Restoration Hardware Holdings, Inc. Reports Record Fourth Quarter and Fiscal Year 2013 Financial Results
Fiscal 2013 Net Revenues Increased 33% on Comparable Week Basis;
Comparable Brand Revenue Growth of 31%; Adjusted Diluted EPS Increased
76% on Comparable Week Basis to
Q4 Net Revenues Increased 26% on Comparable Week Basis; Comparable
Brand Revenue Growth of 24%; Adjusted Diluted EPS Increased 38% on
Comparable Week Basis to
Company Expects Q1 2014 Adjusted EPS of
Fiscal 2014 Adjusted EPS of
Full Year Highlights
- On a comparable 52 week basis, net revenues increased 33% on top of a 22% increase for the same period last year; GAAP net revenues increased 30%
- Comparable brand revenue growth was 31% on top of 28% last year
-
Adjusted operating income increased 76% to
$120.9 million from$68.7 million for the same period last year; GAAP operating income increased to$54.9 million from a loss of$69.0 million for the same period last year -
Adjusted net income increased 92% on a comparable week basis to
$69.1 million ; GAAP net income of$18.2 million compared to a net loss of$12.8 million for the same period last year -
Adjusted diluted earnings per share increased 76% on a comparable
week basis to
$1.71 ; GAAP diluted earnings per share of$0.45 compared to a loss per share of$1.36 for the same period last year
Fourth Quarter Highlights
- On a comparable 13 week basis, net revenues increased 26% on top of a 23% increase for the same period last year; GAAP net revenues increased 18%
- Comparable brand revenue growth was 24% on top of 29% last year
-
Adjusted operating income increased 41% to
$58.3 million from$41.4 million for the same period last year; GAAP operating income of$58.3 million compared to operating loss of$88.6 million in the prior year period -
Adjusted net income increased 52% on a comparable week basis to
$34.0 million ; GAAP net income of$26.6 million compared to a net loss of$28.4 million for the same period last year -
Adjusted diluted earnings per share increased 38% on a comparable
week basis to
$0.83 ; GAAP diluted earnings per share of$0.65 compared to a loss of$0.79 for the same period last year
Mr. Friedman added, “Throughout fiscal 2013, we continued to take market share and outperform our expectations – delivering results that far exceeded the annual financial targets we introduced at the beginning of the year. We increased revenue by 32% in the back half of the year on a comparable week basis, roughly in-line with the 34% growth in the first half, despite the elimination of our Fall Source Book. During the fourth quarter of fiscal 2013, we increased comparable brand revenue by 24%, on top of 29% last year, in spite of a tougher than anticipated holiday selling season and the impact of weather on our retail business. Additionally, we increased adjusted net income 52% on a comparable week basis demonstrating the disruptive nature of the RH brand and the power of our multi-channel business model.”
Mr. Friedman concluded, “As we enter 2014, we remain focused on our two
largest value driving strategies – the expansion of our offer and the
transformation of our retail stores. The expansion of our offer will be
highlighted across 3,200 pages in our Spring 2014 Source Books,
positioning us for what we believe will be another year of industry
leading results. In regards to the transformation of our retail stores,
we believe we have a
Fiscal Year 2013 Financial Highlights
Revenue - Net revenues for fiscal 2013 increased 30% to
- Comparable brand revenue growth, which includes direct, increased 31% in fiscal 2013 on top of a 28% increase in fiscal 2012.
- Comparable store sales increased 27% in fiscal 2013 on top of a 28% increase in fiscal 2012.
-
Direct revenues increased 33% to
$732.6 million for fiscal 2013 from$549.7 million . Excluding the additional week in fiscal 2012, direct revenues increased 36% in fiscal 2013 on top of a 27% increase in fiscal 2012.
Operating Income (Loss)* - Adjusted operating income for fiscal
year 2013 increased 76% to
EBITDA* - Adjusted EBITDA for fiscal year 2013 increased 54% to
Net Income (Loss)* - Adjusted net income for fiscal 2013
increased 83% to
Earnings Per Share* - Adjusted diluted earnings per share
increased 69% to
Fourth Quarter Fiscal 2013 Financial Results
Revenue - Net revenues for the fourth quarter of fiscal 2013
increased 18% to
- Comparable brand revenue growth, which includes direct, increased 24% in the fourth quarter of fiscal 2013 on top of a 29% increase last year.
- Comparable store sales increased 17% for the fourth quarter of fiscal 2013 on top of a 26% increase last year.
-
As of
February 1, 2014 , the Company operated a total of 70 retail stores, consisting of 62 Galleries, 5 Full Line Design Galleries and 3 Baby & Child Galleries, as well as 17 outlet stores throughoutthe United States andCanada . This compares to a total of 71 retail stores, consisting of 65 Galleries, 3 Full Line Design Galleries and 3 Baby & Child Galleries, as well as 13 outlet stores at the end of fiscal 2012. -
Direct revenues increased 22% to
$228.9 million for the fourth quarter of fiscal 2013. Excluding the additional week in the fourth quarter of fiscal 2012, direct revenues increased 30% on top of a 32% increase in the fourth quarter of fiscal 2012.
Operating Income (Loss)* - Adjusted operating income for the
fourth quarter of fiscal 2013 increased 41% to
EBITDA* - Adjusted EBITDA for the fourth quarter of fiscal 2013
increased 35% to
Net Income (Loss)* - Adjusted net income for the fourth quarter
of fiscal 2013 increased 41% to
Earnings Per Share* - Adjusted diluted earnings per share
increased 30% to
A reconciliation of GAAP to non-GAAP financial measures is provided in the tables accompanying this release.
