Regis Corporation Reports Second Quarter Fiscal Year 2022 Earnings

Regis Corporation (NYSE: RGS), a leader in the haircare industry, today reported results for the second fiscal quarter ended December 31, 2021 versus the prior year as noted below. Results reflect an improvement in system-wide same stores sales and a lower cost structure.

  • Total revenue in the quarter of $70.3 million decreased $34.1 million, or 32.7%, year-over-year, driven primarily by exiting company-owned salons that generated significant revenue, but were loss making.
  • System-wide same-store sales increased 22.1%.
  • Reported G&A declined $10.7 million and adjusted G&A declined $9.8 million.
  • Operating loss of $1.1 million improved compared to a $26.8 million loss in the prior year quarter.
  • Net loss of $4.9 million, or $0.11 per diluted share improved compared to a net loss of $32.9 million, or $0.92 per share in the prior year quarter.
  • EBITDA, as adjusted, of $2.4 million improved compared to a loss of $17.5 million in the prior year quarter.
  • Franchise segment EBITDA, as adjusted, of $5.5 million improved $12.3 million, compared to second quarter 2021.
  • Earnings webcast scheduled for 9am CST on February 3 will include insight into Regis' go-forward business and future earnings potential. Accompanying the webcast will be a slide presentation.

"Our second quarter results reflect our shift to a fully franchised business model, as we are nearing profitability amidst the continued impact of the pandemic in terms of labor availability and customer traffic," said Matt Doctor, Regis Interim Chief Executive Officer. "The improvement in our operating performance in the quarter was due to fewer company-owned salons, increases in royalties, and lower expense levels. While the pandemic dampened our overall revenue performance in the quarter, Regis has the foundation in place for improved performance going forward and we are excited by the potential of our platform."

 

 

Three Months Ended December 31,

 

Six Months Ended December 31,

(Dollars in thousands)

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

Consolidated revenue

 

$

70,256

 

 

$

104,320

 

 

$

148,012

 

 

$

215,716

 

System-wide revenue (1)

 

 

304,364

 

 

 

261,452

 

 

 

620,649

 

 

 

523,573

 

 

 

 

 

 

 

 

 

 

System-wide same-store sales comps

 

 

22.1

%

 

 

(32.0

) %

 

 

22.6

%

 

 

(32.3

) %

Two-year system-wide same-store sales comps

 

 

(16.9

) %

 

 

N/A

 

 

 

(17.0

) %

 

 

N/A

 

 

 

 

 

 

 

 

 

 

Operating loss

 

$

(1,127

)

 

$

(26,755

)

 

$

(6,929

)

 

$

(58,345

)

Net loss

 

 

(4,928

)

 

 

(32,879

)

 

 

(15,306

)

 

 

(68,144

)

Diluted net loss per share

 

 

(0.11

)

 

 

(0.92

)

 

 

(0.37

)

 

 

(1.90

)

EBITDA (2)

 

 

389

 

 

 

(20,030

)

 

 

(4,700

)

 

 

(38,968

)

as a percent of revenue

 

 

0.6

%

 

 

(19.2

) %

 

 

(3.2

) %

 

 

(18.1

) %

 

 

 

 

 

 

 

 

 

As adjusted (2)

 

 

 

 

 

 

 

 

Net loss, as adjusted

 

$

(2,643

)

 

$

(25,902

)

 

$

(13,117

)

 

$

(53,833

)

Diluted net loss per share, as adjusted

 

 

(0.06

)

 

 

(0.72

)

 

 

(0.32

)

 

 

(1.50

)

EBITDA, as adjusted

 

 

2,367

 

 

 

(17,526

)

 

 

(3,269

)

 

 

(36,169

)

as a percent of revenue

 

 

3.4

%

 

 

(16.8

) %

 

 

(2.2

) %

 

 

(16.8

) %

(1) Represents total sales within the system.

(2) See GAAP to non-GAAP reconciliations, within the attached section titled "Non-GAAP Reconciliations".

Regis reported a second quarter 2022 net loss of $4.9 million, or $0.11 loss per diluted share, compared to a net loss of $32.9 million, or $0.92 loss per diluted share, in the second quarter of 2021. Excluding discrete items, the Company reported a second quarter 2022 adjusted net loss of $2.6 million, or $0.06 loss per diluted share, compared to an adjusted net loss of $25.9 million, or $0.72 loss per diluted share, for the same period last year. The year-over-year decrease 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.

