Regis Corporation (NYSE: RGS), a leader in the haircare
industry, today announced financial results for the fourth fiscal
quarter and full year ended June 30, 2023.
Matthew Doctor, Regis Corporation's President and Chief
Executive Officer, commented: "At the end of fiscal 2022, I
mentioned that we were poised to deliver stronger results in fiscal
2023 – and we did exactly that. We finished the year strong,
delivering our fourth consecutive quarter of positive operating
income, leading to our highest-level of operating income since
2017. We demonstrated growth across key financial metrics including
same-store sales, operating income and adjusted EBITDA, reflecting
the successful execution of the strategies we have been
implementing. We have largely stabilized the business in a
relatively short period of time, and during what remains to be a
challenging operating environment for our industry – having gone
from an adjusted EBITDA loss of $76.9 million in fiscal 2021, an
adjusted EBITDA loss $1.8 million in fiscal 2022, to positive
adjusted EBITDA of $21.0 million in fiscal 2023. We continued to
reduce costs and generated efficiencies while focusing on our
talent, technology, stylist community, and customer marketing to
optimize our platform for sustained profitable growth. I am proud
of our team and franchisees for their valuable contributions to the
year and am excited to make continued progress in fiscal 2024."
Financial Highlights:
Fourth quarter fiscal 2023 compared to fourth quarter fiscal
2022:
- System-wide revenue of $311.8 million decreased $5.0 million
from $316.8 million and system-wide same-store sales increased
2.5%;
- Operating income improved $4.9 million to $3.6 million, from an
operating loss of $1.3 million in the 2022 fourth quarter;
- Franchise adjusted EBITDA of $5.5 million increased $3.0
million from $2.5 million in the 2022 fourth quarter;
- Net loss of $4.8 million improved $37.8 million from a loss of
$42.6 million in the 2022 fourth quarter; and
- Adjusted EBITDA of $5.2 million increased $4.2 million from
$1.0 million in the 2022 fourth quarter.
Full fiscal year 2023 compared to full fiscal year
2022:
- System-wide revenue of $1,230.5 million increased $2.0 million
from $1,228.5 million and system-wide same-store sales increased
4.4%;
- Operating income improved $37.7 million to $8.8 million, from
an operating loss of $28.9 million in the 2022 fiscal year;
- Franchise adjusted EBITDA of $22.8 million increased $15.1
million from $7.7 million in the 2022 fiscal year;
- Net loss of $7.4 million improved $78.5 million from a loss of
$85.9 million in the 2022 fiscal year; and
- Adjusted EBITDA of $21.0 million increased $22.8 million from a
loss of $1.8 million in the 2022 fiscal year.
Fourth Quarter Fiscal Year 2023
Consolidated Results
Three Months Ended June
30,
Twelve Months Ended June
30,
(Dollars in millions, except per share
data)
2023
2022
2023
2022
Consolidated revenue
$
55.7
$
66.1
$
233.3
$
276.0
System-wide revenue (1)
311.8
316.8
1,230.5
1,228.5
System-wide same-store sales comps
2.5
%
7.1
%
4.4
%
14.8
%
Operating income (loss)
$
3.6
$
(1.3
)
$
8.8
$
(28.9
)
Loss from continuing operations
(4.8
)
(8.6
)
(11.3
)
(46.5
)
Diluted loss per share from continuing
operations
(0.10
)
(0.19
)
(0.25
)
(1.07
)
(Loss) income from discontinued
operations
—
(34.1
)
4.0
(39.4
)
Net loss
(4.8
)
(42.6
)
(7.4
)
(85.9
)
Diluted net loss per share
(0.10
)
(0.93
)
(0.16
)
(1.97
)
Adjusted EBITDA (2)
5.2
1.0
21.0
(1.8
)
_____________________________________________________________
(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 fourth quarter 2023 of $55.7 million
decreased $10.4 million and total revenue in fiscal year 2023 of
$233.3 million decreased $42.7 million. The decreases were driven
primarily by a reduction in salon count and exiting the product
distribution business.
Operating Income
Regis reported fourth quarter 2023 income from operations of
$3.6 million compared to a loss from operations of $1.3 million in
the fourth quarter 2022. Regis reported fiscal year 2023 income
from operations of $8.8 million, compared to a loss from operations
of $28.9 million in 2022. The year-over-year improvement in
operations was driven primarily by our lower general and
administrative expense structure and the wind down of
loss-generating company-owned salons during the last twelve
months.
