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Item 1. Financial Statements

2025-05-13 compared with 2025-02-12 · 154 added, 151 removed, 447 unchanged (41% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

As of December 31, 2024, and June 30, 2024

As of March 31, 2025, and June 30, 2024

(Dollars in thousands, except per share data)

2 unchanged sentences

Cash and cash equivalents (Note 7) $ 13,287 $ 10,066

$ 10,198 $ 10,066

Receivables, net 8,979 9,434

3 unchanged sentences

Goodwill (Note 1) 184,317 173,146

188,975 173,146

Other intangibles, net 5,906 2,427

Right of use asset (Note 8) 244,664 287,912

266,513 287,912

Other assets 18,263 21,297

5 unchanged sentences

Short-term lease liability (Note 8) 62,572 69,127

70,971 69,127

Total current liabilities 100,995 103,518

Long-term debt, net (Note 9) 112,010 99,545

111,532 99,545

Long-term lease liability (Note 8) 193,314 230,607

206,872 230,607

Other non-current liabilities 37,470 40,039

Other noncurrent liabilities 36,285 40,039

Total liabilities 442,604 473,709

Commitments and contingencies (Note 6)

Shareholders’ equity:

Common stock, $ 0.05 par value;

issued and outstanding, 2,435,979 and 2,279,948 common shares at December 31, 2024, and June 30, 2024, respectively

issued and outstanding 2,435,981 and 2,279,948 common shares at March 31, 2025, and June 30, 2024, respectively

Additional paid-in capital 74,878 69,660

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

For the Three and Six Months Ended December 31, 2024, and 2023

For the Three and Nine Months Ended March 31, 2025, and 2024

(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,

2025 2024 2025 2024

4 unchanged sentences

Franchise rental income (Note 8) 16,866 23,780 58,524 72,534

20,022 24,087 41,658 48,754

Company-owned salon revenue 18,953 1,324 23,188 5,039

4 unchanged sentences

Rent (Note 8) 4,058 1,766 7,271 4,257

2,149 1,394 3,213 2,491

Advertising fund expense 5,203 5,773 16,334 19,807

9 unchanged sentences

Income (loss) from operations before income taxes 249 ( 2,367 ) ( 1,444 ) ( 2,431 )

Income tax (expense) benefit ( 136 ) 107 89 255

Income tax benefit (expense) 1 ( 54 ) 90 201

Income (loss) from continuing operations 250 ( 2,421 ) ( 1,354 ) ( 2,230 )

Income from discontinued operations (Note 3) — 89 8,396 2,089

Net income $ 7,645 $ 997 $ 6,792 $ 2,191

Net income per share:

Net income (loss) $ 250 $ ( 2,332 ) $ 7,042 $ ( 141 )

Net income (loss) per share:

Income (loss) from continuing operations $ 0.10 $ ( 1.03 ) $ ( 0.58 ) $ ( 0.95 )

Income from discontinued operations 0.00 0.04 3.57 0.89

Net income per share (2) $ 3.29 $ 0.43 $ 2.90 $ 0.94

Net income (loss) per share, basic (2) $ 0.10 $ ( 1.00 ) $ 3.00 $ ( 0.06 )

Income (loss) from continuing operations $ 0.08 $ ( 1.03 ) $ ( 0.58 ) $ ( 0.95 )

Income from discontinued operations 0.00 0.04 3.57 0.89

Net income per share, diluted (2) $ 2.71 $ 0.43 $ 2.90 $ 0.93

Net income (loss) per share, diluted (2) $ 0.08 $ ( 1.00 ) $ 3.00 $ ( 0.06 )

Weighted average common and common equivalent shares outstanding:

2 unchanged sentences

_______________________________________________________________________________

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

(1) 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 .

3 unchanged sentences

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

For the Three and Six Months Ended December 31, 2024, and 2023

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

For the Three and Nine Months Ended March 31, 2025, and 2024

(Dollars in thousands)

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

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

2025 2024 2025 2024

Net income $ 7,645 $ 997 $ 6,792 $ 2,191

Net income (loss) $ 250 $ ( 2,332 ) $ 7,042 $ ( 141 )

Foreign currency translation adjustments 41 ( 230 ) ( 411 ) ( 227 )

Comprehensive income $ 7,041 $ 1,289 $ 6,340 $ 2,194

Comprehensive income (loss) $ 291 $ ( 2,562 ) $ 6,631 $ ( 368 )

_______________________________________________________________________________

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (Unaudited)

For the Three and Six Months Ended December 31, 2024, and 2023

For the Three and Nine Months Ended March 31, 2025, and 2024

(Dollars in thousands)

