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Sally Beauty Holdings Reports Second Quarter Fiscal 2024 Results
Fiscal 2024 Second Quarter Summary
Consolidated net sales of $908 million, a decrease of 1.1% compared to the prior year; Consolidated comparable sales decline of 1.5%; Global e-commerce sales of $90 million, representing 9.9% of net sales; GAAP gross margin 51.0%; GAAP operating earnings of $60 million and GAAP operating margin of 6.6%; Adjusted Operating Earnings of $69 million and Adjusted Operating Margin of 7.6%; GAAP diluted net earnings per share of $0.27 and Adjusted Diluted Net Earnings Per Share of $0.35; and Cash flow from operations of $37 million and Operating Free Cash Flow of $23 million.
"Our second quarter performance reflects the benefits of expanded distribution, product innovation and the strengthening of salon demand trends in our Beauty Systems Group segment, offset by moderating traffic and customer purchasing patterns in our Sally Beauty segment resulting from the inflationary environment," said Denise Paulonis, president and chief executive officer. "Amidst these cross-currents, our teams continued to advance our strategic initiatives and deliver engaging experiences for our customers as we focus on driving long-term growth and profitability."
Paulonis added, "We further optimized our balance sheet by refinancing our $680 million senior unsecured note due 2025, which extended the maturity to 2032. We also generated solid cash flow from operations of $37 million in the quarter, allowing us to return value to shareholders through our share repurchase program."
Fiscal 2024 Second Quarter Operating Results
Second quarter consolidated net sales were $908.4 million, a decrease of 1.1% compared to the prior year. Foreign currency translation had a favorable impact of 50 basis points on consolidated net sales for the quarter. At constant currency, global e-commerce sales were $90 million or 9.9% of consolidated net sales for the quarter.
Consolidated comparable sales declined 1.5%, primarily reflecting soft traffic and consumer purchasing trends at Sally Beauty driven by the inflationary environment, partially offset by expanded distribution, product innovation and improving salon demand trends at Beauty Systems Group.
Consolidated gross profit for the second quarter was $463.1 million compared to $468.3 million in the prior year, a decrease of 1.1%. Consolidated GAAP gross margin was 51.0%, which was flat to the prior year of 51.0%. Excluding the prior year's true-up of the non-cash inventory write-down as part of the Company's previously announced distribution center consolidation and store optimization plan, Adjusted Gross Margin was 51.0%, an increase of 30 basis points compared to 50.7% in the prior year. The increase was driven primarily by lower distribution and freight costs from supply chain efficiencies, partially offset by an unfavorable sales mix shift between Sally Beauty (higher margin) and Beauty Systems Group (lower margin).
Selling, general and administrative (SG&A) expenses totaled $403.4 million, an increase of $13.8 million compared to the prior year. Adjusted Selling, General and Administrative Expenses, excluding costs related to the Company's fuel for growth initiative and other expenses, totaled $394.5 million, an increase of $4.8 million compared to the prior year. The increase was driven primarily by higher labor costs and rent expense, partially offset by lower accrued bonus expense. As a percentage of sales, Adjusted SG&A expenses were 43.4% compared to 42.4% in the prior year.
GAAP operating earnings and operating margin in the second quarter were $59.6 million and 6.6%, compared to $71.4 million and 7.8%, in the prior year. Adjusted Operating Earnings and Operating Margin, excluding the costs related to the Company's fuel for growth initiative, restructuring efforts, and other expenses, were $68.6 million and 7.6%, compared to $76.3 million and 8.3%, in the prior year.
GAAP net earnings in the second quarter were $29.2 million, or $0.27 per diluted share, compared to GAAP net earnings of $40.9 million, or $0.37 per diluted share in the prior year. Adjusted Net Earnings, excluding the costs related to the Company's fuel for growth initiative, loss on debt extinguishment, restructuring efforts, and other expenses, were $37.8 million, or $0.35 per diluted share, compared to Adjusted Net Earnings of $44.6 million, or $0.41 per diluted share in the prior year. Adjusted EBITDA in the second quarter was $99.5 million, a decrease of 5.4% compared to the prior year, and Adjusted EBITDA Margin was 11.0%, a decrease of 50 basis points compared to the prior year.
