RH (NYSE:RH)

Debt to Equity and Related Measures

The debt to equity ratio remained unreported until 2020, where it showed an exceptionally high figure at 71.17. This sharply declined to 2.47 in 2021, followed by a slight reduction to 2.41 in 2022, and then increased again to 4.03 in 2023. When including operating lease liabilities, a similar trend is observed but with higher ratios, peaking at 96.31 in 2020 and subsequently reducing to 3.63 in 2021, 2.94 in 2022, and rising again to 4.78 in 2023. This suggests a significant deleveraging event or restructuring around 2020-2021.

Debt to Capital and Related Measures

Debt to capital ratios were consistently close to 1.0 from 2018 through 2020, indicating a high level of debt relative to capital. A notable decline occurred in 2021 and 2022 to around 0.71, signaling an improvement in capital structure or reduction in reliance on debt. In 2023, this ratio slightly increased to 0.8, showing some renewed leveraging. Including operating lease liabilities results in higher ratios but follows the same overall pattern.

Debt to Assets and Related Measures

The debt to assets ratio showed a moderate increase from 0.5 in 2018 to 0.54 in 2020, dipped to 0.38 in 2021, then increased sharply to 0.51 in 2022 and further to 0.6 in 2023. When operating lease liabilities are included, the ratio jumps significantly, from 0.5 in 2018 to 0.73 in 2020, then improves to 0.56 in 2021, but rises again to 0.62 in 2022 and 0.71 in 2023. These fluctuations reflect variable asset and debt management strategies over the period.

Financial Leverage

Financial leverage data is missing for the earliest years but displays an extremely high ratio of 131.13 in 2020, indicating very high leverage at that time. This lowered substantially to 6.48 in 2021, decreased further to 4.73 in 2022, but then increased again to 6.77 in 2023, suggesting fluctuating leverage levels with a major reduction after 2020 followed by some increased leveraging recently.

Interest Coverage

Interest coverage improved steadily from 1.48 in 2018 to a peak of 13.29 in 2022, indicating enhanced ability to meet interest obligations from operating earnings. However, in 2023 it declined sharply to 3.88, suggesting a reduction in operational profitability or increased interest expenses undermining coverage.

Fixed Charge Coverage

Fixed charge coverage follows a similar pattern to interest coverage, increasing from 1.19 in 2018 to 5.93 in 2022, showing improved capacity to cover fixed financial obligations. This ratio also declined in 2023 to 2.73, highlighting a decrease in the company’s ability to service fixed charges in the most recent period.

Overall Analysis

The company’s leverage and debt ratios exhibit significant volatility, with very high debt-related ratios in 2020 followed by notable deleveraging efforts through 2021 and 2022. The improvement in coverage ratios during this time indicates strengthened financial stability. However, the partial reversal indicated by increased debt ratios and lower coverage ratios in 2023 suggests renewed financial strain or strategic leveraging. The inclusion of operating lease liabilities consistently elevates the debt ratios, implying that off-balance sheet obligations have sizable impacts on the overall leverage profile.

Total Debt

The total debt exhibited significant fluctuations over the period analyzed. Initially, there was a moderate increase from approximately 874.2 million US dollars in early 2018 to around 931.3 million in early 2019. The debt then rose more sharply, peaking at approximately 1.33 billion in early 2020. Following this peak, a reduction occurred in early 2021, with debt decreasing to about 1.10 billion. However, from early 2021 onwards, there was a substantial increase, reaching roughly 2.82 billion by early 2022 and further rising to approximately 3.16 billion in early 2023. This reflects an overall trend of increasing leverage, particularly marked after 2021.

Stockholders’ Equity (Deficit)

The stockholders’ equity demonstrated a major transformation over the period. Initially, the company experienced a deficit, starting with approximately negative 7.3 million in early 2018 and worsening to around negative 23.0 million in early 2019. By early 2020, the equity position shifted into a positive territory, reaching approximately 18.7 million. The positive trajectory continued dramatically through 2021 and 2022, with equity rising to about 447 million and then 1.17 billion, respectively. However, in early 2023, there was a noticeable decline in equity, dropping to roughly 785 million. This suggests a period of recovery and capital strengthening until 2022, followed by a reduction in shareholders’ equity in the most recent year.

