What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-13 compared with 2026-02-05 · 62 added, 54 removed, 187 unchanged (38% of the section changed)

7 unchanged sentences

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

As of December 31, 2025, the Company franchised or owned 3,829 locations, primarily in North America.

As of March 31, 2026, the Company franchised or owned 3,770 locations, primarily in North America.

Our locations consisted of 3,497 franchised salons and 273 company-owned salons.

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

As of December 31, 2025, the Company had 1,732 employees of which 1,565 were acquired as part of the Alline acquisition.

As of March 31, 2026, the Company had 1,655 employees of which 1,497 were acquired as part of the Alline acquisition.

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 December 31, 2025.

As of December 31, 2025, and June 30, 2025, the franchise reporting unit had goodwill of $173.1 million and $173.2 million, respectively, and the company-owned reporting unit had goodwill of $10.3 million as of both December 31, 2025, and June 30, 2025.

An interim impairment analysis was not required in the three months ended March 31, 2026.

As of March 31, 2026, and June 30, 2025, the franchise reporting unit had goodwill of $172.8 million and $173.1 million, respectively, and the company-owned reporting unit had goodwill of $10.3 million as of both March 31, 2026, and June 30, 2025.

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, 2025, 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 six months ended December 31, 2025, a net 96 franchise salons and 16 company-owned salons have closed.

In the nine months ended March 31, 2026, a net 150 franchise salons and 21 company-owned salons have closed.

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

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

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

2026 2025 2026 2025

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

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

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

2026 2025 2026 2025 2026 2025 2026 2025

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

Three and Six Months Ended December 31, 2025, Compared with Three and Six Months Ended December 31, 2024

During the three and six months ended December 31, 2025, royalties decreased $1.2 million and $2.8 million, or 8.1% and 9.2%, respectively, primarily due to a decrease in franchise salon count caused by franchise salon closures and the Alline acquisition.

During the three and six months ended December 31, 2025, fees decreased $1.1 million and $1.8 million, or 37.9% and 34.0%, respectively, primarily due to terminated franchise fees related to the Alline acquisition in the prior year periods and salon closures.

Three and Nine Months Ended March 31, 2026, Compared with Three and Nine Months Ended March 31, 2025

During the three and nine months ended March 31, 2026, royalties decreased $0.3 million and $3.1 million, or 2.2% and 7.0%, respectively, primarily due to a decrease in franchise salon count caused by franchise salon closures.

The decrease for the nine months ended March 31, 2026, includes a greater impact from the Alline acquisition conversion of franchise salons to company-owned as these salons converted in December 2024.

During the three months ended March 31, 2026, fees decreased $0.5 million, or 20.8%, primarily due to salon closures.

During the nine months ended March 31, 2026, fees decreased $2.3 million, or 29.9%, as a result of salon closures in the current year, as well as terminated franchise fees related to the Alline acquisition in the prior year period.

Advertising Fund Contributions

During the three and six months ended December 31, 2025, advertising fund contributions decreased $0.2 million and $0.2 million, or 3.6% and 1.8%, respectively, primarily due to lower salon count.

During the three months ended March 31, 2026, advertising fund contributions remained flat compared to the prior year period.

During the nine months ended March 31, 2026, advertising fund contributions decreased $0.2 million, or 1.2%, primarily due to lower salon count.

Franchise Rental Income

During the three and six months ended December 31, 2025, franchise rental income decreased $2.8 million and $7.1 million, or 14.0% and 17.0%, respectively, primarily due to the decrease in franchise salon count caused by franchise salon closures and the Alline acquisition.

During the three and nine months ended March 31, 2026, franchise rental income decreased $3.9 million and $10.9 million, or 23.1% and 18.6%, respectively, primarily due to franchisees signing their own leases and the decrease in franchise salon count.

Company-Owned Salon Revenue

During the three and six months ended December 31, 2025, company-owned salon revenue increased $15.7 million and $35.2 million, respectively, from $3.5 million to $19.2 million and $4.2 million to $39.4 million, respectively, due to the increase in company-owned salon count because of the Alline acquisition.

During the three months ended March 31, 2026, company-owned salon revenue increased $0.1 million, or 0.5%, primarily due to the closure of underperforming salons.

During the nine months ended March 31, 2026, company-owned salon revenue increased $35.3 million, from $23.2 million to $58.5 million, due to the increase in company-owned salon count related to the Alline acquisition.

General and Administrative

General and administrative expense for the three and six months ended December 31, 2025, decreased $0.9 million and $3.6 million, or 8.0% and 14.3%, respectively, primarily due to lower broker fees, severance, and stock-based compensation expense in the current year period.

