Sally Beauty Holdings Reports Fourth Quarter and Full Year Fiscal 2023 Results
- Consolidated net sales for Q4 decreased by 4.3% compared to the prior year, with a 1.6% decline in comparable sales.
- GAAP gross margin increased by 240 basis points to 50.6% in Q4, driven primarily by non-cash inventory write-downs of $19.4 million related to distribution center consolidation and store optimization plan.
- The strategic acquisition of assets from Goldwell of New York is expected to result in an incremental sales benefit of approximately 1% to the Beauty Systems Group segment in fiscal 2024.
- None.
-
Generated Q4 Cash Flow from Operations of
and Operating Free Cash Flow of$117 Million $90 Million -
Beauty Systems Group Announces Strategic Acquisition of Assets from Goldwell of
New York -
Executed
in Share Repurchases and Repaid the Outstanding Balance of$15 Million on ABL Credit Facility$16 Million - Provides Fiscal 2024 Guidance
Fiscal 2023 Fourth Quarter Summary
-
Consolidated net sales of
, a decrease of$921 million 4.3% compared to the prior year; -
Consolidated comparable sales decline of
1.6% ; -
Global e-commerce sales of
, representing$87 million 9.4% of net sales; -
GAAP gross margin increased 240 basis points to
50.6% , driven primarily by the prior year’s non-cash inventory write-down of related to the distribution center consolidation and store optimization plan; Adjusted Gross Margin increased 50 basis points to$19.4 million 50.6% ; -
GAAP operating earnings of
and GAAP operating margin of$77 million 8.3% ; Adjusted Operating Earnings of and Adjusted Operating Margin of$79 million 8.6% ; -
GAAP diluted net earnings per share of
and Adjusted Diluted Net Earnings Per Share of$0.39 ; and$0.42 -
Cash flow from operations of
and Operating Free Cash Flow of$117 million .$90 million
Fiscal 2023 Full Year Summary
-
Consolidated net sales of
, a decrease of$3.73 billion 2.3% compared to the prior year, primarily driven by the Company’s store optimization plan; -
Consolidated comparable sales increase of
1.4% ; -
Global e-commerce sales were
, representing$348 million 9.3% of net sales; -
GAAP gross margin increased 60 basis points to
50.9% and Adjusted Gross Margin decreased 10 basis points to50.8% ; -
GAAP operating earnings of
and GAAP operating margin of$325 million 8.7% , Adjusted Operating Earnings of and Adjusted Operating Margin of$341 million 9.1% ; -
GAAP diluted net earnings per share of
and Adjusted Diluted Net Earnings Per Share of$1.69 ; and$1.83 -
Cash flow from operations of
and Operating Free Cash Flow of$249 million .$159 million
“We are pleased to report full year financial results in line with the expectations we laid out at the beginning of fiscal 2023,” said Denise Paulonis, president and chief executive officer. “We drove a comparable sales gain, maintained healthy gross margins and generated strong cash flow from operations against a rapidly shifting backdrop. We also advanced our consumer-centric strategies during the year, launching new concepts and bringing new services to the market, while delivering unparalleled product innovation to both our Sally and BSG customers.”
“Our teams are executing well on our strategic initiatives designed to reignite top line growth and improve profitability -- enhancing our customer centricity, growing our high margin own brands and amplifying innovation, and increasing the efficiency of our operations. Building on our strong foundation, we are focused on the future and remain committed to creating value for our shareholders.”
Beauty Systems Group Announces Strategic Acquisition of Assets from Goldwell of
In September, Beauty Systems Group acquired certain assets from Goldwell of
Fiscal 2023 Fourth Quarter Operating Results
Fourth quarter consolidated net sales were
Consolidated comparable sales declined
Consolidated gross profit for the fourth quarter was
Selling, general and administrative (SG&A) expenses totaled
GAAP operating earnings and operating margin in the fourth quarter were
GAAP net earnings in the fourth quarter were
Balance Sheet and Cash Flow
As of September 30, 2023, the Company had cash and cash equivalents of
Fourth quarter cash flow from operations was
On September 13, 2023, the Company repriced its term loan B, reducing the pricing from SOFR (secured overnight financing rate) plus a spread of 250 basis points to SOFR plus a spread of 225 basis points. The 25 basis point reduction in the spread results in approximately
Fiscal 2023 Fourth Quarter Segment Results
Sally Beauty Supply
-
Segment net sales were
in the quarter, a decrease of$524.6 million 5.3% compared to the prior year. The segment operated 291 fewer stores at the end of the quarter compared to the prior year and had a favorable impact of 200 basis points from foreign currency translation on reported sales. At constant currency, segment e-commerce sales were or$32 million 6.1% of segment net sales for the quarter. -
Segment comparable sales decreased
1.2% in the fourth quarter. The Sally Beauty businesses in theU.S. andCanada represented76% of segment net sales for the quarter and had a comparable sales decrease of2.0% , primarily reflecting lower traffic and inflationary pressures that impacted consumer behavior. - At the end of the quarter, net store count was 3,148.
