Regis® Reports Fourth Quarter and Full Year Results, Completion of Transformational Phase and Continued Progress on Key Foundational Initiatives

Business Transformation To A Fully-Franchised Model Considered Complete; Refranchised, Negotiated Lease Buyouts, Or Closed At Lease Term 550 Company-Owned Salons During The Fourth Quarter And 1,356 During The Fiscal Year

Nominal Sales Continue To Improve; Q4 2021 System-Wide Same-Store Sales Up 4.2% Compared To Q4 2020

Corporate Re-Organization And Zero-Based Budgeting Process Finalized, Resulting In A Right-Sized G&A Structure To Support Regis As A Franchisor

Continued Rollout Of Proprietary Technology Platform Opensalon® Pro; Over 2,100 Salons, Representing 37% Of U.S. Franchise Salons, Are Now Running Or Have Signed Contracts To Install

Regis Corporation (NYSE: RGS):

 

Three Months Ended June 30,

 

Twelve Months Ended June 30,

(Dollars in thousands)

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Consolidated revenue

 

$

99,130

 

 

$

60,143

 

 

$

415,113

 

 

$

669,729

 

System-wide revenue (1)

 

$

293,981

 

 

$

119,417

 

 

$

1,086,024

 

 

$

1,367,567

 

 

 

 

 

 

 

 

 

 

System-wide same-store sales comps

 

4.2

%

 

(20.2

)%

 

(25.8

)%

 

(4.4

)%

Two-year system-wide same-store sales comps

 

(21.0

)%

 

N/A

 

 

(28.3

)%

 

N/A

 

 

 

 

 

 

 

 

 

 

Operating loss

 

$

(27,265

)

 

$

(68,567

)

 

$

(104,152

)

 

$

(145,338

)

Loss from continuing operations

 

$

(34,339

)

 

$

(73,654

)

 

$

(113,331

)

 

$

(172,194

)

Diluted loss per share from continuing operations

 

$

(0.95

)

 

$

(2.05

)

 

$

(3.15

)

 

$

(4.79

)

EBITDA (2)

 

$

(26,677

)

 

$

(37,478

)

 

$

(69,210

)

 

$

(108,947

)

as a percent of revenue

 

(26.9

)%

 

(62.3

)%

 

(16.7

)%

 

(16.3

)%

 

 

 

 

 

 

 

 

 

As adjusted (2)

 

 

 

 

 

 

 

 

Net loss, as adjusted

 

$

(26,500

)

 

$

(36,211

)

 

$

(105,672

)

 

$

(21,714

)

Diluted loss per share, as adjusted

 

$

(0.74

)

 

$

(1.01

)

 

$

(2.94

)

 

$

(0.60

)

EBITDA, as adjusted (2)

 

$

(23,246

)

 

$

(33,845

)

 

$

(79,225

)

 

$

19,512

 

as a percent of revenue

 

(23.5

)%

 

(56.3

)%

 

(19.1

)%

 

2.9

%

_______________________________________________________________________________

(1)

Represents total sales within the system.

(2)

See GAAP to non-GAAP reconciliations, within the attached section titled "Non-GAAP Reconciliations."

Regis Corporation (NYSE: RGS), a leader in the haircare industry, whose primary business is franchising technology-enabled hair salons, today reported a fourth quarter 2021 net loss from continuing operations of $34.3 million, or $0.95 loss per diluted share as compared to net loss of $73.7 million or $2.05 loss per diluted share in the fourth quarter of 2020. The Company's fourth quarter 2021 reported results included $7.8 million of discrete items. Excluding discrete items, the Company reported fourth quarter 2021 adjusted net loss of $26.5 million, or $0.74 loss per diluted share as compared to adjusted net loss of $36.2 million, or $1.01 per diluted share for the same period last year. The year-over-year improvement in adjusted net loss was driven primarily by government-mandated salon closures in the prior year due to COVID-19. The improvement in adjusted net loss was partially offset by an increase in the loss from the sale of salons to franchisees of $7.1 million year-over-year due to lower proceeds per salon.

Total revenue in the quarter of $99.1 million increased $39.0 million, or 64.8%, year-over-year driven primarily by mandated salon closures in the prior year due to the COVID-19 pandemic.

Fourth quarter adjusted EBITDA loss of $23.2 million decreased $10.6 million, versus adjusted EBITDA loss of $33.8 million in the same period last year. Excluding the $8.2 million adjusted loss and $1.2 adjusted loss from the sale of company-owned salons during the current and prior year quarter, respectively, adjusted EBITDA loss of $15.0 million was $17.7 million favorable versus the same period last year. This was driven primarily by government-mandated salon closures in response to COVID-19 in the prior year.

On a full year basis, adjusted EBITDA loss of $79.2 million increased $98.7 million versus adjusted EBITDA income of $19.5 million in the same period last year. Excluding the $16.7 million loss and $49.7 million gain from the sale of company-owned salons during the current and prior year, respectively, adjusted EBITDA loss of $62.5 million was $32.4 million unfavorable versus the same period last year and was driven primarily by the impact of COVID-19 on same-store sales in the current year and the elimination of EBITDA that was generated in the prior year from the net 747 company-owned salons that were sold and converted to the Company’s asset-light franchise portfolio over the past 12 months.

Felipe Athayde, President and Chief Executive Officer, commented, "While we are still feeling the effects of the pandemic, Regis is well-positioned heading into fiscal year 2022 due to our achievements during a time of unprecedented challenges in fiscal year 2021. The Regis of today is an entirely different company when compared to the beginning of fiscal year 2021, from our management team to our technology platform and everything in between. We have a new team, a brand-centric focus to drive sales, the right business model for growth, and the right-sized organizational structure and technology platform to support and drive that growth."

