Restoration Hardware Holdings, Inc. Reports Record Fourth Quarter and Fiscal Year 2012 Financial Results
Q4 Net Revenues Increased 30%; Q4 Comparable Store Sales Increased
26%; Q4 Adjusted Diluted EPS of
Company Provides Q1 Guidance of Revenue Growth Between 28% and
31%, Diluted EPS of
Company Provides Fiscal 2013 Guidance of Revenue Growth Between
19% and 22%, Diluted EPS of
Fourth Quarter Highlights
-
Net revenues increased 30% on top of a 19% increase for the same
period last year
- Comparable store sales increased 26% on top of a 22% increase for the same period last year
- Direct revenues increased 41%, on top of a 23% increase for the same period last year
-
Adjusted net income increased 24% from the same period last year to
$24.2 million -
GAAP net loss of
$28.4 million was primarily driven by one-time IPO related charges -
Adjusted diluted earnings per share reached
$0.64 -
GAAP net loss per diluted share of
$0.79
Full Year Highlights
-
Net revenues increased 25% on top of a 24% increase last year
- Comparable store sales increased 28% on top of a 25% increase last year
- Direct revenues increased 30% on top of a 27% increase last year
-
Adjusted net income increased 43% from last year to
$37.7 million -
GAAP net loss was
$12.8 million -
Adjusted diluted earnings per share reached
$1.01 -
GAAP net loss per diluted share of
$1.36
Mr. Alberini continued, “The execution of our real estate transformation
into our new
Mr. Friedman continued, “This Spring, our collection will be presented
across six Source Book titles and will total over 1,600 pages. Our
Interiors and Small Spaces Source Books include the addition of new
furniture collections and finishes, the expansion and presentation of
color across our upholstered furniture and textiles collections, and
dramatic new lighting collections highlighted throughout the books. In
addition, we are introducing two new businesses this Spring, RH Objects
of Curiosity and RH Tableware, which we believe represent significant
long-term opportunities for RH.” Mr. Friedman concluded, “Further, our
newest business, RH Contemporary Art, has acquired the
Fourth Quarter Fiscal 2012 Financial Results
Revenue - Net revenues for the fourth quarter of fiscal 2012
increased 30% to
- Comparable store sales on a 13 week basis increased 26% for the fourth quarter of fiscal 2012. This growth compares to an increase of 22% in comparable store sales for the fourth quarter of fiscal 2011.
-
As of
February 2, 2013 , the Company operated a total of 71 retail stores, consisting of 68 Galleries and 3 Full Line Design Galleries, as well as 13 outlet stores throughoutthe United States andCanada . This compares to a total of 74 retail stores, consisting of 72 Galleries and 2 Full Line Design Galleries, and 10 outlet stores open at the end of the fourth quarter of fiscal 2011. -
Direct revenues increased 41% to
$187.9 million for the fourth quarter of fiscal 2012. Excluding the 14th week, direct revenues increased 32% compared to the fourth quarter of fiscal 2011. This growth is on top of the 23% increase in direct revenues for the fourth quarter of fiscal 2011.
Operating Income (Loss)* - Adjusted operating income for the
fourth quarter of fiscal 2012 increased 21% to
EBITDA* - Adjusted EBITDA for the fourth quarter of fiscal 2012
increased 18% to
Net Income (Loss)* - Adjusted net income increased 24% to
Earnings Per Share* - Adjusted diluted EPS was
Fiscal Year 2012 Financial Highlights
Revenue - Net revenues for fiscal 2012 increased 25% to
- Comparable store sales on a 52 week basis increased 28% for fiscal 2012. This growth compares to an increase of 25% in fiscal 2011.
-
Direct revenues increased 30% to
$549.7 million for fiscal 2012. Excluding the 53rd week, fiscal 2012 direct revenues increased 27% compared to fiscal 2011. This growth is on top of a 27% increase for fiscal 2011.
