Exhibit 99
CONTACT: | ||||
Investors: | REGIS CORPORATION: Paul D. Finkelstein – President, CEO Randy L. Pearce – Executive Vice President, CFO Kyle P. Didier – Vice President, Finance (952) 947-7000 | |||
For Immediate Release | ||||
Media: | BERNS COMMUNICATIONS GROUP: Melissa Jaffin/Michael McMullan (212) 994-4660 |
REGIS CORPORATION REPORTS SECOND QUARTER EPS GROWTH OF 15 PERCENT
-Earnings per Diluted Share of $0.60 Tops Guidance by 4 Cents-
- -Company Raises 2004 EPS Guidance to a Range of $2.21 to $2.24-
MINNEAPOLIS, January 21, 2004 — Regis Corporation (NYSE:RGS) the global leader in the $135 billion hair care industry, today reported record financial results for its fiscal second quarter ended December 31, 2003. Consolidated revenues for the second quarter increased 14 percent to a record $472 million, compared to $415 million during the second quarter last year. Consolidated same-store sales increased 2.4 percent, compared to a 1.1 percent increase during the same period last year. Second quarter earnings increased to $27.7 million, or $0.60 per diluted share, compared with $23.6 million, or $0.52 per diluted share, last year.
As of December 31, 2003, Regis Corporation owned or franchised 9,775 salons compared to 9,313 salons as of December 31, 2002, a net increase of 462 salons. In the second quarter, the Company added a net total of 68 salons to its overall base by constructing and opening 92 new salons, acquiring 32 salons (including 18 franchise buybacks) and franchisees opening an additional 66 salons. Additionally, 104 company-owned and franchised salons were relocated or closed during the quarter.
Paul D. Finkelstein, president and chief executive officer, commented, “Driven by strong retail product sales, second quarter same-store sales were nearly a full percentage point above plan. As a result, we are pleased to report that quarterly earnings per share exceeded the high-end of our previous guidance by four cents.” Mr. Finkelstein further commented, “Due to the stronger than expected second quarter results, we are raising our earnings guidance for fiscal 2004 to a range of $2.21 to $2.24 per diluted share compared to $1.92 per diluted share in fiscal 2003, a projected increase of 15 to 17 percent.”
Mr. Finkelstein continued, “While significant growth opportunities exist for each of our salon concepts and markets, we continue to explore new initiatives. We consider expansion into Asia to be one such initiative and are currently identifying salon acquisition targets in Japan. Japan offers a highly developed market, with a fashion-conscious populace.” Mr. Finkelstein further commented, “Another potential growth initiative is beauty schools. After operating four Vidal Sassoon Beauty Academies for the past year, we grew attracted to this highly profitable business. Given our size, the ability to educate, hire and place highly skilled stylists into our various Regis salon concepts should provide our company yet another competitive advantage.”
Fiscal Year 2004 Outlook
The following points pertain to changes in our financial outlook for the fiscal year ending June 30, 2004:
(For our comprehensive financial outlook please visit the Investor Information section of our corporate website at www.regiscorp.com).
• | Exclusive of future acquisitions, earnings are expected to increase 15 to 17 percent to a range of $2.21 to $2.24 per diluted share versus our previous guidance of $2.17 to $2.20. |
• | Exclusive of future acquisitions, consolidated revenue is forecasted to grow to $1.88 to $1.89 billion, an increase of 12 percent. Our previous guidance was for revenue growth of 11 to 12 percent to a range of $1.86 to $1.88 billion. |
• | Full year consolidated same-store sales are projected to increase 1.7 to 2.0 percent, which assumes same-store sales of 1.0 to 1.5 percent in the second half of fiscal 2004. Our previous fiscal year same-store sales guidance was for an increase of 1.0 to 1.5 percent. |
• | Product margins are expected to be in the high 48 to low 49 percent range of product revenue versus our previous guidance of product margins in the mid 48 percent range. |
• | We plan to build 450 to 475 new company-owned salons excluding salon closures and relocations. Previously, we had projected adding 525 to 575 new corporate salons. |
• | We anticipate spending up to $80 million to acquire 350 to 400 salons. Previously, we had forecasted spending $60 to $75 million. |
• | Capital expenditures, excluding acquisitions, are projected to be $75 to $80 million compared to our previous forecasted range of $85 to $90 million. |
Regis Corporation will broadcast its second quarter conference call live over the internet on Wednesday, January 21, 2004 at 11:00AM Eastern Time. Interested parties are invited to listen by logging on to www.regiscorp.com. An archive of the conference call will be available at this website shortly after the conclusion of the live broadcast. On February 6, 2004 the Company will release its January revenue results, including same-store sales, before the market opens. On April 20, 2004, the Company will release its third quarter results and will provide an initial outlook for fiscal year 2005.
