What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-04 compared with 2023-02-02 · 109 added, 76 removed, 104 unchanged (64% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section discusses management’s view of the financial condition, results of operations and cash flows of Sally Beauty.

This section discusses management’s view of the financial condition, results of operations and cash flows of Sally Beauty for the periods covered by this Quarterly Report.

This section should be read in conjunction with the information contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022, including the Risk Factors sections therein, and information contained elsewhere in this Quarterly Report, including the condensed consolidated interim financial statements and notes to those financial statements.

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Enhancing our customer centricity

During the quarter, BSG launched a new strategic partnership with Salon HQ.

Salon HQ is a customizable digital storefront platform that gives stylists the ability to curate a product selection from thousands of BSG merchandise choices and enables their clients to purchase directly from their shops without the stylists having to finance and carry inventory.

In addition, SBS has identified the locations for its initial Studio by Sally pilot stores that we expect to open this fiscal year.

The Studio by Sally pilot store program will have a digital-first focus, from digital check-in to digital education throughout the store and beyond, including personalized appointments at our in-store salons with licensed stylists who will train and educate consumers on how to color their own hair and achieve their desired results.

During the fiscal year, SBS launched its first Studio by Sally pilot store in Denton, Texas and has identified other locations for its additional pilot stores expected to open this fiscal year.

We believe that we will be able to expand the Studio by Sally concept to 100 locations throughout the U.S.

over the next three to four fiscal years if successful.

Additionally, earlier this fiscal year, BSG launched a new strategic partnership with Salon HQ to help its professional stylist customers grow their business.

Salon HQ is a customizable digital storefront platform that gives stylists the ability to curate a product selection from thousands of BSG merchandise choices, and enables their clients to purchase directly from their shops without the stylists having to finance and carry inventory.

Growing high margin owned brands at Sally Beauty and amplifying innovation

We believe growing our SBS owned brands, through innovation and marketing, will provide improved margins, strengthen our long-term relationships with existing customers and help attract new customers.

During the quarter, we invested more into marketing of our owned-brands and launched the first phase of our new owned-branded hair repair product line – bondbar.

During the fiscal year, we have invested more into marketing of our owned brands and launched the first and second phases of our new owned branded vegan hair repair product line – bondbar – that’s SLS/SLES-free, paraben-free, phthalate-free and cruelty-free.

These initiatives delivered an increase in our owned brands sales penetration, resulting in increased SBS profit margins.

Furthermore, we look forward to providing salons and stylists with new innovations from our BSG vendors as they are launched over the next two fiscal quarters.

Furthermore during the second quarter, some of our BSG vendors began launching new and exciting product lines, including Paul Mitchell’s new permanent hair color line for gray coverage – the color 10 – that is a formulated using sustainably sourced beeswax, and Wella’s new hair care line – Ultimate Repair – which helps nourish and repair damaged hair.

We are thrilled to be able to provide these new innovative products to salons and stylists, and look forward to providing more of our BSG vendor’s new innovative products in our third quarter.

Increasing the efficiency of our operations and optimizing our capabilities

In the fourth quarter of fiscal year 2022, we announced our plan to close 330 SBS stores, 35 BSG stores and two BSG distribution centers.

Based on our strategic evaluation, we believe that we will able to recapture demand of closed stores in other nearby store locations and improve overall profitability.

During the quarter, we completed the closure of our two BSG distributions centers and the majority of our planned store closures.

Additionally, we re-optimized our store supply chain network based on our new store fleet.

As of December 31, 2022, we have closed 327 SBS stores and 14 BSG stores as part of the Plan and are currently meeting our sales recapture expectations.

At the end of fiscal year 2022, we announced our plan to close 330 SBS stores, 35 BSG stores and two BSG distribution centers.

Based on our strategic evaluation, we believe that we will able to recapture approximately half of the demand of closed stores in other nearby store locations and improve overall profitability.

