8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported):  November 12, 2013

SALLY BEAUTY HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	1-33145	36-2257936
(State or other Jurisdiction	(Commission File Number)	(IRS Employer
of Incorporation)		Identification No.)

3001 Colorado Boulevard

Denton, Texas 76210

(Address of Principal Executive Offices, Zip Code)

Registrant’s telephone number, including area code: (940) 898-7500

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02.  Results of Operations and Financial Condition

On November 14, 2013, Sally Beauty Holdings, Inc. (the “Company”) issued the news release attached hereto as Exhibit 99.1 reporting the financial results of the Company for the quarter and the full year ended September 30, 2013 (the “Earnings Release”).  In the Earnings Release, the Company utilized the non-GAAP financial measures and other items discussed in the attached Appendix A, which is incorporated herein by this reference.  Appendix A also contains statements of the Company’s management regarding the use and purposes of the non-GAAP financial measures utilized in the Earnings Release.  A reconciliation of the non-GAAP financial measures discussed in the Earnings Release to the most directly comparable GAAP financial measures is attached to the Earnings Release.

Item 5.02.Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Departure of Kathleen J. Affeldt as Director

On November 12, 2013, Kathleen J. Affeldt, a director of Sally Beauty Holdings, Inc., notified the Company of her resignation from the Company’s Board of Directors (the “Board”) and from all committees of the Board upon which she serves, effective November 12, 2013.  Ms. Affeldt’s resignation was not due to any disagreement with the Company.  Ms. Affeldt has served on the Company’s Board since 2006 and the Company is grateful for Ms. Affeldt’s leadership and commitment to the success of the Company during her tenure as a director of the Company.

Appointment of New Director

On November 12, 2013, the Board appointed John R. Golliher to fill the vacancy resulting from the retirement of Ms. Affeldt, effective November 12, 2013.  Mr. Golliher will be a Class II director and will serve as a director until the 2014 annual meeting of the Company’s stockholders or until his earlier resignation or removal.

Mr. Golliher, age 61, is the President of Beauty Systems Group LLC, or BSG, a position he has held with the Company since 2006. Prior to 2006, Mr. Golliher served as Vice President and General Manager for the West Coast Beauty Systems division of BSG and the Vice President of Full Service Sales, Beauty Systems Group East.

Mr. Golliher will not receive additional compensation for his service as a director.

Appointment of Committee Members and Chairman of Compensation Committee

On November 12, 2013, the Board appointed Edward W. Rabin to replace Ms. Affeldt as the Chairman of the Compensation Committee, Katherine Button Bell to replace Ms. Affeldt as a member of the Compensation Committee and Robert R. McMaster to replace Ms. Affeldt as a member of the Nominating and Corporate Governance Committee.  All of these appointments are effective November 12, 2013.

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ITEM 7.01.  Regulation FD Disclosure

The Earnings Release also provides an update on the Company’s strategy and business outlook.

Item 8.01.Other Events.

Appointment of Tobin Anderson as President of Sally Beauty Supply LLC

On November 12, 2013, the Board appointed Tobin Anderson, age 50, to the position of President of Sally Beauty Supply LLC, effective immediately.  Mr. Anderson replaces Mike Spinozzi, who retired effective November 8, 2013.  Since August 2013, Mr. Anderson has been the Senior Vice President of Sally Beauty Supply in charge of the Sally Beauty Merchandising and Marketing Departments.  Prior to joining the Company, Mr. Anderson has held numerous executive positions in merchandising and sales, including Senior Vice President of Product Innovation and Merchandising at Lenscrafters from 2010 to 2012, Executive Vice President and Chief Merchandising and Sales Officer at Crabtree & Evelyn during 2008 and 2009 and various positions at Bath & Body Works from 1993-2007, most recently as Senior Vice President, Retail Merchandising. Since leaving Lenscrafters in 2012, Mr. Anderson has acted as an independent retail merchandising and product management consultant for retail businesses.

On November 12, 2013, the Company also entered into a Severance Agreement with Mr. Anderson in connection with his promotion on that day.  The terms of his Severance Agreement are substantially the same as the Company’s Severance Agreements with Messrs. Haltom, Flaherty and Golliher, as previously disclosed on the Company’s Current Report on Form 8-K dated as of October 30, 2012, which description is incorporated by reference herein.

ITEM 9.01.  Financial Statements and Exhibits

(d)See exhibit index.

All of the information furnished in Items 2.02, 7.01 and 9.01 of this report and the accompanying appendix and exhibit shall not be deemed to be “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, unless expressly incorporated by reference therein.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SALLY BEAUTY HOLDINGS, INC.
November 14, 2013	By:	/s/ Matt Haltom
	Name:	Matt Haltom
	Title:	Senior Vice President, Secretary and General Counsel

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EXHIBIT INDEX

Exhibit  Number	Description
Exhibit 99.1	News release reporting financial results for the quarter and full year ended September 30, 2013, issued by Sally Beauty Holdings, Inc. on November 14, 2013.

