Regis Corporation (NYSE: RGS), a leader in the haircare
industry, today reported results for the third fiscal quarter and
nine months ended March 31, 2022 versus the prior year as noted
below.
- Total third quarter and nine months ended March 31, 2022
revenue of $64.7 million and $212.8 million includes Royalty growth
of 23.1% and 31.2%, respectively.
- System-wide same-store sales increased 8.6%.
- Reported G&A of $15.6 million and adjusted G&A of
$14.7 million, represented a decline of $9.0 million and $8.3
million compared to the third quarter 2021, respectively.
- The Franchise segment posted adjusted EBITDA of $3.0 million
compared to a loss of $7.0 million in third quarter 2021. Second
consecutive quarter of positive adjusted EBITDA in the Franchise
segment.
- Third quarter adjusted EBITDA loss of $0.3 million improved
by $19.5 million compared to a loss of $19.8 million in the third
quarter 2021.
- For the nine months ended March 31, 2022 adjusted EBITDA
loss of $3.6 million improved significantly from a loss of $56.0
million during the same period of the prior year.
- Earnings webcast scheduled for 9am CST on May 10, 2022 and
will be accompanied by a slide presentation.
"Our third quarter results improved year over year, but were
below our expectations due to a slower sales recovery and the
continued wind down of our legacy businesses," said Matt Doctor,
Regis Chief Executive Officer. "We continue to be affected by labor
issues and lower customer counts stemming from the pandemic, but
remain encouraged because our results reflect a business that has
not yet benefited from the action steps we have identified in
tandem with our franchisees to improve our performance, including a
single technology platform for our entire system, more robust
stylist education and events for a stronger talent brand, and a
refocus of our marketing efforts toward digital. We are confident
that our fully franchised business model and the measures we have
underway will lead to stronger profitability going forward."
Three Months Ended
March 31,
Nine Months Ended
March 31,
(Dollars in thousands)
2022
2021
2022
2021
Consolidated revenue
$
64,749
$
100,267
$
212,761
$
315,983
System-wide revenue (1)
290,977
269,951
911,626
791,577
System-wide same-store sales comps
8.6
%
(20.7
) %
17.8
%
(28.7
) %
Two-year system-wide same-store sales
comps
(13.7
) %
N/A
(16.1
) %
N/A
Operating loss
$
(25,444
)
$
(18,541
)
$
(32,372
)
$
(76,886
)
Net loss
(27,918
)
(10,847
)
(43,224
)
(78,991
)
Diluted net loss per share
(0.61
)
(0.30
)
(1.01
)
(2.20
)
EBITDA (2)
(23,461
)
(3,564
)
(28,160
)
(42,532
)
as a percent of revenue
(36.2
) %
(3.6
) %
(13.2
) %
(13.5
) %
As adjusted (2)
Net loss, as adjusted
$
(4,337
)
$
(25,340
)
$
(17,454
)
$
(79,172
)
Diluted net loss per share, as
adjusted
(0.09
)
(0.70
)
(0.41
)
(2.20
)
EBITDA, as adjusted
(306
)
(19,812
)
(3,574
)
(55,981
)
as a percent of revenue
(0.5
) %
(19.8
) %
(1.7
) %
(17.7
) %
(1)
Represents total sales within the system.
(2)
See GAAP to non-GAAP reconciliations, within the attached
section titled "Non-GAAP Reconciliations".
Total revenue in the quarter of $64.7 million decreased $35.5
million, or 35.4%, year-over-year, driven primarily by the Company
exiting company-owned salons that generated significant revenue,
but were loss making. Partially offsetting the decline in
Company-owned revenue was an increase in royalty revenue due to
higher franchise salon sales and an increase in franchise salon
count.
Third quarter adjusted EBITDA loss of $0.3 million improved
$19.5 million, versus an adjusted EBITDA loss of $19.8 million in
the same period last year. The improvement was driven by an
increase in royalties; a decrease in general and administrative
expense; and the Company exiting loss making company-owned salons
over the last twelve months.
Regis reported a third quarter 2022 net loss of $27.9 million,
or $0.61 loss per diluted share, compared to a net loss of $10.8
million, or $0.30 loss per diluted share, in the third quarter of
2021. Net loss included a goodwill impairment charge and increased
inventory reserve totaling $22.4 million. Excluding discrete items,
the Company reported a third quarter 2022 adjusted net loss of $4.3
million, or $0.09 loss per diluted share, compared to an adjusted
net loss of $25.3 million, or $0.70 loss per diluted share, for the
same period last year. The year-over-year improvement in adjusted
net loss was driven primarily by improved sales leading to an
increase in royalties; a decrease in general and administrative
expense; and the Company exiting loss making company-owned
salons.
