Regis (RGS) - 2025 Q4 - Annual Results

Executive Summary & Business Outlook CEO Commentary & Strategic Initiatives Regis Corporation concluded fiscal year 2025 with improved financial performance and strategic confidence, driven by cost management, transformation initiatives, and a significant valuation allowance release - FY2025 Revenue: $210.1 million[2] - FY2025 Operating Income: $19.9 million[2] - FY2025 Adjusted EBITDA: $31.6 million[2] - Q4 Same-Store Sales (Supercuts): Up 2.9%[1] - Q4 Same-Store Sales (Regis Consolidated): Up 1.3%[1] - Strategic Action: Release of $116.3 million valuation allowance on deferred tax assets, reflecting confidence in future profitability and NOL utilization[1][3] - Operational Highlight: Delivered third consecutive quarter of positive cash from operations[1] - Strategic Focus: Advancing transformational strategy for long-term profitable growth, supported by digital transformation and brand strategy expertise from Forum3[1][4] Company Overview Regis Corporation is a prominent haircare industry leader, operating or franchising 3,941 locations under well-known brands as of June 30, 2025 - Total Locations (as of June 30, 2025): 3,941[28] - Key Brands: Supercuts, SmartStyle, Cost Cutters, Roosters, First Choice Haircutters[28] Financial Highlights (Overview) Fourth Quarter Fiscal Year 2025 vs. 2024 Regis Corporation reported improved Q4 FY2025 consolidated revenue, operating income, net income, and Adjusted EBITDA, primarily driven by company-owned salon revenue Fourth Quarter Financial Performance (Millions USD, except percentages and EPS) | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :-------------------------- | :-------- | :-------- | :------- | | Consolidated Revenue (Millions USD) | $60.4M | $49.4M | +$11.0M | | Supercuts Same-Store Sales | 2.9% | N/A | N/A | | Consolidated Same-Store Sales | 1.3% | N/A | N/A | | Operating Income (Millions USD) | $7.3M | $4.6M | +$2.7M | | Cash from Operations (Millions USD) | $6.8M | $5.1M | +$1.7M | | Adjusted EBITDA (Millions USD) | $9.7M | $7.8M | +$1.9M | | Net Income (Millions USD) | $116.5M | $91.2M | +$25.3M | | Diluted EPS (USD) | $42.58 | $38.10 | +$4.48 | | Adjusted Net Income (Millions USD) | $2.0M | $(2.0)M | +$4.0M | | Adjusted Diluted EPS (USD) | $0.74 | $(0.84) | +$1.58 | Full Fiscal Year 2025 vs. 2024 Full fiscal year 2025 saw increased consolidated revenue, significantly improved cash from operations, and growth in Adjusted EBITDA and net income, despite a slight operating income decrease Full Fiscal Year Financial Performance (Millions USD, except percentages and EPS) | Metric | FY2025 | FY2024 | Change | | :-------------------------- | :------- | :------- | :------- | | Consolidated Revenue (Millions USD) | $210.1M | $203.0M | +$7.1M | | Supercuts Same-Store Sales | 1.3% | N/A | N/A | | Consolidated Same-Store Sales | (0.6)% | N/A | N/A | | Operating Income (Millions USD) | $19.9M | $20.9M | -$1.0M | | Cash from Operations (Millions USD) | $13.7M | $(2.0)M | +$15.7M | | Adjusted EBITDA (Millions USD) | $31.6M | $27.5M | +$4.1M | | Net Income (Millions USD) | $123.5M | $91.1M | +$32.4M | | Diluted EPS (USD) | $46.10 | $38.34 | +$7.76 | | Adjusted Net Income (Millions USD) | $7.6M | $(2.2)M | +$9.8M | | Adjusted Diluted EPS (USD) | $2.85 | $(0.92) | +$3.77 | Detailed Consolidated Financial Results Consolidated Financial Performance Summary Regis Corporation reported strong Q4 and FY2025 consolidated financial results, with significant increases in net income and diluted EPS driven by an income tax benefit, alongside improved revenue and Adjusted EBITDA Consolidated Financial Performance Summary (Millions USD, except percentages and EPS) | Metric | Q4 2025 | Q4 2024 | FY 2025 | FY 2024 | | :------------------------------------------ | :-------- | :-------- | :-------- | :-------- | | Consolidated revenue (Millions USD) | $60.4M | $49.4M | $210.1M | $203.0M | | System-wide revenue (Millions USD) | $278.5M | $293.7M | $1,104.9M | $1,179.5M | | System-wide same-store sales comps | 1.3% | (1.3)% | (0.6)% | 0.7% | | Operating income (Millions USD) | $7.3M | $4.6M | $19.9M | $20.9M | | Income from continuing operations (Millions USD) | $118.4M | $91.3M | $117.0M | $89.1M | | Diluted income per share from continuing operations (USD) | $43.27 | $38.14 | $43.67 | $37.50 | | Net income (Millions USD) | $116.5M | $91.2M | $123.5M | $91.1M | | Net income per diluted share (USD) | $42.58 | $38.10 | $46.10 | $38.34 | | Adjusted EBITDA (Millions USD) | $9.7M | $7.8M | $31.6M | $27.5M | | Adjusted net income (loss) (Millions USD) | $2.0M | $(2.0)M | $7.6M | $(2.2)M | | Adjusted net income (loss) per diluted share (USD) | $0.74 | $(0.84) | $2.85 | $(0.92) | Revenue Analysis Consolidated revenue increased in Q4 and FY2025, reaching $60.4 million and $210.1 million respectively, primarily driven by company-owned salon revenue from the Alline acquisition - Q4 Consolidated Revenue: $60.4 million (up $11.0 million YoY)[9] - FY2025 Consolidated Revenue: $210.1 million (up $7.1 million YoY)[9] - Primary Driver: Increase in company-owned salon revenue from the Alline acquisition (December 19, 2024)[9] Operating Income Analysis Q4 2025 operating income increased to $7.3 million due to Alline salons, while FY2025 operating income slightly decreased to $19.9 million compared to the prior year - Q4 2025 Operating Income: $7.3 million (vs. $4.6 million in Q4 2024)[10] - FY2025 Operating Income: $19.9 million (vs. $20.9 million in FY2024)[10] - Q4 Driver: Operating income from Alline salons, partially offset by lower royalties[10] Income from Continuing Operations Analysis Income from continuing operations significantly increased in Q4 and FY2025, primarily due to a $115.5 million income tax benefit from a valuation allowance release, with Q4 2024 including a $94.6 million debt extinguishment gain - Q4 2025 Income from Continuing Operations: $118.4 million ($43.27 diluted EPS)[12] - FY2025 Income from Continuing Operations: $117.0 million ($43.67 diluted EPS)[12] - Primary Driver: $115.5 million income tax benefit from partial release of valuation allowance[12] - Q4 2024 Note: Included a $94.6 million gain on extinguishment of long-term debt[12] Net Income Analysis Net income for Q4 2025 was $116.5 million and for FY2025 was $123.5 million, driven by a $115.5 million income tax benefit, partially offset by a prior year $94.6 million debt extinguishment gain - Q4 2025 Net Income: $116.5 million ($42.58 diluted EPS)[13] - FY2025 Net Income: $123.5 million ($46.10 diluted EPS)[13] - Primary Driver: $115.5 million income tax benefit from partial release of valuation allowance in Q4 FY2025[13] - Offsetting Factor (prior year): $94.6 million gain on extinguishment of long-term debt in FY2024[13] Adjusted EBITDA Analysis Adjusted EBITDA improved in Q4 and FY2025, reaching $9.7 million and $31.6 million respectively, driven by higher company-owned salon revenue and lower general and administrative expenses - Q4 Adjusted EBITDA: $9.7 million (up $1.9 million YoY)[14] - FY2025 Adjusted EBITDA: $31.6 million (up $4.1 million YoY)[15] - Drivers: Higher company-owned salon revenue (Alline Acquisition), lower general and administrative expenses[14][15] - Offset: Lower franchise revenue[14][15] Segment Performance Franchise Segment