-
GAAP gross margin increased by 260 basis points to
59.2% compared to the prior year. The increase was driven primarily by the prior year’s non-cash inventory write-down related to the Company’s previously announced distribution center consolidation and store optimization plan. Excluding the inventory write-down, Adjusted Gross Margin increased 90 basis points to59.2% compared to the prior year. The increase was driven primarily by higher product margin due to higher owned brand penetration, and lower distribution and freight costs from supply chain efficiencies, partially offset by an unfavorable sales mix shift between Sally US (higher margin) and Sally international (lower margin). -
GAAP operating earnings were
compared to$78.5 million in the prior year, representing a decrease of$80.5 million 2.5% . GAAP operating margin increased to15.0% compared to14.5% in the prior year.
Beauty Systems Group
-
Segment net sales were
in the quarter, a decrease of$396.8 million 2.9% compared to the prior year. The segment operated 17 fewer stores at the end of the quarter compared to the prior year and had an unfavorable impact of 20 basis points on reported sales from foreign currency translation. At constant currency, segment e-commerce sales were or$55 million 13.9% of segment net sales for the quarter. -
Segment comparable sales decreased
2.3% in the fourth quarter, primarily reflecting the continuation of stylist demand trends seen over the last several quarters. - At the end of the quarter, net store count was 1,338.
-
GAAP gross margin increased 260 basis points to
39.3% in the quarter compared to the prior year, driven primarily by the prior year’s non-cash inventory write-down related to the Company’s previously announced distribution center consolidation and store optimization plan. Excluding the inventory write-down, Adjusted Gross Margin increased 40 basis points to39.3% compared to the prior year. The increase was driven primarily by higher product margin and a favorable sales mix shift between stores (higher margin) and full service (lower margin). -
GAAP operating earnings were
in the quarter, an increase of$45.7 million 39.3% compared to in the prior year. GAAP operating margin in the quarter was$32.8 million 11.5% compared to8.0% in the prior year. - At the end of the quarter, there were 670 distributor sales consultants compared to 718 in the prior year.
Fiscal Year 2024 Guidance
The Company remains focused on driving top line growth through its strategic initiatives, including product innovation, expanded distribution at Beauty Systems Group, and new concepts and services. Additionally, the Company’s Fuel for Growth initiative positions the Company to capture gross margin and SG&A benefits, while also investing for growth and returning value to shareholders through its share repurchase program.
The Company is providing the following guidance for the full fiscal year 2024:
- Net sales and comparable sales are expected to be approximately flat compared to the prior year, reflecting growth from the Company’s strategic initiatives, offset by anticipated pressure on consumer spending;
-
Gross Margin is expected to remain above
50% ; -
Adjusted Operating Margin is expected to be at least
9.0% ; -
Operating Cash Flow is expected to be at least
; and$260 million -
Capital expenditures are expected to be approximately
.$100 million
* The Company does not provide a reconciliation for forward-looking non-GAAP financial measures where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the occurrence and the financial impact of various items that have not yet occurred, are out of the Company’s control or cannot be reasonably predicted. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.
Conference Call and Where You Can Find Additional Information
The Company will hold a conference call and audio webcast today to discuss its financial results and its business at approximately 7:30 a.m. Central Time today, November 14, 2023. During the conference call, the Company may discuss and answer one or more questions concerning business and financial matters and trends affecting the Company. The Company’s responses to these questions, as well as other matters discussed during the conference call, may contain or constitute material information that has not been previously disclosed. Simultaneous to the conference call, an audio webcast of the call will be available via a link on the Company’s website, sallybeautyholdings.com/investor-relations. The conference call can be accessed by dialing (844) 867-6169 (International: (409) 207-6975) and referencing the access code 2762682#. The teleconference will be held in a “listen-only” mode for all participants other than the Company’s current sell-side and buy-side investment professionals. A replay of the earnings conference call will be available starting at 10:30 a.m. Central Time, November 14, 2023, through November 28, 2023, by dialing (866) 207-1041 (International: (402) 970-0847) and referencing access code 5652142#. Also, a website replay will be available on sallybeautyholdings.com/investor-relations.
About Sally Beauty Holdings, Inc.
Sally Beauty Holdings, Inc. (NYSE: SBH), as the leader in professional hair color, sells and distributes professional beauty supplies globally through its Sally Beauty Supply and Beauty Systems Group businesses. Sally Beauty Supply stores offer up to 7,000 products for hair color, hair care, nails, and skin care through proprietary brands such as Ion®, Strawberry Leopard®, Generic Value Products®, Beyond the Zone® and Silk Elements® as well as professional lines such as Wella®, Clairol®, OPI®, Conair® and L’Oreal®. Beauty Systems Group stores, branded as CosmoProf® or Armstrong McCall® stores, along with its outside sales consultants, sell up to 8,000 professionally branded products including Paul Mitchell®, Wella®, Matrix®, Schwarzkopf®, Kenra®, Goldwell®, Joico® and Olaplex®, intended for use in salons and for resale by salons to retail consumers. For more information about Sally Beauty Holdings, Inc., please visit https://www.sallybeautyholdings.com/.