Outlook
The Company is providing the following guidance for the first fiscal quarter of 2014:
-
Net revenues in the range of
$345 million to $350 million -
Adjusted net income in the range of
$3.7 million to $4.5 million -
Adjusted diluted EPS in the range of
$0.09 to $0.11 - Diluted shares outstanding of approximately 40.7 million
The Company is providing the following guidance for the fiscal year
ending
-
Net revenues in the range of
$1.825 billion to $1.860 billion -
Adjusted net income in the range of
$87.6 million to $90.9 million -
Adjusted diluted EPS in the range of
$2.14 to $2.22 - Diluted shares outstanding of approximately 40.9 million
Note: The Company’s adjusted net income and adjusted diluted earnings per share guidance does not include certain charges and costs, such as for unusual items which may occur in the future, and which are expected to be similar in future periods to the kinds of charges and costs excluded from adjusted net income and adjusted diluted earnings in prior quarters.
Conference Call and Webcast Information
About
RH (
*Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles (“GAAP”), the Company uses the following non-GAAP financial measures: adjusted operating income, adjusted EBITDA, adjusted net income, adjusted EPS, pro forma EPS and adjusted diluted EPS (collectively, “non-GAAP financial measures”). We compute these measures by adjusting the applicable GAAP measures to remove the impact of certain recurring and non-recurring charges and gains and the tax effect of these adjustments. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that they provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP financial measures used by the Company in this press release may be different from the methods used by other companies.
For more information on the non-GAAP financial measures, please see the Reconciliation of GAAP to non-GAAP Financial Measures tables in this press release. These accompanying tables include details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures. With respect to the Company’s non-GAAP guidance for the first fiscal quarter and the full fiscal year 2014, the Company is not able to provide a reconciliation of the non-GAAP financial measures to GAAP because it does not provide specific guidance for the various non-recurring and recurring reconciling items such as non-cash and other one-time compensation, and one-time income tax expense (benefit), among others. Certain items that impact these measures have not yet occurred, are out of the Company’s control and/or cannot be reasonably predicted, and as a result, reconciliation of the non-GAAP guidance measures to GAAP is not available without unreasonable effort.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of
the federal securities laws including statements related to our
strategy, including the planned expansion of the Company’s product
offerings and the transformation of the Company’s retail stores; the
number of pages to be in the Company’s Spring 2014 Source Books,
positioning us for what we believe will be another year of industry
leading results; the percentage of our assortment that will be displayed
at retail following the mailing of our Spring 2014 Source Books; our
belief that the key to unlocking the value of the Company is to
transform our real estate portfolio into our next generation Full Line
Design Galleries; the planned opening of our new Galleries in Greenwich,
RESTORATION HARDWARE HOLDINGS, INC. |
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FINANCIAL STATEMENTS AND RELATED INFORMATION |
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TABLE OF CONTENTS |
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Page 8. | Condensed Consolidated Statements of Operations | |||||
Page 9. | Condensed Consolidated Balance Sheets | |||||
Page 10. | Condensed Consolidated Statements of Cash Flows | |||||
Page 11. | Operating Metrics and Other Data | |||||
Page 12. | Reconciliation of Adjusted Income Statement Items | |||||
Page 14. | Reconciliation of Net Income (Loss) to Operating Income (Loss) and Adjusted Operating Income | |||||
Page 15. | Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA | |||||
Page 16. | Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income | |||||
Page 17. | Reconciliation of Diluted Net Income (Loss) Per Share to Adjusted Diluted Net Income Per Share | |||||
RESTORATION HARDWARE HOLDINGS, INC. | |||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||||||||||||||
(In thousands, except share and per share amounts) | |||||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||||
Three Months Ended [a] | Twelve Months Ended [a] | ||||||||||||||||||||||||||||||||||||
February 1, | % of Net |
February 2, |
% of Net |
February 1, |
% of Net |
February 2, |
% of Net | ||||||||||||||||||||||||||||||
2014 |
Revenues |
2013 |
Revenues |
2014 |
Revenues |
2013 |
Revenues |
