rgs-20231231

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 December 31, 2023
			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)

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

Title of each class

Trading symbol

Name of exchange on which registered

Common Stock, $0.05 par value

RGS

The Nasdaq Stock Market LLC

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 every Interactive Data File required to be submitted 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 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 ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of January 26, 2024: 2,279,450

REGIS CORPORATION

INDEX


Part I.	Financial Information

	Item 1.	Financial Statements (Unaudited):

		Condensed Consolidated Balance Sheets as of December 31, 2023 and June 30, 2023	3

		Condensed Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2023 and 2022	4

		Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended December 31, 2023 and 2022	6

		Condensed Consolidated Statements of Shareholders' Deficit for the Three and Six Months Ended December 31, 2023 and 2022	7

		Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2023 and December 31, 2022	8

		Notes to Condensed Consolidated Financial Statements	9

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22

	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	37

	Item 5.	Other Information	37



	Item 6.	Exhibits	38

	Signatures		39

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

REGIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

As of December 31, 2023 and June 30, 2023

(Dollars in thousands, except per share data)


	December 31, 2023		June 30, 2023

ASSETS
Current assets:
Cash and cash equivalents (Note 7)	$	7,153	$	9,508
Receivables, net	12,012		10,885
Inventories, net	1,217		1,681
Other current assets	15,034		15,164
Total current assets	35,416		37,238

Property and equipment, net	5,889		6,422
Goodwill (Note 1)	173,780		173,791
Other intangibles, net	2,635		2,783
Right of use asset (Note 8)	331,183		360,836
Other assets	24,814		26,307

Total assets	$	573,717	$	607,377

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	12,047	$	14,309
Accrued expenses	25,923		30,109

Short-term lease liability (Note 8)	76,895		81,917
Total current liabilities	114,865		126,335

Long-term debt, net (Note 9)	181,663		176,830
Long-term lease liability (Note 8)	266,483		291,901

Other non-current liabilities	44,296		49,041
Total liabilities	607,307		644,107
Commitments and contingencies (Note 6)
Shareholders' deficit:
Common stock, $0.05 par value; issued and outstanding, 2,279,450 and 2,277,828 common shares at December 31, 2023 and June 30, 2023, respectively (Note 1)	114		114
Additional paid-in capital (Note 1)	67,710		66,764
Accumulated other comprehensive income	9,026		9,023
Accumulated deficit	(110,440)		(112,631)
Total shareholders' deficit	(33,590)		(36,730)
Total liabilities and shareholders' deficit	$	573,717	$	607,377

_______________________________________________________________________________

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

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

For the Three and Six Months Ended December 31, 2023 and 2022

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


	Three Months Ended December 31,				Six Months Ended December 31,
	2023		2022		2023		2022

Revenues:
Royalties	$	15,820	$	16,158	$	32,348	$	33,338
Fees	2,492		3,238		5,123		5,791
Product sales to franchisees	67		1,107		451		1,550
Advertising fund contributions	6,808		7,965		14,034		16,216
Franchise rental income (Note 8)	24,087		28,886		48,754		59,216
Company-owned salon revenue	1,779		2,613		3,715		5,727
Total revenue	51,053		59,967		104,425		121,838
Operating expenses:
Cost of product sales to franchisees	58		1,310		417		1,780
Inventory reserve	—		1,228		—		1,228
General and administrative	11,772		11,747		22,501		26,108
Rent (Note 8)	1,394		2,090		2,491		3,843
Advertising fund expense	6,808		7,965		14,034		16,216
Franchise rent expense	24,087		28,886		48,754		59,216
Company-owned salon expense (1)	1,308		2,218		2,798		5,203
Depreciation and amortization	677		3,793		1,047		5,044
Long-lived asset impairment	170		—		170		—

Total operating expenses	46,274		59,237		92,212		118,638

Operating income	4,779		730		12,213		3,200

Other (expense) income:
Interest expense	(6,188)		(4,519)		(12,376)		(8,336)

Other, net	299		1,248		99		785

Loss from operations before income taxes	(1,110)		(2,541)		(64)		(4,351)

Income tax benefit (expense)	107		—		255		(28)

(Loss) income from continuing operations	(1,003)		(2,541)		191		(4,379)

Income from discontinued operations (Note 3)	2,000		134		2,000		3,440

Net income (loss)	$	997	$	(2,407)	$	2,191	$	(939)

Net income (loss) per share:
Basic:
(Loss) income from continuing operations	$	(0.43)	$	(1.10)	$	0.08	$	(1.90)
Income from discontinued operations	0.85		0.06		0.86		1.49
Net income (loss) per share, basic (2)	$	0.43	$	(1.04)	$	0.94	$	(0.41)
Diluted:
(Loss) income from continuing operations	(0.43)		$	(1.10)	0.08		(1.90)
Income from discontinued operations	0.85		0.06		0.84		1.49
Net income (loss) per share, diluted (2)	$	0.43	$	(1.04)	$	0.93	$	(0.41)





Weighted average common and common equivalent shares outstanding:
Basic	2,341		2,307		2,336		2,305
Diluted	2,341		2,307		2,367		2,305

_______________________________________________________________________________

(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 STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

For the Three and Six Months Ended December 31, 2023 and 2022

(Dollars in thousands)


	Three Months Ended December 31,				Six Months Ended December 31,
	2023		2022		2023		2022

Net income (loss)	$	997	$	(2,407)	$	2,191	$	(939)
Foreign currency translation adjustments	292		132		3		(726)
Comprehensive income (loss)	$	1,289	$	(2,275)	$	2,194	$	(1,665)

_______________________________________________________________________________

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

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (Unaudited)

For the Three and Six Months Ended December 31, 2023 and 2022

(Dollars in thousands)


	Three Months Ended December 31, 2023
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
	Shares	Amount

Balance, September 30, 2023	2,278,479	$	114	$	67,325	$	8,734	$	(111,437)	$	(35,264)
Net income	—	—		—		—		997		997
Foreign currency translation	—	—		—		292		—		292


Stock-based compensation	—	—		392		—		—		392
Net restricted stock activity	971	—		(7)		—		—		(7)

Balance, December 31, 2023	2,279,450	$	114	$	67,710	$	9,026	$	(110,440)	$	(33,590)

	Three Months Ended December 31, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
	Shares	Amount

Balance, September 30, 2022	2,276,343	$	114	$	65,207	$	8,597	$	(103,778)	$	(29,860)
Net loss	—	—		—		—		(2,407)		(2,407)
Foreign currency translation	—	—		—		132		—		132


Stock-based compensation	—	—		524		—		—		524
Net restricted stock activity	1,302	—		(24)		—		—		(24)

Balance, December 31, 2022	2,277,645	$	114	$	65,707	$	8,729	$	(106,185)	$	(31,635)

	Six Months Ended December 31, 2023
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
	Shares	Amount

Balance, June 30, 2023	2,277,828	$	114	$	66,764	$	9,023	$	(112,631)	$	(36,730)
Net income	—	—		—		—		2,191		2,191
Foreign currency translation

SEC Form 10-Q filed by Regis Corporation