RH (Restoration Hardware Holdings, Inc. – NYSE:RH) Chairman and
Chief Executive Officer, Gary Friedman, today provided a business update
and preliminary fourth quarter and fiscal 2015 results to shareholders.
Preliminary Fourth Quarter Results*
-
Demand sales/written orders increased 21% on top of 26% last year**
-
Net revenues increased 11% to $647.2 million on top of a 24% increase
last year
-
Comparable brand revenues increased 9% on top of a 24% increase last
year
-
Adjusted operating margin of 11.5% versus 12.7% last year; GAAP
operating margin of 10.4%
-
Adjusted net income of $41.8 million versus $42.5 million last year;
GAAP net income of $33.8 million
-
Adjusted diluted EPS of $0.99 versus $1.02 last year; GAAP diluted EPS
of $0.80
Preliminary Fiscal 2015 Results*
-
Net revenues increased 13% to $2.109 billion on top of a 20% increase
last year
-
Comparable brand revenues increased 11% on top of a 20% increase last
year
-
Adjusted operating margin of 9.7% versus 9.3% last year; GAAP
operating margin of 8.8%
-
Adjusted net income increased 18% to $115.4 million versus $97.6
million last year; GAAP net income of $91.6 million
-
Adjusted diluted EPS increased 16% to $2.73 versus $2.36 last year;
GAAP diluted EPS of $2.17
RH Shareholders:
We are clearly operating in different market conditions than a year ago,
and believe it requires us to adjust our strategies to optimize
performance in the short term, while positioning the company for
long-term value creation.
Let me address what we are seeing, and consequently, how we are thinking
and operating differently.
There are three key factors that had a negative effect on our fourth
quarter results, along with several positive developments that give us
tremendous confidence in our long-term growth strategy.
First, our demand sales/written orders were up a strong 21% in the
fourth quarter on top of up 26% last year. Our delivered revenue,
however, was up only 11% in the quarter on top of up 24% last year,
representing a shortfall to our plan. While the initial response to RH
Modern has been outstanding, we are experiencing shipping delays as
certain vendors are struggling to ramp up production of this new product
line. We expect the majority of the demand/written orders to turn into
revenues in the first and second quarter, and anticipate our vendors
will be substantially caught up by the end of the first half.
Additionally, we believe the poor in-stocks also suppressed orders, and
we expect demand to build as our in-stocks improve.
Second, we continue to see underperformance in markets affected by
energy, oil, or currency fluctuations. The Canada, Texas and Miami
markets were a drag of 2 points to total Company revenues in the first
half, then accelerated to a 4 point drag in the third quarter, and
continued as a 4 point drag in the fourth quarter despite increased
promotional efforts, including reduced shipping charges to incentivize
our Canadian customers. These results tell us the conditions remain weak
in these markets and in aggregate they are trending 20 points below the
rest of the Company. Looking forward, we will begin to cycle the
underperformance, and the negative drag should be mitigated.
Third, our attempt to drive incremental revenue through increased
promotional activity in the fourth quarter was less successful than in
prior periods, signaling a further pullback by the high-end consumer.
Our sense is the increased volatility in the US stock markets,
especially the extreme conditions in January, which is historically our
biggest month of the quarter for furniture sales, contributed to our
performance. Historically, our business has a correlation to large
movements in stock prices as we believe asset valuations influence our
customers’ buying patterns.
While there is certainly a fair amount of bad news in the quarter, the
good news from our point of view greatly outweighs the bad when you put
it into the context of our long-term growth strategy.
Despite the economic headwinds, our two key growth strategies –
the expansion of our product offer and the transformation of our real
estate – are working exceptionally well.
The strong response to RH Modern, both in retail and direct, indicates
this can quickly become a billion dollar plus brand. Our first
standalone gallery in Los Angeles is on trend to achieve $25 million in
first year demand, and the full floor presentations in our next
generation Design Galleries are performing exceedingly well. We plan to
expand the RH Modern assortment this Fall and add to our retail
footprint. Additionally, RH Teen is off to a strong start, and should
continue to build momentum as we expand the product offer and retail
presence in the second half of 2016.
