Q3 2025 Regis Corp Earnings Call
Speaker Change: Thank you for joining the quarterly Regis earnings call. We will begin shortly.
Speaker Change: Thank you for joining the quarterly Regis earnings call. We will begin shortly.
Matthew Doctor, Regis Doctor, Regis Doctor
Speaker Change: Good morning, and thank you for joining the Regis 3rd quarter 2025 earnings conference call. I am your host
Speaker Change: First, Kersten Zupfer, Executive Vice President and Chief Financial Officer. I am joined today by our President and Chief Executive Officer, Matthew Doctor. All participants are in the listen only mode and this conference is being recorded.
Speaker Change: I would like to remind everyone that the language on forward looking statements included in our earnings release and 8K filing also applies to our comments made on the call today.
Speaker Change: These documents can be found on our website www.regiscorp.com forward-flash investor relations along with the reconciliation of any non-GAAP financial measures mentioned on today's call with their course bonding GAAP measures . With that, I will now turn the call over to Matt Doctor.
Matt Doctor: On today's call, we will provide an update on the progress we are making towards key initiatives that are reshaping Regis for long term growth as well as review our financial results for our third fiscal quarter and.
Matt Doctor: And we just we're in the midst of a comprehensive transformation aimed at building a more resilient efficient and future ready company <unk>.
Matt Doctor: This transformation is centered on creating a sustainable business model that prioritizes operational stability and support.
Matt Doctor: And salon level profitability and strong cash flow generation ultimately positioning us for a return to long term growth.
Matt Doctor: Our near term efforts are foundational to reversing a history of traffic declines strengthening our core operations.
Matt Doctor: <unk> and our franchisees to thrive in a rapidly evolving market.
Matt Doctor: This has been and continues to be a multiyear journey to stabilize and improve the business and returned to growth that is both profitable and sustainable.
Matt Doctor: We are continuing to see tangible results from the actions we have taken over the past year, we have strengthened our balance sheet returned to profitability and are now consistently generating positive operating cash flow and have paved a clear path to a brighter future.
Matt Doctor: These are significant achievements that speak to the progress we have made in stabilizing our business, which is a testament to our team's focus and execution.
Matt Doctor: <unk> is in a much stronger financial and operational position today than we were just a year ago and we are confident the steps. We're taking now we'll continue to build a healthier more valuable company.
Matt Doctor: As our efforts progress we believe the broader market will begin to recognize the value. We are creating while this transformation will take time, we are confident that the cumulative effect of our work will become increasingly evident and then it will generate meaningful long term benefits for our franchisees.
Matt Doctor: Yes, stylus shareholders and broader stakeholder base.
Matt Doctor: Success of our efforts is further demonstrated by the results we are reporting today as well as some green shoots we are seeing in the business.
Matt Doctor: As compared to our fiscal third quarter of last year adjusted EBITDA grew 33%.
Matt Doctor: Operating income grew by 23% both reported and adjusted earnings per share grew and shifted from negative to positive.
Matt Doctor: And we generated more than $6 million in cash from operations. All during what is historically a weaker quarter from a seasonality perspective.
Matt Doctor: Year to date cash from operations has improved $14 million versus last year, and we have now generated positive cash flow for the second consecutive quarter for the first time since the first fiscal quarter in 2018.
Matt Doctor: This performance highlights the improving health of our business and demonstrates that the intentional steps we have taken to shape <unk> with a more optimized corporate owned versus franchise Salon mix.
Matt Doctor: As well as our overall operational strategy is working.
Matt Doctor: One element of our strategic plan has been the acquisition and integration of our largest franchisee aligns Salon group.
Matt Doctor: Which we completed during last fiscal quarter I received several questions on how this acquisition came about and I want to reiterate that this was a proactive strategy pursued by Regis and not one in which we had to be done for any other reason and we saw significant financial and strategic benefits of having a strong company owned portfolio.
Matt Doctor: This acquisition expands our growth and cash generation levers opens up new brand and operational improvement opportunities and has contributed contributed positively to our results immediately upon closing.
Matt Doctor: For the quarter the alliance portfolio contribution to overall results was modest which was expected as this quarter was primarily focused on integrating and planning our go forward strategy.
