Minnesota | 1-12725 | 41-0749934 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No) |
EXHIBIT NUMBER | ||
99 |
REGIS CORPORATION | |||
Dated: August 21, 2018 | By: | /s/ Amanda P. Rusin | |
Name: Amanda P. Rusin, Title: Secretary |
Exhibit No. 99 | |
Three Months Ended June 30, | Twelve Months Ended June 30, | |||||||||||
(Dollars in thousands) | 2018 | 2017 (1) | 2018 | 2017 (1) | ||||||||
Consolidated Revenue | $294,885 | $320,902 | $1,214,074 | $1,268,460 | ||||||||
Consolidated Same-Store Sales Comps | 0.7 | % | 1.8 | % | 0.5 | % | (0.5 | )% | ||||
Net Income (Loss) From Continuing Operations | $6,973 | $4,222 | $61,886 | $(896) | ||||||||
Diluted Earnings (Loss) per Share From Continuing Operations | $0.15 | $0.09 | $1.32 | $(0.02) | ||||||||
EBITDA | $25,714 | $19,060 | $11,964 | $53,756 | ||||||||
as a percent of revenue | 8.7 | % | 5.9 | % | 1.0 | % | 4.2 | % | ||||
As Adjusted(2) | ||||||||||||
Consolidated Revenue, as Adjusted | $294,885 | $320,902 | $1,212,013 | $1,268,460 | ||||||||
Consolidated Same-Store Sales Comps, as Adjusted | 0.7 | % | 1.8 | % | 0.3 | % | (0.5 | )% | ||||
Net Income, as Adjusted | $10,442 | $11,576 | $27,946 | $17,328 | ||||||||
Diluted Earnings per Share, as Adjusted | $0.22 | $0.25 | $0.59 | $0.37 | ||||||||
EBITDA, as Adjusted | $31,168 | $29,383 | $94,079 | $87,224 | ||||||||
as a percent of revenue, as adjusted | 10.6 | % | 9.2 | % | 7.8 | % | 6.9 | % |
(1) | Amounts for fiscal year 2017 have been recast to account for mall-based business and International segment as discontinued operations. |
Three Months Ended June 30, | (Decrease) Increase | Twelve Months Ended June 30, | (Decrease) Increase | ||||||||||||||||||
(Dollars in millions) (1) | 2018 | 2017 (2) | 2018 | 2017 (2) | |||||||||||||||||
Total Revenue, as Adjusted | $ | 263.4 | $ | 299.6 | (12.1 | )% | $ | 1,102.0 | $ | 1,189.5 | (7.4 | )% | |||||||||
Same-Store Sales Comps, as Adjusted | 0.7 | % | 1.8 | % | (110) bps | 0.3 | % | (0.5 | )% | 80 bps | |||||||||||
Year-over-Year Ticket change | 4.4 | % | 3.4 | % | |||||||||||||||||
Year-over-Year Traffic change | (3.7 | )% | (3.1 | )% | |||||||||||||||||
Gross Profit, as Adjusted(3) | $ | 119.3 | $ | 125.2 | (4.7 | )% | $ | 476.7 | $ | 480.5 | (0.8 | )% | |||||||||
as a percent of revenue, as adjusted | 45.3 | % | 41.8 | % | 350 bps | 43.3 | % | 40.4 | % | 290 bps | |||||||||||
EBITDA, as Adjusted | $ | 38.2 | $ | 38.3 | (0.2 | )% | $ | 126.7 | $ | 125.9 | 0.6 | % | |||||||||
as a percent of revenue, as adjusted | 14.5 | % | 12.8 | % | 170 bps | 11.5 | % | 10.6 | % | 90 bps |
(1) | Variances calculated on amounts shown in millions may result in rounding differences. |
(2) | Amounts for fiscal year 2017 have been recast to account for mall-based business and International segment as discontinued operations. |
(3) | Gross profit, as Adjusted, excludes depreciation and amortization. |
Three Months Ended June 30, | Increase (Decrease) | Twelve Months Ended June 30, | Increase (Decrease) | ||||||||||||||||||
(Dollars in millions) (1) | 2018 | 2017 (2) | 2018 | 2017 (2) | |||||||||||||||||
Revenue | |||||||||||||||||||||
Product | $ | 9.8 | $ | 8.1 | 21.2 | % | $ | 34.6 | $ | 30.6 | 13.1 | % | |||||||||
Product sold to The Beautiful Group | 6.2 | — | N/A | 19.1 | — | N/A | |||||||||||||||
Total product | $ | 16.0 | $ | 8.1 | 97.1 | % | $ | 53.7 | $ | 30.6 | 75.4 | % | |||||||||
Royalties and fees | 15.5 | 13.2 | 17.3 | % | 56.4 | 48.3 | 16.7 | % | |||||||||||||
Total Revenue | $ | 31.5 | $ | 21.3 | 47.6 | % | $ | 110.1 | $ | 78.9 | 39.5 | % | |||||||||
EBITDA, as Adjusted | $ | 11.9 | $ | 9.5 | 25.3 | % | $ | 41.8 | $ | 34.8 | 19.9 | % | |||||||||
as a percent of revenue | 37.9 | % | 44.6 | % | (670) bps | 38.0 | % | 44.1 | % | (610) bps |
(1) | Variances calculated on amounts shown in millions may result in rounding differences. |
(2) | Amounts for fiscal year 2017 have been recast to account for mall-based business and International segment as discontinued operations. |
• | Repurchased 883,000 common shares at a total price of $15.2 million. In August 2018, the Company's Board of Directors authorized an additional $200 million for share repurchases. |
• | Converted 144 Company-owned salons to franchise locations. |
• | Announced it would consider franchising the remaining Company-owned Supercuts salons where it facilitated strategic and financial objectives. |