Operating Income (Loss)* - Adjusted operating income for the
fiscal year period increased 40% to
EBITDA* - Adjusted EBITDA for the fiscal year period increased
20% to
Net Income (Loss)* - Adjusted net income for the fiscal year 2012
increased 43% to
Earnings Per Share* - Fiscal year 2012 adjusted diluted EPS was
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 2013:
-
Net revenues in the range of
$280 million to $285 million -
Net income in the range of a loss of
$1 million to breakeven -
Diluted EPS in the range of
($0.02) to breakeven
The Company is providing the following guidance for the fiscal year
ending
-
Net revenues in the range of
$1.42 billion to $1.45 billion -
Net income in the range of
$51 million to $54 million -
Diluted EPS in the range of
$1.29 to $1.37
Note: The Company’s fiscal year 2013 will include 52 weeks compared to fiscal year 2012 which included 53 weeks.
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, EBITDA, adjusted EBITDA, adjusted net income, pro forma EPS and adjusted EPS (collectively the “non-GAAP financial measures”). 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 have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of
the federal securities laws including statements related to the
performance of our full line
RESTORATION HARDWARE HOLDINGS, INC. FINANCIAL STATEMENTS AND RELATED INFORMATION |
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TABLE OF CONTENTS |
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Page 7. |
Condensed Consolidated Statements of Operations |
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Page 8. |
Condensed Consolidated Balance Sheets |
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Page 9. |
Condensed Consolidated Statements of Cash Flows |
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Page 10. |
Operating Metrics and Other Data |
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Page 11. |
Reconciliation of Adjusted Income Statement Items |
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Page 13. |
Reconciliation of Net Income (Loss) to Operating Income (Loss) and Adjusted Operating Income |
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Page 14. |
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA |
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Page 15. |
Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income |
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Page 16. |
Reconciliation of Pro Forma Net Income (Loss) Per Share to Adjusted Net Income Per Share |
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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 2, | % of Net | January 28, | % of Net | February 2, | % of Net | January 28, | % of Net | |||||||||||||||||||||||||||||
2013 | Revenues | 2012 | Revenues | 2013 | Revenues | 2012 | Revenues | |||||||||||||||||||||||||||||
Net revenues | $ | 398,055 | 100.0 | % | $ | 305,242 | 100.0 | % | $ | 1,193,046 | 100.0 | % | $ | 958,084 | 100.0 | % | ||||||||||||||||||||
Cost of goods sold | 252,881 | 63.5 | % | 187,716 | 61.5 | % | 756,597 | 63.4 | % | 601,735 | 62.8 | % | ||||||||||||||||||||||||
Gross profit | 145,174 | 36.5 | % | 117,526 | 38.5 | % | 436,449 | 36.6 | % | 356,349 | 37.2 | % | ||||||||||||||||||||||||
Selling, general and administrative expenses | 233,769 | 58.7 | % | 90,615 | 29.7 | % | 505,485 | 42.4 | % | 329,506 | 34.4 | % | ||||||||||||||||||||||||
Income (loss) from operations | (88,595 | ) | -22.2 | % | 26,911 | 8.8 | % | (69,036 | ) | -5.8 | % | 26,843 | 2.8 | % | ||||||||||||||||||||||
Interest expense | (1,178 | ) | -0.3 | % | (1,648 | ) | -0.5 | % | (5,776 | ) | -0.5 | % | (5,134 | ) | -0.5 | % | ||||||||||||||||||||
Income (loss) before income taxes | (89,773 | ) | -22.5 | % | 25,263 | 8.3 | % | (74,812 | ) | -6.3 | % | 21,709 | 2.3 | % | ||||||||||||||||||||||
Income tax expense (benefit) | (61,411 | ) | -15.4 | % | 1,209 | 0.4 | % | (62,023 | ) | -5.2 | % | 1,121 | 0.1 | % | ||||||||||||||||||||||
Net income (loss) | $ | (28,362 | ) | -7.1 | % | $ | 24,054 | 7.9 | % | $ | (12,789 | ) | -1.1 | % | $ | 20,588 | 2.2 | % | ||||||||||||||||||
Adjusted EBITDA [b] | $ | 48,701 | 12.2 | % | $ | 41,305 | 13.5 | % | $ | 96,571 | 8.1 | % | $ | 80,154 | 8.4 | % | ||||||||||||||||||||
Weighted-average shares used in computing basic and diluted net income (loss) per share | 35,692,064 | 1,000 | 9,428,828 | 468 | ||||||||||||||||||||||||||||||||
Basic and diluted net income (loss) per share | $ | (0.79 | ) | $ | 24,054 | $ | (1.36 | ) | $ | 43,991 | ||||||||||||||||||||||||||
Pro forma weighted-average shares used in computing pro forma basic and diluted net loss per share [c] | 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] EBITDA and Adjusted EBITDA are supplemental
measures of financial performance that are not required by, or presented
in accordance with, Generally Accepted Accounting Principles (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, our Board of Directors and our principal
shareholders 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 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. We believe that Adjusted EBITDA provides
useful information facilitating operating performance comparisons from
period to period and company to company. Please see the table titled
“Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA” for
further information.