We are pleased to report that all of our new next generation Design
Galleries are exceeding plan. With the one-year anniversary of Atlanta,
plus the openings of Chicago, Denver, and Tampa we continue to
demonstrate that our strategy to transform our 7,500 selling square feet
legacy stores into 45,000 to 60,000 selling square feet next generation
Design Galleries will drive meaningful growth over the next 7 to 10
years. Our ability to blur the lines between residential and retail,
creating an immersive environment that is more home than store, is
producing industry leading results and positioning RH as the clear
leader in the luxury home furnishings market. The unprecedented success
of our Gallery at the Historic Three Arts Club in Chicago takes our
strategy one step further, as we blur the lines between home and
hospitality, with a beautifully integrated central courtyard restaurant,
wine vault, pantry and coffee bar. We believe RH Chicago represents the
future of experiential retail and proves we can create a destination,
making us an even more valuable tenant to developers.
In summary, despite the macro economic challenges, our two key growth
strategies are performing beyond our expectations.
When we pause and think about the current market uncertainty, our bias
is to de-risk our strategy in the short term, focus on sharpening
execution in our core business, and continue to invest in the important
long-term strategies that will continue to fuel our growth and
strengthen our brand.
Our focus for 2016 will be the following:
1. Optimize Our Core Business: Our energies
in the first half will be focused on ramping production and improving
in-stocks for RH Modern and our core RH Interiors business. With RH
Modern revenues being affected in the first half by the production
issues mentioned earlier, we believe the business will continue to build
throughout 2016 as our inventory position strengthens, we expand the
assortment, and grow our retail footprint. The results in our New York
City Gallery, where we replaced a third of our core assortment with RH
Modern, generated a 25% demand lift. We believe we can increase
comparable store sales by creating a positive arbitrage in many of our
legacy galleries by adding RH Modern, and should be in a position to do
so in the second half of 2016. Additionally, we do not plan to introduce
any incremental new businesses in fiscal 2016, as we believe launching
into a potential headwind creates asymmetrical risk to the downside. We
will, however, mail our annual RH Source Books, along with our second
mailing of RH Modern, this Fall both featuring exciting new product
launches and expanded assortments. We intend to assess how the current
market volatility plays out during the year so we can tailor our
circulation strategy to business conditions.
2. Be Opportunistic with Real Estate: In
times of market dislocation, asset values in real estate generally come
down, and we plan to take advantage of this likely outcome for the long
term benefit of the business. Lower real estate costs translate into
higher operating margins and ROIC, and we are in a strong financial
position to take advantage of anticipated opportunities.
3. Elevate the Customer Experience: We are
focusing a significant amount of our energy on improving the end-to-end
customer experience. As we have elevated our brand, especially at
retail, other customer touch points also need to leapfrog forward to
create a cohesive experience. This initiative will focus on everything
from product quality to in-home delivery across all channels, and
includes new people, processes and systems.
4. Change the Promotional Cadence and Elevate the
RH Brand: Much of how we behave promotionally is left over from
the Great Recession. The multiple sale events and email communications
do not reflect the brand we are building, nor are these promotions
aligned with how our customers shop with us. Additionally, these
promotional activities can skew customer behavior with spikes in volume
and higher cancellation rates creating inefficiencies throughout our
supply chain. Accordingly, we will be launching a new membership model
this Spring. For an annual fee, our customers will be able to shop for
what they want, when they want, at a set discount, much like the high
end interior design trade. Members will also receive free interior
design services, a concierge number to manage their orders, preferred
financing terms, and early access to annual clearance events. We believe
the new membership program will greatly enhance the customer experience,
render our brand more valuable, improve execution, and significantly
reduce costs.
Since the Dow peaked, and oil began to destabilize in 2014, we have been
positioning the Company to win, regardless of market conditions. That is
why we completed two successful, zero interest convertible debt
offerings, strengthening our balance sheet, and putting us in a position
to take advantage of the opportunities that present themselves in
difficult markets. We are ending FY 2015 with over $500 million of cash
and investments on our balance sheet, and zero borrowings on our $600
million line of credit, and expect to be cash flow positive in fiscal
2016. It has been clear to us, watching the success of others, that
those with capital in difficult markets are generally those who
capitalize.