Regis Corporation, a Fortune 1000 company, is the largest owner, operator and franchisor of hair and retail product salons in the world. As of December 31, 2003, the Company operated and franchised 9,775 salons utilizing several concepts including: Supercuts, Jean Louis David, Vidal Sassoon, Regis Salons, MasterCuts, Trade Secret, SmartStyle and Cost Cutters. These salons are located in the United States, Canada, France, Italy, United Kingdom, Spain, Germany, Belgium, Switzerland, Poland and Puerto Rico.
Headquartered in Minneapolis, Minnesota, Regis Corporation has 51,000 employees worldwide. The Company’s common stock is traded on the NYSE under the symbol RGS. For additional information about the Company, including a reconciliation of non-GAAP financial information and our current financial outlook, please visit the Investor Information section of our corporate website at www.regiscorp.com.
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This press release contains “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 competition within the personal hair care industry, which remains strong, both domestically and internationally, and price sensitivity; changes in economic condition; changes in consumer tastes and fashion trends; labor and benefit costs; legal claims; risk inherent to international development (including currency fluctuations); the continued ability of the Company and its franchisees to obtain suitable locations and financing for new salon development; governmental initiatives such as minimum wage rates, taxes and possible franchise legislation; the ability of the Company to successfully identify and acquire salons that support its growth objectives; or other factors not listed above. The ability of the Company to meet its expected revenue growth is dependent on salon acquisitions, new salon construction and same-store sales increases, all of which are affected by many of the aforementioned risks. Additional information concerning potential factors that could affect future financial results is set forth the Company’s Annual Report onForm 10-K for the year ended June 30, 2003 and included inForm S-3 Registration Statement filed with the Securities and Exchange Commission on January 31, 2003.
(TABLES TO FOLLOW)
REGIS CORPORATION (NYSE:RGS)
Divisional Salon Counts and Revenues
For the 6-Month Period Ending December 31, 2003
December 31, 2003 | June 30, 2003 | ||||||||
SYSTEM -WIDE SALONS: | |||||||||
Company-owned Salons | 5,780 | 5,563 | |||||||
Franchised Salons | 3,995 | 4,054 | |||||||
Total Salons | 9,775 | 9,617 | |||||||
SALON LOCATION SUMMARY | |||||||||
DOMESTIC: | |||||||||
REGIS SALONS | |||||||||
Open at beginning of period | 1,096 | 1,016 | |||||||
Constructed | 19 | 53 | |||||||
Acquired | 4 | 73 | |||||||
Relocations and conversions | (5 | ) | (14 | ) | |||||
Closed | (20 | ) | (32 | ) | |||||
Net salon openings | (2 | ) | 80 | ||||||
Open at end of period | 1,094 | 1,096 | |||||||
MASTERCUTS | |||||||||
Open at beginning of period | 590 | 551 | |||||||
Constructed | 17 | 47 | |||||||
Acquired | 3 | 0 | |||||||
Relocations and conversions | (3 | ) | (4 | ) | |||||
Closed | (7 | ) | (4 | ) | |||||
Net salon openings | 10 | 39 | |||||||
Open at end of period | 600 | 590 | |||||||
TRADE SECRET | |||||||||
Company-owned Salons: | |||||||||
Open at beginning of period | 517 | 490 | |||||||
Constructed | 13 | 34 | |||||||
Acquired | 12 | 10 | |||||||
Relocations and conversions | 0 | (4 | ) | ||||||
Closed | (3 | ) | (13 | ) | |||||
Net salon openings | 22 | 27 | |||||||
Open at end of period | 539 | 517 | |||||||
Franchised Salons: | |||||||||
