RH (NYSE:RH)

Current Tax Expense

The current tax expense demonstrated a consistent upward trend from 2018 through 2022, increasing from $22,287 thousand in 2018 to a peak of $140,479 thousand in 2022. However, in 2023, there was an abrupt and significant drop to $1,252 thousand, breaking the pattern of growth observed in the previous years.

Deferred Tax Expense (Benefit)

The deferred tax expense began with a positive value of $5,684 thousand in 2018 but shifted to negative values starting in 2019. This indicates a deferred tax benefit rather than an expense from 2019 onwards. The magnitude of this benefit generally increased over time, reaching -$9,2610 thousand in 2023, which represents a substantial increase in deferred tax benefits compared to prior years.

Income Tax Expense (Benefit)

The total income tax expense, combining current and deferred components, reflected growth from $27,971 thousand in 2018 to a high of $133,558 thousand in 2022. Similar to the current tax expense, the income tax expense dropped sharply in 2023, registering a negative value of -$91,358 thousand, which implies an overall income tax benefit for that year. This reversal in 2023 aligns with the significant deferred tax benefit recorded that same year.

The analysis of tax-related items over the six-year period reveals multiple significant trends and variations in the effective tax rate components.

Federal Statutory Tax Rate

This rate decreased sharply from 33.7% in 2018 to 21% in 2019, remaining stable at 21% through 2023. This marks a permanent reduction consistent with legislative changes.

State Income Taxes, Net of Federal Tax Impact

State income taxes exhibited volatility, beginning at 4.8% in 2018 and fluctuating between positive and negative values in subsequent years, notably turning negative (-2.8%) in 2023, which may suggest increased state tax credits or refunds affecting the overall tax burden.

Stock Compensation, Excess Benefits

A consistent downward trend is evident in this component, starting from a large negative impact of -20.9% in 2018 and worsening to -50% in 2023. This trend indicates escalating excess tax benefits from stock compensation over time.

Tax Impact of Convertible Senior Notes Repurchase

This component appears exclusively in 2023 at 9.4%, reflecting a one-time tax effect related to this financial activity.

Non-Deductible Stock-Based Compensation

Values were reported intermittently, with 26.7% in 2018, dropping to nearly negligible effects (0.6% to 0.9%) in 2022 and 2023. The 2019 and 2020 data are missing, preventing trend analysis during those years.

Goodwill Impairment

Significant in 2018 at 17.9%, it dramatically declined to 1.6% in 2019 and was absent thereafter, indicating a substantial one-time goodwill write-down affecting tax calculations primarily in 2018.

Valuation Allowance

Relatively minor and stable, ranging between 0.1% and 1.1%, with no clear upward or downward trend.

Tax Rate Adjustments and Other Permanent Items

Generally small in magnitude, with "Tax rate adjustments and other" hovering around zero and "Other permanent items" diminishing from 6.4% in 2018 to 0.6% in 2021, then unreported subsequently.

Effective Tax Rate

This exhibits significant fluctuations. An extraordinarily high 92.8% in 2018 is notably anomalous, likely due to the substantial goodwill impairment and stock compensation effects. From 2019 onward, the rate normalizes to a range between 16.2% and 27.8%, except in 2023 where it turns negative (-20.9%), reflecting the combined influence of negative state income taxes, large stock compensation excess benefits, and positive tax impact from convertible notes repurchase.

Overall, the data shows a marked shift in the federal statutory tax environment starting in 2019, with significant variability in other tax components that contribute to the effective tax rate's volatility. The pronounced impact of stock compensation has increasingly favored tax benefits, especially in the latest period. One-time items such as goodwill impairment and convertible notes repurchase materially influence specific years, complicating the consistent assessment of underlying tax expense trends.

The financial data reveals several noteworthy trends over the examined periods. Lease liabilities, which were not reported prior to 2021, show a consistent increase from $249,243 thousand in 2021 to $339,911 thousand in 2023, indicating a growing commitment to lease obligations. Net operating loss carryforwards experienced a significant surge in 2023, rising sharply from $2,884 thousand in 2022 to $120,586 thousand, which may suggest a substantial accumulation of tax losses available for offsetting future taxable income.

