- 2Q15 same store sales growth of 2.8%
versus 1.0% in 2Q14
- Consolidated gross margin expansion of
20 basis points
- 2Q15 net earnings of $61.5 million with
earnings per share of $0.39
- Adjusted EBITDA of $154 million, up
4.3%
- Repurchased $60.3 million, or 1.8
million shares, of stock in 2Q15
Sally Beauty Holdings, Inc. (NYSE: SBH) (the “Company”) today
announced financial results for the fiscal 2015 second quarter. The
Company will hold a conference call today at 10:00 a.m. (Central)
to discuss these results and its business.
“We made solid progress on our initiatives and we are pleased
with our financial results for Q2,” stated Chris Brickman,
President and Chief Executive Officer. “Consolidated same store
sales grew 2.8% and gross margin expanded by 20 basis points,
resulting in 11% year-over-year growth in EPS. Despite this
progress, we aspire to much more, and we clearly have more work
left in order to achieve our long term objectives.
“During the second quarter, our store refresh initiative
continued to realize positive returns and we are on track to
complete the next phase of remodels by June 1st. The Nail studio is
now fully installed in all our Sally U.S. stores and we are
investing to market this winning category assortment during the
spring nail season. We reset the multicultural category in all
stores to better reflect modern consumer needs. The Sally team
finished the work required to get our dynamic CRM program fully
operational by April and we are very excited about the early
results and future potential of this initiative. At the same time,
our BSG team completed new brand integrations into our stores and
we began the work required to extend CRM and improved e-commerce
capabilities to our professional business by year-end. Finally, we
have developed a strong list of merchandising and marketing
innovations we plan to deploy in both businesses during the coming
quarters – and I have full confidence in the team to build on the
initial momentum so that we can achieve our objectives for this
year and beyond.”
FISCAL 2015 SECOND QUARTER FINANCIAL HIGHLIGHTS
Net Sales: For the fiscal 2015 second quarter,
consolidated net sales were $937.8 million, an increase of 2.0%
from the fiscal 2014 second quarter. The fiscal 2015 second quarter
sales increase is attributed to same store sales growth and the
addition of new stores. The unfavorable impact from changes in
foreign currency exchange rates in the fiscal 2015 second quarter
was $21.5 million, or 2.3% of sales. Consolidated same store sales
growth in the fiscal 2015 second quarter was 2.8%.
Gross Profit: Consolidated gross profit for the fiscal
2015 second quarter was $467.5 million, an increase of 2.4% over
gross profit of $456.4 million for the fiscal 2014 second quarter.
Gross profit as a percentage of sales was 49.8%, a 20 basis point
improvement from the fiscal 2014 second quarter.
Selling, General and Administrative Expenses: For the
fiscal 2015 second quarter, GAAP consolidated selling, general and
administrative (SG&A) expenses, including unallocated corporate
expenses and share-based compensation, were $317.5 million, or
33.9% of sales, a 10 basis point improvement from the fiscal 2014
second quarter metric of 34.0% of sales and total SG&A expenses
of $312.8 million. Excluding a $1.5 million, pre-tax, contingent
liability related to the data security incident, adjusted SG&A
expenses in the fiscal 2015 third quarter, were $315.9 million or
33.7% of sales.
Fiscal 2015 second quarter GAAP SG&A expenses increased 1.5%
or $4.6 million, primarily due to expenses associated with the
opening of new stores, higher expenses related to on-going upgrades
to our information technology systems, higher employee
compensation-related expenses in connection with our ongoing
management transition plans and a contingent liability related to
the data security incident.
Note: SG&A expenses include unallocated corporate expenses,
as detailed in the Company’s segment information on schedule B.
Interest Expense: Interest expense for the fiscal 2015
second quarter was $29.2 million, slightly down from the fiscal
2014 second quarter of $29.3 million.