Open at beginning of period | 25 | 26 | |||||||
Constructed | 1 | 0 | |||||||
Closed or sold | (1 | ) | (1 | ) | |||||
Net salon openings | 0 | (1 | ) | ||||||
Open at end of period | 25 | 25 | |||||||
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December 31, 2003 | June 30, 2003 | ||||||||
SMARTSTYLE/COST CUTTERS IN WAL-MART | |||||||||
Company-owned Salons: | |||||||||
Open at beginning of period | 1,033 | 861 | |||||||
Constructed | 63 | 168 | |||||||
Acquired (1) | 49 | 14 | |||||||
Relocations and conversions | 0 | (5 | ) | ||||||
Closed or sold | (4 | ) | (5 | ) | |||||
Net salon openings | 108 | 172 | |||||||
Open at end of period | 1,141 | 1,033 | |||||||
Franchised Salons: | |||||||||
Open at beginning of period | 230 | 210 | |||||||
Constructed | 18 | 33 | |||||||
Relocations and conversions (1) | (49 | ) | (12 | ) | |||||
Closed or sold | (1 | ) | (1 | ) | |||||
Net salon openings | (32 | ) | 20 | ||||||
Open at end of period | 198 | 230 | |||||||
STRIP CENTERS | |||||||||
Company-owned Salons: | |||||||||
Open at beginning of period | 1,928 | 1,476 | |||||||
Constructed | 58 | 85 | |||||||
Acquired | 55 | 446 | |||||||
Relocations and conversions | (10 | ) | (16 | ) | |||||
Closed or sold | (29 | ) | (63 | ) | |||||
Net salon openings | 74 | 452 | |||||||
Open at end of period | 2,002 | 1,928 | |||||||
Franchised Salons: | |||||||||
Open at beginning of period | 2,172 | 1,988 | |||||||
Constructed | 78 | 147 | |||||||
Acquired (3) | 0 | 198 | |||||||
Relocations and conversions (1) | (61 | ) | (82 | ) | |||||
Closed or sold | (45 | ) | (79 | ) | |||||
Net salon openings | (28 | ) | 184 | ||||||
Open at end of period | 2,144 | 2,172 | |||||||
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December 31, 2003 | June 30, 2003 | ||||||||
INTERNATIONAL (2) | |||||||||
Company-owned Salons: | |||||||||
Open at beginning of period | 399 | 382 | |||||||
Constructed | 16 | 10 | |||||||
Acquired | 6 | 17 | |||||||
Closed | (17 | ) | (10 | ) | |||||
Net salon openings | 5 | 17 | |||||||
Open at end of period | 404 | 399 | |||||||
Franchised Salons: | |||||||||
Open at beginning of period | 1,627 | 1,684 | |||||||
Constructed | 42 | 95 | |||||||
Closed or sold | (41 | ) | (152 | ) | |||||
Net salon openings | 1 | (57 | ) | ||||||
Open at end of period | 1,628 | 1,627 | |||||||
Grand total, system-wide | 9,775 | 9,617 | |||||||
TOTAL SYSTEM-WIDE SALONS | |||||||||
Company-owned Salons: | |||||||||
Open at beginning of period | 5,563 | 4,776 | |||||||
Constructed | 186 | 397 | |||||||
Acquired | 129 | 560 | |||||||
Relocations and conversions (1) | (18 | ) | (43 | ) | |||||
Closed | (80 | ) | (127 | ) | |||||
Net salon openings | 217 | 787 | |||||||
Open at end of period | 5,780 | 5,563 | |||||||
Franchised Salons: | |||||||||
Open at beginning of period | 4,054 | 3,908 | |||||||
Constructed | 139 | 275 | |||||||
Acquired | 0 | 198 | |||||||
Relocations and conversions (1) | (110 | ) | (94 | ) | |||||
Closed or sold | (88 | ) | (233 | ) | |||||
Net salon openings | (59 | ) | 146 | ||||||
Open at end of period | 3,995 | 4,054 | |||||||
Grand total, system-wide | 9,775 | 9,617 | |||||||
(1) | Represents primarily the conversion of franchise operations to company-owned. |
(2) | Canadian and Puerto Rican salons are included in the Regis Salons, Strip Center, MasterCuts and Trade Secret divisions and not included in the International salon totals. |
(3) | Represents primarily the acquisition of franchise networks. |
Relocations represent a transfer of location by the same salon concept.
Conversions represent the transfer of one salon concept to another concept.