Three Months Ended December 31, 2024

Three Months Ended March 31, 2025

Common Stock Additional

Capital Accumulated Other Comprehensive Income Accumulated Deficit Total

Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total

Shares Amount

Balance, September 30, 2024 2,282,395 $ 114 $ 69,972 $ 8,736 $ ( 22,424 ) $ 56,398

Balance, December 31, 2024 2,435,981 $ 122 $ 73,243 $ 8,132 $ ( 14,779 ) $ 66,718

Net income — — — — 250 250

1 unchanged sentence

Stock-based compensation — — 383 — — 383

Net restricted stock activity 13,034 1 ( 52 ) — — ( 51 )

Common stock issued in connection with Alline acquisition (Note 13) 140,550 7 2,993 — — 3,000

Balance, December 31, 2024 2,435,979 $ 122 $ 73,243 $ 8,132 $ ( 14,779 ) $ 66,718

Three Months Ended December 31, 2023

Stock warrants issued in connection with debt — — 1,252 — — 1,252

Balance, March 31, 2025 2,435,981 $ 122 $ 74,878 $ 8,173 $ ( 14,529 ) $ 68,644

Three Months Ended March 31, 2024

Common Stock Additional

Capital Accumulated Other Comprehensive Income Accumulated Deficit Total

Capital Accumulated Other Comprehensive 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 )

Six Months Ended December 31, 2024

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

Nine Months Ended March 31, 2025

Common Stock Additional

Capital Accumulated Other Comprehensive Income Accumulated Deficit Total

Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total

Shares Amount

4 unchanged sentences

Net restricted stock activity 15,481 1 ( 75 ) — — ( 74 )

Common stock issued in connection with Alline acquisition (Note 13) 140,550 7 2,993 — — 3,000

Balance, December 31, 2024 2,435,979 $ 122 $ 73,243 $ 8,132 $ ( 14,779 ) $ 66,718

Six Months Ended December 31, 2023

Common stock issued in connection with Alline Acquisition (1) 140,552 7 2,993 — — 3,000

Stock warrants issued in connection with debt — — 1,252 — — 1,252

Balance, March 31, 2025 2,435,981 $ 122 $ 74,878 $ 8,173 $ ( 14,529 ) $ 68,644

Nine Months Ended March 31, 2024

Common Stock Additional

Capital Accumulated Other Comprehensive Income Accumulated Deficit Total

Capital Accumulated Other Comprehensive 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 )

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

_______________________________________________________________________________

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

For the Six Months Ended December 31, 2024, and 2023

For the Nine Months Ended March 31, 2025, and 2024

(Dollars in thousands)

Six Months Ended December 31,

Nine Months Ended March 31,

Cash flows provided by (used in) operating activities:

Net income $ 6,792 $ 2,191

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

Gain from sale of OSP (Note 3) ( 8,396 ) ( 2,000 )

Net income (loss) $ 7,042 $ ( 141 )

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

Gain from sale of OSP ( 8,396 ) ( 2,000 )

Depreciation and amortization 1,596 1,576

Long-lived asset impairment 352 170

Deferred income taxes ( 197 ) ( 50 )

Non-cash interest 3,846 1,956

Long lived asset impairment 352 170

Stock-based compensation 2,043 1,201

3 unchanged sentences

Net cash provided by (used in) operating activities 6,986 ( 7,130 )

Cash flows provided by (used in) investing activities:

Cash flows (used in) provided by investing activities:

Capital expenditures ( 769 ) ( 372 )

Proceeds from sale of OSP 8,463 2,000

Business acquisitions, net of cash acquired and certain obligations assumed ( 18,631 ) —

Proceeds from sale of OSP, net of fees 8,463 —

Net cash used in investing activities ( 10,612 ) ( 323 )

Net cash (used in) provided by investing activities ( 10,937 ) 1,628

Cash flows provided by (used in) financing activities:

Proceeds from issuance of long-term debt 15,000 —

Borrowings on revolving credit facility 4,326 4,000

Repayments of long-term debt ( 825 ) ( 2,499 )

Borrowings on revolving credit facility 4,326 4,000

Repayments of revolving credit facility ( 10,238 ) —

1 unchanged sentence

Taxes paid for shares withheld ( 75 ) ( 16 )

Net cash provided by financing activities 7,673 2,316

Net cash provided by (used in) financing activities 7,239 ( 1,067 )

Effect of exchange rate changes on cash and cash equivalents ( 92 ) ( 11 )

Decrease in cash, cash equivalents, and restricted cash ( 2,259 ) ( 4,814 )

Cash, cash equivalents and restricted cash:

Increase (decrease) in cash and cash equivalents, restricted cash and restricted cash equivalents 3,196 ( 6,580 )

Cash, cash equivalents and restricted cash and restricted cash equivalents:

Beginning of period 29,312 21,396

End of period $ 32,508 $ 14,816

Supplemental non-cash disclosure

Stock issued in connection with Alline Acquisition $ 3,000 $ —

_______________________________________________________________________________

(1) Changes in operating assets and liabilities exclude assets and liabilities sold and assets and liabilities acquired through business acquisitions.