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Appendix A

USE OF NON-GAAP FINANCIAL MEASURES

Sally Beauty Holdings, Inc. (the “Company”) occasionally utilizes financial measures and terms not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”) in order to provide investors with an alternative method for assessing our operating results in a manner that enables investors to more thoroughly evaluate our current performance as compared to past performance.  We also believe these non-GAAP measures provide investors with a more informed baseline for modeling the Company’s future financial performance.  Our management uses these non-GAAP measures for the same purpose.  We believe that our investors should have access to, and that we are obligated to provide, the same set of tools that we use in analyzing our results.  These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results.  We have provided definitions below for certain non-GAAP financial measures, together with an explanation of why management uses these measures and why management believes that these non-GAAP financial measures are useful to investors.  In addition, in our Earnings Release we have provided tables to reconcile the non-GAAP financial measures utilized to GAAP financial measures.  We have provided adjusted net earnings and adjusted EPS metrics for the purpose of adjusting for (i) a 2012 charge related to a potential settlement of litigation, and (ii) losses on extinguishment of debt, interest expense on redeemed debt and unamortized deferred financing costs which we expensed related to the redemption and repayment of certain debt.  Excluding these adjustments provides investors with a better depiction of the Company’s core operating results and provides a more informed baseline for modeling future earnings expectations. We also intend to adjust for all share-based compensation expense recognized in accordance with FAS 123R, including stock option expense and expense related to restricted shares, in addition to the foregoing adjustments, when calculating certain cash flow measures such as Adjusted EBITDA.  The Company believes adjusting for all share-based compensation expense is appropriate, as it is a non-cash expense, and adjusting is consistent with how a number of debt and equity analysts track that measure.

ADJUSTED EBITDA

We define the measure Adjusted EBITDA as GAAP Net Earnings before depreciation and amortization, share-based compensation, interest expense, and income taxes.   We have also adjusted Adjusted EBITDA to exclude (i) a 2012 charge related to a potential settlement of litigation, and (ii) losses on extinguishment of debt, interest expense on redeemed debt and unamortized deferred financing costs which we expensed related to the redemption and repayment of certain debt.   Our management uses Adjusted EBITDA as a supplemental measure in the evaluation of our businesses and believes that Adjusted EBITDA provides a meaningful

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measure of our ability to meet our future debt service, capital expenditures and working capital requirements.  Adjusted EBITDA is not a financial measure under GAAP.  Accordingly, it should not be considered in isolation or as a substitute for net income, operating income, cash flow provided by (used in) operating activities or other income or cash flow data prepared in accordance with GAAP.  When evaluating Adjusted EBITDA, investors should consider, among other factors, (i) increasing or decreasing trends in Adjusted EBITDA, (ii) whether Adjusted EBITDA has remained at positive levels historically, and (iii) how Adjusted EBITDA compares to levels of interest expense. We provide a reconciliation of Adjusted EBITDA to GAAP Net Earnings.  Because Adjusted EBITDA excludes some, but not all, items that affect net earnings and may vary among companies, the Adjusted EBITDA presented by the Company may not be comparable to similarly titled measures of other companies.   Although we believe that Adjusted EBITDA may provide additional information with respect to our ability to meet our future debt service, capital expenditures and working capital requirements, our functional or legal requirements may require us to utilize available funds for other purposes.

ADJUSTED NET EARNINGS

This measure consists of GAAP Net Earnings, which is then adjusted for (i) a 2012 charge related to a potential settlement of litigation, and (ii) losses on extinguishment of debt, interest expense on redeemed debt and unamortized deferred financing costs which we expensed related to the redemption and repayment of certain debt.  Excluding these adjustments provides investors with a better depiction of the Company’s core operating results and provides a more informed baseline for modeling future earnings expectations.  Adjusted Net Earnings does not provide a complete position of our results of operations, as the historical items excluded in the related reconciliation are included in net earnings presented under GAAP.  We recommend a review of net earnings on both a non-GAAP basis and GAAP basis be performed to get a comprehensive view of our results.  We provide a reconciliation of Adjusted Net Earnings to GAAP Net Earnings.

ADJUSTED EARNINGS PER SHARE (ADJUSTED EPS)

We define this non-GAAP financial measure as the portion of the Company’s GAAP Net Earnings assigned to each share of stock, excluding (i) a 2012 charge related to a potential settlement of litigation, and (ii) losses on extinguishment of debt, interest expense on redeemed debt and unamortized deferred financing costs which we expensed related to the redemption and repayment of certain debt.  Excluding these adjustments provides investors with a better depiction of the Company’s core operating results and provides a more informed baseline for modeling future earnings expectations.  We recommend a review of diluted EPS on both a non-GAAP basis and GAAP basis be performed to get a comprehensive view of our results.  We provide a reconciliation of Adjusted Net Earnings to GAAP Net Earnings, as well as information on how these share calculations are made.

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EX-99.1

Exhibit 99.1

	Contact: Karen Fugate
	Investor Relations
	940-297-3877

Sally Beauty Holdings, Inc. Reports Fourth Quarter and Full Year Results

·Net sales in 4Q13 of $906 million; FY2013 of over $3.6 billion

·Same store sales growth in 4Q13 and FY2013; 0.4% and 0.8%, respectively

·4Q13 diluted earnings per share of $0.38; FY2013 diluted earnings per share of $1.48

·During fiscal 2013, repurchased $509.7 million, or 18.9 million shares of common stock

DENTON, Texas, November 14, 2013 — Sally Beauty Holdings, Inc. (NYSE: SBH) (the “Company”) today announced financial results for the fourth quarter and fiscal year ended September 30, 2013.  The Company will hold a conference call today at 10:00 a.m. (Central) to discuss these results and its business.

