Regis Corporation (NYSE: RGS), a leader in the haircare industry, today announced financial results for the fourth fiscal quarter and full year ended June 30, 2023.
Matthew Doctor, Regis Corporation's President and Chief Executive Officer, commented: "At the end of fiscal 2022, I mentioned that we were poised to deliver stronger results in fiscal 2023 – and we did exactly that. We finished the year strong, delivering our fourth consecutive quarter of positive operating income, leading to our highest-level of operating income since 2017. We demonstrated growth across key financial metrics including same-store sales, operating income and adjusted EBITDA, reflecting the successful execution of the strategies we have been implementing. We have largely stabilized the business in a relatively short period of time, and during what remains to be a challenging operating environment for our industry – having gone from an adjusted EBITDA loss of $76.9 million in fiscal 2021, an adjusted EBITDA loss $1.8 million in fiscal 2022, to positive adjusted EBITDA of $21.0 million in fiscal 2023. We continued to reduce costs and generated efficiencies while focusing on our talent, technology, stylist community, and customer marketing to optimize our platform for sustained profitable growth. I am proud of our team and franchisees for their valuable contributions to the year and am excited to make continued progress in fiscal 2024."
Financial Highlights:
Fourth quarter fiscal 2023 compared to fourth quarter fiscal 2022:
- System-wide revenue of $311.8 million decreased $5.0 million from $316.8 million and system-wide same-store sales increased 2.5%;
- Operating income improved $4.9 million to $3.6 million, from an operating loss of $1.3 million in the 2022 fourth quarter;
- Franchise adjusted EBITDA of $5.5 million increased $3.0 million from $2.5 million in the 2022 fourth quarter;
- Net loss of $4.8 million improved $37.8 million from a loss of $42.6 million in the 2022 fourth quarter; and
- Adjusted EBITDA of $5.2 million increased $4.2 million from $1.0 million in the 2022 fourth quarter.
Full fiscal year 2023 compared to full fiscal year 2022:
- System-wide revenue of $1,230.5 million increased $2.0 million from $1,228.5 million and system-wide same-store sales increased 4.4%;
- Operating income improved $37.7 million to $8.8 million, from an operating loss of $28.9 million in the 2022 fiscal year;
- Franchise adjusted EBITDA of $22.8 million increased $15.1 million from $7.7 million in the 2022 fiscal year;
- Net loss of $7.4 million improved $78.5 million from a loss of $85.9 million in the 2022 fiscal year; and
- Adjusted EBITDA of $21.0 million increased $22.8 million from a loss of $1.8 million in the 2022 fiscal year.
Fourth Quarter Fiscal Year 2023 Consolidated Results | ||||||||||||||||
Three Months Ended June 30, | Twelve Months Ended June 30, | |||||||||||||||
(Dollars in millions, except per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Consolidated revenue | $ | 55.7 | $ | 66.1 | $ | 233.3 | $ | 276.0 | ||||||||
System-wide revenue (1) | 311.8 | 316.8 | 1,230.5 | 1,228.5 | ||||||||||||
System-wide same-store sales comps | 2.5 | % | 7.1 | % | 4.4 | % | 14.8 | % | ||||||||
Operating income (loss) | $ | 3.6 | $ | (1.3 | ) | $ | 8.8 | $ | (28.9 | ) | ||||||
Loss from continuing operations | (4.8 | ) | (8.6 | ) | (11.3 | ) | (46.5 | ) | ||||||||
Diluted loss per share from continuing operations | (0.10 | ) | (0.19 | ) | (0.25 | ) | (1.07 | ) | ||||||||
(Loss) income from discontinued operations | — | (34.1 | ) | 4.0 | (39.4 | ) | ||||||||||
Net loss | (4.8 | ) | (42.6 | ) | (7.4 | ) | (85.9 | ) | ||||||||
Diluted net loss per share | (0.10 | ) | (0.93 | ) | (0.16 | ) | (1.97 | ) | ||||||||
Adjusted EBITDA (2) | 5.2 | 1.0 | 21.0 | (1.8 | ) | |||||||||||
_____________________________________________________________ | |
(1) | Represents total sales within the system. |
(2) | See GAAP to non-GAAP reconciliations within the attached section titled "Non-GAAP Reconciliations." |
Revenue
Total revenue in the fourth quarter 2023 of $55.7 million decreased $10.4 million and total revenue in fiscal year 2023 of $233.3 million decreased $42.7 million. The decreases were driven primarily by a reduction in salon count and exiting the product distribution business.
Operating Income
Regis reported fourth quarter 2023 income from operations of $3.6 million compared to a loss from operations of $1.3 million in the fourth quarter 2022. Regis reported fiscal year 2023 income from operations of $8.8 million, compared to a loss from operations of $28.9 million in 2022. The year-over-year improvement in operations was driven primarily by our lower general and administrative expense structure and the wind down of loss-generating company-owned salons during the last twelve months.
Net Loss from Continuing Operations
Regis reported fourth quarter 2023 net loss from continuing operations of $4.8 million, or $0.10 loss per diluted share, compared to a net loss from continuing operations of $8.6 million, or $0.19 loss per diluted share, in the fourth quarter 2022. Regis reported fiscal year 2023 net loss from continuing operations of $11.3 million, or $0.25 loss per diluted share, compared to a net loss from continuing operations of $46.5 million, or $1.07 loss per diluted share, in 2022. The year-over-year improvement in net loss from continuing operations in both periods was driven primarily by an increase in operating income partially offset by an increase in interest expense.
Net Loss
The Company reported a fourth quarter 2023 net loss of $4.8 million, or $0.10 loss per diluted share, compared to a net loss of $42.6 million, or $0.93 loss per diluted share for the same period last year. The Company reported fiscal year 2023 net loss of $7.4 million, or $0.16 loss per diluted share, compared to a net loss of $85.9 million, or $1.97 loss per diluted share, in 2022. The year-over-year improvement in net loss in both periods was driven by the loss on the sale of our point-of-sale system in the prior year.
Adjusted EBITDA
Fourth quarter adjusted EBITDA of $5.2 million improved $4.2 million versus adjusted EBITDA of $1.0 million in the same period last year. Fiscal year adjusted EBITDA of $21.0 million improved $22.8 million, versus an adjusted EBITDA loss of $1.8 million in the same period last year. The improvements were driven by lower general and administrative expense and the wind down of loss-generating company-owned salons during the last twelve months. Fiscal year 2023 adjusted EBITDA also benefited from a $1.1 million grant from the state of North Carolina related to COVID-19 relief.
Fourth Quarter Fiscal Year 2023 Segment Results Franchise | ||||||||||||||||||||||||
Three Months Ended
| Increase (Decrease) | Twelve Months Ended
| Increase (Decrease) | |||||||||||||||||||||
(Dollars in millions) (1) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Royalties | $ | 16.6 | $ | 17.2 | $ | (0.6 | ) | $ | 66.0 | $ | 65.8 | $ | 0.2 | |||||||||||
Fees | 3.0 | 3.0 | — | 11.3 | 11.6 | (0.3 | ) | |||||||||||||||||
Product sales to franchisees | 0.6 | 3.3 | (2.7 | ) | 2.8 | 15.1 | (12.3 | ) | ||||||||||||||||
Advertising fund contributions | 7.7 | 8.4 | (0.7 | ) | 31.7 | 32.6 | (0.9 | ) | ||||||||||||||||
Franchise rental income | 25.6 | 30.6 | (5.0 | ) | 111.4 | 130.8 | (19.4 | ) | ||||||||||||||||
Total Franchise revenue | $ | 53.5 | $ | 62.5 | $ | (9.0 | ) | $ | 223.2 | $ | 255.8 | $ | (32.6 | ) | ||||||||||
Franchise same-store sales comps | 2.4 | % | 7.2 | % | 4.4 | % | 15.0 | % | ||||||||||||||||
Franchise adjusted EBITDA | $ | 5.5 | $ | 2.5 | $ | 3.0 | $ | 22.8 | $ | 7.7 | $ | 15.1 | ||||||||||||
as a percent of revenue | 10.2 | % | 4.1 | % | 10.2 | % | 3.0 | % | ||||||||||||||||
as a percent of adjusted revenue (2) | 27.1 | % | 10.8 | % | 28.5 | % | 8.4 | % | ||||||||||||||||
Total Franchise salons | 4,795 | 5,395 | (600 | ) | ||||||||||||||||||||
as a percent of total Franchise and Company-owned salons | 98.6 | % | 98.1 | % | ||||||||||||||||||||
_________________________________________________________ | |
(1) | Variances calculated on amounts shown in millions may result in rounding differences. |
(2) | Adjusted revenue excludes non-margin revenue. See GAAP to non-GAAP reconciliations within the attached section titled "Non-GAAP Reconciliations." |
Franchise Revenue
Fourth quarter franchise revenue was $53.5 million, a $9.0 million, or 14.4%, decrease compared to the prior year quarter. Non-margin franchise rental income decreased $5.0 million due to fewer salons in the current year. Royalties were $16.6 million, a $0.6 million, or 3.5% decrease, versus the same period last year due to the decline in salon count. Product sales to franchisees of $0.6 million decreased $2.7 million, or 81.8%, as a result of the transition out of the wholesale product business.
Fiscal year 2023 franchise revenue was $223.2 million, a $32.6 million, or 12.7%, decrease compared to the prior year primarily due to a decline in non-margin franchise rental income as a result of a lower franchise salon count.
Franchise Adjusted EBITDA
Fourth quarter franchise adjusted EBITDA of $5.5 million improved $3.0 million year-over-year primarily due to a decrease in general and administrative expense.
Fiscal year 2023 franchise adjusted EBITDA of $22.8 million improved $15.1 million year-over-year primarily due to a decrease in general and administrative expense.
Company-Owned Salons | ||||||||||||||||||||||||
Three Months Ended
| Increase (Decrease) | Twelve Months Ended
| Increase (Decrease) | |||||||||||||||||||||
(Dollars in millions) (1) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
