Minnesota | 1-12725 | 41-0749934 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No) |
EXHIBIT NUMBER | ||
99 | Regis Corporation News Release dated October 29, 2015. |
REGIS CORPORATION | |||
Dated: October 29, 2015 | By: | /s/ Eric Bakken | |
Name: Eric Bakken, Title: Secretary |
EXHIBIT NUMBER | ||
99 | Regis Corporation News Release dated October 29, 2015. |
Exhibit No. 99 | |
![]() | CONTACT: REGIS CORPORATION: Mark Fosland – SVP, Finance and Investor |
Relations, 952-806-1707 |
• | Sales of $450.1 million, a decline of $14.4 million. Same-store sales increased 0.7%. |
◦ | Same-store service sales increased 0.3% and same-store product sales increased 2.4%. |
• | GAAP net loss of $(0.8) million or $(0.02) per diluted share. |
◦ | Includes $(0.03) per diluted share impact due to the deferred tax valuation allowance on income tax expense. |
• | EBITDA, as adjusted, of $22.9 million compared to $21.9 million in the prior year quarter. |
◦ | Increase of $2.2 million from same-store sales improvement and franchise growth. |
◦ | Decline of $(1.2) million mainly from minimum wage increases, stylist productivity, impact of an additional year of earned performance equity grants, planned strategic investments and foreign exchange, partly offset by costs savings, reduced self-insurance, lapping certain costs in the prior year quarter, and lower marketing expenditures due to timing. |
• | Diluted EPS, as adjusted, was $(0.02) compared to $(0.17) in the prior year quarter. |
◦ | Excluding the impact of the deferred tax valuation allowance, Diluted EPS, as adjusted, increased $0.05 per share compared to the prior year quarter. |
◦ | Increase of $0.03 per share from same-store sales improvement and franchise growth. |
◦ | Increase of $0.01 per share due to lower depreciation, cost savings, reduced self-insurance, lower interest expense, lapping certain costs in the prior year quarter, and lower marketing expenditures due to timing, partly offset by minimum wage increases, stylist productivity, impact of an additional year of earned performance equity grants, planned strategic investments, foreign exchange and non-cash losses from our equity investment in Empire Education Group. |
◦ | Increase of $0.01 per share due to reduced shares outstanding. |
• | The current quarter GAAP net loss includes discrete income of $0.2 million. The prior year quarter GAAP net loss includes net discrete expense of $0.6 million. See non-GAAP reconciliations. |
Comparable Profitability Measures | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended September 30, | Fiscal Years Ended June 30, | |||||||||||||||
2015 | 2014(1) | 2015(1) | 2014(1) | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Revenue | $ | 450.1 | $ | 464.6 | $ | 1,837.3 | $ | 1,892.4 | ||||||||
Revenue decline % | (3.1 | ) | (0.9 | ) | (2.9 | ) | (6.3 | ) | ||||||||
Same-Store Sales % | 0.7 | 0.6 | (0.3 | ) | (4.8 | ) | ||||||||||
Same-Store Average Ticket % Change | 2.1 | 1.8 | 1.6 | 1.3 | ||||||||||||
Same-Store Guest Count % Change | (1.4 | ) | (1.2 | ) | (1.9 | ) | (6.1 | ) | ||||||||
Cost of Service and Product %, U.S. GAAP reported and as adjusted (2) | 59.5 | 59.2 | 59.3 | 59.1 | ||||||||||||
Cost of Service % (2) | 62.2 | 61.3 | 61.8 | 61.3 | ||||||||||||
Cost of Product % (2) | 48.9 | 50.7 | 49.7 | 50.3 | ||||||||||||
Cost of Product %, as adjusted (2) | 48.9 | 50.7 | 49.7 | 50.1 | ||||||||||||
Site operating expense as % of total revenues, U.S. GAAP reported | 10.6 | 11.1 | 10.5 | 10.8 | ||||||||||||
Site operating expense as % of total revenues, as adjusted | 10.7 | 11.1 | 10.6 | 10.9 | ||||||||||||
General and administrative as % of total revenues, U.S. GAAP reported | 9.9 | 9.7 | 10.1 | 9.1 | ||||||||||||
General and administrative as % of total revenues, as adjusted | 9.9 | 9.6 | 10.1 | 9.1 | ||||||||||||
Operating income (loss) as % of total revenues, U.S. GAAP reported | 0.9 | (0.2 | ) | 0.2 | (1.8 | ) | ||||||||||
