What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-06 compared with 2024-05-01 · 78 added, 123 removed, 170 unchanged (54% of the section changed)

4 unchanged sentences

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

As of March 31, 2024, the Company franchised or owned 4,557 locations, primarily in North America.

As of September 30, 2024, the Company franchised or owned 4,359 locations, primarily in North America.

Our locations consisted of 4,350 franchised salons and 9 company-owned salons.

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

As of March 31, 2024, the Company had 296 employees.

Merchandising Strategy

As part of the Company's transformation to focus on managing and nurturing its brands, and in line with its capital-light business, the Company shifted its product business from a wholesale model to a third-party distribution model in fiscal year 2022.

Management expects the change will positively impact franchisees by providing them access to industry-leading pricing, loyalty programs, promotional benefits, educational assets, and ongoing support.

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 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 with the support of legal and financial advisors.

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

The Company is continuing with 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.

Tax Benefit Preservation Plan

On January 28, 2024, the Board adopted a Tax Benefits Preservation Plan (the “Plan”).

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

See Note 1 of the unaudited Condensed Consolidated Financial Statements.

As of September 30, 2024, the Company had 203 employees.

CRITICAL ACCOUNTING ESTIMATES

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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.

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

An interim impairment analysis was not required in the three months ended September 30, 2024.

As of September 30, 2024, and June 30, 2024, the franchise reporting unit had goodwill of $173.4 million and $173.1 million, respectively, and the company-owned reporting unit had no goodwill for both periods.

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, 2024, 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 nine months ended March 31, 2024, a net 258 franchise salons have closed, which will reduce future royalty income.

In the three months ended September 30, 2024, a net 41 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:

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

2024 2023 2024 2023

Three Months Ended September 30,

(Dollars in Millions)

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

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

Three Months Ended September 30,

2024 2023 2024 2023

($ in millions) % of Total

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

Revenues (1) Increase (Decrease)

Revenue Increase (Decrease)

Royalties $ 15.6 $ 16.5 33.9 % 30.9 % 300

5 unchanged sentences

Cost of product sales to franchisees (1) — 0.4 — 100.0 N/M

Inventory reserve — — — — — — 1.2 — 0.7 (70)

General and administrative 14.0 10.7 30.4 20.1 1,030

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Other, net 0.7 (0.2) 1.5 (0.4) 190

Income tax (expense) benefit (4) (0.1) 0.2 (2.3) 10.0 N/A 0.2 0.2 8.3 3.2 N/A

Loss from continuing operations (2.4) (2.2) (4.9) (3.9) (100) (2.2) (6.5) (1.4) (1.2) (20)

Income tax benefit (4) 0.2 0.1 11.1 (14.1) N/A

(Loss) income from continuing operations (1.8) 1.2 (3.9) 2.3 (620)

Income from discontinued operations 1.0 — 2.2 — 220

Net loss (3) (2.3) (1.6) (4.7) (2.9) (180) (0.1) (2.6) (0.1) (1.5) 140

Net (loss) income (3) (0.9) 1.2 (2.0) 2.3 (430)

_______________________________________________________________________________

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

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

(4) Computed as a percent of (loss) income 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 Nine Months Ended March 31, 2024 Compared with Three and Nine Months Ended March 31, 2023

During the three and nine months ended March 31, 2024, royalties decreased $0.3 million and $1.4 million, or 2.2% and 2.7%, respectively, primarily due to a decrease in franchise salon count.

During the three months ended March 31, 2024, fees increased $0.1 million due to an increase in terminated development agreements in the current year quarter.

During the nine months ended March 31, 2024, fees decreased $0.6 million, primarily due to a decrease in terminated development agreements and lower fees from franchise product vendors.

Three Months Ended September 30, 2024, Compared with Three Months Ended September 30, 2023

During the three months ended September 30, 2024, royalties decreased $0.9 million, or 5.5%, primarily due to a decrease in franchise salon count and negative same-store-sales.

During the three months ended September 30, 2024, fees decreased $0.2 million, or 10.6%, primarily due to lower option fees and lower rebate fees from franchise product vendors.

Product Sales to Franchisees

Product sales to franchisees in the three and nine months ended March 31, 2024 decreased $0.6 million and $1.7 million, or 100.0% and 79.4%, respectively, compared to the three and nine months ended March 31, 2023.

The decreases are 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.

Product sales to franchisees in the three months ended September 30, 2024, decreased $0.4 million, or 100.0%, compared to the three months ended September 30, 2023, primarily due to the Company's shift in its product business from a wholesale model to a third-party distribution model.

