For Immediate Release
REGIS REPORTS IMPROVED SECOND QUARTER 2018 RESULTS
Second Quarter Diluted Earnings Per Share From Continuing Operations of $0.83, Which Includes A One-Time, Non-Cash Benefit Of Recently Passed Federal Tax Reform Legislation; Second Quarter Adjusted Diluted Earnings Per Share Of $0.06 Increased $0.02 Versus Prior Year
Adjusted EBITDA of $18.2 million is $1.0 million, or 6.0% Favorable Year-Over-Year;
Year-To-Date Adjusted EBITDA of $42.1 million Increased $2.2 million, or 5.5% Year-Over-Year
During the Quarter, the Company Executed Upon Two Major Transformative Events -
The Sale and Subsequent Franchising of Substantially All of Its Mall-Based Salons and U.K. Businesses and the Restructuring of its Company-Owned SmartStyle® Portfolio By Committing to Close Approximately 597 Cash Flow Negative Salons
|
| | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | Six Months Ended
December 31, |
| (Dollars in thousands) | | 2017 | | 2016(1) | | 2017 | | 2016(1) |
| Consolidated Revenue | | $308,515 | | $315,249 | | $618,388 | | $634,080 |
| Consolidated Same-Store Sales Comps | | (0.7 | )% | | (2.5 | )% | | (0.2 | )% | | (1.1 | )% |
| | | | | | | | | |
| Net Income From Continuing Operations | | $39,321 | | $982 | | $50,113 | | $6,722 |
| Diluted Earnings per Share From Continuing Operations | | $0.83 | | $0.02 | | $1.07 | | $0.14 |
| EBITDA | | $(16,622) | | $13,299 | | $(20,372) | | $33,592 |
| | | | | | | | | |
| As Adjusted(2) | | | | | | | | |
| Net Income, as Adjusted | | $2,886 | | $1,655 | | $7,598 | | $7,395 |
| Diluted Earnings per Share, as Adjusted | | $0.06 | | $0.04 | | $0.16 | | $0.16 |
| EBITDA, as Adjusted | | $18,198 | | $17,173 | | $42,135 | | $39,925 |
____________________________________
| |
| (1) | Amounts for fiscal year 2017 have been recast to account for mall-based business and International segment as discontinued operations. |
(2) See GAAP to non-GAAP reconciliations, within the attached section titled "Non-GAAP Reconciliations".
MINNEAPOLIS, February 1, 2018 -- Regis Corporation (NYSE: RGS), a leader in the haircare industry, whose primary business is owning, operating and franchising hair salons, today reported second fiscal quarter 2018 net income from continuing operations of $39.3 million, or $0.83 per diluted share as compared to net income from continuing operations of $1.0 million, or $0.02 per diluted share in the second fiscal quarter of 2017. The Company’s reported results include $68.9 million of non-cash, one-time, tax benefits related to the enactment of the Tax Cuts and Jobs Act ("Tax Reform"), partially offset by $37.6 million of one-time
lease termination and other non-recurring costs associated with the recently announced restructuring of the Company's SmartStyle® salon portfolio, and $3.5 million of other discrete costs. Excluding these tax benefits, restructuring charges, discrete items, and the loss from discontinued operations, the Company reported second quarter 2018 as adjusted net income of $2.9 million, or $0.06 earnings per diluted share versus net income of $1.7 million, or $0.04 earnings per diluted share, for the same period last year.
Total revenue in the quarter of $308.5 million decreased $6.7 million, or 2.1%, year-over-year driven primarily by the closure, or re-franchising of 448 salons. Second quarter adjusted EBITDA of $18.2 million was $1.0 million, or 6.0% favorable year-over-year.
On a full year basis, the Company reported net income from continuing operations of $50.1 million, or $1.07 per diluted share as compared to net income from continuing operations of $6.7 million, or $0.14 per diluted share in the prior year. On an adjusted basis, EBITDA of $42.1 million increased $2.2 million, or 5.5% versus the same period last year.
Hugh Sawyer, President and Chief Executive Officer, commented, "Restructuring the non-performing elements of our company-owned salon portfolio in order to focus on the performing core, and the growth of our franchise business, has been a key element of our strategy.” Mr. Sawyer continued, “The second quarter represents an important milestone where we substantially completed the restructuring phase of our strategic transformation and operational turnaround. Moreover, we are pleased to report initial signs of progress in both our quarterly and year-over-year adjusted EBITDA results.”
Sale of Company’s Mall-based Salons and U.K. Business
In October 2017, after a comprehensive process, the Company reached the strategic conclusion to sell, and subsequently franchise, substantially all of its mall-based salon business in North America, representing 858 salons, and substantially all of its International segment, representing approximately 250 salons in the U.K. This transaction clarified the Company's strategy by focusing its company-owned salon portfolio in North America on the value segment. At the same time, this outcome was consistent with the Company's previously stated strategic imperative to accelerate the growth of its franchise portfolio.
Due to this transaction, the Company has classified the results of its mall-based business and its International segment as discontinued operations for all periods presented in the Condensed Consolidated Statement of Operations. Included within discontinued operations are the impairment charges, results of operations, and professional fees associated with the transaction, for the three and six months ended December 31, 2017. The operations of the mall-based business and International segment, which were previously recorded in the North American Value, North American Premium and International reporting segments, have been eliminated from ongoing operations of the Company. The new Company-owned segment is comprised of its SmartStyle®, Supercuts® and Signature Style® concepts.
Restructuring of Company-Owned SmartStyle® Portfolio
In December 2017, the Company committed to close 597 non-performing Company-owned SmartStyle® salons in January 2018. The 597 non-performing salons generated negative cash flow of approximately $15 million during the twelve months ended September 30, 2017. The action delivers on the Company's commitment to restructure its salon portfolio to improve shareholder value and position the Company for long-term growth. The Company anticipates this action will allow the Company to reallocate capital and human resources to strategically grow its remaining SmartStyle® salons with creative new offerings.
As part of the agreement, the Company recorded a net $24.0 million charge to rent expense in the second quarter driven primarily by $27.3 million of one-time lease termination and other related closure costs, partially offset by a $3.3 million reversal of deferred rent for the impacted salons. The Company also committed to return the salons to its pre-occupancy condition, or “modified white boxes”, and recorded $7.5 million in depreciation expense. Additionally, as part of the closures, the Company recorded inventory and fixed asset impairments of $0.6 million and $5.4 million, respectively.
