Sally Beauty Holdings, Inc. (NYSE:SBH) Q2 2022 Earnings Conference Call August 4, 2022 8:30 AM ET Company Participants Jeff Harkins - VP, IR & Strategic Planning Denise Paulonis - President, CEO & Director Marlo Cormier - SVP & CFO Conference Call Participants Rupesh Parikh - Oppenheimer Steph Wissink - Jefferies Oliver Chen - Cowen Olivia Tong - Raymond James Carla Casella - JP Morgan Operator Welcome to the Sally Beauty Holdings conference call to discuss the company's fiscal 2022 third quarter results. A ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 2022 -OR- ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 1-33145 SALLY BEAUTY HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware 36-2257936 (State or other jurisdiction of incorporation or organization) (I.R ...

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2022 -OR- ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Commission File No. 1-33145 SALLY BEAUTY HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware 36-2257936 (State or other jurisdiction of incorporation or organization) (I. ...

[PART I — FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's Q1 2022 financials reflect YoY growth in sales and net earnings, offset by a significant decrease in operating cash flow due to inventory investment [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets were $2.86 billion as of December 31, 2021, with a notable increase in inventory and a decrease in cash Balance Sheet Highlights (in thousands) | Account | Dec 31, 2021 | Sep 30, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $298,140 | $400,959 | | Inventory | $1,005,838 | $871,349 | | Total current assets | $1,415,530 | $1,383,575 | | Total assets | $2,855,942 | $2,847,132 | | **Liabilities & Equity** | | | | Total current liabilities | $681,752 | $664,881 | | Long-term debt | $1,381,926 | $1,382,530 | | Total liabilities | $2,574,921 | $2,566,391 | | Total stockholders' equity | $281,021 | $280,741 | [Condensed Consolidated Statements of Earnings](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) Net sales for Q1 2022 grew 4.7% YoY to $980.3 million, with net earnings increasing 20.4% to $68.8 million Statement of Earnings Summary (in thousands, except per share data) | Metric | Q1 FY2022 (ended Dec 31, 2021) | Q1 FY2021 (ended Dec 31, 2020) | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $980,251 | $936,022 | +4.7% | | Gross profit | $500,129 | $470,724 | +6.2% | | Operating earnings | $112,780 | $104,322 | +8.1% | | Net earnings | $68,838 | $57,191 | +20.4% | | Diluted EPS | $0.60 | $0.50 | +20.0% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used by operations was $5.7 million in Q1 2022, a significant decline from the prior year, driven by inventory increases and share repurchases Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net cash (used) provided by operating activities | $(5,685) | $38,986 | | Net cash used by investing activities | $(26,709) | $(17,508) | | Net cash used by financing activities | $(70,185) | $(312) | | **Net (decrease) increase in cash** | **$(102,819)** | **$23,493** | - The primary driver for the decrease in operating cash flow was a significant investment in inventory, which **increased by $137.3 million** during the quarter[27](index=27&type=chunk) - The company used **$75.0 million for common stock repurchases** during the quarter, compared to none in the prior-year period[27](index=27&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the performance of the two operating segments, SBS and BSG, both of which reported sales and earnings growth - The company operates through two segments: **Sally Beauty Supply (SBS)**, which targets retail consumers and professionals, and **Beauty Systems Group (BSG)**, which targets salons and professionals[29](index=29&type=chunk) - During the three months ended December 31, 2021, the company repurchased **3.675 million shares for a total cost of $75.0 million**[40](index=40&type=chunk) Segment Performance (in thousands) | Segment | Net Sales (Q1 2022) | Net Sales (Q1 2021) | Segment Operating Earnings (Q1 2022) | Segment Operating Earnings (Q1 2021) | | :--- | :--- | :--- | :--- | :--- | | Sally Beauty Supply (SBS) | $561,530 | $547,670 | $100,623 | $95,128 | | Beauty Systems Group (BSG) | $418,721 | $388,352 | $58,546 | $48,572 | | **Total** | **$980,251** | **$936,022** | **$159,169** | **$143,700** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=15&type=section&id=Item%202.