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REGIS CORP (RGS)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 delivered revenue of $60.4M (+22% YoY) and adjusted EBITDA of $9.7M (+25% YoY), marking the third consecutive quarter of positive operating cash flow; reported net income was inflated by a $115.5M tax valuation allowance release, driving diluted EPS to $42.58 .
  • Company-owned salons (Alline acquisition) were the primary growth driver; franchise royalties and non-margin rental income declined on lower franchise salon count, while Supercuts comps rose 2.9% and consolidated comps rose 1.3% .
  • Guidance cadence focused on cost discipline: management reiterated annual G&A run-rate of $40.5–$42.5M and expects a “meaningful” increase in unrestricted cash generation in FY26 while deploying accumulated ad fund cash; management aims to refinance SOFR+9% debt after the make‑whole ends in 2026 .
  • Quarter’s stock-relevant narrative: operational momentum (comps, adjusted EBITDA, cash from operations), brand transformation (Supercuts loyalty 36% of transactions), and the tax allowance release underscoring confidence in long‑term profitability and NOL utilization .

What Went Well and What Went Wrong

  • What Went Well

    • Supercuts comps +2.9% and consolidated comps +1.3% in Q4; preliminary QTD comps into June showed Supercuts +3.0% and consolidated +1.3% .

    • Adjusted EBITDA rose to $9.7M (+$1.9M YoY), driven by company-owned salon revenue and lower G&A; franchise adjusted EBITDA margin on adjusted revenue improved to 47.4% .

    • Management released $116.3M valuation allowance on deferred tax assets, signaling confidence in future taxable income/NOL utilization; “third consecutive quarter of positive cash from operations” (Q4 $6.8M) .

    • Quote: “Supercuts Rewards… has already grown to represent 36% of transactions… reinforcing its potential to be a powerful driver of long-term growth and customer retention” .

  • What Went Wrong

    • Franchise revenue declined to $39.9M (−15.3% YoY), with royalties −12.4% and non‑margin rental income −$4.6M on lower salon count; total franchise salons fell by 744 YoY .
    • Company-owned salon expense rose with portfolio scale (Q4 $14.6M vs $0.8M prior year), compressing company-owned adjusted EBITDA margin to 9.8% from a non‑comparable high last year (small base) .
    • Retail comps remained weak across brands (Total retail −11.3% in Q4); SmartStyle continued to lag with total comps −4.1% .

Financial Results

MetricQ4 2024Q2 2025 (Dec 31, 2024)Q3 2025 (Mar 31, 2025)Q4 2025
Revenue ($USD Millions)$49.4 $46.7 $57.0 $60.4
Operating Income ($USD Millions)$4.6 $5.5 $5.0 $7.3
Adjusted EBITDA ($USD Millions)$7.8 $7.1 $7.1 $9.7
Net Income ($USD Millions)$91.2 $7.6 $0.3 $116.5
Diluted EPS ($USD)$38.10 $2.71 $0.08 $42.58
Adjusted EPS ($USD)$(0.84) $0.61 $0.43 $0.74
  • Estimate comparison: Wall Street consensus (S&P Global) for Q4 2025 EPS and revenue was unavailable; no # of estimates returned. Values retrieved from S&P Global.*

Segment breakdown (Q4 2025 vs Q4 2024):

Segment MetricQ4 2024Q4 2025
Franchise Revenue ($M)$47.1 $39.9
• Royalties ($M)$16.1 $14.1
• Fees ($M)$2.4 $2.1
• Advertising Contributions ($M)$5.9 $5.6
• Franchise Rental Income ($M)$22.7 $18.1
Franchise Adjusted EBITDA ($M)$6.5 $7.7
• Adj EBITDA as % Adjusted Revenue34.9% 47.4%
Company-owned Revenue ($M)$2.3 $20.5
Company-owned Adjusted EBITDA ($M)$1.3 $2.0
Total Franchise Salons (units)4,391 3,647
Total Company-owned Salons (units)17 294

KPIs

KPIQ4 2024Q4 2025
System-wide same-store sales (Total)−1.3% +1.3%
Supercuts total comps0.0% +2.9%
SmartStyle total comps−5.5% −4.1%
Portfolio Brands total comps−0.8% +1.8%
Operating Cash Flow ($M)$5.1 (Q4 2024) $6.8 (Q4 2025)
OCF ex Ad Fund Build ($M)—$4.3 (Q4 2025)
Supercuts Rewards share of transactions—36% (Q4 run-rate)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted G&A Run-rate ($M)Annual~$42.5–$43.0 (Q2 FY25 run-rate outlook) ~$40.5–$42.5 (as reiterated) Lowered
Unrestricted Cash from OperationsFY 2026Not specifiedExpect “meaningful increase” vs FY25 Raised
Ad Fund SpendingFY 2026Slowed spending to build cash in FY25 Plan to deploy accumulated ad fund cash in FY26 Increased spending
Debt Refinancing PlanPost make‑whole (2026)Not specifiedTarget refinancing after make‑whole ends; current rate SOFR+9% (matures Jun 2029) New disclosure