Fourth Quarter Segment Results

Franchise Salons

 

 

Three Months Ended June 30,

 

Increase (Decrease)

 

Twelve Months Ended June 30,

 

Increase (Decrease)

(Dollars in millions) (1)

 

2021

 

2020

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

15.6

 

 

$

7.2

 

 

$

8.4

 

$

56.7

 

 

$

50.4

 

 

$

6.3

 

Product sold to TBG locations

 

 

 

 

 

 

 

 

2.0

 

 

(2.0

)

Product

 

$

15.6

 

 

$

7.2

 

 

$

8.4

 

$

56.7

 

 

$

52.4

 

 

$

4.3

 

Royalties and fees

 

26.7

 

 

7.3

 

 

19.4

 

88.1

 

 

73.4

 

 

14.7

 

Franchise rental income

 

31.5

 

 

30.3

 

 

1.2

 

127.4

 

 

127.2

 

 

0.2

 

Total franchised salons revenue

 

$

73.8

 

 

$

44.8

 

 

$

29.0

 

$

272.1

 

 

$

253.0

 

 

$

19.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise same-store sales comps (2)

 

4.4

%

 

(20.4

)%

 

 

 

(24.5

)%

 

(4.4

)%

 

 

Franchise two-year same-store sales comps (2)

 

(20.2

)%

 

N/A

 

 

 

 

(27.2

)%

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA, as Adjusted

 

$

11.3

 

 

$

1.4

 

 

$

9.9

 

$

41.0

 

 

$

37.9

 

 

$

3.1

 

as a percent of revenue

 

15.3

%

 

3.1

%

 

 

 

15.1

%

 

15.0

%

 

 

as a percent of adjusted revenue (3)

 

32.1

%

 

9.7

%

 

 

 

33.4

%

 

34.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Franchise Salons

 

5,563

 

 

5,209

 

 

354

 

 

 

 

 

 

as a percent of total Franchise and Company-owned salons

 

95.3

%

 

76.1

%

 

 

 

 

 

 

 

 

_______________________________________________________________________________

(1)

Variances calculated on amounts shown in millions may result in rounding differences.

(2)

TBG is excluded from same-store sales in all periods

(3)

Adjusted revenue excludes non-margin revenue. See Non-GAAP reconciliation

Fourth quarter Franchise revenue was $73.8 million, a $29.0 million, or 64.7% increase compared to the prior year quarter. Royalties and fees were $26.7 million, a $19.4 million, or 265.8% increase versus the same period last year. Product sales to franchisees of $15.6 million increased $8.4 million. Both increases were due to government-mandated salon closures in the prior year. Franchise adjusted EBITDA of $11.3 million increased $9.9 million, or 707.1% year-over-year primarily due to an increase in royalties and a decrease in bad debt.

Company-Owned Salons

 

 

Three Months Ended June 30,

 

Increase (Decrease)

 

Twelve Months Ended June 30,

 

Increase (Decrease)

(Dollars in millions) (1)

 

2021

 

2020

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

$

25.3

 

 

$

15.3

 

 

$

10.0

 

 

$

143.0

 

 

$

416.7

 

 

$

(273.7

)

Company-owned same-store sales comps

 

(7.0

)%

 

(18.9

)%

 

 

 

(33.4

)%

 

(4.4

)%

 

 

Company-owned two-year same-store sales comps

 

(30.4

)%

 

N/A

 

 

 

 

(35.2

)%

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA, as Adjusted

 

$

(13.3

)

 

$

(21.6

)

 

$

8.3

 

 

$

(47.5

)

 

$

(6.6

)

 

$

(40.9

)

as a percent of revenue

 

(52.6

)%

 

(141.2

)%

 

 

 

(33.2

)%

 

(1.6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company-owned Salons

 

276

 

 

1,632

 

 

(1,356

)

 

 

 

 

 

 

as a percent of total Franchise and Company-owned salons

 

4.7

%

 

23.9

%

 

 

 

 

 

 

 

 

_______________________________________________________________________________

(1)

Variances calculated on amounts shown in millions may result in rounding differences.

Fourth quarter revenue for the Company-owned salon segment increased $10.0 million versus the prior year to $25.3 million. The year-over-year increase in revenue was driven by the government-mandated closure of salons during fiscal year 2020 due to the COVID-19 pandemic.

Fourth quarter adjusted EBITDA loss of $13.3 million decreased $8.4 million versus the same period last year driven primarily by the government-mandated closure of salon in fiscal year 2020 due to the COVID-19 pandemic.

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 results on August 26, 2021, at 9 a.m., Central time. Interested parties are invited to participate in the live webcast by registering for the event at www.regiscorp.com/investor-relations.html. A replay of the presentation will be available on our website at www.regiscorp.com/investor-relations.html.

About Regis Corporation

Regis Corporation (NYSE:RGS) is a leader in the beauty salon industry. As of June 30, 2021, the Company franchised, owned or held ownership interests in 5,917 worldwide locations. Regis’ franchised and corporate locations operate under concepts such as Supercuts®, SmartStyle®, Cost Cutters®, Roosters® and First Choice Haircutters®. Regis maintains an ownership interest in Empire Education Group in the U.S. For additional information about the Company, including a reconciliation of certain non-GAAP financial information and certain supplemental financial information, please visit the Investor Information section of the corporate website at www.regiscorp.com.

