What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-01 compared with 2024-01-31 · 98 added, 107 removed, 386 unchanged (35% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

As of December 31, 2023 and June 30, 2023

As of March 31, 2024 and June 30, 2023

(Dollars in thousands, except per share data)

31 unchanged sentences

Common stock, $ 0.05 par value;

issued and outstanding, 2,279,450 and 2,277,828 common shares at December 31, 2023 and June 30, 2023, respectively (Note 1)

issued and outstanding, 2,279,948 and 2,277,828 common shares at March 31, 2024 and June 30, 2023, respectively (Note 1)

Additional paid-in capital (Note 1) 68,040 66,764

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

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

For the Three and Nine Months Ended March 31, 2024 and 2023

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

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

Three Months Ended March 31, Nine Months Ended March 31,

2024 2023 2024 2023

24 unchanged sentences

Loss from operations before income taxes ( 2,367 ) ( 2,402 ) ( 2,431 ) ( 6,753 )

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

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

Income tax (expense) benefit ( 54 ) 241 201 213

Loss from continuing operations ( 2,421 ) ( 2,161 ) ( 2,230 ) ( 6,540 )

Income from discontinued operations (Note 3) 89 518 2,089 3,958

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

Net income (loss) per share:

(Loss) income from continuing operations $ ( 0.43 ) $ ( 1.10 ) $ 0.08 $ ( 1.90 )

Income from discontinued operations 0.85 0.06 0.86 1.49

Net income (loss) per share, basic (2) $ 0.43 $ ( 1.04 ) $ 0.94 $ ( 0.41 )

(Loss) income from continuing operations ( 0.43 ) $ ( 1.10 ) 0.08 ( 1.90 )

Net loss $ ( 2,332 ) $ ( 1,643 ) $ ( 141 ) $ ( 2,582 )

Net loss per share:

Basic and diluted:

Loss from continuing operations $ ( 1.03 ) $ ( 0.93 ) $ ( 0.95 ) $ ( 2.83 )

Income from discontinued operations 0.04 0.22 0.89 1.71

Net income (loss) per share, diluted (2) $ 0.43 $ ( 1.04 ) $ 0.93 $ ( 0.41 )

Net loss per share (2) $ ( 1.00 ) $ ( 0.71 ) $ ( 0.06 ) $ ( 1.12 )

Weighted average common and common equivalent shares outstanding:

Basic 2,341 2,307 2,336 2,305

Diluted 2,341 2,307 2,367 2,305

Basic and diluted 2,342 2,315 2,338 2,308

_______________________________________________________________________________

5 unchanged sentences

REGIS CORPORATION

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

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

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

For the Three and Nine Months Ended March 31, 2024 and 2023

(Dollars in thousands)

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

Three Months Ended March 31, Nine Months Ended March 31,

2024 2023 2024 2023

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

Net loss $ ( 2,332 ) $ ( 1,643 ) $ ( 141 ) $ ( 2,582 )

Foreign currency translation adjustments ( 230 ) 29 ( 227 ) ( 697 )

Comprehensive income (loss) $ 1,289 $ ( 2,275 ) $ 2,194 $ ( 1,665 )

Comprehensive loss $ ( 2,562 ) $ ( 1,614 ) $ ( 368 ) $ ( 3,279 )

_______________________________________________________________________________

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (Unaudited)

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

For the Three and Nine Months Ended March 31, 2024 and 2023

(Dollars in thousands)

Three Months Ended December 31, 2023

Three Months Ended March 31, 2024

Common Stock Additional

1 unchanged sentence

Comprehensive

Income Accumulated Deficit Total

Income (Loss) Accumulated Deficit Total

Shares Amount

Balance, September 30, 2023 2,278,479 $ 114 $ 67,325 $ 8,734 $ ( 111,437 ) $ ( 35,264 )

Net income — — — — 997 997

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

Net loss — — — — ( 2,332 ) ( 2,332 )

Foreign currency translation — — — ( 230 ) — ( 230 )

1 unchanged sentence

Net restricted stock activity 498 — ( 3 ) — — ( 3 )

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

Three Months Ended December 31, 2022

Balance, March 31, 2024 2,279,948 $ 114 $ 68,040 $ 8,796 $ ( 112,772 ) $ ( 35,822 )

Three Months Ended March 31, 2023

Common Stock Additional

3 unchanged sentences

Shares Amount

Balance, September 30, 2022 2,276,343 $ 114 $ 65,207 $ 8,597 $ ( 103,778 ) $ ( 29,860 )

