Highest first half operating income in five
years.
Regis Corporation (NYSE: RGS), a leader in the haircare
industry, today announced financial results for the second fiscal
quarter ended December 31, 2022.
Matthew Doctor, Regis Corporation’s President and Chief
Executive Officer, commented: "I am pleased with our strong results
this quarter, which contributed to our highest first half operating
income in five years and adjusted EBITDA growth. Our continued
improved performance reflects the success of our transformation to
an asset-light franchise business and the execution on our
strategies across technology, stylist retention and recruitment,
customer retention and marketing with the goal of increasing
franchisee sales and profitability. As we look ahead, while we
recognize the environment remains dynamic, we remain excited about
our future and the significant potential that exists to unlock
value for key stakeholders. I am incredibly proud of our
franchisees, the Regis team and all of our business partners for
their contributions to Regis’ results and continued execution
against our plans."
Financial Highlights:
Second quarter 2023 compared to second quarter 2022:
- System-wide same-store sales increased 4.5% in the
quarter;
- Operating income improved $1.2 million to $0.7 million, from an
operating loss of $0.5 million in the 2022 second quarter;
operating income excluding certain non-cash charges was $4.5
million;
- Franchise adjusted EBITDA of $7.5 million compared to $5.7
million in the 2022 second quarter, and was positive for the fifth
quarter in a row;
- Net loss of $2.4 million improved $2.5 million from a loss of
$4.9 million in the 2022 second quarter; and
- Adjusted EBITDA was $7.8 million compared to $2.6 million in
the 2022 second quarter. Adjusted EBITDA includes a $1.1 million
grant from the state of North Carolina related to COVID-19 relief
and a favorable actuarial adjustment of $0.6 million.
First half 2023 compared to first half 2022:
- System-wide same-store sales increased 4.5% for the year;
- Operating income improved $8.6 million to $3.2 million, from an
operating loss of $5.4 million in the 2022 first half;
- Franchise adjusted EBITDA of $12.5 million increased $10.2
million from $2.3 million in the 2022 first half;
- Net loss of $0.9 million improved $14.4 million from a loss of
$15.3 million in the 2022 first half; and
- Adjusted EBITDA was $11.7 million compared to a loss of $2.4
million in the 2022 first half. Adjusted EBITDA includes the
benefits referenced above.
Second Quarter Fiscal Year 2023 Consolidated Results
Three Months Ended December
31,
Six Months Ended December
31,
(Dollars in millions)
2022
2021
2022
2021
Consolidated revenue
$
60.0
$
69.3
$
121.8
$
146.1
System-wide revenue (1)
303.4
304.4
619.4
620.6
System-wide same-store sales comps
4.5
%
22.1
%
4.5
%
22.6
%
Operating income (loss)
$
0.7
$
(0.5
)
$
3.2
$
(5.4
)
Loss from continuing operations
(2.5
)
(4.1
)
(4.4
)
(13.4
)
Diluted loss per share from continuing
operations
(0.06
)
(0.09
)
(0.10
)
(0.32
)
Income (loss) from discontinued
operations
0.1
(0.8
)
3.4
(1.9
)
Net loss
(2.4
)
(4.9
)
(0.9
)
(15.3
)
Diluted net loss per share
(0.05
)
(0.11
)
(0.02
)
(0.37
)
Adjusted EBITDA (2)
7.8
2.6
11.7
(2.4
)
_______________________________________________________________________________
(1)
Represents total sales within the
system.
(2)
See GAAP to non-GAAP reconciliations
within the attached section titled "Non-GAAP Reconciliations."
Revenue
Total revenue in the second quarter 2023 of $60.0 million
decreased $9.3 million and total revenue in the first half 2023 of
$121.8 million decreased $24.3 million. The decreases were driven
primarily by a reduction in non-margin franchise rental income, the
wind down of loss-generating company-owned salons that generated
significant revenue and exiting the product distribution business.
Partially offsetting the decline in revenue was an increase in
royalty revenue due to higher average royalty rates.
