Regis Corporation Reports Third Quarter Results

- Earnings Per Share Grows Seven Percent to $0.30, Exceeding Expectations -



- Fiscal Year 2002 EPS to Increase to $1.35 -



Apr 24, 2001, 01:00 ET from Regis Corporation

    MINNEAPOLIS, April 24 /PRNewswire/ -- Regis Corporation (Nasdaq:   RGIS) the
 largest owner, operator, franchisor and acquirer of hair and retail product
 salons in the world, today reported financial results for its fiscal third
 quarter and nine months ended March 31, 2001.  The Company also issued
 financial guidance for its fiscal year ending June 30, 2002.
 
     Quarterly Highlights
     The following are highlights for the fiscal third quarter ended
 March 31, 2001:
 
     * Earnings per share grows seven percent to $0.30, exceeding expectations
     * Revenues increase 15 percent to $331 million
     * Combined gross margin expands 20 basis points to 43.8 percent
     * Operating income grows 16 percent to $26 million
     * EBITDA and operating cash flow increases 16 and 15 percent, respectively
 
     Financial Summary
     (Exclusive of nonrecurring items)
     (In thousands, except per share amounts)
 
                            Three Months Ended        Nine Months Ended
                               March 31,                  March 31,
                         2001      2000  % Change     2001        2000 % Change
 
     System-wide sales $480,483  $416,099  15.5%  $1,405,664  $1,226,364  14.6%
     Total revenues     330,910   288,062  14.9      965,713     840,025  15.0
     Operating income    26,375    22,782  15.8       77,571      72,545   6.9
     Net income          12,533    11,617   7.9       37,335      37,912  (1.5)
     EPS                   0.30      0.28   7.1         0.89        0.91  (2.2)
     EBITDA              43,084    37,046  16.3      125,887     113,092  11.3
 
     "We are extremely pleased to report solid results with double digit
 revenue and operating income growth and expansion of our gross margin.  Our
 results in a difficult retail environment demonstrate the strength of our
 brands and the replenishment aspect of our business," commented Paul D.
 Finkelstein, President and Chief Executive Officer.  "Regis' story has always
 been its ability to generate exceptionally strong cash flow and this quarter
 was no exception.  Third quarter EBITDA grew by more than 16 percent to over
 $43 million.  In addition, we are on track to deliver EBITDA of over
 $175 million for our fiscal year ending June 30, 2001."
     In addition to reporting financial results, Regis Corporation announced
 fiscal year 2002 financial expectations.
 
     Fiscal Year 2002 Highlights
     The following highlights relate to the company's fiscal year ending
 June 30, 2002 financial expectations:
 
     * Total revenue and net income growth of nine percent
     * Earnings per share increasing seven percent to $1.35, excluding
       accretion from fiscal 2002 acquisitions
     * EBITDA and operating cash flow expected to increase seven and nine
       percent to $190 and $130 million, respectively
     * Total capital expenditures, including acquisitions, expected to be
       $100 million
     * Same-store sales growth of 2.5 to 3.0 percent
 
     "We are confident that fiscal 2002 will be a solid year for us, with
 continued improvement in gross margins, operating income and cash flow.  As
 disclosed previously, we have tempered our financial guidance for fiscal 2002
 in response to expectations of a protracted economic slowdown.  However,
 looking beyond next year, we clearly see a return to consistent double-digit
 revenue and earnings growth," commented Mr. Finkelstein.  "Our earnings growth
 for 2002 reflects same-store sales expectations of 2.5 to 3.0 percent and our
 capital expenditure budget, including acquisitions, is targeted to be
 approximately $100 million, 40 percent lower than fiscal 2001 levels.  With
 regard to our real estate strategy, we anticipate building approximately
 375 to 400 company-owned salons and acquiring another 250 to 300 salons.
 Projections for our franchisees call for an additional 200 to 225 new salons."
     Mr. Finkelstein further added, "The temporary slowdown in salon expansion
 will provide us with an opportunity to de-leverage our balance sheet and
 increase our flexibility to maximize future growth opportunities.  It is also
 important to note that our expectations are exclusive of any earnings
 accretion we will recognize from acquisitions completed during fiscal year
 2002.  Should the economy show signs of improvement before the completion of
 fiscal year 2002, these expectations could prove to be conservative.  Our
 expectations for the next year also include approximately $0.22 per share of
 goodwill amortization as an expense item.  If the FASB's currently proposed
 accounting changes become effective, which eliminates the amortization of
 goodwill, most if not all of the goodwill charge would be added back to
 earnings (depending on implementation date)."
 
