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RC

REGIS CORP (RGS)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY2026 delivered revenue of $59.0M and diluted EPS of $0.49, with consolidated same‑store sales up 0.9%, Supercuts up 2.5%, and fourth consecutive quarter of positive operating cash flow ($2.3M) .
  • Company‑owned salon momentum continued: revenue rose to $20.2M and adjusted EBITDA to $1.6M, driven by the Alline acquisition; franchise headwinds persisted with lower royalties and non‑margin rental income .
  • Guidance signals: management reiterated an annual G&A range of $40–$43M and expects higher unrestricted operating cash generation in FY2026 versus FY2025; near‑term debt refinancing was explicitly downplayed on economics despite make‑whole ending mid‑2026 .
  • Catalysts: loyalty penetration climbed to 40% from 36% in Q4 and 30%+ in Q3, prototype salon construction slated for early 2026, and a new stylist pay model is improving productivity—key drivers for traffic/EBITDA and potential estimate revisions despite limited sell‑side coverage .

What Went Well and What Went Wrong

What Went Well

  • Same‑store sales grew at Supercuts (+2.5%) and consolidated (+0.9%), reflecting pricing/actions and execution improvements; adjusted EBITDA increased year‑over‑year to $8.0M (GAAP EBITDA $7.93M) .
  • Company‑owned salons posted $20.2M revenue and $1.6M adjusted EBITDA with improving stylist productivity under the new pay plan; management sees this portfolio as a “center of excellence” for pilots/best practices .
  • Engagement and loyalty: Supercuts Rewards participation rose to 40% (from 36% in Q4), with pilots to improve digital interaction and omnichannel efficiency planned next month; “we’re off to a strong start in fiscal 2026” .

What Went Wrong

  • Franchise segment revenue declined to $38.7M (royalties fell $1.6M YoY; franchise rental income down $4.2M), and franchise adjusted EBITDA decreased to $6.4M, reflecting salon closures and lower fees .
  • Retail weakness continued: system retail comps were -10.6% (Supercuts retail -7.6%, SmartStyle retail -18.8%), offsetting service comps; consolidated SSS total was only +0.9% .
  • Higher interest expense weighed on profitability; management emphasized refinancing does not make sense near‑term given current terms despite investor queries .

Financial Results

MetricQ3 2025Q4 2025Q1 2026
Revenue ($USD Millions)$56.96 $60.40 $58.96
Diluted EPS ($)$0.08 $42.58 $0.49
Operating Income ($USD Millions)$5.02 $7.29 $5.92
Operating Margin (%)8.8% (5.02/56.96) 12.1% (7.29/60.40) 10.0% (5.92/58.96)
Net Income ($USD Millions)$0.25 $116.49 $1.36
Net Income Margin (%)0.4% (0.25/56.96) 192.9% (116.49/60.40) 2.3% (1.36/58.96)
Adjusted EBITDA ($USD Millions)$7.13 $9.67 $7.97
Adjusted Diluted EPS ($)$0.43 $0.74 $0.50
Cash from Operations ($USD Millions)$6.20 $6.80 $2.28
Consensus Revenue (Q1 2026)n/a (no active sell‑side coverage) n/a (context) n/a (via S&P Global unavailable)
Consensus EPS (Q1 2026)n/a (no active sell‑side coverage) n/a (context) n/a (via S&P Global unavailable)

Segment breakdown

Segment MetricQ3 2025Q4 2025Q1 2026
Franchise Revenue ($USD Millions)$38.00 $39.90 $38.75
Royalties ($USD Millions)$13.53 $14.14 $14.00
Fees ($USD Millions)$2.40 $2.05 $1.80
Franchise Rental Income ($USD Millions)$16.87 $18.08 $17.35
Ad Fund Contributions ($USD Millions)$5.20 $5.59 $5.57
Franchise Adjusted EBITDA ($USD Millions)$6.28 $7.68 $6.38
Franchise SSS (Total, %)-0.7% +1.3% +0.9%
Company‑Owned Revenue ($USD Millions)$19.00 $20.50 $20.21
Company‑Owned Adjusted EBITDA ($USD Millions)$0.84 $2.00 $1.60
Company‑Owned SSS (Total, %)n/a+1.9% +1.7%
Franchise Salon Count3,776 3,647 3,593
Company‑Owned Salon Count311 294 286

KPIs

KPIQ3 2025Q4 2025Q1 2026
Supercuts SSS (Total, %)+1.1% +2.9% +2.5%
Consolidated SSS (Total, %)-1.1% +1.3% +0.9%
Supercuts Rewards Participation (%)30%+ 36% 40%
Available Liquidity ($USD Millions)$19.0 $25.9 $25.5
Cash & Equivalents ($USD Millions)$13.3 $17.0 $16.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Corporate G&A ($USD Millions)FY2026 run‑rate$40.5–$42.5M (FY2025 commentary) $40–$43M (Q1 FY2026 call) Maintained/narrowly updated range
Unrestricted Cash from OperationsFY2026 vs FY2025Expected meaningful increase in FY2026 Expected meaningful increase in FY2026; total reported CFO may be lower due to planned ad fund usage Maintained, with clarity on ad fund
Debt RefinancingNear‑termEvaluate post make‑whole; debt matures Jun‑2029, SOFR+9% Not advisable near‑term; economics do not support; will reassess after make‑whole (mid‑2026) Maintained conservative stance
Store Closures TrajectoryFY2026FY2025 likely last year of closures at recent magnitude Q1: 54 closures; expect fewer than last few years (no numeric guidance) Improving trajectory signaled
Marketing/Ad Fund DeploymentFY2026Ad fund cash built in FY2025 Plan to deploy ad fund cash in FY2026 to drive growth initiatives Implementing spend shift

