The Company Continues To Make Progress In Its Transition To A Fully-Franchised Model With The Sale And Conversion Of An Additional 145 Company-Owned Salons To Its Franchise Portfolio During The Quarter
Second Quarter 2021 Results Were Materially Impacted By The COVID-19 Pandemic; Excluding Discrete Items, The Company Reported Second Quarter 2021 Adjusted Net Loss of $25.9 Million
As Of December 31, 2020, Approximately 84% Of The Company’s Salon Portfolio Was Franchised
MINNEAPOLIS–(BUSINESS WIRE)–Regis Corporation (NYSE: RGS):
|
|
|
Three Months Ended December 31, |
|
Six Months Ended December 31, |
||||||||||||
|
(Dollars in thousands) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Consolidated Revenue |
|
$ |
104,320 |
|
|
$ |
208,765 |
|
|
$ |
215,716 |
|
|
$ |
455,803 |
|
|
System-wide Revenue (1) |
|
$ |
261,452 |
|
|
$ |
428,731 |
|
|
$ |
523,573 |
|
|
$ |
878,019 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
System-wide Same-Store Sales Comps (2) |
|
(32.0 |
)% |
|
(2.3 |
)% |
|
(32.3 |
)% |
|
(1.7 |
)% |
||||
|
Franchise Same-Store Sales Comps (2) |
|
(31.1 |
)% |
|
(1.4 |
)% |
|
(31.5 |
)% |
|
(0.8 |
)% |
||||
|
Company-owned Same-Store Sales Comps |
|
(36.2 |
)% |
|
(3.6 |
)% |
|
(35.4 |
)% |
|
(2.7 |
)% |
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating Loss |
|
$ |
(26,755 |
) |
|
$ |
(7,466 |
) |
|
$ |
(58,345 |
) |
|
$ |
(17,372 |
) |
|
Loss From Continuing Operations |
|
$ |
(32,879 |
) |
|
$ |
(16,520 |
) |
|
$ |
(68,144 |
) |
|
$ |
(30,698 |
) |
|
Diluted Loss per Share From Continuing Operations |
|
$ |
(0.92 |
) |
|
$ |
(0.46 |
) |
|
$ |
(1.90 |
) |
|
$ |
(0.85 |
) |
|
EBITDA (3) |
|
$ |
(20,030 |
) |
|
$ |
(9,178 |
) |
|
$ |
(38,968 |
) |
|
$ |
(15,020 |
) |
|
as a percent of revenue |
|
(19.2 |
)% |
|
(4.4 |
)% |
|
(18.1 |
)% |
|
(3.3 |
)% |
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
As Adjusted (3) |
|
|
|
|
|
|
|
|
||||||||
|
Net (Loss) Income, as Adjusted |
|
$ |
(25,902 |
) |
|
$ |
4,622 |
|
|
$ |
(53,833 |
) |
|
$ |
18,522 |
|
|
Diluted (Loss) Income per Share, as Adjusted |
|
$ |
(0.72 |
) |
|
$ |
0.13 |
|
|
$ |
(1.50 |
) |
|
$ |
0.50 |
|
|
EBITDA, as Adjusted (3) |
|
$ |
(17,526 |
) |
|
$ |
17,014 |
|
|
$ |
(36,169 |
) |
|
$ |
46,799 |
|
|
as a percent of revenue |
|
(16.8 |
)% |
|
8.1 |
% |
|
(16.8 |
)% |
|
10.3 |
% |
||||
_______________________________________________________________________________
|
(1) |
|
Represents total sales within the system, excluding TBG franchise sales. |
|
(2) |
|
System-wide and franchise same-store sales excludes TBG in both periods. |
|
(3) |
|
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, owning and operating technology enabled hair salons, today reported a second quarter 2021 net loss from continuing operations of $32.9 million, or $0.92 loss per diluted share as compared to a net loss from continuing operations of $16.5 million, or $0.46 loss per diluted share in the second quarter of 2020. The Company’s second quarter reported results included $7.0 million of discrete items. Excluding discrete items, the Company reported second quarter 2021 adjusted net loss of $25.9 million, or $0.72 loss per diluted share as compared to adjusted net income of $4.6 million, or $0.13 earnings per diluted share, for the same period last year. The year-over-year decrease in adjusted net income was driven primarily by the decrease in the gain from the sale of salons to franchisees of $18.2 million due to lower proceeds per salon in the current year. The elimination of adjusted net income that had been generated in the prior year period from the 768 company-owned salons that were sold and converted to the Company’s asset-light franchise portfolio over the past twelve months also contributed to the decline, but this was partially offset by significant reductions in general and administrative expense and marketing. Additionally, the Company estimates it lost approximately $35 million in revenue due to government-mandated salon closures and lower traffic due to the COVID-19 pandemic.