Total revenue in the quarter of $70.3 million decreased $34.1 million, or 32.7%, 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.

Second quarter adjusted EBITDA of $2.4 million increased $19.9 million, versus an adjusted EBITDA loss of $17.5 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.

 

Second Quarter Segment Results

 
 

Franchise

 

 

 

Three Months Ended

December 31,

 

Increase (Decrease)

 

Six Months Ended

December 31,

 

Increase (Decrease)

 

 

 

 

 

 

 

 

 

 

 

(Dollars in millions) (1)

 

 

2021

 

 

 

2020

 

 

 

 

2021

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Royalties

 

$

16.1

 

 

$

12.7

 

 

$

3.4

 

 

$

32.7

 

 

$

24.2

 

 

$

8.5

 

Fees

 

 

4.9

 

 

 

2.4

 

 

 

2.5

 

 

 

8.1

 

 

 

4.5

 

 

 

3.6

 

Product sales to franchisees

 

 

2.4

 

 

 

14.2

 

 

 

(11.8

)

 

 

10.4

 

 

 

28.0

 

 

 

(17.6

)

Advertising fund contributions

 

 

8.0

 

 

 

4.7

 

 

 

3.3

 

 

 

16.1

 

 

 

9.2

 

 

 

6.9

 

Franchise rental income

 

 

33.8

 

 

 

32.3

 

 

 

1.5

 

 

 

67.5

 

 

 

64.6

 

 

 

2.9

 

Total Franchise revenue

 

$

65.2

 

 

$

66.4

 

 

$

(1.2

)

 

$

135.0

 

 

$

130.4

 

 

$

4.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise same-store sales comps

 

 

22.4

%

 

 

(31.1

) %

 

 

 

 

23.0

%

 

 

(31.5

) %

 

 

Franchise two-year same-store sales comps

 

 

(16.6

) %

 

 

N/A

 

 

 

 

 

(16.7

) %

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA, as adjusted

 

$

5.5

 

 

$

(6.8

)

 

$

12.3

 

 

$

1.4

 

 

$

(14.8

)

 

$

16.2

 

as a percent of revenue

 

 

8.4

%

 

 

(10.3

) %

 

 

 

 

1.1

%

 

 

(11.3

) %

 

 

as a percent of adjusted revenue (2)

 

 

23.5

%

 

 

(23.2

) %

 

 

 

 

2.8

%

 

 

(26.1

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Franchise salons

 

 

5,553

 

 

 

5,269

 

 

 

284

 

 

 

 

 

 

 

as a percent of total Franchise and Company-owned salons

 

 

97.4

%

 

 

83.6

%

 

 

 

 

 

 

 

 

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

(2) Adjusted revenue excludes non-margin revenue. See Non-GAAP reconciliation.

Second quarter Franchise revenue was $65.2 million, a $1.2 million, or 1.8% decrease compared to the prior year quarter. Royalties were $16.1 million, a $3.4 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 $2.4 million decreased $11.8 million, as expected. The decrease in product sales will continue as the Company transitions out of its whole-sale product sales business. Franchise adjusted EBITDA of $5.5 million improved $12.3 million, year-over-year primarily due to an increase in royalties; an increase in fees due partially to a one-time benefit; and a decrease in general and administrative expense.

Company-Owned Salons

 

 

Three Months Ended December 31,

 

(Decrease) Increase

 

Six Months Ended December 31,

 

(Decrease) Increase

 

 

 

 

 

 

 

 

 

 

 

(Dollars in millions) (1)

 

 

2021

 

 

 

2020

 

 

 

 

2021

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company-owned salon revenue

 

$

5.0

 

 

$

37.9

 

 

$

(32.9

)

 

$

13.0

 

 

$

85.3

 

 

$

(72.3

)

Company-owned same-store sales comps

 

 

7.2

%

 

 

(36.2

) %

 

 

 

 

6.8

%

 

 

(35.4

) %

 

 

Company-owned two-year same-store sales comps

 

 

(33.3

) %

 

 

N/A

 

 

 

 

 

(32.6

) %

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA, as adjusted

 

$

(3.1

)

 

$

(10.7

)

 

$

7.6

 

 

$

(4.7

)

 

$

(21.4

)