“Fiscal 2013 was challenging due to comparisons against our record-breaking growth in fiscal 2012 and soft traffic in our Sally U.S. retail business.” stated Gary Winterhalter, Chairman, President and Chief Executive Officer. “Nevertheless, our performance was solid and we executed on our strategic initiatives, including our information technology projects in the U.S. and Europe as well as the new U.K. distribution center.  For 2013, we generated $310 million in operating cash flow and repurchased approximately $510 million, or 19 million shares of our common stock.  As we move into fiscal 2014, I believe that we’ve embarked on the right initiatives to gradually improve retail traffic in the Sally U.S. stores and continue the strong performance at BSG and our International businesses.”

Fiscal 2013 Fourth Quarter and Full Year 2013 Financial Highlights

Net Sales:  For the fiscal 2013 fourth quarter, consolidated net sales were $906.4 million, an increase of 2.7% from the fiscal 2012 fourth quarter.  The fiscal 2013 fourth quarter sales increase is primarily attributed to the addition of new stores and growth in BSG’s full service business.  The impact from changes in foreign currency exchange rates in the fiscal 2013 fourth quarter was not material.  Consolidated same store sales growth in the fiscal 2013 fourth quarter was 0.4% compared to 4.3% in the fiscal 2012 fourth quarter.

Consolidated net sales for fiscal year 2013 were over $3.6 billion, an increase of 2.8% from fiscal year 2012. The impact from foreign currency exchange in the 2013 fiscal year was not material.  Fiscal 2013 sales increased primarily due to the addition of new stores and same stores sales growth.  Consolidated same store sales growth in fiscal year 2013 was 0.8% compared to 6.4% in fiscal year 2012.

Gross Profit:  Consolidated gross profit for the fiscal 2013 fourth quarter was $449.4 million, an increase of 2.1% over gross profit of $440.2 million for the fiscal 2012 fourth quarter.  Gross profit as a percentage of sales (gross profit margin) was 49.6%, a 30 basis point decline from the fiscal 2012 fourth quarter.  Consolidated gross profit margin in the fiscal 2013 fourth quarter was down over the prior year due to difficult comparisons against a record high gross profit margin in BSG due to the timing of vendor allowances in the fiscal 2012 fourth quarter.

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For fiscal year 2013, consolidated gross profit was $1.8 billion, an increase of 3.0% over fiscal 2012 gross profit.  Gross profit as a percentage of sales was 49.6%, a 10 basis point improvement from fiscal year 2012.

In fiscal 2013, gross profit margin improved in both business segments driven by favorable changes in product and customer mix.

Selling, General and Administrative Expenses:  For the fiscal 2013 fourth quarter, consolidated selling, general and administrative (SG&A) expenses, including unallocated corporate expenses and share-based compensation, were $301.9 million, or 33.3% of sales, a 130 basis point improvement from the fiscal 2012 fourth quarter metric of 34.6% of sales and total SG&A expenses of $305.5 million.  Fiscal 2012 fourth quarter SG&A expenses include a charge of $10.2 million related to a litigation settlement.

For fiscal year 2013, SG&A expenses, including $117.1 million of unallocated corporate expenses and share-based compensation, were $1.2 billion, or 33.2% of sales, compared to fiscal year 2012 metric of 33.5% of sales and total SG&A expenses of $1.2 billion.  Fiscal year 2012 SG&A expenses include a $10.2 million charge related to a litigation settlement.

Fiscal year 2013 SG&A expenses did not increase materially over fiscal year 2012.  Although the Company continued its investments in loyalty programs and information technology initiatives, as well the opening of new stores and acquisitions, during fiscal year 2013, the Company took measures to lower costs due to softer-than-expected sales in the Sally U.S. business.

Note: SG&A expenses include unallocated corporate expenses, as detailed in the Company’s segment information on Schedule B.

Interest Expense: Interest expense, net of interest income, for the fiscal 2013 fourth quarter was $27.2 million, up $2.0 million from the fiscal 2012 fourth quarter of $25.2 million.

For fiscal year 2013, interest expense, net of interest income, was $107.7 million, down $30.7 million from the fiscal year 2012 interest expense of $138.4 million.  Interest expense in fiscal year 2012 included $43.2 million in charges in connection with the Company’s debt refinancing initiatives.  Detailed explanations of these charges are provided in the Company’s non-GAAP financial measures reconciliations on Schedule C.

Provision for Income Taxes:  For the fiscal 2013 fourth quarter, income taxes were $36.1 million.  The effective tax rate for the fiscal 2013 fourth quarter was 35.8% compared to 29.2% for the fiscal 2012 fourth quarter.  In the fiscal 2012 fourth quarter, a limited restructuring occurred for U.S. income tax purposes.  This tax planning opportunity resulted in the recognition of $10.3 million in income tax benefits.

