10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on September 7, 2023
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 September 1, 2023,
RH
INDEX TO FORM 10-Q
PART I
ITEM 1. FINANCIAL STATEMENTS
RH
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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JULY 29, |
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JANUARY 28, |
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2023 |
2023 |
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(in thousands) |
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ASSETS |
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Cash and cash equivalents |
$ |
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$ |
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Restricted cash |
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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 (DEFICIT) |
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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 |
— |
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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 B—net |
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Term loan B-2—net |
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Real estate loans |
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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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Deferred tax 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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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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( |
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Retained earnings (accumulated deficit) |
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( |
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Total stockholders’ equity (deficit) |
( |
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Total liabilities and stockholders’ equity (deficit) |
$ |
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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
(Unaudited)
|
THREE MONTHS ENDED |
SIX MONTHS ENDED |
||||||||||
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JULY 29, |
JULY 30, |
JULY 29, |
JULY 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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(in thousands, except share and per share amounts) |
||||||||||||
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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Loss on extinguishment of debt |
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— |
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— |
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Other (income) expense—net |
( |
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( |
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Total other expenses |
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Income before income taxes and equity method investments |
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Income tax expense (benefit) |
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( |
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Income before equity method investments |
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Share of equity method investments loss |
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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.
RH
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
THREE MONTHS ENDED |
SIX MONTHS ENDED |
||||||||||
|
JULY 29, |
JULY 30, |
JULY 29, |
JULY 30, |
||||||||
|
2023 |
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2022 |
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2023 |
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2022 |
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(in thousands) |
||||||||||||
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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( |
||||||
Comprehensive income |
$ |
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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.
PART I. FINANCIAL INFORMATION |
2023 SECOND QUARTER FORM 10-Q | 5 |
RH
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
THREE MONTHS ENDED |
||||||||||||||||||||||
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 |
TOTAL |
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PAID-IN |
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COMPREHENSIVE |
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(ACCUMULATED |
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STOCKHOLDERS' |
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SHARES |
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AMOUNT |
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CAPITAL |
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INCOME (LOSS) |
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DEFICIT) |
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SHARES |
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AMOUNT |
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EQUITY (DEFICIT) |
|||||||
(in thousands, except share amounts) |
||||||||||||||||||||||
Balances—April 29, 2023 |
|
$ |
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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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||||||||||||||
Issuance of restricted stock |
|
— |
— |
— |
— |
— |
— |
— |
||||||||||||||
Vested and delivered restricted stock units |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||
Exercise of stock options |
|
— |
|
— |
— |
— |
— |
|
||||||||||||||
Settlement of convertible senior notes |
|
— |
— |
— |
— |
— |
— |
— |
||||||||||||||
Repurchases of common stock—including excise tax |
( |
— |
— |
— |
— |
|
( |
( |
||||||||||||||
Retirement of treasury stock |
— |
— |
( |
— |
( |
( |
|
— |
||||||||||||||
Net income |
— |
— |
— |
— |
|
— |
— |
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||||||||||||||
Net gains from foreign currency translation |
— |
— |
— |
|
— |
— |
— |
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||||||||||||||
Balances—July 29, 2023 |
|
|
$ |
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|
$ |
|
|
$ |
|
|
$ |
( |
|
— |
|
$ |
— |
|
$ |
( |
|
Balances—April 30, 2022 |
|
$ |