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

Net loss — — — — ( 1,643 ) ( 1,643 )

2 unchanged sentences

Net restricted stock activity 106 — — — — —

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

Six Months Ended December 31, 2023

Balance, March 31, 2023 2,277,751 $ 114 $ 66,209 $ 8,758 $ ( 107,828 ) $ ( 32,747 )

Nine Months Ended March 31, 2024

Common Stock Additional

1 unchanged sentence

Comprehensive

Income Accumulated Deficit Total

Income (Loss) Accumulated Deficit Total

Shares Amount

Balance, June 30, 2023 2,277,828 $ 114 $ 66,764 $ 9,023 $ ( 112,631 ) $ ( 36,730 )

Net income — — — — 2,191 2,191

Net loss — — — — ( 141 ) ( 141 )

Foreign currency translation — — — ( 227 ) — ( 227 )

1 unchanged sentence

Net restricted stock activity 2,120 — ( 16 ) — — ( 16 )

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

Six Months Ended December 31, 2022

Balance, March 31, 2024 2,279,948 $ 114 $ 68,040 $ 8,796 $ ( 112,772 ) $ ( 35,822 )

Nine Months Ended March 31, 2023

Common Stock Additional

1 unchanged sentence

Comprehensive

Income Accumulated Deficit Total

Income (Loss) Accumulated Deficit Total

Shares Amount

4 unchanged sentences

Net restricted stock activity 2,722 — ( 37 ) — — ( 37 )

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

Balance, March 31, 2023 2,277,751 $ 114 $ 66,209 $ 8,758 $ ( 107,828 ) $ ( 32,747 )

_______________________________________________________________________________

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

For the Six Months Ended December 31, 2023 and 2022

For the Nine Months Ended March 31, 2024 and 2023

(Dollars in thousands)

Six Months Ended December 31,

Nine Months Ended March 31,

Cash flows from operating activities:

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

Adjustments to reconcile net income (loss) to cash used in operating activities:

Net loss $ ( 141 ) $ ( 2,582 )

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

Gain from sale of OSP (Note 3) ( 2,000 ) ( 4,552 )

12 unchanged sentences

Proceeds from sale of OSP, net of fees 2,000 4,500

Net cash (used in) provided by investing activities ( 323 ) 3,639

Net cash provided by investing activities 1,628 4,161

Cash flows from financing activities:

3 unchanged sentences

Taxes paid for shares withheld ( 16 ) ( 35 )

Net cash provided by (used in) financing activities 2,316 ( 1,596 )

Net cash used in financing activities ( 1,067 ) ( 2,552 )

Effect of exchange rate changes on cash and cash equivalents ( 11 ) ( 103 )

9 unchanged sentences

BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The unaudited interim Condensed Consolidated Financial Statements of Regis Corporation (the Company) as of December 31, 2023 and for the three and six months ended December 31, 2023 and 2022, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of December 31, 2023 and its consolidated results of operations, comprehensive income (loss), shareholders' deficit and cash flows for the interim periods.

The unaudited interim Condensed Consolidated Financial Statements of Regis Corporation (the Company) as of March 31, 2024 and for the three and nine months ended March 31, 2024 and 2023, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of March 31, 2024 and its consolidated results of operations, comprehensive loss, shareholders' deficit and cash flows for the interim periods.

Adjustments consist only of normal recurring items, except for any discussed in the notes below.

The results of operations and cash flows for any interim period are not necessarily indicative of results of operations and cash flows for the full year.

The accompanying interim unaudited Condensed Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).

The accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).

Accordingly, they do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP).

The unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended June 30, 2023 and other documents filed or furnished with the SEC during the current fiscal year.

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.

An interim impairment analysis was not required in the three months ended March 31, 2024.

As of March 31, 2024 and June 30, 2023, the Franchise reporting unit had goodwill of $ 173.3 million and $ 173.8 million, respectively.

Reverse stock split:

4 unchanged sentences

Shareholders who would otherwise be entitled to a fractional share of common stock were instead entitled to receive a proportional cash payment.

All common share and per share amounts presented in the consolidated financial statements and accompanying notes have been retroactively adjusted to reflect the reverse stock split.

All common share and per share amounts presented in the unaudited condensed consolidated financial statements and accompanying notes have been retroactively adjusted to reflect the reverse stock split.

