Regis Corporation Reports Continued Profitability for the Second Fiscal Quarter 2024
- Operating income improved by $4.1 million compared to the same quarter last year.
- Net income improved by $3.4 million compared to the same quarter last year.
- System-wide same-store sales improved by 1.9%.
- System-wide revenue declined by $11.0 million compared to the same quarter last year.
- Franchise adjusted EBITDA declined by $1.1 million compared to the same quarter last year.
Insights
The reported financial results from Regis Corporation indicate a mixed performance, with some areas of improvement and others showing decline. A noteworthy aspect is the improvement in operating income, which signals better operational efficiency. The increase from $0.7 million to $4.8 million represents a significant year-over-year enhancement and suggests effective cost management strategies might be in place.
However, the decline in system-wide revenue and franchise adjusted EBITDA could be concerning. The decrease in revenue, both for the quarter and the half-year, might reflect market challenges or competitive pressures. This decline, coupled with the reduced franchise adjusted EBITDA, could indicate that while operational efficiencies are being achieved, top-line growth is still a challenge. It's important to monitor whether these trends continue, as they can have implications for the company's financial health and stock valuation.
Furthermore, the net income improvement is a positive sign for investors, as it reflects a turnaround from a net loss in the previous year. This could potentially signal to the market that the company's restructuring efforts are bearing fruit, which could have a favorable impact on investor sentiment.
Regis Corporation's performance in the haircare industry is particularly interesting given the context of the post-pandemic recovery. The 6% same-store-sales growth in top quartile salons indicates a strong consumer response to certain brands or locations, which could be leveraged for broader strategic initiatives. Understanding consumer behavior and preferences in the personal care sector is crucial for sustaining growth and adapting to market trends.
The company's strategic review of alternatives to assess its capital structure suggests an active approach to financial management. This could be a response to the competitive dynamics in the personal care industry, where consolidation and innovation are key drivers. The company's focus on franchisee support and profitability is also significant, as it underlines the importance of the franchise model in Regis Corporation's business strategy.
From an economic perspective, the results from Regis Corporation may reflect broader economic trends such as consumer spending patterns and discretionary income levels. The improvement in same-store sales suggests that consumers are continuing to spend on personal care services despite any economic headwinds. This could be indicative of the sector's resilience or a result of successful strategic initiatives by the company.
The closure of loss-generating company-owned salons aligns with a larger trend of businesses optimizing their operations for efficiency. The strategic shift towards a franchise model can be seen as a way to mitigate risk and capitalize on the entrepreneurial drive of franchisees. The economic implications of such a shift are significant, as they can affect employment, investment in local economies and the overall competitive landscape.
Financial Highlights:
Second quarter fiscal 2024 compared to second quarter fiscal 2023:
-
System-wide revenue of
$292.4 million $11.0 million $303.4 million 1.9% ; -
Operating income of
$4.8 million $4.1 million $0.7 million -
Franchise adjusted EBITDA of
$6.4 million $1.1 million $7.5 million -