Accrued expenses demonstrate a fluctuating trend with a peak in 2023 at $30,108 thousand after a decline in 2022. Stock-based compensation shows a general decline from $25,047 thousand in 2018 to $14,974 thousand in 2023, indicating reduced expenses related to employee stock incentives. Merchandise inventories initially declined from 2018 to 2020 but then increased steadily from 2021 onwards, reaching $13,346 thousand in 2023.

Deferred revenue displays variability, with a notable decrease in 2021 followed by a rebound in 2023. Deferred lease credits showed a sharp reduction from 2019 onward, with no data available for 2023. Convertible senior notes have minimal and inconsistent figures, limiting interpretability. The "Other" category fluctuates without a clear pattern, ending with a rise in 2023.

Non-current deferred tax assets increased substantially across the periods, rising from $78,024 thousand in 2018 to $555,234 thousand in 2023, signaling a growing recognition of tax benefits. Conversely, the valuation allowance, which offsets deferred tax assets, remains negative with an increasing absolute value in 2023, suggesting heightened uncertainty regarding the realization of some tax assets.

Property and equipment values become increasingly negative, reaching a low of $-212,424 thousand in 2023, reflecting either accumulated depreciation or disposals. Lease right-of-use assets, recognized from 2020, increased sharply to $-146,368 thousand in 2022 but slightly decreased to $-142,199 thousand in 2023. Prepaid expenses and other assets show a steady decline, becoming more negative over time.

Intangible assets, including tradename and trademarks, display a general decline with fluctuations but remain negative, indicating amortization or impairment. State benefits decline notably in 2023, reaching $-8,339 thousand, which may reflect changes in state aid or tax credits. Convertible senior notes present negative figures in early years but none reported in recent periods, suggesting possible repayment or retirement.

Deferred revenue appeared as negative in 2019 with no corresponding recent data, reducing clarity on this item. Non-current deferred tax liabilities progressively increased in absolute terms to $-390,308 thousand by 2023, showing rising future tax obligations. The net position of non-current deferred tax assets and liabilities improved significantly, from $23,311 thousand in 2018 to $160,724 thousand in 2023, indicating an improvement in the overall deferred tax asset position after netting liabilities.

Overall, the data points to growing lease obligations and deferred tax assets, a substantial increase in net operating loss carryforwards in the latest period, and continued challenges related to asset depreciation and valuation allowances. Movements in accrued expenses and stock-based compensation suggest changes in operational and employee-related costs, while fluctuations in deferred revenue and intangible assets reflect ongoing adjustments in revenue recognition and asset valuation.

Non-current deferred tax assets, net

The non-current deferred tax assets demonstrated a consistent and substantial growth trend over the observed periods. Starting at US$ 23,311 thousand in February 2018, the value increased each year, reaching US$ 30,033 thousand in February 2019, and continuing upward to US$ 45,005 thousand in February 2020. This upward movement persisted through January 2021 and January 2022, with recorded values of US$ 49,924 thousand and US$ 56,843 thousand respectively. The most significant increase occurred in the latest period ending January 28, 2023, where the figure surged dramatically to US$ 167,039 thousand, indicating an acceleration in deferred tax assets accumulation or recognition in this final year.

Non-current deferred tax liabilities

Data for non-current deferred tax liabilities is only available for the latest period, January 28, 2023, with a reported value of US$ 6,315 thousand. There is no historical data to ascertain any trend or change over the previous years in this category.

Total Assets

The reported total assets showed a consistent upward trend from 1,732,866 thousand USD in early 2018 to a peak of 5,540,470 thousand USD in early 2022, followed by a slight decrease to 5,309,289 thousand USD in early 2023. The adjusted total assets followed a similar pattern, increasing steadily from 1,709,555 thousand USD in 2018 to 5,483,627 thousand USD in 2022, then declining to 5,142,250 thousand USD in 2023. The adjustment generally resulted in slightly lower asset values compared to the reported figures but maintained the overall growth trend.