The reverse stock split affected all issued and outstanding shares of the Company’s common stock, as well as the number of shares of common stock available for issuance under the Company’s outstanding stock options and stock unit awards.

The reverse stock split reduced the number of shares of common stock issuable upon the exercise of stock options outstanding and the vesting of stock unit awards outstanding immediately prior to the reverse stock split and correspondingly increased the respective exercise prices or other price dependent terms.

Tax Benefits Preservation Plan:

On January 28, 2024, the Board authorized and declared a dividend of one preferred stock purchase right (a Right) for each outstanding share of common stock.

The dividend was payable on February 9, 2024 (the Record Date) to the holders of record of shares of common stock as of the close of business on the Record Date.

The description and terms of the Rights are set forth in a Tax Benefits Preservation Plan (the Plan), dated as of January 29, 2024, as the same may be amended from time to time between the Company and Equiniti Trust Company, LLC, as Rights Agent.

By adopting the Plan, the Board is seeking to protect the Company’s ability to use its net operating loss carryforwards (“NOLs”) and other tax attributes to offset potential future income tax liabilities.

The Company’s ability to use such NOLs and other tax attributes would be substantially limited if the Company experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code (the “Code”).

Generally, an “ownership change” occurs if the percentage of the Company’s stock owned by one or more “five percent stockholders” increases by more than fifty percentage points over the lowest percentage of stock owned by such stockholders at any time during the prior three-year period or, if sooner, since the last “ownership change” experienced by the Company.

The Plan is intended to make it more difficult for the Company to undergo an ownership change by deterring any person from acquiring 4.95 % or more of the outstanding shares without the approval of the Board.

The Board believes it is in the best interest of the Company and its stockholders to reduce the likelihood of an ownership change, which could harm the Company’s future operating results by effectively increasing the Company future tax liabilities.

Depreciation:

Depreciation expense in the three months ended December 31, 2023 and 2022 includes $ 0.0 and $ 0.2 million, respectively, and for the six months ended December 31, 2023 and 2022 includes $ 0.04 and $ 0.4 million, respectively, of asset retirement obligations, which are cash expenses.

Depreciation expense in the three months ended March 31, 2024 and 2023 includes $ 0.4 million and $ 0.2 million, respectively, and for the nine months ended March 31, 2024 and 2023 includes $ 0.5 million and $ 0.6 million, respectively, of asset retirement obligations, which are cash expenses.

REVENUE RECOGNITION:

29 unchanged sentences

Receivables relate primarily to payments due for royalties, advertising fees and rent.

The receivables balance is presented net of an allowance for expected losses (i.e., doubtful accounts).

The receivables balance is presented net of an allowance for expected credit losses (i.e., doubtful accounts).

Provisions for credit losses are recorded based on management’s judgment regarding our ability to collect as well as the age of the receivables.

Receivable are written off when they are deemed uncollectible.

As of December 31, 2023 and June 30, 2023, the allowance for doubtful accounts was $ 6.3 million and $ 7.3 million, respectively.

As of March 31, 2024 and June 30, 2023, the allowance for doubtful accounts was $ 6.9 million and $ 7.3 million, respectively.

The Company offers financing to SmartStyle ® franchisees when they remodel their salons.

3 unchanged sentences

The following table is a rollforward of the broker fee balance for the periods indicated:

Six Months Ended December 31,

Nine Months Ended March 31,

(Dollars in thousands)

4 unchanged sentences

Deferred franchise fees related to open salons are generally recognized on a straight-line basis over the term of the franchise agreement.

Franchise fee revenue for the three months ended December 31, 2023 and 2022 was $ 1.6 million and $ 1.7 million, respectively, and for the six months ended December 31, 2023 and 2022 was $ 3.3 million and $ 3.2 million, respectively.

Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as of December 31, 2023 is as follows (dollars in thousands):

Franchise fee revenue for the three months ended March 31, 2024 and 2023 was $ 1.7 million and $ 1.6 million, respectively, and for the nine months ended March 31, 2024 and 2023 was $ 5.0 million and $ 4.8 million, respectively.

Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as of March 31, 2024 is as follows (dollars in thousands):

Remainder of 2024 $ 1,243

5 unchanged sentences

The Company received $ 13.0 million in proceeds in June 2022 and received $ 5.0 million in fiscal year 2023, offset by a $ 0.5 million transaction fee.

In the quarter ended December 31, 2023, the Company earned $ 2.0 million of proceeds that had been previously held back.

The Company received the $ 2.0 million in January 2024.