||||||||||||||||||||||||||||||
Net revenues | $ | 471,694 | 100.0 | % | $ | 398,055 | 100.0 | % | $ | 1,550,961 | 100.0 | % | $ | 1,193,046 | 100.0 | % | |||||||||||||||||||||
Cost of goods sold | 296,717 | 62.9 | % | 252,881 | 63.5 | % | 994,081 | 64.1 | % | 756,597 | 63.4 | % | |||||||||||||||||||||||||
Gross profit | 174,977 | 37.1 | % | 145,174 | 36.5 | % | 556,880 | 35.9 | % | 436,449 | 36.6 | % | |||||||||||||||||||||||||
Selling, general and administrative expenses | 116,717 | 24.7 | % | 233,769 | 58.7 | % | 502,029 | 32.4 | % | 505,485 | 42.4 | % | |||||||||||||||||||||||||
Income (loss) from operations | 58,260 | 12.4 | % | (88,595 | ) | -22.2 | % | 54,851 | 3.5 | % | (69,036 | ) | -5.8 | % | |||||||||||||||||||||||
Interest expense | (1,537 | ) | -0.3 | % | (1,178 | ) | -0.3 | % | (5,733 | ) | -0.3 | % | (5,776 | ) | -0.5 | % | |||||||||||||||||||||
Income (loss) before income taxes | 56,723 | 12.1 | % | (89,773 | ) | -22.5 | % | 49,118 | 3.2 | % | (74,812 | ) | -6.3 | % | |||||||||||||||||||||||
Income tax expense (benefit) | 30,081 | 6.5 | % | (61,411 | ) | -15.4 | % | 30,923 | 2.0 | % | (62,023 | ) | -5.2 | % | |||||||||||||||||||||||
Net income (loss) | $ | 26,642 | 5.6 | % | $ | (28,362 | ) | -7.1 | % | $ | 18,195 | 1.2 | % | $ | (12,789 | ) | -1.1 | % | |||||||||||||||||||
Weighted-average shares used in computing basic net income (loss) per share | 39,008,383 | 35,692,064 | 38,671,564 | 9,428,828 | |||||||||||||||||||||||||||||||||
Weighted-average shares used in computing diluted net income (loss) per share | 41,119,175 | 35,692,064 | 40,416,630 | 9,428,828 | |||||||||||||||||||||||||||||||||
Basic net income (loss) per share | $ | 0.68 | $ | (0.79 | ) | $ | 0.47 | $ | (1.36 | ) | |||||||||||||||||||||||||||
Diluted net income (loss) per share | $ | 0.65 | $ | (0.79 | ) | $ | 0.45 | $ | (1.36 | ) | |||||||||||||||||||||||||||
Pro forma weighted-average shares used in computing pro forma basic and diluted net loss per share [b] | 37,578,314 | 37,131,790 | |||||||||||||||||||||||||||||||||||
Pro forma basic and diluted net loss per share | $ | (0.75 | ) | $ | (0.34 | ) |
[a] The three months ended
[b] On a pro forma basis, basic and diluted shares outstanding for the
three and twelve months ended
RESTORATION HARDWARE HOLDINGS, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
February 1, |
February 2, |
|||||||
2014 | 2013 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 13,389 | $ | 8,354 | ||||
Merchandise inventories | 453,845 | 353,329 | ||||||
Other current assets | 146,581 | 131,075 | ||||||
Total current assets | 613,815 | 492,758 | ||||||
Property and equipment—net | 214,909 | 111,406 | ||||||
Goodwill and other intangibles | 171,132 | 172,724 | ||||||
Other assets | 25,247 | 12,725 | ||||||
Total assets | $ | 1,025,103 | $ | 789,613 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 206,778 | $ | 145,353 | ||||
Other current liabilities | 110,670 | 74,071 | ||||||
Total current liabilities | 317,448 | 219,424 | ||||||
Revolving line of credit | 85,425 | 82,501 | ||||||
Other long-term liabilities | 76,958 | 36,077 | ||||||
Total liabilities | 479,831 | 338,002 | ||||||
Stockholders’ equity | 545,272 | 451,611 | ||||||
Total liabilities and stockholders’ equity | $ | 1,025,103 | $ | 789,613 | ||||
RESTORATION HARDWARE HOLDINGS, INC. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(In thousands) | |||||||||||
(Unaudited) | |||||||||||
Twelve Months Ended [a] | |||||||||||
February 1, | February 2, | ||||||||||
2014 | 2013 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net income (loss) | $ | 18,195 | $ | (12,789 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||
Depreciation and amortization | 27,654 | 26,748 | |||||||||
Stock-based compensation expense | 67,622 | 116,183 | |||||||||
Other non-cash items | 3,973 | (61,008 | ) | ||||||||
Change in assets and liabilities: | |||||||||||
Merchandise inventories | (100,937 | ) | (107,454 | ) | |||||||
Accounts payable, accrued expenses, and other | 71,014 | 34,456 | |||||||||
Net cash provided by (used in) operating activities | 87,521 | (3,864 | ) | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Capital expenditures | (93,868 | ) | (49,058 | ) | |||||||
Purchase of trademarks and other intangible assets |
|
— |
(310 | ) | |||||||
Net cash used in investing activities | (93,868 | ) | (49,368 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Net borrowings under revolving line of credit | 2,924 | (25,001 | ) | ||||||||
Repayment of term loan |
|
— |
(15,000 | ) | |||||||
Debt issuance costs |
|
— |
(426 | ) | |||||||
Payments on capital leases and other long-term obligations | (2,555 | ) | (4,214 | ) | |||||||
Proceeds from issuance of common stock–net of issuance costs |
|
— |
97,693 | ||||||||
Stock options exercised | 7,629 | — | |||||||||
Excess tax benefit from exercise of stock options | 3,685 | — | |||||||||
