What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-01-31 compared with 2023-11-01 · 103 added, 82 removed, 188 unchanged (50% of the section changed)

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MANAGEMENT'S OVERVIEW

Regis Corporation (NYSE:RGS) is a leader in the beauty salon industry.

As of September 30, 2023, the Company franchised or owned 4,811 locations, primarily in North America.

Regis Corporation (NasdaqGM:RGS) is a leader in the beauty salon industry.

As of December 31, 2023, the Company franchised or owned 4,709 locations, primarily in North America.

Our locations consisted of 4,651 franchised salons and 58 company-owned salons.

Regis’ franchised and corporate locations operate under concepts such as Supercuts ® , SmartStyle ® , Cost Cutters ® , Roosters ® and First Choice Haircutters ® .

Regis maintains an ownership interest in Empire Education Group, Inc.

in the United States.

As of September 30, 2023, the Company had 425 employees worldwide.

As of December 31, 2023, the Company had 397 employees worldwide.

Merchandising Strategy

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The Company receives a fee from the third-party distributor, which is included in fees on the interim unaudited Condensed Consolidated Statements of Operations.

As a result of the change, product sales to franchisees and cost of products sales to franchisees will continue to decrease and are expected to be immaterial for the remainder of fiscal year 2024.

As a result of the change, product sales to franchisees and cost of product sales to franchisees will continue to decrease and are expected to be immaterial for the remainder of fiscal year 2024.

Corporate Strategy Update

On November 1, 2023, the Company announced that the Board has initiated a strategic review to proactively assess the Company’s capital structure.

On November 1, 2023, the Company announced that the Board has initiated a strategic review to proactively assess the Company’s capital structure with support of legal and financial advisors.

The Board has established a Special Committee to evaluate the various strategic alternatives and initiatives.

There is no set timetable for this process, and there can be no assurances as to the results of the review.

The Company is continuing on such strategic review and there is no set timetable for this process, and there can be no assurances as to the results of the review.

The Company does not intend to comment further on developments or status of this process until it deems further disclosure is appropriate or required by law.

The Company is being advised by Jefferies, LLC as its financial advisor and Weil, Gotshal & Manges LLP as its legal advisor.

CRITICAL ACCOUNTING POLICIES

The interim unaudited Condensed Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America.

CRITICAL ACCOUNTING ESTIMATES

The interim unaudited Condensed Consolidated Financial Statements are prepared in conformity with U.S.

In preparing the interim unaudited Condensed Consolidated Financial Statements, we are required to make various judgments, estimates and assumptions that could have a significant impact on the results reported in the interim unaudited Condensed Consolidated Financial Statements.

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Changes in these estimates could have a material effect on our interim unaudited Condensed Consolidated Financial Statements.

The Company assesses goodwill impairment on an annual basis, during the Company's fourth fiscal quarter, and between annual assessments if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

The Company determined a triggering event occurred related to a decrease in the Company's stock price, resulting in a quantitative impairment test performed over goodwill.

Accordingly, the Company engaged a third-party valuation specialist to perform an impairment analysis on the Franchise reporting unit of the business as of November 30, 2023.

For the goodwill impairment analysis, management utilized a combination of both a discounted cash flows approach and market approach to evaluate the Franchise reporting unit.

The discounted cash flows model reflects management's assumptions regarding discount rates, revenue growth rates, economic and market trends, cost structure, and other expectations about the anticipated short-term and long-term operating results.

These assumptions are inherently uncertain.

An increase in the discount rate or a decrease in revenue growth rate or market trends would have a negative impact on the fair value of the reporting unit which could be material.

As a result of the impairment testing, the Franchise reporting unit was determined to have a fair value in excess of its carrying value of 6%, resulting in no goodwill impairment charge.

As of December 31, 2023 and June 30, 2023, the Franchise reporting unit had goodwill of $173.8 million.

Our significant accounting policies can be found in Note 1 to the Consolidated Financial Statements contained in Part II, Item 8 of the June 30, 2023 Annual Report on Form 10-K.

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We believe system-wide sales information aids in understanding how we derive royalty revenue and in evaluating performance.

In the three months ended September 30, 2023, a net 50 franchise salons have closed, which will reduce future royalty income.

In the six months ended December 31, 2023, a net 144 franchise salons have closed, which will reduce future royalty income.