Operating Income
Regis reported second quarter 2023 income from operations of
$0.7 million, compared to a loss from operations of $0.5 million in
the second quarter 2022. This included certain non-cash charges of
$2.6 million for accelerated depreciation related to the
consolidation of corporate office space and a $1.2 million
inventory reserve. Operating income excluding these non-cash
charges was $4.5 million. The year-over-year improvement in
operations was driven primarily by lower general and administrative
expense and the wind down of loss-generating company-owned salons
during the last twelve months.
Regis reported first half 2023 income from operations of $3.2
million, compared to a loss from operations of $5.4 million in the
first half 2022. The year-over-year improvement in operations was
driven primarily by lower general and administrative expense, and
the wind down of loss-generating company-owned salons.
Net Loss from Continuing Operations
Regis reported second quarter 2023 net loss from continuing
operations of $2.5 million, or $0.06 loss per diluted share,
compared to a net loss from continuing operations of $4.1 million,
or $0.09 loss per diluted share, in the second quarter 2022. Regis
reported a first half 2023 net loss from continuing operations of
$4.4 million, or $0.10 loss per diluted share, compared to a net
loss from continuing operations of $13.4 million, or $0.32 loss per
diluted share, in the first half 2022. The year-over-year
improvement in net loss from continuing operations in both periods
was driven primarily by an increase in operating income partially
offset by an increase in interest expense.
Net Loss
The Company reported a second quarter 2023 net loss of $2.4
million, or $0.05 loss per diluted share, compared to a net loss of
$4.9 million, or $0.11 loss per diluted share for the same period
last year. The net loss improved year-over-year due to the increase
in operating income due to lower general and administrative
expense.
The Company reported a first half 2023 net loss of $0.9 million,
or $0.02 loss per diluted share, compared to a net loss of $15.3
million, or $0.37 loss per diluted share for the same period last
year. The net loss improved year-over-year due to the proceeds
associated with discontinued operations and an increase in
operating income due to lower general and administrative
expense.
Adjusted EBITDA
Second quarter adjusted EBITDA of $7.8 million improved $5.2
million versus adjusted EBITDA of $2.6 million in the same period
last year. First half adjusted EBITDA of $11.7 million improved
$14.1 million, versus an adjusted EBITDA loss of $2.4 million in
the same period last year. The improvement was driven by lower
general and administrative expenses due to the wind down of
loss-generating company-owned salons during the last twelve months,
as well as recoveries including: a $1.1 million grant from the
state of North Carolina related to COVID-19 relief and a favorable
$0.6 million actuarial adjustment. The Company noted that the
majority of its strategic investment spend will occur in the second
half of the year.
Second Quarter Fiscal Year 2023 Segment Results
Franchise
Three Months Ended December
31,
Increase (Decrease)
Six Months Ended December
31,
Increase (Decrease)
(Dollars in millions) (1)
2022
2021
2022
2021
Royalties
$
16.2
$
16.1
$
0.1
$
33.3
$
32.7
$
0.6
Fees
3.2
3.9
(0.7
)
5.8
6.2
(0.4
)
Product sales to franchisees
1.1
2.4
(1.3
)
1.6
10.4
(8.8
)
Advertising fund contributions
8.0
8.0
—
16.2
16.1
0.1
Franchise rental income
28.9
33.8
(4.9
)
59.2
67.5
(8.3
)
Total Franchise revenue
$
57.4
$
64.2
$
(6.8
)
$
116.1
$
133.0
$
(16.9
)
Franchise same-store sales comps
4.5
%
22.4
%
4.6
%
23.0
%
Franchise adjusted EBITDA
$
7.5
$
5.7
$
1.8
$
12.5
$
2.3
$
10.2
as a percent of revenue
13.1
%
8.9
%
10.8
%
1.7
%
as a percent of adjusted revenue (2)
36.7
%
25.5
%
30.8
%
4.6
%
Total Franchise salons
5,196
5,553
(357
)
as a percent of total Franchise and
Company-owned salons
98.6
%
97.4
%
_______________________________________________________________________________
(1)
Variances calculated on amounts shown in
millions may result in rounding differences.