Provision for Income Taxes: Income taxes were $38.2
million for the fiscal 2015 second quarter versus $36.3 million in
the fiscal 2014 second quarter. The Company’s effective tax rate in
the fiscal 2015 second quarter was 38.3%, flat when compared to the
fiscal 2014 second quarter.
Net Earnings and Diluted Net Earnings per Share (EPS):
For the fiscal 2015 second quarter, GAAP net earnings were up 5.2%
to $61.5 million, or $0.39 per diluted earnings per share, from net
earnings of $58.5 million, or $0.35 per diluted earnings per share
in the year ago quarter.
Adjusted net earnings for the fiscal 2015 second quarter were up
5.6% to $62.5 million or $0.39 per diluted earnings per share when
compared to fiscal 2014 adjusted net earnings of $59.2 million or
$0.36 per diluted earnings per share. Adjusted net earnings for the
fiscal 2015 second quarter excludes a $1.0 million, net of tax,
contingent liability related to the data security incident.
Adjusted (Non-GAAP) EBITDA(1): Adjusted
EBITDA for the fiscal 2015 second quarter was $154.4 million, an
increase of 4.3% from $148.0 million for the fiscal 2014 second
quarter.
Financial Position, Capital Expenditures and Working
Capital: Cash and cash equivalents as of March 31, 2015, were
$246.0 million. The Company’s asset-based loan (ABL) revolving
credit facility ended the fiscal 2015 second quarter with no
outstanding borrowings. The Company’s debt, excluding capital
leases, totaled $1.8 billion as of March 31, 2015.
For fiscal 2015 year-to-date, the Company’s capital expenditures
totaled $39.3 million. Capital expenditures for the fiscal year
2015 are projected to be in the previously stated range of $95
million to $100 million, excluding acquisitions.
Working capital (current assets less current liabilities)
increased $126.3 million to $766.9 million at March 31, 2015
compared to $640.6 million at September 30, 2014. Borrowing
capacity on the ABL facility was approximately $478.4 million at
the end of the fiscal 2015 second quarter. The ratio of current
assets to current liabilities was 2.62 to 1.00 at March 31, 2015
compared to 2.38 to 1.00 at September 30, 2014.
Inventory as of March 31, 2015 was $838.1 million, an increase
of $18.4 million or growth of 2.2% from March 31, 2014 inventory.
This increase is primarily due to sales growth from existing stores
and additional inventory from new store openings.
During the period of January 1, 2015 through March 31, 2015, the
Company repurchased (and subsequently retired) 1.8 million shares
of its common stock at an aggregate cost of $60.3 million and had
approximately $932.5 million of additional share repurchase
authorization remaining under its $1 billion share repurchase
authorization announced on August 20, 2014. The Company remains
committed to deploying excess cash flow, after investments to grow
the business, in the form of stock repurchases.
Business Segment Results:
Sally Beauty Supply
Fiscal 2015 Second Quarter Results for Sally Beauty
Supply
- Sales of $572.1 million, up 0.4% from
$569.6 million in the fiscal 2014 second quarter. Sales growth was
from net new store openings and same store sales growth. The
unfavorable impact of foreign currency exchange on sales was $17.9
million, or 3.1%.
- Same store sales growth of 1.4% versus
growth of 0.5% in the fiscal 2014 second quarter.
- Gross margin of 55.3%, a 50 basis point
increase from 54.8% in the fiscal 2014 second quarter.
- Segment earnings of $106.1 million, up
0.6% from $105.5 million in the fiscal 2014 second quarter.
- Segment operating margin was 18.5%,
flat when compared to the fiscal 2014 second quarter.
- Net store count increased by 154 over
the fiscal 2014 second quarter for total store count of 3,631.
Sales growth in the fiscal 2015 second quarter was driven by new
store openings and same store sales; this growth was partially
offset by the unfavorable impact of foreign currency exchange.