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Three Months Ended | Six Months Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2003 | 2002 | 2003 | 2002 | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Revenues by Concept: | |||||||||||||||||
Regis Salons | $ | 119,906 | $ | 106,139 | $ | 239,091 | $ | 210,830 | |||||||||
MasterCuts | 43,671 | 42,225 | 87,217 | 84,931 | |||||||||||||
Trade Secret | 65,051 | 55,486 | 123,992 | 105,316 | |||||||||||||
SmartStyle | 69,964 | 54,774 | 138,411 | 107,271 | |||||||||||||
Strip Center | 123,521 | 115,911 | 249,165 | 229,634 | |||||||||||||
International | 50,339 | 40,224 | 95,297 | 76,000 | |||||||||||||
$ | 472,452 | $ | 414,759 | $ | 933,173 | $ | 813,982 | ||||||||||
Included in the table above are franchise revenues of $26,620 and $26,131 for the three months ended December 31, 2003 and 2002, respectively, and $52,666 and $51,985 for the six months ended December 31, 2003 and 2002, respectively.
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REGIS CORPORATION (NYSE:RGS)
CONSOLIDATED BALANCE SHEET (Unaudited)
as of December 31, 2003 and June 30, 2003
(Dollars in thousands, except par value)
December 31, | June 30, | |||||||||
ASSETS | 2003 | 2003 | ||||||||
Current assets: | ||||||||||
Cash | $ | 87,663 | $ | 59,680 | ||||||
Receivables, net | 35,427 | 31,947 | ||||||||
Inventories | 154,384 | 156,827 | ||||||||
Deferred income taxes | 17,620 | 18,469 | ||||||||
Other current assets | 12,998 | 12,737 | ||||||||
Total current assets | 308,092 | 279,660 | ||||||||
Property and equipment, net | 364,421 | 356,725 | ||||||||
Goodwill | 408,627 | 372,618 | ||||||||
Other intangibles, net | 67,641 | 64,498 | ||||||||
Other assets | 39,616 | 39,454 | ||||||||
Total assets | $ | 1,188,397 | $ | 1,112,955 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Long-term debt, current portion | $ | 18,066 | $ | 21,123 | ||||||
Accounts payable | 53,453 | 56,175 | ||||||||
Accrued expenses | 130,424 | 121,767 | ||||||||
Total current liabilities | 201,943 | 199,065 | ||||||||
Long-term debt | 263,955 | 280,634 | ||||||||
Other noncurrent liabilities | 82,924 | 70,452 | ||||||||
Shareholders’ equity: | ||||||||||
Common stock, $.05 par value; issued and outstanding, 44,116,319 and 43,527,244 common shares at December 31 and June 30, 2003, respectively | 2,206 | 2,176 | ||||||||
Additional paid-in capital | 220,493 | 207,650 | ||||||||
Accumulated other comprehensive income | 41,686 | 27,789 | ||||||||
Retained earnings | 375,190 | 325,189 | ||||||||
Total shareholders’ equity | 639,575 | 562,804 | ||||||||
Total liabilities and shareholders’ equity | $ | 1,188,397 | $ | 1,112,955 | ||||||
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REGIS CORPORATION (NYSE:RGS)
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended | Six Months Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||||||
Revenues: | ||||||||||||||||||||
Company-owned salons: | ||||||||||||||||||||
Service | $ | 306,630 | $ | 270,688 | $ | 609,582 | $ | 533,764 | ||||||||||||
Product | 139,202 | 117,940 | 270,925 | 228,233 | ||||||||||||||||
445,832 | 388,628 | 880,507 | 761,997 | |||||||||||||||||
Franchise revenues: | ||||||||||||||||||||
Royalties and fees | 18,380 | 17,280 | 36,489 | 34,398 | ||||||||||||||||
Product sales | 8,240 | 8,851 | 16,177 | 17,587 | ||||||||||||||||
26,620 | 26,131 | 52,666 | 51,985 | |||||||||||||||||
Total Revenue | 472,452 | 414,759 | 933,173 | 813,982 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Company-owned salons: | ||||||||||||||||||||
Cost of service | 171,577 | 152,683 | 341,982 | 300,311 | ||||||||||||||||
Cost of product | 70,671 | 56,603 | 139,002 | 113,275 | ||||||||||||||||
Direct salon | 39,154 | 34,385 | 77,701 | 69,790 | ||||||||||||||||