Total Liabilities

Reported total liabilities increased notably over the period, beginning at 1,740,202 thousand USD in 2018 and rising moderately until 2021, then experiencing a significant increase to 4,370,193 thousand USD in 2022 and further to 4,524,628 thousand USD in 2023. Adjusted total liabilities mirrored the reported values almost exactly in the earlier years and showed a very small divergence only in 2023, where adjusted liabilities were marginally lower. This indicates that the liabilities were largely unaffected by the adjustments over the years.

Stockholders' Equity (Deficit)

Reported stockholders’ equity started with a deficit of -7,336 thousand USD in 2018 and worsened to -22,962 thousand USD in 2019, then shifted to positive figures from 2020 onward, rising sharply to 447,026 thousand USD in 2021 and further peaking at 1,170,277 thousand USD in 2022 before declining to 784,661 thousand USD in 2023. The adjusted equity figures present a larger deficit initially, with -30,647 thousand USD in 2018 and -52,995 thousand USD in 2019, remaining negative in 2020 at -26,354 thousand USD. Subsequently, it turned positive in 2021 at 397,102 thousand USD and increased to 1,113,434 thousand USD in 2022, followed by a decline to 623,937 thousand USD in 2023. The adjusted figures thus indicate a more conservative equity position, especially in the earlier years.

Net Income

Reported net income exhibited strong growth over the period, beginning at 2,180 thousand USD in 2018 and peaking at 688,546 thousand USD in 2022 before falling to 528,642 thousand USD in 2023. Adjusted net income showed a similar pattern but with somewhat lower values from 2019 onward: starting at 7,864 thousand USD in 2018, slightly decreasing to 149,596 thousand USD in 2019, then increasing to 681,625 thousand USD in 2022, and falling more sharply to 436,032 thousand USD in 2023. The adjustments therefore tended to moderate reported net income, particularly in the most recent year.

Overall Analysis

The data reflect robust growth in assets and net income over the period, with a peak around 2022 and a modest decline thereafter. The company’s liabilities also rose substantially, especially from 2021 onward. The transition from negative to positive stockholders’ equity suggests improving financial health, although adjusted figures reveal a more cautious valuation of equity, especially in earlier years. The adjustments to income tax appear to lead to more conservative net income and equity figures, tempering some of the growth observed in reported figures. The slight decrease in assets and equity in 2023 could indicate emerging challenges or a moderation following prior expansion.

The financial data reveals several noteworthy trends across various profitability, efficiency, and leverage metrics over the analyzed periods from early 2018 to early 2023.

Net Profit Margin

Both reported and adjusted net profit margins demonstrate a generally increasing trend from 2018 through 2022, with reported margin rising from 0.09% in 2018 to a peak of 18.32% in 2022, before declining to 14.72% in 2023. The adjusted net profit margin follows a similar trajectory, reaching a high of 18.13% in 2022 and subsequently falling more sharply to 12.14% in 2023. This indicates strong profitability growth until 2022, followed by a noticeable decrease in 2023.

Total Asset Turnover

The total asset turnover ratios, both reported and adjusted, show a gradual decline over the period. Starting from approximately 1.4 in 2018 and 2019, the ratios decrease to around 0.7 by 2022 and 2023. This downward trend suggests a reduction in asset efficiency, implying the company is generating less revenue per unit of asset over time.

Financial Leverage

Financial leverage data is incomplete for earlier years but becomes available from 2020 onward. Reported financial leverage peaked extraordinarily at 131.13 in 2020, followed by significant reductions in subsequent years to 6.48 in 2021, 4.73 in 2022, and then increasing to 6.77 in 2023. Adjusted financial leverage exhibits a less extreme peak and fluctuates between 7.17 in 2020 and 4.92 in 2022 before increasing notably to 8.24 in 2023. These variations indicate a period of unusually high leverage in 2020, with a move toward more moderate levels thereafter, although an upward shift in 2023 suggests increased leverage risk in the most recent period.