The Franchise segment experienced decreased revenue in Q4 and FY2025 due to a lower salon count, but Franchise Adjusted EBITDA improved from reduced general and administrative expenses Franchise Revenue Franchise revenue decreased by $7.2 million in Q4 to $39.9 million and by $29.3 million for FY2025 to $166.4 million, primarily due to a lower franchise salon count Franchise Revenue Performance (Millions USD, except percentages) | Metric | Q4 2025 | Q4 2024 | Change | FY 2025 | FY 2024 | Change | | :-------------------------- | :-------- | :-------- | :------- | :-------- | :-------- | :------- | | Royalties (Millions USD) | $14.1M | $16.1M | $(2.0)M | $58.2M | $64.1M | $(5.9)M | | Fees (Millions USD) | $2.1M | $2.4M | $(0.3)M | $9.7M | $10.2M | $(0.5)M | | Franchise rental income (Millions USD) | $18.1M | $22.7M | $(4.6)M | $76.6M | $95.3M | $(18.7)M | | Total franchise revenue (Millions USD) | $39.9M | $47.1M | $(7.2)M | $166.4M | $195.7M | $(29.3)M | | Franchise same-store sales comps | 1.3% | (1.4)% | N/A | (0.6)% | 0.6% | N/A | - Primary Reason for Decrease: Decline in non-margin franchise rental income and royalties due to fewer salons[17][18] Franchise Adjusted EBITDA Franchise Adjusted EBITDA improved by $1.2 million in Q4 to $7.7 million and by $0.6 million for FY2025 to $28.4 million, primarily driven by lower general and administrative expenses - Q4 Franchise Adjusted EBITDA: $7.7 million (up $1.2 million YoY)[19] - FY2025 Franchise Adjusted EBITDA: $28.4 million (up $0.6 million YoY)[19] - Primary Driver: Lower general and administrative expenses[19] Company-Owned Salons Segment The Company-Owned Salons segment achieved significant revenue and Adjusted EBITDA growth in Q4 and FY2025, driven by the Alline Acquisition and strategic closure of unprofitable salons Company-Owned Salon Revenue Company-owned salon revenue significantly improved in Q4 and FY2025, increasing by $18.2 million to $20.5 million and by $36.4 million to $43.7 million respectively, primarily due to the Alline Acquisition Company-Owned Salon Revenue Performance (Millions USD, except percentages and count) | Metric | Q4 2025 | Q4 2024 | Change | FY 2025 | FY 2024 | Change | | :-------------------------------- | :-------- | :-------- | :------- | :-------- | :-------- | :------- | | Total company-owned salon revenue (Millions USD) | $20.5M | $2.3M | +$18.2M | $43.7M | $7.3M | +$36.4M | | Company-owned same-store sales comps | 1.9% | 2.4% | N/A | (2.8)% | 3.5% | N/A | | Total Company-owned salons (Count) | 294 | 17 | +277 | N/A | N/A | N/A | - Primary Driver: Increase in salon count due to the Alline Acquisition[21][22] Company-Owned Salon Adjusted EBITDA Company-owned salon Adjusted EBITDA improved by $0.7 million in Q4 and by $3.5 million for FY2025, driven by increased revenues from the Alline Acquisition and closure of unprofitable salons - Q4 Company-Owned Salon Adjusted EBITDA: $2.0 million (up $0.7 million YoY)[20][23] - FY2025 Company-Owned Salon Adjusted EBITDA: $3.2 million (up $3.5 million YoY)[20][23] - Drivers: Increased revenues from higher salon count (Alline Acquisition) and closure of unprofitable salons[23] Financial Position and Cash Flow Balance Sheet As of June 30, 2025, total assets increased to $598,957 thousand, driven by goodwill, property, equipment, and a deferred tax asset, while total liabilities decreased, significantly increasing shareholders' equity Balance Sheet Summary (Thousands USD) | Metric (in thousands) | 2025 | 2024 | Change | | :-------------------------------- | :--------- | :--------- | :--------- | | ASSETS: | | | | | Cash and cash equivalents | $16,959 | $10,066 | +$6,893 | | Total current assets | $50,484 | $42,050 | +$8,434 | | Property and equipment, net | $10,085 | $3,664 | +$6,421 | | Goodwill | $183,436 | $173,146 | +$10,290 | | Other intangibles, net | $5,830 | $2,427 | +$3,403 | | Right of use asset | $229,861 | $287,912 | $(58,051) | | Deferred tax asset | $102,504 | $0 | +$102,504 | | Total assets | $598,957 | $530,496 | +$68,461 | | LIABILITIES & EQUITY: | | | | | Total current liabilities | $101,688 | $103,518 | $(1,830) | | Long-term debt, net | $109,693 | $99,545 | +$10,148 | | Long-term lease liability | $179,280 | $230,607 | $(51,327) | | Total liabilities | $413,341 | $473,709 | $(60,368) | | Retained earnings (deficit) | $101,965 | $(21,571) | +$123,536 | | Total shareholders' equity | $185,616 | $56,787 | +$128,829 | - Key Change: Recognition of $102,504 thousand deferred tax asset in 2025[31] - Debt: Amended 2024 Credit Agreement for an additional $15,000 thousand in long-term debt, resulting in $125,300 thousand outstanding borrowings at June 30, 2025[24] Cash Flow Statement Net cash provided by operating activities for FY2025 significantly improved to $13,744 thousand, driven by company-owned salon income and ad fund cash, while investing activities used $11,453 thousand and financing provided $3,589 thousand Cash Flow Summary (Thousands USD) | Metric (in thousands) | 2025 | 2024 | Change | | :------------------------------------------ | :--------- | :--------- | :--------- | | Net income | $123,536 | $91,060 | +$32,476 | | Deferred income taxes | $(113,891) | $519 | $(114,410) | | Gain on extinguishment of long-term debt, net | $0 | $(94,611) | +$94,611 | | Net cash provided by (used in) operating activities | $13,744 | $(2,040) | +$15,784 | | Net cash (used in) provided by investing activities | $(11,453) | $1,624 | $(13,077) | | Net cash provided by financing activities | $3,589 | $8,363 | $(4,774) | | Increase in cash, cash equivalents and restricted cash | $5,893 | $7,916 | $(2,023) | | Cash, cash equivalents and restricted cash, End of year | $35,205 | $29,312 | +$5,893 | - Operating Cash Flow Driver: Income from company-owned salons and ad fund cash build[24] - Investing Activities: Business acquisitions (net of cash acquired) of $18,620 thousand[36] - Financing Activities: Proceeds from long-term debt ($15,000 thousand) and repayments ($1,125 thousand)[36] Supplemental Operational Metrics System-Wide Same-Store Sales Q4 2025 saw total system-wide same-store sales up 1.3%, led by Supercuts, while FY2025 experienced a 0.6% decrease, with service sales generally outperforming retail sales System-Wide Same-Store Sales (Percentages) | Brand | Q4 2025 Service | Q4 2025 Retail | Q4 2025 Total | FY 2025 Service | FY 2025 Retail | FY 2025 Total | | :---------------- | :-------------- | :------------- | :------------ | :-------------- | :------------- | :------------ | | Supercuts | 3.2% | (7.0)% | 2.9% | 1.7% | (9.0)% | 1.3% | | SmartStyle | (1.7)% | (17.8)% | (4.1)% | (3.8)% | (18.5)% | (6.1)% | | Portfolio Brands | 2.2% | (5.5)% | 1.8% | (0.2)% | (7.7)% | (0.6)% | | Total | 2.1% | (11.3)% | 1.3% | 0.3% | (12.9)% | (0.6)% | System-Wide Location Counts As of June 30, 2025, Regis Corporation operated 3,941 salons, a decrease from 2024, reflecting a reduction in franchise salons and a substantial increase in company-owned salons due to the Alline Acquisition System-Wide Location Counts (Number of Salons) | Category | 2025 | 2024 | Change | | :------------------------------------------ | :----- | :----- | :----- | | Total Franchise salons | 3,647 | 4,391 | (744) | | Total Company-owned salons | 294 | 17 | +277 | | Total franchise and