Second Quarter Segment Results
Company-Owned Salons
|
| | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended December 31, | | (Decrease) Increase | | Six Months Ended December 31, | | (Decrease) Increase |
| (Dollars in millions) (1) | 2017 | | 2016(2) | | | 2017 | | 2016(2) | |
| | | | | | | | | | | | |
| Total Revenue | $ | 280.0 |
| | $ | 296.2 |
| | (5.5 | )% | | $ | 568.7 |
| | $ | 595.6 |
| | (4.5 | )% |
Same-Store Sales Comps
| (0.7 | )% | | (2.5 | )% | | 180 bps |
| | (0.2 | )% | | (1.1 | )% | | 90 bps |
|
| Year-over-Year Ticket change | 2.5 | % | | | | | | 3.0 | % | | | | |
| Year-over-Year Traffic change | (3.2 | )% | | | | | | (3.2 | )% | | | | |
| | | | | | | | | | | | |
| Gross Profit, as Adjusted(3) | 117.7 |
| | 116.3 |
| | 1.2 | % | | 242.1 |
| | 239.5 |
| | 1.1 | % |
| as a percent of revenue | 42.0 | % | | 39.2 | % | | 280 bps |
| | 42.6 | % | | 40.2 | % | | 240 bps |
|
| | | | | | | | | | | | |
| EBITDA, as Adjusted | 26.5 |
| | 26.9 |
| | (1.2 | )% | | 59.8 |
| | 59.9 |
| | (0.2 | )% |
| as a percent of revenue | 9.5 | % | | 9.1 | % | | 40 bps |
| | 10.5 | % | | 10.1 | % | | 40 bps |
|
| |
| (1) | Variances calculated on amounts shown in millions may result in rounding differences. |
| |
| (2) | Amounts for fiscal year 2017 have been revised for discontinued operations due to the October sale of the mall-based business and the International segment. |
| |
| (3) | Gross profit, as Adjusted, excludes depreciation and amortization. |
Second quarter revenue for the Company-owned salon segment decreased 5.5% versus the prior year to $280.0 million. The year-over-year decline in revenue was driven by the closure of unprofitable salons, the refranchising of salons, and a decrease in same-store sales of 0.7% partially offset by increase in average ticket and a favorable foreign currency impact in the Company’s Canadian business.
Second quarter adjusted EBITDA of $26.5 million declined $0.3 million, or 1.2% versus the same period last year driven primarily by same-store sales declines and investments in a strategic digital marketing campaign, partially offset by the closing of unprofitable salons, benefits from the Company's strategic initiative plan, and a one-time benefit related to the discontinuance of a limited loyalty program test.
Franchise Operations
|
| | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended December 31, | | Increase (Decrease) | | Six Months Ended December 31, | | Increase (Decrease) |
| (Dollars in millions) (1) | 2017 | | 2016(2) | | | 2017 | | 2016(2) | |
| | | | | | | | | | | | |
| Total Revenue | $ | 28.6 |
| | $ | 19.0 |
| | 50.2 | % | | $ | 49.6 |
| | $ | 38.4 |
| | 29.2 | % |
| | | | | | | | | | | | |
| EBITDA, as Adjusted | 9.8 |
| | 8.2 |
| | 19.5 | % | | 19.6 |
| | 16.7 |
| | 17.2 | % |
| as a percent of revenue | 34.3 | % | | 43.1 | % | | (880) bps |
| | 39.4 | % | | 43.5 | % | | (410) bps |
|
| |
| (1) | Variances calculated on amounts shown in millions may result in rounding differences. |
| |
| (2) | Amounts for fiscal year 2017 have been revised for discontinued operations due to the October sale of the mall-based business and the International segment. |
Second quarter Franchise revenue was $28.6 million, a $9.5 million, or 50.2%, increase compared to the prior year quarter. Royalties and fees were $13.5 million, a $2.1 million, or 18.2% increase versus the same period last year. Royalties increased 9.9% driven primarily by positive same-store revenue and increased franchise salon counts. Initial franchise fees increased $1.2 million as the Company opened, or converted, a net 108 franchised locations in the quarter as compared to 41 in the prior year quarter. Franchise adjusted EBITDA of $9.8 million improved $1.6 million, or 19.5% year-over-year.
Other Company Updates
Consolidated Year-Over-Year General & Administrative ("G&A") Comparability
The Company announced during the first fiscal quarter a realignment of its field leadership team by brand. An outcome of this reorganization is that the costs associated with senior district leaders have been moved out of cost of goods sold and site operating expense, where the expense has historically been recorded, and into G&A. The Company notes that this change does not impact the overall consolidated results but does result in an $8.9 million decrease in cost of goods sold and site expense, and a corresponding $8.9 million increase to G&A this quarter, when compared to the comparable period last year. On a year-to-date basis, this reclassification of expenses decreased cost of goods sold and site expense, and had a corresponding increase to G&A, of $15.1 million versus the same period last year.
Transformational Strategy Update
The Company continued to make progress implementing its transformational strategy and operational turnaround initiatives focused on improving the performance of company-owned salons, while at the same time accelerating the growth of its franchise portfolio. During the quarter, the Company:
| |
| • | Closed on a transaction to sell, and subsequently franchise, substantially all of its mall-based salon business in North America and substantially all of its International segment. This transaction moved approximately 1,100 salons from the company-owned segment to the franchise segment. |
| |
| • | Committed to closing 597 non-performing, cash flow negative Company-owned SmartStyle® salons in January 2018. |
| |
| • | Executed a number of operational initiatives, building on its previously discussed 120-day plan, to help stabilize performance and establish a platform for longer-term revenue and earnings growth in Company-owned salons. The Company estimates the initiatives delivered benefit in a range of $7.0 million to $9.0 million in the second quarter of fiscal 2018. |
| |
| • | Initiated a review of non-core, non-essential, G&A costs associated with the Company’s field and corporate restructuring efforts. |
| |
| • | Announced its industry-exclusive agreement with LSMx, a Buxton local store marketing application. Buxton is a leading customer analytics provider for over 4,000 retailers. The Company currently |
intends to use LSMx, and its advanced customer data insights, to drive hyper-local, targeted marketing for its corporate and franchise salons.
| |
| • | Entered into an industry-exclusive, multi-year sponsorship with Major League Baseball ("MLB") for the Supercuts® brand. The Supercuts® sponsorship will be implemented throughout MLB’s core marketing platforms including broadcast, digital, mobile and social. |
| |
| • | Greatly reduced the complexity of the service offerings in its SmartSyle® portfolio with the introduction of “Everyday Simple Pricing” while also introducing a new “Express Haircut” service targeted toward male guests who shop at Walmart®. |
Tax Update
As a result of the recently enacted Tax Reform, the Company recognized a one-time, non-cash, tax benefit of $68.9 million in the quarter related to impacts on its deferred tax assets and liabilities. The reduction in U.S. Federal corporate income tax rates, and a change in the net operating loss rules, were the primary drivers of this benefit.
