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Regis Corporation Reports Improved Profitability for the Second Fiscal Quarter 2025 and Positive Cash from Operations

Continues to position Regis for future growth with the integration of the Alline Salon Group acquisition

MINNEAPOLIS--(BUSINESS WIRE)-- Regis Corporation (NasdaqGM: RGS), a leader in the haircare industry, today announced financial results for the second fiscal quarter ended December 31, 2024.

Matthew Doctor, Regis Corporation鈥檚 President and Chief Executive Officer, commented, 鈥淥ur business has undergone a remarkable transformation over a short period of time. The Alline acquisition that was completed at the end of the fiscal quarter marks yet another step to position Regis to deliver future growth by adding several profitability and cash flow levers that complement our franchise business, creating a well-diversified model and an optimal mix of franchised and company owned locations. From a results standpoint, with growth across key profitability metrics, our fiscal second quarter results reflect strong operational execution and business traction, despite challenging sales conditions. We are excited to continue executing against our priorities, that now include the Alline portfolio, to drive growth and financial performance across our entire system of branded salons."

Financial Highlights:

Second quarter fiscal 2025 compared to second quarter fiscal 2024:

• Consolidated revenue of $46.7 million versus $51.1 million; driven by lower non-margin franchise rental income and lower advertising fund contributions, partially offset by company-owned salon revenue
• Same-store sales decreased 1.6% versus second quarter 2024
• Net income of $7.6 million, inclusive of income from discontinued operations of $7.4 million, versus $1.0 million, inclusive of income from discontinued operations of $2.0 million in prior year second quarter; Diluted EPS of $2.71 versus $0.43 in second quarter 2024
• Adjusted net income of $1.7 million versus an adjusted net loss of $0.4 million in prior year second quarter; Adjusted EPS of $0.61 versus $(0.18) in second quarter 2024
• Adjusted EBITDA of $7.1 million versus $6.3 million in prior year second quarter

First half fiscal 2025 compared to first half fiscal 2024:

• Consolidated revenue of $92.8 million versus $104.4 million; driven by lower non-margin franchise rental income and lower advertising fund contributions
• Same-store sales decreased 1.4% versus the prior year
• Net income of $6.8 million, inclusive of income from discontinued operations of $8.4 million, versus $2.2 million, inclusive of income from discontinued operations of $2.0 million in prior year; Diluted EPS of $2.90 versus $0.93 in the prior year
• Adjusted net income of $4.3 million versus $1.3 million in prior year; Adjusted EPS of $1.51 versus $0.53 in prior year
• Adjusted EBITDA of $14.8 million versus $14.4 million in prior year

Consolidated Revenue

Total consolidated revenue of $46.7 million in the second quarter 2025 and $92.8 million in the first half 2025, declined $4.3 million and $11.6 million, respectively. 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 resulting from the acquisition of Alline on December 19, 2024.

Operating Income

Regis reported second quarter 2025 operating income of $5.5 million, an improvement of $0.7 million compared to $4.8 million in the second quarter 2024. The year-over-year improvement in operating income was driven primarily by operating income from the Alline salons.

Regis reported first half 2025 operating income of $7.6 million, a decline of $4.6 million compared to $12.2 million in the first half 2024. The year-over-year decline in operating income was driven primarily non-recurring severance costs.

Income (Loss) from Continuing Operations

Regis reported second quarter 2025 income from continuing operations of $0.2 million, or $0.07 per diluted share, compared to a loss from continuing operations of $1.0 million, or $(0.43) per diluted share, in the second quarter 2024. The improvement was driven primarily by improvements to the Company鈥檚 cost structure and income generated by the Alline salons.

Regis reported first half 2025 loss from continuing operations of $1.6 million, or $(0.68) per diluted share, compared to income from continuing operations of $0.2 million, or $0.08 per share, in the second half 2024. The year-over-year decline was driven primarily by lower operating income in the first quarter of fiscal 2025 as a result of non-recurring severance costs, partially offset by a decrease in interest expense.

