Regis Corporation (NYSE: RGS), a leader in the haircare
industry, today announced financial results for the third fiscal
quarter and nine months ended March 31, 2023.
Matthew Doctor, Regis Corporation’s President and Chief
Executive Officer, commented: "We are pleased with our third
quarter performance, which was highlighted by year-over-year growth
across all key financial metrics, including our third consecutive
quarter of positive operating income. Our business has demonstrated
sales growth and positive EBITDA in each of the first three
quarters of our fiscal year, further demonstrating the progress we
have made in stabilizing our business. As we continue to execute on
our key initiatives and explore potential growth catalysts, we
expect to deliver consistent and sustainable long-term profitable
growth that will drive increased value for our shareholders. I
remain proud of all of our team members, franchise owners and
business partners for their resilience, passion and dedication to
Regis, and look forward to reporting on additional progress in the
final quarter of the fiscal year."
Financial Highlights:
Third quarter fiscal 2023 compared to third quarter fiscal
2022:
- System-wide revenue of $299.3 million increased $8.3 million
from $291.0 million and system-wide same-store sales increased
6.0%;
- Operating income improved $24.2 million to $2.0 million, from
an operating loss of $22.2 million in the 2022 third quarter;
- Franchise adjusted EBITDA of $4.8 million increased $1.9
million from $2.9 million in the 2022 third quarter, and was
positive for the sixth quarter in a row;
- Net loss of $1.6 million improved $26.3 million from a loss of
$27.9 million in the 2022 third quarter; and
- Adjusted EBITDA of $4.2 million increased $4.5 million from a
loss of $0.3 million in the 2022 third quarter.
First nine months 2023 compared to first nine months
2022:
- System-wide revenue of $918.7 million increased $7.1 million
from $911.6 million and system-wide same-store sales increased
5.0%;
- Operating income improved $32.8 million to $5.2 million, from
an operating loss of $27.6 million in the 2022 fiscal year;
- Franchise adjusted EBITDA of $17.3 million increased $12.1
million from $5.2 million in the 2022 fiscal year;
- Net loss of $2.6 million improved $40.6 million from a loss of
$43.2 million in the 2022 fiscal year; and
- Adjusted EBITDA of $15.8 million increased $18.6 million from a
loss of $2.8 million in the 2022 fiscal year. Adjusted EBITDA
includes a $1.1 million grant from the state of North Carolina
related to COVID-19 relief.
Third Quarter Fiscal Year 2023
Consolidated Results
Three Months Ended March
31,
Nine Months Ended March
31,
(Dollars in millions)
2023
2022
2023
2022
Consolidated revenue
$
55.8
$
63.8
$
177.6
$
209.9
System-wide revenue (1)
299.3
291.0
918.7
911.6
System-wide same-store sales comps
6.0
%
8.6
%
5.0
%
17.8
%
Operating income (loss)
$
2.0
$
(22.2
)
$
5.2
$
(27.6
)
Loss from continuing operations
(2.2
)
(24.5
)
(6.5
)
(37.9
)
Diluted loss per share from continuing
operations
(0.05
)
(0.53
)
(0.14
)
(0.89
)
Income (loss) from discontinued
operations
0.5
(3.4
)
4.0
(5.3
)
Net loss
(1.6
)
(27.9
)
(2.6
)
(43.2
)
Diluted net loss per share
(0.04
)
(0.61
)
(0.06
)
(1.01
)
Adjusted EBITDA (2)
4.2
(0.3
)
15.8
(2.8
)
_______________________________________________________________________________
(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 third quarter 2023 of $55.8 million
decreased $8.0 million and total revenue year-to-date 2023 of
$177.6 million decreased $32.3 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.
Operating Income
Regis reported third quarter 2023 income from operations of $2.0
million, compared to a loss from operations of $22.2 million in the
third quarter 2022. Regis reported year-to-date 2023 income from
operations of $5.2 million, compared to a loss from operations of
$27.6 million in 2022. The year-over-year improvement in operations
was driven primarily by an impairment for inventory and goodwill in
the prior year that did not reoccur, lower general and
administrative expense, and the wind down of loss-generating
company-owned salons during the last twelve months.