Non-GAAP reconciliations:
For GAAP to non-GAAP reconciliations, please refer to attached section titled "Non-GAAP Reconciliations". A complete reconciliation of reported earnings to adjusted earnings is included in this press release and is available on the Company’s website at www.regiscorp.com.
Earnings Webcast
Regis Corporation will host a conference call via webcast discussing second quarter results today, February 1, 2018, at 9 a.m., Central time. Interested parties are invited to participate in the live webcast by logging on to www.regiscorp.com or participate via telephone by dialing (800) 239-9838 and entering access code 6862837. A replay of the presentation will be available later that day. The replay phone number is (888) 203-1112, access code 6862837.
About Regis Corporation
Regis Corporation (NYSE:RGS) is a leader in beauty salons and cosmetology education. As of December 31, 2017, the Company owned, franchised or held ownership interests in 8,883 worldwide locations. Regis’ corporate and franchised locations operate under concepts such as Supercuts®, SmartStyle®, MasterCuts®, Regis Salons®, Sassoon®, 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. To join Regis Corporation’s email alert list, click on this link:
http://www.b2i.us/irpass.asp?BzID=913&to=ea&Nav=1&S=0&L=1
CONTACT: REGIS CORPORATION:
Paul Dunn
VP, Finance and Investor Relations, 952-947-7915
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 the continued ability of the Company to implement its strategy, priorities and initiatives; our ability to attract, train and retain talented stylists; financial performance of our franchisees; acceleration of sale of certain salons to franchisees; the ability of the Company to maintain a satisfactory relationship with Walmart; the success of The Beautiful Group, our largest franchisee; marketing efforts to drive traffic; changes in regulatory and statutory laws including increases in minimum wages; our ability to manage cyber threats and protect the security of sensitive information about our guests, employees, vendors or Company information; reliance on information technology systems; reliance on external vendors; competition within the personal hair care industry; changes in tax exposure; changes in healthcare; changes in interest rates and foreign currency exchange rates; failure to standardize operating processes across brands; consumer shopping trends and changes in manufacturer distribution channels; financial performance of Empire Education Group; the continued ability of the Company to implement cost reduction initiatives; compliance with debt covenants; changes in economic conditions; changes in consumer tastes and fashion trends; exposure to uninsured or unidentified risks; ability to attract and retain key management personnel; reliance on our management team and other key personnel or other factors not listed above. Additional information concerning potential factors that could affect future financial results is set forth in the Company’s Annual Report on Form 10-K for the year ended June 30, 2017. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.
REGIS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(Dollars in thousands, except share data)
|
| | | | | | | | |
| | | December 31, 2017 | | June 30, 2017 |
| ASSETS | | |
| | |
|
| Current assets: | | |
| | |
|
| Cash and cash equivalents | | $ | 163,300 |
| | $ | 171,044 |
|
| Receivables, net | | 31,895 |
| | 19,683 |
|
| Inventories | | 87,347 |
| | 98,392 |
|
| Other current assets | | 47,814 |
| | 48,114 |
|
| Current assets held for sale | | — |
| | 32,914 |
|
| Total current assets | | 330,356 |
| | 370,147 |
|
| | | | | |
| Property and equipment, net | | 109,448 |
| | 123,281 |
|
| Goodwill | | 417,709 |
| | 416,987 |
|
| Other intangibles, net | | 11,416 |
| | 11,965 |
|
| Other assets | | 52,958 |
| | 61,756 |
|
| Noncurrent assets held for sale | | — |
| | 27,352 |
|
| Total assets | | $ | 921,887 |
| | $ | 1,011,488 |
|
| | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | |
| | |
|
| Current liabilities: | | |
| | |
|
| Accounts payable | | $ | 52,738 |
| | $ | 54,501 |
|
| Accrued expenses | | 107,198 |
| | 110,435 |
|
| Current liabilities related to assets held for sale | | — |
| | 13,126 |
|
| Total current liabilities | | 159,936 |
| | 178,062 |
|
| | | | | |
| Long-term debt, net | | 121,096 |
| | 120,599 |
|
| Other noncurrent liabilities | | 112,284 |
| | 197,374 |
|
| Noncurrent liabilities related to assets held for sale | | — |
| | 7,232 |
|
| Total liabilities | | 393,316 |
| | 503,267 |
|
| Commitments and contingencies | |
|
| |
|
|
| Shareholders’ equity: | | |
| | |
|
| Common stock, $0.05 par value; issued and outstanding 46,688,423 and 46,400,367 common shares at December 31, 2017 and June 30, 2017, respectively | | 2,335 |
| | 2,320 |
|
| Additional paid-in capital | | 216,301 |
| | 214,109 |
|
| Accumulated other comprehensive income | | 11,789 |
| | 3,336 |
|
| Retained earnings | | 298,146 |
| | 288,456 |
|
| | | | | |
| Total shareholders’ equity | | 528,571 |
| | 508,221 |
|
| | | | | |
| Total liabilities and shareholders’ equity | | $ | 921,887 |
| | $ | 1,011,488 |
|
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REGIS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
For The Three and Six Months Ended December 31, 2017 and 2016
(Dollars and shares in thousands, except per share data amounts)
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, | | Six Months Ended December 31, |
| | | 2017 | | 2016 | | 2017 | | 2016 |
| Revenues: | | | | | | | | |
| Service | | $ | 223,214 |
| | $ | 235,609 |
| | $ | 458,773 |
| | $ | 478,700 |
|
| Product | | 71,816 |
| | 68,229 |
| | 132,756 |
| | 131,945 |
|
| Royalties and fees | | 13,485 |
| | 11,411 |
| | 26,859 |
| | 23,435 |
|
| | | 308,515 |
| | 315,249 |
| | 618,388 |
| | 634,080 |
|
| Operating expenses: | | | | | | | | |