Rent expense increased $1.5 million and $3.6 million, or 71.4% and 112.5%, respectively, during the three and six months ended December 31, 2025, as a result of rent expense associated with the salons from the Alline acquisition.

General and administrative expense for the three and nine months ended March 31, 2026, decreased $1.2 million and $4.8 million, or 10.7% and 13.2%, respectively, primarily due to lower corporate compensation expenses in the current year period and lapping of education events, offset partially by increased company-owned general and administrative expense.

During the three months ended March 31, 2026, rent expense decreased $0.5 million, or 12.2%, primarily due to the closure of underperforming company-owned salons.

During the nine months ended March 31, 2026, rent expense increased $3.1 million, or 42.5%, primarily as a result of rent expense associated with the salons from the Alline acquisition.

Advertising Fund Expense

During the three and six months ended December 31, 2025, advertising fund expense decreased $0.2 million and $0.2 million, or 3.6% and 1.8%, respectively, primarily due to lower salon count.

During the three months ended March 31, 2026, advertising fund expense remained flat compared to the prior year period.

During the nine months ended March 31, 2026, advertising fund expense decreased $0.2 million, or 1.2%, primarily due to lower salon count.

Franchise Rent Expense

During the three and six months ended December 31, 2025, franchise rent expense decreased $2.8 million and $7.1 million, or 14.0% and 17.0%, respectively, primarily due to the decrease in franchise salon count caused by franchise salon closures and the Alline acquisition.

During the three and nine months ended March 31, 2026, franchise rent expense decreased $3.9 million and $10.9 million, or 23.1% and 18.6%, respectively, primarily due to franchisees signing their own leases and the decrease in franchise salon count.

Company-Owned Salon Expense

Company-owned salon expense, for the three and six months ended December 31, 2025, increased $11.8 million and $25.8 million from $1.9 million to $13.7 million and from $2.7 million to $28.5 million, respectively, primarily due to the Alline acquisition in the prior year period.

Company-owned salon expense, for the three and nine months ended March 31, 2026, increased $0.2 million and $26.0 million from $13.8 million to $14.0 million and from $16.5 million to $42.5 million, respectively, primarily due to the Alline acquisition in the prior year period.

Depreciation and Amortization

Depreciation and amortization for the three and six months ended December 31, 2025, increased $0.3 million and $0.7 million, or 60.0% and 77.8%, respectively, primarily due to depreciation expense associated with the assets acquired in the Alline acquisition.

Depreciation and amortization for the three and nine months ended March 31, 2026, increased $0.2 million and $0.9 million, or 28.6% and 56.3%, respectively, primarily due to depreciation expense associated with the assets acquired in the Alline acquisition.

Long-Lived Asset Impairment

In the three and six months ended December 31, 2025, the Company did not record any long-lived asset impairments.

In the three and six months ended December 31, 2024, the Company recorded long-lived asset impairment charges of $0 and $0.4 million, respectively, related to the right-of-use asset associated with the corporate office lease.

In the three and nine months ended March 31, 2026, the Company did not record any long-lived asset impairments.

In the nine months ended March 31, 2025, the Company recorded long-lived asset impairment charges of $0.4 million related to the right-of-use asset associated with the corporate office lease.

Interest Expense

The $0.5 million and $0.8 million increase in interest expense for the three and six months ended December 31, 2025, respectively, was primarily due to higher debt outstanding compared to the three and six months ended December 31, 2024.

Cash interest increased $0.2 million for the three and six months ended December 31, 2025, compared to the prior year periods.

For the three months ended March 31, 2026, interest expense decreased $0.1 million or 2.0%, primarily due to declining interest rates.

The $0.8 million increase in interest expense for the nine months ended March 31, 2026, was primarily due to higher debt outstanding, offset partially by declining rates.

Cash interest decreased $0.2 million for the three months ended March 31, 2026, and remained flat for the nine months ended March 31, 2026, compared to the prior year periods.

Gain on Earn-Out Liability

The $1.0 million gain on earn-out liability in the six months ended December 31, 2025, is due to a change in the estimated fair value expected to be paid in conjunction with the Alline acquisition.

The $1.0 million gain on earn-out liability in the nine months ended March 31, 2026, is due to a change in the estimated fair value expected to be paid in conjunction with the Alline acquisition.

Other, net primarily relates to corporate sublease income and foreign currency gains and losses.

Other, net increased $0.8 million and $0.4 million, respectively, in the three and six months ended December 31, 2025, primarily due to a higher unfavorable currency adjustment in the prior year periods.

Other, net decreased $0.1 million and increased $0.3 million, respectively, in the three and nine months ended March 31, 2026, primarily due to foreign currency gains and losses adjustments.

