Regis Corporation (NYSE: RGS), a leader in the haircare
industry, today reported results for the fourth quarter and full
year ended June 30, 2022. Highlights from the year include:
- Fourth quarter and full year revenue of $66.1 million and
$276.0 million, including royalty growth of 12.1% and 25.6%,
respectively.
- System-wide same-store sales increase of 7.1% in the quarter
and 14.8% in fiscal year 2022.
- Positive fourth quarter adjusted EBITDA, excluding salon
sales, of $1.1 million, a $15.6 million improvement compared to a
loss of $14.5 million during the fourth quarter 2021; Franchise
EBITDA of $2.5 million, positive for the 3rd quarter in a
row.
- Positive fiscal year adjusted EBITDA, excluding salon sales,
of $0.5 million compared to a $60.2 million loss in fiscal year
2021.
- Efforts to renegotiate debt culminated in the successful
amendment to our credit agreement and extension of the maturity
date from March 2023 to August 2025.
- Sold proprietary salon management system, Opensalon®
Pro, for up to $39.0 million in proceeds and partnered with
salon technology leader, Zenoti, to provide a best-in-class
technology solution to franchisees.
- Reduced loss-generating company-owned locations from 276 to
105, resulting in a $38.0 million year-over-year EBITDA
improvement.
- Well-positioned with strategy in place to deliver strong
EBITDA growth in fiscal year 2023.
- Earnings webcast scheduled for 9am CST on August 23, 2022
and will be accompanied by a slide presentation.
"When I stepped in as Interim CEO in December 2021, we
identified refinancing our debt, providing the right technology
solution to our franchisees, and continuing the wind down of our
company-owned salons as our top priorities. I am pleased that in a
short period of time, we successfully delivered on all three by
renegotiating our credit agreement with our lender group, selling
Opensalon Pro to our new point-of-sale technology partner, Zenoti,
and winding down our company-owned salons from 276 to 105
locations," said Matt Doctor, Regis Chief Executive Officer. "In
addition to these transformative efforts, our performance is
continuing to improve with positive adjusted EBITDA, excluding
salon sales, in Q4 and fiscal year 2022. With our fully-franchised
business model and strategies in place that focus on stylist
retention and recruiting, enhanced digital marketing, and a more
robust salon management system, we are poised to deliver stronger
results in fiscal 2023."
Three Months Ended June
30,
Twelve Months Ended June
30,
(Dollars in thousands)
2022
2021
2022
2021
Consolidated revenue
$
66,069
$
97,614
$
275,967
$
411,651
System-wide revenue (1)
316,838
293,981
1,228,464
1,086,024
System-wide same-store sales
comps
7.1
%
4.2
%
14.8
%
(25.8
) %
Two-year system-wide same-store
sales comps
7.4
%
(21.0
) %
(13.7
) %
(28.3
) %
Operating loss
$
(1,315
)
$
(22,844
)
$
(28,898
)
$
(94,677
)
Loss from continuing
operations
(8,560
)
(29,755
)
(46,459
)
(103,206
)
Diluted loss per share from
continuing operations
(0.19
)
(0.83
)
(1.07
)
(2.87
)
Loss from discontinued
operations
(34,073
)
(4,584
)
(39,398
)
(10,125
)
Net loss
(42,633
)
(34,339
)
(85,857
)
(113,331
)
Diluted net loss per share
(0.93
)
(0.95
)
(1.97
)
(3.15
)
EBITDA (2)
(34,384
)
(27,140
)
(64,160
)
(70,824
)
as a percent of revenue
(52.0
) %
(27.8
) %
(23.2
) %
(17.2
) %
As adjusted (2)
Loss from continuing operations,
as adjusted
$
(3,032
)
$
(25,483
)
$
(18,054
)
$
(101,685
)
Diluted loss per share from
continuing operations, as adjusted
(0.07
)
(0.71
)
(0.41
)
(2.83
)
Net loss, as adjusted
(3,032
)
(25,483
)
(18,054
)
(101,685
)
Diluted net loss per share, as
adjusted
(0.07
)
(0.71
)
(0.41
)
(2.83
)
EBITDA, as adjusted
959
(22,728
)
(1,799
)
(76,914
)
as a percent of revenue
1.5
%
(23.3
) %
(0.7
) %
(18.7
) %
EBITDA, as adjusted excluding
loss on sale of salons
1,104
(14,495
)
535
(60,218
)
as a percent of revenue
1.7
%
(14.8
) %
0.2
%
(14.6
) %
_______________________________________________________________________________
(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 $66.1 million decreased $31.5
million, or 32.3% and full year revenue declined $135.7 million
year-over-year. Both of these declines were driven primarily by
exiting company-owned salons that generated significant revenue,
but were loss generating. Partially offsetting the decline in
revenue was an increase in royalty revenue due to higher franchise
system sales.