Third Quarter Segment Results
Franchise
Three Months Ended
March 31,
Increase
(Decrease)
Nine Months Ended
March 31,
Increase
(Decrease)
(Dollars in millions) (1)
2022
2021
2022
2021
Royalties
$
15.8
$
12.8
$
3.0
$
48.5
$
37.0
$
11.5
Fees
3.4
5.1
(1.7
)
11.5
9.6
1.9
Product sales to franchisees
1.3
13.1
(11.8
)
11.7
41.1
(29.4
)
Advertising fund contributions
8.1
5.6
2.5
24.2
14.8
9.4
Franchise rental income
32.7
31.3
1.4
100.2
95.9
4.3
Total Franchise revenue
$
61.2
$
67.9
$
(6.7
)
$
196.2
$
198.3
$
(2.1
)
Franchise same-store sales comps
8.8
%
(19.3
) %
18.0
%
(27.6
) %
Franchise two-year same-store sales
comps
(13.4
) %
N/A
(15.8
) %
N/A
EBITDA, as adjusted
$
3.0
$
(7.0
)
$
10.0
$
4.4
$
(21.8
)
$
26.2
as a percent of revenue
4.8
%
(10.3
) %
2.2
%
(11.0
) %
as a percent of adjusted revenue (2)
14.5
%
(22.5
) %
6.1
%
(24.9
) %
Total Franchise salons
5,504
5,317
187
as a percent of total Franchise and
Company-owned salons
97.9
%
86.6
%
(1)
Variances calculated on amounts
shown in millions may result in rounding differences.
(2)
Adjusted revenue excludes
non-margin revenue. See Non-GAAP reconciliation.
Third quarter Franchise revenue was $61.2 million, a $6.7
million, or 9.9% decrease compared to the prior year quarter.
Royalties were $15.8 million, a $3.0 million increase versus the
same period last year. The increase in royalties is due to higher
franchise system sales and the increase in franchise salons.
Product sales to franchisees of $1.3 million decreased $11.8
million, as expected. The decrease in product sales will continue
as the company transitions out of its wholesale product sales
business. Franchise adjusted EBITDA of $3.0 million improved $10.0
million year-over-year primarily due to an increase in royalties
and a decrease in general and administrative expense.
Company-Owned Salons
Three Months Ended
March 31,
(Decrease)
Increase
Nine Months Ended
March 31,
(Decrease)
Increase
(Dollars in millions) (1)
2022
2021
2022
2021
Total Company-owned salon revenue
$
3.5
$
32.3
$
(28.8
)
$
16.6
$
117.6
$
(101.0
)
Company-owned same-store sales comps
(3.0
) %
(28.8
) %
4.4
%
(33.8
) %
Company-owned two-year same-store sales
comps
(31.1
) %
N/A
(32.2
) %
N/A
EBITDA, as adjusted
$
(3.3
)
$
(12.8
)
$
9.5
$
(8.0
)
$
(34.2
)
$
26.2
as a percent of revenue
(94.3
) %
(39.6
) %
(48.2
) %
(29.1
) %
Total Company-owned salons
117
826
(709
)
as a percent of total Franchise and
Company-owned salons
2.1
%
13.4
%
(1)
Variances calculated on amounts
shown in millions may result in rounding differences.
Third quarter revenue for the Company-owned salon segment
decreased $28.8 million, versus the prior year to $3.5 million. The
year-over-year decline in revenue was expected and driven by a net
448 salons sold and converted to the Company's franchise portfolio
over the past 12 months and the closure of a net 261 unprofitable
salons over the past 12 months. Third quarter Company-owned salons
adjusted EBITDA loss improved $9.5 million, versus the same period
last year driven primarily by the elimination of EBITDA losses in
the prior year period from the unprofitable salons now closed. The
adjusted EBITDA loss of $3.3 million includes a $1.1 million
inventory excess and obsolescence charge.
Non-GAAP reconciliations
For GAAP to non-GAAP reconciliations, please refer to the
attached section titled "Non-GAAP Reconciliations." A complete
reconciliation of reported earnings to adjusted earnings is
included in this press release and is available on the Company’s
website at www.regiscorp.com.
Earnings Webcast
Regis Corporation will host a conference call via webcast
discussing third quarter results on May 10, 2022, at 9 a.m. Central
time. Interested parties are invited to participate in the live
webcast by registering for the event at
www.regiscorp.com/investor-relations.html. The webcast will include
a slide presentation. A replay of the presentation will be
available on our website at
www.regiscorp.com/investor-relations.html.