This press release contains or may contain “forward-looking statements” within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this document reflect management’s best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, “may,” “believe,” “project,” “forecast,” “expect,” “estimate,” “anticipate,” and “plan.” In addition, the following factors could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include a potential material adverse impact on our business and results of operations as a result of the uncertain duration and severity of the COVID-19 pandemic, including any adverse impact from the Delta variant; the impact of the COVID-19 pandemic on our key suppliers; 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 and fashion trends; the continued ability of the Company to implement its strategy, priorities and initiatives including the re-engineering of our corporate and field infrastructure; new merchandising strategy; our and our franchisees' ability to attract, train and retain talented stylists; financial performance of our franchisees; success of the sale of salons to franchisees; the ability to operate or sell the salons transferred back from TBG; our ability to manage cyber threats and protect the security of potentially sensitive information about our guests, 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; 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; Opensalon® Pro may not yield the intended results on timing and amounts; compliance with credit facility covenants and access to the existing revolving credit facility; ability to re-finance our existing credit facility or the ability to re-finance at a similar rate; if our capital investments in technology do not achieve appropriate returns; premature termination of agreements with our franchisees; financial performance of Empire Education Group; the continued ability of the Company to implement cost reduction initiatives; 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; potential litigation and other legal or regulatory proceedings could have an adverse effect on our business or other factors not listed above. Additional information concerning potential factors that could affect future financial results is set forth under Item 1A of Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.

 

REGIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Dollars in thousands, except per share data)

 

 

 

June 30,

 

 

2021

 

 

2020

 

 

 

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

19,191

 

 

$

113,667

Receivables, net

 

27,372

 

 

31,030

Inventories

 

22,993

 

 

62,597

Other current assets

 

17,103

 

 

19,138

Total current assets

 

86,659

 

 

226,432

 

 

 

 

 

Property and equipment, net

 

23,113

 

 

57,176

Goodwill

 

229,582

 

 

227,457

Other intangibles, net

 

3,761

 

 

4,579

Right of use asset

 

611,880

 

 

786,216

Other assets

 

41,388

 

 

40,934

Total assets

 

$

996,383

 

 

$

1,342,794

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

27,157

 

 

$

50,918

Accrued expenses

 

54,857

 

 

48,825

Short-term lease liability

 

116,471

 

 

137,271

Total current liabilities

 

198,485

 

 

237,014

 

 

 

 

 

Long-term debt, net

 

186,911

 

 

177,500

Long-term lease liability

 

518,866

 

 

680,454

Long-term financing liabilities

 

 

 

27,981

Other non-current liabilities

 

75,075

 

 

94,142

Total liabilities

 

979,337

 

 

1,217,091

Commitments and contingencies

 

 

 

 

Shareholders' equity:

 

 

 

 

Common stock, $0.05 par value; issued and outstanding, 35,795,844 and 35,625,716 common shares at June 30, 2021 and 2020, respectively

 

1,790

 

 

1,781

Additional paid-in capital

 

25,102

 

 

22,011

Accumulated other comprehensive income

 

9,543

 

 

7,449

Retained (deficit) earnings

 

(19,389

)

 

94,462

Total shareholders' equity

 

17,046

 

 

125,703

Total liabilities and shareholders' equity

 

$

996,383

 

 

$

1,342,794

 

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Dollars and shares in thousands, except per share data)

 

 

 

Three Months Ended June 30,

 

Twelve Months Ended June 30,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Service

 

$

18,080

 

 

$

9,405

 

 

$

108,120

 

 

$

331,538

 

Product

 

22,879

 

 

13,070

 

 

91,544

 

 

137,586

 

Royalties and fees

 

26,664

 

 

7,340

 

 

88,057

 

 

73,402

 

Franchise rental income

 

31,507

 

 

30,328

 

 

127,392

 

 

127,203

 

Total revenue

 

99,130

 

 

60,143

 

 

415,113

 

 

669,729

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of service

 

12,703

 

 

9,615

 

 

79,144

 

 

222,279

 

Cost of product

 

24,327

 

 

9,441

 

 

79,167

 

 

84,698

 

Site operating expenses

 

14,507

 

 

8,611

 

 

51,463

 

 

71,543

 

General and administrative

 

28,014

 

 

25,766

 

 

105,433

 

 

130,953

 

Rent

 

6,802

 

 

12,958

 

 

40,930

 

 

76,382

 

Franchise rent expense

 

31,507

 

 

30,328

 

 

127,392

 

 

127,203

 

Depreciation and amortization

 

5,330

 

 

9,466

 

 

22,713

 

 

36,952

 

Long-lived asset impairment

 

3,205

 

 

22,560

 

 

13,023

 

 

22,560

 

TBG mall restructuring

 

 

 

(35

)

 

 

 

2,333

 

Goodwill impairment

 

 

 

 

 

 

 

40,164

 

Total operating expenses

 

126,395

 

 

128,710

 

 

519,265

 

 

815,067

 

 

 

 

 

 

 

 

 

 

Operating loss

 

(27,265

)

 

(68,567

)

 

(104,152

)

 

(145,338

)

 

 

 

 

 

 

 

 

 

Other (expense) income:

 

 

 

 

 

 

 

 

Interest expense

 

(3,187

)

 

(2,907

)

 

(13,813

)

 

(7,522

)

Loss from sale of salon assets to franchisees

 

(8,233

)

 

(1,181

)

 

(16,696

)

 

(27,306

)

Interest income and other, net

 

286

 

 

165

 

 