The Company recorded the $ 2.0 million gain and receivable in the quarter ended December 31, 2023.

In the quarter ended December 31, 2023, the Company earned $ 2.0 million of proceeds that had been previously held back, which were paid to the Company in January 2024.

No income taxes have been allocated to discontinued operations based on the methodology required by accounting for income taxes guidance.

Cash used in operations includes $ 0.1 million of cash from discontinued operations.

The following summarizes the results of discontinued operations for the periods presented:

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

Three Months Ended March 31, Nine Months Ended March 31,

2024 2023 2024 2023

4 unchanged sentences

Rent — — — ( 341 )

Other income 89 — 89 —

Gain from sale of OSP — 518 2,000 4,552

2 unchanged sentences

Stock-Based Employee Compensation:

During the three and six months ended December 31, 2023, the Company granted restricted stock units as follows:

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

During the three and nine months ended March 31, 2024, the Company granted restricted stock units as follows:

Three Months Ended March 31, 2024 Nine Months Ended March 31, 2024

Restricted stock units (RSUs) — 12,970

The RSUs granted during the six months ended December 31, 2023, vest in equal amounts over a three-year period subsequent to the grant date.

Total compensation cost for stock-based payment arrangements totaling $ 0.3 and $ 0.6 million for the three months ended December 31, 2023 and 2022, respectively, and $ 0.9 and $ 1.1 million for the six months ended December 31, 2023 and 2022, respectively, was recorded within general and administrative on the unaudited Condensed Consolidated Statements of Operations.

The RSUs granted during the nine months ended March 31, 2024, vest in equal amounts over a three-year period subsequent to the grant date.

Total compensation cost for stock-based payment arrangements totaling $ 0.3 million and $ 0.6 million for the three months ended March 31, 2024 and 2023, respectively, and $ 1.2 and $ 1.7 million for the nine months ended March 31, 2024 and 2023, respectively, was recorded within general and administrative on the unaudited Condensed Consolidated Statements of Operations.

Share Issuance Program:

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

During the three and six months ended December 31, 2023 and 2022, the Company did no t issue any shares under this prospectus.

As of December 31, 2023, $ 11.6 million remains under the prospectus supplement, which equates to 1.2 million shares based on the Company's share price as of December 31, 2023.

The program expires on February 10, 2024.

In fiscal year 2021, the Company filed a $ 150.0 million shelf registration statement and $ 50.0 million prospectus supplement (collectively, the Share Issuance Program) with the Securities and Exchange Commission (SEC) under which it may offer and sell, from time to time, up to $ 50.0 million worth of its Class A common stock in "at-the-market" offerings.

During the three and nine months ended March 31, 2024 and 2023, the Company did no t issue any shares under this prospectus.

The Share Issuance Program expired on February 10, 2024.

INCOME TAXES:

A summary of the income tax benefit (expense) and corresponding effective tax rate is as follows:

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

A summary of the income tax (expense) benefit and corresponding effective tax rate is as follows:

Three Months Ended March 31, Nine Months Ended March 31,

_______________________________________________________________________________ 2024 2023 2024 2023

(Dollars in thousands)

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

Income tax (expense) benefit $ ( 54 ) $ 241 $ 201 $ 213

Effective tax rate ( 2.3 ) % 10.0 % 8.3 % 3.2 %

(1) The recorded tax provision and effective tax rate for the three and six months ended December 31, 2023 and 2022 were different than what would normally be expected, due to the impact of the deferred tax valuation allowance in addition to the impact of a one-time tax benefit in fiscal year 2024 recognized as a result of an income tax audit of foreign subsidiaries.

The recorded tax provision and effective tax rate for the three and nine months ended March 31, 2024 and 2023 were different than what would normally be expected, primarily due to the impact of the deferred tax valuation allowance.

In addition, the Company recognized a one-time tax benefit of $ 0.2 million in fiscal year 2024 as a result of an income tax audit of foreign subsidiaries.

With limited exceptions, due to net operating loss carryforwards, our federal, state, and foreign tax returns are open to examination for all years since 2014, 2013 and 2016, respectively.

17 unchanged sentences

Because the Company holds a majority ownership interest in EEG and is a co-signatory to the Title IV program participation agreements of the EEG schools with the Department of Education, the Department of Education could hold the Company responsible for EEG's Title IV program liabilities.

As of December 31, 2023, EEG had $ 10.1 million of Title IV liabilities.

As of March 31, 2024, EEG had $ 10.8 million of Title IV liabilities.