Gross profit margin improvement of 50 basis points primarily
resulted from improvement in the international business and
favorable product mix shift in the U.S. business. Segment operating
earnings and margin were favorably impacted by gross margin
improvement which was partially offset by higher SG&A expenses
associated with new store openings and higher depreciation.
Beauty Systems Group
Fiscal 2015 Second Quarter Results for Beauty Systems
Group
- Sales of $365.6 million, up 4.5% from
$349.9 million in the fiscal 2014 second quarter. The unfavorable
impact of foreign currency exchange on sales was $3.6 million, or
1.0%.
- Same store sales growth of 5.9% versus
2.2% in the fiscal 2014 second quarter.
- Gross margin of 41.3%, a 10 basis point
increase from 41.2% in the fiscal 2014 second quarter.
- Segment earnings of $55.6 million, up
9.3% from $50.9 million in the fiscal 2014 second quarter.
- Segment operating margin increased by
70 basis points to 15.2% of sales from 14.5% in the fiscal 2014
second quarter.
- Net store count was 1,278, an increase
of 24 stores over the fiscal 2014 second quarter.
- Total BSG distributor sales consultants
at the end of the fiscal 2015 second quarter were 971 versus 993 at
the end of the fiscal 2014 second quarter.
Sales growth for the Beauty Systems Group was primarily driven
by growth in same store sales, improvement in the sales consultant
business and new store openings; this growth was partially offset
by the unfavorable impact of foreign currency exchange. Growth in
segment operating earnings and margin expansion was primarily due
to SG&A leverage improvement and gross margin expansion.
(1)A detailed table reconciling 2015 and 2014 adjusted EBITDA is
included in Supplemental Schedule C.
Conference Call and Where You Can Find Additional
Information
As previously announced, at approximately 10:00 a.m. (Central)
today the Company will hold a conference call and audio webcast to
discuss its financial results and its business. During the
conference call, the Company may discuss and answer one or more
questions concerning business and financial matters and trends
affecting the Company. The Company’s responses to these questions,
as well as other matters discussed during the conference call, may
contain or constitute material information that has not been
previously disclosed. Simultaneous to the conference call, an audio
webcast of the call will be available via a link on the Company’s
website, investor.sallybeautyholdings.com. The conference call can
be accessed by dialing 800-230-1092 (International: 612-234-9959).
The teleconference will be held in a “listen-only” mode for all
participants other than the Company’s current sell-side and
buy-side investment professionals. If you are unable to listen to
this conference call, the replay will be available at about 12:00
p.m. (Central) May 5, 2015 through May 19, 2015 by dialing
1-800-475-6701 or if international dial 320-365-3844 and reference
the conference ID number 358653. Also, a website replay will be
available on investor.sallybeautyholdings.com
About Sally Beauty Holdings, Inc.
Sally Beauty Holdings, Inc. (NYSE: SBH) is an international
specialty retailer and distributor of professional beauty supplies
with revenues of $3.8 billion annually. Through the Sally Beauty
Supply and Beauty Systems Group businesses, the Company sells and
distributes through 4,900 stores, including approximately 200
franchised units, throughout the United States, the United Kingdom,
Belgium, Chile, Colombia, Peru, France, the Netherlands, Canada,
Puerto Rico, Mexico, Ireland, Spain and Germany. Sally Beauty
Supply stores offer up to 10,000 products for hair, skin, and nails
through professional lines such as Clairol, L’Oreal, Wella and
Conair, as well as an extensive selection of proprietary
merchandise. Beauty Systems Group stores, branded as CosmoProf or
Armstrong McCall stores, along with its outside sales consultants,
sell up to 10,000 professionally branded products including Paul
Mitchell, Wella, Sebastian, Goldwell, Joico, and Aquage which are
targeted exclusively for professional and salon use and resale to
their customers. For more information about Sally Beauty Holdings,
Inc., please visit sallybeautyholdings.com.