Matt Doctor: These efforts culminated with our first large scale strategic changes being implemented and the in line portfolio at the end of March.
Matt Doctor: We still saw a positive progression of same store sales throughout the quarter within align joined from January when same store sales for the portfolio was down seven 5% versus prior year driving improvement to March where same store sales were down two 7%.
Matt Doctor: As I mentioned earlier at the end of March March 30th to be exact we implemented some major strategic changes that included first and foremost a brand new pay plan for all stylists that is more transparent and better aligns incentives. We wanted to ensure we are providing a clear path for managers and stylists to earn more money.
Matt Doctor: For generating more service and retail sales as well as additional profitability.
Matt Doctor: Rolling out a new compensation plan is absolutely no small effort and I am very proud of the entire team for executing this flawlessly.
Matt Doctor: In addition to the revamped pay plan, we went through all service menus and pricing structures to clean up and bring more uniformity to the services offered and the requisite pricing we.
Matt Doctor: We saw an opportunity to take some price on core services like haircuts and color, while simultaneously price ancillary services and more attractive levels to enable our stylists and salon to build total ticket and deliver more sales.
Matt Doctor: We have also begun to display our service pricing across all digital check in channels. We view. These initial efforts as critical to further streamlining operations and providing the right foundation to align incentives and drive results.
Matt Doctor: And we are encouraged by early results as in April we did build off the momentum we saw throughout the quarter from a same store sales perspective.
Matt Doctor: Turning positive in the portfolio along with improved profit margins.
Matt Doctor: Overall, we remain highly confident in the long term value. This strategic transition, we will deliver transaction will deliver.
Matt Doctor: As we turn back to review our total company performance this quarter I want to acknowledge the consolidated same store sales saw a modest decline of one 1% for.
Matt Doctor: For the third fiscal quarter. This decline was driven by several factors, including the timing of Easter, which fell in the fourth fiscal quarter of this year as well as the continued softness in overall overall salon traffic and new guest visits we estimate that the Easter timing shift had a negative one 1% percent impact on sales.
Matt Doctor: Meaning we would've been roughly flat for the quarter when excluding the estimated impact is.
Matt Doctor: As further evidence of the sales shift.
Matt Doctor: <unk> same store sales came in stronger versus last year, where supercuts delivering a four 5% increase in the entire consolidated system demonstrating a two 8% increase over last year's April.
Matt Doctor: While this is one month and I want to be cautious not to represent an expectation for this to be a new baseline. We felt it was important to share. These results given the context of the holidays affect on our third quarter results.
Matt Doctor: In addition, I also think it is important to point out the.
Matt Doctor: The various brand contributions and focus areas, we have as an organization as it relates to driving sales.
Matt Doctor: Our largest brands supercuts saw same store sales increase of one 1% for the third quarter. While this is certainly not what we're aiming for and believe our efforts should ultimately drive an increase higher than that.
Matt Doctor: The flow through Supercuts has on overall same store sales results as roughly 55%.
Matt Doctor: Smart style, which saw a seven 4% same store sales decline for the quarter represented a contribution of 20% and spark style. As we stated before our collective efforts there are in rationalizing and remodeling to get down to a healthier go forward Salon base and these figures represent why a number of our resources are deployed towards driving results.
Matt Doctor: At the Supercuts brand at this moment.
Matt Doctor: It is a brand that has a long operating history coming up on 50 years. This year combined with high awareness and scale and the impact on overall <unk> results given the level of contribution the brand has.
Matt Doctor: <unk> is by far the most significant.
Matt Doctor: All that being said we are not satisfied with this level of performance and we are acutely aware that we need to increase traffic to our salons, especially new guest traffic and improve franchisee profitability in order to achieve that outsized growth that we believe is possible across all of our brands. We also believe that while same store sales is a critical.
Matt Doctor: Eric It is one of many defining metrics during this phase of our transformation.
Matt Doctor: Driving traffic and sales growth remain top priorities. There was a tremendous amount of work to be done to return to growth and our focus right now is on improving our foundation and utilizing data driven analytics to better inform our decision making importantly.
Matt Doctor: Importantly, even with the slight decline in same store sales and store count the financial impact remains manageable to region due in large part to our relentless efforts and focus on disciplined cost management and capital allocation, which gives us the resilience and flexibility continue moving forward with our transformation.