Tax withholdings related to issuance of stock-based awards | (178 | ) | — | ||||||||
Net cash provided by financing activities | 11,505 | 53,052 | |||||||||
Effects of foreign currency exchange rate translation | (123 | ) | 22 | ||||||||
Net increase (decrease) in cash and cash equivalents | 5,035 | (158 | ) | ||||||||
Cash and cash equivalents | |||||||||||
Beginning of period | 8,354 | 8,512 | |||||||||
End of period | $ | 13,389 | $ | 8,354 | |||||||
[a] The twelve months ended
RESTORATION HARDWARE HOLDINGS, INC. | |||||||||||||||||||||
OPERATING METRICS AND OTHER DATA | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Three Months Ended [a] | Twelve Months Ended [a] | ||||||||||||||||||||
February 1, | February 2, | February 1, | February 2, | ||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Growth in net revenues: | |||||||||||||||||||||
Stores [b] | 16 | % | 22 | % | 27 | % | 20 | % | |||||||||||||
Direct | 22 | % | 41 | % | 33 | % | 30 | % | |||||||||||||
Total | 18 | % | 30 | % | 30 | % | 25 | % | |||||||||||||
Comparable brand revenue growth [c] | 24 | % | 29 | % | 31 | % | 28 | % | |||||||||||||
Retail: [d] | |||||||||||||||||||||
Comparable store sales change [e] | 17 | % | 26 | % | 27 | % | 28 | % | |||||||||||||
Retail stores open at beginning of period | 70 | 73 | 71 | 74 | |||||||||||||||||
Stores opened | — |
2 |
2 | 5 | |||||||||||||||||
Stores closed | — | 4 | 3 | 8 | |||||||||||||||||
Retail stores open at end of period | 70 | 71 | 70 | 71 | |||||||||||||||||
Retail sales per leased selling square foot [f] | $ | 392 | $ | 382 | $ | 1,395 | $ | 1,143 | |||||||||||||
Total leased square footage at end of period (in thousands) | 798 | 768 | 798 | 768 | |||||||||||||||||
Total leased selling square footage at end of period (in thousands) [g] | 554 | 501 | 554 | 501 | |||||||||||||||||
Average leased square footage (in thousands) [h] | 797 | 775 | 793 | 784 | |||||||||||||||||
Average leased selling square footage (in thousands) [h] | 537 | 500 | 522 | 504 | |||||||||||||||||
Direct: | |||||||||||||||||||||
Catalogs circulated (in thousands) [i] | — | 5,861 | 12,325 | 32,712 | |||||||||||||||||
Catalog pages circulated (in millions) [i] | — | 669 | 6,583 | 16,029 | |||||||||||||||||
Direct as a percentage of net revenues [j] | 49 | % | 47 | % | 47 | % | 46 | % |
[a] The three months ended
[b] Store data represents retail stores plus outlet stores. Net revenues
for outlet stores for the three months ended
[c] Comparable brand revenue growth includes retail comparable store
sales, including Baby & Child Galleries, and direct net revenues.
Comparable brand revenue growth excludes retail non-comparable store
sales and outlet store net revenues. Refer to footnote [e] below for a
definition of comparable store sales. Because the three and twelve
months ended
[d] Retail data has been calculated based upon retail stores, which includes our Baby & Child Galleries and excludes outlet stores.
[e] Comparable store sales have been calculated based upon retail stores
that were open at least fourteen full months as of the end of the
reporting period and did not change square footage by more than 20%
between periods. If a store is closed for seven days during a month,
that month will be excluded from comparable store sales. Comparable
store net revenues exclude revenues from outlet stores. Because the
three and twelve months ended
[f] Retail sales per leased selling square foot is calculated by dividing total net revenues for all retail stores, comparable and non-comparable, by the average leased selling square footage for the period.
[g] Leased selling square footage is retail space at our stores used to sell our products. Leased selling square footage excludes backrooms at retail stores used for storage, office space or similar matters. Leased selling square footage excludes exterior sales space located outside a store, such as courtyards, gardens and rooftops. Leased selling square footage includes approximately 4,500 square feet related to one owned store location.
[h] Average square footage (leased or leased selling, as applicable) is calculated for each quarter by taking the total applicable square footage at the beginning of the quarter plus the total applicable square footage at the end of the quarter and dividing by two. Average square footage for periods of six, nine and twelve months is calculated by averaging the average square footage for the quarters within such periods.
[i] The catalogs and catalog pages circulated from period to period do not take into account different page sizes per catalog distributed. Page sizes and page counts vary for different catalog mailings and we sometimes mail different versions of a catalog at the same time. Accordingly, period to period comparisons of catalogs circulated and catalog pages circulated do not take these variations into account.
[j] Direct revenues include sales through our catalogs and websites.