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

2 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, 2024 and for the three and six months ended December 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 December 31, 2024 and its consolidated results of operations, comprehensive income, shareholders' equity (deficit) and cash flows for the interim periods.

The unaudited interim Condensed Consolidated Financial Statements of Regis Corporation (the Company) as of March 31, 2025 and for the three and nine months ended March 31, 2025, and 2024, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of March 31, 2025, and its consolidated results of operations, comprehensive income (loss), shareholders' equity (deficit) and cash flows for the interim periods.

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

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Refer to Note 13 to these unaudited Condensed Consolidated Financial Statements for additional information regarding the acquisition.

The Company’s financial results for the three and six months ended December 31, 2024, include the results of Alline subsequent to the December 19, 2024, acquisition date.

The Company’s financial results for the three and nine months ended March 31, 2025, include the results of Alline subsequent to the December 19, 2024, acquisition date.

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 December 31, 2024.

An interim impairment analysis was not required in the three or nine months ended March 31, 2025.

As further described in Note 13 of these unaudited Condensed Consolidated Financial Statements, the acquisition of Alline resulted in a preliminary recognition of approximately $ 12.1 million in goodwill, which was assigned to the company-owned operating segment.

As of December 31, 2024, and June 30, 2024, the franchise reporting unit had goodwill of $ 172.4 million and $ 173.1 million, respectively, and the company-owned reporting unit had $ 16.6 million of goodwill at December 31, 2024.

As of March 31, 2025, and June 30, 2024, the franchise reporting unit had goodwill of $ 172.2 million and $ 173.1 million, respectively, and the company-owned reporting unit had $ 12.1 million of goodwill at March 31, 2025.

Acquisition-Related Costs:

Acquisition-related costs of $ 1.2 million were incurred during the three and six months ended December 31, 2024, and primarily represent third-party consulting and legal expenses associated with the acquisition of Alline completed on December 19, 2024.

These costs were recorded within general and administrative expenses on the December 31, 2024, unaudited Condensed Consolidated Statement of Operations.

On December 31, 2024, the inventory balance of $ 3.3 million primarily consists of beauty products sold and used in serving our customers in our company-owned salons.

This amount is included in other current assets on the December 31, 2024, unaudited Condensed Consolidated Balance Sheet.

Acquisition-related costs of $ 0.2 million and $ 1.4 million were incurred during the three and nine months ended March 31, 2025, respectively, and primarily represent third-party consulting and legal expenses associated with the acquisition of Alline completed on December 19, 2024.

These costs were recorded within general and administrative expenses on the March 31, 2025, unaudited Condensed Consolidated Statements of Operations.

Other current assets includes an inventory balance of $ 2.9 million and $ 0.8 million as of March 31, 2025, and June 30, 2024, respectively, in the unaudited Condensed Consolidated Balance Sheets.

Inventory primarily consists of beauty products sold and used in serving our customers in our company-owned salons.

The preliminary inventory balance acquired in connection with the Alline Acquisition consists of shampoo, conditioner, hair care tools, and various other hair care and beauty products available for sale to salon customers and used in the servicing of our customers.

The inventory is valued at the lower of cost or net realizable value, with cost determined using a weighted average.

Reverse stock split:

On November 29, 2023, the Company effected a one-for-20 reverse stock split of its outstanding common stock, par value $ 0.05 per share.

As a result of the reverse stock split, every 20 shares of common stock issued and outstanding was converted into one share of common stock.

The reverse stock split affected all shareholders uniformly and did not alter any shareholder’s percentage interest in the Company’s equity.

No fractional shares were issued in connection with the reverse stock split.

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 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:

17 unchanged sentences

The Company is evaluating the standard and determining the extent of additional disclosures that will be required.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued the ASC 2024-03 "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-04) Disaggregation of Income Statement of Expenses" which requires additional disclosure of the nature of expenses included in the income statement in response to requests from investors for more information about an entity’s expenses.

The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as disclosures about selling expenses.

The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027.

The requirements will be applied prospectively with the option for retrospective application.

Early adoption is permitted.

The Company is currently evaluating the impact this new guidance will have on its financial statements and disclosures.

