Regis® Reports Fourth Quarter and Full Year Results, Completion of Transformational Phase and Continued Progress on Key Foundational Initiatives

Rhea-AI Summary

Regis Corporation (NYSE: RGS) has completed its shift to a fully-franchised model, closing 1,356 company-owned salons during the fiscal year. In Q4 2021, system-wide same-store sales rose 4.2% compared to the previous year, marking a positive trend post-COVID-19. Although fourth-quarter revenue increased to $99.1 million, a significant improvement year-over-year, the company reported a net loss from continuing operations of $34.3 million. Adjusted EBITDA loss decreased to $23.2 million, showcasing financial improvement amidst challenges posed by the pandemic.

Positive

• Fourth-quarter system-wide same-store sales rose by 4.2% compared to Q4 2020.
• Total revenue for Q4 2021 increased by 64.8% to $99.1 million from $60.1 million in Q4 2020.
• Adjusted EBITDA loss decreased to $23.2 million from $33.8 million year-over-year.
• Franchise revenue grew by 64.7% year-over-year to $73.8 million in Q4 2021.

Negative

• Net loss from continuing operations was $34.3 million for Q4 2021, despite improvements.
• Adjusted EBITDA loss for the full year was $79.2 million, a decline from $19.5 million in the previous year.
• Company-owned same-store sales comps declined by 7.0% in Q4 2021.

Business Transformation To A Fully-Franchised Model Considered Complete; Refranchised, Negotiated Lease Buyouts, Or Closed At Lease Term 550 Company-Owned Salons During The Fourth Quarter And 1,356 During The Fiscal Year

Nominal Sales Continue To Improve; Q4 2021 System-Wide Same-Store Sales Up 4.2% Compared To Q4 2020

Corporate Re-Organization And Zero-Based Budgeting Process Finalized, Resulting In A Right-Sized G&A Structure To Support Regis As A Franchisor

Continued Rollout Of Proprietary Technology Platform Opensalon^® Pro; Over 2,100 Salons, Representing 37% Of U.S. Franchise Salons, Are Now Running Or Have Signed Contracts To Install

MINNEAPOLIS--(BUSINESS WIRE)-- Regis Corporation (NYSE: RGS):

		Three Months Ended June 30,								Twelve Months Ended June 30,
(Dollars in thousands)		2021				2020				2021				2020
Consolidated revenue		$	99,130			$	60,143			$	415,113			$	669,729
System-wide revenue (1)		$	293,981			$	119,417			$	1,086,024			$	1,367,567
System-wide same-store sales comps		4.2		%		(20.2		)%		(25.8		)%		(4.4		)%
Two-year system-wide same-store sales comps		(21.0		)%		N/A				(28.3		)%		N/A
Operating loss		$	(27,265	)		$	(68,567	)		$	(104,152	)		$	(145,338	)
Loss from continuing operations		$	(34,339	)		$	(73,654	)		$	(113,331	)		$	(172,194	)
Diluted loss per share from continuing operations		$	(0.95	)		$	(2.05	)		$	(3.15	)		$	(4.79	)
EBITDA (2)		$	(26,677	)		$	(37,478	)		$	(69,210	)		$	(108,947	)
as a percent of revenue		(26.9		)%		(62.3		)%		(16.7		)%		(16.3		)%
As adjusted (2)
Net loss, as adjusted		$	(26,500	)		$	(36,211	)		$	(105,672	)		$	(21,714	)
Diluted loss per share, as adjusted		$	(0.74	)		$	(1.01	)		$	(2.94	)		$	(0.60	)
EBITDA, as adjusted (2)		$	(23,246	)		$	(33,845	)		$	(79,225	)		$	19,512
as a percent of revenue		(23.5		)%		(56.3		)%		(19.1		)%		2.9		%

_______________________________________________________________________________

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

Regis Corporation (NYSE: RGS), a leader in the haircare industry, whose primary business is franchising technology-enabled hair salons, today reported a fourth quarter 2021 net loss from continuing operations of $34.3 million, or $0.95 loss per diluted share as compared to net loss of $73.7 million or $2.05 loss per diluted share in the fourth quarter of 2020. The Company's fourth quarter 2021 reported results included $7.8 million of discrete items. Excluding discrete items, the Company reported fourth quarter 2021 adjusted net loss of $26.5 million, or $0.74 loss per diluted share as compared to adjusted net loss of $36.2 million, or $1.01 per diluted share for the same period last year. The year-over-year improvement in adjusted net loss was driven primarily by government-mandated salon closures in the prior year due to COVID-19. The improvement in adjusted net loss was partially offset by an increase in the loss from the sale of salons to franchisees of $7.1 million year-over-year due to lower proceeds per salon.

