Business Wire | Feb 3, 2021 06:14PM EST

Regis Reports Second Quarter 2021 Results and Takes Action on a Number of Initiatives to Position the Company for Growth

Feb. 03, 2021

MINNEAPOLIS--(BUSINESS WIRE)--Feb. 03, 2021--Regis Corporation (NYSE: RGS):

Three Months Ended Six Months Ended December December 31, 31,

(Dollars in thousands) 2020 2019 2020 2019



Consolidated Revenue $ 104,320 $ 208,765 $ 215,716 $ 455,803

System-wide Revenue (1) $ 261,452 $ 428,731 $ 523,573 $ 878,019



System-wide Same-Store (32.0 ) (2.3 ) (32.3 ) (1.7 )Sales Comps (2) % % % %

Franchise Same-Store (31.1 ) (1.4 ) (31.5 ) (0.8 )Sales Comps (2) % % % %

Company-owned (36.2 ) (3.6 ) (35.4 ) (2.7 )Same-Store Sales Comps % % % %



Operating Loss $ (26,755 ) $ (7,466 ) $ (58,345 ) $ (17,372 )

Loss From Continuing $ (32,879 ) $ (16,520 ) $ (68,144 ) $ (30,698 )Operations

Diluted Loss per ShareFrom Continuing $ (0.92 ) $ (0.46 ) $ (1.90 ) $ (0.85 )Operations

EBITDA (3) $ (20,030 ) $ (9,178 ) $ (38,968 ) $ (15,020 )

as a percent of revenue (19.2 ) (4.4 ) (18.1 ) (3.3 ) % % % %



As Adjusted (3)

Net (Loss) Income, as $ (25,902 ) $ 4,622 $ (53,833 ) $ 18,522 Adjusted

Diluted (Loss) Income $ (0.72 ) $ 0.13 $ (1.50 ) $ 0.50 per Share, as Adjusted

EBITDA, as Adjusted (3) $ (17,526 ) $ 17,014 $ (36,169 ) $ 46,799

as a percent of revenue (16.8 ) 8.1 % (16.8 ) 10.3 % % %

_______________________________________________________________________________

(1) Represents total sales within the system, excluding TBG franchise sales.

(2) System-wide and franchise same-store sales excludes TBG in both periods.

(3) See GAAP to non-GAAP reconciliations, within the attached section titled "Non-GAAP Reconciliations".

Regis Corporation (NYSE: RGS), a leader in the haircare industry, whose primary business is franchising, owning and operating technology enabled hair salons, today reported a second quarter 2021 net loss from continuing operations of $32.9 million, or $0.92 loss per diluted share as compared to a net loss from continuing operations of $16.5 million, or $0.46 loss per diluted share in the second quarter of 2020. The Company's second quarter reported results included $7.0 million of discrete items. Excluding discrete items, the Company reported second quarter 2021 adjusted net loss of $25.9 million, or $0.72 loss per diluted share as compared to adjusted net income of $4.6 million, or $0.13 earnings per diluted share, for the same period last year. The year-over-year decrease in adjusted net income was driven primarily by the decrease in the gain from the sale of salons to franchisees of $18.2 million due to lower proceeds per salon in the current year. The elimination of adjusted net income that had been generated in the prior year period from the 768 company-owned salons that were sold and converted to the Company's asset-light franchise portfolio over the past twelve months also contributed to the decline, but this was partially offset by significant reductions in general and administrative expense and marketing. Additionally, the Company estimates it lost approximately $35 million in revenue due to government-mandated salon closures and lower traffic due to the COVID-19 pandemic.

Total revenue in the quarter of $104.3 million decreased $104.4 million, or 50.0%, year-over-year driven primarily by the conversion of a net 768 company-owned salons to the Company's asset-light franchise portfolio over the past 12 months and due to the impact of the COVID-19 pandemic.

Second quarter adjusted EBITDA loss of $17.5 million decreased $34.5 million, versus the same period last year. Excluding the $3.2 million adjusted loss and $15.0 million adjusted gain from the sale of company-owned salons during the current and prior year quarter, respectively, adjusted EBITDA loss of $14.3 million was $16.3 million unfavorable versus the same period last year. This was driven primarily by the elimination of adjusted EBITDA that had been generated in the prior year period from the 768 company-owned salons that were sold and converted to the Company's asset-light franchise portfolio over the past twelve months, partially offset by significant reductions in general and administrative expense and marketing spend.

Felipe Athayde, President and Chief Executive Officer, commented, "While the effects of the pandemic are evident in our results, we remain very confident about the strength of our business and our brands. Over the past quarter, we have executed on a number of strategic initiatives including a brand-centric corporate reorganization, the implementation of a zero-based budgeting process, an evolution of our corporate salon refranchising strategy, and the launch of new salon automation functionalities to our proprietary POS and salon management technology: Opensalon(r) PRO. These initiatives were designed to transform Regis into a nimble, performance-driven, data-oriented organization, which we believe will position Regis well for a solid comeback."

Second Quarter Segment Results

Franchise Salons

Three Months Ended Six Months Ended December 31, December 31, Increase Increase (Decrease) (Decrease)

(Dollars in 2020 2019 2020 2019 millions) (1)



Revenue

Product $ 14.2 $ 16.2 $ (2.0 ) $ 28.0 $ 28.0 $ -

Product soldto TBG mall - 0.7 (0.7 ) - 2.0 (2.0 )locations

Total product 14.2 16.9 (2.7 ) 28.0 30.0 (2.0 )

Royalties and 19.9 29.3 (9.4 ) 37.9 57.4 (19.5 )fees

Franchise 32.3 33.6 (1.3 ) 64.6 65.1 (0.5 )rental income

Totalfranchised $ 66.4 $ 79.8 $ (13.4 ) $ 130.4 $ 152.4 $ (22.0 )salonsrevenue



FranchiseSame-Store (31.1 ) (1.4 ) (31.5 ) (0.8 ) Sales Comps % % % %(2)



EBITDA, as $ 10.8 $ 13.1 $ (2.3 ) $ 17.7 $ 24.9 $ (7.2 )Adjusted

as a percent 16.2 % 16.4 % 13.6 % 16.4 % of revenue

as a percentof adjusted 36.6 % 37.6 % 31.3 % 38.8 % revenue (3)



TotalFranchise 5,269 4,790 479 Salons

as a percentof totalFranchise and 83.6 % 67.8 % Company-ownedsalons

_______________________________________________________________________________

(1) Variances calculated on amounts shown in millions may result in rounding differences.

(2) TBG is excluded from same-store sales in all periods.

(3) Adjusted revenue excludes non-margin revenue. See Non-GAAP reconciliation.

Second quarter Franchise revenue was $66.4 million, a $13.4 million, or 16.8% decrease compared to the prior year quarter, and included franchise rental income of $32.3 million. Royalties and fees were $19.9 million, a $9.4 million, or 32.2% decrease versus the same period last year. Royalties and other franchise fees decreased $3.5 million due to an estimated $5.5 million decrease in royalties due to the COVID-19 pandemic, partially offset by an increase in franchisees. Advertising funds decreased $6.0 million also related to the COVID-19 pandemic. Product sales to franchisees of $14.2 million decreased $2.7 million versus the same period last year due to lower same-store retail sales due primarily to the COVID-19 pandemic. Franchise adjusted EBITDA of $10.8 million decreased $2.3 million, or 17.6% year-over-year primarily due to the decline in franchise same-store sales of 31.1% primarily related to the COVID-19 pandemic. Total franchised locations open at December 31, 2020 were 5,269 compared to 4,790 at December 31, 2019.

