Regis - Earnings Call - Q2 2020

Transcript

Speaker 0

Ladies and gentlemen, thank you for standing by. Welcome to the Regis Corporation Second Quarter Fiscal twenty twenty Earnings Call. My name is Britney, and I will be your conference facilitator today. At this time, all participants are in a listen only mode. Following management's presentation, we will conduct a question and answer session.

As a reminder, this call is being recorded for playback and will be available by approximately twelve p. M. Central Time today. I'll now turn the conference call over McShane, AVT Finance.

Please go ahead.

Speaker 1

Thank you, Britney. Good morning, everyone, and thank you all for joining us. On the call with me today, we have Hugh Sawyer, our Chief Executive Officer Kirsten Zupfer, our Executive Vice President and Chief Financial Officer Eric Bakken, President of Franchise Segment and Amanda Russon, our General Counsel. Before I turn the call over to Hugh, there are a few housekeeping items I'd like to address. First, yesterday's earnings release and today's conference call include forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward looking statements are not guarantees of performance and by their nature are subject to inherent risks and uncertainties that could cause actual results to differ materially from such forward looking statements. Please refer to the company's current earnings release and recent SEC filings, including our most recent 10 Q and June 3039, 10 ks for more information on these risks and uncertainties. The company undertakes no obligation to update or revise any forward looking statements to reflect events or circumstances that may arise after the date of this call. Second, this morning's conference call must be considered in conjunction with the earnings release we issued yesterday and our previous SEC filings, including our most recent 10 ks. On today's call, we will be discussing non GAAP as adjusted financial results that exclude the impact of certain business events and other discrete items.

These non GAAP financial measures are provided to facilitate meaningful year over year comparisons, which should not be considered superior to or as a substitute for our GAAP financial measures and should be read in conjunction with GAAP financial measures for the period. A reconciliation of these non GAAP financial measures to the most directly comparable GAAP financial measures can be found in yesterday's release, which is available on our website @www.regiscorp.comslashinvestorrelations. With that, I will now turn the call over to Hugh.

Speaker 2

Thank you, Des, and good morning, everyone. Our guiding principle at Regis is to generate long term value for our shareholders and key stakeholders. In that regard, I was honored to be asked to chair our company's Board of Directors in addition to my continuing role as President and Chief Executive Officer. I believe that assuming the Chairman's role will help ensure continuity of leadership in our multiphase transformational strategy during a period of ongoing change. The second quarter does represent an important milestone where we gained greater clarity into the end date of our portfolio transformation.

Based on our year to date results and a robust pipeline of potential transactions, we now believe that our transition to a fully franchised business will be substantially complete by the end of this calendar year. This improved visibility into the cadence of our portfolio transition enabled us

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to begin meaningful reductions in

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our cost structure and to initiate other plans we have for the business, including reengineering our capital structure so that it will be appropriate for a fully franchised capital like growth platform. We are pleased to report this quarter that we continue to make meaningful progress in our ongoing strategic transformation to a capital light, high growth franchise company. In August, we estimated that it would take us eighteen to twenty four months to complete our conversion to a fully franchised portfolio. However, due to the success we've had in the first half of fiscal year twenty twenty, we expect that we will substantially complete this conversion at a somewhat earlier date than we originally anticipated. In the first half of fiscal twenty twenty, we have converted nine eighty eight salons to franchise owners with line of sight to the sale of approximately 900 additional salons.

This means that net of closing roughly three fifty to 500 underperforming salons, which typically occurs at lease expiration, we have approximately 50% of the remaining company owned salon portfolio in the pipeline at various stages of transition. As of December 31, nearly 70% of our portfolio is now franchised. And you may recall that when I began my tenure as CEO in April, our salon portfolio was roughly 28% franchised and 72% company owned. So by any measure, very significant progress in our portfolio transformation. As I mentioned, our transition to a fully franchised model has been occurring at a rapid pace.

And as a result, we have been thoughtful and intentional in our plans to begin more aggressive expense reductions. In January, we announced actions that will reduce G and A by approximately $19,000,000 on an annualized basis. As we consider the magnitude of these planned G and A reductions, we decided to schedule our actions at the beginning of the third quarter. And of course, we recognized that scheduling the execution of these G and A reductions in January would dilute our second quarter results given the increased pace of our venditions. However, we wanted to ensure that our actions to reduce expense did not create an unacceptable level of risk to the stability of our company owned salons and corporate operations.