15,902

 

 

3,353

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations before income taxes

 

(38,399

)

 

(72,490

)

 

(118,759

)

 

(176,813

)

 

 

 

 

 

 

 

 

 

Income tax benefit (expense)

 

4,060

 

 

(1,164

)

 

5,428

 

 

4,619

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations

 

(34,339

)

 

(73,654

)

 

(113,331

)

 

(172,194

)

 

 

 

 

 

 

 

 

 

Income from discontinued operations, net of income taxes

 

 

 

79

 

 

 

 

832

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(34,339

)

 

$

(73,575

)

 

$

(113,331

)

 

$

(171,362

)

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted:

 

 

 

 

 

 

 

 

Loss from continuing operations

 

$

(0.95

)

 

$

(2.05

)

 

$

(3.15

)

 

$

(4.79

)

Income from discontinued operations

 

 

 

 

 

 

 

0.02

 

Net loss per share:, basic and diluted (1)

 

$

(0.95

)

 

$

(2.05

)

 

$

(3.15

)

 

$

(4.77

)

 

 

 

 

 

 

 

 

 

Weighted average common and common equivalent shares outstanding:

 

 

 

 

 

 

 

 

Basic and diluted

 

36,038

 

 

35,871

 

 

35,956

 

 

35,936

 

_______________________________________________________________________________

(1)

Total is a recalculation; line items calculated individually may not sum to total due to rounding.

 

REGIS CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in thousands)

 

 

 

Twelve Months Ended June 30,

 

 

2021

 

2020

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(113,331)

 

$

(171,362)

Adjustments to reconcile net loss used in operating activities

 

 

 

 

Non-cash adjustments related to discontinued operations

 

 

(1,098)

Depreciation and amortization

 

17,871

 

33,101

Salon asset impairment

 

 

3,851

Long-lived asset impairment

 

13,023

 

22,560

Deferred income taxes

 

(3,388)

 

(3,934)

Inventory reserve

 

12,068

 

Gain from disposal of distribution center assets

 

(14,997)

 

Gain from sale of company headquarters, net

 

 

(2,513)

Loss from sale of salon assets to franchisees, net

 

16,696

 

27,306

Goodwill impairment

 

 

40,164

Stock-based compensation

 

3,254

 

3,275

Amortization of debt discount and financing costs

 

1,839

 

398

Other non-cash items affecting earnings

 

(351)

 

(539)

Changes in operating assets and liabilities (1):

 

 

 

 

Receivables

 

(279)

 

(3,902)

Inventories

 

17,879

 

(2,255)

Income tax receivable

 

1,295

 

(1,804)

Other current assets

 

1,658

 

2,827

Other assets

 

(2,896)

 

(10,094)

Accounts payable

 

(21,669)

 

4,588

Accrued expenses

 

5,296

 

(27,622)

Net lease liabilities

 

(19,248)

 

276

Other non-current liabilities

 

(14,603)

 

368

Net cash used in operating activities:

 

(99,883)

 

(86,409)

Cash flows from investing activities:

 

 

 

 

Capital expenditures

 

(11,475)

 

(37,494)

Proceeds from sale of company headquarters

 

 

8,996

Proceeds from sale of assets to franchisees

 

8,437

 

91,616

Costs associated with sale of assets to franchisees

 

(261)

 

(2,089)

Proceeds from company-owned life insurance policies

 

1,200

 

Net cash (used in) provided by investing activities:

 

(2,099)

 

61,029

Cash flows from financing activities:

 

 

 

 

Borrowings on revolving credit facility

 

10,000

 

213,000

Repayments of revolving credit facility

 

(589)

 

(125,500)

Repurchase of common stock

 

 

(28,246)

Minority interest buyout

 

(562)

 

Distribution center lease payments

 

(724)

 

(769)

Taxes paid for shares withheld

 

(348)

 

(2,320)

Net cash provided by financing activities:

 

7,777

 

56,165

Effect of exchange rate changes on cash and cash equivalents

 

477

 

(284)

(Decrease) increase in cash, cash equivalents and restricted cash

 

(93,728)

 

30,501

Cash, cash equivalents and restricted cash:

 

 

 

 

Beginning of year

 

122,880

 

92,379

End of year

 

$

29,152

 

$

122,880

_______________________________________________________________________________

(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, 2021

 

June 30, 2020

 

 

Service

 

Retail

 

Total

 

Service

 

Retail

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

SmartStyle

 

2.4

%

 

(14.0

)%

 

(1.7

)%

 

(17.9

)%

 

(17.1

)%

 

(17.7

)%

Supercuts

 

12.4

 

 

(10.1

)

 

10.9

 

 

(23.1

)

 

(12.6

)

 

(22.5

)

Portfolio Brands

 

(0.5

)

 

(14.7

)

 

(2.2

)

 

(16.2

)

 

(13.3

)

 

(15.9

)

Total

 

6.8

%

 

(13.2

)%

 

4.2

%

 

(20.9

)%

 

(14.6

)%

 

(20.2

)%

 

 

Twelve Months Ended

 

 

June 30, 2021

 

June 30, 2020

 

 

Service

 

Retail

 

Total

 

Service

 

Retail

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

SmartStyle

 

(26.1

)%

 

(28.5

)%

 

(26.7

)%

 

(3.6

)%

 

(10.1

)%

 

(5.5

)%

Supercuts

 

(25.9

)

 

(23.5

)

 

(25.8

)

 

(3.8

)

 

(10.7

)

 

(4.2

)

Portfolio Brands

 

(25.3

)