company-owned salons | 3,941 | 4,408 | (467) | - Key Driver: Alline Acquisition increased company-owned salons[42] Non-GAAP Financial Measures & Reconciliations Explanation of Non-GAAP Measures Regis Corporation uses non-GAAP measures like Adjusted EBITDA and adjusted franchise revenue to provide additional insight into operating performance and facilitate investor analysis, excluding specific non-cash and non-margin items - Purpose: Provide meaningful insight into ongoing operating performance, supplemental perspective, and enhanced understanding for investors[43] - Exclusions for Adjusted EBITDA: Discontinued operations, inventory reserve, one-time professional fees and settlements, severance expense, lease liability decreases benefit, lease termination fees, asset retirement obligation costs, and debt refinancing benefit[46] - Exclusions for Adjusted Franchise Revenue: Non-margin revenue (franchise rental income, advertising fund contributions) to show a meaningful margin rate[47] - Limitation: Non-GAAP results are not in accordance with U.S. GAAP and may differ from other companies; should be viewed as supplemental[48] Reconciliation of Net Income to Adjusted EBITDA This reconciliation details adjustments to reported net income, including interest, taxes, depreciation, impairment, stock compensation, discontinued operations, debt extinguishment gain, and discrete items, to derive Adjusted EBITDA Reconciliation of Net Income to Adjusted EBITDA (Thousands USD) | Metric (in thousands) | Q4 2025 | Q4 2024 | FY 2025 | FY 2024 | | :------------------------------------------ | :-------- | :-------- | :-------- | :-------- | | Reported net income | $116,494 | $91,201 | $123,536 | $91,060 | | Interest expense | $5,471 | $6,864 | $20,252 | $25,393 | | Income taxes | $(115,406) | $1,070 | $(115,496) | $869 | | Depreciation and amortization | $1,321 | $1,889 | $2,966 | $3,945 | | Long-lived asset impairment | $0 | $628 | $352 | $798 | | EBITDA | $7,880 | $101,652 | $31,610 | $122,065 | | Stock-based compensation expense | $(103) | $358 | $1,940 | $1,559 | | Loss (gain) on discontinued operations | $1,892 | $96 | $(6,504) | $(1,993) | | Gain on extinguishment of long-term debt, net | $0 | $(94,611) | $0 | $(94,611) | | Discrete items | $3 | $258 | $4,529 | $472 | | Adjusted EBITDA, non-GAAP financial measure | $9,672 | $7,753 | $31,575 | $27,492 | Reconciliation of Franchise Adjusted EBITDA to Adjusted Franchise Revenue This reconciliation adjusts GAAP franchise revenue by removing non-margin components like rental income and advertising fund contributions to calculate a more representative franchise Adjusted EBITDA percentage Reconciliation of Franchise Adjusted EBITDA to Adjusted Franchise Revenue (Thousands USD, except percentages) | Metric (in thousands) | Q4 2025 | Q4 2024 | FY 2025 | FY 2024 | | :-------------------------------------------------- | :-------- | :-------- | :-------- | :-------- | | Franchise adjusted EBITDA | $7,678 | $6,469 | $28,362 | $27,815 | | GAAP franchise revenue | $39,855 | $47,092 | $166,403 | $195,659 | | Franchise adjusted EBITDA as a percent of GAAP franchise revenue | 19.3% | 13.7% | 17.0% | 14.2% | | Non-margin revenue adjustments: | | | | | | Franchise rental income | $(18,075) | $(22,724) | $(76,599) | $(95,258) | | Advertising fund contributions | $(5,590) | $(5,856) | $(21,924) | $(25,663) | | Adjusted franchise revenue | $16,190 | $18,512 | $67,880 | $74,738 | | Franchise adjusted EBITDA as a percent of adjusted franchise revenue | 47.4% | 34.9% | 41.8% | 37.2% | Reconciliation of Net Income to Adjusted Net Income (Loss) This reconciliation adjusts reported net