• | Executed a number of operational initiatives to stabilize performance and establish a platform for longer-term revenue and earnings growth in Company-owned salons. The Company estimates the initiatives delivered a benefit in a range of $5.0 million to $7.0 million in the fourth quarter of fiscal 2018. |
• | Announced the addition of two key members of the Executive team. Chad Kapadia was named Executive Vice President, Chief Technology Officer, and Head of Product Engineering and Laura Alexander was promoted to the role of Senior Vice President, Merchandise. |
June 30, 2018 | June 30, 2017 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 110,399 | $ | 171,044 | ||||
Receivables, net | 52,430 | 19,683 | ||||||
Inventories | 79,363 | 98,392 | ||||||
Other current assets | 47,867 | 48,114 | ||||||
Current assets held for sale | — | 32,914 | ||||||
Total current assets | 290,059 | 370,147 | ||||||
Property and equipment, net | 105,860 | 123,281 | ||||||
Goodwill | 412,643 | 416,987 | ||||||
Other intangibles, net | 10,557 | 11,965 | ||||||
Other assets | 37,616 | 61,756 | ||||||
Long-term assets held for sale | — | 27,352 | ||||||
Total assets | $ | 856,735 | $ | 1,011,488 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 57,738 | $ | 54,501 | ||||
Accrued expenses | 97,630 | 110,435 | ||||||
Current liabilities related to assets held for sale | — | 13,126 | ||||||
Total current liabilities | 155,368 | 178,062 | ||||||
Long-term debt, net | 90,000 | 120,599 | ||||||
Other noncurrent liabilities | 107,875 | 197,374 | ||||||
Noncurrent liabilities related to assets held for sale | — | 7,232 | ||||||
Total liabilities | 353,243 | 503,267 | ||||||
Commitments and contingencies | ||||||||
Shareholders' equity: | ||||||||
Common stock, $0.05 par value; issued and outstanding, 45,258,571 and 46,400,367 common shares at June 30, 2018 and 2017, respectively | 2,263 | 2,320 | ||||||
Additional paid-in capital | 194,436 | 214,109 | ||||||
Accumulated other comprehensive income | 9,568 | 3,336 | ||||||
Retained earnings | 297,225 | 288,456 | ||||||
Total shareholders' equity | 503,492 | 508,221 | ||||||
Total liabilities and shareholders' equity | $ | 856,735 | $ | 1,011,488 |
Three Months Ended June 30, | Twelve Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues: | ||||||||||||||||
Service | $ | 218,352 | $ | 243,649 | $ | 899,051 | $ | 960,347 | ||||||||
Product | 61,023 | 64,033 | 258,666 | 259,822 | ||||||||||||
Royalties and fees | 15,510 | 13,220 | 56,357 | 48,291 | ||||||||||||
294,885 | 320,902 | 1,214,074 | 1,268,460 | |||||||||||||
Operating expenses: | ||||||||||||||||
Cost of service | 123,815 | 155,386 | 530,582 | 610,384 | ||||||||||||
Cost of product | 33,458 | 29,909 | 140,623 | 126,297 | ||||||||||||
Site operating expenses | 30,806 | 31,910 | 127,249 | 127,797 | ||||||||||||
General and administrative | 44,561 | 39,030 | 174,045 | 157,335 | ||||||||||||
Rent | 35,816 | 43,333 | 183,096 | 180,478 | ||||||||||||
Depreciation and amortization | 11,441 | 13,757 | 58,205 | 52,088 | ||||||||||||
Total operating expenses | 279,897 | 313,325 | 1,213,800 | 1,254,379 | ||||||||||||
Operating income | 14,988 | 7,577 | 274 | 14,081 | ||||||||||||
Other (expense) income: | ||||||||||||||||
Interest expense | (1,090 | ) | (2,143 | ) | (10,492 | ) | (8,584 | ) | ||||||||
Interest income and other, net | 1,496 | 695 | 6,670 | 2,831 | ||||||||||||
Income (loss) from continuing operations before income taxes | 15,394 | 6,129 | (3,548 | ) | 8,328 | |||||||||||
Income tax (expense) benefit | (8,421 | ) | (1,907 | ) | 65,434 | (9,224 | ) | |||||||||
Income (loss) from continuing operations | 6,973 | 4,222 | 61,886 | (896 | ) | |||||||||||
Loss from discontinued operations, net of income taxes | (2,211 | ) | (2,969 | ) | (53,185 | ) | (15,244 | ) | ||||||||
Net income (loss) | $ | 4,762 | $ | 1,253 | $ | 8,701 | $ | (16,140 | ) | |||||||
Net income (loss) per share: | ||||||||||||||||
Basic: | ||||||||||||||||
Income (loss) from continuing operations | $ | 0.15 | $ | 0.09 | $ | 1.33 | $ | (0.02 | ) | |||||||
Loss from discontinued operations | (0.05 | ) | (0.06 | ) | (1.14 | ) | (0.33 | ) | ||||||||
Net income (loss) per share, basic (1) | $ | 0.10 | $ | 0.03 | $ | 0.19 | $ | (0.35 | ) | |||||||
Diluted: | ||||||||||||||||
