rgs-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended September 30, 2022
			OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission file number 1-12725

Regis Corporation

(Exact name of registrant as specified in its charter)

Minnesota

41-0749934

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

3701 Wayzata Boulevard,

Minneapolis

Minnesota

55416

(Address of principal executive offices)

(Zip Code)

(952) 947-7777

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to be submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes ☐ No ☒

Title of each class

Trading symbol

Name of exchange

Common Stock, $0.05 par value

RGS

NYSE

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of October 25, 2022: 45,536,525

REGIS CORPORATION

INDEX


Part I.	Financial Information

	Item 1.	Financial Statements (Unaudited):

		Condensed Consolidated Balance Sheet as of September 30, 2022 and June 30, 2022	2

		Condensed Consolidated Statement of Operations for the Three Months Ended September 30, 2022 and 2021	3

		Condensed Consolidated Statement of Comprehensive Income (Loss) for the Three Months Ended September 30, 2022 and 2021	4

		Condensed Consolidated Statement of Shareholders' Deficit for the Three Months Ended September 30, 2022 and 2021	5

		Condensed Consolidated Statement of Cash Flows for the Three Months Ended September 30, 2022 and 2021	6

		Notes to Condensed Consolidated Financial Statements	7

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33

	Item 4.	Controls and Procedures	33

Part II.	Other Information		34

	Item 1.	Legal Proceedings	34

	Item 1A.	Risk Factors	34

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35



	Item 6.	Exhibits	36

	Signatures		37

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

REGIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

(Dollars in thousands, except share data)


	September 30, 2022		June 30, 2022

ASSETS
Current assets:
Cash and cash equivalents (Note 7)	$	9,505	$	17,041
Receivables, net	12,999		14,531
Inventories, net	5,127		3,109
Other current assets	15,730		13,984
Total current assets	43,361		48,665

Property and equipment, net	12,070		12,835
Goodwill (Note 1)	173,057		174,360
Other intangibles, net	2,975		3,226
Right of use asset (Note 8)	461,579		493,749
Other assets	28,976		36,465

Total assets	$	722,018	$	769,300

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	16,080	$	15,860
Accrued expenses	28,980		33,784

Short-term lease liability (Note 8)	98,270		103,196
Total current liabilities	143,330		152,840

Long-term debt, net (Note 9)	171,879		179,994
Long-term lease liability (Note 8)	379,915		408,445

Other non-current liabilities	56,754		58,974
Total liabilities	751,878		800,253
Commitments and contingencies (Note 6)
Shareholders' deficit:
Common stock, $0.05 par value; issued and outstanding, 45,536,525 and 45,510,245 common shares at September 30, 2022 and June 30, 2022, respectively	2,277		2,276
Additional paid-in capital	63,044		62,562
Accumulated other comprehensive income	8,597		9,455
Accumulated deficit	(103,778)		(105,246)
Total shareholders' deficit	(29,860)		(30,953)
Total liabilities and shareholders' deficit	$	722,018	$	769,300

_______________________________________________________________________________

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For The Three Months Ended September 30, 2022 And 2021

(Dollars and shares in thousands, except per share amounts)


	Three Months Ended September 30,
	2022		2021

Revenues:
Royalties	$	17,180	$	16,602
Fees	2,553		2,327
Product sales to franchisees	443		8,008
Advertising fund contributions	8,251		8,114
Franchise rental income (Note 8)	30,330		33,762
Company-owned salon revenue	3,114		8,005
Total revenue	61,871		76,818
Operating expenses:
Cost of product sales to franchisees	470		7,648

General and administrative	14,361		20,784
Rent (Note 8)	1,753		1,747
Advertising fund expense	8,251		8,114
Franchise rent expense	30,330		33,762
Company-owned salon expense (1)	2,985		7,945
Depreciation and amortization	1,251		1,539
Long-lived asset impairment	—		163

Total operating expenses	59,401		81,702

Operating income (loss)	2,470		(4,884)

Other expense:
Interest expense	(3,817)		(3,127)
Loss from sale of salon assets to franchisees, net	—		(1,080)
Other, net	(463)		(239)

Loss from operations before income taxes	(1,810)		(9,330)

Income tax (expense) benefit	(28)		48

Loss from continuing operations	(1,838)		(9,282)

Income (loss) from discontinued operations (Note 3)	3,306		(1,096)

Net income (loss)	$	1,468	$	(10,378)

Net income (loss) per share:
Basic and diluted:
Loss from continuing operations	$	(0.04)	$	(0.25)
Income (loss) from discontinued operations	0.07		(0.03)
Net income (loss) per share, basic and diluted (2)	$	0.03	$	(0.28)





Weighted average common and common equivalent shares outstanding:
Basic and diluted	46,054		36,850

_______________________________________________________________________________

(1)Includes cost of service and product sold to guests in our Company-owned salons. Excludes general and administrative expense, rent and depreciation and amortization related to Company-owned salons.

(2)Total is a recalculation; line items calculated individually may not sum to total due to rounding.

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

For The Three Months Ended September 30, 2022 And 2021

(Dollars in thousands)


	Three Months Ended September 30,
	2022		2021

Net income (loss)	$	1,468	$	(10,378)
Foreign currency translation adjustments	(858)		(474)
Comprehensive income (loss)	$	610	$	(10,852)

_______________________________________________________________________________

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT (Unaudited)

For The Three Months Ended September 30, 2022 And 2021

(Dollars in thousands)


	Three Months Ended September 30, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
	Shares	Amount

Balance, June 30, 2022	45,510,245	$	2,276	$	62,562	$	9,455	$	(105,246)

SEC Form 10-Q filed by Regis Corporation