We expect to consider further G and A reductions as we draw closer to the end date of our transition and gain additional visibility into our path to sustainable growth. Further, we believe it is the right time to redesign our capital structure so that our debt facility is better suited for a company that is now 70% franchised. We recently engaged Guggenheim Securities to help us design the optimal capital structure for what is now franchise business. Guggenheim has an outstanding track record of success in working with large franchised doors. And assuming continued favorable market conditions, we anticipate that this process will be successful and that we will complete our replacement financing no later than fourth quarter.

Once we have completed our financing, we anticipate that we will continue to make investments to prepare the company for the growth phase of our multiphase transformation. This could include additional investments in the following franchisor capabilities: frictionless

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customer

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facing technology the company's new internally developed back office salon management system, which is now in beta disruptive marketing and advertising trend driven merchandise, including investments we have made in the new private label brand we've named Blossom and the relaunch of our historically successful design line brand. Ongoing investments in stylist recruiting and education and in stylist and franchise partner education will also be considered. We may also utilize our cash in the next eighteen months to complete any remaining elements of our multiyear restructuring, including closing nonperforming company owned salons when it's justified by the economics. Although our operational bias is typically to manage these salons to lease expiration. Paying down some debt, we determined that it's wise to do so, supporting our ongoing G and A reductions through severance programs and, if needed, capital investments in salon refurbishments and remodels as we consolidated our various brands into what we have called the Fab five.

And as you all know, we have utilized cash to repurchase our shares in circumstances where we believe that would be in the best interest of our shareholders. We decided to push the pause button on share repurchases during the second quarter in order to reduce our debt levels and continue investments in other growth initiatives. Upon completion of our refinancing, management and the Board will continue to assess our capital allocation strategies on a periodic basis as we have done historically. Despite the inherent variability and near term risks associated with our transformational strategy, we remain convinced that a fully franchised business has the potential to generate a higher return on its capital and will prove to be in the best long term interest of our shareholders and franchise constituents. We do have a significant amount of work ahead of us in order to substantially complete the portfolio transformational phase of our strategy by calendar year end.

However, we are determined to bring this phase to a conclusion so that we can continue to shift our time and energy and our talent toward the organic growth phase of our strategy. Although conditions could change, we have growing confidence in our plan and our ability to successfully execute our multiphase transformation. Our restructuring and portfolio transformational phases are each moving rapidly toward their end dates, and we intend for Regis to be well positioned for its growth phase, a period we expect to generate sustainable revenue and earnings in the years ahead. With that, I'll ask Kirsten Zupfert, our Chief Financial Officer, to take us through the numbers. Kirsten?

Speaker 1

Thanks, Hugh, and good morning. As Hugh mentioned, we are pleased to share significant progress in our transition to a fully franchised model. Yesterday, we reported on a consolidated basis second quarter revenues of $208,800,000 which represented a decrease of $65,900,000 or 24 percent versus the prior year. The year over year revenue decline was driven primarily by the conversion of a net fourteen forty seven company owned salons to the company's franchise portfolio over the past twelve months and the closure of 172 salons, of which the majority were cash flow negative and not essential to our future plans. When targeting salons for closure, our bias is to exit the location expiration unless the economics justify a course of action to buy out of the lease early.

The headwinds in the quarter were partially offset by a 5,800,000 increase in franchise revenues and $33,600,000 of rent revenue recorded in connection with the new lease accounting guidance adopted in the first quarter of fiscal twenty twenty. Second quarter consolidated adjusted EBITDA of $17,000,000 was $3,600,000 or 17.5% unfavorable to the same period last year and was driven primarily by the elimination of the EBITDA that had been generated in the prior period from the net fourteen forty seven company owned salons that have been sold and converted to the franchise portfolio over the past twelve months. Second quarter adjusted EBITDA was also impacted by lower comps, minimum wage increases and strategic investments in technology. We believe our comps may have been impacted by fewer retail days between the Thanksgiving and Christmas holidays. The decline in adjusted EBITDA was partially offset by a $5,600,000 increase in the gain associated with the sale of company owned salons.