Total revenue in the quarter of $99.1 million increased $39.0 million, or 64.8%, year-over-year driven primarily by mandated salon closures in the prior year due to the COVID-19 pandemic.

Fourth quarter adjusted EBITDA loss of $23.2 million decreased $10.6 million, versus adjusted EBITDA loss of $33.8 million in the same period last year. Excluding the $8.2 million adjusted loss and $1.2 adjusted loss from the sale of company-owned salons during the current and prior year quarter, respectively, adjusted EBITDA loss of $15.0 million was $17.7 million favorable versus the same period last year. This was driven primarily by government-mandated salon closures in response to COVID-19 in the prior year.

On a full year basis, adjusted EBITDA loss of $79.2 million increased $98.7 million versus adjusted EBITDA income of $19.5 million in the same period last year. Excluding the $16.7 million loss and $49.7 million gain from the sale of company-owned salons during the current and prior year, respectively, adjusted EBITDA loss of $62.5 million was $32.4 million unfavorable versus the same period last year and was driven primarily by the impact of COVID-19 on same-store sales in the current year and the elimination of EBITDA that was generated in the prior year from the net 747 company-owned salons that were sold and converted to the Company’s asset-light franchise portfolio over the past 12 months.

Felipe Athayde, President and Chief Executive Officer, commented, "While we are still feeling the effects of the pandemic, Regis is well-positioned heading into fiscal year 2022 due to our achievements during a time of unprecedented challenges in fiscal year 2021. The Regis of today is an entirely different company when compared to the beginning of fiscal year 2021, from our management team to our technology platform and everything in between. We have a new team, a brand-centric focus to drive sales, the right business model for growth, and the right-sized organizational structure and technology platform to support and drive that growth."

Fourth Quarter Segment Results

Franchise Salons

		Three Months Ended June 30,								Increase (Decrease)			Twelve Months Ended June 30,								Increase (Decrease)
(Dollars in millions) (1)		2021				2020							2021				2020
Revenue
Product		$	15.6			$	7.2			$	8.4		$	56.7			$	50.4			$	6.3
Product sold to TBG locations		—				—				—			—				2.0				(2.0		)
Product		$	15.6			$	7.2			$	8.4		$	56.7			$	52.4			$	4.3
Royalties and fees		26.7				7.3				19.4			88.1				73.4				14.7
Franchise rental income		31.5				30.3				1.2			127.4				127.2				0.2
Total franchised salons revenue		$	73.8			$	44.8			$	29.0		$	272.1			$	253.0			$	19.1
Franchise same-store sales comps (2)		4.4		%		(20.4		)%					(24.5		)%		(4.4		)%
Franchise two-year same-store sales comps (2)		(20.2		)%		N/A							(27.2		)%		N/A
EBITDA, as Adjusted		$	11.3			$	1.4			$	9.9		$	41.0			$	37.9			$	3.1
as a percent of revenue		15.3		%		3.1		%					15.1		%		15.0		%
as a percent of adjusted revenue (3)		32.1		%		9.7		%					33.4		%		34.3		%
Total Franchise Salons		5,563				5,209				354
as a percent of total Franchise and Company-owned salons		95.3		%		76.1		%

_______________________________________________________________________________

(1)			Variances calculated on amounts shown in millions may result in rounding differences.
(2)			TBG is excluded from same-store sales in all periods
(3)			Adjusted revenue excludes non-margin revenue. See Non-GAAP reconciliation

Fourth quarter Franchise revenue was $73.8 million, a $29.0 million, or 64.7% increase compared to the prior year quarter. Royalties and fees were $26.7 million, a $19.4 million, or 265.8% increase versus the same period last year. Product sales to franchisees of $15.6 million increased $8.4 million. Both increases were due to government-mandated salon closures in the prior year. Franchise adjusted EBITDA of $11.3 million increased $9.9 million, or 707.1% year-over-year primarily due to an increase in royalties and a decrease in bad debt.