[c] On a pro forma basis, basic and diluted
shares outstanding include (1) the impact of the Company’s
reorganization, as further described in the Company’s final prospectus
filed with the
RESTORATION HARDWARE HOLDINGS, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
February 2,
2013 |
January 28,
2012 |
|||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 8,354 | $ | 8,512 | ||||
Merchandise inventories | 353,329 | 245,876 | ||||||
Other current assets | 131,075 | 68,490 | ||||||
Total current assets | 492,758 | 322,878 | ||||||
Property and equipment—net | 111,406 | 83,558 | ||||||
Goodwill and other intangibles | 172,724 | 175,121 | ||||||
Other assets | 12,725 | 5,253 | ||||||
Total assets | $ | 789,613 | $ | 586,810 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Accounts payable and accrued expenses | $ | 145,353 | $ | 105,694 | ||||
Other current liabilities | 74,071 | 56,280 | ||||||
Total current liabilities | 219,424 | 161,974 | ||||||
Revolving line of credit and term loan | 82,501 | 122,300 | ||||||
Other long term liabilities | 36,077 | 52,073 | ||||||
Total liabilities | 338,002 | 336,347 | ||||||
Stockholders’ equity | 451,611 | 250,463 | ||||||
Total liabilities and stockholders’ equity | $ | 789,613 | $ | 586,810 | ||||
RESTORATION HARDWARE HOLDINGS, INC. | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
(In thousands) | ||||||||||
(Unaudited) | ||||||||||
Twelve Months Ended [a] | ||||||||||
February 2,
2013 |
January 28,
2012 |
|||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||
Net income (loss) | $ | (12,789 | ) | $ | 20,588 | |||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||
Depreciation and amortization | 26,748 | 29,186 | ||||||||
Stock-based compensation expense and other non-cash compensation | 116,183 | 7,907 | ||||||||
Other non-cash items | (61,008 | ) | 11,546 | |||||||
Change in assets and liabilities: | ||||||||||
Merchandise inventories | (107,454 | ) | (39,475 | ) | ||||||
Accounts payable, accrued expenses, and other | 34,456 | (12,631 | ) | |||||||
Net cash provided by (used in) operating activities | (3,864 | ) | 17,121 | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||
Capital expenditures | (49,058 | ) | (25,593 | ) | ||||||
Purchase of domain name | (310 | ) | — | |||||||
Net cash used in investing activities | (49,368 | ) | (25,593 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||
Net borrowings under line of credit | (25,001 | ) | (4,607 | ) | ||||||
Net borrowings under term loan | (15,000 | ) | 15,000 | |||||||
Debt issuance costs | (426 | ) | (2,834 | ) | ||||||
Payments on capital leases | (4,214 | ) | (4,188 | ) | ||||||
Proceeds from issuance of common stock—net of issuance costs | 97,693 | — | ||||||||
Net cash provided by financing activities | 53,052 | 3,371 | ||||||||
Effects of foreign currency exchange rate translation | 22 | 249 | ||||||||
Net decrease in cash and cash equivalents | (158 | ) | (4,852 | ) | ||||||
Cash and cash equivalents | ||||||||||
Beginning of period | 8,512 | 13,364 | ||||||||
End of period | $ | 8,354 | $ | 8,512 | ||||||
[a] The twelve months ended February 2, 2013 and January 28, 2012 included 53 weeks and 52 weeks, respectively. |
||||||||||
RESTORATION HARDWARE HOLDINGS, INC. | ||||||||||||||||||||