Excluding discrete items and the income from discontinued operations, the company reported decreased second quarter twenty twenty adjusted net income of $4,600,000 or $0.13 earnings per diluted share as compared to adjusted net income of 8,000,000 or $0.18 earnings per diluted share for the same period last year. The year over year decrease in adjusted net income was driven primarily by the elimination of adjusted net income that had been generated in the prior year from salons that were sold and converted to the company's asset light franchise portfolio over the past twelve months. On a year to date basis, consolidated adjusted EBITDA of $46,800,000 was $1,100,000 or 2.3% favorable versus the same period last year. The year over year favorability was driven primarily by a $24,700,000 increase in the gain, excluding noncash goodwill derecognition related to the year to date sale and conversion of nine eighty eight company owned salons to the franchise portfolio. Excluding the impact of the gains, second quarter year to date adjusted EBITDA totaled $5,600,000 which was $23,700,000 unfavorable year over year.

And like the second quarter results, this unfavorable variance is also driven largely by the elimination of EBITDA related to the sold and transferred salons over the past twelve months. As Hugh noted, we disclosed at the close of fiscal year twenty nineteen that our transition to a capital light franchise model would initially have a dilutive impact on the company's adjusted EBITDA. So this decline in our reported adjusted EBITDA was not unexpected. Nevertheless, please note that as we continue our transition, we are certainly paying attention to cash from operations. As you know, we do not provide guidance.

However, assuming no unexpected changes in market conditions and after adjusting for unusual transition related items, our objective is for our run rate trajectory to be cash flow positive in the fourth quarter as we accelerate into the end state of our transition. Looking at the segment specific performance and starting with our Franchise segment, second quarter franchise royalties and fees of $29,300,000 increased $6,700,000 or 29.8% versus the same quarter last year, driven primarily by increased franchise salon counts. Product sales to franchisees decreased $1,000,000 year over year to $16,900,000 driven primarily by a $6,500,000 decrease in products sold to TBG, partially offset by increased franchise salon counts. Franchise same store sales was unfavorable 1.4% and we believe may have been negatively impacted by the reduced retail days between Thanksgiving and Christmas. As a reminder, franchise same store sales are calculated in a manner that is consistent with how we calculate our same store sales in our company owned salon portfolio and represents the total change in sales for salons that have been a franchise location for more than twelve months.

As we are in this transition phase, salons are leaving company owned comps but not entering franchise comps for twelve months, which adds temporary noise to same store sales comparisons. Further, as we've previously discussed, our comps represent salon transactions and are not necessarily a precise representation of customer traffic in the traditional retail sense. Second quarter franchise adjusted EBITDA of $13,100,000 grew approximately $4,600,000 year over year, driven by growth in the franchise salon portfolio and better leverage of our cost structure, partially offset by lower margins on franchise product sales. We believe that the performance of our franchise portfolio may have been temporarily challenged by the operational complexity of onboarding new owners and transitioning salons to a more to our more experienced owners among other factors. With the revenue recognition and the lease accounting guidance we've adopted over the last two years as well as sales of merchandise to TVG at cost, our EBITDA margin percentage is not comparable year over year.

After adjusting for the noncontributory revenue associated with ad fund revenue, franchisee rent revenue and TBG product sales, EBITDA margin was approximately 37.5%, which is approximately 4.2% favorable year over year and is in line with where we would expect it to be. Year to date franchise adjusted EBITDA of $24,900,000 grew approximately $6,600,000 or 36% year over year. Now looking at the company owned salon segment, second quarter revenue decreased $105,300,000 or 45% versus the prior year to $128,900,000 This year over year decline is driven and consistent with the decrease of approximately fifteen ninety eight company owned salons over the past twelve months, which can be bucketed into two main categories. First, the conversion of fourteen ninety eight company owned salons to our asset light franchise platform over the course of the past twelve months, of which four forty three were sold during the second quarter. And second, the closure of approximately 172 company owned salons over the course of the last twelve months, most of which were underperforming salons at lease expiration, and as I noted earlier, not essential to our future strategy.

These net company owned salon reductions were partially offset by 51 salons that were brought bought back from franchisees over the last year and 21 new company owned organic salon openings during the last twelve months, which we expect to transition to our portfolio in the months end. Second quarter company owned salon segment adjusted EBITDA decreased $17,000,000 year over year to $4,200,000 Consistent with the total company consolidated results, the year over year variance was driven primarily by the elimination of the adjusted EBITDA that had been generated in the prior year period from the company owned salons that were sold and converted into the franchise platform over the past twelve months. The quarter was also impacted year over year by increases in stylist minimum wage and stylist commissions and a decline in same store sales in our company owned salons. As you might expect, we are carefully monitoring our company owned salons as we continue through our transition. Our objective is to maintain focus and stability in those salons until they are venditioned.