Company-Owned Salons

Three Months Ended Six Months Ended December 31, December 31, Increase Increase (Decrease) (Decrease)

(Dollars in 2020 2019 2020 2019 millions) (1)



Total Revenue $ 37.9 $ 128.9 $ (91.0 ) $ 85.3 $ 303.4 $ (218.1 )

Company-owned ) ) ) )Same-Store (36.2 % (3.6 % (35.4 % (2.7 % Sales Comps

Year-over-Year 10.8 % 3.0 % 12.3 % 3.0 % Ticket change

Year-over-Year ) ) ) )Transaction (47.0 % (6.6 % (47.7 % (5.7 % change



EBITDA, as $ (10.7 ) $ 4.2 $ (14.9 ) $ (21.4 ) $ 15.7 $ (37.1 )Adjusted

as a percent (28.2 ) 3.3 % (25.1 ) 5.2 % of revenue % %



TotalCompany-owned 1,037 2,277 (1,240 ) salons

as a percentof totalFranchise and 16.4 % 32.2 % Company-ownedsalons

_______________________________________________________________________________

(1) Variances calculated on amounts shown in millions may result in rounding differences.

Second quarter revenue for the Company-owned salon segment decreased $91.0 million, or 70.6%, versus the prior year to $37.9 million. The year-over-year decline in revenue was driven by the decrease of a net 768 salons sold and converted to the Company's asset-light franchise portfolio over the past 12 months, the closure of a net 472 unprofitable salons over the past 12 months and a decline in revenue due to the COVID-19 pandemic. Company-owned same-store sales decreased 36.2%, primarily driven by a 47.0% decrease in transactions related to the COVID-19 pandemic, partially offset by a 10.8% increase in average ticket.

Second quarter adjusted EBITDA decreased $14.9 million, or 352.6%, versus the same period last year driven primarily by the elimination of EBITDA that had been generated in the prior year period from the 768 company-owned salons that were sold and converted to the Company's asset-light franchise portfolio over the past 12 months, the impacts of the COVID-19 pandemic, and the decline in service and product margins, partially offset by a decrease in general and administrative expense and marketing spend.

Other Key Events

* In October 2020, Felipe Athayde joined the Company as CEO and President to lead the Company as it enters its growth phase. * In December 2020, the Company announced a brand-centric reorganization. This reorganization is the first major strategic initiative by Felipe Athayde, the Company's CEO, and reorients the Company to focus on the performance of its brands and the profitability of its franchisees. As part of the reorganization, Supercuts, SmartStyle and Portfolio Brands (a collection of growth and innovation concepts), are each run by a Brand President and dedicated team. This presents a departure from the Company's previous organizing principle that only distinguished between the Franchise and Company-owned businesses. * Continued migration of the Company's proprietary cloud-based salon management and point of commerce solution, Opensalon PRO. Approximately 1,000 salons, or 18%, of our franchise salons, have signed contracts to install Opensalon PRO, with approximately 350 salons currently live. * Launched a comprehensive zero-based budget and zero-based organization initiative, to align our cost structure with our brand-focused franchise strategy. * The Company continues its extensive lease re-negotiation efforts; since mid-May total system-wide lease savings of over $9 million have been achieved. * Today, the Company filed a $150 million shelf registration and $50 million prospectus supplement with the Securities and Exchange Commission under which it may offer and sell, from time to time, up to $50 million worth of its of its Class A common stock in "at-the-market offerings." Net proceeds from sales of shares under the "at-the-market" program, if any, may be used, among other things, to fund working capital requirements, repay debt, and support of our growth strategies. Such strategies may include positioning the Company for potential expansion through targeted industry acquisitions and alternatives to fund additional capital investment requirements related to potential partnership opportunities to facilitate continued growth of our proprietary technology, Opensalon PRO. The timing and amount of sales of shares, if any, will depend on a variety of factors, including prevailing market conditions, the trading price of shares, and other factors as determined by the Company. * The Company continues to make meaningful progress on its multi-year strategy to convert to a fully-franchised model. During the second quarter, it sold and transferred 145 company-owned salons to its asset-light franchise portfolio. The Company is still committed to converting to a fully-franchise capital-light business. * The impact of the transactions closed in the quarter is as follows:

Three Months Ended Six Months Ended December 31, December 31, Increase Increase (Decrease) (Decrease)

2020 2019 2020 2019



(Dollars in thousands)



Salons soldto 145 443 (298 ) 282 988 (706 )franchisees

Cash proceeds $ 3,413 $ 31,468 $ (28,055 ) $ 7,148 $ 69,414 $ (62,266 )received



(Loss) gainonvenditions, $ (3,226 ) $ 14,993 $ (18,219 ) $ (3,888 ) $ 41,213 $ (45,101 )excludinggoodwillderecognition

Non-cashgoodwill - (27,400 ) 27,400 - (59,480 ) 59,480 derecognition

Loss fromsale of salonassets to $ (3,226 ) $ (12,407 ) $ 9,181 $ (3,888 ) $ (18,267 ) $ 14,379 franchisees,net

Non-GAAP reconciliations:

For GAAP to non-GAAP reconciliations, please refer to the attached section titled "Non-GAAP Reconciliations." A complete reconciliation of reported earnings to adjusted earnings is included in this press release and is available on the Company's website at www.regiscorp.com.

Earnings Webcast

Regis Corporation will host a conference call via webcast discussing second quarter results on February 4, 2021, at 9 a.m., Central time. Interested parties are invited to participate in the live webcast by logging on to www.regiscorp.com or participate via telephone by dialing (888) 254-3590 and entering access code 9126102. A replay of the presentation will be available later that day. The replay phone number is (888) 203-1112, access code 9126102.

About Regis Corporation

Regis Corporation (NYSE:RGS) is a leader in beauty salons and cosmetology education. As of December 31, 2020, the Company franchised, owned or held ownership interests in 6,384 worldwide locations. Regis' franchised and corporate locations operate under concepts such as Supercuts(r), SmartStyle(r), Cost Cutters(r), Roosters(r) and First Choice Haircutters(r). Regis maintains an ownership interest in Empire Education Group in the U.S. For additional information about the Company, including a reconciliation of certain non-GAAP financial information and certain supplemental financial information, please visit the Investor Information section of the corporate website at www.regiscorp.com.