Return on Equity (ROE)

Reported ROE is only available from 2020 onwards, showing a strikingly high value of 1181.57% in 2020, which drastically reduces to around 60% in the following years. Adjusted ROE figures show a more conservative range, with values around 67%, 61%, and 70% from 2020 to 2023. The extreme reported ROE in 2020 likely reflects abnormal or nonrecurring items, while the adjusted figures provide a consistent return profile suggesting strong but stable equity profitability.

Return on Assets (ROA)

ROA, both reported and adjusted, generally improves from very low levels in 2018 (0.13% reported, 0.46% adjusted) to more robust levels above 8% in subsequent years. The peak is seen in 2022 with both reported and adjusted ROA at approximately 12.43%, followed by a decline in 2023 to 9.96% reported and a sharper drop to 8.48% adjusted. This pattern reflects increasing asset profitability through 2022, but a softening in asset returns in the latest reported period.

Overall, the data demonstrates a company that experienced significant growth in profitability and returns from 2018 through 2022, supported by moderate financial leverage except for an anomalously high spike in 2020. Efficiency, as measured by asset turnover, declined steadily over the timeframe. The noticeable decreases in net profit margin and returns on assets and equity in 2023 raise considerations about emerging pressures or changing operating conditions impacting financial performance. The leverage increases in 2023 may compound the financial risk moving forward.

Reported Net Income

Reported net income demonstrated a substantial upward trend from 2018 to 2022, escalating sharply from 2,180 thousand US dollars in 2018 to a peak of 688,546 thousand US dollars in 2022. In 2023, a notable decline occurred, with reported net income decreasing to 528,642 thousand US dollars, though it remained significantly higher than in the earlier years.

Adjusted Net Income

Adjusted net income followed a broadly similar trajectory, increasing markedly from 7,864 thousand US dollars in 2018 to a high of 681,625 thousand US dollars in 2022. Unlike reported net income, the adjusted net income in 2023 declined more substantially to 436,032 thousand US dollars, indicating a greater reduction when deferred income tax adjustments are considered.

Reported Net Profit Margin

The reported net profit margin showed consistent growth over the period from 2018 through 2022, rising from a very low margin of 0.09% to a peak margin of 18.32%. In 2023, the margin receded to 14.72%, suggesting a reduction in profitability relative to revenue but maintaining a relatively high performance compared to earlier years.

Adjusted Net Profit Margin

Adjusted net profit margin displayed a comparable pattern, increasing from 0.32% in 2018 to a peak of 18.13% in 2022. The margin then decreased to 12.14% in 2023, representing a more pronounced reduction than the reported margin, reflecting the impact of income tax adjustments on net profitability.

Overall Trends and Insights

The data indicates strong profitability improvement over the period spanning 2018 to 2022 for both reported and adjusted net income and margins. The peak in 2022 suggests optimal financial performance before a decline in 2023. The decline in 2023, more significant in adjusted figures, highlights the influence of deferred income tax items on the company’s bottom line. The patterns suggest that while the company has substantially improved profitability over the medium term, recent financial results show a contraction that could warrant further analysis of tax-related impacts and other operational factors affecting profitability.

Total Assets

The reported total assets show a consistent upward trend from 1,732,866 thousand US dollars in 2018 to a peak of 5,540,470 thousand US dollars in 2022, followed by a slight decline to 5,309,289 thousand US dollars in 2023. Adjusted total assets follow a similar pattern, increasing steadily from 1,709,555 thousand US dollars in 2018 to 5,483,627 thousand US dollars in 2022, then decreasing slightly to 5,142,250 thousand US dollars in 2023. This indicates substantial growth in asset base over the years until 2022, with a minor contraction in the most recent period.

Total Asset Turnover Ratios

Both reported and adjusted total asset turnover ratios display a declining trend over the examined years. Reported asset turnover decreased from 1.41 in 2018 to 0.68 in 2022 and remained flat at 0.68 in 2023. Adjusted asset turnover similarly declined from 1.43 in 2018 to 0.69 in 2022, with a slight increase to 0.70 in 2023. This steady decrease signals reduced efficiency in generating sales revenue from each dollar of assets, with a minor stabilization or marginal improvement in the latest year on an adjusted basis.

