Sally Beauty Holdings, Inc. Announces Fiscal 2015 Second Quarter Results
-
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
DENTON, Texas--(BUSINESS WIRE)--
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 Pt Chg | | | | | | | | Basis Pt Chg |
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 from Data Security Incident (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 from Data Security Incident (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 from Data Security Incident (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 from Data Security Incident (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, 940-297-3877
Investor
Relations
Source: Sally Beauty Holdings, Inc.