OPERATING METRICS AND OTHER DATA | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three Months Ended [a] | Twelve Months Ended [a] | |||||||||||||||||||
February 2,
2013 |
January 28,
2012 |
February 2,
2013 |
January 28,
2012 |
|||||||||||||||||
Growth in net revenues: | ||||||||||||||||||||
Stores [b] | 22 | % | 17 | % | 20 | % | 22 | % | ||||||||||||
Direct | 41 | % | 23 | % | 30 | % | 27 | % | ||||||||||||
Total | 30 | % | 19 | % | 25 | % | 24 | % | ||||||||||||
Retail [c]: | ||||||||||||||||||||
Comparable store sales change [d] | 26 | % | 22 | % | 28 | % | 25 | % | ||||||||||||
Retail stores open at beginning of period | 73 | 84 | 74 | 91 | ||||||||||||||||
Stores opened | 2 | 2 | 5 | 5 | ||||||||||||||||
Stores closed | 4 | 12 | 8 | 22 | ||||||||||||||||
Retail stores open at end of period | 71 | 74 | 71 | 74 | ||||||||||||||||
Retail sales per leased selling square foot [e] | $ | 382 | $ | 293 | $ | 1,143 | $ | 846 | ||||||||||||
Total leased square footage at end of period (in thousands) | 768 | 808 | 768 | 808 | ||||||||||||||||
Total leased selling square footage at end of period (in thousands) [f] | 501 | 516 | 501 | 516 | ||||||||||||||||
Direct: | ||||||||||||||||||||
Catalogs circulated (in thousands) [g] | 5,861 | 4,974 | 32,712 | 26,052 | ||||||||||||||||
Catalog pages circulated (in millions) [g] | 669 | 726 | 16,029 | 8,848 | ||||||||||||||||
Direct as a percentage of net revenues [h] | 47 | % | 44 | % | 46 | % | 44 | % | ||||||||||||
[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] Retail data have been
calculated based upon retail stores, which includes our Baby & Child
stores, and excludes outlet stores.
[d] 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 fiscal 2012 was a 53-week year, comparable
store sales percentage for fiscal 2012 excludes the extra week of sales.
[e]
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.
[f]
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.
[g] 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.
[h] 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 | |||||||||||||||||||||||||||||||||||
February 2, | February 2, | % of Net | January 28, | January 28, | % of Net | |||||||||||||||||||||||||||||||||
2013 | Adjustments | 2013 | Revenues | 2012 | Adjustments | 2012 | Revenues | |||||||||||||||||||||||||||||||
Net revenues | $ | 398,055 | $ | — | $ | 398,055 | 100.0 | % | $ | 305,242 | $ | — | $ | 305,242 | 100.0 | % | ||||||||||||||||||||||
Cost of goods sold [b] | 252,881 | (3,250 | ) | 249,631 | 62.7 | % | 187,716 | — | 187,716 | 61.5 | % | |||||||||||||||||||||||||||
Gross profit | 145,174 | 3,250 | 148,424 | 37.3 | % | 117,526 | — | 117,526 | 38.5 | % | ||||||||||||||||||||||||||||
Selling, general and administrative expenses [c] | 233,769 | (126,783 | ) | 106,986 | 26.9 | % | 90,615 | (7,220 | ) | 83,395 | 27.3 | % | ||||||||||||||||||||||||||
Income (loss) from operations | (88,595 | ) | 130,033 | 41,438 | 10.4 | % | 26,911 | 7,220 | 34,131 | 11.2 | % | |||||||||||||||||||||||||||
Interest expense | (1,178 | ) | — | (1,178 | ) | -0.3 | % | (1,648 | ) | — | (1,648 | ) | -0.5 | % | ||||||||||||||||||||||||
Income (loss) before income taxes | (89,773 | ) | 130,033 | 40,260 | 10.1 | % | 25,263 | 7,220 | 32,483 | 10.7 | % | |||||||||||||||||||||||||||
Income tax expense (benefit) [d] | (61,411 | ) | 77,515 | 16,104 | 4.0 | % | 1,209 | 11,784 | 12,993 | 4.3 | % | |||||||||||||||||||||||||||