Net loss from continuing operations of
$1.0 million $1.5 million $2.5 million -
Net income of
$1.0 million $3.4 million $2.4 million -
Adjusted EBITDA of
$6.0 million $1.8 million $7.8 million
First half fiscal 2024 compared to first half fiscal 2023:
-
System-wide revenue of
$599.0 million $20.5 million $619.4 million 1.8% ; -
Operating income of
$12.2 million $9.0 million $3.2 million -
Franchise adjusted EBITDA of
$14.3 million $1.8 million $12.5 million -
Net income from continuing operations of
$0.2 million $4.6 million $4.4 million -
Net income of
$2.2 million $3.1 million $0.9 million -
Adjusted EBITDA of
$13.5 million $1.8 million $11.7 million
Second Quarter Fiscal Year 2024 Consolidated Results |
||||||||||||||||
|
|
Three Months Ended December 31, |
|
Six Months Ended December 31, |
||||||||||||
(Dollars in millions, except per share data) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Consolidated revenue |
|
$ |
51.1 |
|
|
$ |
60.0 |
|
|
$ |
104.4 |
|
|
$ |
121.8 |
|
System-wide revenue (1) |
|
|
292.4 |
|
|
|
303.4 |
|
|
|
599.0 |
|
|
|
619.4 |
|
|
|
|
|
|
|
|
|
|
||||||||
System-wide same-store sales comps |
|
|
1.9 |
% |
|
|
4.5 |
% |
|
|
1.8 |
% |
|
|
4.5 |
% |
|
|
|
|
|
|
|
|
|
||||||||
Operating income |
|
$ |
4.8 |
|
|
$ |
0.7 |
|
|
$ |
12.2 |
|
|
$ |
3.2 |
|
(Loss) income from continuing operations |
|
|
(1.0 |
) |
|
|
(2.5 |
) |
|
|
0.2 |
|
|
|
(4.4 |
) |
Diluted (loss) income per share from continuing operations |
|
|
(0.43 |
) |
|
|
(1.10 |
) |
|
|
0.08 |
|
|
|
(1.90 |
) |
Income from discontinued operations |
|
|
2.0 |
|
|
|
0.1 |
|
|
|
2.0 |
|
|
|
3.4 |
|
Net income (loss) |
|
|
1.0 |
|
|
|
(2.4 |
) |
|
|
2.2 |
|
|
|
(0.9 |
) |
Diluted net income (loss) per share |
|
|
0.43 |
|
|
|
(1.04 |
) |
|
|
0.93 |
|
|
|
(0.41 |
) |
Adjusted EBITDA (2) |
|
|
6.0 |
|
|
|
7.8 |
|
|
|
13.5 |
|
|
|
11.7 |
|
_______________________________________________________________________________ |
|
(1) |
Represents total sales within the system. |
(2) |
See GAAP to non-GAAP reconciliations within the attached section titled "Non-GAAP Reconciliations." |
Consolidated Revenue
Total consolidated revenue of
Operating Income
Regis reported second quarter 2024 operating income of
Regis reported first half 2024 operating income of
(Loss) Income from Continuing Operations
Regis reported second quarter 2024 net loss from continuing operations of
Net Income (Loss)
The Company reported second quarter 2024 net income of
Adjusted EBITDA
Second quarter adjusted EBITDA of
First half adjusted EBITDA of
Second Quarter Fiscal Year 2024 Segment Results |
||||||||||||||||||||||||
Franchise |
||||||||||||||||||||||||
|
|
Three Months Ended December 31, |
|
(Decrease) |
|
Six Months Ended December 31, |
|
Increase
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
(Dollars in millions) (1) |
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Royalties |
|
$ |
15.8 |
|
|
$ |
16.2 |
|
|
$ |
(0.4 |
) |
|
$ |
32.3 |
|
|
$ |
33.3 |
|
|
$ |
(1.0 |
) |
Fees |
|
|
2.5 |
|
|
|
3.2 |
|
|
|
(0.7 |
) |
|
|
5.1 |
|
|
|
5.8 |
|
|
|
(0.7 |
) |
Product sales to franchisees |
|
|
0.1 |
|
|
|
1.1 |
|
|
|
(1.0 |
) |
|
|
0.5 |
|
|
|
1.6 |
|
|
|
(1.1 |
) |
Advertising fund contributions |
|
|
6.8 |
|
|
|
8.0 |
|
|
|
(1.2 |
) |
|
|
14.0 |
|
|
|
16.2 |
|
|
|
(2.2 |
) |
Franchise rental income |
|
|
24.1 |
|
|
|
28.9 |
|
|
|
(4.8 |
) |
|
|
48.8 |
|
|
|
59.2 |
|
|
|
(10.4 |
) |
Total Franchise revenue |
|
$ |
49.3 |
|
|
$ |
57.4 |
|
|
$ |
(8.1 |
) |
|
$ |
100.7 |
|
|
$ |
116.1 |
|
|
$ |
(15.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Franchise same-store sales comps |
|
|
1.9 |
% |
|
|
4.5 |
% |
|
|
|
|
1.8 |
% |
|
|
4.6 |
% |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Franchise adjusted EBITDA |
|
$ |
6.4 |
|
|
$ |
7.5 |
|
|
$ |
(1.1 |
