Regis Corporation — First Quarter 2027 Earnings Summary

Financial Performance:

• Consolidated revenue was $54.3 million, a decrease of $4.7 million (8.0%) compared to $59.0 million in the first quarter of 2026, driven by lower non-margin franchise rental income and company-owned salon revenue.
• Operating income was $5.3 million, down $0.6 million from $5.9 million in the prior year period.
• Net income was $0.5 million ($0.18 diluted EPS), compared to $1.4 million ($0.49 diluted EPS) in the prior year.
• Adjusted EBITDA was $7.7 million, a decline of $0.3 million from $8.0 million in the prior year.
• Adjusted net income was $1.4 million, flat compared to $1.4 million in the prior year.
• Adjusted diluted EPS was $0.48, down from $0.50 in the prior year.
• Net cash provided by operating activities was $2.6 million, an improvement of $0.3 million from the prior year period.
• The company ended the quarter with $20.8 million in cash and cash equivalents.
• Outstanding borrowings totaled $121.1 million, consisting of a $108.2 million term loan, $12.5 million in paid-in-kind interest, and a $0.4 million revolver draw.
• Available total liquidity was $30.4 million.

Guidance and Future Outlook:

• Management expects to return to the debt markets early in calendar 2027.
• The company plans to continue generating cash and reducing debt according to scheduled repayment obligations ahead of further refinancing discussions.
• Refinancing was deemed not to deliver sufficient value at this time due to the scheduled decline in the call premium on existing debt in mid-2027.
• Management is taking targeted actions to increase guest traffic across brands to build a stronger business for sustainable growth.

Business Segments and Product Lines:

• Franchise Segment:
  • Total franchise revenue was $35.4 million, down $3.3 million from $38.7 million in the prior year.
  • Franchise same-store sales increased 0.3% compared to 0.9% in the prior year.
  • Franchise Adjusted EBITDA was $6.1 million, down $0.3 million from $6.4 million in the prior year.
  • Total franchise salons decreased to 3,419 from 3,593 in the prior year.
  • Royalties were $13.6 million, down $0.4 million, primarily due to fewer franchise salons.
  • Franchise rental income was $15.0 million, down $2.4 million, driven by franchisees signing their own leases and fewer salons.
• Company-Owned Salons:
  • Revenue was $18.9 million, down $1.3 million from $20.2 million in the prior year, primarily driven by closures of underperforming salons.
  • Company-owned same-store sales declined 1.1% compared to an increase of 1.7% in the prior year.
  • Company-owned Adjusted EBITDA was $1.6 million, flat compared to $1.6 million in the prior year.
  • Total company-owned salons decreased to 259 from 286 in the prior year.
• System-Wide Performance:
  • Consolidated same-store sales increased 0.2% compared to 0.9% in the prior year.
  • Supercuts same-store sales increased 2.0% (Service: 2.3%, Retail: -7.3%).
  • SmartStyle same-store sales declined 2.3% (Service: -0.4%, Retail: -16.3%).
  • Portfolio Brands same-store sales declined 2.0% (Service: -0.7%, Retail: -21.6%).
  • Total system-wide same-store sales were 0.2%, down from 0.9% in the prior year.

Market and Competitive Landscape:

• The company operates 3,678 franchised or owned locations as of September 30, 2026.
• Brands include Supercuts, SmartStyle, Cost Cutters, Roosters, and First Choice Haircutters.
• Declining guest traffic in company-owned salons is identified as a key challenge requiring immediate attention.
• The company relies on franchise royalties and the overall success of its franchisees' salons.

Risks and Challenges:

• Operating income was negatively impacted by a $2.5 million accrual related to a Department of Justice inquiry concerning a Paycheck Protection Program (PPP) loan obtained by Alline.
• Net income in the prior year included a $1.0 million gain related to the Alline earnout liability adjustment, which was absent in the current year.
• Potential risks include changes in consumer shopping trends, minimum wage increases, reliance on third-party supplier agreements, and the ability to attract and retain talented stylists.
• The company faces risks related to data security, legacy IT systems, and the implementation of new enterprise resource planning systems.

Management Commentary and Tone:

• Susan Lintonsmith, President and CEO, stated the quarter achieved operating income of $5.3 million and positive cash flow, reinforcing a solid foundation for improving performance.
• Lintonsmith noted that while Supercuts delivered growth, declining guest traffic in company-owned salons requires immediate attention.
• Kersten Zupfer, CFO, confirmed the repayment of approximately $7.9 million of debt and highlighted the completion of a comprehensive review of refinancing alternatives with Board oversight.
• Management expressed confidence in returning to the debt markets in early 2027 and strengthening the financial position through cash generation and debt reduction.

Other Key Points:

• The company repaid approximately $7.9 million of debt during the first quarter.
• The company recorded a $2.5 million accrual for the Alline PPP loan matter, which was excluded from Adjusted EBITDA and Adjusted Net Income.
• A $2.1 million gain on the derecognition of benefit obligations was recognized in the current quarter.
• The company reported the eighth consecutive quarter of positive cash flows from operations.
• Capital expenditures were $0.5 million for the quarter.
• The company completed a comprehensive review of refinancing alternatives including senior bank debt, private credit financing, preferred equity structures, and whole business securitization.