Regis (US:RGS)2020-08-31 19:23Financial Data and Key Metrics Changes - The company reported fourth quarter revenues of $60 million, representing a 76% decrease from the prior year due to government-mandated salon closures [31] - The operating loss for the quarter was $69 million, primarily driven by the economic disruption caused by the pandemic [33] - Fourth quarter consolidated adjusted EBITDA loss was $34 million, which was $73 million or 186% unfavorable compared to the same period last year [35] Business Line Data and Key Metrics Changes - Franchise segment fourth quarter royalties and fees decreased by $19 million or 72% year-over-year to $7 million, driven by the pandemic [39] - Company-owned salon segment revenue decreased by $195 million or 93% year-over-year to $15 million, primarily due to COVID-19 and the conversion of salons to the franchise model [43] - Fourth quarter adjusted EBITDA for company-owned salons decreased by $44 million year-over-year to a loss of $22 million [46] Market Data and Key Metrics Changes - Approximately 82% of the company's salons were open at the end of the quarter, with nearly 90% of salons open when excluding California locations [32][15] - Franchise same-store sales were down 20% due to reduced customer traffic during the pandemic [40] Company Strategy and Development Direction - The company is focused on completing its transformation to a capital-light franchise platform and enhancing technology investments [13][23] - The launch of OpenSalon Pro, a cloud-based salon management system, is part of the strategy to improve franchisee operations and customer engagement [24][60] - The company anticipates completing its refranchising efforts by the end of fiscal year 2021, slightly delayed due to the pandemic [21][50] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term sustainability of consumer interest in grooming despite current challenges [18] - The company is adapting to a post-COVID reality by implementing new operational ideas and safety protocols [16] - Management acknowledged the uncertainty surrounding the pandemic's impact on salon traffic and revenue recovery [74] Other Important Information - The company amended its revolving credit facility in May 2020, which is expected to provide long-term flexibility amid pandemic uncertainties [10][54] - The liquidity position as of June 30 was $210 million, down from $241.5 million as of March 31 [53] Q&A Session Summary Question: Fate and time horizon for mall-based salons - Management indicated that the approach to mall-based salons will mirror the overall strategy for company-owned salons, with plans to address them by the end of the fiscal year [65][66] Question: Financial impact of the new POS system - Management views the investment in technology as a long-term strategy to enable franchisees and improve customer relationships [68][69] Question: Comparable performance and revenue recovery - Management noted that recovery has not yet met expectations, with variability in traffic levels due to ongoing pandemic effects [74] Question: Digital initiatives and technology transformation - Management emphasized that the company is undergoing a digital revolution, which will take time for franchisees to fully embrace [76][77] Question: Rent deferrals for franchisees - Management is closely monitoring franchisee performance and assisting them in obtaining favorable rent deals from landlords [78][80]