RH0001528849--02-032023Q2falsehttp://fasb.org/us-gaap/2023#OperatingLeaseRightOfUseAssethttp://fasb.org/us-gaap/2023#PropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2023#OperatingLeaseLiabilityCurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#OperatingLeaseLiabilityNoncurrenthttp://fasb.org/us-gaap/2023#FinanceLeaseLiabilityNoncurrent00http://fasb.org/us-gaap/2023#AccountsPayableAndAccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#AccountsPayableAndAccruedLiabilitiesCurrent1839785322045385http://fasb.org/us-gaap/2023#OperatingLeaseRightOfUseAssethttp://fasb.org/us-gaap/2023#PropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2023#OperatingLeaseLiabilityCurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#OperatingLeaseLiabilityNoncurrenthttp://fasb.org/us-gaap/2023#FinanceLeaseLiabilityNoncurrentP2D0001528849us-gaap:TreasuryStockCommonMember2023-04-302023-07-290001528849us-gaap:TreasuryStockCommonMember2023-01-292023-07-290001528849us-gaap:TreasuryStockCommonMember2022-05-012022-07-300001528849rh:AspenLlcSMember2022-01-302022-07-3000015288492022-06-0200015288492022-01-280001528849us-gaap:CommonStockMember2023-04-302023-07-290001528849us-gaap:RetainedEarningsMember2023-07-290001528849us-gaap:AdditionalPaidInCapitalMember2023-07-290001528849us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-290001528849us-gaap:RetainedEarningsMember2023-04-290001528849us-gaap:AdditionalPaidInCapitalMember2023-04-290001528849us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-2900015288492023-04-290001528849us-gaap:RetainedEarningsMember2023-01-280001528849us-gaap:AdditionalPaidInCapitalMember2023-01-280001528849us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-280001528849us-gaap:RetainedEarningsMember2022-07-300001528849us-gaap:AdditionalPaidInCapitalMember2022-07-300001528849us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-300001528849us-gaap:RetainedEarningsMember2022-04-300001528849us-gaap:AdditionalPaidInCapitalMember2022-04-300001528849us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-3000015288492022-04-300001528849srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2022-01-290001528849srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2022-01-290001528849us-gaap:RetainedEarningsMember2022-01-290001528849us-gaap:AdditionalPaidInCapitalMember2022-01-290001528849us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-290001528849srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2022-01-290001528849us-gaap:CommonStockMember2023-07-290001528849us-gaap:CommonStockMember2023-04-290001528849us-gaap:CommonStockMember2023-01-280001528849us-gaap:CommonStockMember2022-07-300001528849us-gaap:CommonStockMember2022-04-300001528849us-gaap:CommonStockMember2022-01-290001528849us-gaap:EmployeeStockOptionMemberrh:TwoThousandTwentyThreeStockIncentivePlanMember2023-07-290001528849rh:TwoThousandTwelveStockIncentivePlanMember2023-07-290001528849rh:TwoThousandTwelveStockIncentivePlanMember2023-01-292023-07-290001528849rh:TwoThousandTwelveStockIncentiveAndOptionPlanMember2022-11-012022-11-010001528849us-gaap:EmployeeStockOptionMemberrh:TwoThousandTwelveStockIncentiveAndOptionPlanMember2023-01-292023-07-290001528849rh:TwoThousandTwentyThreeStockIncentivePlanMember2023-04-040001528849rh:TwoThousandTwentyThreeStockIncentivePlanMember2023-04-042023-04-040001528849us-gaap:RestrictedStockUnitsRSUMemberrh:TwoThousandTwelveStockIncentiveAndOptionPlanMember2023-04-302023-07-290001528849us-gaap:RestrictedStockUnitsRSUMemberrh:TwoThousandTwelveStockIncentiveAndOptionPlanMember2023-01-292023-07-290001528849srt:ChiefExecutiveOfficerMemberrh:TwoThousandTwelveStockIncentiveAndOptionPlanMember2023-04-302023-07-290001528849srt:ChiefExecutiveOfficerMemberrh:TwoThousandTwelveStockIncentiveAndOptionPlanMember2023-01-292023-07-290001528849srt:ChiefExecutiveOfficerMemberrh:TwoThousandTwelveStockIncentiveAndOptionPlanMember2022-05-012022-07-300001528849srt:ChiefExecutiveOfficerMemberrh:TwoThousandTwelveStockIncentiveAndOptionPlanMember2022-01-302022-07-300001528849rh:NonFurnitureMember2023-04-302023-07-290001528849rh:FurnitureMember2023-04-302023-07-290001528849rh:NonFurnitureMember2023-01-292023-07-290001528849rh:FurnitureMember2023-01-292023-07-290001528849rh:NonFurnitureMember2022-05-012022-07-300001528849rh:FurnitureMember2022-05-012022-07-300001528849rh:NonFurnitureMember2022-01-302022-07-300001528849rh:FurnitureMember2022-01-302022-07-300001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMember2023-06-012023-06-300001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMember2022-01-302022-07-300001528849us