Rent | 64,759 | 56,920 | 127,818 | 110,702 | ||||||||||||||||
Depreciation | 15,293 | 13,017 | 29,891 | 25,756 | ||||||||||||||||
361,454 | 313,608 | 716,394 | 619,834 | |||||||||||||||||
Franchise direct costs, including product and equipment | 15,178 | 15,423 | 28,849 | 29,209 | ||||||||||||||||
Corporate and franchise support costs | 45,357 | 39,299 | 91,108 | 79,215 | ||||||||||||||||
Depreciation and amortization | 3,380 | 3,194 | 6,408 | 6,141 | ||||||||||||||||
Total operating expenses | 425,369 | 371,524 | 842,759 | 734,399 | ||||||||||||||||
Operating income | 47,083 | 43,235 | 90,414 | 79,583 | ||||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest | (3,851 | ) | (5,379 | ) | (8,219 | ) | (10,524 | ) | ||||||||||||
Other, net | 331 | 349 | 671 | 675 | ||||||||||||||||
Income before income taxes | 43,563 | 38,205 | 82,866 | 69,734 | ||||||||||||||||
Income taxes | (15,901 | ) | (14,632 | ) | (30,246 | ) | (26,444 | ) | ||||||||||||
Net income | $ | 27,662 | $ | 23,573 | $ | 52,620 | $ | 43,290 | ||||||||||||
Net income per share: | ||||||||||||||||||||
Basic | $ | .63 | $ | .55 | $ | 1.20 | $ | 1.00 | ||||||||||||
Diluted | $ | .60 | $ | .52 | $ | 1.15 | $ | .96 | ||||||||||||
Weighted average common and common equivalent shares outstanding: | ||||||||||||||||||||
Basic | 43,893 | 43,236 | 43,795 | 43,266 | ||||||||||||||||
Diluted | 45,973 | 45,332 | 45,835 | 45,267 | ||||||||||||||||
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REGIS CORPORATION (NYSE:RGS)
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
Six Months Ended December 31, | |||||||||||
2003 | 2002 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 52,620 | $ | 43,290 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation | 34,888 | 30,308 | |||||||||
Amortization | 1,724 | 1,867 | |||||||||
Deferred income taxes | 5,901 | 703 | |||||||||
Other | 179 | 329 | |||||||||
Changes in operating assets and liabilities*: | |||||||||||
Receivables | (2,408 | ) | (5,887 | ) | |||||||
Inventories | 4,883 | (21,604 | ) | ||||||||
Other current assets | 268 | 2,622 | |||||||||
Other assets | (2,870 | ) | (6,855 | ) | |||||||
Accounts payable | 881 | 3,459 | |||||||||
Accrued expenses | 14,057 | 14,629 | |||||||||
Other noncurrent liabilities | 5,826 | 6,274 | |||||||||
Net cash provided by operating activities | 115,949 | 69,135 | |||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (34,404 | ) | (32,930 | ) | |||||||
Proceeds from sale of assets | 95 | 586 | |||||||||
Business and salon acquisitions, net of cash acquired | (33,611 | ) | (55,362 | ) | |||||||
Net cash used in investing activities | (67,920 | ) | (87,706 | ) | |||||||
Cash flows from financing activities: | |||||||||||
Borrowings on revolving credit facilities | 385,175 | 431,000 | |||||||||
Payments on revolving credit facilities | (396,150 | ) | (419,000 | ) | |||||||
Proceeds from issuance of long-term debt | 11,860 | 0 | |||||||||
Repayments of long-term debt | (20,110 | ) | (6,220 | ) | |||||||
Other, primarily decrease in negative book cash balances | (8,838 | ) | (2,837 | ) | |||||||
Dividends paid | (2,631 | ) | (2,605 | ) | |||||||
Repurchase of common stock | (3,373 | ) | (10,234 | ) | |||||||
Proceeds from issuance of common stock | 10,390 | 2,444 | |||||||||
Net cash used in financing activities | (23,677 | ) | (7,452 | ) | |||||||
Effect of exchange rate changes on cash | 3,631 | 1,047 | |||||||||
Increase (decrease) in cash | 27,983 | (24,976 | ) | ||||||||
Cash: | |||||||||||
Beginning of period | 59,680 | 87,103 | |||||||||
End of period | $ | 87,663 | $ | 62,127 | |||||||
* | Changes in operating assets and liabilities do not include assets and liabilities assumed through acquisitions. |
END