 

$

16.7

 

as a percent of revenue

 

 

(62.1

) %

 

 

(28.2

) %

 

 

 

 

(35.9

) %

 

 

(25.1

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company-owned salons

 

 

150

 

 

 

1,037

 

 

 

(887

)

 

 

 

 

 

 

as a percent of total Franchise and Company-owned salons

 

 

2.6

%

 

 

16.4

%

 

 

 

 

 

 

 

 

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

Second quarter revenue for the Company-owned salon segment decreased $32.9 million, versus the prior year to $5.0 million. The year-over-year decline in revenue was expected and driven by the decrease of a net 560 salons sold and converted to the Company's franchise portfolio over the past 12 months and the closure of a net 327 unprofitable salons over the past 12 months. Second quarter adjusted EBITDA loss improved $7.6 million, or 70.7%, 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 $3.1 million includes a $1.2 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 second quarter results on February 3, 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 December 31, 2021, the Company franchised, owned or held ownership interests in 5,779 locations worldwide. Regis’ 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; 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)

 

 

 

December 31,

2021

 

June 30,

2021

 

 

 

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

35,442

 

 

$

19,191

 

Receivables, net

 

 

16,624

 

 

 

27,372

 

Inventories

 

 

16,008

 

 

 

22,993

 

Other current assets

 

 

15,439

 

 

 

17,103

 

Total current assets

 

 

83,513

 

 

 

86,659

 

 

 

 

 

 

Property and equipment, net

 

 

22,244

 

 

 

23,113

 

Goodwill

 

 

229,028

 

 

 

229,582

 

Other intangibles, net

 

 

3,474

 

 

 

3,761

 

Right of use asset

 

 

548,598

 

 

 

611,880

 

Other assets

 

 

39,301

 

 

 

41,388

 

Total assets

 

$

926,158

 

 

$

996,383

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

18,579

 

 

$

27,157

 

Accrued expenses

 

 

39,041

 

 

 

54,857

 

Short-term lease liability

 

 

110,597

 

 

 

116,471

 

Total current liabilities

 

 

168,217

 

 

 

198,485

 

 

 

 

 

 

Long-term debt, net

 

 

194,177

 

 

 

186,911

 

Long-term lease liability

 

 

457,924

 

 

 

518,866

 

Other non-current liabilities

 

 

67,552

 

 

 

75,075

 

Total liabilities

 

 

887,870

 

 

 

979,337

 

Commitments and contingencies

 

 

 

 

Shareholders' equity:

 

 

 

 

Common stock, $0.05 par value; issued and outstanding 45,490,074 and 35,795,844

common shares at December 31, 2021 and June 30, 2021, respectively

 

 

2,277

 

 

 

1,790

 

Additional paid-in capital

 

 

61,601

 

 

 

25,102

 

Accumulated other comprehensive income

 

 

9,105

 

 

 

9,543

 

Accumulated deficit

 

 

(34,695

)

 

 

(19,389

)

Total shareholders' equity

 

 

38,288

 

 

 

17,046

 

Total liabilities and shareholders' equity

 

$

926,158

 

 

$

996,383

 

 

 

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For The Three And Six Months Ended December 31, 2021 And 2020

(Dollars and shares in thousands, except per share data amounts)

 

 

 

Three Months Ended December 31,

 

Six Months Ended

December 31,

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Royalties

 

$

16,125

 

 

$

12,749

 

 

$

32,726

 

 

$

24,154

 

Fees

 

 

4,867

 

 

 

2,438

 

 

 

8,132

 

 

 

4,480

 

Product sales to franchisees

 

 

2,428

 

 

 

14,236

 

 

 

10,436

 

 

 

27,978

 

Advertising fund contributions

 

 

8,021

 

 

 

4,715

 

 

 

16,136

 

 

 

9,224

 

Franchise rental income

 

 

33,772

 

 

 

32,285

 

 

 

67,534

 

 

 

64,568

 

Company-owned salon revenue

 

 

5,043

 

 

 

37,897

 

 

 

13,048

 

 

 

85,312

 

Total revenue

 

 

70,256

 

 

 

104,320

 

 

 

148,012

 

 

 

215,716

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of product sales to franchisees

 

 

3,419

 

 

 

11,324

 

 

 

11,532

 

 

 

22,003

 

General and administrative

 

 

