Sign in

You're signed outSign in or to get full access.

RC

REGIS CORP (RGS)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY2025 delivered improved profitability despite softer top-line: revenue $46.7M (-8.5% y/y), operating income $5.5M (+$0.7M y/y), adjusted EBITDA $7.1M (+$0.8M y/y), and diluted EPS $2.71 (boosted by $7.4M discontinued operations) . Same-store sales fell 1.6% as December’s shorter holiday window and ongoing unit closures weighed on comps .
  • Company-owned segment turned positive post Alline (closed Dec 19): $3.5M revenue and $0.7M adjusted EBITDA; Alline contributed ~$2.7M revenue and ~$0.5M EBITDA in <2 weeks; franchise EBITDA margin on adjusted revenue held at 36.1% .
  • Liquidity improved and cash generation inflected: Q2 cash from operations $2.1M and 1H FY25 $0.8M (vs. ($6.9M) p/y); cash $10.2M, debt $126.4M; management expects to generate cash for the remainder of FY25 .
  • No formal revenue/EPS guidance; management reiterated FY25 adjusted G&A ex‑Alline ~$39.5M and introduced Alline G&A add $4.5–$5.0M (FY25 adj. G&A incl. Alline ~ $42M). Street consensus from S&P Global was unavailable at time of research, so estimate comparisons are not provided .

What Went Well and What Went Wrong

  • What Went Well

    • Alline integration as strategic and financial lever: CEO emphasized a “remarkable transformation,” optimal mix of franchise and company-owned, and line-of-sight to EBITDA/cash flow growth; purchase multiple ~3.8x corporate EBITDA with identified synergies of ~$1.5M by calendar 2026 .
    • Profitability and cash flow improved: adjusted EBITDA +13% y/y to $7.1M; positive operating cash generation in Q2 and YTD; operating income up y/y on Alline contribution and cost structure improvements .
    • Company-owned turnaround: segment revenue rose to $3.5M (vs. $1.8M y/y) and adjusted EBITDA to $0.7M (vs. $(0.3)M y/y), driven by Alline .

  • What Went Wrong

    • Top-line softness: consolidated revenue declined to $46.7M (from $51.1M) on lower non‑margin franchise rental income/advertising contributions and lower royalties tied to fewer salons and negative comps .
    • Negative comps and December timing effect: system-wide comps −1.6%, with SmartStyle −6.4% total and retail softness across brands; closures dragged comps by ~130 bps .
    • Franchise scale reduction: franchise salons fell to 3,925 (from 4,651 y/y), pressuring royalties and franchise revenue despite maintaining franchise EBITDA margin on adjusted revenue .

Financial Results

MetricQ4 FY2024Q1 FY2025Q2 FY2025
Revenue ($M)$49.4 $46.1 $46.7
Operating Income ($M)$4.6 $2.1 $5.5
Net Income ($M)$91.2 $(0.9) $7.6
Diluted EPS ($)$38.10 $(0.36) $2.71
Adjusted EBITDA ($M)$7.4 $7.6 $7.1
System-wide Same-Store Sales (%)(1.3)% (1.1)% (1.6)%

Segment breakdown

Segment MetricQ4 FY2024Q1 FY2025Q2 FY2025
Franchise Revenue ($M)$47.1 $45.3 $43.3
Franchise Adj. EBITDA ($M)$6.1 $8.0 $6.4
Franchise Adj. EBITDA % of Adjusted Revenue33.0% 44.4% 36.1%
Company-owned Revenue ($M)$2.3 $0.8 $3.5
Company-owned Adj. EBITDA ($M)$1.3 $(0.3) $0.7

KPIs and footprint

KPIQ4 FY2024Q1 FY2025Q2 FY2025
System-wide Revenue ($M)$293.7 $285.6 $274.1
System-wide Same-Store Sales (%)(1.3)% (1.1)% (1.6)%
Franchise Salons (period-end)4,391 4,350 3,925
Company-owned Salons (period-end)17 9 323
Total Locations (period-end)4,408 4,359 4,248
Cash & Cash Equivalents ($M)$10.1 $6.3 $10.2
Debt Outstanding ($M)$115.3 $110.4 $126.4