For fiscal year 2013, income taxes were $151.5 million versus $127.9 million in fiscal 2012.  The Company’s effective tax rate for fiscal year 2013 was 36.7% compared to 35.4% for fiscal 2012.

Net Earnings and Diluted Net Earnings Per Share (EPS) (1):   Net earnings were $64.8 million in the fiscal 2013 fourth quarter, compared to fiscal 2012 fourth quarter GAAP net earnings of $65.6 million and adjusted net earnings of $72.2 million, down 1.2% and down 10.2%, respectively.  Adjusted net earnings for the fiscal 2012 fourth quarter excluded a $10.2 million charge, before taxes, related to a litigation settlement.

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Diluted earnings per share for the fiscal 2013 fourth quarter were $0.38 compared to fiscal 2012 fourth quarter GAAP diluted earnings per share of $0.35 and adjusted diluted earnings per share of $0.39, an increase of 8.6% and a decrease of 2.6%, respectively.

Net earnings were $261.2 million in fiscal year 2013, compared to fiscal year 2012 GAAP net earnings of $233.1 million and adjusted net earnings of $267.2 million, an increase of 12.1% and a decrease of 2.3%, respectively.

Diluted earnings per share in fiscal year 2013 were $1.48 compared to fiscal year 2012 GAAP diluted earnings per share of $1.24 and adjusted diluted earnings per share of $1.42, an increase of 19.4% and 4.2%, respectively.

Fiscal year 2012 adjusted net earnings includes adjustments of $34.2 million, net of tax, and are described in detail on Schedule C.

Adjusted (Non-GAAP) EBITDA(1):  Adjusted EBITDA for the fiscal 2013 fourth quarter was $151.1 million, an increase of 2.1% from $148.0 million for the fiscal 2012 fourth quarter.

Fiscal year 2013 Adjusted EBITDA was $611.8 million, an increase of 3.5% from $591.1 million in fiscal 2012.

(1)A detailed table reconciling 2013 and 2012 GAAP net earnings to adjusted net earnings, adjusted EPS and adjusted EBITDA is included in Supplemental Schedule C.

Financial Position, Capital Expenditures and Working Capital:  Cash and cash equivalents as of September 30, 2013, were $47.1 million.  The Company ended fiscal year 2013 with a $76.0 million balance on its asset-based loan (ABL) revolving credit facility.  Borrowing capacity on the ABL facility was approximately $382.3 million at the end of fiscal year 2013.  The Company’s debt, excluding capital leases, totaled $1.686 billion as of September 30, 2013.  Net cash provided by operating activities for fiscal year 2013 was $310.5 million.

During the fiscal 2013 fourth quarter, the Company repurchased (and subsequently retired) a total of 3.8 million shares of its common stock at an aggregate cost of $102.5 million.

For the fiscal 2013 year, the Company repurchased (and subsequently retired) a total of 18.9 million shares of its common stock at an aggregate cost of $509.7 million.  As of September 30, 2013, the Company has approximately $457 million remaining under its $700 million stock repurchase plan authorization announced on March 5, 2013

For the full year ended September 30, 2013, the Company’s capital expenditures, excluding acquisitions, totaled $84.9 million.

Working capital (current assets less current liabilities) decreased $213.4 million to $473.2 million at September 30, 2013, compared to $686.5 million at September 30, 2012.  Working capital in fiscal year 2012 includes $150 million of cash from debt issuance on September 5, 2012.  The ratio of current assets to current liabilities was 1.87 to 1.00 at September 30, 2013, compared to 2.44 to 1.00 at September 30, 2012.

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Inventory as of September 30, 2013 was $808.3 million, an increase of $73.0 million or growth of 9.9% from September 30, 2012 inventory.  This increase is primarily due to sales growth from new store openings and new product offerings.

Business Segment Results:

Sally Beauty Supply

Fiscal 2013 Fourth Quarter Results for Sally Beauty Supply

·Sales of $556.1 million, up 0.2% from $554.7 million in the fiscal 2012 fourth quarter.  The favorable impact of foreign currency exchange on net sales was $1.0 million, or 0.2% of sales.

·Same store sales declined 1.5% versus growth of 3.8% in the fiscal 2012 fourth quarter.

·Gross margin of 54.9%, a 10 basis point improvement from 54.8% in the fiscal 2012 fourth quarter.

·Segment operating earnings of $107.3 million, up 7.8% from $99.5 million in the fiscal 2012 fourth quarter.  Segment operating margins increased 140 basis points to 19.3% of sales from 17.9% in the fiscal 2012 fourth quarter.  In the fiscal 2012 fourth quarter, segment operating results were negatively impacted by a $10.2 million charge related to a litigation settlement.

Sales growth in the fiscal 2013 fourth quarter was driven by new store openings and growth in the international business which were largely offset by a same store sales decline in the Sally U.S. business.  Gross profit margin expansion of 10 basis points resulted from improvement in the international business.

Fiscal 2013 Results for Sally Beauty Supply

·Sales of $2.2 billion, up 1.4% over fiscal year 2012.  The impact of foreign currency exchange was not material for the year.

·Same store sales declined 0.6% versus growth of 6.5% in fiscal year 2012.

