Restoration Hardware (RH) Reports In-Line Q3 EPS, Offers Q4 Guidance

Restoration Hardware (NYSE: RH) reported Q3 EPS of $1.04, in-line with the analyst estimate of $1.04. Revenue for the quarter came in at $592.5 million versus the consensus estimate of $591 million.

Fourth Quarter and Fiscal 2017 Outlook

• Fourth quarter adjusted net income in the range of $37 million to $41 million despite an approximate $1.5 million negative impact as a result of the Company’s decision to delay the opening of its New York Design Gallery to Spring-Summer 2018. This outlook assumes an approximate $2 million tax benefit which corresponds to an expected 35% tax rate. Due to the recent increases in the Company’s stock price and its impact on the fully diluted share count, the Company is providing a table to assist in estimating diluted shares outstanding and adjusted diluted earnings per share.
• Fourth quarter net revenues in the range of $655 million to $680 million despite a $9 million negative impact due to the Company’s decision to delay the opening of its New York Design Gallery.
• Fiscal 2017 adjusted net income in the range of $83 million to $87 million despite the Company’s decision to delay the opening of its New York Design Gallery.
• Fiscal 2017 net capital expenditures in the range of $120 million to $130 million.
• Fiscal 2017 free cash flow in the range of $420 million to $440 million.

(Street sees Q4 EPS of $1.56 on revenue of $673.5 million and FY EPS of $2.93 on revenue of $2.45 billion)

Preliminary 2018 Outlook

• Net revenues in the range of $2.58 billion to $2.62 billion, representing growth of 6% to 7% on a 52-week vs 53-week basis. On a comparable 52-week vs 52-week basis, net revenue growth is expected to be in the range of 8% to 9%.
• Adjusted operating margin in the range of 9% to 10%.
• Adjusted net income in the range of $125 million to $145 million.
• Net capital expenditures in the range of $65 million to $75 million.
• Free cash flow in excess of $240 million.

For earnings history and earnings-related data on Restoration Hardware (RH) click here.

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