Income (loss) from continuing operations | $ | 0.15 | $ | 0.09 | $ | 1.32 | $ | (0.02 | ) | |||||||
Loss from discontinued operations | (0.05 | ) | (0.06 | ) | (1.13 | ) | (0.33 | ) | ||||||||
Net income (loss) per share, diluted (1) | $ | 0.10 | $ | 0.03 | $ | 0.18 | $ | (0.35 | ) | |||||||
Weighted average common and common equivalent shares outstanding: | ||||||||||||||||
Basic | 46,014 | 46,527 | 46,517 | 46,359 | ||||||||||||
Diluted | 46,633 | 46,762 | 47,035 | 46,359 |
Three Months Ended June 30, | Twelve Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income (loss) | $ | 4,762 | $ | 1,253 | $ | 8,701 | $ | (16,140 | ) | |||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Foreign currency translation adjustments during the period: | ||||||||||||||||
Foreign currency translation adjustments | (1,175 | ) | 2,701 | (256 | ) | (1,889 | ) | |||||||||
Reclassification adjustments for losses included in net income (loss) | — | — | 6,152 | — | ||||||||||||
Net current period foreign currency translation adjustments | (1,175 | ) | 2,701 | 5,896 | (1,889 | ) | ||||||||||
Recognition of deferred compensation | 336 | 179 | 336 | 157 | ||||||||||||
Other comprehensive (loss) income | (839 | ) | 2,880 | 6,232 | (1,732 | ) | ||||||||||
Comprehensive income (loss) | $ | 3,923 | $ | 4,133 | $ | 14,933 | $ | (17,872 | ) |
Twelve Months Ended June 30, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 8,701 | $ | (16,140 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Non-cash impairment related to discontinued operations | 38,826 | — | ||||||
Depreciation and amortization | 39,433 | 40,722 | ||||||
Depreciation related to discontinued operations | 3,738 | 14,239 | ||||||
Equity in loss of affiliated companies | — | 81 | ||||||
Deferred income taxes | (75,863 | ) | 7,962 | |||||
Gain on life insurance proceeds | (7,986 | ) | — | |||||
Gain from sale of salon assets to franchisees, net (2) | (241 | ) | (492 | ) | ||||
Loss on write down of inventories | — | 5,905 | ||||||
Salon asset impairments | 11,092 | 11,366 | ||||||
Accumulated other comprehensive income reclassification adjustments | 6,152 | — | ||||||
Stock-based compensation | 8,269 | 13,142 | ||||||
Amortization of debt discount and financing costs | 4,080 | 1,403 | ||||||
Other non-cash items affecting earnings | (294 | ) | 935 | |||||
Changes in operating assets and liabilities(1): | ||||||||
Receivables | (12,081 | ) | 724 | |||||
Inventories | 13,940 | 4,010 | ||||||
Income tax receivable | 527 | (535 | ) | |||||
Other current assets | (23 | ) | 820 | |||||
Other assets | (11,229 | ) | (2,586 | ) | ||||
Accounts payable | (1,103 | ) | (684 | ) | ||||
Accrued expenses | (12,526 | ) | (13,667 | ) | ||||
Other noncurrent liabilities | (11,084 | ) | (7,150 | ) | ||||
Net cash provided by operating activities | 2,328 | 60,055 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (29,571 | ) | (26,572 | ) | ||||
Capital expenditures related to discontinued operations | (1,171 | ) | (7,271 | ) | ||||
Proceeds from sale of salon assets to franchisees (2) | 11,582 | 2,253 | ||||||
Change in restricted cash | (524 | ) | 1,123 | |||||
Proceeds from company-owned life insurance policies | 18,108 | 876 | ||||||
Proceeds from sale of investment | — | 500 | ||||||
Net cash used in investing activities | (1,576 | ) | (29,091 | ) | ||||
Cash flows from financing activities: | ||||||||
Borrowings on revolving credit facilities | 90,000 | — | ||||||
Repayments of long-term debt and capital lease obligations | (124,230 | ) | — | |||||
Repurchase of common stock | (24,798 | ) | — | |||||
Employee taxes paid for shares withheld | (2,413 | ) | (3,698 | ) | ||||
Settlement of equity awards | (794 | ) | (3,151 | ) | ||||
Net cash used in financing activities | (62,235 | ) | (6,849 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (514 | ) | 935 | |||||
(Decrease) increase in cash and cash equivalents | (61,997 | ) | 25,050 | |||||
Cash and cash equivalents: | ||||||||
Beginning of year | 171,044 | 147,346 | ||||||
Cash and cash equivalents included in current assets held for sale | 1,352 | — | ||||||
Beginning of year, total cash and cash equivalents | 172,396 | 147,346 | ||||||
End of year | $ | 110,399 | $ | 172,396 |
(1) | Changes in operating assets and liabilities exclude assets and liabilities sold or acquired. |