Balance Sheet and Cash Flow
As of March 31, 2024, the Company had cash and cash equivalents of $97 million and a $62 million balance outstanding under its asset-based revolving line of credit. At the end of the quarter, inventory was $1.04 billion, up 1.6% versus a year ago. The Company ended the quarter with a net debt leverage ratio of 2.2x.
During the second quarter, the Company issued a new $600 million 8-year senior unsecured note due 2032. The net proceeds from the transaction, in combination with existing cash and a modest draw under the Company's asset-based revolving line of credit, were used to refinance the Company's $680 million 5.625% senior unsecured note due 2025. The new senior unsecured note was issued with a coupon rate of 6.75%.
Second quarter cash flow from operations was $36.9 million. Capital expenditures in the quarter totaled $14.1 million. During the quarter, the Company repurchased 1.5 million shares under its share repurchase program at an aggregate cost of $20 million.
Fiscal 2024 Second Quarter Segment Results
Sally Beauty Supply
Segment net sales were $513.2 million in the quarter, a decrease of 3.2% compared to the prior year. The segment had a favorable impact of 90 basis points from foreign currency translation on reported sales. At constant currency, segment e-commerce sales were $34 million or 6.6% of segment net sales for the quarter. Segment comparable sales decreased 4.0% in the second quarter, primarily reflecting soft traffic and customer purchasing trends driven by the inflationary environment. At the end of the quarter, segment store count was 3,134 compared to 3,143 in the prior year. GAAP gross margin increased by 10 basis points to 59.9% compared to the prior year. The increase was driven primarily by lower distribution and freight costs from supply chain efficiencies, partially offset by the prior year's true-up of the non-cash inventory write-down as part of the Company's previously announced distribution center consolidation and store optimization plan. GAAP operating earnings were $76.8 million compared to $92.1 million in the prior year. GAAP operating margin decreased to 15.0% compared to 17.4% in the prior year.
Beauty Systems Group
Segment net sales were $395.1 million in the quarter, an increase of 1.7% compared to the prior year. At constant currency, segment e-commerce sales were $56 million or 14.1% of segment net sales for the quarter. Segment comparable sales increased 2.0% in the second quarter, primarily reflecting expanded distribution, product innovation and improving salon demand trends. At the end of the quarter, net store count was 1,334 compared to 1,341 in the prior year. GAAP gross margin increased 50 basis points to 39.4% in the quarter compared to the prior year. The increase was driven primarily by lower distribution and freight costs from supply chain efficiencies, partially offset by lower product margin due to a higher take rate on promotions and brand mix. GAAP operating earnings were $43.0 million in the quarter compared to $37.3 million in the prior year. GAAP operating margin in the quarter was 10.9% compared to 9.6% in the prior year. At the end of the quarter, there were 654 distributor sales consultants compared to 675 in the prior year.
Fiscal Year 2024 Guidance
The Company is updating its full year guidance by adjusting its full year operating margin outlook to reflect the Company's second quarter results, as follows:
The Company continues to expect net sales and comparable sales to be approximately flat compared to the prior year; Gross Margin is now expected to be in the range of 50.5% to 51.0%; Adjusted Operating Margin is now expected to be approximately 8.5%; Operating Cash Flow is now expected to be approximately $240 million; and Capital expenditures are expected to be approximately $100 million.
* The Company does not provide a reconciliation for forward-looking non-GAAP financial measures where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the occurrence and the financial impact of various items that have not yet occurred, are out of the Company's control or cannot be reasonably predicted. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures. The Company does not provide a reconciliation for forward-looking non-GAAP financial measures where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the occurrence and the financial impact of various items that have not yet occurred, are out of the Company's control or cannot be reasonably predicted. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.