·Sales from international locations (Mexico, Canada, the United Kingdom, Ireland, Belgium, the Netherlands, France, Germany, Spain and Chile) represented 23% of segment sales versus 22% in fiscal 2012.

·Gross margin of 54.9%, up 30 bps from 54.6% in fiscal 2012.

·Segment operating earnings of $437.0 million, up 1.7% from $429.5 million in fiscal 2012. Segment operating margins increased 10 basis points to 19.6% of sales from 19.5% in fiscal 2012.

·Net store base increased by 115 or 3.5% for total store count of 3,424.  Store growth in the U.S. business was 2.7% while store growth in the international business was 6.4%.

Sales growth in fiscal 2013 was driven by new store openings and growth in the international business while partially offset by a same store sales decline in the Sally U.S. business.  Gross profit margin improvement of 30 bps resulted from the favorable shift in product and customer mix and low-cost sourcing initiatives in the U.S. business and improvement in the international business.

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Beauty Systems Group

Fiscal 2013 Fourth Quarter Results for Beauty Systems Group

·Sales of $350.3 million, up 6.9% from $327.8 million in the fiscal 2012 fourth quarter.  The impact of unfavorable foreign currency exchange on net sales was $1.5 million, or 0.4% of sales.

·Same store sales growth of 5.2% versus 5.5% in the fiscal 2012 fourth quarter.

·Gross margin of 41.1%, down 50 basis points from 41.6% in the fiscal 2012 fourth quarter.

·Segment operating earnings of $49.2 million, up 4.4% from $47.1 million in the fiscal 2012 fourth quarter.

·Segment operating margins declined by 40 basis points to 14.0% of sales from 14.4% in the fiscal 2012 fourth quarter.

Sales growth for Beauty Systems Group was driven by growth in same store sales, new store openings and the full service business. Consolidated gross profit margin in the fiscal 2013 fourth quarter was down over the prior year due to difficult comparisons against a record high gross profit margin in BSG due to the timing of vendor allowances in the fiscal 2012 fourth quarter.  Segment operating earnings growth is primarily due to sales growth and SG&A leverage.  Segment operating margins are down primarily due to a decline in gross margin.

Fiscal 2013 Results for Beauty Systems Group

·Sales of $1.4 billion, up 5.1% from $1.3 billion in fiscal 2012.  The impact of foreign currency exchange on net sales was not material for the year.

·Same store sales growth of 4.2% versus 6.1% in fiscal 2012.

·Gross margin of 41.1%, up from 41.0% in fiscal 2012, a 10 basis point improvement.

·Segment operating earnings of $200.5 million, up 9.7% from $182.7 million in fiscal 2012.

·Segment operating margins increased to 14.4% of sales from 13.8% in fiscal 2012, a 60 basis point improvement.

·Net store base increased by 55 or 4.6% for total store count of 1,245, including 161 franchised locations.

·Total BSG distributor sales consultants at the end of fiscal 2013 were 982 versus 1,044 at the end of fiscal 2012.

Sales growth in fiscal year 2013 for the Beauty Systems Group was primarily due to same store sales growth and new store openings. Gross margin expansion was primarily due to improved sales and product mix, and expansion in new and existing territories.  Segment earnings growth is primarily due to sales growth, gross profit improvement and SG&A leverage.

Fiscal Year 2014 Outlook

·Fiscal year 2014 consolidated same store sales growth is expected to be in the range of 1% to 3%, and assumes a gradual sales improvement in the Sally U.S. retail business throughout fiscal year 2014.

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·Consolidated gross profit margin expansion is expected to be in the range of 30 bps to 40 bps and assumes a gradual sales improvement in the Sally U.S. retail business throughout fiscal year 2014.

·Fiscal year 2014 unallocated corporate expenses, including approximately $19 million in share-based compensation, are expected to be in the range of $135 million to $140 million.

·Consolidated SG&A as a percent of sales is expected to be in the range of 33.3% to 33.5%, higher than fiscal 2013 due to investments made to enter new countries, higher compensation due in part to expanding Sally’s marketing staff and continued investments in marketing initiatives.

·The effective tax rate for fiscal year 2014 is expected to be in the range of 36.5% to 37.5%.

·Capital expenditures for fiscal year 2014 are projected to be in the range of $85 million to $90 million.

·Consolidated organic store growth of 3% to 4%.

Conference Call and Where You Can Find Additional Information

As previously announced, at approximately 10:00 a.m. (Central) today the Company will hold a conference call and audio webcast to discuss its financial results and its business.  During the conference call, the Company may discuss and answer one or more questions concerning business and financial matters and trends affecting the Company.  The Company’s responses to these questions, as well as other matters discussed during the conference call, may contain or constitute material information that has not been previously disclosed.  Simultaneous to the conference call, an audio webcast of the call will be available via a link on the Company’s website, investor.sallybeautyholdings.com.  The conference call can be accessed by dialing 800-230-1092 (International:  612-332-0107).  The teleconference will be held in a “listen-only” mode for all participants other than the Company’s current sell-side and buy-side investment professionals.  If you are unable to listen in this conference call, the replay will be available at about 12:00 p.m. (Central) November 14, 2013 through November 28, 2013 by dialing 1-800-475-6701 or if international dial 320-365-3844 and reference the conference ID number 307628.  Also, a website replay will be available on investor.sallybeautyholdings.com

About Sally Beauty Holdings, Inc.