     Regis Corporation will broadcast its conference call live over the
 Internet on Tuesday, April 24, 2001 at 11:00 a.m., Eastern Daylight Time.
 Interested parties are invited to listen by logging on to
 http://www.regiscorp.com.
 
     Regis Corporation, based in Minneapolis, is the largest owner, operator,
 franchisor and acquirer of hair and retail product salons in the world.  Regis
 operates and franchises 6,604 salons (4,405 company-owned and 2,199 franchise)
 in six divisions: Regis Salons, Strip Center Salons (primarily Supercuts and
 Cost Cutters), MasterCuts, Trade Secret, Wal-Mart/SmartStyle Family Hair
 Salons, and International, and has 40,000 employees worldwide.
 
     This press release contains "forward-looking statements" within the
 meaning of the federal securities laws, including statements concerning
 anticipated future events and expectations that are not historical facts.
 These forward-looking statements are made pursuant to the safe harbor
 provisions of the Private Securities Litigation Reform Act of 1995.  The
 forward-looking statements in this press release reflect management's best
 judgment at the time they are made, but all such statements are subject to
 numerous risks and uncertainties, which could cause actual results to differ
 materially from those expressed in or implied by the statements herein.
 Additional information concerning potential factors that could affect future
 financial results is included in the Company's Form S-3 Registration Statement
 filed with the Securities and Exchange Commission on March 15, 2001.
 
                        REGIS CORPORATION (Nasdaq:   RGIS)
                      Divisional Salon Counts and Revenues
 
                                                      March 31,      June 30,
                                                        2001           2000
     System-wide Salons:
 
       Company-owned Salons                             4,405          3,752
       Franchise Salons                                 2,199          1,917
          Total Salons                                  6,604          5,669
 
     Divisional Salons:
 
       Regis Salons                                       975            912
 
       MasterCuts                                         520            502
 
       Trade Secret:
        Company-owned                                     475            460
        Franchise                                          26             26
 
       SmartStyle/Wal-Mart:
        Company-owned                                     701            547
        Franchise                                         178            148
 
       Strip Center (primarily Supercuts/Cost Cutters):
        Company-owned                                   1,367            982
        Franchise                                       1,994          1,740
 
       International                                      368            352
 
 
                             Three Months Ended          Nine Months Ended
                                  March 31,                  March 31,
                             2001          2000          2001         2000
 
     Company-owned Divisional Revenue:
 
     Regis Salons          $102,333       $94,246     $299,379      $281,350
     MasterCuts              39,640        36,084      116,874       106,419
     Trade Secret            43,394        41,029      135,172       122,669
     SmartStyle/Wal-Mart     32,904        23,303       89,965        63,069
     Strip Center
      (primarily Supercuts/
      Cost Cutters)          75,142        55,783      213,001       151,703
     International           23,234        24,822       70,099        77,369
     Franchise Revenue       14,263        12,795       41,223        37,446
                           $330,910      $288,062     $965,713      $840,025
 
 
                        REGIS CORPORATION (Nasdaq:   RGIS)
                           Consolidated Balance Sheet
                    (In thousands, except per share amounts)
 
                                                   (Unaudited)
                                                 March 31, 2001   June 30, 2000
     ASSETS
     Current assets:
      Cash                                            $24,598        $14,888
      Accounts receivable, net                         17,594         16,220
      Inventories                                     103,704         91,823
      Deferred income taxes                             9,169         10,160
      Other current assets                              7,829         10,713
 
        Total current assets                          162,894        143,804
 
     Property and equipment, net                      293,708        260,532
     Goodwill, net                                    246,468        208,724
     Other assets                                      17,363         15,295
 
        Total assets                                 $720,433       $628,355
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Current liabilities:
      Long-term debt, current portion                  $5,701         $9,983
      Accounts payable                                 32,447         34,216
      Accrued expenses                                 70,229         58,845
 
        Total current liabilities                     108,377        103,044
 
     Long-term debt                                   263,756        224,618
     Other noncurrent liabilities                      27,409         21,552
 
     Shareholders' equity:
     Common stock, $.05 par value; issued
      and outstanding, 41,322,142 and 40,702,707
      common shares at March 31, 2001 and
      June 30, 2000, respectively                       2,066          2,035
 
      Additional paid-in capital                      162,288        150,793
      Accumulated other comprehensive income          (5,695)        (2,274)
      Retained earnings                               162,232        128,587
 
        Total shareholders' equity                    320,891        279,141
 
        Total liabilities and shareholders' equity   $720,433       $628,355
 
 
                        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,
                             2001          2000          2001         2000
 