Conference Call and Where You Can Find Additional Information
The Company will hold a conference call and audio webcast today to discuss its financial results and its business at approximately 7:30 a.m. Central Time today, May 9, 2024. 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, sallybeautyholdings.com/investor-relations. The conference call can be accessed by dialing (877) 336-4440 (International: (409) 207-6984) and referencing the access code 2198500#. 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. A replay of the earnings conference call will be available starting at 11:30 a.m. Central Time, May 9, 2024, through May 23, 2024, by dialing (866) 207-1041 (International: (402) 970-0847) and referencing access code 3810288#. Also, a website replay will be available on sallybeautyholdings.com/investor-relations.
About Sally Beauty Holdings, Inc.
Sally Beauty Holdings, Inc. (NYSE: SBH), as the leader in professional hair color, sells and distributes professional beauty supplies globally through its Sally Beauty Supply and Beauty Systems Group businesses. Sally Beauty Supply stores offer up to 7,000 products for hair color, hair care, nails, and skin care through proprietary brands such as Ion(R), Bondbar(R), Strawberry Leopard(R), Generic Value Products(R), Inspired by Nature(R) and Silk Elements(R) as well as professional lines such as Wella(R), Clairol(R), OPI(R), L'Oreal(R), Wahl(R) and Babyliss Pro(R). Beauty Systems Group stores, branded as CosmoProf(R) or Armstrong McCall(R) stores, along with its outside sales consultants, sell up to 8,000 professionally branded products including Paul Mitchell(R), Wella(R), Matrix(R), Schwarzkopf(R), Kenra(R), Goldwell(R), Joico(R), Amika(R) and Moroccannoil(R), intended for use in salons and for resale by salons to retail consumers. For more information about Sally Beauty Holdings, Inc., please visit https://www.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. Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as "believes," "projects," "expects," "can," "may," "estimates," "should," "plans," "targets," "intends," "could," "will," "would," "anticipates," "potential," "confident," "optimistic," or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, guidance, expectations and future plans. Forward-looking statements can also be identified by the fact that these statements do not relate strictly to historical or current matters.
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, those described in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended September 30, 2023. 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 United States, or GAAP, and are therefore referred to as non-GAAP financial measures: (1) Adjusted Gross Margin; (2) Adjusted Selling, General and Administrative Expenses; (3) Adjusted EBITDA and EBITDA Margin; (4) Adjusted Operating Earnings and Operating Margin; (5) Adjusted Net Earnings; (6) Adjusted Diluted Net Earnings Per Share; and (7) 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 Gross Margin - We define the measure Adjusted Gross Margin as GAAP gross margin excluding the true-up of the inventory write-down related to the Company's distribution center consolidation and store optimization plan for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures.
Adjusted Selling, General and Administrative Expenses - We define the measure Adjusted Selling, General and Administrative Expenses as GAAP selling, general and administrative expenses excluding costs related to the Company's fuel for growth initiative and other expenses for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures.
Adjusted EBITDA and EBITDA Margin - 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 restructuring plans, costs related to the Company's fuel for growth initiative and other expenses for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures. Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of net sales.
Adjusted Operating Earnings and Operating Margin - Adjusted operating earnings are GAAP operating earnings that exclude costs related to the Company's restructuring plans, costs related to the Company's fuel for growth initiative and other expenses for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures. Adjusted Operating Margin is Adjusted Operating Earnings as a percentage of net sales.
Adjusted Net Earnings - Adjusted net earnings is GAAP net earnings that exclude tax-effected costs related to the Company's restructuring plans, tax-effected expenses related to the Company's fuel for growth initiative and other costs, and tax-effected expenses related to loss on debt extinguishment for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures.
Adjusted Diluted Net Earnings Per Share - Adjusted diluted net earnings per share is GAAP diluted earnings per share that exclude tax-effected costs related to the Company's restructuring plans, tax-effected expenses related to the Company's fuel for growth initiative and other costs, and tax-effected expenses related to loss on debt extinguishment for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures.
Operating Free Cash Flow - We define the measure Operating Free Cash Flow as GAAP net cash provided by operating activities less payments for capital expenditures (net). 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 payments for capital expenditures (net).
We believe that these non-GAAP financial measures 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.