At RH, our most significant transformative moves have occurred during
periods of macro uncertainty. We emerged from the 2008/2009 Great
Recession a much stronger brand and business than when we entered, and
expect to do the same during this cycle.
Despite the uncertainty, our underlying fundamentals are very strong. We
continue to have the highest sales and earnings growth in our industry.
We have expanded our operating margins to nearly 10%, among the best of
our peer group. We have a dynamic multi-channel platform that gives us
all the advantages of online retailing, without the limitations of
single channel competitors. We are opening immersive spaces that are
redefining physical retailing in the age of the Internet. We are in the
very early stages of the most disruptive and transformational growth
strategy in all of retail. Our next generation Design Galleries are
exceeding expectations, and our product expansion plans, especially the
launch of RH Modern, demonstrate our ability to open the brand to new
markets.
We believe what should change in this environment, is the pace at which
we deploy our investments, with a focus on optimizing returns.
Being opportunistic with real estate in response to market conditions
could lead to improved deal terms, and pulling back the throttle a bit
on the expansion of our product offer, could avoid the missteps of
subpar returns from investing into a headwind.
History has taught us that real value is created by those who have the
courage to lead rather than follow, who are willing to destroy today's
reality to create tomorrow's future. At our core we are innovators. We
obsessively look for opportunities to destroy the current version of
ourselves to create something significantly better and more valuable.
This remains true in any and all market conditions.
Our plan is to take the next few weeks to sharpen our focus for 2016,
and ensure we are positioning the brand and business for long-term value
creation.
We will provide more details when we speak with you during our next
quarterly earnings video and conference call on March 23rd.
Carpe Diem,
Gary
Gary Friedman
Chairman and Chief Executive Officer
RH
Restoration Hardware
*Adjusted operating margin, adjusted net income and adjusted diluted EPS
are non-GAAP financial measures that do not include certain charges and
costs. A reconciliation of GAAP to non-GAAP financial measures is
provided in the tables accompanying this release. See the Company’s most
recent Form 10-K and Form 10-Q filings for the definition of comparable
brand revenue.
** Demand sales/written orders means the dollar value of orders booked
by customers during the specified period.
Preliminary Financial Information
The preliminary financial results set forth in this release are
unaudited preliminary numbers which are subject to change. The Company
has not completed its quarter and year end closing and review process
and the audit process for its full year financial statements with its
independent registered public accounting firm. The final results for the
fourth quarter and fiscal 2015 results may vary materially from the
preliminary financial information included in this press release.
Further commentary on the Company’s actual fourth quarter and fiscal
2015 financial results will be provided as part of its fourth quarter
and fiscal 2015 earnings release, video presentation and Q&A conference
call.
About RH
RH (Restoration Hardware Holdings, Inc. - NYSE:RH) is a curator of
design, taste and style in the luxury lifestyle market. The Company
offers collections through its retail galleries, Source Books, and
online at RH.com.
Non-GAAP Financial Measures
To supplement its condensed consolidated financial statements, which are
prepared and presented in accordance with Generally Accepted Accounting
Principles (“GAAP”), the Company uses the following non-GAAP financial
measures: adjusted operating income, adjusted operating margin, adjusted
net income, and adjusted diluted EPS (collectively, “non-GAAP financial
measures”). We compute these measures by adjusting the applicable GAAP
measures to remove the impact of certain recurring and non-recurring
charges and gains and the tax effect of these adjustments. The
presentation of this financial information is not intended to be
considered in isolation or as a substitute for, or superior to, the
financial information prepared and presented in accordance with GAAP.
The Company uses these non-GAAP financial measures for financial and
operational decision making and as a means to evaluate period-to-period
comparisons. The Company believes that they provide useful information
about operating results, enhance the overall understanding of past
financial performance and future prospects, and allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision making. The non-GAAP financial
measures used by the Company in this press release may be different from
the non-GAAP financial measures, including similarly titled measures,
used by other companies.