This press release contains or may contain "forward-looking statements" within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this document reflect management's best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, "may," "believe," "project," "forecast," "expect," "estimate," "anticipate," and "plan." In addition, the following factors could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. These uncertainties include a potential material adverse impact on our business and results of operations as a result of the uncertain duration and severity of the COVID-19 pandemic, as well as the health and risk appetite of our stylists, customers and employees to return to the salon environment; the continued ability of the Company to implement its strategy, priorities and initiatives including the re-engineering of our corporate and field infrastructure; our new company-owned back office management system may not yield the intended results on timing and amounts due to the COVID-19 pandemic, efforts by our current third-party back office management system vendor to make it difficult for our franchisees to convert to our new company-owned system, and the pending litigation with that third-party vendor; the impact of the COVID-19 pandemic on our key suppliers; the ability to address rent obligations incurred during the government-mandated hibernation of our salons related to the COVID-19 pandemic and the ability to obtain long-term rent concessions; the ability to operate or sell the salons transferred back from TBG; the outcome of the review by the administrator in TBG's insolvency proceedings in the United Kingdom; compliance with credit facility covenants and access to the existing revolving credit facility; our and our franchisees' ability to attract, train and retain talented stylists; financial performance of our franchisees; success of the sale of salons to franchisees; if our capital investments in technology do not achieve appropriate returns; our ability to manage cyber threats and protect the security of potentially sensitive information about our guests, employees, vendors or Company information; the ability of the Company to maintain a satisfactory relationship with Walmart; the impact of recent actions by Walmart; marketing efforts to drive traffic to our franchisees' salons; changes in regulatory and statutory laws including increases in minimum wages; our ability to maintain and enhance the value of our brands; premature termination of agreements with our franchisees; reliance on information technology systems; reliance on external vendors; consumer shopping trends and changes in manufacturer distribution channels; competition within the personal hair care industry; continued ability to compete in our business markets; the continued ability to maintain an effective system of internal controls over financial reporting; changes in tax exposure; failure to standardize operating processes across brands; financial performance of Empire Education Group; the continued ability of the Company to implement cost reduction initiatives; changes in economic conditions; changes in consumer tastes and fashion trends; failure at our distribution centers; exposure to uninsured or unidentified risks; reliance on our management team and other key personnel or other factors not listed above. Additional information concerning potential factors that could affect future financial results is set forth under Item 1A on Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.

REGIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

(Dollars in thousands, except per share data)

December 31, June 30, 2020 2020



ASSETS

Current assets:

Cash and cash equivalents $ 50,850 $ 113,667

Receivables, net 31,185 31,030

Inventories 51,483 62,597

Other current assets 17,226 19,138

Total current assets 150,744 226,432



Property and equipment, net 43,579 57,176

Goodwill 228,950 227,457

Other intangibles, net 4,532 4,579

Right of use asset 637,108 786,216

Other assets 40,237 40,934

Total assets $ 1,105,150 $ 1,342,794



LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 36,922 $ 50,918

Accrued expenses 49,277 48,825

Short-term lease liability 127,649 137,271

Total current liabilities 213,848 237,014



Long-term debt, net 177,500 177,500

Long-term lease liability 540,930 680,454

Long-term financing liabilities 27,640 27,981

Other non-current liabilities 86,784 94,142

Total liabilities 1,046,702 1,217,091

Commitments and contingencies

Shareholders' equity:

Common stock, $0.05 par value; issued andoutstanding 35,768,086 and 35,625,716 common 1,788 1,781 shares at December 31, 2020 and June 30, 2020,respectively

Additional paid-in capital 22,076 22,011

Accumulated other comprehensive income 8,786 7,449

Retained earnings 25,798 94,462

Total shareholders' equity 58,448 125,703

Total liabilities and shareholders' equity $ 1,105,150 $ 1,342,794

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For The Three And Six Months Ended December 31, 2020 And 2019

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

Three Months Ended December 31,

Six Months Ended December 31,

2020

2019

2020

2019

Revenues:

Service

$

28,987

$

101,805

$

65,395

$

243,746

Product

23,146

43,983

47,895

89,639

Royalties and fees

19,902

29,347

37,858

57,364

Franchise rental income

32,285

33,630

64,568

65,054

Total revenue

104,320

208,765

215,716

455,803

Operating expenses:

Cost of service

22,097

67,358

50,620

157,840

Cost of product

17,203

27,258

33,572

53,585

Site operating expenses

10,350

26,330

23,589

59,272

General and administrative

26,690

32,691

52,837

73,316

Rent

12,902

20,495

26,127

44,759

Franchise rent expense

32,285

33,630

64,568

65,054

Depreciation and amortization

6,388

7,747

13,764

17,127

Long-lived asset impairment

3,160

-

8,984

-

TBG mall location restructuring

-

722

-

2,222

Total operating expenses

131,075

216,231

274,061

473,175

Operating loss

(26,755

)

(7,466

)

(58,345

)

(17,372

)

Other (expense) income:

Interest expense

(3,701

)

(1,464

)

(7,463

)

(2,903

)

Loss from sale of salon assets to franchisees, net

(3,226

)

(12,407

)

(3,888

)

(18,267

)

Interest income and other, net

403

2,869

517

3,040

Loss from continuing operations before income taxes

(33,279

)

(18,468

)

(69,179

)

(35,502

)

Income tax benefit

400

1,948

1,035

4,804

Loss from continuing operations

(32,879

)

(16,520

)

(68,144

)

(30,698

)

Income from discontinued operations, net of taxes

-

79

-

452

Net loss

$

(32,879

)

$

(16,441

)

$

(68,144

)

$

(30,246

)

Net loss per share:

Basic and diluted:

Loss from continuing operations

$

(0.92

)

$

(0.46

)

$

(1.90

)

$

(0.85

)

Income from discontinued operations

0.00

0.00

0.00

0.01

Net loss per share, basic and diluted (1)

$

(0.92

)

$

(0.46

)

$

(1.90

)

$

(0.84

)

Weighted average common and common equivalent shares outstanding:

Basic and diluted

35,931

35,798

35,889

36,028

_______________________________________________________________________________

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For The Three And Six Months Ended December 31, 2020 And 2019

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

Three Months Ended Six Months Ended December 31, December 31,

2020 2019 2020 2019



Revenues:

Service $ 28,987 $ 101,805 $ 65,395 $ 243,746

Product 23,146 43,983 47,895 89,639

Royalties and fees 19,902 29,347 37,858 57,364

Franchise rental income 32,285 33,630 64,568 65,054

Total revenue 104,320 208,765 215,716 455,803

Operating expenses:

Cost of service 22,097 67,358 50,620 157,840

Cost of product 17,203 27,258 33,572 53,585

Site operating expenses 10,350 26,330 23,589 59,272

General and 26,690 32,691 52,837 73,316 administrative

Rent 12,902 20,495 26,127 44,759

Franchise rent expense 32,285 33,630 64,568 65,054

Depreciation and 6,388 7,747 13,764 17,127 amortization

Long-lived asset 3,160 - 8,984 - impairment

TBG mall location - 722 - 2,222 restructuring

Total operating 131,075 216,231 274,061 473,175 expenses



Operating loss (26,755 ) (7,466 ) (58,345 ) (17,372 )



Other (expense) income:

Interest expense (3,701 ) (1,464 ) (7,463 ) (2,903 )

Loss from sale of salonassets to franchisees, (3,226 ) (12,407 ) (3,888 ) (18,267 )net

Interest income and 403 2,869 517 3,040 other, net



Loss from continuingoperations before (33,279 ) (18,468 ) (69,179 ) (35,502 )income taxes



Income tax benefit 400 1,948 1,035 4,804



Loss from continuing (32,879 ) (16,520 ) (68,144 ) (30,698 )operations



Income fromdiscontinued - 79 - 452 operations, net oftaxes



Net loss $ (32,879 ) $ (16,441 ) $ (68,144 ) $ (30,246 )



Net loss per share:

Basic and diluted:

Loss from continuing $ (0.92 ) $ (0.46 ) $ (1.90 ) $ (0.85 )operations

Income from 0.00 0.00 0.00 0.01 discontinued operations

Net loss per share, $ (0.92 ) $ (0.46 ) $ (1.90 ) $ (0.84 )basic and diluted (1)



Weighted average commonand common equivalent shares outstanding:

Basic and diluted 35,931 35,798 35,889 36,028

_______________________________________________________________________________

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

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

For The Six Months Ended December 31, 2020 And 2019

(Dollars in thousands)

Six Months Ended December 31,

2020

2019

Cash flows from operating activities:

Net loss

$

(68,144

)

$

(30,246

)

Adjustments to reconcile net loss to cash used in operating activities:

Non-cash adjustments related to discontinued operations

-

(586

)

Depreciation and amortization

11,123

14,484

Salon asset impairment

-

2,643

Long-lived asset impairment

8,984

-

Deferred income taxes

(669

)

(6,380

)

Gain from sale of company headquarters, net

-

(2,513

)

Loss from sale of salon assets to franchisees, net

3,888

18,267

Stock-based compensation

89

2,139

Amortization of debt discount and financing costs

875

138

Other non-cash items affecting earnings

202

(243

)

Changes in operating assets and liabilities, excluding the effects of asset sales

(21,812

)

(17,032

)

Net cash used in operating activities

(65,464

)

(19,329

)

Cash flows from investing activities:

Capital expenditures

(7,502

)

(17,576

)

Proceeds from sale of assets to franchisees

7,148

69,414

Costs associated with sale of salon assets to franchisees

(222

)

(1,550

)

Proceeds from company-owned life insurance policies

1,200

-

Proceeds from sale of company headquarters

-

8,996

Net cash provided by investing activities

624

59,284

Cash flows from financing activities:

Repayments of revolving credit facility

-

(30,000

)

Repurchase of common stock

-

(28,246

)

Taxes paid for shares withheld

(212

)

(1,809

)

Minority interest buyout

(562

)

-

Distribution center lease payments

(478

)

(480

)

Net cash used in financing activities

(1,252

)

(60,535

)

Effect of exchange rate changes on cash and cash equivalents

(68

)

122

Decrease in cash, cash equivalents, and restricted cash

(66,160

)

(20,458

)

Cash, cash equivalents and restricted cash:

Beginning of period

122,880

92,379

End of period

$

56,720

$

71,921

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

For The Six Months Ended December 31, 2020 And 2019

(Dollars in thousands)

Six Months Ended December 31,

2020 2019



Cash flows from operating activities:

Net loss $ (68,144 ) $ (30,246 )

Adjustments to reconcile net loss to cash used in operating activities:

Non-cash adjustments related to discontinued - (586 )operations

Depreciation and amortization 11,123 14,484

Salon asset impairment - 2,643

Long-lived asset impairment 8,984 -

Deferred income taxes (669 ) (6,380 )

Gain from sale of company headquarters, net - (2,513 )

Loss from sale of salon assets to franchisees, net 3,888 18,267

Stock-based compensation 89 2,139

Amortization of debt discount and financing costs 875 138

Other non-cash items affecting earnings 202 (243 )

Changes in operating assets and liabilities, (21,812 ) (17,032 )excluding the effects of asset sales

Net cash used in operating activities (65,464 ) (19,329 )



Cash flows from investing activities:

Capital expenditures (7,502 ) (17,576 )

Proceeds from sale of assets to franchisees 7,148 69,414

Costs associated with sale of salon assets to (222 ) (1,550 )franchisees

Proceeds from company-owned life insurance policies 1,200 -

Proceeds from sale of company headquarters - 8,996

Net cash provided by investing activities 624 59,284



Cash flows from financing activities:

Repayments of revolving credit facility - (30,000 )

Repurchase of common stock - (28,246 )

Taxes paid for shares withheld (212 ) (1,809 )

Minority interest buyout (562 ) -

Distribution center lease payments (478 ) (480 )

Net cash used in financing activities (1,252 ) (60,535 )



Effect of exchange rate changes on cash and cash (68 ) 122 equivalents



Decrease in cash, cash equivalents, and restricted (66,160 ) (20,458 )cash



Cash, cash equivalents and restricted cash:

Beginning of period 122,880 92,379

End of period $ 56,720 $ 71,921

REGIS CORPORATION

Same-Store Sales

SYSTEM-WIDE SAME-STORE SALES (1):

Three Months Ended

December 31, 2020

December 31, 2019

Service

Retail

Total

Service

Retail

Total

SmartStyle

(32.3

)%

(31.9

)%

(32.2

)%

(2.0

)%

(9.6

)%

(4.3

)%

Supercuts

(33.2

)

(29.6

)

(32.9

)

(0.4

)

(11.8

)

(1.1

)

Portfolio Brands

(30.9

)

(23.8

)

(30.0

)

(1.5

)

(8.0

)

(2.3

)

Total

(32.4

)%

(28.9

)%

(32.0

)%

(1.1

)%

(9.6

)%

(2.3

)%

Six Months Ended

December 31, 2020

December 31, 2019

Service

Retail

Total

Service

Retail

Total

SmartStyle

(33.6

)%

(31.3

)%

(33.0

)%

(0.9

)%

(8.6

)%

(3.1

)%

Supercuts

(33.5

)

(28.0

)

(33.2

)

0.2

(9.8

)

(0.4

)

Portfolio Brands

(31.2

)

(21.7

)

(30.1

)

(1.3

)

(6.7

)

(2.0

)

Total

(32.8

)%

(27.7

)%

(32.3

)%

(0.5

)%

(8.3

)%

(1.7

)%

_______________________________________________________________________________

REGIS CORPORATION

Same-Store Sales

SYSTEM-WIDE SAME-STORE SALES (1):

Three Months Ended

December 31, 2020 December 31, 2019

Service Retail Total Service Retail Total



SmartStyle (32.3 )% (31.9 )% (32.2 )% (2.0 )% (9.6 )% (4.3 )%

Supercuts (33.2 ) (29.6 ) (32.9 ) (0.4 ) (11.8 ) (1.1 )

Portfolio (30.9 ) (23.8 ) (30.0 ) (1.5 ) (8.0 ) (2.3 )Brands

Total (32.4 )% (28.9 )% (32.0 )% (1.1 )% (9.6 )% (2.3 )%



Six Months Ended

December 31, 2020 December 31, 2019

Service Retail Total Service Retail Total



SmartStyle (33.6 )% (31.3 )% (33.0 )% (0.9 )% (8.6 )% (3.1 )%

Supercuts (33.5 ) (28.0 ) (33.2 ) 0.2 (9.8 ) (0.4 )

Portfolio (31.2 ) (21.7 ) (30.1 ) (1.3 ) (6.7 ) (2.0 )Brands

Total (32.8 )% (27.7 )% (32.3 )% (0.5 )% (8.3 )% (1.7 )%

_______________________________________________________________________________

System-wide same-store sales are calculated as the total change in sales for system-wide franchise and company-owned locations for more than one year that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date system-wide same-store sales are the sum of the system-wide same-store sales computed on a daily basis. Franchise salons that do not report(1) daily sales are excluded from same-store sales. Locations relocated within a one-mile radius are included in same-store sales as they are considered to have been open in the prior period. System-wide same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation. TBG salons were not a franchise location in fiscal year 2021 so they are excluded from fiscal year 2020 same-store sales for comparability.