) |
|
$ |
14.3 |
|
|
$ |
12.5 |
|
|
$ |
1.8 |
|
as a percent of revenue |
|
|
12.9 |
% |
|
|
13.1 |
% |
|
|
|
|
14.2 |
% |
|
|
10.8 |
% |
|
|
||||
as a percent of adjusted revenue (2) |
|
|
34.7 |
% |
|
|
36.7 |
% |
|
|
|
|
37.8 |
% |
|
|
30.8 |
% |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Franchise salons |
|
|
4,651 |
|
|
|
5,196 |
|
|
|
(545 |
) |
|
|
|
|
|
|
||||||
as a percent of total Franchise and Company-owned salons |
|
|
98.8 |
% |
|
|
98.6 |
% |
|
|
|
|
|
|
|
|
||||||||
_______________________________________________________________________________ |
|
(1) |
Variances calculated on amounts shown in millions may result in rounding differences. |
(2) |
Adjusted revenue excludes non-margin revenue. See GAAP to non-GAAP reconciliations within the attached section titled "Non-GAAP Reconciliations." |
Franchise Revenue
Second quarter franchise revenue was
Royalties were
Franchise Adjusted EBITDA
Second quarter franchise adjusted EBITDA of
First half franchise adjusted EBITDA of
Company-Owned Salons |
||||||||||||||||||||||||
|
|
Three Months Ended December 31, |
|
(Decrease) |
|
Six Months Ended December 31, |
|
(Decrease)
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
(Dollars in millions) (1) |
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Company-owned salon revenue |
|
$ |
1.8 |
|
|
$ |
2.6 |
|
|
$ |
(0.8 |
) |
|
$ |
3.7 |
|
|
$ |
5.7 |
|
|
$ |
(2.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Company-owned salon adjusted EBITDA |
|
$ |
(0.3 |
) |
|
$ |
0.3 |
|
|
$ |
(0.6 |
) |
|
$ |
(0.8 |
) |
|
$ |
(0.9 |
) |
|
$ |
0.1 |
|
as a percent of revenue |
|
|
(16.7 |
)% |
|
|
11.5 |
% |
|
|
|
|
(21.6 |
)% |
|
|
(15.8 |
)% |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Company-owned salons |
|
|
58 |
|
|
|
75 |
|
|
|
(17 |
) |
|
|
|
|
|
|
||||||
as a percent of total Franchise and Company-owned salons |
|
|
1.2 |
% |
|
|
1.4 |
% |
|
|
|
|
|
|
|
|
||||||||
| ______________________________________________________________________ | |
(1) |
Variances calculated on amounts shown in millions may result in rounding differences. |
Company-Owned Salon Revenue
Second quarter revenue for the Company-owned salon segment declined
Company-Owned Salon Adjusted EBITDA
Second quarter Company-owned salon adjusted EBITDA declined
First half company-owned salon adjusted EBITDA loss remained consistent year-over-year. Excluding the
Balance Sheet and Cash Flow
The Company ended the second quarter of fiscal year 2024 with
Non-GAAP Reconciliations
For GAAP to non-GAAP reconciliations, please refer to the attached section titled "Non-GAAP Reconciliations." A complete reconciliation of reported earnings to adjusted earnings is included in this press release and is available on the Company’s website at www.regiscorp.com.
Earnings Webcast
Regis Corporation will host a conference call via webcast discussing second quarter results today, January 31, 2024, at 7:30 a.m. Central time. Interested parties are invited to participate in the live webcast by registering for the event at www.regiscorp.com/investor-relations.html. The webcast will include a slide presentation. A replay of the presentation will be available on our website at the same web address.
About Regis Corporation
Regis Corporation (NasdaqGM:RGS) is a leader in the haircare industry. As of December 31, 2023, the Company franchised or owned 4,709 locations. Regis’ franchised and corporate locations operate under concepts such as Supercuts®, SmartStyle®, Cost Cutters®, Roosters® and First Choice Haircutters®. For additional information about the Company, including a reconciliation of certain non-GAAP financial information and certain supplemental financial information, please visit the Investor Relations section of the corporate website at www.regiscorp.com.