15,984

 

 

 

26,690

 

 

 

37,773

 

 

 

52,837

 

Rent

 

 

3,088

 

 

 

12,902

 

 

 

4,891

 

 

 

26,127

 

Advertising fund expense

 

 

8,021

 

 

 

4,715

 

 

 

16,136

 

 

 

9,224

 

Franchise rent expense

 

 

33,772

 

 

 

32,285

 

 

 

67,534

 

 

 

64,568

 

Company-owned salon expense (1)

 

 

5,067

 

 

 

33,611

 

 

 

13,011

 

 

 

76,554

 

Depreciation and amortization

 

 

1,980

 

 

 

6,388

 

 

 

3,849

 

 

 

13,764

 

Long-lived asset impairment

 

 

52

 

 

 

3,160

 

 

 

215

 

 

 

8,984

 

Total operating expenses

 

 

71,383

 

 

 

131,075

 

 

 

154,941

 

 

 

274,061

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(1,127

)

 

 

(26,755

)

 

 

(6,929

)

 

 

(58,345

)

 

 

 

 

 

 

 

 

 

Other (expense) income:

 

 

 

 

 

 

 

 

Interest expense

 

 

(3,449

)

 

 

(3,701

)

 

 

(6,755

)

 

 

(7,463

)

Loss from sale of salon assets to franchisees, net

 

 

(615

)

 

 

(3,226

)

 

 

(1,695

)

 

 

(3,888

)

Interest income and other, net

 

 

99

 

 

 

403

 

 

 

(140

)

 

 

517

 

 

 

 

 

 

 

 

 

 

Loss from operations before income taxes

 

 

(5,092

)

 

 

(33,279

)

 

 

(15,519

)

 

 

(69,179

)

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

164

 

 

 

400

 

 

 

213

 

 

 

1,035

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(4,928

)

 

$

(32,879

)

 

$

(15,306

)

 

$

(68,144

)

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted:

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted (2)

 

$

(0.11

)

 

$

(0.92

)

 

$

(0.37

)

 

$

(1.90

)

 

 

 

 

 

 

 

 

 

Weighted average common and common equivalent shares outstanding:

 

 

 

 

 

 

 

 

Basic and diluted

 

 

45,721

 

 

 

35,931

 

 

 

41,274

 

 

 

35,889

 

 (1) Includes cost of service and product sold to guests in our Company-owned salons. Excludes general and administrative expense, rent and depreciation and amortization related to Company-owned salons.

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

 

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

For The Six Months Ended December 31, 2021 And 2020

(Dollars in thousands)

 

 

 

Six Months Ended December 31,

 

 

 

2021

 

 

 

2020

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(15,306

)

 

$

(68,144

)

Adjustments to reconcile net loss to cash used in operating activities:

 

 

 

 

Depreciation and amortization

 

 

3,284

 

 

 

11,123

 

Long-lived asset impairment

 

 

215

 

 

 

8,984

 

Deferred income taxes

 

 

(529

)

 

 

(669

)

Loss from sale of salon assets to franchisees, net

 

 

1,695

 

 

 

3,888

 

Stock-based compensation

 

 

305

 

 

 

89

 

Amortization of debt discount and financing costs

 

 

920

 

 

 

875

 

Other non-cash items affecting earnings

 

 

551

 

 

 

202

 

Changes in operating assets and liabilities, excluding the effects of asset sales

 

 

(15,463

)

 

 

(21,812

)

Net cash used in operating activities

 

 

(24,328

)

 

 

(65,464

)

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Capital expenditures

 

 

(2,947

)

 

 

(7,502

)

Proceeds from sale of assets to franchisees

 

 

 

 

 

7,148

 

Costs associated with sale of salon assets to franchisees

 

 

 

 

 

(222

)

Proceeds from company-owned life insurance policies

 

 

 

 

 

1,200

 

Net cash (used in) provided by investing activities

 

 

(2,947

)

 

 

624

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Borrowings on revolving credit facility

 

 

10,000

 

 

 

 

Repayments of revolving credit facility

 

 

(2,734

)

 

 

 

Proceeds from issuance of common stock, net of offering costs

 

 

37,185

 

 

 

 

Taxes paid for shares withheld

 

 

(823

)

 

 

(212

)

Minority interest buyout

 

 

 

 

 

(562

)