Company-Owned Salons

		Three Months Ended June 30,								Increase (Decrease)				Twelve Months Ended June 30,								Increase (Decrease)
(Dollars in millions) (1)		2021				2020								2021				2020
Total Revenue		$	25.3			$	15.3			$	10.0			$	143.0			$	416.7			$	(273.7	)
Company-owned same-store sales comps		(7.0		)%		(18.9		)%						(33.4		)%		(4.4		)%
Company-owned two-year same-store sales comps		(30.4		)%		N/A								(35.2		)%		N/A
EBITDA, as Adjusted		$	(13.3	)		$	(21.6	)		$	8.3			$	(47.5	)		$	(6.6	)		$	(40.9	)
as a percent of revenue		(52.6		)%		(141.2		)%						(33.2		)%		(1.6		)%
Total Company-owned Salons		276				1,632				(1,356		)
as a percent of total Franchise and Company-owned salons		4.7		%		23.9		%

_______________________________________________________________________________

(1)

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

Fourth quarter revenue for the Company-owned salon segment increased $10.0 million versus the prior year to $25.3 million. The year-over-year increase in revenue was driven by the government-mandated closure of salons during fiscal year 2020 due to the COVID-19 pandemic.

Fourth quarter adjusted EBITDA loss of $13.3 million decreased $8.4 million versus the same period last year driven primarily by the government-mandated closure of salon in fiscal year 2020 due to the COVID-19 pandemic.

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 fourth quarter results on August 26, 2021, 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. 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 June 30, 2021, the Company franchised, owned or held ownership interests in 5,917 worldwide locations. 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 the Delta variant; 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 and our franchisees' ability to attract, train and retain talented stylists; financial performance of our franchisees; success of the sale of salons to 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 on timing and amounts; compliance with credit facility covenants and access to the existing revolving credit facility; ability to re-finance our existing credit facility or the ability to re-finance at a similar rate; if our capital investments in technology do 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; 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; 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 of 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 (Dollars in thousands, except per share data)
		June 30,
		2021				2020
ASSETS
Current assets:
Cash and cash equivalents		$	19,191			$	113,667
Receivables, net		27,372				31,030
Inventories		22,993				62,597
Other current assets		17,103				19,138
Total current assets		86,659				226,432
Property and equipment, net		23,113				57,176
Goodwill		229,582				227,457
Other intangibles, net		3,761				4,579
Right of use asset		611,880				786,216
Other assets		41,388				40,934
Total assets		$	996,383			$	1,342,794
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	27,157			$	50,918
Accrued expenses		54,857				48,825
Short-term lease liability		116,471				137,271
Total current liabilities		198,485				237,014
Long-term debt, net		186,911				177,500
Long-term lease liability		518,866				680,454
Long-term financing liabilities		—				27,981
Other non-current liabilities		75,075				94,142
Total liabilities		979,337				1,217,091
Commitments and contingencies
Shareholders' equity:
Common stock, $0.05 par value; issued and outstanding, 35,795,844 and 35,625,716 common shares at June 30, 2021 and 2020, respectively		1,790				1,781
Additional paid-in capital		25,102				22,011
Accumulated other comprehensive income		9,543				7,449
Retained (deficit) earnings		(19,389		)		94,462
Total shareholders' equity		17,046				125,703
Total liabilities and shareholders' equity		$	996,383			$	1,342,794