About Regis Corporation
Regis Corporation (NYSE:RGS) is a leader in the beauty salon
industry. As of March 31, 2022, the Company franchised, owned or
held ownership interests in 5,697 locations worldwide. Regis’
franchised and corporate locations operate under concepts such as
Supercuts®, SmartStyle®, Cost Cutters®, Roosters® and First Choice
Haircutters®. Regis maintains an ownership interest in Empire
Education Group in the U.S. For additional information about the
Company, including a reconciliation of certain non-GAAP financial
information and certain supplemental financial information, please
visit the Investor Information section of the corporate website at
www.regiscorp.com.
This press release contains or may contain “forward-looking
statements” within the meaning of the federal securities laws,
including statements concerning anticipated future events and
expectations that are not historical facts. These forward-looking
statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The
forward-looking statements in this document reflect management’s
best judgment at the time they are made, but all such statements
are subject to numerous risks and uncertainties, which could cause
actual results to differ materially from those expressed in or
implied by the statements herein. Such forward-looking statements
are often identified herein by use of words including, but not
limited to, “may,” “believe,” “project,” “forecast,” “expect,”
“estimate,” “anticipate,” and “plan.” In addition, the following
factors could affect the Company's actual results and cause such
results to differ materially from those expressed in
forward-looking statements. These factors include a potential
material adverse impact on our business and results of operations
as a result of the uncertain duration and severity of the COVID-19
pandemic, including any adverse impact from Delta, Omicron and
other variants; the impact of the COVID-19 pandemic on our key
suppliers; consumer shopping trends and changes in manufacturer
distribution channels; changes in regulatory and statutory laws
including increases in minimum wages; laws and regulations could
require us to modify current business practices and incur increased
costs; changes in economic conditions; changes in consumer tastes
and fashion trends; the continued ability of the Company to
implement its strategy, priorities and initiatives including the
re-engineering of our corporate and field infrastructure; new
merchandising strategy; our franchisees' ability to attract, train
and retain talented stylists; financial performance of our
franchisees; the ability to operate or sell the salons transferred
back from TBG; our ability to manage cyber threats and protect the
security of potentially sensitive information about our guests,
employees, vendors or Company information; the ability of the
Company to maintain a satisfactory relationship with Walmart;
marketing efforts to drive traffic to our franchisees' salons; our
ability to maintain and enhance the value of our brands; reliance
on information technology systems; reliance on external vendors;
the use of social media; failure to standardize operating processes
across brands; exposure to uninsured or unidentified risks;
Opensalon® Pro may not yield the intended results; compliance with
credit facility covenants and access to the existing revolving
credit facility; ability to re-finance our existing credit
facility, including the ability to re-finance at a similar rate,
and our ability to raise additional debt or equity capital; our
capital investments in technology may not achieve appropriate
returns; premature termination of agreements with our franchisees;
financial performance of Empire Education Group; the continued
ability of the Company to implement cost reduction initiatives and
achieve expected cost savings; continued ability to compete in our
business markets; reliance on our management team and other key
personnel; the continued ability to maintain an effective system of
internal controls over financial reporting; changes in tax
exposure; the ability to use U.S. net operating loss carryforwards;
potential litigation and other legal or regulatory proceedings
could have an adverse effect on our business or other factors not
listed above. Additional information concerning potential factors
that could affect future financial results is set forth under Item
1A on Form 10-K. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise. However, your attention is
directed to any further disclosures made in our subsequent annual
and periodic reports filed or furnished with the SEC on Forms 10-K,
10-Q and 8-K and Proxy Statements on Schedule 14A.
