GAAP Diluted EPS of $0.34; Adjusted Diluted EPS
of $0.57
GAAP Operating Margin of 8.2%; Adjusted
Operating Margin of 12.1%
Sally Beauty Holdings, Inc.
(NYSE: SBH) (“the Company”), the leader in professional hair color,
today announced financial results for its second quarter ended
March 31, 2021. The Company will hold a conference call today at
7:30 a.m. Central Time to discuss the results.
Fiscal 2021 Second Quarter Summary
- Consolidated same store sales increased 6.5%, primarily
reflecting the favorable impact in the U.S. from improving consumer
confidence, government stimulus payments and the easing of COVID-19
restrictions in salons;
- Global e-commerce sales increased 56%;
- GAAP gross margin of 50.4%, up 110 basis points compared to the
prior year;
- GAAP operating earnings of $76 million and GAAP operating
margin of 8.2%, Adjusted Operating Earnings of $112 million and
Adjusted Operating Margin of 12.1%, up 510 basis points compared to
the prior year;
- GAAP diluted net earnings per share of $0.34 and Adjusted
Diluted Net Earnings Per Share of $0.57, up 183% and 148%,
respectively, compared to the prior year;
- Strong liquidity position, balance sheet cash and cash
equivalents of $408 million and zero balance outstanding on $600
million asset-based line of credit at quarter end.
“We are pleased to report strong financial results across all of
our key measures despite extensive store closures in parts of our
international territories and salon closures in California in
January,” said Chris Brickman, president and chief executive
officer. “In the U.S., we saw an acceleration in consumer demand in
the latter part of the quarter, which drove a net sales increase of
6.3%. Our top line performance, coupled with ongoing strength in
gross margin, resulted in significant earnings per share growth
compared to the prior year.”
“In the second half of the year, we will continue to focus on
growing customer engagement and loyalty, leveraging our new
capabilities in support of our mission to recruit and retain color
customers, and implementing the remaining steps in our successful
transformation journey, which remains on track to be substantially
completed by the end of the year. It is clear that the capabilities
we’ve been building across digital, customer engagement and supply
chain are bearing fruit and position us to drive sustainable
long-term growth.”
COVID-19 Update
The table below includes the operating status of corporate-owned
stores at the end of each month during the second quarter,
reflecting the disruption caused by COVID-19 on global stores
operations and customer traffic.
January February March Territory
Hard Closed
Reduced Capacity
Fully Open
Hard Closed
Reduced Capacity
Fully Open
Hard Closed
Reduced Capacity
Fully Open
Sally US/CAN
0%
38%
62%
0%
37%
63%
0%
34%
66%
Sally Europe
62%
2%
36%
49%
17%
34%
32%
36%
32%
Sally LATAM
28%
69%
3%
13%
70%
17%
11%
35%
54%
BSG US/CAN
2%
39%
59%
0%
42%
58%
0%
40%
60%
SBH Total *
8%
37%
55%
5%
39%
56%
4%
35%
61%
*Includes corporate stores only (excludes franchises)
Fiscal 2021 Second Quarter Operating Results
Second quarter consolidated same store sales increased 6.5% and
consolidated net sales increased 6.3% to $926.3 million, primarily
driven by the favorable impact in the U.S. from improving consumer
confidence, government stimulus payments and the easing of COVID-19
restrictions in salons. The favorable impact was partially offset
by continued COVID-19 mandated store closures in parts of our
international territories and salon closures in California in
January while operating 71 fewer stores compared to the prior year.
Foreign currency translation had a favorable impact of
approximately 90 basis points on reported sales. Global e-commerce
sales increased 56%.
Consolidated gross profit for
the second quarter was $467.2 million compared to $429.8 million in
the prior year, an increase of 8.7%. Consolidated gross margin was
50.4%, an increase of 110 basis points compared to 49.3% in the
prior year, driven primarily by fewer promotions in the Sally
segment. Adjusted Gross Margin was 51.2%, excluding a $7 million
write-down of COVID-19 related personal protective equipment
inventory.