On a year to date basis, company owned salon consolidated adjusted EBITDA of $15,700,000 was $33,200,000 unfavorable versus the same period last year. The unfavorable year over year variance is driven by the elimination of the adjusted EBITDA related to the sold and transferred salons over the past twelve months, partially offset by management initiatives to rightsize the support structure in the field. Of course, it's important to note that our company owned salon performance will continue to become less critical to the future trajectory of our business as we accelerate our conversion to franchise. Turning now to corporate overhead. Second quarter adjusted EBITDA of $300,000 increased $8,800,000 and is driven primarily by the $15,000,000 of net gains, excluding noncash goodwill derecognition from the sale and conversion of company owned salons, the net impact of management initiatives to eliminate noncore, nonessential G and A expense and lower year over year incentive and equity compensation.

In January, based on the improved visibility into the speed of our transition, we began meaningful reductions in our expenses by eliminating approximately two ninety positions, including 15 contractors across The U. S. And Canada, which is expected to result in approximately $19,000,000 of annualized G and A savings as the company accelerates into its multiyear transformation. We expect the removal of these G and A costs will also positively impact the company's cash from operations in the back half of fiscal twenty twenty and in future periods. Lastly, I wanted to point out that vendition cash proceeds during the second quarter were approximately $71,000 per salon compared to approximately $69,000 per salon in the first quarter of our fiscal twenty twenty, which is consistent quarter over quarter.

However, as we vendition more Signature Style salons this fiscal year, we may have lower net proceeds per salon due to the cost of converting some of these salons as part of our brand consolidation efforts along with more SmartStyle venditions. Looking now at the balance sheet. At the end of the quarter, we made a decision to pay $30,000,000 towards our outstanding debt, which decreased our cash balance to $49,800,000 as of December 3139. We paid down the debt to remain in compliance with the net leverage covenants that are part of our existing credit facility. Given our successful vendition process, we have known for some time that our existing credit facility would not be appropriate for our end state franchise business and that we would need to reengineer our credit facility to meet the opportunities inherent in our new business model.

We believe we now have the visibility and facts that we need to move forward with our refinancing effort. After careful consideration, we retained Guggenheim because they have a strong track record establishing capital structures for growth oriented franchise companies. We expect a successful outcome in our refinancing efforts and to complete the process no later than the fourth quarter of this fiscal year. Turning now to cash flow. I thought it might be helpful to provide a high level reconciliation of how we see adjusted EBITDA flow through to cash from operations and our free cash flow.

When looking at the cash flow statement, the single largest use of cash is approximately $17,000,000 use of working capital. As we noted in the prior quarter, this net use of cash is significantly impacted by cash outlays associated with the wind down of company owned salons as we convert to a fully franchised platform, including transition related payroll and vacation payments and severance payments related to restructuring our field teams to better align with our future state. As Hugh noted, we also invested in our new Blossom brand of our private label merchandise, which was received in December and will be in the salons in the spring. We have also invested in the repackaging and reformulation of our historically successful design line private label brand. In addition to change in working capital when reconciling the adjusted EBITDA to operating cash flow, you will need to take into account the fact that the $41,200,000 net gain from the conversion of our company owned salons to the franchise platform are included in our net income and adjusted EBITDA, but not included in cash from operations as the proceeds are reported as inflows in the investing section of the cash flow statement.

I also wanted to provide a brief update on TBG. At the December, TBG transferred back to Regis two zero seven of its North American mall based salons or roughly 10% of the company's portfolio. When TBG approached Regis about their financial situation in late twenty nineteen, we just determined that acquiring the salons where Regis had continuing obligations under real estate leases would provide greater control over the outcomes and maximum optionality for these locations. This was always a previously considered strategy for these salons. The remaining lease liability associated with the TBG salons is approximately 30,000,000 and Regis will operate the salons until lease end date or until a new franchise owner is identified.

Essentially, we are now managing these salons in the normal course and will treat the former TBG salons as we would any other location in our company owned salon portfolio. We continue to believe the overall transaction, which was always intended to mitigate the company's lease obligation on these salons, was a financial and strategic success. As a reminder, when we executed the original transaction with PBG back in October, the lease liability for the mall based portfolio was approximately $140,000,000 and as noted, is less than $30,000,000 today. With that, I'd like to thank you for your continued support and interest in Regis, and we'll now turn the call back to Britney for questions.

Speaker 0

Thank you, Hugh and Kirsten. The question and answer session will begin at this time. And our first question will come from Stephanie Wiesenk with Jefferies.