REGIS CORPORATION CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Dollars and shares in thousands, except per share data)
		Three Months Ended June 30,								Twelve Months Ended June 30,
		2021				2020				2021				2020
Revenues:
Service		$	18,080			$	9,405			$	108,120			$	331,538
Product		22,879				13,070				91,544				137,586
Royalties and fees		26,664				7,340				88,057				73,402
Franchise rental income		31,507				30,328				127,392				127,203
Total revenue		99,130				60,143				415,113				669,729
Operating expenses:
Cost of service		12,703				9,615				79,144				222,279
Cost of product		24,327				9,441				79,167				84,698
Site operating expenses		14,507				8,611				51,463				71,543
General and administrative		28,014				25,766				105,433				130,953
Rent		6,802				12,958				40,930				76,382
Franchise rent expense		31,507				30,328				127,392				127,203
Depreciation and amortization		5,330				9,466				22,713				36,952
Long-lived asset impairment		3,205				22,560				13,023				22,560
TBG mall restructuring		—				(35		)		—				2,333
Goodwill impairment		—				—				—				40,164
Total operating expenses		126,395				128,710				519,265				815,067
Operating loss		(27,265		)		(68,567		)		(104,152		)		(145,338		)
Other (expense) income:
Interest expense		(3,187		)		(2,907		)		(13,813		)		(7,522		)
Loss from sale of salon assets to franchisees		(8,233		)		(1,181		)		(16,696		)		(27,306		)
Interest income and other, net		286				165				15,902				3,353
Loss from continuing operations before income taxes		(38,399		)		(72,490		)		(118,759		)		(176,813		)
Income tax benefit (expense)		4,060				(1,164		)		5,428				4,619
Loss from continuing operations		(34,339		)		(73,654		)		(113,331		)		(172,194		)
Income from discontinued operations, net of income taxes		—				79				—				832
Net loss		$	(34,339	)		$	(73,575	)		$	(113,331	)		$	(171,362	)
Net loss per share:
Basic and diluted:
Loss from continuing operations		$	(0.95	)		$	(2.05	)		$	(3.15	)		$	(4.79	)
Income from discontinued operations		—				—				—				0.02
Net loss per share:, basic and diluted (1)		$	(0.95	)		$	(2.05	)		$	(3.15	)		$	(4.77	)
Weighted average common and common equivalent shares outstanding:
Basic and diluted		36,038				35,871				35,956				35,936

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(1)

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

REGIS CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in thousands)
		Twelve Months Ended June 30,
		2021			2020
Cash flows from operating activities:
Net loss		$	(113,331)		$	(171,362)
Adjustments to reconcile net loss used in operating activities
Non-cash adjustments related to discontinued operations		—			(1,098)
Depreciation and amortization		17,871			33,101
Salon asset impairment		—			3,851
Long-lived asset impairment		13,023			22,560
Deferred income taxes		(3,388)			(3,934)
Inventory reserve		12,068			—
Gain from disposal of distribution center assets		(14,997)			—
Gain from sale of company headquarters, net		—			(2,513)
Loss from sale of salon assets to franchisees, net		16,696			27,306
Goodwill impairment		—			40,164
Stock-based compensation		3,254			3,275
Amortization of debt discount and financing costs		1,839			398
Other non-cash items affecting earnings		(351)			(539)
Changes in operating assets and liabilities (1):
Receivables		(279)			(3,902)
Inventories		17,879			(2,255)
Income tax receivable		1,295			(1,804)
Other current assets		1,658			2,827
Other assets		(2,896)			(10,094)
Accounts payable		(21,669)			4,588
Accrued expenses		5,296			(27,622)
Net lease liabilities		(19,248)			276
Other non-current liabilities		(14,603)			368
Net cash used in operating activities:		(99,883)			(86,409)
Cash flows from investing activities:
Capital expenditures		(11,475)			(37,494)
Proceeds from sale of company headquarters		—			8,996
Proceeds from sale of assets to franchisees		8,437			91,616
Costs associated with sale of assets to franchisees		(261)			(2,089)
Proceeds from company-owned life insurance policies		1,200			—
Net cash (used in) provided by investing activities:		(2,099)			61,029
Cash flows from financing activities:
Borrowings on revolving credit facility		10,000			213,000
Repayments of revolving credit facility		(589)			(125,500)
Repurchase of common stock		—			(28,246)
Minority interest buyout		(562)			—
Distribution center lease payments		(724)			(769)
Taxes paid for shares withheld		(348)			(2,320)
Net cash provided by financing activities:		7,777			56,165
Effect of exchange rate changes on cash and cash equivalents		477			(284)
(Decrease) increase in cash, cash equivalents and restricted cash		(93,728)			30,501
Cash, cash equivalents and restricted cash:
Beginning of year		122,880			92,379
End of year		$	29,152		$	122,880

_______________________________________________________________________________

(1)			Changes in operating assets and liabilities exclude assets and liabilities sold or acquired.