Net income (loss) [e] | $ | (28,362 | ) | $ | 52,518 | $ | 24,156 | 6.1 | % | $ | 24,054 | $ | (4,564 | ) | $ | 19,490 | 6.4 | % | ||||||||||||||||||||
Weighted-average shares used in computing basic net income (loss) per share [f] | 35,692,064 | 37,578,314 | 1,000 | 1,000 | ||||||||||||||||||||||||||||||||||
Weighted-average shares used in computing diluted net income (loss) per share [f] | 35,692,064 | 37,978,500 | 1,000 | 1,000 | ||||||||||||||||||||||||||||||||||
Basic net income (loss) per share | $ | (0.79 | ) | $ | 0.64 | $ | 24,054 | $ | 19,490 | |||||||||||||||||||||||||||||
Diluted net income (loss) per share | $ | (0.79 | ) | $ | 0.64 | $ | 24,054 | $ | 19,490 | |||||||||||||||||||||||||||||
[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, non-cash and other one-time compensation,
terminated operations, severance and other transactions costs, and
initial public offering 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]
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 2, | February 2, | % of Net | January 28, | January 28, | % of Net | |||||||||||||||||||||||||||||||||
2013 | Adjustments | 2013 | Revenues | 2012 | Adjustments | 2012 | Revenues | |||||||||||||||||||||||||||||||
Net revenues | $ | 1,193,046 | $ | — | $ | 1,193,046 | 100.0 | % | $ | 958,084 | $ | — | $ | 958,084 | 100.0 | % | ||||||||||||||||||||||
Cost of goods sold [b] | 756,597 | (3,250 | ) | 753,347 | 63.1 | % | 601,735 | — | 601,735 | 62.8 | % | |||||||||||||||||||||||||||
Gross profit | 436,449 | 3,250 | 439,699 | 36.9 | % | 356,349 | — | 356,349 | 37.2 | % | ||||||||||||||||||||||||||||
Selling, general and administrative expenses [c] | 505,485 | (134,460 | ) | 371,025 | 31.1 | % | 329,506 | (22,376 | ) | 307,130 | 32.1 | % | ||||||||||||||||||||||||||
Income (loss) from operations | (69,036 | ) | 137,710 | 68,674 | 5.8 | % | 26,843 | 22,376 | 49,219 | 5.1 | % | |||||||||||||||||||||||||||
Interest expense | (5,776 | ) | — | (5,776 | ) | -0.5 | % | (5,134 | ) | — | (5,134 | ) | -0.5 | % | ||||||||||||||||||||||||
Income (loss) before income taxes | (74,812 | ) | 137,710 | 62,898 | 5.3 | % | 21,709 | 22,376 | 44,085 | 4.6 | % | |||||||||||||||||||||||||||
Income tax expense (benefit) [d] | (62,023 | ) | 87,182 | 25,159 | 2.1 | % | 1,121 | 16,513 | 17,634 | 1.8 | % | |||||||||||||||||||||||||||
Net income (loss) [e] | $ | (12,789 | ) | $ | 50,528 | $ | 37,739 | 3.2 | % | $ | 20,588 | $ | 5,863 | $ | 26,451 | 2.8 | % | |||||||||||||||||||||
Weighted-average shares used in computing basic net income (loss) per share [f] | 9,428,828 | 37,131,790 | 468 | 468 | ||||||||||||||||||||||||||||||||||
Weighted-average shares used in computing diluted net income (loss) per share [f] | 9,428,828 | 37,242,178 | 468 | 468 | ||||||||||||||||||||||||||||||||||
Basic net income (loss) per share | $ | (1.36 | ) | $ | 1.02 | $ | 43,991 | $ | 56,519 | |||||||||||||||||||||||||||||
Diluted net income (loss) per share | $ | (1.36 | ) | $ | 1.01 | $ | 43,991 | $ | 56,519 | |||||||||||||||||||||||||||||
[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, non-cash and other one-time compensation,
terminated operations, severance and other transactions costs, lease
termination costs, special committee investigation and remediation, and
initial public offering 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 twelve 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]