REVENUE RECOGNITION:

25 unchanged sentences

Total current deferred revenue $ 4,567 $ 5,104

Deferred franchise fees unopened salons $ 1,580 $ 1,783 Other non-current liabilities

Deferred franchise fees open salons 11,797 14,972 Other non-current liabilities

Deferred franchise fees unopened salons $ 1,530 $ 1,783 Other noncurrent liabilities

Deferred franchise fees open salons 10,532 14,972 Other noncurrent liabilities

Total non-current deferred revenue $ 12,062 $ 16,755

2 unchanged sentences

The Company monitors the financial condition of its franchisees and records provisions for estimated losses on receivables when it believes franchisees are unable to make their required payments based on factors such as delinquencies and aging trends.

The allowance for credit losses is the Company's best estimate of the amount of probable credit losses related to existing accounts and notes receivables.

The allowance for credit losses is the Company's best estimate of the amount of probable credit losses related to existing accounts and notes receivable.

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

Included in other assets is a receivable of $ 0.8 million, partially offset by a credit loss reserve of $ 0.2 million, related to this financing program.

The following table is a rollforward of the allowance for credit losses for the period:

Six Months Ended December 31,

The following table is a rollforward of the allowance for credit losses for the periods indicated:

Nine Months Ended March 31,

(Dollars in thousands)

11 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

________________________________________________________________________________________

(1) Broker fees of $ 0.9 million were written off in connection with the Alline acquisition for the three and six months ended December 31, 2024.

(1) In the nine months ended March 31, 2025, broker fees of $ 0.9 million were written off in connection with the Alline Acquisition.

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, 2024, and 2023 was $ 2.1 million and $ 1.6 million, respectively, and for the six months ended December 31, 2024, and 2023 was $ 3.7 million and $ 3.3 million, respectively.

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

Franchise fee revenue for the three months ended March 31, 2025, and 2024, was $ 1.8 million and $ 1.7 million, respectively, and for the nine months ended March 31, 2025, and 2024, was $ 5.5 million and $ 5.0 million, respectively.

Deferred franchise fees of $ 0.7 million were recognized in connection with the acquisition of Alline in the nine months ended March 31, 2025.

Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as of March 31, 2025, is as follows (dollars in thousands):

Remainder of 2025 $ 998

4 unchanged sentences

As a result of the sale, the Company classified the OSP business as discontinued operations in the financial statements for all periods presented.

During the three and six months ended December 31, 2024, the Company received $ 7.5 million and $ 8.5 million of proceeds related to the number of salons migrating to Soham's Zenoti product, respectively.

During the three and six months ended December 31, 2023, the Company received $ 2.0 million of proceeds that had been previously held back for general indemnity provisions.

During the three and nine months ended March 31, 2025, the Company received $ 0.0 million and $ 8.5 million, respectively, of proceeds related to the number of salons migrating to Soham's Zenoti product.

During the nine months ended March 31, 2024, the Company received $ 2.0 million of proceeds that had been previously held back for general indemnity provisions.

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

Cash used in investing activities for the six months ended December 31, 2024, includes $ 8.5 million of cash from discontinued operations .

Cash (used in) provided by investing activities for the nine months ended March 31, 2025, and 2024, includes $ 8.5 million and $ 2.0 million, respectively, of cash from discontinued operations.

SHAREHOLDERS' EQUITY (DEFICIT):

Stock-Based Employee Compensation:

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

Three Months Ended December 31, 2024 Six Months Ended December 31, 2024

During the three and nine months ended March 31, 2025, the Company granted restricted stock units as follows:

Three Months Ended March 31, 2025 Nine Months Ended March 31, 2025

Restricted stock units (RSUs) 3,002 81,802

The RSUs granted during the three and six months ended December 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 $ 0.2 million and $ 0.3 million, and $ 1.6 million and $ 0.9 million for the three and six months ended December 31, 2024, and 2023, respectively, were recorded within general and administrative expense on the unaudited Condensed Consolidated Statements of Operations.

The RSUs granted during the three and nine months ended March 31, 2025, vest in equal amounts over a one or three-year period subsequent to the grant date.

Total compensation cost for stock-based payment arrangements totaling $ 0.4 million and $ 0.3 million, and $ 2.0 million and $ 1.2 million for the three and nine months ended March 31, 2025, and 2024, respectively, were recorded within general and administrative expense on the unaudited Condensed Consolidated Statements of Operations.

Alline Acquisition:

5 unchanged sentences

The warrants may also be exercised on a cashless basis under certain circumstances under the agreement.