REGIS CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEET (Unaudited)
(Dollars in thousands, except
per share data)
March 31, 2022
June 30, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
25,630
$
19,191
Receivables, net
15,443
27,372
Inventories
8,606
22,993
Other current assets
13,254
17,103
Total current assets
62,933
86,659
Property and equipment, net
21,922
23,113
Goodwill
213,362
229,582
Other intangibles, net
3,420
3,761
Right of use asset
525,429
611,880
Other assets
35,712
41,388
Total assets
$
862,778
$
996,383
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
14,319
$
27,157
Accrued expenses
36,469
54,857
Short-term debt, net
193,814
—
Short-term lease liability
107,373
116,471
Total current liabilities
351,975
198,485
Long-term debt, net
—
186,911
Long-term lease liability
437,117
518,866
Other non-current liabilities
62,567
75,075
Total liabilities
851,659
979,337
Commitments and contingencies
Shareholders' equity:
Common stock, $0.05 par value; issued and
outstanding 45,505,055 and 35,795,844
common shares at March 31, 2022 and June
30, 2021, respectively
2,275
1,790
Additional paid-in capital
62,131
25,102
Accumulated other comprehensive income
9,326
9,543
Accumulated deficit
(62,613
)
(19,389
)
Total shareholders' equity
11,119
17,046
Total liabilities and shareholders'
equity
$
862,778
$
996,383
REGIS CORPORATION
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (Unaudited)
For The Three And Nine Months
Ended March 31, 2022 And 2021
(Dollars and shares in
thousands, except per share data)
Three Months Ended
March 31,
Nine Months Ended
March 31,
2022
2021
2022
2021
Revenues:
Royalties
$
15,799
$
12,835
$
48,526
$
36,989
Fees
3,364
5,120
11,496
9,600
Product sales to franchisees
1,293
13,079
11,729
41,057
Advertising fund contributions
8,078
5,580
24,213
14,804
Franchise rental income
32,666
31,317
100,200
95,885
Company-owned salon revenue
3,549
32,336
16,597
117,648
Total revenue
64,749
100,267
212,761
315,983
Operating expenses:
Cost of product sales to franchisees
2,598
11,168
14,129
33,171
Inventory reserve (1)
6,420
—
6,420
—
General and administrative
15,569
24,582
53,342
77,419
Rent
1,246
8,001
6,137
34,128
Advertising fund expense
8,078
5,580
24,213
14,804
Franchise rent expense
32,666
31,317
100,200
95,885
Company-owned salon expense (2)
5,292
33,707
18,304
110,261
Depreciation and amortization
1,997
3,620
5,846
17,384
Long-lived asset impairment
327
833
542
9,817
Goodwill impairment
16,000
—
16,000
—
Total operating expenses
90,193
118,808
245,133
392,869
Operating loss
(25,444
)
(18,541
)
(32,372
)
(76,886
)
Other (expense) income:
Interest expense
(3,403
)
(3,163
)
(10,158
)
(10,626
)
Loss from sale of salon assets to
franchisees, net
(494
)
(4,575
)
(2,189
)
(8,463
)
Interest income and other, net
153
15,099
13
15,616
Loss from operations before income
taxes
(29,188
)
(11,180
)
(44,706
)
(80,359
)
Income tax benefit
1,270
333
1,482
1,368
Net loss
$
(27,918
)
$
(10,847
)
$
(43,224
)
$
(78,991
)
Net loss per share:
Basic and diluted:
Net loss per share, basic and diluted
$
(0.61
)
$
(0.30
)
$
(1.01
)
$
(2.20
)
Weighted average common and common
equivalent shares outstanding:
Basic and diluted
45,886
36,011
42,789
35,929
(1)
Includes charge in the third
quarter associated with liquidation of distribution center
inventory. Excludes reserves for inventory at salons.
(2)
Includes cost of service and
product sold to guests in our Company-owned salons. Excludes
general and administrative expense, rent and depreciation and
amortization related to Company-owned salons.
REGIS CORPORATION
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS (Unaudited)
For The Nine Months Ended
March 31, 2022 And 2021
(Dollars in thousands)
Nine Months Ended
March 31,
2022
2021
Cash flows from operating activities:
Net loss
$
(43,224
)
$
(78,991
)
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation and amortization
4,944
13,968
Long-lived asset impairment
542
9,817
Deferred income taxes
(1,693
)
(806
)
Inventory reserve
9,007
6,875
Gain from disposal of distribution center
assets
—
(14,878
)
Loss from sale of salon assets to
franchisees, net
2,189
8,463
Goodwill impairment
16,000
—
Stock-based compensation
854
1,792
Amortization of debt discount and
financing costs
1,379
1,313
Other non-cash items affecting
earnings
419
183
Changes in operating assets and
liabilities, excluding the effects of asset sales
(24,770
)
(27,743
)
(34,353
)
(80,007
)
Cash flows from investing activities:
Capital expenditures
(4,258
)
(9,609
)
Proceeds from sale of assets to
franchisees
—
7,743
Costs associated with sale of salon assets
to franchisees
—
(242
)
Proceeds from company-owned life insurance
policies
—
1,200
(4,258
)
(908
)