During the first quarter, we completed the closure of our two BSG distributions centers and the majority of our planned store closures.

Additionally, we have re-optimized our store supply chain network based on our new store fleet.

As of March 31, 2023, we have closed 329 SBS stores and 28 BSG stores as part of the Plan and are currently meeting our sales recapture expectations.

See Note 11, Restructuring , in Item 1 of this quarterly report for more information on the Plan.

Financial Summary for the Three Months Ended December 31, 2022

Consolidated net sales for the three months ended December 31, 2022, decreased $23.2 million, or 2.4%, to $957.1 million, compared to the three months ended December 31, 2021.

Financial Summary for the Three Months Ended March 31, 2023

Consolidated net sales for the three months ended March 31, 2023, increased $7.3 million, or 0.8%, to $918.7 million, compared to the three months ended March 31, 2022.

Consolidated net sales included a negative impact from changes in foreign currency exchange rates of $7.0 million;

Consolidated comparable sales increased 1.1% for the three months ended December 31, 2022, compared to the three months ended December 31, 2021;

Consolidated gross profit for the three months ended December 31, 2022, decreased $11.6 million, or 2.3%, to $488.6 million, compared to the three months ended December 31, 2021.

Gross margin was unchanged at 51.0% for the three months ended December 31, 2022, compared to the three months ended December 31, 2021;

Consolidated operating earnings for the three months ended December 31, 2022 , decreased $26.2 million , or 23.2% , to $ 86.6 million , compared to the three months ended December 31, 2021 .

Operating margin decreased 250 bps to 9.0% for the three months ended December 31, 2022 , compared to the three months ended December 31, 2021 ;

For the three months ended December 31, 2022, our consolidated net earnings decreased $18.5 million, or 26.9%, to $50.3 million, compared to the three months ended December 31, 2021;

For the three months ended December 31, 2022, our diluted earnings per share was $0.46 compared to $0.60 for the three months ended December 31, 2021;

Cash provided by operations was $55.0 million for the three months ended December 31, 2022, compared to cash used by operations of $5.7 million for the three months ended December 31, 2021.

Consolidated comparable sales increased 5.7% for the three months ended March 31, 2023;

Consolidated gross profit for the three months ended March 31, 2023, increased $3.0 million, or 0.6%, to $468.3 million, compared to the three months ended March 31, 2022.

Consolidated gross margin decreased 10 bps to 51.0% for the three months ended March 31, 2023, compared to the three months ended March 31, 2022;

Consolidated operating earnings for the three months ended March 31, 2023, decreased $15.1 million, or 17.4%, to $71.4 million, compared to the three months ended March 31, 2022.

Operating margin decreased 170 bps to 7.8% for the three months ended March 31, 2023, compared to the three months ended March 31, 2022;

For the three months ended March 31, 2023, our consolidated net earnings decreased $5.9 million, or 12.7%, to $40.9 million, compared to the three months ended March 31, 2022;

For the three months ended March 31, 2023, our diluted earnings per share was $0.37 compared to $0.42 for the three months ended March 31, 2022;

Cash provided by operations was $24.7 million for the three months ended March 31, 2023, compared to $2.9 million for the three months ended March 31, 2022;

On February 28, 2023, we entered into a seven-year term loan B facility agreement, with an aggregate principal amount equal to $400.0 million, and used the funds to repay our previously existing term loan B facility.

Trends Impacting Our Business

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Additionally, inflationary pressures have impacted wages, especially among retail and hourly employees, as we have experienced an increase in our labor costs in order to attract and retain associates.

During the current quarter, these headwinds have resulted in lower traffic and conversion in our business and increases in certain operating costs.

During the current year, these headwinds have resulted in lower traffic and conversion in our business and increases in certain operating costs.

We continue to monitor these challenges and implement measures to help mitigate their impacts, including managing our inventory levels to reduce out-of-stock items, adjusting our promotional activities, optimizing our store base and expanding our partnerships with delivery service providers.