Selling, general and
administrative (SG&A) expenses totaled $391.1 million, up $7.8
million compared to the prior year, which included COVID-19 related
net expenses of $29.0 million ($31.2 million donation expense of
personal protective equipment inventory partially offset by
Canadian wage and rent subsidy credits of $2.2 million). Adjusted
Selling, General and Administrative (Adjusted SG&A) Expenses,
excluding COVID-19 net expenses in both years, were $362.1 million
as compared to $368.6 million in the prior year. As a percentage of
sales, Adjusted SG&A was 39.1% compared to 42.3% in the prior
year.
GAAP operating earnings and operating margin in the second
quarter were $75.5 million and 8.2%, respectively, compared to
$43.3 million and 5.0%, respectively, in the prior year. Adjusted
Operating Earnings and Operating Margin increased to $112.1 million
and 12.1%, respectively, compared to $61.2 million and 7.0%,
respectively, in the prior year.
GAAP net earnings in the
second quarter were $38.3 million, or $0.34 per diluted share,
compared to $13.4 million, or $0.12 per diluted share in the prior
year. Adjusted Net Earnings were $65.5 million, an increase of 143%
compared to $27.0 million in the prior year and Adjusted Diluted
Net Earnings Per Share increased 148% to $0.57. Adjusted EBITDA in
the second quarter was $141.3 million, an increase of 55.0% compared to the
prior year, and Adjusted EBITDA Margin was 15.3%, an increase of
480 basis points compared to the prior year.
Balance Sheet and Cash Flow
In January, the Company
utilized excess cash to fully repay the outstanding balance of $213
million of its 4.5% fixed rate term loan. At the end of the
quarter, the Company had cash and cash equivalents on the balance
sheet of $408 million and a zero balance outstanding under its $600
million asset-based revolving line of credit. Additionally, the
Company ended the quarter with a net debt leverage ratio of 2.34x,
reflecting its significant cash balance. For comparison purposes,
the leverage ratio, as defined in our loan agreements where the
impact of balance sheet cash and cash equivalents is capped at $100
million for net debt calculation purposes, was 2.95x.
Second quarter fiscal 2021
cash flow from operations totaled $92.6 million. Capital expenditures totaled
$11.6 million. Operating
free cash flow totaled $81.0 million. Subsequent to quarter end, on
April 1, 2021, the Company utilized excess cash to fully repay the
outstanding balance of $197 million of its 5.50% unsecured notes
due 2023.
Fiscal 2021 Second Quarter Segment Results
Sally Beauty Supply
- Global segment same store sales increased 4.9% in the second
quarter. The Sally Beauty businesses in the U.S. and Canada
represented 86% of the segment sales for the quarter and had a same
store sales increase of 13.9%. Both Europe and Latin America had
decreases in same store sales for the quarter due to government
mandated store closures related to COVID-19.
- Net sales were $542.7 million in the quarter, an increase of
4.5% compared to the prior year, driven primarily by the favorable
impact in the U.S. from improving consumer confidence, government
stimulus payments, partially offset by continued COVID-19 mandated
store closures in parts of our international territories and
operating 76 fewer stores compared to the prior year. Foreign
currency translation had a favorable impact of approximately 110
basis points on reported sales.
- At the end of the quarter, net store count was 3,625, a
decrease of 76 stores compared to the prior year.
- Gross margin increased by 280 basis points to 58.4%, with the
Sally Beauty business in the U.S. and Canada delivering gross
margin of 60.2%. The increase in gross margin was primarily driven
by fewer promotions, partially offset by the write-down of COVID-19
related personal protective equipment inventory, which impacted
segment gross margin by approximately 60 basis points.
- GAAP operating earnings were $100.1 million in the quarter, an
increase of 77.5% compared to the prior year. GAAP operating margin
was 18.4% compared to 10.9% in the prior year.
Beauty Systems Group
- Total segment same store sales increased 9.9% in the second
quarter.
