WELCOME TO THE NEW SALLY. NEW L LOOK. K. N NEW E EXPER ERIEN - - PowerPoint PPT Presentation
WELCOME TO THE NEW SALLY. NEW L LOOK. K. N NEW E EXPER ERIEN ENCE. E. Sally Beauty Holdings, Inc. Fisc scal 2019 2019 Fourth Qu Quar arter Ear arnin ings C Call all Novem ember er 7 7, 2019 2019 Sally Beauty Holdings, Inc.
Sally Beauty Holdings, Inc.
Sally Beauty Holdings, Inc.
Sally Beauty Holdings, Inc.
Improving our retail fundamentals Advancing our digital commerce capabilities Continuing to drive costs out of the business
Increased competition in the retail beauty space Customers desire for more convenient
shopping experience Increased investment in stores and technology Rising labor costs and tighter job market
Playing to win with
Color & Care
Sally Beauty Holdings, Inc.
Sally Beauty Holdings, Inc.
19 20 18 21 22 Bric icks & Mo Mortar t to O Omnic nichann nnel R el Retaile iler 19 20 18 21 22 Core e Retail O il Oper eratio ions ns F From B Brut ute F e Force Ma Manua nual P l Process t to T Tec echn hnolo logy-Ena nable bled 19 20 18 21 22 Produ duct Designe igner t to P Produc uct B Brand nd B Build ilder er 19 20 18 21 22 Old S d Scho hool “ l “Sup upply ply” Ma ” Market etin ing t to Reset et D Digit ital C l Conf nfid iden ence B Brand nding ing 18 22 21 19 Segr gregated, d, S Slow D w Distribu ibutio ion N Node des t to F Flex exible ible R Reple plenis nishm hment 20 18 22 21 19 Unde derinv invested ed S Store E Exper perien ience t to R Refreshe hed S d Store E e Expe perie ienc nce 20
Sally Beauty Holdings, Inc.
Compared to PY: Up for SBH, SBS and BSG Increased 10 bps Down 20 bps Increase of 13.7%
Sally Beauty Holdings, Inc.
(1) Adjusted EPS is a non-GAAP measure. See Appendix for a reconciliation of this non-GAAP measure.
Guidance for the Full-Year: Approximately Flat Approximately Flat Up Slightly Up Mid-Single Digits
Sally Beauty Holdings, Inc.
(1) Adjusted SG&A is a non-GAAP measure. See Appendix for a reconciliation of this non-GAAP measure. (2) Adjusted EPS is a non-GAAP measure. See Appendix for a reconciliation of this non-GAAP measure.
(1) Free Cash Flow is a non-GAAP measure. See Appendix for a reconciliation of this non-GAAP measure.
Improving our retail fundamentals Advancing our digital commerce capabilities Continuing to drive costs out of the business
Increased competition in the retail beauty space Customers desire for more convenient
shopping experience Increased investment in stores and technology Rising labor costs and tighter job market
Playing to win with
Color & Care
promotional strategy
e-commerce site
App
Commit” hair color technology
solution
color/care brands and men’s barbering
both Sally and BSG
and BSG stores
Chain Platform
center
digital commerce, brand marketing/strategy and global sourcing
“Unleash Your (Pro)tential”
support “Buy Online / Ship From Store and Same- Day Delivery”
distribution rights
Sally Beauty Holdings, Inc.
Sally Beauty Holdings, Inc.
As Reported (GAAP) Restructuring (1) As Adjusted (Non-GAAP) Selling, general and administrative expenses 363,955 $
363,955 $ SG&A expenses, as a percentage of sales 37.7% 37.7% Operating earnings 116,092 (756) 115,336 Operating margin 12.0% 11.9% Earnings before provision for income taxes 93,875 (756) 93,119 Provision for income taxes (3) 24,868 (277) 24,591 Net earnings 69,007 $ (479) $ 68,528 $ Earnings per share: Basic 0.58 $ (0.00) $ 0.58 $ Diluted 0.58 $ (0.00) $ 0.58 $ As Reported (GAAP) Restructuring (1) U.S. Tax Reform
(2)
As Adjusted (Non-GAAP) Selling, general and administrative expenses 365,864 $
365,864 $ SG&A expenses, as a percentage of sales 37.9% 37.9% Operating earnings 103,126 9,102
Operating margin 10.7% 11.6% Earnings before provision for income taxes 78,743 9,102
Provision for income taxes (3) 23,557 1,884 1,039 26,480 Net earnings 55,186 $ 7,218 $ (1,039) $ 61,365 $ Earnings per share: Basic 0.46 $ 0.06 $ (0.01) $ 0.51 $ Diluted 0.46 $ 0.06 $ (0.01) $ 0.51 $ (1) For the three months ended September 30, 2019, restructuring represents costs and expenses incurred in connection with the supply chain modernization plan, including a $1.8 million gain from the sale our Marinette fullfillment center. For the three months ended September 30, 2018, restructuring represents costs and expenses incurred in connection with the 2018 Restructuring Plan. (2) U.S. tax reform represents adjustments to the revaluation of deferred income taxes and a deemed repatriation tax on previously undistributed foreign earnings resulting from changes to U.S. federal tax law in December 2017. (3) The income tax provision associated with restructuring for the three months ended September 30, 2019 and 2018, was calculated using a 36.6% and 20.7% tax rate, respectively, since realization of a tax benefit for portions of these expenses are currently not deemed probable. Three Months Ended September 30, 2018 SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES Non-GAAP Financial Measures Reconciliations, Continued (In thousands, except per share data) (Unaudited) Three Months Ended September 30, 2019
Sally Beauty Holdings, Inc.