Advertising Fund Contributions

Advertising fund contributions decreased $2.0 million and $4.2 million, or 25.9% and 17.5%, during the three and nine months ended March 31, 2024, respectively, primarily due to the decrease in franchise salon count and lower contribution rates.

Advertising fund contributions decreased $1.6 million, or 21.9%, during the three months ended September 30, 2024, primarily due to the decrease in franchise salon count and lower contribution rates.

Franchise Rental Income

During the three and nine months ended March 31, 2024, franchise rental income decreased $2.8 million and $13.3 million, or 10.7% and 15.5%, respectively, primarily due to the decrease in franchise salon count and franchisees signing their own leases.

During the three months ended September 30, 2024, franchise rental income decreased $3.1 million, or 12.3%, primarily due to the decrease in franchise salon count and franchisees signing their own leases.

Company-Owned Salon Revenue

During the three and nine months ended March 31, 2024, company-owned salon revenue decreased $0.9 million and $2.9 million, or 38.9% and 36.2%, respectively, due to the decrease in company-owned salon count.

During the three months ended September 30, 2024, company-owned salon revenue decreased $1.1 million, or 59.5%, 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 and nine months ended March 31, 2024 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

There were no inventory reserve charges in the three months ended March 31, 2024 or 2023.

In the nine months ended March 31, 2023, the Company recorded an inventory reserve charge of $1.2 million related to slow moving products.

There were no similar charges during the nine months ended March 31, 2024.

The decrease in cost of product as a percent of product revenues during the three months ended September 30, 2024, was primarily due to the Company's shift in its product business from a wholesale model to a third-party distribution model.

General and Administrative

General and administrative expense for the three and nine months ended March 31, 2024 decreased $1.9 million and $5.5 million, or 14.1% or 13.9%, respectively, primarily due to lower headcount resulting in lower compensation expense and lower legal, insurance and professional fees.

Rent expense decreased $0.3 million and $1.6 million, or 15.0% and 28.1%, during the three and nine months ended March 31, 2024, respectively, primarily due to a reduction in company-owned salon count.

General and administrative expense for the three months ended September 30, 2024, increased $3.3 million, or 30.8%, primarily due to severance costs of $2.3 million and stock-based compensation expense of $0.8 million.

Rent expense remained unchanged during the three months ended September 30, 2024.

Advertising Fund Expense

Advertising fund expense decreased $2.0 million and $4.2 million, or 25.6% and 17.5%, during the three and nine months ended March 31, 2024, respectively, primarily due to the decrease in franchise salon count and and lower contribution rates.

Advertising fund expense decreased $1.6 million, or 21.9%, during the three months ended September 30, 2024, primarily due to the decrease in franchise salon count and lower contribution rates.

Franchise Rent Expense

During the three and nine months ended March 31, 2024, franchise rent expense decreased $2.8 million and $13.3 million, or 10.7% and 15.5%, respectively, primarily due to the decrease in franchise salon count and franchisees signing their own leases.

During the three months ended September 30, 2024, franchise rent expense decreased $3.1 million, or 12.3%, primarily due to the decrease in franchise salon count and franchisees signing their own leases.

Company-Owned Salon Expense

Company-owned salon expense, for the three and nine months ended March 31, 2024, decreased $0.6 million and $3.0 million, or 28.0% and 41.0%, respectively, primarily due to the reduction in company-owned salon count.

Company-owned salon expense, for the three months ended September 30, 2024, decreased $0.7 million, or 49.5%, primarily due to the reduction in company-owned salon count.

Depreciation and Amortization

Depreciation and amortization was $1.0 million in the three months ended March 31, 2024 and 2023.

Depreciation and amortization decreased $4.0 million, or 66.0%, during the nine months ended March 31, 2024.

The decrease was 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.

Depreciation and amortization remained unchanged during the three months ended September 30, 2024.

Long-Lived Asset Impairment

In the three months ended March 31, 2024 and 2023, there were no significant long-lived asset impairment charges.

In the nine months ended March 31, 2024, 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 nine months ended March 31, 2023.

In the three months ended September 30, 2024, the Company recorded a long-lived asset impairment charge of $0.4 million related to the right-of-use asset associated with the corporate office lease.

There were no similar charges recorded in the three months ended September 30, 2023.

Interest Expense

The $1.4 million and $5.4 million increase in interest expense for the three and nine months ended March 31, 2024, respectively, was primarily due to a higher weighted average interest rate on outstanding borrowings.

Cash interest increased $0.7 million and $3.3 million in the three and nine months ended March 31, 2024, respectively.