Total revenue in the quarter of $104.3 million decreased $104.4 million, or 50.0%, year-over-year driven primarily by the conversion of a net 768 company-owned salons to the Company’s asset-light franchise portfolio over the past 12 months and due to the impact of the COVID-19 pandemic.
Second quarter adjusted EBITDA loss of $17.5 million decreased $34.5 million, versus the same period last year. Excluding the $3.2 million adjusted loss and $15.0 million adjusted gain from the sale of company-owned salons during the current and prior year quarter, respectively, adjusted EBITDA loss of $14.3 million was $16.3 million unfavorable versus the same period last year. This was driven primarily by the elimination of adjusted EBITDA that had been generated in the prior year period from the 768 company-owned salons that were sold and converted to the Company’s asset-light franchise portfolio over the past twelve months, partially offset by significant reductions in general and administrative expense and marketing spend.
Felipe Athayde, President and Chief Executive Officer, commented, “While the effects of the pandemic are evident in our results, we remain very confident about the strength of our business and our brands. Over the past quarter, we have executed on a number of strategic initiatives including a brand-centric corporate reorganization, the implementation of a zero-based budgeting process, an evolution of our corporate salon refranchising strategy, and the launch of new salon automation functionalities to our proprietary POS and salon management technology: Opensalon® PRO. These initiatives were designed to transform Regis into a nimble, performance-driven, data-oriented organization, which we believe will position Regis well for a solid comeback.”
Second Quarter Segment Results
Franchise Salons
|
|
|
Three Months Ended |
|
Increase |
|
Six Months Ended |
|
Increase |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(Dollars in millions) (1) |
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Product |
|
$ |
14.2 |
|
|
$ |
16.2 |
|
|
$ |
(2.0 |
) |
|
$ |
28.0 |
|
|
$ |
28.0 |
|
|
$ |
— |
|
|
Product sold to TBG mall locations |
|
— |
|
|
0.7 |
|
|
(0.7 |
) |
|
— |
|
|
2.0 |
|
|
(2.0 |
) |
||||||
|
Total product |
|
14.2 |
|
|
16.9 |
|
|
(2.7 |
) |
|
28.0 |
|
|
30.0 |
|
|
(2.0 |
) |
||||||
|
Royalties and fees |
|
19.9 |
|
|
29.3 |
|
|
(9.4 |
) |
|
37.9 |
|
|
57.4 |
|
|
(19.5 |
) |
||||||
|
Franchise rental income |
|
32.3 |
|
|
33.6 |
|
|
(1.3 |
) |
|
64.6 |
|
|
65.1 |
|
|
(0.5 |
) |
||||||
|
Total franchised salons revenue |
|
$ |
66.4 |
|
|
$ |
79.8 |
|
|
$ |
(13.4 |
) |
|
$ |
130.4 |
|
|
$ |
152.4 |
|
|
$ |
(22.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Franchise Same-Store Sales Comps (2) |
|
(31.1 |
)% |
|
(1.4 |
)% |
|
|
|
(31.5 |
)% |
|
(0.8 |
)% |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
EBITDA, as Adjusted |
|
$ |
10.8 |
|
|
$ |
13.1 |
|
|
$ |
(2.3 |
) |
|
$ |
17.7 |
|
|
$ |
24.9 |
|
|
$ |
(7.2 |
) |
|
as a percent of revenue |
|
16.2 |
% |
|
16.4 |
% |
|
|
|
13.6 |
% |
|
16.4 |
% |
|
|
||||||||
|
as a percent of adjusted revenue (3) |
|
36.6 |
% |
|
37.6 |
% |
|
|
|
31.3 |
% |
|
38.8 |
% |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total Franchise Salons |
|
5,269 |
|
|
4,790 |
|
|
479 |
|
|
|
|
|
|
|
|||||||||
|
as a percent of total Franchise and Company-owned salons |
|
83.6 |
% |
|
67.8 |
% |
|
|
|
|
|
|
|
|
||||||||||
_______________________________________________________________________________
|
(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. |
