Regis Corporation Sustains Profitable Performance in Q2 2024

Regis Corporation (NasdaqGM: RGS), a prominent figure in the haircare industry, has unveiled its financial outcomes for the second fiscal quarter concluding on December 31, 2023. Matthew Doctor, the President and Chief Executive Officer of Regis Corporation, provided insights into the company’s performance, stating, “During the second quarter, our focus remained on stabilizing and fortifying the Company’s foundation. Encouragingly, positive indicators were evident across all our brands, with top quartile salons collectively showcasing a noteworthy 6% increase in same-store-sales for the quarter, coupled with favorable traffic comparisons. Notably, our operating income witnessed a significant $4.1 million improvement compared to the corresponding quarter last year, underscoring our commitment to streamlining operations. Despite these strides, we recognize the ongoing need to position Regis, our franchisees, and our employees for sustained and long-term growth. This involves reinforcing our operations, enhancing support to franchisees, prudent cost reduction, and augmenting franchisee sales and profitability. Concurrently, the Board is actively exploring strategic alternatives to evaluate the Company’s capital structure, with a steadfast dedication to maximizing value for all stakeholders and maintaining a leadership position in the global beauty industry.”

Financial Highlights:

Comparison of the second quarter fiscal 2024 to the second quarter fiscal 2023 revealed the following key metrics:

  • System-wide revenue of $292.4 million saw a decline of $11.0 million from $303.4 million, with system-wide same-store sales improving by 1.9%.
  • Operating income surged to $4.8 million, marking a $4.1 million improvement from $0.7 million in the second quarter of 2023.
  • Franchise adjusted EBITDA declined to $6.4 million, a decrease of $1.1 million from $7.5 million in the same quarter last year.
  • Net loss from continuing operations improved to $1.0 million, reflecting a $1.5 million enhancement from a net loss of $2.5 million in the second quarter of 2023.
  • Net income exhibited a positive trend, reaching $1.0 million and showing a $3.4 million improvement from a net loss of $2.4 million in the second quarter of 2023.
  • Adjusted EBITDA declined to $6.0 million, down $1.8 million from $7.8 million in the second quarter of 2023.

Comparing the first half fiscal 2024 to the first half fiscal 2023, the results were as follows:

  • System-wide revenue amounted to $599.0 million, reflecting a decrease of $20.5 million from $619.4 million, with system-wide same-store sales showing a 1.8% improvement.
  • Operating income for the first half of 2024 reached $12.2 million, marking a substantial $9.0 million improvement from $3.2 million in the first half of 2023.
  • Franchise adjusted EBITDA rose to $14.3 million, an increase of $1.8 million from $12.5 million in the first half of 2023.
  • Net income from continuing operations improved to $0.2 million, exhibiting a $4.6 million enhancement from a net loss of $4.4 million in the first half of 2023.
  • Net income saw a positive trajectory, reaching $2.2 million and showing a $3.1 million improvement from a net loss of $0.9 million in the first half of 2023.
  • Adjusted EBITDA for the first half of 2024 improved to $13.5 million, up $1.8 million from $11.7 million in the first half of 2023.

Consolidated Revenue:

Total consolidated revenue for the second quarter of 2024 was $51.1 million, reflecting a decline of $8.9 million. Similarly, for the first half of 2024, consolidated revenue amounted to $104.4 million, marking a decrease of $17.4 million. This decline was primarily attributed to a reduction in non-margin franchise rental income and the gradual phase-out of unprofitable company-owned salons that previously contributed significant revenue.

Operating Income:

Regis reported second-quarter 2024 operating income of $4.8 million, demonstrating a notable improvement of $4.1 million compared to the second quarter of 2023. This improvement was primarily driven by a reduction in depreciation expense and the absence of a $1.2 million inventory reserve charge incurred in the preceding fiscal quarter.

For the first half of 2024, operating income reached $12.2 million, indicating an improvement of $9.0 million from $3.2 million in the first half of 2023. The year-over-year enhancement in operating income was primarily attributable to a lower general and administrative expense structure, reduced depreciation expense, and the absence of a $1.2 million inventory reserve charge from the previous fiscal year.

(Loss) Income from Continuing Operations:

In the second quarter of 2024, Regis reported a net loss from continuing operations of $1.0 million, equating to a $0.43 diluted loss per share from continuing operations. This marked an improvement from a net loss of $2.5 million, or $1.10 diluted loss per share from continuing operations, in the second quarter of 2023. For the first half of 2024, net income from continuing operations reached $0.2 million, reflecting a $4.6 million improvement from a net loss of $4.4 million in the first half of 2023. The year-over-year improvement in both fiscal 2024 periods was primarily driven by an increase in operating income, partially offset by an increase in interest expense.

Net Income (Loss):

For the second quarter of 2024, the Company reported net income of $1.0 million, translating to $0.43 diluted income per share. This marked a positive shift from a net loss of $2.4 million, or $1.04 loss per diluted share, for the same period in the previous year. In the first half of 2024, net income amounted to $2.2 million, resulting in $0.93 diluted income per share, compared to a net loss of $0.9 million, or $0.41 loss per diluted share, in the first half of 2023. The year-over-year improvement in net income for both fiscal 2024 periods was primarily driven by an increase in operating income, partially offset by an increase in interest expense.

Adjusted EBITDA:

Second-quarter adjusted EBITDA for 2024 amounted to $6.0 million, reflecting a decline of $1.8 million compared to adjusted EBITDA of $7.8 million in the same period last year. This decline was primarily attributed to the Company receiving a $1.1 million grant from the state of North Carolina related to COVID-19 relief in the second quarter of fiscal year 2023.

For the first half of 2024, adjusted EBITDA improved to $13.5 million, showing a $1.8 million increase from adjusted EBITDA of $11.7 million in the same period last year. This improvement was primarily driven by a lower general and administrative expense structure, partially offset by the impact of the Company receiving a $1.1 million grant from the state of.

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