10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on December 9, 2021
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of |
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(I.R.S. Employer |
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(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
(Title of each class) |
(Trading symbol) |
(Name of each exchange on which registered) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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☒ |
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Accelerated filer |
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☐ |
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Non-accelerated filer |
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☐ |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of December 3, 2021,
RH
INDEX TO FORM 10-Q
PART I
ITEM 1. FINANCIAL STATEMENTS
RH
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts) (Unaudited)
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OCTOBER 30, |
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JANUARY 30, |
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2021 |
2021 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
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$ |
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Accounts receivable—net |
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Merchandise inventories |
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Prepaid expense and other current assets |
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Total current assets |
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Property and equipment—net |
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Operating lease right-of-use assets |
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Goodwill |
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Tradenames, trademarks and other intangible assets |
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Deferred tax assets |
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Equity method investments |
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Other non-current assets |
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Total assets |
$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable and accrued expenses |
$ |
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$ |
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Deferred revenue and customer deposits |
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Convertible senior notes due 2023—net |
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Convertible senior notes due 2024—net |
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— |
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Operating lease liabilities |
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Other current liabilities |
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Total current liabilities |
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Asset based credit facility |
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— |
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— |
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Term loan—net |
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— |
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Equipment promissory notes—net |
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Convertible senior notes due 2023—net |
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Convertible senior notes due 2024—net |
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Non-current operating lease liabilities |
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Non-current finance lease liabilities |
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Other non-current obligations |
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Total liabilities |
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Commitments and contingencies (Note 16) |
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Mezzanine equity—convertible senior notes (Note 9) |
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— |
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Stockholders’ equity: |
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Preferred stock—$ |
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Common stock—$ |
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Additional paid-in capital |
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Accumulated other comprehensive income (loss) |
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Retained earnings (accumulated deficit) |
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( |
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Total stockholders’ equity |
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Total liabilities, mezzanine equity and stockholders’ equity |
$ |
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$ |
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The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
RH
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts) (Unaudited)
|
THREE MONTHS ENDED |
NINE MONTHS ENDED |
||||||||||
|
OCTOBER 30, |
OCTOBER 31, |
OCTOBER 30, |
OCTOBER 31, |
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2021 |
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2020 |
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2021 |
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2020 |
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Net revenues |
$ |
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$ |
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$ |
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$ |
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Cost of goods sold |
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Gross profit |
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Selling, general and administrative expenses |
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Income from operations |
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Other expenses |
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Interest expense—net |
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Tradename impairment |
— |
— |
— |
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(Gain) loss on extinguishment of debt |