Second quarter Franchise revenue was $66.4 million, a $13.4 million, or 16.8% decrease compared to the prior year quarter, and included franchise rental income of $32.3 million. Royalties and fees were $19.9 million, a $9.4 million, or 32.2% decrease versus the same period last year. Royalties and other franchise fees decreased $3.5 million due to an estimated $5.5 million decrease in royalties due to the COVID-19 pandemic, partially offset by an increase in franchisees. Advertising funds decreased $6.0 million also related to the COVID-19 pandemic. Product sales to franchisees of $14.2 million decreased $2.7 million versus the same period last year due to lower same-store retail sales due primarily to the COVID-19 pandemic. Franchise adjusted EBITDA of $10.8 million decreased $2.3 million, or 17.6% year-over-year primarily due to the decline in franchise same-store sales of 31.1% primarily related to the COVID-19 pandemic. Total franchised locations open at December 31, 2020 were 5,269 compared to 4,790 at December 31, 2019.
Company-Owned Salons
|
|
|
Three Months Ended |
|
Increase |
|
Six Months Ended |
|
Increase |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(Dollars in millions) (1) |
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total Revenue |
|
$ |
37.9 |
|
|
$ |
128.9 |
|
|
$ |
(91.0 |
) |
|
$ |
85.3 |
|
|
$ |
303.4 |
|
|
$ |
(218.1 |
) |
|
Company-owned Same-Store Sales Comps |
|
(36.2 |
)% |
|
(3.6 |
)% |
|
|
|
(35.4 |
)% |
|
(2.7 |
)% |
|
|
||||||||
|
Year-over-Year Ticket change |
|
10.8 |
% |
|
3.0 |
% |
|
|
|
12.3 |
% |
|
3.0 |
% |
|
|
||||||||
|
Year-over-Year Transaction change |
|
(47.0 |
)% |
|
(6.6 |
)% |
|
|
|
(47.7 |
)% |
|
(5.7 |
)% |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
EBITDA, as Adjusted |
|
$ |
(10.7 |
) |
|
$ |
4.2 |
|
|
$ |
(14.9 |
) |
|
$ |
(21.4 |
) |
|
$ |
15.7 |
|
|
$ |
(37.1 |
) |
|
as a percent of revenue |
|
(28.2 |
)% |
|
3.3 |
% |
|
|
|
(25.1 |
)% |
|
5.2 |
% |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total Company-owned salons |
|
1,037 |
|
|
2,277 |
|
|
(1,240 |
) |
|
|
|
|
|
|
|||||||||
|
as a percent of total Franchise and Company-owned salons |
|
16.4 |
% |
|
32.2 |
% |
|
|
|
|
|
|
|
|
||||||||||
_______________________________________________________________________________
|
(1) |
|
Variances calculated on amounts shown in millions may result in rounding differences. |
Second quarter revenue for the Company-owned salon segment decreased $91.0 million, or 70.6%, versus the prior year to $37.9 million. The year-over-year decline in revenue was driven by the decrease of a net 768 salons sold and converted to the Company’s asset-light franchise portfolio over the past 12 months, the closure of a net 472 unprofitable salons over the past 12 months and a decline in revenue due to the COVID-19 pandemic. Company-owned same-store sales decreased 36.2%, primarily driven by a 47.0% decrease in transactions related to the COVID-19 pandemic, partially offset by a 10.8% increase in average ticket.
Second quarter adjusted EBITDA decreased $14.9 million, or 352.6%, versus the same period last year driven primarily by the elimination of EBITDA that had been generated in the prior year period from the 768 company-owned salons that were sold and converted to the Company’s asset-light franchise portfolio over the past 12 months, the impacts of the COVID-19 pandemic, and the decline in service and product margins, partially offset by a decrease in general and administrative expense and marketing spend.
Other Key Events
- In October 2020, Felipe Athayde joined the Company as CEO and President to lead the Company as it enters its growth phase.
