Regis Corporation Reports Continued Profitability for the Fourth Fiscal Quarter and Full Fiscal Year 2023

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MINNEAPOLIS, August 23, 2023--(BUSINESS WIRE)--Regis Corporation (NYSE: RGS), a leader in the haircare industry, today announced financial results for the fourth fiscal quarter and full year ended June 30, 2023.

Matthew Doctor, Regis Corporation's President and Chief Executive Officer, commented: "At the end of fiscal 2022, I mentioned that we were poised to deliver stronger results in fiscal 2023 – and we did exactly that. We finished the year strong, delivering our fourth consecutive quarter of positive operating income, leading to our highest-level of operating income since 2017. We demonstrated growth across key financial metrics including same-store sales, operating income and adjusted EBITDA, reflecting the successful execution of the strategies we have been implementing. We have largely stabilized the business in a relatively short period of time, and during what remains to be a challenging operating environment for our industry – having gone from an adjusted EBITDA loss of $76.9 million in fiscal 2021, an adjusted EBITDA loss $1.8 million in fiscal 2022, to positive adjusted EBITDA of $21.0 million in fiscal 2023. We continued to reduce costs and generated efficiencies while focusing on our talent, technology, stylist community, and customer marketing to optimize our platform for sustained profitable growth. I am proud of our team and franchisees for their valuable contributions to the year and am excited to make continued progress in fiscal 2024."

Financial Highlights:

Fourth quarter fiscal 2023 compared to fourth quarter fiscal 2022:

  • System-wide revenue of $311.8 million decreased $5.0 million from $316.8 million and system-wide same-store sales increased 2.5%;

  • Operating income improved $4.9 million to $3.6 million, from an operating loss of $1.3 million in the 2022 fourth quarter;

  • Franchise adjusted EBITDA of $5.5 million increased $3.0 million from $2.5 million in the 2022 fourth quarter;

  • Net loss of $4.8 million improved $37.8 million from a loss of $42.6 million in the 2022 fourth quarter; and

  • Adjusted EBITDA of $5.2 million increased $4.2 million from $1.0 million in the 2022 fourth quarter.

Full fiscal year 2023 compared to full fiscal year 2022:

  • System-wide revenue of $1,230.5 million increased $2.0 million from $1,228.5 million and system-wide same-store sales increased 4.4%;

  • Operating income improved $37.7 million to $8.8 million, from an operating loss of $28.9 million in the 2022 fiscal year;

  • Franchise adjusted EBITDA of $22.8 million increased $15.1 million from $7.7 million in the 2022 fiscal year;

  • Net loss of $7.4 million improved $78.5 million from a loss of $85.9 million in the 2022 fiscal year; and

  • Adjusted EBITDA of $21.0 million increased $22.8 million from a loss of $1.8 million in the 2022 fiscal year.

Fourth Quarter Fiscal Year 2023 Consolidated Results

Three Months Ended June 30,

Twelve Months Ended June 30,

(Dollars in millions, except per share data)

2023

2022

2023

2022

Consolidated revenue

$

55.7

$

66.1

$

233.3

$

276.0

System-wide revenue (1)

311.8

316.8

1,230.5

1,228.5

System-wide same-store sales comps

2.5

%

7.1

%

4.4

%

14.8

%

Operating income (loss)

$

3.6

$

(1.3

)

$

8.8

$

(28.9

)

Loss from continuing operations

(4.8

)

(8.6

)

(11.3

)

(46.5

)

Diluted loss per share from continuing operations

(0.10

)

(0.19

)

(0.25

)

(1.07

)

(Loss) income from discontinued operations

—

(34.1

)

4.0

(39.4

)

Net loss

(4.8

)

(42.6

)

(7.4

)

(85.9

)

Diluted net loss per share

(0.10

)

(0.93

)

(0.16

)

(1.97

)

Adjusted EBITDA (2)

5.2

1.0

21.0

(1.8

)

_____________________________________________________________

(1)

Represents total sales within the system.

(2)

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

Revenue

Total revenue in the fourth quarter 2023 of $55.7 million decreased $10.4 million and total revenue in fiscal year 2023 of $233.3 million decreased $42.7 million. The decreases were driven primarily by a reduction in salon count and exiting the product distribution business.

Operating Income

Regis reported fourth quarter 2023 income from operations of $3.6 million compared to a loss from operations of $1.3 million in the fourth quarter 2022. Regis reported fiscal year 2023 income from operations of $8.8 million, compared to a loss from operations of $28.9 million in 2022. The year-over-year improvement in operations was driven primarily by our lower general and administrative expense structure and the wind down of loss-generating company-owned salons during the last twelve months.