Cautionary Notice Regarding Forward-Looking
Statements
Statements in this news release and the schedules hereto which
are not purely historical facts or which depend upon future events
may be forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Words such as
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,”
“project,” “target,” “can,” “could,” “may,” “should,” “will,”
“would,” or similar expressions may also identify such
forward-looking statements.
Readers are cautioned not to place undue reliance on
forward-looking statements as such statements speak only as of the
date they were made. Any forward-looking statements involve risks
and uncertainties that could cause actual events or results to
differ materially from the events or results described in the
forward-looking statements, including, but not limited to, risks
and uncertainties related to: the highly competitive nature of, and
the increasing consolidation of, the beauty products distribution
industry; anticipating and effectively responding to changes in
consumer preferences and buying trends in a timely manner;
potential fluctuation in our same store sales and quarterly
financial performance; our dependence upon manufacturers who may be
unwilling or unable to continue to supply products to us; the
possibility of material interruptions in the supply of products by
our third-party manufacturers or distributors; products sold by us
being found to be defective in labeling or content; compliance with
current laws and regulations or becoming subject to additional or
more stringent laws and regulations; the success of our e-commerce
businesses; product diversion to mass retailers or other
unauthorized resellers; the operational and financial performance
of our franchise-based business; successfully identifying
acquisition candidates and successfully completing desirable
acquisitions; integrating acquired businesses; opening and
operating new stores profitably; the impact of the health of the
economy upon our business; the success of our cost control plans;
protecting our intellectual property rights, particularly our
trademarks; the risk that our products may infringe on the
intellectual property of others or that we may be required to
defend our intellectual property rights; conducting business
outside the United States; disruption in our information technology
systems; a significant data security breach, including
misappropriation of our customers’ or employees’ confidential
information, and the potential costs related thereto; the negative
impact on our reputation and loss of confidence of our customers,
suppliers and others arising from a significant data security
breach; the costs and diversion of management attention required to
investigate and remediate a data security breach; the ultimate
determination of the extent or scope of the potential liabilities
relating to our 2014 data security incident; our ability to attract
or retain highly skilled management and other personnel; severe
weather, natural disasters or acts of violence or terrorism; the
preparedness of our accounting and other management systems to meet
financial reporting and other requirements and the upgrade of our
existing financial reporting system; being a holding company, with
no operations of our own, and depending on our subsidiaries for
cash; our ability to execute and implement our common stock
repurchase program; our substantial indebtedness; the possibility
that we may incur substantial additional debt, including secured
debt, in the future; restrictions and limitations in the agreements
and instruments governing our debt; generating the significant
amount of cash needed to service all of our debt and refinancing
all or a portion of our indebtedness or obtaining additional
financing; changes in interest rates increasing the cost of
servicing our debt; the potential impact on us if the financial
institutions we deal with become impaired; and the costs and
effects of litigation.
Additional factors that could cause actual events or results to
differ materially from the events or results described in the
forward-looking statements can be found in our filings with the
Securities and Exchange Commission, including our most recent
Annual Report on Form 10-K for the year ended September 30, 2014,
as filed with the Securities and Exchange Commission. Consequently,
all forward-looking statements in this release are qualified by the
factors, risks and uncertainties contained therein. We assume no
obligation to publicly update or revise any forward-looking
statements.
Use of Non-GAAP Financial Measures
This news release and the schedules hereto include the following
financial measures that have not been calculated in accordance with
accounting principles generally accepted in the U.S., or GAAP, and
are therefore referred to as non-GAAP financial measures: (1)
Adjusted EBITDA; (2) Adjusted net earnings, earnings per share and
diluted earnings per share and (3) Adjusted SG&A expenses. We
have provided definitions below for these non-GAAP financial
measures and have provided tables in the schedules hereto to
reconcile these non-GAAP financial measures to the comparable GAAP
financial measures.
Adjusted EBITDA – We define the measure Adjusted EBITDA as GAAP
net earnings before depreciation and amortization, interest
expense, income taxes, share-based compensation and costs related
to the Company’s previously disclosed data security incident.