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 2,
2013 |
January 28,
2012 |
February 2,
2013 |
January 28,
2012 |
||||||||||||||||
Net income (loss) | $ | (28,362 | ) | $ | 24,054 | $ | (12,789 | ) | $ | 20,588 | |||||||||
Interest expense | 1,178 | 1,648 | 5,776 | 5,134 | |||||||||||||||
Income tax expense (benefit) | (61,411 | ) | 1,209 | (62,023 | ) | 1,121 | |||||||||||||
Operating income (loss) | (88,595 | ) | 26,911 | (69,036 | ) | 26,843 | |||||||||||||
Management and pre-IPO board fees [b] | 973 | 7,170 | 4,258 | 10,715 | |||||||||||||||
Non-cash and other one-time compensation [c] | 115,055 | — | 115,055 | 6,350 | |||||||||||||||
Terminated operations [d] | — | (100 | ) | — | 1,580 | ||||||||||||||
Severance and other transaction costs [e] | — | 150 | — | 621 | |||||||||||||||
Lease termination costs [f] | — | — | (386 | ) | 3,110 | ||||||||||||||
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 | — | |||||||||||||||
Adjusted operating income | $ | 41,438 | $ | 34,131 | $ | 68,674 | $ | 49,219 | |||||||||||
[a] The three months ended
[b] Includes fees and expenses paid in accordance
with our management services agreement with
[c]
The three and twelve months ended
[d] Includes
costs related to the restructuring of our
[e]
Amounts include executive severance and other related costs.
[f]
Includes lease termination costs for retail stores that were closed
prior to their respective lease termination dates. The amount in the
twelve months ended
[g]
Represents legal and other professional fees, incurred in connection
with the investigation conducted by the special committee of the
[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
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 2,
2013 |
January 28,
2012 |
February 2,
2013 |
January 28,
2012 |
||||||||||||||||
Net income (loss) | $ | (28,362 | ) | $ | 24,054 | $ | (12,789 | ) | $ | 20,588 | |||||||||
Depreciation and amortization | 7,263 | 6,830 | 26,748 | 29,186 | |||||||||||||||
Interest expense | 1,178 | 1,648 | 5,776 | 5,134 | |||||||||||||||
Income tax expense (benefit) | (61,411 | ) | 1,209 | (62,023 | ) | 1,121 | |||||||||||||
EBITDA [b] | (81,332 | ) | 33,741 | (42,288 | ) | 56,029 | |||||||||||||
Management and pre-IPO board fees [c] | 973 | 7,170 | 4,258 | 10,715 | |||||||||||||||
Non-cash and other one-time compensation [d] | 115,055 | 344 | 116,157 | 7,907 | |||||||||||||||
Terminated operations [e] | — | (100 | ) | — | 1,580 | ||||||||||||||
Severance and other transaction costs [f] | — | 150 | — | 621 | |||||||||||||||
Lease termination costs [g] | — | — | (386 | ) | 3,110 | ||||||||||||||
Special committee investigation and remediation [h] | — | — | 4,778 | — | |||||||||||||||
Initial public offering costs [i] | 10,755 | — | 10,755 | — | |||||||||||||||
Anti-dumping exposure [j] | 3,250 | — | 3,250 | — | |||||||||||||||
Other [k] | — | — | 47 | 192 | |||||||||||||||
Adjusted EBITDA [b] | $ | 48,701 | $ | 41,305 | $ | 96,571 | $ | 80,154 | |||||||||||
[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, our
[c] Includes fees and expenses
paid in accordance with our management services agreement with
[d]
The three and twelve months ended
[e] Includes costs related to the
restructuring of our
[f] Amounts include
executive severance and other related costs.