 

(20.6

)

 

(24.8

)

 

(3.3

)

 

(7.2

)

 

(3.7

)

Total

 

(25.8

)%

 

(25.5

)%

 

(25.8

)%

 

(3.6

)%

 

(9.4

)%

 

(4.4

)%

_______________________________________________________________________________

(1)

System-wide same-store sales in fiscal year 2021 are calculated as the change in sales for locations that were open on a specific day of the week during the current period and the corresponding prior period. System-wide same-store sales in fiscal year 2020 are calculated as the total change in sales for system-wide franchise and company-owned locations that were open for more than one year that were open on a specific day of the week during the current period and the corresponding prior period. For both years, 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,

 

 

2021

 

2020

 

 

 

 

 

FRANCHISE SALONS:

 

 

 

 

SmartStyle/Cost Cutters in Walmart Stores

 

1,666

 

 

1,317

 

Supercuts

 

2,386

 

 

2,508

 

Portfolio Brands (1)

 

1,357

 

 

1,217

 

Total North American Salons

 

5,409

 

 

5,042

 

Total International Salons (2)

 

154

 

 

167

 

Total Franchise Salons

 

5,563

 

 

5,209

 

as a percent of total Franchise and Company-owned salons

 

95.3

%

 

76.1

%

 

 

 

 

 

COMPANY-OWNED SALONS:

 

 

 

 

SmartStyle/Cost Cutters in Walmart Stores

 

91

 

 

751

 

Supercuts

 

35

 

 

210

 

Portfolio Brands (1)

 

107

 

 

505

 

Mall-based (3)

 

43

 

 

166

 

Total Company-owned Salons

 

276

 

 

1,632

 

as a percent of total Franchise and Company-owned salons

 

4.7

%

 

23.9

%

 

 

 

 

 

OWNERSHIP INTEREST LOCATIONS:

 

 

 

 

Equity ownership interest locations

 

78

 

 

82

 

 

 

 

 

 

Grand Total, System-wide

 

5,917

 

 

6,923

 

_______________________________________________________________________________

(1)

Portfolio Brands was previously referred to as Signature Style.

(2)

Canadian and Puerto Rican salons are included in the North American salon totals.

(3)

The mall-based salons were acquired from TBG on December 31, 2019. They are included in continuing operations under the Company-owned operating segment beginning January 1, 2020.

Non-GAAP Reconciliations:

We believe our presentation of non-GAAP operating loss, net (loss), net (loss) per diluted share, and other non-GAAP financial measures provides meaningful insight into our ongoing operating performance and an alternative perspective of our results of operations. Presentation of the non-GAAP measures allows investors to review our core ongoing operating performance from the same perspective as management and the Board of Directors. These non-GAAP financial measures provide investors an enhanced understanding of our operations, facilitate investors’ analyses and comparisons of our current and past results of operations and provide insight into the prospects of our future performance. We also believe the non-GAAP measures are useful to investors because they provide supplemental information that research analysts frequently use to analyze financial performance.

The method we use to produce non-GAAP results is not in accordance with U.S. GAAP and may differ from methods used by other companies. These non-GAAP results should not be regarded as a substitute for corresponding U.S. GAAP measures, but instead should be utilized as a supplemental measure of operating performance in evaluating our business. Non-GAAP measures do have limitations as they do not reflect certain items that may have a material impact upon our reported financial results. As such, these non-GAAP measures should be viewed in conjunction with our financial statements prepared in accordance with U.S. GAAP.

Non-GAAP reconciling items for the three and twelve months ended June 30, 2021 and 2020:

The following information is provided to give qualitative and quantitative information related to items impacting comparability. Items impacting comparability are not defined terms within U.S. GAAP. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies. We determine the items to consider as “items impacting comparability” based on how management views our business, makes financial, operating and planning decisions and evaluates the Company’s ongoing performance. The following items have been excluded from our non-GAAP results:

  • Employee litigation reserve
  • Marketing impairment
  • CEO transition
  • Professional fees
  • Severance expense
  • Corporate office transition
  • Benefit from lease liability decrease in excess of previously impaired ROUA ("Lease liability benefit")
  • Lease termination fees
  • Real estate fees
  • Asset retirement obligation
  • Long-lived asset impairment
  • TBG restructuring
  • Goodwill impairment
  • Gain on distribution centers
  • Goodwill derecognition
  • TBG discontinued operations
 

REGIS CORPORATION

Reconciliation Of Selected U.S. GAAP To Non-GAAP Financial Measures

(Dollars in thousands, except per share data)

Reconciliation of U.S. GAAP operating loss and net loss to equivalent non-GAAP measures

 

 

 

 

Three Months Ended June 30,

 

Twelve Months Ended June 30,

 

 

U.S. GAAP financial line item

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP revenue

 

 

 

$

99,130

 

 

$

60,143

 

 

$

415,113

 

 

$

669,729

 

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP operating loss

 

 

 

$

(27,265

)

 

$

(68,567

)

 

$

(104,152

)

 

$

(145,338

)

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating expense adjustments (1)

 

 

 

 

 

 

 

 

 

 

Employee litigation reserve

 

Site operating expenses

 

 

 

 

 

 

 

(600

)

Marketing impairment

 

Site operating expenses

 

 

 

1,653

 

 

 

 

1,653

 

CEO transition

 

General and administrative

 

 

 

 

 

(694

)

 

 

Professional fees

 

General and administrative

 

3,603

 

 

460

 

 

7,026

 

 

681

 

Severance

 

General and administrative

 