(2)
Adjusted revenue excludes non-margin
revenue. See GAAP to non-GAAP reconciliations within the attached
section titled "Non-GAAP Reconciliations."
Franchise Revenue
Second quarter franchise revenue was $57.4 million, a $6.8
million, or 10.6% decrease compared to the prior year quarter.
Royalties were $16.2 million, a $0.1 million, or 0.6% increase,
versus the same period last year. The increase in royalties is due
to higher average royalty rates and improved system-wide same-store
sales, partially offset by a decrease in franchise salon count.
Product sales to franchisees of $1.1 million decreased $1.3
million, or 54.2%, as a result of the transition out of the
wholesale product business.
First half franchise revenue was $116.1 million, a $16.9
million, or 12.7% decrease compared to the first half of the prior
year.
Franchise Adjusted EBITDA
Second quarter franchise adjusted EBITDA of $7.5 million
improved $1.8 million year-over-year primarily due to an increase
in average royalty revenues and a decrease in general and
administrative expense.
First half franchise adjusted EBITDA of $12.5 million improved
$10.2 million year-over-year.
Company-Owned Salons
Three Months Ended December
31,
(Decrease) Increase
Six Months Ended December
31,
(Decrease) Increase
(Dollars in millions) (1)
2022
2021
2022
2021
Total Company-owned salon revenue
$
2.6
$
5.0
$
(2.4
)
$
5.7
$
13.0
$
(7.3
)
Company-owned same-store sales comps
6.8
%
7.2
%
1.0
%
6.8
%
Company-owned salon adjusted EBITDA
$
0.3
$
(3.1
)
$
3.4
$
(0.9
)
$
(4.7
)
$
3.8
as a percent of revenue
11.5
%
(62.1
) %
(15.8
) %
(35.9
) %
Total Company-owned salons
75
150
(75
)
as a percent of total Franchise and
Company-owned salons
1.4
%
2.6
%
______________________________________________________________________________
(1)
Variances calculated on amounts shown in
millions may result in rounding differences.
Company-Owned Salon Revenue
Second quarter revenue for the Company-owned salon segment
decreased $2.4 million versus the prior year to $2.6 million. The
year-over-year decline in revenue was expected and driven by 17
salons converted to the Company's franchise portfolio over the past
twelve months and the closure of 59 unprofitable salons over the
past twelve months.
First half revenue for the Company-owned salon segment decreased
$7.3 million versus the prior year to $5.7 million.
Company-Owned Salon Adjusted EBITDA
Second quarter company-owned salon adjusted EBITDA improved $3.4
million year-over-year driven primarily by the closure of
unprofitable salons and a $1.1 million grant from the state of
North Carolina related to COVID-19 relief.
First half company-owned salon adjusted EBITDA loss improved
$3.8 million year-over-year.
Balance Sheet and Cash
Flow
The Company ended the second quarter with $9.4 million in cash
and cash equivalents, $182.8 million in outstanding borrowings and
total liquidity of $43.7 million. Net cash used in operating
activities totaled $6.9 million, an improvement of $17.4 million
from the prior year. Cash used in operations includes a $2.5
million payment of previously deferred social security
contributions.
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 today, February 1, 2023, at 7:30
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 the same web address.