Matt Doctor: Some data points that underscore the resilience of our business is for each 1% of annual same store sales decrease.
Matt Doctor: Royalty revenue was impacted by approximately $550000 regarding closures the stores that had been closing average roughly 120000 in annual sales and at our average royalty rate of five 5% each closure at this average is roughly $6 $5000 of royalty revenue.
Matt Doctor: Im certainly not trying to minimize the impact of Salon closures as many of these have been looked after and with great care by our franchisees and all our dedicated staff that may be impacted.
Matt Doctor: Do want to point out the overall impact to our business in this context.
Matt Doctor: We have several operational levers at our disposal to manage and overcome these headwinds should they continue or arise again.
Matt Doctor: A few examples to point out would be a 1% increase in salon level profit margin and our company owned portfolio represents $750000 of incremental store level profitability.
Matt Doctor: In addition, we have our corporate G&A expense, which we have proven to manage strategically to this point and are continuously monitoring closely.
Matt Doctor: As well as the continued runoff of legacy items that require cash to service today like rent we were paying on dark salons that have historically closed and workers' compensation claims related to in regions with self insured during previous operating company days.
Matt Doctor: Taking an illustrative example of running in any way our annual same store sales decrease of 1% combined with 100 closures.
Matt Doctor: A one 6% increase in profit margin in our company owned business alone. The gates. This effect, assuming all else be in there.
Matt Doctor: There are several permutations that get us to the same profitability and cash generating results in that scenario, but I. Just wanted to provide one example here. These factors give us confidence on our ability to navigate the times its turnaround the topline and have been the key elements and growing our profitability and cash flow over the last several years despite the.
Matt Doctor: Ends.
Matt Doctor: And to wrap up on the quarter before touching on our go forward priorities I believe we continue to advance our transformation transformation strategy forward, while executing on the business and delivering growth across all profitability metrics.
Matt Doctor: I also want to reiterate that the <unk> acquisition, along with the broader moves that we've made have been very intentional to set this business up to turnaround our topline with the proper financial foundation and runway to do so which is a major step forward from where we were just one year ago.
Matt Doctor: Now in terms of our companies.
Matt Doctor: <unk> go forward priorities.
Matt Doctor: We have two primary areas of focus one is optimizing and growing the sales and profitability of our company owned Salon portfolio and two is a holistic supercuts brand transformation agenda.
Matt Doctor: Given how much change has occurred in <unk> over the last 12 months, including a refinancing the completion of our point of sale migration. The rollout of brand excellent standards visits the rollout of our supercuts rewards loyalty program further right sizing of our G&A the acquisition of Alliance Salon portfolio.
Matt Doctor: I wanted to put some stakes in the ground and be clearer.
Matt Doctor: But rather the critical areas, we felt most relevant to discuss in the short to medium term to drive future growth and value creation on.
Our company owned Salon portfolio, our ultimate goals here are to increase sales EBITDA and cash flow I.
Matt Doctor: I mentioned earlier about the progress we've been making in stabilizing sales as well as the execution of our first major strategic efforts.
Matt Doctor: Round of new pay plan and menu pricing structure.
Matt Doctor: Looking ahead, we will continue to bring more uniformity to operations and data and decision, making while upholding our own standards and sharing our best practices to the system.
Matt Doctor: From a business building standpoint, we will spend the remainder of the calendar year focused on hiring and rehiring efforts leveraging our new pay plan.
Matt Doctor: Testing opening up a larger pre booking windows and a re visitation incentives to drive frequency trial and retention <unk>.
Matt Doctor: <unk> and remodeling select salons, and launching brand level promotional calendars and.
Matt Doctor: In addition to being a growth driver our company owned portfolio is a great complement to our broader supercuts transformation work stream as we have around 100 company owned supercuts to provide a valuable testing ground for anything we want to prove out as part of the strategy work and I want to again reiterate the value of this portfolio brings to Regis and the belief we.
Matt Doctor: Have in this segment as a growth catalyst for the future.
Matt Doctor: Our second key focus area is finalizing a comprehensive strategy roadmap for our flagship brand supercuts, which will serve as a cornerstone in our efforts to reverse traffic trends drive outsized same store sales growth increased franchisee profitability and get back to the path of net salon growth.