Adjusted Net Earnings, Earnings Per Share, Diluted Earnings Per
Share and SG&A Expenses – Adjusted net earnings, earnings per
share, diluted earnings per share and SG&A expenses are GAAP
net earnings, earnings per share, diluted earnings per share and
SG&A expenses that exclude costs related to the Company’s
previously disclosed data security incident for the relevant time
periods as indicated in the accompanying non-GAAP reconciliations
to the comparable GAAP financial measures.
We have provided these non-GAAP financial measures as
supplemental information to our GAAP financial measures and believe
these non-GAAP measures provide investors with additional
meaningful financial information regarding our operating
performance. Our management and Board of Directors also use these
non-GAAP measures as supplemental measures in the evaluation of our
businesses and believe that these non-GAAP measures provide a
meaningful measure to evaluate our historical and prospective
financial performance. These non-GAAP measures should not be
considered a substitute for or superior to GAAP results.
Furthermore, the non-GAAP measures presented by us may not be
comparable to similarly titled measures of other companies.
Supplemental Schedules Consolidated Statement of Earnings
A Segment Information B Non-GAAP Financial
Measures Reconciliations (Adjusted EBITDA) C Non-GAAP Financial
Measures Reconciliations (Continued)
D, E
Store Count and Same Store Sales
F
Selected Financial Data and Debt
G
Supplemental Schedule A
SALLY BEAUTY HOLDINGS, INC. AND
SUBSIDIARIES Consolidated Statements of Earnings (In thousands,
except per share data) (Unaudited)
Three Months Ended Six Months Ended March 31, March 31,
2015 2014 % CHG
2015 2014 % CHG
Net sales $ 937,755 $ 919,471 2.0 % $ 1,902,222 $ 1,859,935 2.3 %
Cost of products sold and distribution expenses
470,303 463,075
1.6 % 961,001
943,013 1.9 % Gross profit
467,452 456,396 2.4 % 941,221 916,922 2.7 % Selling, general and
administrative expenses (1)(2) 317,456 312,813 1.5 % 654,410
632,291 3.5 % Depreciation and amortization
20,989 19,495 7.7
% 41,567
38,750 7.3 % Operating earnings 129,007
124,088 4.0 % 245,244 245,881 -0.3 % Interest expense
29,228 29,258
-0.1 % 58,469
57,747 1.3 % Earnings before
provision for income taxes 99,779 94,830 5.2 % 186,775 188,134 -0.7
% Provision for income taxes 38,244
36,338 5.2 %
70,331 71,647
-1.8 % Net earnings $ 61,535
$ 58,492 5.2 %
$ 116,444 $ 116,487
0.0 % Earnings per share: Basic $ 0.39 $ 0.36
8.3 % $ 0.74 $ 0.71 4.2 % Diluted $ 0.39 $ 0.35 11.4 % $ 0.73 $
0.70 4.3 % Weighted average shares: Basic 157,504 162,535
156,797 163,075 Diluted 159,620
166,140
158,845 166,637
Basis PtChg
Basis PtChg
Comparison as a % of
Net sales
Sally Beauty Supply Segment Gross Profit Margin 55.3 % 54.8 % 50
54.9 % 54.6 % 30 BSG Segment Gross Profit Margin 41.3 % 41.2 % 10
41.1 % 40.9 % 20 Consolidated Gross Profit Margin 49.8 % 49.6 % 20
49.5 % 49.3 % 20 Selling, general and administrative expenses 33.9
% 34.0 % (10 ) 34.4 % 34.0 % 40 Consolidated Operating Profit
Margin 13.8 % 13.5 % 30 12.9 % 13.2 % (30 ) Net Earnings Margin 6.6
% 6.4 % 20 6.1 % 6.3 % (20 )
Effective Tax
Rate
38.3 % 38.3 % 0 37.7 % 38.1 % (40 ) (1) Selling,
general and administrative expenses include share-based
compensation of $2.8 million and $3.3 for the three months ended
March 31, 2015 and 2014, respectively; and, for the six months
ended March 31, 2015 and 2014, $10.6 million and $11.8 million,
respectively. (2) Selling, general and administrative
expenses include charges of $1.5 million and $1.1 million for the
three months ended March 31, 2015 and 2014, respectively; and, for
the six months ended March 31, 2015 and 2014, $1.8 million and $1.1
million, respectively, in connection with the data security
incident disclosed in March 2014. These amounts reflect a
contingent liability of $1.5 million recorded in the three months
ended March 31, 2015.
