Regis Corporation Reports Financial Results for the Third Fiscal Quarter 2025

MINNEAPOLIS--(BUSINESS WIRE)--Regis Corporation (NasdaqGM: RGS), a leader in the haircare industry, today announced financial results for the third fiscal quarter ended March 31, 2025. Matthew Doctor, Regis Corporation's President and Chief Executive Officer, commented, “Our results for the third fiscal quarter demonstrate meaningful progress towards the transformation of our business. We delivered a 22.0% increase in operating profit, 33.1% increase in Adjusted EBITDA, and importantly, generated positive cash from operations of more than $6 million. The underlying economics of our business are strengthening, and our financial position remains solid as we continue executing a strategic roadmap aimed at reigniting growth that is both profitable and sustainable. “We implemented targeted pricing and compensation changes at our Alline salons at the end of the third fiscal quarter, which we expect will contribute incrementally to performance in the near term, and the revitalization of the Supercuts brand is underway, with same-store sales trends stabilizing over the past three quarters. A shift in the timing of the Easter holiday, from March 31 last year to April 20 this year, adversely impacted same-store sales comparisons for the third quarter. However, to start the fourth quarter, in April, same-store sales at Supercuts were up 4.5% and consolidated sales were up 2.8%. While we expect the continued transformation to take time, the steps we are taking to elevate our brands, drive company-owned salon results, and enhance operations are foundational to the business, and we are encouraged by the progress we are making and the underlying momentum that is building.” Financial Highlights: Third quarter fiscal 2025 compared to third quarter fiscal 2024: Consolidated revenue of $57.0 million versus $49.2 million; driven by increased company-owned salon revenue, offset by lower royalties, non-margin franchise rental income and lower advertising fund contributions Same-store sales versus third quarter 2024: Supercuts: +1.1%; Consolidated: (1.1)% Operating Income of $5.0 million, versus $4.1 million Cash from operations of $6.2 million versus $(0.3) million, increase of $6.5 million Second consecutive quarter of cash from operations since the first fiscal quarter of 2018 $3.8 million of cash from operations excluding the effect of restricted cash ad fund build Adjusted EBITDA of $7.1 million versus $5.4 million Net income of $0.3 million versus $(2.3) million Diluted EPS of $0.08 versus $(1.00) Adjusted net income of $1.3 million versus $(1.4) million Adjusted EPS of $0.43 versus $(0.61) Additional third quarter fiscal 2025 commentary: Alline acquisition focus during the quarter was primarily on continued integration and strategic planning Progress made on same-store sales growth since acquisition Rolled out first set of strategic initiatives, including: a new stylist compensation plan, updated service menu and pricing on March 30, 2025; impact expected in future quarters Fiscal year-to-date 2025 compared to fiscal year-to-date fiscal 2024: Consolidated revenue of $149.7 million versus $153.6 million Same-store sales versus prior year: Supercuts: +0.8%; Consolidated: (1.3)% Operating Income of $12.7 million versus $16.3 million, primarily driven by non-recurring severance costs Cash from operations of $7.0 million versus $(7.1) million, increase of $14.1 million $1.1 million of cash from operations excluding the effect of restricted cash ad fund build Adjusted EBITDA of $21.9 million versus $19.7 million Net income of $7.0 million versus $(0.1) million Diluted EPS of $3.00 versus $(0.06) Adjusted net income of $5.6 million versus $(0.2) million Adjusted EPS of $1.97 versus $(0.07) Consolidated Revenue Total consolidated revenue of $57.0 million in the third quarter 2025, an increase of 15.9%, or $7.8 million, due primarily to an increase in company-owned salon revenue resulting from the acquisition of Alline on December 19, 2024. Year-to-date consolidated revenue declined 2.5% or $3.9 million, to $149.7 million. The decline was driven primarily by a reduction in non-margin franchise rental income and advertising fund contributions, which was partially offset by an increase in company-owned salon revenue. Operating Income Regis reported third quarter 2025 operating income of $5.0 million, an improvement of 22.9%, or $0.9 million, compared to $4.1 million in the third quarter 2024. The year-over-year improvement in operating income was driven primarily by operating income from the Alline salons. Regis reported year-to-date 2025 operating income of $12.7 million, a decline of 22.1%, or $3.6 million, compared to $16.3 million year-to-date 2024. The year-over-year decline in operating income was primarily driven by non-recurring severance costs. Income (Loss) from Continuing Operations Regis reported third quarter 2025 income from continuing operations of $250,000, or $0.08 per diluted share, compared to a loss from continuing operations of $2.4 million, or $(1.03) per diluted share, in the third quarter 2024. The year-over-year improvement was driven by an increase in operating income and a decrease in interest expense. Regis reported year-to-date 2025 loss from continuing operations of $1.4 million, or $(0.58) per diluted share, compared to a loss