Fourth quarter adjusted EBITDA of $1.0 million improved $23.7
million, versus an adjusted EBITDA loss of $22.7 million in the
same period last year. On a full year basis, adjusted EBITDA loss
of $1.8 million improved $75.1 million from fiscal 2021. The
improvements were driven by an increase in royalty revenues; lower
general and administrative expense; and the wind down of
loss-generating company-owned salons during the last twelve
months.
Regis reported a fourth quarter 2022 net loss from continuing
operations of $8.6 million, or $0.19 loss per diluted share,
compared to a net loss from continuing operations of $29.8 million,
or $0.83 loss per diluted share, in the fourth quarter of 2021.
Excluding discrete items, the Company reported fourth quarter 2022
adjusted net loss from continuing operations of $3.0 million, or
$0.07 loss per diluted share, compared to adjusted net loss from
continuing operations of $25.5 million, or $0.71 per diluted share
for the same period last year. On a full year basis, the Company
reported an adjusted net loss from continuing operations of $18.1
million or $0.41 loss per diluted share compared to an adjusted net
loss from continuing operations of $101.7 million or $2.83 loss per
share for the same period last year. The year-over-year improvement
in adjusted net loss from continuing operations was driven
primarily by improved sales leading to an increase in royalty
revenues; lower general and administrative expense; and the Company
winding down loss-generating company-owned salons during the last
twelve months.
The Company reported a fourth quarter 2022 net loss of $42.6
million, or $0.93 loss per diluted share, compared to a net loss of
$34.3 million, or $0.95 per diluted share for the same period last
year. On a full year basis, the Company reported a net loss of
$85.9 million, or $1.97 loss per diluted share, compared to a net
loss of $113.3 million, or $3.15 loss per share, in fiscal 2021.
The net loss in the quarter and in the year was driven by the loss
from discontinued operations of $34.1 and $39.4 million in the
quarter and full year, respectively, which includes a $38.4 million
non-cash goodwill derecognition charge. Additionally, the twelve
months results include a non-cash goodwill impairment charge of
$13.1 million. The net loss improved year-over-year in both periods
due to higher royalty revenues and lower general and administrative
expense.
Fourth Quarter Segment Results
Franchise
Three Months Ended June
30,
Increase (Decrease)
Twelve Months Ended June
30,
Increase (Decrease)
(Dollars in millions) (1)
2022
2021
2022
2021
Royalties
$
17.2
$
15.4
$
1.8
$
65.8
$
52.4
$
13.4
Fees
3.0
2.6
0.4
11.6
10.2
1.4
Product sales to franchisees
3.3
15.6
(12.3
)
15.1
56.7
(41.6
)
Advertising fund contributions
8.4
7.2
1.2
32.6
22.0
10.6
Franchise rental income
30.6
31.5
(0.9
)
130.8
127.4
3.4
Total Franchise revenue
$
62.5
$
72.3
$
(9.8
)
$
255.8
$
268.7
$
(12.9
)
Franchise same-store sales comps
7.2
%
4.4
%
15.0
%
(24.5
) %
Franchise two-year same-store sales
comps
7.5
%
(20.2
) %
(13.4
) %
(27.2
) %
EBITDA, as Adjusted
$
2.5
$
(9.4
)
$
11.9
$
7.7
$
(29.4
)
$
37.1
as a percent of revenue
4.1
%
(13.0
) %
3.0
%
(10.9
) %
as a percent of adjusted revenue (2)
10.8
%
(28.1
) %
8.4
%
(24.7
) %
Total Franchise salons
5,395
5,563
(168
)
as a percent of total Franchise and
Company-owned salons
98.1
%
95.3
%
_______________________________________________________________________________
(1)
Variances calculated on amounts shown in
millions may result in rounding differences.