Supplemental Schedule B
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
Segment Information (In thousands) (Unaudited) Three Months
Ended Six Months Ended March 31, March 31,
2015 2014 % CHG
2015 2014 % CHG Net sales: Sally Beauty
Supply $ 572,110 $ 569,618 0.4 % $ 1,158,629 $ 1,142,973 1.4 %
Beauty Systems Group 365,645
349,853 4.5 %
743,593 716,962
3.7 % Total net sales $ 937,755
$ 919,471 2.0 %
$ 1,902,222 $ 1,859,935
2.3 % Operating earnings: Sally Beauty Supply $
106,089 $ 105,474 0.6 % $ 207,268 $ 209,017 -0.8 % Beauty Systems
Group 55,607
50,882 9.3 %
112,197 105,717
6.1 % Segment operating earnings $ 161,696
$ 156,356 3.4 %
$ 319,465 $ 314,734
1.5 % Unallocated corporate expenses (1) (29,849 )
(29,000 ) 2.9 % (63,621 ) (57,063 ) 11.5 % Share-based compensation
(2,840 ) (3,268 ) -13.1 % (10,600 ) (11,790 ) -10.1 % Interest
expense (29,228 ) (29,258
) -0.1 % (58,469 )
(57,747 ) 1.3 % Earnings before
provision for income taxes $ 99,779
$ 94,830 5.2 % $
186,775 $ 188,134 -0.7 %
Segment operating profit margin:
Basis Pt Chg
Basis Pt Chg Sally Beauty Supply 18.5 % 18.5 % 0 17.9 % 18.3
% (40 ) Beauty Systems Group 15.2 % 14.5 % 70 15.1 % 14.7 % 40
Consolidated operating profit margin 13.8 %
13.5 % 30
12.9 % 13.2 % (30
) (1) Unallocated expenses consist of corporate and
shared costs.
Supplemental Schedule C
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES Non-GAAP
Financial Measures Reconciliations (In thousands) (Unaudited)
Three Months Ended Six Months Ended March 31, March 31,
2015 2014 % CHG
2015 2014 % CHG
Adjusted EBITDA: Net earnings (per GAAP) $ 61,535 $ 58,492 5.2 % $
116,444 $ 116,487 0.0 % Add: Depreciation and amortization 20,989
19,495 7.7 % 41,567 38,750 7.3 % Share-based compensation (1) 2,840
3,268 -13.1 % 10,600 11,790 -10.1 % Loss from data security
incident (2) 1,515 1,110 36.5 % 1,756 1,110 58.2 % Interest expense
29,228 29,258 -0.1 % 58,469 57,747 1.3 % Provision for income taxes
38,244 36,338
5.2 % 70,331
71,647 -1.8 % Adjusted EBITDA (Non-GAAP)
$ 154,351 $ 147,961 4.3 %
$ 299,167 $ 297,531
0.5 % (1) For the six months ended March 31,
2015 and 2014, share-based compensation includes $4.8 million and
$5.3 million, respectively, of accelerated expense related to
certain retirement-eligible employees who are eligible to continue
vesting awards upon retirement. (2) Selling, general and
administrative expenses include charges of $1.5 million and $1.1
million for the three months ended March 31, 2015 and 2014,
respectively; and, for the six months ended March 31, 2015 and
2014, $1.8 million and $1.1 million, respectively, in connection
with the data security incident disclosed in March 2014. These
amounts reflect a contingent liability of $1.5 million recorded in
the three months ended March 31, 2015. Supplemental
Schedule D
SALLY BEAUTY HOLDINGS,
INC. AND SUBSIDIARIES Non-GAAP Financial Measures
Reconciliations, Continued
Three Months Ended March 31,
2015 As Reported
Charges fromData SecurityIncident (1)
