Regis Reports Second Quarter 2021 Results and Takes Action on a Number of Initiatives to Position the Company for Growth

February 3, 2021 6:14 PM EST

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The Company Continues To Make Progress In Its Transition To A Fully-Franchised Model With The Sale And Conversion Of An Additional 145 Company-Owned Salons To Its Franchise Portfolio During The Quarter

Second Quarter 2021 Results Were Materially Impacted By The COVID-19 Pandemic; Excluding Discrete Items, The Company Reported Second Quarter 2021 Adjusted Net Loss of $25.9 Million

As Of December 31, 2020, Approximately 84% Of The Company's Salon Portfolio Was Franchised

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

 

 

Three Months Ended December 31,

 

Six Months Ended December 31,

(Dollars in thousands)

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Consolidated Revenue

 

$

104,320

 

 

$

208,765

 

 

$

215,716

 

 

$

455,803

 

System-wide Revenue (1)

 

$

261,452

 

 

$

428,731

 

 

$

523,573

 

 

$

878,019

 

 

 

 

 

 

 

 

 

 

System-wide Same-Store Sales Comps (2)

 

(32.0

)%

 

(2.3

)%

 

(32.3

)%

 

(1.7

)%

Franchise Same-Store Sales Comps (2)

 

(31.1

)%

 

(1.4

)%

 

(31.5

)%

 

(0.8

)%

Company-owned Same-Store Sales Comps

 

(36.2

)%

 

(3.6

)%

 

(35.4

)%

 

(2.7

)%

 

 

 

 

 

 

 

 

 

Operating Loss

 

$

(26,755

)

 

$

(7,466

)

 

$

(58,345

)

 

$

(17,372

)

Loss From Continuing Operations

 

$

(32,879

)

 

$

(16,520

)

 

$

(68,144

)

 

$

(30,698

)

Diluted Loss per Share From Continuing Operations

 

$

(0.92

)

 

$

(0.46

)

 

$

(1.90

)

 

$

(0.85

)

EBITDA (3)

 

$

(20,030

)

 

$

(9,178

)

 

$

(38,968

)

 

$

(15,020

)

as a percent of revenue

 

(19.2

)%

 

(4.4

)%

 

(18.1

)%

 

(3.3

)%

 

 

 

 

 

 

 

 

 

As Adjusted (3)

 

 

 

 

 

 

 

 

Net (Loss) Income, as Adjusted

 

$

(25,902

)

 

$

4,622

 

 

$

(53,833

)

 

$

18,522

 

Diluted (Loss) Income per Share, as Adjusted

 

$

(0.72

)

 

$

0.13

 

 

$

(1.50

)

 

$

0.50

 

EBITDA, as Adjusted (3)

 

$

(17,526

)

 

$

17,014

 

 

$

(36,169

)

 

$

46,799

 

as a percent of revenue

 

(16.8

)%

 

8.1

%

 

(16.8

)%

 

10.3

%

_______________________________________________________________________________

(1)

 

Represents total sales within the system, excluding TBG franchise sales.

(2)

 

System-wide and franchise same-store sales excludes TBG in both periods.

(3)

 

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, owning and operating technology enabled hair salons, today reported a second quarter 2021 net loss from continuing operations of $32.9 million, or $0.92 loss per diluted share as compared to a net loss from continuing operations of $16.5 million, or $0.46 loss per diluted share in the second quarter of 2020. The Company’s second quarter reported results included $7.0 million of discrete items. Excluding discrete items, the Company reported second quarter 2021 adjusted net loss of $25.9 million, or $0.72 loss per diluted share as compared to adjusted net income of $4.6 million, or $0.13 earnings per diluted share, for the same period last year. The year-over-year decrease in adjusted net income was driven primarily by the decrease in the gain from the sale of salons to franchisees of $18.2 million due to lower proceeds per salon in the current year. The elimination of adjusted net income that had been generated in the prior year period from the 768 company-owned salons that were sold and converted to the Company’s asset-light franchise portfolio over the past twelve months also contributed to the decline, but this was partially offset by significant reductions in general and administrative expense and marketing. Additionally, the Company estimates it lost approximately $35 million in revenue due to government-mandated salon closures and lower traffic due to the COVID-19 pandemic.

Total revenue in the quarter of $104.3 million decreased $104.4 million, or 50.0%, year-over-year driven primarily by the conversion of a net 768 company-owned salons to the Company's asset-light franchise portfolio over the past 12 months and due to the impact of the COVID-19 pandemic.

Second quarter adjusted EBITDA loss of $17.5 million decreased $34.5 million, versus the same period last year. Excluding the $3.2 million adjusted loss and $15.0 million adjusted gain from the sale of company-owned salons during the current and prior year quarter, respectively, adjusted EBITDA loss of $14.3 million was $16.3 million unfavorable versus the same period last year. This was driven primarily by the elimination of adjusted EBITDA that had been generated in the prior year period from the 768 company-owned salons that were sold and converted to the Company’s asset-light franchise portfolio over the past twelve months, partially offset by significant reductions in general and administrative expense and marketing spend.

Felipe Athayde, President and Chief Executive Officer, commented, "While the effects of the pandemic are evident in our results, we remain very confident about the strength of our business and our brands. Over the past quarter, we have executed on a number of strategic initiatives including a brand-centric corporate reorganization, the implementation of a zero-based budgeting process, an evolution of our corporate salon refranchising strategy, and the launch of new salon automation functionalities to our proprietary POS and salon management technology: Opensalon® PRO. These initiatives were designed to transform Regis into a nimble, performance-driven, data-oriented organization, which we believe will position Regis well for a solid comeback."