Income Tax (Expense) Benefit

During the three months ended December 31, 2025, the Company recognized a tax expense of $1.0 million, with a corresponding effective tax rate of 68.7%, as compared to recognizing a tax expense of $0.1 million, with a corresponding effective tax rate of 39.8% during the three months ended December 31, 2024.

During the six months ended December 31, 2025, the Company recognized a tax expense of $1.5 million, with a corresponding effective tax rate of 45.9%, as compared to recognizing a tax benefit of $0.1 million, with a corresponding effective tax rate of 5.3% during the six months ended December 31, 2024.

During the three months ended March 31, 2026, the Company recognized a tax expense of $0.2 million, with a corresponding effective tax rate of 17.7%, as compared to recognizing a small tax benefit with a corresponding effective tax rate of (0.4)% during the three months ended March 31, 2025.

During the nine months ended March 31, 2026, the Company recognized a tax expense of $1.7 million, with a corresponding effective tax rate of 40.0%, as compared to recognizing a tax benefit of $0.1 million, with a corresponding effective tax rate of 6.2% during the nine months ended March 31, 2025.

See Note 5 to the unaudited Condensed Consolidated Financial Statements.

Income from Discontinued Operations

Income from discontinued operations in the three and six months ended December 31, 2024, relates to proceeds received from the sale of OSP related to the number of salons migrating to the Zenoti platform.

Income from discontinued operations in the nine months ended March 31, 2025, relates to proceeds received 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 December 31, Six Months Ended December 31,

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

2026 2025 Decrease (1) 2026 2025 Decrease (1)

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

Three and Six Months Ended December 31, 2025, Compared with Three and Six Months Ended December 31, 2024

Three and Nine Months Ended March 31, 2026, Compared with Three and Nine Months Ended March 31, 2025

Franchise Revenue

Franchise revenue decreased $5.4 million and $11.8 million during the three and six months ended December 31, 2025.

The decrease in franchise revenue during the three and six months ended December 31, 2025, was primarily due to the decrease in franchise salon count caused by salon closures and the Alline acquisition..

Franchise revenue decreased $4.7 million and $16.5 million during the three and nine months ended March 31, 2026, primarily due to the decrease in franchise rental income due to franchisees signing their own leases, and the decrease in franchise salon count.

Franchise Adjusted EBITDA

During the three and six months ended December 31, 2025, franchise adjusted EBITDA totaled $6.2 million and $12.6 million, a decrease of $0.2 million and $1.8 million, respectively, compared to the three and six months ended December 31, 2024.

The decline in the three and six months ended December 31, 2025, was primarily due to a decrease in royalties and fees, offset partially by decreased general and administrative expenses.

During the three and nine months ended March 31, 2026, franchise adjusted EBITDA totaled $6.2 million and $18.9 million, a decrease of $0.1 million and $1.8 million, respectively, compared to the three and nine months ended March 31, 2025.

The decline in the three and nine months ended March 31, 2026, was primarily due to decreases in royalties and fees, offset partially by decreased general and administrative expenses.

Company-Owned Salons

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

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

2026 2025 Increase (Decrease) (1) 2026 2025 Increase (1)

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Company-owned salon revenue $ 19.1 $ 19.0 $ 0.1 $ 58.5 $ 23.2 $ 35.3

Company-owned same-store sales comps 9.6 % (6.8) % 5.1 % (6.7) %

Company-owned salon adjusted EBITDA $ 1.4 $ 0.8 $ 0.6 $ 4.8 $ 1.2 $ 3.6

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

Three and Six Months Ended December 31, 2025, Compared with Three and Six Months Ended December 31, 2024

Three and Nine Months Ended March 31, 2026, Compared with Three and Nine Months Ended March 31, 2025

Company-Owned Salon Revenue

Company-owned salon revenue increased $15.7 million and $35.2 million during the three and six months ended December 31, 2025, respectively, primarily due to the Alline acquisition.

During the three months ended March 31, 2026, company-owned salon revenue increased $0.1 million, primarily due to the closure of underperforming salons.

Company-owned salon revenue increased $35.3 million during the nine months ended March 31, 2026, primarily due to the impact of the Alline acquisition.

Company-Owned Salon Adjusted EBITDA

In the three and six months ended December 31, 2025, company-owned salon adjusted EBITDA improved $1.1 million and $2.9 million, respectively, primarily due to the salons acquired in the Alline acquisition generating income for the current year periods.

In the three and nine months ended March 31, 2026, company-owned salon adjusted EBITDA improved $0.6 million and $3.6 million, respectively, primarily due to income generated by the salons acquired in the Alline acquisition in the current year periods.