- Net sales were $383.7 million in the quarter, an increase of
9.1% compared to the prior year, driven primarily by the favorable
impact from the easing of COVID-19 restrictions across the U.S. and
higher operating capacities in salons, resulting in stronger
demand. Foreign currency translation had a favorable impact of
approximately 50 basis points on reported sales.
- At the end of the quarter, net store count was 1,379, an
increase of 5 stores compared to the prior year.
- Gross margin decreased 90 basis points to 39.1% in the quarter,
driven primarily by the write-down of COVID-19 related personal
protective equipment inventory which was approximately 90 basis
points.
- GAAP operating earnings were $47.8 million in the quarter, an
increase of 16.6% compared to the prior year. GAAP operating margin
in the quarter was 12.5% compared to 11.7% in the prior year.
- At the end of the quarter, there were 704 distributor sales
consultants compared to 660 in the prior year.
Fiscal Year 2021 Outlook
The Company will provide
perspective on its outlook for the third quarter during its
earnings conference call. The Company will not be providing formal
guidance at this time.
Conference Call and Where You Can Find Additional
Information
The Company will hold a
conference call and audio webcast today to discuss its financial
results and its business at approximately 7:30 a.m. Central Time
today, May 6, 2021. During the conference call, the Company may
discuss and answer one or more questions concerning business and
financial matters and trends affecting the Company. The Company’s
responses to these questions, as well as other matters discussed
during the conference call, may contain or constitute material
information that has not been previously disclosed. Simultaneous to
the conference call, an audio webcast of the call will be available
via a link on the Company’s website,
sallybeautyholdings.com/investor-relations. The conference call can
be accessed by dialing (844) 867-6169 (International:
(409-207-6975) and referencing the access code 6806264#. The
teleconference will be held in a “listen-only” mode for all
participants other than the Company’s current sell-side and
buy-side investment professionals. In addition, a supplemental
slide presentation may be viewed during the call at the following
link SBH Q2 Earnings Presentation and entering the event password
2TErvPZw4S5. A replay of the earnings conference call will be
available starting at 10:30 a.m. Central Time, May 6, 2021, through
May 13, 2021, by dialing (866) 207-1041 (International: (402)
970-0847) and reference access code 3919224#. Also, a website
replay will be available on
sallybeautyholdings.com/investor-relations.
About Sally Beauty Holdings, Inc.
Sally Beauty Holdings, Inc. (NYSE: SBH), as the leader in
professional hair color, sells and distributes professional beauty
supplies globally through its Sally Beauty Supply and Beauty
Systems Group businesses. The Company operates approximately 5,000
stores, including 142 franchised locations. Sally Beauty Supply
stores offer up to 8,000 products for hair color, hair care, skin
care, and nails through proprietary brands such as Ion®, Generic
Value Products®, Beyond the Zone® and Silk Elements® as well as
professional lines such as Wella®, Clairol®, OPI®, Conair® and Hot
Shot Tools®. Beauty Systems Group stores, branded as CosmoProf® or
Armstrong McCall® stores, along with its outside sales consultants,
sell up to 10,500 professionally branded products including Paul
Mitchell®, Wella®, Matrix®, Schwarzkopf®, Kenra®, Goldwell®, Joico®
and CHI®, intended for use in salons and for resale by salons to
retail consumers. For more information about Sally Beauty Holdings,
Inc., please visit https://www.sallybeautyholdings.com/.
Cautionary Notice Regarding Forward-Looking
Statements
Statements in this news release and the schedules hereto which
are not purely historical facts or which depend upon future events
may be forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements, as that term is defined in the Private Securities
Litigation Reform Act of 1995, can be identified by the use of
forward-looking terminology such as “believes,” “projects,”
“expects,” “can,” “may,” “estimates,” “should,” “plans,” “targets,”
“intends,” “could,” “will,” “would,” “anticipates,” “potential,”
“confident,” “optimistic,” or the negative thereof, or other
variations thereon, or comparable terminology, or by discussions of
strategy, objectives, estimates, guidance, expectations and future
plans. Forward-looking statements can also be identified by the
fact that these statements do not relate strictly to historical or
current matters.
