Regis Corporation Reports Third Quarter 2022 Results

Rhea-AI Summary

Regis Corporation (NYSE: RGS) reported a third quarter revenue of $64.7 million, down 35.4% from the previous year, with a net loss of $27.9 million or $0.61 per share. Despite challenges, including labor issues and lower customer counts, the company saw a 23.1% increase in royalty revenue and an 8.6% rise in system-wide same-store sales. The Franchise segment achieved an adjusted EBITDA of $3.0 million, reflecting significant improvement. CEO Matt Doctor expressed optimism, citing future performance improvements from strategic initiatives.

Positive

• Royalty revenue increased by 23.1% in Q3.
• System-wide same-store sales rose by 8.6%.
• Franchise segment achieved positive adjusted EBITDA of $3.0 million, a significant improvement from prior year.

Negative

• Total revenue decreased by $35.5 million, or 35.4%, year-over-year.
• Net loss for Q3 increased to $27.9 million from $10.8 million in the prior year.
• Company-owned salon revenue decreased by $28.8 million.

MINNEAPOLIS--(BUSINESS WIRE)-- Regis Corporation (NYSE: RGS), a leader in the haircare industry, today reported results for the third fiscal quarter and nine months ended March 31, 2022 versus the prior year as noted below.

• Total third quarter and nine months ended March 31, 2022 revenue of $64.7 million and $212.8 million includes Royalty growth of 23.1% and 31.2%, respectively.
• System-wide same-store sales increased 8.6%.
• Reported G&A of $15.6 million and adjusted G&A of $14.7 million, represented a decline of $9.0 million and $8.3 million compared to the third quarter 2021, respectively.
• The Franchise segment posted adjusted EBITDA of $3.0 million compared to a loss of $7.0 million in third quarter 2021. Second consecutive quarter of positive adjusted EBITDA in the Franchise segment.
• Third quarter adjusted EBITDA loss of $0.3 million improved by $19.5 million compared to a loss of $19.8 million in the third quarter 2021.
• For the nine months ended March 31, 2022 adjusted EBITDA loss of $3.6 million improved significantly from a loss of $56.0 million during the same period of the prior year.
• Earnings webcast scheduled for 9am CST on May 10, 2022 and will be accompanied by a slide presentation.

"Our third quarter results improved year over year, but were below our expectations due to a slower sales recovery and the continued wind down of our legacy businesses," said Matt Doctor, Regis Chief Executive Officer. "We continue to be affected by labor issues and lower customer counts stemming from the pandemic, but remain encouraged because our results reflect a business that has not yet benefited from the action steps we have identified in tandem with our franchisees to improve our performance, including a single technology platform for our entire system, more robust stylist education and events for a stronger talent brand, and a refocus of our marketing efforts toward digital. We are confident that our fully franchised business model and the measures we have underway will lead to stronger profitability going forward."

		Three Months Ended March 31,								Nine Months Ended March 31,
(Dollars in thousands)			2022				2021				2022				2021
Consolidated revenue		$	64,749			$	100,267			$	212,761			$	315,983
System-wide revenue (1)			290,977				269,951				911,626				791,577
System-wide same-store sales comps			8.6	%			(20.7	) %			17.8	%			(28.7	) %
Two-year system-wide same-store sales comps			(13.7	) %			N/A				(16.1	) %			N/A
Operating loss		$	(25,444	)		$	(18,541	)		$	(32,372	)		$	(76,886	)
Net loss			(27,918	)			(10,847	)			(43,224	)			(78,991	)
Diluted net loss per share			(0.61	)			(0.30	)			(1.01	)			(2.20	)
EBITDA (2)			(23,461	)			(3,564	)			(28,160	)			(42,532	)
as a percent of revenue			(36.2	) %			(3.6	) %			(13.2	) %			(13.5	) %
As adjusted (2)
Net loss, as adjusted		$	(4,337	)		$	(25,340	)		$	(17,454	)		$	(79,172	)
Diluted net loss per share, as adjusted			(0.09	)			(0.70	)			(0.41	)			(2.20	)
EBITDA, as adjusted			(306	)			(19,812	)			(3,574	)			(55,981	)
as a percent of revenue			(0.5	) %			(19.8	) %			(1.7	) %			(17.7	) %

(1)		Represents total sales within the system.
(2)		See GAAP to non-GAAP reconciliations, within the attached section titled "Non-GAAP Reconciliations".