Debt to Equity Ratio

The debt to equity ratio data, starting from 2020, reveals significant volatility. The ratio was extraordinarily high at approximately 71.17 in early 2020, indicating a highly leveraged position likely due to minimal equity at that time. Subsequently, there was a dramatic decrease to about 2.47 in early 2021 and a slight decrease to 2.41 in early 2022, reflecting strengthening equity relative to debt. In early 2023, the ratio increased again to approximately 4.03, suggesting a reduction in equity relative to debt or increased borrowing. The overall movement indicates fluctuating leverage with an initial peak, subsequent improvement, and a moderate increase in leverage in the latest period observed.

Total Debt (including operating lease liability)

The total debt increased notably over the analyzed periods. Initially, from 874,207 thousand USD in early 2018, there was a moderate increase to 931,283 thousand USD in 2019. A significant jump occurred in 2020 when the debt almost doubled to 1,796,264 thousand USD. Though there was a slight decline in 2021 to 1,623,970 thousand USD, the debt surged sharply again in 2022 to 3,434,817 thousand USD, continuing upward to 3,749,513 thousand USD by early 2023. This trend shows a growing reliance on debt financing, especially pronounced from 2020 onwards.

Stockholders' Equity (Deficit)

Stockholders’ equity exhibited substantial volatility over the period. It began with a negative value of -7,336 thousand USD in 2018, which deteriorated further to -22,962 thousand USD in 2019, indicating worsening equity deficits at the start. However, a remarkable turnaround occurred in 2020, flipping to a positive equity of 18,651 thousand USD. The upward trajectory accelerated dramatically through 2021 and 2022, peaking at 1,170,277 thousand USD. In 2023, equity decreased to 784,661 thousand USD, but remained substantially positive compared to the initial years. This pattern reflects significant improvement in the company's net worth after 2019, albeit with some recent contraction.

Debt to Equity Ratio (including operating lease liability)

This ratio became available from 2020 onwards and displays substantial fluctuations. In 2020, the ratio was exceptionally high at 96.31, indicating that debt massively outweighed equity at that point, likely due to the recent equity recovery from negative to slightly positive values. In 2021, the ratio dropped sharply to 3.63, reflecting the rapid increase in equity and a relative reduction in debt impact. The ratio remained relatively stable at 2.94 in 2022, showing an improved balance between debt and equity. However, in 2023, the ratio increased to 4.78, suggesting a renewed increase in leverage relative to equity. Overall, leverage ratios indicate a period of high financial risk in 2020, considerable improvement in the following years, and a moderate increase in leverage in the most recent period.

Total Debt

The total debt shows an overall increasing trend over the analyzed periods. It starts at approximately 874 million US dollars in early 2018, gradually increasing to about 931 million in early 2019, followed by a significant rise to approximately 1.33 billion in early 2020. There is a slight decrease to around 1.10 billion in early 2021, but in the subsequent two years, the total debt experiences marked growth, reaching about 2.82 billion in early 2022 and increasing further to approximately 3.16 billion by early 2023.

Total Capital

Total capital also demonstrates a general upward trajectory throughout the period. Beginning near 867 million US dollars in early 2018, it increases modestly to around 908 million in early 2019, then rises significantly to approximately 1.35 billion in 2020 and further to 1.55 billion in 2021. There is a substantial jump in capital to nearly 4.0 billion in early 2022, with a slight decrease to approximately 3.95 billion in early 2023.

Debt to Capital Ratio

The debt to capital ratio fluctuates during the period under review. Initially, the ratio is slightly above 1.0 in 2018 and 2019, indicating that total debt slightly exceeds total capital. In 2020, the ratio dips marginally below 1.0, demonstrating a more balanced capital structure. A notable decline occurs in 2021, when the ratio falls to approximately 0.71, maintaining this level into 2022. In 2023, the ratio increases to 0.8, indicating a moderate rise in leverage but still below the earlier high levels observed.

Summary

The data indicate a substantial increase in both total debt and total capital over the six-year period, with particularly significant growth after 2020. Despite rising debt levels, improvements in total capital have resulted in a reduced debt to capital ratio beginning in 2021, suggesting an enhanced capital structure with relatively lower leverage. However, the slight uptick in the debt to capital ratio in 2023 merits monitoring as it may signal increasing reliance on debt financing.

The analysis of the given financial data reveals several key trends related to the company's capital and debt structure over the six-year period examined.