%20Management's%20Discussion%20And%20Analysis%20Of%20Financial%20Condition%20And%20Results%20Of%20Operations) Management discusses strong Q1 2022 performance, driven by comparable sales growth, and strategies for managing supply chain challenges [Executive Overview and Highlights](index=15&type=section&id=Executive%20Overview%20and%20Highlights) Q1 2022 performance was strong, driven by growth in hair color and care categories and execution of strategic pillars Q1 FY2022 Financial Highlights (YoY) | Metric | Value/Change | | :--- | :--- | | Consolidated Net Sales | +4.7% to $980.3M | | Consolidated Comparable Sales | +6.1% | | Gross Margin | +70 bps to 51.0% | | Operating Margin | +40 bps to 11.5% | | Net Earnings | +20.4% to $68.8M | | Diluted EPS | $0.60 (vs. $0.50) | [Results of Operations](index=17&type=section&id=Results%20of%20Operations) Consolidated net sales increased 4.7% in Q1 2022, with gross margin improving to 51.0% and operating earnings growing 8.1% - SBS net sales increased by **$13.9 million (2.5%)**, driven by a **4.4% increase in comparable sales** reflecting strong customer demand and higher average unit prices, particularly in color categories[64](index=64&type=chunk)[66](index=66&type=chunk) - BSG net sales increased by **$30.4 million (7.8%)**, driven by an **8.6% increase in comparable sales**, due to higher unit prices, salons operating at full capacity, and strong e-commerce growth[64](index=64&type=chunk)[67](index=67&type=chunk) - Consolidated gross margin **increased by 70 basis points**, attributed to pricing leverage in both segments, partially offset by higher distribution and freight costs[64](index=64&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) - Interest expense **decreased by 22.1%** due to lower outstanding debt principal following paydowns in fiscal year 2021[74](index=74&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity through cash and its ABL facility while executing a $75.0 million share repurchase - Working capital increased by **$15.1 million to $733.8 million** at Dec 31, 2021, primarily due to increased inventory levels to meet demand and mitigate supply chain risks[76](index=76&type=chunk) - As of December 31, 2021, the company had **$481.1 million available for borrowing** under its ABL facility[78](index=78&type=chunk) - During the quarter, **3.7 million shares were repurchased for $75.0 million**, with approximately **$651.1 million remaining** under the share repurchase authorization[79](index=79&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=20&type=section&id=Item%203.%20Quantitative%20And%20Qualitative%20Disclosures%20About%20Market%20Risk) There were no material changes to the company's market risks, including foreign currency and interest rates, since September 30, 2021 - There have been **no material changes** to the company's market risks from September 30, 2021[93](index=93&type=chunk) [Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20And%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 31, 2021, with no material changes to internal controls - Based on an evaluation as of December 31, 2021, the CEO and CFO concluded that the company's disclosure controls and procedures are **effective in providing reasonable assurance**[98](index=98&type=chunk) - **No changes in internal control over financial reporting** occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[99](index=99&type=chunk) [PART II — OTHER INFORMATION](index=22&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal matters are not expected to have a material adverse impact on the company's financial position or results - The company does not expect that the resolution of its ordinary-course legal proceedings will have a **material adverse impact** on its consolidated financial position[102](index=102&type=chunk) [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) No material changes were reported to the risk factors disclosed in the company's most recent Annual Report on Form 10-K - **No material changes** have occurred regarding the risk factors disclosed in the company's Annual Report for the fiscal year ended September 30, 2021[104](index=104&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=22&type=section&id=Item%202.Unregistered%20Sales%20Of%20Equity%20Securities%20And%20Use%20Of%20Proceeds) The company repurchased 3.7 million shares for $75.0 million in Q1 2022, with $651.1 million remaining under its authorization Issuer Purchases of Equity Securities (Q1 FY2022) | Period | Total Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares Remaining for Purchase | | :--- | :--- | :--- | :--- | | Oct 2021 | - | - | $726,120,621 | | Nov 2021 | 1,495,824 | $20.85 | $694,938,779 | | Dec 2021 | 2,179,273 | $20.11 | $651,120,625 | | **Total** | **3,675,097** | **$20.41** | **$651,120,625** | - The share repurchase program, authorizing up to **$1.0 billion in repurchases**, was extended in July 2021 and expires on September 30, 2025[106](index=106&type=chunk) [Exhibits](index=23&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required CEO/CFO certifications and iXBRL data - Exhibits filed with the report include **CEO and CFO certifications** under Rule 13a-14(a)/15d-14(a) and Section 1350, as well as iXBRL financial statements[108](index=108&type=chunk)