Cautionary Notice Regarding Forward-Looking Statements
Statements in this news release and the schedules hereto which are not purely historical facts or which depend upon future events may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as “believes,” “projects,” “expects,” “can,” “may,” “estimates,” “should,” “plans,” “targets,” “intends,” “could,” “will,” “would,” “anticipates,” “potential,” “confident,” “optimistic,” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, guidance, expectations and future plans. Forward-looking statements can also be identified by the fact that these statements do not relate strictly to historical or current matters.
Readers are cautioned not to place undue reliance on forward-looking statements as such statements speak only as of the date they were made. Any forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements, including, those described in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended September 30, 2023. Consequently, all forward-looking statements in this release are qualified by the factors, risks and uncertainties contained therein. We assume no obligation to publicly update or revise any forward-looking statements.
Use of Non-GAAP Financial Measures
This news release and the schedules hereto include the following financial measures that have not been calculated in accordance with accounting principles generally accepted in
Adjusted Gross Margin – We define the measure Adjusted Gross Margin as GAAP gross margin excluding the write-down of inventory related to the Company’s distribution center consolidation and store optimization plan for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures.
Adjusted Selling, General and Administrative Expenses – We define the measure Adjusted Selling, General and Administrative Expenses as GAAP selling, general and administrative expenses excluding costs related to the Company’s restructuring plans and COVID-19 net expenses for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures.
Adjusted EBITDA and EBITDA Margin – We define the measure Adjusted EBITDA as GAAP net earnings before depreciation and amortization, interest expense, income taxes, share-based compensation, costs related to the Company’s restructuring plans, COVID-19 related net expenses and other adjustments for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures. Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of net sales.
Adjusted Operating Earnings and Operating Margin – Adjusted operating earnings are GAAP operating earnings that exclude costs related to the Company’s restructuring plans and net expenses related to COVID-19 for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures. Adjusted Operating Margin is Adjusted Operating Earnings as a percentage of net sales.
Adjusted Net Earnings – Adjusted net earnings is GAAP net earnings that exclude tax-effected costs related to the Company’s restructuring plans, tax-effected net expenses related to COVID-19, and tax-effected expenses related to the loss on debt extinguishment for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures.
Adjusted Diluted Net Earnings Per Share – Adjusted diluted net earnings per share is GAAP diluted earnings per share that exclude tax-effected costs related to the Company’s restructuring plans, tax-effected net expenses related to COVID-19, and tax-effected expenses related to the loss on debt extinguishment for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures.
Operating Free Cash Flow – We define the measure Operating Free Cash Flow as GAAP net cash provided by operating activities less payments for capital expenditures (net). We believe Operating Free Cash Flow is an important liquidity measure that provides useful information to investors about the amount of cash generated from operations after taking into account payments for capital expenditures (net).
We believe that these non-GAAP financial measures provide valuable information regarding our earnings and business trends by excluding specific items that we believe are not indicative of the ongoing operating results of our businesses; providing a useful way for investors to make a comparison of our performance over time and against other companies in our industry.
We have provided these non-GAAP financial measures as supplemental information to our GAAP financial measures and believe these non-GAAP measures provide investors with additional meaningful financial information regarding our operating performance and cash flows. Our management and Board of Directors also use these non-GAAP measures as supplemental measures to evaluate our businesses and the performance of management, including the determination of performance-based compensation, to make operating and strategic decisions, and to allocate financial resources. We believe that these non-GAAP measures also provide meaningful information for investors and securities analysts to evaluate our historical and prospective financial performance. These non-GAAP measures should not be considered a substitute for or superior to GAAP results. Furthermore, the non-GAAP measures presented by us may not be comparable to similarly titled measures of other companies.