Net Loss from Continuing Operations

Regis reported fourth quarter 2023 net loss from continuing operations of $4.8 million, or $0.10 loss per diluted share, compared to a net loss from continuing operations of $8.6 million, or $0.19 loss per diluted share, in the fourth quarter 2022. Regis reported fiscal year 2023 net loss from continuing operations of $11.3 million, or $0.25 loss per diluted share, compared to a net loss from continuing operations of $46.5 million, or $1.07 loss per diluted share, in 2022. The year-over-year improvement in net loss from continuing operations in both periods was driven primarily by an increase in operating income partially offset by an increase in interest expense.

Net Loss

The Company reported a fourth quarter 2023 net loss of $4.8 million, or $0.10 loss per diluted share, compared to a net loss of $42.6 million, or $0.93 loss per diluted share for the same period last year. The Company reported fiscal year 2023 net loss of $7.4 million, or $0.16 loss per diluted share, compared to a net loss of $85.9 million, or $1.97 loss per diluted share, in 2022. The year-over-year improvement in net loss in both periods was driven by the loss on the sale of our point-of-sale system in the prior year.

Adjusted EBITDA

Fourth quarter adjusted EBITDA of $5.2 million improved $4.2 million versus adjusted EBITDA of $1.0 million in the same period last year. Fiscal year adjusted EBITDA of $21.0 million improved $22.8 million, versus an adjusted EBITDA loss of $1.8 million in the same period last year. The improvements were driven by lower general and administrative expense and the wind down of loss-generating company-owned salons during the last twelve months. Fiscal year 2023 adjusted EBITDA also benefited from a $1.1 million grant from the state of North Carolina related to COVID-19 relief.

Fourth Quarter Fiscal Year 2023 Segment Results

Franchise

Three Months Ended
June 30,

Increase (Decrease)

Twelve Months Ended
June 30,

Increase (Decrease)

(Dollars in millions) (1)

2023

2022

2023

2022

Royalties

$

16.6

$

17.2

$

(0.6

)

$

66.0

$

65.8

$

0.2

Fees

3.0

3.0

—

11.3

11.6

(0.3

)

Product sales to franchisees

0.6

3.3

(2.7

)

2.8

15.1

(12.3

)

Advertising fund contributions

7.7

8.4

(0.7

)

31.7

32.6

(0.9

)

Franchise rental income

25.6

30.6

(5.0

)

111.4

130.8

(19.4

)

Total Franchise revenue

$

53.5

$

62.5

$

(9.0

)

$

223.2

$

255.8

$

(32.6

)

Franchise same-store sales comps

2.4

%

7.2

%

4.4

%

15.0

%

Franchise adjusted EBITDA

$

5.5

$

2.5

$

3.0

$

22.8

$

7.7

$

15.1

as a percent of revenue

10.2

%

4.1

%

10.2

%

3.0

%

as a percent of adjusted revenue (2)

27.1

%

10.8

%

28.5

%

8.4

%

Total Franchise salons

4,795

5,395

(600

)

as a percent of total Franchise and Company-owned salons

98.6

%

98.1

%

_________________________________________________________

(1)

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

(2)

Adjusted revenue excludes non-margin revenue. See GAAP to non-GAAP reconciliations within the attached section titled "Non-GAAP Reconciliations."

Franchise Revenue

Fourth quarter franchise revenue was $53.5 million, a $9.0 million, or 14.4%, decrease compared to the prior year quarter. Non-margin franchise rental income decreased $5.0 million due to fewer salons in the current year. Royalties were $16.6 million, a $0.6 million, or 3.5% decrease, versus the same period last year due to the decline in salon count. Product sales to franchisees of $0.6 million decreased $2.7 million, or 81.8%, as a result of the transition out of the wholesale product business.

Fiscal year 2023 franchise revenue was $223.2 million, a $32.6 million, or 12.7%, decrease compared to the prior year primarily due to a decline in non-margin franchise rental income as a result of a lower franchise salon count.

Franchise Adjusted EBITDA

Fourth quarter franchise adjusted EBITDA of $5.5 million improved $3.0 million year-over-year primarily due to a decrease in general and administrative expense.

Fiscal year 2023 franchise adjusted EBITDA of $22.8 million improved $15.1 million year-over-year primarily due to a decrease in general and administrative expense.