Sally Beauty Holdings, Inc. (NYSE:SBH) Q1 2022 Earnings Conference Call February 2, 2022 8:30 AM ET Company Participants Denise Paulonis – President and Chief Executive Officer Jeff Harkins – Vice President of Investor Relations Marlo Cormier – Chief Financial Officer Conference Call Participants Rupesh Parikh – Oppenheimer Stephanie Wissink – Jefferies Oliver Chen – Cowen Simeon Gutman – Morgan Stanley Olivia Tong – Raymond James William Reuter – Bank of America Jenna Giannelli – Goldman Sachs Operator Goo ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED: SEPTEMBER 30, 2021 -OR- ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to __________________ Commission File No. 1-33145 SALLY BEAUTY HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware 36-2257936 ( ...

Sally Beauty Holdings, Inc. (NYSE:SBH) Q4 2021 Earnings Conference Call November 11, 2021 8:30 AM ET Company Participants Jeff Harkins - Vice President of Investor Relations Denise Paulonis - President and Chief Executive Officer Marlo Cormier - Chief Financial Officer Conference Call Participants Katy Hallberg - Cowen Rupesh Parikh - Oppenheimer Mark Altschwager - Baird Steph Wissink – Jefferies Simeon Gutman - Morgan Stanley Olivia Tong - Raymond James William Reuter - Bank of America Operator Good mornin ...

Financial Data and Key Metrics Changes - The company reported net sales exceeding $1 billion, reflecting a year-over-year increase of 45% [7][29] - Same-store sales came in at 44.7%, with gross margin at 50.3%, up 470 basis points from the previous year [29][31] - Adjusted operating margin was 12.6%, with adjusted EBITDA more than doubling to $157 million, representing a margin of 15.3% [34] Business Line Data and Key Metrics Changes - Sally Beauty segment saw same-store sales increase of 43.3%, with e-commerce sales totaling $34 million [35] - BSG segment reported same-store sales growth of 47.8%, with e-commerce sales totaling $37 million [37] - The color category increased by 36%, with vivid colors growing by 52% in Sally U.S. and Canada [13][14] Market Data and Key Metrics Changes - Global e-commerce sales were $71 million, representing approximately 7% of total net sales [30][17] - E-commerce sales fulfillment by stores was 43% in Sally U.S. and Canada, with BOPIS comprising 22% of e-commerce sales [17][30] Company Strategy and Development Direction - The company is focused on recruiting and retaining color customers, driving operational excellence, and enhancing omni-channel experiences [15][25] - A new partnership with Regis will position the company as a primary distributor, optimizing the store portfolio for a superior customer experience [19] - The company aims to grow e-commerce sales to 15% of total sales in the coming years [16] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding macro uncertainties, including supply chain disruptions and pandemic variants impacting consumer sentiment [23][42] - The company anticipates Q4 net sales to be flat to up 2% compared to the previous year, reflecting normalization of comparisons [24][42] - Management remains optimistic about long-term growth, targeting low-single digit same-store sales beginning in fiscal 2022 [24][78] Other Important Information - The company reduced debt levels by over $200 million in Q3, bringing the leverage ratio below 2.5 times [23][40] - Cash flow from operations was $86 million, with capital expenditures totaling $18 million, resulting in free cash flow of $68 million [39] Q&A Session Summary Question: Can you provide more color on Q4 given COVID risks and supply chain disruptions? - Management noted that comparisons are challenging due to a strong Q4 last year, with uncertainty around supply chain disruptions and pandemic impacts [46][48] Question: Are you seeing any noticeable impact from the Delta variant? - Management indicated that the impact is more pronounced in August and September than in July [51] Question: What are your thoughts on gross margins and expenses for Q4? - Management expects gross margins to remain above 50% and anticipates an increase in SG&A expenses due to wage inflation and marketing investments [53][54] Question: How do you see the evolution of the color category and its sustainability? - Management believes the trend towards vivid colors is driven by self-expression, with significant growth potential among Gen Z consumers [62][94] Question: What are your priorities regarding shareholder returns and debt pay down? - The company remains focused on liquidity and will prioritize growth investments and debt pay down before considering shareholder returns [120]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 2021 -OR- ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 1-33145 SALLY BEAUTY HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware 36-2257936 (State or other jurisdiction of incorporation or organization) (I.R ...