Net Income

The company reported second quarter 2025 net income of $7.6 million, or $2.71 per diluted share, compared to net income of $1.0 million, or $0.43 income per diluted share, for the same period last year. The company reported first half 2025 net income of $6.8 million, or $2.90 diluted income per share, compared to $2.2 million and $0.93 for the second half 2024. The year-over-year increases for the two periods were driven primarily by a gain related to discontinued operations.

Adjusted EBITDA

Second quarter and first half 2025 adjusted EBITDA of $7.1 million and $14.8 million, improved $0.8 million and $0.4 million, respectively, compared to $6.3 million and $14.4 million in the same periods last year. The improvement in both periods was primarily related to the Alline salons and improved cost structure.

Franchise Revenue

Second quarter franchise revenue was $43.3 million, a $6.0 million, or 12.2% decrease compared to the prior year quarter. First half 2025 franchise revenue was $88.5 million, a 12.1% decline compared to the first half of the prior year. Decreases in franchise salon count and same-store sales were the primary drivers of the declines.

Royalties were $14.8 million and $30.5 million, a $1.0 million and $1.8 million, or 6.3% and 5.6% decrease for the second quarter and first half 2025, compared to the same period last year. The declines were due to fewer franchise salons and lower same-store sales.

Franchise Adjusted EBITDA

Second quarter franchise adjusted EBITDA of $6.4 million declined $0.2 million. First half 2025 franchise adjusted EBITDA of $14.4 million declined $0.8 million year-over-year. The declines are primarily due to a decrease in royalties, partially offset by lower general and administrative expenses.

Company-Owned Salon Revenue

Second quarter revenue for the company-owned salon segment increased $1.7 million versus the prior year to $3.5 million. First half 2025 revenue for the company-owned salon segment improved $0.5 million versus the prior year to $4.2 million. The year-over-year increases were primarily driven by the Alline acquisition, partially offset by other company-owned store closures.

Company-Owned Salon Adjusted EBITDA

Second quarter company-owned salon adjusted EBITDA improved $1.0 million from the same period last year. First half 2025 company-owned salon adjusted EBITDA improved $1.2 million versus the prior year to $0.4 million. The year-over-year improvements were due to the Alline acquisition, partially offset by the wind-down of underperforming company-owned salons.

Balance Sheet and Cash Flow

The Company ended the second quarter of fiscal year 2025 with $10.2 million in cash and cash equivalents, $126.4 million in outstanding borrowings and available total liquidity of $15.9 million. Net cash provided by operating activities for the six months ended December 31, 2024, totaled $0.8 million, an improvement of $7.6 million from the six months ended December 31, 2023, 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鈥檚 website at .

Earnings Webcast

Regis Corporation will host a conference call via webcast discussing second quarter results today, February 12, 2025, at 7:30 a.m. Central time. Interested parties are invited to participate in the live webcast by registering for the event at . 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 December 31, 2024, the Company franchised or owned 4,248 locations. Regis鈥� franchised and corporate locations operate under concepts such as Supercuts^庐, SmartStyle^庐, Cost Cutters^庐, Roosters^庐, and First Choice Haircutters^庐. 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 .

This press release contains or may contain 鈥渇orward-looking statements鈥� 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鈥檚 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, 鈥渕ay,鈥� 鈥渨ill,鈥� 鈥渂elieve,鈥� 鈥減roject,鈥� 鈥渇orecast,鈥� 鈥渆xpect,鈥� 鈥渆stimate,鈥� 鈥渁nticipate,鈥� and 鈥減lan.鈥� 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鈥� 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鈥� 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, excess inventory impairment charges, 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.

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View source version on businesswire.com:

REGIS CORPORATION:

Kersten Zupfer

[email protected]

HAYDEN IR:

James Carbonara

[email protected]

(646) 755-7412

Brett Maas

[email protected]

(646) 536-7331

Source: Regis Corporation