As Reported Restructuring (1) As Adjusted (Non-GAAP) Selling, general and administrative expenses 1,452,751 $
1,452,751 $ SG&A expenses, as a percentage of sales 37.5% 37.5% Operating earnings 458,473 (682) 457,791 Operating margin 11.8% 11.8% Earnings before provision for income taxes 362,164 (682) 361,482 Provision for income taxes (5) 90,541 (573) 89,968 Net earnings 271,623 $ (109) $ 271,514 $ Earnings per share: Basic 2.27 $ (0.00) $ 2.27 $ Diluted 2.26 $ (0.00) $ 2.26 $ As Reported Restructuring (1) Charges from Data Security Incidents (2) Loss on Extinguishment of Debt (3) U.S. Tax Reform (4) As Adjusted (Non-GAAP) Selling, general and administrative expenses 1,484,209 $
(7,935) $
1,476,274 $ SG&A expenses, as a percentage of sales 37.7% 37.5% Operating earnings 426,589 33,615 7,935
Operating margin 10.8% 11.9% Earnings before provision for income taxes 328,427 33,615 7,935 876
Provision for income taxes (5) 70,380 7,563 2,301 254 23,241 103,739 Net earnings 258,047 $ 26,052 $ 5,634 $ 622 $ (23,241) $ 267,114 $ Earnings per share: Basic 2.09 $ 0.21 $ 0.05 $ 0.01 $ (0.19) $ 2.17 $ Diluted 2.08 $ 0.21 $ 0.05 $ 0.01 $ (0.19) $ 2.16 $ (5) The income tax provision associated with the fiscal years 2019 and 2018 restructuring was calculated using a 84.0% and 22.5% tax rate, respectively, since realization of a tax benefit for portions of these expenses are currently not deemed probable. The income tax provision associated with other charges for the fiscal year 2018 was calculated using a 29.0% tax rate. Twelve Months Ended September 30, 2018 (1) For the fiscal year 2019, restructuring represents costs and expenses incurred in connection with the supply chain modernization plan, including a $8.4 million gain from the sale of our secondary headquarters and fulfillment center and our Marinette fullfillment center, and costs and expenses incurred in connection with the 2018 Restructuring Plan. For the fiscal year 2018, restructuring represents costs and expenses incurred in connection with the 2018 Restructuring Plan. (2) Charges from data security incidents are included in selling, general and administrative expenses and represent expenses (including assessments by credit card networks, remediation costs, and other costs and expenses) incurred in connection with the prior data security incidents. (3) Interest expense reflects a loss on extinguishment of debt in connection with a repricing of the variable-rate tranche of our term loan B, resulting in a lower effective interest. (4) U.S. tax reform represents the net impact the revaluation of deferred income taxes and a deemed repatriation tax on previously undistributed foreign earnings resulting from changes to U.S. federal tax law in December 2017. Twelve Months Ended September 30, 2019 SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES Non-GAAP Financial Measures Reconciliations, Continued (In thousands, except per share data) (Unaudited)
Sally Beauty Holdings, Inc.
Operating Free Cash Flow: 2019 2018 Percentage Change 2019 2018 Percentage Change Net cash provided by operating activities 116,592 $ 90,731 $ 28.5% 320,415 $ 372,661 $
Less: Payments for property and equipment, net (1) (37,701) (23,967) 57.3% (92,443) (86,138) 7.3% Operating free cash flow (non-GAAP) 78,891 $ 66,764 $ 18.2% 227,972 $ 286,523 $
Three Months Ended September 30, Twelve Months Ended September 30, (1) For the three and twelve months ended September 30, 2019, payments for property and equipment, net includes cash proceeds of $3.3 million and $15.3 million, respectively, from the sale of certain fullfillment centers in connection with the supply chain modernization plan. SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES Non-GAAP Financial Measures Reconciliations, Continued (In thousands) (Unaudited)