Regis Corporation Announces Q4 and FY 2024 Results

Regis Corporation (NYSE: NASDAQ:RGS), a leader in the hair salon industry, has announced its fourth-quarter and full-year results for fiscal year 2024, revealing a return to profitability and significant debt reduction. CEO Matthew Doctor outlined the company’s strategic advancements, including a successful refinancing initiative that reduced Regis’ debt by over $80 million and resulted in annual cash interest savings of $7 million. The company has closed a net of 455 locations during the fiscal year to improve its financial standing and expects continued growth in adjusted EBITDA, net income, and cash flow for fiscal year 2025.

Key Takeaways

• Regis Corporation has reduced its debt by over $80 million and saved $7 million in cash interest annually.
• The company returned to profitability with an adjusted EBITDA of $26 million and a franchise EBITDA margin of 35% for fiscal year 2024.
• Regis completed migration to Zenoti’s point-of-sale system, enabling personalized marketing and sales growth.
• A new Supercuts Rewards loyalty program is expected to boost customer retention and traffic.
• Regis plans to implement excellence standards across its salons, starting with Supercuts in the fall of 2024.
• The company closed a net of 149 locations in Q4 and 455 locations in fiscal year 2024 to improve financial health.
• Regis expects to drive adjusted EBITDA growth and increase earnings per share and cash flow in fiscal year 2025.

Company Outlook

• Regis anticipates adjusted EBITDA, net income, and cash generation to improve in fiscal year 2025.
• The company forecasts G&A savings of $6 million and expects to generate approximately $1.2 million in sublease income.
• Regis plans to close unprofitable franchise locations, mainly in the third quarter of fiscal year 2025.
• Additional Zenoti proceeds in the range of $7 million to $9 million are expected, which will be reinvested in the business.

Bearish Highlights

• Regis used $2 million of cash from operations in fiscal year 2024, although this was an improvement from the previous year.
• The company had to close a significant number of locations, 149 in Q4 and 455 throughout the fiscal year, to maintain financial health.

Bullish Highlights

• The strategic review process and refinancing have significantly improved the company’s financial flexibility.
• Migration to a unified point-of-sale system is expected to drive further sales growth.
• The launch of the Supercuts Rewards program and digital marketing initiatives are projected to enhance customer experience and retention.

Misses

• Despite the positive outlook, the company still had to draw $10.2 million on their line of credit to cash collateralize their letters of credit with former lenders.

Q&A Highlights

• Inquiries were made about strategies for operational execution and digital marketing initiatives.
• Questions were raised regarding the impact of salon closures on profitability and future growth.

In conclusion, Regis Corporation has demonstrated a robust strategic approach to managing its finances and improving its operational performance. The company’s efforts to reduce debt and increase financial flexibility, coupled with its focus on enhancing the customer experience through technology and loyalty programs, signal a positive trajectory for fiscal year 2025. Regis’ management remains committed to driving growth and delivering value to its shareholders.

InvestingPro Insights

Regis Corporation (NYSE: RGS) has shown dynamic financial performance recently, with notable shifts in stock metrics. According to InvestingPro data, the company has a market capitalization of $51 million. Despite facing challenges, the company reported a 15.31% total return over the last week, indicating resilience in a volatile market.

However, the broader financial context reveals a significant debt burden, and analysts do not anticipate the company will be profitable this year. For more insights, InvestingPro provides 13 additional tips that offer detailed analysis and insights useful for investment decisions.

InvestingPro Data also highlights the company’s Price to Earnings (P/E) Ratio at -7.43, indicating losses for investors currently. However, the adjusted P/E Ratio for the last twelve months as of Q4 2024 is 0.57, reflecting a more favorable earnings outlook.

Regis Corporation has also experienced a revenue decline of -13.0% in the last twelve months as of Q4 2024, aligning with analyst forecasts for a sales decline this year.

For further financial analysis and real-time data on Regis Corporation, check out InvestingPro.

Full transcript – Regis Corp (RGS) Q4 2024:

Kersten Zupfer:

Good morning, and thank you for joining the Regis Fourth Quarter and Full-Year 2024 Earnings Conference Call. …

Matthew Doctor:

Thank you, and good morning, everyone…
…

Kersten Zupfer:

Thanks, Matt. For this morning’s call, I will review our fourth quarter and full-year results…

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