Summary Insights

The data reveals substantial growth in both reported and adjusted total assets up to 2022, followed by a modest contraction in 2023. Meanwhile, total asset turnover ratios have declined notably, indicating decreasing asset utilization effectiveness over time. The slight stabilization in adjusted turnover in the last year may suggest initial attempts to improve efficiency or changes in asset composition. Overall, the company appears to have expanded its asset base significantly, but with reduced turnover efficiency, warranting closer examination of asset management strategies.

The analysis of the financial data reveals significant fluctuations in reported and adjusted total assets, stockholders’ equity, and financial leverage over the specified periods.

Total Assets

Reported total assets show a general upward trend, increasing from approximately 1.73 billion US dollars in early 2018 to a peak of about 5.54 billion in early 2022, before slightly declining to approximately 5.31 billion in early 2023.

Adjusted total assets follow a similar pattern, rising steadily from about 1.71 billion in 2018 to around 5.48 billion in 2022, then decreasing to roughly 5.14 billion in 2023. The adjustments result in slightly lower asset values compared to reported figures, reflecting the impact of deferred tax adjustments on asset valuation.

Stockholders' Equity (Deficit)

Reported stockholders’ equity starts negative at -7.3 million in 2018 and deteriorates further to -23.0 million in 2019. However, a sharp turnaround occurs in 2020, with equity turning positive at 18.7 million, followed by a substantial increase to 447 million in 2021 and peaking at over 1.17 billion in 2022, before declining to 785 million in 2023.

Adjusted stockholders’ equity values are consistently lower than reported figures, starting more negatively at -30.6 million in 2018 and worsening to -53.0 million in 2019. Despite these initially negative adjusted equity values, there is a positive trend starting in 2020, with a negative adjustment of -26.4 million improving to a positive 397 million in 2021, and further rising to 1.11 billion in 2022. The adjusted equity then decreases to approximately 624 million in 2023. The adjustments indicate that deferred taxes reduce equity more significantly earlier but these effects are moderated in later years.

Financial Leverage

Reported financial leverage data begins in 2020, showing an extremely high ratio of 131.13, suggesting a highly leveraged position that year. This ratio decreases sharply to 6.48 in 2021 and further to 4.73 in 2022, followed by a slight increase to 6.77 in 2023, indicating improved but still moderately leveraged financial structure.

Adjusted financial leverage ratios, available from 2021 onward, start at 7.17, lower than the reported ratio of the prior year, decrease to 4.92 in 2022, and increase to 8.24 in 2023. The noticeable increase in 2023 suggests growing use of debt or financial obligations relative to equity when adjusted for deferred tax effects.

Overall, the company exhibits substantial growth in asset size over the observed period, accompanied by a marked recovery in equity from deficit to significant positive values. The financial leverage trends imply a considerable reduction in leverage after 2020, which later sees some increase, especially in the adjusted figures in 2023. Adjustments for deferred income taxes consistently reduce equity and alter leverage ratios, highlighting the importance of tax considerations in financial assessments.

The financial data reveals a dynamic evolution in reported and adjusted income figures, equity positions, and return on equity ratios over the six-year period ending in early 2023. Significant growth patterns and volatility can be observed across these metrics, reflecting shifts in profitability, equity structure, and overall financial performance.

Net Income Trends

Reported net income exhibited a sharp increase from a modest 2.18 million USD in early 2018 to a peak of approximately 688.5 million USD in early 2022, followed by a decline to 528.6 million USD in early 2023. Adjusted net income follows a similar trajectory but consistently reports slightly lower figures than the reported net income in most periods. Starting from 7.9 million USD in early 2018, adjusted net income increased to 681.6 million USD by early 2022 before decreasing to 436.0 million USD in early 2023.