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In turn, these increases have raised the cost of debt borrowings.

We currently have $471.1 million in variable rate debt outstanding, of which $406.1 million is hedged with interest rate caps to help mitigate the impact of raising rates.

Future increases in the federal funds effective rate could have a material adverse impact to our cost of borrowing, including any future changes in our debt structure.

Impact of COVID-19 on Our Business

While we have seen signs of stabilization from the impacts of the COVID-19 virus, we cannot reasonably predict the effects of new variants or expect improving trends to continue.

Therefore, our future performance may partially depend on impacts of COVID-19, such as decreased customer in-store traffic, temporary store closures, and labor and supply chain disruptions.

Refer to Item 1A.

“Risk Factors” in our Form 10-K for the fiscal year ended September 30, 2022, for further discussion on the risks and uncertainties created by COVID-19.

We currently have $434.0 million in variable rate debt outstanding and future increases in the federal funds effective rate could have a material adverse impact to our cost of borrowing, including any future changes in our debt structure.

Comparable Sales

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Three Months Ended

Six Months Ended

Increase (Decrease)

Gross profit:

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Unallocated expenses consist of corporate and shared costs and are included in selling, general and administrative expenses in our condensed consolidated statements of earnings.

Our December 31, 2022 store count was impacted by the closure of 327 SBS store and 14 BSG store from the Plan.

Our March 31, 2023 store count was impacted by store closure in connection with the Plan.

See Note 11, Restructuring , in Item 1 of this quarterly report for more information on the Plan.

Results of Operations

The Three Months Ended December 31, 2022, compared to the Three Months Ended December 31, 2021

The decrease in net sales for SBS was primarily driven by the following (in thousands):

The Three Months Ended March 31, 2023, compared to the Three Months Ended March 31, 2022

The increase in net sales for SBS was primarily driven by the following (in thousands):

Comparable sales

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Foreign currency exchange

Includes closed stores, including stores closed under the Plan, net of stores opened for less than 14 months

The increase in SBS’s comparable sales was a result of a growth in our average unit retail, primarily from inflationary impacts and pricing leverage, and an increase in transactions, driven by recapturing approximately half of the sales from stores closed in connection with the Plan and the lapping of the prior year’s impact from Omicron and supply chain challenges .

The increase in net sales for BSG was primarily driven by the following (in thousands):

Comparable sales

Sales outside comparable sales (a)

Foreign currency exchange

Includes stores opened for less than 14 months, net of stores closures, including stores closed under the Plan

The decrease in SBS’s net sales was driven by the negative impact from foreign exchange rates and the impact of store closures in the prior twelve months, including stores closed under the Plan, partially offset by an increase in our comparable sales.

SBS’s comparable sales increase was driven by a growth in average ticket, primarily from inflationary impacts and pricing leverage, and partially offset by fewer transactions.

BSG’s comparable sales reflected the lapping of the prior year’s impact from supply challenges and Omicron, partially offset by the impacts of the current economic environment on stylist shopping behaviors .

These impacts resulted in an increase in our average unit retail and fewer units per transaction.

SBS’s gross profit increased for the three months ended March 31, 2023, as a result of an increase in net sales and a higher gross margin.

SBS’s gross margin grew as a result of pricing leverage, increased penetration of our owned brand products and adjustments to our expected obsolescence reserve related to the Plan.

BSG’s gross profit decreased for the three months ended March 31, 2023, as a result of a lower gross margin, partially offset by an increase in net sales.

BSG’s gross margin decline was driven by lower product margin resulting from an unfavorable sales channel mix, between stores and lower-margin Regis e-commerce sales, and a shift in some distribution center costs from selling, general and administrative expenses into gross margin.

Selling, General and Administrative Expenses

SBS’s selling, general and administrative expenses decreased $3.3 million, or 1.5%, for the three months ended March 31, 2023 and included a favorable impact from foreign exchange rates of $2.2 million.