FRANCHISE SAME-STORE SALES (1):

Three Months Ended

December 31, 2020

December 31, 2019

Service

Retail

Total

Service

Retail

Total

SmartStyle

(29.3

)%

(33.9

)%

(30.4

)%

(5.1

)%

(14.8

)%

(7.6

)%

Supercuts

(32.7

)

(28.6

)

(32.5

)

0.1

(10.5

)

(0.5

)

Portfolio Brands

(29.5

)

(20.7

)

(28.4

)

(0.4

)

(6.8

)

(1.4

)

Total

(31.4

)%

(28.1

)%

(31.1

)%

(0.4

)%

(10.1

)%

(1.4

)%

Six Months Ended

December 31, 2020

December 31, 2019

Service

Retail

Total

Service

Retail

Total

SmartStyle

(30.2

)%

(33.3

)%

(31.0

)%

(4.3

)%

(16.6

)%

(7.6

)%

Supercuts

(33.1

)

(27.1

)

(32.7

)

0.9

(8.8

)

0.3

Portfolio Brands

(30.1

)

(18.4

)

(28.8

)

-

(7.3

)

(1.0

)

Total

(32.0

)%

(26.3

)%

(31.5

)%

0.3

%

(10.1

)%

(0.8

)%

_______________________________________________________________________________

FRANCHISE SAME-STORE SALES (1):

Three Months Ended

December 31, 2020 December 31, 2019

Service Retail Total Service Retail Total



SmartStyle (29.3 )% (33.9 )% (30.4 )% (5.1 )% (14.8 )% (7.6 )%

Supercuts (32.7 ) (28.6 ) (32.5 ) 0.1 (10.5 ) (0.5 )

Portfolio (29.5 ) (20.7 ) (28.4 ) (0.4 ) (6.8 ) (1.4 )Brands

Total (31.4 )% (28.1 )% (31.1 )% (0.4 )% (10.1 )% (1.4 )%



Six Months Ended

December 31, 2020 December 31, 2019

Service Retail Total Service Retail Total



SmartStyle (30.2 )% (33.3 )% (31.0 )% (4.3 )% (16.6 )% (7.6 )%

Supercuts (33.1 ) (27.1 ) (32.7 ) 0.9 (8.8 ) 0.3

Portfolio (30.1 ) (18.4 ) (28.8 ) - (7.3 ) (1.0 )Brands

Total (32.0 )% (26.3 )% (31.5 )% 0.3 % (10.1 )% (0.8 )%

_______________________________________________________________________________

Franchise same-store sales are calculated as the total change in sales for salons that have been a franchise location for more than one year that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date franchise same-store sales are the sum of the franchise same-store sales computed on a daily basis. Franchise salons that do not report daily sales are(1) excluded from same-store sales. Locations relocated within a one-mile radius are included in same-store sales as they are considered to have been open in the prior period. Franchise same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation. TBG salons were not a franchise location in fiscal year 2021 so they are excluded from fiscal year 2020 same-store sales for comparability.

COMPANY-OWNED SAME-STORE SALES (2):

Three Months Ended

December 31, 2020

December 31, 2019

Service

Retail

Total

Service

Retail

Total

SmartStyle

(38.2

)%

(29.0

)%

(35.3

)%

(1.2

)%

(8.6

)%

(3.5

)%

Supercuts

(39.9

)

(40.3

)

(40.0

)

(3.9

)

(17.7

)

(5.1

)

Portfolio Brands

(35.3

)

(33.9

)

(35.1

)

(2.5

)

(9.4

)

(3.3

)

Total

(37.3

)%

(31.2

)%

(36.2

)%

(2.1

)%

(9.3

)%

(3.6

)%

Six Months Ended

December 31, 2020

December 31, 2019

Service

Retail

Total

Service

Retail

Total

SmartStyle

(38.0

)%

(29.4

)%

(35.4

)%

(0.1

)%

(7.1

)%

(2.2

)%

Supercuts

(39.7

)

(37.1

)

(39.5

)

(3.6

)

(13.4

)

(4.4

)

Portfolio Brands

(33.9

)

(30.8

)

(33.6

)

(2.4

)

(6.0

)

(2.8

)

Total

(36.6

)%

(30.3

)%

(35.4

)%

(1.6

)%

(7.2

)%

(2.7

)%

_______________________________________________________________________________

COMPANY-OWNED SAME-STORE SALES (2):

Three Months Ended

December 31, 2020 December 31, 2019

Service Retail Total Service Retail Total



SmartStyle (38.2 )% (29.0 )% (35.3 )% (1.2 )% (8.6 )% (3.5 )%

Supercuts (39.9 ) (40.3 ) (40.0 ) (3.9 ) (17.7 ) (5.1 )

Portfolio (35.3 ) (33.9 ) (35.1 ) (2.5 ) (9.4 ) (3.3 )Brands

Total (37.3 )% (31.2 )% (36.2 )% (2.1 )% (9.3 )% (3.6 )%



Six Months Ended

December 31, 2020 December 31, 2019

Service Retail Total Service Retail Total



SmartStyle (38.0 )% (29.4 )% (35.4 )% (0.1 )% (7.1 )% (2.2 )%

Supercuts (39.7 ) (37.1 ) (39.5 ) (3.6 ) (13.4 ) (4.4 )

Portfolio (33.9 ) (30.8 ) (33.6 ) (2.4 ) (6.0 ) (2.8 )Brands

Total (36.6 )% (30.3 )% (35.4 )% (1.6 )% (7.2 )% (2.7 )%

_______________________________________________________________________________

Company-owned same-store sales are calculated as the total change in sales for company-owned locations that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date company-owned same-store sales are the sum of(2) the company-owned same-store sales computed on a daily basis. Locations relocated within a one-mile radius are included in same-store sales as they are considered to have been open in the prior period. Company-owned same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.

REGIS CORPORATION

System-Wide Location Counts

December 31,2020

June 30,2020

FRANCHISE SALONS:

SmartStyle/Cost Cutters in Walmart Stores

1,535

1,317

Supercuts

2,368

2,508

Portfolio Brands (1)

1,207

1,217

Total North American salons

5,110

5,042

Total International Salons (2)

159

167

Total Franchise Salons

5,269

5,209

as a percent of total Franchise and Company-owned salons

83.6

%

76.1

%

COMPANY-OWNED SALONS:

SmartStyle/Cost Cutters in Walmart Stores

466

751

Supercuts

154

210

Portfolio Brands (1)

340

505

Mall-based (3)

77

166

Total Company-owned salons

1,037

1,632

as a percent of total Franchise and Company-owned salons

16.4

%

23.9

%

OWNERSHIP INTEREST LOCATIONS:

Equity ownership interest locations

78

82

Grand Total, System-wide

6,384

6,923

_______________________________________________________________________________

REGIS CORPORATION

System-Wide Location Counts

December June 30, 31, 2020 2020



FRANCHISE SALONS:

SmartStyle/Cost Cutters in Walmart Stores 1,535 1,317

Supercuts 2,368 2,508

Portfolio Brands (1) 1,207 1,217

Total North American salons 5,110 5,042

Total International Salons (2) 159 167

Total Franchise Salons 5,269 5,209

as a percent of total Franchise and Company-owned 83.6 % 76.1 %salons



COMPANY-OWNED SALONS:

SmartStyle/Cost Cutters in Walmart Stores 466 751

Supercuts 154 210

Portfolio Brands (1) 340 505

Mall-based (3) 77 166

Total Company-owned salons 1,037 1,632

as a percent of total Franchise and Company-owned 16.4 % 23.9 %salons



OWNERSHIP INTEREST LOCATIONS:

Equity ownership interest locations 78 82



Grand Total, System-wide 6,384 6,923

_______________________________________________________________________________

(1) Portfolio Brands was previously referred to as Signature Style.