About Regis Corporation
Regis Corporation (NYSE:RGS) is a leader in the haircare
industry. As of December 31, 2022, the Company franchised, owned or
held ownership interests in 5,347 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 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 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
share data)
December 31,
2022
June 30, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
9,406
$
17,041
Receivables, net
13,962
14,531
Inventories, net
2,623
3,109
Other current assets
18,138
13,984
Total current assets
44,129
48,665
Property and equipment, net
8,692
12,835
Goodwill
173,337
174,360
Other intangibles, net
2,917
3,226
Right of use asset
430,979
493,749
Other assets
27,622
36,465
Total assets
$
687,676
$
769,300
LIABILITIES AND SHAREHOLDERS'
DEFICIT
Current liabilities:
Accounts payable
$
17,277
$
15,860
Accrued expenses
27,690
33,784
Short-term lease liability
93,940
103,196
Total current liabilities
138,907
152,840
Long-term debt, net
174,846
179,994
Long-term lease liability
352,212
408,445
Other non-current liabilities
53,346
58,974
Total liabilities
719,311
800,253
Commitments and contingencies
Shareholders' deficit:
Common stock, $0.05 par value; issued and
outstanding 45,562,555 and 45,510,245 common shares at December 31,
2022 and June 30, 2022, respectively
2,278
2,276
Additional paid-in capital
63,543
62,562
Accumulated other comprehensive income
8,729
9,455
Accumulated deficit
(106,185
)
(105,246
)
Total shareholders' deficit
(31,635
)
(30,953
)
Total liabilities and shareholders'
deficit
$
687,676
$
769,300
REGIS CORPORATION
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (Unaudited)
For the Three and Six Months
Ended December 31, 2022 and 2021
(Dollars and shares in
thousands, except per share data)
Three Months Ended December
31,
Six Months Ended December
31,
2022
2021
2022
2021
Revenues:
Royalties
$
16,158
$
16,125
$
33,338
$
32,726
Fees
3,238
3,881
5,791
6,208
Product sales to franchisees
1,107
2,428
1,550
10,436
Advertising fund contributions
7,965
8,021
16,216
16,136
Franchise rental income
28,886
33,772
59,216
67,534
Company-owned salon revenue
2,613
5,043
5,727
13,048
Total revenue
59,967
69,270
121,838
146,088
Operating expenses:
Cost of product sales to franchisees
1,310
3,117
1,780
10,766
Inventory reserve
1,228
—
1,228
—
General and administrative
11,747
15,082
26,108
35,866
Rent
2,090
3,042
3,843
4,789
Advertising fund expense
7,965
8,021
16,216
16,136
Franchise rent expense
28,886
33,772
59,216
67,534
Company-owned salon expense (1)
2,218
5,067
5,203
13,011
Depreciation and amortization
3,793
1,605
5,044
3,144
Long-lived asset impairment
—
52
—
215
Total operating expenses
59,237
69,758
118,638
151,461
Operating income (loss)
730
(488
)
3,200
(5,373
)
Other expense:
Interest expense
(4,519
)
(3,270
)
(8,336
)
(6,397
)
Loss from sale of salon assets to
franchisees, net
—
(615
)
—
(1,695
)
Other, net
1,248
99
785
(140
)
Loss from operations before income
taxes
(2,541
)
(4,274
)
(4,351
)
(13,605
)
Income tax benefit (expense)
—
164
(28
)
213
Loss from continuing operations
(2,541
)
(4,110
)
(4,379
)
(13,392
)
Income (loss) from discontinued
operations
134
(818
)
3,440
(1,914
)
Net loss
$
(2,407
)
$
(4,928
)
$
(939
)
$
(15,306
)
Net loss per share:
Basic and diluted:
Loss from continuing operations
$
(0.06
)
$
(0.09
)
$
(0.10
)
$
(0.32
)
Income (loss) from discontinued
operations
0.00
(0.02
)
0.07
(0.05
)
Net loss per share, basic and diluted
(2)
$
(0.05
)
$
(0.11
)
$
(0.02
)
$
(0.37
)
Weighted average common and common
equivalent shares outstanding:
Basic and diluted
46,148
45,721
46,091
41,274
_______________________________________________________________________________
(1)
Includes cost of service and product sold
to guests in our Company-owned salons. Excludes general and
administrative expense, rent and depreciation and amortization
related to Company-owned salons.
(2)
Total is a recalculation; line items
calculated individually may not sum to total due to rounding.