Supplemental Schedules |
|
|
|
Segment Information |
1 |
Non-GAAP Financial Measures Reconciliations |
2-3 |
Non-GAAP Financial Measures Reconciliations; Adjusted EBITDA and |
|
Operating Free Cash Flow |
4 |
Store Count and Comparable Sales |
5 |
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||||||||
Condensed Consolidated Statements of Earnings | |||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Three Months Ended September 30, |
|
Twelve Months Ended September 30, |
|||||||||||||||||||
2023 |
|
2022 |
Percentage Change |
|
2023 |
|
2022 |
Percentage Change |
|||||||||||||
Net sales | $ |
921,356 |
|
$ |
962,460 |
|
(4.3 |
)% |
$ |
3,728,131 |
|
$ |
3,815,565 |
|
(2.3 |
)% |
|||||
Cost of products sold |
|
454,794 |
|
|
498,964 |
|
(8.9 |
)% |
|
1,829,951 |
|
|
1,896,400 |
|
(3.5 |
)% |
|||||
Gross profit |
|
466,562 |
|
|
463,496 |
|
0.7 |
% |
|
1,898,180 |
|
|
1,919,165 |
|
(1.1 |
)% |
|||||
Selling, general and administrative expenses |
|
390,526 |
|
|
397,866 |
|
(1.8 |
)% |
|
1,555,946 |
|
|
1,553,948 |
|
0.1 |
% |
|||||
Restructuring |
|
(872 |
) |
|
26,434 |
|
(103.3 |
)% |
|
17,205 |
|
|
27,577 |
|
(37.6 |
)% |
|||||
Operating earnings |
|
76,908 |
|
|
39,196 |
|
96.2 |
% |
|
325,029 |
|
|
337,640 |
|
(3.7 |
)% |
|||||
Interest expense |
|
19,717 |
|
|
17,429 |
|
13.1 |
% |
|
72,979 |
|
|
93,543 |
|
(22.0 |
)% |
|||||
Earnings before provision for income taxes |
|
57,191 |
|
|
21,767 |
|
162.7 |
% |
|
252,050 |
|
|
244,097 |
|
3.3 |
% |
|||||
Provision for income taxes |
|
14,610 |
|
|
428 |
|
3313.6 |
% |
|
67,450 |
|
|
60,544 |
|
11.4 |
% |
|||||
Net earnings | $ |
42,581 |
|
$ |
21,339 |
|
99.5 |
% |
$ |
184,600 |
|
$ |
183,553 |
|
0.6 |
% |
|||||
Earnings per share: | |||||||||||||||||||||
Basic | $ |
0.40 |
|
$ |
0.20 |
|
100.0 |
% |
$ |
1.72 |
|
$ |
1.69 |
|
1.8 |
% |
|||||
Diluted | $ |
0.39 |
|
$ |
0.20 |
|
95.0 |
% |
$ |
1.69 |
|
$ |
1.66 |
|
1.8 |
% |
|||||
Weighted average shares: | |||||||||||||||||||||
Basic |
|
107,181 |
|
|
106,964 |
|
|
107,332 |
|
|
108,665 |
|
|||||||||
Diluted |
|
109,098 |
|
|
108,510 |
|
|
109,336 |
|
|
110,293 |
|
|||||||||
Basis Point Change |
|
|
|
|
Basis Point Change |
||||||||||||||||
Comparison as a percentage of net sales | |||||||||||||||||||||
Consolidated gross margin |
|
50.6 |
% |
|
48.2 |
% |
240 |
|
|
50.9 |
% |
|
50.3 |
% |
60 |
|
|||||
Selling, general and administrative expenses |
|
42.4 |
% |
|
41.3 |
% |
110 |
|
|
41.7 |
% |
|
40.7 |
% |
100 |
|
|||||
Consolidated operating margin |
|
8.3 |
% |
|
4.1 |
% |
420 |
|
|
8.7 |
% |
|
8.8 |
% |
(10 |
) |
|||||
Effective tax rate |
|
25.5 |
% |
|
2.0 |
% |
2,350 |
|
|
26.8 |
% |
|
24.8 |
% |
200 |
|
|||||
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES | |||||
Condensed Consolidated Balance Sheets | |||||
(In thousands) | |||||
September 30, |
|||||
2023 |
|
2022 |
|||
Cash and cash equivalents | $ |
123,001 |
$ |
70,558 |
|
Trade and other accounts receivable |
|
75,875 |
|
72,277 |
|
Inventory |
|
975,218 |
|
936,374 |
|
Other current assets |
|
53,903 |
|
53,192 |
|
Total current assets |
|
1,227,997 |
|
1,132,401 |
|
Property and equipment, net |
|
297,779 |
|
297,876 |
|
Operating lease assets |
|
570,657 |
|
532,177 |
|
Goodwill and other intangible assets |
|
588,252 |
|
576,381 |
|
Other assets |
|
40,565 |
|
38,032 |
|
Total assets | $ |
2,725,250 |
$ |
2,576,867 |
|
Current maturities of long-term debt | $ |
4,173 |
$ |
68,658 |
|
Accounts payable |
|
258,884 |
|
275,717 |
|
Accrued liabilities |
|
163,366 |
|
161,065 |
|
Current operating lease liabilities |
|
150,479 |
|
157,734 |
|
Income taxes payable |
|
2,355 |
|
4,740 |
|
Total current liabilities |
|
579,257 |
|
667,914 |
|
Long-term debt, including capital leases |
|
1,065,811 |
|