Matt Doctor: The roadmap will encompass three strategic pillars that are entirely interconnected and ladder up to our North Star plan.
Matt Doctor: Token about these pillars in the past in some former fashion, we wanted to bring some more definitive structure around each of these pillars that include first an evolving the brand strategy, where we will utilize insights and the legacy Foundation, we have to reshape perceptions and further build their beloved brand for <unk>.
Matt Doctor: Does this thing and prospective guests Silas and franchisees.
Matt Doctor: This encompasses deep research that will drive the brand building strategy and differentiation.
Matt Doctor: Ultimately, leading to a refreshed brand expression, including a personality and voice visual identity storytelling and customer experience that reflects the brand's purpose mission values promise and positioning.
Matt Doctor: Second pillar unlocking omnichannel growth, which is to elevate pilot and scale innovation across all touch points to fuel our marketing flywheel effect.
Matt Doctor: Unifies utilize unified guest data, which is now me even more possible by being on a single point of sale system and enriched by our rewards program to fuel personalized marketing and customer acquisition initiatives through performance marketing digital bookings CRM and loyalty membership.
Matt Doctor: Discuss supercuts rewards at length over the last year and a half and we are pleased with the performance of the program, thus far and the opportunity that lies ahead for us.
Matt Doctor: Awards members sales as a percentage of total sales is up to over 30% and it is driving the behaviors. We are looking forward such as decreased times between hair services as well as higher overall retention.
Matt Doctor: Top two quartile as measured by membership sales as a percentage of total each demonstrate over 40% of sales coming from members and we see that 40% Mark as an initial inflection point with those salons at 40% or more member sales, demonstrating one 8% higher traffic versus those that are less than 20%.
Matt Doctor: This has been and is a key initiative. It forms just a piece of the overall omnichannel experience, albeit a critical one in a big differentiator in the industry and we're excited at the prospects of how much we can do with the rewards program and how this fits into the context of our broader digital ecosystem.
Matt Doctor: Third strategic pillar scaling operational excellence all of these efforts fall flat if they cannot be operationalized and if there is a poor in salon experience.
Matt Doctor: Key elements to supporting this pillar is the brand excellent standards and subsequent assessment visits we've rolled out at the end of calendar 2024.
Matt Doctor: As well as our technical education training prowess, we have completed our first wave of standards visits identified a baseline of opportunities and are now in our second wave in addressing quick wins with franchisees.
Matt Doctor: For the purposes of today's call I just wanted to continue to call. This entire work stream out as his priority and highlight what we are aiming to achieve.
Matt Doctor: The <unk> team and our thought partners are in Dallas as we speak to meet with our Supercuts franchise Council to discuss progress and insights on this important work stream and while I work on this strategy is continuous work being done to optimize current programs and drive quick wins, along the way we plan on sharing more specifics of this holistic strategy when we have.
Stakeholder alignment likely jerky during either our fourth fiscal quarter and full fiscal year results in August of 2025, or our first quarter fiscal 2026 call in November 2025.
Matt Doctor: As we move forward, our key priorities and focus remain clear deliver operational and digital excellent excellence in.
Matt Doctor: Improved salon perception on performance and invest in areas that will drive long term stakeholder value. We are confident that the decisive actions. We are taking today combined with the progress that we've made will position regis to emerge a stronger more competitive and better align with the future of the salon industry.
Speaker Change: In order to deliver value creation for all stakeholders I will now turn the call over to Carsten for a more detailed review of our third quarter financials Kirsten.
Speaker Change: Thanks, Matt.
Speaker Change: Quick note before going through the results our fiscal 2025 third quarter results include the results of approximately 300 salons that we acquired from our line in December of 2024 during our second quarter of fiscal year 2025.
Speaker Change: As a reminder, our results for the quarter reflect contributions from the line that prior year results do not.
Speaker Change: As Matt discussed we are focused on improving profitability and generating cash from operations as we implement key foundational changes designed to reignite growth.
Speaker Change: Third quarter results demonstrate meaningful progress on both fronts for the third quarter, we delivered a 23% increase in operating income and generated approximately $6 $2 million in cash from operations.