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberus-gaap:ConstructionInProgressMember2023-07-290001528849us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberus-gaap:ConstructionInProgressMember2023-01-280001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMemberrh:ConvertibleBondHedgeAndWarrantTransactionsMember2022-01-302022-04-300001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMemberrh:ConvertibleBondHedgeAndWarrantTransactionsMember2022-01-302022-04-300001528849rh:AspenLlcSMember2023-04-302023-04-300001528849rh:AspenLlcSMember2023-02-012023-02-280001528849us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-302023-07-290001528849us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-292023-07-290001528849us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-05-012022-07-300001528849us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-302022-07-300001528849us-gaap:OperatingSegmentsMember2023-04-302023-07-290001528849us-gaap:OperatingSegmentsMember2023-01-292023-07-290001528849us-gaap:OperatingSegmentsMember2022-05-012022-07-300001528849us-gaap:OperatingSegmentsMember2022-01-302022-07-300001528849us-gaap:RetainedEarningsMember2023-04-302023-07-290001528849us-gaap:RetainedEarningsMember2023-01-292023-07-290001528849us-gaap:RetainedEarningsMember2022-05-012022-07-300001528849us-gaap:RetainedEarningsMember2022-01-302022-07-300001528849rh:SevenMemberLlcMember2023-01-280001528849rh:AspenLlcSMember2023-01-280001528849rh:TermLoanFacilityMember2023-07-290001528849rh:SecondLienTermLoanMember2023-07-290001528849rh:TermLoanFacilityMember2023-01-280001528849rh:SecondLienTermLoanMember2023-01-280001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberus-gaap:OtherCurrentLiabilitiesMemberrh:TermLoanFacilityMemberus-gaap:SecuredDebtMember2023-07-290001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberus-gaap:OtherCurrentLiabilitiesMemberrh:SecondLienTermLoanMemberus-gaap:SecuredDebtMember2023-07-290001528849rh:TermLoanFacilityMemberus-gaap:SecuredDebtMember2023-07-290001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberus-gaap:OtherCurrentLiabilitiesMemberrh:TermLoanFacilityMemberus-gaap:SecuredDebtMember2023-01-280001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberus-gaap:OtherCurrentLiabilitiesMemberrh:SecondLienTermLoanMemberus-gaap:SecuredDebtMember2023-01-280001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberrh:TermLoanFacilityMemberus-gaap:SecuredDebtMember2023-01-280001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMemberus-gaap:OverAllotmentOptionMember2018-06-300001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMembersrt:MinimumMemberus-gaap:RevolvingCreditFacilityMemberrh:TwelfthAmendedAndRestatedCreditAgreementMember2021-07-290001528849rh:RestorationHardwareCanadaIncorporationMemberus-gaap:RevolvingCreditFacilityMemberrh:TwelfthAmendedAndRestatedCreditAgreementMember2021-07-290001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberus-gaap:RevolvingCreditFacilityMemberrh:TwelfthAmendedAndRestatedCreditAgreementMember2023-07-290001528849us-gaap:LetterOfCreditMember2023-07-290001528849rh:TradenamesTrademarksAndOtherIntangibleAssetsMemberrh:WaterworksSegmentMember2023-07-290001528849rh:TradenamesTrademarksAndOtherIntangibleAssetsMemberrh:RHSegmentMember2023-07-290001528849rh:TradenamesTrademarksAndOtherIntangibleAssetsMemberrh:WaterworksSegmentMember2023-01-280001528849rh:TradenamesTrademarksAndOtherIntangibleAssetsMemberrh:RHSegmentMember2023-01-280001528849rh:TradenamesTrademarksAndOtherIntangibleAssetsMemberrh:RHSegmentMember2023-01-292023-07-290001528849rh:RealEstateInvestmentSegmentMember2023-04-302023-07-290001528849rh:RealEstateInvestmentSegmentMember2023-01-292023-07-290001528849rh:RealEstateInvestmentSegmentMember2022-05-012022-07-300001528849rh:RealEstateInvestmentSegmentMember2022-01-302022-07-300001528849rh:WaterworksSegmentMember2022-01-302023-01-280001528849rh:WaterworksSegmentMember2018-02-042019-02-020001528849rh:WaterworksSegmentMember2016-01-312017-01-280001528849rh:RealEstateSegmentMember2023-07-290001528849rh:ConvertibleSeniorNotesDue2023And2024Memberrh:ConvertibleBondHedgeAndWarrantTransactionsMemberus-gaap:OtherExpenseMember2022-01-302022-04-300001528849rh:WarrantsSubjectToCertainAdjustmentMechanismsMemberrh:ConvertibleSeniorNotesDue2023And2024Memberus-gaap:OtherExpenseMember2022-01-302022-04-300001528849rh:AspenLlcSOneOfThreeMember2023-07-290001528849rh:SevenMemberLlcMember2023-01-280001528849rh:OneMemberLlcMember2023-01-280001528849srt:ChiefExecutiveOfficerMemberus-gaap:EmployeeStockOptionMemberrh:TwoThousandTwelveStockIncentiveAndOptionPlanMember2023-07-290001528849us-gaap:EmployeeStockOptionMemberrh:TwoThousandTwelveStockIncentiveAndOptionPlanMember2023-07-290001528849us-gaap:RestrictedStockUnitsRSUMemberrh:TwoThousandTwelveStockIncentiveAndOptionPlanMember2023-07-290001528849us-gaap:EmployeeStockOptionMemberrh:TwoThousandTwentyThreeStockIncentivePlanMember2023-01-292023-07-290001528849rh:NotesRepurchaseMemberus-gaap:OtherExpenseMemberus-gaap:PrivatePlacementMember2022-05-012022-07-300001528849rh:NotesRepurchaseMemberus-gaap:OtherExpenseMemberus-gaap:PrivatePlacementMember2022-01-302022-04-300001528849rh:WaterworksSegmentMember2023-04-302023-07-290001528849rh:RHSegmentMember2023-04-302023-07-290001528849rh:WaterworksSegmentMember2023-01-292023-07-290001528849rh:RHSegmentMember2023-01-292023-07-290001528849rh:WaterworksSegmentMember2022-05-012022-07-300001528849rh:RHSegmentMember2022-05-012022-07-300001528849rh:WaterworksSegmentMember2022-01-302022-07-300001528849rh:RHSegmentMember2022-01-302022-07-300001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberrh:SecondLienTermLoanMemberrh:SecondLienTermLoanMember2023-07-290001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberrh:SecondLienTermLoanMemberrh:SecondLienTermLoanMember2023-01-280001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberus-gaap:OtherNoncurrentAssetsMemberrh:AssetBasedCreditFacilityMember2023-07-290001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberus-gaap:OtherNoncurrentAssetsMemberrh:AssetBasedCreditFacilityMember2023-01-280001528849rh:NotesRepurchaseMemberrh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMemberus-gaap:PrivatePlacementMember2022-07-300001528849rh:NotesRepurchaseMemberrh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMemberus-gaap:PrivatePlacementMember2022-07-300001528849rh:NotesRepurchaseMemberrh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMemberus-gaap:PrivatePlacementMember2022-04-300001528849rh:NotesRepurchaseMemberrh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMemberus-gaap:PrivatePlacementMember2022-04-300001528849rh:WarrantsSubjectToCertainAdjustmentMechanismsMemberrh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMember2022-04-300001528849rh:WarrantsSubjectToCertainAdjustmentMechanismsMemberrh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMember2022-04-300001528849rh:RestorationHardwareInc.Membersrt:ScenarioForecastMemberus-gaap:SecuredDebtMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2023-08-310001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberus-gaap:RevolvingCreditFacilityMemberrh:TwelfthAmendedAndRestatedCreditAgreementMemberrh:LiborMember2023-07-290001528849rh:RestorationHardwareInc.Memberus-gaap:SecuredDebtMemberrh:LiborMember2023-07-290001528849rh:OneMemberLlcMemberus-gaap:DebtInstrumentRedemptionPeriodOneMemberus-gaap:NotesPayableOtherPayablesMember2022-09-090001528849rh:RestorationHardwareInc.Memberrh:IncrementalAmendmentWithBankOfAmericaN.a.Memberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2022-05-130001528849rh:RestorationHardwareInc.Memberus-gaap:SecuredDebtMemberrh:LiborMember2021-10-200001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberrh:AssetBasedCreditFacilityMember2023-01-292023-07-290001528849rh:RestorationHardwareInc.Memberrh:TermLoanFacilityMember2023-01-292023-07-290001528849rh:RestorationHardwareInc.Memberrh:SecondLienTermLoanMember2023-01-292023-07-290001528849rh:TermLoanFacilityMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-07-290001528849rh:TermLoanFacilityMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-07-290001528849rh:SecondLienTermLoanMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-07-290001528849rh:SecondLienTermLoanMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-07-290001528849rh:RealEstateLoansMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-07-290001528849rh:RealEstateLoansMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-07-290001528849rh:TermLoanFacilityMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-01-280001528849rh:TermLoanFacilityMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-01-280001528849rh:SecondLienTermLoanMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-01-280001528849rh:SecondLienTermLoanMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-01-280001528849rh:RealEstateLoansMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-01-280001528849rh:RealEstateLoansMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-01-280001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMember2023-06-300001528849rh:OneMemberLlcMemberus-gaap:NotesPayableOtherPayablesMember2022-09-090001528849rh:OneMemberLlcMemberus-gaap:SecuredDebtMember2022-08-030001