1,083,043 |
|
Long-term operating lease liabilities |
|
455,071 |
|
424,762 |
|
Other liabilities |
|
23,140 |
|
22,427 |
|
Deferred income tax liabilities, net |
|
93,224 |
|
85,085 |
|
Total liabilities |
|
2,216,503 |
|
2,283,231 |
|
Total stockholders’ equity |
|
508,747 |
|
293,636 |
|
Total liabilities and stockholders’ equity | $ |
2,725,250 |
$ |
2,576,867 |
Supplemental Schedule 1 |
|||||||||||||||||||||
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||||||||
Segment Information | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Three Months Ended September 30, |
|
Twelve Months Ended September 30, |
|||||||||||||||||||
2023 |
|
2022 |
Percentage Change |
|
2023 |
|
2022 |
Percentage Change |
|||||||||||||
Net sales: | |||||||||||||||||||||
Sally Beauty Supply ("SBS") | $ |
524,556 |
|
$ |
554,004 |
|
(5.3 |
)% |
$ |
2,139,206 |
|
$ |
2,193,044 |
|
(2.5 |
)% |
|||||
Beauty Systems Group ("BSG") |
|
396,800 |
|
|
408,456 |
|
(2.9 |
)% |
|
1,588,925 |
|
|
1,622,521 |
|
(2.1 |
)% |
|||||
Total net sales | $ |
921,356 |
|
$ |
962,460 |
|
(4.3 |
)% |
$ |
3,728,131 |
|
$ |
3,815,565 |
|
(2.3 |
)% |
|||||
Operating earnings: | |||||||||||||||||||||
SBS | $ |
78,483 |
|
$ |
80,529 |
|
(2.5 |
)% |
$ |
358,474 |
|
$ |
350,884 |
|
2.2 |
% |
|||||
BSG |
|
45,672 |
|
|
32,786 |
|
39.3 |
% |
|
181,275 |
|
|
193,407 |
|
(6.3 |
)% |
|||||
Segment operating earnings |
|
124,155 |
|
|
113,315 |
|
9.6 |
% |
|
539,749 |
|
|
544,291 |
|
(0.8 |
)% |
|||||
Unallocated expenses (1) |
|
48,119 |
|
|
47,685 |
|
0.9 |
% |
|
197,515 |
|
|
179,074 |
|
10.3 |
% |
|||||
Restructuring |
|
(872 |
) |
|
26,434 |
|
(103.3 |
)% |
|
17,205 |
|
|
27,577 |
|
(37.6 |
)% |
|||||
Interest expense |
|
19,717 |
|
|
17,429 |
|
13.1 |
% |
|
72,979 |
|
|
93,543 |
|
(22.0 |
)% |
|||||
Earnings before provision for income taxes | $ |
57,191 |
|
$ |
21,767 |
|
162.7 |
% |
$ |
252,050 |
|
$ |
244,097 |
|
3.3 |
% |
|||||
Segment gross margin: | 2023 |
|
2022 |
Basis Point Change |
|
2023 |
|
2022 |
Basis Point Change |
||||||||||||
SBS |
|
59.2 |
% |
|
56.6 |
% |
260 |
|
|
59.2 |
% |
|
58.1 |
% |
110 |
|
|||||
BSG |
|
39.3 |
% |
|
36.7 |
% |
260 |
|
|
39.8 |
% |
|
39.8 |
% |
— |
|
|||||
Segment operating margin: | |||||||||||||||||||||
SBS |
|
15.0 |
% |
|
14.5 |
% |
50 |
|
|
16.8 |
% |
|
16.0 |
% |
80 |
|
|||||
BSG |
|
11.5 |
% |
|
8.0 |
% |
350 |
|
|
11.4 |
% |
|
11.9 |
% |
(50 |
) |
|||||
Consolidated operating margin |
|
8.3 |
% |
|
4.1 |
% |
420 |
|
|
8.7 |
% |
|
8.8 |
% |
(10 |
) |
|||||
(1) Unallocated expenses, including share-based compensation expense, consist of corporate and shared costs and are included in selling, general and administrative expenses. |
Supplemental Schedule 2 |
||||||||||||||||||||
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||
Non-GAAP Financial Measures Reconciliations | ||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three Months Ended September 30, 2023 | ||||||||||||||||||||
As Reported (GAAP) |
Restructuring(1) | COVID and Other(2) |
Loss on Debt Extinguishment(3) |
As Adjusted (Non-GAAP) |
||||||||||||||||
Cost of products sold | $ |
454,794 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
454,794 |
|
|||||
Consolidated gross margin |
|
50.6 |
% |
|
50.6 |
% |
||||||||||||||
Selling, general and administrative expenses |
|
390,526 |
|
|
(606 |
) |
|
(2,649 |
) |
|
— |
|
|
387,271 |
|
|||||
SG&A expenses, as a percentage of sales |
|
42.4 |
% |
|
42.0 |
% |
||||||||||||||
Restructuring |
|
(872 |
) |
|
872 |
|
|
— |
|
|
— |
|
|
— |
|
|||||
Operating earnings |
|
76,908 |
|
|
(266 |
) |
|
2,649 |
|
|
— |
|
|
79,291 |
|
|||||
Operating margin |
|
8.3 |
% |
|
8.6 |
% |
||||||||||||||
Interest expense |
|
19,717 |
|
|
— |
|
|
— |
|
|
(1,793 |
) |
|
17,924 |
|
|||||