1,606

 

 

1,534

 

 

4,545

 

 

9,588

 

Corporate office transition

 

Rent

 

 

 

100

 

 

 

 

1,019

 

Lease liability benefit

 

Rent

 

(8,727

)

 

 

 

(20,022

)

 

 

Lease termination fees

 

Rent

 

7,020

 

 

 

 

13,544

 

 

 

Real estate fees

 

Rent

 

49

 

 

 

 

583

 

 

 

Asset retirement obligation

 

Depreciation and amortization

 

1,280

 

 

 

 

4,726

 

 

 

Long-lived asset impairment

 

Long-lived asset impairment

 

3,205

 

 

22,560

 

 

13,023

 

 

22,560

 

TBG restructuring

 

TBG restructuring

 

 

 

(35

)

 

 

 

2,333

 

Goodwill impairment

 

Goodwill impairment

 

 

 

 

 

 

 

40,164

 

Total non-GAAP operating expense adjustments

 

 

 

8,036

 

 

26,272

 

 

22,731

 

 

77,398

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating loss (1)

 

 

 

$

(19,229

)

 

$

(42,295

)

 

$

(81,421

)

 

$

(67,940

)

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP net loss

 

 

 

$

(34,339

)

 

$

(73,575

)

 

$

(113,331

)

 

$

(171,362

)

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net loss adjustments:

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating expense adjustments

 

 

 

8,036

 

 

26,272

 

 

22,731

 

 

77,398

 

Corporate office transition

 

Interest income and other, net

 

 

 

 

 

 

 

(2,513

)

Gain on distribution centers

 

Interest income and other, net

 

(120

)

 

 

 

(14,997

)

 

 

Goodwill derecognition

 

Interest income and other, net

 

 

 

 

 

 

 

76,966

 

Income tax impact on Non-GAAP adjustments (2)

 

Income taxes

 

(77

)

 

11,171

 

 

(75

)

 

(1,371

)

TBG discontinued operations, net of income tax

 

Loss from discontinued operations, net of tax

 

 

 

(79

)

 

 

 

(832

)

Total non-GAAP net loss adjustments

 

 

 

7,839

 

 

37,364

 

 

7,659

 

 

149,648

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net loss

 

 

 

$

(26,500

)

 

$

(36,211

)

 

$

(105,672

)

 

$

(21,714

)

_______________________________________________________________________________

(1)

Adjusted operating margins for the three months ended June 30, 2021 and 2020, were (19.4)% and (70.3)%, respectively, and were (19.6)% and (10.1)% for the twelve months ended June 30, 2021 and 2020, respectively, and are calculated as non-GAAP operating loss divided by non-GAAP revenue for each respective period.

(2)

Based on projected statutory effective tax rate analyses, the non-GAAP tax provision was calculated to be approximately 1% and 22% for the three and twelve months ended June 30, 2021 and 2020, respectively, for all non-GAAP operating expense adjustments.

REGIS CORPORATION

Reconciliation Of Selected U.S. GAAP To Non-GAAP Financial Measures

(Dollars in thousands, except per share data)

Reconciliation of U.S. GAAP net loss per diluted share to non-GAAP net loss per diluted share

 

Three Months Ended June 30,

 

Twelve Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

U.S. GAAP net loss per diluted share

 

$

(0.953

)

 

$

(2.051

)

 

$

(3.152

)

 

$

(4.769

)

Employee litigation reserve (1)

 

 

 

 

 

 

 

(0.013

)

Marketing impairment (1)

 

 

 

0.036

 

 

 

 

0.036

 

CEO transition (1)

 

 

 

 

 

(0.019

)

 

 

Professional fees (1)

 

0.100

 

 

0.010

 

 

0.192

 

 

0.015

 

Severance (1)

 

0.044

 

 

0.034

 

 

0.125

 

 

0.208

 

Corporate office transition (1)

 

 

 

 

 

 

 

(0.033

)

Lease liability benefit (1)

 

(0.240

)

 

 

 

(0.550

)

 

 

Lease termination fees (1)

 

0.193

 

 

 

 

0.373

 

 

 

Real estate fees (1)

 

0.001

 

 

 

 

0.016

 

 

 

Asset retirement obligation (1)

 

0.035

 

 

 

 

0.130

 

 

 

Long-lived asset impairment (1)

 

0.088

 

 

0.492

 

 

0.359

 

 

0.490

 

TBG restructuring (1)

 

 

 

(0.001

)

 

 

 

0.050

 

Goodwill impairment (1)

 

 

 

 

 

 

 

0.872

 

Goodwill derecognition (1)

 

 

 

 

 

 

 

1.671

 

Gain on distribution centers (1)

 

(0.003

)

 

 

 

(0.413

)

 

 

TBG discontinued operations, net of tax

 

 

 

(0.002

)

 

 

 

(0.023

)

CARES Act

 

 

 

 

 

 

 

0.408

 

Tax asset valuation

 

 

 

0.473

 

 

 

 

0.484

 

Impact of change in weighted average shares (3)

 

 

 

 

 

 

 

 

Non-GAAP net loss per diluted share (2) (3)

 

$

(0.735

)

 

$

(1.009

)

 

$

(2.939

)

 

$

(0.604

)

 

 

 

 

 

 

 

 

 

U.S. GAAP Weighted average share - basic and diluted

 

36,038

 

 

35,871

 

 

35,956

 

 

35,936

 

Non-GAAP Weighted average shares - diluted (2)

 

36,038

 

 

35,871

 

 

35,956

 

 

35,936

 

_______________________________________________________________________________

(1)

Based on projected statutory effective tax rate analyses, the non-GAAP tax provision was calculated to be approximately 1% for the three and twelve months ended June 30, 2021, and 22% for the three and twelve months ended June 30, 2020, for all non-GAAP operating expense adjustments.

