Sally Beauty Holdings — Fiscal Year 2026 Earnings Summary

Financial Performance:

• Consolidated net sales for Q4 2026 were $953 million, a 0.6% increase year-over-year; full-year net sales were $3.73 billion, a 0.9% increase.
• Consolidated comparable sales grew 0.9% in Q4 and 0.5% for the full year.
• Global e-commerce sales increased 8% to $113 million in Q4 (12% of net sales) and 10% to $441 million for the full year (12% of net sales).
• GAAP diluted EPS increased 22% to $0.60 in Q4 and 7% to $2.02 for the full year; Adjusted diluted EPS increased 13% to $0.62 in Q4 and 9% to $2.08 for the full year.
• GAAP operating earnings were $92 million (9.7% margin) in Q4, up 130 basis points; full-year GAAP operating earnings were $326 million (8.7% margin), down 20 basis points.
• Adjusted operating earnings were $95 million (10.0% margin) in Q4, up 60 basis points; full-year Adjusted operating earnings were $334 million (9.0% margin), up 10 basis points.
• GAAP gross margin was 51.9% in Q4 (down 30 basis points) and 52.0% for the full year (up 40 basis points); Adjusted gross margin expanded 40 basis points to 52.1% for the full year.
• GAAP SG&A expenses were $402 million in Q4 and $1.62 billion for the full year; Adjusted SG&A decreased $5 million to $400 million in Q4 and increased $25 million to $1.61 billion for the full year.
• Cash flow from operations was $75 million in Q4 and $323 million for the full year; Free Cash Flow was $47 million in Q4 and $210 million for the full year.
• Inventory was $1.00 billion as of September 30, 2026, up 1% versus the prior year.
• Net debt leverage ratio was 1.4x at the end of Q4 2026.

Guidance and Future Outlook:

• Fiscal 2027 Initial Guidance: Consolidated Net Sales of $3.77 billion to $3.81 billion; Comparable Sales Growth of 1% to 2%; Adjusted Operating Earnings of $334 million to $347 million; Adjusted Diluted EPS of $2.20 to $2.30.
• Fiscal 2027 Guidance assumes approximately 30 basis points of unfavorable impact from expected foreign currency rates and assumes 50% of Free Cash Flow goes toward share repurchases.
• First Quarter 2027 Guidance: Consolidated Net Sales of $945 million to $955 million; Comparable Sales Growth of 0.5% to 1.5%; Adjusted Operating Earnings of $75 million to $80 million; Adjusted Diluted EPS of $0.48 to $0.52.
• Capital Expenditures for Fiscal 2027 are projected at approximately $140 million; Free Cash Flow is projected at approximately $200 million.

Business Segments and Product Lines:

• Sally Beauty segment Q4 net sales were $550 million (up 1.6%); full-year sales were $2.14 billion (up 2.3%).
• Beauty Systems Group (BSG) segment Q4 net sales were $402 million (down 0.8%); full-year sales were $1.59 billion (down 0.9%).
• Sally Beauty segment Q4 comparable sales grew 2.0% (up 80 basis points); full-year comparable sales grew 1.5% (up 110 basis points).
• BSG segment Q4 comparable sales declined 0.6% (down 200 basis points); full-year comparable sales declined 0.8% (down 100 basis points).
• Sally Beauty segment Q4 operating margin was 16.1% (up 20 basis points); full-year margin was 15.6% (flat).
• BSG segment Q4 operating margin was 12.9% (up 30 basis points); full-year margin was 12.7% (up 50 basis points).
• Sally Beauty segment gross margin was 60.6% in Q4 (down 70 basis points) and 60.8% for the full year (flat).
• BSG segment gross margin was 40.0% in Q4 (flat) and 40.3% for the full year (up 60 basis points).
• Total store count decreased to 4,390 as of September 30, 2026 (3,062 Sally Beauty stores and 1,328 BSG stores); BSG salon business consultants decreased to 547.

Market and Competitive Landscape:

• The Company describes itself as the leader in professional hair color and sells and distributes professional beauty supplies globally.
• Management highlighted continued advancement of a long-term growth agenda focused on scaling capabilities, deepening customer engagement, and generating profitable growth.
• The Company noted new customer growth, digital and omnichannel expansion, and product innovation as key drivers throughout the year.

Risks and Challenges:

• Forward-looking statements involve risks and uncertainties, including foreign currency rate fluctuations which are expected to have an unfavorable impact of approximately 30 basis points in Q1 2027.
• Actual results may differ materially from forward-looking statements due to factors described in the "Risk Factors" section of the Annual Report on Form 10-K for the fiscal year ended September 30, 2026.
• The Company notes inherent difficulty in forecasting non-GAAP financial measures due to the occurrence and financial impact of various items out of the Company's control.

Management Commentary and Tone:

• Denise Paulonis, President and CEO, stated the Company finished fiscal 2026 with positive momentum, delivering double-digit adjusted EPS growth.
• Management emphasized disciplined execution, strengthening the balance sheet, and returning significant capital to shareholders while investing in the future.
• The tone indicates confidence in scaling growth platforms and driving long-term shareholder value as the Company enters fiscal 2027.

Other Key Points:

• During Q4 2026, the Company repaid $20 million in term loan debt and repurchased 2.6 million shares for $42 million.
• For the full year 2026, the Company completed $80 million in term loan repayments and $113 million in share repurchases.
• The Company had $158 million in cash and cash equivalents and no outstanding borrowings under its asset-based revolving line of credit as of September 30, 2026.
• Unallocated expenses decreased 16.3% in Q4 to $48 million and increased 7.3% for the full year to $209 million.
• The Company utilizes non-GAAP measures including Adjusted Gross Margin, Adjusted SG&A, Adjusted EBITDA, Adjusted Operating Earnings, Adjusted Net Earnings, Adjusted Diluted EPS, and Free Cash Flow to evaluate performance.
• Adjusted EBITDA for Q4 2026 was $126 million (up 7.3%); for the full year, it was $459 million (up 2.5%).
• Adjusted EBITDA margin was 13.2% in Q4 (up 80 basis points) and 12.3% for the full year (up 20 basis points).