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMember2022-07-300001528849rh:RestorationHardwareInc.Memberus-gaap:SecuredDebtMemberrh:IncrementalAmendmentWithBankOfAmericaN.a.Member2022-05-130001528849rh:RestorationHardwareInc.Memberus-gaap:SecuredDebtMember2021-10-200001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMemberus-gaap:PrivatePlacementMember2019-09-300001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMemberus-gaap:PrivatePlacementMember2018-06-300001528849us-gaap:PrivatePlacementMember2018-06-300001528849rh:ConvertibleDebtInstrumentConversionPeriodTwoMemberrh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMember2019-09-012019-09-300001528849rh:ConvertibleDebtInstrumentConversionPeriodOneMemberrh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMember2019-09-012019-09-300001528849rh:ConvertibleDebtInstrumentConversionPeriodTwoMemberrh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMember2018-06-012018-06-300001528849rh:ConvertibleDebtInstrumentConversionPeriodOneMemberrh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMember2018-06-012018-06-300001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMember2019-09-012019-09-300001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMember2018-06-012018-06-300001528849rh:WarrantsSubjectToCertainAdjustmentMechanismsMemberrh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMember2023-07-290001528849rh:WarrantsSubjectToCertainAdjustmentMechanismsMemberrh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMember2023-07-290001528849rh:RestorationHardwareInc.Memberrh:TermLoanFacilityMember2023-07-290001528849rh:RestorationHardwareInc.Memberrh:SecondLienTermLoanMember2023-07-290001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMemberus-gaap:PrivatePlacementMember2023-07-290001528849us-gaap:PrivatePlacementMember2023-07-290001528849rh:RestorationHardwareInc.Memberrh:TermLoanFacilityMember2023-01-280001528849rh:RestorationHardwareInc.Memberrh:SecondLienTermLoanMember2023-01-280001528849rh:RestorationHardwareInc.Memberrh:EquipmentPromissoryNotesMember2023-01-280001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMemberus-gaap:PrivatePlacementMember2023-01-280001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMemberus-gaap:PrivatePlacementMember2023-01-280001528849us-gaap:PrivatePlacementMember2023-01-280001528849rh:NotesRepurchaseMemberus-gaap:PrivatePlacementMember2022-07-300001528849rh:NotesRepurchaseMemberus-gaap:PrivatePlacementMember2022-04-300001528849rh:RestorationHardwareInc.Membersrt:ScenarioForecastMemberus-gaap:SecuredDebtMember2023-08-012023-08-310001528849rh:RestorationHardwareInc.Memberus-gaap:SecuredDebtMember2023-01-292023-07-290001528849rh:OneMemberLlcMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMemberus-gaap:NotesPayableOtherPayablesMember2022-09-092022-09-090001528849rh:RestorationHardwareInc.Memberus-gaap:SecuredDebtMember2021-10-202021-10-200001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMember2023-01-292023-07-290001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMemberrh:ConvertibleBondHedgeAndWarrantTransactionsMemberus-gaap:CommonStockMember2022-01-302022-07-300001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMemberus-gaap:CommonStockMember2022-01-302022-07-300001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMember2022-01-302022-07-300001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMember2023-07-290001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMember2023-01-280001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MarketApproachValuationTechniqueMember2023-07-290001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MarketApproachValuationTechniqueMember2023-07-290001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MarketApproachValuationTechniqueMember2023-01-280001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MarketApproachValuationTechniqueMember2023-01-280001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MarketApproachValuationTechniqueMember2023-01-280001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MarketApproachValuationTechniqueMember2023-01-280001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMember2023-01-280001528849rh:GiftCardAndMerchandiseCreditMember2023-04-302023-07-290001528849rh:GiftCardAndMerchandiseCreditMember2022-05-012022-07-300001528849rh:GiftCardAndMerchandiseCreditMember2022-01-302022-07-300001528849rh:WarrantsSubjectToCertainAdjustmentMechanismsMemberrh:ConvertibleSeniorNotesDue2023And2024Member2023-07-2900015288492022-01-2900015288492022-01-302023-01-280001528849rh:WaterworksSegmentMember2023-07-290001528849rh:RHSegmentMember