Second Quarter Segment Results

Franchise Salons

 

 

Three Months Ended
December 31,

 

Increase
(Decrease)

 

Six Months Ended
December 31,

 

Increase
(Decrease)

 

 

 

 

 

 

 

 

 

 

 

(Dollars in millions) (1)

 

2020

 

2019

 

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

14.2

 

 

$

16.2

 

 

$

(2.0

)

 

$

28.0

 

 

$

28.0

 

 

$

 

Product sold to TBG mall locations

 

 

 

0.7

 

 

(0.7

)

 

 

 

2.0

 

 

(2.0

)

Total product

 

14.2

 

 

16.9

 

 

(2.7

)

 

28.0

 

 

30.0

 

 

(2.0

)

Royalties and fees

 

19.9

 

 

29.3

 

 

(9.4

)

 

37.9

 

 

57.4

 

 

(19.5

)

Franchise rental income

 

32.3

 

 

33.6

 

 

(1.3

)

 

64.6

 

 

65.1

 

 

(0.5

)

Total franchised salons revenue

 

$

66.4

 

 

$

79.8

 

 

$

(13.4

)

 

$

130.4

 

 

$

152.4

 

 

$

(22.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise Same-Store Sales Comps (2)

 

(31.1

)%

 

(1.4

)%

 

 

 

(31.5

)%

 

(0.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA, as Adjusted

 

$

10.8

 

 

$

13.1

 

 

$

(2.3

)

 

$

17.7

 

 

$

24.9

 

 

$

(7.2

)

as a percent of revenue

 

16.2

%

 

16.4

%

 

 

 

13.6

%

 

16.4

%

 

 

as a percent of adjusted revenue (3)

 

36.6

%

 

37.6

%

 

 

 

31.3

%

 

38.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Franchise Salons

 

5,269

 

 

4,790

 

 

479

 

 

 

 

 

 

 

as a percent of total Franchise and Company-owned salons

 

83.6

%

 

67.8

%

 

 

 

 

 

 

 

 

_______________________________________________________________________________

(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.

Second quarter Franchise revenue was $66.4 million, a $13.4 million, or 16.8% decrease compared to the prior year quarter, and included franchise rental income of $32.3 million. Royalties and fees were $19.9 million, a $9.4 million, or 32.2% decrease versus the same period last year. Royalties and other franchise fees decreased $3.5 million due to an estimated $5.5 million decrease in royalties due to the COVID-19 pandemic, partially offset by an increase in franchisees. Advertising funds decreased $6.0 million also related to the COVID-19 pandemic. Product sales to franchisees of $14.2 million decreased $2.7 million versus the same period last year due to lower same-store retail sales due primarily to the COVID-19 pandemic. Franchise adjusted EBITDA of $10.8 million decreased $2.3 million, or 17.6% year-over-year primarily due to the decline in franchise same-store sales of 31.1% primarily related to the COVID-19 pandemic. Total franchised locations open at December 31, 2020 were 5,269 compared to 4,790 at December 31, 2019.

Company-Owned Salons

 

 

Three Months Ended
December 31,

 

Increase
(Decrease)

 

Six Months Ended
December 31,

 

Increase
(Decrease)

 

 

 

 

 

 

 

 

 

 

 

(Dollars in millions) (1)

 

2020

 

2019

 

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

$

37.9

 

 

$

128.9

 

 

$

(91.0

)

 

$

85.3

 

 

$

303.4

 

 

$

(218.1

)

Company-owned Same-Store Sales Comps

 

(36.2

)%

 

(3.6

)%

 

 

 

(35.4

)%

 

(2.7

)%

 

 

Year-over-Year Ticket change

 

10.8

%

 

3.0

%

 

 

 

12.3

%

 

3.0

%

 

 

Year-over-Year Transaction change

 

(47.0

)%

 

(6.6

)%

 

 

 

(47.7

)%

 

(5.7

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA, as Adjusted

 

$

(10.7

)

 

$

4.2

 

 

$

(14.9

)

 

$

(21.4

)

 

$

15.7

 

 

$

(37.1

)

as a percent of revenue

 

(28.2

)%

 

3.3

%

 

 

 

(25.1

)%

 

5.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company-owned salons

 

1,037

 

 

2,277

 

 

(1,240

)

 

 

 

 

 

 

as a percent of total Franchise and Company-owned salons

 

16.4

%

 

32.2

%

 

 

 

 

 

 

 

 

_______________________________________________________________________________

(1)

 

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

Second quarter revenue for the Company-owned salon segment decreased $91.0 million, or 70.6%, versus the prior year to $37.9 million. The year-over-year decline in revenue was driven by the decrease of a net 768 salons sold and converted to the Company's asset-light franchise portfolio over the past 12 months, the closure of a net 472 unprofitable salons over the past 12 months and a decline in revenue due to the COVID-19 pandemic. Company-owned same-store sales decreased 36.2%, primarily driven by a 47.0% decrease in transactions related to the COVID-19 pandemic, partially offset by a 10.8% increase in average ticket.

Second quarter adjusted EBITDA decreased $14.9 million, or 352.6%, versus the same period last year driven primarily by the elimination of EBITDA that had been generated in the prior year period from the 768 company-owned salons that were sold and converted to the Company's asset-light franchise portfolio over the past 12 months, the impacts of the COVID-19 pandemic, and the decline in service and product margins, partially offset by a decrease in general and administrative expense and marketing spend.