SYSTEM-WIDE SAME-STORE SALES (1):
		Three Months Ended
		June 30, 2021									June 30, 2020
		Service			Retail			Total			Service			Retail			Total
SmartStyle		2.4	%		(14.0	)%		(1.7	)%		(17.9	)%		(17.1	)%		(17.7	)%
Supercuts		12.4			(10.1	)		10.9			(23.1	)		(12.6	)		(22.5	)
Portfolio Brands		(0.5	)		(14.7	)		(2.2	)		(16.2	)		(13.3	)		(15.9	)
Total		6.8	%		(13.2	)%		4.2	%		(20.9	)%		(14.6	)%		(20.2	)%

		Twelve Months Ended
		June 30, 2021									June 30, 2020
		Service			Retail			Total			Service			Retail			Total
SmartStyle		(26.1	)%		(28.5	)%		(26.7	)%		(3.6	)%		(10.1	)%		(5.5	)%
Supercuts		(25.9	)		(23.5	)		(25.8	)		(3.8	)		(10.7	)		(4.2	)
Portfolio Brands		(25.3	)		(20.6	)		(24.8	)		(3.3	)		(7.2	)		(3.7	)
Total		(25.8	)%		(25.5	)%		(25.8	)%		(3.6	)%		(9.4	)%		(4.4	)%

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(1)

System-wide same-store sales in fiscal year 2021 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 2020 are calculated as the total change in sales for system-wide franchise and company-owned locations that were 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. For both years, 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
		June 30,
		2021			2020
FRANCHISE SALONS:
SmartStyle/Cost Cutters in Walmart Stores		1,666			1,317
Supercuts		2,386			2,508
Portfolio Brands (1)		1,357			1,217
Total North American Salons		5,409			5,042
Total International Salons (2)		154			167
Total Franchise Salons		5,563			5,209
as a percent of total Franchise and Company-owned salons		95.3	%		76.1	%
COMPANY-OWNED SALONS:
SmartStyle/Cost Cutters in Walmart Stores		91			751
Supercuts		35			210
Portfolio Brands (1)		107			505
Mall-based (3)		43			166
Total Company-owned Salons		276			1,632
as a percent of total Franchise and Company-owned salons		4.7	%		23.9	%
OWNERSHIP INTEREST LOCATIONS:
Equity ownership interest locations		78			82
Grand Total, System-wide		5,917			6,923

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(1)			Portfolio Brands was previously referred to as Signature Style.
(2)			Canadian and Puerto Rican salons are included in the North American salon totals.
(3)			The mall-based salons were acquired from TBG on December 31, 2019. They are included in continuing operations under the Company-owned operating segment beginning January 1, 2020.

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 twelve months ended June 30, 2021 and 2020:

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:

• Employee litigation reserve
• Marketing impairment
• CEO transition
• Professional fees
• Severance expense
• Corporate office transition
• 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
• TBG restructuring
• Goodwill impairment
• Gain on distribution centers
• Goodwill derecognition
• TBG discontinued operations