Net Loss from Continuing Operations
Regis reported third quarter 2023 net loss from continuing
operations of $2.2 million, or $0.05 loss per diluted share,
compared to a net loss from continuing operations of $24.5 million,
or $0.53 loss per diluted share, in the third quarter 2022. Regis
reported year-to-date 2023 net loss from continuing operations of
$6.5 million, or $0.14 loss per diluted share, compared to a net
loss from continuing operations of $37.9 million, or $0.89 loss per
diluted share, in 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 third quarter 2023 net loss of $1.6
million, or $0.04 loss per diluted share, compared to a net loss of
$27.9 million, or $0.61 loss per diluted share for the same period
last year. The Company reported year-to-date 2023 net loss of $2.6
million, or $0.06 loss per diluted share, compared to a net loss of
$43.2 million, or $1.01 loss per diluted share for the same period
last year. The net loss improved year-over-year due to the increase
in operating income and gains from discontinued operations
resulting from proceeds from the sale of OSP that were previously
held back.
Adjusted EBITDA
Third quarter adjusted EBITDA of $4.2 million improved $4.5
million versus an adjusted EBITDA loss of $0.3 million in the same
period last year. Year-to-date adjusted EBITDA of $15.8 million
improved $18.6 million, versus an adjusted EBITDA loss of $2.8
million in the same period last year. The improvement in the
quarter and year-to-date periods was driven by lower general and
administrative expenses due to the wind down of loss-generating
company-owned salons and lower head count. Year-to-date adjusted
EBITDA also benefited from a $1.1 million grant from the state of
North Carolina related to COVID-19 relief.
Third Quarter Fiscal Year 2023 Segment
Results
Franchise
Three Months Ended March
31,
Increase (Decrease)
Nine Months Ended March
31,
Increase (Decrease)
(Dollars in millions) (1)
2023
2022
2023
2022
Royalties
$
16.0
$
15.8
$
0.2
$
49.4
$
48.5
$
0.9
Fees
2.5
2.4
0.1
8.3
8.6
(0.3
)
Product sales to franchisees
0.6
1.3
(0.7
)
2.2
11.7
(9.5
)
Advertising fund contributions
7.8
8.1
(0.3
)
24.0
24.2
(0.2
)
Franchise rental income
26.6
32.7
(6.1
)
85.8
100.2
(14.4
)
Total Franchise revenue
$
53.6
$
60.3
$
(6.7
)
$
169.7
$
193.3
$
(23.6
)
Franchise same-store sales comps
6.0
%
8.8
%
5.1
%
18.0
%
Franchise adjusted EBITDA
$
4.8
$
2.9
$
1.9
$
17.3
$
5.2
$
12.1
as a percent of revenue
9.0
%
4.9
%
10.2
%
2.7
%
as a percent of adjusted revenue (2)
25.1
%
15.0
%
29.0
%
7.5
%
Total Franchise salons
5,057
5,504
(447
)
as a percent of total Franchise and
Company-owned salons
98.6
%
97.9
%
_______________________________________________________________________________
(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
Third quarter franchise revenue was $53.6 million, a $6.7
million, or 11.1%, decrease compared to the prior year quarter.
Non-margin franchise rental income decreased $6.1 million due to
fewer salons in the current year. Royalties were $16.0 million, a
$0.2 million, or 1.3%, increase, versus the same period last year.
Product sales to franchisees of $0.6 million decreased $0.7
million, or 53.8%, as a result of the transition out of the
wholesale product business.
Year-to-date franchise revenue was $169.7 million, a $23.6
million, or 12.2%, decrease compared to the prior year primarily
due to a decline in non-margin franchise rental income as a result
of a lower franchise salon count.
Franchise Adjusted EBITDA
Third quarter franchise adjusted EBITDA of $4.8 million improved
$1.9 million year-over-year primarily due to an increase in average
royalty revenues and a decrease in general and administrative
expense.
Year-to-date franchise adjusted EBITDA of $17.3 million improved
$12.1 million year-over-year.