Total revenue in the quarter of $64.7 million decreased $35.5 million, or 35.4%, year-over-year, driven primarily by the Company exiting company-owned salons that generated significant revenue, but were loss making. Partially offsetting the decline in Company-owned revenue was an increase in royalty revenue due to higher franchise salon sales and an increase in franchise salon count.

Third quarter adjusted EBITDA loss of $0.3 million improved $19.5 million, versus an adjusted EBITDA loss of $19.8 million in the same period last year. The improvement was driven by an increase in royalties; a decrease in general and administrative expense; and the Company exiting loss making company-owned salons over the last twelve months.

Regis reported a third quarter 2022 net loss of $27.9 million, or $0.61 loss per diluted share, compared to a net loss of $10.8 million, or $0.30 loss per diluted share, in the third quarter of 2021. Net loss included a goodwill impairment charge and increased inventory reserve totaling $22.4 million. Excluding discrete items, the Company reported a third quarter 2022 adjusted net loss of $4.3 million, or $0.09 loss per diluted share, compared to an adjusted net loss of $25.3 million, or $0.70 loss per diluted share, for the same period last year. The year-over-year improvement in adjusted net loss was driven primarily by improved sales leading to an increase in royalties; a decrease in general and administrative expense; and the Company exiting loss making company-owned salons.

Third Quarter Segment Results
Franchise
		Three Months Ended March 31,								Increase (Decrease)				Nine Months Ended March 31,								Increase (Decrease)
(Dollars in millions) (1)			2022				2021								2022				2021
Royalties		$	15.8			$	12.8			$	3.0			$	48.5			$	37.0			$	11.5
Fees			3.4				5.1				(1.7	)			11.5				9.6				1.9
Product sales to franchisees			1.3				13.1				(11.8	)			11.7				41.1				(29.4	)
Advertising fund contributions			8.1				5.6				2.5				24.2				14.8				9.4
Franchise rental income			32.7				31.3				1.4				100.2				95.9				4.3
Total Franchise revenue		$	61.2			$	67.9			$	(6.7	)		$	196.2			$	198.3			$	(2.1	)
Franchise same-store sales comps			8.8	%			(19.3	) %							18.0	%			(27.6	) %
Franchise two-year same-store sales comps			(13.4	) %			N/A								(15.8	) %			N/A
EBITDA, as adjusted		$	3.0			$	(7.0	)		$	10.0			$	4.4			$	(21.8	)		$	26.2
as a percent of revenue			4.8	%			(10.3	) %							2.2	%			(11.0	) %
as a percent of adjusted revenue (2)			14.5	%			(22.5	) %							6.1	%			(24.9	) %
Total Franchise salons			5,504				5,317				187
as a percent of total Franchise and Company-owned salons			97.9	%			86.6	%

(1)		Variances calculated on amounts shown in millions may result in rounding differences.
(2)		Adjusted revenue excludes non-margin revenue. See Non-GAAP reconciliation.

Third quarter Franchise revenue was $61.2 million, a $6.7 million, or 9.9% decrease compared to the prior year quarter. Royalties were $15.8 million, a $3.0 million increase versus the same period last year. The increase in royalties is due to higher franchise system sales and the increase in franchise salons. Product sales to franchisees of $1.3 million decreased $11.8 million, as expected. The decrease in product sales will continue as the company transitions out of its wholesale product sales business. Franchise adjusted EBITDA of $3.0 million improved $10.0 million year-over-year primarily due to an increase in royalties and a decrease in general and administrative expense.

Company-Owned Salons
		Three Months Ended March 31,								(Decrease) Increase				Nine Months Ended March 31,								(Decrease) Increase
(Dollars in millions) (1)			2022				2021								2022				2021
Total Company-owned salon revenue		$	3.5			$	32.3			$	(28.8	)		$	16.6			$	117.6			$	(101.0	)
Company-owned same-store sales comps			(3.0	) %			(28.8	) %							4.4	%			(33.8	) %
Company-owned two-year same-store sales comps			(31.1	) %			N/A								(32.2	) %			N/A
EBITDA, as adjusted		$	(3.3	)		$	(12.8	)		$	9.5			$	(8.0	)		$	(34.2	)		$	26.2
as a percent of revenue			(94.3	) %			(39.6	) %							(48.2	) %			(29.1	) %
Total Company-owned salons			117				826				(709	)
as a percent of total Franchise and Company-owned salons			2.1	%			13.4	%

(1)		Variances calculated on amounts shown in millions may result in rounding differences.