LIQUIDITY AND CAPITAL RESOURCES

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

The Company has a 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.

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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 December 31, 2025, cash and cash equivalents were $18.4 million, with $17.6 million and $0.8 million within the United States and Canada, respectively.

As of December 31, 2025, the Company's borrowing arrangements include a $116.7 million term loan, $8.3 million of paid-in-kind interest and a $25.0 million revolving credit facility that matures in June 2029.

As of December 31, 2025, the unused available credit under the revolving credit facility was $19.0 million, and total available liquidity, net of the $10.0 million minimum liquidity covenant, was $27.4 million.

As of March 31, 2026, cash and cash equivalents were $22.9 million, with $21.9 million and $1.0 million within the United States and Canada, respectively.

As of March 31, 2026, the Company's borrowing arrangements include a $116.4 million term loan, $9.7 million of paid-in-kind interest and a $25.0 million revolving credit facility that matures in June 2029.

As of March 31, 2026, the unused available credit under the revolving credit facility was $19.0 million, and total available liquidity, net of the $10.0 million minimum liquidity covenant, was $31.9 million.

See Note 9 to the unaudited Condensed Consolidated Financial Statements.

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Cash Requirements

The Company's most significant contractual cash requirements as of December 31, 2025, were lease commitments and interest payments.

The Company's most significant contractual cash requirements as of March 31, 2026, 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 six months ended December 31, 2025, cash provided by operating activities was $3.9 million compared to $0.8 million in the six months ended December 31, 2024, primarily due to higher operating income in the current year period.

During the nine months ended March 31, 2026, cash provided by operating activities was $8.9 million compared to $7.0 million in the nine months ended March 31, 2025, primarily due to higher operating income in the current year period, offset partially by cash accumulated in the ad fund in the prior year.

Cash Flows from Investing Activities

During the six months ended December 31, 2025, cash used in investing activities of $1.2 million was primarily due to capital expenditures.

During the six months ended December 31, 2024, cash used in investing activities of $10.6 million primarily related to the $18.6 million used in the Alline acquisition, partially offset by proceeds from the sale of OSP of $8.5 million.

During the nine months ended March 31, 2026, cash used in investing activities of $1.4 million was primarily due to capital expenditures.

During the nine months ended March 31, 2025, cash used in investing activities of $10.9 million was primarily related to the $18.6 million used in the Alline acquisition, partially offset by proceeds from the sale of OSP of $8.5 million.

Cash Flows from Financing Activities

During the six months ended December 31, 2025, cash used in financing activities was $1.4 million, primarily as a result of the repayment of long-term debt of $2.1 million, partially offset by proceeds from the issuance of common stock.

During the six months ended December 31, 2024, cash provided by financing activities was $7.7 million, primarily as a result of $15.0 million of proceeds from the issuance of long-term debt and $4.3 million of borrowings under the revolving credit facility partially offset by repayments of the revolving credit facility of $10.2 million.

During the nine months ended March 31, 2026, cash used in financing activities was $1.7 million, primarily as a result of the repayment of long-term debt of $2.4 million, partially offset by proceeds from the issuance of common stock.

During the nine months ended March 31, 2025, cash provided by financing activities was $7.2 million, primarily as a result of $15.0 million of proceeds from the issuance of long-term debt and $4.3 million of borrowings under the revolving credit facility partially offset by repayments of the revolving credit facility of $10.2 million.

Financing Arrangements

See Note 9 of the Notes to the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for the quarter ended December 31, 2025, 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, 2025, 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 March 31, 2026, 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, 2025, for additional information regarding our financing arrangements.

Debt to Capitalization Ratio

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Capitalization (1)

December 31, 2025 40.0 %

March 31, 2026 40.2 %

June 30, 2025 40.3 %

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

Since that time and through December 31, 2025, 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 March 31, 2026, 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 Company last purchased shares through this program in fiscal year 2020.

As of December 31, 2025, a total accumulated 1.5 million shares have been cumulatively repurchased for $595.4 million.

At December 31, 2025, $54.6 million remain outstanding under the approved stock repurchase program.

As of March 31, 2026, a total accumulated 1.5 million shares have been cumulatively repurchased for $595.4 million.

At March 31, 2026, $54.6 million remain outstanding under the approved stock repurchase program.

The Company does not expect to repurchase shares in fiscal year 2026.

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potential liabilities related to the employee retention credit received by Alline;

reliance on our management team and other key personnel, including a successful search for a new CEO;

reliance on our management team and other key personnel;

the ability to attract and retain key personnel;

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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 2. Management’s Discussion and Analysis