This press release contains or may contain “forward-looking statements” within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this document reflect management’s best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, “may,” “will,” “believe,” “project,” “forecast,” “expect,” “estimate,” “anticipate,” and “plan.” In addition, the following factors could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include a potential material adverse impact on our business and results of operations as a result of changes in consumer shopping trends and changes in manufacturer distribution channels; laws and regulations could require us to modify current business practices and incur increased costs; our potential responsibility for Empire Education Group, Inc.'s liabilities; changes in general economic environment; changes in consumer tastes, hair product innovation, fashion trends and consumer spending patterns; compliance with listing requirements; reliance on franchise royalties and overall success of our franchisees’ salons; our salons' dependence on a third-party supplier agreement for merchandise; our franchisees' ability to attract, train and retain talented stylists and salon leaders; the success of our franchisees, which operate independently; data security and privacy compliance and our ability to manage cyber threats and protect the security of potentially sensitive information about our guests, franchisees, employees, vendors or Company information; the ability of the Company to maintain a satisfactory relationship with Walmart; marketing efforts to drive traffic to our franchisees' salons; the successful migration of our franchisees to the Zenoti salon technology platform; our ability to maintain and enhance the value of our brands; reliance on information technology systems; reliance on external vendors; the use of social media; the effectiveness of our enterprise risk management program; ability to generate sufficient cash flow to satisfy our debt service obligations; compliance with covenants in our financing arrangement, access to the existing revolving credit facility, and acceleration of our obligation to repay our indebtedness; the completion and/or results of the strategic alternatives review; limited resources to invest in our business; premature termination of agreements with our franchisees; financial performance of Empire Education Group, Inc.; our ability to close the sale of our ownership stake in Empire Education Group, Inc.; the continued ability of the Company to implement cost reduction initiatives and achieve expected cost savings; continued ability to compete in our business markets; reliance on our management team and other key personnel; the continued ability to maintain an effective system of internal control over financial reporting; changes in tax exposure; the ability to use
REGIS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands, except per share data) |
||||||||
|
|
December 31,
|
|
June 30,
|
||||
|
|
|
|
|
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
7,153 |
|
|
$ |
9,508 |
|
Receivables, net |
|
|
12,012 |
|
|
|
10,885 |
|
Inventories, net |
|
|
1,217 |
|
|
|
1,681 |
|
Other current assets |
|
|
15,034 |
|
|
|
15,164 |
|
Total current assets |
|
|
35,416 |
|
|
|
37,238 |
|
|
|
|
|
|
||||
Property and equipment, net |
|
|
5,889 |
|
|
|
6,422 |
|
Goodwill |
|
|
173,780 |
|
|
|
173,791 |
|
Other intangibles, net |
|
|
2,635 |
|
|
|
2,783 |
|
Right of use asset |
|
|
331,183 |
|
|
|
360,836 |
|
Other assets |
|
|
24,814 |
|
|
|
26,307 |
|
Total assets |
|
$ |
573,717 |
|
|
$ |
607,377 |
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS' DEFICIT |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
12,047 |
|
|
$ |
14,309 |
|
Accrued expenses |
|
|
25,923 |
|
|
|
30,109 |
|
Short-term lease liability |
|
|
76,895 |
|
|
|
81,917 |
|
Total current liabilities |
|
|
114,865 |
|
|
|
126,335 |
|
|
|
|
|
|
||||