Distribution center lease payments

 

 

 

 

 

(478

)

Net cash provided by (used in) financing activities

 

 

43,628

 

 

 

(1,252

)

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(134

)

 

 

(68

)

 

 

 

 

 

Increase (decrease) in cash, cash equivalents, and restricted cash

 

 

16,219

 

 

 

(66,160

)

 

 

 

 

 

Cash, cash equivalents and restricted cash:

 

 

 

 

Beginning of period

 

 

29,152

 

 

 

122,880

 

End of period

 

$

45,371

 

 

$

56,720

 

 

 REGIS CORPORATION

Same-Store Sales

 

SYSTEM-WIDE SAME-STORE SALES (1):

 

 

Three Months Ended

 

 

December 31, 2021

 

December 31, 2020

 

 

Service

 

Retail

 

Total

 

Service

 

Retail

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

SmartStyle

 

19.8

%

 

(6.6

) %

 

13.2

%

 

(32.3

) %

 

(31.9

) %

 

(32.2

) %

Supercuts

 

32.7

 

 

2.3

 

 

30.8

 

 

(33.2

)

 

(29.6

)

 

(32.9

)

Portfolio Brands

 

19.0

 

 

(1.3

)

 

16.6

 

 

(30.9

)

 

(23.8

)

 

(30.0

)

Total

 

25.7

%

 

(3.2

) %

 

22.1

%

 

(32.4

) %

 

(28.9

) %

 

(32.0

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

December 31, 2021

 

December 31, 2020

 

 

Service

 

Retail

 

Total

 

Service

 

Retail

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

SmartStyle

 

21.2

%

 

(3.2

) %

 

15.1

%

 

(33.6

) %

 

(31.3

) %

 

(33.0

) %

Supercuts

 

32.7

 

 

0.4

 

 

30.6

 

 

(33.5

)

 

(28.0

)

 

(33.2

)

Portfolio Brands

 

20.0

 

 

(0.2

)

 

17.6

 

 

(31.2

)

 

(21.7

)

 

(30.1

)

Total

 

26.2

%

 

(1.6

) %

 

22.6

%

 

(32.8

) %

 

(27.7

) %

 

(32.3

) %

(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 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

 

 

 

December 31,

2021

 

June 30,

2021

 

 

 

 

 

FRANCHISE SALONS:

 

 

 

 

SmartStyle/Cost Cutters in Walmart Stores

 

1,676

 

 

1,666

 

Supercuts

 

2,345

 

 

2,386

 

Portfolio Brands

 

1,386

 

 

1,357

 

Total North American salons

 

5,407

 

 

5,409

 

Total International Salons (1)

 

146

 

 

154

 

Total Franchise Salons

 

5,553

 

 

5,563

 

as a percent of total Franchise and Company-owned salons

 

97.4

%

 

95.3

%

 

 

 

 

 

COMPANY-OWNED SALONS:

 

 

 

 

SmartStyle/Cost Cutters in Walmart Stores

 

63

 

 

91

 

Supercuts

 

22

 

 

35

 

Portfolio Brands

 

65

 

 

150

 

Total Company-owned salons

 

150

 

 

276

 

as a percent of total Franchise and Company-owned salons

 

2.6

%

 

4.7

%

 

 

 

 

 

OWNERSHIP INTEREST LOCATIONS:

 

 

 

 

Equity ownership interest locations

 

76

 

 

78

 

 

 

 

 

 

Grand Total, System-wide

 

5,779

 

 

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 income (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 six months ended December 31, 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:

  • 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
  • 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 December 31,

 

Six Months Ended December 31,

 

 

U.S. GAAP financial line item

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP revenue

 

 

 

$

70,256

 

 

$

104,320

 

 

$

148,012

 

 

$

215,716

 

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP operating loss

 

 

 

$

(1,127

)

 

$

(26,755

)

 

$

(6,929

)

 

$

(58,345

)

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating expense adjustments (1)

 

 

 

 

 

 

 

 

 

 

CEO transition

 

General and administrative

 

 

(516

)

 

 

 

 

 

(516

)

 

 

(1,294

)

Distribution center fees

 

General and administrative

 

 

56

 

 

 

 

 

 

285

 

 

 

 

Professional fees and settlements

 

General and administrative

 

 

1,061

 

 

 

1,216

 

 

 

1,160

 