Stockholders’ Equity Development

Reported stockholders’ equity moved from negative values, -7.3 million USD in 2018 and deepening to nearly -23.0 million USD in 2019, to positive territory starting in 2020 with 18.7 million USD, followed by substantial growth through 2021 and 2022, reaching over 1.17 billion USD before declining to 784.7 million USD in 2023. Adjusted stockholders’ equity also started negative and showed improvement to become positive by 2021 with 397.1 million USD, peaking at over 1.11 billion USD in 2022 and subsequently decreasing to 623.9 million USD in 2023. The adjusted equity figures remain consistently below the reported figures after 2020, indicating the impact of deferred tax and other adjustments.

Return on Equity (ROE) Patterns

Reported ROE shows extreme variability, with missing data in the first two years, followed by a very high figure of 1181.57% in early 2020, which sharply falls to around 60.8% and 58.8% in the years 2021 and 2022 respectively, then rises to 67.4% in 2023. This anomaly likely relates to the initially low equity base transitioning to positive values. Adjusted ROE displays more stable behavior with recorded values starting in 2021, declining slightly from 67.2% in 2021 to 61.2% in 2022, and climbing again to nearly 69.9% in 2023. The adjusted ROE tends to be lower than the reported ROE values in the later years, reflective of the adjustments made to equity and income.

Overall, the data indicates rapid growth in net income and equity from 2019 through 2022, accompanied by very high profitability as measured by ROE. However, both net income and equity declined in 2023, suggesting a reversal or moderation of previous growth trends. The adjustments related to deferred taxes and income tax measures appear to temper both income and equity figures, resulting in consistently lower adjusted values compared to reported ones.

Net Income Trends

Reported net income has exhibited significant growth from 2018 to 2022, increasing from 2.18 million USD in early 2018 to a peak of 688.5 million USD in early 2022. However, in early 2023, there was a noticeable decline to 528.6 million USD. Adjusted net income follows a similar pattern, growing substantially from 7.86 million USD in 2018 to 681.6 million USD in 2022, then decreasing to 436.0 million USD in 2023. This suggests that both reported and adjusted earnings experienced strong expansion until 2022, followed by a contraction in 2023.

Total Assets Trends

Total assets have increased steadily from 2018 to 2022, with reported total assets rising from approximately 1.73 billion USD to 5.54 billion USD. Adjusted total assets also show a continuous upward trend from 1.71 billion USD to 5.48 billion USD in the same period. In 2023, reported assets saw a slight decline to 5.31 billion USD, and adjusted assets similarly decreased to 5.14 billion USD. The asset base nearly tripled over the period, with a minor pullback in the final year.

Return on Assets (ROA) Analysis

Reported ROA improved markedly over the observed period, starting from a minimal 0.13% in 2018 and reaching the highest level of 12.43% in 2022, before decreasing to 9.96% in 2023. Adjusted ROA followed a very similar trend, beginning at 0.46% in 2018, peaking at 12.43% in 2022, and then dropping more sharply to 8.48% in 2023. This indicates enhanced asset efficiency over time with a notable dip in profitability relative to assets in the most recent year.

Comparative Observations Between Reported and Adjusted Figures

The adjusted figures closely mirror the reported values across net income, total assets, and ROA, suggesting that adjustments related to reported and deferred income taxes have modest impact on the overall financial performance trends. Differences between reported and adjusted net income are more evident in 2023, highlighting that tax adjustments may have played a greater role in this period’s earnings profile. The adjusted ROA values tend to be slightly lower or comparable to the reported figures, reflecting minor adjustments in profitability measurement on an asset base.

Overall Insights

The data reveals robust financial growth until 2022, characterized by rising net income, expansion of assets, and improving return on assets. This growth phases into a contraction or normalization in 2023, evidenced by declines in net income, asset base, and ROA. These trends could reflect changing market conditions, cost pressures, or strategic shifts affecting profitability and asset utilization. The close alignment between reported and adjusted metrics suggests that the company's tax-related accounting impacts are relatively stable with some increased influence in the latest year analyzed.