Sally Beauty Holdings, Inc. (NYSE: SBH) (the “Company”) today
announced financial results for the fiscal 2017 first quarter. The
Company will hold a conference call today at 10:00 a.m. (Central)
to discuss these results and its business.
Fiscal 2017 First Quarter Highlights
Consolidated net sales were $999.6 million in the fiscal first
quarter, an increase of 0.2% from the prior year’s first quarter.
Same store sales growth of 0.4% and incremental sales from new
stores were partially offset by the unfavorable impact from foreign
currency exchange rates of $15.7 million, or approximately 1.6% of
sales.
Gross margin for the quarter was 49.2%, a decline of 30 basis
points from the prior year’s first quarter due to unfavorable
product and customer mix shift, lower vendor allowances and higher
promotions than the prior year.
Selling, general and administrative expense (SG&A) during
the quarter, excluding depreciation and amortization expense, was
34.8% of sales, an increase of 80 basis points from the prior year,
driven by wage increases for store sales associates, higher
expenses due to on-going upgrades to information technology systems
and incremental expenses from new store openings.
Operating earnings were $117.5 million, down 10.3% from $130.9
million in the prior year quarter primarily due to an increase in
cost of goods sold and SG&A expenses outpacing the increase in
sales.
Net earnings were $55.8 million, up 32.2% compared to reported
net earnings of $42.2 million in the prior year first quarter and
down 14.2% compared to the prior year first quarter adjusted net
earnings of $65.1 million.
Diluted earnings per share were $0.39 compared to the prior year
first quarter reported and adjusted diluted earnings per share of
$0.28 and $0.43, respectively.
Cash flow from operations was $90.5 million in the first quarter
compared to $69.1 million, an increase of $21.3 million, over the
prior year fiscal first quarter. Operating free cash flow was a
strong $62.4 million in the fiscal first quarter, an increase of
$33.9 million or 118.7% compared to the prior year quarter. The
Company repurchased (and subsequently retired) a total of 2.5
million shares of common stock during the quarter at an aggregate
cost of $67.0 million. Approximately $498.2 million authorization
remains available under the current $1 billion share repurchase
program.
“We had a disappointing start to fiscal 2017, as sales growth
and gross margins fell below expectations,” stated Chris Brickman,
President and Chief Executive Officer. “In our core Sally business,
our financial performance was negatively impacted by the
challenging retail environment and promotional activity that failed
to drive sufficient traffic to the stores. In response, we are
today announcing a comprehensive restructuring plan and other
aggressive cost reduction initiatives that we expect will
meaningfully lower our cost structure without compromising our
ability to serve the customer and execute on our strategic
priorities. These actions should enable us to deliver low-to-mid
single digit adjusted operating income growth in fiscal 2017
despite lowering our full year same store sales outlook to a range
of flat to low-single-digit growth.
“Looking forward, the Sally team will test a new loyalty program
this spring and continue to focus on improving customer engagement
and conversion, while BSG continues to strive towards gaining
channel share and becoming the indisputable partner of choice for
both stylists and manufacturers. Over the long-term, we remain
focused on evolving our business model to better meet the needs of
our customers, drive profitable growth and create value for our
shareholders.”
Additional Fiscal 2017 First Quarter Details
Interest expense for the fiscal 2017 first quarter was $26.8
million, down $37.1 million from the fiscal 2016 first quarter. In
the prior year’s first quarter, the Company recorded in interest
expense the loss on the extinguishment of debt of $33.3 million in
connection with the December 2015 redemption of its $750 million of
6.875% Senior Notes Due 2019 and the overlapping interest expense
on such senior notes of $2.1 million.
The Company’s effective tax rate in the fiscal 2017 first
quarter was 38.4%, up 150 basis points compared to the prior year’s
effective tax rate in the fiscal 2016 first quarter of 36.9%. The
increase in the effective tax rate was due primarily to the absence
of a prior year tax benefit from the retroactive reinstatement of
certain tax credits.
Adjusted EBITDA for the fiscal 2017 first quarter was $148.1
million, a decrease of $11.8 million, or 7.4%, from the prior
year’s first quarter. Adjusted EBITDA margin was 14.8% in the
quarter vs. 16.0% in the prior year’s quarter.