(2)
Adjusted revenue excludes non-margin
revenue. See Non-GAAP reconciliation
Fourth quarter Franchise revenue was $62.5 million, a $9.8
million, or 13.6% decrease, compared to the prior year quarter.
Royalties were $17.2 million, a $1.8 million, or 11.7% increase,
versus the same period last year. The increase in royalties is due
to higher franchise system sales. Product sales to franchisees of
$3.3 million decreased $12.3 million as a result of the transition
out of the wholesale product business. Franchise adjusted EBITDA of
$2.5 million improved $11.9 million year-over-year primarily due to
an increase in royalty revenues and a decrease in general and
administrative expense. Full year results followed the same
trends.
Company-Owned Salons
Three Months Ended June
30,
(Decrease) Increase
Twelve Months Ended June
30,
(Decrease) Increase
(Dollars in millions) (1)
2022
2021
2022
2021
Total Company-owned salon revenue
$
3.6
$
25.3
$
(21.7
)
$
20.2
$
143.0
$
(122.8
)
Company-owned same-store sales comps
(0.8
) %
(7.0
) %
3.4
%
(33.4
) %
Company-owned two-year same-store sales
comps
(27.1
) %
(30.4
) %
(32.1
) %
(35.2
) %
EBITDA, as adjusted
$
(1.6
)
$
(13.3
)
$
11.7
$
(9.5
)
$
(47.5
)
$
38.0
as a percent of revenue
(44.4
) %
(52.6
) %
(47.0
) %
(33.2
) %
Total Company-owned salons
105
276
(171
)
as a percent of total Franchise and
Company-owned salons
1.9
%
4.7
%
_______________________________________________________________________________
(1)
Variances calculated on amounts shown in
millions may result in rounding differences.
Fourth quarter revenue for the Company-owned salon segment
decreased $21.7 million versus the prior year to $3.6 million and
full year revenue declined $122.8 million. The year-over-year
decline in revenue was expected and driven by 110 salons converted
to the Company's franchise portfolio and the closure of 61
unprofitable salons over the past 12 months. Fourth quarter
adjusted EBITDA loss improved $11.7 million, or 88.0%, and full
year adjusted EBITDA loss improved $38.0 million, or 79.9%, versus
the same period last year, driven primarily by current year closure
of unprofitable salons and an inventory reserve charge in the prior
year.
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 to
discuss fourth quarter and full year results on August 23, 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.
About Regis Corporation
Regis Corporation (NYSE:RGS) is a leader in the beauty salon
industry. As of June 30, 2022, the Company franchised, owned or
held ownership interests in 5,576 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 COVID-19 pandemic, including any adverse impact
from variants; 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,
fashion trends and consumer spending patterns; compliance with New
York Stock Exchange listing requirements; reliance on franchise
royalties and overall success of our franchisees’ salons; the
return of sales at franchise locations to pre-pandemic levels; new
merchandising strategy that utilizes third-party preferred supplier
arrangements; our franchisees' ability to attract, train and retain
talented stylists and salon leaders; the success of our
franchisees, which operate independently; our ability to manage
cyber threats and protect the security of potentially sensitive
information about our guests, franchisees, 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; the successful migration of our
franchisees to the Zenoti salon technology platform; 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; the
effectiveness of our enterprise risk management program; compliance
with covenants in our financing arrangement, access to the existing
revolving credit facility, and we may face an accelerated
obligation to repay our indebtedness; our capital investments in
technology may not achieve appropriate returns; premature
termination of agreements with our franchisees; financial
performance of Empire Education Group, Inc.; 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 of Form
10-K. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. However, your attention is directed to
any further disclosures made in our subsequent annual and periodic
reports filed or furnished with the SEC on Forms 10-K, 10-Q and 8-K
and Proxy Statements on Schedule 14A.