income by adding or subtracting non-GAAP items like stock compensation, asset impairment, discontinued operations, debt restructuring gain, and discrete items to derive adjusted net income (loss) Reconciliation of Net Income to Adjusted Net Income (Loss) (Thousands USD) | Metric (in thousands) | Q4 2025 | Q4 2024 | FY 2025 | FY 2024 | | :------------------------------------------ | :-------- | :-------- | :-------- | :-------- | | Net income | $116,494 | $91,201 | $123,536 | $91,060 | | Stock-based compensation | $(103) | $358 | $1,940 | $1,559 | | Long lived asset impairment | $0 | $629 | $352 | $798 | | Discontinued operations | $1,892 | $96 | $(6,504) | $(1,993) | | Gain on debt restructuring | $0 | $(94,611) | $0 | $(94,611) | | Discrete items (1) | $(116,261) | $320 | $(111,687) | $1,015 | | Adjusted net income (loss) | $2,022 | $(2,007) | $7,637 | $(2,172) | | (1) Discrete items include partial release of valuation allowance of $(116.3) million in Q4 and FY2025 | | | | | Reconciliation of EPS to Adjusted EPS This reconciliation adjusts reported diluted EPS by accounting for the per-share impact of stock compensation, asset impairment, discontinued operations, debt restructuring gain, discrete items, and changes in weighted average shares to derive adjusted diluted EPS Reconciliation of EPS to Adjusted EPS (USD per share) | Metric | Q4 2025 | Q4 2024 | FY 2025 | FY 2024 | | :------------------------------------------ | :-------- | :-------- | :-------- | :-------- | | Reported earnings per diluted share | $42.58 | $38.10 | $46.10 | $38.34 | | Stock compensation | $(0.04) | $0.15 | $0.72 | $0.67 | | Long lived asset impairment | $0.00 | $0.27 | $0.13 | $0.34 | | Discontinued operations | $0.69 | $0.04 | $(2.43) | $(0.85) | | Gain on debt restructuring | $0.00 | $(40.39) | $0.00 | $(40.45) | | Discrete items (1) | $(42.49) | $0.15 | $(41.67) | $0.44 | | Impact of change in weighted average shares (2) | $0.00 | $0.84 | $0.00 | $0.59 | | Adjusted earnings (loss) per diluted share | $0.74 | $(0.84) | $2.85 | $(0.92) | | (1) Discrete items include partial release of valuation allowance of ($42.51) and ($43.40) in Q4 and FY2025, respectively | | | | | Other Information Earnings Webcast Regis Corporation hosted an earnings webcast on September 3, 2025, at 7:30 a.m. Central time, to discuss Q4 and FY2025 financial results, with a replay available online - Event: Q4 and FY2025 Earnings Webcast[27] - Date: September 3, 2025[27] - Time: 7:30 a.m. Central time[27] - Access: www.regiscorp.com/investor-relations.html[27](index=27&type=chunk) Forward-Looking Statements This press release contains forward-looking statements subject to various risks, including consumer trends, regulations, economic environment, and operational challenges, with no obligation for the company to update them - Nature: Statements concerning anticipated future events and expectations, not historical facts[29] - Risks: Changes in consumer shopping trends, manufacturer distribution channels, laws/regulations (e.g., minimum wages), general economic environment, consumer tastes, reliance on franchise royalties, third-party supplier agreements, ability to attract/retain stylists, data security, relationship with Walmart, brand value, IT systems, external vendors, enterprise risk management, ERP system challenges, debt service obligations, compliance with covenants, premature termination of franchisee agreements, cost reduction initiatives, competition, management team, internal controls, tax exposure, Tax Preservation Plan, potential litigation[29] - Disclaimer: No obligation to publicly update or revise forward-looking statements[29]