As a percentage of SBS net sales, SG&A for the three months ended March 31, 2023 was 42.4% compared to 43.4% for the three months ended March 31, 2022.

The decrease as a percentage of sales was primarily driven by cost savings from the closure of stores as part of the Plan, partially offset by increased labor and personnel costs and higher advertising expense.

BSG’s selling, general and administrative expenses increased $3.9 million, or 3.5%, for the three months ended March 31, 2023.

As a percentage of BSG net sales, SG&A for the three months ended March 31, 2023 was 29.3% compared to 28.5% for the three months ended March 31, 2022.

The increase as a percentage of sales was driven primarily by increases in labor and personnel costs.

Unallocated selling, general and administrative expenses, which represent certain corporate costs that have not been charged to our reporting segments, increased $10.2 million, or 25.3%, for the three months ended March 31, 2023, primarily due to increased labor and personnel costs and information technology expense .

Restructuring

For the three months ended March 31, 2023, we incurred $7.3 million in restructuring charges related to our Distribution Center Consolidation and Store Optimization Plan.

See Note 11, Restructuring , in Item 1 of this quarterly report for more information on the Plan.

Interest Expense

The decrease in interest expense is due to the interest savings from the repayment of our 8.75% Senior Notes due 2025 in fiscal year 2022, partially offset by higher interest expense on our variable rate debt resulting from the increase in borrowing rates and outstanding amounts under our ABL facility .

Additionally, we released the $2.2 million in net gains held in AOCL related to our interest rate caps due to the early settlement of the derivatives driven by the repayment of our TLB 2024.

Provision for Income Taxes

The effective tax rates were 25.3% and 29.7%, for the three months ended March 31, 2023, and 2022, respectively.

The decrease in the effective tax rate was primarily due to the tax impact of share-based compensation which was beneficial this quarter, but detrimental in the prior year quarter, and greater losses in the prior year quarter for which a tax benefit could not be recognized.

The Six Months Ended March 31, 2023, compared to the Six Months Ended March 31, 2022

The decrease in net sales for SBS was primarily driven by the following (in thousands):

Comparable sales

Sales outside comparable sales (a)

Foreign currency exchange

Includes closed stores, including stores closed under the Plan, net of stores opened for less than 14 months

SBS’s comparable sales increase was driven by a growth in our average unit retail, primarily from inflationary impacts, pricing leverage and the lapping of Omicron and supply chain challenges.

Comparable sales were also positively impacted by recapturing of approximately half of the sales from stores closed in connection with the Plan.

The decrease in net sales for BSG was primarily driven by the following (in thousands):

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Foreign currency exchange

Includes stores opened for less than 14 months, net of stores closures, including from the Plan

The decrease in BSG’s net sales was primarily due to lower comparable sales, the impact of closed stores and the negative impact from the Canadian foreign exchange rate.

BSG’s comparable sales faced headwinds from elevated demand in the prior year from the easing of COVID-19 restrictions and the impacts of the current economic environment which resulted in fewer transactions, but was partially offset by growth in average ticket.

SBS’s gross profit decreased for the three months ended December 31, 2022, as a result of lower net sales, partially offset by a higher gross margin.

SBS’s gross margin grew as a result of pricing leverage and increased penetration of our owned-brand products.

BSG’s gross profit decreased for the three months ended December 31, 2022, as a result of lower net sales and a lower gross margin.

BSG’s gross margin decline was driven by lower product margin resulting from an unfavorable sales channel mix between stores and lower-margin Regis e-commerce sales, partially offset by adjustments to our expected obsolescence reserve related to the Plan.

Includes closed stores, including stores closed under the Plan, net of stores opened for less than 14 months

BSG’s comparable sales faced headwinds from elevated demand in the prior year from the easing of COVID-19 restrictions and the impacts of the current economic environment which resulted in fewer transactions and units per transaction, partially offset by an increase in our average unit retail.