Total debt (including operating lease liability)

The total debt showed a general upward trend across the years. Starting from approximately 874 million US dollars in early 2018, the debt level nearly doubled by the start of 2020, reaching around 1.8 billion US dollars. Subsequently, it decreased slightly by the start of 2021 but then surged significantly to over 3.4 billion in early 2022 and continued to increase to nearly 3.75 billion by early 2023.

Total capital (including operating lease liability)

Total capital followed a similar upward pattern. Beginning at approximately 867 million US dollars in early 2018, it more than doubled by early 2020 to reach about 1.8 billion US dollars. The capital then steadily rose to above 2 billion by the start of 2021 and experienced a sharp increase to over 4.6 billion in early 2022, before slightly declining to approximately 4.53 billion in early 2023.

Debt to capital ratio (including operating lease liability)

The debt to capital ratio exhibited variability over time. Initially, it was very high at or above 1.0 during the first three years, indicating debt levels roughly equal to or slightly exceeding total capital. In 2021, this ratio decreased markedly to 0.78, suggesting an improvement in the balance between debt and capital. The ratio continued to improve slightly to 0.75 in 2022, before rising modestly to 0.83 in 2023. This trend indicates a period of deleveraging followed by a moderate increase in leverage.

Overall, the data indicate a substantial increase in both debt and capital over the period, with a notable peak in both measures around 2022. The debt to capital ratio's decline from above 1.0 to below 1.0 after 2020 reflects a shift toward a stronger capital base relative to debt, despite the absolute levels of debt rising. The slight increase in the ratio in the latest year suggests a recent marginal increase in reliance on debt financing.

Total Debt

The total debt exhibits significant fluctuations over the observed periods. It increased from approximately 874 million USD in early 2018 to about 1.33 billion USD in early 2020, indicating a period of rising leverage. Subsequently, there was a decline to around 1.10 billion USD in early 2021. However, from 2021 onward, the total debt surged considerably, reaching over 3.16 billion USD by early 2023, nearly tripling compared to 2018 levels.

Total Assets

Total assets show a consistent upward trend throughout the period. Starting from roughly 1.73 billion USD in early 2018, assets grew steadily each year, peaking around 5.54 billion USD in early 2022 before slightly declining to approximately 5.31 billion USD in early 2023. This suggests aggressive asset accumulation, with a minor contraction in the most recent year.

Debt to Assets Ratio

The debt to assets ratio, representing leverage relative to asset base, follows a variable pattern. Initially, it increased slightly from 0.50 in 2018 to 0.54 in 2020, then decreased significantly to 0.38 in 2021, indicating a reduction in leverage relative to assets. However, this ratio rose again to 0.51 in 2022 and further to 0.60 in 2023, marking the highest leverage relative to assets in the observed timeframe. This corresponds with the sharp increase in total debt outpacing asset growth during these last two years.

Overall Insights

The data reflects a company that has been expanding its asset base consistently. While there was a first phase of moderate increase in debt aligned with asset growth, a more recent period is characterized by a sharp rise in indebtedness, notably surpassing the growth in assets, as highlighted by the increase in the debt to assets ratio to 0.60. The peak leverage in 2023 raises considerations about financial risk management and sustainability of debt levels amid asset growth moderate decline. Monitoring these trends will be crucial for assessing future financial stability.

Total debt (including operating lease liability)

The total debt exhibits a notable increasing trend over the years. Starting from approximately $874 million in early 2018, it rose moderately to around $931 million by early 2019. A sharp increase is observed in 2020, with total debt nearly doubling to about $1.8 billion. This was followed by a slight decrease in 2021 to approximately $1.6 billion. However, the debt level more than doubled again by 2022 to over $3.4 billion and continued to grow, reaching nearly $3.75 billion in 2023.

Total assets

Total assets have shown a consistent upward trajectory from 2018 to 2023, albeit not without some fluctuations. Assets increased steadily from approximately $1.73 billion in early 2018 to about $1.81 billion in 2019. A more substantial increase occurred in 2020, reaching roughly $2.45 billion, followed by further growth to nearly $2.9 billion in 2021. A significant jump occurred in 2022, with total assets reaching approximately $5.54 billion, though a slight decline is evident in 2023, settling at around $5.31 billion.