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY2025 and Q4 FY2025)Current Period (Q1 FY2026)Trend
Digital/AI and Omnichannel (Forum3)Defined 3 pillars incl. omnichannel; Rewards >30% and growing Expanding digital/AI initiatives; pilots next month; loyalty at 40% Strengthening
Pricing StrategyAlline pricing/menu changes and pay plan at 3/30 Annual pricing survey; corporate price actions tied to minimum wage; no notable geographic variance Ongoing/upward
Company‑Owned OptimizationAdj. EBITDA improving; testing/remodels; pay plan roll‑out Productivity improving; center of excellence for pilots/best practices Improving
Franchise Salon ClosuresYear of magnitude closures; net declines; resilience levers outlined 54 closures in Q1; expect fewer than last years; end‑of‑lease timing driven Easing
Regulatory/Legal (FICA tip credit)Not discussedSignificant positive impact expected for franchisees; industry guidance effort underway Positive tailwind
Debt/RefinancingDebt terms: SOFR+9%, maturity 2029; evaluate post make‑whole Refinancing “does not make sense” near‑term; reassess after June 2026 Conservative
Macro/SeasonalityEaster timing; weather impact; April SSS rebound Typical seasonality; steady compliance; no significant regional variance Stable/seasonal

Management Commentary

  • “We are off to a strong start in fiscal 2026, with growth in same‑store sales, improved profitability and our fourth consecutive quarter of positive cash from operations.”
  • “Our modernization of Supercuts continues to gain traction… participation in our loyalty program grew from 36% in the prior quarter to 40% in fiscal Q1.”
  • “Technology continues to be a critical enabler… partnership with Forum 3 and the expansion of our digital and AI initiatives will help us harness data more effectively.”
  • “Turning to our company‑owned salon group… adjusted EBITDA of $1.6M… stylist productivity is improving… serve as a center of excellence.”
  • CFO: “We had $25.5M of available liquidity… and $16.6M in unrestricted cash… outstanding debt of $124.8M… [refinancing] economics do not support such a move in the near term.”

Q&A Highlights

  • Pricing and traffic: Franchisees act on annual competitive surveys; corporate salons adjust for minimum wage and local competition; no notable geographic traffic variance .
  • Closures cadence: 54 locations closed in Q1; management expects closures below recent years but avoids numeric guidance due to lease dynamics .
  • FICA tip credit: Material profitability benefit for franchisees; industry groups drafting implementation guidance for tax filing .
  • G&A outlook: Annual G&A expected in a $40–$43M range, including Alline transaction costs .
  • Prototype timing/CEO search: Supercuts prototype near completion; value‑engineered roll‑out targeted for early 2026; CEO decision expected “in the coming months” .
  • Refinancing stance: Despite make‑whole ending mid‑2026, near‑term refinance economics unattractive; will reassess as agreements mature .

Estimates Context

  • Wall Street consensus for Q1 FY2026 EPS and revenue was unavailable via S&P Global; management and investors highlighted the lack of sell‑side coverage in prior calls, complicating consensus benchmarking . Where estimates are unavailable, use company disclosures and trend analysis.

Key Takeaways for Investors

  • Company‑owned salon performance is improving (revenue $20.2M, adj. EBITDA $1.6M), supporting consolidated profitability and cash generation; continued operational pilots may lift EBITDA further .
  • Supercuts loyalty penetration reached 40% and is correlated with higher traffic/retention, a potential driver of comp acceleration as digital pilots launch and brand standards tighten .
  • Franchise pressure from lower royalties/rental income persists as salon counts decline; however, closures are skewed to low‑volume units, and trajectory is easing per management .
  • Cash generation remains positive ($2.3M in Q1; $16.6M cash; $25.5M liquidity), with FY2026 unrestricted operating cash expected to rise even as ad fund spending ramps .
  • Debt profile (SOFR+9%, maturity 2029) implies sustained higher interest expense near term; explicit stance against near‑term refinancing reduces financial engineering catalysts before mid‑2026 .
  • Regulatory tailwind: FICA tip credit should materially benefit franchisee profitability, a potential indirect support for system‑wide health and royalties over time .
  • Trading lens: Near‑term stock catalysts are likely tied to comp momentum (Supercuts), loyalty/digital execution, and company‑owned EBITDA progression; lack of sell‑side coverage may amplify price reactions to clear operational milestones .