REGIS CORPORATION
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS (Unaudited)
For the Six Months Ended
December 31, 2022 and 2021
(Dollars in thousands)
Six Months Ended December
31,
2022
2021
Cash flows from operating activities:
Net loss
$
(939
)
$
(15,306
)
Adjustments to reconcile net loss to cash
used in operating activities:
Gain from sale of OSP
(4,034
)
—
Depreciation and amortization
4,647
3,284
Long-lived asset impairment
—
215
Deferred income taxes
28
(529
)
Inventory reserve
1,228
—
Loss from sale of salon assets to
franchisees, net
—
1,695
Stock-based compensation
1,111
305
Amortization of debt discount and
financing costs
1,391
920
Other non-cash items affecting
earnings
376
551
Changes in operating assets and
liabilities, excluding the effects of asset sales
(10,722
)
(15,463
)
Net cash used in operating activities
(6,914
)
(24,328
)
Cash flows from investing activities:
Capital expenditures
(361
)
(2,947
)
Proceeds from sale of OSP, net of fees
4,000
—
Net cash provided by (used in) investing
activities
3,639
(2,947
)
Cash flows from financing activities:
Borrowings on credit facility
11,357
10,000
Repayments of long-term debt
(8,535
)
(2,734
)
Debt refinancing fees
(4,383
)
—
Proceeds from issuance of common stock,
net of offering costs
—
37,185
Taxes paid for shares withheld
(35
)
(823
)
Net cash (used in) provided by financing
activities
(1,596
)
43,628
Effect of exchange rate changes on cash
and cash equivalents
(135
)
(134
)
(Decrease) increase in cash, cash
equivalents, and restricted cash
(5,006
)
16,219
Cash, cash equivalents and restricted
cash:
Beginning of period
27,464
29,152
End of period
$
22,458
$
45,371
REGIS CORPORATION
Same-Store Sales
SYSTEM-WIDE SAME-STORE SALES
(1):
Three Months Ended
December 31, 2022
December 31, 2021
Service
Retail
Total
Service
Retail
Total
Supercuts
8.0
%
(7.3
)%
7.2
%
32.7
%
2.3
%
30.8
%
SmartStyle
(0.7
)
(11.3
)
(2.9
)
19.8
(6.6
)
13.2
Portfolio Brands
7.3
(5.1
)
6.0
19.0
(1.3
)
16.6
Total
6.0
%
(8.6
)%
4.5
%
25.7
%
(3.2
)%
22.1
%
Six Months Ended
December 31, 2022
December 31, 2021
Service
Retail
Total
Service
Retail
Total
Supercuts
8.8
%
(7.7
)%
8.0
%
32.7
%
0.4
%
30.6
%
SmartStyle
0.2
(15.1
)
(3.1
)
21.2
(3.2
)
15.1
Portfolio Brands
6.2
(7.6
)
4.8
20.0
(0.2
)
17.6
Total
6.3
%
(11.3
)%
4.5
%
26.2
%
(1.6
)%
22.6
%
_______________________________________________________________________________
(1)
System-wide same-store sales 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
December 31,
2022
June 30, 2022
FRANCHISE SALONS:
Supercuts
2,160
2,264
SmartStyle/Cost Cutters in Walmart
Stores
1,605
1,646
Portfolio Brands
1,293
1,344
Total North American salons
5,058
5,254
Total International salons (1)
138
141
Total Franchise salons
5,196
5,395
as a percent of total Franchise and
Company-owned salons
98.6
%
98.1
%
COMPANY-OWNED SALONS:
Supercuts
10
18
SmartStyle/Cost Cutters in Walmart
Stores
48
49
Portfolio Brands
17
38
Total Company-owned salons
75
105
as a percent of total Franchise and
Company-owned salons
1.4
%
1.9
%
OWNERSHIP INTEREST LOCATIONS:
Equity ownership interest locations
76
76
Grand Total, System-wide
5,347
5,576
(1)
Canadian and Puerto Rican salons are
included in the North American salon totals.
