see. We kinda see us holding steady as where we're at right now. We have seen a nice, you know, decrease in container costs and current product coming in. But as Dawn said, you know, a lot of the product we own, and we do have a good amount of product, not excessive by any means, but the right amount of product, so we can service our customers and clients on a timely basis. We're happy with our inventory levels. We're able to service our customers a lot quicker than we were. I do see out there in some of the industry that some people are still way out on inventory, and then other people have excess, so they're trying to clear that out. We're in good shape. We don't have excess, so we're not trying to clear anything out. We see, you know, pricing holding steady. We'll look once we clear out the inventory that we own at the higher container cost. You know, we'll look to even adjust our prices a little bit if we can to you know sell more units. That's down the road. Okay. Helpful. Just lastly, just on the unit growth outlook, a lot of other growth-oriented retailers have talked about opening delays from permitting HVAC. What are you guys seeing out there right now as you're planning the openings for 2023? Yeah. We had a couple stores that were planned for 2021 that are falling into the beginning of 2023. I think we have a good handle on it now. It's just we just have to plan longer because we know things like, you know, parts for HVAC and so forth are gonna take six months to get in and so forth. We've got a great team that's building our stores that they're all over it. They're way out in front of it. The dates that we're committing to, we think we're gonna be able to hit pretty well. They're longer than, of course, we'd like or anything, but the dates we are committing to, we feel confident we'll get them open at those dates. My real estate team might kill me for saying that, but that's about what we're seeing right now. Okay. Sounds good. Well, best of luck to the real estate team and everyone else there. Thank you. Thank you, Peter. We have reached the end of our question and answer session. I would like to turn the conference back over to Wendy for closing remarks. Thank you everybody for your participation in the call and interest in Arhaus. We look forward to talking to you again next quarter. Thank you. Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.