Executive Summary
Rh delivered solid top-line performance in QQ3 2024 with year-over-year revenue growth and strong gross margins, but faces meaningful balance-sheet leverage and cash-flow headwinds driven by working-capital dynamics. Revenue reached $811.7 million, up 11.7% versus the prior-year quarter, while gross profit rose 14.3% to $361.3 million and gross margin held at ~44.5%. Operating income expanded to $101.5 million and net income to $33.2 million, yielding an EPS of $1.79 (diluted $1.66). Despite the earnings strength, operating cash flow remained negative at $(31.4) million and free cash flow was deeply negative at $(95.99) million, signaling heavy working-capital consumption and inventory-related outflows.
Balance-sheet health remains a key concern. Total debt stood at $3.86 billion with net debt of $3.77 billion and total liabilities exceeding assets, resulting in negative stockholders’ equity of $(183.0) million. Liquidity is modest with cash of $87.0 million and a current ratio of 1.43, but leverage metrics remain elevated (long-term debt to equity and capitalization near 1.0x). The company operates in a high-inventory environment (inventory days ~195.5) and a short receivables cycle (~7 days), implying substantial capital tied in working-capital needs. The blend of premium branding, a multi-channel distribution model, and price discipline, however, supports a potential path to margin resilience and cash-flow recovery as product mix, pricing, and operating-expenditure discipline improve.
Looking ahead, management has not published explicit quantitative guidance in QQ3 2024 filings. Investors should monitor deleveraging progress, inventory optimization, and cash generation initiatives, as well as any shifts in demand for premium home furnishings amid macro volatility. Given RH’s brand strength and scalable direct-to-consumer channels, a gradual improvement in cash flow and leverage could unlock multiple expansion potential, particularly if margins stabilize and working-capital efficiency improves.
Key Performance Indicators
QoQ: 14.56% | YoY:1 014.98%
QoQ: 14.01% | YoY:995.00%
Key Insights
Revenue: $811.7M (YoY +11.66%, QoQ -2.16%)
Gross Profit: $361.34M (YoY +14.33%, QoQ -3.58%)
Operating Income: $101.47M (YoY +66.72%, QoQ +5.56%)
Net Income: $33.17M (YoY +1,014.98%, QoQ +14.56%)
EPS: $1.79 (Diluted $1.66); Weighted Avg Shs: 18.535M (Diluted 19.982M)
Gross Margin: 44.51%; Operating Margin: 12.50%; Net Margin: 4.09%
EBITDA: $135.49M; EBITDA Margin: 16.69%
Free Cash Flow: $(95.99)M; Operating Cash Flow: $(31.44)M
Cash at End of Period: $87.01M; Cash Flow from Operations yield: nega...
Financial Highlights
Revenue: $811.7M (YoY +11.66%, QoQ -2.16%)
Gross Profit: $361.34M (YoY +14.33%, QoQ -3.58%)
Operating Income: $101.47M (YoY +66.72%, QoQ +5.56%)
Net Income: $33.17M (YoY +1,014.98%, QoQ +14.56%)
EPS: $1.79 (Diluted $1.66); Weighted Avg Shs: 18.535M (Diluted 19.982M)
Gross Margin: 44.51%; Operating Margin: 12.50%; Net Margin: 4.09%
EBITDA: $135.49M; EBITDA Margin: 16.69%
Free Cash Flow: $(95.99)M; Operating Cash Flow: $(31.44)M
Cash at End of Period: $87.01M; Cash Flow from Operations yield: negative
Days Inventory Outstanding: 195.5; Days Sales Outstanding: 7.0; Payables Outstanding: 44.4; Cash Conversion Cycle: 158.2 days
Total Assets: $4.464B; Total Liabilities: $4.647B; Stockholders’ Equity: $(183.0)M
Total Debt: $3.860B; Net Debt: $3.773B; Current Ratio: 1.43; Quick Ratio: 0.33
P/BV: -32.69; P/S: 7.37; P/E: 45.09; Enterprise Value/EBITDA: 72.01
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
811.73M |
11.66% |
-2.16% |
| Gross Profit |
361.34M |
14.33% |
-3.58% |
| Operating Income |
101.47M |
66.72% |
5.56% |
| Net Income |
33.17M |
1 014.98% |
14.56% |
| EPS |
1.79 |
995.00% |
14.01% |
Key Financial Ratios
operatingProfitMargin
12.5%
operatingCashFlowPerShare
$-1.7
freeCashFlowPerShare
$-5.18
Management Commentary
Transcript data not provided in the materials supplied for QQ3 2024. Unable to extract management quotes or theme-based highlights from an earnings call. This section will be updated if the call transcript is supplied.
Forward Guidance
No explicit quantitative guidance was published in the QQ3 2024 10-Q. Based on the results and industry context, the short-term focus areas likely include: (1) deleveraging and normalization of cash flows to reduce leverage risk; (2) working-capital optimization to align operating cash flow with earnings; (3) inventory discipline to reduce days of inventory on hand and markdown risk; (4) sustaining gross margin through product mix and pricing strategies amid a premium positioning in the luxury home furnishings segment. Investors should monitor liquidity milestones, the cadence of inventory turns, any commentary on cost-of-goods-sold improvements, and planned capital allocation (capex vs. buybacks/dividends) as potential indicators of the trajectory toward FCF recovery.