Other Key Events

  • In October 2020, Felipe Athayde joined the Company as CEO and President to lead the Company as it enters its growth phase.
  • In December 2020, the Company announced a brand-centric reorganization. This reorganization is the first major strategic initiative by Felipe Athayde, the Company's CEO, and reorients the Company to focus on the performance of its brands and the profitability of its franchisees. As part of the reorganization, Supercuts, SmartStyle and Portfolio Brands (a collection of growth and innovation concepts), are each run by a Brand President and dedicated team. This presents a departure from the Company's previous organizing principle that only distinguished between the Franchise and Company-owned businesses.
  • Continued migration of the Company's proprietary cloud-based salon management and point of commerce solution, Opensalon PRO. Approximately 1,000 salons, or 18%, of our franchise salons, have signed contracts to install Opensalon PRO, with approximately 350 salons currently live.
  • Launched a comprehensive zero-based budget and zero-based organization initiative, to align our cost structure with our brand-focused franchise strategy.
  • The Company continues its extensive lease re-negotiation efforts; since mid-May total system-wide lease savings of over $9 million have been achieved.
  • Today, the Company filed a $150 million shelf registration and $50 million prospectus supplement with the Securities and Exchange Commission under which it may offer and sell, from time to time, up to $50 million worth of its of its Class A common stock in “at-the-market offerings.” Net proceeds from sales of shares under the “at-the-market” program, if any, may be used, among other things, to fund working capital requirements, repay debt, and support of our growth strategies. Such strategies may include positioning the Company for potential expansion through targeted industry acquisitions and alternatives to fund additional capital investment requirements related to potential partnership opportunities to facilitate continued growth of our proprietary technology, Opensalon PRO. The timing and amount of sales of shares, if any, will depend on a variety of factors, including prevailing market conditions, the trading price of shares, and other factors as determined by the Company.
  • The Company continues to make meaningful progress on its multi-year strategy to convert to a fully-franchised model. During the second quarter, it sold and transferred 145 company-owned salons to its asset-light franchise portfolio. The Company is still committed to converting to a fully-franchise capital-light business.
  • The impact of the transactions closed in the quarter is as follows:

 

 

Three Months Ended
December 31,

 

Increase
(Decrease)

 

Six Months Ended
December 31,

 

Increase
(Decrease)

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

2019

 

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Salons sold to franchisees

 

145

 

 

443

 

 

(298

)

 

282

 

 

988

 

 

(706

)

Cash proceeds received

 

$

3,413

 

 

$

31,468

 

 

$

(28,055

)

 

$

7,148

 

 

$

69,414

 

 

$

(62,266

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) gain on venditions, excluding goodwill derecognition

 

$

(3,226

)

 

$

14,993

 

 

$

(18,219

)

 

$

(3,888

)

 

$

41,213

 

 

$

(45,101

)

Non-cash goodwill derecognition

 

 

 

(27,400

)

 

27,400

 

 

 

 

(59,480

)

 

59,480

 

Loss from sale of salon assets to franchisees, net

 

$

(3,226

)

 

$

(12,407

)

 

$

9,181

 

 

$

(3,888

)

 

$

(18,267

)

 

$

14,379

 

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 4, 2021, at 9 a.m., Central time. Interested parties are invited to participate in the live webcast by logging on to www.regiscorp.com or participate via telephone by dialing (888) 254-3590 and entering access code 9126102. A replay of the presentation will be available later that day. The replay phone number is (888) 203-1112, access code 9126102.

About Regis Corporation

Regis Corporation (NYSE: RGS) is a leader in beauty salons and cosmetology education. As of December 31, 2020, the Company franchised, owned or held ownership interests in 6,384 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 uncertainties 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, as well as the health and risk appetite of our stylists, customers and employees to return to the salon environment; the continued ability of the Company to implement its strategy, priorities and initiatives including the re-engineering of our corporate and field infrastructure; our new company-owned back office management system may not yield the intended results on timing and amounts due to the COVID-19 pandemic, efforts by our current third-party back office management system vendor to make it difficult for our franchisees to convert to our new company-owned system, and the pending litigation with that third-party vendor; the impact of the COVID-19 pandemic on our key suppliers; the ability to address rent obligations incurred during the government-mandated hibernation of our salons related to the COVID-19 pandemic and the ability to obtain long-term rent concessions; the ability to operate or sell the salons transferred back from TBG; the outcome of the review by the administrator in TBG's insolvency proceedings in the United Kingdom; compliance with credit facility covenants and access to the existing revolving credit facility; 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; if our capital investments in technology do not achieve appropriate returns; 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; the impact of recent actions by Walmart; marketing efforts to drive traffic to our franchisees' salons; changes in regulatory and statutory laws including increases in minimum wages; our ability to maintain and enhance the value of our brands; premature termination of agreements with our franchisees; reliance on information technology systems; reliance on external vendors; consumer shopping trends and changes in manufacturer distribution channels; competition within the personal hair care industry; continued ability to compete in our business markets; the continued ability to maintain an effective system of internal controls over financial reporting; changes in tax exposure; failure to standardize operating processes across brands; financial performance of Empire Education Group; the continued ability of the Company to implement cost reduction initiatives; changes in economic conditions; changes in consumer tastes and fashion trends; failure at our distribution centers; exposure to uninsured or unidentified risks; reliance on our management team and other key personnel 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,
2020

 

June 30,
2020

 

 

 

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

50,850

 

 

$

113,667

 

Receivables, net

 

31,185

 

 

31,030

 

Inventories

 

51,483

 

 

62,597

 

Other current assets

 

17,226

 

 

19,138

 

Total current assets

 

150,744

 

 

226,432

 

 

 

 

 

 

Property and equipment, net

 

43,579

 

 

57,176

 

Goodwill

 

228,950

 

 

227,457

 

Other intangibles, net

 

4,532

 

 

4,579

 