 

 

2,943

 

Severance

 

General and administrative

 

 

1,735

 

 

 

2,022

 

 

 

1,911

 

 

 

2,391

 

Lease liability benefit

 

Rent

 

 

(496

)

 

 

(2,226

)

 

 

(2,927

)

 

 

(8,286

)

Lease termination fees

 

Rent

 

 

238

 

 

 

1,117

 

 

 

1,578

 

 

 

6,670

 

Real estate fees

 

Rent

 

 

 

 

 

375

 

 

 

40

 

 

 

375

 

Asset retirement obligation

 

Depreciation and amortization

 

 

278

 

 

 

1,383

 

 

 

565

 

 

 

2,672

 

Long-lived asset impairment

 

Long-lived asset impairment

 

 

52

 

 

 

3,160

 

 

 

215

 

 

 

8,984

 

Total non-GAAP operating expense adjustments

 

 

 

 

2,408

 

 

 

7,047

 

 

 

2,311

 

 

 

14,455

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating income (loss) (1)

 

 

 

$

1,281

 

 

$

(19,708

)

 

$

(4,618

)

 

$

(43,890

)

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP net loss

 

 

 

$

(4,928

)

 

$

(32,879

)

 

$

(15,306

)

 

$

(68,144

)

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net loss adjustments:

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating expense adjustments

 

 

 

 

2,408

 

 

 

7,047

 

 

 

2,311

 

 

 

14,455

 

Non-recurring, non-operating income

 

Interest income and other, net

 

 

(100

)

 

 

 

 

 

(100

)

 

 

 

Income tax impact on Non-GAAP adjustments (2)

 

Income taxes

 

 

(23

)

 

 

(70

)

 

 

(22

)

 

 

(144

)

Total non-GAAP net loss adjustments

 

 

 

 

2,285

 

 

 

6,977

 

 

 

2,189

 

 

 

14,311

 

Non-GAAP net loss

 

 

 

$

(2,643

)

 

$

(25,902

)

 

$

(13,117

)

 

$

(53,833

)

(1) Adjusted operating margins for the three months ended December 31, 2021 and 2020 were 1.8% and (18.9)%, and were (3.1)% and (20.3)% for the six months ended December 31, 2021 and 2020, respectively, and are calculated as non-GAAP operating income (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 six months ended December 31, 2021 and 2020 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

December 31,

 

Six Months Ended December

31,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

U.S. GAAP net loss per diluted share

 

$

(0.108

)

 

$

(0.915

)

 

$

(0.371

)

 

$

(1.899

)

CEO Transition (1)

 

 

(0.011

)

 

 

 

 

 

(0.013

)

 

 

(0.036

)

Distribution center fees (1)

 

 

0.001

 

 

 

 

 

 

0.007

 

 

 

 

Professional fees and settlements (1)

 

 

0.023

 

 

 

0.034

 

 

 

0.028

 

 

 

0.081

 

Severance (1)

 

 

0.038

 

 

 

0.055

 

 

 

0.045

 

 

 

0.067

 

Lease liability benefit (1)

 

 

(0.011

)

 

 

(0.061

)

 

 

(0.070

)

 

 

(0.229

)

Lease termination fees (1)

 

 

0.005

 

 

 

0.031

 

 

 

0.038

 

 

 

0.184

 

Real estate fees (1)

 

 

 

 

 

0.010

 

 

 

0.001

 

 

 

0.010

 

Asset retirement obligation (1)

 

 

0.006

 

 

 

0.038

 

 

 

0.014

 

 

 

0.074

 

Long-lived asset impairment (1)

 

 

0.001

 

 

 

0.087

 

 

 

0.005

 

 

 

0.248

 

Non-recurring, non-operating income (1)

 

 

(0.002

)

 

 

 

 

 

(0.002

)

 

 

 

Non-GAAP net loss per diluted share (2)

 

$

(0.058

)

 

$

(0.721

)

 

$

(0.318

)

 

$

(1.500

)

 

 

 

 

 

 

 

 

 

U.S. GAAP Weighted average shares - basic and diluted

 

 

45,721

 

 

 

35,931

 

 

 

41,274

 

 

 

35,889

 

Non-GAAP Weighted average shares - diluted

 

 

45,721

 

 

 

35,931

 

 

 

41,274

 

 

 

35,889

 

 

(1) Based on projected statutory effective tax rate analyses, the non-GAAP tax provision was calculated to be approximately 1% for the three and six months ended December 31, 2021 and 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.