- In December 2020, the Company announced a brand-centric reorganization. This reorganization is the first major strategic initiative by Felipe Athayde, the Company’s CEO, and reorients the Company to focus on the performance of its brands and the profitability of its franchisees. As part of the reorganization, Supercuts, SmartStyle and Portfolio Brands (a collection of growth and innovation concepts), are each run by a Brand President and dedicated team. This presents a departure from the Company’s previous organizing principle that only distinguished between the Franchise and Company-owned businesses.
- Continued migration of the Company’s proprietary cloud-based salon management and point of commerce solution, Opensalon PRO. Approximately 1,000 salons, or 18%, of our franchise salons, have signed contracts to install Opensalon PRO, with approximately 350 salons currently live.
- Launched a comprehensive zero-based budget and zero-based organization initiative, to align our cost structure with our brand-focused franchise strategy.
- The Company continues its extensive lease re-negotiation efforts; since mid-May total system-wide lease savings of over $9 million have been achieved.
- Today, the Company filed a $150 million shelf registration and $50 million prospectus supplement with the Securities and Exchange Commission under which it may offer and sell, from time to time, up to $50 million worth of its of its Class A common stock in “at-the-market offerings.” Net proceeds from sales of shares under the “at-the-market” program, if any, may be used, among other things, to fund working capital requirements, repay debt, and support of our growth strategies. Such strategies may include positioning the Company for potential expansion through targeted industry acquisitions and alternatives to fund additional capital investment requirements related to potential partnership opportunities to facilitate continued growth of our proprietary technology, Opensalon PRO. The timing and amount of sales of shares, if any, will depend on a variety of factors, including prevailing market conditions, the trading price of shares, and other factors as determined by the Company.
- The Company continues to make meaningful progress on its multi-year strategy to convert to a fully-franchised model. During the second quarter, it sold and transferred 145 company-owned salons to its asset-light franchise portfolio. The Company is still committed to converting to a fully-franchise capital-light business.
- The impact of the transactions closed in the quarter is as follows:
|
|
|
Three Months Ended |
|
Increase |
|
Six Months Ended |
|
Increase |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
(Dollars in thousands) |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Salons sold to franchisees |
|
145 |
|
|
443 |
|
|
(298 |
) |
|
282 |
|
|
988 |
|
|
(706 |
) |
||||||
|
Cash proceeds received |
|
$ |
3,413 |
|
|
$ |
31,468 |
|
|
$ |
(28,055 |
) |
|
$ |
7,148 |
|
|
$ |
69,414 |
|
|
$ |
(62,266 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(Loss) gain on venditions, excluding goodwill derecognition |
|
$ |
(3,226 |
) |
|
$ |
14,993 |
|
|
$ |
(18,219 |
) |
|
$ |
(3,888 |
) |
|
$ |
41,213 |
|
|
$ |
(45,101 |
) |
|
Non-cash goodwill derecognition |
|
— |
|
|
(27,400 |
) |
|
27,400 |
|
|
— |
|
|
(59,480 |
) |
|
59,480 |
|
||||||
|
Loss from sale of salon assets to franchisees, net |
|
$ |
(3,226 |
) |
|
$ |
(12,407 |
) |
|
$ |
9,181 |
|
|
$ |
(3,888 |
) |
|
$ |
(18,267 |
) |
|
$ |
14,379 |
|
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 second quarter results on February 4, 2021, 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 (888) 254-3590 and entering access code 9126102. A replay of the presentation will be available later that day. The replay phone number is (888) 203-1112, access code 9126102.