Financial Data and Key Metrics Changes - Net sales increased by 6.3% year-over-year, with same-store sales up 6.5% [30][29] - Adjusted operating margin expanded by 510 basis points to 12.1%, and adjusted EBITDA increased by 55% to $141 million [36][29] - Adjusted diluted EPS more than doubled to $0.57 [36] Business Line Data and Key Metrics Changes - Sally Beauty same-store sales increased by 4.9%, with e-commerce sales up 46% year-over-year [37] - BSG segment same-store sales increased by 9.9%, with e-commerce growth at 68% year-over-year [38] - Hair color category saw a 27% increase in Sally U.S. and Canada, with vivid colors growing by 53% [13][14] Market Data and Key Metrics Changes - Strong consumer demand driven by improving consumer confidence and government stimulus actions [29][8] - E-commerce sales for Sally U.S. and Canada increased by 56% year-over-year [30][14] - The company ended Q2 with $408 million in cash and zero balance on its $600 million ABL credit facility [11][39] Company Strategy and Development Direction - The company is focused on three major priorities for fiscal 2021: completing transformation elements, leveraging new capabilities to recruit and retain color customers, and reducing debt leverage ratio to 2.5 times [18] - Key initiatives include expanding delivery services, replatforming the BSG digital storefront, enhancing loyalty and CRM programs, and continuing the rollout of JDA [19][22][23][24] - The company aims to be a leader in color with a focus on customer centricity, executing a full reset of color offerings in all Sally U.S. stores [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of fiscal 2021, expecting net sales growth in the high double-digits for Q3 [26] - The company is cautious about ongoing store closures in international markets and salon capacity restrictions in the U.S. [26] - Management highlighted the importance of ESG initiatives and their role in long-term performance and value creation [27] Other Important Information - The company plans to test approximately 90 store closures to analyze sales transfer and purchasing patterns [17] - The balance sheet remains strong, with a net debt leverage ratio of 2.34x, and the company aims to bring it closer to 2.5 times [41] Q&A Session Summary Question: What are you seeing in terms of the cosmetic side? - Cosmetics is a small percentage of the business, continuing to decline, while larger categories like color and care are significantly up [48][49] Question: Do you think the headwinds were more than a tailwind? - Sally U.S. was up 13.9%, but international shutdowns lowered overall segment results by 900 basis points [52][53] Question: Do you believe you gained market share? - Sally is outgrowing the color category, and BSG's color growth of 17% indicates strong competitive positioning [54][56] Question: Can you talk about your CRM and new customer acquisition? - The CRM program is improving, with a significant portion of customers returning, and new technology allows for personalized customer journeys [60][61] Question: What cost pressures are you seeing? - The company is experiencing wage inflation and product cost inflation but remains confident in maintaining 50% margin targets [65][66] Question: How did the Texas storms impact your business? - The storms caused significant disruptions, with around 1,000 stores closed for multiple days in February [91] Question: Is Q3 expected to be the biggest of the year? - The company expects net sales growth of 35% to 40% in Q3, but the environment remains dynamic [92][93] Question: Are the operating margins sustainable? - The company believes it can maintain low-single-digit same-store sales growth and leverage SG&A in a stabilized environment [98][99]