Earnings before provision for income taxes |
|
57,191 |
|
|
(266 |
) |
|
2,649 |
|
|
1,793 |
|
|
61,367 |
|
|||||
Provision for income taxes (4) |
|
14,610 |
|
|
(181 |
) |
|
779 |
|
|
461 |
|
|
15,669 |
|
|||||
Net earnings | $ |
42,581 |
|
$ |
(85 |
) |
# | $ |
1,870 |
|
$ |
1,332 |
|
$ |
45,698 |
|
||||
Earnings per share: | ||||||||||||||||||||
Basic | $ |
0.40 |
|
$ |
(0.00 |
) |
$ |
0.02 |
|
$ |
0.01 |
|
$ |
0.43 |
|
|||||
Diluted | $ |
0.39 |
|
$ |
(0.00 |
) |
$ |
0.02 |
|
$ |
0.01 |
|
$ |
0.42 |
|
|||||
Three Months Ended September 30, 2022 | ||||||||||||||||||||
As Reported (GAAP) |
Restructuring(1) | As Adjusted (Non-GAAP) |
||||||||||||||||||
Cost of products sold | $ |
498,964 |
|
$ |
(18,316 |
) |
$ |
480,648 |
|
|||||||||||
Consolidated gross margin |
|
48.2 |
% |
|
50.1 |
% |
||||||||||||||
Selling, general and administrative expenses |
|
397,866 |
|
|
— |
|
|
397,866 |
|
|||||||||||
SG&A expenses, as a percentage of sales |
|
41.3 |
% |
|
41.3 |
% |
||||||||||||||
Restructuring |
|
26,434 |
|
|
(26,434 |
) |
|
— |
|
|||||||||||
Operating earnings |
|
39,196 |
|
|
44,750 |
|
|
83,946 |
|
|||||||||||
Operating margin |
|
4.1 |
% |
|
8.7 |
% |
||||||||||||||
Interest expense |
|
17,429 |
|
|
— |
|
|
17,429 |
|
|||||||||||
Earnings before provision for income taxes |
|
21,767 |
|
|
44,750 |
|
|
66,517 |
|
|||||||||||
Provision for income taxes (4) |
|
428 |
|
|
11,659 |
|
|
12,087 |
|
|||||||||||
Net earnings | $ |
21,339 |
|
$ |
33,091 |
|
$ |
54,430 |
|
|||||||||||
Earnings per share: | ||||||||||||||||||||
Basic | $ |
0.20 |
|
$ |
0.31 |
|
$ |
0.51 |
|
|||||||||||
Diluted | $ |
0.20 |
|
$ |
0.30 |
|
$ |
0.50 |
|
|||||||||||
(1) For the three months ended September 30, 2023, restructuring primarily related to favorable adjustments to the settlement of store lease terminations, resulting in income, in connection with our Distribution Center Consolidation and Store Optimization Plan (the "Plan"). For the three months ended September 30, 2022, restructuring represents expenses incurred primarily in connection with the Plan, including inventory write-downs of |
||||||||||||||||||||
(2) COVID and Other relates primarily to obsolete personal-protective equipment ("PPE") related to store supplies in selling, general and administrative expense. | ||||||||||||||||||||
(3) Loss on debt extinguishment relates to the repricing of our Term Loan B, which resulted in the write-off of unamortized deferred financing costs of |
||||||||||||||||||||
(4) The provision for income taxes was calculated using the applicable tax rates for each country, while excluding the tax benefits for countries where the tax benefit is not currently deemed probable of being realized. |
Supplemental Schedule 3 |
||||||||||||||||||||
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||
Non-GAAP Financial Measures Reconciliations, Continued | ||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Twelve Months Ended September 30, 2023 | ||||||||||||||||||||
As Reported (GAAP) |
Restructuring(1) | COVID(2) | Loss on Debt Extinguishment and Other(3) |
As Adjusted (Non-GAAP) |
||||||||||||||||
Cost of products sold | $ |
1,829,951 |
|
$ |
5,789 |
|
$ |
— |
|
$ |
— |
|
$ |
1,835,740 |
|
|||||
Consolidated gross margin |
|
50.9 |
% |
|
50.8 |
% |
||||||||||||||
Selling, general and administrative expenses |
|
1,555,946 |
|
|
(606 |
) |
|
(3,701 |
) |
|
— |
|
|
1,551,639 |
|
|||||
SG&A expenses, as a percentage of sales |
|
41.7 |
% |
|
41.6 |
% |
||||||||||||||
Restructuring |
|
17,205 |
|
|
(17,205 |
) |
|
— |
|
|
— |
|
|
— |
|
|||||
Operating earnings |
|
325,029 |
|
|
12,022 |
|
|
3,701 |
|
|
— |
|
|
340,752 |
|
|||||
Operating margin |
|
8.7 |
% |
|
9.1 |
% |
||||||||||||||
Interest expense |
|
72,979 |
|
|