from continuing operations of $2.2 million, or $0.95 per diluted share from continuing operations, in 2024. The year-over-year improvement was driven primarily by a decrease in interest expense, which was partially offset by a decrease in operating income. Net Income (Loss) The Company reported third quarter 2025 net income of $250,000, or $0.08 diluted income per share, compared to a net loss of $2.3 million, inclusive of a net gain from discontinued operations of $89,000, or $(1.00) per diluted share, for the same period last year. The Company reported year-to-date 2025 net income of $7.0 million, inclusive of net income from discontinued operations of $8.4 million, or $3.00 per diluted share, compared to a net loss of $141,000, inclusive of net income from discontinued operations of $2.1 million or $(0.06) per diluted share, for 2024. Adjusted EBITDA Third quarter adjusted EBITDA of $7.1 million improved $1.7 million, compared to adjusted EBITDA of $5.4 million in the same period last year. Year-to-date adjusted EBITDA of $21.9 million improved 11.1% or $2.2 million versus adjusted EBITDA of $19.7 million in the same period last year. The improvement is primarily driven by a lower general and administrative expense structure. Franchise Revenue Third quarter franchise revenue for franchise salons was $38.0 million, a decrease of 20.7% or $9.9 million, compared to the prior-year quarter. Year-to-date franchise revenue was $126.5 million, a decrease of 14.9%, or $22.1 million, compared to the prior year period. Non-margin franchise rental income was the primary driver of the decline in both periods due to fewer franchise salons in the current year and franchisees renewing their own leases. Royalties were $13.5 million and $44.0 million, a $2.2 million and $4.0 million, or 14.0% and 8.3% decrease for the third quarter and year-to-date 2025, versus the same periods last year due to fewer franchise salons. Franchise Adjusted EBITDA Third quarter franchise adjusted EBITDA of $6.3 million increased 2.6%, or $0.2 million, and year-to-date franchise adjusted EBITDA of $20.7 million decreased 2.8%, or $0.6 million year-over-year primarily due to a decrease in royalty revenue. Company-Owned Salon Revenue Third quarter revenue for Company-owned salons was $19.0 million, an increase of $17.7 million compared to the prior year. Year-to-date revenue for the Company-owned salon segment was $23.2 million, an increase of $18.2 million versus the prior year. The year-over-year increase in revenue for both periods was expected and driven by the acquisition of Alline on December 19, 2024. Company-Owned Salon Adjusted EBITDA Third quarter Company-owned salon adjusted EBITDA improved $1.6 million year-over-year to $843,000. Year-to-date Company-owned salon adjusted EBITDA improved $2.8 million year-over-year to $1.2 million. The improvement in each of the periods is due primarily to increased revenue from an increased number of company-owned salons resulting from the Alline acquisition. Balance Sheet and Cash Flow The Company ended the third quarter of fiscal year 2025 with $13.3 million in cash and cash equivalents, $127.4 million in outstanding borrowings and available total liquidity of $19.0 million. Net cash provided by operating activities for the nine months ended March 31, 2025, totaled $7.0 million, an improvement of $14.1 million from the nine months ended March 31, 2024, due to lower operating costs. Cash used in investing activities includes $18.6 million for Alline acquisition. Non-GAAP Reconciliations For GAAP to non-GAAP reconciliations, please refer to the attached section titled "Non-GAAP Reconciliations." A complete reconciliation of reported earnings to adjusted earnings is included in this press release and is available on the Company’s website at www.regiscorp.com. Earnings Webcast Regis Corporation will host a conference call via webcast discussing third quarter results today, May 13, 2025, at 7:30 a.m. Central time. Interested parties are invited to participate in the live webcast by registering for the event at www.regiscorp.com/investor-relations.html. A replay of the presentation will be available on our website at the same web address. About Regis Corporation Regis Corporation (NasdaqGM:RGS) is a leader in the haircare industry. As of March 31, 2025, the Company franchised or owned 4,087 locations. Regis’ franchised and corporate locations operate under concepts such as Supercuts®, SmartStyle®, Cost Cutters®, Roosters®, and First Choice Haircutters®. For additional information about the Company, including a reconciliation of certain non-GAAP financial information and certain supplemental financial information, please visit the Investor Relations section of the corporate website at www.regiscorp.com. This press release contains or may contain “forward-looking statements” within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this document reflect management’s best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, “may,” “will,” “believe,” “project,” “forecast,” “expect,” “estimate,” “anticipate,” and “plan.” In addition, the following factors could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include a potential material adverse impact on our business and results of operations as a result of changes in consumer shopping trends and changes in manufacturer distribution channels; laws and