Cash flows from financing activities:
Borrowings on revolving credit
facility
10,000
—
Repayments of revolving credit
facility
(3,096
)
—
Proceeds from issuance of common stock,
net of offering costs
37,185
—
Taxes paid for shares withheld
(844
)
(316
)
Minority interest buyout
—
(562
)
Distribution center lease payments
—
(724
)
43,245
(1,602
)
Effect of exchange rate changes on cash
and cash equivalents
(88
)
6
Increase (decrease) in cash, cash
equivalents, and restricted cash
4,546
(82,511
)
Cash, cash equivalents and restricted
cash:
Beginning of period
29,152
122,880
End of period
$
33,698
$
40,369
REGIS CORPORATION
Same-Store Sales
SYSTEM-WIDE SAME-STORE SALES
(1):
Three Months Ended
March 31, 2022
March 31, 2021
Service
Retail
Total
Service
Retail
Total
SmartStyle
2.1
%
(17.4
) %
(2.5
) %
(19.4
) %
(20.3
) %
(19.6
) %
Supercuts
19.6
(10.1
)
17.8
(22.5
)
(18.8
)
(22.3
)
Portfolio Brands
5.5
(9.3
)
4.0
(17.7
)
(19.0
)
(17.9
)
Total
11.6
%
(13.7
) %
8.6
%
(20.9
) %
(19.4
) %
(20.7
) %
Nine Months Ended
March 31, 2022
March 31, 2021
Service
Retail
Total
Service
Retail
Total
SmartStyle
14.3
%
(8.0
) %
8.8
%
(28.9
) %
(28.0
) %
(28.7
) %
Supercuts
28.0
(3.3
)
26.0
(30.2
)
(25.2
)
(29.9
)
Portfolio Brands
15.3
(2.8
)
13.2
(27.3
)
(20.9
)
(26.6
)
Total
21.1
%
(5.6
) %
17.8
%
(29.2
) %
(25.2
) %
(28.7
) %
(1)
System-wide same-store sales in
fiscal year 2022 are calculated as the change in sales for
locations that were open on a specific day of the week during the
current period and the corresponding prior period. System-wide
same-store sales in fiscal year 2021 are calculated as the total
change in sales for system-wide franchise and company-owned
locations open for more than one year that were open on a specific
day of the week during the current period and the corresponding
prior period. Quarterly and year-to-date system-wide same-store
sales are the sum of the system-wide same-store sales computed on a
daily basis. Franchise salons that do not report daily sales are
excluded from same-store sales. System-wide same-store sales are
calculated in local currencies to remove foreign currency
fluctuations from the calculation.
REGIS CORPORATION
System-Wide Location
Counts
March 31, 2022
June 30, 2021
FRANCHISE SALONS:
SmartStyle/Cost Cutters in Walmart
Stores
1,667
1,666
Supercuts
2,316
2,386
Portfolio Brands
1,378
1,357
Total North American salons
5,361
5,409
Total International Salons (1)
143
154
Total Franchise Salons
5,504
5,563
as a percent of total Franchise and
Company-owned salons
97.9
%
95.3
%
COMPANY-OWNED SALONS:
SmartStyle/Cost Cutters in Walmart
Stores
52
91
Supercuts
19
35
Portfolio Brands
46
150
Total Company-owned salons
117
276
as a percent of total Franchise and
Company-owned salons
2.1
%
4.7
%
OWNERSHIP INTEREST LOCATIONS:
Equity ownership interest locations
76
78
Grand Total, System-wide
5,697
5,917
(1)
Canadian and Puerto Rican salons
are included in the North American salon totals.
Non-GAAP Reconciliations:
We believe our presentation of non-GAAP operating loss, net
loss, net loss per diluted share, and other non-GAAP financial
measures provides meaningful insight into our ongoing operating
performance and an alternative perspective of our results of
operations. Presentation of the non-GAAP measures allows investors
to review our core ongoing operating performance from the same
perspective as management and the Board of Directors. These
non-GAAP financial measures provide investors an enhanced
understanding of our operations, facilitate investors’ analyses and
comparisons of our current and past results of operations and
provide insight into the prospects of our future performance. We
also believe the non-GAAP measures are useful to investors because
they provide supplemental information that research analysts
frequently use to analyze financial performance.
The method we use to produce non-GAAP results is not in
accordance with U.S. GAAP and may differ from methods used by other
companies. These non-GAAP results should not be regarded as a
substitute for corresponding U.S. GAAP measures, but instead should
be utilized as a supplemental measure of operating performance in
evaluating our business. Non-GAAP measures do have limitations as
they do not reflect certain items that may have a material impact
upon our reported financial results. As such, these non-GAAP
measures should be viewed in conjunction with our financial
statements prepared in accordance with U.S. GAAP.
Non-GAAP reconciling items for the three and nine months
ended March 31, 2022 and 2021:
The following information is provided to give qualitative and
quantitative information related to items impacting comparability.
Items impacting comparability are not defined terms within U.S.