For more information on the non-GAAP financial measures, please see the
Reconciliation of GAAP to non-GAAP Financial Measures tables in this
press release. These accompanying tables include details on the GAAP
financial measures that are most directly comparable to non-GAAP
financial measures and the related reconciliations between these
financial measures.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of
the federal securities laws including statements related to our
preliminary financial results, including for the fourth quarter of
fiscal 2015 and the full fiscal year ending January 30, 2016, as well as
our expectations for future financial trends and performance of our
business and our strategy in future periods including during fiscal
2016; statements regarding the conversion of demand and written orders
into revenues; our beliefs regarding the ability of our vendors to
resolve production difficulties and to catch up with demand; statements
regarding our ability to improve on in-stocks and the correlation
between in-stocks and sales; statements regarding our beliefs and
strategies for our business in Florida, Texas and Canada; statements
regarding the effect of stock market fluctuations on our business and
our customer behavior; statements regarding our beliefs with respect to
the success of our business strategies; statements regarding our
expectations for the current and future performance of and future plans
for our business initiatives, particularly RH Modern, RH Teen and the
transformation of our real estate through our Modern Gallery in Los
Angeles and our newest Next Generation Design Galleries including those
in Denver, Chicago, Atlanta and Tampa (including our expectations
relating to expected demand for the first year of our Modern Gallery in
Los Angeles and the expansion of RH Modern and RH Teen during fiscal
2016); statements regarding our expectation that RH Modern can become a
brand with revenue in excess of one billion dollars; statements
regarding our expectation that expanding our real estate footprint to
45,000 – 60,000 selling square feet per Next Generation Design Gallery
will drive meaningful growth over the long term; statements regarding
our focus for 2016, including (i) the optimization of our core business
through ramping up production, improving in-stocks and optimization of
our Sourcebook circulation strategy in relation to market conditions,
(ii) being opportunistic with real estate, including by being very
selective about entering into new real estate transactions, (iii) the
elevation of the customer experience and (iv) changing the promotional
cadence and elevating the RH Brand, including through the launch of a
new membership-based business model; statements regarding our financial
health and capital position and the additional flexibility that we
believe this provides to us to take advantage of adverse market
conditions; statements regarding the health of our balance sheet, our
liquidity position, our preparation for future market conditions and our
ability emerge stronger from difficult market conditions; statements
regarding our strong position in terms of sales, earnings growth and
operating margins compared to our industry and peers; statements
regarding the disruptive and transformational nature of our growth
strategy; statements regarding RH Modern’s ability to open our brand to
new markets; and any statements or assumptions underlying any of the
foregoing. You can identify forward-looking statements by the fact that
they do not relate strictly to historical or current facts. These
statements may include words such as “anticipate,” “expect,” “plan,”
“believe,” “may,” “will,” “should” and other words and terms of similar
meaning in connection with any discussion of the timing or nature of
future events. We cannot assure you that future developments affecting
us will be those that we have anticipated. Important risks and
uncertainties that could cause actual results to differ materially from
our expectations include, among others, that the preliminary results for
the fourth quarter of fiscal 2015 and for the fiscal year ended January
30, 2016 are subject to change pending the completion of the Company’s
audit of its financial statements for fiscal 2015; our ability to retain
key personnel; successful implementation of our growth strategies;
strikes and work stoppages affecting port workers and other industries
involved in the transportation of our products; the financial health and
production capacity of our vendors; general economic conditions and the
impact on consumer confidence and spending; changes in customer demand
for our products; factors affecting our outstanding convertible senior
notes; our ability to anticipate consumer preferences and buying trends,
and maintaining our brand promise to customers; changes in consumer
spending based on weather and other conditions beyond our control; risks
related to the number of new business initiatives we are undertaking;
our ability to obtain our products in a timely fashion or in the
quantities required; our ability to employ reasonable and appropriate
security measures to protect personal information that we collect; our
ability to support our growth with appropriate information technology
systems; risks related to “conflict minerals” compliance and its impact
on sourcing, if any, as well as those risks and uncertainties disclosed
under the sections entitled “Risk Factors” and “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” in
Restoration Hardware Holdings’ Form 10-K filed with the Securities and
Exchange Commission on March 27, 2015, and similar disclosures in
subsequent reports filed with the SEC, which are available on our
investor relations website at ir.restorationhardware.com and on the SEC
website at www.sec.gov.