About Regis Corporation
Regis Corporation (NYSE:RGS) is a leader in beauty salons and cosmetology education. As of December 31, 2020, the Company franchised, owned or held ownership interests in 6,384 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 uncertainties 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, as well as the health and risk appetite of our stylists, customers and employees to return to the salon environment; the continued ability of the Company to implement its strategy, priorities and initiatives including the re-engineering of our corporate and field infrastructure; our new company-owned back office management system may not yield the intended results on timing and amounts due to the COVID-19 pandemic, efforts by our current third-party back office management system vendor to make it difficult for our franchisees to convert to our new company-owned system, and the pending litigation with that third-party vendor; the impact of the COVID-19 pandemic on our key suppliers; the ability to address rent obligations incurred during the government-mandated hibernation of our salons related to the COVID-19 pandemic and the ability to obtain long-term rent concessions; the ability to operate or sell the salons transferred back from TBG; the outcome of the review by the administrator in TBG’s insolvency proceedings in the United Kingdom; compliance with credit facility covenants and access to the existing revolving credit facility; 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; if our capital investments in technology do not achieve appropriate returns; 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; the impact of recent actions by Walmart; marketing efforts to drive traffic to our franchisees’ salons; changes in regulatory and statutory laws including increases in minimum wages; our ability to maintain and enhance the value of our brands; premature termination of agreements with our franchisees; reliance on information technology systems; reliance on external vendors; consumer shopping trends and changes in manufacturer distribution channels; competition within the personal hair care industry; continued ability to compete in our business markets; the continued ability to maintain an effective system of internal controls over financial reporting; changes in tax exposure; failure to standardize operating processes across brands; financial performance of Empire Education Group; the continued ability of the Company to implement cost reduction initiatives; changes in economic conditions; changes in consumer tastes and fashion trends; failure at our distribution centers; exposure to uninsured or unidentified risks; 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 under Item 1A on 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 (Unaudited) |
||||||||
|
(Dollars in thousands, except per share data) |
||||||||
|
|
|
December 31, |
|
June 30, |
||||
|
|
|
|
|
|
||||
|
ASSETS |
|
|
|
|
||||
|
Current assets: |
|
|
|
|
||||
|
Cash and cash equivalents |
|
$ |
50,850 |
|
|
$ |
113,667 |
|
|
Receivables, net |
|
31,185 |
|
|
31,030 |
|
||
|
Inventories |
|
51,483 |
|
|
62,597 |
|
||
|
Other current assets |
|
17,226 |
|
|
19,138 |
|
||
|
Total current assets |
|
150,744 |
|
|
226,432 |
|
||
|
|
|
|
|
|
||||
|
Property and equipment, net |
|
43,579 |
|
|
57,176 |
|
||
|
Goodwill |
|
228,950 |
|
|
227,457 |
|
||
|
Other intangibles, net |
|
4,532 |
|
|
4,579 |
|
||
|
Right of use asset |
|
637,108 |
|
|
786,216 |
|
||
|
Other assets |
|
40,237 |
|
|
40,934 |
|
||
|
Total assets |
|
$ |
1,105,150 |
|
|
$ |
1,342,794 |
|
|
|
|
|
|
|
||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
||||
|
Current liabilities: |
|
|
|
|
||||
|
Accounts payable |
|
$ |
36,922 |
|
|
$ |
50,918 |
|
|
Accrued expenses |