In addition, in connection with the issuance of the warrants, the Company granted an exemption in favor of each holder pursuant to Section 36 of the Tax Benefits Plan, dated January 29, 2024, among the Company and Equiniti Trust Company, LLC, such that neither holder was deemed to be an Acquiring Person solely in connection with (i) the issuance of the warrants nor (ii) the acquisition of beneficial ownership of securities of the Company pursuant to the exercise of the warrants.

In addition, in connection with the issuance of the warrants, the Company granted an exemption in favor of each holder pursuant to Section 36 of the Plan, dated January 29, 2024, among the Company and Equiniti Trust Company, LLC, such that neither holder was deemed to be an Acquiring Person solely in connection with (i) the issuance of the warrants nor (ii) the acquisition of beneficial ownership of securities of the Company pursuant to the exercise of the warrants.

In December 2024, the Company amended the 2024 Credit Agreement.

The Company issued additional warrants to affiliates of TCW Asset Management Company LLC and Asilia Investments.

In connection with this amendment, the warrant holders can purchase up to an aggregate 64,372 shares of Common Stock, at an exercise price equal to $ 23.86 per share.

The warrants are exercisable for a seven-year period beginning December 19, 2024 (the "Issue Date”).

The warrants may also be exercised on a cashless basis if, at the time of exercise, there is no effective registration statement registering, or the prospectus therein is not available for, the issuance of the shares of common stock underlying the warrants.

Prior to the second anniversary of the Issue Date, the Company may call for cancellation up to an aggregate 32,186 shares of common stock underlying the warrants for consideration equal to $ 51.13 per share;

provided necessary requirements are met.

These warrants were valued at $ 1.3 million at March 31, 2025.

The warrants and the shares of common stock issuable upon the exercise of such warrants have not been registered under the Securities Act of 1933, as amended (the Securities Act), and may not be sold absent registration or an applicable exemption from the registration requirements of the Securities Act.

Based in part upon the representations of each holder in each warrant, the offering and sale of each warrant is exempt from registration under Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act.

The warrants are valued at $ 1.5 million using a relative fair value method and were accounted for through additional paid-in capital.

The combined value of these warrants was valued at $ 2.8 million using a relative fair value method and accounted for through additional paid-in capital.

Further, the related financing fees incurred as a result of warrant issuance is recorded through a contra-equity account and amounts to $ 0.2 million.

1 unchanged sentence

provided, that the volume weighted average price on the trading day immediately preceding the date the Company delivers a written call notice to a holder exceeds $ 20.00 .

As of December 31, 2024, the Company has no intentions of exercising this call provision.

As of March 31, 2025, the Company has no intention of exercising this call provision.

The Company will reassess this provision on a quarterly basis.

INCOME TAXES:

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

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

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

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

2025 2024 2025 2024

(Dollars in thousands)

Income tax (expense) benefit $ ( 136 ) $ 107 $ 89 $ 255

Income tax benefit (expense) $ 1 $ ( 54 ) $ 90 $ 201

Effective tax rate ( 0.4 ) % ( 2.3 ) % 6.2 % 8.3 %

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

The recorded tax provision and effective tax rate for the three and nine months ended March 31, 2025, and 2024, were different than what would normally be expected, primarily due to the impact of the deferred tax valuation allowance.

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.

22 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,

2025 2024 2025 2024

1 unchanged sentence

Office rent (1) $ 737 $ 756 $ 2,164 $ 2,330

Lease termination expense 27 174 79 161

Lease termination expense (benefit) 70 ( 39 ) 149 122

Lease liability benefit (2) ( 81 ) ( 59 ) ( 209 ) ( 281 )

3 unchanged sentences

_______________________________________________________________________________

(1) Rental income associated with the sublease of corporate office space is recorded in other income and was $ 0.3 million and $ 0.6 million for the three and six months ended December 31, 2024, respectively.

(2) Upon termination of previously impaired leases, the Company derecognizes the corresponding ROU assets and lease liabilities, which results in a net gain.

(1) Rental income associated with the sublease of corporate office space is recorded in other income and was $ 0.3 million and $ 0.9 million for the three and nine months ended March 31, 2025, respectively.

(2) Upon termination of previously impaired leases, the Company derecognizes the corresponding right of use (ROU) assets and lease liabilities, which results in a net gain.

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.

(3) Franchise salon rent is a benefit in the three and six months ended December 31, 2023, due to settlements with landlords for less than previously accrued.

(4) Note that this amount includes 12 days of rent related to the Alline salons acquired during the quarter.

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

(4) Includes rent related to the Alline salons acquired December 2024.

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, 2024, and 2023, franchise rental income and franchise rent expense were $ 20.0 million and $ 24.1 million, and $ 41.7 million and $ 48.8 million, respectively.