Speaker Change: Total third quarter revenue was $57 million, an increase of 15, 9% or $7 $8 million compared to the prior year.
Speaker Change: This increase was primarily driven by an increase in revenue from company owned salons as a result of the line acquisition.
Speaker Change: Increase was partially offset by declines in franchise revenues stemming from the closure of unprofitable franchise locations.
Speaker Change: The closures along with a modest one 1% decline in same store sales resulted in lower franchise rental income and lower advertising fund revenues, which provide no contribution margin and royalty revenues.
Speaker Change: To put the change in same store sales in perspective, as Matt noted, we estimate that a 1% change in franchise same store sales represents an annual EBITDA impact of approximately $585000.
Speaker Change: Underscoring that a modest decline in same store sales has a relatively minor effect on our profitability on an EBITDA basis.
Speaker Change: During the third quarter, we had 49 net closures primarily related to underperforming stores.
Speaker Change: Each with significantly lower trailing 12 months sales volumes than our top performing locations.
Speaker Change: The performance gap between these closed stores and our highest performing units was approximately $350000 underscoring the strong potential within our system and highlighting the opportunity we have to further enhance profitability margins and cash flow generation as we continue executing our transformation strategy.
Speaker Change: As we have discussed in the past, we expect calendar 2025 to be the last year of closures in the order of magnitude compared to previous years.
Speaker Change: One additional item to note as it relates to Salon count as part of our disclosures is the shift of approximately 300 locations from franchise to corporate Salon counts as a result of the align acquisition. So while we're showing 761 less franchise salons. These do not all represent closures, but rather a mix of close.
Speaker Change: <unk> and franchise to company owned shift.
Speaker Change: In terms of profitability, we reported GAAP operating income of $5 million, an increase of 22% compared to $4 $1 million in the year ago quarter. This increase was primarily driven by operating income contribution from the alliance lines shuttering of underperforming franchise locations and diligent management of our journey.
Speaker Change: Administrative expenses as a percentage of revenue G&A was 22, 8% in the third quarter of fiscal year 2024 to 19, 6% in the current year quarter. This decrease in the G&A as a percentage of revenue was primarily due to an increase in revenue from the alliance acquisition.
Speaker Change: Income from continuing operations is $250000 compared to a loss from continuing operations of $2 $4 million in the year ago quarter. This improvement was driven primarily by lower interest expense.
Speaker Change: Turning to our adjusted results as a reminder, in the first quarter of fiscal year 2025, we made a change to our methodology to exclude stock based compensation expense when presenting our adjusted results.
Speaker Change: Our adjusted results in the current year and prior years have been adjusted to reflect this presentation. We believe our adjusted results are more representative.
Speaker Change: A more representative view of the business reconciliations of our GAAP results to our adjusted non-GAAP results can be found in our press release.
Speaker Change: For the third quarter, our consolidated adjusted EBITDA was $7 1 million compared to $5 $4 million in the prior year quarter.
Speaker Change: The $1 $7 million improvement was primarily due to favorable aligns salon EBITDA lower G&A expenses, sublease revenue and currency gains partially offset by a decline in royalties.
Speaker Change: Our adjusted G&A was $10 $2 million in the third quarter of fiscal year 2025 down from $10 $7 million in the year ago quarter.
Speaker Change: <unk> G&A, excluding $1 $1 million of G&A associated with the alliance lines was $9 1 million, an improvement of $1 $6 million year over year.
Speaker Change: We remain committed to diligent management of our corporate G&A expenses. The align acquisition adds approximately four $5 million to $5 million in incremental annual G&A expense.
Speaker Change: For fiscal year 2025, we expect adjusted G&A, including line to be approximately $45 million, we expect our run rate for G&A to be in the range of $43 million to $45 million.
Speaker Change: Adjusted EBITDA for our franchise segment was $6 $3 million in the quarter $157000 increase compared to $6 1 million in the prior year quarter.
Speaker Change: Adjusted EBITDA for our company owned Salon segment improved $1 $6 million year over year to 843000 for the quarter, primarily as a result of an increased number of salons from the align acquisition.