RESTORATION HARDWARE HOLDINGS, INC. | ||||||||||||||||||||||||||||||||
RECONCILIATION OF ADJUSTED INCOME STATEMENT ITEMS | ||||||||||||||||||||||||||||||||
(In thousands, except share and per share amounts) | ||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||
Three Months Ended [a] | ||||||||||||||||||||||||||||||||
Reported |
|
Adjusted |
|
Reported |
|
Adjusted |
|
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February 1, |
February 1, |
% of Net |
February 2, |
February 2, |
% of Net |
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2014 |
Adjustments |
2014 |
Revenues |
2013 |
Adjustments |
2013 |
Revenues |
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Net revenues | $ | 471,694 |
$ |
— |
$ | 471,694 | 100.0 | % | $ | 398,055 |
$ |
— |
$ | 398,055 | 100.0 | % | ||||||||||||||||
Cost of goods sold [b] | 296,717 | — | 296,717 | 62.9 | % | 252,881 | (3,250 | ) | 249,631 | 62.7 | % | |||||||||||||||||||||
Gross profit | 174,977 | — | 174,977 | 37.1 | % | 145,174 | 3,250 | 148,424 | 37.3 | % | ||||||||||||||||||||||
Selling, general and administrative expenses [c] | 116,717 | — | 116,717 | 24.7 | % | 233,769 | (126,783 | ) | 106,986 | 26.9 | % | |||||||||||||||||||||
Income (loss) from operations | 58,260 | — | 58,260 | 12.4 | % | (88,595 | ) | 130,033 | 41,438 | 10.4 | % | |||||||||||||||||||||
Interest expense | (1,537 | ) | — | (1,537 | ) | -0.4 | % | (1,178 | ) | — | (1,178 | ) | -0.3 | % | ||||||||||||||||||
Income (loss) before income taxes | 56,723 | — | 56,723 | 12.0 | % | (89,773 | ) | 130,033 | 40,260 | 10.1 | % | |||||||||||||||||||||
Income tax expense (benefit) [d] | 30,081 | (7,392 | ) | 22,689 | 4.8 | % | (61,411 | ) | 77,515 | 16,104 | 4.0 | % | ||||||||||||||||||||
Net income (loss) [e] | $ | 26,642 | $ | 7,392 | $ | 34,034 | 7.2 | % | $ | (28,362 | ) | $ | 52,518 | $ | 24,156 | 6.1 | % | |||||||||||||||
EBITDA [f] | $ | 65,955 | $ | 65,955 | $ | (81,332 | ) | $ | 48,701 | |||||||||||||||||||||||
Weighted-average shares used in computing basic net income (loss) per share [g] | 39,008,383 | 39,008,383 | 35,692,064 | 37,578,314 | ||||||||||||||||||||||||||||
Weighted-average shares used in computing diluted net income (loss) per share [g] | 41,119,175 | 41,119,175 | 35,692,064 | 37,978,500 | ||||||||||||||||||||||||||||
Basic net income (loss) per share | $ | 0.68 | $ | 0.87 | $ | (0.79 | ) | $ | 0.64 | |||||||||||||||||||||||
Diluted net income (loss) per share | $ | 0.65 | $ | 0.83 | $ | (0.79 | ) | $ | 0.64 |
[a] The three months ended
[b] The adjustment to cost of goods sold relates to the anti-dumping exposure. See table titled “Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income” for additional details.
[c] The adjustments for selling, general, and administrative expenses include management and pre-initial public offering board fees, certain non-cash and other one-time compensation, follow-on offering fees, lease termination costs and special committee investigation and remediation costs. See table titled “Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income” for additional details.
[d] As of the end of fiscal 2012, our U.S. operations had returned to a
position of cumulative profits for the most recent three-year period. We
concluded that this record of cumulative profitability in recent years,
coupled with our business plan for profitability in future periods,
provided assurance that our future tax benefits more likely than not
would be realized. Accordingly, in the three months ended
[e] Adjusted net income is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. We define adjusted net income as consolidated net income (loss) less non-recurring and other items. Adjusted net income is included in this press release because management believes that adjusted net income provides meaningful supplemental information for investors regarding the performance of our business and facilitates a meaningful evaluation of actual results on a comparable basis with historical results. Our management uses this non-GAAP financial measure in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter.
[f] EBITDA and Adjusted EBITDA are supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. We define EBITDA as consolidated net income (loss) before depreciation and amortization, interest expense and provision for income taxes. Adjusted EBITDA reflects further adjustments to EBITDA to eliminate the impact of certain items including non-cash or other items that we do not consider representative of our ongoing financial performance. EBITDA and Adjusted EBITDA are included in this press release because they are key metrics used by management and our Board of Directors to assess our financial performance, and Adjusted EBITDA is used in connection with determining incentive compensation under our Management Incentive Program (“MIP”). Additionally, EBITDA is frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We believe that Adjusted EBITDA provides useful information facilitating operating performance comparisons from period to period and company to company. We use EBITDA and Adjusted EBITDA, alongside other GAAP measures such as gross profit, operating income (loss) and net income (loss), to measure profitability, as a key profitability target in our annual and other budgets, and to compare our performance against that of peer companies. Please see the table titled “Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA” for further information.
[g] On an adjusted basis for the three months ended
RESTORATION HARDWARE HOLDINGS, INC. | |||||||||||||||||||||||||||||||||||||||||||||
RECONCILIATION OF ADJUSTED INCOME STATEMENT ITEMS | |||||||||||||||||||||||||||||||||||||||||||||
(In thousands, except share and per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
Twelve Months Ended [a] | |||||||||||||||||||||||||||||||||||||||||||||
Reported |
|
Adjusted |
|
Reported |
|
Adjusted |
|
||||||||||||||||||||||||||||||||||||||
February 1, | February 1, |
% of Net |
February 2, | February 2, |
% of Net |
||||||||||||||||||||||||||||||||||||||||
2014 |
Adjustments |
2014 |
Revenues |
2013 |
Adjustments |
2013 |
Revenues |
||||||||||||||||||||||||||||||||||||||
Net revenues | $ | 1,550,961 |
$ |
— |
$ | 1,550,961 | 100.0 | % | $ | 1,193,046 |
$ |
— |
$ |
1,193,046 |
100.0 | % | |||||||||||||||||||||||||||||
Cost of goods sold [b] | 994,081 | — | 994,081 | 64.1 | % | 756,597 | (3,250 | ) | 753,347 | 63.1 | % | ||||||||||||||||||||||||||||||||||