SBS’s gross profit increased for the six months ended March 31, 2023, as a result of a higher gross margin, partially offset by lower net sales.

SBS’s gross margin grew as a result of pricing leverage, increased penetration of our owned brand products and adjustments to our expected obsolescence reserve related to the Plan.

BSG’s gross profit decreased for the six months ended March 31, 2023, as a result of lower net sales and a lower gross margin.

Selling, General and Administrative Expenses

SBS’s selling, general and administrative expenses decreased $3.2 million, or 1.4%, for the three months ended December 31, 2022 and included a favorable impact from foreign exchange rates of $4.6 million.

As a percentage of SBS net sales, SG&A for the three months ended December 31, 2022 was 40.8% compared to 40.5% for the three months ended December 31, 2021.

The increase as a percentage of sales was driven by deleveraging as a result of lower net sales.

BSG’s selling, general and administrative expenses increased $2.0 million, or 1.8%, for the three months ended December 31, 2022.

As a percentage of BSG net sales, SG&A for the three months ended December 31, 2022 was 28.3% compared to 27.1% for the three months ended December 31, 2021.

The increase as a percentage of sales was driven primarily by deleveraging as a result of lower net sales as well as increases in labor and personnel costs and depreciation expenses.

Unallocated selling, general and administrative expenses, which represent certain corporate costs that have not been charged to our reporting segments, increased $6.5 million, or 14.4%, for the three months ended December 31, 2022, primarily due to increased labor and personnel costs of $4.6 million and information technology expense of $2.9 million .

SBS’s selling, general and administrative expenses decreased $6.6 million, or 1.4%, for the six months ended March 31, 2023 and included a favorable impact from foreign exchange rates of $6.8 million.

As a percentage of SBS net sales, SG&A for the six months ended March 31, 2023 was 41.6% compared to 41.9% for the six months ended March 31, 2022.

The decrease as a percentage of sales was primarily driven by cost savings from the closure of stores in connection with the Plan, partially offset by an increase in labor and personnel costs.

BSG’s selling, general and administrative expenses increased $5.9 million, or 2.7%, for the six months ended March 31, 2023.

As a percentage of BSG net sales, SG&A for the six months ended March 31, 2023 was 28.8% compared to 27.8% for the six months ended March 31, 2022.

The increase as a percentage of sales was driven primarily by deleveraging as a result of lower net sales as well as increases in labor and personnel costs.

Unallocated selling, general and administrative expenses, which represent certain corporate costs that have not been charged to our reporting segments, increased $16.8 million , or 19.5% , for the six months ended March 31, 2023 , primarily due to increased labor and personnel costs and information technology expenses .

Restructuring

For the three months ended December 31, 2022, we incurred $10.4 million in restructuring charges related to our Distribution Center Consolidation and Store Optimization Plan.

For the three months ended December 31, 2021, restructuring charges in connection with our previously communicated Transformation Plan were immaterial .

For the six months ended March 31, 2023, we incurred $17.7 million in restructuring charges related to the Plan.

For the six months ended March 31, 2022, restructuring charges in connection with our prior transformation plan were immaterial .

See Note 11, Restructuring , in Item 1 of this quarterly report for more information on the Plan.

Interest Expense

The decrease in interest expense is due to the interest savings from the repayment of our 8.75% Senior Notes due 2025 during fiscal year 2022, partially offset by higher interest expense on our variable rate debt resulting from the increase in borrowing rates and outstanding amounts under our ABL facility .

See Note 9, Derivatives , in Item 1 of this quarterly report for more information on our interest rate caps used to help mitigate raising interest rates.

The decrease in interest expense is due to interest savings from the repayment of our 8.75% Senior Notes due 2025 in fiscal year 2022, partially offset by higher interest expense on our variable rate debt resulting from the increase in borrowing rates and outstanding amounts under our ABL facility .