No formal revenue/EPS/margin forward ranges provided in Q4 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 and Q3)Current Period (Q4)Trend
Supercuts brand transformationDeep research, brand architecture refresh underway; excellence standards visits rolled out Three pillars: brand refresh, omnichannel, operational excellence; nearing pilot of new salon concept Accelerating
Digital/loyalty & online bookingSupercuts Rewards launched; 27–30% member sales; positive cohort behaviors Rewards at 36% of transactions; strong correlation between online booking and sales Improving
Alline (company-owned) integrationAcquisition (314 salons); $0.5M EBITDA in partial Q2; integration planning; pricing/pay plan changes Company-owned revenue $20.5M; EBITDA improvement; closures of unprofitable units; pay model redesigned Building momentum
Same-store sales & closuresQ2 comps −1.6%; Q3 overall −1.1%; closures intentional to prune underperformers Q4 comps +1.3%; preliminary QTD Supercuts +3.0%; expect fewer closures in future years Turning positive
G&A discipline & cash generationRun-rate ranges set; OCF returned positive (Q2 $2.1M; Q3 $6.2M) Q4 OCF $6.8M; reiterate annual G&A $40.5–$42.5M; plan higher unrestricted OCF in FY26 Sustained
Capital structure/refinancingRefi June 2024; leverage reduced; planning future options Early lender talks; aim to refi after make‑whole; SOFR+9% today, maturity 2029 Preparatory

Management Commentary

  • “We closed fiscal year 2025 with $210.1 million in revenue, $19.9 million in operating income and $31.6 million in Adjusted EBITDA… consistently delivering profitability and positive cash from operations” — Interim CEO Jim Lain .
  • “Supercuts Rewards… grew to 36% of transactions… our most frequent visitors and highest lifetime value customers” — Interim CEO Jim Lain .
  • “We remain committed to diligent management of our corporate G&A… expect our run rate for G&A to be in the range of $40.5 million to $42.5 million annually” — CFO Kersten Zupfer .
  • “Release of a significant portion of the valuation allowance… reflects a high degree of confidence… to realize the value of our NOL carryforwards” — Interim CEO Jim Lain .

Q&A Highlights

  • Forum3 initiatives: brand modernization, omnichannel growth (loyalty, online booking), operational excellence; franchisees engaged in improvements .
  • New salon prototype financing: multiple paths under review; franchisees ready to remodel once prototype is finalized (early 2026) .
  • Alline upside: early stage of operational improvements (new pay model, pricing pilots); expect EBITDA to rise as initiatives mature; noted seasonal/weather headwinds in Q1 calendar months .
  • Capital allocation and debt: priorities include debt paydown (sweep), reinvesting in growth; exploring strategic transactions; target refinancing post make‑whole (2026) to lower interest rate .

Estimates Context

  • S&P Global consensus coverage for Q4 2025 was unavailable for EPS and revenue (# of estimates not returned), consistent with limited sell-side coverage; therefore, no formal beat/miss assessment versus Street estimates is provided.*
  • Given improving comps and adjusted EBITDA, we expect internal and external models to raise near-term cash generation assumptions and modestly increase EBITDA trajectory, while normalizing reported EPS for non-recurring tax allowance effects .

Key Takeaways for Investors

  • Operational trajectory improving: Q4 comps positive, adjusted EBITDA +25% YoY; watch Supercuts comps and loyalty penetration for durable momentum .
  • Mix shift to company-owned salons is a core earnings lever; near-term margin work (pay model, pricing, closures) should support EBITDA scaling from the Alline portfolio .
  • Cost discipline intact with annual G&A $40.5–$42.5M; ad fund spend redeployment in FY26 may dampen reported OCF but unrestricted OCF should rise — frame cash analysis accordingly .
  • Reported EPS heavily impacted by tax valuation allowance release; focus on adjusted metrics (EBITDA, adjusted EPS) to gauge run‑rate performance .
  • Debt carries SOFR+9%; potential refinancing after make‑whole (2026) is a medium‑term catalyst to lower interest burden and expand equity value .
  • Franchise salon count rationalization is largely behind; improved franchise adjusted margin on adjusted revenue (47.4%) signals healthier unit economics despite lower GAAP franchise revenue .
  • Near-term trading: momentum trades may key off monthly comp updates and loyalty penetration; medium-term thesis hinges on brand transformation execution, company-owned EBITDA scaling, and eventual refi.

* Values retrieved from S&P Global.