REGIS CORPORATION Reconciliation Of Selected U.S. GAAP To Non-GAAP Financial Measures (Dollars in thousands, except per share data)
Reconciliation of U.S. GAAP operating loss and net loss to equivalent non-GAAP measures
				Three Months Ended June 30,								Twelve Months Ended June 30,
		U.S. GAAP financial line item		2021				2020				2021				2020
U.S. GAAP revenue				$	99,130			$	60,143			$	415,113			$	669,729
U.S. GAAP operating loss				$	(27,265	)		$	(68,567	)		$	(104,152	)		$	(145,338	)
Non-GAAP operating expense adjustments (1)
Employee litigation reserve		Site operating expenses		—				—				—				(600		)
Marketing impairment		Site operating expenses		—				1,653				—				1,653
CEO transition		General and administrative		—				—				(694		)		—
Professional fees		General and administrative		3,603				460				7,026				681
Severance		General and administrative		1,606				1,534				4,545				9,588
Corporate office transition		Rent		—				100				—				1,019
Lease liability benefit		Rent		(8,727		)		—				(20,022		)		—
Lease termination fees		Rent		7,020				—				13,544				—
Real estate fees		Rent		49				—				583				—
Asset retirement obligation		Depreciation and amortization		1,280				—				4,726				—
Long-lived asset impairment		Long-lived asset impairment		3,205				22,560				13,023				22,560
TBG restructuring		TBG restructuring		—				(35		)		—				2,333
Goodwill impairment		Goodwill impairment		—				—				—				40,164
Total non-GAAP operating expense adjustments				8,036				26,272				22,731				77,398
Non-GAAP operating loss (1)				$	(19,229	)		$	(42,295	)		$	(81,421	)		$	(67,940	)
U.S. GAAP net loss				$	(34,339	)		$	(73,575	)		$	(113,331	)		$	(171,362	)
Non-GAAP net loss adjustments:
Non-GAAP operating expense adjustments				8,036				26,272				22,731				77,398
Corporate office transition		Interest income and other, net		—				—				—				(2,513		)
Gain on distribution centers		Interest income and other, net		(120		)		—				(14,997		)		—
Goodwill derecognition		Interest income and other, net		—				—				—				76,966
Income tax impact on Non-GAAP adjustments (2)		Income taxes		(77		)		11,171				(75		)		(1,371		)
TBG discontinued operations, net of income tax		Loss from discontinued operations, net of tax		—				(79		)		—				(832		)
Total non-GAAP net loss adjustments				7,839				37,364				7,659				149,648
Non-GAAP net loss				$	(26,500	)		$	(36,211	)		$	(105,672	)		$	(21,714	)

_______________________________________________________________________________

(1)			Adjusted operating margins for the three months ended June 30, 2021 and 2020, were (19.4)% and (70.3)%, respectively, and were (19.6)% and (10.1)% for the twelve months ended June 30, 2021 and 2020, respectively, and are calculated as non-GAAP operating loss divided by non-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% and 22% for the three and twelve months ended June 30, 2021 and 2020, respectively, 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)
Reconciliation of U.S. GAAP net loss per diluted share to non-GAAP net loss per diluted share
		Three Months Ended June 30,								Twelve Months Ended June 30,
		2021				2020				2021				2020
U.S. GAAP net loss per diluted share		$	(0.953	)		$	(2.051	)		$	(3.152	)		$	(4.769	)
Employee litigation reserve (1)		—				—				—				(0.013		)
Marketing impairment (1)		—				0.036				—				0.036
CEO transition (1)		—				—				(0.019		)		—
Professional fees (1)		0.100				0.010				0.192				0.015
Severance (1)		0.044				0.034				0.125				0.208
Corporate office transition (1)		—				—				—				(0.033		)
Lease liability benefit (1)		(0.240		)		—				(0.550		)		—
Lease termination fees (1)		0.193				—				0.373				—
Real estate fees (1)		0.001				—				0.016				—
Asset retirement obligation (1)		0.035				—				0.130				—
Long-lived asset impairment (1)		0.088				0.492				0.359				0.490
TBG restructuring (1)		—				(0.001		)		—				0.050
Goodwill impairment (1)		—				—				—				0.872
Goodwill derecognition (1)		—				—				—				1.671
Gain on distribution centers (1)		(0.003		)		—				(0.413		)		—
TBG discontinued operations, net of tax		—				(0.002		)		—				(0.023		)
CARES Act		—				—				—				0.408
Tax asset valuation		—				0.473				—				0.484
Impact of change in weighted average shares (3)		—				—				—				—
Non-GAAP net loss per diluted share (2) (3)		$	(0.735	)		$	(1.009	)		$	(2.939	)		$	(0.604	)
U.S. GAAP Weighted average share - basic and diluted		36,038				35,871				35,956				35,936
Non-GAAP Weighted average shares - diluted (2)		36,038				35,871				35,956				35,936

_______________________________________________________________________________

(1)			Based on projected statutory effective tax rate analyses, the non-GAAP tax provision was calculated to be approximately 1% for the three and twelve months ended June 30, 2021, and 22% for the three and twelve months ended June 30, 2020, for all non-GAAP operating expense adjustments.
(2)			Total is a recalculation; line items calculated individually may not sum to total due to rounding.
(3)			Non-GAAP net loss per share reflects the weighted average shares associated with non-GAAP net loss, which includes the dilutive effect of common stock equivalents. The impact of the adjustments described above result in the impact of the common stock equivalents to be dilutive to the non-GAAP net loss per share. For the three months and twelve months ended June 30, 2021 and 2020, the impact of the adjustments described above resulted in a non-GAAP net loss, therefore, the impact of the common stock equivalents is not dilutive.