(2) Canadian and Puerto Rican salons are included in the North American salon totals.

The mall-based salons were acquired from TBG on December 31, 2019. They(3) are included in continuing operations under the Company-owned operating segment from January 1, 2020.

Non-GAAP Reconciliations:

We believe our presentation of non-GAAP operating loss, net (loss) income, net (loss) income per diluted share, and other non-GAAP financial measures provides meaningful insight into our ongoing operating performance and an alternative perspective of our results of operations. Presentation of the non-GAAP measures allows investors to review our core ongoing operating performance from the same perspective as management and the Board of Directors. These non-GAAP financial measures provide investors an enhanced understanding of our operations, facilitate investors' analyses and comparisons of our current and past results of operations and provide insight into the prospects of our future performance. We also believe the non-GAAP measures are useful to investors because they provide supplemental information that research analysts frequently use to analyze financial performance.

The method we use to produce non-GAAP results is not in accordance with U.S. GAAP and may differ from methods used by other companies. These non-GAAP results should not be regarded as a substitute for corresponding U.S. GAAP measures, but instead should be utilized as a supplemental measure of operating performance in evaluating our business. Non-GAAP measures do have limitations as they do not reflect certain items that may have a material impact upon our reported financial results. As such, these non-GAAP measures should be viewed in conjunction with our financial statements prepared in accordance with U.S. GAAP.

Non-GAAP reconciling items for the three and six months ended December 31, 2020 and 2019:

The following information is provided to give qualitative and quantitative information related to items impacting comparability. Items impacting comparability are not defined terms within U.S. GAAP. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies. We determine which items to consider as "items impacting comparability" based on how management views our business, makes financial, operating and planning decisions and evaluates the Company's ongoing performance. The following items have been excluded from our non-GAAP results:

* Employee litigation reserve * Professional fees * Severance expense * CEO transition * Corporate office transition * Benefit from lease liability decrease in excess of previously impaired ROUA ("Lease Liability Benefit") * Lease termination fees * Real estate fees * Asset retirement obligations * Long-lived asset impairment * TBG restructuring * Goodwill derecognition * TBG discontinued operations

REGIS CORPORATION

Reconciliation Of Selected U.S. GAAP To Non-GAAP Financial Measures

(Dollars in thousands, except per share data)

(Unaudited)

Reconciliation of U.S. GAAP operating loss and U.S. GAAP net loss to equivalentnon-GAAP measures

Three Months Ended Six Months Ended December 31, December 31,

U.S. GAAP financial line 2020 2019 2020 2019 item



U.S. GAAP $ 104,320 $ 208,765 $ 215,716 $ 455,803 revenue



U.S. GAAPoperating $ (26,755 ) $ (7,466 ) $ (58,345 ) $ (17,372 )loss



Non-GAAPoperatingexpense adjustments(1)

Employee Site operatinglitigation expenses - (600 ) - (600 )reserve

Professional General and 1,216 115 2,943 115 fees administrative

Severance General and 2,022 497 2,391 2,917 administrative

CEO General and - - (1,294 ) - Transition administrative

Corporateoffice Rent - 404 - 404 transition

Leaseliability Rent (2,226 ) - (8,286 ) - benefit

Leasetermination Rent 1,117 - 6,670 - fees

Real estate Rent 375 - 375 - fees

Asset Depreciationretirement and 1,383 - 2,672 - obligation amortization

Long-lived Long-livedasset asset 3,160 - 8,984 - impairment impairment

TBG TBG - 968 - 2,468 restructuring restructuring

Totalnon-GAAPoperating 7,047 1,384 14,455 5,304 expenseadjustments



Non-GAAPoperating $ (19,708 ) $ (6,082 ) $ (43,890 ) $ (12,068 )loss (1)



U.S. GAAP net $ (32,879 ) $ (16,441 ) $ (68,144 ) $ (30,246 )loss



Non-GAAP netincome adjustments:

Non-GAAPrevenue - - - - adjustments

Non-GAAPoperating 7,047 1,384 14,455 5,304 expenseadjustments

Corporate Interestoffice income and - (2,513 ) - (2,513 )transition other, net

Goodwill Interestderecognition income and - 27,400 - 59,480 other, net

Income taximpact onNon-GAAP Income taxes (70 ) (5,129 ) (144 ) (13,051 )adjustments(2)

TBG Loss fromdiscontinued discontinuedoperations, operations, - (79 ) - (452 )net of income net of taxtax

Totalnon-GAAP net 6,977 21,063 14,311 48,768 incomeadjustments

Non-GAAP net $ (25,902 ) $ 4,622 $ (53,833 ) $ 18,522 (loss) income

_______________________________________________________________________________

Adjusted operating margins for the three months ended December 31, 2020 and 2019 were 18.9% and 2.9%, and were 20.3% and 2.6% for the six months(1) ended December 31, 2020 and 2019, respectively, and are calculated as non-GAAP operating loss divided by U.S. GAAP revenue for each respective period.

Based on projected statutory effective tax rate analyses, the non-GAAP(2) tax provision was calculated to be approximately 1% and 22% for the three and six months ended December 31, 2020 and 2019, respectively, for all non-GAAP operating expense adjustments.

REGIS CORPORATION

Reconciliation Of Selected U.S. GAAP To Non-GAAP Financial Measures

(Dollars in thousands, except per share data)

(Unaudited)

Reconciliation of U.S. GAAP net loss per diluted share to non-GAAP net (loss) income per diluted share

Three Months Ended December 31,

Six Months Ended December 31,

2020

2019

2020

2019

U.S. GAAP net loss per diluted share

$

(0.915

)

$

(0.459

)

$

(1.899

)

$

(0.840

)

Employee litigation reserve (1)

-

(0.013

)

-

(0.013

)

Professional fees (1)

0.034

0.002

0.081

0.002

Severance (1)

0.055

0.010

0.067

0.061

CEO Transition (1)

-

-

(0.036

)

-

Corporate office transition (1)

-

(0.044

)

-

(0.044

)

Lease liability benefit (1)

(0.061

)

-

(0.229

)

-

Lease termination fees (1)

0.031

-

0.184

-

Real estate fees (1)

0.010

-

0.010

-

Asset retirement obligation (1)

0.038

-

0.074

-

Long-lived asset impairment (1)

0.087

-

0.248

-

TBG restructuring (1)

-

0.020

-

0.052

Goodwill derecognition (1)

-

0.593

-

1.259

TBG discontinued operations, net of tax

-

(0.002

)

-

(0.012

)

Impact of change in weighted average shares (3)

-

0.018

-

0.031

Non-GAAP net (loss) income per diluted share (2)

$

(0.721

)

$

0.125

$

(1.500

)

$

0.496

U.S. GAAP Weighted average shares - basic

35,931

35,798

35,889

36,028

U.S. GAAP Weighted average shares - diluted

35,931

35,798

35,889

36,028

Non-GAAP Weighted average shares - diluted (3)