Right of use asset

 

637,108

 

 

786,216

 

Other assets

 

40,237

 

 

40,934

 

Total assets

 

$

1,105,150

 

 

$

1,342,794

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

36,922

 

 

$

50,918

 

Accrued expenses

 

49,277

 

 

48,825

 

Short-term lease liability

 

127,649

 

 

137,271

 

Total current liabilities

 

213,848

 

 

237,014

 

 

 

 

 

 

Long-term debt, net

 

177,500

 

 

177,500

 

Long-term lease liability

 

540,930

 

 

680,454

 

Long-term financing liabilities

 

27,640

 

 

27,981

 

Other non-current liabilities

 

86,784

 

 

94,142

 

Total liabilities

 

1,046,702

 

 

1,217,091

 

Commitments and contingencies

 

 

 

 

Shareholders’ equity:

 

 

 

 

Common stock, $0.05 par value; issued and outstanding 35,768,086 and 35,625,716 common shares at December 31, 2020 and June 30, 2020, respectively

 

1,788

 

 

1,781

 

Additional paid-in capital

 

22,076

 

 

22,011

 

Accumulated other comprehensive income

 

8,786

 

 

7,449

 

Retained earnings

 

25,798

 

 

94,462

 

Total shareholders’ equity

 

58,448

 

 

125,703

 

Total liabilities and shareholders’ equity

 

$

1,105,150

 

 

$

1,342,794

 

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For The Three And Six Months Ended December 31, 2020 And 2019

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

 

 

 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Service

 

$

28,987

 

 

$

101,805

 

 

$

65,395

 

 

$

243,746

 

Product

 

23,146

 

 

43,983

 

 

47,895

 

 

89,639

 

Royalties and fees

 

19,902

 

 

29,347

 

 

37,858

 

 

57,364

 

Franchise rental income

 

32,285

 

 

33,630

 

 

64,568

 

 

65,054

 

Total revenue

 

104,320

 

 

208,765

 

 

215,716

 

 

455,803

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of service

 

22,097

 

 

67,358

 

 

50,620

 

 

157,840

 

Cost of product

 

17,203

 

 

27,258

 

 

33,572

 

 

53,585

 

Site operating expenses

 

10,350

 

 

26,330

 

 

23,589

 

 

59,272

 

General and administrative

 

26,690

 

 

32,691

 

 

52,837

 

 

73,316

 

Rent

 

12,902

 

 

20,495

 

 

26,127

 

 

44,759

 

Franchise rent expense

 

32,285

 

 

33,630

 

 

64,568

 

 

65,054

 

Depreciation and amortization

 

6,388

 

 

7,747

 

 

13,764

 

 

17,127

 

Long-lived asset impairment

 

3,160

 

 

 

 

8,984

 

 

 

TBG mall location restructuring

 

 

 

722

 

 

 

 

2,222

 

Total operating expenses

 

131,075

 

 

216,231

 

 

274,061

 

 

473,175

 

 

 

 

 

 

 

 

 

 

Operating loss

 

(26,755

)

 

(7,466

)

 

(58,345

)

 

(17,372

)

 

 

 

 

 

 

 

 

 

Other (expense) income:

 

 

 

 

 

 

 

 

Interest expense

 

(3,701

)

 

(1,464

)

 

(7,463

)

 

(2,903

)

Loss from sale of salon assets to franchisees, net

 

(3,226

)

 

(12,407

)

 

(3,888

)

 

(18,267

)

Interest income and other, net

 

403

 

 

2,869

 

 

517

 

 

3,040

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations before income taxes

 

(33,279

)

 

(18,468

)

 

(69,179

)

 

(35,502

)

 

 

 

 

 

 

 

 

 

Income tax benefit

 

400

 

 

1,948

 

 

1,035

 

 

4,804

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations

 

(32,879

)

 

(16,520

)

 

(68,144

)

 

(30,698

)

 

 

 

 

 

 

 

 

 

Income from discontinued operations, net of taxes

 

 

 

79

 

 

 

 

452

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(32,879

)

 

$

(16,441

)

 

$

(68,144

)

 

$

(30,246

)

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted:

 

 

 

 

 

 

 

 

Loss from continuing operations

 

$

(0.92

)

 

$

(0.46

)

 

$

(1.90

)

 

$

(0.85

)

Income from discontinued operations

 

0.00

 

 

0.00

 

 

0.00

 

 

0.01

 

Net loss per share, basic and diluted (1)

 

$

(0.92

)

 

$

(0.46

)

 

$

(1.90

)

 

$

(0.84

)

 

 

 

 

 

 

 

 

 

Weighted average common and common equivalent shares outstanding:

 

 

 

 

 

 

 

 

Basic and diluted

 

35,931

 

 

35,798

 

 

35,889

 

 

36,028

 

_______________________________________________________________________________

(1)

 

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, 2020 And 2019

(Dollars in thousands)

 

 

 

Six Months Ended December 31,

 

 

2020

 

2019

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(68,144

)

 

$

(30,246

)

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

 

 

 

 

Non-cash adjustments related to discontinued operations

 

 

 

(586

)

Depreciation and amortization

 

11,123

 

 

14,484

 

Salon asset impairment

 

 

 

2,643

 

Long-lived asset impairment

 

8,984

 

 

 

Deferred income taxes

 

(669

)

 

(6,380

)

Gain from sale of company headquarters, net

 

 

 

(2,513

)

Loss from sale of salon assets to franchisees, net

 

3,888

 

 

18,267

 

Stock-based compensation

 

89

 

 

2,139

 

Amortization of debt discount and financing costs

 

875

 

 

138

 

Other non-cash items affecting earnings

 