Speaker Change: Turning to cash flows for the three months ended March 31, 2025, we generated $6 $2 million in cash from operations, which is an improvement of $6 $5 million compared to the third quarter of fiscal year 2024. This brings our year to date total for cash from operations to $7 million and.
Speaker Change: An improvement of $14 $1 million compared to the first nine months of fiscal year 2024.
Speaker Change: The increase in cash generation was driven by our line operating profitability lower use of working capital and lower cash interest. It is important to note that our cash from operations includes $2 $4 million and $5 $8 million of.
Speaker Change: Of cash related to the advertising fund for the three and nine months ended March 31 2025, respectively.
Speaker Change: These amounts are restricted and not available for general corporate use however, our recent quarter results are starting to reflect our cash generating potential.
Speaker Change: We continue to expect positive cash generation for the remainder mandar of fiscal year 2025, now that we are generating cash after several years of cash usage, we are thoughtfully evaluating capital allocation strategies.
Speaker Change: In the near term this includes paying down our debt in connection with the excess cash flow sweep provision of our credit agreement building a cash balance while also identifying opportunities to deploy capital in ways that we believe will create long term value.
Speaker Change: In terms of liquidity as of March 31, 2025, we had $19 million of available liquidity, which consists of our availability under our revolving credit agreement and $13 $3 million of unrestricted cash and cash equivalents the $19 million of available liquidity as none of our 10 million.
Speaker Change: Minimum liquidity covenant.
Speaker Change: As of the end of the third quarter, we had $127 4 million and outstanding debt, excluding deferred financing cost and the value of warrants plus accrued paid in kind interest.
Speaker Change: As a reminder, in accordance with GAAP, our balance sheet includes approximately $255 $9 million of operating lease liabilities related to franchise Salon leases. These leases have a weighted average remaining term of less than five years and the obligations are serviced by our franchisees.
Speaker Change: So so long as the franchisees continue to meet their lease payments as they historically have it is our view that these amounts should not be considered part of our debt position. We expect these liabilities will continue to decrease as the leases mature and as we continue to move away from franchise leases.
Speaker Change: As Matt discussed our third quarter performance reflects meaningful progress in our transformation journey with improved profit profitability and positive cash generation, we are building momentum and laying the groundwork for long term value creation. Thank you for your continued support and interest in Regis, We will look forward to updating you on our progress.
Speaker Change: Next quarter.
Speaker Change: Please feel free to reach out to Investor Relations at Regis Corp, Dot com to discuss any questions related to the business or quarterly results.
Speaker Change: This concludes the <unk> third quarter fiscal year 2025 earnings call and we will now take questions that were submitted as well as some live Q&A.
Speaker Change: Yes.
Speaker Change: Please use the raise hand function to ask questions.
Speaker Change: Good morning, Bill charters, please introduce yourself and take your computer off of mute.
Speaker Change: Okay.
Charter is a stable capital management, thanks for taking my question great quarter.
Speaker Change: The first question that I have is understanding the accounting for our lines. So I see the royalty fees down.
Speaker Change: And yes.
Speaker Change: And I just wanted to understand the owned economics, including the line are up about eight.
Speaker Change: $800000. So does this mean that the royalties go down but the company owned EBITDA is more like $9 $8 million from that and I am just including.
Speaker Change: The royalty fees plus that original $5 8 million that you had in guidance. When you did the deal I just wanted to understand that that sure I can take that no. That's exactly right you will see royalties come down in the franchise segment and then.
Speaker Change: The EBITDA go up in that.
Speaker Change: Company owned segment so.
Speaker Change: That's exactly right okay.
Speaker Change: Susan that 800000 of positive that months ahead and a lot of.
Speaker Change: One time items or something included in that because it seems kind of kind of low.
Speaker Change: Or were there a lot of company owned stores that.
Speaker Change: Outside of our line that we are a massive cash drag this quarter.
Speaker Change: Just trying to understand a little better yes, sure Hey, Bill it's Matt. Thanks for the question I can give you more insights to align for the quarter as I mentioned, a lot of Q1 related to that portfolio was planning launching strategy and sales stabilization efforts.
Speaker Change: I think I discussed last quarter, but it did lag a system a bit from a sale. So we did see that nice progression from the quarter from January to March and then ultimately turning in April so that was a factor in the results. The other factors were either related to the paid plans and price adjustment changes they were.