REGIS CORPORATION

Reconciliation Of Reported U.S. GAAP Net Income (Loss) To Adjusted EBITDA, A Non-GAAP Financial Measure

(Dollars in thousands)

(Unaudited)

Adjusted EBITDA

EBITDA represents U.S. GAAP net income (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 twelve months ended June 30, 2021 and 2020, 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 income (loss) to EBITDA reconciliation, therefore there is no adjustment needed for the reconciliation from EBITDA to adjusted EBITDA.

		Three Months Ended June 30, 2021
		Franchise				Company-owned				Corporate				Consolidated (1)
Consolidated reported net income (loss), as reported (U.S. GAAP)		$	11,917			$	(19,292	)		$	(26,964	)		$	(34,339	)
Interest expense, as reported		—				—				3,187				3,187
Income taxes, as reported		—				—				(4,060		)		(4,060		)
Depreciation and amortization, as reported		153				3,651				1,526				5,330
Long-lived asset impairment, as reported		—				3,205				—				3,205
EBITDA (as defined above)		$	12,070			$	(12,436	)		$	(26,311	)		$	(26,677	)
Professional fees		—				—				3,603				3,603
Severance		—				—				1,606				1,606
Lease liability benefit		(716		)		(8,011		)		—				(8,727		)
Lease termination fees		(103		)		7,123				—				7,020
Real estate fees		21				28				—				49
Gain on distribution centers		—				—				(120		)		(120		)
Adjusted EBITDA, non-GAAP financial measure		$	11,272			$	(13,296	)		$	(21,222	)		$	(23,246	)

		Three Months Ended June 30, 2020
		Franchise				Company-owned				Corporate				Consolidated (1)
Consolidated reported net loss, as reported (U.S. GAAP)		$	(531	)		$	(49,763	)		$	(23,281	)		$	(73,575	)
Interest expense, as reported		—				—				2,907				2,907
Income taxes, as reported		—				—				1,164				1,164
Depreciation and amortization, as reported		260				7,269				1,937				9,466
Long-lived asset impairment, as reported		1,712				20,848				—				22,560
EBITDA (as defined above)		$	1,441			$	(21,646	)		$	(17,273	)		$	(37,478	)
Professional fees		—				—				460				460
Severance		—				—				1,534				1,534
Corporate office transition		—				—				100				100
TBG restructuring		(35		)		—				—				(35		)
Marketing impairment		—				—				1,653				1,653
TBG discontinued operations, net of tax		—				—				(79		)		(79		)
Adjusted EBITDA, non-GAAP financial measure		$	1,406			$	(21,646	)		$	(13,605	)		$	(33,845	)

_______________________________________________________________________________

(1)

Consolidated EBITDA margins for the three months ended June 30, 2021, and 2020, were (26.9)% and (62.3)%, respectively, and are calculated as EBITDA (as defined above) divided by U.S. GAAP revenue for each respective period. Consolidated adjusted EBITDA margin for the three months ended June 30, 2021, and 2020 were (23.5)% and (56.3)%, respectively, and are calculated as consolidated adjusted EBITDA (as defined above) divided by consolidated adjusted revenue for each respective period.

		Twelve Months Ended June 30, 2021
		Franchise				Company-owned				Corporate				Consolidated (1)
Consolidated reported net income (loss), as reported (U.S. GAAP)		$	40,652			$	(70,032	)		$	(83,951	)		$	(113,331	)
Interest expense, as reported		—				—				13,813				13,813
Income taxes, as reported		—				—				(5,428		)		(5,428		)
Depreciation and amortization, as reported		1,049				14,730				6,934				22,713
Long-lived asset impairment, as reported		726				12,297				—				13,023
EBITDA (as defined above)		$	42,427			$	(43,005	)		$	(68,632	)		$	(69,210	)
CEO transition		—				—				(694		)		(694		)
Professional fees		—				—				7,026				7,026
Severance		—				—				4,545				4,545
Lease liability benefit		(1,322		)		(18,700		)		—				(20,022		)
Lease termination fees		(103		)		13,647				—				13,544
Real estate fees		22				561				—				583
Gain on distribution centers		—				—				(14,997		)		(14,997		)
Adjusted EBITDA, non-GAAP financial measure		$	41,024			$	(47,497	)		$	(72,752	)		$	(79,225	)