2023-07-290001528849rh:RealEstateDevelopmentSegmentMember2023-07-290001528849rh:WaterworksSegmentMember2023-01-280001528849rh:RHSegmentMember2023-01-280001528849rh:RealEstateDevelopmentSegmentMember2023-01-280001528849us-gaap:RestrictedStockMember2023-04-302023-07-290001528849us-gaap:EmployeeStockOptionMember2023-04-302023-07-290001528849us-gaap:RestrictedStockMember2023-01-292023-07-290001528849us-gaap:EmployeeStockOptionMember2023-01-292023-07-290001528849us-gaap:RestrictedStockMember2022-05-012022-07-300001528849us-gaap:EmployeeStockOptionMember2022-05-012022-07-300001528849us-gaap:ConvertibleNotesPayableMember2022-05-012022-07-300001528849us-gaap:RestrictedStockMember2022-01-302022-07-300001528849us-gaap:EmployeeStockOptionMember2022-01-302022-07-300001528849us-gaap:ConvertibleNotesPayableMember2022-01-302022-07-300001528849us-gaap:AdditionalPaidInCapitalMember2023-04-302023-07-290001528849us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2023-07-290001528849us-gaap:CommonStockMember2023-01-292023-07-290001528849us-gaap:CommonStockMember2022-05-012022-07-300001528849us-gaap:AdditionalPaidInCapitalMember2023-01-292023-07-290001528849us-gaap:AdditionalPaidInCapitalMember2022-05-012022-07-300001528849us-gaap:TreasuryStockCommonMember2022-01-302022-07-300001528849us-gaap:CommonStockMember2022-01-302022-07-300001528849srt:ChiefExecutiveOfficerMemberrh:TwoThousandTwelveStockIncentiveAndOptionPlanMember2020-10-182020-10-1800015288492022-07-300001528849rh:GiftCardAndMerchandiseCreditMember2023-01-292023-07-290001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberrh:TwelfthAmendedAndRestatedCreditAgreementMember2021-07-292021-07-290001528849country:GB2023-07-290001528849rh:AspenLlcSMember2023-07-290001528849us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2023-01-280001528849country:CA2023-07-290001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMembersrt:MaximumMemberus-gaap:RevolvingCreditFacilityMemberrh:TwelfthAmendedAndRestatedCreditAgreementMember2021-07-290001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberus-gaap:RevolvingCreditFacilityMemberrh:TwelfthAmendedAndRestatedCreditAgreementMember2021-07-290001528849rh:NotesRepurchaseMemberrh:FinancingLiabilityMemberus-gaap:PrivatePlacementMember2022-05-012022-07-300001528849rh:NotesRepurchaseMemberrh:FinancingLiabilityMemberus-gaap:PrivatePlacementMember2022-01-302022-04-300001528849us-gaap:AccountsPayableAndAccruedLiabilitiesMember2023-04-302023-07-290001528849rh:SevenMemberLlcMember2022-01-302023-01-280001528849rh:OneMemberLlcMember2022-01-302023-01-280001528849rh:AspenLlcSMember2023-01-292023-07-290001528849rh:RestorationHardwareInc.Memberus-gaap:SecuredDebtMember2023-05-132023-05-130001528849rh:RestorationHardwareInc.Memberrh:IncrementalAmendmentWithBankOfAmericaN.a.Member2022-05-132022-05-130001528849rh:ConvertibleDebtInstrumentConversionPeriodTwoMemberrh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMember2019-09-300001528849rh:ConvertibleSeniorNotesDueTwoThousandTwentyFourMember2019-09-300001528849rh:ConvertibleDebtInstrumentConversionPeriodTwoMemberrh:ConvertibleSeniorNotesDueTwoThousandTwentyThreeMember2018-06-300001528849rh:OneMemberLlcMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMemberus-gaap:NotesPayableOtherPayablesMember2022-09-090001528849rh:NotesRepurchaseMemberus-gaap:PrivatePlacementMember2022-05-012022-07-300001528849srt:MinimumMemberrh:WarrantsSubjectToCertainAdjustmentMechanismsMemberus-gaap:CommonStockMember2022-01-302022-04-300001528849srt:MaximumMemberrh:WarrantsSubjectToCertainAdjustmentMechanismsMemberus-gaap:CommonStockMember2022-01-302022-04-300001528849rh:NotesRepurchaseMemberus-gaap:PrivatePlacementMember2022-01-302022-04-300001528849rh:ConvertibleSeniorNotesDue2023And2024Memberrh:ConvertibleBondHedgeAndWarrantTransactionsMember2022-01-302022-04-300001528849us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2023-01-292023-07-290001528849us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-302022-07-3000015288492022-05-012022-07-300001528849rh:RestorationHardwareIncRestorationHardwareCanadaIncAndOtherSubsidiariesOfRhMemberrh:TwelfthAmendedAndRestatedCreditAgreementMember2021-07-290001528849rh:WarrantsSubjectToCertainAdjustmentMechanismsMember2022-04-300001528849rh:ConvertibleBondHedgeAndWarrantTransactionsMember2022-04-300001528849us-gaap:AdditionalPaidInCapitalMember2022-01-302022-07-3000015288492022-01-302022-07-3000015288492023-07-2900015288492023-01-2800015288492023-04-302023-07-2900015288492023-09-0100015288492023-01-292023-07-29xbrli:sharesiso4217:USDxbrli:purerh:customerrh:itemrh:storeiso4217:USDxbrli:sharesrh:Drh:segment