Inventory at quarter end was $907.8 million, down $4.6 million,
or 0.5%, vs. the prior year first quarter, reflecting the Company’s
aggressive approach to inventory management during the challenging
retail environment. Capital expenditures in the fiscal first
quarter were $28.0 million, primarily for information technology
projects, new stores openings and distribution facility
upgrades.
Restructuring Plan and Other Cost Reduction
Initiatives
On January 26, 2017, the Board of Directors of the Company
approved a comprehensive restructuring plan (the “Restructuring
Plan”) for the Company’s businesses that includes a wide range of
organizational efficiency initiatives and cost reduction
opportunities.
The Company expects that it will incur total aggregate charges
of approximately $12 million to $14 million from the Restructuring
Plan, including estimated severance and related costs of
approximately $7 million. The Company expects to recognize most of
these charges in the second quarter of 2017.
The Restructuring Plan is expected to generate annualized pretax
benefits in the range of $17 million to $19 million, with pretax
benefits in fiscal 2017 estimated in the range of $10 million to
$12 million.
Other cost reduction initiatives, not included in the
Restructuring Plan, are expected to further reduce planned
operating expenses by approximately $20 million over the remainder
of fiscal year 2017.
Revised Fiscal 2017 Guidance
- The Company now expects full year same
store sales in the range of flat to low-single-digit growth versus
prior guidance of approximately 3%.
- Net new store openings are expected to
grow in the range of 2.0% to 3.0%, unchanged from prior
guidance.
- Full year consolidated gross margin is
now expected to expand in the range of 20 to 30 basis points versus
prior guidance of gross margin expansion in the range of 30 to 40
basis points.
- Including the Restructuring Plan and
other cost reduction initiatives, the Company now expects adjusted
SG&A in the range of 34.1% to 34.4% of sales and adjusted
operating income growth in the low-to-mid single digits in fiscal
2017.
- Capital expenditures for the full
fiscal year are expected in a range of $115 million to $120 million
versus prior guidance of approximately $135 million.
Fiscal 2017 First Quarter Segment Results
Sally Beauty Supply (“Sally”)
- Sales were $589.9 million, down 1.9%
from $601.4 million in the fiscal 2016 first quarter. Sally’s sales
performance was negatively impacted by the challenging retail
environment and promotional activity that failed to drive
sufficient traffic to the stores. Unfavorable foreign currency
exchange rates of $15.7 million, or 260 basis points of sales
growth, was partially offset by incremental sales from new store
openings. Same store sales declined 0.6% in the quarter.
- Net store count at quarter end
increased by 104 from the prior year first quarter, to 3,815.
- Gross margin was 55.0%, a 10 basis
point increase from the prior year’s first quarter, driven by gross
margin improvements in the U.K. and continental Europe, partially
offset by the incremental promotional environment in the U.S.
- Operating earnings were $92.5 million,
down 13.1% from the prior year’s first quarter, driven by the sales
decline, labor cost inflation and new store opening costs,
partially offset by modest gross margin improvement.
Beauty Systems Group (“BSG”)
- Sales were $409.8 million, up 3.3% from
$396.6 million in the fiscal 2016 first quarter, driven by same
store sales growth of 2.6%, new store openings and the acquisition
of Peerless Beauty in September 2016. Foreign currency exchange
rates did not have a material impact on BSG’s reported revenue
growth.
- Net store count at quarter end
increased by 37 from the prior year to 1,340.
- Gross margin declined 40 basis points
from the fiscal 2016 first quarter to 40.9%, driven by unfavorable
product mix shift and higher promotions than the prior year first
quarter, and partially offset by favorable customer mix.
- Operating earnings were $63.6 million,
down 2.9% from the prior first year, driven by lower gross margin
and higher SG&A costs (wages, store rent and computer expense)
partially offset by sales growth.
- Total BSG distributor sales consultants
at quarter end were 900 versus 930 at the end of the prior year’s
first quarter.
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 800-398-9386 (International: 612-332-0819).