Long-term debt, net |
|
|
181,663 |
|
|
|
176,830 |
|
Long-term lease liability |
|
|
266,483 |
|
|
|
291,901 |
|
Other non-current liabilities |
|
|
44,296 |
|
|
|
49,041 |
|
Total liabilities |
|
|
607,307 |
|
|
|
644,107 |
|
Commitments and contingencies |
|
|
|
|
||||
Shareholders' deficit: |
|
|
|
|
||||
Common stock, |
|
|
114 |
|
|
|
114 |
|
Additional paid-in capital |
|
|
67,710 |
|
|
|
66,764 |
|
Accumulated other comprehensive income |
|
|
9,026 |
|
|
|
9,023 |
|
Accumulated deficit |
|
|
(110,440 |
) |
|
|
(112,631 |
) |
Total shareholders' deficit |
|
|
(33,590 |
) |
|
|
(36,730 |
) |
Total liabilities and shareholders' deficit |
|
$ |
573,717 |
|
|
$ |
607,377 |
|
REGIS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the Three and Six Months Ended December 31, 2023 and 2022 (Dollars and shares in thousands, except per share data) |
||||||||||||||||
|
|
Three Months Ended December 31, |
|
Six Months Ended December 31, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenues: |
|
|
|
|
|
|
|
|
||||||||
Royalties |
|
$ |
15,820 |
|
|
$ |
16,158 |
|
|
$ |
32,348 |
|
|
$ |
33,338 |
|
Fees |
|
|
2,492 |
|
|
|
3,238 |
|
|
|
5,123 |
|
|
|
5,791 |
|
Product sales to franchisees |
|
|
67 |
|
|
|
1,107 |
|
|
|
451 |
|
|
|
1,550 |
|
Advertising fund contributions |
|
|
6,808 |
|
|
|
7,965 |
|
|
|
14,034 |
|
|
|
16,216 |
|
Franchise rental income |
|
|
24,087 |
|
|
|
28,886 |
|
|
|
48,754 |
|
|
|
59,216 |
|
Company-owned salon revenue |
|
|
1,779 |
|
|
|
2,613 |
|
|
|
3,715 |
|
|
|
5,727 |
|
Total revenue |
|
|
51,053 |
|
|
|
59,967 |
|
|
|
104,425 |
|
|
|
121,838 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
Cost of product sales to franchisees |
|
|
58 |
|
|
|
1,310 |
|
|
|
417 |
|
|
|
1,780 |
|
Inventory reserve |
|
|
— |
|
|
|
1,228 |
|
|
|
— |
|
|
|
1,228 |
|
General and administrative |
|
|
11,772 |
|
|
|
11,747 |
|
|
|
22,501 |
|
|
|
26,108 |
|
Rent |
|
|
1,394 |
|
|
|
2,090 |
|
|
|
2,491 |
|
|
|
3,843 |
|
Advertising fund expense |
|
|
6,808 |
|
|
|
7,965 |
|
|
|
14,034 |
|
|
|
16,216 |
|
Franchise rent expense |
|
|
24,087 |
|
|
|
28,886 |
|
|
|
48,754 |
|
|
|
59,216 |
|
Company-owned salon expense (1) |
|
|
1,308 |
|
|
|
2,218 |
|
|
|
2,798 |
|
|
|
5,203 |
|
Depreciation and amortization |
|
|
677 |
|
|
|
3,793 |
|
|
|
1,047 |
|
|
|
5,044 |
|
Long-lived asset impairment |
|
|
170 |
|
|
|
— |
|
|
|
170 |
|
|
|
— |
|
Total operating expenses |
|
|
46,274 |
|
|
|
59,237 |
|
|
|
92,212 |
|
|
|
118,638 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income |
|
|
4,779 |
|
|
|
730 |
|
|
|
12,213 |
|
|
|
3,200 |
|
|
|
|
|
|
|
|
|
|
||||||||
Other (expense) income: |
|
|
|
|
|
|
|
|
||||||||
Interest expense |
|
|
(6,188 |
) |
|
|
(4,519 |
) |
|
|
(12,376 |
) |
|
|
(8,336 |
) |
Other, net |
|
|
299 |
|
|
|
1,248 |
|
|
|
99 |
|
|
|
785 |
|
|
|
|
|
|
|
|
|
|
||||||||
Loss from operations before income taxes |
|
|
(1,110 |
) |
|
|
(2,541 |
) |
|
|
(64 |
) |
|
|
(4,351 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Income tax benefit (expense) |
|
|
107 |
|
|
|
— |
|
|
|
255 |
|
|
|
(28 |
) |
|
|
|
|
|
|
|
|
|
||||||||
(Loss) income from continuing operations |
|
|
(1,003 |
) |
|
|
(2,541 |
) |
|
|
191 |
|
|
|
(4,379 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Income from discontinued operations |
|
|
2,000 |
|
|
|
134 |
|
|
|
2,000 |
|
|
|
3,440 |
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) |
|
$ |
997 |
|
|
$ |
(2,407 |
) |
|
$ |
2,191 |
|
|
$ |
(939 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share: |
|
|
|
|
|
|
|
|
||||||||
Basic: |
|
|
|
|
|
|
|
|
||||||||
(Loss) income from continuing operations |
|
$ |
(0.43 |
) |
|
$ |
(1.10 |
) |
|
$ |
0.08 |
|
|
$ |
(1.90 |
) |
Income from discontinued operations |
|
|
0.85 |
|
|
|
0.06 |
|
|
|
0.86 |
|
|
|
1.49 |
|
Net income (loss) per share, basic (2) |
|
$ |
0.43 |
|
|
$ |
(1.04 |
) |
|
$ |
0.94 |
|
|
$ |
(0.41 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Diluted: |