(2)

Total is a recalculation; line items calculated individually may not sum to total due to rounding.

(3)

Non-GAAP net loss per share reflects the weighted average shares associated with non-GAAP net loss, which includes the dilutive effect of common stock equivalents. The impact of the adjustments described above result in the impact of the common stock equivalents to be dilutive to the non-GAAP net loss per share. For the three months and twelve months ended June 30, 2021 and 2020, the impact of the adjustments described above resulted in a non-GAAP net loss, therefore, the impact of the common stock equivalents is not dilutive.

REGIS CORPORATION

Reconciliation Of Reported U.S. GAAP Net Income (Loss) To Adjusted EBITDA, A Non-GAAP Financial Measure

(Dollars in thousands)

(Unaudited)

Adjusted EBITDA

EBITDA represents U.S. GAAP net income (loss) for the respective period excluding interest expense, income taxes and depreciation and amortization expense. The Company defines adjusted EBITDA, as EBITDA excluding identified items impacting comparability for each respective period. For the three and twelve months ended June 30, 2021 and 2020, the items impacting comparability consisted of the items identified in the non-GAAP reconciling items for the respective periods. The impacts of the income tax provision adjustments associated with the above items are already included in the U.S. GAAP reported net income (loss) to EBITDA reconciliation, therefore there is no adjustment needed for the reconciliation from EBITDA to adjusted EBITDA.

 

 

Three Months Ended June 30, 2021

 

 

Franchise

 

Company-owned

 

Corporate

 

Consolidated (1)

 

 

 

 

 

 

 

 

 

Consolidated reported net income (loss), as reported (U.S. GAAP)

 

$

11,917

 

 

$

(19,292

)

 

$

(26,964

)

 

$

(34,339

)

Interest expense, as reported

 

 

 

 

 

3,187

 

 

3,187

 

Income taxes, as reported

 

 

 

 

 

(4,060

)

 

(4,060

)

Depreciation and amortization, as reported

 

153

 

 

3,651

 

 

1,526

 

 

5,330

 

Long-lived asset impairment, as reported

 

 

 

3,205

 

 

 

 

3,205

 

EBITDA (as defined above)

 

$

12,070

 

 

$

(12,436

)

 

$

(26,311

)

 

$

(26,677

)

 

 

 

 

 

 

 

 

 

Professional fees

 

 

 

 

 

3,603

 

 

3,603

 

Severance

 

 

 

 

 

1,606

 

 

1,606

 

Lease liability benefit

 

(716

)

 

(8,011

)

 

 

 

(8,727

)

Lease termination fees

 

(103

)

 

7,123

 

 

 

 

7,020

 

Real estate fees

 

21

 

 

28

 

 

 

 

49

 

Gain on distribution centers

 

 

 

 

 

(120

)

 

(120

)

Adjusted EBITDA, non-GAAP financial measure

 

$

11,272

 

 

$

(13,296

)

 

$

(21,222

)

 

$

(23,246

)

 

 

Three Months Ended June 30, 2020

 

 

Franchise

 

Company-owned

 

Corporate

 

Consolidated (1)

 

 

 

 

 

 

 

 

 

Consolidated reported net loss, as reported (U.S. GAAP)

 

$

(531

)

 

$

(49,763

)

 

$

(23,281

)

 

$

(73,575

)

Interest expense, as reported

 

 

 

 

 

2,907

 

 

2,907

 

Income taxes, as reported

 

 

 

 

 

1,164

 

 

1,164

 

Depreciation and amortization, as reported

 

260

 

 

7,269

 

 

1,937

 

 

9,466

 

Long-lived asset impairment, as reported

 

1,712

 

 

20,848

 

 

 

 

22,560

 

EBITDA (as defined above)

 

$

1,441

 

 

$

(21,646

)

 

$

(17,273

)

 

$

(37,478

)

 

 

 

 

 

 

 

 

 

Professional fees

 

 

 

 

 

460

 

 

460

 

Severance

 

 

 

 

 

1,534

 

 

1,534

 

Corporate office transition

 

 

 

 

 

100

 

 

100

 

TBG restructuring

 

(35

)

 

 

 

 

 

(35

)

Marketing impairment

 

 

 

 

 

1,653

 

 

1,653

 

TBG discontinued operations, net of tax

 

 

 

 

 

(79

)

 

(79

)

Adjusted EBITDA, non-GAAP financial measure

 

$

1,406

 

 

$

(21,646

)

 

$

(13,605

)

 

$

(33,845

)

_______________________________________________________________________________

(1)

Consolidated EBITDA margins for the three months ended June 30, 2021, and 2020, were (26.9)% and (62.3)%, respectively, and are calculated as EBITDA (as defined above) divided by U.S. GAAP revenue for each respective period. Consolidated adjusted EBITDA margin for the three months ended June 30, 2021, and 2020 were (23.5)% and (56.3)%, respectively, and are calculated as consolidated adjusted EBITDA (as defined above) divided by consolidated adjusted revenue for each respective period.

