MINNEAPOLIS, April 27, 1999 (PRIMEZONE) -- Regis Corporation (NASDAQ: RGIS) today reported record financial results for its fiscal third quarter and nine months ended March 31, 1999.
Revenues for the third quarter of fiscal 1999 grew to a record $238.3 million, a 17 percent increase over the $203.1 million reported in the same quarter last year. System-wide sales grew 17 percent to $306.4 million from the third quarter of fiscal 1998. Excluding nonrecurring Year 2000 costs and a one-time charge related to the Company's pooling-of-interests merger with Heidi's, Inc., third quarter net income grew to a record $8.6 million, or $0.23 per diluted share, a 21 percent increase in earnings per share, from the $6.9 million, or $0.19 per diluted share, reported in the third quarter of fiscal 1998. Same-store sales for domestic company-owned salons increased six percent for the quarter.
Revenues for the first nine months of fiscal 1999 rose 15 percent to a record $693.1 million from $603.3 million in the same period last year. System-wide sales were $882.6 million, a 14 percent increase from the first nine months of fiscal 1998. Net income, excluding nonrecurring costs associated with the Year 2000 and the Heidi's transaction, grew to $27.6 million, or $0.74 per diluted share, a 23 percent increase in earnings per share from $21.8 million, or $0.60 per diluted share, in the comparable period last year, exclusive of nonrecurring items.
Commenting on the results, Paul D. Finkelstein, President and Chief Executive Officer, stated, "Our domestic salon operations performed above plan in the third quarter, fueled by a strong same-store sales increase of six percent. However, our European business outside of the United Kingdom fell below plan by about one cent per share and we have taken strong remedial action. During this fiscal year, we will have closed or sold our unprofitable operations in Mexico, South Africa, Switzerland, Dubai, France and Ireland. We are also downsizing and relocating our London office to a city near Birmingham, England to reduce overhead costs. As a result of these changes, our fiscal 1999 fourth quarter will include a nonrecurring charge that should have a two to three year payback."
Mr. Finkelstein continued, "During the March quarter we also announced a definitive agreement to merge with The Barbers, Hairstyling for Men & Women, Inc., a national franchisor, owner and operator of nearly 1,000 affordable salons, in a stock-for-stock transaction which will be accounted for as a pooling-of-interests. This strategic combination complements Regis' Supercuts division and, importantly, adds key senior level expertise to Regis in the area of franchising hair salons. We anticipate completing this transaction during our fiscal fourth quarter. Once The Barbers merger is completed, Regis will become the sole provider of beauty salon services for Wal-Mart with fiscal 2000 new salon openings projected in the range of 120 to 150 units, up from the 85 new Wal-Mart salons in fiscal 1999."
The Company reported net income of $7.0 million, including nonrecurring Year 2000 costs and the one-time charge related to the Company's merger with Heidi's, Inc., or $0.19 per diluted share, for the third quarter of 1999, compared to $6.9 million, or $0.19 per diluted share, in the third quarter of fiscal 1998. Including nonrecurring items, net income for the first nine months of fiscal 1999 increased to $24.3 million, or $0.65 per diluted share, versus $20.7 million, or $0.57 per diluted share in fiscal 1998, representing a 14 percent increase in earnings per share.
Regis Corporation, based in Minneapolis, is the largest owner, operator, franchisor and consolidator of hair and retail product salons in the world. Regis operates and franchises 3,909 salons in six divisions: Regis Hairstylists, Strip Center Salons (primarily Supercuts), MasterCuts, Trade Secret, Wal-Mart/SmartStyle Family Hair Salons, and International, and has more than 29,000 employees worldwide.
REGIS CORPORATION (NASDAQ: RGIS)
Consolidated Statement of Operations
(In thousands, except per share amounts and salon data)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
Revenues:
Company-owned
salons:
Service $165,190 $141,091 $480,560 $416,388
Product 66,667 55,714 193,067 167,196
231,857 196,805 673,627 583,584
Franchise income 6,473 6,300 19,436 19,671
238,330 203,105 693,063 603,255
Operating expenses:
Company-owned:
Cost of service 95,989 81,819 276,957 240,785
Cost of product 36,197 30,291 103,879 91,464
Direct salon 20,160 17,626 58,149 53,388
Rent 32,031 27,689 92,444 80,983
Depreciation 7,752 6,534 22,288 19,221
192,129 163,959 553,717 485,841
Selling, general
and administrative 25,381 22,239 75,302 65,071
Depreciation and
amortization 3,577 2,476 9,903 6,770
Nonrecurring charges:
Year 2000 remediation 1,032 3,923
Merger and
transaction 1,175 1,175
Loss on divestiture 1,979
Other 343 376 1,098 1,166
Total operating
expense 223,637 189,050 645,118 560,827
Operating income 14,693 14,055 47,945 42,428
Other income (expense):
Interest (3,139) (2,676) (8,745) (7,902)
Other, net 367 324 1,157 788
Income before
income taxes 11,921 11,703 40,357 35,314
Income taxes 4,926 4,829 16,036 14,589
Net income $6,995 $6,874 $24,321 $20,725
Net income per share:
Basic $0.19 $0.19 $0.67 $0.58
Diluted $0.19 $0.19 $0.65 $0.57
Weighted average
shares outstanding:
Basic 36,524 35,683 36,388 35,598
Diluted 37,714 36,591 37,451 36,505
Net income, excluding
nonrecurring items $8,573 $6,874 $27,644 $21,837
Net income per diluted
share, excluding
nonrecurring items $0.23 $0.19 $0.74 $0.60
Number of salons at
end of period:
Company-owned 3,067 2,719
Franchised 842 813
Total Salons 3,909 3,532
REGIS CORPORATION (Nasdaq: RGIS)
Consolidated Balance Sheet
(In thousands, except per share amounts)
(Unaudited)
March 31, 1999 June 30, 1998
ASSETS
Current assets:
Cash $16,813 $4,774
Accounts receivable, net 11,902 10,604
Inventories 64,027 54,020
Deferred income taxes 5,964 6,069
Other current assets 8,989 6,706
Total current assets 107,695 82,173
Property and equipment, net 205,959 179,748
Goodwill 153,106 116,579
Other assets 12,543 10,389
Total assets $ 479,303 $388,889
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term debt,
current portion $ 28,228 $ 19,741
Accounts payable 21,251 24,040
Accrued expenses 49,635 41,933
Total current liabilities 99,114 85,714
Long-term debt 144,967 104,688
Other noncurrent
liabilities 13,006 8,329
Shareholders' equity:
Common stock, $.05 par value;
issued and outstanding,
36,646,761 and 35,730,543
common shares at
March 31, 1999 and
June 30, 1998,
respectively 1,233 1,218
Additional paid-in capital 147,722 137,949
Accumulated other
comprehensive income (1,199) (1,677)
Retained earnings 74,460 52,668
Total shareholders' equity 222,216 190,158
Total liabilities and
shareholders' equity $479,303 $388,889