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) February 2, 2017 through February 16, 2017 by
dialing 800-475-6701 or if international dial 320-365-3844 and
reference the conference ID number 416018. 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 $4.0 billion annually. Through the Sally Beauty
Supply and Beauty Systems Group businesses, the Company sells and
distributes through over 5,000 stores, including approximately 182
franchised units, throughout the United States, the United Kingdom,
Belgium, Chile, Peru, Colombia, France, the Netherlands, Canada,
Puerto Rico, Mexico, Ireland, Spain and Germany. Sally Beauty
Supply stores offer up to 9,000 products for hair, skin, and nails
through professional lines such as Clairol, L’Oreal, OPI 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: anticipating and effectively
responding to changes in consumer and professional stylist
preferences and buying trends in a timely manner; the success of
our strategic initiatives, including our store refresh program and
increased marketing efforts, to enhance the customer experience,
attract new customers, drive brand awareness and improve customer
loyalty; our ability to efficiently manage and control our costs
and the success of our cost control plans, including our recently
announced restructuring plan; our ability to implement our
restructuring plan in various jurisdictions; our ability to manage
the effects of our cost reduction plans on our employees and other
operations costs; charges related to the restructuring plan;
possible changes in the size and components of the expected costs
and charges associated with the restructuring plan; our ability to
realize the anticipated cost savings from the restructuring plan
within the anticipated time frame, if at all; the highly
competitive nature of, and the increasing consolidation of, the
beauty products distribution industry; the timing and acceptance of
new product introductions; shifts in product mix sold during any
period; 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; our
dependence upon manufacturers who have developed or could develop
their own distribution businesses which compete directly with ours;
the possibility of material interruptions in the supply of products
by our third-party manufacturers or distributors or increases in
the prices of products we purchase from 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;
diversion of professional products sold by Beauty Systems Group 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; the
success of our initiatives to expand into new geographies; the
success of our existing stores, and our ability to increase sales
at existing stores; opening and operating new stores profitably;
the volume of traffic to our stores; the impact of the health of
the economy upon our business; conducting business outside the
United States; the impact of Britain’s vote to leave the European
Union and related or other disruptive events in the European Union
or other geographies in which we conduct business; rising labor and
rental costs; protecting our intellectual property rights,
particularly our trademarks; the risk that our products may
infringe on the intellectual property rights of others;
successfully updating and integrating our information technology
systems; disruption in our information technology systems; a
significant data security breach, including misappropriation of our
customers’, or employees’ or suppliers’ 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’s attention required to investigate and
remediate a data security breach and to continuously upgrade our
information technology security systems to address evolving
cyber-security threats; the ultimate determination of the extent or
scope of the potential liabilities relating to our past or any
future data security incidents; 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 our
liquidity needs; 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; 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, 2016,
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, basic and diluted
earnings per share; (3) Adjusted SG&A expenses; and (4)
Operating Free Cash Flow. 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, costs related to
the Company’s previously disclosed data security incidents,
management transition plan, executive separation expenses and asset
impairment charges.
Adjusted Net Earnings, Basic and Diluted Earnings Per Share and
SG&A Expenses – Adjusted net earnings, basic and diluted
earnings per share, operating earnings and SG&A expenses are
GAAP net earnings, earnings per share, diluted earnings per share,
operating earnings and SG&A expenses that exclude costs related
to the Company’s previously disclosed management transition plan,
executive separation expenses, data security incidents, asset
impairment charges and the loss on extinguishment of debt and
overlapping interest expense for the relevant time periods as
indicated in the accompanying non-GAAP reconciliations to the
comparable GAAP financial measures.
We are unable to reconcile forecasted adjusted SG&A, as a
percent to sales, and adjusted operating income growth to U.S. GAAP
measures without unreasonable efforts because a forecast of certain
charges, such as restructuring charges and costs related to data
security incidents, is not practical.
We believe that Adjusted EBITDA and Adjusted Net Earnings, Basic
and Diluted Earnings Per Share and SG&A Expenses provide
valuable information regarding our earnings and business trends by
excluding specific items that we believe are not indicative of the
ongoing operating results of our businesses, providing a useful way
for investors to make a comparison of our performance over time and
against other companies in our industry.