REGIS CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEET
(Dollars in thousands, except
per share data)
June 30,
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$
17,041
$
19,191
Receivables, net
14,531
26,270
Inventories
3,109
20,639
Other current assets
13,984
17,017
Current assets related to discontinued
operations
—
3,542
Total current assets
48,665
86,659
Property and equipment, net
12,835
16,906
Goodwill
174,360
188,257
Other intangibles, net
3,226
3,761
Right of use asset
493,749
610,599
Other assets
36,465
41,388
Non-current assets related to discontinued
operations
—
48,813
Total assets
$
769,300
$
996,383
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
EQUITY
Current liabilities:
Accounts payable
$
15,860
$
27,157
Accrued expenses
33,784
51,242
Short-term lease liability
103,196
116,348
Current liabilities related to
discontinued operations
—
3,738
Total current liabilities
152,840
198,485
Long-term debt, net
179,994
186,911
Long-term lease liability
408,445
517,626
Other non-current liabilities
58,974
75,075
Non-current liabilities related to
discontinued operations
—
1,240
Total liabilities
800,253
979,337
Commitments and contingencies
Shareholders' (deficit) equity:
Common stock, $0.05 par value; issued and
outstanding, 45,510,245 and 35,795,844 common shares at June 30,
2022 and 2021, respectively
2,276
1,790
Additional paid-in capital
62,562
25,102
Accumulated other comprehensive income
9,455
9,543
Accumulated deficit
(105,246
)
(19,389
)
Total shareholders' (deficit) equity
(30,953
)
17,046
Total liabilities and shareholders'
(deficit) equity
$
769,300
$
996,383
REGIS CORPORATION
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(Dollars and shares in
thousands, except per share data)
Three Months Ended June
30,
Twelve Months Ended June
30,
2022
2021
2022
2021
Revenues:
Royalties
$
17,227
$
15,369
$
65,753
$
52,357
Fees
2,954
2,561
11,587
10,215
Product sales to franchisees
3,343
15,642
15,072
56,699
Advertising fund contributions
8,360
7,218
32,573
22,023
Franchise rental income
30,577
31,507
130,777
127,392
Company-owned salon revenue
3,608
25,317
20,205
142,965
Total revenue
66,069
97,614
275,967
411,651
Operating expenses:
Cost of product sales to franchisees
4,172
12,201
17,391
43,756
Inventory reserve (1)
1,235
—
7,655
—
General and administrative
14,566
23,597
65,274
96,427
Rent
3,368
6,758
9,357
40,754
Advertising fund expense
8,360
7,218
32,573
22,023
Franchise rent expense
30,577
31,507
130,777
127,392
Company-owned salon expense (2)
3,648
30,942
21,952
141,204
Depreciation and amortization
1,458
5,030
6,224
21,749
Long-lived asset impairment
—
3,205
542
13,023
Goodwill impairment
—
—
13,120
—
Total operating expenses
67,384
120,458
304,865
506,328
Operating loss
(1,315
)
(22,844
)
(28,898
)
(94,677
)
Other (expense) income:
Interest expense
(3,292
)
(3,024
)
(12,914
)
(13,163
)
Loss from sale of salon assets to
franchisees
(145
)
(8,233
)
(2,334
)
(16,696
)
Interest income and other, net
(309
)
286
(296
)
15,902
Loss from operations before income
taxes
(5,061
)
(33,815
)
(44,442
)
(108,634
)
Income tax (expense) benefit
(3,499
)
4,060
(2,017
)
5,428
Loss from continuing operations
(8,560
)
(29,755
)
(46,459
)
(103,206
)
Loss from discontinued operations, net of
income taxes
(34,073
)
(4,584
)
(39,398
)
(10,125
)
Net loss
$
(42,633
)
$
(34,339
)
$
(85,857
)
$
(113,331
)
Net loss per share:
Basic and diluted:
Loss from continuing operations
$
(0.19
)
$
(0.83
)
$
(1.07
)
$
(2.87
)
Income from discontinued operations
(0.74
)
(0.13
)
(0.90
)
(0.28
)
Net loss per share, basic and diluted
(3)
$
(0.93
)
$
(0.95
)
$
(1.97
)
$
(3.15
)
Weighted average common and common
equivalent shares outstanding:
Basic and diluted
45,969
36,038
43,582
35,956
_______________________________________________________________________________
(1)
Includes charges in the third and fourth
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.
(3)
Total is a recalculation; line items
calculated individually may not sum to total due to rounding.