For the three and nine months ended March 31, 2025, and 2024, franchise rental income and franchise rent expense were $ 16.9 million and $ 23.8 million, and $ 58.5 million and $ 72.5 million, respectively.

These leases generally have lease terms of approximately five years .

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The lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date, including one lease term option when the lease is expected to be renewed.

The ROU asset is initially and subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, less accrued lease payments and unamortized lease incentives received, if any.

The ROU asset is initially and subsequently measured throughout the expected lease term at the carrying amount of the lease liability, plus initial direct costs, less accrued lease payments and unamortized lease incentives received, if any.

Expense for lease payments is recognized on a straight-line basis over the lease term, including the lease renewal option when the lease is expected to be renewed.

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

The weighted average remaining lease term was 4.92 and 5.05 years, and the weighted average discount rate was 5.47 % and 5.13 % for all salon operating leases as of December 31, 2024, and June 30, 2024, respectively.

As of December 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):

The weighted average remaining lease term was 4.82 years and 5.05 years, and the weighted average discount rate was 5.93 % and 5.13 % for all salon operating leases as of March 31, 2025, and June 30, 2024, respectively.

As of March 31, 2025, 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

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The Company's debt consists of the following:

Three Months Ended December 31, 2024 Fiscal Year Balance at December 31, 2024 Balance at

Three Months Ended March 31, 2025 Fiscal Year Balance at March 31, 2025 Balance at

June 30, 2024

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The Company incurred $ 14.2 million of refinancing fees (including $ 3.9 million of Original Issue Discount fee) that will be amortized on a straight-line basis over the term of the agreement.

As of December 31, 2024, the Company had outstanding standby letters of credit under the revolving credit facility of $ 9.3 million, primarily related to the Company's self-insurance program.

As of December 31, 2024, total available liquidity and available credit under the $ 25.0 million revolving credit facility, as defined by the 2024 Credit Agreement Amendment, were $ 15.9 million and $ 15.7 million, respectively.

As of March 31, 2025, the Company had outstanding standby letters of credit under the revolving credit facility of $ 9.3 million, primarily related to the Company's self-insurance program.

As of March 31, 2025, total available liquidity and available credit under the $ 25.0 million revolving credit facility, as defined by the 2024 Credit Agreement Amendment, were $ 19.0 million and $ 15.7 million, respectively.

The interest rate on the 2024 Credit Agreement is based on the secured overnight financing rate (SOFR) plus margin.

The margin applicable to the 2024 Credit Agreement is subject to change based on the Company's total leverage ratio, remeasured annually on a predetermined date set by the lender.

When the Company's total leverage ratio is greater than or equal to 3.75 to 1.00, the margin applicable to the new term loan and revolving credit facility is 9.00 %.

When the Company's total leverage ratio is greater than or equal to 3.75 to 1.00, the margin applicable to the term loan and revolving credit facility is 9.00 %.

If the Company's leverage ratio is less than 3.75 to 1.00, the margin rate is 8.50 %.

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In connection with the 2024 Credit Agreement, the Company issued detachable stock warrants to the debt lenders.

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

The Company's assets serve as collateral to the new credit facility.

The Company was in compliance with its covenants and other requirements of the financing arrangements as of March 31, 2025.

The Company's assets serve as collateral to the credit facility.

The agreement includes scheduled payments totaling $ 1.1 million in fiscal years 2025 and 2026, payable quarterly.

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On December 19, 2024, the Company amended the 2024 Credit Agreement (the 2024 Credit Agreement Amendment) for an additional $ 15.0 million in long-term debt in the form of a term loan.

In connection with this 2024 Credit Agreement Amendment, the Company issued warrants as discussed in Note 4.

The term loan was provided on the same terms as the original term loan, with respect to maturity and interest rate margins.

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The Company incurred $ 0.4 million of Original Issue Discount fee that will be amortized on a straight-line basis over the term of the agreement.

As of December 31, 2024, the Company had cash and cash equivalents of $ 10.2 million and current liabilities of $ 107.5 million.

As of March 31, 2025, the Company had cash and cash equivalents of $ 13.3 million and current liabilities of $ 101.0 million.

FAIR VALUE MEASUREMENTS:

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Addition for acquisition 3,000

Earn-out liability at December 31, 2024

Earn-out liability at March 31, 2025

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of December 31, 2024, and June 30, 2024, 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.

The Company recorded the estimated fair value of the contingent consideration liability in the unaudited Condensed Consolidated Balance Sheets within accrued expenses and other non-current liabilities, totaling $ 3.0 million.