202

 

 

(243

)

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

 

(21,812

)

 

(17,032

)

Net cash used in operating activities

 

(65,464

)

 

(19,329

)

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Capital expenditures

 

(7,502

)

 

(17,576

)

Proceeds from sale of assets to franchisees

 

7,148

 

 

69,414

 

Costs associated with sale of salon assets to franchisees

 

(222

)

 

(1,550

)

Proceeds from company-owned life insurance policies

 

1,200

 

 

 

Proceeds from sale of company headquarters

 

 

 

8,996

 

Net cash provided by investing activities

 

624

 

 

59,284

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Repayments of revolving credit facility

 

 

 

(30,000

)

Repurchase of common stock

 

 

 

(28,246

)

Taxes paid for shares withheld

 

(212

)

 

(1,809

)

Minority interest buyout

 

(562

)

 

 

Distribution center lease payments

 

(478

)

 

(480

)

Net cash used in financing activities

 

(1,252

)

 

(60,535

)

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(68

)

 

122

 

 

 

 

 

 

Decrease in cash, cash equivalents, and restricted cash

 

(66,160

)

 

(20,458

)

 

 

 

 

 

Cash, cash equivalents and restricted cash:

 

 

 

 

Beginning of period

 

122,880

 

 

92,379

 

End of period

 

$

56,720

 

 

$

71,921

 

REGIS CORPORATION

Same-Store Sales

SYSTEM-WIDE SAME-STORE SALES (1):

 

 

 

Three Months Ended

 

 

December 31, 2020

 

December 31, 2019

 

 

Service

 

Retail

 

Total

 

Service

 

Retail

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

SmartStyle

 

(32.3

)%

 

(31.9

)%

 

(32.2

)%

 

(2.0

)%

 

(9.6

)%

 

(4.3

)%

Supercuts

 

(33.2

)

 

(29.6

)

 

(32.9

)

 

(0.4

)

 

(11.8

)

 

(1.1

)

Portfolio Brands

 

(30.9

)

 

(23.8

)

 

(30.0

)

 

(1.5

)

 

(8.0

)

 

(2.3

)

Total

 

(32.4

)%

 

(28.9

)%

 

(32.0

)%

 

(1.1

)%

 

(9.6

)%

 

(2.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

December 31, 2020

 

December 31, 2019

 

 

Service

 

Retail

 

Total

 

Service

 

Retail

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

SmartStyle

 

(33.6

)%

 

(31.3

)%

 

(33.0

)%

 

(0.9

)%

 

(8.6

)%

 

(3.1

)%

Supercuts

 

(33.5

)

 

(28.0

)

 

(33.2

)

 

0.2

 

 

(9.8

)

 

(0.4

)

Portfolio Brands

 

(31.2

)

 

(21.7

)

 

(30.1

)

 

(1.3

)

 

(6.7

)

 

(2.0

)

Total

 

(32.8

)%

 

(27.7

)%

 

(32.3

)%

 

(0.5

)%

 

(8.3

)%

 

(1.7

)%

_______________________________________________________________________________

(1)

 

System-wide same-store sales 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. Locations relocated within a one-mile radius are included in same-store sales as they are considered to have been open in the prior period. System-wide same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation. TBG salons were not a franchise location in fiscal year 2021 so they are excluded from fiscal year 2020 same-store sales for comparability.

FRANCHISE SAME-STORE SALES (1):

 

 

 

Three Months Ended

 

 

December 31, 2020

 

December 31, 2019

 

 

Service

 

Retail

 

Total

 

Service

 

Retail

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

SmartStyle

 

(29.3

)%

 

(33.9

)%

 

(30.4

)%

 

(5.1

)%

 

(14.8

)%

 

(7.6

)%

Supercuts

 

(32.7

)

 

(28.6

)

 

(32.5

)

 

0.1

 

 

(10.5

)

 

(0.5

)

Portfolio Brands

 

(29.5

)

 

(20.7

)

 

(28.4

)

 

(0.4

)

 

(6.8

)

 

(1.4

)

Total

 

(31.4

)%

 

(28.1

)%

 

(31.1

)%

 

(0.4

)%

 

(10.1

)%

 

(1.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

December 31, 2020

 

December 31, 2019

 

 

Service

 

Retail

 

Total

 

Service

 

Retail

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

SmartStyle

 

(30.2

)%

 

(33.3

)%

 

(31.0

)%

 

(4.3

)%

 

(16.6

)%

 

(7.6

)%

Supercuts

 

(33.1

)

 

(27.1

)

 

(32.7

)

 

0.9

 

 

(8.8

)

 

0.3

 

Portfolio Brands

 

(30.1

)

 

(18.4

)

 

(28.8

)

 

 

 

(7.3

)

 

(1.0

)

Total

 

(32.0

)%

 

(26.3

)%

 

(31.5

)%

 

0.3

%

 

(10.1

)%

 

(0.8

)%

_______________________________________________________________________________

(1)

 

Franchise same-store sales are calculated as the total change in sales for salons that have been a franchise location 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 franchise same-store sales are the sum of the franchise same-store sales computed on a daily basis. Franchise salons that do not report daily sales are excluded from same-store sales. Locations relocated within a one-mile radius are included in same-store sales as they are considered to have been open in the prior period. Franchise same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation. TBG salons were not a franchise location in fiscal year 2021 so they are excluded from fiscal year 2020 same-store sales for comparability.