Readers are cautioned not to place undue reliance on
forward-looking statements as such statements speak only as of the
date they were made. Any forward-looking statements involve risks
and uncertainties that could cause actual events or results to
differ materially from the events or results described in the
forward-looking statements, including, but not limited to, the
risks and uncertainties related to COVID-19 and those described in
our filings with the Securities and Exchange Commission, including
our Annual Report on Form 10-K for the year ended September 30,
2020. Consequently, all forward-looking statements in this release
are qualified by the factors, risks and uncertainties contained
therein. We assume no obligation to publicly update or revise any
forward-looking statements.
Use of Non-GAAP Financial Measures
This news release and the schedules hereto include the following
financial measures that have not been calculated in accordance with
accounting principles generally accepted in the United States, or
GAAP, and are therefore referred to as non-GAAP financial measures:
(1) Adjusted Gross Margin; (2) Adjusted Selling, General and
Administrative Expenses; (3) Adjusted EBITDA and EBITDA Margin; (4)
Adjusted Operating Earnings and Operating Margin; (5) Adjusted Net
Earnings; (6) Adjusted Diluted Net Earnings Per Share; and (7)
Operating Free Cash Flow. We have provided definitions below for
these non-GAAP financial measures and have provided tables in the
schedules hereto to reconcile these non-GAAP financial measures to
the comparable GAAP financial measures.
Adjusted Gross Margin – We define the measure Adjusted Gross
Margin as GAAP gross margin excluding the write-down of COVID-19
related personal protective equipment inventory for the relevant
time periods as indicated in the accompanying non-GAAP
reconciliations to the comparable GAAP financial measures.
Adjusted Selling, General and Administrative Expenses – We
define the measure Adjusted Selling, General and Administrative
Expenses as GAAP selling, general and administrative expenses
excluding COVID-19 net expenses for the relevant time periods as
indicated in the accompanying non-GAAP reconciliations to the
comparable GAAP financial measures.
Adjusted EBITDA and EBITDA Margin – We define the measure
Adjusted EBITDA as GAAP net earnings before depreciation and
amortization, interest expense, income taxes, share-based
compensation, costs related to the Company’s previously announced
restructuring plans and COVID-19 related net expenses for the
relevant time periods as indicated in the accompanying non-GAAP
reconciliations to the comparable GAAP financial measures. Adjusted
EBITDA Margin is Adjusted EBITDA as a percentage of net sales.
Adjusted Operating Earnings and Operating Margin – Adjusted
operating earnings are GAAP operating earnings that exclude costs
related to the Company’s previously announced restructuring plans
and net expenses related to COVID-19 for the relevant time periods
as indicated in the accompanying non-GAAP reconciliations to the
comparable GAAP financial measures. Adjusted Operating Margin is
Adjusted Operating Earnings as a percentage of net sales.
Adjusted Net Earnings – Adjusted net earnings is GAAP net
earnings that exclude tax-effected costs related to the Company’s
previously announced restructuring plans and tax-effected net
expenses related to COVID-19 for the relevant time periods as
indicated in the accompanying non-GAAP reconciliations to the
comparable GAAP financial measures.
Adjusted Diluted Net Earnings Per Share – Adjusted diluted net
earnings per share is GAAP diluted earnings per share that exclude
tax-effected costs related to the Company’s previously announced
restructuring plans and tax-effected net expenses related to
COVID-19 for the relevant time periods as indicated in the
accompanying non-GAAP reconciliations to the comparable GAAP
financial measures.
Operating Free Cash Flow – We define the measure Operating Free
Cash Flow as GAAP net cash provided by operating activities less
payments for capital expenditures (net). We believe Operating Free
Cash Flow is an important liquidity measure that provides useful
information to investors about the amount of cash generated from
operations after taking into account payments for capital
expenditures (net).