Additionally, we released the $2.2 million in net gains held in AOCL related to our interest rate caps due to the early settlement of the derivatives driven by the repayment of our TLB 2024 in our second fiscal quarter.

Provision for Income Taxes

The effective tax rates were 26.7% and 25.6%, for the three months ended December 31, 2022, and 2021, respectively.

The increase in the effective tax rate was primarily due to the tax impact of share-based compensation which was detrimental in the current year quarter, but beneficial in the prior year quarter.

The effective tax rates were 26.1% and 27.3%, for the six months ended March 31, 2023, and 2022, respectively.

The decrease in the effective tax rate was primarily due to greater losses in the prior year for which a tax benefit could not be recognized.

Liquidity and Capital Resources

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A substantial portion of our liquidity needs arise from funding the costs of our operations, working capital, capital expenditures, debt interest and principal payment.

Additionally, under our share repurchase program, see below for more details, we will repurchase shares of our common stock on the open market to return value to our shareholders.

At December 31, 2022, we had $440.8 million in our liquidity pool, which includes $417.7 million available for borrowings under our ABL facility and cash and cash equivalents of $99.1 million.

Working capital (current assets less current liabilities) increased $77.4 million, to $541.9 million at December 31, 2022, compared to $464.5 million at September 30, 2022.

This increase was driven by higher inventory balances, resulting from inflationary cost increases and the impact of foreign exchange rates of $12.7 million, and an increase in cash and cash equivalents.

Additionally, under our share repurchase program, see below for more details, we will from time-to-time repurchase shares of our common stock on the open market to return value to our shareholders.

At March 31, 2023, we had $510.3 million in our liquidity pool, which includes $448.7 million available for borrowings under our ABL facility and cash and cash equivalents of $61.6 million.

Working capital (current assets less current liabilities) increased $113.9 million, to $578.4 million at March 31, 2023, compared to $464.5 million at September 30, 2022.

This increase was driven by higher inventory balances, resulting from inflationary cost increases and the impact of foreign exchange rates of $21.7 million, and a decrease in borrowing outstanding under our ABL facility.

We anticipate that existing cash balances (excluding certain amounts permanently invested in connection with foreign operations), cash expected to be generated by operations, and funds available under our ABL facility will be sufficient to fund our working capital and capital expenditure requirements over the next twelve months.

Three Months Ended December 31,

Six Months Ended March 31,

(in thousands)

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Net Cash Provided (Used) by Operating Activities

The change in net cash provided by operating activities for the three months ended December 31, 2022, compared to the net cash used by operating activities three months ended December 31, 2021, was driven by the timing of inventory purchases, primarily from the impact of global supply chain issues in the prior year.

Additionally, it was driven by the timing of income taxes and a decrease in net sales.

The change in net cash provided by operating activities for the six months ended March 31, 2023, compared to the net cash used by operating activities for the six months ended March 31, 2022, was driven by the timing of inventory purchases and vendor payments, primarily from the impact of global supply chain issues in the prior year, and the decrease in net sales.

Net Cash Used by Investing Activities

The decrease in net cash used by investing activities for the three months ended December 31, 2022, compared to the three months ended December 31, 2021, was driven by fewer capital expenditures related to store improvements and information technology.

The decrease in net cash used by investing activities for the six months ended March 31, 2023, compared to the six months ended March 31, 2022, was driven by fewer capital expenditures related to store improvements and information technology.

Net Cash Used by Financing Activities

The decrease in net cash used by financing activities for the three months ended December 31, 2022, compared to the three months ended December 31, 2021, was a result of share repurchases in the prior year and lower cash proceeds from employees exercising equity awards.

The decrease in net cash used by financing activities for the six months ended March 31, 2023, compared to the six months ended March 31, 2022, was primarily a result of no share repurchases in the current year and the net reduction in our outstanding debt principal.

Debt and Guarantor Financial Information

At December 31, 2022, we had $1,151.1 million in debt, not including capital leases, unamortized debt issuance costs and debt discounts, in the aggregate, of $3.7 million.