|
|
|
|
|
|
|
|
||||||||
(Loss) income from continuing operations |
|
$ |
(0.43 |
) |
|
$ |
(1.10 |
) |
|
|
(0.43 |
) |
|
|
(1.90 |
) |
Income from discontinued operations |
|
|
0.85 |
|
|
|
0.06 |
|
|
|
0.85 |
|
|
|
1.49 |
|
Net income (loss) per share, diluted (2) |
|
$ |
0.43 |
|
|
$ |
(1.04 |
) |
|
$ |
0.93 |
|
|
$ |
(0.41 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common and common equivalent shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
2,341 |
|
|
|
2,307 |
|
|
|
2,336 |
|
|
|
2,305 |
|
Diluted |
|
|
2,341 |
|
|
|
2,307 |
|
|
|
2,367 |
|
|
|
2,305 |
|
_______________________________________________________________________________ |
|
(1) |
Includes cost of service and product sold to guests in our Company-owned salons. Excludes general and administrative expense, rent and depreciation and amortization related to Company-owned salons. |
(2) |
Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
REGIS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Six Months Ended December 31, 2023 and 2022 (Dollars in thousands) |
||||||||
|
|
Six Months Ended December 31, |
||||||
|
|
2023 |
|
2022 |
||||
|
|
|
|
|
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net income (loss) |
|
$ |
2,191 |
|
|
$ |
(939 |
) |
Adjustments to reconcile net income (loss) to cash used in operating activities: |
|
|
|
|
||||
Gain from sale of OSP |
|
|
(2,000 |
) |
|
|
(4,034 |
) |
Depreciation and amortization |
|
|
1,005 |
|
|
|
4,647 |
|
Long-lived asset impairment |
|
|
170 |
|
|
|
— |
|
Deferred income taxes |
|
|
(29 |
) |
|
|
28 |
|
Inventory reserve |
|
|
— |
|
|
|
1,228 |
|
Non-cash interest |
|
|
1,290 |
|
|
|
— |
|
Stock-based compensation |
|
|
890 |
|
|
|
1,111 |
|
Amortization of debt discount and financing costs |
|
|
1,493 |
|
|
|
1,391 |
|
Other non-cash items affecting earnings |
|
|
(29 |
) |
|
|
376 |
|
Changes in operating assets and liabilities, excluding the effects of asset sales |
|
|
(11,834 |
) |
|
|
(10,722 |
) |
Net cash used in operating activities |
|
|
(6,853 |
) |
|
|
(6,914 |
) |
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
|
||||
Capital expenditures |
|
|
(323 |
) |
|
|
(361 |
) |
Proceeds from sale of OSP, net of fees |
|
|
— |
|
|
|
4,000 |
|
Net cash (used in) provided by investing activities |
|
|
(323 |
) |
|
|
3,639 |
|
|
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
|
||||
Borrowings on credit facility |
|
|
4,000 |
|
|
|
11,357 |
|
Repayments of long-term debt |
|
|
(455 |
) |
|
|
(8,535 |
) |
Debt refinancing fees |
|
|
(1,216 |
) |
|
|
(4,383 |
) |
Taxes paid for shares withheld |
|
|
(13 |
) |
|
|
(35 |
) |
Net cash provided by (used in) financing activities |
|
|
2,316 |
|
|
|
(1,596 |
) |
|
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents |
|
|
46 |
|
|
|
(135 |
) |
|
|
|
|
|
||||
Decrease in cash, cash equivalents, and restricted cash |
|
|
(4,814 |
) |
|
|
(5,006 |
) |
|
|
|
|
|
||||
Cash, cash equivalents and restricted cash: |
|
|
|
|
||||
Beginning of period |
|
|
21,396 |
|
|
|
27,464 |
|
End of period |
|
$ |
16,582 |
|
|
$ |
22,458 |
|
REGIS CORPORATION Same-Store Sales |
||||||||||||||||||
SYSTEM-WIDE SAME-STORE SALES (1): |
||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||
|
|
December 31, 2023 |
|
December 31, 2022 |
||||||||||||||
|
|
Service |
|
Retail |
|
Total |
|
Service |
|
Retail |
|
Total |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Supercuts |
|
3.0 |
% |
|
(5.7 |
)% |
|
2.6 |
% |
|
8.0 |
% |
|
(7.3 |
)% |
|
7.2 |
% |
SmartStyle |
|
(0.5 |
) |
|
(10.8 |
) |
|
(2.4 |
) |
|
(0.7 |
) |
|
(11.3 |
) |
|
(2.9 |
) |
Portfolio Brands |
|
4.2 |
|
|
(1.5 |
) |
|
3.7 |
|
|
7.3 |
|
|
(5.1 |
) |
|
6.0 |
|
Total |
|
2.7 |
% |
|
(6.7 |
)% |
|
1.9 |
% |
|
6.0 |
% |
|
(8.6 |
)% |
|
4.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Six Months Ended |
||||||||||||||||
|
|
December 31, 2023 |
|
December 31, 2022 |
||||||||||||||
|
|
Service |
|
Retail |
|
Total |