 

 

Twelve Months Ended June 30, 2021

 

 

Franchise

 

Company-owned

 

Corporate

 

Consolidated (1)

 

 

 

 

 

 

 

 

 

Consolidated reported net income (loss), as reported (U.S. GAAP)

 

$

40,652

 

 

$

(70,032

)

 

$

(83,951

)

 

$

(113,331

)

Interest expense, as reported

 

 

 

 

 

13,813

 

 

13,813

 

Income taxes, as reported

 

 

 

 

 

(5,428

)

 

(5,428

)

Depreciation and amortization, as reported

 

1,049

 

 

14,730

 

 

6,934

 

 

22,713

 

Long-lived asset impairment, as reported

 

726

 

 

12,297

 

 

 

 

13,023

 

EBITDA (as defined above)

 

$

42,427

 

 

$

(43,005

)

 

$

(68,632

)

 

$

(69,210

)

 

 

 

 

 

 

 

 

 

CEO transition

 

 

 

 

 

(694

)

 

(694

)

Professional fees

 

 

 

 

 

7,026

 

 

7,026

 

Severance

 

 

 

 

 

4,545

 

 

4,545

 

Lease liability benefit

 

(1,322

)

 

(18,700

)

 

 

 

(20,022

)

Lease termination fees

 

(103

)

 

13,647

 

 

 

 

13,544

 

Real estate fees

 

22

 

 

561

 

 

 

 

583

 

Gain on distribution centers

 

 

 

 

 

(14,997

)

 

(14,997

)

Adjusted EBITDA, non-GAAP financial measure

 

$

41,024

 

 

$

(47,497

)

 

$

(72,752

)

 

$

(79,225

)

 

 

Twelve Months Ended June 30, 2020

 

 

Franchise

 

Company-owned

 

Corporate

 

Consolidated (1)

 

 

 

 

 

 

 

 

 

Consolidated reported net income (loss), as reported (U.S. GAAP)

 

$

32,886

 

$

(96,128

)

 

$

(108,120

)

 

$

(171,362

)

Interest expense, as reported

 

 

 

 

7,522

 

 

7,522

 

Income taxes, as reported

 

 

 

 

(4,619

)

 

(4,619

)

Depreciation and amortization, as reported

 

922

 

29,113

 

 

6,917

 

 

36,952

 

Long-lived asset impairment, as reported

 

1,712

 

20,848

 

 

 

 

22,560

 

EBITDA (as defined above)

 

$

35,520

 

$

(46,167

)

 

$

(98,300

)

 

$

(108,947

)

 

 

 

 

 

 

 

 

 

Employee litigation reserve

 

 

(600

)

 

 

 

(600

)

Marketing impairment

 

 

 

 

1,653

 

 

1,653

 

Professional fees

 

 

 

 

681

 

 

681

 

Severance

 

 

 

 

9,588

 

 

9,588

 

Corporate office transition

 

 

 

 

(1,494

)

 

(1,494

)

TBG restructuring

 

2,333

 

 

 

 

 

2,333

 

Goodwill impairment, as reported

 

 

40,164

 

 

 

 

40,164

 

Goodwill derecognition

 

 

 

 

76,966

 

 

76,966

 

TBG discontinued operations, net of tax

 

 

 

 

(832

)

 

(832

)

Adjusted EBITDA, non-GAAP financial measure

 

$

37,853

 

$

(6,603

)

 

$

(11,738

)

 

$

19,512

 

_______________________________________________________________________________

(1)

Consolidated EBITDA margins for the twelve months ended June 30, 2021, and 2020, were (16.7)% and (16.3)%, respectively, and are calculated as EBITDA (as defined above) divided by U.S. GAAP revenue for each respective period. Consolidated adjusted EBITDA margin for the twelve months ended June 30, 2021, and 2020, were (19.1)% and 2.9%, respectively, and are calculated as consolidated adjusted EBITDA (as defined above) divided by consolidated adjusted revenue for each respective period.

 

REGIS CORPORATION

Reconciliation Of Reported Franchise EBITDA As A Percent Of U.S. GAAP Revenue

To EBITDA As A Percent Of Adjusted Revenue

(Dollars in thousands)

(Unaudited)

 

 

Three Months Ended June 30,

 

 

2021

 

2020

 

 

 

 

 

As Adjusted EBITDA

 

$

11,272

 

 

$

1,406

 

U.S. GAAP revenue

 

73,813

 

 

44,802

 

As Adjusted EBITDA as a % of U.S. GAAP revenue

 

15.3

%

 

3.1

%

Non-margin revenue adjustments:

 

 

 

 

Franchise rental income

 

(31,507

)

 

(30,328

)

Ad fund revenue

 

(7,218

)

 

 

Adjusted revenue

 

$

35,088

 

 

$

14,474

 

As Adjusted EBITDA as a percent of adjusted revenue (1)

 

32.1

%

 

9.7

%

 

Twelve Months Ended June 30,

 

 

2021

 

2020

 

 

 

 

 

As Adjusted EBITDA

 

$

41,024

 

 

$

37,853

 

U.S. GAAP revenue

 

272,148

 

 

253,026

 

As Adjusted EBITDA as a % of U.S. GAAP revenue

 

15.1

%

 

15.0

%

Non-margin revenue adjustments:

 

 

 

 

Franchise rental income

 

(127,392

)

 

(127,203

)

Ad fund revenue

 

(22,023

)

 

(13,341

)

TBG product sales

 

 

 

(2,010

)

Adjusted revenue

 

$

122,733

 

 

$

110,472

 

As Adjusted EBITDA as a percent of adjusted revenue (1)

 

33.4

%

 

34.3

%

_______________________________________________________________________________

(1)

Total is a recalculation; line items calculated individually may not sum to total due to rounding.

 

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