The following table summarizes system-wide revenue and system-wide same-store sales by concept (1):

Three Months Ended September 30,

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

2023 2022 2023 2022

(Dollars in Millions)

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

Three Months Ended September 30,

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

2023 2022 2023 2022 2023 2022 2023 2022

($ in millions) % of Total

Revenues (1) Increase (Decrease) ($ in millions) % of Total

Revenues (1) Increase (Decrease)

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Cost of product sales to franchisees 0.1 1.3 100.0 118.2 (1,820) 0.4 1.8 80.0 112.5 (3,250)

Inventory reserve — 1.2 — 2.0 (200) — 1.2 — 1.0 (100)

General and administrative 11.8 11.7 23.1 19.6 350 22.5 26.1 21.6 21.4 20

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Depreciation and amortization 0.7 3.8 1.4 6.3 (490) 1.0 5.0 1.0 4.1 (310)

Long-lived asset impairment 0.2 — 0.4 — 40 0.2 — 0.2 — 20

Operating income (3) 4.8 0.7 9.4 1.2 820 12.2 3.2 11.7 2.6 910

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Other, net 0.3 1.2 0.6 2.0 (140) 0.1 0.8 0.1 0.7 (60)

Income tax benefit (expense) (4) 0.1 — (14.1) (1.5) N/A

Income (loss) from continuing operations 1.2 (1.8) 2.3 (2.9) 520

Income tax benefit (4) 0.1 — 9.6 — N/A 0.3 — 398.4 (0.6) N/A

(Loss) income from continuing operations (1.0) (2.5) (2.0) (4.2) 220 0.2 (4.4) 0.2 (2.1) 230

Income from discontinued operations 2.0 0.1 3.9 0.2 370 2.0 3.4 1.9 2.8 (90)

Net income (3) 1.2 1.5 2.3 2.4 (10)

Net income (loss) (3) 1.0 (2.4) 2.0 (4.0) 600 2.2 (0.9) 2.1 (0.7) 280

_______________________________________________________________________________

(1) Cost of product sales to franchisees is computed as a percent of product sales to franchisees.

(2) Includes cost of service and product sold to guests in our Company-owned salons.

(2) Includes cost of services and products sold to guests in our Company-owned salons.

Excludes general and administrative expense, rent and depreciation and amortization related to Company-owned salons.

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line items calculated individually may not sum to total due to rounding.

(4) Computed as a percent of income (loss) from continuing operations before income taxes.

The income tax basis point change is noted as not applicable (N/A) as the discussion within the MD&A is related to the effective income tax rate.

Three Months Ended September 30, 2023 Compared with Three Months Ended September 30, 2022

During the three months ended September 30, 2023, royalties decreased $0.7 million, or 4.1%, primarily due to a decrease in franchise salon count.

During the three months ended September 30, 2023, fees were consistent with prior period.

An increase in terminated franchise agreement fees was offset by a decline in product fees.

(4) Computed as a percent of loss from continuing operations before income taxes.

The income tax basis point change is noted as not applicable (N/A) because the discussion within the MD&A is related to the effective income tax rate.

Three and Six Months Ended December 31, 2023 Compared with Three and Six Months Ended December 31, 2022

During the three and six months ended December 31, 2023, royalties decreased $0.4 million and $1.0 million, or 2.5% and 3.0%, respectively, primarily due to a decrease in franchise salon count.

During the three and six months ended December 31, 2023, fees decreased $0.7 million and $0.7 million, respectively, primarily due to a decrease in terminated development agreements.

Product Sales to Franchisees

Product sales to franchisees in the three months ended September 30, 2023 were less than the three months ended September 30, 2022, primarily due to the Company's shift in its product business from a wholesale model to a third-party distribution model.

Product sales to franchisees are not expected to be material in fiscal year 2024.

Product sales to franchisees in the three and six months ended December 31, 2023 were less than the three and six months ended December 31, 2022, primarily due to the Company's shift in its product business from a wholesale model to a third-party distribution model.

Product sales to franchisees are not expected to be material for the remainder of fiscal year 2024.

Advertising Fund Contributions

Advertising fund contributions decreased $1.1 million, or 13.3%, during the three months ended September 30, 2023, primarily due to the decrease in franchise salon count.

Advertising fund contributions decreased $1.2 million and $2.2 million, or 15.0% and 13.6%, during the three and six months ended December 31, 2023, respectively, primarily due to the decrease in franchise salon count.

Franchise Rental Income

During the three months ended September 30, 2023, franchise rental income decreased $5.6 million, or 18.5%, primarily due to the decrease in franchise salon count.

During the three and six months ended December 31, 2023, franchise rental income decreased $4.8 million and $10.4 million, or 16.6% and 17.6%, respectively, primarily due to the decrease in franchise salon count.