Other, net decreased $0.7 million for the three months ended March 31, 2024, primarily due to fluctuations in the Canadian dollar.

Other, net decreased $1.4 million in the nine months ended March 31, 2024, primarily due to a $1.1 million grant received in fiscal year 2023 from the state of North Carolina related to COVID-19 relief.

Income Tax (Expense) Benefit

During the three months ended March 31, 2024, the Company recognized a tax expense of $0.1 million, with a corresponding effective tax rate of (2.3)%, as compared to recognizing a tax benefit of $0.2 million during the three months ended March 31, 2023, for an effective tax rate of 10.0%.

During the nine months ended March 31, 2024, the Company recognized a tax benefit of $0.2 million, with a corresponding effective tax rate of 8.3%, as compared to recognizing a tax benefit of $0.2 million, with a corresponding effective tax rate of 3.2% during the nine months ended March 31, 2023.

The $1.4 million decrease in interest expense for the three months ended September 30, 2024, was primarily due to less debt outstanding compared to the three months ended September 30, 2023.

Cash interest decreased $1.8 million to $3.0 million for the three months ended September 30, 2024.

Other, net increased $0.9 million in the three months ended September 30, 2024, primarily due to a favorable currency adjustment, unclaimed property, and corporate office sublease income.

Income Tax Benefit

During the three months ended September 30, 2024, the Company recognized a tax benefit of $0.2 million, with a corresponding effective tax rate of 11.1%, as compared to recognizing a tax benefit of $0.1 million, with a corresponding effective tax rate of (14.1)% during the three months ended September 30, 2023.

The negative effective tax rate during the three months ended September 30, 2023 was a result of an income tax benefit during a period in which the Company had income from operations.

See Note 5 to the unaudited Condensed Consolidated Financial Statements.

Income from Discontinued Operations

Income from discontinued operations decreased $0.4 million in the three months ended March 31, 2024 due to sales proceeds in the prior year of $0.5 million.

Income from discontinued operations decreased $1.9 million in the nine months ended March 31, 2024, due primarily to the recognition of $5.0 million of sales proceeds in fiscal year 2023 compared to $2.0 million in fiscal year 2024.

Income from discontinued operations increased $1.0 million in the three months ended September 30, 2024, due primarily to receiving proceeds from the sale of OSP related to the number of salons migrating to the Zenoti platform.

See Note 3 to the unaudited Condensed Consolidated Financial Statements.

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Franchise Salons

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

2024 2023 (Decrease) Increase (1) 2024 2023 (Decrease) Increase (1)

(Dollars in millions) (Dollars in millions)

Three Months Ended September 30,

2024 2023 Decrease (1)

(Dollars in millions)

Royalties $ 15.6 $ 16.5 $ (0.9)

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

Three and Nine Months Ended March 31, 2024 Compared with Three and Nine Months Ended March 31, 2023

Three Months Ended September 30, 2024, Compared with Three Months Ended September 30, 2023

Franchise Revenue

Franchise revenue decreased $5.7 million and $21.1 million during the three and nine months ended March 31, 2024, respectively.

The decreases in franchise revenue during the three and nine months ended March 31, 2024 were primarily due to the decrease in franchise salon count.

During the twelve months ended March 31, 2024, franchisees opened (net of relocations) and closed 10 and 540 franchise salons, respectively, and and purchased (net of Company buybacks) 10 salons from the Company during the same period..

Franchise revenue decreased $6.1 million during the three months ended September 30, 2024.

The decrease in franchise revenue during the three months ended September 30, 2024, was primarily due to the decrease in franchise salon count and negative same-store-sales.

Franchise Adjusted EBITDA

During the three and nine months ended March 31, 2024, franchise adjusted EBITDA totaled $5.8 million and $20.1 million, respectively, an increase of $1.0 million and $2.8 million compared to the three and nine months ended March 31, 2023, respectively.

The improvement in both periods was primarily due to a decrease in general and administrative expense, partially offset by a decrease in royalties and fees.

During the three months ended September 30, 2024, franchise adjusted EBITDA totaled $8.0 million, a decrease of $0.6 million compared to the three months ended September 30, 2023.

The decline was primarily due to a decrease in royalties and fees.

Company-Owned Salons

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

2024 2023 Decrease (1) 2024 2023 Decrease (1)

(Dollars in millions) (Dollars in millions)

Three Months Ended September 30,

2024 2023 (Decrease) Increase (1)

(Dollars in millions)

Company-owned salon revenue $ 0.8 $ 1.9 $ (1.1)

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

Three and Nine Months Ended March 31, 2024 Compared with Three and Nine Months Ended March 31, 2023

Three Months Ended September 30, 2024, Compared with Three Months Ended September 30, 2023

Company-Owned Salon Revenue

Company-owned salon revenue decreased $0.9 million and $2.9 million during the three and nine months ended March 31, 2024, respectively, primarily due to the decrease in company-owned salon count.