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— |
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( |
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Total other expenses |
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Income before income taxes |
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Income tax expense |
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Income before equity method investments |
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Share of equity method investments losses |
( |
— |
( |
— |
||||||||
Net income |
$ |
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$ |
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$ |
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$ |
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Weighted-average shares used in computing basic net income per share |
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Basic net income per share |
$ |
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$ |
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$ |
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$ |
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Weighted-average shares used in computing diluted net income per share |
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Diluted net income per share |
$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
4 | 2021 THIRD QUARTER FORM 10-Q |
PART I. FINANCIAL INFORMATION |
RH
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands) (Unaudited)
|
THREE MONTHS ENDED |
NINE MONTHS ENDED |
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|
OCTOBER 30, |
OCTOBER 31, |
OCTOBER 30, |
OCTOBER 31, |
||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||
Net income |
$ |
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$ |
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$ |
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$ |
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||||
Net gains (losses) from foreign currency translation |
|
( |
( |
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( |
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|||||
Total comprehensive income |
$ |
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$ |
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$ |
|
$ |
|
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
PART I. FINANCIAL INFORMATION |
2021 THIRD QUARTER FORM 10-Q | 5 |
RH
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share amounts) (Unaudited)
THREE MONTHS ENDED |
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COMMON STOCK |
TREASURY STOCK |
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ACCUMULATED |
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RETAINED |
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ADDITIONAL |
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OTHER |
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EARNINGS |
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TOTAL |
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MEZZANINE |
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PAID-IN |
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COMPREHENSIVE |
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(ACCUMULATED |
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STOCKHOLDERS' |
|||||||||||||||||
EQUITY |
SHARES |
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AMOUNT |
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CAPITAL |
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INCOME (LOSS) |
|
DEFICIT) |
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SHARES |
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AMOUNT |
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EQUITY |
|||||||||||
Balances—July 31, 2021 |
$ |
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|
|
$ |
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$ |
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$ |
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|
$ |
|
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— |
|
$ |
— |
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$ |
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|||
Stock-based compensation |
— |
|
— |
— |
|
— |
— |
— |
— |
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|||||||||||||||
Vested and delivered restricted stock units |
— |
|
|
— |
( |
— |
— |
— |
— |
|
( |
|||||||||||||||
Exercise of stock options |
— |
|
|
— |
|
— |
— |
— |
— |
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|||||||||||||||
Settlement of convertible senior notes |
— |
|
— |
( |
— |
— |
( |
|
( |
|||||||||||||||||
Exercise of call option under bond hedge upon settlement of convertible senior notes |
— |
( |
— |
|
— |
— |
|
( |
— |
|||||||||||||||||
Reclassification of equity component to mezzanine equity related to early converted senior notes outstanding―net |
( |
|
— |
— |
— |
— |
— |
— |
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|||||||||||||||||
Net income |
— |
|
— |
— |
— |
— |
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— |
— |
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|||||||||||||||
Net losses from foreign currency translation |
— |
|
— |
— |
— |
( |
— |
— |
— |
|
( |
|||||||||||||||
Balances—October 30, 2021 |
$ |
|
|
|
|
$ |
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$ |
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|
$ |
|
|
$ |
|
|
— |
|
$ |
— |
|
$ |
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Balances—August 1, 2020 |
$ |
— |
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|
$ |
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|
$ |
|
|
$ |
( |
|
$ |
( |
|
|
|
$ |
( |
|
$ |
|
|||
Stock-based compensation |
— |
|
— |
— |
|
— |
— |
— |
— |
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|
|||||||||||||||
Vested and delivered restricted stock units |
— |
|
|
— |
( |
— |
— |
— |
— |
|
( |
|||||||||||||||
Exercise of stock options |
— |
|
|
— |
|
— |
— |
— |
— |
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|||||||||||||||
Shares issued in connection with warrant agreements |
— |
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|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|||||||||
Retirement of treasury stock |
— |
|
— |
— |
( |
— |
— |
( |
|
|
— |
|||||||||||||||
Net income |
— |
|
— |
— |
— |
— |
|
— |