GAAP. Therefore, our non-GAAP financial information may not be
comparable to similarly titled measures reported by other
companies. We determine the items to consider as "items impacting
comparability" based on how management views our business, makes
financial, operating and planning decisions and evaluates the
Company's ongoing performance. The following items have been
excluded from our non-GAAP results:
- Inventory reserve
- CEO transition
- Distribution center wind down fees ("Distribution center
fees")
- Professional fees and settlements
- Severance
- Benefit from lease liability decrease in excess of previously
impaired ROUA ("Lease liability benefit")
- Lease termination fees
- Real estate fees
- Asset retirement obligation
- Long-lived asset impairment
- Goodwill impairment
- Gain on distribution centers
- Non-recurring, non-operating income
REGIS CORPORATION
Reconciliation Of Selected
U.S. GAAP To Non-GAAP Financial Measures
(Dollars in thousands, except
per share data)
(Unaudited)
Reconciliation of U.S. GAAP
operating loss and U.S. GAAP net loss to equivalent non-GAAP
measures
Three Months
Ended
March 31,
Nine Months
Ended
March 31,
U.S. GAAP financial line
item
2022
2021
2022
2021
U.S. GAAP revenue
$
64,749
$
100,267
$
212,761
$
315,983
U.S. GAAP operating loss
$
(25,444
)
$
(18,541
)
$
(32,372
)
$
(76,886
)
Non-GAAP operating expense adjustments
(1)
Inventory reserve
Inventory reserve
6,420
—
6,420
—
CEO transition
General and administrative
50
300
(466
)
(994
)
Distribution center fees
General and administrative
—
—
285
—
Professional fees and settlements
General and administrative
713
480
1,873
3,422
Severance
General and administrative
104
848
2,015
3,239
Lease liability benefit
Rent
(357
)
(3,009
)
(3,284
)
(11,295
)
Lease termination fees
Rent
225
(147
)
1,803
6,523
Real estate fees
Rent
—
158
40
534
Asset retirement obligation
Depreciation and amortization
337
774
902
3,447
Long-lived asset impairment
Long-lived asset impairment
327
833
542
9,817
Goodwill impairment
Goodwill impairment
16,000
—
16,000
—
Total non-GAAP operating expense
adjustments
23,819
237
26,130
14,693
Non-GAAP operating loss (1)
$
(1,625
)
$
(18,304
)
$
(6,242
)
$
(62,193
)
U.S. GAAP net loss
$
(27,918
)
$
(10,847
)
$
(43,224
)
$
(78,991
)
Non-GAAP net loss adjustments:
Non-GAAP operating expense adjustments
23,819
237
26,130
14,693
Gain on distribution centers
Interest income and other,
net
—
(14,878
)
—
(14,878
)
Non-recurring, non-operating income
Interest income and other,
net
—
—
(100
)
—
Income tax impact on Non-GAAP adjustments
(2)
Income taxes
(238
)
148
(260
)
4
Total non-GAAP net loss adjustments
23,581
(14,493
)
25,770
(181
)
Non-GAAP net loss
$
(4,337
)
$
(25,340
)
$
(17,454
)
$
(79,172
)
(1)
Adjusted operating margins for
the three months ended March 31, 2022 and 2021 were (2.5)% and
(18.3)%, and were (2.9)% and (19.7)% for the nine months ended
March 31, 2022 and 2021, respectively, and are calculated as
non-GAAP operating loss divided by U.S. GAAP revenue for each
respective period.
(2)
Based on projected statutory
effective tax rate analyses, the non-GAAP tax provision was
calculated to be approximately 1% for the three and nine months
ended March 31, 2022 and 2021 for all non-GAAP operating expense
adjustments.
REGIS CORPORATION
Reconciliation Of Selected
U.S. GAAP To Non-GAAP Financial Measures
(Dollars in thousands, except
per share data)
(Unaudited)
Reconciliation of U.S. GAAP
net loss per diluted share to non-GAAP net loss per diluted
share
Three Months Ended
March 31,
Nine Months Ended
March 31,
2022
2021
2022
2021
U.S. GAAP net loss per diluted
share
$
(0.608
)
$
(0.301
)
$
(1.010
)
$
(2.199
)
Inventory reserve (1)
0.139
—
0.147
—
CEO Transition (1)
0.001
0.008
(0.011
)
(0.027
)
Distribution center fees (1)
—
—
0.007
—
Professional fees and settlements (1)
0.015
0.014
0.043
0.094
Severance (1)
0.002
0.023
0.047
0.089
Lease liability benefit (1)
(0.008
)
(0.083
)
(0.076
)
(0.311
)
Lease termination fees (1)
0.005
(0.004
)
0.042
0.180
Real estate fees (1)
—
0.004
0.001
0.015
Asset retirement obligation (1)
0.007
0.021
0.021
0.095
Long-lived asset impairment (1)
0.007
0.023
0.013
0.270
Goodwill impairment (1)
0.345
—
0.370
—
Gain on distribution centers (1)
—
(0.409
)
—
(0.410
)
Non-recurring, non-operating income
(1)
—
—
(0.002
)
—
Non-GAAP net loss per diluted share
(2)
$
(0.095
)
$
(0.704
)
$
(0.408
)
$
(2.204
)
U.S. GAAP Weighted average shares - basic
and diluted
45,886
36,011
42,789
35,929
Non-GAAP Weighted average shares -
diluted
45,886
36,011
42,789
35,929
(1)
Based on projected statutory
effective tax rate analyses, the non-GAAP tax provision was
calculated to be approximately 1% for the three and nine months
ended March 31, 2022 and 2021 for all non-GAAP operating expense
adjustments.