Third quarter revenue for the Company-owned salon segment decreased $28.8 million, versus the prior year to $3.5 million. The year-over-year decline in revenue was expected and driven by a net 448 salons sold and converted to the Company's franchise portfolio over the past 12 months and the closure of a net 261 unprofitable salons over the past 12 months. Third quarter Company-owned salons adjusted EBITDA loss improved $9.5 million, versus the same period last year driven primarily by the elimination of EBITDA losses in the prior year period from the unprofitable salons now closed. The adjusted EBITDA loss of $3.3 million includes a $1.1 million inventory excess and obsolescence charge.

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 third quarter results on May 10, 2022, at 9 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 www.regiscorp.com/investor-relations.html.

About Regis Corporation

Regis Corporation (NYSE:RGS) is a leader in the beauty salon industry. As of March 31, 2022, the Company franchised, owned or held ownership interests in 5,697 locations worldwide. Regis’ franchised and corporate locations operate under concepts such as Supercuts^®, SmartStyle^®, Cost Cutters^®, Roosters^® and First Choice Haircutters^®. Regis maintains an ownership interest in Empire Education Group in the U.S. For additional information about the Company, including a reconciliation of certain non-GAAP financial information and certain supplemental financial information, please visit the Investor Information 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,” “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 the uncertain duration and severity of the COVID-19 pandemic, including any adverse impact from Delta, Omicron and other variants; the impact of the COVID-19 pandemic on our key suppliers; consumer shopping trends and changes in manufacturer distribution channels; changes in regulatory and statutory laws including increases in minimum wages; laws and regulations could require us to modify current business practices and incur increased costs; changes in economic conditions; changes in consumer tastes and fashion trends; the continued ability of the Company to implement its strategy, priorities and initiatives including the re-engineering of our corporate and field infrastructure; new merchandising strategy; our franchisees' ability to attract, train and retain talented stylists; financial performance of our franchisees; the ability to operate or sell the salons transferred back from TBG; our ability to manage cyber threats and protect the security of potentially sensitive information about our guests, 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; 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; failure to standardize operating processes across brands; exposure to uninsured or unidentified risks; Opensalon® Pro may not yield the intended results; compliance with credit facility covenants and access to the existing revolving credit facility; ability to re-finance our existing credit facility, including the ability to re-finance at a similar rate, and our ability to raise additional debt or equity capital; our capital investments in technology may not achieve appropriate returns; premature termination of agreements with our franchisees; financial performance of Empire Education Group; 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 controls over financial reporting; changes in tax exposure; the ability to use U.S. net operating loss carryforwards; potential litigation and other legal or regulatory proceedings could have an adverse effect on our business or other factors not listed above. Additional information concerning potential factors that could affect future financial results is set forth under Item 1A on Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.

REGIS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(Dollars in thousands, except per share data)
		March 31, 2022				June 30, 2021
ASSETS
Current assets:
Cash and cash equivalents		$	25,630			$	19,191
Receivables, net			15,443				27,372
Inventories			8,606				22,993
Other current assets			13,254				17,103
Total current assets			62,933				86,659
Property and equipment, net			21,922				23,113
Goodwill			213,362				229,582
Other intangibles, net			3,420				3,761
Right of use asset			525,429				611,880
Other assets			35,712				41,388
Total assets		$	862,778			$	996,383
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	14,319			$	27,157
Accrued expenses			36,469				54,857
Short-term debt, net			193,814				—
Short-term lease liability			107,373				116,471
Total current liabilities			351,975				198,485
Long-term debt, net			—				186,911
Long-term lease liability			437,117				518,866
Other non-current liabilities			62,567				75,075
Total liabilities			851,659				979,337
Commitments and contingencies
Shareholders' equity:
Common stock, $0.05 par value; issued and outstanding 45,505,055 and 35,795,844 common shares at March 31, 2022 and June 30, 2021, respectively			2,275				1,790
Additional paid-in capital			62,131				25,102
Accumulated other comprehensive income			9,326				9,543
Accumulated deficit			(62,613	)			(19,389	)
Total shareholders' equity			11,119				17,046
Total liabilities and shareholders' equity		$	862,778			$	996,383