 

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 six months ended December 31, 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 loss to EBITDA reconciliation, therefore there is no adjustment needed for the reconciliation from EBITDA to adjusted EBITDA.

 

 

Three Months Ended December 31, 2021

 

 

Franchise

 

Company-

owned

 

Consolidated (1)

 

 

 

 

 

 

 

Consolidated reported net loss, as reported (U.S. GAAP)

 

$

(1,708

)

 

$

(3,220

)

 

$

(4,928

)

Interest expense, as reported

 

 

3,449

 

 

 

 

 

 

3,449

 

Income taxes, as reported

 

 

(164

)

 

 

 

 

 

(164

)

Depreciation and amortization, as reported

 

 

1,503

 

 

 

477

 

 

 

1,980

 

Long-lived asset impairment, as reported

 

 

128

 

 

 

(76

)

 

 

52

 

EBITDA (as defined above)

 

$

3,208

 

 

$

(2,819

)

 

$

389

 

 

 

 

 

 

 

 

CEO transition

 

 

(516

)

 

 

 

 

 

(516

)

Distribution center fees

 

 

56

 

 

 

 

 

 

56

 

Professional fees and settlements

 

 

1,061

 

 

 

 

 

 

1,061

 

Severance

 

 

1,735

 

 

 

 

 

 

1,735

 

Lease liability benefit

 

 

(60

)

 

 

(436

)

 

 

(496

)

Lease termination fees

 

 

116

 

 

 

122

 

 

 

238

 

Non-recurring, non-operating income

 

 

(100

)

 

 

 

 

 

(100

)

Adjusted EBITDA, non-GAAP financial measure

 

$

5,500

 

 

$

(3,133

)

 

$

2,367

 

 

 

 

Three Months Ended December 31, 2020

 

 

Franchise

 

Company-

owned

 

Consolidated (1)

 

 

 

 

 

 

 

Consolidated reported net loss, as reported (U.S. GAAP)

 

$

(15,509

)

 

$

(17,370

)

 

$

(32,879

)

Interest expense, as reported

 

 

3,701

 

 

 

 

 

 

3,701

 

Income taxes, as reported

 

 

(400

)

 

 

 

 

 

(400

)

Depreciation and amortization, as reported

 

 

2,077

 

 

 

4,311

 

 

 

6,388

 

Long-lived asset impairment, as reported

 

 

94

 

 

 

3,066

 

 

 

3,160

 

EBITDA (as defined above)

 

$

(10,037

)

 

$

(9,993

)

 

$

(20,030

)

 

 

 

 

 

 

 

Professional fees and settlements

 

 

1,216

 

 

 

 

 

 

1,216

 

Severance

 

 

2,022

 

 

 

 

 

 

2,022

 

Lease liability benefit

 

 

(34

)

 

 

(2,192

)

 

 

(2,226

)

Lease termination fees

 

 

 

 

 

1,117

 

 

 

1,117

 

Real estate fees

 

 

 

 

 

375

 

 

 

375

 

Adjusted EBITDA, non-GAAP financial measure

 

$

(6,833

)

 

$

(10,693

)

 

$

(17,526

)

(1) Consolidated EBITDA margins for the three months ended December 31, 2021 and 2020 were 0.6% and (19.2)%, 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 December 31, 2021 and 2020 were 3.4% and (16.8)%, respectively, and are calculated as adjusted EBITDA divided by U.S. GAAP revenue for each respective period. 

 

 

 

Six Months Ended December 31, 2021

 

 

Franchise

 

Company-

owned

 

Consolidated (1)

 

 

 

 

 

 

 

Consolidated reported net loss, as reported (U.S. GAAP)

 

$

(11,065

)

 

$

(4,241

)

 

$

(15,306

)

Interest expense, as reported

 

 

6,755

 

 

 

 

 

 

6,755

 

Income taxes, as reported

 

 

(213

)

 

 

 

 

 

(213

)

Depreciation and amortization, as reported

 

 

3,125

 

 

 

724

 

 

 

3,849

 

Long-lived asset impairment, as reported

 

 

128

 

 

 

87

 

 

 

215

 

EBITDA (as defined above)

 