|
Service |
|
Retail |
|
Total |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Supercuts |
|
2.8 |
% |
|
(5.2 |
)% |
|
2.4 |
% |
|
8.8 |
% |
|
(7.7 |
)% |
|
8.0 |
% |
SmartStyle |
|
(0.7 |
) |
|
(9.0 |
) |
|
(2.2 |
) |
|
0.2 |
|
|
(15.1 |
) |
|
(3.1 |
) |
Portfolio Brands |
|
4.2 |
|
|
(1.5 |
) |
|
3.7 |
|
|
6.2 |
|
|
(7.6 |
) |
|
4.8 |
|
Total |
|
2.5 |
% |
|
(5.8 |
)% |
|
1.8 |
% |
|
6.3 |
% |
|
(11.3 |
)% |
|
4.5 |
% |
_______________________________________________________________________________ |
|
(1) |
System-wide same-store sales are calculated as the total change in sales for system-wide franchise and company-owned locations that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly system-wide same-store sales are the sum of the system-wide same-store sales computed on a daily basis. Franchise salons that do not report daily sales are excluded from same-store sales. System-wide same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation. |
REGIS CORPORATION System-Wide Location Counts |
||||||
|
|
December 31,
|
|
June 30,
|
||
|
|
|
|
|
||
FRANCHISE SALONS: |
|
|
|
|
||
Supercuts |
|
2,022 |
|
|
2,082 |
|
SmartStyle/Cost Cutters in Walmart Stores |
|
1,351 |
|
|
1,388 |
|
Portfolio Brands |
|
1,178 |
|
|
1,223 |
|
Total North American salons |
|
4,551 |
|
|
4,693 |
|
Total International salons (1) |
|
100 |
|
|
102 |
|
Total Franchise salons |
|
4,651 |
|
|
4,795 |
|
as a percent of total Franchise and Company-owned salons |
|
98.8 |
% |
|
98.6 |
% |
|
|
|
|
|
||
COMPANY-OWNED SALONS: |
|
|
|
|
||
Supercuts |
|
6 |
|
|
7 |
|
SmartStyle/Cost Cutters in Walmart Stores |
|
44 |
|
|
48 |
|
Portfolio Brands |
|
8 |
|
|
13 |
|
Total Company-owned salons |
|
58 |
|
|
68 |
|
as a percent of total Franchise and Company-owned salons |
|
1.2 |
% |
|
1.4 |
% |
|
|
|
|
|
||
Grand Total, System-wide |
|
4,709 |
|
|
4,863 |
|
___________________________________________________________________ |
|
(1) |
Canadian and Puerto Rican salons are included in the North American salon totals. |
Non-GAAP Reconciliations:
This press release includes a presentation of adjusted EBITDA and adjusted Franchise revenue, which are non-GAAP measures. The non-GAAP measures are financial measures that do not reflect United States Generally Accepted Accounting Principles (GAAP). We believe our presentation of the non-GAAP measures provides meaningful insight into our ongoing operating performance and a supplemental perspective of our results of operations. Presentation of the non-GAAP measures allows investors to review our core ongoing operating performance from the same perspective as management and the Board of Directors. These non-GAAP financial measures provide investors an enhanced understanding of our operations, facilitate investors’ analyses and comparisons of our current and past results of operations and provide insight into the prospects of our future performance. We also believe the non-GAAP measures are useful to investors because they provide supplemental information that research analysts frequently use to analyze financial performance.
Items impacting comparability are not defined terms within
The following items have been excluded from our non-GAAP adjusted EBITDA results: discontinued operations, one-time professional fees and legal settlements, severance expense, excess inventory impairment charges, the benefit from lease liability decreases in excess of previously impaired right of use asset, lease termination fees and asset retirement obligation costs.
We present adjusted revenue to provide a meaningful Franchise adjusted EBITDA margin, which removes non-margin revenue from total revenue to arrive at an adjusted margin. Margin is a common metric used by investors, however, the majority of our revenue is offset by equal expense, so it does not contribute to our margin. We remove the non-margin revenue from this metric in order to show a meaningful margin rate.