REGIS CORPORATION
CONSOLIDATED STATEMENT OF CASH
FLOWS
(Dollars in thousands)
Twelve Months Ended June
30,
2022
2021
Cash flows from operating activities:
Net loss
$
(85,857
)
$
(113,331
)
Adjustments to reconcile net loss to net
cash used in operating activities
Loss from sale of OSP
36,143
—
Depreciation and amortization
6,504
17,871
Long-lived asset impairment
542
13,023
Deferred income taxes
391
(3,388
)
Inventory reserve
10,478
12,068
Gain from disposal of distribution center
assets
—
(14,997
)
Loss from sale of salon assets to
franchisees, net
2,334
16,696
Goodwill impairment
16,000
—
Stock-based compensation
1,334
3,254
Amortization of debt discount and
financing costs
1,839
1,839
Other non-cash items affecting
earnings
709
(351
)
Changes in operating assets and
liabilities (1):
Receivables
11,896
(279
)
Inventories
7,886
17,879
Income tax receivable
1,118
1,295
Other current assets
2,118
1,658
Other assets
2,703
(2,896
)
Accounts payable
(10,966
)
(21,669
)
Accrued expenses
(21,983
)
5,296
Net lease liabilities
(5,960
)
(19,248
)
Other non-current liabilities
(15,867
)
(14,603
)
Net cash used in operating activities:
(38,638
)
(99,883
)
Cash flows from investing activities:
Capital expenditures
(5,316
)
(11,475
)
Proceeds from sale of OSP
13,000
—
Proceeds from sale of assets to
franchisees
—
8,437
Costs associated with sale of assets to
franchisees
—
(261
)
Proceeds from company-owned life insurance
policies
—
1,200
Net cash provided by (used in) investing
activities:
7,684
(2,099
)
Cash flows from financing activities:
Borrowings on revolving credit
facility
10,000
10,000
Repayments of revolving credit
facility
(16,916
)
(589
)
Proceeds from issuance of common stock,
net of offering costs
37,185
—
Taxes paid for shares withheld
(845
)
(348
)
Minority interest buyout
—
(562
)
Distribution center lease payments
—
(724
)
Net cash provided by financing
activities:
29,424
7,777
Effect of exchange rate changes on cash
and cash equivalents
(158
)
477
Decrease in cash, cash equivalents and
restricted cash
(1,688
)
(93,728
)
Cash, cash equivalents and restricted
cash:
Beginning of year
29,152
122,880
End of year
$
27,464
$
29,152
_______________________________________________________________________________
(1)
Changes in operating assets and
liabilities exclude assets and liabilities sold or acquired.
SYSTEM-WIDE SAME-STORE SALES
(1):
Three Months Ended
June 30, 2022
June 30, 2021
Service
Retail
Total
Service
Retail
Total
SmartStyle
1.5
%
(17.9
) %
(2.7
) %
2.4
%
(14.0
) %
(1.7
) %
Supercuts
14.4
(11.8
)
13.0
12.4
(10.1
)
10.9
Portfolio Brands
6.5
(5.5
)
5.3
(0.5
)
(14.7
)
(2.2
)
Total
9.6
%
(13.4
) %
7.1
%
6.8
%
(13.2
) %
4.2
%
Twelve Months Ended
June 30, 2022
June 30, 2021
Service
Retail
Total
Service
Retail
Total
SmartStyle
10.7
%
(10.5
) %
5.7
%
(26.1
) %
(28.5
) %
(26.7
) %
Supercuts
23.8
(5.6
)
22.1
(25.9
)
(23.5
)
(25.8
)
Portfolio Brands
13.0
(3.4
)
11.2
(25.3
)
(20.6
)
(24.8
)
Total
17.8
%
(7.5
) %
14.8
%
(25.8
) %
(25.5
) %
(25.8
) %
_______________________________________________________________________________
(1)
System-wide same-store sales in fiscal
years 2022 and 2021 are calculated as the total change in sales for
system-wide franchise and 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 system-wide
same-store sales are the sum of the system-wide same-store sales
computed on a daily basis. Franchise salons that do not report
daily sales are excluded from same-store sales. System-wide
same-store sales are calculated in local currencies to remove
foreign currency fluctuations from the calculation.