REGIS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
For The Three And Nine Months Ended March 31, 2022 And 2021
(Dollars and shares in thousands, except per share data)
		Three Months Ended March 31,								Nine Months Ended March 31,
			2022				2021				2022				2021
Revenues:
Royalties		$	15,799			$	12,835			$	48,526			$	36,989
Fees			3,364				5,120				11,496				9,600
Product sales to franchisees			1,293				13,079				11,729				41,057
Advertising fund contributions			8,078				5,580				24,213				14,804
Franchise rental income			32,666				31,317				100,200				95,885
Company-owned salon revenue			3,549				32,336				16,597				117,648
Total revenue			64,749				100,267				212,761				315,983
Operating expenses:
Cost of product sales to franchisees			2,598				11,168				14,129				33,171
Inventory reserve (1)			6,420				—				6,420				—
General and administrative			15,569				24,582				53,342				77,419
Rent			1,246				8,001				6,137				34,128
Advertising fund expense			8,078				5,580				24,213				14,804
Franchise rent expense			32,666				31,317				100,200				95,885
Company-owned salon expense (2)			5,292				33,707				18,304				110,261
Depreciation and amortization			1,997				3,620				5,846				17,384
Long-lived asset impairment			327				833				542				9,817
Goodwill impairment			16,000				—				16,000				—
Total operating expenses			90,193				118,808				245,133				392,869
Operating loss			(25,444	)			(18,541	)			(32,372	)			(76,886	)
Other (expense) income:
Interest expense			(3,403	)			(3,163	)			(10,158	)			(10,626	)
Loss from sale of salon assets to franchisees, net			(494	)			(4,575	)			(2,189	)			(8,463	)
Interest income and other, net			153				15,099				13				15,616
Loss from operations before income taxes			(29,188	)			(11,180	)			(44,706	)			(80,359	)
Income tax benefit			1,270				333				1,482				1,368
Net loss		$	(27,918	)		$	(10,847	)		$	(43,224	)		$	(78,991	)
Net loss per share:
Basic and diluted:
Net loss per share, basic and diluted		$	(0.61	)		$	(0.30	)		$	(1.01	)		$	(2.20	)
Weighted average common and common equivalent shares outstanding:
Basic and diluted			45,886				36,011				42,789				35,929

(1)		Includes charge in the third quarter associated with liquidation of distribution center inventory. Excludes reserves for inventory at salons.
(2)		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.

REGIS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
For The Nine Months Ended March 31, 2022 And 2021
(Dollars in thousands)
		Nine Months Ended March 31,
			2022				2021
Cash flows from operating activities:
Net loss		$	(43,224	)		$	(78,991	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization			4,944				13,968
Long-lived asset impairment			542				9,817
Deferred income taxes			(1,693	)			(806	)
Inventory reserve			9,007				6,875
Gain from disposal of distribution center assets			—				(14,878	)
Loss from sale of salon assets to franchisees, net			2,189				8,463
Goodwill impairment			16,000				—
Stock-based compensation			854				1,792
Amortization of debt discount and financing costs			1,379				1,313
Other non-cash items affecting earnings			419				183
Changes in operating assets and liabilities, excluding the effects of asset sales			(24,770	)			(27,743	)
			(34,353	)			(80,007	)
Cash flows from investing activities:
Capital expenditures			(4,258	)			(9,609	)
Proceeds from sale of assets to franchisees			—				7,743
Costs associated with sale of salon assets to franchisees			—				(242	)
Proceeds from company-owned life insurance policies			—				1,200
			(4,258	)			(908	)
Cash flows from financing activities:
Borrowings on revolving credit facility			10,000				—
Repayments of revolving credit facility			(3,096	)			—
Proceeds from issuance of common stock, net of offering costs			37,185				—
Taxes paid for shares withheld			(844	)			(316	)
Minority interest buyout			—				(562	)
Distribution center lease payments			—				(724	)
			43,245				(1,602	)
Effect of exchange rate changes on cash and cash equivalents			(88	)			6
Increase (decrease) in cash, cash equivalents, and restricted cash			4,546				(82,511	)
Cash, cash equivalents and restricted cash:
Beginning of period			29,152				122,880
End of period		$	33,698			$	40,369