For the Three Months Ended | ||||||||||||||||||
June 30, 2018 | June 30, 2017 | |||||||||||||||||
Service | Retail | Total | Service | Retail | Total | |||||||||||||
SmartStyle | 0.8 | % | 4.2 | % | 1.8 | % | 2.7 | % | 0.7 | % | 2.1 | % | ||||||
Supercuts | 0.7 | (5.7 | ) | 0.2 | 3.2 | (2.3 | ) | 2.7 | ||||||||||
Signature Style | 0.4 | (4.3 | ) | — | 0.7 | 1.0 | 0.7 | |||||||||||
Consolidated same-store sales | 0.6 | % | 1.0 | % | 0.7 | % | 2.1 | % | 0.4 | % | 1.8 | % |
For the Twelve Months Ended | ||||||||||||||||||
June 30, 2018 | June 30, 2017 | |||||||||||||||||
Service | Retail | Total | Service | Retail | Total | |||||||||||||
SmartStyle | (0.5 | )% | 2.1 | % | 0.3 | % | (0.1 | )% | (1.2 | )% | (0.4 | )% | ||||||
Supercuts | 2.3 | (4.6 | ) | 1.7 | 0.9 | (4.3 | ) | 0.4 | ||||||||||
Signature Style | 0.2 | (3.5 | ) | (0.2 | ) | (1.4 | ) | (1.1 | ) | (1.4 | ) | |||||||
Consolidated same-store sales | 0.5 | % | 0.2 | % | 0.5 | % | (0.3 | )% | (1.5 | )% | (0.5 | )% |
June 30, 2018 | June 30, 2017 | |||||
COMPANY-OWNED SALONS: | ||||||
SmartStyle/Cost Cutters in Walmart Stores | 1,660 | 2,652 | ||||
Supercuts | 928 | 980 | ||||
Signature Style | 1,378 | 1,468 | ||||
Mall locations (Regis and MasterCuts) | — | 898 | ||||
Total North American Salons | 3,966 | 5,998 | ||||
Total International Salons (1) | — | 275 | ||||
Total Company-owned Salons | 3,966 | 6,273 | ||||
as a percent of total Company-owned and Franchise salons | 49.1 | % | 70.3 | % | ||
FRANCHISE SALONS: | ||||||
SmartStyle/Cost Cutters in Walmart Stores | 561 | 176 | ||||
Supercuts | 1,739 | 1,687 | ||||
Signature Style | 745 | 770 | ||||
Total non-mall franchise locations | 3,045 | 2,633 | ||||
Mall franchise locations (Regis and MasterCuts) | 807 | — | ||||
Total North American Salons | 3,852 | 2,633 | ||||
Total International Salons (1) | 262 | 13 | ||||
Total Franchise Salons | 4,114 | 2,646 | ||||
as a percent of total Company-owned and Franchise salons | 50.9 | % | 29.7 | % | ||
OWNERSHIP INTEREST LOCATIONS: | ||||||
Equity ownership interest locations | 88 | 89 | ||||
Grand Total, System-wide | 8,168 | 9,008 |
(1) | Canadian and Puerto Rican salons are included in the North American salon totals. |
• | SmartStyle restructuring discounting and costs. |
• | Salon tools write-off. |
• | Severance expense for former executive officers. |
• | Professional fees. |
• | Executive transition costs. |
• | Gain on life insurance proceeds. |
• | Legal fees. |
• | Debt refinancing. |
• | Goodwill derecognition. |
• | Impact of tax reform. |
• | Discontinued operations. |
Reconciliation of U.S. GAAP operating income and net income (loss) to equivalent non-GAAP measures | ||||||||||||||||||
Three Months Ended June 30, | Twelve Months Ended June 30, | |||||||||||||||||
U.S. GAAP financial line item | 2018 | 2017 | 2018 | 2017 | ||||||||||||||
U.S. GAAP revenue | $ | 294,885 | $ | 320,902 | $ | 1,214,074 | $ | 1,268,460 | ||||||||||
Non-GAAP revenue adjustments | ||||||||||||||||||
SmartStyle restructuring discounting | Product Sales | — | — | (2,061 | ) | — | ||||||||||||
Non-GAAP revenue | $ | 294,885 | $ | 320,902 | $ | 1,212,013 | $ | 1,268,460 | ||||||||||
U.S. GAAP operating income | $ | 14,988 | $ | 7,577 | $ | 274 | $ | 14,081 | ||||||||||
Non-GAAP revenue adjustments | — | — | (2,061 | ) | — | |||||||||||||
Non-GAAP operating expense adjustments (1) | ||||||||||||||||||
SmartStyle restructuring discounting | Cost of Service | 636 | — | 826 | — | |||||||||||||
Salon tools write-off | Cost of Service | — | 4,983 | — | 4,983 | |||||||||||||
SmartStyle restructuring and discounting costs | Cost of Product | 1 | — | 2,993 | — | |||||||||||||
SmartStyle restructuring discounting | Site operating expenses | 48 | — | 534 | — | |||||||||||||
Salon tools write-off | Site operating expenses | — | 341 | — | 341 | |||||||||||||
SmartStyle restructuring costs | General and administrative | 469 | — | 1,803 | — | |||||||||||||
Severance | General and administrative | (176 | ) | 583 | 2,652 | 8,437 | ||||||||||||
Professional fees | General and administrative | 80 | 1,125 | 1,707 | 2,836 | |||||||||||||
Executive transition costs | General and administrative | — | 322 | 564 | 322 | |||||||||||||
Gain on life insurance proceeds | General and administrative | — | — | (7,986 | ) | (100 | ) | |||||||||||