— |
|
|
— |
|
|
(1,793 |
) |
|
71,186 |
|
|||||
Earnings before provision for income taxes |
|
252,050 |
|
|
12,022 |
|
|
3,701 |
|
|
1,793 |
|
|
269,566 |
|
|||||
Provision for income taxes (4) |
|
67,450 |
|
|
2,928 |
|
|
1,049 |
|
|
(2,239 |
) |
|
69,188 |
|
|||||
Net earnings | $ |
184,600 |
|
$ |
9,094 |
|
$ |
2,652 |
|
$ |
4,032 |
|
$ |
200,378 |
|
|||||
Earnings per share: | ||||||||||||||||||||
Basic | $ |
1.72 |
|
$ |
0.08 |
|
$ |
0.02 |
|
$ |
0.04 |
|
$ |
1.87 |
|
|||||
Diluted | $ |
1.69 |
|
$ |
0.08 |
|
$ |
0.02 |
|
$ |
0.04 |
|
$ |
1.83 |
|
|||||
Twelve Months Ended September 30, 2022 | ||||||||||||||||||||
As Reported (GAAP) |
Restructuring(1) | COVID-19(2) | Loss on Debt Extinguishment and Other(3) |
As Adjusted (Non-GAAP) |
||||||||||||||||
Cost of products sold | $ |
1,896,400 |
|
$ |
(18,316 |
) |
$ |
(2,841 |
) |
$ |
— |
|
$ |
1,875,243 |
|
|||||
Consolidated gross margin |
|
50.3 |
% |
|
50.9 |
% |
||||||||||||||
Selling, general and administrative expenses |
|
1,553,948 |
|
|
— |
|
|
(3,382 |
) |
|
(1,546 |
) |
|
1,549,020 |
|
|||||
SG&A expenses, as a percentage of sales |
|
40.7 |
% |
|
40.6 |
% |
||||||||||||||
Restructuring |
|
27,577 |
|
|
(27,577 |
) |
|
— |
|
|
— |
|
|
— |
|
|||||
Operating earnings |
|
337,640 |
|
|
45,893 |
|
|
6,223 |
|
|
1,546 |
|
|
391,302 |
|
|||||
Operating margin |
|
8.8 |
% |
|
10.3 |
% |
||||||||||||||
Interest expense |
|
93,543 |
|
|
— |
|
|
— |
|
|
(16,439 |
) |
|
77,104 |
|
|||||
Earnings before provision for income taxes |
|
244,097 |
|
|
45,893 |
|
|
6,223 |
|
|
17,985 |
|
|
314,198 |
|
|||||
Provision for income taxes (4) |
|
60,544 |
|
|
9,830 |
|
|
2,132 |
|
|
3,821 |
|
|
76,327 |
|
|||||
Net earnings | $ |
183,553 |
|
# | $ |
36,063 |
|
$ |
4,091 |
|
$ |
14,164 |
|
$ |
237,871 |
|
||||
Earnings per share: | ||||||||||||||||||||
Basic | $ |
1.69 |
|
# | $ |
0.33 |
|
$ |
0.04 |
|
$ |
0.13 |
|
$ |
2.19 |
|
||||
Diluted | $ |
1.66 |
|
# | $ |
0.33 |
|
$ |
0.04 |
|
$ |
0.13 |
|
$ |
2.16 |
|
||||
(1) For fiscal year 2023, restructuring represents expenses and adjustments incurred primarily in connection with the Plan, including |
||||||||||||||||||||
(2) For fiscal year 2023, COVID primarily relates obsolete PPE related to store supplies in selling, general and administrative expenses and to use taxes around the donation of personal protection merchandise. For fiscal year 2022, COVID primarily comprised of obsolete PPE included in costs of products sold of |
||||||||||||||||||||
(3) For fiscal year 2023, loss on debt extinguishment relates to the repricing of our Term Loan B, which resulted in the write-off of unamortized deferred financing costs of |
||||||||||||||||||||
(4) The provision for income taxes was calculated using the applicable tax rates for each country, while excluding the tax benefits for countries where the tax benefit is not currently deemed probable of being realized. Additionally, for fiscal year 2023, provision for income taxes, within loss on debt extinguishment and other, includes additional |
Supplemental Schedule 4 |
||||||||||||||||||||
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||
Non-GAAP Financial Measures Reconciliations, Continued | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three Months Ended September 30, |
|
Twelve Months Ended September 30, |
||||||||||||||||||
Adjusted EBITDA: | 2023 |
|
2022 |
Percentage Change |
|
2023 |
|
2022 |
Percentage Change |
|||||||||||
Net earnings | $ |
42,581 |
|
$ |
21,339 |
|
99.5 |
% |
$ |
184,600 |
|
$ |
183,553 |
|
0.6 |
% |
||||
Add: | ||||||||||||||||||||
Depreciation and amortization |
|
26,639 |
|
|
26,568 |
|
0.3 |
% |
|
102,412 |
|
|
99,929 |
|
2.5 |
% |
||||
Interest expense |
|
19,717 |
|
|
17,429 |
|
13.1 |
% |
|
72,979 |
|
|