The earn-out liability is adjusted at fair value at each reporting date until settled, and changes in fair value will be reported in our unaudited Condensed Consolidated Statements of Operations.

The following provides information regarding fair value measurements for our remaining contingent earn-out liability as of December 31, 2024, according to the three-level fair value hierarchy:

As of March 31, 2025, and June 30, 2024, 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.

The Company recorded the estimated fair value of the contingent consideration liability assumed with the acquisition of Alline on a preliminary basis.

The estimated fair value of the contingent consideration liability is included in the unaudited Condensed Consolidated Balance Sheets within accrued expenses and other noncurrent liabilities, totaling $ 3.0 million at March 31, 2025.

The earn-out liability is adjusted at fair value quarterly until settled, and changes in fair value will be reported in our unaudited Condensed Consolidated Statements of Operations.

The following provides information regarding fair value measurements for our remaining contingent earn-out liability as of March 31, 2025, according to the three-level fair value hierarchy:

(Dollars in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs

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EARNINGS PER SHARE:

The Company's basic earnings per share is calculated as net income 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 divided by weighted average common shares and common share equivalents outstanding, which includes shares issued under the Company's stock-based compensation plans and warrants issued in connection with the Company's credit agreement.

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), and RSUs.

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 include shares issued under the Company's stock-based compensation plans and warrants issued in connection with the Company's credit agreement.

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 193,186 and 219,945 , and 191,964 and 215,656 of stock-based awards during the three and six months ended December 31, 2024, and 2023, respectively, as they were not dilutive under the treasury stock method.

The computation of weighted average shares outstanding, assuming dilution, excluded stock-based awards as detailed below, as they were not dilutive under the treasury stock method.

The following table sets forth the presentation of shares outstanding used in the calculation of basic and diluted earnings per share (EPS):

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

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

2025 2024 2025 2024

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Denominator for diluted EPS - weighted average common shares and dilutive potential common shares 3,002 2,342 2,350 2,338

Options excluded from EPS calculation - anti-dilutive 193 220 192 216

Stock-based awards excluded from EPS calculation - anti-dilutive 188 219 191 217

SEGMENT INFORMATION:

Segment information is prepared on the same basis that the chief operating decision maker (CODM) reviews financial information for operational decision-making purposes.

Segment information is prepared on the same basis that the CODM reviews financial information for operational decision-making purposes.

The Company's reportable operating segments consisted of the following salons:

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Total franchise and company-owned salons

_______________________________________________________________________________

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

(2) Salon counts as of December 31, 2024, include the 314 salons acquired as part of the Alline acquisition.

See Note 13 to these unaudited Condensed Consolidated Financial Statements for further details over the transaction.

(2) Salon counts as of March 31, 2025, include salons acquired as part of the Alline Acquisition.

See Note 13 to these unaudited Condensed Consolidated Financial Statements for further details on the transaction.

Financial information concerning the Company's reportable operating segments is shown in the table below.

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They are based on how management views the business, makes financial, operating and planning decisions and evaluates the Company's ongoing performance and are not attributable to either segment.

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

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

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

2025 2024 2025 2024

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Interest expense ( 5,087 ) ( 6,153 ) ( 14,781 ) ( 18,529 )

Income tax (expense) benefit ( 136 ) 107 89 255

Income tax benefit (expense) 1 ( 54 ) 90 201

Income from discontinued operations — 89 8,396 2,089

Total net income (2) $ 7,645 $ 997 $ 6,792 $ 2,191

_______________________________________________________________________________

(1) Amounts from prior periods may not equal those per the prior period financials due to rounding from updating formulas for consistency purposes.

(2) Unallocated expenses for the three and six months ended December 31, 2024, include severance expenses of $ 0 and $ 2.3 million, respectively.

Total net income (loss) (2) $ 250 $ ( 2,332 ) $ 7,042 $ ( 141 )

(1) Unallocated expenses for the three and nine months ended March 31, 2025, include severance expenses of $ 0.4 million and $ 2.7 million, respectively.

(2) Total is a recalculation;

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The transaction provides Regis with a turn-key operating infrastructure and gets the Company closer to salon operations alongside franchisees and the salon portfolio provides a testing ground for brand and operational initiatives.

The transaction terminated the existing franchise arrangements between Regis and Alline, which resulted in the Company recognizing a loss of $ 0.2 million upon settlement, which is included in the unaudited Condensed Consolidated Financial Statements as a component of operating income for the three and six months ended December 31, 2024.

The acquisition was accounted for as a business combination with the purchase price allocated on a preliminary basis using information available as of December 31, 2024.

