Regis (US:RGS)2023-08-23 15:02Financial Data and Key Metrics Changes - In Q4 2023, same-store sales increased by 2.5% compared to Q4 2022, while for the full year, same-store sales rose by 4.4% compared to fiscal 2022 [7][50] - Adjusted Q4 EBITDA was $5.2 million, a significant improvement from $1 million in the prior year's quarter, leading to a full-year adjusted EBITDA of $21 million, up from a loss of $1.8 million in fiscal 2022 [8][52] - Operating income for the full year improved by $37.7 million to $8.8 million, compared to a loss of $28.9 million in fiscal 2022, marking the strongest operating income result in six years [9][51] - Positive operating cash flow of $0.5 million was achieved for the first time since Q4 2019, although caution was advised regarding future cash flow stability [9][57] Business Line Data and Key Metrics Changes - The company closed 264 salons in Q4 and 616 salons for the full year, resulting in a year-end franchise salon count of 4,795 [10][19] - Corporate-owned salon losses decreased to $1.8 million from $9.5 million in fiscal 2022, indicating improved performance in this segment [23] Market Data and Key Metrics Changes - System-wide same-store sales comps were positive 2.5% in Q4 and 4.4% for the full year, although system-wide sales were unchanged for the year and down slightly in Q4 due to salon closures [50] - The closures primarily affected underperforming salons, with an average volume of approximately $110,000 for the closed locations [19] Company Strategy and Development Direction - The company is focused on financial stability and growing profitability through managing G&A expenses, exiting corporate-owned locations, and mitigating bad debt exposure [35] - Key strategic pillars include enhancing support for stylists, driving customer traffic, and improving the salon experience through technology [36][39] - The integration of the Zenoti platform is expected to enhance marketing capabilities, guest experience, and franchisee operations [30][70] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced by the industry but expressed confidence in the company's progress and stability [6][34] - The focus for fiscal 2024 will be on stabilizing the business while exploring opportunities for salon count growth in a meaningful manner [68] - Management emphasized the importance of driving customer traffic while ensuring a quality salon experience to foster customer loyalty [72] Other Important Information - The company ended the fiscal year with total liquidity of $43 million, maintaining a stable liquidity position [18][59] - Adjusted G&A expenses were reduced by $12.5 million year-over-year, contributing to improved financial health [14][53] Q&A Session Summary Question: What do you foresee coming forward now that you've closed a lot of the very low productivity stores? - Management indicated that closures in 2024 will likely be less than in 2023, with a focus on optimizing stylists in more productive locations [68] Question: Could you remind us what Zenoti enables you to do? - Zenoti allows for improved marketing, guest experience, and franchisee operations, including customizable guest targeting and better operational management [70] Question: Is there an opportunity to increase the amount of visits to drive traffic? - Management acknowledged the need to drive traffic into salons and emphasized testing various marketing strategies to optimize customer visits [71][72] Question: Will Zenoti payments be used to pay down debt or generate free cash flow? - Management suggested that while Zenoti payments will contribute to debt reduction, expectations for significant free cash flow should be tempered [73]