Speaker Change: We're lapping lapping the price increase so there was an opportunity to take price.
Speaker Change: The pay plans for not only the right thing to do for the business, but also our intentional to counter minimum wage pressures. So given all of those things launched at the end of March literally kind of the day before the end of March.
Speaker Change: With the sales pressures, we live with the minimum wage increases we lived with.
Speaker Change: Lapping.
Speaker Change: Pricing changes that were taking a year half ago and all those things are kind of factors that hit the quarter.
Speaker Change: Given the implementation of that at the end and.
Speaker Change: Seeing the change in April I think.
Speaker Change: It'll be we'll start to build on sales and profit margins I think youll start seeing that EBITDA rise, which is also is historically a seasonally low quarter.
Speaker Change: Profitability results perspective, with January and February being some of the lower months and in addition, we just got hammered by weather, especially in the Midwest in February.
Speaker Change: It kind of has an impact on the entire system for the quarter, but really the Midwest and northeast regions really saw that weather impacts. So number of things that have another contributor to the quarter, but seeing a lot of that positive momentum of the changes we want to make sure that they were loss the right way and kind of lived with that quarter and make sure you guys have implemented properly.
Speaker Change: Sure.
Speaker Change: Okay great.
Speaker Change: Then the other question I have is.
Speaker Change: Quarter to quarter it looks like the storage went from $42 48 to 4087, So net 161 store decline and I think almost 90 something stores with just from this smart style.
Speaker Change: Do you have any updates on the store closings.
Speaker Change: This year I mean, thats kind of in line, what you said at the beginning of the fiscal quarter to get down to around 4000 or a little bit lower.
Speaker Change: Do you have any updates on that number.
Speaker Change: For this year in India.
Speaker Change: And next year.
Speaker Change: Yes, I think not much more to add on that front I mean, that's right in line.
Speaker Change: <unk>.
Speaker Change: <unk> closures, we're seeing it kind of come in and around that pace.
Speaker Change: Don't have much to add beyond that and as well as going forward that we anticipate an order of magnitude less I. Just also want to point back to earlier in the call when I mentioned about levers and the resilience of the business to Medicaid overcome as we continue to grow and advance the business I know there was a question on <unk>.
Speaker Change: What's the closures look like I've gotten a lot of questions on broader guidance and I'll just use this as an opportunity to say that those are things that are.
Speaker Change: We're continuing to think through here.
Speaker Change: What to give and win as it relates to and we think that that should happen at some point as you know like this business has gone through with just a ton of changes over the past year or two years three years, so really wanted to get our feet under us and understand.
Speaker Change: We're coming out with something like that but I think to get all of us kind of on site and to recognize where this is going collectively whether it be annual guidance or just some sort of bigger picture guidance of what this business can look like executing on the strategy. We're executing we are I don't want to just say hey look we're not giving guidance, it's going to be less but I do want to just put.
Speaker Change: Out there that we are thinking through.
Speaker Change: Marketers and things to put out of what this business looks like in the future.
Speaker Change: We'll do that probably.
Speaker Change: We're trying to think about the right time to do it perhaps even the next quarter during our fiscal year end results can be a logical time for something like that with some more with some more business traction underneath us.
Speaker Change: I think that'd be great, especially in light of the fact that you don't have sell side coverage that type of.
Speaker Change: Guidance will be greater range.
Speaker Change: For EBITDA.
Speaker Change: That would really help the market understand the drivers because I mean that 800000.
Speaker Change: Number of company owned stores being depressed.
Speaker Change: Youre doing very well.
Speaker Change: Good quarter because of that.
Speaker Change: Considering its almost like $10 million from the alignment of company EBITDA, So thats great.
Speaker Change: The other question I have is can you give us more color on.
Speaker Change: The impact of the remodeled stores on same store sales.
Speaker Change: What is the impact and how quickly does that happen when these stores.
Speaker Change: The refresh.
Speaker Change: Our remodel period.
Speaker Change: Yes, I'll take this in kind of two parts because really the.
Speaker Change: The majority of the remodel that hasnt been done over the course of the past few years has really been more concentrated to one brand, which is smart style and thats really because of just the structures of the lease in all Walmart stores themselves that have been re modeling which in turn.