Company-Owned Salons
Three Months Ended March
31,
(Decrease) Increase
Nine Months Ended March
31,
(Decrease) Increase
(Dollars in millions) (1)
2023
2022
2023
2022
Total Company-owned salon revenue
$
2.2
$
3.5
$
(1.3
)
$
7.9
$
16.6
$
(8.7
)
Company-owned same-store sales comps
12.2
%
(3.0
) %
3.9
%
4.4
%
Company-owned salon adjusted EBITDA
$
(0.6
)
$
(3.3
)
$
2.7
$
(1.5
)
$
(8.0
)
$
6.5
as a percent of revenue
(27.3
) %
(94.3
) %
(19.0
) %
(48.2
) %
Total Company-owned salons
70
117
(47
)
as a percent of total Franchise and
Company-owned salons
1.4
%
2.1
%
_______________________________________________________________________________
(1)
Variances calculated on amounts shown in
millions may result in rounding differences.
Company-Owned Salon Revenue
Third quarter revenue for the Company-owned salon segment
decreased $1.3 million versus the prior year to $2.2 million. The
year-over-year decline in revenue was expected and driven by the
closure of 45 unprofitable salons and the conversion of 3 salons to
the Company's franchise portfolio over the past twelve months.
Year-to-date revenue for the Company-owned salon segment
decreased $8.7 million versus the prior year to $7.9 million
related to fewer company-owned salons.
Company-Owned Salon Adjusted EBITDA
Third quarter Company-owned salon adjusted EBITDA loss improved
$2.7 million year-over-year driven primarily by the closure of
unprofitable salons.
Year-to-date Company-owned salon adjusted EBITDA loss improved
$6.5 million year-over-year and includes a $1.1 million grant from
the state of North Carolina related to COVID-19 relief.
Balance Sheet and Cash
Flow
The Company ended the third quarter with $8.8 million in cash
and cash equivalents, $181.9 million in outstanding borrowings and
total liquidity of $43.0 million. Net cash used in operating
activities for the nine months ended March 31, 2023 totaled $8.5
million, an improvement of $25.9 million from the prior year. Cash
used in operations for the nine months ended March 31, 2023
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 third quarter results today, May 3, 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 March 31, 2023, the Company franchised, owned or
held ownership interests in 5,203 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
per share data)
March 31, 2023
June 30, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
8,787
$
17,041
Receivables, net
13,718
14,531
Inventories, net
1,935
3,109
Other current assets
14,777
13,984
Total current assets
39,217
48,665
Property and equipment, net
7,923
12,835
Goodwill
173,364
174,360
Other intangibles, net
2,829
3,226
Right of use asset
391,456
493,749
Other assets
26,157
36,465
Total assets
$
640,946
$
769,300
LIABILITIES AND SHAREHOLDERS'
DEFICIT
Current liabilities:
Accounts payable
$
15,835
$
15,860
Accrued expenses
26,156
33,784
Short-term lease liability
87,074
103,196
Total current liabilities
129,065
152,840
Long-term debt, net
174,694
179,994
Long-term lease liability
318,265
408,445
Other non-current liabilities
51,669
58,974
Total liabilities
673,693
800,253
Commitments and contingencies
Shareholders' deficit:
Common stock, $0.05 par value; issued and
outstanding 45,564,673 and 45,510,245 common shares at March 31,
2023 and June 30, 2022, respectively
2,278
2,276
Additional paid-in capital
64,045
62,562
Accumulated other comprehensive income
8,758
9,455
Accumulated deficit
(107,828
)
(105,246
)
Total shareholders' deficit
(32,747
)
(30,953
)
Total liabilities and shareholders'
deficit
$
640,946
$
769,300
REGIS CORPORATION