|
49,277 |
|
|
48,825 |
|
||
|
Short-term lease liability |
|
127,649 |
|
|
137,271 |
|
||
|
Total current liabilities |
|
213,848 |
|
|
237,014 |
|
||
|
|
|
|
|
|
||||
|
Long-term debt, net |
|
177,500 |
|
|
177,500 |
|
||
|
Long-term lease liability |
|
540,930 |
|
|
680,454 |
|
||
|
Long-term financing liabilities |
|
27,640 |
|
|
27,981 |
|
||
|
Other non-current liabilities |
|
86,784 |
|
|
94,142 |
|
||
|
Total liabilities |
|
1,046,702 |
|
|
1,217,091 |
|
||
|
Commitments and contingencies |
|
|
|
|
||||
|
Shareholders’ equity: |
|
|
|
|
||||
|
Common stock, $0.05 par value; issued and outstanding 35,768,086 and 35,625,716 common shares at December 31, 2020 and June 30, 2020, respectively |
|
1,788 |
|
|
1,781 |
|
||
|
Additional paid-in capital |
|
22,076 |
|
|
22,011 |
|
||
|
Accumulated other comprehensive income |
|
8,786 |
|
|
7,449 |
|
||
|
Retained earnings |
|
25,798 |
|
|
94,462 |
|
||
|
Total shareholders’ equity |
|
58,448 |
|
|
125,703 |
|
||
|
Total liabilities and shareholders’ equity |
|
$ |
1,105,150 |
|
|
$ |
1,342,794 |
|
|
REGIS CORPORATION |
||||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) |
||||||||||||||||
|
For The Three And Six Months Ended December 31, 2020 And 2019 |
||||||||||||||||
|
(Dollars and shares in thousands, except per share data amounts) |
||||||||||||||||
|
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Revenues: |
|
|
|
|
|
|
|
|
||||||||
|
Service |
|
$ |
28,987 |
|
|
$ |
101,805 |
|
|
$ |
65,395 |
|
|
$ |
243,746 |
|
|
Product |
|
23,146 |
|
|
43,983 |
|
|
47,895 |
|
|
89,639 |
|
||||
|
Royalties and fees |
|
19,902 |
|
|
29,347 |
|
|
37,858 |
|
|
57,364 |
|
||||
|
Franchise rental income |
|
32,285 |
|
|
33,630 |
|
|
64,568 |
|
|
65,054 |
|
||||
|
Total revenue |
|
104,320 |
|
|
208,765 |
|
|
215,716 |
|
|
455,803 |
|
||||
|
Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
|
Cost of service |
|
22,097 |
|
|
67,358 |
|
|
50,620 |
|
|
157,840 |
|
||||
|
Cost of product |
|
17,203 |
|
|
27,258 |
|
|
33,572 |
|
|
53,585 |
|
||||
|
Site operating expenses |
|
10,350 |
|
|
26,330 |
|
|
23,589 |
|
|
59,272 |
|
||||
|
General and administrative |
|
26,690 |
|
|
32,691 |
|
|
52,837 |
|
|
73,316 |
|
||||
|
Rent |
|
12,902 |
|
|
20,495 |
|
|
26,127 |
|
|
44,759 |
|
||||
|
Franchise rent expense |
|
32,285 |
|
|
33,630 |
|
|
64,568 |
|
|
65,054 |
|
||||
|
Depreciation and amortization |
|
6,388 |
|
|
7,747 |
|
|
13,764 |
|
|
17,127 |
|
||||
|
Long-lived asset impairment |
|
3,160 |
|
|
— |
|
|
8,984 |
|
|
— |
|
||||
|
TBG mall location restructuring |
|
— |
|
|
722 |
|
|
— |
|
|
2,222 |
|
||||
|
Total operating expenses |
|
131,075 |
|
|
216,231 |
|
|
274,061 |
|
|
473,175 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating loss |
|
(26,755 |
) |
|
(7,466 |
) |
|
(58,345 |
) |
|
(17,372 |
) |
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Other (expense) income: |
|
|
|
|
|
|
|
|
||||||||
|
Interest expense |
|
(3,701 |
) |
|
(1,464 |
) |
|
(7,463 |
) |
|
(2,903 |
) |
||||
|
Loss from sale of salon assets to franchisees, net |
|
(3,226 |
) |
|
(12,407 |
) |
|
(3,888 |
) |
|
(18,267 |
) |
||||
|
Interest income and other, net |
|
403 |
|
|
2,869 |
|
|
517 |
|
|
3,040 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Loss from continuing operations before income taxes |
|
(33,279 |
) |
|
(18,468 |
) |
|
(69,179 |
) |
|
(35,502 |
) |
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Income tax benefit |
|
400 |
|
|
1,948 |
|
|
1,035 |
|
|
4,804 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Loss from continuing operations |
|
(32,879 |
) |
|
(16,520 |
) |
|
(68,144 |
) |
|
(30,698 |
) |
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Income from discontinued operations, net of taxes |
|
— |
|
|
79 |
|
|
— |
|
|