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 29, 2023

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: 001-35720

Graphic

(Exact name of registrant as specified in its charter)

Delaware

    

45-3052669

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification Number)

15 Koch Road
Corte Madera, CA

 

94925

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (415924-1005

Securities registered pursuant to Section 12(b) of the Act:

 

Common Stock, $0.0001 par value

RH

New York Stock Exchange, Inc.

(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.   Yes     No  

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).   Yes      No  

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.

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

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      No  

As of September 1, 2023, 18,400,192 shares of the registrant’s common stock were outstanding.

Table of Contents

RH

INDEX TO FORM 10-Q

    

    

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

3

Condensed Consolidated Balance Sheets (Unaudited)
as of July 29, 2023 and January 28, 2023

3

Condensed Consolidated Statements of Income (Unaudited)
for the three and six months ended July 29, 2023 and July 30, 2022

4

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
for the three and six months ended July 29, 2023 and July 30, 2022

5

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)
for the three and six months ended July 29, 2023 and July 30, 2022

6

Condensed Consolidated Statements of Cash Flows (Unaudited)
for the six months ended July 29, 2023 and July 30, 2022

8

Notes to Condensed Consolidated Financial Statements (Unaudited)

11

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

36

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

57

Item 4.

Controls and Procedures

58

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

59

Item 1A.

Risk Factors

59

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

60

Item 3.

Defaults Upon Senior Securities

60

Item 4.

Mine Safety Disclosures

60

Item 5.

Other Information

60

Item 6.

Exhibits

61

Signatures

62

2 | 2023 SECOND QUARTER FORM 10-Q

TABLE OF CONTENTS

Table of Contents

PART I

ITEM 1.     FINANCIAL STATEMENTS

RH

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

    

JULY 29,

    

JANUARY 28,

2023

2023

(in thousands)

ASSETS

 

  

 

  

Cash and cash equivalents

$

417,047

$

1,508,101

Restricted cash

3,538

3,662

Accounts receivable—net

 

54,447

 

59,763

Merchandise inventories

 

737,663

 

801,841

Prepaid expense and other current assets

 

143,831

 

139,297

Total current assets

 

1,356,526

 

2,512,664

Property and equipment—net

 

1,655,326

 

1,635,984

Operating lease right-of-use assets

532,090

527,246

Goodwill

 

141,053

 

141,048

Tradenames, trademarks and other intangible assets

 

75,472

 

74,633

Deferred tax assets

 

123,405

 

167,039

Equity method investments

130,211

101,468

Other non-current assets

 

198,748

 

149,207

Total assets

$

4,212,831

$

5,309,289

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

  

 

  

Accounts payable and accrued expenses

$

357,479

$

374,949

Deferred revenue and customer deposits

331,031

 

325,754

Convertible senior notes due 2023

1,696

Operating lease liabilities

83,489

80,384

Other current liabilities

 

100,667

 

103,190

Total current liabilities

 

872,666

 

885,973

Asset based credit facility

 

 

Term loan B—net

 

1,928,180

 

1,936,529

Term loan B-2—net

 

468,934

 

469,245

Real estate loans

17,902

17,909

Convertible senior notes due 2024—net

41,779

41,724

Non-current operating lease liabilities

 

506,535

 

505,809

Non-current finance lease liabilities

646,900

653,050

Deferred tax liabilities

6,401

6,315

Other non-current obligations

 

8,116

 

8,074

Total liabilities

4,497,413

4,524,628

Commitments and contingencies (Note 16)

 

 

Stockholders’ equity:

 

  

 

  

Preferred stock—$0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of July 29, 2023 and January 28, 2023

 

Common stock—$0.0001 par value per share, 180,000,000 shares authorized, 18,397,853 shares issued and outstanding as of July 29, 2023; 22,045,385 shares issued and outstanding as of January 28, 2023

 

2

 

2

Additional paid-in capital

 

261,803

 

247,076

Accumulated other comprehensive income (loss)

 

3,272

 

(2,403)

Retained earnings (accumulated deficit)

 

(549,659)

 

539,986

Total stockholders’ equity (deficit)

(284,582)

784,661

Total liabilities and stockholders’ equity (deficit)

$

4,212,831

$

5,309,289

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

PART I. FINANCIAL INFORMATION

2023 SECOND QUARTER FORM 10-Q | 3

Table of Contents

RH

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

THREE MONTHS ENDED

SIX MONTHS ENDED

JULY 29,

JULY 30,

JULY 29,

JULY 30,

    

2023

    

2022 

    

2023

    

2022 

(in thousands, except share and per share amounts)

Net revenues

$

800,479

$

991,620

$

1,539,641

$

1,948,912

Cost of goods sold

 

420,406

468,402

 

812,023

927,111

Gross profit

 

380,073

 

523,218

 

727,618

 

1,021,801

Selling, general and administrative expenses

 

228,733

288,804

477,038

582,099

Income from operations

 

151,340

 

234,414

 

250,580

 

439,702

Other expenses

 

Interest expense—net

44,422

26,264

84,238

47,119

Loss on extinguishment of debt

 

23,462

 

169,578

Other (income) expense—net

(186)

3,195

(839)

2,852

Total other expenses

 

44,236

52,921

 

83,399

219,549

Income before income taxes and equity method investments

107,104

181,493

 

167,181

220,153

Income tax expense (benefit)

27,245

56,397

 

43,830

(107,029)