35,931

37,120

35,889

37,366

_______________________________________________________________________________

REGIS CORPORATION

Reconciliation Of Selected U.S. GAAP To Non-GAAP Financial Measures

(Dollars in thousands, except per share data)

(Unaudited)

Reconciliation of U.S. GAAP net loss per diluted share to non-GAAP net (loss)income per diluted share

Three Months Ended Six Months Ended December 31, December 31,

2020 2019 2020 2019



U.S. GAAP net loss per $ (0.915 ) $ (0.459 ) $ (1.899 ) $ (0.840 )diluted share

Employee litigation reserve - (0.013 ) - (0.013 )(1)

Professional fees (1) 0.034 0.002 0.081 0.002

Severance (1) 0.055 0.010 0.067 0.061

CEO Transition (1) - - (0.036 ) -

Corporate office transition - (0.044 ) - (0.044 )(1)

Lease liability benefit (1) (0.061 ) - (0.229 ) -

Lease termination fees (1) 0.031 - 0.184 -

Real estate fees (1) 0.010 - 0.010 -

Asset retirement obligation 0.038 - 0.074 - (1)

Long-lived asset impairment 0.087 - 0.248 - (1)

TBG restructuring (1) - 0.020 - 0.052

Goodwill derecognition (1) - 0.593 - 1.259

TBG discontinued - (0.002 ) - (0.012 )operations, net of tax

Impact of change in - 0.018 - 0.031 weighted average shares (3)

Non-GAAP net (loss) income $ (0.721 ) $ 0.125 $ (1.500 ) $ 0.496 per diluted share (2)



U.S. GAAP Weighted average 35,931 35,798 35,889 36,028 shares - basic

U.S. GAAP Weighted average 35,931 35,798 35,889 36,028 shares - diluted

Non-GAAP Weighted average 35,931 37,120 35,889 37,366 shares - diluted (3)

_______________________________________________________________________________

Based on projected statutory effective tax rate analyses, the non-GAAP(1) tax provision was calculated to be approximately 1% and 22% for the three and six months ended December 31, 2020 and 2019, respectively, for all non-GAAP operating expense adjustments.

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

Non-GAAP net (loss) income per share reflects the weighted average shares associated with non-GAAP net (loss) income, which includes the dilutive effect of common stock equivalents. The earnings per share impact of the adjustments for the three and six months ended December 31, 2019 included(3) additional shares for common stock equivalents of 1.3 million. The impact of the adjustments described above result in the impact of the common stock equivalents to be dilutive to the non-GAAP net income per share. For the three and six months ended December 31, 2020, the impact of the adjustments described above resulted in a non-GAAP net loss, therefore, the impact of the common stock equivalents is not dilutive.

REGIS CORPORATION Reconciliation Of Reported U.S. GAAP Net Income (Loss) To Adjusted EBITDA, A Non-GAAP Financial Measure (Dollars in thousands) (Unaudited)

Adjusted EBITDA

EBITDA represents U.S. GAAP net (loss) income for the respective period excluding interest expense, income taxes and depreciation and amortization expense. The Company defines adjusted EBITDA, as EBITDA excluding identified items impacting comparability for each respective period. For the three and six months ended December 31, 2020, the items impacting comparability consisted of the items identified in the non-GAAP reconciling items for the respective periods. The impacts of the income tax provision adjustments associated with the above items are already included in the U.S. GAAP reported net (loss) income to EBITDA reconciliation, therefore there is no adjustment needed for the reconciliation from EBITDA to adjusted EBITDA.

Three Months Ended December 31, 2020

Franchise Company- Corporate Consolidated owned (1)



Consolidated reportednet income (loss), as $ 10,430 $ (17,370 ) $ (25,939 ) $ (32,879 )reported (U.S. GAAP)

Interest expense, as - - 3,701 3,701 reported

Income taxes, as - - (400 ) (400 )reported

Depreciation andamortization, as 289 4,311 1,788 6,388 reported

Long-lived asset 94 3,066 - 3,160 impairment

EBITDA (as defined $ 10,813 $ (9,993 ) $ (20,850 ) $ (20,030 )above)



Professional fees - - 1,216 1,216

Severance - - 2,022 2,022

Lease liability benefit (34 ) (2,192 ) - (2,226 )

Lease termination fees - 1,117 - 1,117

Real estate fees - 375 - 375

Adjusted EBITDA,non-GAAP financial $ 10,779 $ (10,693 ) $ (17,612 ) $ (17,526 )measure

Three Months Ended December 31, 2019

Franchise

Company- owned

Corporate

Consolidated (1)

Consolidated reported net income (loss), as reported (U.S. GAAP)

$

12,126

$

(1,105

)

$

(27,462

)

$

(16,441

)

Interest expense, as reported

-

-

1,464

1,464

Income taxes, as reported

-

-

(1,948

)

(1,948

)

Depreciation and amortization, as reported

210

5,938

1,599

7,747

EBITDA (as defined above)

$

12,336

$

4,833

$

(26,347

)

$

(9,178

)

Professional fees

-

-

115

115

Severance

-

-

497

497

Employee litigation reserve

-

(600

)

-

(600

)

TBG restructuring

722

-

246

968

Corporate office transition

-

-

(2,109

)

(2,109

)

Goodwill derecognition

-

-

27,400

27,400

TBG discontinued operations, net of income tax

-

-

(79

)

(79

)

Adjusted EBITDA, non-GAAP financial measure

$

13,058

$

4,233

$

(277

)

$

17,014

_______________________________________________________________________________

Three Months Ended December 31, 2019

Franchise Company- Corporate Consolidated owned (1)



Consolidated reported netincome (loss), as $ 12,126 $ (1,105 ) $ (27,462 ) $ (16,441 )reported (U.S. GAAP)

Interest expense, as - - 1,464 1,464 reported

Income taxes, as reported - - (1,948 ) (1,948 )

Depreciation and 210 5,938 1,599 7,747 amortization, as reported

EBITDA (as defined above) $ 12,336 $ 4,833 $ (26,347 ) $ (9,178 )



Professional fees - - 115 115

Severance - - 497 497

Employee litigation - (600 ) - (600 )reserve

TBG restructuring 722 - 246 968

Corporate office - - (2,109 ) (2,109 )transition

Goodwill derecognition - - 27,400 27,400

TBG discontinuedoperations, net of income - - (79 ) (79 )tax

Adjusted EBITDA, non-GAAP $ 13,058 $ 4,233 $ (277 ) $ 17,014 financial measure

_______________________________________________________________________________

Consolidated EBITDA margins for the three months ended December 31, 2020 and 2019 were (19.2)% and (4.4)%, respectively, and are calculated as EBITDA (as defined above) divided by U.S. GAAP revenue for each(1) respective period. Consolidated adjusted EBITDA margins for the three months ended December 31, 2020 and 2019 were (16.8)% and 8.1%, respectively, and are calculated as adjusted EBITDA divided by U.S. GAAP revenue for each respective period.