Non-GAAP Reconciliations:
This press release includes a presentation of operating income
excluding certain non-cash charges, Adjusted EBITDA and adjusted
Franchise revenue, which are non-GAAP measures. The non-GAAP
measures are financial measures that do not reflect United States
Generally Accepted Accounting Principles (GAAP). We believe our
presentation of the non-GAAP measures provides meaningful insight
into our ongoing operating performance and a supplemental
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.
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 reconciliation of GAAP operating income to non-GAAP
operating income excluding certain non-cash charges is included in
the release.
The following items have been excluded from our non-GAAP
Adjusted EBITDA results: discontinued operations, non-recurring
non-operating income, distribution center wind down fees, CEO
transition costs, inventory reserve, one-time professional fees and
settlements, severance expense, the benefit from lease liability
decreases in excess of previously impaired right of use asset,
lease termination fees and asset retirement obligation costs.
We present adjusted revenue to provide a meaningful Franchise
adjusted EBITDA margin, which removes non-margin revenue from total
revenue to arrive at an adjusted margin. Margin is a common metric
used by investors however, the majority of our revenue is offset by
equal expense, so it does not contribute to our margin. We remove
the non-margin revenue from this metric in order to show a
meaningful margin rate.
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.
REGIS CORPORATION
Reconciliation of U.S. GAAP
Net Loss to Adjusted EBITDA
(Dollars in thousands)
(Unaudited)
Three Months Ended December
31,
Six Months Ended December
31,
2022
2021
2022
2021
Consolidated reported net loss, as
reported (U.S. GAAP)
$
(2,407
)
$
(4,928
)
$
(939
)
$
(15,306
)
Interest expense, as reported
4,519
3,270
8,336
6,397
Income taxes, as reported
—
(164
)
28
(213
)
Depreciation and amortization, as
reported
3,793
1,605
5,044
3,144
Long-lived asset impairment, as
reported
—
52
—
215
EBITDA (as defined above)
$
5,905
$
(165
)
$
12,469
$
(5,763
)
Inventory reserve
1,228
—
1,228
—
CEO transition
—
(516
)
—
(516
)
Distribution center fees
—
56
—
285
Professional fees and legal
settlements
540
1,018
1,248
1,146
Severance
63
1,735
66
1,911
Lease liability benefit
(615
)
(496
)
(1,217
)
(2,927
)
Lease termination fees
848
238
1,306
1,578
Real estate fees
—
—
—
40
Non-recurring, non-operating income
—
(100
)
—
(100
)
Discontinued operations
(134
)
818
(3,440
)
1,914
Adjusted EBITDA, non-GAAP financial
measure
$
7,835
$
2,588
$
11,660
$
(2,432
)
REGIS CORPORATION
Reconciliation of Reported
Franchise Adjusted EBITDA as a Percent of GAAP Franchise
Revenue
to Franchise Adjusted EBITDA
as a Percent of Adjusted Franchise Revenue
(Dollars in thousands)
(Unaudited)
Three Months Ended December
31,
Six Months Ended December
31,
2022
2021
2022
2021
Franchise adjusted EBITDA
$
7,532
$
5,721
$
12,523
$
2,256
GAAP Franchise revenue
57,354
64,227
116,111
133,040
Franchise adjusted EBITDA as a percent of
GAAP Franchise revenue
13.1
%
8.9
%
10.8
%
1.7
%
Non-margin revenue adjustments:
Franchise rental income
$
(28,886
)
$
(33,772
)
$
(59,216
)
$
(67,534
)
Advertising fund contributions
(7,965
)
(8,021
)
(16,216
)
(16,136
)
Adjusted Franchise revenue
20,503
22,434
40,679
49,370
Franchise adjusted EBITDA as a percent of
adjusted Franchise revenue
36.7
%
25.5
%
30.8
%
4.6
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230201005213/en/
REGIS CORPORATION: Kersten Zupfer
investorrelations@regiscorp.com
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