Income before equity method investments

79,859

125,096

123,351

327,182

Share of equity method investments loss

3,382

2,821

4,984

4,196

Net income

$

76,477

$

122,275

$

118,367

$

322,986

Weighted-average shares used in computing basic net income per share

20,960,329

24,475,373

 

21,503,090

 

23,541,955

Basic net income per share

$

3.65

$

5.00

$

5.50

$

13.72

Weighted-average shares used in computing diluted net income per share

22,727,560

26,934,914

 

23,242,585

 

27,371,500

Diluted net income per share

$

3.36

$

4.54

$

5.09

$

11.80

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

4 | 2023 SECOND QUARTER FORM 10-Q

PART I. FINANCIAL INFORMATION

Table of Contents

RH

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

THREE MONTHS ENDED

SIX MONTHS ENDED

JULY 29,

JULY 30,

JULY 29,

JULY 30,

2023

    

2022 

    

2023

    

2022 

(in thousands)

Net income

$

76,477

$

122,275

$

118,367

$

322,986

Net gains (losses) from foreign currency translation

3,380

(2,240)

 

5,675

 

(6,385)

Comprehensive income

$

79,857

$

120,035

$

124,042

$

316,601

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

Table of Contents

RH

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

THREE MONTHS ENDED

COMMON STOCK

TREASURY STOCK

 

ACCUMULATED

 

RETAINED

 

ADDITIONAL

 

OTHER

 

EARNINGS

TOTAL

 

PAID-IN

 

COMPREHENSIVE

 

(ACCUMULATED

 

 

STOCKHOLDERS'

  

SHARES

  

AMOUNT

  

CAPITAL

  

INCOME (LOSS)

  

DEFICIT)

  

SHARES

  

AMOUNT

  

EQUITY (DEFICIT)

(in thousands, except share amounts)

Balances—April 29, 2023

22,051,251

 

$

2

 

$

257,616

 

$

(108)

 

$

581,876

 

 

$

 

$

839,386

Stock-based compensation

8,538

8,538

Issuance of restricted stock

2,961

Vested and delivered restricted stock units

Exercise of stock options

40,599

4,272

4,272

Settlement of convertible senior notes

1,929

Repurchases of common stockincluding excise tax

(3,698,887)

3,698,887

(1,216,635)

(1,216,635)

Retirement of treasury stock

(8,623)

(1,208,012)

(3,698,887)

1,216,635

Net income

76,477

76,477

Net gains from foreign currency translation

3,380

3,380

Balances—July 29, 2023

18,397,853

 

$

2

 

$

261,803

 

$

3,272

 

$

(549,659)

 

 

$

 

$

(284,582)

Balances—April 30, 2022

24,661,781

 

$

2

 

$

575,635

 

$

(5,555)

 

$

771,708

 

 

$

 

$

1,341,790

Stock-based compensation

10,736

10,736

Issuance of restricted stock

3,577

Vested and delivered restricted stock units

457

(57)

(57)

Exercise of stock options

49,375

2,471

2,471

Settlement of convertible senior notes

1

Repurchases of common stock

(1,000,000)

1,000,000

(254,731)

(254,731)

Retirement of treasury stock

(254,731)

(1,000,000)

254,731

Net income

122,275

122,275

Net losses from foreign currency translation

(2,240)

(2,240)

Balances—July 30, 2022

23,715,191

 

$

2

 

$

334,054

 

$

(7,795)

 

$

893,983

 

 

$

 

$

1,220,244

6 | 2023 SECOND QUARTER FORM 10-Q

PART I. FINANCIAL INFORMATION

Table of Contents

RH

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (continued)

(Unaudited)

SIX MONTHS ENDED

COMMON STOCK

TREASURY STOCK

 

ACCUMULATED

 

RETAINED

 

ADDITIONAL

 

OTHER

 

EARNINGS

TOTAL

 

PAID-IN

 

COMPREHENSIVE

 

(ACCUMULATED

 

 

STOCKHOLDERS'

  

SHARES

  

AMOUNT

  

CAPITAL

  

INCOME (LOSS)

  

DEFICIT)

  

SHARES

  

AMOUNT

  

EQUITY (DEFICIT)

(in thousands, except share amounts)

Balances—January 28, 2023

22,045,385

 

$

2

 

$

247,076

 

$

(2,403)

 

$

539,986

 

 

$

 

$

784,661

Stock-based compensation

18,718

18,718

Issuance of restricted stock

2,961

Vested and delivered restricted stock units

847

(96)

(96)

Exercise of stock options

45,616

4,728

4,728

Settlement of convertible senior notes

1,931

Repurchase of common stock—including excise tax

(3,698,887)

3,698,887

(1,216,635)

(1,216,635)

Retirement of treasury stock

(8,623)

(1,208,012)

(3,698,887)

1,216,635

Net income

118,367

118,367

Net gains from foreign currency translation

5,675

5,675

Balances—July 29, 2023

18,397,853

 

$

2

 

$

261,803

 

$

3,272

 

$

(549,659)

 

 

$

 