Net Loss from Continuing Operations
Regis reported fourth quarter 2023 net loss from continuing
operations of $4.8 million, or $0.10 loss per diluted share,
compared to a net loss from continuing operations of $8.6 million,
or $0.19 loss per diluted share, in the fourth quarter 2022. Regis
reported fiscal year 2023 net loss from continuing operations of
$11.3 million, or $0.25 loss per diluted share, compared to a net
loss from continuing operations of $46.5 million, or $1.07 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 fourth quarter 2023 net loss of $4.8
million, or $0.10 loss per diluted share, compared to a net loss of
$42.6 million, or $0.93 loss per diluted share for the same period
last year. The Company reported fiscal year 2023 net loss of $7.4
million, or $0.16 loss per diluted share, compared to a net loss of
$85.9 million, or $1.97 loss per diluted share, in 2022. The
year-over-year improvement in net loss in both periods was driven
by the loss on the sale of our point-of-sale system in the prior
year.
Adjusted EBITDA
Fourth quarter adjusted EBITDA of $5.2 million improved $4.2
million versus adjusted EBITDA of $1.0 million in the same period
last year. Fiscal year adjusted EBITDA of $21.0 million improved
$22.8 million, versus an adjusted EBITDA loss of $1.8 million in
the same period last year. The improvements were driven by lower
general and administrative expense and the wind down of
loss-generating company-owned salons during the last twelve months.
Fiscal year 2023 adjusted EBITDA also benefited from a $1.1 million
grant from the state of North Carolina related to COVID-19
relief.
Fourth Quarter Fiscal Year 2023 Segment
Results
Franchise
Three Months Ended June
30,
Increase (Decrease)
Twelve Months Ended June
30,
Increase (Decrease)
(Dollars in millions) (1)
2023
2022
2023
2022
Royalties
$
16.6
$
17.2
$
(0.6
)
$
66.0
$
65.8
$
0.2
Fees
3.0
3.0
—
11.3
11.6
(0.3
)
Product sales to franchisees
0.6
3.3
(2.7
)
2.8
15.1
(12.3
)
Advertising fund contributions
7.7
8.4
(0.7
)
31.7
32.6
(0.9
)
Franchise rental income
25.6
30.6
(5.0
)
111.4
130.8
(19.4
)
Total Franchise revenue
$
53.5
$
62.5
$
(9.0
)
$
223.2
$
255.8
$
(32.6
)
Franchise same-store sales comps
2.4
%
7.2
%
4.4
%
15.0
%
Franchise adjusted EBITDA
$
5.5
$
2.5
$
3.0
$
22.8
$
7.7
$
15.1
as a percent of revenue
10.2
%
4.1
%
10.2
%
3.0
%
as a percent of adjusted revenue (2)
27.1
%
10.8
%
28.5
%
8.4
%
Total Franchise salons
4,795
5,395
(600
)
as a percent of total Franchise and
Company-owned salons
98.6
%
98.1
%
_________________________________________________________
(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
Fourth quarter franchise revenue was $53.5 million, a $9.0
million, or 14.4%, decrease compared to the prior year quarter.
Non-margin franchise rental income decreased $5.0 million due to
fewer salons in the current year. Royalties were $16.6 million, a
$0.6 million, or 3.5% decrease, versus the same period last year
due to the decline in salon count. Product sales to franchisees of
$0.6 million decreased $2.7 million, or 81.8%, as a result of the
transition out of the wholesale product business.
Fiscal year 2023 franchise revenue was $223.2 million, a $32.6
million, or 12.7%, 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
Fourth quarter franchise adjusted EBITDA of $5.5 million
improved $3.0 million year-over-year primarily due to a decrease in
general and administrative expense.
Fiscal year 2023 franchise adjusted EBITDA of $22.8 million
improved $15.1 million year-over-year primarily due to a decrease
in general and administrative expense.