Operating income as % of total revenues, as adjusted | 0.9 | 0.0 | 0.1 | 0.0 | ||||||||||||
EBITDA | 22.2 | 21.7 | 73.8 | 56.5 | ||||||||||||
EBITDA, as adjusted | 22.9 | 21.9 | 86.5 | 100.8 |
(1) | Amounts for fiscal years 2015 and 2014 have been revised. |
(2) | Excludes depreciation and amortization. |
September 30, 2015 (Unaudited) | June 30, 2015 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 176,780 | $ | 212,279 | ||||
Receivables, net | 24,247 | 24,631 | ||||||
Inventories | 140,333 | 128,610 | ||||||
Other current assets | 62,496 | 62,762 | ||||||
Total current assets | 403,856 | 428,282 | ||||||
Property and equipment, net | 206,261 | 218,157 | ||||||
Goodwill | 416,057 | 418,953 | ||||||
Other intangibles, net | 16,240 | 17,069 | ||||||
Investment in affiliates | 14,453 | 15,321 | ||||||
Other assets | 63,506 | 64,233 | ||||||
Total assets | $ | 1,120,373 | $ | 1,162,015 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Long-term debt and capital lease obligations, current | $ | — | $ | 2 | ||||
Accounts payable | 74,125 | 63,302 | ||||||
Accrued expenses | 146,803 | 153,362 | ||||||
Total current liabilities | 220,928 | 216,666 | ||||||
Long-term debt | 120,000 | 120,000 | ||||||
Other noncurrent liabilities | 198,906 | 197,905 | ||||||
Total liabilities | 539,834 | 534,571 | ||||||
Commitments and contingencies (Note 6) | ||||||||
Shareholders’ equity: | ||||||||
Common stock, $0.05 par value; issued and outstanding 50,338,680 and 53,664,366 common shares at September 30, 2015 and June 30, 2015, respectively | 2,517 | 2,683 | ||||||
Additional paid-in capital | 256,660 | 298,396 | ||||||
Accumulated other comprehensive income | 5,234 | 9,506 | ||||||
Retained earnings | 316,128 | 316,859 | ||||||
Total shareholders’ equity | 580,539 | 627,444 | ||||||
Total liabilities and shareholders’ equity | $ | 1,120,373 | $ | 1,162,015 |
Three Months Ended September 30, | ||||||||
2015 | 2014(1) | |||||||
Revenues: | ||||||||
Service | $ | 350,161 | $ | 364,742 | ||||
Product | 87,976 | 88,762 | ||||||
Royalties and fees | 11,993 | 11,047 | ||||||
450,130 | 464,551 | |||||||
Operating expenses: | ||||||||
Cost of service | 217,768 | 223,687 | ||||||
Cost of product | 43,036 | 44,977 | ||||||
Site operating expenses | 47,828 | 51,572 | ||||||
General and administrative | 44,548 | 45,185 | ||||||
Rent | 74,819 | 77,696 | ||||||
Depreciation and amortization | 17,855 | 22,188 | ||||||
Total operating expenses | 445,854 | 465,305 | ||||||
Operating income (loss) | 4,276 | (754 | ) | |||||
Other (expense) income: | ||||||||
Interest expense | (2,354 | ) | (3,098 | ) | ||||
Interest income and other, net | 944 | (127 | ) | |||||
Income (loss) before income taxes and equity in (loss) income of affiliated companies | 2,866 | (3,979 | ) | |||||
Income taxes | (2,816 | ) | (6,256 | ) | ||||
Equity in (loss) income of affiliated companies, net of income taxes | (858 | ) | 392 | |||||
Net loss | $ | (808 | ) | $ | (9,843 | ) | ||
Net loss per share: | ||||||||
Basic and diluted | $ | (0.02 | ) | $ | (0.18 | ) | ||
Weighted average common and common equivalent shares outstanding: | ||||||||
Basic and diluted | 52,793 | 55,743 |
Three Months Ended September 30, | ||||||||
2015 | 2014(1) | |||||||
Net loss | $ | (808 | ) | $ | (9,843 | ) | ||
Other comprehensive loss: | ||||||||
Foreign currency translation adjustments during the period | (4,272 | ) | (4,622 | ) | ||||
Other comprehensive loss | (4,272 | ) | (4,622 | ) | ||||
Comprehensive loss | $ | (5,080 | ) | $ | (14,465 | ) |
Three Months Ended September 30, | ||||||||
2015 | 2014(1) | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (808 | ) | $ | (9,843 | ) | ||
Adjustments to reconcile net loss to net cash provided by: | ||||||||
Depreciation and amortization | 15,205 | 18,122 | ||||||
Equity in loss (income) of affiliated companies | 858 | (392 | ) | |||||
Deferred income taxes | 1,727 | 4,619 | ||||||