Company-Owned Salon Revenue

During the three months ended September 30, 2023, company-owned salon revenue decreased $1.2 million, or 38.7%, due to the decrease in company-owned salon count.

During the three and six months ended December 31, 2023, company-owned salon revenue decreased $0.8 million and $2.0 million, or 30.8% and 35.1%, respectively, due to the decrease in company-owned salon count.

Cost of Product Sales to Franchisees

The decrease in cost of product as a percent of product revenues during the three months ended September 30, 2023 was primarily due to lower freight charges.

Cost of product sales to franchisees is not expected to be material in fiscal year 2024.

The decrease in cost of product as a percent of product revenues during the three and six months ended December 31, 2023 was primarily due to the Company's shift in its product business from a wholesale model to a third-party distribution model.

Cost of product sales to franchisees is not expected to be material for the remainder of fiscal year 2024.

Inventory Reserve

In the three and six months ended December 31, 2022, the Company recorded an inventory reserve charge of $1.2 million related to slow moving products.

There were no similar charges during the three and six months ended December 31, 2023.

General and Administrative

General and administrative expense decreased $3.7 million, or 25.7%, during the three months ended September 30, 2023, primarily due to lower headcount resulting in lower compensation expense and lower legal, insurance and professional fees.

Rent expense decreased $0.7 million, or 38.9%, during the three months ended September 30, 2023, primarily due to a reduction in franchise rent due to lower lease termination fees, settling with landlords for less than previously accrued and the net reduction in the number of company-owned salons, partially offset by a reduction in the lease liability benefit.

See Note 8 to the unaudited Condensed Consolidated Financial Statements.

General and administrative expense for the three months ended December 31, 2023 remained consistent with the prior period.

General and administrative expense for the six months ended December 31, 2023 decreased $3.6 million, or 13.8%, primarily due to lower headcount resulting in lower compensation expense and lower legal, insurance and professional fees.

Rent expense decreased $0.7 million and $1.3 million, or 33.3% and 34.2%, during the three and six months ended December 31, 2023, respectively, primarily due to a reduction in company-owned salon count.

Advertising Fund Expense

Advertising fund expense decreased $1.1 million, or 13.3%, during the three months ended September 30, 2023, primarily due to the decrease in franchise salon count.

Advertising fund expense decreased $1.2 million and $2.2 million, or 15.0% and 13.6%, during the three and six months ended December 31, 2023, respectively, primarily due to the decrease in franchise salon count.

Franchise Rent Expense

During the three months ended September 30, 2023, franchise rent expense decreased $5.6 million, or 18.5%, primarily due to the decrease in franchise salon count.

During the three and six months ended December 31, 2023, franchise rent expense decreased $4.8 million and $10.4 million, or 16.6% and 17.6%, respectively, primarily due to the decrease in franchise salon count.

Company-Owned Salon Expense

Company-owned salon expense for the three months ended September 30, 2023 decreased $1.5 million, or 50.0%, primarily due to the reduction in company-owned salon count.

Company-owned salon expense for the three and six months ended December 31, 2023 decreased $0.9 million and $2.4 million, or 40.9% and 46.2%, respectively, primarily due to the reduction in company-owned salon count.

Depreciation and Amortization

Depreciation and amortization decreased $0.9 million, or 69.2%, during the three months ended September 30, 2023.

The decrease in the three months ended September 30, 2023 was primarily due to a reduction in corporate office and IT assets and a reduction in asset retirement "white boxing" expense.

Depreciation and amortization decreased $3.1 million and $4.0 million, or 81.6% and 80.0%, during the three and six months ended December 31, 2023, respectively.

The decreases were primarily due to a $2.6 million accelerated depreciation charge related to the consolidation of office space within the Company's corporate headquarters in the second quarter of fiscal year 2023 and the decrease in company-owned salon count.

Long-Lived Asset Impairment

In the three and six months ended December 31, 2023, the Company recorded a long-lived asset impairment charge of $0.2 million related to the right-of-use asset associated with the corporate office lease.

There were no similar charges recorded in the three and six months ended December 31, 2022.

Interest Expense

The $2.4 million increase in interest expense for the three months ended September 30, 2023 was primarily due to the amortization of fees related to the credit amendment that was signed in the first quarter of fiscal year 2023 and a higher weighted average interest rate on outstanding borrowings, including non-cash interest and amortization of debt discount and financing costs of $1.4 million.