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|
$ |
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|
$ |
( |
|
$ |
|
|
— |
|
$ |
— |
|
$ |
|
||
Stock-based compensation |
— |
— |
|
— |
— |
— |
— |
|
||||||||||||||
Issuance of restricted stock |
|
— |
— |
— |
— |
— |
— |
— |
||||||||||||||
Vested and delivered restricted stock units |
|
— |
( |
— |
— |
— |
— |
( |
||||||||||||||
Exercise of stock options |
|
— |
|
— |
— |
— |
— |
|
||||||||||||||
Settlement of convertible senior notes |
|
— |
— |
— |
— |
— |
— |
— |
||||||||||||||
Repurchases of common stock |
( |
— |
— |
— |
— |
|
( |
( |
||||||||||||||
Retirement of treasury stock |
— |
— |
( |
— |
— |
( |
|
— |
||||||||||||||
Net income |
— |
— |
— |
— |
|
— |
— |
|
||||||||||||||
Net losses from foreign currency translation |
— |
— |
— |
( |
— |
— |
— |
( |
||||||||||||||
Balances—July 30, 2022 |
|
|
$ |
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|
$ |
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|
$ |
( |
|
$ |
|
|
— |
|
$ |
— |
|
$ |
|
RH
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
(Unaudited)
SIX MONTHS ENDED |
||||||||||||||||||||||
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 |
TOTAL |
||||||||||||||||
|
PAID-IN |
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COMPREHENSIVE |
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(ACCUMULATED |
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STOCKHOLDERS' |
||||||||||||||
|
SHARES |
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AMOUNT |
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CAPITAL |
|
INCOME (LOSS) |
|
DEFICIT) |
|
SHARES |
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AMOUNT |
|
EQUITY (DEFICIT) |
|||||||
(in thousands, except share amounts) |
||||||||||||||||||||||
Balances—January 28, 2023 |
|
$ |
|
$ |
|
$ |
( |
|
$ |
|
— |
|
$ |
— |
|
$ |
||||||
Stock-based compensation |
— |
— |
— |
— |
— |
— |
||||||||||||||||
Issuance of restricted stock |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||
Vested and delivered restricted stock units |
— |
( |
— |
— |
— |
— |
( |
|||||||||||||||
Exercise of stock options |
— |
— |
— |
— |
— |
|||||||||||||||||
Settlement of convertible senior notes |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||
Repurchase of common stock—including excise tax |
( |
— |
— |
— |
— |
( |
( |
|||||||||||||||
Retirement of treasury stock |
— |
— |
( |
— |
( |
( |
— |
|||||||||||||||
Net income |
— |
— |
— |
— |
— |
— |
||||||||||||||||
Net gains from foreign currency translation |
— |
— |
— |
— |
— |
— |
||||||||||||||||
Balances—July 29, 2023 |
|
$ |
|
$ |
|
$ |
|
$ |
( |
|
— |
|
$ |
— |
|
$ |
( |
|||||
Balances—January 29, 2022 |
|
$ |
|
$ |
|
$ |
( |
|
$ |
|
— |
|
$ |
— |
|
$ |
||||||
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 |
— |
— |
( |
— |
— |
( |
— |
|||||||||||||||
Exercise of call option under bond hedge upon settlement of convertible senior notes |
( |
|
— |
|
|
— |
|
— |
|
|
( |
|
— |
|||||||||
Settlement of convertible senior notes |
|
— |
|
( |
|
— |
|
— |
|
( |
|
|
— |
|||||||||
Termination of common stock warrants |
— |
|
— |
|
( |
|
— |
|
— |
|
— |
|
— |
|
( |
|||||||
Termination of convertible note hedge |
— |
|
— |
|
|
— |
|
— |
|
— |
|
— |
|
|||||||||
Impact of ASU 2020-06 adoption |
— |
|
— |
|
( |
|
— |
|
|
— |
|
— |
|
( |
||||||||
Net income |
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|||||||||
Net losses from foreign currency translation |
— |
|
— |
|
— |
|
( |
|
— |
|
— |
|
— |
|
( |
|||||||
Balances—July 30, 2022 |
|
$ |
|
$ |
|
$ |
( |
|
$ |
|
— |
|
$ |
— |
|
$ |
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
RH
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
SIX MONTHS ENDED |
|||||
---|---|---|---|---|---|---|
|
JULY 29, |
JULY 30, |
||||
|
2023 |
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2022 |
|||
(in thousands) |
||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||
Net income |
$ |
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: |
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||||
Depreciation and amortization |
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Non-cash operating lease cost |
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Asset impairments |
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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 |
|
|
||||
Loss on extinguishment of debt |
— |
|
||||
Gain on derivative instruments—net |
— |
( |
||||
Share of equity method investments loss |
|
|
||||
Other non-cash items |
|
|
|
|||
Change in assets and liabilities: |
|
|||||
Accounts receivable |
|
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|
|||
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 |
|
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||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
||||
Capital expenditures |
|
( |
( |
|||
Equity method investments |
|
( |
( |
|||
Net cash used in investing activities |
|
( |
|
( |
|
SIX MONTHS ENDED |
|||||
---|---|---|---|---|---|---|
|
JULY 29, |
JULY 30, |
||||
|
2023 |
|
2022 |
|||
(in thousands) |
||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
||
Borrowings under term loans |
— |
|
||||
Repayments under term loans |
( |
( |
||||
Repayments under real estate loans |
( |
— |
||||
Repayments under promissory and equipment security notes |
|
( |
( |
|||
Repayments of convertible senior notes |
( |
( |
||||
Repayment under convertible senior notes repurchase obligation |
— |
( |
||||
Debt issuance costs |
|
— |
( |
|||
Principal payments under finance lease agreements—net of tenant allowances |
( |
( |
||||
Proceeds from termination of convertible senior note hedges |
— |
|
||||
Payments for termination of common stock warrants |
— |
( |
||||
Repurchases of common stock—inclusive of excise taxes paid |
( |
( |
||||
Proceeds from exercise of stock options |
|
|
|
|||
Tax withholdings related to issuance of stock-based awards |
( |
( |
||||
Net cash used in financing activities |
|
( |
|
( |
||
Effects of foreign currency exchange rate translation |
|
|
( |
|||
Net decrease in cash and cash equivalents, restricted cash and restricted cash equivalents |
|
( |
|
( |
||
Cash and cash equivalents, restricted cash and restricted cash equivalents |
|
|
|
|||
Beginning of period—cash and cash equivalents |
|
|
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|
||
Beginning of period—restricted cash |