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted G&A (ex‑Alline)FY2025~$39.5M (Q1) ~$39.5M (reiterated) Maintained
Run-rate G&A (ex‑Alline)Ongoing~$38M (Q1) ~$38M (reiterated) Maintained
Alline Incremental G&AAnnual—$4.5–$5.0M New
Adjusted G&A (incl. Alline)FY2025—~ $42M New
Run-rate G&A (incl. Alline)Ongoing—$42.5–$43.0M New
Cash from OperationsFY2025Expect to generate cash (Q1) Expect to generate cash (reiterated) Maintained
Unit Closures PaceCalendar 2025Last year at current magnitude (Q1) Reiterated Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY2024 and Q1 FY2025)Current Period (Q2 FY2025)Trend
Capital structure/liquidityRefinancing reduced debt >$80M; liquidity $19.9M at FY-end Liquidity $25.9M; cash from ops positive; no further Zenoti earnout Improving liquidity and cash generation
Digital/loyalty (Supercuts Rewards)Nationwide launch announced (Sep) and rollout; 20% of sales at Wave 2 early 27% of Supercuts sales from members; 200 bps SSS/traffic outperformance in salons ≥50% member sales; reducing days between visits Building traction, early uplift
Brand operations excellenceLaunch of Supercuts brand excellence standards and first wave visits Strong correlation between compliance and performance (≥500 bps SSS delta in compliant salons); rolling to other brands Operational rigor scaling
Comps and closuresQ4 comps −1.3%; Q1 −1.1% with closures drag; closures expected to slow post 2025 Q2 comps −1.6% with ~130 bps drag from closures and shorter holiday window; SmartStyle weak Near-term headwind persists
Alline acquisition/integrationDeal announced Dec 19: $83M Rev, $5.8M EBITDA; $22M consideration; synergies $1.0–$1.5M by CY26 Contributed ~$2.7M Rev and ~$0.5M EBITDA in Q2; strategic testing ground; no further M&A planned near term Integration underway, accretive

Management Commentary

  • “Our business has undergone a remarkable transformation…Alline…adds several profitability and cash flow levers that complement our franchise business, creating a well-diversified model and an optimal mix of franchised and company owned locations.” — Matthew Doctor, CEO .
  • “The acquired [Alline] salons contributed $2.7 million in revenue and $0.5 million in EBITDA in the less than 2 weeks post acquisition…Our second quarter results were largely in line with our expectations.” — Kersten Zupfer, CFO .
  • “Same-store sales declined 1.6%…a smaller window between Thanksgiving and Christmas…[and] closures had a roughly 130 basis points drag on overall comps.” — Matthew Doctor, CEO .
  • “We remain committed to diligent management of our corporate G&A…FY25 adjusted G&A, excluding Alline, ~ $39.5M…Alline adds $4.5–$5M…FY25 G&A adjusted for Alline ~ $42M.” — Kersten Zupfer, CFO .

Q&A Highlights

  • The published transcript contains prepared remarks only and did not include a Q&A section; no additional Q&A disclosures were available to summarize .

Estimates Context

  • S&P Global (Capital IQ) Wall Street consensus estimates for Q2 FY2025 (EPS and revenue) were unavailable at the time of research due to data access limitations; therefore, we cannot present a vs. estimates comparison for this quarter. Future updates should anchor estimate comparisons to S&P Global consensus when accessible.

Key Takeaways for Investors

  • Alline provides immediate EBITDA uplift and a controlled environment to test operational/digital levers; identified $1.0–$1.5M synergies by calendar 2026 and early EBITDA contribution support the accretive case .
  • Profitability resilience despite negative comps: adjusted EBITDA remained healthy at $7.1M with franchise adjusted EBITDA margins on adjusted revenue at 36.1% .
  • Near-term comp headwinds likely persist (calendar effects, ongoing closures, SmartStyle softness) but closure cadence should moderate after 2025, easing pressure on royalties and comps .
  • G&A discipline is a key lever: FY25 adjusted G&A ex‑Alline ~$39.5M; Alline adds $4.5–$5.0M; execution on run-rate targets ($42.5–$43M incl. Alline) underpins margin durability .
  • Cash generation inflection is material for the equity story: positive Q2 operating cash flow and management’s expectation to generate cash through FY25 de‑risks liquidity; watch revolver availability and debt trajectory ($126.4M) .
  • Digital/loyalty adoption can be a comp catalyst: 27% of Supercuts sales via members and early evidence of higher traffic/SSS in high‑adoption salons suggest a potential self‑help uplift as penetration increases .
  • Monitoring items: SmartStyle brand turnaround and remodels, integration pace at Alline, brand repositioning work for Supercuts, franchise health (bad debt/rent), and any updates on unit development pipeline .

References

  • Q2 FY2025 press release and 8‑K 2.02: .
  • Q2 FY2025 earnings call transcript: .
  • Q1 FY2025 press release and call: .
  • Q4 FY2024 press release: .
  • Alline acquisition press release (Dec 19, 2024): .