$

(1,270

)

 

$

(3,430

)

 

$

(4,700

)

 

 

 

 

 

 

 

CEO transition

 

 

(516

)

 

 

 

 

 

(516

)

Distribution center fees

 

 

285

 

 

 

 

 

 

285

 

Professional fees and settlements

 

 

1,160

 

 

 

 

 

 

1,160

 

Severance

 

 

1,911

 

 

 

 

 

 

1,911

 

Lease liability benefit

 

 

(146

)

 

 

(2,781

)

 

 

(2,927

)

Lease termination fees

 

 

95

 

 

 

1,483

 

 

 

1,578

 

Real estate fees

 

 

 

 

 

40

 

 

 

40

 

Non-recurring, non-operating income

 

 

(100

)

 

 

 

 

 

(100

)

Adjusted EBITDA, non-GAAP financial measure

 

$

1,419

 

 

$

(4,688

)

 

$

(3,269

)

 

 

 

Six Months Ended December 31, 2020

 

 

Franchise

 

Company-

owned

 

Consolidated (1)

 

 

 

 

 

 

 

Consolidated reported net loss, as reported (U.S. GAAP)

 

$

(30,028

)

 

$

(38,116

)

 

$

(68,144

)

Interest expense, as reported

 

 

7,463

 

 

 

 

 

 

7,463

 

Income taxes, as reported

 

 

(1,035

)

 

 

 

 

 

(1,035

)

Depreciation and amortization, as reported

 

 

4,371

 

 

 

9,393

 

 

 

13,764

 

Long-lived asset impairment

 

 

704

 

 

 

8,280

 

 

 

8,984

 

EBITDA (as defined above)

 

$

(18,525

)

 

$

(20,443

)

 

$

(38,968

)

 

 

 

 

 

 

 

CEO transition

 

 

(1,294

)

 

 

 

 

 

(1,294

)

Professional fees and settlements

 

 

2,943

 

 

 

 

 

 

2,943

 

Severance

 

 

2,391

 

 

 

 

 

 

2,391

 

Lease liability benefit

 

 

(298

)

 

 

(7,988

)

 

 

(8,286

)

Lease termination fees

 

 

 

 

 

6,670

 

 

 

6,670

 

Real estate fees

 

 

 

 

 

375

 

 

 

375

 

Adjusted EBITDA, non-GAAP financial measure

 

$

(14,783

)

 

$

(21,386

)

 

$

(36,169

)

(1) Consolidated EBITDA margins for the six months ended December 31, 2021 and 2020 were (3.2)% and (18.1)%, 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 six months ended December 31, 2021 and 2020 were (2.2)% and (16.8)%, respectively, and are calculated as adjusted EBITDA divided by U.S. GAAP 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 December 31,

 

 

 

2021

 

 

 

2020

 

 

 

 

 

 

As adjusted EBITDA

 

$

5,500

 

 

$

(6,833

)

U.S. GAAP revenue

 

 

65,213

 

 

 

66,423

 

As adjusted EBITDA as a % of U.S. GAAP revenue (1)

 

 

8.4

%

 

 

(10.3

) %

Non-margin revenue adjustments:

 

 

 

 

Franchise rental income

 

 

(33,772

)

 

 

(32,285

)

Advertising fund contributions

 

 

(8,021

)

 

 

(4,715

)

Adjusted revenue

 

$

23,420

 

 

$

29,423

 

As adjusted EBITDA as a percent of adjusted revenue (1)

 

 

23.5

%

 

 

(23.2

) %

 

Six Months Ended December 31,

 

 

 

2021

 

 

 

2020

 

 

 

 

 

 

As adjusted EBITDA

 

$

1,419

 

 

$

(14,783

)

U.S. GAAP revenue

 

 

134,964

 

 

 

130,404

 

As adjusted EBITDA as a % of U.S. GAAP revenue (1)

 

 

1.1

%

 

 

(11.3

) %

Non-margin revenue adjustments:

 

 

 

 

Franchise rental income

 

 

(67,534

)

 

 

(64,568

)

Advertising fund contributions

 

 

(16,136

)

 

 

(9,224

)

Adjusted revenue

 

$

51,294

 

 

$

56,612

 

As adjusted EBITDA as a percent of adjusted revenue (1)

 

 

2.8

%

 

 

(26.1

) %

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

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