Company-owned salon revenue decreased $1.1 million during the three months ended September 30, 2024, primarily due to the decrease in company-owned salon count.

Company-Owned Salon Adjusted EBITDA

During the three months ended March 31, 2024, company-owned salon adjusted EBITDA decreased $0.2 million due primarily to expenses associated with closing Canadian salons in the quarter.

In the nine months ended March 31, 2024, company-owned salon adjusted EBITDA decreased $0.1 million, primarily due to the lapping of a North Carolina COVID-19 relief grant of $1.1 million received in the prior fiscal year, partially offset by the closure of loss-generating company-owned salons.

In the three months ended September 30, 2024, company-owned salon adjusted EBITDA loss improved $0.2 million, primarily due to the wind-down of under performing salons.

LIQUIDITY AND CAPITAL RESOURCES

The Company's credit agreement in August 2022, the facility matures on August 31, 2025.

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.

See Note 9 to the unaudited Condensed Consolidated Financial Statements.

In June 2024, the Company entered into a new credit agreement with TCW Asset Management Company, LLC, and MidCap Financial Trust, which matures in June 2029.

In addition to a $10.0 million minimum liquidity covenant, the agreement includes typical provisions and financial covenants, including leverage and fixed-charge coverage ratio covenants.

Sources of Liquidity

Funds generated by operating activities, available cash and cash equivalents and our credit agreement are our most significant sources of liquidity.

The Company believes it has sufficient liquidity, cash on hand and borrowing capacity to meet its obligations in the next twelve months and until maturity of the credit agreement in August 2025.

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 March 31, 2024, cash and cash equivalents were $5.9 million, with $5.0 million and $0.9 million within the United States and Canada, respectively.

As of March 31, 2024, the Company's borrowing arrangements include a $169.8 million term loan, $4.1 million of paid-in-kind interest and a $55.0 million revolving credit facility that matures in August 2025.

As of March 31, 2024, the unused available credit under the revolving credit facility was $30.9 million, the credit agreement has a minimum liquidity covenant of $10.0 million, and total liquidity per the agreement was $36.7 million.

The Company believes it has sufficient liquidity, cash on hand and borrowing capacity to meet its obligations in the next twelve months and until maturity of the credit agreement in June 2029.

As of September 30, 2024, cash and cash equivalents were $6.3 million, with $5.4 million and $0.9 million within the United States and Canada, respectively.

As of September 30, 2024, the Company's borrowing arrangements include a $104.7 million term loan, $1.3 million of paid-in-kind interest and a $25.0 million revolving credit facility that matures in June 2029.

As of September 30, 2024, the unused available credit under the revolving credit facility was $15.7 million, the credit agreement has a minimum liquidity covenant of $10.0 million, and total available liquidity per the agreement was $11.9 million.

See Note 9 to the unaudited Condensed Consolidated Financial Statements.

On June 30, 2022, the Company sold its OSP software-as-a-service solution to Soham Inc.

for a purchase price of $20.0 million in cash plus additional cash proceeds contingent upon the number of salons that migrate to Soham's Zenoti product as their salon technology platform.

As of March 31, 2024, the Company has received $20 million in cash proceeds.

The Company is not expecting any additional proceeds in fiscal year 2024 and overall is expecting less proceeds than the maximum amount contemplated under the contract due to the decrease in salon count and the longer than anticipated migration period.

On June 30, 2022, the Company sold its OSP software-as-a-service solution to Soham, Inc., for a purchase price of $20.0 million in cash plus additional cash proceeds contingent upon the number of salons that migrate to Soham's Zenoti product as their salon technology platform.

As of September 30, 2024, the Company has received $21.0 million in cash proceeds.

The Company expects additional proceeds in fiscal year 2025 of approximately $7.0 to $7.5 million.

The Company closely manages its liquidity and capital resources.

The Company's liquidity requirements depend on key variables, including the performance of the business, the level of investment needed to support its business strategies, credit facilities and borrowing arrangements, and working capital management.

The Company has a disciplined approach to capital allocation, which focuses on ensuring we can meet our interest obligations and investing in key priorities to support the Company's strategic plan as discussed within Part I, Item 1 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

Cash Requirements

The Company's most significant contractual cash requirements as of March 31, 2024 were lease commitments and interest payments.