Our debt consists of $680.0 million in 5.625% Senior Notes due 2025 (“2025 Senior Notes”) outstanding, $406.1 million remaining on our term loan and $65.0 million in outstanding borrowings under our ABL facility.

On February 28, 2023, we entered into a seven-year term loan facility agreement in the aggregate principal amount of $400.0 million and used the proceeds to subsequently repay our previously existing term loan facility.

See Note 8, Short-term Borrowings and Long-term Debt , in Item 1 of this quarterly report for more information.

At March 31, 2023, we had $1,114.0 million in outstanding debt, not including capital leases, unamortized debt issuance costs and debt discounts, in the aggregate, of $10.7 million.

Our debt consists of $680.0 million in 2025 Senior Notes outstanding, $400.0 million remaining on our term loan and $34.0 million in outstanding borrowings under our ABL facility.

We utilize our ABL facility for the issuance of letters of credit, certain working capital and liquidity needs, and to manage normal fluctuations in our operational cash flow.

In that regard, we may from time to time draw funds under the ABL facility for general corporate purposes including funding of capital expenditures, acquisitions, paying down other debt and share repurchases.

drawn on our ABL facility are generally paid down with cash provided by our operating activities.

During the three months ended December 31, 2022 , the weighted average interest rate on our borrowings under the ABL facility was 5.2%.

Amounts drawn on our ABL facility are generally paid down with cash provided by our operating activities.

During the six months ended March 31, 2023, the weighted average interest rate on our borrowings under the ABL facility was 5.5%.

We are currently in compliance with the agreements and instruments governing our debt, including our financial covenants.

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(the “Issuers”).

The notes are unsecured debt instruments guaranteed by us and certain of our wholly-owned domestic subsidiaries (together, the “Guarantors”) and have certain restrictions on the ability to pay restrictive payments to Sally Beauty.

The guarantees are joint and several, and full and unconditional.

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All transactions and intercompany balances between these combined entities has been eliminated.

The following table presents the summarized balance sheets information for the Issuers and the Guarantors as of December 31, 2022, and September 30, 2022:

The following table presents the summarized balance sheets information for the Issuers and the Guarantors as of March 31, 2023, and September 30, 2022:

(in thousands)

December 31, 2022

March 31, 2023

September 30, 2022

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Total liabilities

The following table presents the summarized statement of earnings information for the Issuers and the Guarantors for three months ended December 31, 2022 (in thousands):

The following table presents the summarized statement of earnings information for the Issuers and the Guarantors for six months ended March 31, 2023 (in thousands):

Earnings before provision for income taxes

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Under our current share repurchase program, we may from time-to-time repurchase our common stock on the open market.

During the three months ended December 31, 2022, no shares were repurchased in connection with our share repurchase program.

During three months ended December 31, 2021, we repurchased 3.7 million shares of our common stock for $75.0 million under our share repurchase program.

During the six months ended March 31, 2023, no shares were repurchased in connection with our share repurchase program.

During the six months ended March 31, 2022, we repurchased 6.8 million shares of our common stock for $130.3 million under our share repurchase program.

See Note 4, Stockholders’ Equity , for more information about our share repurchase program.

Contractual Obligations

There have been no material changes outside the ordinary course of our business in any of our contractual obligations since September 30, 2022.

Other than the repayment of our TLB 2024 and entering into the TLB 2030 as discussed above, there have been no material changes outside the ordinary course of our business in any of our contractual obligations since September 30, 2022.

Off-Balance Sheet Financing Arrangements

At December 31, 2022 and September 30, 2022, we had no off-balance sheet financing arrangements other than outstanding letters of credit related to inventory purchases and self-insurance programs.

At March 31, 2023 and September 30, 2022, we had no off-balance sheet financing arrangements other than outstanding letters of credit related to inventory purchases and self-insurance programs.

Critical Accounting Estimates

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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