REGIS CORPORATION
System-Wide Location
Counts
June 30,
2022
2021
FRANCHISE SALONS:
Supercuts
2,264
2,386
SmartStyle/Cost Cutters in Walmart
stores
1,646
1,666
Portfolio Brands
1,344
1,357
Total North American salons
5,254
5,409
Total International salons (1)
141
154
Total Franchise salons
5,395
5,563
as a percent of total Franchise and
Company-owned salons
98.1
%
95.3
%
COMPANY-OWNED SALONS:
Supercuts
18
35
SmartStyle/Cost Cutters in Walmart
stores
49
91
Portfolio Brands
38
150
Total Company-owned salons
105
276
as a percent of total Franchise and
Company-owned salons
1.9
%
4.7
%
OWNERSHIP INTEREST LOCATIONS:
Equity ownership interest locations
76
78
Grand Total, System-wide
5,576
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 twelve months
ended June 30, 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
- Deferred tax asset
- Discontinued operations
REGIS CORPORATION
Reconciliation Of Selected
U.S. GAAP To Non-GAAP Financial Measures
(Dollars in thousands, except
per share data)
Reconciliation of U.S. GAAP
operating loss and U.S. GAAP net loss to equivalent non-GAAP
measures
Three Months Ended June
30,
Twelve Months Ended June
30,
U.S. GAAP financial line
item
2022
2021
2022
2021
U.S. GAAP revenue
$
66,069
$
97,614
$
275,967
$
411,651
U.S. GAAP operating loss
$
(1,315
)
$
(22,844
)
$
(28,898
)
$
(94,677
)
Non-GAAP operating expense adjustments
(1)
Inventory reserve
Inventory reserve
1,235
—
7,655
—
CEO transition
General and administrative
—
—
(466
)
(694
)
Distribution center fees
General and administrative
—
—
285
—
Professional fees and settlements
General and administrative
280
—
2,140
826
Severance
General and administrative
59
1,606
2,074
4,545
Lease liability benefit
Rent
(336
)
(8,727
)
(3,620
)
(20,022
)
Lease termination fees
Rent
32
7,020
1,835
13,544
Real estate fees
Rent
—
49
40
583
Asset retirement obligation
Depreciation and amortization
139
1,280
1,041
4,726
Long-lived asset impairment
Long-lived asset impairment
—
3,205
542
13,023
Goodwill impairment
Goodwill impairment
—
—
13,120
—
Total non-GAAP operating expense
adjustments
1,409
4,433
24,646
16,531
Non-GAAP operating income (loss)
(1)
$
94
$
(18,411
)
$
(4,252
)
$
(78,146
)
U.S. GAAP net loss
$
(42,633
)
$
(34,339
)
$
(85,857
)
$
(113,331
)
Non-GAAP net loss adjustments:
Non-GAAP operating expense adjustments
1,409
4,433
24,646
16,531
Gain on distribution centers
Interest income and other,
net
—
(120
)
—
(14,997
)
Non-recurring, non-operating income
Interest income and other,
net
—
—
(100
)
—
Income tax impact on Non-GAAP adjustments
(2)
Income taxes
4,119
(41
)
3,859
(13
)
Discontinued operations, net of tax
Loss from discontinued
operations, net of tax
34,073
4,584
39,398
10,125
Total non-GAAP net loss adjustments
39,601
8,856
67,803
11,646
Non-GAAP net loss
$
(3,032
)
$
(25,483
)
$
(18,054
)
$
(101,685
)
_______________________________________________________________________________
(1)
Adjusted operating margins for the three
months ended June 30, 2022 and 2021, were 0.1% and (18.9)%,
respectively, and were (1.5)% and (19.0)% for the twelve months
ended June 30, 2022 and 2021, respectively, and are calculated as
non-GAAP operating income (loss) divided by non-GAAP revenue for
each respective period.