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 flows. 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. 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
--------------------------------------------------------------------------------------------------------
Segment Information 1 1
Non-GAAP Financial Measures Reconciliations 2-3 2-3
Non-GAAP Financial Measures Reconciliations; Adjusted EBITDA and
Operating Free Cash Flow 4 4
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31, Three Months Ended March 31, Six Months Ended March 31, Six Months Ended March 31,
----------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------------------------
2024 2023 Percentage 2024 2023 Percentage
Change Change
----------------------------------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- ---------------------------------- -------------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- ------------------------------
Net sales $ 908,361 $ $ 918,712 (1.1 )% $ $ 1,839,663 $ $ 1,875,767 (1.9 )%
Cost of products sold 445,289 450,373 (1.1 )% 909,415 918,854 (1.0 )%
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------- -------------------- -------------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- ---------- --------------------
Gross profit 463,072 468,339 (1.1 )% 930,248 956,913 (2.8 )%
Selling, general and administrative expenses 403,435 389,657 3.5 % 801,573 781,237 2.6 %
Restructuring 63 7,274 (99.1 )% (22 ) 17,680 (100.1 )%
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------- -------------------- -------------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- ---------- --------------------
Operating earnings 59,574 71,408 (16.6 )% 128,697 157,996 (18.5 )%
Interest expense 20,523 16,685 23.0 % 37,837 34,608 9.3 %
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------- -------------------- -------------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- ---------- --------------------
Earnings before provision for income taxes 39,051 54,723 (28.6 )% 90,860 123,388 (26.4 )%
Provision for income taxes 9,807 13,862 (29.3 )% 23,226 32,190 (27.8 )%
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------- -------------------- -------------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- ---------- --------------------
Net earnings $ 29,244 $ $ 40,861 (28.4 )% $ $ 67,634 $ $ 91,198 (25.8 )%
==================== ======= ==================== ==================== ==================== ======= ==================== ============== ==================== ========================== ==================== ========= ==================== ==================== ==================== ========= ==================== ========== ====================
Earnings per share:
Basic $ 0.28 $ $ 0.38 (26.3 )% $ $ 0.64 $ $ 0.85 (24.7 )%
Diluted $ 0.27 $ $ 0.37 (27.0 )% $ $ 0.63 $ $ 0.83 (24.1 )%
==================== ======= ==================== ==================== ==================== ======= ==================== ============== ==================== ========================== ==================== ========= ==================== ==================== ==================== ========= ==================== ========== ====================
Weighted average shares:
Basic 104,276 107,453 105,117 107,294
Diluted 107,080 109,706 107,881 109,499
==================== ======= ==================== ==================== ==================== ======= ==================== ================================== ========================== ==================== ========= ==================== ==================== ==================== ========= ====================
Basis Point Basis Point Basis Point Basis Point Basis Point Basis Point Basis Point Basis Point Basis Point Basis Point
Change Change Change Change Change Change Change Change Change Change
----------------------------------------------- ----------------------------------------------- -------------------- ----------------------------------------------- ---------------------------------- -------------------------- ------------------------------------------------- -------------------- ------------------------------------------------- ------------------------------
Comparison as a percentage of net sales
-----------------------------------------------
Consolidated gross margin 51.0 % 51.0 % -- 50.6 % 51.0 % (40 )
Selling, general and administrative expenses 44.4 % 42.4 % 200 43.6 % 41.6 % 200
Consolidated operating margin 6.6 % 7.8 % (120 ) 7.0 % 8.4 % (140 )
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 31, March 31, September 30, September 30,
2024 2024 2023 2023
----------------------------------------------------- ------------------------------ -------------------- ------------------------------
Cash and cash equivalents $ 97,174 $ $ 123,001
Trade and other accounts receivable 87,561 75,875