Assets acquired and liabilities assumed were recorded at estimated fair values based on management’s estimates, available information, and supportable assumptions that management considered reasonable.

The purchase price and related allocation are preliminary and will likely be revised as a result of adjustments to the purchase price, additional information obtained and revisions to the provisional estimates of fair value, including, but not limited to, the completion of independent appraisals and valuations related to property and equipment, intangible assets, right of use assets and corresponding lease obligations, and the contingent consideration arrangement.

The final valuations of assets acquired and liabilities assumed may be materially different from the estimated values shown below.

The fair value of total consideration transferred by the Company is $ 24.6 million, as detailed below.

As of March 31, 2025, the purchase price and related allocation have been revised as a result of additional information obtained and revisions to the provisional estimates of fair value, including, but not limited to, the completion of independent appraisals and valuations related to property and equipment, intangible assets, right of use assets and corresponding lease obligations.

Management is continuing to analyze the data and as such, the final valuations of assets acquired and liabilities assumed may be materially different from the estimated values shown below.

The preliminary fair value of total consideration transferred by the Company upon acquisition is $ 24.6 million, as detailed below.

Consideration (Dollars in thousands)

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The potential undiscounted amount of all future payments that Regis could be required to make under the contingent consideration arrangement is between $ 0 and $ 3.0 million.

Regis recognized a provisional fair value of $ 3.0 million on the acquisition date and as of December 31, 2024, which is included in accrued expenses ($ 1.0 million) and other non-current liabilities ($ 2.0 million) in the unaudited Condensed Consolidated Balance Sheet.

Regis recognized a provisional fair value of $ 3.0 million on the acquisition date and as of March 31, 2025, which is included in accrued expenses ($ 1.0 million) and other noncurrent liabilities ($ 2.0 million) in the unaudited Condensed Consolidated Balance Sheets.

The fair value of the contingent consideration arrangement is provisional while the Company completes its fair value assessment.

4-Wall EBITDA is defined as EBITDA excluding general and administrative expenses.

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of the acquisition date:

4-Wall EBITDA is defined as earnings before interest, tax, depreciation and amortization and excluding corporate general and administrative expenses for acquired salons.

The following table summarizes the preliminary estimated fair value of the assets acquired and liabilities assumed as of the acquisition date:

(Dollars in thousands)

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Goodwill (1) 12,574

Intangible assets (2) 3,780

Right of use assets 7,292

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Fair value of total consideration $ 24,631

_______________________________________________________________________________

(1) Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

(1) Preliminary Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

Specifically, the goodwill that will be recorded as part of the acquisition of Alline includes the following:

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Goodwill is not amortized and is deductible for tax purposes.

All of the goodwill related to the acquisition of Alline is related to our company-owned operating segment.

The Company has not yet obtained all the information required to finalize the valuations of the assets acquired and liabilities assumed, primarily because of the proximity of the acquisition date to the balance sheet date of December 31, 2024.

All the goodwill related to the acquisition of Alline is related to our company-owned operating segment.

The Company has not yet obtained all the information required to finalize the valuations of the assets acquired and liabilities assumed.

As such, we expect that goodwill could change from the amount noted above.

The Company incurred $ 1.2 million of acquisition related costs which are included in general and administrative expense in Regis’s unaudited Condensed Consolidated Statement of Operations for the periods ended December 31, 2024.

(2) Intangible assets includes $ 2.4 million related to the preliminary fair value of reacquired rights and $ 1.4 million related to the preliminary fair value of favorable leasehold interests, net.

The reacquired rights were preliminarily valued using a form of the income approach where the asset's value is determined by its ability to generate future cash flows by isolating and discounting the cash flows attributable to the asset.

The Company assumed a four-year life based on the weighted average remaining contract term, assuming no renewals.

Upon acquisition, the Company assumed lease agreements with lease payments fixed at a rate below the current market rate.

As a result, a preliminary favorable lease asset of $ 1.4 million has been recorded on the balance sheet.

This asset represents the benefit the Company receives from having lease payments below market and will be amortized to rent expense on a straight-line basis over the remaining terms of the respective leases.

The Company incurred $ 0.2 million and $ 1.4 million of acquisition related costs which are included in general and administrative expense in Regis’s unaudited Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2025, respectively.

The following table provides revenues and operating income from Alline that are included in our unaudited Condensed Consolidated Financial Statements:

Three Months Ended December 31, 2024 Six Months Ended December 31, 2024

Three Months Ended March 31, 2025 Nine Months Ended March 31, 2025

Total revenues $ 18,290 $ 20,993

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The following table presents pro forma information as if the Alline Acquisition had occurred on July 1, 2023:

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

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

2025 2024 2025 2024

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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