| Cost of service | | 134,850 |
| | 151,193 |
| | 274,686 |
| | 301,990 |
|
| Cost of product | | 39,864 |
| | 34,584 |
| | 70,026 |
| | 65,399 |
|
| Site operating expenses | | 32,119 |
| | 32,638 |
| | 65,422 |
| | 65,283 |
|
| General and administrative | | 48,592 |
| | 36,695 |
| | 83,758 |
| | 72,611 |
|
| Rent | | 65,473 |
| | 45,091 |
| | 107,889 |
| | 91,324 |
|
| Depreciation and amortization | | 24,951 |
| | 12,646 |
| | 37,206 |
| | 24,755 |
|
| Total operating expenses | | 345,849 |
| | 312,847 |
| | 638,987 |
| | 621,362 |
|
| | | | | | | | | |
| Operating (loss) income | | (37,334 | ) | | 2,402 |
| | (20,599 | ) | | 12,718 |
|
| | | | | | | | | |
| Other (expense) income: | | | | | | | | |
| Interest expense | | (2,169 | ) | | (2,153 | ) | | (4,307 | ) | | (4,316 | ) |
| Interest income and other, net | | 2,362 |
| | 1,452 |
| | 3,389 |
| | 1,779 |
|
| | | | | | | | | |
| (Loss) income from continuing operations before income taxes | | (37,141 | ) | | 1,701 |
| | (21,517 | ) | | 10,181 |
|
| | | | | | | | | |
| Income tax benefit (expense) | | 76,462 |
| | (719 | ) | | 71,630 |
| | (3,459 | ) |
| | | | | | | | | |
| Income from continuing operations | | 39,321 |
| | 982 |
| | 50,113 |
| | 6,722 |
|
| | | | | | | | | |
| Loss from discontinued operations, net of taxes | | (6,601 | ) | | (3,201 | ) | | (40,368 | ) | | (5,660 | ) |
| | | | | | | | | |
| Net income (loss) | | $ | 32,720 |
| | $ | (2,219 | ) | | $ | 9,745 |
| | $ | 1,062 |
|
| | | | | | | | | |
| Net income (loss) per share: | | | | | | | | |
| Basic: | | | | | | | | |
| Income from continuing operations | | $ | 0.84 |
| | $ | 0.02 |
| | $ | 1.07 |
| | $ | 0.15 |
|
| Loss from discontinued operations | | (0.14 | ) | | (0.07 | ) | | (0.86 | ) | | (0.12 | ) |
| Net income (loss) per share, basic (1) | | $ | 0.70 |
| | $ | (0.05 | ) | | $ | 0.21 |
| | $ | 0.02 |
|
| Diluted: | | | | | | | | |
| Income from continuing operations | | $ | 0.83 |
| | $ | 0.02 |
| | $ | 1.07 |
| | $ | 0.14 |
|
| Loss from discontinued operations | | (0.14 | ) | | (0.07 | ) | | (0.86 | ) | | (0.12 | ) |
| Net income (loss) per share, diluted (1) | | $ | 0.69 |
| | $ | (0.05 | ) | | $ | 0.21 |
| | $ | 0.02 |
|
| | | | | | | | | |
| Weighted average common and common equivalent shares outstanding: | | | | | | | | |
| Basic | | 46,821 |
| | 46,327 |
| | 46,719 |
| | 46,277 |
|
| Diluted | | 47,314 |
| | 46,774 |
| | 47,053 |
| | 46,751 |
|
_______________________________________________________________________________
| |
| (1) | Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
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REGIS CORPORATION (NYSE: RGS)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(Dollars in thousands)
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, | | Six Months Ended December 31, |
| | | 2017 | | 2016 | | 2017 | | 2016 |
| Net income (loss) | | $ | 32,720 |
| | $ | (2,219 | ) | | $ | 9,745 |
| | $ | 1,062 |
|
| Foreign currency translation adjustments | | (381 | ) | | (2,322 | ) | | 2,301 |
| | (4,838 | ) |
| Reclassification adjustments for losses included in net income (loss) | | 6,152 |
| | — |
| | 6,152 |
| | — |
|
| Comprehensive income (loss) | | $ | 38,491 |
| | $ | (4,541 | ) | | $ | 18,198 |
| | $ | (3,776 | ) |
– more –
REGIS CORPORATION (NYSE: RGS)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)
(Dollars in thousands)
|
| | | | | | | | |
| | | Six Months Ended December 31, |
| | | 2017 | | 2016 |
| Cash flows from operating activities: | | |
| | |
|
| Net income | | $ | 9,745 |
| | $ | 1,062 |
|
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | | | | |
|
| Non-cash impairment related to discontinued operations | | 25,095 |
| | — |
|
| Depreciation and amortization | | 20,492 |
| | 20,369 |
|
| Depreciation related to discontinued operations | | 3,038 |
| | 7,220 |
|
| Deferred income taxes | | (77,055 | ) | | 3,297 |
|
| Gain on life insurance | | (7,986 | ) | | — |
|
| Gain from sale of salon assets to franchisees, net(1) | | (18 | ) | | (121 | ) |
| Salon asset impairments | | 16,714 |
| | 4,386 |
|
| Accumulated other comprehensive income reclassification adjustments | | 6,152 |
| | — |
|
| Stock-based compensation | | 4,618 |
| | 4,400 |
|
| Amortization of debt discount and financing costs | | 703 |
| | 703 |
|
| Other non-cash items affecting earnings | | (104 | ) | | 64 |
|
| Changes in operating assets and liabilities, excluding the effects of asset sales | | (13,647 | ) | | (13,775 | ) |
| Net cash (used in) provided by operating activities | | (12,253 | ) | | 27,605 |
|
| | | | | |
| Cash flows from investing activities: | | | | |
|
| Capital expenditures | | (13,773 | ) | | (15,510 | ) |
| Capital expenditures related to discontinued operations | | (1,171 | ) | | (2,893 | ) |
| Proceeds from sale of assets to franchisees(1) | | 2,696 |
| | 335 |
|
| Change in restricted cash | | (542 | ) | | 738 |
|
| Proceeds from company-owned life insurance policies | | 18,108 |
| | — |
|
| Net cash provided by (used in) investing activities | | 5,318 |
| | (17,330 | ) |
| | | | | |
| Cash flows from financing activities: | | | | |
|
| Taxes paid for shares withheld | | (2,039 | ) | | (1,113 | ) |
| Cash settlement of equity awards | | (375 | ) | | — |
|
| Net cash used in financing activities | | (2,414 | ) | | (1,113 | ) |
| | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | 253 |
| | (866 | ) |
| | | | | |
| (Decrease) increase in cash and cash equivalents | | (9,096 | ) | | 8,296 |
|
| | | | | |
| Cash and cash equivalents: | | | | |
|
| Beginning of period | | 171,044 |
| | 147,346 |
|
| Cash and cash equivalents included in current assets held for sale | | 1,352 |
| | — |
|
| Beginning of period, total cash and cash equivalents | | 172,396 |
| | 147,346 |
|
| End of period | | $ | 163,300 |
| | $ | 155,642 |
|
_____________________________
(1) Excludes transaction with The Beautiful Group.