Sally Beauty Holdings, Inc. (NYSE: SBH) is an international specialty retailer and distributor of professional beauty supplies with revenues of $3.6 billion annually.  Through the Sally Beauty Supply and Beauty Systems Group businesses, the Company sells and distributes through 4,700 stores, including approximately 200 franchised units, throughout the United States, the United Kingdom, Belgium, Chile, France, the Netherlands, Canada, Puerto Rico, Mexico, Ireland, Spain and Germany.  Sally Beauty Supply stores offers up to 10,000 products for hair, skin, and nails through professional lines such as Clairol, L’Oreal, Wella and Conair, as well as an extensive selection of proprietary merchandise. Beauty Systems Group stores, branded as CosmoProf or Armstrong McCall stores, along with its outside sales consultants, sell up to 10,000 professionally branded products including Paul Mitchell, Wella, Sebastian, Goldwell, Joico, and Aquage which are targeted exclusively for professional and salon use and resale to their customers.  For more information about Sally Beauty Holdings, Inc., please visit sallybeautyholdings.com.

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Cautionary Notice Regarding Forward-Looking Statements

Statements in this news release and the schedules hereto which are not purely historical facts or which depend upon future events may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would,” or similar expressions may also identify such forward-looking statements.

Readers are cautioned not to place undue reliance on forward-looking statements as such statements speak only as of the date they were made.  Any forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements, including, but not limited to, risks and uncertainties related to: the highly competitive nature of, and the increasing consolidation of, the beauty products distribution industry; anticipating changes in consumer preferences and buying trends and managing our product lines and inventory; potential fluctuation in our same store sales and quarterly financial performance; our dependence upon manufacturers who may be unwilling or unable to continue to supply products to us; the possibility of material interruptions in the supply of beauty supply products by our manufacturers or third-party distributors; products sold by us being found to be defective in labeling or content; compliance with laws and regulations or becoming subject to additional or more stringent laws and regulations; product diversion; the operational and financial performance of our franchise-based business; the success of our e-commerce business; successfully identifying acquisition candidates and successfully completing desirable acquisitions; integrating acquired businesses; opening and operating new stores profitably; the impact of in the health of the economy upon our business; the success of our cost control plans; protecting our intellectual property rights, particularly our trademarks; the risk that our products may infringe on the intellectual property of others; conducting business outside the United States; disruption in our information technology systems; severe weather, natural disasters or acts of violence or terrorism; the preparedness of our accounting and other management systems to meet financial reporting and other requirements and the upgrade of our financial reporting system; being a holding company, with no operations of our own, and depending on our subsidiaries for cash; our substantial indebtedness; the possibility that we may incur substantial additional debt, including secured debt, in the future; restrictions and limitations in the agreements and instruments governing our debt; generating the significant amount of cash needed to service all of our debt and refinancing all or a portion of our indebtedness or obtaining additional financing; changes in interest rates increasing the cost of servicing our debt; the potential impact on us if the financial institutions we deal with become impaired; and the costs and effects of litigation.

Additional factors that could cause actual events or results to differ materially from the events or results described in the forward-looking statements can be found in our most recent Annual Report on Form 10-K for the year ended September 30, 2013, as filed with the Securities and Exchange Commission.  Consequently, all forward-looking statements in this release are qualified by the factors, risks and uncertainties contained therein.  We assume no obligation to publicly update or revise any forward-looking statements.

Note Concerning Non-GAAP Measurement Tools

We have provided detailed explanations of our non-GAAP financial measures in our Form 8-K filed this morning, which is available on our website.

Supplemental Schedules

Consolidated Statement of Earnings	A
Segment Information	B
Non-GAAP Financial Measures Reconciliations	C
Store Count and Same Store Sales	D
Selected Financial Data and Debt	E

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Supplemental Schedule A

SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

	Three Months Ended						Twelve Months Ended
	September 30,						September 30,
	2013		2012		% CHG		2013		2012		% CHG
Net sales	$	906,435	$	882,557	2.7	%	$	3,622,216	$	3,523,644	2.8	%
Cost of products sold and distribution expenses	457,077		442,321		3.3	%	1,826,953		1,780,385		2.6	%
Gross profit	449,358		440,236		2.1	%	1,795,263		1,743,259		3.0	%
Selling, general and administrative expenses (1)	301,931		305,469		-1.2	%	1,202,709		1,179,206		2.0	%
Depreciation and amortization	19,340		16,906		14.4	%	72,192		64,698		11.6	%
Operating earnings	128,087		117,861		8.7	%	520,362		499,355		4.2	%
Interest expense (2)	27,185		25,172		8.0	%	107,695		138,412		-22.2	%
Earnings before provision for income taxes	100,902		92,689		8.9	%	412,667		360,943		14.3	%
Provision for income taxes	36,090		27,059		33.4	%	151,516		127,879		18.5	%
Net earnings	$	64,812	$	65,630	-1.2	%	$	261,151	$	233,064	12.1	%
Net earnings per share:
Basic	$	0.39	$	0.36	8.3	%	$	1.52	$	1.27	19.7	%
Diluted	$	0.38	$	0.35	8.6	%	$	1.48	$	1.24	19.4	%
Weighted average shares:
Basic	166,204		179,911				171,682		183,420
Diluted	170,734		185,425				176,159		188,610