Operating Free Cash Flow – We define the measure Operating Free
Cash Flow as GAAP net cash provided by operating activities less
capital expenditures. We believe Operating Free Cash Flow is an
important liquidity measure that provides useful information to
investors about the amount of cash generated from operations after
taking into account capital expenditures.
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 and cash flow. Our management and Board of Directors
also use these non-GAAP measures as supplemental measures to
evaluate our businesses and the performance of management,
including the determination of performance-based compensation, to
make operating and strategic decisions, and to allocate financial
resources. We believe that these non-GAAP measures also provide
meaningful information for investors and securities analysts to
evaluate our historical and prospective financial performance and
cash flow. 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 Statements
of Earnings A Segment
Information B Non-GAAP Financial Measures Reconciliations (Adjusted
EBITDA) C Non-GAAP Financial Measures Reconciliations (Continued) D
Store Count and Same Store Sales E Selected Financial Data and Debt
F Supplemental
Schedule A
SALLY BEAUTY HOLDINGS, INC. AND
SUBSIDIARIES Consolidated Statements of Earnings (In thousands,
except per share data) (Unaudited) Three Months Ended
December 31, 2016
2015 (1)
% Chg Net sales $ 999,609 $ 998,032 0.2 % Cost
of products sold and distribution expenses
507,901 503,983
0.8 % Gross profit 491,708 494,049 -0.5 % Selling, general and
administrative expenses (2) 347,412 339,728 2.3 % Depreciation and
amortization 26,839
23,386 14.8 % Operating earnings
117,457 130,935 -10.3 % Interest expense (3)
26,799 63,943
-58.1 % Earnings before provision for income taxes 90,658 66,992
35.3 % Provision for income taxes 34,832
24,749 40.7 % Net
earnings $ 55,826 $ 42,243
32.2 % Earnings per share: Basic $ 0.39
$ 0.28 39.3 % Diluted $ 0.39 $ 0.28 39.3 % Weighted average
shares: Basic 143,631 150,786 Diluted 144,860
152,426
Basis Pt Chg
Comparison as a % of
Net sales
Sally Beauty Supply Segment Gross Margin 55.0 % 54.9 % 10 BSG
Segment Gross Margin 40.9 % 41.3 % (40 ) Consolidated Gross Margin
49.2 % 49.5 % (30 ) Selling, general and administrative expenses
34.8 % 34.0 % 80 Consolidated Operating Margin 11.8 % 13.1 % (130 )
Effective Tax
Rate
38.4 % 36.9 % 150
(1)
Certain amounts for the prior fiscal period have been reclassified
to conform to the current period presentation. (2) For the
three months ended December 31, 2016 and 2015, selling, general and
administrative expenses include share-based compensation expense of
$3.8 million and $4.2 million, respectively. In addition, for the
three months ended December 31, 2015, selling, general and
administrative expenses include pre-tax expenses incurred in
connection with the data security incidents disclosed earlier of
$0.5 million and pre-tax expenses incurred in connection with
management transition plans disclosed earlier of $0.9 million.
(3) For the three months ended December 31, 2015, interest
expense includes a loss on extinguishment of debt of $33.3 million
in connection with the Company's December 2015 redemption of its
senior notes due 2019.
Supplemental Schedule B
SALLY BEAUTY HOLDINGS,
INC. AND SUBSIDIARIES Segment Information (In thousands)
(Unaudited) Three Months Ended December 31, 2016
2015 (1)
% Net sales: Sally Beauty Supply $ 589,859 $ 601,439
-1.9 % Beauty Systems Group 409,750
396,593 3.3 % Total net
sales $ 999,609 $ 998,032
0.2 % Operating earnings: Sally Beauty Supply
$ 92,526 $ 106,464 -13.1 % Beauty Systems Group
63,600 65,493
-2.9 % Segment operating earnings 156,126 171,957 -9.2 %
Unallocated expenses (2) (34,855 ) (36,834 ) -5.4 %
Share-based compensation (3,814 ) (4,188 ) -8.9 % Interest expense
(3) (26,799 ) (63,943 )
-58.1 % Earnings before provision for income taxes
$ 90,658 $ 66,992
35.3 % Segment operating margin:
Basis Pt Chg
Sally Beauty Supply 15.7 % 17.7 % (200 ) Beauty Systems Group 15.5
% 16.5 % (100 ) Consolidated operating margin
11.8 % 13.1 % (130 ) (1)
Certain amounts for the prior fiscal period have been reclassified
to conform to the current period presentation. (2)
Unallocated expenses consist of corporate and shared costs, and are
included in selling, general and administrative expenses. For the
three months ended December 31, 2015, unallocated expenses include
pre-tax expenses incurred in connection with the data security
incidents disclosed earlier of $0.5 million and pre-tax expenses
incurred in connection with management transition plans disclosed
earlier of $0.9 million. (3) For the three months ended
December 31, 2015, interest expense includes a loss on
extinguishment of debt of $33.3 million in connection with the
Company's December 2015 redemption of its senior notes due 2019.