– more –
SAME-STORE SALES (1):
|
| | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended |
| | | December 31, 2017 | | December 31, 2016 |
| | | Service | | Retail | | Total | | Service | | Retail | | Total |
| SmartStyle | | (2.5 | ) | | 0.5 |
| | (1.5 | ) | | (1.5 | ) | | (3.8 | ) | | (2.3 | ) |
| Supercuts | | 2.1 |
| | (4.8 | ) | | 1.4 |
| | (0.4 | ) | | (7.1 | ) | | (1.1 | ) |
| Signature Style | | (1.0 | ) | | (3.4 | ) | | (1.3 | ) | | (3.3 | ) | | (6.3 | ) | | (3.7 | ) |
| Consolidated | | (0.7 | )% | | (0.8 | )% | | (0.7 | )% | | (1.9 | )% | | (4.7 | )% | | (2.5 | )% |
| | | | | | | | | | | | | |
| | | For the Six Months Ended |
| | | December 31, 2017 | | December 31, 2016 |
| | | Service | | Retail | | Total | | Service | | Retail | | Total |
| SmartStyle | | (0.8 | ) | | 0.4 |
| | (0.5 | ) | | (0.5 | ) | | (2.3 | ) | | (1.1 | ) |
| Supercuts | | 2.3 |
| | (5.3 | ) | | 1.6 |
| | 0.4 |
| | (4.2 | ) | | — |
|
| Signature Style | | (0.6 | ) | | (4.4 | ) | | (1.1 | ) | | (1.8 | ) | | (2.8 | ) | | (1.9 | ) |
| Consolidated | | 0.1 | % | | (1.2 | )% | | (0.2 | )% | | (0.7 | )% | | (2.6 | )% | | (1.1 | )% |
____________________________________
(1) Same-store sales are calculated on a daily basis as the total change in sales for 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 same-store sales are the sum of the same-store sales computed on a daily basis. Locations relocated within a one-mile radius are included in same-store sales as they are considered to have been open in the prior period. Same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.
– more –
REGIS CORPORATION (NYSE: RGS)
System-wide location counts
|
| | | | | | |
| | December 31, 2017 | | June 30, 2017 |
| COMPANY-OWNED SALONS: | | | | |
| | | | | |
| SmartStyle/Cost Cutters in Walmart Stores (1) | | 2,497 |
| | 2,652 |
|
| Supercuts | | 954 |
| | 980 |
|
| Signature Style | | 1,414 |
| | 1,468 |
|
| Mall locations (Regis and MasterCuts) | | — |
| | 898 |
|
| Total North American Salons | | 4,865 |
| | 5,998 |
|
| Total International Salons (2) | | — |
| | 275 |
|
| Total Company-owned Salons | | 4,865 |
| | 6,273 |
|
| as a percent of total Company-owned and Franchise salons | | 55.3 | % | | 70.3 | % |
| | | | | |
| FRANCHISE SALONS: | | | | |
| | | | | |
| SmartStyle in Walmart Stores | | 210 |
| | 62 |
|
| Cost Cutters in Walmart Stores | | 116 |
| | 114 |
|
| Supercuts | | 1,730 |
| | 1,687 |
|
| Signature Style | | 754 |
| | 770 |
|
| Total non-mall franchise locations | | 2,810 |
| | 2,633 |
|
| Mall franchise locations (Regis and MasterCuts) | | 849 |
| | — |
|
| Total North American Salons | | 3,659 |
| | 2,633 |
|
| Total International Salons (2) | | 270 |
| | 13 |
|
| Total Franchise Salons | | 3,929 |
| | 2,646 |
|
| as a percent of total Company-owned and Franchise salons | | 44.7 | % | | 29.7 | % |
| | | | | |
| OWNERSHIP INTEREST LOCATIONS: | | | | |
| | | | | |
| Equity ownership interest locations | | 89 |
| | 89 |
|
| | | | | |
| Grand Total, System-wide | | 8,883 |
| | 9,008 |
|
____________________________________
| |
| (1) | In January 2018, the Company closed 597 non-performing Company-owned SmartStyle salons. |
| |
| (2) | Canadian and Puerto Rican salons are included in the North American salon totals. |
– more –
Non-GAAP Reconciliations
We believe our presentation of non-GAAP operating income, net income, net income 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 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 in that 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 both our financial statements prepared in accordance with U.S. GAAP and the reconciliation of the selected U.S. GAAP to non-GAAP financial measures, which are located in the Investor Information section of the corporate website at www.regiscorp.com.