As Adjusted(Non-GAAP)
Selling, general and administrative expenses $ 317,456 $
(1,515 ) $ 315,941 SG&A expenses, as a percentage of sales 33.9
% 33.7 % Operating earnings 129,007 1,515 130,522 Operating Profit
Margin 13.8 % 13.9 % Earnings before provision for income
taxes 99,779 1,515 101,294 Provision for income taxes (2)
38,244 561
38,805 Net earnings $ 61,535
$ 954 $ 62,489 Earnings
per share: Basic $ 0.39 $ 0.01 $ 0.40 Diluted $ 0.39 $ 0.01 $ 0.39
Three Months Ended March 31, 2014 As Reported
Charges fromData SecurityIncident (1)
As Adjusted(Non-GAAP)
Selling, general and administrative expenses $ 312,813 $
(1,110 ) $ 311,703 SG&A expenses, as a percentage of sales 34.0
% 33.9 % Operating earnings 124,088 1,110 125,198 Operating Profit
Margin 13.5 % 13.6 % Earnings before provision for income
taxes 94,830 1,110 95,940 Provision for income taxes (2)
36,338 433
36,771 Net earnings $ 58,492
$ 677 $ 59,169 Earnings
per share: Basic $ 0.36 $ 0.00 $ 0.36 Diluted $ 0.35 $ 0.00 $ 0.36
(1) For the three months ended March 31, 2015 and
2014, selling, general and administrative expenses include charges
of $1.5 million and $1.1 million, respectively, in connection with
the data security incident disclosed in March 2014. These amounts
reflect a contingent liability of $1.5 million recorded in the
three months ended March 31, 2015. (2) The tax provision for
the adjustments to net earnings was calculated using an estimated
effective tax rate of 37.0% and 39.0% for the three months ended
March 31, 2015 and 2014, respectively.
Supplemental Schedule E
SALLY BEAUTY
HOLDINGS, INC. AND SUBSIDIARIES Non-GAAP Financial Measures
Reconciliations, Continued
Six Months Ended March
31, 2015 As Reported
Charges fromData SecurityIncident (1)
As Adjusted(Non-GAAP)
Selling, general and administrative expenses $ 654,410 $
(1,756 ) $ 652,654 SG&A expenses, as a percentage of sales 34.4
% 34.3 % Operating earnings 245,244 1,756 247,000 Operating Profit
Margin 12.9 % 13.0 % Earnings before provision for income
taxes 186,775 1,756 188,531 Provision for income taxes (2)
70,331 650
70,981 Net earnings $ 116,444
$ 1,106 $ 117,550
Earnings per share: Basic $ 0.74 $ 0.01 $ 0.75 Diluted $
0.73 $ 0.01 $ 0.74
Six Months Ended March 31, 2014
As Reported
Charges fromData SecurityIncident (1)
As Adjusted(Non-GAAP)
Selling, general and administrative expenses $ 632,291 $
(1,110 ) $ 631,181 SG&A expenses, as a percentage of sales 34.0
% 33.9 % Operating earnings 245,881 1,110 246,991 Operating Profit
Margin 13.2 % 13.3 % Earnings before provision for income
taxes 188,134 1,110 189,244 Provision for income taxes (2)
71,647 433
72,080 Net earnings $ 116,487
$ 677 $ 117,164
Earnings per share: Basic $ 0.71 $ 0.00 $ 0.72 Diluted $
0.70 $ 0.00 $ 0.70 (1) For the six months ended March
31, 2015 and 2014, selling, general and administrative expenses
include charges of $1.8 million and $1.1 million, respectively, in
connection with the data security incident disclosed in March 2014.