Other, net decreased $0.3 million for the three months ended September 30, 2023 primarily due to a lower foreign currency loss.

The $1.7 million and $4.1 million increase in interest expense for the three and six months ended December 31, 2023, respectively, was primarily due to a higher weighted average interest rate on outstanding borrowings.

Cash interest increased $1.0 million and $2.6 million in the three and six months ended December 31, 2023, respectively.

Other, net decreased $0.9 million and $0.7 million for the three and six months ended December 31, 2023, respectively, primarily due to a $1.1 million grant received from the state of North Carolina related to COVID-19 relief.

Income Tax Benefit (Expense)

During the three months ended September 30, 2023, the Company recognized a tax benefit of $0.1 million, with a corresponding effective tax rate of (14.1)%, as compared to recognizing a tax expense of $0.0 million, with a corresponding effective tax rate of (1.5)% during the three months ended September 30, 2022.

During the three months ended December 31, 2023, the Company recognized a tax benefit of $0.1 million, with a corresponding effective tax rate of 9.6%, as compared to recognizing no tax benefit during the three months ended December 31, 2022.

During the six months ended December 31, 2023, the Company recognized a tax benefit of $0.3 million, with a corresponding effective tax rate of 398.4%, as compared to recognizing a tax expense of $0.03 million, with a corresponding effective tax rate of (0.6)% during the six months ended December 31, 2022.

See Note 5 to the unaudited Condensed Consolidated Financial Statements.

Income from Discontinued Operations

In the three months ended September 30, 2022, the Company recorded income from discontinued operations of $3.3 million due primarily to receipt of $4.0 million in sales proceeds.

In the three and six months ended December 31, 2023, the Company recorded a gain from discontinued operations of $2.0 million, due primarily to the earning of $2.0 million in sales proceeds in December 2023.

See Note 3 to the unaudited Condensed Consolidated Financial Statements.

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Franchise Salons

Three Months Ended September 30,

2023 2022 (Decrease) Increase (1)

(Dollars in millions)

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

2023 2022 Decrease (1) 2023 2022 (Decrease) Increase (1)

(Dollars in millions) (Dollars in millions)

Royalties $ 15.8 $ 16.2 $ (0.4) $ 32.3 $ 33.3 $ (1.0)

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Franchise same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.

Three Months Ended September 30, 2023 Compared with Three Months Ended September 30, 2022

Three and Six Months Ended December 31, 2023 Compared with Three and Six Months Ended December 31, 2022

Franchise Revenue

Franchise revenue decreased $7.4 million during the three months ended September 30, 2023.

The decrease in franchise revenue during the three months ended September 30, 2023 was primarily due to the decrease in franchise salon count.

During the twelve months ended September 30, 2023, franchisees purchased zero salons from the Company and constructed (net of relocations) and closed 11 and 589 franchise salons, respectively.

Franchise revenue decreased $8.1 million and $15.4 million during the three and six months ended December 31, 2023, respectively.

The decreases in franchise revenue during the three and six months ended December 31, 2023 were primarily due to the decrease in franchise salon count.

During the twelve months ended December 31, 2023, franchisees constructed (net of relocations) and closed 8 and 553 franchise salons, respectively.

Franchise Adjusted EBITDA

During the three months ended September 30, 2023, franchise adjusted EBITDA totaled $8.0 million, an improvement of $3.0 million compared to the three months ended September 30, 2022.

The improvement was primarily due to a decrease in general and administrative expense due primarily to lower headcount, resulting in lower compensation expense, lower professional fees and a benefit in rent expense related to settling with landlords for less than previously accrued.

During the three and six months ended December 31, 2023, franchise adjusted EBITDA totaled $6.4 million and $14.3 million, respectively, a decrease of $1.1 million and increase of $1.8 million compared to the three and six months ended December 31, 2022, respectively.

The decline of $1.1 million for the three months ended December 31, 2023, was due to a decrease in royalties and fees.

The improvement of $1.8 million for the six months ended December 31, 2023, was primarily due to a decrease in general and administrative expense, partially offset by a decrease in royalties and fees.

Company-Owned Salons

Three Months Ended September 30,

2023 2022 (Decrease) Increase (1)

(Dollars in millions)

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

2023 2022 Decrease (1) 2023 2022 Decrease (1)

(Dollars in millions) (Dollars in millions)

Total revenue $ 1.8 $ 2.6 $ (0.8) $ 3.7 $ 5.7 $ (2.0)

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line items calculated individually may not sum to total due to rounding.