Speaker Change: Drives our stores after remodel as well so that's really the brand or the majority of the Remodels have been done for those kind of 350 to 400 that remodel we've seen a modest lift call up 5% from the time, a remodel, but I also kind of want to put this in broader context.
Speaker Change: Not only this brand where we think we can further optimize that and grow the sales of that portfolio over time, but as it relates to other brands, especially in supercuts and we're talking about a holistic transformation agenda.
Speaker Change: A refresh and remodel effort is certainly a piece of those pillars and coming up with the right prototype right now is where a lot of the efforts are being put towards as part of that over our overall brand refresh I guess to interesting data points that I know <unk> talked about but I don't think we've talked about it.
Speaker Change: <unk>.
Speaker Change: A couple of salons that we remodeled and our corporate portfolio, maybe close to couple of years ago in Chicago.
Speaker Change: Where we test it to see that if we can elevate.
Speaker Change: So lot of that really have strong underlying factors.
Speaker Change: Tenured dedicated staff high traffic high volume, if we can elevate the look and feel of the Swan enable us into a price increase that was a theory that we have and I know, we just did it in two but in those two we saw 20% sustained price increases there and again just two data points with the theory that if we can replicate elsewhere.
Speaker Change: <unk> tier remodel leveraging a strong base.
Speaker Change: That's something we're going to explore so right now there's just a whole effort going on this piece regarding the transformation agenda.
Speaker Change: I'll look to pilot some of the work.
Speaker Change: Out of that effort in the alliance salons in the back half of this calendar year across all the brands Theyre not just supercuts.
Speaker Change: Okay sounds good.
Speaker Change: I guess the last question I have is can you alluded to before so I see the cash has increased on the balance sheet you can pay down debt.
Speaker Change: And then and then you alluded to something redeploy it and I know you can't buy stock due to the credit agreement.
Speaker Change: And this.
Speaker Change: As of right now but.
Speaker Change: Would you be tucking in further franchisees what would be the use and how's your priorities is the number one to pay down debt number to look for these one offs. If you could just provide more color on just what are you going to do with the cash as it starts coming in.
Speaker Change: Absolutely I appreciate that question, we say being stewards of capital very seriously.
Speaker Change: As Chris had mentioned there is a portion of this where it does make sense.
Speaker Change: Delever contractually obligated given our relationship with our lender partners that will be using cash to delever so that'll be.
Speaker Change: A quick one with that as a given.
Speaker Change: Absolutely want to we're going to do.
Speaker Change: Beyond that.
Speaker Change: Cash balance and liquidity is prudent in this environment, especially as we continue to navigate and really.
Speaker Change: I don't want to continue to see as we move through the alignment and supercuts strategies, we want to see what gets unlocked there and see where we should invest to ensure we have dry powder to do just that as well as explore other value creation Avenue. So I guess, what I'm, saying is really want to have the business dictate the capital allocation needs.
Speaker Change: I think we're pretty early in that given as I mentioned kind of as a roadmap strategy work that has been underway, but it's really still ongoing alignment. We've had five months now we've got a lot of interesting things we want to do there so.
Speaker Change: Wait what the business needs to drive growth between alliance Supercuts may be and if we see something that we can get outsized returns we will absolutely deploy it there. So I think the good news is yes, we are starting to generate cash.
Speaker Change: <unk>, which is extremely encouraging because that hasn't necessarily been the case over the last three years. So I think we're still early in this we want the business to dictate will continuing to delever.
Speaker Change: Broader franchise acquisitions on the table I think I said that pass were very happy with this portfolio. We have in getting your arms around and like that happened to be the right portfolio the right time.
Speaker Change: Optimizing at running that for now.
Speaker Change: Just as we've done in the past will ensure that whatever we do with this we take seriously and we will put it to the highest ROI cases.
Speaker Change: Okay great.
Speaker Change: It was a great quarter locally this as the inflection point and you can add from here, but all of these initiatives and seem to be starting to take hold so good job.
Speaker Change: Thanks, I don't have any other questions.
Thanks.
Speaker Change: Thanks, Scott. This concludes the Q&A session of the call today. We appreciate your interest in <unk> Corporation and have a nice day.