Company-Owned Salons
Three Months Ended June
30,
Increase (Decrease)
Twelve Months Ended June
30,
Increase (Decrease)
(Dollars in millions) (1)
2023
2022
2023
2022
Total Company-owned salon revenue
$
2.2
$
3.6
$
(1.4
)
$
10.1
$
20.2
$
(10.1
)
Company-owned same-store sales comps
8.7
%
(0.8
)%
4.9
%
3.4
%
Company-owned salon adjusted EBITDA
$
(0.3
)
$
(1.6
)
$
1.3
$
(1.8
)
$
(9.5
)
$
7.7
as a percent of revenue
(13.6
)%
(44.4
)%
(17.8
)%
(47.0
)%
Total Company-owned salons
68
105
(37
)
as a percent of total Franchise and
Company-owned salons
1.4
%
1.9
%
_________________________________________________________
(1)
Variances calculated on amounts shown in
millions may result in rounding differences.
Company-Owned Salon Revenue
Fourth quarter revenue for the Company-owned salon segment
decreased $1.4 million versus the prior year to $2.2 million. The
year-over-year decline in revenue was expected and driven by the
closure of 37 unprofitable salons over the past twelve months.
Fiscal year 2023 revenue for the Company-owned salon segment
decreased $10.1 million versus the prior year to $10.1 million due
to company-owned salons closures.
Company-Owned Salon Adjusted EBITDA
Fourth quarter Company-owned salon adjusted EBITDA loss improved
$1.3 million year-over-year driven primarily by the closure of
unprofitable salons.
Fiscal year 2023 Company-owned salon adjusted EBITDA loss
improved $7.7 million year-over-year driven primarily by the
closure of unprofitable salons and includes a $1.1 million grant
from the state of North Carolina related to COVID-19 relief in
fiscal year 2023.
Balance Sheet and Cash
Flow
The Company ended fiscal year 2023 with $9.5 million in cash and
cash equivalents, $183.3 million in outstanding borrowings and
total liquidity of $42.8 million. Net cash used in operating
activities for the fiscal year totaled $7.9 million, an improvement
of $30.7 million from the prior year. Cash use improved due
primarily to lower general and administrative expense.
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 fourth quarter and fiscal year 2023 results today,
August 23, 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 June 30, 2023, the Company franchised or owned
4,863 locations. Regis' franchised and corporate locations operate
under concepts such as Supercuts®, SmartStyle®, Cost Cutters®,
Roosters® and First Choice Haircutters®. 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 changes in consumer shopping trends and changes in
manufacturer distribution channels; laws and regulations could
require us to modify current business practices and incur increased
costs including increases in minimum wages; our potential
responsibility for Empire Education Group, Inc.'s liabilities;
changes in general economic environment; changes in consumer
tastes, hair product innovation, 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; our salons' dependence on a third-party
supplier agreement for merchandise; our franchisees' ability to
attract, train and retain talented stylists and salon leaders; the
success of our franchisees, which operate independently; data
security and privacy compliance and 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; the effectiveness of our enterprise risk
management program; ability to generate sufficient cash flow to
satisfy our debt service obligations; compliance with covenants in
our financing arrangement, access to the existing revolving credit
facility, and acceleration of our obligation to repay our
indebtedness; limited resources to invest in our business;
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
control 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; 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
SHEETS
(Dollars in thousands, except
per share data)
June 30,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
9,508
$
17,041
Receivables, net
10,885
14,531
Inventories
1,681
3,109
Other current assets
15,164
13,984
Total current assets
37,238
48,665
Property and equipment, net
6,422
12,835
Goodwill
173,791
174,360
