WELCOME TO THE NEW SALLY - NEW LOOK. NEW EXPERIENCE. Fiscal 2020 Second Quarter Earnings Call - Sally Beauty Holdings, Inc.
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
WELCOME TO THE NEW SALLY. NEW LOOK. NEW EXPERIENCE. Sally Beauty Holdings, Inc. Fiscal 2020 Second Quarter Earnings Call May 6, 2020
Forward-Looking Statements and Non-GAAP Financial Measures
Statements in this presentation which are not purely historical facts or which depend upon future events may be forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be
identified by the use of forward-looking terminology such as “believes,” “projects,” “expects,” “can,” “may,” “estimates,” “should,” “plans,”
“targets,” “intends,” “could,” “will,” “would,” “anticipates,” “potential,” “confident,” “optimistic,” or the negative thereof, or other
variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, guidance, expectations and future
plans. Forward-looking statements can also be identified by the fact that these statements do not relate strictly to historical or current
matters.
Readers are cautioned not to place undue reliance on forward-looking statements as such statements speak only as of the date they were
made. Any forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from
the events or results described in the forward-looking statements, including, but not limited to, the risks and uncertainties related to
COVID-19 and those described in our filings with the Securities and Exchange Commission, including our most recent Annual Report on
Form 10-K for the year ended September 30, 2019, and our Current Report on Form 8-K dated as of April, 20, 2020, each as filed with the
Securities and Exchange Commission. Consequently, all forward-looking statements in this presentation are qualified by the factors, risks
and uncertainties contained therein. We assume no obligation to publicly update or revise any forward-looking statements.
This presentation includes certain financial measures that have not been calculated in accordance with accounting principles generally
accepted in the United States, or GAAP, and are therefore referred to as non-GAAP financial measures. These non-GAAP financial
measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors’ overall
understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information
prepared and presented in accordance with GAAP. A reconciliation of GAAP to non-GAAP measures is provided in the appendix of this
presentation.
Sally Beauty Holdings, Inc.
Significant Progress Made on Transformation Plan
Launched National Re-Brand Campaign at Sally Beauty
1
Added New Leaders to our Digital Product and E-commerce Platforms
2
Fixed the First Quarter Technology Issues
3
Launched sallybeauty.ca and Ship-From-Store Capabilities in Canada
4
Launched Same-Day Delivery in BSG in One Territory
5
Q2 FY20 Same Store Sales Performance
Prior to March 12 (Pre-COVID) Q2 with COVID Impact
Sally Beauty Holdings 4.7% (7.1%)
Sally Beauty Supply 4.8% (7.0%)
Beauty Systems Group 4.5% (7.4%)
WELCOME TO THE NEW SALLY. NEW LOOK. NEW EXPERIENCE. Sally Beauty Holdings, Inc.
Accelerating E-commerce Performance
Q2 March April
Sally Beauty Holdings 28% 52% 353%
Sally Beauty Supply 56% 118% 872%
*U.S. & Canada Only
Beauty Systems Group 10% 12% 129%
SBH U.S. & Canada Store Status Over 50% of stores are open to public Over 50% of stores are ship-from-store/same- day delivery/curbside but not open to public Majority of state/province is hard closed
What Makes Sally Beauty Holdings Different Post-COVID
High Demand Categories in Hair Color/Hair Care/PPE
1
Natural Hedge Between Sally Beauty and Beauty Systems Group
2
We Do Not Face the Overhang of Mall Stores or Fear of Traffic (Mall Crowds)
3
Building Strong Digital Platforms – Ship-From-Store & Same-Day Delivery
4
Restart of Store Networks with Emphasis on Safety
5
WELCOME TO THE NEW SALLY. NEW LOOK. NEW EXPERIENCE. Sally Beauty Holdings, Inc.