Speaker 3

Hi. This is Sebastian Barbera for Stephanie Wiesenk. Just had a couple of questions and a couple of follow ups, if I may. The first one, the comp sales performance at the system and franchise level, any further explanation for the December quarter step down? And how has the business performed post holiday?

And the second one, on the product sales to the core franchisees were up nicely year over year. Can you talk about the initiative, including the rebranding and updating of your private label brands? And what percentage of product sales are now private label? And do you believe there's room to advance on that percentage?

Speaker 2

Why don't I take the first part of the both questions, and I'll toss it to Eric for follow-up on franchise. We still have a high degree of confidence in the ability of our franchise partners to grow their service and product sales at the salon level. We do believe strongly that they were impacted by the retail days that occurred between the holidays, the compressed retail days between the holidays of Thanksgiving and Christmas. So we don't have a high degree of concern about our partners' ability our franchise partners' ability to grow their businesses. Hypothesis from the beginning has been that when you turn these salons over to local owners who are entrepreneurial and they put their own capital to work, they tend to be highly focused on growth and, performance.

But it's also important to remember that the condition process is a distraction for all It's a distraction for the corporation, and it's a distraction for new franchisees and our legacy franchisees who, take control of salons that we're venditioning. But that's, you know, transitional in nature, and we're coming to the end state of that. And I still feel very confident that our franchise partners will grow their businesses, and all the historical data that we have confirms that. To the new private label brands, Blossom and DesignLine, DesignLine has been an important part of our company for years and has been extremely successful with great margins.

We repackaged design line and reformulated design line to support future growth initiatives, and that's relaunching prior to the summer. And Blossom is a brand new product line that's been reformulated with an emphasis on sustainability. And so we feel very optimistic about both of those launches. We don't yet know what percentage of merchandise sales it will represent in the future years, but we're very well aware of the success other retailers have had with private label, including Target and Walmart. And we were watching their results.

So we we got behind this initiative and, supported it, and we're optimistic that it will become an important part of our merchandise offering for our franchisees and for the end consumer. And Eric, you can build on please do build on all of that.

Speaker 4

Sure. Thank you. So this is

Speaker 5

Eric Bakken. As it relates to the comps, if you peel back the layers a little bit, for the quarter, Supercuts on the service side was still positive, up 0.1%. And we were negatively impacted in December for the reasons that both Hugh and Kirsten mentioned. If you look at year to date, Supercuts on the service side was up 0.9% and then overall franchise service was up 0.3% in the year to date numbers. So we saw some negative impact in December.

In December, our service comp in franchise was off 2.5%. So that really hurt our numbers. It's an important month. But we're confident that we'll see the numbers bounce back as we go forward. As it relates to retail, just one item that I would mention on the franchise side.

So when we transfer stores to franchisees on the corporate side, we utilize auto replenishment. So that is all centralized here in Minneapolis. When we converted the stores to franchise, they did not have that model in place. So we've developed that now internally. We're able to provide a very similar replenishment model for our franchisees.

It's called auto guided ordering. And the only difference is that the franchisees can decide if they want to modify what we suggest that they order. So we now have north of 500 locations on auto guided ordering, and that number will grow. We're making some technology enhancements to it to make it work more effectively and efficiently. And we expect, as I said, that number to grow as we go forward.

Speaker 3

Got it. And one more, if I may. Could you please retrace the bridge to 12 in G and A per salon? And how do marketing costs get accounted for in the future? And does this include tech investments?

Speaker 1

So so the the marketing is not included in our g and a line. That marketing advertising expenses are included in the site operating line. Now as we move to a fully franchised entity platform, those marketing and advertising costs will be borne by the ad funds. The twelve five as it relates to the g and a per store, some of the guidance that we had provided in the past, that does include technology spend in that G and A of the 12.5%.

Speaker 3

Got it. Thank you very much.

Speaker 2

And to emphasize Eric's point, which is an important one, the auto guided ordering is enabling merchandise growth through technology. It essentially, is a lift and shift of a historical capability. We had an OpCo that we did not yet have fully integrated and franchised where they can make informed judgments. Our franchise partners can make informed judgments by utilizing that technology. So it's an important initiative.

And as Eric noted, we have about 500 of the franchise salons enabled, but we're going to continue to migrate that throughout the platform.

Speaker 5

Got it. Thanks.

Speaker 2

You bet.