Any forward-looking statement made by us in this press release speaks
only as of the date on which we make it. We undertake no obligation to
publicly update any forward-looking statement, whether as a result of
new information, future developments or otherwise, except as may be
required by any applicable securities laws.
|
RESTORATION HARDWARE HOLDINGS, INC.
|
PRELIMINARY RECONCILIATION OF NET INCOME TO OPERATING INCOME
AND ADJUSTED OPERATING INCOME
|
(In thousands)
|
(Unaudited)
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
January 30,
|
|
January 31,
|
|
January 30,
|
|
January 31,
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
2015
|
|
Net income
|
|
$
|
33,813
|
|
|
$
|
42,525
|
|
|
$
|
91,614
|
|
|
$
|
91,002
|
|
Interest expense
|
|
|
11,619
|
|
|
|
5,939
|
|
|
|
35,677
|
|
|
|
17,551
|
|
Income tax expense
|
|
|
21,801
|
|
|
|
26,861
|
|
|
|
58,270
|
|
|
|
57,173
|
|
Operating income
|
|
|
67,233
|
|
|
|
75,325
|
|
|
|
185,561
|
|
|
|
165,726
|
|
Legal claim [a]
|
|
|
6,928
|
|
|
|
(1,500
|
)
|
|
|
19,046
|
|
|
|
7,700
|
|
Adjusted operating income
|
|
$
|
74,161
|
|
|
$
|
73,825
|
|
|
$
|
204,607
|
|
|
$
|
173,426
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
647,208
|
|
|
$
|
582,727
|
|
|
$
|
2,109,006
|
|
|
$
|
1,867,422
|
|
Operating margin [b]
|
|
|
10.4
|
%
|
|
|
12.9
|
%
|
|
|
8.8
|
%
|
|
|
8.9
|
%
|
Adjusted operating margin [b]
|
|
|
11.5
|
%
|
|
|
12.7
|
%
|
|
|
9.7
|
%
|
|
|
9.3
|
%
|
|
|
|
|
|
|
|
|
|
[a]
|
|
Adjustments for the three and twelve months ended January 30, 2016
represent the estimated cumulative impact of coupons redeemed in
connection with a legal claim alleging that the Company violated
California’s Song-Beverly Credit Card Act of 1971 by requesting
and recording ZIP codes from customers paying with credit cards.
Adjustment for the three months ended January 31, 2015 includes a
reversal of estimated expenses associated with the legal claim
mentioned above based on a revision of estimated class member
response. Adjustment for the twelve months ended January 31, 2015
represents charges incurred in connection with the legal claim
mentioned above.
|
[b]
|
|
Operating margin is defined as operating income divided by net
revenues. Adjusted operating margin is defined as adjusted operating
income divided by net revenues.
|
|
RESTORATION HARDWARE HOLDINGS, INC.
|
PRELIMINARY RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET
INCOME
|
(In thousands)
|
(Unaudited)
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
January 30,
|
|
January 31,
|
|
January 30,
|
|
January 31,
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
2015
|
|
GAAP net income
|
|
$
|
33,813
|
|
|
$
|
42,525
|
|
|
$
|
91,614
|
|
|
$
|
91,002
|
|
Adjustments (pre-tax):
|
|
|
|
|
|
|
|
|
Legal claim [a]
|
|
$
|
6,928
|
|
|
$
|
(1,500
|
)
|
|
$
|
19,046
|
|
|
$
|
7,700
|
|
Amortization of debt discount [b]
|
|
|
6,193
|
|
|
|
2,943
|
|
|
|
19,803
|
|
|
|
6,852
|
|
Subtotal adjusted items
|
|
|
13,121
|
|
|
|
1,443
|
|
|
|
38,849
|
|
|
|
14,552
|
|
Impact of income tax on adjusted items [c]
|
|
|
(5,143
|
)
|
|
|
(1,471
|
)
|
|
|
(15,072
|
)
|
|
|
(7,918
|
)
|
Adjusted net income [d]
|
|
$
|
41,791
|
|
|
$
|
42,497
|
|
|
$
|
115,391
|
|
|
$
|
97,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[a]
|
|
Refer to table titled “Preliminary Reconciliation of Net Income to
Operating Income and Adjusted Operating Income” and the related
footnotes for additional information.
|
[b]
|
|
Under GAAP, certain convertible debt instruments that may be settled
in cash on conversion are required to be separately accounted for as
liability and equity components of the instrument in a manner that
reflects the issuer’s non-convertible debt borrowing rate.