These amounts reflect a contingent liability of $1.5 million
recorded in the three months ended March 31, 2015. (2) The
tax provision for the adjustments to net earnings was calculated
using an estimated effective tax rate of 37.0% and 39.0% for the
six months ended March 31, 2015 and 2014, respectively.
Supplemental Schedule F
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES Store Count and
Same Store Sales (Unaudited) As of March 31, 2015
2014 CHG Number of retail stores (end
of period): Sally Beauty Supply: Company-operated stores 3,612
3,456 156 Franchise stores 19 21 (2 ) Total
Sally Beauty Supply 3,631 3,477 154 Beauty Systems Group:
Company-operated stores 1,112 1,095 17 Franchise stores 166
159 7 Total Beauty System Group 1,278
1,254 24 Total 4,909 4,731 178
BSG distributor sales consultants (end of period) (1)
971 993 (22 )
2015 2014 Second quarter
company-operated same store sales growth (2)
Basis Pt
Chg Sally Beauty Supply 1.4 % 0.5 % 90 Beauty Systems
Group 5.9 % 2.2 % 370 Consolidated 2.8 % 1.0 % 180 Six
months ended March 31 company-operated same store sales growth (2)
Basis Pt Chg Sally Beauty Supply 1.5 % 0.7 % 80
Beauty Systems Group 4.9 % 3.7 % 120 Consolidated 2.5 % 1.6 % 90
(1) Includes 329 and 334 distributor sales
consultants as reported by our franchisees at March 31, 2015 and
2014, respectively. (2) For the purpose of calculating our
same store sales metrics, we compare the current period sales for
stores open for 14 months or longer as of the last day of a month
with the sales for these stores for the comparable period in the
prior fiscal year. Our same store sales are calculated in constant
U.S. dollars and include internet-based sales and the effect of
store expansions, if applicable, but do not generally include the
sales of stores relocated until 14 months after the relocation. The
sales of stores acquired are excluded from our same store sales
calculation until 14 months after the acquisition.
Supplemental Schedule G
SALLY BEAUTY
HOLDINGS, INC. AND SUBSIDIARIES Selected Financial Data and
Debt (Amounts in thousands) (Unaudited) March 31, 2015
September 30, 2014 Financial condition information (at period end):
Working capital $ 766,899 $ 640,612 Cash and cash equivalents
246,027 106,575 Property and equipment, net 233,761 238,111 Total
assets $ 2,134,853 2,029,973 Total debt, including capital leases
1,810,156 1,811,641 Total stockholders' (deficit) equity ($261,004
) ($347,053 )
As of March 31, 2015 Interest Rates Debt position excluding
capital leases (at period end): Revolving ABL facility $ - (i)
Prime + 0.50-0.75% or (ii) LIBOR + 1.50-1.75% Senior notes due 2019
750,000 6.875 % Senior notes due 2022 (1) 856,978 5.750 % Senior
notes due 2023 200,000 5.500 % Other (2) 23 5.790 %
Total debt $ 1,807,001
Debt maturities, excluding capital leases
Twelve months ending March 31,
2016
$ 23
2017-2019
-
2020
750,000 Thereafter (1) 1,056,978 Total debt $
1,807,001 (1) Amount includes unamortized
premium of $7.0 million related to notes in an aggregate principal
amount of $150.0 million issued in September 2012. The 5.75%
interest rate relates to notes in an aggregate principal amount of
$850.0 million. (2) Represents pre-acquisition debt of
businesses acquired.
Sally Beauty Holdings, Inc.Karen Fugate, 940-297-3877Investor
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