Inventory 1,039,752 975,218
Other current assets 55,836 53,903
-------------------- ---------- -------------------- -------------------- ----------
Total current assets 1,280,323 1,227,997
Property and equipment, net 273,175 297,779
Operating lease assets 562,770 570,657
Goodwill and other intangible assets 588,582 588,252
Other assets 41,692 40,565
-------------------- ---------- -------------------- -------------------- ----------
Total assets $ 2,746,542 $ $ 2,725,250
==================== ========== ==================== ==================== ==========
Current maturities of long-term debt $ 66,164 $ $ 4,173
Accounts payable 289,606 258,884
Accrued liabilities 150,002 163,366
Current operating lease liabilities 137,631 150,479
Income taxes payable 366 2,355
-------------------- ---------- -------------------- -------------------- ----------
Total current liabilities 643,769 579,257
Long-term debt, including capital leases 978,360 1,065,811
Long-term operating lease liabilities 458,030 455,071
Other liabilities 21,626 23,139
Deferred income tax liabilities, net 93,907 93,224
-------------------- ---------- -------------------- -------------------- ----------
Total liabilities 2,195,692 2,216,502
Total stockholders' equity 550,850 508,748
-------------------- ---------- -------------------- -------------------- ----------
Supplemental Schedule 1 Supplemental Schedule 1 Supplemental Schedule 1 Supplemental Schedule 1 Supplemental Schedule 1 Supplemental Schedule 1 Supplemental Schedule 1 Supplemental Schedule 1 Supplemental Schedule 1
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
Segment Information
(In thousands)
(Unaudited)
Three Months Ended March 31, Three Months Ended March 31, Six Months Ended March 31, Six Months Ended March 31,
------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------
2024 2023 Percentage 2024 2023 Percentage
Change Change
------------------------------------------- -------------------- ------- -------------------- ----------------------- -------------------- ------- -------------------- ------------------------------- -------------------------- -------------------- --------- -------------------- ----------------------- -------------------- --------- -------------------- ----------------------------------
Net sales:
Sally Beauty Supply ("SBS") $ 513,241 $ $ 530,246 (3.2 )% $ $ 1,036,479 $ $ 1,079,718 (4.0 )%
Beauty Systems Group ("BSG") 395,120 388,466 1.7 % 803,184 796,049 0.9 %
-------------------- ------- -------------------- ----------------------- -------------------- ------- -------------------- ----------- -------------------- -------------------------- -------------------- --------- -------------------- ----------------------- -------------------- --------- -------------------- -------------- --------------------
Total net sales $ 908,361 $ $ 918,712 (1.1 )% $ $ 1,839,663 $ $ 1,875,767 (1.9 )%
==================== ======= ==================== ======================= ==================== ======= ==================== =========== ==================== ========================== ==================== ========= ==================== ======================= ==================== ========= ==================== ============== ====================
Operating earnings:
SBS $ 76,820 $ $ 92,134 (16.6 )% $ $ 154,449 $ $ 191,308 (19.3 )%
BSG 43,015 37,260 15.4 % 87,642 86,907 0.8 %
-------------------- ------- -------------------- ----------------------- -------------------- ------- -------------------- ----------- -------------------- -------------------------- -------------------- --------- -------------------- ----------------------- -------------------- --------- -------------------- -------------- --------------------
Segment operating earnings 119,835 129,394 (7.4 )% 242,091 278,215 (13.0 )%
Unallocated expenses (1) 60,198 50,712 18.7 % 113,416 102,539 10.6 %
Restructuring 63 7,274 (99.1 )% (22 ) 17,680 (100.1 )%
Interest expense 20,523 16,685 23.0 % 37,837 34,608 9.3 %
-------------------- ------- -------------------- ----------------------- -------------------- ------- -------------------- ----------- -------------------- -------------------------- -------------------- --------- -------------------- ----------------------- -------------------- --------- -------------------- -------------- --------------------
Earnings before provision for income taxes $ 39,051 $ $ 54,723 (28.6 )% $ $ 90,860 $ $ 123,388 (26.4 )%
==================== ======= ==================== ======================= ==================== ======= ==================== =========== ==================== ========================== ==================== ========= ==================== ======================= ==================== ========= ==================== ============== ====================
Segment gross margin: 2024 2023 Basis Point 2024 2023 Basis Point
Change Change