93,543 |
|
(22.0 |
)% |
||||
Provision for income taxes |
|
14,610 |
|
|
428 |
|
3313.6 |
% |
|
67,450 |
|
|
60,544 |
|
11.4 |
% |
||||
EBITDA (non-GAAP) |
|
103,547 |
|
|
65,764 |
|
57.5 |
% |
|
427,441 |
|
|
437,569 |
|
(2.3 |
)% |
||||
Share-based compensation |
|
3,339 |
|
|
1,841 |
|
81.4 |
% |
|
15,862 |
|
|
10,708 |
|
48.1 |
% |
||||
Restructuring |
|
(266 |
) |
|
44,750 |
|
(100.6 |
)% |
|
12,022 |
|
|
47,439 |
|
(74.7 |
)% |
||||
COVID-19 and Other |
|
2,649 |
|
|
— |
|
100.0 |
% |
|
3,701 |
|
|
6,223 |
|
(40.5 |
)% |
||||
Adjusted EBITDA (non-GAAP) | $ |
109,269 |
|
$ |
112,355 |
|
(2.7 |
)% |
$ |
459,026 |
|
$ |
501,939 |
|
(8.5 |
)% |
||||
Basis Point Change |
Basis Point Change |
|||||||||||||||||||
Adjusted EBITDA as a percentage of net sales | ||||||||||||||||||||
Adjusted EBITDA margin |
|
11.9 |
% |
|
11.7 |
% |
20 |
|
|
12.3 |
% |
|
13.2 |
% |
(90 |
) |
||||
Operating Free Cash Flow: | 2023 |
|
2022 |
Percentage Change |
|
2023 |
|
2022 |
Percentage Change |
|||||||||||
Net cash provided by operating activities | $ |
116,540 |
|
$ |
107,273 |
|
8.6 |
% |
$ |
249,311 |
|
$ |
156,500 |
|
59.3 |
% |
||||
Less: | ||||||||||||||||||||
Payments for property and equipment, net |
|
26,946 |
|
|
32,016 |
|
(15.8 |
)% |
|
90,742 |
|
|
99,250 |
|
(8.6 |
)% |
||||
Operating free cash flow (non-GAAP) | $ |
89,594 |
|
$ |
75,257 |
|
19.1 |
% |
$ |
158,569 |
|
$ |
57,250 |
|
177.0 |
% |
Supplemental Schedule 5 |
|||||||||||||||||
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES |
|||||||||||||||||
Store Count and Comparable Sales |
|||||||||||||||||
(Unaudited) |
|||||||||||||||||
As of September 30, |
|||||||||||||||||
2023 |
|
2022 |
|
Change |
|||||||||||||
Number of stores: | |||||||||||||||||
SBS: | |||||||||||||||||
Company-operated stores (1) | 3,148 |
|
3,439 |
|
(291 |
) |
|||||||||||
BSG: | |||||||||||||||||
Company-operated stores (1) | 1,206 |
|
1,223 |
|
(17 |
) |
|||||||||||
Franchise stores | 132 |
|
132 |
|
— |
|
|||||||||||
Total BSG | 1,338 |
|
1,355 |
|
(17 |
) |
|||||||||||
Total consolidated | 4,486 |
|
4,794 |
|
(308 |
) |
|||||||||||
Number of BSG distributor sales consultants (2) | 670 |
|
718 |
|
(48 |
) |
|||||||||||
(1) Store count was impacted by the closure of 294 SBS stores and 26 BSG stores in the last twelve months related to our Distribution Center and Site Optimization Plan. | |||||||||||||||||
(2) BSG distributor sales consultants (DSC) include 193 and 195 sales consultants employed by our franchisees at September 30, 2023 and 2022, respectively. | |||||||||||||||||
Three Months Ended September 30, | Twelve Months Ended September 30, | ||||||||||||||||
2023 |
|
2022 |
|
Basis Point Change |
|
2023 |
|
2022 |
|
Basis Point Change |
|||||||
Comparable sales growth (decline): | |||||||||||||||||
SBS | (1.2 |
)% |
(1.1 |
)% |
(10 |
) |
3.4 |
% |
(0.6 |
)% |
400 |
|
|||||
BSG | (2.3 |
)% |
1.5 |
% |
(380 |
) |
(1.3 |
)% |
2.3 |
% |
(360 |
) |
|||||
Consolidated | (1.6 |
)% |
— |
% |
(160 |
) |
1.4 |
% |
0.6 |
% |
80 |
|
|||||
Our comparable sales include sales from stores that have been operating for 14 months or longer as of the last day of a month and e-commerce revenue. Additionally, our comparable sales include sales to franchisees and full service sales. Our comparable sales excludes the effect of changes in foreign exchange rates and sales from stores relocated until 14 months after the relocation. Revenue from acquired stores are excluded from our comparable sales calculation until 14 months after the acquisition. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20231114751795/en/
Jeff Harkins
Investor Relations
940-297-3877
jharkins@sallybeauty.com
Source: Sally Beauty Holdings, Inc.
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