Non-GAAP reconciling items for the three and six months ended December 31, 2017 and 2016:
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 which 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:
| |
| • | SmartStyle restructuring costs. |
| |
| • | Severance expense for former executive officers. |
| |
| • | Executive transition costs. |
| |
| • | Gain on life insurance proceeds. |
| |
| • | Discontinued operations. |
– more –
REGIS CORPORATION
Reconciliation of selected U.S. GAAP to non-GAAP financial measures
(Dollars in thousands, except per share data)
(unaudited)
|
| | | | | | | | | | | | | | | | | | |
| Reconciliation of U.S. GAAP operating (loss) income and net income (loss) to equivalent non-GAAP measures |
| | | | | Three Months Ended
December 31, | | Six Months Ended
December 31, |
| | | U.S. GAAP financial line item | | 2017 | | 2016 | | 2017 | | 2016 |
| U.S. GAAP revenue | | | | $ | 308,515 |
| | $ | 315,249 |
| | $ | 618,388 |
| | $ | 634,080 |
|
| | | | | | | | | | | |
| U.S. GAAP operating (loss) income | | | | $ | (37,334 | ) | | $ | 2,402 |
| | $ | (20,599 | ) | | $ | 12,718 |
|
| | | | | | | | | | | |
| Non-GAAP operating adjustments (1) | | | | | | | | | | |
| SmartStyle restructuring costs | | Cost of product | | 585 |
| | — |
| | 585 |
| | — |
|
| Severance | | General and administrative | | 2,295 |
| | — |
| | 2,828 |
| | — |
|
| Professional fees | | General and administrative | | 806 |
| | 673 |
| | 1,636 |
| | 673 |
|
| Executive transition costs | | General and administrative | | 146 |
| | — |
| | 418 |
| | — |
|
| SmartStyle restructuring costs | | General and administrative | | 117 |
| | — |
| | 117 |
| | — |
|
| Gain on life insurance proceeds | | General and administrative | | — |
| | — |
| | (7,986 | ) | | — |
|
| SmartStyle restructuring costs, net | | Rent | | 23,999 |
| | — |
| | 23,999 |
| | — |
|
| SmartStyle restructuring costs | | Depreciation and amortization | | 12,880 |
| | — |
| | 12,880 |
| | — |
|
| Non-GAAP operating adjustments | | | | 40,828 |
| | 673 |
| | 34,477 |
| | 673 |
|
| Non-GAAP operating income (1) | | | | $ | 3,494 |
| | $ | 3,075 |
| | $ | 13,878 |
| | $ | 13,391 |
|
| | | | | | | | | | | |
| U.S. GAAP net income (loss) | | | | $ | 32,720 |
| | $ | (2,219 | ) | | $ | 9,745 |
| | $ | 1,062 |
|
| | | | | | | | | | | |
| Non-GAAP net (loss) income adjustments: | | | | | | | | | | |
| Non-GAAP operating adjustments | | | | 40,828 |
| | 673 |
| | 34,477 |
| | 673 |
|
| Goodwill derecognition | | Interest income and other, net | | 271 |
| | — |
| | 542 |
| | — |
|
| Tax impact of non-GAAP adjustments (2) | | Income taxes | | (8,631 | ) | | — |
| | (8,631 | ) | | — |
|
| Impact of tax reform | | Income taxes | | (68,903 | ) | | — |
| | (68,903 | ) | | — |
|
| Discontinued operations | | Loss from discontinued operations, net of tax | | 6,601 |
| | 3,201 |
| | 40,368 |
| | 5,660 |
|
| Total non-GAAP net income adjustments | | | | (29,834 | ) | | 3,874 |
| | (2,147 | ) | | 6,333 |
|
| Non-GAAP net income | | | | $ | 2,886 |
| | $ | 1,655 |
| | $ | 7,598 |
| | $ | 7,395 |
|
____________________________________
Notes:
| |
| (1) | Adjusted operating margins for the three months ended December 31, 2017, and 2016, were 1.1% and 1.0%, respectively, and were 2.2% and 2.1% for the six months ended December 31, 2017, and 2016, respectively, and are calculated as non-GAAP operating income divided by U.S. 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 21% for the three months ended December 31, 2017, for all non-GAAP operating expense adjustments. Non-GAAP operating expense adjustments recognized during the first quarter of fiscal year 2018 were not tax effected as a result of the valuation allowance. As a result of the valuation allowance, non-GAAP adjustments were not tax effected for the three and six months ended December 31, 2016. |
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REGIS CORPORATION
Reconciliation of selected U.S. GAAP to non-GAAP financial measures
(Dollars in thousands, except per share data)
(Unaudited)
|
| | | | | | | | | | | | | | | | |
| Reconciliation of U.S. GAAP net income (loss) per diluted share to non-GAAP net income per diluted share |
| | Three Months Ended
December 31, | | Six Months Ended
December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| U.S. GAAP net income (loss) per diluted share | | $ | 0.692 |
| | $ | (0.047 | ) | | $ | 0.207 |
| | $ | 0.023 |
|
| SmartStyle restructuring costs, net (1) | | 0.628 |
| | — |
| | 0.631 |
| | — |
|
| Severance (1) | | 0.038 |
| | — |
| | 0.050 |
| | — |
|
| Professional fees (1) | | 0.013 |
| | 0.014 |
| | 0.031 |
| | 0.014 |
|
| Executive transition costs (1) | | 0.002 |
| | — |
| | 0.008 |
| | — |
|
| Gain on life insurance proceeds (1) | | — |
| | — |
| | (0.170 | ) | | — |
|
| Goodwill derecognition (1) | | 0.005 |
| | — |
| | 0.010 |
| | — |
|
| Impact of tax reform | | (1.456 | ) | | — |
| | (1.464 | ) | | — |
|
| Discontinued operations, net of tax | | 0.140 |
| | 0.068 |
| | 0.858 |
| | 0.121 |
|
| Non-GAAP net income per diluted share (2) | | $ | 0.061 |
| | $ | 0.035 |
| | $ | 0.161 |
| | $ | 0.158 |
|
| | | | | | | | | |
| U.S. GAAP Weighted average shares - basic | | 46,821 |
| | 46,327 |
| | 46,719 |
| | 46,277 |
|
| U.S. GAAP Weighted average shares - diluted | | 47,314 |
| | 46,774 |
| | 47,053 |
| | 46,751 |
|
____________________________________
Notes:
| |
(1) | Based on projected statutory effective tax rate analyses, the non-GAAP tax provision was calculated to be approximately 21% for the three months ended December 31, 2017, for all non-GAAP operating expense adjustments. Non-GAAP operating expense adjustments recognized during the first quarter of fiscal year 2018 were not tax effected as a result of the valuation allowance. As a result of the valuation allowance, non-GAAP adjustments were not tax effected for the three and six months ended December 31, 2016. |
| |
| (2) | Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