		Twelve Months Ended June 30, 2020
		Franchise			Company-owned				Corporate				Consolidated (1)
Consolidated reported net income (loss), as reported (U.S. GAAP)		$	32,886		$	(96,128	)		$	(108,120	)		$	(171,362	)
Interest expense, as reported		—			—				7,522				7,522
Income taxes, as reported		—			—				(4,619		)		(4,619		)
Depreciation and amortization, as reported		922			29,113				6,917				36,952
Long-lived asset impairment, as reported		1,712			20,848				—				22,560
EBITDA (as defined above)		$	35,520		$	(46,167	)		$	(98,300	)		$	(108,947	)
Employee litigation reserve		—			(600		)		—				(600		)
Marketing impairment		—			—				1,653				1,653
Professional fees		—			—				681				681
Severance		—			—				9,588				9,588
Corporate office transition		—			—				(1,494		)		(1,494		)
TBG restructuring		2,333			—				—				2,333
Goodwill impairment, as reported		—			40,164				—				40,164
Goodwill derecognition		—			—				76,966				76,966
TBG discontinued operations, net of tax		—			—				(832		)		(832		)
Adjusted EBITDA, non-GAAP financial measure		$	37,853		$	(6,603	)		$	(11,738	)		$	19,512

_______________________________________________________________________________

(1)

Consolidated EBITDA margins for the twelve months ended June 30, 2021, and 2020, were (16.7)% and (16.3)%, respectively, and are calculated as EBITDA (as defined above) divided by U.S. GAAP revenue for each respective period. Consolidated adjusted EBITDA margin for the twelve months ended June 30, 2021, and 2020, were (19.1)% and 2.9%, respectively, and are calculated as consolidated adjusted EBITDA (as defined above) divided by consolidated adjusted revenue for each respective period.

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 June 30,
		2021				2020
As Adjusted EBITDA		$	11,272			$	1,406
U.S. GAAP revenue		73,813				44,802
As Adjusted EBITDA as a % of U.S. GAAP revenue		15.3		%		3.1		%
Non-margin revenue adjustments:
Franchise rental income		(31,507		)		(30,328		)
Ad fund revenue		(7,218		)		—
Adjusted revenue		$	35,088			$	14,474
As Adjusted EBITDA as a percent of adjusted revenue (1)		32.1		%		9.7		%

		Twelve Months Ended June 30,
		2021				2020
As Adjusted EBITDA		$	41,024			$	37,853
U.S. GAAP revenue		272,148				253,026
As Adjusted EBITDA as a % of U.S. GAAP revenue		15.1		%		15.0		%
Non-margin revenue adjustments:
Franchise rental income		(127,392		)		(127,203		)
Ad fund revenue		(22,023		)		(13,341		)
TBG product sales		—				(2,010		)
Adjusted revenue		$	122,733			$	110,472
As Adjusted EBITDA as a percent of adjusted revenue (1)		33.4		%		34.3		%

_______________________________________________________________________________

(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/20210825005828/en/

REGIS CORPORATION:

Kersten Zupfer

investorrelations@regiscorp.com

Source: Regis Corporation

FAQ

What were Regis Corporation's Q4 2021 financial results?

In Q4 2021, Regis Corporation reported a revenue of $99.1 million and a net loss from continuing operations of $34.3 million, or $0.95 loss per diluted share.

How did Regis Corporation's same-store sales perform in Q4 2021?

Regis Corporation experienced a 4.2% increase in system-wide same-store sales compared to Q4 2020.

What is the adjusted EBITDA for Regis Corporation in Q4 2021?

The adjusted EBITDA loss for Q4 2021 was $23.2 million, which is an improvement compared to the loss of $33.8 million in Q4 2020.

How many salons did Regis Corporation close during the fiscal year?

Regis Corporation closed a total of 1,356 company-owned salons during the fiscal year.

What is the future outlook for Regis Corporation following the recent changes?

Regis Corporation aims to leverage its new franchising model and technology platform for growth heading into fiscal year 2022.