(2)
Based on projected statutory effective tax
rate analyses, the non-GAAP tax benefit (provision) was calculated
to be approximately 0% and 1% for the three months ended June 30,
2022 and 2021, respectively and approximately 1% for the twelve
months ended June 30, 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)
Reconciliation of U.S. GAAP
net loss per diluted share to non-GAAP net loss per diluted
share
Three Months Ended June
30,
Twelve Months Ended June
30,
2022
2021
2022
2021
U.S. GAAP net loss per diluted
share
$
(0.927
)
$
(0.953
)
$
(1.970
)
$
(3.152
)
Inventory reserve (1)
0.027
—
0.174
—
CEO transition (1)
—
—
(0.011
)
(0.019
)
Distribution center fees (1)
—
—
0.006
—
Professional fees and settlements (1)
0.006
—
0.049
0.022
Severance (1)
0.001
0.044
0.047
0.125
Lease liability benefit (1)
(0.007
)
(0.240
)
(0.082
)
(0.550
)
Lease termination fees (1)
0.001
0.193
0.042
0.373
Real estate fees (1)
—
0.001
0.001
0.016
Asset retirement obligation (1)
0.003
0.035
0.024
0.130
Long-lived asset impairment (1)
—
0.088
0.012
0.359
Goodwill impairment (1)
—
—
0.297
—
Gain on distribution centers (1)
—
(0.003
)
—
(0.413
)
Non-recurring, non-operating income
(1)
—
—
(0.002
)
—
Discontinued operations, net of tax
0.740
0.127
0.904
0.282
Deferred tax asset
0.090
—
0.095
—
Non-GAAP net loss per diluted share
(2)
$
(0.066
)
$
(0.707
)
$
(0.414
)
$
(2.828
)
U.S. GAAP Weighted average shares - basic
and diluted
45,969
36,038
43,582
35,956
Non-GAAP Weighted average shares -
diluted
45,969
36,038
43,582
35,956
_______________________________________________________________________________
(1)
Based on projected statutory effective tax
rate analyses, the non-GAAP tax benefit (provision) was calculated
to be approximately 0% and 1% for the three months ended June 30,
2022 and 2021, respectively, and approximately 1% for the twelve
months ended June 30, 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 twelve months ended June 30,
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 benefit
(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 June 30,
2022
Franchise
Company-owned
Consolidated (1)(2)
Consolidated reported net loss, as
reported (U.S. GAAP)
$
(39,879
)
$
(1,519
)
$
(42,633
)
Interest expense, as reported
3,292
—
3,292
Income taxes, as reported
3,499
—
3,499
Depreciation and amortization, as
reported
1,275
183
1,458
EBITDA (as defined above)
$
(31,813
)
$
(1,336
)
$
(34,384
)
Inventory reserve, as reported (2)
—
—
1,235
Professional fees and settlements
280
—
280
Severance
56
3
59
Lease liability benefit
(130
)
(206
)
(336
)
Lease termination fees
72
(40
)
32
Discontinued operations, net of tax
34,073
—
34,073
Adjusted EBITDA, non-GAAP financial
measure
$
2,538
$
(1,579
)
$
959
Three Months Ended June 30,
2021
Franchise
Company-owned
Consolidated (1)
Consolidated reported net loss, as
reported (U.S. GAAP)
$
(15,047
)
$
(19,292
)
$
(34,339
)
Interest expense, as reported
3,024
—
3,024
Income taxes, as reported
(4,060
)
—
(4,060
)
Depreciation and amortization, as
reported
1,379
3,651
5,030
Long-lived asset impairment, as
reported
—
3,205
3,205
EBITDA (as defined above)
$
(14,704
)
$
(12,436
)
$
(27,140
)
Severance
1,606
—
1,606
Lease liability benefit
(716
)
(8,011
)
(8,727
)
Lease termination fees
(103
)
7,123
7,020
Real estate fees
21
28
49
Gain on distribution centers
(120
)
—
(120
)
Discontinued operations, net of tax
4,584
—
4,584
Adjusted EBITDA, non-GAAP financial
measure
$
(9,432
)
$
(13,296
)
$
(22,728
)
_______________________________________________________________________________
(1)
Consolidated EBITDA margins for the three
months ended June 30, 2022, and 2021, were (52.0)% and (27.8)%,
respectively, and are calculated as EBITDA (as defined above)
divided by U.S. GAAP revenue for each respective period.
Consolidated adjusted EBITDA margin for the three months ended June
30, 2022, and 2021 were 1.5% and (23.3)%, respectively, and are
calculated as consolidated adjusted EBITDA (as defined above)
divided by consolidated adjusted 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.