					Basis Pt Chg						Basis Pt Chg
Comparison as a % of Net sales
Sally Beauty Supply Segment Gross Profit Margin	54.9	%	54.8	%	10		54.9	%	54.6	%	30
BSG Segment Gross Profit Margin	41.1	%	41.6	%	(50	)	41.1	%	41.0	%	10
Consolidated Gross Profit Margin	49.6	%	49.9	%	(30	)	49.6	%	49.5	%	10
Selling, general and administrative expenses	33.3	%	34.6	%	(130	)	33.2	%	33.5	%	(30	)
Consolidated Operating Profit Margin	14.1	%	13.4	%	70		14.4	%	14.2	%	20
Net Earnings Margin	7.2	%	7.4	%	(20	)	7.2	%	6.6	%	60
Effective Tax Rate	35.8	%	29.2	%	660		36.7	%	35.4	%	130

(1)Selling, general and administrative expenses include share-based compensation of $3.7 million and $3.1 million for the three months ended September 30, 2013 and 2012; and $19.2 million and $16.9 million for the twelve months ended September 30, 2013 and 2012, respectively.

(2)Interest expense is net of interest income of $0.2 million for the twelve months ended September 30, 2013 and 2012. For the twelve months ended September 30, 2012, interest expense includes losses on extinguishment of debt aggregating $37.8 million in connection with the Company’s December 2011 redemption of outstanding notes and its May 2012 repayment in full of a senior term loan.

Supplemental Schedule B

SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Segment Information

(In thousands)

(Unaudited)

	Three Months Ended								Twelve Months Ended
	September 30,								September 30,
	2013			2012			% CHG		2013			2012			% CHG
Net sales:
Sally Beauty Supply	$	556,086		$	554,719		0.2	%	$	2,230,028		$	2,198,468		1.4	%
Beauty Systems Group	350,349			327,838			6.9	%	1,392,188			1,325,176			5.1	%
Total net sales	$	906,435		$	882,557		2.7	%	$	3,622,216		$	3,523,644		2.8	%
Operating earnings:
Sally Beauty Supply (1)	$	107,303		$	99,497		7.8	%	$	437,018		$	429,520		1.7	%
Beauty Systems Group	49,185			47,108			4.4	%	200,492			182,699			9.7	%
Segment operating earnings	$	156,488		$	146,605		6.7	%	$	637,510		$	612,219		4.1	%
Unallocated corporate expenses (2)	(24,702		)	(25,694		)	-3.9	%	(97,947		)	(96,012		)	2.0	%
Share-based compensation	(3,699		)	(3,050		)	21.3	%	(19,201		)	(16,852		)	13.9	%
Interest expense (3)	(27,185		)	(25,172		)	8.0	%	(107,695		)	(138,412		)	-22.2	%
Earnings before provision for income taxes	$	100,902		$	92,689		8.9	%	$	412,667		$	360,943		14.3	%

					Basis Pt Chg						Basis Pt Chg
Segment operating profit margin:
Sally Beauty Supply	19.3	%	17.9	%	140		19.6	%	19.5	%	10
Beauty Systems Group	14.0	%	14.4	%	(40	)	14.4	%	13.8	%	60
Consolidated operating profit margin	14.1	%	13.4	%	70		14.4	%	14.2	%	20

(1)For the twelve months ended September 30, 2012, the Sally Beauty Supply segment reflect a $10.2 million charge from a litigation settlement.

(2)Unallocated expenses consist of corporate and shared costs.

(3)For the twelve months ended September 30, 2012, interest expense includes losses on extinguishment of debt aggregating $37.8 million in connection with the Company’s December 2011 redemption outstanding notes and its May 2012 repayment in full of a senior term loan.

Supplemental Schedule C

SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Non-GAAP Financial Measures Reconciliations

(In thousands, except per share data)

(Unaudited)

	Three Months Ended							Twelve Months Ended
	September 30,							September 30,
	2013		2012			% CHG		2013		2012			% CHG
Adjusted EBITDA:
Net earnings (per GAAP)	$	64,812	$	65,630		-1.2	%	$	261,151	$	233,064		12.1	%
Add:
Depreciation and amortization	19,340		16,906			14.4	%	72,192		64,698			11.6	%
Share-based compensation (1)	3,699		3,050			21.3	%	19,201		16,852			13.9	%
Interest expense (2)(3)	27,185		25,172			8.0	%	107,695		138,412			-22.2	%
Litigation settlement (4)	—		10,194			N/A		—		10,194			N/A
Provision for income taxes	36,090		27,059			33.4	%	151,516		127,879			18.5	%
Adjusted EBITDA (Non-GAAP)	$	151,126	$	148,011		2.1	%	$	611,755	$	591,099		3.5	%
Net earnings (per GAAP)	$	64,812	$	65,630				$	261,151	$	233,064
Add (Less):
Losses on extinguishment of debt (2)	—		—					—		37,789
Interest expense on redeemed debt (3)	—		—					—		5,149
Amortization of deferred financing costs	—		—					—		229
Litigation settlement (4)	—		10,194					—		10,194
Tax provision for the adjustments to net earnings (5)	—		(3,670		)			—		(19,210		)
Adjusted net earnings, excluding non-recurring items (Non-GAAP)	$	64,812	$	72,154		-10.2	%	$	261,151	$	267,215		-2.3	%
Adjusted net earnings per share (Non-GAAP):
Basic	$	0.39	$	0.40		-2.5	%	$	1.52	$	1.46		4.1	%
Diluted	$	0.38	$	0.39		-2.6	%	$	1.48	$	1.42		4.2	%
Weighted average shares:
Basic	166,204		179,911					171,682		183,420
Diluted	170,734		185,425					176,159		188,610