Legal fees | General and administrative | — | — | — | 1,405 | |||||||||||||
SmartStyle restructuring costs | Rent | — | — | 23,999 | — | |||||||||||||
SmartStyle restructuring costs | Depreciation and amortization | 218 | — | 13,140 | — | |||||||||||||
Total non-GAAP operating expense adjustments | 1,276 | 7,354 | 40,232 | 18,224 | ||||||||||||||
Non-GAAP operating income (1) | $ | 16,264 | $ | 14,931 | $ | 38,445 | $ | 32,305 | ||||||||||
U.S. GAAP net income (loss) | $ | 4,762 | $ | 1,253 | $ | 8,701 | $ | (16,140 | ) | |||||||||
Non-GAAP net income adjustments: | ||||||||||||||||||
Non-GAAP revenue adjustments | — | — | (2,061 | ) | — | |||||||||||||
Non-GAAP operating adjustments | 1,276 | 7,354 | 40,232 | 18,224 | ||||||||||||||
Debt refinancing | Interest expense | — | — | 2,957 | — | |||||||||||||
Goodwill derecognition | Interest income and other, net | 2,185 | — | 3,899 | — | |||||||||||||
Income tax impact on Non-GAAP adjustments (2) | Income taxes | (761 | ) | — | (10,833 | ) | — | |||||||||||
Impact of tax reform | Income taxes | 769 | — | (68,134 | ) | — | ||||||||||||
Discontinued operations, net of income tax | Loss from discontinued operations, net of tax | 2,211 | 2,969 | 53,185 | 15,244 | |||||||||||||
Total non-GAAP net income adjustments | $ | 5,680 | $ | 10,323 | $ | 19,245 | $ | 33,468 | ||||||||||
Non-GAAP net income | $ | 10,442 | $ | 11,576 | $ | 27,946 | $ | 17,328 |
(1) | Adjusted operating margins for the three months ended June 30, 2018, and 2017, were 5.5% and 4.7%, respectively, and were 3.2% and 2.5% for the twelve months ended June 30, 2018 and 2017, respectively, and are calculated as non-GAAP operating income divided by non-GAAP revenue for each respective period. |
(2) | Based on projected statutory effective tax rate analyses, the non-GAAP tax provision was calculated to be approximately 22% for the three and nine months ended June 30, 2018, for all non-GAAP operating expense adjustments. Non-GAAP operating expense adjustments recognized during the first quarter of fiscal year 2018 and during the three and twelve months ended June 30, 2017, were not tax effected as a result of the valuation allowance. |
Reconciliation of U.S. GAAP net income (loss) per diluted share to non-GAAP net income per diluted share | ||||||||||||||||
Three Months Ended June 30, | Twelve Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
U.S. GAAP net income (loss) per diluted share | $ | 0.102 | $ | 0.027 | $ | 0.185 | $ | (0.348 | ) | |||||||
SmartStyle restructuring and discounting costs (1) (2) | 0.023 | — | 0.692 | — | ||||||||||||
Severance (1) (2) | (0.003 | ) | 0.012 | 0.047 | 0.179 | |||||||||||
Professional fees (1) (2) | 0.001 | 0.024 | 0.032 | 0.060 | ||||||||||||
Salon tools write-off (1) (2) | — | 0.114 | — | 0.113 | ||||||||||||
Executive transition costs (1) (2) | — | 0.007 | 0.011 | 0.007 | ||||||||||||
Gain on life insurance proceeds (1) (2) | — | — | (0.170 | ) | (0.002 | ) | ||||||||||
Legal fees (1) (2) | — | — | — | 0.030 | ||||||||||||
Debt refinancing (1) (2) | — | — | 0.049 | — | ||||||||||||
Goodwill derecognition (1) (2) | 0.037 | — | 0.066 | — | ||||||||||||
Impact of tax reform | 0.016 | — | (1.449 | ) | — | |||||||||||
Discontinued operations, net of tax (2) | 0.047 | 0.063 | 1.131 | 0.324 | ||||||||||||
Impact of change in weighted average shares (2) | — | — | — | 0.005 | ||||||||||||
Non-GAAP net income per diluted share (2) (3) | $ | 0.224 | $ | 0.248 | $ | 0.594 | $ | 0.368 | ||||||||
U.S. GAAP Weighted average shares - basic | 46,014 | 46,527 | 46,517 | 46,359 | ||||||||||||
U.S. GAAP Weighted average shares - diluted | 46,633 | 46,762 | 47,035 | 46,359 | ||||||||||||
Non-GAAP Weighted average shares - diluted (2) | 46,633 | 46,762 | 47,035 | 47,088 |
(1) | Based on projected statutory effective tax rate analyses, the non-GAAP tax provision was calculated to be approximately 22% for the three and nine months ended June 30, 2018, for all non-GAAP operating expense adjustments. Non-GAAP operating expense adjustments recognized during the first quarter of fiscal year 2018 and during the three and twelve months ended June 30, 2017, were not tax effected as a result of the valuation allowance. |
(2) | Non-GAAP net income per share reflects the weighted average shares associated with non-GAAP net income, which includes the dilutive effect of common stock equivalents. The earnings per share impact of the adjustments for the twelve months ended June 30, 2017 included additional shares for common stock equivalents of 0.7 million. The impact of the adjustments described above result in the effect of the common stock equivalents to be dilutive to the non-GAAP net income per share. |
(3) | Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
Pre-Tax | Income Taxes | Net Income | |||||||||
SmartStyle restructuring discounting and costs, net | $ | (1,372 | ) | $ | 302 | $ | (1,070 | ) | |||
Severance | 176 | (39 | ) | 137 | |||||||
Professional fees | (80 | ) | 17 | (63 | ) | ||||||
Goodwill derecognition | (2,185 | ) | 481 | (1,704 | ) | ||||||
Impact of tax reform | — | (769 | ) | (769 | ) | ||||||
$ | (3,461 | ) | $ | (8 | ) | $ | (3,469 | ) | |||
Discontinued operations, net of tax | $ | (2,211 | ) | ||||||||
Total | $ | (5,680 | ) |
Three Months Ended June 30, 2018 | ||||||||||||||||
Company-owned (1) | Franchise (2) | Corporate | Consolidated (3) | |||||||||||||
Consolidated reported net income (loss), as reported (U.S. GAAP) | $ | 27,787 | $ | 11,835 | $ | (34,860 | ) | $ | 4,762 | |||||||
Interest expense, as reported | — | — | 1,090 | 1,090 | ||||||||||||
Income taxes, as reported | — | — | 8,421 | 8,421 | ||||||||||||
Depreciation and amortization, as reported | 9,284 | 90 | 2,067 | 11,441 | ||||||||||||
EBITDA (as defined above) | $ | 37,071 | $ | 11,925 | $ | (23,282 | ) | $ | 25,714 | |||||||
SmartStyle restructuring discounting and costs, net | 1,154 | — | — | 1,154 | ||||||||||||
Severance | — | — | (176 | ) | (176 | ) | ||||||||||
Professional fees | — | — | 80 | 80 | ||||||||||||
Goodwill derecognition | — | — | 2,185 | 2,185 | ||||||||||||
Discontinued operations, net of tax | — | — | 2,211 | 2,211 | ||||||||||||
Adjusted EBITDA, non-GAAP financial measure | $ | 38,225 | $ | 11,925 | $ | (18,982 | ) | $ | 31,168 |
Three Months Ended June 30, 2017 | ||||||||||||||||
Company-owned(1) | Franchise (2) | Corporate | Consolidated (3) | |||||||||||||
Consolidated reported net income (loss), as reported (U.S. GAAP) | $ | 21,692 | $ | 9,425 | $ | (29,864 | ) | $ | 1,253 | |||||||
Interest expense, as reported | — | — | 2,143 | 2,143 | ||||||||||||
Income taxes, as reported | — | — | 1,907 | 1,907 | ||||||||||||
Depreciation and amortization, as reported | 11,280 | 89 | 2,388 | 13,757 | ||||||||||||
EBITDA (as defined above) | $ | 32,972 | $ | 9,514 | $ | (23,426 | ) | $ | 19,060 | |||||||
Salon tools write-off | 5,324 | — | — | 5,324 | ||||||||||||
Professional fees | — | — | 1,125 | 1,125 | ||||||||||||
Severance | — | — | 583 | 583 | ||||||||||||
Executive transition costs | — | — | 322 | 322 | ||||||||||||
Discontinued operations, net of tax | — | — | 2,969 | 2,969 | ||||||||||||
Adjusted EBITDA, non-GAAP financial measure | $ | 38,296 | $ | 9,514 | $ | (18,427 | ) | $ | 29,383 |
(1) | Company-owned adjusted EBITDA margin for the three ended June 30, 2018, and 2017, were 14.5% and 12.8%, respectively, and are calculated as company-owned adjusted EBITDA (as defined above) divided by company-owned adjusted revenue for each respective period. |
(2) | Franchise adjusted EBITDA margin for the three months ended June 30, 2018 and 2017, were 37.9% and 44.6%, respectively and are calculated as franchise adjusted EBITDA (as defined above) divided by franchise adjusted revenue for each respective period. Removing the dilutive impact of $6.2 million for the franchise product sales to The Beautiful Group, franchise adjusted EBITDA margin for the three months ended June 30, 2018 was 43.9%. |
(3) | Consolidated EBITDA margins for the three months ended June 30, 2018, and 2017, were 8.7% and 5.9%, respectively, and are calculated as EBITDA (as defined above) divided by U.S. GAAP revenue for each respective period. Consolidated adjusted EBITDA margin for the three months ended June 30, 2018, and 2017, were 10.6% and 9.2%, respectively, and are calculated as consolidated adjusted EBITDA (as defined above) divided by consolidated adjusted revenue for each respective period. |
Twelve Months Ended June 30, 2018 | ||||||||||||||||
Company-owned(1) | Franchise (2) | Corporate | Consolidated (3) | |||||||||||||
Consolidated reported net income (loss), as reported (U.S. GAAP) | $ | 50,148 | $ | 41,418 | $ | (82,865 | ) | $ | 8,701 | |||||||
Interest expense, as reported | — | — | 10,492 | 10,492 | ||||||||||||
Income taxes, as reported | — | — | (65,434 | ) | (65,434 | ) | ||||||||||
Depreciation and amortization, as reported | 48,508 | 365 | 9,332 | 58,205 | ||||||||||||
EBITDA (as defined above) | $ | 98,656 | $ | 41,783 | $ | (128,475 | ) | $ | 11,964 | |||||||
SmartStyle restructuring discounting and costs, net | 28,057 | — | 37 | 28,094 | ||||||||||||
Gain on life insurance proceeds | — | — | (7,986 | ) | (7,986 | ) | ||||||||||
Severance | — | — | 2,652 | 2,652 | ||||||||||||
Professional fees | — | — | 1,707 | 1,707 | ||||||||||||
Executive transition costs | — | — | 564 | 564 | ||||||||||||
Goodwill derecognition | — | — | 3,899 | 3,899 | ||||||||||||
Discontinued operations, net of tax | — | — | 53,185 | 53,185 | ||||||||||||
Adjusted EBITDA, non-GAAP financial measure | $ | 126,713 | $ | 41,783 | $ | (74,417 | ) | $ | 94,079 | |||||||
Twelve Months Ended June 30, 2017 | ||||||||||||||||
Company-owned(1) | Franchise (2) | Corporate | Consolidated (3) | |||||||||||||
Consolidated reported net income (loss), as reported (U.S. GAAP) | $ | 78,345 | $ | 34,478 | $ | (128,963 | ) | $ | (16,140 | ) | ||||||
Interest expense, as reported | — | — | 8,584 | 8,584 | ||||||||||||
Income taxes, as reported | — | — | 9,224 | 9,224 | ||||||||||||
Depreciation and amortization, as reported | 42,273 | 357 | 9,458 | 52,088 | ||||||||||||
EBITDA (as defined above) | $ | 120,618 | $ | 34,835 | $ | (101,697 | ) | $ | 53,756 | |||||||
Salon tools write-off | 5,324 | — | — | 5,324 | ||||||||||||
Severance | — | — | 8,437 | 8,437 | ||||||||||||
Legal fees | — | — | 1,405 | 1,405 | ||||||||||||
Professional fees | — | — | 2,836 | 2,836 | ||||||||||||
Executive transition costs | — | — | 322 | 322 | ||||||||||||
Gain on life insurance proceeds | — | — | (100 | ) | (100 | ) | ||||||||||
Discontinued operations, net of tax | — | — | 15,244 | 15,244 | ||||||||||||
Adjusted EBITDA, non-GAAP financial measure | $ | 125,942 | $ | 34,835 | $ | (73,553 | ) | $ | 87,224 | |||||||
(1) | Company-owned adjusted EBITDA margin for the twelve ended June 30, 2018, and 2017, were 11.5% and 10.6%, respectively, and are calculated as company-owned adjusted EBITDA (as defined above) divided by company-owned adjusted revenue for each respective period. |
(2) | Franchise adjusted EBITDA margin for the twelve months ended June 30, 2018 and 2017, were 38.0% and 44.1%, respectively and are calculated as franchise adjusted EBITDA (as defined above) divided by franchise adjusted revenue for each respective period. |
(3) | Consolidated EBITDA margins for the twelve months ended June 30, 2018, and 2017, were 1.0% and 4.2%, respectively, and are calculated as EBITDA (as defined above) divided by U.S. GAAP revenue for each respective period. Consolidated adjusted EBITDA margin for the twelve months ended June 30, 2018, and 2017, were 7.8% and 6.9%, respectively, and are calculated as consolidated adjusted EBITDA (as defined above) divided by consolidated adjusted revenue for each respective period. |
Three Months Ended June 30, 2018 | ||||||||||||||||
Company-owned | Franchise | Corporate | Consolidated | |||||||||||||
Consolidated total revenue, as reported (U.S. GAAP) | $ | 263,393 | $ | 31,492 | $ | — | $ | 294,885 |
Three Months Ended June 30, 2017 | ||||||||||||||||
Company-owned | Franchise | Corporate | Consolidated | |||||||||||||
Consolidated total revenue, U.S. GAAP and non-GAAP | $ | 299,573 | $ | 21,329 | $ | — | $ | 320,902 |
Twelve Months Ended June 30, 2018 | ||||||||||||||||
Company-owned | Franchise | Corporate | Consolidated | |||||||||||||
Consolidated total revenue, as reported (U.S. GAAP) | $ | 1,104,014 | $ | 110,060 | $ | — | $ | 1,214,074 | ||||||||
SmartStyle restructuring discounting | (2,061 | ) | — | — | (2,061 | ) | ||||||||||
Adjusted total revenue, non-GAAP financial measure | $ | 1,101,953 | $ | 110,060 | $ | — | $ | 1,212,013 |
Twelve Months Ended June 30, 2017 | ||||||||||||||||
Company-owned | Franchise | Corporate | Consolidated | |||||||||||||
Consolidated total revenue, U.S. GAAP and non-GAAP | $ | 1,189,546 | $ | 78,914 | $ | — | $ | 1,268,460 |
Three Months Ended June 30, 2018 | ||||||||||||||||
Company-owned | Franchise | Corporate | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Service | $ | 218,352 | $ | — | $ | — | $ | 218,352 | ||||||||
Product | 45,041 | 15,982 | — | 61,023 | ||||||||||||
263,393 | 15,982 | — | 279,375 | |||||||||||||
Cost of service | 123,815 | — | — | 123,815 | ||||||||||||
Cost of product | 20,867 | 12,591 | — | 33,458 | ||||||||||||
144,682 | 12,591 | — | 157,273 | |||||||||||||
U.S. GAAP gross profit(1) | $ | 118,711 | $ | 3,391 | $ | — | $ | 122,102 | ||||||||
Non-GAAP gross profit adjustments: | ||||||||||||||||
SmartStyle restructuring discounting | 637 | — | — | 637 | ||||||||||||
Non-GAAP gross profit(1) | $ | 119,348 | $ | 3,391 | $ | — | $ | 122,739 |
Three Months Ended June 30, 2017 | ||||||||||||||||
Company-owned | Franchise | Corporate | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Service | $ | 243,649 | $ | — | $ | — | $ | 243,649 | ||||||||
Product | 55,924 | 8,109 | — | 64,033 | ||||||||||||
299,573 | 8,109 | — | 307,682 | |||||||||||||
Cost of service | 155,386 | — | — | 155,386 | ||||||||||||
Cost of product | 23,982 | 5,927 | — | 29,909 | ||||||||||||
179,368 | 5,927 | — | 185,295 | |||||||||||||
U.S. GAAP gross profit(1) | $ | 120,205 | $ | 2,182 | $ | — | $ | 122,387 | ||||||||
Non-GAAP gross profit adjustments: | ||||||||||||||||
Salon tools write-off | 4,983 | — | — | 4,983 | ||||||||||||
Non-GAAP gross profit(1) | $ | 125,188 | $ | 2,182 | $ | — | $ | 127,370 |
Twelve Months Ended June 30, 2018 | ||||||||||||||||
Company-owned | Franchise | Corporate | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Service | $ | 899,051 | $ | — | $ | — | $ | 899,051 | ||||||||
Product | 204,963 | 53,703 | — | 258,666 | ||||||||||||
1,104,014 | 53,703 | — | 1,157,717 | |||||||||||||
SmartStyle restructuring discounting | (2,061 | ) | — | — | (2,061 | ) | ||||||||||
Adjusted total revenue, non-GAAP financial measure | $ | 1,101,953 | $ | 53,703 | $ | — | $ | 1,155,656 | ||||||||
Cost of service | 530,582 | — | — | 530,582 | ||||||||||||
Cost of product | 98,495 | 42,128 | — | 140,623 | ||||||||||||
629,077 | 42,128 | — | 671,205 | |||||||||||||
U.S. GAAP and Non-GAAP gross profit(1) | $ | 474,937 | $ | 11,575 | $ | — | $ | 486,512 | ||||||||
Non-GAAP gross profit adjustments: | ||||||||||||||||
SmartStyle restructuring discounting and costs | 1,758 | — | — | 1,758 | ||||||||||||
Non-GAAP gross profit(1) | $ | 476,695 | $ | 11,575 | $ | — | $ | 488,270 |
Twelve Months Ended June 30, 2017 | ||||||||||||||||
Company-owned | Franchise | Corporate | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Service | $ | 960,347 | $ | — | $ | — | $ | 960,347 | ||||||||
Product | 229,199 | 30,623 | — | 259,822 | ||||||||||||
1,189,546 | 30,623 | — | 1,220,169 | |||||||||||||
Cost of service | 610,384 | — | — | 610,384 | ||||||||||||
Cost of product | 103,611 | 22,686 | — | 126,297 | ||||||||||||
713,995 | 22,686 | — | 736,681 | |||||||||||||
U.S. GAAP and Non-GAAP gross profit(1) | $ | 475,551 | $ | 7,937 | $ | — | $ | 483,488 | ||||||||
Non-GAAP gross profit adjustments: | ||||||||||||||||
Salon tools write-off | 4,983 | — | — | 4,983 | ||||||||||||
Non-GAAP gross profit(1) | $ | 480,534 | $ | 7,937 | $ | — | $ | 488,471 |
Three Months Ended June 30, | Twelve Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Revenue decline, as reported (U.S. GAAP) | (8.1 | )% | (1.1 | )% | (4.3 | )% | (1.8 | )% | ||||
Effect of new company-owned stores | — | (0.5 | ) | (0.2 | ) | (0.5 | ) | |||||
Effect of closed salons | 11.9 | 2.7 | 7.4 | 2.0 | ||||||||
Franchise | (3.2 | ) | (0.1 | ) | (2.4 | ) | — | |||||
Foreign currency | (0.3 | ) | 0.3 | (0.3 | ) | 0.1 | ||||||
Other | 0.4 | 0.5 | 0.3 | (0.3 | ) | |||||||
Same-store sales, non-GAAP | 0.7 | % | 1.8 | % | 0.5 | % | (0.5 | )% |
Three Months Ended June 30, | Twelve Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Revenue decline, as adjusted (non-GAAP) | (8.1 | )% | (1.1 | )% | (4.5 | )% | (1.8 | )% | ||||
Effect of new company-owned stores | — | (0.5 | ) | (0.2 | ) | (0.5 | ) | |||||
Effect of closed salons | 11.9 | 2.7 | 7.4 | 2.0 | ||||||||
Other | 0.4 | 0.5 | 0.3 | (0.3 | ) | |||||||
Franchise | (3.2 | ) | (0.1 | ) | (2.4 | ) | — | |||||
Foreign currency | (0.3 | ) | 0.3 | (0.3 | ) | 0.1 | ||||||
Same-store sales, as adjusted non-GAAP | 0.7 | % | 1.8 | % | 0.3 | % | (0.5 | )% |
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