The method we use to produce non-GAAP results is not in accordance with
REGIS CORPORATION
Reconciliation of (Dollars in thousands) (Unaudited) |
||||||||||||||||
|
|
Three Months Ended December 31, |
|
Six Months Ended December 31, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Consolidated reported net income, as reported ( |
|
$ |
997 |
|
|
$ |
(2,407 |
) |
|
$ |
2,191 |
|
|
$ |
(939 |
) |
Interest expense, as reported |
|
|
6,188 |
|
|
|
4,519 |
|
|
|
12,376 |
|
|
|
8,336 |
|
Income taxes, as reported |
|
|
(107 |
) |
|
|
— |
|
|
|
(255 |
) |
|
|
28 |
|
Depreciation and amortization, as reported |
|
|
677 |
|
|
|
3,793 |
|
|
|
1,047 |
|
|
|
5,044 |
|
Long-lived asset impairment, as reported |
|
|
170 |
|
|
|
— |
|
|
|
170 |
|
|
|
— |
|
EBITDA |
|
$ |
7,925 |
|
|
$ |
5,905 |
|
|
$ |
15,529 |
|
|
$ |
12,469 |
|
|
|
|
|
|
|
|
|
|
||||||||
Inventory reserve |
|
|
— |
|
|
|
1,228 |
|
|
|
— |
|
|
|
1,228 |
|
Professional fees and legal settlements |
|
|
29 |
|
|
|
540 |
|
|
|
29 |
|
|
|
1,248 |
|
Severance |
|
|
— |
|
|
|
63 |
|
|
|
— |
|
|
|
66 |
|
Lease liability benefit |
|
|
(95 |
) |
|
|
(615 |
) |
|
|
(223 |
) |
|
|
(1,217 |
) |
Lease termination fees |
|
|
174 |
|
|
|
848 |
|
|
|
161 |
|
|
|
1,306 |
|
Discontinued operations |
|
|
(2,000 |
) |
|
|
(134 |
) |
|
|
(2,000 |
) |
|
|
(3,440 |
) |
Adjusted EBITDA, non-GAAP financial measure |
|
$ |
6,033 |
|
|
$ |
7,835 |
|
|
$ |
13,496 |
|
|
$ |
11,660 |
|
REGIS CORPORATION Reconciliation of Reported Franchise Adjusted EBITDA as a Percent of GAAP Franchise Revenue to Franchise Adjusted EBITDA as a Percent of Adjusted Franchise Revenue (Dollars in thousands) (Unaudited) |
||||||||||||||||
|
Three Months Ended December 31, |
|
Six Months Ended December 31, |
|||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Franchise adjusted EBITDA |
|
$ |
6,371 |
|
|
$ |
7,532 |
|
|
$ |
14,331 |
|
|
$ |
12,523 |
|
GAAP Franchise revenue |
|
|
49,274 |
|
|
|
57,354 |
|
|
|
100,710 |
|
|
|
116,111 |
|
Franchise adjusted EBITDA as a percent of GAAP Franchise revenue |
|
|
12.9 |
% |
|
|
13.1 |
% |
|
|
14.2 |
% |
|
|
10.8 |
% |
Non-margin revenue adjustments: |
|
|
|
|
|
|
|
|
||||||||
Franchise rental income |
|
$ |
(24,087 |
) |
|
$ |
(28,886 |
) |
|
$ |
(48,754 |
) |
|
$ |
(59,216 |
) |
Advertising fund contributions |
|
|
(6,808 |
) |
|
|
(7,965 |
) |
|
|
(14,034 |
) |
|
|
(16,216 |
) |
Adjusted Franchise revenue |
|
$ |
18,379 |
|
|
$ |
20,503 |
|
|
$ |
37,922 |
|
|
$ |
40,679 |
|
Franchise adjusted EBITDA as a percent of adjusted Franchise revenue |
|
|
34.7 |
% |
|
|
36.7 |
% |
|
|
37.8 |
% |
|
|
30.8 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240131446207/en/
REGIS CORPORATION:
Kersten Zupfer
investorrelations@regiscorp.com
Source: Regis Corporation
FAQ
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What is the total liquidity of Regis Corporation at the end of the second quarter of fiscal 2024?