We believe that these non-GAAP financial measures provide
valuable information regarding our earnings and business trends by
excluding specific items that we believe are not indicative of the
ongoing operating results of our businesses; providing a useful way
for investors to make a comparison of our performance over time and
against other companies in our industry.
We have provided these non-GAAP financial measures as
supplemental information to our GAAP financial measures and believe
these non-GAAP measures provide investors with additional
meaningful financial information regarding our operating
performance and cash flows. Our management and Board of Directors
also use these non-GAAP measures as supplemental measures to
evaluate our businesses and the performance of management,
including the determination of performance-based compensation, to
make operating and strategic decisions, and to allocate financial
resources. We believe that these non-GAAP measures also provide
meaningful information for investors and securities analysts to
evaluate our historical and prospective financial performance.
These non-GAAP measures should not be considered a substitute for
or superior to GAAP results. Furthermore, the non-GAAP measures
presented by us may not be comparable to similarly titled measures
of other companies.
Supplemental Schedules
Segment Information
1
Non-GAAP Financial Measures
Reconciliations
2-3
Non-GAAP Financial Measures
Reconciliations; Adjusted EBITDA and
Operating Free Cash Flow
4
Store Count and Same Store Sales
5
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings (In thousands, except per share
data) (Unaudited)
Three Months Ended March 31,
Six Months Ended March 31,
2021
2020
PercentageChange
2021
2020
PercentageChange Net sales
$
926,328
$
871,023
6.3
%
$
1,862,350
$
1,851,231
0.6
%
Cost of products sold
459,099
441,266
4.0
%
924,397
946,626
(2.3
)%
Gross profit
467,229
429,757
8.7
%
937,953
904,605
3.7
%
Selling, general and administrative expenses
391,087
383,299
2.0
%
757,257
761,228
(0.5
)%
Restructuring
631
3,193
(80.2
)%
863
5,725
(84.9
)%
Operating earnings
75,511
43,265
74.5
%
179,833
137,652
30.6
%
Interest expense
23,883
21,644
10.3
%
49,861
43,185
15.5
%
Earnings before provision for income taxes
51,628
21,621
138.8
%
129,972
94,467
37.6
%
Provision for income taxes
13,316
8,253
61.3
%
34,469
27,884
23.6
%
Net earnings
$
38,312
$
13,368
186.6
%
$
95,503
$
66,583
43.4
%
Earnings per share: Basic
$
0.34
$
0.12
183.3
%
$
0.85
$
0.58
46.6
%
Diluted
$
0.34
$
0.12
183.3
%
$
0.84
$
0.57
47.4
%
Weighted average shares: Basic
112,603
114,823
112,538
115,478
Diluted
114,342
115,795
114,028
116,462
Basis PointChange Basis PointChange
Comparison as a percentage of net
sales Consolidated gross margin
50.4
%
49.3
%
110
50.4
%
48.9
%
150
Selling, general and administrative expenses
42.2
%
44.0
%
(180
)
40.7
%
41.1
%
(40
)
Consolidated operating margin
8.2
%
5.0
%
320
9.7
%
7.4
%
230
Effective tax rate
25.8
%
38.2
%
(1,240
)
26.5
%
29.5
%
(300
)
SALLY BEAUTY HOLDINGS, INC. AND
SUBSIDIARIES Condensed Consolidated Balance Sheets (In
thousands) (Unaudited)
March 31,2021 September
30,2020 Cash and cash equivalents
$
408,321
$
514,151
Trade and other accounts receivable
66,156