Q2 Financial Recap
Gross Adjusted
SSS SG&A%
Margin EPS
(7.1%) 44.0%
49.3% $0.23 (1)
Compared to PY: Prior to Mar 12 Down 20 bps Up 580 bps Decrease of 54.9%
Up 4.7%
(1) Adjusted EPS is a non-GAAP measure. See Appendix for a reconciliation of this non-GAAP measure.
Sally Beauty Holdings, Inc.WELCOME TO THE NEW SALLY. NEW LOOK. NEW EXPERIENCE. Sally Beauty Holdings, Inc.
Liquidity Actions
Expense Management Cash Management/Capital Markets
Negotiated with Landlords for rent Borrowed $340 million on revolving line of
1 abatements 1 credit to hold as cash on balance sheet
Partnered with merchandise vendors to
Increased revolving line of credit capacity
2 lower inventory and extend payment 2 from $500 million to $620 million
terms
Reduced capital spend except for
3 3 Sold $300 million of senior secured notes
E-commerce related capital investments
Furloughed approximately 70% of our field
4 staff, 60% of our Corporate staff and
reduced executive compensation
Reduced marketing, non-personnel field
5 and shared services back office spendWELCOME TO THE NEW SALLY. NEW LOOK. NEW EXPERIENCE. Sally Beauty Holdings, Inc.
Supplemental Schedule 2
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
Non-GAAP Financial Measures Reconciliations
(In thousands, except per share data)
Appendix
(Unaudited)
Three Months Ended March 31, 2020
As Reported COVID-19 As Adjusted
(1) (2)
(GAAP) Restructuring Expenses, net (Non-GAAP)
Selling, general and administrative expenses $ 383,299 $ - $ (14,697) $ 368,602
SG&A expenses, as a percentage of sales 44.0% 42.3%
Operating earnings 43,265 3,193 14,697 61,155
Operating margin 5.0% 7.0%
Earnings before provision for income taxes 21,621 3,193 14,697 39,511
(3)
Provision for income taxes 8,253 853 3,438 12,544
Net earnings $ 13,368 $ 2,340 $ 11,259 $ 26,967
Earnings per share:
Basic $ 0.12 $ 0.02 $ 0.10 $ 0.23
Diluted $ 0.12 $ 0.02 $ 0.10 $ 0.23
Three Months Ended March 31, 2019
As Reported As Adjusted
(1)
(GAAP) Restructuring (Non-GAAP)
Selling, general and administrative expenses $ 361,626 $ - $ 361,626
SG&A expenses, as a percentage of sales 38.2% 38.2%
Operating earnings 112,512 (5,814) 106,698
Operating margin 11.9% 11.3%
Earnings before provision for income taxes 88,691 (5,814) 82,877
Provision for income taxes (3) 22,966 (1,494) 21,472
Net earnings $ 65,725 $ (4,320) $ 61,405
Earnings per share:
Basic $ 0.55 $ (0.04) $ 0.51
Diluted $ 0.54 $ (0.04) $ 0.51
(1) For the three months ended March 31, 2020, restructuring represents costs and expenses incurred primarily in connection with the
Project Surge and the Transformation Plan. For the three months ended March 31, 2019, restructuring represents costs and expenses
incurred in connection with the 2018 Restructuring Plan.
(2) For the three months ended March 31, 2020, COVID-19 expenses primarily represents costs associated with disaster pay and
furloughed employees in response to the coronavirus pandemic. These cost were partially offset by an employee retention payroll tax credit
provided by the U.S. Coronavirus Aid, Relief, and Economic Security Act ("CARES Act").
(3) The income tax provision associated with restructuring for the three months ended March 31, 2020 and 2019, was calculated using a
26.7% and 25.7% tax rate, respectively, since realization of a tax benefit for portions of these expenses are currently not deemed probable.
Sally Beauty Holdings, Inc. The income tax provision associated with the COVID-19 expenses for the three months ended March 31, 2020, was calculated using a
23.4% tax rate.You can also read