     SYSTEM-WIDE SALES     $480,483      $416,099   $1,405,664    $1,226,364
 
     Revenues:
     Company-owned salons:
      Service              $226,309      $196,156     $654,491      $570,468
      Product                90,338        79,111      269,999       232,111
                            316,647       275,267      924,490       802,579
     Franchise revenue:
      Royalties and fees      9,536         9,069       28,159        26,809
      Product sales           4,727         3,726       13,064        10,637
                             14,263        12,795       41,223        37,446
 
        Total revenues      330,910       288,062      965,713       840,025
 
     Operating expenses:
     Company-owned:
      Cost of service       129,510       112,256      375,501       324,943
      Cost of product        48,405        42,913      144,874       124,888
      Direct salon           28,725        24,146       82,182        69,533
      Rent                   44,478        38,639      129,024       111,419
      Depreciation           10,756         9,346       31,268        26,909
                            261,874       227,300      762,849       657,692
 
     Selling, general
      and administrative     33,400        30,843       99,678        89,491
 
     Depreciation and
      amortization            5,788         4,310       16,022        12,184
 
     Nonrecurring items                                                3,145
 
     Other (primarily
      franchise
      product costs)          3,473         2,827        9,593         8,113
 
     Total operating
      expenses              304,535       265,280      888,142       770,625
 
     Operating income        26,375        22,782       77,571        69,400
 
     Other income (expense):
      Interest              (5,492)       (4,187)     (16,328)      (11,542)
      Other, net                165           608        1,026         1,454
 
     Income before
      income taxes           21,048        19,203       62,269        59,312
 
     Income taxes           (8,515)       (7,586)     (24,934)      (24,250)
 
     Net income             $12,533       $11,617      $37,335       $35,062
 
     Net income per share:
       Basic                  $ .30         $ .29        $ .91         $ .86
       Diluted                $ .30         $ .28        $ .89         $ .84
 
     Weighted average common
      and common equivalent
      shares outstanding:
       Basic                 41,125        40,718       40,880        40,563
       Diluted               42,266        41,849       41,878        41,694
 
     Net income, excluding
      nonrecurring items    $12,533       $11,617      $37,335       $37,912
 
     Net income per diluted
      share, excluding
      nonrecurring items      $ .30         $ .28        $ .89         $ .91
 
 
 

SOURCE Regis Corporation
    MINNEAPOLIS, April 24 /PRNewswire/ -- Regis Corporation (Nasdaq:   RGIS) the
 largest owner, operator, franchisor and acquirer of hair and retail product
 salons in the world, today reported financial results for its fiscal third
 quarter and nine months ended March 31, 2001.  The Company also issued
 financial guidance for its fiscal year ending June 30, 2002.
 
     Quarterly Highlights
     The following are highlights for the fiscal third quarter ended
 March 31, 2001:
 
     * Earnings per share grows seven percent to $0.30, exceeding expectations
     * Revenues increase 15 percent to $331 million
     * Combined gross margin expands 20 basis points to 43.8 percent
     * Operating income grows 16 percent to $26 million
     * EBITDA and operating cash flow increases 16 and 15 percent, respectively
 
     Financial Summary
     (Exclusive of nonrecurring items)
     (In thousands, except per share amounts)
 
                            Three Months Ended        Nine Months Ended
                               March 31,                  March 31,
                         2001      2000  % Change     2001        2000 % Change
 
     System-wide sales $480,483  $416,099  15.5%  $1,405,664  $1,226,364  14.6%
     Total revenues     330,910   288,062  14.9      965,713     840,025  15.0
     Operating income    26,375    22,782  15.8       77,571      72,545   6.9
     Net income          12,533    11,617   7.9       37,335      37,912  (1.5)
     EPS                   0.30      0.28   7.1         0.89        0.91  (2.2)
     EBITDA              43,084    37,046  16.3      125,887     113,092  11.3
 
     "We are extremely pleased to report solid results with double digit
 revenue and operating income growth and expansion of our gross margin.  Our
 results in a difficult retail environment demonstrate the strength of our
 brands and the replenishment aspect of our business," commented Paul D.
 Finkelstein, President and Chief Executive Officer.  "Regis' story has always
 been its ability to generate exceptionally strong cash flow and this quarter
 was no exception.  Third quarter EBITDA grew by more than 16 percent to over
 $43 million.  In addition, we are on track to deliver EBITDA of over
 $175 million for our fiscal year ending June 30, 2001."
     In addition to reporting financial results, Regis Corporation announced
 fiscal year 2002 financial expectations.
 