(1)Share-based compensation for the twelve months ended September 30, 2013 and 2012 includes $5.9 million and $5.3 million, respectively, of accelerated expense related to certain retirement-eligible employees who are eligible to continue vesting awards upon retirement.

(2)For the twelve months ended September 30, 2012, interest expense includes losses on extinguishment of debt aggregating $37.8 million in connection with the Company’s December 2011 redemption of outstanding notes and its May 2012 repayment in full of a senior term loan. This amount includes a premium paid to redeem the notes, as well as unamortized deferred financing costs expensed in connection with the notes redeemed and the loan repaid.

(3)For the twelve months ended September 30, 2012, interest expense includes interest of $5.1 million on outstanding notes after November 8, 2011 and until their redemption in full, as well as interest on the Company’s new senior notes due 2019 issued on that date. This pro-forma adjustment assumes the notes were redeemed on November 8, 2011.

(4)Results for the twelve months ended September 30, 2012, reflect a $10.2 million charge from a litigation settlement.

(5)The tax provisions for the adjustments to net earnings were calculated using an estimated effective tax rate of 36.0% in the twelve months ended September 30, 2012.

Supplemental Schedule D

SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Store Count and Same Store Sales

(Unaudited)

	As of September 30,
	2013	2012	CHG
Number of retail stores (end of period):
Sally Beauty Supply:
Company-operated stores	3,403	3,284	119
Franchise stores	21	25	(4	)
Total Sally Beauty Supply	3,424	3,309	115
Beauty Systems Group:
Company-operated stores	1,084	1,031	53
Franchise stores	161	159	2
Total Beauty System Group	1,245	1,190	55
Total	4,669	4,499	170
BSG distributor sales consultants (end of period) (1)	982	1,044	(62	)

	2013		2012		Basis Pt Chg
Fourth quarter company-operated same store sales growth (decline) (2)
Sally Beauty Supply	-1.5	%	3.8	%	(530	)
Beauty Systems Group	5.2	%	5.5	%	(30	)
Consolidated	0.4	%	4.3	%	(390	)

					Basis Pt Chg
Fiscal year ended September 30 company-operated same store sales growth (decline) (2)
Sally Beauty Supply	-0.6	%	6.5	%	(710	)
Beauty Systems Group	4.2	%	6.1	%	(190	)
Consolidated	0.8	%	6.4	%	(560	)

(1)Includes 321 and 356 distributor sales consultants as reported by our franchisees at September 30, 2013 and 2012, respectively.

(2)For the purpose of calculating our same store sales metrics, we compare the current period sales for stores open for 14 months or longer as of the last day of a month with the sales for these stores for the comparable period in the prior fiscal year. Our same store sales are calculated in constant U.S. dollars and include internet-based sales and the effect of store expansions, if applicable, but do not generally include the sales of stores relocated until 14 months after the relocation. The sales of stores acquired are excluded from our same store sales calculation until 14 months after the acquisition.

Supplemental Schedule E

SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Selected Financial Data and Debt

(In thousands)

(Unaudited)

	As of September 30,
	2013			2012
Financial condition information (at period end):
Working capital	$	473,164		$	686,519
Cash and cash equivalents	47,115			240,220
Property and equipment, net	229,540			202,661
Total assets	1,950,086			2,065,800
Total debt, including capital leases	1,690,703			1,617,230
Total stockholders’ (deficit) equity	$	(303,479	)	$	(115,085	)

Debt position excluding capital leases:

		At September 30,
	Interest Rates	2013
Revolving ABL facility	(i) Prime + 0.50-0.75% or (ii) LIBOR + 1.50-1.75%	$	76,000
Senior notes due 2019	6.875%	750,000
Senior notes due 2022 (1)	5.750% (1)	858,381
Other (2)	4.93% to 5.79%	1,310
Total debt		$	1,685,691

Debt maturities excluding capital leases:

Twelve months ending September 30,
2014	$	77,203
2015	107
2016-2018	—
Thereafter (1)	1,608,381
Total debt	$	1,685,691

(1)Includes unamortized premium of $8.4 million related to notes issued in September 2012 with an aggregate principal amount of $150.0 million. The 5.75% interest rate relates to notes in the aggregate principal amount of $850.0 million.

(2)Represents pre-acquisition debt of businesses acquired.