56,429
Inventory
949,695
814,503
Other current assets
42,278
48,014
Total current assets
1,466,450
1,433,097
Property and equipment, net
289,070
315,029
Operating lease assets
524,955
525,634
Goodwill and other intangible assets
601,539
598,321
Other assets
27,558
23,066
Total assets
$
2,909,572
$
2,895,147
Current maturities of long-term debt
$
197,596
$
180
Accounts payable
310,215
236,333
Accrued liabilities
195,467
170,665
Current operating lease liabilities
155,711
153,267
Income taxes payable
16,062
2,917
Total current liabilities
875,051
563,362
Long-term debt, including capital leases
1,389,545
1,796,897
Long-term operating lease liabilities
388,733
394,375
Other liabilities
30,113
32,976
Deferred income tax liabilities, net
91,297
92,094
Total liabilities
2,774,739
2,879,704
Total stockholders’ equity
134,833
15,443
Total liabilities and stockholders’ equity
$
2,909,572
$
2,895,147
Supplemental Schedule 1
SALLY BEAUTY HOLDINGS,
INC. AND SUBSIDIARIES Segment Information (In thousands)
(Unaudited)
Three Months Ended March 31,
Six Months Ended March 31,
2021
2020
PercentageChange
2021
2020
PercentageChange Net sales: Sally Beauty Supply ("SBS")
$
542,664
$
519,509
4.5
%
$
1,090,334
$
1,088,657
0.2
%
Beauty Systems Group ("BSG")
383,664
351,514
9.1
%
772,016
762,574
1.2
%
Total net sales
$
926,328
$
871,023
6.3
%
$
1,862,350
$
1,851,231
0.6
%
Operating earnings: SBS
$
100,063
$
56,373
77.5
%
$
195,191
$
130,598
49.5
%
BSG
47,843
41,039
16.6
%
96,415
103,473
(6.8
)%
Segment operating earnings
147,906
97,412
51.8
%
291,606
234,071
24.6
%
Unallocated expenses (1)
71,764
50,954
40.8
%
110,910
90,694
22.3
%
Restructuring
631
3,193
(80.2
)%
863
5,725
(84.9
)%
Interest expense
23,883
21,644
10.3
%
49,861
43,185
15.5
%
Earnings before provision for income taxes
$
51,628
$
21,621
138.8
%
$
129,972
$
94,467
37.6
%
Segment gross margin:
2021
2020
Basis PointChange
2021
2020
Basis PointChange SBS
58.4
%
55.6
%
280
58.1
%
54.9
%
320
BSG
39.1
%
40.0
%
(90
)
39.5
%
40.2
%
(70
)
Segment operating margin: SBS
18.4
%
10.9
%
750
17.9
%
12.0
%
590
BSG
12.5
%
11.7
%
80
12.5
%
13.6
%
(110
)
Consolidated operating margin
8.2
%
5.0
%
320
9.7
%
7.4
%
230
(1) Unallocated expenses, including share-based compensation
expense, consist of corporate and shared costs and are included in
selling, general and administrative expenses. Supplemental
Schedule 2
SALLY BEAUTY HOLDINGS, INC. AND
SUBSIDIARIES Non-GAAP Financial Measures Reconciliations (In
thousands, except per share data) (Unaudited)
Three Months Ended March 31, 2021 As Reported(GAAP)
Restructuring (1) COVID-19 (2) As Adjusted(Non-GAAP) Cost of
products sold
$
459,099
$
-
$
(6,957
)
$
452,142
Consolidated gross margin
50.4
%
51.2
%
Selling, general and administrative expenses
391,087
-
(28,974
)
362,113
SG&A expenses, as a percentage of sales
42.2
%
39.1
%
Operating earnings
75,511
631
35,931
112,073
Operating margin
8.2
%
12.1
%
Earnings before provision for income taxes
51,628
631
35,931
88,190
Provision for income taxes (3)
13,316
143
9,210
22,669
Net earnings
$
38,312
$
488
$
26,721
$
65,521
Earnings per share: Basic
$
0.34
$
0.00
$
0.24
$
0.58
Diluted
$
0.34
$
0.00
$
0.23
$
0.57
Three Months Ended March 31, 2020 As Reported(GAAP)
Restructuring (1) COVID-19 (2) As Adjusted(Non-GAAP)