Speaker 0

Our next question comes from Laura Champon with Loop Capital.

Speaker 4

Thanks for taking my questions. It strikes us that you paid down debt in the quarter, although the goal with the Guggenheim is to raise debt. Were there EBITDA covenants that were at risk of being violated? Is that why you paid down debt in the quarter?

Speaker 2

It wasn't. Intent with hey, Lawrence Hughes. Our intent with Guggenheim is not to raise debt, but it's a debt replacement facility. We'll scale that facility that we put in place for the franchise business. The prior facility, suspect, would if you do the comparative analysis, would be larger than what we will need going forward.

We looked at some of the covenants that were in the existing historical facility, and we knew that some of the net leverage ratios would not could not be supported by the future franchise business. We Laura, we've known this for months, maybe a year. We just wanted to time our entry into the debt markets at the right moment. And as you well know, the debt markets are robust today, and there's a lot of money out there to put to work. And so we feel good that we've selected the right moment in time when we have the visibility we need to make informed judgments.

We could have proceeded down this path earlier, but we didn't have all the visibility or facts we needed. So the simple way to think about it is we had a an old facility that was designed, for a different time in a different company, and it just simply is not structured correctly for the future state of the business. So it's time to make that transition too.

Speaker 4

Understood. With the shortened calendar, can you look back to the last time we had that same calendar and tell us how much that impacted comps then? Because it's just tough to parse out what's going on with disruption versus the calendar in December.

Speaker 2

Go ahead, Kirsten. The answer is yes. We did actually go back and trace back through the history, and then, that's a good question, Laura, because we we it doesn't happen very often, but it it it's always academically interesting until it happens to you. But it did happen. And I'll let the person answer your question.

We did go back and look.

Speaker 1

Yes. I'll just add a little bit to that. We did go back to the last time that there was that shortened period between Thanksgiving and Christmas, and we did see the same same impact. You know, we're not able to quantify that with certainty, so I I don't wanna share that publicly. But what I can share is that we have seen some nice improvement in the January comps.

You know, we're in the early days of February, and we hope we, you know, we see that continue. But it it appears to us that that haircut that haircut or color that occurred before the Thanksgiving holiday, we picked up, in early January at some point in January.

Speaker 4

Got it. And then lastly, if it's if if you had more of a haircut, but you still would have comped negatively, how

Speaker 1

do

Speaker 4

you get comfort that your investments in tech are working? So the relationship with Google, it's it's been a long enough, I would think, for it to have an impact. You've had the group in Silicon Valley for a while. So how do you get comfort that that those tech investments are the right thing to do with the comp, getting worse, not better?

Speaker 2

Lawrence, you may remember when we started down the path of technology investments, the Board was quite focused on generating the appropriate return on those investments. And to help govern the process, we went out and recruited a world class director, Virginia Gambelli, who, if you've had a chance to look at her bio, she is extraordinarily gifted in the technology space. And so we convene the Tech Committee of the Board on a quarterly basis to make certain that we are utilizing our shareholders' money in a good way, and we continue to feel good about the technology investments we're making. When you think about it, break it into three buckets. Bucket one is DemandGen, which is OpenSalon, which essentially gives us access to users of Facebook Messenger, Alexa, and Google, through all the Google search functions.

But particularly important, Laura, is investments that we've made in our back office salon support capability. That program is in beta. As you think about that back office support capability, think about it as a fee generating capability that will begin to migrate this year and calendar year. And as to the third components of technology, we've just publicly disclosed on prior calls that we know we need to make an ERP conversion at some point in the process, and we're looking at various options in that regard as well. We need to bring Regis into the modern age on our back office technology functionality, and we're beginning to think about that as well.

And we've talked about that in our prior calls, and we intend to do it. So three basic functions. Back office technology for our salons, back office technology for corporate and the managing capability with OpenSalon.

Speaker 3

Got it. Thank you.

Speaker 1

This concludes the Q and

Speaker 0

A portion of the call. I will now turn the conference back to Hugh.

Speaker 2

Well, thanks, everyone, for your attendance today. We appreciate your continued support and interest in Regis and look forward to speaking with you again next quarter. Thank you, everyone. Good day.

Speaker 0

Thank you, ladies and gentlemen. This concludes our conference call for today. If you wish to access the replay for this presentation, you may do so by visiting regiscorp.com in the Investor Relations section of the website or by dialing +1 (888) 203-1112, Access code, 827-4513. Thank you for all for participating, and have a nice day. All parties may now