(2)
Total is a recalculation; line
items calculated individually may not sum to total due to
rounding.
REGIS CORPORATION Reconciliation Of
Reported U.S. GAAP Net Loss To Adjusted EBITDA, A Non-GAAP
Financial Measure (Dollars in thousands)
(Unaudited)
Adjusted EBITDA
EBITDA represents U.S. GAAP net loss for the respective period
excluding interest expense, income taxes and depreciation and
amortization expense. The Company defines adjusted EBITDA, as
EBITDA excluding identified items impacting comparability for each
respective period. For the three and nine months ended March 31,
2022 and 2021, the items impacting comparability consisted of the
items identified in the non-GAAP reconciling items for the
respective periods. The impacts of the income tax provision
adjustments associated with the above items are already included in
the U.S. GAAP reported net loss to EBITDA reconciliation, therefore
there is no adjustment needed for the reconciliation from EBITDA to
adjusted EBITDA.
Three Months Ended March 31,
2022
Franchise
Company-owned
Consolidated (1)(2)
Consolidated reported net loss, as
reported (U.S. GAAP)
$
(17,791
)
$
(3,707
)
$
(27,918
)
Interest expense, as reported
3,403
—
3,403
Income taxes, as reported
(1,270
)
—
(1,270
)
Depreciation and amortization, as
reported
1,592
405
1,997
Long-lived asset impairment, as
reported
322
5
327
EBITDA (as defined above)
$
(13,744
)
$
(3,297
)
$
(23,461
)
Inventory reserve, as reported (2)
—
—
6,420
CEO transition
50
—
50
Professional fees and settlements
713
—
713
Severance
33
71
104
Lease liability benefit
(99
)
(258
)
(357
)
Lease termination fees
6
219
225
Goodwill impairment, as reported
16,000
—
16,000
Adjusted EBITDA, non-GAAP financial
measure
$
2,959
$
(3,265
)
$
(306
)
Three Months Ended March 31,
2021
Franchise
Company-owned
Consolidated (1)
Consolidated reported net income
(loss), as reported (U.S. GAAP)
$
1,776
$
(12,623
)
$
(10,847
)
Interest expense, as reported
3,163
—
3,163
Income taxes, as reported
(333
)
—
(333
)
Depreciation and amortization, as
reported
1,933
1,687
3,620
Long-lived asset impairment, as
reported
22
811
833
EBITDA (as defined above)
$
6,561
$
(10,125
)
$
(3,564
)
CEO transition
300
—
300
Professional fees and settlements
480
—
480
Severance
848
—
848
Lease liability benefit
(308
)
(2,701
)
(3,009
)
Lease termination fees
—
(147
)
(147
)
Real estate fees
—
158
158
Gain on distribution centers
(14,878
)
—
(14,878
)
Adjusted EBITDA, non-GAAP financial
measure
$
(6,997
)
$
(12,815
)
$
(19,812
)
(1)
Consolidated EBITDA margins for
the three months ended March 31, 2022 and 2021 were (36.2)% and
(3.6)%, respectively, and are calculated as EBITDA (as defined
above) divided by U.S. GAAP revenue for each respective period.
Consolidated adjusted EBITDA margins for the three months ended
March 31, 2022 and 2021 were (0.5)% and (19.8)%, respectively, and
are calculated as adjusted EBITDA (as defined above) divided by
U.S. GAAP revenue for each respective period.
(2)
This charge, primarily related to
reserving for personal protective equipment acquired as a result of
the COVID-19 pandemic, relates to the wind down of our distribution
centers and is reviewed separately from the segment results by the
chief operating decision maker. Consolidated results will not cross
foot as the inventory reserve is not part of the Company's
segments.