-------------------- ------- -------------------- ----------------------- -------------------- ------- -------------------- ------------------------------- -------------------------- -------------------- --------- -------------------- ----------------------- -------------------- --------- -------------------- ----------------------------------
SBS 59.9 % 59.8 % 10 59.3 % 59.3 % --
BSG 39.4 % 38.9 % 50 39.4 % 39.7 % (30 )
Segment operating margin:
SBS 15.0 % 17.4 % (240 ) 14.9 % 17.7 % (280 )
BSG 10.9 % 9.6 % 130 10.9 % 10.9 % --
Consolidated operating margin 6.6 % 7.8 % (120 ) 7.0 % 8.4 % (140 )
==================== ======= ==================== ======================= ==================== ======= ==================== =========== ==================== ========================== ==================== ========= ==================== ======================= ==================== ========= ==================== ============== ====================
Supplemental Schedule 2 Supplemental Schedule 2 Supplemental Schedule 2 Supplemental Schedule 2 Supplemental Schedule 2 Supplemental Schedule 2 Supplemental Schedule 2 Supplemental Schedule 2
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
Non-GAAP Financial Measures Reconciliations
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31, 2024 Three Months Ended March 31, 2024
-------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
As Reported As Reported Restructuring (1) Restructuring (1) Fuel for Growth Fuel for Growth Loss on Debt Loss on Debt As Adjusted As Adjusted
(GAAP) (GAAP) and Other (2) and Other (2) Extinguishment (3) Extinguishment (3) (Non-GAAP) (Non-GAAP)
-------------------------------------------- --------------------------------------------------------------------------------- --------------------------- ------------------------------------------------------ --------------------------- --------------------------------------------------------------------------------- --------------------------- --------------------------------------------------------------------------------- --------------------------- ---------------------------------------------------------------------------------
Cost of products sold $ 445,289 $ $ -- $ $ -- $ $ -- $ $ 445,289
Consolidated gross margin 51.0 % 51.0 %
Selling, general and administrative expenses 403,435 -- (8,945 ) -- 394,490
SG&A expenses, as a percentage of sales 44.4 % 43.4 %
Operating earnings 59,574 63 8,945 -- 68,582
Operating margin 6.6 % 7.6 %
Interest expense 20,523 -- -- (2,565 ) 17,958
Earnings before provision for income taxes 39,051 63 8,945 2,565 50,624
Provision for income taxes (4) 9,807 16 2,297 659 12,779
--------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- ---------------------------
Net earnings $ 29,244 $ $ 47 $ $ 6,648 $ $ 1,906 $ $ 37,845
=========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== ===========================
Earnings per share:
Basic $ 0.28 $ $ 0.00 $ $ 0.06 $ $ 0.02 $ $ 0.36
Diluted $ 0.27 $ $ 0.00 $ $ 0.07 $ $ 0.02 $ $ 0.35
=========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== =========================== ===========================
Three Months Ended March 31, 2023 Three Months Ended March 31, 2023
-------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
As Reported As Reported Restructuring (1) Restructuring (1) As Adjusted As Adjusted As Adjusted As Adjusted As Adjusted As Adjusted
(GAAP) (GAAP) (Non-GAAP) (Non-GAAP) (Non-GAAP) (Non-GAAP) (Non-GAAP) (Non-GAAP)
-------------------------------------------- --------------------------------------------------------------------------------- --------------------------- ------------------------------------------------------ --------------------------- --------------------------------------------------------------------------------- --------------------------- --------------------------------------------------------------------------------- --------------------------- ---------------------------------------------------------------------------------
Cost of products sold $ 450,373 $ $ 2,362 $ $ $ $ $ $ 452,735
Consolidated gross margin 51.0 % 50.7 %
Selling, general and administrative expenses 389,657 -- 389,657
SG&A expenses, as a percentage of sales 42.4 % 42.4 %
Operating earnings 71,408 4,912 76,320
Operating margin 7.8 % 8.3 %
Interest expense 16,685 -- 16,685
Earnings before provision for income taxes 54,723 4,912 59,635
Provision for income taxes (4) 13,862 1,222 15,084
--------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------------------------------------------------------------- --------------------------- --------------------------------------------------------------------------------- --------------------------- --------------------------- --------------------------- ---------------------------
Net earnings $ 40,861 $ $ 3,690 $