Selling, general and administrative expenses
$
383,299
$
-
$
(14,697
)
$
368,602
SG&A expenses, as a percentage of sales
44.0
%
42.3
%
Operating earnings
43,265
3,193
14,697
61,155
Operating margin
5.0
%
7.0
%
Earnings before provision for income taxes
21,621
3,193
14,697
39,511
Provision for income taxes (3)
8,253
853
3,438
12,544
Net earnings
$
13,368
$
2,340
$
11,259
$
26,967
Earnings per share: Basic
$
0.12
$
0.02
$
0.10
$
0.23
Diluted
$
0.12
$
0.02
$
0.10
$
0.23
(1) For the three months ended March 31, 2021 and
2020, restructuring represents costs and expenses incurred
primarily in connection with Project Surge and the Transformation
Plan. (2) For the three months ended March 31, 2021,
COVID-19 net expenses primarily represents a write-down of $7.0
million for personal protective equipment inventory in costs of
products sold and donation expense of $31.2 million in selling,
general, and administrative expenses related to personal-protective
equipment inventory, partially offset by wage and rent subsidies
provided by the Canadian government of $2.2 million. For the three
months ended March 31, 2020, COVID-19 expenses primarily represents
costs associated with disaster pay and furloughed employees in
response to the coronavirus pandemic, partially offset by an
employee retention payroll tax credit provided by the U.S.
Coronavirus Aid, Relief, and Economic Security Act ("CARES Act").
(3) The provision for income taxes was calculated using the
applicable tax rates for each country, while excluding the tax
benefits for countries where the tax benefit is not currently
deemed probable of being realized. Supplemental Schedule 3
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES Non-GAAP
Financial Measures Reconciliations, Continued (In thousands, except
per share data) (Unaudited)
Six Months Ended March
31, 2021 As Reported Restructuring (1) COVID-19 (2) As
Adjusted(Non-GAAP) Cost of products sold
$
924,397
$
-
$
(6,957
)
$
917,440
Consolidated gross margin
50.4
%
50.7
%
Selling, general and administrative expenses
757,257
-
(28,929
)
728,328
SG&A expenses, as a percentage of sales
40.7
%
39.1
%
Operating earnings
179,833
863
35,886
216,582
Operating margin
9.7
%
11.6
%
Earnings before provision for income taxes
129,972
863
35,886
166,721
Provision for income taxes (3)
34,469
177
9,198
43,844
Net earnings
$
95,503
$
686
$
26,688
$
122,877
Earnings per share: Basic
$
0.85
$
0.01
$
0.24
$
1.09
Diluted
$
0.84
$
0.01
$
0.23
$
1.08
Six Months Ended March 31, 2020 As Reported
Restructuring (1) COVID-19 (2) As Adjusted(Non-GAAP)
Selling, general and administrative expenses
$
761,228
$
-
$
(14,697
)
$
746,531
SG&A expenses, as a percentage of sales
41.1
%
40.3
%
Operating earnings
137,652
5,725
14,697
158,074
Operating margin
7.4
%
8.5
%
Earnings before provision for income taxes
94,467
5,725
14,697
114,889
Provision for income taxes (3)
27,884
718
3,438
32,040
Net earnings
$
66,583
$
5,007
$
11,259
$
82,849
Earnings per share: Basic
$
0.58
$
0.04
$
0.10
$
0.72
Diluted
$
0.57
$
0.04
$
0.10
$
0.71
(1) For the six months ended March 31, 2021 and 2020,
restructuring represents costs and expenses incurred primarily in
connection with Project Surge and the Transformation Plan.