Three Months Ended September 30, 2023 Compared with Three Months Ended September 30, 2022

Three and Six Months Ended December 31, 2023 Compared with Three and Six Months Ended December 31, 2022

Company-Owned Salon Revenue

Company-owned salon revenue decreased $1.2 million during the three months ended September 30, 2023, primarily due to the decrease in company-owned salon count.

Company-owned salon revenue decreased $0.8 million and $2.0 million during the three and six months ended December 31, 2023, respectively, primarily due to the decrease in company-owned salon count.

Company-Owned Salon Adjusted EBITDA

During the three months ended September 30, 2023, company-owned salon adjusted EBITDA improved $0.7 million, primarily due to the closure of loss-generating company-owned salons.

During the three months ended December 31, 2023, company-owned salon adjusted EBITDA decreased $0.6 million due primarily to a $1.1 million grant received from the state of North Carolina related to COVID-19 relief in the prior fiscal year.

In the six months ended December 31, 2023, company-owned salon adjusted EBITDA decreased $0.1 million, primarily due to the lapping of the North Carolina Covid-19 relief grant received in the prior fiscal year, partially offset by the closure of loss-generating company-owned salons.

LIQUIDITY AND CAPITAL RESOURCES

Following the amendment of the Company's credit agreement in August 2022, the facility matures in August 2025.

In addition to a $10.0 million minimum liquidity covenant, the amended credit agreement includes typical provisions and financial covenants, including minimum EBITDA, leverage and fixed-charge coverage ratio covenants, the latter two of which are not tested until December 31, 2023.

In addition to a $10.0 million minimum liquidity covenant, the amended credit agreement includes typical provisions and financial covenants, including leverage and fixed-charge coverage ratio covenants, the latter two of which were not tested until December 31, 2023.

See Note 9 to the unaudited Condensed Consolidated Financial Statements.

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In conducting the Company’s current operations, all cash in excess of the amounts needed to support existing operating activities is used to pay the interest on the amounts outstanding under the credit agreement, and we are periodically borrowing additional amounts to cover these costs.

As of September 30, 2023, cash and cash equivalents were $9.3 million, with $8.6 and $0.7 million within the United States and Canada, respectively.

As of September 30, 2023, the Company's borrowing arrangements include a $172.1 million term loan, $2.0 million of paid-in-kind interest and a $55.0 million revolving credit facility that expires in August 2025.

As of September 30, 2023, the unused available credit under the revolving credit facility was $33.1 million, the credit agreement has a minimum liquidity covenant of $10.0 million, and total liquidity per the agreement was $42.4 million.

As of December 31, 2023, cash and cash equivalents were $7.2 million, with $5.8 and $1.4 million within the United States and Canada, respectively.

As of December 31, 2023, the Company's borrowing arrangements include a $171.8 million term loan, $3.0 million of paid-in-kind interest and a $55.0 million revolving credit facility that expires in August 2025.

As of December 31, 2023, the unused available credit under the revolving credit facility was $31.0 million, the credit agreement has a minimum liquidity covenant of $10.0 million, and total liquidity per the agreement was $38.1 million.

See Note 9 to the unaudited Condensed Consolidated Financial Statements.

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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.

During the three months ended September 30, 2023 and 2022, the Company did not issue shares under the prospectus supplement.

As of September 30, 2023, $11.6 million remains outstanding under the share issuance program.

During the three and six months ended December 31, 2023 and 2022, the Company did not issue shares under the prospectus supplement.

As of December 31, 2023, $11.6 million remains outstanding under the share issuance program.

The program expires on February 10, 2024.

The Company closely manages its liquidity and capital resources.

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Cash Requirements

The Company's most significant contractual cash requirements as of September 30, 2023 were lease commitments and interest payments.

The Company's most significant contractual cash requirements as of December 31, 2023 were lease commitments and interest payments.

See Notes 8 and 9 to the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Cash Flows from Operating Activities

During the three months ended September 30, 2023, cash used in operating activities was $2.8 million compared to $5.1 million in the prior year.

Cash used in operating activities improved due primarily to our lower cost structure.

During the six months ended December 31, 2023 and 2022, cash used in operating activities was $6.9 million.

Excluding the $1.1 million grant received from the state of North Carolina related to COVID-19 relief in fiscal year 2023, cash used in operating activities improved due primarily to our lower cost structure.

Cash Flows from Investing Activities

During the three months ended September 30, 2023, cash used in investing activities of $0.2 million primarily related to a salon capital improvements.