— |
|
|
|||||||||||||||
Net losses from foreign currency translation |
— |
|
— |
— |
— |
( |
— |
— |
— |
|
( |
|||||||||||||||
Balances—October 31, 2020 |
$ |
— |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
|
$ |
( |
|
— |
|
$ |
— |
|
$ |
|
RH
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)
(In thousands) (Unaudited)
NINE MONTHS ENDED |
||||||||||||||||||||||||||
COMMON STOCK |
TREASURY STOCK |
|||||||||||||||||||||||||
|
ACCUMULATED |
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RETAINED |
|
||||||||||||||||||||||
|
ADDITIONAL |
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OTHER |
|
EARNINGS |
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TOTAL |
|||||||||||||||||||
MEZZANINE |
|
PAID-IN |
|
COMPREHENSIVE |
|
(ACCUMULATED |
|
|
STOCKHOLDERS' |
|||||||||||||||||
EQUITY |
SHARES |
|
AMOUNT |
|
CAPITAL |
|
INCOME (LOSS) |
|
DEFICIT) |
|
SHARES |
|
AMOUNT |
|
EQUITY |
|||||||||||
Balances—January 30, 2021 |
$ |
— |
$ |
$ |
$ |
( |
— |
$ |
— |
$ |
||||||||||||||||
Stock-based compensation |
— |
|
— |
— |
— |
— |
— |
— |
|
|||||||||||||||||
Issuance of restricted stock |
— |
|
— |
— |
— |
— |
— |
— |
|
— |
||||||||||||||||
Vested and delivered restricted stock units |
— |
|
— |
( |
— |
— |
— |
— |
|
( |
||||||||||||||||
Exercise of stock options |
— |
|
— |
— |
— |
— |
— |
|
||||||||||||||||||
Settlement of convertible senior notes |
— |
— |
( |
— |
— |
( |
( |
|||||||||||||||||||
Exercise of call option under bond hedge upon settlement of convertible senior notes |
— |
( |
— |
— |
— |
( |
— |
|||||||||||||||||||
Reclassification of equity component to mezzanine equity related to early converted senior notes outstanding―net |
|
— |
— |
( |
— |
— |
— |
— |
|
( |
||||||||||||||||
Net income |
— |
|
— |
— |
— |
— |
— |
— |
|
|||||||||||||||||
Net losses from foreign currency translation |
— |
|
— |
— |
— |
( |
— |
— |
— |
|
( |
|||||||||||||||
Balances—October 30, 2021 |
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
— |
|
$ |
— |
|
$ |
|||||||||
Balances—February 1, 2020 |
$ |
— |
|
|
$ |
|
$ |
|
$ |
( |
|
$ |
( |
|
— |
|
$ |
— |
||||||||
Stock-based compensation |
— |
|
— |
— |
— |
— |
— |
— |
|
|||||||||||||||||
Issuance of restricted stock |
— |
|
— |
— |
— |
— |
— |
— |
|
— |
||||||||||||||||
Vested and delivered restricted stock units |
— |
|
— |
( |
— |
— |
— |
— |
|
( |
||||||||||||||||
Exercise of stock options |
— |
|
— |
— |
— |
— |
— |
|
||||||||||||||||||
Repurchases of common stock |
— |
|
( |
— |
— |
— |
— |
( |
|
( |
||||||||||||||||
Retirement of treasury stock |
— |
|
— |
— |
( |
— |
— |
( |
|
— |
||||||||||||||||
Shares issued in connection with warrant agreements |
— |
|
— |
— |
— |
— |
— |
— |
|
— |
||||||||||||||||
Settlement of convertible senior notes |
— |
— |
( |
— |
— |
( |
|
— |
||||||||||||||||||
Exercise of call option under bond hedge upon settlement of convertible senior notes |
— |
( |
— |
— |
— |
( |
|
— |
||||||||||||||||||
Net income |
— |
|
— |
— |
— |
— |
— |
— |
|
|||||||||||||||||
Net gains from foreign currency translation |
— |
|
— |
— |
— |
— |
— |
— |
|
|||||||||||||||||
Balances—October 31, 2020 |
$ |
— |
|
|
$ |
|
$ |
|
$ |
( |
|
$ |
( |
|
— |
|
$ |
— |
|
$ |
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
PART I. FINANCIAL INFORMATION |
2021 THIRD QUARTER FORM 10-Q | 7 |
RH
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
|
NINE MONTHS ENDED |
|||||
---|---|---|---|---|---|---|
|
OCTOBER 30, |
OCTOBER 31, |
||||
|
2021 |
|
2020 |
|||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||
Net income |
$ |
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
||||
Depreciation and amortization |
|
|
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|
||
Non-cash operating lease cost |
|
|
||||
Tradename impairment |
— |
|
||||
Asset impairments |
|
|
||||
Loss on sale leaseback transaction |
— |
|
||||
Amortization of debt discount |
|
|
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Stock-based compensation expense |
|
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|
||
Non-cash finance lease interest expense |
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|
||||
Product recalls |
|
|
||||
Deferred income taxes |
|
( |
|
|
||
(Gain) loss on extinguishment of debt |
|
( |
||||
Share of equity method investments losses |
|
— |
||||
Other non-cash items |
|
( |
|
|
||
Cash paid attributable to accretion of debt discount upon settlement of debt |
( |
( |
||||
Change in assets and liabilities: |
|
|
||||
Accounts receivable |
|
( |
|
( |
||
Merchandise inventories |
|
( |
|
( |
||
Prepaid expense and other assets |
|
( |
|
( |
||
Landlord assets under construction—net of tenant allowances |
|
( |
|
( |
||
Accounts payable and accrued expenses |
|
( |
|
|
||
Deferred revenue and customer deposits |
|
|
|
|
||
Other current liabilities |
|
( |
|
|
||
Current and non-current operating lease liabilities |
|
( |
|
( |
||
Other non-current obligations |
|
( |
|
( |
||
Net cash provided by operating activities |
|
|
|
|
8 | 2021 THIRD QUARTER FORM 10-Q |
PART I. FINANCIAL INFORMATION |
RH
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands) (Unaudited)
|
NINE MONTHS ENDED |
|||||
---|---|---|---|---|---|---|
|
OCTOBER 30, |
OCTOBER 31, |
||||
|
2021 |
|
2020 |
|||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|||
Capital expenditures |
|
( |
|
( |
||
Equity method investments |
|
( |
|
( |
||
Acquisition of business and assets |
|
— |
|
( |
||
Proceeds from sale of assets |
|
— |
|
|
||
Net cash used in investing activities |
|
( |
|
( |
||
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
||
Borrowings under asset based credit facility |
|
— |
|
|
||
Repayments under asset based credit facility |
|
— |
|
( |
||
Borrowings under term loan |
|
|
|
— |
||
Repayments under promissory and equipment security notes |
|
( |
|
( |
||
Debt issuance costs |
|
( |
|
— |
||
Repayments of convertible senior notes |
( |
( |
||||
Principal payments under finance leases |
( |
( |
||||
Proceeds from exercise of stock options |
|
|
|
|
||
Tax withholdings related to issuance of stock-based awards |
( |
|
( |
|||
Net cash provided by (used in) financing activities |
|
|
|
( |
||
Effects of foreign currency exchange rate translation |
|
|
|
( |
||
Net increase in cash and cash equivalents and restricted cash equivalents |
|
|
|
|
||
Cash and cash equivalents and restricted cash equivalents |
|
|
|
|||