Gain on sale of salon assets | (407 | ) | — | |||||
Salon asset impairment | 2,650 | 4,066 | ||||||
Stock-based compensation | 2,508 | 1,781 | ||||||
Amortization of debt discount and financing costs | 337 | 618 | ||||||
Other non-cash items affecting earnings | 8 | 343 | ||||||
Changes in operating assets and liabilities, excluding the effects of asset sales | (10,224 | ) | (3,281 | ) | ||||
Net cash provided by operating activities | 11,854 | 16,033 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (8,611 | ) | (11,629 | ) | ||||
Proceeds from sale of assets | 684 | 4 | ||||||
Change in restricted cash | (682 | ) | — | |||||
Net cash used in investing activities | (8,609 | ) | (11,625 | ) | ||||
Cash flows from financing activities: | ||||||||
Repayments of long-term debt and capital lease obligations | (2 | ) | (173,740 | ) | ||||
Repurchase of common stock (2) | (38,418 | ) | (21,529 | ) | ||||
Net cash used in financing activities | (38,420 | ) | (195,269 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (324 | ) | (1,509 | ) | ||||
Decrease in cash and cash equivalents | (35,499 | ) | (192,370 | ) | ||||
Cash and cash equivalents: | ||||||||
Beginning of period | 212,279 | 378,627 | ||||||
End of period | $ | 176,780 | $ | 186,257 | ||||
(2) | During the three months ended September 30, 2015, the Company repurchased approximately 3.4 million shares of common stock for $43.7 million, of which $5.3 million had not been paid for as of September 30, 2015. |
For the Three Months Ended | ||||||||||||||||||
September 30, 2015 | September 30, 2014 | |||||||||||||||||
Service | Retail | Total | Service | Retail | Total | |||||||||||||
SmartStyle | 3.7 | % | 3.5 | % | 3.6 | % | 3.6 | % | 3.4 | % | 3.5 | % | ||||||
Supercuts | 1.7 | 7.7 | 2.2 | 1.7 | 6.5 | 2.1 | ||||||||||||
MasterCuts | (4.0 | ) | (2.4 | ) | (3.8 | ) | (3.5 | ) | 3.8 | (2.3 | ) | |||||||
Other Value | (0.9 | ) | 5.4 | (0.2 | ) | (1.4 | ) | 9.9 | (0.4 | ) | ||||||||
North American Value | 0.9 | % | 3.8 | % | 1.5 | % | 0.7 | % | 4.9 | % | 1.4 | % | ||||||
North American Premium | (2.5 | )% | (2.9 | )% | (2.6 | )% | (3.4 | )% | 1.7 | % | (2.5 | )% | ||||||
International | 0.2 | % | — | % | 0.1 | % | 1.7 | % | (5.3 | )% | (0.3 | )% | ||||||
Consolidated | 0.3 | % | 2.4 | % | 0.7 | % | — | % | 3.5 | % | 0.6 | % |
(1) | Same-store sales are calculated on a daily basis as the total change in sales for company-owned locations that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and fiscal year same-store sales are the sum of the same-store sales computed on a daily basis. Locations relocated within a one-mile radius are included in same-store sales as they are considered to have been open in the prior period. International same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation. |
September 30, 2015 | June 30, 2015 | |||||
COMPANY-OWNED SALONS: | ||||||
SmartStyle/Cost Cutters in Walmart Stores | 2,663 | 2,639 | ||||
Supercuts | 1,079 | 1,092 | ||||
MasterCuts | 461 | 466 | ||||
Other Value | 1,681 | 1,711 | ||||
Regis salons | 750 | 761 | ||||
Total North American Salons (1) | 6,634 | 6,669 | ||||
Total International Salons (2) | 349 | 356 | ||||
Total Company-owned Salons | 6,983 | 7,025 | ||||
FRANCHISE SALONS: | ||||||
SmartStyle/Cost Cutters in Walmart Stores | 127 | 127 | ||||
Supercuts | 1,453 | 1,393 | ||||
Other Value | 794 | 804 | ||||
Total North American Salons (1) | 2,374 | 2,324 | ||||
Total International Salons (2) | — | — | ||||
Total Franchise Salons | 2,374 | 2,324 | ||||
OWNERSHIP INTEREST LOCATIONS: | ||||||
Equity ownership interest locations | 207 | 207 | ||||
Grand Total, System-wide | 9,564 | 9,556 |
(1) | The North American Value operating segment is comprised primarily of the SmartStyle, Supercuts, MasterCuts and Other Value salon brands. The North American Premium operating segment is comprised primarily of the Regis salon brands. |
(2) | Canadian and Puerto Rican salons are included in the North American salon totals. |