$

(284,582)

Balances—January 29, 2022

21,506,967

 

$

2

 

$

620,577

 

$

(1,410)

 

$

551,108

 

 

$

 

$

1,170,277

Stock-based compensation

 

 

23,538

 

 

 

 

 

23,538

Issuance of restricted stock

3,577

 

 

 

 

 

 

 

Vested and delivered restricted stock units

1,866

 

 

(323)

 

 

 

 

 

(323)

Exercise of stock options

3,202,775

 

 

152,041

 

 

 

 

 

152,041

Repurchases of common stock

(1,000,000)

1,000,000

(254,731)

(254,731)

Retirement of treasury stock

(254,731)

(1,000,000)

254,731

Exercise of call option under bond hedge upon settlement of convertible senior notes

(36,968)

 

 

14,705

 

 

 

36,968

 

(14,705)

 

Settlement of convertible senior notes

36,974

 

 

(14,705)

 

 

 

(36,968)

 

14,705

 

Termination of common stock warrants

 

 

(386,708)

 

 

 

 

 

(386,708)

Termination of convertible note hedge

 

 

236,050

 

 

 

 

 

236,050

Impact of ASU 2020-06 adoption

 

 

(56,390)

 

 

19,889

 

 

 

(36,501)

Net income

 

 

 

 

322,986

 

 

 

322,986

Net losses from foreign currency translation

 

 

 

(6,385)

 

 

 

 

(6,385)

Balances—July 30, 2022

23,715,191

 

$

2

 

$

334,054

 

$

(7,795)

 

$

893,983

 

 

$

 

$

1,220,244

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

PART I. FINANCIAL INFORMATION

2023 SECOND QUARTER FORM 10-Q | 7

Table of Contents

RH

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

SIX MONTHS ENDED

JULY 29,

JULY 30,

2023

    

2022

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

118,367

$

322,986

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Depreciation and amortization

 

55,906

51,728

Non-cash operating lease cost

38,858

37,190

Asset impairments

2,894

8,154

Stock-based compensation expense

 

18,718

23,538

Non-cash finance lease interest expense

17,280

14,962

Product recalls

560

Deferred income taxes

43,717

5,493

Loss on extinguishment of debt

169,578

Gain on derivative instruments—net

(1,724)

Share of equity method investments loss

4,984

4,196

Other non-cash items

 

4,454

3,348

Change in assets and liabilities:

 

Accounts receivable

 

5,332

2,332

Merchandise inventories

 

64,848

(124,958)

Prepaid expense and other assets

 

(24,680)

(153,471)

Landlord assets under construction—net of tenant allowances

 

(13,959)

(32,460)

Accounts payable and accrued expenses

 

(32,205)

(63,820)

Deferred revenue and customer deposits

 

5,216

2,911

Other current liabilities

 

(2,315)

(24,902)

Current and non-current operating lease liabilities

 

(41,654)

(38,329)

Other non-current obligations

 

(17,406)

(14,796)

Net cash provided by operating activities

 

248,355

 

192,516

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

Capital expenditures

 

(81,596)

(62,558)

Equity method investments

 

(33,727)

(1,520)

Net cash used in investing activities

 

(115,323)

 

(64,078)

8 | 2023 SECOND QUARTER FORM 10-Q

PART I. FINANCIAL INFORMATION

Table of Contents

RH

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited)

SIX MONTHS ENDED

JULY 29,

JULY 30,

2023

    

2022

(in thousands)

CASH FLOWS FROM FINANCING ACTIVITIES

 

  

 

  

Borrowings under term loans

500,000

Repayments under term loans

(12,500)

(10,000)

Repayments under real estate loans

(13)

Repayments under promissory and equipment security notes

 

(1,160)

(12,807)

Repayments of convertible senior notes

(1,696)

(13,048)

Repayment under convertible senior notes repurchase obligation

(395,372)

Debt issuance costs

 

(27,646)

Principal payments under finance lease agreements—net of tenant allowances

(5,454)

(3,132)

Proceeds from termination of convertible senior note hedges

231,796

Payments for termination of common stock warrants

(390,934)

Repurchases of common stock—inclusive of excise taxes paid

(1,208,290)

(254,731)

Proceeds from exercise of stock options

 

4,728

152,041

Tax withholdings related to issuance of stock-based awards

(96)

(323)

Net cash used in financing activities

 

(1,224,481)

 

(224,156)

Effects of foreign currency exchange rate translation

 

271

(440)

Net decrease in cash and cash equivalents, restricted cash and restricted cash equivalents

 

(1,091,178)

 

(96,158)

Cash and cash equivalents, restricted cash and restricted cash equivalents

 

 

  

Beginning of period—cash and cash equivalents

 

1,508,101

 

2,177,889

Beginning of period—restricted cash

 

3,662

 

Beginning of period—restricted cash equivalents (acquisition related escrow deposits)

 

3,975

Beginning of period—cash and cash equivalents, restricted cash and restricted cash equivalents