If EEG is unable to meet the required metrics for gainful employment programs and subsequently unable to allow students to complete their programs, then it is possible the Company could be liable for all or some of the Title IV liabilities.

16 unchanged sentences

Total rent includes the following:

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

Three Months Ended March 31, Nine Months Ended March 31,

2024 2023 2024 2023

1 unchanged sentence

Office rent $ 756 $ 875 $ 2,330 $ 2,581

Lease termination expense 174 848 161 1,306

Lease termination (benefit) expense ( 39 ) 266 122 1,571

Lease liability benefit (1) ( 59 ) ( 297 ) ( 281 ) ( 1,515 )

5 unchanged sentences

In addition, the Company recognizes a benefit from lease liabilities decreasing in excess of previously impaired ROU assets for ongoing leases that were previously impaired.

(2) The credit in franchise salon rent is related to settlements with landlords for less than previously accrued.

(2) Franchise salon rent is lower in the nine months ended March 31, 2024 due to settlements with landlords for less than previously accrued.

The Company leases salon premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees.

1 unchanged sentence

The Company records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the unaudited Condensed Consolidated Statements of Operations.

For the three and six months ended December 31, 2023 and 2022, franchise rental income and franchise rent expense were $ 24.1 million and $ 28.9 million, and $ 48.8 million and $ 59.2 million, respectively.

For the three and nine months ended March 31, 2024 and 2023, franchise rental income and franchise rent expense were $ 23.8 million and $ 26.6 million, and $ 72.5 million and $ 85.8 million, respectively.

These leases generally have lease terms of approximately five years .

8 unchanged sentences

The Company uses the portfolio approach in applying the discount rate based on the original lease term.

The weighted average remaining lease term was 5.28 years and 5.52 years, and the weighted average discount rate was 4.84 % and 4.55 % for all salon operating leases as of December 31, 2023 and June 30, 2023, respectively.

As of December 31, 2023, future operating lease commitments, including one renewal option for leases expected to be renewed, to be paid and received by the Company were as follows (dollars in thousands):

The weighted average remaining lease term was 5.15 and 5.52 years, and the weighted average discount rate was 4.99 % and 4.55 % for all salon operating leases as of March 31, 2024 and June 30, 2023, respectively.

As of March 31, 2024, future operating lease commitments, including one renewal option for leases expected to be renewed, to be paid and received by the Company were as follows (dollars in thousands):

Fiscal Year Leases for Franchise Salons Leases for Company-owned Salons Corporate Leases Total Operating Lease Payments Sublease Income to be Received from Franchisees Net Rent Commitments

12 unchanged sentences

The Company's debt consists of the following:

Maturity Date December 31,

2023 December 31,

Maturity Date March 31,

2024 March 31,

2024 June 30,

11 unchanged sentences

Effective March 27, 2023, the margin increased to 6.25 %, of which 4.25 % is paid currently in cash and 2.00 % is PIK interest (added to the principal balance and thereafter accruing interest).

Effective March 27, 2024, the margin will increase to 7.25 %, of which 4.25 % will be paid currently in cash and 3.00 % will be PIK interest.

Effective March 27, 2024, the margin increased to 7.25 %, of which 4.25 % will be paid currently in cash and 3.00 % will be PIK interest.

The margin applicable to base rate loans will be 100 basis points ( 1.00 %) less than the margin applicable to term SOFR loans.

1 unchanged sentence

The significant assumptions used in the weighted average estimate are the future SOFR rates and debt balance, as well as the length of time the debt will be outstanding.

Cash interest paid in the three and six months ended December 31, 2023 and 2022 was $ 4.8 and $ 3.8 million, and $ 9.6 and $ 6.9 million, respectively.

At December 31, 2023, the Company had outstanding standby letters of credit under the revolving credit facility of $ 9.8 million, primarily related to the Company's self-insurance program.

As of December 31, 2023, total liquidity and available credit under the revolving credit facility, as defined by the amended agreement, were $ 38.1 million and $ 31.0 million, respectively.

As of December 31, 2023, the Company had cash and cash equivalents of $ 7.2 million and current liabilities of $ 114.9 million.

The Company was in compliance with its covenants and other requirements of the financing arrangements as of December 31, 2023.

Cash interest paid in the three and nine months ended March 31, 2024 and 2023 was $ 4.7 million and $ 14.2 million, and $ 4.0 million and $ 10.9 million, respectively.