REGIS CORPORATION
Same-Store Sales
SYSTEM-WIDE SAME-STORE SALES (1):
		Three Months Ended
		March 31, 2022									March 31, 2021
		Service			Retail			Total			Service			Retail			Total
SmartStyle		2.1	%		(17.4	) %		(2.5	) %		(19.4	) %		(20.3	) %		(19.6	) %
Supercuts		19.6			(10.1	)		17.8			(22.5	)		(18.8	)		(22.3	)
Portfolio Brands		5.5			(9.3	)		4.0			(17.7	)		(19.0	)		(17.9	)
Total		11.6	%		(13.7	) %		8.6	%		(20.9	) %		(19.4	) %		(20.7	) %
		Nine Months Ended
		March 31, 2022									March 31, 2021
		Service			Retail			Total			Service			Retail			Total
SmartStyle		14.3	%		(8.0	) %		8.8	%		(28.9	) %		(28.0	) %		(28.7	) %
Supercuts		28.0			(3.3	)		26.0			(30.2	)		(25.2	)		(29.9	)
Portfolio Brands		15.3			(2.8	)		13.2			(27.3	)		(20.9	)		(26.6	)
Total		21.1	%		(5.6	) %		17.8	%		(29.2	) %		(25.2	) %		(28.7	) %

(1)		System-wide same-store sales in fiscal year 2022 are calculated as the change in sales for locations that were open on a specific day of the week during the current period and the corresponding prior period. System-wide same-store sales in fiscal year 2021 are calculated as the total change in sales for system-wide franchise and company-owned locations open for more than one year that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date 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
		March 31, 2022			June 30, 2021
FRANCHISE SALONS:
SmartStyle/Cost Cutters in Walmart Stores		1,667			1,666
Supercuts		2,316			2,386
Portfolio Brands		1,378			1,357
Total North American salons		5,361			5,409
Total International Salons (1)		143			154
Total Franchise Salons		5,504			5,563
as a percent of total Franchise and Company-owned salons		97.9	%		95.3	%
COMPANY-OWNED SALONS:
SmartStyle/Cost Cutters in Walmart Stores		52			91
Supercuts		19			35
Portfolio Brands		46			150
Total Company-owned salons		117			276
as a percent of total Franchise and Company-owned salons		2.1	%		4.7	%
OWNERSHIP INTEREST LOCATIONS:
Equity ownership interest locations		76			78
Grand Total, System-wide		5,697			5,917

(1)		Canadian and Puerto Rican salons are included in the North American salon totals.

Non-GAAP Reconciliations:

We believe our presentation of non-GAAP operating loss, net loss, net loss per diluted share, and other non-GAAP financial measures provides meaningful insight into our ongoing operating performance and an alternative 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.

The method we use to produce non-GAAP results is not in accordance with U.S. GAAP and may differ from methods used by other companies. These non-GAAP results should not be regarded as a substitute for corresponding U.S. GAAP measures, but instead should be utilized as a supplemental measure of operating performance in evaluating our business. Non-GAAP measures do have limitations as they do not reflect certain items that may have a material impact upon our reported financial results. As such, these non-GAAP measures should be viewed in conjunction with our financial statements prepared in accordance with U.S. GAAP.

Non-GAAP reconciling items for the three and nine months ended March 31, 2022 and 2021:

The following information is provided to give qualitative and quantitative information related to items impacting comparability. Items impacting comparability are not defined terms within U.S. GAAP. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies. We determine the items to consider as "items impacting comparability" based on how management views our business, makes financial, operating and planning decisions and evaluates the Company's ongoing performance. The following items have been excluded from our non-GAAP results:

• Inventory reserve
• CEO transition
• Distribution center wind down fees ("Distribution center fees")
• Professional fees and settlements
• Severance
• Benefit from lease liability decrease in excess of previously impaired ROUA ("Lease liability benefit")
• Lease termination fees
• Real estate fees
• Asset retirement obligation
• Long-lived asset impairment
• Goodwill impairment
• Gain on distribution centers
• Non-recurring, non-operating income

REGIS CORPORATION
Reconciliation Of Selected U.S. GAAP To Non-GAAP Financial Measures
(Dollars in thousands, except per share data)
(Unaudited)
Reconciliation of U.S. GAAP operating loss and U.S. GAAP net loss to equivalent non-GAAP measures
				Three Months Ended March 31,								Nine Months Ended March 31,
		U.S. GAAP financial line item			2022				2021				2022				2021
U.S. GAAP revenue				$	64,749			$	100,267			$	212,761			$	315,983
U.S. GAAP operating loss				$	(25,444	)		$	(18,541	)		$	(32,372	)		$	(76,886	)
Non-GAAP operating expense adjustments (1)
Inventory reserve		Inventory reserve			6,420				—				6,420				—
CEO transition		General and administrative			50				300				(466	)			(994	)
Distribution center fees		General and administrative			—				—				285				—
Professional fees and settlements		General and administrative			713				480				1,873				3,422
Severance		General and administrative			104				848				2,015				3,239
Lease liability benefit		Rent			(357	)			(3,009	)			(3,284	)			(11,295	)
Lease termination fees		Rent			225				(147	)			1,803				6,523
Real estate fees		Rent			—				158				40				534
Asset retirement obligation		Depreciation and amortization			337				774				902				3,447
Long-lived asset impairment		Long-lived asset impairment			327				833				542				9,817
Goodwill impairment		Goodwill impairment			16,000				—				16,000				—
Total non-GAAP operating expense adjustments					23,819				237				26,130				14,693
Non-GAAP operating loss (1)				$	(1,625	)		$	(18,304	)		$	(6,242	)		$	(62,193	)
U.S. GAAP net loss				$	(27,918	)		$	(10,847	)		$	(43,224	)		$	(78,991	)
Non-GAAP net loss adjustments:
Non-GAAP operating expense adjustments					23,819				237				26,130				14,693
Gain on distribution centers		Interest income and other, net			—				(14,878	)			—				(14,878	)
Non-recurring, non-operating income		Interest income and other, net			—				—				(100	)			—
Income tax impact on Non-GAAP adjustments (2)		Income taxes			(238	)			148				(260	)			4
Total non-GAAP net loss adjustments					23,581				(14,493	)			25,770				(181	)
Non-GAAP net loss				$	(4,337	)		$	(25,340	)		$	(17,454	)		$	(79,172	)

(1)		Adjusted operating margins for the three months ended March 31, 2022 and 2021 were (2.5)% and (18.3)%, and were (2.9)% and (19.7)% for the nine months ended March 31, 2022 and 2021, respectively, and are calculated as non-GAAP operating loss divided by U.S. GAAP revenue for each respective period.
(2)		Based on projected statutory effective tax rate analyses, the non-GAAP tax provision was calculated to be approximately 1% for the three and nine months ended March 31, 2022 and 2021 for all non-GAAP operating expense adjustments.

REGIS CORPORATION
Reconciliation Of Selected U.S. GAAP To Non-GAAP Financial Measures
(Dollars in thousands, except per share data)
(Unaudited)
Reconciliation of U.S. GAAP net loss per diluted share to non-GAAP net loss per diluted share
		Three Months Ended March 31,								Nine Months Ended March 31,
			2022				2021				2022				2021
U.S. GAAP net loss per diluted share		$	(0.608	)		$	(0.301	)		$	(1.010	)		$	(2.199	)
Inventory reserve (1)			0.139				—				0.147				—
CEO Transition (1)			0.001				0.008				(0.011	)			(0.027	)
Distribution center fees (1)			—				—				0.007				—
Professional fees and settlements (1)			0.015				0.014				0.043				0.094
Severance (1)			0.002				0.023				0.047				0.089
Lease liability benefit (1)			(0.008	)			(0.083	)			(0.076	)			(0.311	)
Lease termination fees (1)			0.005				(0.004	)			0.042				0.180
Real estate fees (1)			—				0.004				0.001				0.015
Asset retirement obligation (1)			0.007				0.021				0.021				0.095
Long-lived asset impairment (1)			0.007				0.023				0.013				0.270
Goodwill impairment (1)			0.345				—				0.370				—
Gain on distribution centers (1)			—				(0.409	)			—				(0.410	)
Non-recurring, non-operating income (1)			—				—				(0.002	)			—
Non-GAAP net loss per diluted share (2)		$	(0.095	)		$	(0.704	)		$	(0.408	)		$	(2.204	)
U.S. GAAP Weighted average shares - basic and diluted			45,886				36,011				42,789				35,929
Non-GAAP Weighted average shares - diluted			45,886				36,011				42,789				35,929

(1)		Based on projected statutory effective tax rate analyses, the non-GAAP tax provision was calculated to be approximately 1% for the three and nine months ended March 31, 2022 and 2021 for all non-GAAP operating expense adjustments.
(2)		Total is a recalculation; line items calculated individually may not sum to total due to rounding.