Six Months Ended December 31, 2020

Franchise

Company- owned

Corporate

Consolidated (1)

Consolidated reported net income (loss), as reported (U.S. GAAP)

$

16,776

$

(38,116

)

$

(46,804

)

$

(68,144

)

Interest expense, as reported

-

-

7,463

7,463

Income taxes, as reported

-

-

(1,035

)

(1,035

)

Depreciation and amortization, as reported

563

9,393

3,808

13,764

Long-lived asset impairment

704

8,280

-

8,984

EBITDA (as defined above)

$

18,043

$

(20,443

)

$

(36,568

)

$

(38,968

)

Professional fees

-

-

2,943

2,943

Severance

-

-

2,391

2,391

CEO Transition

-

-

(1,294

)

(1,294

)

Lease liability benefit

(298

)

(7,988

)

-

(8,286

)

Lease termination fees

-

6,670

-

6,670

Real estate fees

-

375

-

375

Adjusted EBITDA, non-GAAP financial measure

$

17,745

$

(21,386

)

$

(32,528

)

$

(36,169

)

Six Months Ended December 31, 2020

Franchise Company- Corporate Consolidated owned (1)



Consolidated reportednet income (loss), as $ 16,776 $ (38,116 ) $ (46,804 ) $ (68,144 )reported (U.S. GAAP)

Interest expense, as - - 7,463 7,463 reported

Income taxes, as - - (1,035 ) (1,035 )reported

Depreciation andamortization, as 563 9,393 3,808 13,764 reported

Long-lived asset 704 8,280 - 8,984 impairment

EBITDA (as defined $ 18,043 $ (20,443 ) $ (36,568 ) $ (38,968 )above)



Professional fees - - 2,943 2,943

Severance - - 2,391 2,391

CEO Transition - - (1,294 ) (1,294 )

Lease liability benefit (298 ) (7,988 ) - (8,286 )

Lease termination fees - 6,670 - 6,670

Real estate fees - 375 - 375

Adjusted EBITDA,non-GAAP financial $ 17,745 $ (21,386 ) $ (32,528 ) $ (36,169 )measure

Six Months Ended December 31, 2019

Franchise

Company-owned

Corporate

Consolidated (1)

Consolidated reported net income (loss), as reported (U.S. GAAP)

$

22,335

$

4,296

$

(56,877

)

$

(30,246

)

Interest expense, as reported

-

-

2,903

2,903

Income taxes, as reported

-

-

(4,804

)

(4,804

)

Depreciation and amortization, as reported

370

12,045

4,712

17,127

EBITDA (as defined above)

$

22,705

$

16,341

$

(54,066

)

$

(15,020

)

Professional fees

-

-

115

115

Severance

-

-

2,917

2,917

Employee litigation reserve

-

(600

)

-

(600

)

TBG restructuring

2,222

-

246

2,468

Corporate office transition

-

-

(2,109

)

(2,109

)

Goodwill derecognition

-

-

59,480

59,480

TBG discontinued operations

-

-

(452

)

(452

)

Adjusted EBITDA, non-GAAP financial measure

$

24,927

$

15,741

$

6,131

$

46,799

_______________________________________________________________________________

Six Months Ended December 31, 2019

Franchise Company-owned Corporate Consolidated (1)



Consolidated reportednet income (loss), as $ 22,335 $ 4,296 $ (56,877 ) $ (30,246 )reported (U.S. GAAP)

Interest expense, as - - 2,903 2,903 reported

Income taxes, as - - (4,804 ) (4,804 )reported

Depreciation andamortization, as 370 12,045 4,712 17,127 reported

EBITDA (as defined $ 22,705 $ 16,341 $ (54,066 ) $ (15,020 )above)



Professional fees - - 115 115

Severance - - 2,917 2,917

Employee litigation - (600 ) - (600 )reserve

TBG restructuring 2,222 - 246 2,468

Corporate office - - (2,109 ) (2,109 )transition

Goodwill derecognition - - 59,480 59,480

TBG discontinued - - (452 ) (452 )operations

Adjusted EBITDA,non-GAAP financial $ 24,927 $ 15,741 $ 6,131 $ 46,799 measure

_______________________________________________________________________________

Consolidated EBITDA margins for the six months ended December 31, 2020 and 2019 were (18.1)% and (3.3)%, respectively, and are calculated as EBITDA (as defined above) divided by U.S. GAAP revenue for each(1) respective period. Consolidated adjusted EBITDA margins for the six months ended December 31, 2020 and 2019 were (16.8)% and 10.3%, respectively, and are calculated as adjusted EBITDA divided by adjusted U.S. GAAP revenue for each respective period.

REGIS CORPORATION

Reconciliation Of Reported Franchise EBITDA As A Percent Of U.S. GAAP Revenue

To EBITDA As A Percent Of Adjusted Revenue

(Dollars in thousands)

(Unaudited)

Three Months Ended December 31,

2020

2019

As Adjusted EBITDA

$

10,779

$

13,058

U.S. GAAP revenue

66,423

79,841

As Adjusted EBITDA as a % of U.S. GAAP revenue

16.2

%

16.4

%

Non-margin revenue adjustments:

Franchise rental income

(32,285

)

(33,630

)

Ad Fund revenue

(4,715

)

(10,703

)

TBG product sales

-

(744

)

Adjusted revenue

$

29,423

$

34,764

As Adjusted EBITDA as a percent of adjusted revenue (1)

36.6

%

37.6

%

REGIS CORPORATION

Reconciliation Of Reported Franchise EBITDA As A Percent Of U.S. GAAP Revenue

To EBITDA As A Percent Of Adjusted Revenue

(Dollars in thousands)

(Unaudited)

Three Months Ended December 31,

2020 2019



As Adjusted EBITDA $ 10,779 $ 13,058

U.S. GAAP revenue 66,423 79,841

As Adjusted EBITDA as a % of U.S. GAAP revenue 16.2 % 16.4 %

Non-margin revenue adjustments:

Franchise rental income (32,285 ) (33,630 )

Ad Fund revenue (4,715 ) (10,703 )

TBG product sales - (744 )

Adjusted revenue $ 29,423 $ 34,764

As Adjusted EBITDA as a percent of adjusted 36.6 % 37.6 %revenue (1)

Six Months Ended December 31,

2020

2019

As Adjusted EBITDA

$

17,745

$

24,927

U.S. GAAP revenue

130,404

152,387

As Adjusted EBITDA as a % of U.S. GAAP revenue

13.6

%

16.4

%

Non-margin revenue adjustments:

Franchise rental income

(64,568

)

(65,054

)

Ad Fund revenue

(9,224

)

(21,129

)

TBG product sales

-

(2,010

)

Adjusted revenue

$

56,612

$

64,194

As Adjusted EBITDA as a percent of adjusted revenue (1)

31.3

%

38.8

%

_______________________________________________________________________________

Six Months Ended December 31,

2020 2019



As Adjusted EBITDA $ 17,745 $ 24,927

U.S. GAAP revenue 130,404 152,387

As Adjusted EBITDA as a % of U.S. GAAP revenue 13.6 % 16.4 %

Non-margin revenue adjustments:

Franchise rental income (64,568 ) (65,054 )

Ad Fund revenue (9,224 ) (21,129 )

TBG product sales - (2,010 )

Adjusted revenue $ 56,612 $ 64,194

As Adjusted EBITDA as a percent of adjusted 31.3 % 38.8 %revenue (1)

_______________________________________________________________________________

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210203005992/en/

CONTACT: REGIS CORPORATION: Kersten Zupfer investorrelations@regiscorp.com