Other intangibles, net
2,783
3,226
Right of use asset
360,836
493,749
Other assets
26,307
36,465
Total assets
$
607,377
$
769,300
LIABILITIES AND SHAREHOLDERS'
DEFICIT
Current liabilities:
Accounts payable
$
14,309
$
15,860
Accrued expenses
30,109
33,784
Short-term lease liability
81,917
103,196
Total current liabilities
126,335
152,840
Long-term debt, net
176,830
179,994
Long-term lease liability
291,901
408,445
Other non-current liabilities
49,041
58,974
Total liabilities
644,107
800,253
Commitments and contingencies
Shareholders' deficit:
Common stock, $0.05 par value; issued and
outstanding, 45,566,228 and 45,510,245 common shares as of June 30,
2023 and 2022, respectively
2,278
2,276
Additional paid-in capital
64,600
62,562
Accumulated other comprehensive income
9,023
9,455
Accumulated deficit
(112,631
)
(105,246
)
Total shareholders' deficit
(36,730
)
(30,953
)
Total liabilities and shareholders'
deficit
$
607,377
$
769,300
REGIS CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Dollars and shares in
thousands, except per share data)
Three Months Ended June
30,
Twelve Months Ended June
30,
2023
2022
2023
2022
Revenues:
Royalties
$
16,607
$
17,227
$
65,981
$
65,753
Fees
2,965
2,954
11,266
11,587
Product sales to franchisees
608
3,343
2,802
15,072
Advertising fund contributions
7,744
8,360
31,747
32,573
Franchise rental income
25,596
30,577
111,441
130,777
Company-owned salon revenue
2,195
3,608
10,089
20,205
Total revenue
55,715
66,069
233,326
275,967
Operating expenses:
Cost of product sales to franchisees
715
4,172
3,540
17,391
Inventory reserve
—
1,235
1,228
7,655
General and administrative
11,544
14,566
50,751
65,274
Rent
3,276
3,368
9,196
9,357
Advertising fund expense
7,744
8,360
31,747
32,573
Franchise rent expense
25,596
30,577
111,441
130,777
Company-owned salon expense (1)
1,536
3,648
8,827
21,952
Depreciation and amortization
1,664
1,458
7,716
6,224
Long-lived asset impairment
65
—
101
542
Goodwill impairment
—
—
—
13,120
Total operating expenses
52,140
67,384
224,547
304,865
Operating income (loss)
3,575
(1,315
)
8,779
(28,898
)
Other (expense) income:
Interest expense
(9,018
)
(3,292
)
(22,141
)
(12,914
)
Loss from sale of salon assets to
franchisees, net
—
(145
)
—
(2,334
)
Other, net
198
(309
)
1,364
(296
)
Loss from operations before income
taxes
(5,245
)
(5,061
)
(11,998
)
(44,442
)
Income tax benefit (expense)
442
(3,499
)
655
(2,017
)
Loss from continuing operations
(4,803
)
(8,560
)
(11,343
)
(46,459
)
(Loss) income from discontinued
operations, net of income taxes
—
(34,073
)
3,958
(39,398
)
Net loss
$
(4,803
)
$
(42,633
)
$
(7,385
)
$
(85,857
)
Net loss per share:
Basic and diluted:
Loss from continuing operations
$
(0.10
)
$
(0.19
)
$
(0.25
)
$
(1.07
)
(Loss) income from discontinued
operations
0.00
(0.74
)
0.09
(0.90
)
Net loss per share, basic and diluted
(2)
$
(0.10
)
$
(0.93
)
$
(0.16
)
$
(1.97
)
Weighted average common and common
equivalent shares outstanding:
Basic and diluted
46,461
45,969
46,235
43,582
__________________________________________________________
(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
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Dollars in thousands)
Twelve Months Ended June
30,
2023
2022
Cash flows from operating activities:
Net loss
$
(7,385
)
$
(85,857
)
Adjustments to reconcile net loss to net
cash used in operating activities
(Gain) loss from sale of OSP
(4,562
)
36,143
Depreciation and amortization
7,189
6,504
Long-lived asset impairment
101
542
Deferred income taxes
(8
)
391
Inventory reserve
1,228
10,478
Non-cash interest
3,790
—
Loss from sale of salon assets to
franchisees, net
—
2,334
Goodwill impairment
—
16,000
Stock-based compensation
2,316
1,334
Amortization of debt discount and
financing costs
2,891
1,839
Other non-cash items affecting
earnings
155
709
Changes in operating assets and
liabilities (1):
Receivables
943
11,896
Inventories
(182
)
7,886
Income tax receivable
(577
)
1,118
Other current assets
850
2,118
Other assets
6,818
2,703
Accounts payable
(497
)
(10,966
)
Accrued expenses
(6,151
)
(21,983
)