Company-Owned Salons

Three Months Ended
June 30,

Increase (Decrease)

Twelve Months Ended
June 30,

Increase (Decrease)

(Dollars in millions) (1)

2023

2022

2023

2022

Total Company-owned salon revenue

$

2.2

$

3.6

$

(1.4

)

$

10.1

$

20.2

$

(10.1

)

Company-owned same-store sales comps

8.7

%

(0.8

)%

4.9

%

3.4

%

Company-owned salon adjusted EBITDA

$

(0.3

)

$

(1.6

)

$

1.3

$

(1.8

)

$

(9.5

)

$

7.7

as a percent of revenue

(13.6

)%

(44.4

)%

(17.8

)%

(47.0

)%

Total Company-owned salons

68

105

(37

)

as a percent of total Franchise and Company-owned salons

1.4

%

1.9

%

_________________________________________________________

(1)

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

Company-Owned Salon Revenue

Fourth quarter revenue for the Company-owned salon segment decreased $1.4 million versus the prior year to $2.2 million. The year-over-year decline in revenue was expected and driven by the closure of 37 unprofitable salons over the past twelve months.

Fiscal year 2023 revenue for the Company-owned salon segment decreased $10.1 million versus the prior year to $10.1 million due to company-owned salons closures.

Company-Owned Salon Adjusted EBITDA

Fourth quarter Company-owned salon adjusted EBITDA loss improved $1.3 million year-over-year driven primarily by the closure of unprofitable salons.

Fiscal year 2023 Company-owned salon adjusted EBITDA loss improved $7.7 million year-over-year driven primarily by the closure of unprofitable salons and includes a $1.1 million grant from the state of North Carolina related to COVID-19 relief in fiscal year 2023.

Balance Sheet and Cash Flow

The Company ended fiscal year 2023 with $9.5 million in cash and cash equivalents, $183.3 million in outstanding borrowings and total liquidity of $42.8 million. Net cash used in operating activities for the fiscal year totaled $7.9 million, an improvement of $30.7 million from the prior year. Cash use improved due primarily to lower general and administrative expense.

Non-GAAP reconciliations

For GAAP to non-GAAP reconciliations, please refer to the attached section titled "Non-GAAP Reconciliations." A complete reconciliation of reported earnings to adjusted earnings is included in this press release and is available on the Company’s website at www.regiscorp.com.

Earnings Webcast

Regis Corporation will host a conference call via webcast discussing fourth quarter and fiscal year 2023 results today, August 23, 2023 at 7:30 a.m., Central time. Interested parties are invited to participate in the live webcast by registering for the event at www.regiscorp.com/investor-relations.html. The webcast will include a slide presentation. A replay of the presentation will be available on our website at the same web address.

About Regis Corporation

Regis Corporation (NYSE:RGS) is a leader in the haircare industry. As of June 30, 2023, the Company franchised or owned 4,863 locations. Regis' franchised and corporate locations operate under concepts such as Supercuts®, SmartStyle®, Cost Cutters®, Roosters® and First Choice Haircutters®. 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 changes in consumer shopping trends and changes in manufacturer distribution channels; laws and regulations could require us to modify current business practices and incur increased costs including increases in minimum wages; our potential responsibility for Empire Education Group, Inc.'s liabilities; changes in general economic environment; changes in consumer tastes, hair product innovation, fashion trends and consumer spending patterns; compliance with New York Stock Exchange listing requirements; reliance on franchise royalties and overall success of our franchisees’ salons; our salons' dependence on a third-party supplier agreement for merchandise; our franchisees' ability to attract, train and retain talented stylists and salon leaders; the success of our franchisees, which operate independently; data security and privacy compliance and our ability to manage cyber threats and protect the security of potentially sensitive information about our guests, franchisees, employees, vendors or Company information; the ability of the Company to maintain a satisfactory relationship with Walmart; marketing efforts to drive traffic to our franchisees' salons; the successful migration of our franchisees to the Zenoti salon technology platform; our ability to maintain and enhance the value of our brands; reliance on information technology systems; reliance on external vendors; the use of social media; the effectiveness of our enterprise risk management program; ability to generate sufficient cash flow to satisfy our debt service obligations; compliance with covenants in our financing arrangement, access to the existing revolving credit facility, and acceleration of our obligation to repay our indebtedness; limited resources to invest in our business; premature termination of agreements with our franchisees; financial performance of Empire Education Group, Inc.; the continued ability of the Company to implement cost reduction initiatives and achieve expected cost savings; continued ability to compete in our business markets; reliance on our management team and other key personnel; the continued ability to maintain an effective system of internal control over financial reporting; changes in tax exposure; the ability to use U.S. net operating loss carryforwards; potential litigation and other legal or regulatory proceedings; or other factors not listed above. Additional information concerning potential factors that could affect future financial results is set forth under Item 1A of Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.

REGIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

June 30,

2023

2022

ASSETS

Current assets:

Cash and cash equivalents

$

9,508

$

17,041

Receivables, net

10,885

14,531

Inventories

1,681

3,109

Other current assets

15,164

13,984

Total current assets

37,238

48,665

Property and equipment, net

6,422

12,835

Goodwill

173,791

174,360

Other intangibles, net

2,783

3,226

Right of use asset

360,836

493,749

Other assets

26,307

36,465

Total assets

$

607,377

$

769,300

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:

Accounts payable

$

14,309

$

15,860

Accrued expenses

30,109

33,784

Short-term lease liability

81,917

103,196

Total current liabilities

126,335

152,840

Long-term debt, net

176,830

179,994

Long-term lease liability

291,901

408,445

Other non-current liabilities

49,041

58,974

Total liabilities

644,107

800,253

Commitments and contingencies

Shareholders' deficit:

Common stock, $0.05 par value; issued and outstanding, 45,566,228 and 45,510,245 common shares as of June 30, 2023 and 2022, respectively

2,278

2,276

Additional paid-in capital

64,600

62,562

Accumulated other comprehensive income

9,023

9,455

Accumulated deficit

(112,631

)

(105,246

)

Total shareholders' deficit

(36,730

)

(30,953

)

Total liabilities and shareholders' deficit

$

607,377

$

769,300

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three Months Ended
June 30,

Twelve Months Ended
June 30,

2023

2022

2023

2022

Revenues:

Royalties

$

16,607

$

17,227

$

65,981

$

65,753

Fees

2,965

2,954

11,266

11,587

Product sales to franchisees

608

3,343

2,802

15,072

Advertising fund contributions

7,744

8,360

31,747

32,573

Franchise rental income

25,596

30,577

111,441

130,777

Company-owned salon revenue

2,195

3,608

10,089

20,205

Total revenue

55,715

66,069

233,326

275,967

Operating expenses:

Cost of product sales to franchisees

715

4,172

3,540

17,391

Inventory reserve

—

1,235

1,228

7,655

General and administrative

11,544

14,566

50,751

65,274

Rent

3,276

3,368

9,196

9,357

Advertising fund expense

7,744

8,360

31,747

32,573

Franchise rent expense

25,596

30,577

111,441

130,777

Company-owned salon expense (1)

1,536

3,648

8,827

21,952

Depreciation and amortization

1,664

1,458

7,716

6,224

Long-lived asset impairment

65

—

101

542

Goodwill impairment

—

—

—

13,120

Total operating expenses

52,140

67,384

224,547

304,865

Operating income (loss)

3,575

(1,315

)

8,779

(28,898

)

Other (expense) income:

Interest expense

(9,018

)

(3,292

)

...

(22,141

)

(12,914

)

Loss from sale of salon assets to franchisees, net

—

(145

)

—

(2,334

)

Other, net

198

(309

)

1,364

(296

)

Loss from operations before income taxes

(5,245

)

(5,061

)

(11,998

)

(44,442

)

Income tax benefit (expense)

442

(3,499

)

655

(2,017

)

Loss from continuing operations

(4,803

)

(8,560

)

(11,343

)

(46,459

)

(Loss) income from discontinued operations, net of income taxes

—

(34,073

)

3,958

(39,398

)

Net loss

$

(4,803

)

$

(42,633

)

$

(7,385

)

$

(85,857

)

Net loss per share:

Basic and diluted:

Loss from continuing operations

$

(0.10

)

$

(0.19

)

$

(0.25

)

$

(1.07

)

(Loss) income from discontinued operations

0.00

(0.74

)

0.09

(0.90

)

Net loss per share, basic and diluted (2)

$

(0.10

)

$

(0.93

)

$

(0.16

)

$

(1.97

)

Weighted average common and common equivalent shares outstanding:

Basic and diluted

46,461

45,969

46,235

43,582

__________________________________________________________

(1)

Includes cost of service and product sold to guests in our Company-owned salons. Excludes general and administrative expense, rent and depreciation and amortization related to Company-owned salons.

