Sally Beauty(US:SBH)2025-11-13 21:05Financial Performance - Consolidated net sales for fiscal year 2025 decreased by $15.6 million, or 0.4%, to $3,701.4 million, impacted by foreign currency exchange rates by $11.4 million, or 0.3%[204] - Consolidated comparable sales increased by 0.3% compared to the prior fiscal year[204] - Consolidated gross profit increased by $20.4 million, or 1.1%, to $1,910.7 million, with gross margin improving by 70 basis points to 51.6%[204] - Consolidated net earnings rose by $42.5 million, or 27.7%, to $195.9 million, with diluted earnings per share increasing to $1.89 from $1.43[204] - Net sales for fiscal year 2025 were $2,991.24 million, with a gross profit of $1,568.10 million and net earnings of $180.56 million[231] Cash Flow and Debt Management - Cash provided by operations was $274.8 million for fiscal year 2025, compared to $246.5 million for the prior fiscal year[204] - Net cash provided by operating activities increased by $28.3 million, reaching $274.8 million in fiscal year 2025 compared to $246.5 million in 2024[223] - Net cash used by investing activities decreased by $50.6 million, totaling $58.3 million in 2025, primarily due to $43.6 million received from the sale of corporate headquarters[225] - Net cash used by financing activities increased by $24.7 million, amounting to $178.4 million in 2025, driven by higher net paydown of long-term debt[226] - Total debt was reduced by $119.0 million, and 5.0 million shares were repurchased under the share repurchase program[204] Assets and Liabilities - Total assets decreased to $2,177.97 million in 2025 from $2,085.18 million in 2024, while total liabilities also decreased to $1,883.75 million from $1,951.87 million[231] - The company had $875.0 million in outstanding debt as of September 30, 2025, consisting of $600.0 million in 2032 Senior Notes and $275.0 million remaining on term loan B[227] - Contractual obligations totaled $2,204.76 million as of September 30, 2025, with long-term debt obligations including interest amounting to $1,204.52 million[232] Interest Rate and Currency Risk - The weighted average interest rate on borrowings under the ABL facility was 5.7% during fiscal year 2025[227] - A 10% increase or decrease in exchange rates for the U.S. dollar versus foreign currencies would have impacted consolidated net sales by approximately 1.8% in fiscal year 2025[252] - A 1.0 percentage point interest rate increase would negatively impact annual interest expense and cash flows by $0.8 million at September 30, 2025[254] - Less than 20% of consolidated net sales were made in currencies other than the U.S. dollar for fiscal years 2025, 2024, and 2023[251] - The company holds $200 million of SOFR denominated interest hedged under an interest rate swap agreement to mitigate interest rate risk[254] - The company uses foreign exchange forward contracts to mitigate exposure to changes in foreign currency exchange rates[253] Credit Risk Management - Credit risk exposure is primarily related to accounts receivable, with a broad customer base mitigating this risk[256] - The allowance for doubtful accounts is deemed sufficient to cover customer credit risks as of September 30, 2025[256] - Derivative instruments expose the company to credit risk in the event of counterparty default, but current exposure is considered mitigated[257] - The company performs ongoing credit evaluations to manage credit risk associated with trade receivables[256] Operational Expenses - SG&A expenses for Sally increased by $22.3 million, or 2.4%, to $945.9 million, representing 45.2% of net sales[214] - BSG's SG&A expenses decreased by $12.2 million, or 2.7%, to $441.9 million, accounting for 27.5% of net sales[215] Impairment and Other Losses - The company recognized an impairment loss of $4.5 million on certain trade names due to decreased projected revenues from a specific product line in fiscal year 2025[248] Working Capital - Working capital increased by $12.9 million to $725.5 million at September 30, 2025, with a current assets to current liabilities ratio of 2.26 to 1.00[220] - Cash and cash equivalents increased to $85.36 million in 2025 from $32.82 million in 2024[231]