Supplemental
Schedule C
SALLY BEAUTY HOLDINGS, INC. AND
SUBSIDIARIES Non-GAAP Financial Measures Reconciliations (In
thousands) (Unaudited) Three Months Ended December 31,
Adjusted EBITDA: 2016 2015 % Net
earnings (per GAAP) $ 55,826 $ 42,243 32.2 % Add: Depreciation and
amortization 26,839 23,386 14.8 % Share-based compensation (1)
3,814 4,188 -8.9 % Loss from data security incidents (2) - 478
-100.0 % Management transition expenses (2) - 879 -100.0 % Interest
expense (3) 26,799 63,943 -58.1 % Provision for income taxes
34,832 24,749
40.7 % Adjusted EBITDA (Non-GAAP) $
148,110 $ 159,866 -7.4 %
Basis Pt Chg
Comparison as a % of
Net Sales
Adjusted EBITDA Margin 14.8 %
16.0 % (120 ) Operating Free
Cash Flow 2016 2015 % Net
cash provided by operating activities (per GAAP) $ 90,453 $ 69,129
30.8 % Less: Capital expenditures (28,008 )
(40,575 ) -31.0 % Operating Free
Cash Flow (Non-GAAP) $ 62,445 $
28,554 118.7 % (1) For the three months
ended December 31, 2016 and 2015, share-based compensation includes
$1.1 million and $1.3 million, respectively, of accelerated expense
related to certain retirement-eligible employees who are eligible
to continue vesting awards upon retirement. (2) Results for
the three months ended December 31, 2015 reflect $0.5 million of
pre-tax expenses incurred in connection with the data security
incidents disclosed earlier and $0.9 million of pre-tax expenses
incurred in connection with management transition plans disclosed
earlier. (3) For the three months ended December 31, 2015,
interest expense includes a loss on extinguishment of debt of $33.3
million (including call premiums of $25.8 million) in connection
with the Company's December 2015 redemption of its senior notes due
2019.
Supplemental Schedule D
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES Non-GAAP
Financial Measures Reconciliations, Continued (In thousands)
(Unaudited)
Three Months Ended December 31, 2016 As Reported
Loss onExtinguishmentof Debt (1)
OverlappingInterestExpense (1)
Charges fromData SecurityIncidents (2)
ManagementTransitionExpenses (2)
As Adjusted(Non-GAAP)
Selling, general and administrative expenses 347,412 347,412
SG&A expenses, as a percentage of sales 34.8 % 34.8 % Operating
earnings 117,457 117,457 Operating Margin 11.8 % 11.8 % Earnings
before provision for income taxes 90,658 90,658 Provision for
income taxes (3) 34,832
34,832 Net earnings
$ 55,826
$ 55,826
Earnings per share: Basic $ 0.39 $ 0.39 Diluted $
0.39 $ 0.39 Three Months Ended December 31, 2015 As Reported
Loss onExtinguishmentof Debt (1)
OverlappingInterestExpense (1)
Charges fromData SecurityIncidents (2)
ManagementTransitionExpenses (2)
As Adjusted(Non-GAAP)
Selling, general and administrative expenses 339,728 $ (478
) $ (879 ) 338,371 SG&A expenses, as a percentage of sales 34.0
% 33.9 % Operating earnings 130,935 478 879 132,292 Operating
Margin 13.1 % 13.3 % Earnings before provision for income taxes
66,992 $ 33,296 $ 2,148 478 879 103,793 Provision for income taxes
(3) 24,749 12,652
816 182
334 38,733 Net
earnings $ 42,243 $ 20,644
$ 1,332 $ 296 $
545 $ 65,060 Earnings per share:
Basic $ 0.28 $ 0.14 $ 0.01 $ 0.00 $ 0.00 $ 0.43 Diluted $ 0.28 $
0.14 $ 0.01 $ 0.00 $ 0.00 $ 0.43
(1) For the three months
ended December 31, 2015, interest expense includes a loss on
extinguishment of debt of $33.3 million in connection with the
Company's December 2015 redemption of its senior notes due 2019 and
interest in the amount of $2.1 million on such senior notes after
December 3, 2015 and until their redemption, as well as interest on
the Company's senior notes due 2025 issued on December 3, 2015.