• | Self-insurance reserve adjustments. |
• | Expense associated with legal cases. |
Reconciliation of U.S. GAAP operating income (loss) and net loss to equivalent non-GAAP measures | ||||||||||
Three Months Ended September 30, | ||||||||||
U.S. GAAP financial line item | 2015 | 2014(1) | ||||||||
U.S. GAAP revenue | $ | 450,130 | $ | 464,551 | ||||||
U.S. GAAP operating income (loss) | $ | 4,276 | $ | (754 | ) | |||||
Non-GAAP operating adjustments (2): | ||||||||||
Self-insurance reserve adjustments | Site Operating | (161 | ) | (80 | ) | |||||
Legal fees | General and administrative | — | 659 | |||||||
Total non-GAAP operating adjustments | (161 | ) | 579 | |||||||
Non-GAAP operating income (loss) (3) | $ | 4,115 | $ | (175 | ) | |||||
U.S. GAAP net loss | $ | (808 | ) | $ | (9,843 | ) | ||||
Non-GAAP operating adjustments | (161 | ) | 579 | |||||||
Non-GAAP net loss | $ | (969 | ) | $ | (9,264 | ) |
(1) | Amounts for fiscal year 2015 have been revised. |
(2) | As a result of the valuation allowance, non-GAAP adjustments are not tax effected. |
(3) | Adjusted operating margins for the three months ended September 30, 2015 and 2014, were 0.9% and 0.0%, respectively, and are calculated as non-GAAP operating income divided by U.S. GAAP revenue for each respective period. |
Reconciliation of U.S. GAAP net loss per diluted share to non-GAAP net loss per diluted share | |||||||
Three Months Ended September 30, | |||||||
2015 | 2014(1) | ||||||
U.S. GAAP net loss per diluted share (2) | $ | (0.015 | ) | $ | (0.177 | ) | |
Self-insurance reserve adjustments | (0.003 | ) | (0.001 | ) | |||
Legal fees | — | 0.012 | |||||
Non-GAAP net loss per diluted share (3) | $ | (0.018 | ) | $ | (0.166 | ) | |
U.S. GAAP Weighted average shares - basic and diluted | 52,793 | 55,743 |
(1) | Amounts for fiscal year 2015 have been revised. |
(2) | For the three months ended September 30, 2015, income tax expense of $2.8 million relates primarily to a $1.8 million non-cash charge for tax benefits on certain indefinite-lived assets that the Company cannot recognize for reporting purposes. The presence of a valuation allowance, including the non-cash tax expense on certain indefinite-lived assets, affects comparability of income tax expense, as adjusted and will cause our effective tax rate to fluctuate from quarter to quarter. For the three months ended September 30, 2015, the Company evaluated GAAP diluted EPS with and without the full effects of the valuation allowance and calculated an impact of $0.03. Diluted EPS, as adjusted, without the presence of the valuation allowance, was $0.01 and ($0.03) for the three months ended September 30, 2015 and 2014, respectively, representing an improvement of $0.04. As a result of the valuation allowance, non-GAAP adjustments are not tax effected. |
(3) | Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
Three Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Consolidated reported net loss, as reported (U.S. GAAP) | $ | (808 | ) | $ | (9,843 | ) | |
Interest expense, as reported | 2,354 | 3,098 | |||||
Income taxes, as reported | 2,816 | 6,256 | |||||
Depreciation and amortization, as reported | 17,855 | 22,188 | |||||
EBITDA (as defined above) | $ | 22,217 | $ | 21,699 | |||
Equity in loss (income) of affiliated companies, as reported | 858 | (392 | ) | ||||
Self-insurance reserve adjustments | (161 | ) | (80 | ) | |||
Legal fees | — | 659 | |||||
EBITDA, as adjusted, non-GAAP financial measure | $ | 22,914 | $ | 21,886 | |||
Three Months Ended September 30, | |||||
2015 | 2014 | ||||
Revenue decline, as reported (U.S. GAAP) | (3.1 | )% | (0.9 | )% | |
Effect of new stores and conversions | (0.6 | ) | (0.8 | ) | |
Effect of closed salons | 2.9 | 2.3 | |||
Foreign currency | 1.7 | 0.1 | |||
Other | (0.2 | ) | (0.1 | ) | |
Same-store sales, non-GAAP | 0.7 | % | 0.6 | % |
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