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (Unaudited)
For the Three and Nine Months
Ended March 31, 2023 and 2022
(Dollars and shares in
thousands, except per share amounts)
Three Months Ended March
31,
Nine Months Ended March
31,
2023
2022
2023
2022
Revenues:
Royalties
$
16,036
$
15,799
$
49,374
$
48,526
Fees
2,510
2,425
8,301
8,632
Product sales to franchisees
644
1,293
2,194
11,729
Advertising fund contributions
7,787
8,078
24,003
24,213
Franchise rental income
26,629
32,666
85,845
100,200
Company-owned salon revenue
2,167
3,549
7,894
16,597
Total revenue
55,773
63,810
177,611
209,897
Operating expenses:
Cost of product sales to franchisees
1,045
2,455
2,825
13,219
Inventory reserve
—
6,420
1,228
6,420
General and administrative
13,099
14,842
39,207
50,708
Rent
2,077
1,200
5,920
5,989
Advertising fund expense
7,787
8,078
24,003
24,213
Franchise rent expense
26,629
32,666
85,845
100,200
Company-owned salon expense (1)
2,088
5,292
7,291
18,304
Depreciation and amortization
1,008
1,622
6,052
4,766
Long-lived asset impairment
36
327
36
542
Goodwill impairment
—
13,120
—
13,120
Total operating expenses
53,769
86,022
172,407
237,481
Operating income (loss)
2,004
(22,212
)
5,204
(27,584
)
Other expense:
Interest expense
(4,787
)
(3,224
)
(13,123
)
(9,621
)
Loss from sale of salon assets to
franchisees, net
—
(494
)
—
(2,189
)
Other, net
381
153
1,166
13
Loss from operations before income
taxes
(2,402
)
(25,777
)
(6,753
)
(39,381
)
Income tax benefit
241
1,270
213
1,482
Loss from continuing operations
(2,161
)
(24,507
)
(6,540
)
(37,899
)
Income (loss) from discontinued
operations
518
(3,411
)
3,958
(5,325
)
Net loss
$
(1,643
)
$
(27,918
)
$
(2,582
)
$
(43,224
)
Net loss per share:
Basic and diluted:
Loss from continuing operations
$
(0.05
)
$
(0.53
)
$
(0.14
)
$
(0.89
)
Income (loss) from discontinued
operations
0.01
(0.07
)
0.09
(0.12
)
Net loss per share, basic and diluted
(2)
$
(0.04
)
$
(0.61
)
$
(0.06
)
$
(1.01
)
Weighted average common and common
equivalent shares outstanding:
Basic and diluted
46,301
45,886
46,160
42,789
_______________________________________________________________________________
(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 Nine Months Ended
March 31, 2023 and 2022
(Dollars in thousands)
Nine Months Ended March
31,
2023
2022
Cash flows from operating activities:
Net loss
$
(2,582
)
$
(43,224
)
Adjustments to reconcile net loss to cash
used in operating activities:
Gain from sale of OSP
(4,552
)
—
Depreciation and amortization
5,502
4,944
Long-lived asset impairment
36
542
Deferred income taxes
(49
)
(1,693
)
Inventory reserve
1,228
9,007
Paid-in-kind interest
51
—
Loss from sale of salon assets to
franchisees, net
—
2,189
Goodwill impairment
—
16,000
Stock-based compensation
1,668
854
Amortization of debt discount and
financing costs
2,144
1,379
Other non-cash items affecting
earnings
365
419
Changes in operating assets and
liabilities, excluding the effects of asset sales
(12,276
)
(24,770
)
Net cash used in operating activities
(8,465
)
(34,353
)
Cash flows from investing activities:
Capital expenditures
(339
)
(4,258
)
Proceeds from sale of OSP, net of fees
4,500
—
Net cash provided by (used in) investing
activities
4,161
(4,258
)
Cash flows from financing activities:
Borrowings on credit facility
11,357
10,000
Repayments of long-term debt
(9,491
)
(3,096
)
Debt refinancing fees
(4,383
)
—
Proceeds from issuance of common stock,
net of offering costs
—
37,185
Taxes paid for shares withheld
(35
)
(844
)
Net cash (used in) provided by financing
activities
(2,552
)
43,245