Gross profit | 556,880 | — | 556,880 | 35.9 | % | 436,449 | 3,250 | 439,699 | 36.9 | % | |||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses [c] | 502,029 | (66,050 | ) | 435,979 | 28.1 | % | 505,485 | (134,460 | ) | 371,025 | 31.1 | % | |||||||||||||||||||||||||||||||||
Income (loss) from operations | 54,851 | 66,050 | 120,901 | 7.8 | % | (69,036 | ) | 137,710 | 68,674 | 5.8 | % | ||||||||||||||||||||||||||||||||||
Interest expense | (5,733 | ) | — | (5,733 | ) | -0.4 | % | (5,776 | ) | — | (5,776 | ) | -0.5 | % | |||||||||||||||||||||||||||||||
Income (loss) before income taxes | 49,118 | 66,050 | 115,168 | 7.4 | % | (74,812 | ) | 137,710 | 62,898 | 5.3 | % | ||||||||||||||||||||||||||||||||||
Income tax expense (benefit) [d] | 30,923 | 15,144 | 46,067 | 2.9 | % | (62,023 | ) | 87,182 | 25,159 | 2.1 | % | ||||||||||||||||||||||||||||||||||
Net income (loss) [e] | $ | 18,195 | $ | 50,906 | $ | 69,101 | 4.5 | % | $ | (12,789 | ) | $ | 50,528 | $ | 37,739 | 3.2 | % | ||||||||||||||||||||||||||||
EBITDA [f] | $ | 82,505 | $ | 148,555 | $ | (42,288 | ) | $ | 96,571 | ||||||||||||||||||||||||||||||||||||
Weighted-average shares used in computing basic net income (loss) per share [g] | 38,671,564 | 38,671,564 | 9,428,828 | 37,131,790 | |||||||||||||||||||||||||||||||||||||||||
Weighted-average shares used in computing diluted net income (loss) per share [g] | 40,416,630 | 40,416,630 | 9,428,828 | 37,242,178 | |||||||||||||||||||||||||||||||||||||||||
Basic net income (loss) per share | $ | 0.47 | $ | 1.79 | $ | (1.36 | ) | $ | 1.02 | ||||||||||||||||||||||||||||||||||||
Diluted net income (loss) per share | $ | 0.45 | $ | 1.71 | $ | (1.36 | ) | $ | 1.01 |
[a] The twelve months ended
[b] The adjustment to cost of goods sold relates to the anti-dumping exposure. See table titled “Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income” for additional details.
[c] The adjustments for selling, general, and administrative expenses include management and pre-initial public offering board fees, certain non-cash and other one-time compensation, follow-on offering fees, lease termination costs and special committee investigation and remediation costs. See table titled “Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income” for additional details.
[d] As of the end of fiscal 2012, our U.S. operations had returned to a
position of cumulative profits for the most recent three-year period. We
concluded that this record of cumulative profitability in recent years,
coupled with our business plan for profitability in future periods,
provided assurance that our future tax benefits more likely than not
would be realized. Accordingly, in the three months ended
[e] Adjusted net income is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. We define adjusted net income as consolidated net income (loss) less non-recurring and other items. Adjusted net income is included in this press release because management believes that adjusted net income provides meaningful supplemental information for investors regarding the performance of our business and facilitates a meaningful evaluation of actual results on a comparable basis with historical results. Our management uses this non-GAAP financial measure in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter.
[f] EBITDA and Adjusted EBITDA are supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. We define EBITDA as consolidated net income (loss) before depreciation and amortization, interest expense and provision for income taxes. Adjusted EBITDA reflects further adjustments to EBITDA to eliminate the impact of certain items including non-cash or other items that we do not consider representative of our ongoing financial performance. EBITDA and Adjusted EBITDA are included in this press release because they are key metrics used by management and our Board of Directors to assess our financial performance, and Adjusted EBITDA is used in connection with determining incentive compensation under our MIP. Additionally, EBITDA is frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We believe that Adjusted EBITDA provides useful information facilitating operating performance comparisons from period to period and company to company. We use EBITDA and Adjusted EBITDA, alongside other GAAP measures such as gross profit, operating income (loss) and net income (loss), to measure profitability, as a key profitability target in our annual and other budgets, and to compare our performance against that of peer companies. Please see the table titled “Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA” for further information.
[g] On an adjusted basis for the twelve months ended
RESTORATION HARDWARE HOLDINGS, INC. | |||||||||||||||||||
RECONCILIATION OF NET INCOME (LOSS) TO OPERATING INCOME (LOSS) | |||||||||||||||||||
AND ADJUSTED OPERATING INCOME | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Three Months Ended [a] | Twelve Months Ended [a] | ||||||||||||||||||
February 1, | February 2, | February 1, | February 2, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Net income (loss) | $ | 26,642 | $ | (28,362 | ) | $ | 18,195 | $ | (12,789 | ) | |||||||||
Interest expense | 1,537 | 1,178 | 5,733 | 5,776 | |||||||||||||||
Income tax expense (benefit) | 30,081 | (61,411 | ) | 30,923 | (62,023 | ) | |||||||||||||
Operating income (loss) | 58,260 | (88,595 | ) | 54,851 | (69,036 | ) | |||||||||||||
Management and pre-IPO board fees [b] | — | 973 | — | 4,258 | |||||||||||||||
Non-cash compensation [c] | — | 115,055 | 63,155 | 115,055 | |||||||||||||||
Follow-on offering fees [d] | — | — | 2,895 | — | |||||||||||||||
Lease termination costs [e] | — | — | — | (386 | ) | ||||||||||||||
Special committee investigation and remediation [f] | — | — | — | 4,778 | |||||||||||||||
Initial public offering costs [g] | — | 10,755 | — | 10,755 | |||||||||||||||
Anti-dumping exposure [h] | — | 3,250 | — | 3,250 | |||||||||||||||
Adjusted operating income | $ | 58,260 | $ | 41,438 | $ | 120,901 | $ | 68,674 |
[a] The three months ended
[b] Represents fees paid in accordance with our management services
agreement with
[c] The twelve months ended
[d] Represents legal and other professional fees incurred in connection
with our follow-on offerings in
[e] Represents changes in estimates of future lease payments related to lease termination cost liabilities for retail stores that were closed prior to their respective lease termination dates.