Nine Months Ended March 31,
2022
Franchise
Company-owned
Consolidated (1)(2)
Consolidated reported net loss, as
reported (U.S. GAAP)
$
(28,856
)
$
(7,948
)
$
(43,224
)
Interest expense, as reported
10,158
—
10,158
Income taxes, as reported
(1,482
)
—
(1,482
)
Depreciation and amortization, as
reported
4,718
1,128
5,846
Long-lived asset impairment, as
reported
450
92
542
EBITDA (as defined above)
$
(15,012
)
$
(6,728
)
$
(28,160
)
Inventory reserve, as reported (2)
—
—
6,420
CEO transition
(466
)
—
(466
)
Distribution center fees
285
—
285
Professional fees and settlements
1,873
—
1,873
Severance
1,944
71
2,015
Lease liability benefit
(248
)
(3,036
)
(3,284
)
Lease termination fees
100
1,703
1,803
Real estate fees
—
40
40
Goodwill impairment, as reported
16,000
—
16,000
Non-recurring, non-operating income
(100
)
—
(100
)
Adjusted EBITDA, non-GAAP financial
measure
$
4,376
$
(7,950
)
$
(3,574
)
Nine Months Ended March 31,
2021
Franchise
Company-owned
Consolidated (1)
Consolidated reported net loss, as
reported (U.S. GAAP)
$
(28,252
)
$
(50,739
)
$
(78,991
)
Interest expense, as reported
10,626
—
10,626
Income taxes, as reported
(1,368
)
—
(1,368
)
Depreciation and amortization, as
reported
6,304
11,080
17,384
Long-lived asset impairment, as
reported
726
9,091
9,817
EBITDA (as defined above)
$
(11,964
)
$
(30,568
)
$
(42,532
)
CEO transition
(994
)
—
(994
)
Professional fees and settlements
3,422
—
3,422
Severance
3,239
—
3,239
Lease liability benefit
(606
)
(10,689
)
(11,295
)
Lease termination fees
—
6,523
6,523
Real estate fees
—
534
534
Gain on distribution centers
(14,878
)
—
(14,878
)
Adjusted EBITDA, non-GAAP financial
measure
$
(21,781
)
$
(34,200
)
$
(55,981
)
(1)
Consolidated EBITDA margins for
the nine months ended March 31, 2022 and 2021 were (13.2)% and
(13.5)%, respectively, and are calculated as EBITDA (as defined
above) divided by U.S. GAAP revenue for each respective period.
Consolidated adjusted EBITDA margins for the nine months ended
March 31, 2022 and 2021 were (1.7)% and (17.7)%, respectively, and
are calculated as adjusted EBITDA (as defined above) divided by
U.S. GAAP revenue for each respective period.
(2)
This charge, primarily related to
reserving for personal protective equipment acquired as a result of
the COVID-19 pandemic, relates to the wind down of our distribution
centers and is reviewed separately from the segment results by the
chief operating decision maker. Consolidated results will not cross
foot as the inventory reserve is not part of the Company's
segments.
REGIS CORPORATION
Reconciliation Of Reported
Franchise EBITDA As A Percent Of U.S. GAAP Revenue
To EBITDA As A Percent Of
Adjusted Revenue
(Dollars in thousands)
(Unaudited)
Three Months Ended March
31,
2022
2021
As adjusted EBITDA
$
2,959
$
(6,997
)
U.S. GAAP revenue
61,200
67,931
As adjusted EBITDA as a % of U.S. GAAP
revenue (1)
4.8
%
(10.3
) %
Non-margin revenue adjustments:
Franchise rental income
$
(32,666
)
$
(31,317
)
Advertising fund contributions
(8,078
)
(5,580
)
Adjusted revenue
$
20,456
$
31,034
As adjusted EBITDA as a percent of
adjusted revenue (1)
14.5
%
(22.5
) %
Nine Months Ended March
31,
2022
2021
As adjusted EBITDA
$
4,376
$
(21,781
)
U.S. GAAP revenue
196,164
198,335
As adjusted EBITDA as a % of U.S. GAAP
revenue (1)
2.2
%
(11.0
) %
Non-margin revenue adjustments:
Franchise rental income
$
(100,200
)
$
(95,885
)
Advertising fund contributions
(24,213
)
(14,804
)
Adjusted revenue
$
71,751
$
87,646
As adjusted EBITDA as a percent of
adjusted revenue (1)
6.1
%
(24.9
) %
(1)
Total is a recalculation; line
items calculated individually may not sum to total due to
rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220509006026/en/
REGIS CORPORATION: Kersten Zupfer
investorrelations@regiscorp.com
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