Core Insights - RH reported mixed results for Q1 fiscal 2025, with adjusted earnings exceeding estimates while net revenues fell short [1][4] - Year-over-year growth was notable for both adjusted earnings and net revenues [1] Financial Performance - Adjusted earnings per share were 13 cents, surpassing the Zacks Consensus Estimate of a loss of 9 cents by 244.4%, compared to a loss of 40 cents in the prior year [4][7] - Net revenues reached $814 million, slightly below the consensus estimate of $818 million by 0.5%, but up 12% year-over-year [4][7] - Revenues from the RH segment increased by 13% to $765 million, while Waterworks revenues decreased by 1.9% to $49 million [4] Margin Analysis - Gross margin expanded by 20 basis points to 43.7% [5] - Adjusted operating margin increased by 50 basis points year-over-year to 7% [5] - Adjusted EBITDA rose by 19.4% year-over-year to $106.4 million, with an adjusted EBITDA margin of 13.1%, up 80 basis points [5][7] Balance Sheet and Cash Flow - Cash and cash equivalents were $46.1 million, up from $30.4 million at the end of fiscal 2024 [6] - Merchandise inventories were valued at $1.01 billion, slightly down from $1.02 billion at the end of fiscal 2024 [6] - Net debt stood at $2.57 billion, with a net debt-to-adjusted EBITDA ratio of 4.6x [6] Future Outlook - For Q2, RH expects net revenues to grow between 8% and 10% year-over-year, with adjusted operating margins projected between 15% and 16% [9] - Fiscal 2025 guidance remains unchanged, with revenue growth expected between 10% and 13% and adjusted operating margins between 14% and 15% [10] - Free cash flow is anticipated to be between $250 million and $350 million [10] Market Reaction - Following the earnings announcement, RH's stock surged by 20.3% in after-hours trading, driven by a positive outlook for Q2 and fiscal 2025 [3][7]
RH Q1 Earnings Top Estimates, Revenues Miss, Margins Up Y/Y