Regis (US:RGS)2022-02-03 21:11Financial Data and Key Metrics Changes - Total revenues for Q2 2022 were $70 million, a decline of $34 million from the prior year due to 97% of salons being franchised compared to 84% in the previous year [23] - The company reported an operating loss of $1 million, significantly improved from an operating loss of $27 million in the prior-year quarter [26] - Adjusted EBITDA for Q2 2022 was $2 million, compared to a loss of $18 million in the prior year's quarter, reflecting higher operating income and lower costs [27] Business Line Data and Key Metrics Changes - The Franchise segment achieved a profit of $5.5 million for the first time since the pandemic, despite two-year comps being down 17% [12] - The company-owned segment recorded an adjusted EBITDA loss of approximately $3 million, including a charge to increase the inventory reserve by approximately $1 million [29] Market Data and Key Metrics Changes - Systemwide revenue increased by $43 million from the prior year, driven by a 22% improvement in comparable same-store sales [25] - On a two-year basis, systemwide comps were down 17% compared to pre-COVID levels [25] Company Strategy and Development Direction - The company is focused on transitioning to a fully asset-light franchisor model, which is expected to lead to more predictable revenue streams and cash flow generation [18] - Key priorities include strengthening franchisee relationships, recruiting and retaining stylists, driving customer traffic, and enhancing technology through the Opensalon PRO platform [46][48][54] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges due to labor shortages and the pandemic's impact on the hair services market, but expressed optimism about recovery and growth potential [61] - The transition to a franchisor model is complete, and the benefits of fiscal 2021 actions are beginning to take hold [62] Other Important Information - The company has $138 million in liquidity, including $82 million of available revolver capacity and $35 million in cash, providing operational flexibility [32] - G&A expenses are expected to stabilize between $65 million and $70 million annually, with a target to achieve this by Q4 [31] Q&A Session Summary Question: Plans for recruiting and retaining stylists - The company aims to create a preferred workplace for stylists through technology, culture, and career development opportunities [63] Question: Obstacles to the total adoption of Opensalon PRO - Feedback from franchisees indicated areas for improvement in operational needs, and the company is working on addressing these issues [65][66] Question: System sales relative to pre-pandemic levels - Systemwide comps are down approximately 17% compared to pre-COVID levels [70] Question: Breakdown of fees revenue - Approximately half of the $22 million in fees revenue is from Opensalon PRO tech fees, with the remainder from franchise fees and product rebates [72] Question: G&A cost cuts - The company has been able to narrow G&A expenses to the lower end of the previously expected range, achieving this sooner than anticipated [74][75] Question: Driving more customer traffic - The company sees an opportunity to improve customer retention and is focusing on targeted marketing efforts to increase traffic [76][77]