[f] Represents legal and other professional fees, incurred in connection with the investigation conducted by the special committee of the Board of Directors relating to Mr. Friedman and our subsequent remedial actions.
[g] Represents costs incurred in connection with our initial public
offering, including a fee of
[h] Represents expense incurred as a result of increased tariff
obligations of one of our foreign suppliers following the
RESTORATION HARDWARE HOLDINGS, INC. | ||||||||||||||||||||
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three Months Ended [a] | Twelve Months Ended [a] | |||||||||||||||||||
February 1, | February 2, | February 1, | February 2, | |||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Net income (loss) | $ | 26,642 | $ | (28,362 | ) | $ | 18,195 | $ | (12,789 | ) | ||||||||||
Depreciation and amortization | 7,695 | 7,263 | 27,654 | 26,748 | ||||||||||||||||
Interest expense | 1,537 | 1,178 | 5,733 | 5,776 | ||||||||||||||||
Income tax expense (benefit) | 30,081 | (61,411 | ) | 30,923 | (62,023 | ) | ||||||||||||||
EBITDA [b] | 65,955 | (81,332 | ) | 82,505 | (42,288 | ) | ||||||||||||||
Management and pre-IPO board fees [c] | — | 973 | — | 4,258 | ||||||||||||||||
Non-cash compensation [d] | — | 115,055 | 63,155 | 116,157 | ||||||||||||||||
Follow-on offering fees [e] | — | — | 2,895 | — | ||||||||||||||||
Lease termination costs [f] | — | — | — | (386 | ) | |||||||||||||||
Special committee investigation and remediation [g] | — | — | — | 4,778 | ||||||||||||||||
Initial public offering costs [h] | — | 10,755 | — | 10,755 | ||||||||||||||||
Anti-dumping exposure [i] | — | 3,250 | — | 3,250 | ||||||||||||||||
Other [j] | — | — | — | 47 | ||||||||||||||||
Adjusted EBITDA [b] | $ | 65,955 | $ | 48,701 | $ | 148,555 | $ | 96,571 |
[a] The three months ended
[b] EBITDA and Adjusted EBITDA are supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. We define EBITDA as consolidated net income (loss) before depreciation and amortization, interest expense and provision for income taxes. Adjusted EBITDA reflects further adjustments to EBITDA to eliminate the impact of certain items including non-cash or other items that we do not consider representative of our ongoing financial performance. EBITDA and Adjusted EBITDA are included in this press release because they are key metrics used by management and our Board of Directors to assess our financial performance, and Adjusted EBITDA is used in connection with determining incentive compensation under our MIP. Additionally, EBITDA is frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We believe that Adjusted EBITDA provides useful information facilitating operating performance comparisons from period to period and company to company. We use EBITDA and Adjusted EBITDA, alongside other GAAP measures such as gross profit, operating income (loss) and net income (loss), to measure profitability, as a key profitability target in our annual and other budgets, and to compare our performance against that of peer companies. EBITDA and Adjusted EBITDA are not GAAP measures of our financial performance or liquidity and should not be considered as alternatives to net income (loss), as a measure of financial performance, cash flows from operating activities, as a measure of liquidity, or any other performance measure derived in accordance with GAAP and they should not be construed as an implication that our future results will be unaffected by non-recurring and other items. Our measures of EBITDA and Adjusted EBITDA are not necessarily comparable to other similarly titled captions for other companies due to different methods of calculation.
[c] Represents fees paid in accordance with our management services
agreement with
[d] The twelve months ended
[e] Represents legal and other professional fees incurred in connection
with our follow-on offerings in
[f] Represents changes in estimates of future lease payments related to lease termination cost liabilities for retail stores that were closed prior to their respective lease termination dates.
[g] Represents legal and other professional fees, incurred in connection with the investigation conducted by the special committee of the Board of Directors relating to Mr. Friedman and our subsequent remedial actions.
[h] Represents costs incurred in connection with our initial public
offering, including a fee of
[i] Represents expense incurred as a result of increased tariff
obligations of one of our foreign suppliers following the
[j] Represents certain other items which management believes are not indicative of our ongoing operating performance, which includes foreign exchange gains and losses.
