RH(US:RH)2024-09-12 20:11Financial Performance - GAAP net revenues for Q2 2024 were $830 million, an increase of 3.6% year-over-year[1] - Net revenues for Q2 2024 reached $829.7 million, a 3.2% increase from $800.5 million in Q2 2023[12] - Net revenues for Q2 2024 were $829,655,000, slightly up from $800,479,000 in Q2 2023, a growth of 3.6%[19] - Net income for Q2 2024 was $28.9 million, a significant decrease from $76.5 million in Q2 2023, resulting in a net income margin of 3.5%[12] - Net income for the three months ended August 3, 2024, was $28,952,000, compared to $76,477,000 for the same period last year, representing a decrease of 62.1%[22] - Basic net income per share decreased to $1.57 from $3.65 in the same quarter last year[12] - Diluted net income per share for Q2 2024 was $1.45, compared to $3.36 in Q2 2023, indicating a decrease of 56.9%[18] - Adjusted net income for Q2 2024 was $33,468,000, up from $26,137,000 in Q2 2023, reflecting a growth of 28.2%[17] - Adjusted diluted net income per share for Q2 2024 was $1.69, down from $3.93 in Q2 2023, a decline of 57.0%[18] Operating Metrics - Adjusted operating margin for Q2 2024 was 11.7%, with adjusted EBITDA margin at 17.2%[1] - Adjusted operating margin for Q3 2024 is forecasted to be in the range of 15% to 16%[7] - Operating margin for the three months ended August 3, 2024, was 11.6%, down from 18.9% for the same period last year[22] - Adjusted operating margin for the three months ended August 3, 2024, was 11.7%, compared to 20.2% for the same period last year, reflecting a decrease of 42.0%[22] Expenses and Profitability - Selling, general, and administrative expenses rose to $278.6 million, representing 33.6% of net revenues, compared to 28.6% in the prior year[12] - Selling, general and administrative expenses for Q2 2024 totaled $278,630,000, an increase of 21.8% from $228,733,000 in Q2 2023[19] - Adjusted selling, general and administrative expenses for Q2 2024 were $277,769,000, compared to $218,709,000 in Q2 2023, marking a rise of 27.0%[19] - The selling, general and administrative expenses margin for Q2 2024 was 33.6%, compared to 28.6% in Q2 2023, indicating improved efficiency[19] - The adjusted selling, general and administrative expenses margin for Q2 2024 was 33.5%, up from 27.3% in Q2 2023, reflecting better cost management[19] Demand and Growth Outlook - Demand increased by 7% in Q2 2024, accelerating to 10% in July and 12% in August[2] - The company expects demand growth for fiscal 2024 to be in the range of 8% to 10% and revenue growth to be 5% to 7%[7] - A backlog of approximately $80 to $100 million is anticipated by year-end 2024 due to revenue lagging demand[7] Expansion Plans - The company plans to open a new 3,000 square foot Waterworks Showroom in Newport Beach, California, in Q4 2024[4] - RH Newport Beach is set to open in November 2024, featuring over 90,000 square feet of space and a rooftop restaurant[5] - The company aims to expand into European markets, with openings planned in Paris and London in 2025[6] - The company plans to open Design Galleries in every major market, targeting revenues of $5 to $6 billion in North America and $20 to $25 billion globally[10] - Future expansion includes launching a Waterworks Showroom and developing a Waterworks Sourcebook, with the potential for Waterworks to become a billion-dollar global brand[10] Financial Position - Total assets increased to $4,376,396 thousand as of August 3, 2024, up from $4,143,897 thousand on February 3, 2024, representing a growth of approximately 5.6%[13] - Total liabilities increased to $4,611,113 thousand as of August 3, 2024, up from $4,441,291 thousand on February 3, 2024, indicating a growth of approximately 3.8%[13] - Total current liabilities increased to $1,010,554 thousand as of August 3, 2024, from $872,868 thousand on February 3, 2024, reflecting a rise of approximately 15.8%[13] - Merchandise inventories rose to $917,331 thousand as of August 3, 2024, compared to $754,126 thousand on February 3, 2024, marking an increase of about 21.7%[13] - Accounts payable and accrued expenses increased to $495,961 thousand as of August 3, 2024, compared to $366,585 thousand on February 3, 2024, representing a growth of about 35.2%[13] Cash Flow and Capital Expenditures - Net cash provided by operating activities for the six months ended August 3, 2024, was $67,306 thousand, down from $248,355 thousand in the prior year, reflecting a decrease of approximately 72.9%[15] - Free cash flow for the three months ended August 3, 2024, was $(37,903) thousand, compared to $114,211 thousand for the same period last year, showing a substantial drop[15] - Adjusted capital expenditures for the six months ended August 3, 2024, totaled $132,801 thousand, up from $95,555 thousand in the previous year, indicating an increase of approximately 38.9%[16] Debt and Interest - Total debt as of August 3, 2024, was $2,503,469,000, with total net debt amounting to $2,425,136,000[26] - The ratio of total net debt to trailing twelve months adjusted EBITDA was 5.5 as of August 3, 2024[26] - Interest expense—net for the three months ended August 3, 2024, was $59,262,000, an increase from $44,422,000 for the same period last year, representing a rise of 33.4%[23] Legal and Adjustments - Legal settlements in the six months ended August 3, 2024, resulted in a favorable adjustment of $10 million, impacting overall financial performance positively[17]