During the three months ended September 30, 2022, cash provided by investing activities of $3.3 million was primarily due to cash received of $4.0 million from the sale of OSP, net of a $0.5 million transaction fee.

During the six months ended December 31, 2023, cash used in investing activities of $0.3 million was primarily related to salon capital improvements.

During the six months ended December 31, 2022, cash provided by investing activities of $3.6 million was primarily due to cash received of $4.0 million from the sale of OSP, net of a $0.5 million transaction fee.

Cash Flows from Financing Activities

During the three months ended September 30, 2023, cash provided by financing activities was $1.7 million, primarily as a result of a net $1.8 million borrowing under the Company's revolving credit facility.

During the three months ended September 30, 2022, cash used in financing activities was $3.8 million, primarily as a result of debt refinancing fees of $4.3 million, partially offset by a net $0.6 million borrowing under the Company's revolving credit facility.

During the six months ended December 31, 2023, cash provided by financing activities was $2.3 million, primarily as a result of a net $3.5 million borrowing under the Company's revolving credit facility.

During the six months ended December 31, 2022, cash used in financing activities was $1.6 million, primarily as a result of debt refinancing fees of $4.4 million, partially offset by a net $2.8 million borrowing under the Company's revolving credit facility.

Financing Arrangements

See Note 9 of the Notes to the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 and Note 8 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 for additional information regarding our financing arrangements.

See Note 9 of the Notes to the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for the quarter ended December 31, 2023 and Note 8 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 for additional information regarding our financing arrangements.

Debt to Capitalization Ratio

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Capitalization (1)

September 30, 2023 123.4 %

December 31, 2023 121.6 %

June 30, 2023 125.1 %

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(1) Excludes the long-term lease liability as that liability is offset by the ROU asset.

The decrease in the debt to capitalization ratio as of September 30, 2023 was primarily due to the increase in outstanding debt.

The decrease in the debt to capitalization ratio as of December 31, 2023 was primarily due to the increase in outstanding debt.

Share Issuance Program

In February 2021, the Company filed a $150.0 million shelf registration statement and $50.0 million prospectus supplement with the SEC under which it may offer and sell, from time to time, up to $50.0 million worth of its common stock in "at-the-market" offerings.

During the three months ended September 30, 2023, the Company did not issue shares under the prospectus supplement.

As of September 30, 2023, 9.3 million shares have been cumulatively issued for $38.4 million, and $11.6 million remains outstanding under the share issuance program.

During the six months ended December 31, 2023, the Company did not issue shares under the prospectus supplement.

As of December 31, 2023, $11.6 million remains outstanding under the share issuance program.

The program expires on February 10, 2024.

Share Repurchase Program

In May 2000, the Board approved a stock repurchase program with no stated expiration date.

Since that time and through September 30, 2023, the Board has authorized $650.0 million to be expended for the repurchase of the Company's stock under this program.

Since that time and through December 31, 2023, the Board has authorized $650.0 million to be expended for the repurchase of the Company's stock under this program.

All repurchased shares become authorized but unissued shares of the Company.

The timing and amounts of any repurchases depend on many factors, including the market price of the common stock and overall market conditions.

During the three months ended September 30, 2023, the Company did not repurchase any shares.

As of September 30, 2023, 30.0 million shares have been cumulatively repurchased for $595.4 million, and $54.6 million remains outstanding under the approved stock repurchase program.

During the six months ended December 31, 2023, the Company did not repurchase any shares.

As of December 31, 2023, approximately 1.5 million shares have been cumulatively repurchased for $595.4 million, and $54.6 million remains outstanding under the approved stock repurchase program.

The Company does not anticipate repurchasing shares of common stock for the foreseeable future.

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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." These uncertainties include a potential material adverse impact on our business and results of operations as a result of changes in consumer shopping trends and changes in manufacturer distribution channels;

Such forward-looking statements are often identified herein by use of words including, but not limited to, "may," "will," "believe," "project," "forecast," "expect," "estimate," "anticipate," and "plan." These uncertainties include a potential material adverse impact on our business and results of operations as a result of changes in consumer shopping trends and changes in manufacturer distribution channels;

laws and regulations could require us to modify current business practices and incur increased costs;

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changes in consumer tastes, hair product innovation, fashion trends and consumer spending patterns;

compliance with New York Stock Exchange listing requirements;

compliance with listing requirements;

reliance on franchise royalties and overall success of our franchisees’ salons;

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potential litigation and other legal or regulatory proceedings;

or other factors not listed above.

future goodwill impairment 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.

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis