REGIS CORP Q1 FY2025 earnings call

Financial Highlights - Adjusted results were largely in line with the prior year, while GAAP financials were slightly lower due to one-time expenses like severance accrual and stock-based compensation. Adjusted EBITDA was $7.6 million versus $8.1 million a year ago, with 40% adjusted EBITDA margins representing a two percentage point margin expansion. Adjusted earnings per share was $0.93 versus $0.71 in the prior year. ### Operational Rigor - Launched Supercuts brand excellence standards, with the first wave of excellence visits fully launched on November 4, to be completed in January 2025. Focus areas include salon uniformity, consistent service menus, and strengthening stylist-guest connections. ### Digital Efforts - Completed rollout of Zenoti point-of-sale system and Supercuts Rewards loyalty program. Loyalty member sales are up in Supercuts salons. Focus on cultivating digital relationships, optimizing websites/apps, and increasing digital touchpoints. ### Strategy Alignment - Paused major changes to align with franchisees on a winning strategy. Engaged outside resource for vision and strategy planning with franchisees, gathering feedback from over 100 conversations.

Total first quarter revenues were $46.1 million, a decline of $7.3 million from the prior year. Royalty and fee revenue, which represents the core business revenue, was $18 million, down $1.2 million versus the prior year's first quarter. System-wide same-store sales declined 1.1% in the quarter. On an adjusted basis, first quarter consolidated EBITDA was $7.6 million compared to $8.1 million in the prior year's quarter. The core franchise business achieved adjusted EBITDA of $8 million in the quarter, a $600,000 decrease compared to $8.6 million in the prior year quarter. The company-owned segment reported an adjusted EBITDA loss of $300,000 for the quarter, an improvement of $200,000 from the same quarter last year.

Fiscal 2025 Outlook - Expect to continue driving adjusted EBITDA growth, earnings per share, and cash flow in fiscal 2025 despite net closures and softer sales. ### Closures - Expect 2025 to be the last year of significant closures in the order of magnitude seen, with the pace slowing in future years. ### Profitability - Expect to maintain operating profit, continue managing with a smaller, high-performing footprint as the company gets back on the path to sales and unit count growth.

Salon Closures - Trend of closures may continue, although the pace should slow. ### Digital and Operational Challenges - Need to continue optimizing digital platforms and providing support to franchisees to minimize friction. ### Macro Environment - Impact of macro environment on sales and unit counts remains a risk.