The Company's most significant contractual cash requirements as of September 30, 2024, 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 nine months ended March 31, 2024, cash used in operating activities was $7.1 million compared to an $8.5 million cash use in the nine months ended March 31, 2023.

Cash used in operating activities improved year over year due primarily to our lower cost structure, resulting from a lower headcount.

During the three months ended September 30, 2024, cash used in operating activities was $1.3 million compared to a $2.8 million cash use in the three months ended September 30, 2023.

Cash used in operating activities improved year over year due primarily to our lower cost structure, resulting primarily from a lower headcount in addition to less cash used for working capital.

Cash Flows from Investing Activities

During the nine months ended March 31, 2024, cash provided by investing activities of $1.6 million was primarily due to $2.0 million of OSP sales proceeds, offset by salon capital improvements.

During the nine months ended March 31, 2023, cash provided by investing activities of $4.2 million was primarily due to cash received of $5.0 million from the sale of OSP, net of a $0.5 million transaction fee.

During the three months ended September 30, 2024, cash provided by investing activities of $0.9 million was primarily due to OSP sale proceeds of $957 thousand.

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

Cash Flows from Financing Activities

During the nine months ended March 31, 2024, cash used in financing activities was $1.1 million, primarily as a result of fees associated with our strategic review, partially offset by net borrowings of $1.5 million under the Company's revolving credit facility.

During the nine months ended March 31, 2023, cash used in financing activities was $2.6 million, primarily as a result of debt refinancing fees of $4.4 million, partially offset by a net $1.9 million borrowing under the Company's revolving credit facility.

During the three months ended September 30, 2024, cash used in financing activities was $6.5 million, primarily as a result of the repayment of long-term debt of $0.3 million and repayments of the revolving credit facility of $10.2 million, partially offset by $4.3 million of borrowings under the revolving credit facility.

During the three months ended September 30, 2023, cash provided by financing activities was $1.7 million, primarily as a result of debt refinancing fees of $0.2 million, partially offset by $2.0 million in borrowings 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 March 31, 2024 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 September 30, 2024 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, 2024 for additional information regarding our financing arrangements.

Debt to Capitalization Ratio

Our debt to capitalization ratio, calculated as the principal amount of debt, including paid-in-kind interest accrued, as a percentage of the principal amount of debt and shareholders' deficit at fiscal quarter end, was as follows:

Capitalization (1)

March 31, 2024 123.6 %

September 30, 2024 66.2 %

June 30, 2024 67.0 %

1 unchanged sentence

(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 March 31, 2024 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 nine months ended March 31, 2024, the Company did not issue shares under the prospectus supplement.

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 could offer and sell, from time to time, up to $50.0 million worth of its common stock in "at-the-market" offerings.

The Share Issuance Program expired on February 10, 2024.

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

Since that time and through March 31, 2024, 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 September 30, 2024, 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 nine months ended March 31, 2024, the Company did not repurchase any shares.

As of March 31, 2024, 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.

During the three months ended September 30, 2024, the Company did not repurchase any shares.

As of September 30, 2024, approximately 1.5 million shares have been cumulatively repurchased for $595.4 million, and $54.6 million remain 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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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;

our potential responsibility for Empire Education Group, Inc.'s liabilities;

laws and regulations could require us to modify current business practices and incur increased costs including increases in minimum wages;

changes in general economic environment;

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

compliance with listing requirements;

compliance with Nasdaq listing requirements;

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

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marketing efforts to drive traffic to our franchisees' salons;

the successful migration of our franchisees to the Zenoti salon technology platform;

our ability to maintain and enhance the value of our brands;

reliance on information technology systems;

reliance on legacy information technology systems;

reliance on external vendors;

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ability to generate sufficient cash flow to satisfy our debt service obligations;

compliance with covenants in our financing arrangement, access to the existing revolving credit facility, and acceleration of our obligation to repay our indebtedness;

the completion and/or results of the strategic alternatives review;

limited resources to invest in our business;

compliance with covenants in our financing arrangement;

premature termination of agreements with our franchisees;

financial performance of Empire Education Group, Inc.;

our ability to close the sale of our ownership stake in Empire Education Group, Inc.;

the continued ability of the Company to implement cost reduction initiatives and achieve expected cost savings;

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changes in tax exposure;

the ability to use U.S.

net operating loss carryforwards;

the ability of our Tax Preservation Plan to protect the future availability of the Company's tax assets;

potential litigation and other legal or regulatory proceedings;

future goodwill impairment or other factors not listed above.

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