COMPANY-OWNED SAME-STORE SALES (2):

 

 

 

Three Months Ended

 

 

December 31, 2020

 

December 31, 2019

 

 

Service

 

Retail

 

Total

 

Service

 

Retail

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

SmartStyle

 

(38.2

)%

 

(29.0

)%

 

(35.3

)%

 

(1.2

)%

 

(8.6

)%

 

(3.5

)%

Supercuts

 

(39.9

)

 

(40.3

)

 

(40.0

)

 

(3.9

)

 

(17.7

)

 

(5.1

)

Portfolio Brands

 

(35.3

)

 

(33.9

)

 

(35.1

)

 

(2.5

)

 

(9.4

)

 

(3.3

)

Total

 

(37.3

)%

 

(31.2

)%

 

(36.2

)%

 

(2.1

)%

 

(9.3

)%

 

(3.6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

December 31, 2020

 

December 31, 2019

 

 

Service

 

Retail

 

Total

 

Service

 

Retail

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

SmartStyle

 

(38.0

)%

 

(29.4

)%

 

(35.4

)%

 

(0.1

)%

 

(7.1

)%

 

(2.2

)%

Supercuts

 

(39.7

)

 

(37.1

)

 

(39.5

)

 

(3.6

)

 

(13.4

)

 

(4.4

)

Portfolio Brands

 

(33.9

)

 

(30.8

)

 

(33.6

)

 

(2.4

)

 

(6.0

)

 

(2.8

)

Total

 

(36.6

)%

 

(30.3

)%

 

(35.4

)%

 

(1.6

)%

 

(7.2

)%

 

(2.7

)%

_______________________________________________________________________________

(2)

 

Company-owned same-store sales are calculated as the total change in sales for company-owned locations that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date company-owned same-store sales are the sum of the company-owned same-store sales computed on a daily basis. Locations relocated within a one-mile radius are included in same-store sales as they are considered to have been open in the prior period. Company-owned same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.

REGIS CORPORATION

System-Wide Location Counts

 

 

 

December 31,
2020

 

June 30,
2020

 

 

 

 

 

FRANCHISE SALONS:

 

 

 

 

SmartStyle/Cost Cutters in Walmart Stores

 

1,535

 

 

1,317

 

Supercuts

 

2,368

 

 

2,508

 

Portfolio Brands (1)

 

1,207

 

 

1,217

 

Total North American salons

 

5,110

 

 

5,042

 

Total International Salons (2)

 

159

 

 

167

 

Total Franchise Salons

 

5,269

 

 

5,209

 

as a percent of total Franchise and Company-owned salons

 

83.6

%

 

76.1

%

 

 

 

 

 

COMPANY-OWNED SALONS:

 

 

 

 

SmartStyle/Cost Cutters in Walmart Stores

 

466

 

 

751

 

Supercuts

 

154

 

 

210

 

Portfolio Brands (1)

 

340

 

 

505

 

Mall-based (3)

 

77

 

 

166

 

Total Company-owned salons

 

1,037

 

 

1,632

 

as a percent of total Franchise and Company-owned salons

 

16.4

%

 

23.9

%

 

 

 

 

 

OWNERSHIP INTEREST LOCATIONS:

 

 

 

 

Equity ownership interest locations

 

78

 

 

82

 

 

 

 

 

 

Grand Total, System-wide

 

6,384

 

 

6,923

 

_______________________________________________________________________________

(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 from January 1, 2020.

Non-GAAP Reconciliations:

We believe our presentation of non-GAAP operating loss, net (loss) income, net (loss) income 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, 2020 and 2019:

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 which 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
  • Professional fees
  • Severance expense
  • CEO transition
  • 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 obligations
  • Long-lived asset impairment
  • TBG restructuring
  • 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)

(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

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP revenue

 

 

 

$

104,320

 

 

$

208,765

 

 

$

215,716

 

 

$

455,803

 

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP operating loss

 

 

 

$

(26,755

)

 

$

(7,466

)

 

$

(58,345

)

 

$

(17,372

)

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating expense adjustments (1)

 

 

 

 

 

 

 

 

 

 

Employee litigation reserve

 

Site operating expenses

 

 

 

(600

)

 

 

 

(600

)

Professional fees

 

General and administrative

 

1,216

 

 

115

 

 

2,943

 

 

115

 

Severance

 

General and administrative

 

2,022

 

 

497

 

 

2,391

 

 

2,917

 

CEO Transition

 

General and administrative

 

 

 

 

 

(1,294

)

 

 

Corporate office transition

 

Rent

 

 

 

404

 

 

 

 

404

 

Lease liability benefit

 

Rent

 

(2,226

)

 

 

 

(8,286

)

 

 

Lease termination fees

 

Rent

 

1,117

 

 

 

 

6,670

 

 

 

Real estate fees

 

Rent

 

375

 

 

 

 

375

 

 

 

Asset retirement obligation

 

Depreciation and amortization

 

1,383

 

 

 

 

2,672

 

 

 

Long-lived asset impairment

 

Long-lived asset impairment

 

3,160

 

 

 

 

8,984

 

 

 

TBG restructuring

 

TBG restructuring

 

 

 

968

 

 

 

 

2,468

 

Total non-GAAP operating expense adjustments

 

 

 

7,047

 

 

1,384

 

 

14,455

 

 

5,304

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating loss (1)

 

 

 

$

(19,708

)

 

$

(6,082

)

 

$

(43,890

)

 

$

(12,068

)

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP net loss

 

 

 

$

(32,879

)

 

$

(16,441

)

 

$

(68,144

)

 

$

(30,246

)

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income adjustments:

 

 

 

 

 

 

 

 

 

 

Non-GAAP revenue adjustments

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating expense adjustments

 

 

 

7,047

 

 

1,384

 

 

14,455

 

 

5,304

 

Corporate office transition

 

Interest income and other, net

 