At March 31, 2024, the Company had outstanding standby letters of credit under the revolving credit facility of $ 9.8 million, primarily related to the Company's self-insurance program.

As of March 31, 2024, total liquidity and available credit under the $ 55.0 million revolving credit facility, as defined by the amended agreement, were $ 36.7 million and $ 30.9 million, respectively.

As of March 31, 2024, the Company had cash and cash equivalents of $ 5.9 million and current liabilities of $ 109.1 million.

The Company was in compliance with its covenants and other requirements of the financing arrangements as of March 31, 2024.

FAIR VALUE MEASUREMENTS:

4 unchanged sentences

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of December 31, 2023 and June 30, 2023, the estimated fair value of the Company's cash, cash equivalents, restricted cash, receivables, inventory, deferred compensation assets, accounts payable and debt approximated their carrying values.

As of March 31, 2024 and June 30, 2023, the estimated fair value of the Company's cash, cash equivalents, restricted cash, receivables, inventory, deferred compensation assets, accounts payable and debt approximated their carrying values.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

2 unchanged sentences

EARNINGS PER SHARE:

The Company's basic earnings per share is calculated as net income (loss) divided by weighted average common shares outstanding, excluding unvested outstanding stock options (SOs), stock appreciation rights (SARs), restricted stock units (RSUs) and stock-settled performance units (PSUs).

The Company's diluted earnings per share is calculated as net income (loss) divided by weighted average common shares and common share equivalents outstanding, which includes shares issued under the Company's stock-based compensation plans.

The Company's basic earnings per share is calculated as net loss divided by weighted average common shares outstanding, excluding unvested outstanding stock options (SOs), stock appreciation rights (SARs), restricted stock units (RSUs) and stock-settled performance units (PSUs).

The Company's diluted earnings per share is calculated as net loss divided by weighted average common shares and common share equivalents outstanding, which includes shares issued under the Company's stock-based compensation plans.

Stock-based awards with exercise prices greater than the average market price of the Company's common stock are excluded from the computation of diluted earnings per share.

The computation of weighted average shares outstanding, assuming dilution, excluded 219,945 and 160,574 of stock-based awards during the three months ended December 31, 2023 and 2022, respectively, and excluded 215,656 and 160,574 of stock-based awards during the six months ended December 31, 2023 and 2022, respectively, as they were not dilutive under the treasury stock method.

The computation of weighted average shares outstanding, assuming dilution, excluded 218,904 and 214,684 of stock-based awards during the three months ended March 31, 2024 and 2023, respectively, and excluded 216,727 and 194,093 of stock-based awards during the nine months ended March 31, 2024 and 2023, respectively, as they were not dilutive under the treasury stock method.

SEGMENT INFORMATION:

28 unchanged sentences

Unallocated fees include one-time professional fees and settlements, severance expense, the benefit from lease liability decreases in excess of previously impaired ROUA, lease termination fees and asset retirement obligation costs.

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

Three Months Ended March 31, Nine Months Ended March 31,

2024 2023 2024 2023

11 unchanged sentences

Interest expense ( 6,153 ) ( 4,787 ) ( 18,529 ) ( 13,123 )

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

Income tax (expense) benefit ( 54 ) 241 201 213

Income from discontinued operations 89 518 2,089 3,958

Total net income (loss) $ 997 $ ( 2,407 ) $ 2,191 $ ( 939 )

SUBSEQUENT EVENTS:

On January 28, 2024, the Board of Directors of the Company, authorized and declared a dividend of one preferred stock purchase right (a “Right”) for each outstanding share of Common Stock.

The dividend is payable on February 9, 2024 (the “Record Date”), to the holders of record of shares of Common Stock as of the close of business on the Record Date.

The description and terms of the Rights are set forth in a Tax Benefits Preservation Plan, dated as of January 29, 2024, as the same may be amended from time to time (the “Plan”), between the Company and Equiniti Trust Company, LLC, as Rights Agent.

By adopting the Plan, the Board of Directors is seeking to protect the Company’s ability to use its net operating loss carryforwards (“NOLs”) and other tax attributes to offset potential future income tax liabilities.

The Board of Directors believes it is in the best interest of the Company and its stockholders to reduce the likelihood of an ownership change, which could harm the Company’s future operating results by effectively increasing the Company future tax liabilities.

Total net loss $ ( 2,332 ) $ ( 1,643 ) $ ( 141 ) $ ( 2,582 )

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 1. Financial Statements