regulations could require us to modify current business practices and incur increased costs including increases in minimum wages; changes in general economic environment; changes in consumer tastes, hair product innovation, fashion trends and consumer spending patterns; compliance with Nasdaq listing requirements; our ability to realize the anticipated benefits of the Alline Acquisition; reliance on franchise royalties and overall success of our franchisees’ salons; our salons' dependence on a third-party supplier agreement for merchandise; our and our franchisees' ability to attract, train and retain talented stylists and salon leaders; the success of our franchisees, which operate independently; data security and privacy compliance and our ability to manage cyber threats and protect the security of potentially sensitive information about our guests, franchisees, employees, vendors or Company information; the ability of the Company to maintain a satisfactory relationship with Walmart; marketing efforts to drive traffic to our franchisees' salons; our ability to maintain and enhance the value of our brands; reliance on legacy information technology systems; reliance on external vendors; the use of social media; the effectiveness of our enterprise risk management program; our ability to minimize risks associated with owning and operating additional salons; ability to generate sufficient cash flow to satisfy our debt service obligations; compliance with covenants in our financing arrangement; premature termination of agreements with our franchisees; the continued ability of the Company to implement cost reduction initiatives and achieve expected cost savings; continued ability to compete in our business markets; potential liabilities related to the employee retention credit received by Alline; changes in trade policies, treaties, tariffs and customs duties and taxes; reliance on our management team and other key personnel; the continued ability to maintain an effective system of internal control over financial reporting; changes in tax exposure; the ability of our Tax Preservation Plan to protect the future availability of the Company's tax assets; potential litigation and other legal or regulatory proceedings; or other factors not listed above. Additional information concerning potential factors that could affect future financial results is set forth under Item 1A on Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A. Non-GAAP Reconciliations: This press release includes a presentation of adjusted EBITDA and adjusted franchise revenue, which are non-GAAP measures. The non-GAAP measures are financial measures that do not reflect United States Generally Accepted Accounting Principles (GAAP). We believe our presentation of the non-GAAP measures provides meaningful insight into our ongoing operating performance and a supplemental perspective of our results of operations. Presentation of the non-GAAP measures allows investors to review our core ongoing operating performance from the same perspective as management and the Board of Directors. These non-GAAP financial measures provide investors an enhanced understanding of our operations, facilitate investors’ analyses and comparisons of our current and past results of operations and provide insight into the prospects of our future performance. We also believe the non-GAAP measures are useful to investors because they provide supplemental information that research analysts frequently use to analyze financial performance. Items impacting comparability are not defined terms within U.S. GAAP. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies. We determine the items to consider as "items impacting comparability" based on how management views our business, makes financial, operating and planning decisions and evaluates the Company's ongoing performance. The following items have been excluded from our non-GAAP adjusted EBITDA results: stock-based compensation expense, discontinued operations, one-time professional fees and legal settlements, severance expense, the benefit from lease liability decreases in excess of previously impaired right of use asset, lease termination fees and asset retirement obligation costs. We present adjusted revenue to provide a meaningful franchise adjusted EBITDA margin, which removes non-margin revenue from total revenue to arrive at an adjusted margin. Margin is a common metric used by investors, however, the majority of our revenue is offset by equal expense, so it does not contribute to our margin. We remove the non-margin revenue from this metric in order to show a meaningful margin rate. The method we use to produce non-GAAP results is not in accordance with U.S. GAAP and may differ from methods used by other companies. These non-GAAP results should not be regarded as a substitute for corresponding U.S. GAAP measures, but instead should be utilized as a supplemental measure of operating performance in evaluating our business. Non-GAAP measures do have limitations as they do not reflect certain items that may have a material impact upon our reported financial results. As such, these non-GAAP measures should be viewed in conjunction with our financial statements prepared in accordance with U.S. GAAP.

Regis Corporation Reports Financial Results for the Third Fiscal Quarter 2025

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