(2)

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

REGIS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

Twelve Months Ended June 30,

2023

2022

Cash flows from operating activities:

Net loss

$

(7,385

)

$

(85,857

)

Adjustments to reconcile net loss to net cash used in operating activities

(Gain) loss from sale of OSP

(4,562

)

36,143

Depreciation and amortization

7,189

6,504

Long-lived asset impairment

101

542

Deferred income taxes

(8

)

391

Inventory reserve

1,228

10,478

Non-cash interest

3,790

—

Loss from sale of salon assets to franchisees, net

—

2,334

Goodwill impairment

—

16,000

Stock-based compensation

2,316

1,334

Amortization of debt discount and financing costs

2,891

1,839

Other non-cash items affecting earnings

155

709

Changes in operating assets and liabilities (1):

Receivables

943

11,896

Inventories

(182

)

7,886

Income tax receivable

(577

)

1,118

Other current assets

850

2,118

Other assets

6,818

2,703

Accounts payable

(497

)

(10,966

)

Accrued expenses

(6,151

)

(21,983

)

Net lease liabilities

(4,991

)

(5,960

)

Other non-current liabilities

(9,817

)

(15,867

)

Net cash used in operating activities:

(7,889

)

(38,638

)

Cash flows from investing activities:

Capital expenditures

(481

)

(5,316

)

Net proceeds from sale of OSP

4,500

13,000

Net cash provided by investing activities:

4,019

7,684

Cash flows from financing activities:

Borrowings on credit facility

13,357

10,000

Repayments of long-term debt

(11,083

)

(16,916

)

Debt refinancing fees

(4,383

)

—

Proceeds from issuance of common stock, net of offering costs

—

37,185

Taxes paid for shares withheld

(36

)

(845

)

Net cash (used in) provided by financing activities:

(2,145

)

29,424

Effect of exchange rate changes on cash and cash equivalents

(53

)

(158

)

Decrease in cash, cash equivalents and restricted cash

(6,068

)

(1,688

)

Cash, cash equivalents and restricted cash:

Beginning of year

27,464

29,152

End of year

$

21,396

$

27,464

__________________________________________________________

(1)

Changes in operating assets and liabilities exclude assets and liabilities sold or acquired.

SYSTEM-WIDE SAME-STORE SALES (1):

Three Months Ended

June 30, 2023

June 30, 2022

Service

Retail

Total

Service

Retail

Total

Supercuts

4.5

%

(2.4

)%

4.2

%

14.4

%

(11.8

)%

13.0

%

SmartStyle

(1.9

)

(9.7

)

(3.4

)

1.5

(17.9

)

(2.7

)

Portfolio Brands

4.2

(0.4

)

3.8

6.5

(5.5

)

5.3

Total

3.2

%

(5.3

)%

2.5

%

9.6

%

(13.4

)%

7.1

%

Twelve Months Ended

June 30, 2023

June 30, 2022

Service

Retail

Total

Service

Retail

Total

Supercuts

7.5

%

(5.2

)%

6.9

%

23.8

%

(5.6

)%

22.1

%

SmartStyle

0.1

(12.8

)

(2.5

)

10.7

(10.5

)

5.7

Portfolio Brands

6.4

(3.7

)

5.5

13.0

(3.4

)

11.2

Total

5.7

%

(8.5

)%

4.4

%

17.8

%

(7.5

)%

14.8

%

___________________________________________________________

(1)

System-wide same-store sales are calculated as the total change in sales for system-wide franchise and 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 system-wide same-store sales are the sum of the system-wide same-store sales computed on a daily basis. Franchise salons that do not report daily sales are excluded from same-store sales. System-wide same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.

REGIS CORPORATION

System-Wide Location Counts

June 30,

2023

2022

FRANCHISE SALONS:

Supercuts

2,082

2,264

SmartStyle/Cost Cutters in Walmart stores

1,388

1,646

Portfolio Brands

1,223

1,344

Total North American salons

4,693

5,254

Total International salons (1)

102

141

Total Franchise salons

4,795

5,395

as a percent of total Franchise and Company-owned salons

98.6

%

98.1

%

COMPANY-OWNED SALONS:

Supercuts

7

18

SmartStyle/Cost Cutters in Walmart stores

48

49

Portfolio Brands

13

38

Total Company-owned salons

68

105

as a percent of total Franchise and Company-owned salons

1.4

%

1.9

%

Total Franchise and Company-owned salons

4,863

5,500

___________________________________________________________

(1)

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

Non-GAAP Reconciliations:

This press release includes a presentation of operating income excluding certain non-cash charges, adjusted EBITDA and adjusted Franchise revenue, which are non-GAAP measures. The non-GAAP measures are financial measures that do not reflect United States Generally Accepted Accounting Principles (GAAP). We believe our presentation of the non-GAAP measures provides meaningful insight into our ongoing operating performance and a supplemental perspective of our results of operations. Presentation of the non-GAAP measures allows investors to review our core ongoing operating performance from the same perspective as management and the Board of Directors. These non-GAAP financial measures provide investors an enhanced understanding of our operations, facilitate investors' analyses and comparisons of our current and past results of operations and provide insight into the prospects of our future performance. We also believe the non-GAAP measures are useful to investors because they provide supplemental information that research analysts frequently use to analyze financial performance.

Items impacting comparability are not defined terms within U.S. GAAP. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies. We determine the items to consider as "items impacting comparability" based on how management views our business, makes financial, operating and planning decisions and evaluates the Company's ongoing performance.

The reconciliation of U.S. GAAP operating income to non-GAAP operating income excluding certain non-cash charges is included in the release.

The following items have been excluded from our non-GAAP adjusted EBITDA results: discontinued operations, non-recurring non-operating income, distribution center wind down fees, CEO transition costs, inventory reserve, goodwill impairment, one-time professional fees and settlements, severance expense, the benefit from lease liability decreases in excess of previously impaired right of use asset, lease termination fees and asset retirement obligation costs.

We present adjusted revenue to provide a meaningful Franchise adjusted EBITDA margin, which removes non-margin revenue from total revenue to arrive at an adjusted margin. Margin is a common metric used by investors, however, the majority of our revenue is offset by equal expense, so it does not contribute to our margin. We remove the non-margin revenue from this metric in order to show a meaningful margin rate.

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

REGIS CORPORATION

Reconciliation of U.S. GAAP Net Loss to Adjusted EBITDA

(Dollars in thousands)

(Unaudited)

Three Months Ended June 30,

Twelve Months Ended June 30,

2023

2022

2023

2022

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

$

(4,803

)

$

(42,633

)

$

(7,385

)

$

(85,857

)

Interest expense, as reported

9,018

3,292

22,141

12,914

Income taxes, as reported

(442

)

3,499

(655

)

2,017

Depreciation and amortization, as reported

1,664

1,458

7,716

6,224

Long-lived asset impairment, as reported

65

—

101

542

EBITDA

$

5,502

$

(34,384

)

$

21,918

$

(64,160

)

Inventory reserve

—

1,235

1,228

7,655

CEO transition

—

—

—

(466

)

Distribution center fees

—

—

—

285

Professional fees and legal settlements

—

280

1,248

2,140

Severance

(132

)

59

720

2,074

Lease liability benefit

(258

)

(336

)

(1,773

)

(3,620

)

Lease termination fees

56

32

1,627

1,835

Real estate fees

—

—

—

40

Goodwill impairment

—

—

—

13,120

Non-recurring, non-operating income

—

—

—

(100

)

Discontinued operations

—

34,073

(3,958

)

39,398

Adjusted EBITDA, non-GAAP financial measure

$

5,168

$

959

$

21,010

$

(1,799

)

REGIS CORPORATION

Reconciliation of Reported Franchise Adjusted EBITDA as a Percent of GAAP Franchise Revenue

to Franchise Adjusted EBITDA as a Percent of Adjusted Franchise Revenue

(Dollars in thousands)

(Unaudited)

Three Months Ended June 30,

Twelve Months Ended June 30,

2023

2022

2023

2022

Franchise adjusted EBITDA

$

5,460

$

2,538

$

22,799

$

7,730

GAAP Franchise revenue

53,520

62,461

223,237

255,762

Franchise adjusted EBITDA as a percent of GAAP Franchise revenue

10.2

%

4.1

%

10.2

%

3.0

%

Non-margin revenue adjustments:

Franchise rental income

$

(25,596

)

$

(30,577

)

$

(111,441

)

$

(130,777

)

Advertising fund contributions

(7,744

)

(8,360

)

(31,747

)

(32,573

)

Adjusted Franchise revenue

$

20,180

$

23,524

$

80,049

$

92,412

Franchise adjusted EBITDA as a percent of adjusted Franchise revenue

27.1

%

10.8

%

28.5

%

8.4

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20230823638355/en/

Contacts

REGIS CORPORATION:
Kersten Zupfer
investorrelations@regiscorp.com

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