REGIS CORPORATION
Reconciliation Of Reported U.S. GAAP Net Loss To Adjusted EBITDA, A Non-GAAP Financial Measure
(Dollars in thousands)
(Unaudited)

Adjusted EBITDA

EBITDA represents U.S. GAAP net loss for the respective period excluding interest expense, income taxes and depreciation and amortization expense. The Company defines adjusted EBITDA, as EBITDA excluding identified items impacting comparability for each respective period. For the three and nine months ended March 31, 2022 and 2021, the items impacting comparability consisted of the items identified in the non-GAAP reconciling items for the respective periods. The impacts of the income tax provision adjustments associated with the above items are already included in the U.S. GAAP reported net loss to EBITDA reconciliation, therefore there is no adjustment needed for the reconciliation from EBITDA to adjusted EBITDA.

		Three Months Ended March 31, 2022
		Franchise				Company-owned				Consolidated (1)(2)
Consolidated reported net loss, as reported (U.S. GAAP)		$	(17,791	)		$	(3,707	)		$	(27,918	)
Interest expense, as reported			3,403				—				3,403
Income taxes, as reported			(1,270	)			—				(1,270	)
Depreciation and amortization, as reported			1,592				405				1,997
Long-lived asset impairment, as reported			322				5				327
EBITDA (as defined above)		$	(13,744	)		$	(3,297	)		$	(23,461	)
Inventory reserve, as reported (2)			—				—				6,420
CEO transition			50				—				50
Professional fees and settlements			713				—				713
Severance			33				71				104
Lease liability benefit			(99	)			(258	)			(357	)
Lease termination fees			6				219				225
Goodwill impairment, as reported			16,000				—				16,000
Adjusted EBITDA, non-GAAP financial measure		$	2,959			$	(3,265	)		$	(306	)

		Three Months Ended March 31, 2021
		Franchise				Company-owned				Consolidated (1)
Consolidated reported net income (loss), as reported (U.S. GAAP)		$	1,776			$	(12,623	)		$	(10,847	)
Interest expense, as reported			3,163				—				3,163
Income taxes, as reported			(333	)			—				(333	)
Depreciation and amortization, as reported			1,933				1,687				3,620
Long-lived asset impairment, as reported			22				811				833
EBITDA (as defined above)		$	6,561			$	(10,125	)		$	(3,564	)
CEO transition			300				—				300
Professional fees and settlements			480				—				480
Severance			848				—				848
Lease liability benefit			(308	)			(2,701	)			(3,009	)
Lease termination fees			—				(147	)			(147	)
Real estate fees			—				158				158
Gain on distribution centers			(14,878	)			—				(14,878	)
Adjusted EBITDA, non-GAAP financial measure		$	(6,997	)		$	(12,815	)		$	(19,812	)

(1)		Consolidated EBITDA margins for the three months ended March 31, 2022 and 2021 were (36.2)% and (3.6)%, respectively, and are calculated as EBITDA (as defined above) divided by U.S. GAAP revenue for each respective period. Consolidated adjusted EBITDA margins for the three months ended March 31, 2022 and 2021 were (0.5)% and (19.8)%, respectively, and are calculated as adjusted EBITDA (as defined above) divided by U.S. GAAP revenue for each respective period.
(2)		This charge, primarily related to reserving for personal protective equipment acquired as a result of the COVID-19 pandemic, relates to the wind down of our distribution centers and is reviewed separately from the segment results by the chief operating decision maker. Consolidated results will not cross foot as the inventory reserve is not part of the Company's segments.

		Nine Months Ended March 31, 2022
		Franchise				Company-owned				Consolidated (1)(2)
Consolidated reported net loss, as reported (U.S. GAAP)		$	(28,856	)		$	(7,948	)		$	(43,224	)
Interest expense, as reported			10,158				—				10,158
Income taxes, as reported			(1,482	)			—				(1,482	)
Depreciation and amortization, as reported			4,718				1,128				5,846
Long-lived asset impairment, as reported			450				92				542
EBITDA (as defined above)		$	(15,012	)		$	(6,728	)		$	(28,160	)
Inventory reserve, as reported (2)			—				—				6,420
CEO transition			(466	)			—				(466	)
Distribution center fees			285				—				285
Professional fees and settlements			1,873				—				1,873
Severance			1,944				71				2,015
Lease liability benefit			(248	)			(3,036	)			(3,284	)
Lease termination fees			100				1,703				1,803
Real estate fees			—				40				40
Goodwill impairment, as reported			16,000				—				16,000
Non-recurring, non-operating income			(100	)			—				(100	)
Adjusted EBITDA, non-GAAP financial measure		$	4,376			$	(7,950	)		$	(3,574	)