[g] Includes lease
termination costs for retail stores that were closed prior to their
respective lease termination dates. The amount in the twelve months
ended
[h]
Represents legal and other professional fees, incurred in connection
with the investigation conducted by the special committee of the
[i] Represents costs
incurred in connection with our initial public offering, including a fee
of
[j] Represents expense incurred as a result of increased
tariff obligations of one of our foreign suppliers following the
[k] Represents
certain other items which management believes are not indicative of our
ongoing operating performance. The twelve months ended
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 2,
2013 |
January 28,
2012 |
February 2,
2013 |
January 28,
2012 |
|||||||||||||||||
GAAP net income (loss) | $ | (28,362 | ) | $ | 24,054 | $ | (12,789 | ) | $ | 20,588 | ||||||||||
Adjustments (pre-tax): | ||||||||||||||||||||
Management and pre-IPO board fees [b] | $ | 973 | $ | 7,170 | $ | 4,258 | $ | 10,715 | ||||||||||||
Non-cash and other one-time compensation [c] | 115,055 | — | 115,055 | 6,350 | ||||||||||||||||
Terminated operations [d] | — | (100 | ) | — | 1,580 | |||||||||||||||
Severance and other transaction costs [e] | — | 150 | — | 621 | ||||||||||||||||
Lease termination costs [f] | — | — | (386 | ) | 3,110 | |||||||||||||||
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 | — | ||||||||||||||||
Subtotal adjusted items | 130,033 | 7,220 | 137,710 | 22,376 | ||||||||||||||||
Impact of income tax items [j] | (77,515 | ) | (11,784 | ) | (87,182 | ) | (16,513 | ) | ||||||||||||
Adjusted net income [k] | $ | 24,156 | $ | 19,490 | $ | 37,739 | $ | 26,451 | ||||||||||||
[a] The three months ended
[b] Represents fees paid in accordance with our
management services agreement with
[c]
The three and twelve months ended
[d]
Represents costs related to the restructuring of our
[e] Amounts include executive severance and other related
costs.
[f] Includes lease termination costs for retail stores that
were closed prior to their respective lease termination dates. The
amount in the twelve months ended
[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 our former Chairman and Co-Chief
Executive Officer 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]
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
[k]
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 PRO FORMA NET INCOME PER SHARE TO | ||||||||||
ADJUSTED NET INCOME PER SHARE | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | Twelve Months Ended | |||||||||
February 2,
2013 |
February 2,
2013 |
|||||||||
Pro forma diluted net loss per share [a] | $ | (0.75 | ) | $ | (0.34 | ) | ||||
EPS impact of adjustments (pre-tax): | ||||||||||
Management and pre-IPO board fees [b] | $ | 0.03 | $ | 0.10 | ||||||
Non-cash and other one-time compensation [c] | 3.03 | 3.09 | ||||||||
Special committee investigation and remediation [d] | — | 0.13 | ||||||||
Initial public offering costs [e] | 0.28 | 0.29 | ||||||||
Anti-dumping exposure [f] | 0.09 | 0.09 | ||||||||
Subtotal adjusted items | 3.43 | 3.70 | ||||||||
Impact of income tax items [g] | (2.04 | ) | (2.35 | ) | ||||||
Adjusted diluted net income per share [h] | $ | 0.64 | $ | 1.01 | ||||||
[a] Pro forma diluted net loss per share is calculated based on GAAP net
income and the Company’s vested share count as if (1) the Reorganization
and (2) initial public offering had been completed as of the beginning
of the respective periods and the common stock resulting therefrom was
outstanding for the respective periods. See table titled “Reconciliation
of GAAP Net Income (Loss) to Adjusted Net Income” for pro forma net
income calculation.
[b] Represents fees and expenses paid in
accordance with our management services agreement with
[c] The three and twelve months ended
[d]
Represents legal and other professional fees, incurred in connection
with the investigation conducted by the special committee of the
[e] Represents costs
incurred in connection with our initial public offering, including a fee
of
[f] Represents expense incurred as a result of increased
tariff obligations of one of our foreign suppliers following the
[g] 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
[h] 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
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 net income per share is included
in this press release because management believes that adjusted 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@restorationhardware.com