These pro-forma adjustments assume the senior notes due 2019 were
redeemed on December 3, 2015. (2)
For the three months ended December 31,
2015, selling, general and administrative expenses include pre-tax
expenses incurred in connection with the data security incidents
disclosed earlier of $0.5 million and pre-tax expenses incurred in
connection with management transition plans disclosed earlier of
$0.9 million.
(3) The tax provision associated with the adjustments to net
earnings was calculated using an effective tax rate of 38.0%.
Supplemental
Schedule E
SALLY BEAUTY HOLDINGS, INC. AND
SUBSIDIARIES Store Count and Same Store Sales (Unaudited)
As of December 31, 2016 2015 Chg Number of
stores (at end of period): Sally Beauty Supply: Company-operated
stores 3,797 3,693 104 Franchise stores 18 18 -
Total Sally Beauty Supply 3,815 3,711 104 Beauty
Systems Group: Company-operated stores 1,177 1,141 36 Franchise
stores 163 162 1 Total Beauty System Group
1,340 1,303 37 Total 5,155 5,014
141 BSG distributor sales consultants (end of period)
(1) 900 930 (30 )
2016 2015 First quarter
company-operated same store sales growth (decline) (2)
Basis Pt Chg Sally Beauty Supply -0.6 % 2.4 %
(300 ) Beauty Systems Group 2.6 % 7.2 % (460 ) Consolidated 0.4 %
3.9 % (350 ) (1) Includes 301 and 316 distributor sales
consultants as reported by our franchisees at December 31, 2016 and
2015, 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 F
SALLY BEAUTY
HOLDINGS, INC. AND SUBSIDIARIES Selected Financial Data and
Debt (In thousands) (Unaudited)
December 31,2016
September 30,2016
Financial condition information (at period end): Working capital $
687,424 $ 684,162 Cash and cash equivalents 94,410 86,622 Property
and equipment, net 318,260 319,558 Total assets 2,109,859 2,132,063
Total debt, including capital leases (1) 1,784,287 1,784,010 Total
stockholders' deficit ($288,976 ) ($276,166 )
As of December 31,2016
Interest Rates (2)
Debt position, excluding capital leases: Revolving ABL facility $ -
(i) Prime + 0.50-0.75% or(ii) LIBOR +
1.50-1.75%
Senior notes due 2022 850,000 5.750 % Senior notes due 2023 200,000
5.500 % Senior notes due 2025 750,000 5.625 % Total debt,
excluding capital leases (3) $ 1,800,000
Debt maturities,
excluding capital leases: Twelve months ending December 31,
2017-2021 $ - Thereafter 1,800,000 Total debt,
excluding capital leases (3) $ 1,800,000 (1) Total
debt, including capital leases, is reported net of unamortized debt
issuance costs of $22.9 million at December 31, 2016 and $23.7
million at September 30, 2016. (2) Interest rates shown
represent the coupon or contractual rates related to each
indebtedness. (3) Amounts do not include capital lease
obligations of $1.8 million, unamortized premium of $5.3 million
related to senior notes due 2022 in an aggregate principal amount
of $150.0 million, or unamortized debt issuance costs in the
aggregate amount of $22.9 million in connection with the Company's
senior notes.
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version on businesswire.com: http://www.businesswire.com/news/home/20170202005178/en/
Sally Beauty Holdings, Inc.Karen Fugate, 940-297-3877Investor
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