Net lease liabilities
(4,991
)
(5,960
)
Other non-current liabilities
(9,817
)
(15,867
)
Net cash used in operating activities:
(7,889
)
(38,638
)
Cash flows from investing activities:
Capital expenditures
(481
)
(5,316
)
Net proceeds from sale of OSP
4,500
13,000
Net cash provided by investing
activities:
4,019
7,684
Cash flows from financing activities:
Borrowings on credit facility
13,357
10,000
Repayments of long-term debt
(11,083
)
(16,916
)
Debt refinancing fees
(4,383
)
—
Proceeds from issuance of common stock,
net of offering costs
—
37,185
Taxes paid for shares withheld
(36
)
(845
)
Net cash (used in) provided by financing
activities:
(2,145
)
29,424
Effect of exchange rate changes on cash
and cash equivalents
(53
)
(158
)
Decrease in cash, cash equivalents and
restricted cash
(6,068
)
(1,688
)
Cash, cash equivalents and restricted
cash:
Beginning of year
27,464
29,152
End of year
$
21,396
$
27,464
__________________________________________________________
(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, 2023
June 30, 2022
Service
Retail
Total
Service
Retail
Total
Supercuts
4.5
%
(2.4
)%
4.2
%
14.4
%
(11.8
)%
13.0
%
SmartStyle
(1.9
)
(9.7
)
(3.4
)
1.5
(17.9
)
(2.7
)
Portfolio Brands
4.2
(0.4
)
3.8
6.5
(5.5
)
5.3
Total
3.2
%
(5.3
)%
2.5
%
9.6
%
(13.4
)%
7.1
%
Twelve Months Ended
June 30, 2023
June 30, 2022
Service
Retail
Total
Service
Retail
Total
Supercuts
7.5
%
(5.2
)%
6.9
%
23.8
%
(5.6
)%
22.1
%
SmartStyle
0.1
(12.8
)
(2.5
)
10.7
(10.5
)
5.7
Portfolio Brands
6.4
(3.7
)
5.5
13.0
(3.4
)
11.2
Total
5.7
%
(8.5
)%
4.4
%
17.8
%
(7.5
)%
14.8
%
___________________________________________________________
(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
June 30,
2023
2022
FRANCHISE SALONS:
Supercuts
2,082
2,264
SmartStyle/Cost Cutters in Walmart
stores
1,388
1,646
Portfolio Brands
1,223
1,344
Total North American salons
4,693
5,254
Total International salons (1)
102
141
Total Franchise salons
4,795
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
13
38
Total Company-owned salons
68
105
as a percent of total Franchise and
Company-owned salons
1.4
%
1.9
%
Total Franchise and Company-owned
salons
4,863
5,500
___________________________________________________________
(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 June
30,
Twelve Months Ended June
30,
2023
2022
2023
2022
Consolidated reported net loss, as
reported (U.S. GAAP)
$
(4,803
)
$
(42,633
)
$
(7,385
)
$
(85,857
)
Interest expense, as reported
9,018
3,292
22,141
12,914
Income taxes, as reported
(442
)
3,499
(655
)
2,017
Depreciation and amortization, as
reported
1,664
1,458
7,716
6,224
Long-lived asset impairment, as
reported
65
—
101
542
EBITDA
$
5,502
$
(34,384
)
$
21,918
$
(64,160
)
Inventory reserve
—
1,235
1,228
7,655
CEO transition
—
—
—
(466
)
Distribution center fees
—
—
—
285
Professional fees and legal
settlements
—
280
1,248
2,140
Severance
(132
)
59
720
2,074
Lease liability benefit
(258
)
(336
)
(1,773
)
(3,620
)
Lease termination fees
56
32
1,627
1,835
Real estate fees
—
—
—
40
Goodwill impairment
—
—
—
13,120
Non-recurring, non-operating income
—
—
—
(100
)
Discontinued operations
—
34,073
(3,958
)
39,398
Adjusted EBITDA, non-GAAP financial
measure
$
5,168
$
959
$
21,010
$
(1,799
)
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 June
30,
Twelve Months Ended June
30,
2023
2022
2023
2022
Franchise adjusted EBITDA
$
5,460
$
2,538
$
22,799
$
7,730
GAAP Franchise revenue
53,520
62,461
223,237
255,762
Franchise adjusted EBITDA as a percent of
GAAP Franchise revenue
10.2
%
4.1
%
10.2
%
3.0
%
Non-margin revenue adjustments:
Franchise rental income
$
(25,596
)
$
(30,577
)
$
(111,441
)
$
(130,777
)
Advertising fund contributions
(7,744
)
(8,360
)
(31,747
)
(32,573
)
Adjusted Franchise revenue
$
20,180
$
23,524
$
80,049
$
92,412
Franchise adjusted EBITDA as a percent of
adjusted Franchise revenue
27.1
%
10.8
%
28.5
%
8.4
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230823638355/en/
REGIS CORPORATION: Kersten Zupfer
investorrelations@regiscorp.com
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