REGIS CORPORATION
Summary of Pre-Tax, Income Taxes and Net Income Impact for Q2 FY18 Discrete Items
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | |
| | Pre-Tax | | Income Taxes | | Net Income |
| SmartStyle restructuring costs | $ | 37,581 |
| | $ | (7,891 | ) | | $ | 29,690 |
|
| Severance | 2,295 |
| | (483 | ) | | 1,812 |
|
| Professional fees | 806 |
| | (169 | ) | | 637 |
|
| Executive transition costs | 146 |
| | (31 | ) | | 115 |
|
| Goodwill derecognition | 271 |
| | (57 | ) | | 214 |
|
| Impact of tax reform | — |
| | (68,903 | ) | | (68,903 | ) |
| | $ | 41,099 |
| | $ | (77,534 | ) | | $ | (36,435 | ) |
| | | | | | |
| Discontinued operations, net of tax | $ | — |
| | $ | — |
| | $ | 6,601 |
|
| | | | | | |
| Total | $ | 41,099 |
| | $ | (77,534 | ) | | $ | (29,834 | ) |
– more –
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 six months ended December 31, 2017 and 2016, 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, impact of tax reform and the SmartStyle restructuring costs included within depreciation and amortization 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 December 31, 2017 |
| | | Company-owned | | Franchise | | Corporate | | Consolidated |
| Consolidated reported net income (loss), as reported (U.S. GAAP) | | $ | (20,211 | ) | | $ | 9,703 |
| | $ | 43,228 |
| | $ | 32,720 |
|
| Interest expense, as reported | | — |
| | — |
| | 2,169 |
| | 2,169 |
|
| Income taxes, as reported | | — |
| | — |
| | (76,462 | ) | | (76,462 | ) |
| Depreciation and amortization, as reported | | 22,054 |
| | 91 |
| | 2,806 |
| | 24,951 |
|
| EBITDA (as defined above) | | $ | 1,843 |
| | $ | 9,794 |
| | $ | (28,259 | ) | | $ | (16,622 | ) |
| | | | | | | | | |
| SmartStyle restructuring costs, net | | 24,686 |
| | — |
| | 15 |
| | 24,701 |
|
| Severance | | — |
| | — |
| | 2,295 |
| | 2,295 |
|
| Professional fees | | — |
| | — |
| | 806 |
| | 806 |
|
| Executive transition costs | | — |
| | — |
| | 146 |
| | 146 |
|
| Goodwill derecognition | | — |
| | — |
| | 271 |
| | 271 |
|
| Discontinued operations, net of tax | | — |
| | — |
| | 6,601 |
| | 6,601 |
|
| Adjusted EBITDA, non-GAAP financial measure | | $ | 26,529 |
| | $ | 9,794 |
| | $ | (18,125 | ) | | $ | 18,198 |
|
| | | | | | | | | |
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, 2016 |
| | | Company-owned | | Franchise | | Corporate | | Consolidated |
| Consolidated reported net income (loss), as reported (U.S. GAAP) | | $ | 16,658 |
| | $ | 8,105 |
| | $ | (26,982 | ) | | $ | (2,219 | ) |
| Interest expense, as reported | | — |
| | — |
| | 2,153 |
| | 2,153 |
|
| Income taxes, as reported | | — |
| | — |
| | 719 |
| | 719 |
|
| Depreciation and amortization, as reported | | 10,203 |
| | 89 |
| | 2,354 |
| | 12,646 |
|
| EBITDA (as defined above) | | $ | 26,861 |
| | $ | 8,194 |
| | $ | (21,756 | ) | | $ | 13,299 |
|
| | | | | | | | | |
| Professional fees | | — |
| | — |
| | 673 |
| | 673 |
|
Discontinued operations, net of tax
| | — |
| | — |
| | 3,201 |
| | 3,201 |
|
| Adjusted EBITDA, non-GAAP financial measure | | $ | 26,861 |
| | $ | 8,194 |
| | $ | (17,882 | ) | | $ | 17,173 |
|
| | | | | | | | | |
– more –
|
| | | | | | | | | | | | | | | | |
| | | Six Months Ended December 31, 2017 |
| | | Company-owned | | Franchise | | Corporate | | Consolidated |
| Consolidated reported net income (loss), as reported (U.S. GAAP) | | $ | 3,139 |
| | $ | 19,399 |
| | $ | (12,793 | ) | | $ | 9,745 |
|
| Interest expense, as reported | | — |
| | — |
| | 4,307 |
| | 4,307 |
|
| Income taxes, as reported | | — |
| | — |
| | (71,630 | ) | | (71,630 | ) |
| Depreciation and amortization, as reported | | 31,948 |
| | 183 |
| | 5,075 |
| | 37,206 |
|
| EBITDA (as defined above) | | $ | 35,087 |
| | $ | 19,582 |
| | $ | (75,041 | ) | | $ | (20,372 | ) |
| | | | | | | | | |
| SmartStyle restructuring costs, net | | 24,686 |
| | — |
| | 15 |
| | 24,701 |
|
| Severance | | — |
| | — |
| | 2,828 |
| | 2,828 |
|
| Professional fees | | — |
| | — |
| | 1,636 |
| | 1,636 |
|
| Executive transition costs | | — |
| | — |
| | 418 |
| | 418 |
|
| Gain on life insurance proceeds | | — |
| | — |
| | (7,986 | ) | | (7,986 | ) |
| Goodwill derecognition | | — |
| | — |
| | 542 |
| | 542 |
|
| Discontinued operations, net of tax | | — |
| | — |
| | 40,368 |
| | 40,368 |
|
| Adjusted EBITDA, non-GAAP financial measure | | $ | 59,773 |
| | $ | 19,582 |
| | $ | (37,220 | ) | | $ | 42,135 |
|
| | | | | | | | | |
|
| | | | | | | | | | | | | | | | |
| | | Six Months Ended December 31, 2016 |
| | | Company-owned | | Franchise | | Corporate | | Consolidated |
| Consolidated reported net income (loss), as reported (U.S. GAAP) | | $ | 40,124 |
| | $ | 16,535 |
| | $ | (55,597 | ) | | $ | 1,062 |
|
| Interest expense, as reported | | — |
| | — |
| | 4,316 |
| | 4,316 |
|
| Income taxes, as reported | | — |
| | — |
| | 3,459 |
| | 3,459 |
|
| Depreciation and amortization, as reported | | 19,798 |
| | 179 |
| | 4,778 |
| | 24,755 |
|
| EBITDA (as defined above) | | $ | 59,922 |
| | $ | 16,714 |
| | $ | (43,044 | ) | | $ | 33,592 |
|
| | | | | | | | | |
| Professional fees | | — |
| | — |
| | 673 |
| | 673 |
|
| Discontinued operations, net of tax | | — |
| | — |
| | 5,660 |
| | 5,660 |
|
| Adjusted EBITDA, non-GAAP financial measure | | $ | 59,922 |
| | $ | 16,714 |
| | $ | (36,711 | ) | | $ | 39,925 |
|
| | | | | | | | | |
– more –
REGIS CORPORATION
Reconciliation by reportable segment of reported U.S. GAAP gross profit (excluding depreciation and amortization) to adjusted gross profit (excluding depreciation and amortization), a non-GAAP financial measure
(Dollars in thousands)
(Unaudited)
Gross profit
The Company defines gross profit as service and product revenues less cost of service and cost of product, excluding depreciation and amortization. Non-GAAP gross profit is gross profit, as defined by the Company, adjusted for items impacting comparability for each respective period.