 

 

(2,513

)

 

 

 

(2,513

)

Goodwill derecognition

 

Interest income and other, net

 

 

 

27,400

 

 

 

 

59,480

 

Income tax impact on Non-GAAP adjustments (2)

 

Income taxes

 

(70

)

 

(5,129

)

 

(144

)

 

(13,051

)

TBG discontinued operations, net of income tax

 

Loss from discontinued operations, net of tax

 

 

 

(79

)

 

 

 

(452

)

Total non-GAAP net income adjustments

 

 

 

6,977

 

 

21,063

 

 

14,311

 

 

48,768

 

Non-GAAP net (loss) income

 

 

 

$

(25,902

)

 

$

4,622

 

 

$

(53,833

)

 

$

18,522

 

_______________________________________________________________________________

(1)

 

Adjusted operating margins for the three months ended December 31, 2020 and 2019 were 18.9% and 2.9%, and were 20.3% and 2.6% for the six months ended December 31, 2020 and 2019, respectively, and are calculated as non-GAAP operating loss divided by U.S. GAAP revenue for each respective period.

(2)

 

Based on projected statutory effective tax rate analyses, the non-GAAP tax provision was calculated to be approximately 1% and 22% for the three and six months ended December 31, 2020 and 2019, 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)

(Unaudited)

Reconciliation of U.S. GAAP net loss per diluted share to non-GAAP net (loss) income per diluted share

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

U.S. GAAP net loss per diluted share

 

$

(0.915

)

 

$

(0.459

)

 

$

(1.899

)

 

$

(0.840

)

Employee litigation reserve (1)

 

 

 

(0.013

)

 

 

 

(0.013

)

Professional fees (1)

 

0.034

 

 

0.002

 

 

0.081

 

 

0.002

 

Severance (1)

 

0.055

 

 

0.010

 

 

0.067

 

 

0.061

 

CEO Transition (1)

 

 

 

 

 

(0.036

)

 

 

Corporate office transition (1)

 

 

 

(0.044

)

 

 

 

(0.044

)

Lease liability benefit (1)

 

(0.061

)

 

 

 

(0.229

)

 

 

Lease termination fees (1)

 

0.031

 

 

 

 

0.184

 

 

 

Real estate fees (1)

 

0.010

 

 

 

 

0.010

 

 

 

Asset retirement obligation (1)

 

0.038

 

 

 

 

0.074

 

 

 

Long-lived asset impairment (1)

 

0.087

 

 

 

 

0.248

 

 

 

TBG restructuring (1)

 

 

 

0.020

 

 

 

 

0.052

 

Goodwill derecognition (1)

 

 

 

0.593

 

 

 

 

1.259

 

TBG discontinued operations, net of tax

 

 

 

(0.002

)

 

 

 

(0.012

)

Impact of change in weighted average shares (3)

 

 

 

0.018

 

 

 

 

0.031

 

Non-GAAP net (loss) income per diluted share (2)

 

$

(0.721

)

 

$

0.125

 

 

$

(1.500

)

 

$

0.496

 

 

 

 

 

 

 

 

 

 

U.S. GAAP Weighted average shares - basic

 

35,931

 

 

35,798

 

 

35,889

 

 

36,028

 

U.S. GAAP Weighted average shares - diluted

 

35,931

 

 

35,798

 

 

35,889

 

 

36,028

 

Non-GAAP Weighted average shares - diluted (3)

 

35,931

 

 

37,120

 

 

35,889

 

 

37,366

 

_______________________________________________________________________________

(1)

 

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 six months ended December 31, 2020 and 2019, respectively, 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) income per share reflects the weighted average shares associated with non-GAAP net (loss) income, which includes the dilutive effect of common stock equivalents. The earnings per share impact of the adjustments for the three and six months ended December 31, 2019 included additional shares for common stock equivalents of 1.3 million. The impact of the adjustments described above result in the impact of the common stock equivalents to be dilutive to the non-GAAP net income per share. For the three and six months ended December 31, 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 (loss) income 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, 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) income to EBITDA reconciliation, therefore there is no adjustment needed for the reconciliation from EBITDA to adjusted EBITDA.

 

 

Three Months Ended December 31, 2020

 

 

Franchise

 

Company-
owned

 

Corporate

 

Consolidated (1)

 

 

 

 

 

 

 

 

 

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

 

$

10,430

 

 

$

(17,370

)

 

$

(25,939

)

 

$

(32,879

)

Interest expense, as reported

 

 

 

 

 

3,701

 

 

3,701

 

Income taxes, as reported

 

 

 

 

 

(400

)

 

(400

)

Depreciation and amortization, as reported

 

289

 

 

4,311

 

 

1,788

 

 

6,388

 

Long-lived asset impairment

 

94

 

 

3,066

 

 

 

 

3,160

 

EBITDA (as defined above)

 

$

10,813

 

 

$

(9,993

)

 

$

(20,850

)

 

$

(20,030

)

 

 

 

 

 

 

 

 

 

Professional fees

 

 

 

 

 

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

 

$

10,779

 

 

$

(10,693

)

 

$

(17,612

)

 

$

(17,526

)

 

 

Three Months Ended December 31, 2019

 

 

Franchise

 

Company-
owned

 

Corporate

 

Consolidated (1)

 

 

 

 

 

 

 

 

 

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

 

$

12,126

 

$

(1,105

)

 

$

(27,462

)

 

$

(16,441

)

Interest expense, as reported

 

 

 

 

1,464

 

 

1,464

 

Income taxes, as reported

 

 

 

 

(1,948

)

 

(1,948

)

Depreciation and amortization, as reported

 

210

 

5,938

 

 

1,599

 

 

7,747

 

EBITDA (as defined above)

 

$

12,336

 

$

4,833

 

 

$

(26,347

)

 

$

(9,178

)

 

 

 

 

 

 

 

 

 

Professional fees

 

 

 

 

115

 

 

115

 

Severance

 

 

 

 

497

 

 

497

 

Employee litigation reserve

 

 

(600

)

 

 

 

(600

)

TBG restructuring

 

722

 

 

 

246

 

 

968

 

Corporate office transition

 

 

 

 

(2,109

)

 

(2,109

)

Goodwill derecognition

 

 

 

 

27,400

 

 

27,400

 

TBG discontinued operations, net of income tax

 

 

 

 

(79

)

 

(79

)

Adjusted EBITDA, non-GAAP financial measure

 

$

13,058

 

$

4,233

 

 

$

(277

)

 

$

17,014

 

_______________________________________________________________________________

(1)

 

Consolidated EBITDA margins for the three months ended December 31, 2020 and 2019 were (19.2)% and (4.4)%, 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, 2020 and 2019 were (16.8)% and 8.1%, respectively, and are calculated as adjusted EBITDA divided by U.S. GAAP revenue for each respective period.

 

 

Six Months Ended December 31, 2020

 

 

Franchise

 

Company-
owned

 

Corporate

 

Consolidated (1)

 

 

 

 

 

 

 

 

 

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

 

$

16,776

 

 

$

(38,116

)

 

$

(46,804

)

 

$

(68,144

)

Interest expense, as reported

 

 

 

 

 

7,463

 

 

7,463

 

Income taxes, as reported

 

 

 

 

 

(1,035

)

 

(1,035

)

Depreciation and amortization, as reported

 

563

 

 

9,393

 

 

3,808

 

 

13,764

 

Long-lived asset impairment

 

704

 

 

8,280

 

 

 

 

8,984

 

EBITDA (as defined above)

 

$

18,043

 

 

$

(20,443

)

 

$

(36,568

)

 

$

(38,968

)

 

 

 

 

 

 

 

 

 

Professional fees

 

 

 

 

 

2,943

 

 

2,943

 

Severance

 

 

 

 

 

2,391

 

 

2,391

 

CEO Transition

 

 

 

 

 

(1,294

)

 

(1,294

)

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

 

$

17,745

 

 

$

(21,386

)

 

$

(32,528

)

 

$

(36,169

)

 

 

Six Months Ended December 31, 2019

 

 

Franchise

 

Company-owned

 

Corporate

 

Consolidated (1)

 

 

 

 

 

 

 

 

 

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

 

$

22,335

 

$

4,296

 

 

$

(56,877

)

 

$

(30,246

)

Interest expense, as reported

 

 

 

 

2,903

 

 

2,903

 

Income taxes, as reported

 

 

 

 

(4,804

)

 

(4,804

)

Depreciation and amortization, as reported

 

370

 

12,045

 

 

4,712

 

 

17,127

 

EBITDA (as defined above)

 

$

22,705

 

$

16,341

 

 

$

(54,066

)

 

$

(15,020

)

 

 

 

 

 

 

 

 

 

Professional fees

 

 

 

 

115

 

 

115

 

Severance

 

 

 

 

2,917

 

 

2,917

 

Employee litigation reserve

 

 

(600

)

 

 

 

(600

)

TBG restructuring

 

2,222

 

 

 

246

 

 

2,468

 

Corporate office transition

 

 

 

 

(2,109

)

 

(2,109

)

Goodwill derecognition

 

 

 

 

59,480

 

 

59,480

 

TBG discontinued operations

 

 

 

 

(452

)

 

(452

)

Adjusted EBITDA, non-GAAP financial measure

 

$

24,927

 

$

15,741

 

 

$

6,131

 

 

$

46,799

 

_______________________________________________________________________________

(1)

 

Consolidated EBITDA margins for the six months ended December 31, 2020 and 2019 were (18.1)% and (3.3)%, 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, 2020 and 2019 were (16.8)% and 10.3%, respectively, and are calculated as adjusted EBITDA divided by adjusted 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,

 

 

2020

 

2019

 

 

 

 

 

As Adjusted EBITDA

 

$

10,779

 

 

$

13,058

 

U.S. GAAP revenue

 

66,423

 

 

79,841

 

As Adjusted EBITDA as a % of U.S. GAAP revenue

 

16.2

%

 

16.4

%

Non-margin revenue adjustments:

 

 

 

 

Franchise rental income

 

(32,285

)

 

(33,630

)

Ad Fund revenue

 

(4,715

)

 

(10,703

)

TBG product sales

 

 

 

(744

)

Adjusted revenue

 

$

29,423

 

 

$

34,764

 

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

 

36.6

%

 

37.6

%

 

Six Months Ended December 31,

 

 

2020

 

2019

 

 

 

 

 

As Adjusted EBITDA

 

$

17,745

 

 

$

24,927

 

U.S. GAAP revenue

 

130,404

 

 

152,387

 

As Adjusted EBITDA as a % of U.S. GAAP revenue

 

13.6

%

 

16.4

%

Non-margin revenue adjustments:

 

 

 

 

Franchise rental income

 

(64,568

)

 

(65,054

)

Ad Fund revenue

 

(9,224

)

 

(21,129

)

TBG product sales

 

 

 

(2,010

)

Adjusted revenue

 

$

56,612

 

 

$

64,194

 

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

 

31.3

%

 

38.8

%

_______________________________________________________________________________

(1)

 

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

 

REGIS CORPORATION:
Kersten Zupfer
investorrelations@regiscorp.com

Source: Regis Corporation



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