Accordingly, in accounting for GAAP purposes for the 2019 Notes and
for the 2020 Notes, we separated the 2019 Notes and 2020 Notes into
liability (debt) and equity (conversion option) components and we
are amortizing as debt discount an amount equal to the fair value of
the equity components as interest expense on the 2019 Notes and 2020
Notes over their respective terms. The equity components represent
the difference between the proceeds from the issuance of the 2019
Notes and 2020 Notes and the fair value of the liability components
of the 2019 Notes and 2020 Notes, respectively. Adjustments are
presented net of interest capitalized for capital projects.
|
[c]
|
|
The adjustments for the three and twelve months ended January 30,
2016 represents the tax effect of the adjusted items based on our
estimated effective tax rates of 39.2% and 38.9%, respectively.
The three and twelve months ended January 31, 2015 include an
adjustment to calculate income tax expense at a pro forma 40%
effective tax rate.
|
[d]
|
|
Adjusted net income is a supplemental measure of financial
performance that is not required by, or presented in accordance
with, GAAP. We define adjusted net income as net income, adjusted
for the impact of certain non-recurring and other items that we do
not consider representative of our ongoing operating performance.
Adjusted net income is included in this press release because
management believes that adjusted net income provides meaningful
supplemental information for investors regarding the performance of
our business and facilitates a meaningful evaluation of operating
results on a comparable basis with historical results. Our
management uses this non-GAAP financial measure in order to have
comparable financial results to analyze changes in our underlying
business from quarter to quarter.
|
|
RESTORATION HARDWARE HOLDINGS, INC.
|
PRELIMINARY RECONCILIATION OF DILUTED NET INCOME PER SHARE TO
ADJUSTED DILUTED NET INCOME PER SHARE
|
(Unaudited)
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
January 30,
|
|
January 31,
|
|
January 30,
|
|
January 31,
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
2015
|
|
Diluted net income per share
|
|
$
|
0.80
|
|
|
$
|
1.02
|
|
|
$
|
2.17
|
|
|
$
|
2.20
|
|
EPS impact of adjustments (pre-tax): [a]
|
|
|
|
|
|
|
|
|
Legal claim
|
|
$
|
0.16
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.45
|
|
|
$
|
0.19
|
|
Amortization of debt discount
|
|
|
0.15
|
|
|
|
0.07
|
|
|
|
0.47
|
|
|
|
0.16
|
|
Subtotal adjusted items
|
|
|
0.31
|
|
|
|
0.03
|
|
|
|
0.92
|
|
|
|
0.35
|
|
Impact of income tax on adjusted items [a]
|
|
|
(0.12
|
)
|
|
|
(0.03
|
)
|
|
|
(0.36
|
)
|
|
|
(0.19
|
)
|
Adjusted diluted net income per share [b]
|
|
$
|
0.99
|
|
|
$
|
1.02
|
|
|
$
|
2.73
|
|
|
$
|
2.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[a]
|
|
Refer to tables titled “Preliminary Reconciliation of Net Income to
Operating Income and Adjusted Operating Income” and “Preliminary
Reconciliation of GAAP Net Income to Adjusted Net Income,” as well
as the related footnotes to the tables for additional information.
|
[b]
|
|
Adjusted diluted net income per share is a supplemental measure of
financial performance that is not required by, or presented in
accordance with, GAAP. We define adjusted diluted net income per
share as net income, adjusted for the impact of certain
non-recurring and other items that we do not consider representative
of our ongoing operating performance divided by the Company’s share
count. Adjusted diluted net income per share is included in this
press release because management believes that adjusted diluted net
income per share provides meaningful supplemental information for
investors regarding the performance of our business and facilitates
a meaningful evaluation of operating results on a comparable basis
with historical results. Our management uses this non-GAAP financial
measure in order to have comparable financial results to analyze
changes in our underlying business from quarter to quarter.
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