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, 2017 |
| | | Company-owned | | Franchise | | Corporate | | Consolidated |
| Revenues: | | | | | | | | |
| Service | | $ | 223,214 |
| | $ | — |
| | $ | — |
| | $ | 223,214 |
|
| Product | | 56,748 |
| | 15,068 |
| | — |
| | 71,816 |
|
| | | 279,962 |
| | 15,068 |
| | — |
| | 295,030 |
|
| | | | | | | | | |
| Cost of service | | 134,850 |
| | — |
| | — |
| | 134,850 |
|
| Cost of product | | 28,044 |
| | 11,820 |
| | — |
| | 39,864 |
|
| | | 162,894 |
| | 11,820 |
| | — |
| | 174,714 |
|
| | | | | | | | | |
| U.S. GAAP gross profit(1) | | $ | 117,068 |
| | $ | 3,248 |
| | $ | — |
| | $ | 120,316 |
|
| | | | | | | | | |
| Non-GAAP gross profit adjustments: | | | | | | | | |
| SmartStyle restructuring costs | | 585 |
| | — |
| | — |
| | 585 |
|
| Non-GAAP gross profit(1) | | $ | 117,653 |
| | $ | 3,248 |
| | $ | — |
| | $ | 120,901 |
|
____________________________________
(1) Gross profit excludes depreciation and amortization.
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, 2016 |
| | | Company-owned | | Franchise | | Corporate | | Consolidated |
| Revenues: | | | | | | | | |
| Service | | $ | 235,609 |
| | $ | — |
| | $ | — |
| | $ | 235,609 |
|
| Product | | 60,636 |
| | 7,593 |
| | — |
| | 68,229 |
|
| | | 296,245 |
| | 7,593 |
| | — |
| | 303,838 |
|
| | | | | | | | | |
| Cost of service | | 151,193 |
| | — |
| | — |
| | 151,193 |
|
| Cost of product | | 28,783 |
| | 5,801 |
| | — |
| | 34,584 |
|
| | | 179,976 |
| | 5,801 |
| | — |
| | 185,777 |
|
| | | | | | | | | |
| U.S. GAAP and Non-GAAP gross profit(1) | | $ | 116,269 |
| | $ | 1,792 |
| | $ | — |
| | $ | 118,061 |
|
____________________________________
(1) Gross profit excludes depreciation and amortization.
– more –
|
| | | | | | | | | | | | | | | | |
| | | Six Months Ended December 31, 2017 |
| | | Company-owned | | Franchise | | Corporate | | Consolidated |
| Revenues: | | | | | | | | |
| Service | | $ | 458,773 |
| | $ | — |
| | $ | — |
| | $ | 458,773 |
|
| Product | | 109,966 |
| | 22,790 |
| | — |
| | 132,756 |
|
| | | 568,739 |
| | 22,790 |
| | — |
| | 591,529 |
|
| | | | | | | | | |
| Cost of service | | 274,686 |
| | — |
| | — |
| | 274,686 |
|
| Cost of product | | 52,491 |
| | 17,535 |
| | — |
| | 70,026 |
|
| | | 327,177 |
| | 17,535 |
| | — |
| | 344,712 |
|
| | | | | | | | | |
| U.S. GAAP and Non-GAAP gross profit(1) | | $ | 241,562 |
| | $ | 5,255 |
| | $ | — |
| | $ | 246,817 |
|
| | | | | | | | | |
| Non-GAAP gross profit adjustments: | | | | | | | | |
SmartStyle restructuring costs
| | 585 |
| | — |
| | — |
| | 585 |
|
| Non-GAAP gross profit(1) | | $ | 242,147 |
| | $ | 5,255 |
| | $ | — |
| | $ | 247,402 |
|
____________________________________
(1) Gross profit excludes depreciation and amortization.
|
| | | | | | | | | | | | | | | | |
| | | Six Months Ended December 31, 2016 |
| | | Company-owned | | Franchise | | Corporate | | Consolidated |
| Revenues: | | | | | | | | |
| Service | | $ | 478,700 |
| | $ | — |
| | $ | — |
| | $ | 478,700 |
|
| Product | | 116,949 |
| | 14,996 |
| | — |
| | 131,945 |
|
| | | 595,649 |
| | 14,996 |
| | — |
| | 610,645 |
|
| | | | | | | | | |
| Cost of service | | 301,990 |
| | — |
| | — |
| | 301,990 |
|
| Cost of product | | 54,130 |
| | 11,269 |
| | — |
| | 65,399 |
|
| | | 356,120 |
| | 11,269 |
| | — |
| | 367,389 |
|
| | | | | | | | | |
| U.S. GAAP and Non-GAAP gross profit(1) | | $ | 239,529 |
| | $ | 3,727 |
| | $ | — |
| | $ | 243,256 |
|
____________________________________
(1) Gross profit excludes depreciation and amortization.
REGIS CORPORATION
Reconciliation of reported U.S. GAAP revenue change to same-store sales
(unaudited)
|
| | | | | | | | | | | | |
| | Three Months Ended
December 31, | | Six Months Ended
December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| Revenue decline, as reported (U.S. GAAP) | | (2.1 | )% | | (2.2 | )% | | (2.5 | )% | | (1.7 | )% |
| Effect of new stores and conversions | | (0.6 | ) | | (0.5 | ) | | (0.6 | ) | | (0.5 | ) |
| Effect of closed salons | | 4.8 |
| | 1.5 |
| | 4.2 |
| | 1.7 |
|
| Franchise | | (2.5 | ) | | 0.1 |
| | (1.5 | ) | | — |
|
| Foreign currency | | (0.4 | ) | | — |
| | (0.3 | ) | | — |
|
| Other | | 0.1 |
| | (1.4 | ) | | 0.5 |
| | (0.6 | ) |
| Same-store sales, non-GAAP | | (0.7 | )% | | (2.5 | )% | | (0.2 | )% | | (1.1 | )% |
– end –