		Nine Months Ended March 31, 2021
		Franchise				Company-owned				Consolidated (1)
Consolidated reported net loss, as reported (U.S. GAAP)		$	(28,252	)		$	(50,739	)		$	(78,991	)
Interest expense, as reported			10,626				—				10,626
Income taxes, as reported			(1,368	)			—				(1,368	)
Depreciation and amortization, as reported			6,304				11,080				17,384
Long-lived asset impairment, as reported			726				9,091				9,817
EBITDA (as defined above)		$	(11,964	)		$	(30,568	)		$	(42,532	)
CEO transition			(994	)			—				(994	)
Professional fees and settlements			3,422				—				3,422
Severance			3,239				—				3,239
Lease liability benefit			(606	)			(10,689	)			(11,295	)
Lease termination fees			—				6,523				6,523
Real estate fees			—				534				534
Gain on distribution centers			(14,878	)			—				(14,878	)
Adjusted EBITDA, non-GAAP financial measure		$	(21,781	)		$	(34,200	)		$	(55,981	)

(1)		Consolidated EBITDA margins for the nine months ended March 31, 2022 and 2021 were (13.2)% and (13.5)%, respectively, and are calculated as EBITDA (as defined above) divided by U.S. GAAP revenue for each respective period. Consolidated adjusted EBITDA margins for the nine months ended March 31, 2022 and 2021 were (1.7)% and (17.7)%, respectively, and are calculated as adjusted EBITDA (as defined above) divided by U.S. GAAP revenue for each respective period.
(2)		This charge, primarily related to reserving for personal protective equipment acquired as a result of the COVID-19 pandemic, relates to the wind down of our distribution centers and is reviewed separately from the segment results by the chief operating decision maker. Consolidated results will not cross foot as the inventory reserve is not part of the Company's segments.

REGIS CORPORATION
Reconciliation Of Reported Franchise EBITDA As A Percent Of U.S. GAAP Revenue
To EBITDA As A Percent Of Adjusted Revenue
(Dollars in thousands)
(Unaudited)
		Three Months Ended March 31,
			2022				2021
As adjusted EBITDA		$	2,959			$	(6,997	)
U.S. GAAP revenue			61,200				67,931
As adjusted EBITDA as a % of U.S. GAAP revenue (1)			4.8	%			(10.3	) %
Non-margin revenue adjustments:
Franchise rental income		$	(32,666	)		$	(31,317	)
Advertising fund contributions			(8,078	)			(5,580	)
Adjusted revenue		$	20,456			$	31,034
As adjusted EBITDA as a percent of adjusted revenue (1)			14.5	%			(22.5	) %

		Nine Months Ended March 31,
			2022				2021
As adjusted EBITDA		$	4,376			$	(21,781	)
U.S. GAAP revenue			196,164				198,335
As adjusted EBITDA as a % of U.S. GAAP revenue (1)			2.2	%			(11.0	) %
Non-margin revenue adjustments:
Franchise rental income		$	(100,200	)		$	(95,885	)
Advertising fund contributions			(24,213	)			(14,804	)
Adjusted revenue		$	71,751			$	87,646
As adjusted EBITDA as a percent of adjusted revenue (1)			6.1	%			(24.9	) %

(1)		Total is a recalculation; line items calculated individually may not sum to total due to rounding.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220509006026/en/

REGIS CORPORATION:

Kersten Zupfer

investorrelations@regiscorp.com

Source: Regis Corporation

FAQ

What were Regis Corporation's third quarter earnings for 2022?

Regis Corporation reported a third quarter revenue of $64.7 million and a net loss of $27.9 million.

How much did Regis Corporation's royalty revenue grow in Q3 2022?

Royalty revenue increased by 23.1% in the third quarter of 2022.

What was the adjusted EBITDA for Regis Corporation's Franchise segment in Q3 2022?

The Franchise segment posted an adjusted EBITDA of $3.0 million in Q3 2022.

What challenges did Regis Corporation face in Q3 2022?

Regis Corporation faced labor issues and lower customer counts due to the pandemic.

How did Regis Corporation's net loss per share change in Q3 2022?

The net loss per diluted share increased to $0.61 in Q3 2022 from $0.30 in the prior year.