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Restoration Hardware Holdings, Inc. Reports Record First Quarter Fiscal 2013 Financial Results

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. With respect to the Company’s adjusted net income and adjusted diluted EPA guidance for the second fiscal quarter and the full year of fiscal 2013, the Company is not able to provide a reconciliation of these non-GAAP financial measures to GAAP without unreasonable effort as our estimated results are preliminary and may change as we complete the quarter close process and management’s review of our financial statements.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the federal securities laws including statements related to the expected benefits to our sales, earnings, capital investment amounts and ROIC of anticipated new tenant deals with landlords, potential new markets for our stores, the anticipated timing of the launch of RH Leather and RH Rugs, the anticipating timing of the inaugural exhibition for RH Contemporary Art and the launch of our new online Contemporary Art platform, our intention to launch two new businesses, RH Kitchen and RH Antiquities, and the expected benefits to the Company of such businesses, and the Company’s future financial guidance, including for the second fiscal quarter of 2013 and the fiscal year ending February 1, 2014. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future events. We cannot assure you that future developments affecting us will be those that we have anticipated. Important risks and uncertainties that could cause actual results to differ materially from our expectations include, among others, recent changes in general economic conditions and the impact on consumer confidence and consumer spending, changes in customer demand for our products, our ability to anticipate consumer preferences and buying trends, risks related to the number of new business initiatives we are undertaking, risks in the implementation or our real estate portfolio transformation, delays in store openings, as well as those risks and uncertainties disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Restoration Hardware Holdings’ Form 10-K filed with the Securities and Exchange Commission on April 29, 2013 and available on our investor relations website at ir.restorationhardware.com and on the SEC website at www.sec.gov. Any forward-looking statement made by us in this press release speaks only as of the date on which we make it. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

RESTORATION HARDWARE HOLDINGS, INC. FINANCIAL STATEMENTS AND RELATED INFORMATION

TABLE OF CONTENTS

Page 6. Condensed Consolidated Statements of Operations

Page 7. Condensed Consolidated Balance Sheets

Page 8. Condensed Consolidated Statements of Cash Flows

Page 9. Operating Metrics and Other Data

Page 10. Reconciliation of Adjusted Income Statement Items

Page 11. Reconciliation of Net Loss to Operating Income (Loss) and Adjusted Operating Income (Loss)

Page 12. Reconciliation of Net Loss to EBITDA and Adjusted EBITDA

Page 13. Reconciliation of GAAP Net Loss to Adjusted Net Income (Loss)

Page 14. Reconciliation of Net Loss Per Share to Adjusted Net Income (Loss) Per Share

 
RESTORATION HARDWARE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
       
Three Months Ended

May 4, 2013

% of Net Revenues

April 28, 2012

% of Net Revenues

Net revenues $ 301,337 100.0 % $ 217,914 100.0 %
Cost of goods sold   199,460   66.2 %   142,646   65.5 %
Gross profit 101,877 33.8 % 75,268 34.5 %
Selling, general and administrative expenses   101,366   33.6 %   77,365   35.5 %
Income (loss) from operations 511 0.2 % (2,097 ) -1.0 %
Interest expense   (840 ) -0.3 %   (1,575 ) -0.7 %
Loss before income taxes (329 ) -0.1 % (3,672 ) -1.7 %
Income tax expense (benefit)   (168 ) -0.1 %   56   %
Net loss $ (161 ) %   $ (3,728 ) -1.7 %
 
Weighted-average shares used in computing basic and diluted net loss per share 38,076,026 1,000
 
Basic and diluted net loss per share $ $ (3,728 )
 
Pro forma weighted-average shares used in computing pro forma basic and diluted net loss per share [a] 36,971,500
Pro forma basic and diluted net loss per share $ (0.10 )

[a] On a pro forma basis, basic and diluted shares outstanding for the three months ended April 28, 2012 include (1) the impact of the Company’s reorganization, as further described in the Company’s final prospectus filed with the Securities and Exchange Commission on November 5, 2012 (the “Reorganization”), as well as (2) the 4,782,609 shares of common stock that the Company issued and sold on November 7, 2012 in its initial public offering, as if such events had been completed as of the beginning of the period and the common stock resulting therefrom was outstanding for the period.

 
RESTORATION HARDWARE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
   
 

     May 4,      2013

 February 2,  2013

    April 28,     2012

 
ASSETS
Cash and cash equivalents $ 9,669 $ 8,354 $ 10,205
Merchandise inventories 365,716 353,329 269,995
Other current assets   176,053   131,075   87,577
Total current assets 551,438 492,758 367,777
Property and equipment—net 123,091 111,406 85,927
Goodwill and other intangibles 172,125 172,724 174,506
Other assets   12,968   12,725   4,849
Total assets $ 859,622 $ 789,613 $ 633,059
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses $ 179,420 $ 145,353 $ 128,447
Other current liabilities   75,761   74,071   61,360
Total current liabilities 255,181 219,424 189,807
Revolving line of credit and term loan 113,994 82,501 140,263
Other long term liabilities   35,397   36,077   55,825
Total liabilities   404,572   338,002   385,895
 
Stockholders’ equity   455,050   451,611   247,164
Total liabilities and stockholders’ equity $ 859,622 $ 789,613 $ 633,059
 
RESTORATION HARDWARE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
           
Three Months Ended

   May 4,    2013

  April 28,   2012

 
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (161 ) $ (3,728 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 6,630 6,424
Stock-based compensation expense 3,631 387
Other non-cash items 168 147
Change in assets and liabilities:
Merchandise inventories (12,437 ) (24,039 )
Accounts payable, accrued expenses, and other   (17,454 )   11,842  
Net cash used in operating activities   (19,623 )   (8,967 )
 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures   (9,737 )   (6,193 )
Net cash used in investing activities   (9,737 )   (6,193 )
 
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under line of credit 31,493 17,963
Payments on capital leases   (840 )   (1,110 )
Net cash provided by financing activities   30,653     16,853  
Effects of foreign currency exchange rate translation   22     -  
Net increase in cash and cash equivalents 1,315 1,693
Cash and cash equivalents
Beginning of period   8,354     8,512  
End of period $ 9,669   $ 10,205  
 
RESTORATION HARDWARE HOLDINGS, INC.
OPERATING METRICS AND OTHER DATA
(Unaudited)
   
Three Months Ended

   May 4,    2013

  April 28,   2012

Growth in net revenues:
Stores [a] 39 % 16 %
Direct 38 % 20 %
Total 38 % 18 %
Retail [b] :
Comparable store sales change [c] 41 % 26 %
Retail stores open at beginning of period 71 74
Stores opened 2 3
Stores closed 3 3
Retail stores open at end of period 70 74
Retail sales per leased selling square foot [d] $ 284 $ 200
Total leased square footage at end of period (in thousands) 796 802
Total leased selling square footage at end of period (in thousands) [e] 521 522
Direct:
Catalogs circulated (in thousands) [f] 14,906
Catalog pages circulated (in millions) [f] 7,363
Direct as a percentage of net revenues [g] 47 % 47 %

[a] Store data represents retail stores plus outlet stores. Net revenues for outlet stores for the three months ended May 4, 2013 and April 28, 2012 were $14.4 million and $10.9 million, respectively.

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