Twelve Months Ended June 30,
2022
Franchise
Company-owned
Consolidated (1)(2)
Consolidated reported net loss, as
reported (U.S. GAAP)
$
(68,735
)
$
(9,467
)
$
(85,857
)
Interest expense, as reported
12,914
—
12,914
Income taxes, as reported
2,017
—
2,017
Depreciation and amortization, as
reported
4,913
1,311
6,224
Long-lived asset impairment, as
reported
450
92
542
EBITDA (as defined above)
$
(48,441
)
$
(8,064
)
$
(64,160
)
Inventory reserve, as reported (2)
—
—
7,655
CEO transition
(466
)
—
(466
)
Distribution center fees
285
—
285
Professional fees and settlements
2,140
—
2,140
Severance
2,000
74
2,074
Lease liability benefit
(378
)
(3,242
)
(3,620
)
Lease termination fees
172
1,663
1,835
Real estate fees
—
40
40
Goodwill impairment, as reported
13,120
—
13,120
Non-recurring, non-operating income
(100
)
—
(100
)
Discontinued operations, net of tax
39,398
—
—
39,398
Adjusted EBITDA, non-GAAP financial
measure
$
7,730
$
(9,529
)
$
(1,799
)
Twelve Months Ended June 30,
2021
Franchise
Company-owned
Consolidated (1)
Consolidated reported net loss, as
reported (U.S. GAAP)
$
(43,299
)
$
(70,032
)
$
(113,331
)
Interest expense, as reported
13,163
—
13,163
Income taxes, as reported
(5,428
)
—
(5,428
)
Depreciation and amortization, as
reported
7,019
14,730
21,749
Long-lived asset impairment, as
reported
726
12,297
13,023
EBITDA (as defined above)
$
(27,819
)
$
(43,005
)
$
(70,824
)
CEO transition
(694
)
—
(694
)
Professional fees and settlements
826
—
826
Severance
4,545
—
4,545
Lease liability benefit
(1,322
)
(18,700
)
(20,022
)
Lease termination fees
(103
)
13,647
13,544
Real estate fees
22
561
583
Gain on distribution centers
(14,997
)
—
(14,997
)
Discontinued operations, net of tax
10,125
—
10,125
Adjusted EBITDA, non-GAAP financial
measure
$
(29,417
)
$
(47,497
)
$
(76,914
)
_______________________________________________________________________________
(1)
Consolidated EBITDA margins for the twelve
months ended June 30, 2022, and 2021, were (23.2)% and (17.2)%,
respectively, and are calculated as EBITDA (as defined above)
divided by U.S. GAAP revenue for each respective period.
Consolidated adjusted EBITDA margin for the twelve months ended
June 30, 2022, and 2021, were (0.7)% and (18.7)%, respectively, and
are calculated as consolidated adjusted EBITDA (as defined above)
divided by consolidated adjusted 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 June
30,
2022
2021
As Adjusted EBITDA
$
2,538
$
(9,432
)
U.S. GAAP revenue
62,461
72,297
As Adjusted EBITDA as a % of U.S. GAAP
revenue
4.1
%
(13.0
) %
Non-margin revenue adjustments:
Franchise rental income
$
(30,577
)
$
(31,507
)
Advertising fund contributions
(8,360
)
(7,218
)
Adjusted revenue
$
23,524
$
33,572
As Adjusted EBITDA as a percent of
adjusted revenue (1)
10.8
%
(28.1
) %
Twelve Months Ended June
30,
2022
2021
As Adjusted EBITDA
$
7,730
$
(29,417
)
U.S. GAAP revenue
255,762
268,686
As Adjusted EBITDA as a % of U.S. GAAP
revenue
3.0
%
(10.9
) %
Non-margin revenue adjustments:
Franchise rental income
$
(130,777
)
$
(127,392
)
Advertising fund contributions
(32,573
)
(22,023
)
Adjusted revenue
$
92,412
$
119,271
As Adjusted EBITDA as a percent of
adjusted revenue (1)
8.4
%
(24.7
) %
_______________________________________________________________________________
(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/20220823005227/en/
REGIS CORPORATION: Kersten Zupfer
investorrelations@regiscorp.com
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