Debt to assets ratio (including operating lease liability)

The debt to assets ratio fluctuates over the analyzed period but generally reflects a rising debt burden relative to assets. Starting at 0.5 in 2018, the ratio slightly increased to 0.52 in 2019, suggesting a relatively stable leverage position. A substantial rise to 0.73 in 2020 indicates a markedly higher proportion of debt relative to assets. The ratio then decreased to 0.56 in 2021, suggesting some deleveraging or asset growth outpacing debt. It climbed again to 0.62 in 2022 and further rose to 0.71 in 2023, implying increasing leverage and a higher risk profile in recent years.

The financial data indicates notable trends in total assets, stockholders’ equity, and financial leverage over the six-year period ending in early 2023.

Total Assets

Total assets showed a consistent upward trend from February 2018 through January 2022, increasing from approximately $1.73 billion to $5.54 billion. This represents substantial asset growth over four years. However, by January 2023, total assets declined slightly to approximately $5.31 billion, indicating a small reduction after a period of strong expansion.

Stockholders’ Equity (Deficit)

Stockholders’ equity initially was negative, with deficits of roughly -$7.3 million in 2018 and worsening to -$23.0 million in 2019. In 2020, equity improved significantly to a positive $18.7 million, followed by a pronounced increase in 2021 to $447 million. The upward trajectory continued in 2022, reaching approximately $1.17 billion, the highest point over the period. However, there was a decline in 2023, with equity decreasing to about $784.7 million. Despite this decrease, equity remained well above earlier years, indicating an overall strengthening of the company’s financial position over time.

Financial Leverage

Financial leverage ratios were not reported for the initial two years. Starting in 2020, the leverage ratio was extremely high at 131.13, suggesting significant use of debt relative to equity or an unusual accounting situation. In the subsequent years, leverage decreased substantially to 6.48 in 2021 and 4.73 in 2022, reflecting a considerable reduction in financial risk or improved capital structure. In 2023, leverage rose again slightly to 6.77, indicating a modest increase in reliance on debt or other liabilities relative to equity.

Overall, the data reveals a trajectory of asset growth and enhanced equity position with fluctuations in financial leverage. The company improved from a negative equity situation to a strong equity base with a more balanced leverage ratio over time, despite some recent mild reversals in asset size and equity value alongside a slight uptick in leverage.

Earnings before Interest and Tax (EBIT)

The EBIT showed a substantial upward trend from 2018 through 2022, increasing from 93,235 thousand US$ to a peak of 888,987 thousand US$. This represents a nearly tenfold increase over the five-year period. However, in 2023, there was a notable decline to 589,014 thousand US$, indicating a reduction in operating profitability compared to the previous year.

Interest Expense

Interest expense generally increased from 63,084 thousand US$ in 2018 to 88,509 thousand US$ in 2020, followed by a decline to 66,883 thousand US$ in 2022. In 2023, there was a sharp increase to 151,730 thousand US$, which more than doubled the interest expense from the prior year, indicating significantly higher financing costs in the most recent period.

Interest Coverage Ratio

The interest coverage ratio exhibited a strong improving trend from 1.48 in 2018 to a peak of 13.29 in 2022, suggesting increasing EBIT relative to interest expenses and therefore greater ease in meeting interest obligations over time. However, in 2023, the ratio dropped substantially to 3.88, indicating a reduction in the company's ability to cover interest expenses comfortably, primarily driven by the combined effect of reduced EBIT and increased interest costs.

Earnings before fixed charges and tax

The earnings before fixed charges and tax exhibited a generally upward trend from 2018 through 2022, increasing substantially from 192,450 thousand US dollars in 2018 to a peak of 988,972 thousand US dollars in 2022. However, there was a notable decline in 2023, with earnings decreasing to 689,660 thousand US dollars. This indicates strong growth over the first five years, followed by a significant reduction in the most recent year.

Fixed charges

Fixed charges remained relatively stable between 2018 and 2022, fluctuating modestly from 162,299 thousand US dollars to 166,868 thousand US dollars, with a minor peak in 2020 at 174,957 thousand US dollars. In 2023, fixed charges increased sharply to 252,376 thousand US dollars, representing a notable rise compared to prior years.

Fixed charge coverage

The fixed charge coverage ratio demonstrated a consistent improvement from 2018 to 2022, rising from 1.19 to 5.93. This suggests an enhanced ability to cover fixed charges from earnings over this period. However, in 2023, the coverage ratio declined significantly to 2.73, reflecting the combined effect of reduced earnings and increased fixed charges. Despite this decrease, the ratio remained above the initial levels observed in 2018 and 2019.