452 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net loss |
|
$ |
(32,879 |
) |
|
$ |
(16,441 |
) |
|
$ |
(68,144 |
) |
|
$ |
(30,246 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net loss per share: |
|
|
|
|
|
|
|
|
||||||||
|
Basic and diluted: |
|
|
|
|
|
|
|
|
||||||||
|
Loss from continuing operations |
|
$ |
(0.92 |
) |
|
$ |
(0.46 |
) |
|
$ |
(1.90 |
) |
|
$ |
(0.85 |
) |
|
Income from discontinued operations |
|
0.00 |
|
|
0.00 |
|
|
0.00 |
|
|
0.01 |
|
||||
|
Net loss per share, basic and diluted (1) |
|
$ |
(0.92 |
) |
|
$ |
(0.46 |
) |
|
$ |
(1.90 |
) |
|
$ |
(0.84 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted average common and common equivalent shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
|
Basic and diluted |
|
35,931 |
|
|
35,798 |
|
|
35,889 |
|
|
36,028 |
|
||||
_______________________________________________________________________________
|
(1) |
|
Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
|
REGIS CORPORATION |
||||||||
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) |
||||||||
|
For The Six Months Ended December 31, 2020 And 2019 |
||||||||
|
(Dollars in thousands) |
||||||||
|
|
|
Six Months Ended December 31, |
||||||
|
|
|
2020 |
|
2019 |
||||
|
|
|
|
|
|
||||
|
Cash flows from operating activities: |
|
|
|
|
||||
|
Net loss |
|
$ |
(68,144 |
) |
|
$ |
(30,246 |
) |
|
Adjustments to reconcile net loss to cash used in operating activities: |
|
|
|
|
||||
|
Non-cash adjustments related to discontinued operations |
|
— |
|
|
(586 |
) |
||
|
Depreciation and amortization |
|
11,123 |
|
|
14,484 |
|
||
|
Salon asset impairment |
|
— |
|
|
2,643 |
|
||
|
Long-lived asset impairment |
|
8,984 |
|
|
— |
|
||
|
Deferred income taxes |
|
(669 |
) |
|
(6,380 |
) |
||
|
Gain from sale of company headquarters, net |
|
— |
|
|
(2,513 |
) |
||
|
Loss from sale of salon assets to franchisees, net |
|
3,888 |
|
|
18,267 |
|
||
|
Stock-based compensation |
|
89 |
|
|
2,139 |
|
||
|
Amortization of debt discount and financing costs |
|
875 |
|
|
138 |
|
||
|
Other non-cash items affecting earnings |
|
202 |
|
|
(243 |
) |
||
|
Changes in operating assets and liabilities, excluding the effects of asset sales |
|
(21,812 |
) |
|
(17,032 |
) |
||
|
Net cash used in operating activities |
|
(65,464 |
) |
|
(19,329 |
) |
||
|
|
|
|
|
|
||||
|
Cash flows from investing activities: |
|
|
|
|
||||
|
Capital expenditures |
|
(7,502 |
) |
|
(17,576 |
) |
||
|
Proceeds from sale of assets to franchisees |
|
7,148 |
|
|
69,414 |
|
||
|
Costs associated with sale of salon assets to franchisees |
|
(222 |
) |
|
(1,550 |
) |
||
|
Proceeds from company-owned life insurance policies |
|
1,200 |
|
|
— |
|
||
|
Proceeds from sale of company headquarters |
|
— |
|
|
8,996 |
|
||
|
Net cash provided by investing activities |
|
624 |
|
|
59,284 |
|
||
|
|
|
|
|
|
||||
|
Cash flows from financing activities: |
|
|
|
|
||||
|
Repayments of revolving credit facility |
|
— |
|
|
(30,000 |
) |
||
|
Repurchase of common stock |
|
— |
|
|
(28,246 |
) |
||
|
Taxes paid for shares withheld |
|
(212 |
) |
|
(1,809 |
) |
||
|
Minority interest buyout |
|
(562 |
) |
|
— |
|
||
|
Distribution center lease payments |
|
(478 |
) |
|
(480 |
) |
||
|
Net cash used in financing activities |
|
(1,252 |
) |
|
(60,535 |
) |
||
|
|
|
|
|
|
||||
|
Effect of exchange rate changes on cash and cash equivalents |
|
(68 |
) |
|
122 |
|
||
|
|
|
|
|
|
||||
|
Decrease in cash, cash equivalents, and restricted cash |
|
(66,160 |
) |
|
(20,458 |
) |
||
|
|
|
|
|
|
||||
|
Cash, cash equivalents and restricted cash: |
|
|
|
|
||||
|
Beginning of period |
|
122,880 |
|
|
92,379 |
|
||
|
End of period |
|
$ |
56,720 |
|
|
$ |
71,921 |
|
Contacts
REGIS CORPORATION:
Kersten Zupfer
[email protected]
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