(2) For the six months ended March 31, 2021, COVID-19 net expenses
primarily represents a write-down of $7.0 million for personal
protective equipment inventory in costs of products sold and
donation expense of $31.2 million in selling, general, and
administrative expenses related to personal-protective equipment
inventory, partially offset by wage and rent subsidies provided by
the Canadian government of $2.2 million. For the six months ended
March 31, 2020, COVID-19 expenses primarily represents costs
associated with disaster pay and furloughed employees in response
to the coronavirus pandemic, partially offset by an employee
retention payroll tax credit provided by the CARES Act. (3)
The provision for income taxes was calculated using the applicable
tax rates for each country, while excluding the tax benefits for
countries where the tax benefit is not currently deemed probable of
being realized Supplemental Schedule 4
SALLY BEAUTY
HOLDINGS, INC. AND SUBSIDIARIES Non-GAAP Financial Measures
Reconciliations, Continued (In thousands) (Unaudited)
Three Months Ended March 31, Six Months Ended March
31, Adjusted EBITDA:
2021
2020
PercentageChange
2021
2020
PercentageChange Net earnings
$
38,312
$
13,368
186.6
%
$
95,503
$
66,583
43.4
%
Add: Depreciation and amortization
26,559
26,951
(1.5
)%
52,945
53,997
(1.9
)%
Interest expense
23,883
21,644
10.3
%
49,861
43,185
15.5
%
Provision for income taxes
13,316
8,253
61.3
%
34,469
27,884
23.6
%
EBITDA (non-GAAP)
102,070
70,216
45.4
%
232,778
191,649
21.5
%
Share-based compensation
2,649
3,059
(13.4
)%
5,541
6,532
(15.2
)%
Restructuring
631
3,193
(80.2
)%
863
5,725
(84.9
)%
COVID-19
35,931
14,697
144.5
%
35,886
14,697
144.2
%
Adjusted EBITDA (non-GAAP)
$
141,281
$
91,165
55.0
%
$
275,068
$
218,603
25.8
%
Basis PointChange Basis PointChange
Adjusted EBITDA as a percentage of net
sales Adjusted EBITDA margin
15.3
%
10.5
%
480
14.8
%
11.8
%
300
Operating Free Cash Flow:
2021
2020
PercentageChange
2021
2020
PercentageChange Net cash provided by operating activities
$
92,570
$
13,806
570.5
%
$
131,556
$
76,131
72.8
%
Less: Payments for property and equipment, net
11,612
31,085
(62.6
)%
27,095
71,960
(62.3
)%
Operating free cash flow (non-GAAP)
$
80,958
$
(17,279
)
568.5
%
$
104,461
$
4,171
2404.5
%
Supplemental Schedule 5
SALLY BEAUTY HOLDINGS, INC. AND
SUBSIDIARIES Store Count and Same Store Sales
(Unaudited)
As of March 31,
2021
2020
Change
Number of stores: SBS:
Company-operated stores
3,617
3,688
(71
)
Franchise stores
8
13
(5
)
Total SBS
3,625
3,701
(76
)
BSG: Company-operated stores
1,245
1,229
16
Franchise stores
134
145
(11
)
Total BSG
1,379
1,374
5
Total consolidated
5,004
5,075
(71
)
Number of BSG distributor sales consultants
704
660
44
BSG distributor sales consultants (DSC)
include 187 and 197 sales consultants employed by our franchisees
at March 31, 2021 and 2020, respectively.
Three Months Ended March
31,
Six Months Ended March
31,
2021
2020
Basis Point Change
2021
2020
Basis Point Change
Same store sales growth (decline): SBS
4.9
%
(7.0
)%
1,190
0.7
%
(4.0
)%
470
BSG
9.9
%
(7.4
)%
1,730
2.1
%
(3.0
)%
510
Consolidated
6.5
%
(7.1
)%
1,360
1.2
%
(3.6
)%
480
For the purpose of
calculating our same store sales metrics, we compare the current
period sales for stores open for 14 months or longer as of the last
day of a month with the sales for these stores for the comparable
period in the prior fiscal year. Our same store sales are
calculated in constant U.S. dollars and include e-commerce sales,
but do not generally include the sales from stores relocated until
14 months after the relocation. The sales from stores acquired are
excluded from our same store sales calculation until 14 months
after the acquisition.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210506005260/en/
Jeff Harkins Investor Relations jharkins@sallybeauty.com
940-297-3877
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