Effect of exchange rate changes on cash
and cash equivalents
(103
)
(88
)
(Decrease) increase in cash, cash
equivalents, and restricted cash
(6,959
)
4,546
Cash, cash equivalents and restricted
cash:
Beginning of period
27,464
29,152
End of period
$
20,505
$
33,698
REGIS CORPORATION
Same-Store Sales
SYSTEM-WIDE SAME-STORE SALES
(1):
Three Months Ended
March 31, 2023
March 31, 2022
Service
Retail
Total
Service
Retail
Total
Supercuts
8.1
%
(2.6
) %
7.6
%
19.6
%
(10.1
) %
17.8
%
SmartStyle
1.9
(10.3
)
(0.5
)
2.1
(17.4
)
(2.5
)
Portfolio Brands
9.4
2.3
8.8
5.5
(9.3
)
4.0
Total
7.2
%
(5.1
) %
6.0
%
11.6
%
(13.7
) %
8.6
%
Nine Months Ended
March 31, 2023
March 31, 2022
Service
Retail
Total
Service
Retail
Total
Supercuts
8.6
%
(6.1
) %
7.9
%
28.0
%
(3.3
) %
26.0
%
SmartStyle
0.7
(13.6
)
(2.2
)
14.3
(8.0
)
8.8
Portfolio Brands
7.2
(4.7
)
6.1
15.3
(2.8
)
13.2
Total
6.6
%
(9.4
) %
5.0
%
21.1
%
(5.6
) %
17.8
%
_______________________________________________________________________________
(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
March 31, 2023
June 30, 2022
FRANCHISE SALONS:
Supercuts
2,123
2,264
SmartStyle/Cost Cutters in Walmart
Stores
1,535
1,646
Portfolio Brands
1,265
1,344
Total North American salons
4,923
5,254
Total International salons (1)
134
141
Total Franchise salons
5,057
5,395
as a percent of total Franchise and
Company-owned salons
98.6
%
98.1
%
COMPANY-OWNED SALONS:
Supercuts
7
18
SmartStyle/Cost Cutters in Walmart
Stores
48
49
Portfolio Brands
15
38
Total Company-owned salons
70
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
5,203
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 U.S. 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, goodwill impairment, 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 March
31,
Nine Months Ended March
31,
2023
2022
2023
2022
Consolidated reported net loss, as
reported (U.S. GAAP)
$
(1,643
)
$
(27,918
)
$
(2,582
)
$
(43,224
)
Interest expense, as reported
4,787
3,224
13,123
9,621
Income taxes, as reported
(241
)
(1,270
)
(213
)
(1,482
)
Depreciation and amortization, as
reported
1,008
1,622
6,052
4,766
Long-lived asset impairment, as
reported
36
327
36
542
EBITDA
$
3,947
$
(24,015
)
$
16,416
$
(29,777
)
Inventory reserve
—
6,420
1,228
6,420
CEO transition
—
50
—
(466
)
Distribution center fees
—
—
—
285
Professional fees and legal
settlements
—
713
1,248
1,859
Severance
786
104
852
2,015
Lease liability benefit
(297
)
(357
)
(1,515
)
(3,284
)
Lease termination fees
266
225
1,571
1,803
Real estate fees
—
—
—
40
Goodwill impairment
—
13,120
—
13,120
Non-recurring, non-operating income
—
—
—
(100
)
Discontinued operations
(518
)
3,411
(3,958
)
5,325
Adjusted EBITDA, non-GAAP financial
measure
$
4,184
$
(329
)
$
15,842
$
(2,760
)
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 March
31,
Nine Months Ended March
31,
2023
2022
2023
2022
Franchise adjusted EBITDA
$
4,815
$
2,936
$
17,338
$
5,190
GAAP Franchise revenue
53,606
60,261
169,717
193,300
Franchise adjusted EBITDA as a percent of
GAAP Franchise revenue
9.0
%
4.9
%
10.2
%
2.7
%
Non-margin revenue adjustments:
Franchise rental income
$
(26,629
)
$
(32,666
)
$
(85,845
)
$
(100,200
)
Advertising fund contributions
(7,787
)
(8,078
)
(24,003
)
(24,213
)
Adjusted Franchise revenue
19,190
19,517
59,869
68,887
Franchise adjusted EBITDA as a percent of
adjusted Franchise revenue
25.1
%
15.0
%
29.0
%
7.5
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230503005144/en/
REGIS CORPORATION: Kersten Zupfer
investorrelations@regiscorp.com
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