RESTORATION HARDWARE HOLDINGS, INC. | ||||||||||||||||||||||
RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED NET INCOME | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Three Months Ended [a] | Twelve Months Ended [a] | |||||||||||||||||||||
February 1, | February 2, | February 1, | February 2, | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
GAAP net income (loss) | $ | 26,642 | $ | (28,362 | ) | $ | 18,195 | $ | (12,789 | ) | ||||||||||||
Adjustments (pre-tax): | ||||||||||||||||||||||
Management and pre-IPO board fees [b] |
$ |
— |
$ | 973 |
$ |
— |
$ | 4,258 | ||||||||||||||
Non-cash compensation [c] | — | 115,055 | 63,155 | 115,055 | ||||||||||||||||||
Follow-on offering fees [d] | — | — | 2,895 | — | ||||||||||||||||||
Lease termination costs [e] | — | — | — | (386 | ) | |||||||||||||||||
Special committee investigation and remediation [f] | — | — | — | 4,778 | ||||||||||||||||||
Initial public offering costs [g] | — | 10,755 | — | 10,755 | ||||||||||||||||||
Anti-dumping exposure [h] | — | 3,250 | — | 3,250 | ||||||||||||||||||
Subtotal adjusted items | — | 130,033 | 66,050 | 137,710 | ||||||||||||||||||
Impact of income tax items [i] | 7,392 | (77,515 | ) | (15,144 | ) | (87,182 | ) | |||||||||||||||
Adjusted net income [j] | $ | 34,034 | $ | 24,156 | $ | 69,101 | $ | 37,739 |
[a] The three months ended
[b] Represents fees paid in accordance with our management services
agreement with
[c] The twelve months ended
[d] Represents legal and other professional fees incurred in connection
with our follow-on offerings in
[e] Represents changes in estimates of future lease payments related to lease termination cost liabilities for retail stores that were closed prior to their respective lease termination dates.
[f] Represents legal and other professional fees, incurred in connection with the investigation conducted by the special committee of the Board of Directors relating to Mr. Friedman and our subsequent remedial actions.
[g] Represents costs incurred in connection with our initial public
offering, including a fee of
[h] Represents expense incurred as a result of increased tariff
obligations of one of our foreign suppliers following the
[i] As of the end of fiscal 2012, our U.S. operations had returned to a
position of cumulative profits for the most recent three-year period. We
concluded that this record of cumulative profitability in recent years,
coupled with our business plan for profitability in future periods,
provided assurance that our future tax benefits more likely than not
would be realized. Accordingly, in the three and twelve months ended
[j] Adjusted net income is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. We define adjusted net income as consolidated net income (loss) less non-recurring and other items. Adjusted net income is included in this press release because management believes that adjusted net income provides meaningful supplemental information for investors regarding the performance of our business and facilitates a meaningful evaluation of actual results on a comparable basis with historical results. Our management uses this non-GAAP financial measure in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter.
RESTORATION HARDWARE HOLDINGS, INC. | ||||||||||||||||||||
RECONCILIATION OF DILUTED NET INCOME (LOSS) PER SHARE TO | ||||||||||||||||||||
ADJUSTED DILUTED NET INCOME PER SHARE | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three Months Ended [a] | Twelve Months Ended [a] | |||||||||||||||||||
February 1, | February 2, | February 1, | February 2, | |||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Pro forma diluted net income (loss) per share [b] | $ | 0.65 | $ | (0.75 | ) | $ | 0.45 | $ | (0.34 | ) | ||||||||||
EPS impact of adjustments (pre-tax): | ||||||||||||||||||||
Management and pre-IPO board fees [c] |
$ |
— |
$ |
0.03 |
$ |
— |
$ | 0.10 | ||||||||||||
Non-cash compensation [d] |
|
— |
3.03 | 1.56 | 3.09 | |||||||||||||||
Follow-on offering fees [e] |
|
— |
|
— |
0.07 |
|
— | |||||||||||||
Special committee investigation and remediation [f] |
|
— |
|
— |
|
— |
0.13 | |||||||||||||
Initial public offering costs [g] |
|
— |
0.28 |
|
— |
0.29 | ||||||||||||||
Anti-dumping exposure [h] |
|
— |
0.09 |
|
— |
0.09 | ||||||||||||||
Subtotal adjusted items |
|
— |
3.43 | 1.63 | 3.70 | |||||||||||||||
Impact of income tax items [i] | 0.18 | (2.04 | ) | (0.37 | ) | (2.35 | ) | |||||||||||||
Adjusted diluted net income per share [j] | $ | 0.83 | $ | 0.64 | $ | 1.71 | $ | 1.01 |
[a] The three months ended
[b] Pro forma diluted net income per share for the three and twelve
months ended
[c] Represents fees paid in accordance with our management services
agreement with
[d] The twelve months ended
[e] Represents legal and other professional fees incurred in connection
with our follow-on offerings in
[f] Represents legal and other professional fees incurred in connection with the investigation conducted by the special committee of the Board of Directors relating to Mr. Friedman and our subsequent remedial actions.
[g] Represents costs incurred in connection with our initial public
offering, including a fee of
[h] Represents expense incurred as a result of increased tariff
obligations of one of our foreign suppliers following the
[i] As of the end of fiscal 2012, our U.S. operations had returned to a
position of cumulative profits for the most recent three-year period. We
concluded that this record of cumulative profitability in recent years,
coupled with our business plan for profitability in future periods,
provided assurance that our future tax benefits more likely than not
would be realized. Accordingly, in the three and twelve months ended
[j] Adjusted diluted net income per share is a supplemental measure of financial performance that is not required by, or presented in accordance with GAAP. We define adjusted diluted net income per share as consolidated net income (loss) less non-recurring and other items divided by the Company’s post-initial public offering share count. Adjusted diluted net income per share is included in this press release because management believes that adjusted diluted net income per share provides meaningful supplemental information for investors regarding the performance of our business and facilitates a meaningful evaluation of actual results on a comparable basis with historical results. Our management uses this non-GAAP financial measure in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter.
Source:
Restoration Hardware Holdings, Inc.
Cammeron McLaughlin,
415-945-4998
VP, Investor Relations
cmclaughlin@rh.com