     Fiscal Year 2002 Highlights
     The following highlights relate to the company's fiscal year ending
 June 30, 2002 financial expectations:
 
     * Total revenue and net income growth of nine percent
     * Earnings per share increasing seven percent to $1.35, excluding
       accretion from fiscal 2002 acquisitions
     * EBITDA and operating cash flow expected to increase seven and nine
       percent to $190 and $130 million, respectively
     * Total capital expenditures, including acquisitions, expected to be
       $100 million
     * Same-store sales growth of 2.5 to 3.0 percent
 
     "We are confident that fiscal 2002 will be a solid year for us, with
 continued improvement in gross margins, operating income and cash flow.  As
 disclosed previously, we have tempered our financial guidance for fiscal 2002
 in response to expectations of a protracted economic slowdown.  However,
 looking beyond next year, we clearly see a return to consistent double-digit
 revenue and earnings growth," commented Mr. Finkelstein.  "Our earnings growth
 for 2002 reflects same-store sales expectations of 2.5 to 3.0 percent and our
 capital expenditure budget, including acquisitions, is targeted to be
 approximately $100 million, 40 percent lower than fiscal 2001 levels.  With
 regard to our real estate strategy, we anticipate building approximately
 375 to 400 company-owned salons and acquiring another 250 to 300 salons.
 Projections for our franchisees call for an additional 200 to 225 new salons."
     Mr. Finkelstein further added, "The temporary slowdown in salon expansion
 will provide us with an opportunity to de-leverage our balance sheet and
 increase our flexibility to maximize future growth opportunities.  It is also
 important to note that our expectations are exclusive of any earnings
 accretion we will recognize from acquisitions completed during fiscal year
 2002.  Should the economy show signs of improvement before the completion of
 fiscal year 2002, these expectations could prove to be conservative.  Our
 expectations for the next year also include approximately $0.22 per share of
 goodwill amortization as an expense item.  If the FASB's currently proposed
 accounting changes become effective, which eliminates the amortization of
 goodwill, most if not all of the goodwill charge would be added back to
 earnings (depending on implementation date)."
 
     Regis Corporation will broadcast its conference call live over the
 Internet on Tuesday, April 24, 2001 at 11:00 a.m., Eastern Daylight Time.
 Interested parties are invited to listen by logging on to
 http://www.regiscorp.com.
 
     Regis Corporation, based in Minneapolis, is the largest owner, operator,
 franchisor and acquirer of hair and retail product salons in the world.  Regis
 operates and franchises 6,604 salons (4,405 company-owned and 2,199 franchise)
 in six divisions: Regis Salons, Strip Center Salons (primarily Supercuts and
 Cost Cutters), MasterCuts, Trade Secret, Wal-Mart/SmartStyle Family Hair
 Salons, and International, and has 40,000 employees worldwide.
 
     This press release contains "forward-looking statements" within the
 meaning of the federal securities laws, including statements concerning
 anticipated future events and expectations that are not historical facts.
 These forward-looking statements are made pursuant to the safe harbor
 provisions of the Private Securities Litigation Reform Act of 1995.  The
 forward-looking statements in this press release reflect management's best
 judgment at the time they are made, but all such statements are subject to
 numerous risks and uncertainties, which could cause actual results to differ
 materially from those expressed in or implied by the statements herein.
 Additional information concerning potential factors that could affect future
 financial results is included in the Company's Form S-3 Registration Statement
 filed with the Securities and Exchange Commission on March 15, 2001.
 
                        REGIS CORPORATION (Nasdaq:   RGIS)
                      Divisional Salon Counts and Revenues
 
                                                      March 31,      June 30,
                                                        2001           2000
     System-wide Salons:
 
       Company-owned Salons                             4,405          3,752
       Franchise Salons                                 2,199          1,917
          Total Salons                                  6,604          5,669
 
     Divisional Salons:
 
       Regis Salons                                       975            912
 
       MasterCuts                                         520            502
 
       Trade Secret:
        Company-owned                                     475            460
        Franchise                                          26             26
 
       SmartStyle/Wal-Mart:
        Company-owned                                     701            547
        Franchise                                         178            148
 
       Strip Center (primarily Supercuts/Cost Cutters):
        Company-owned                                   1,367            982
        Franchise                                       1,994          1,740
 
       International                                      368            352
 
 
                             Three Months Ended          Nine Months Ended
                                  March 31,                  March 31,
                             2001          2000          2001         2000
 
     Company-owned Divisional Revenue:
 
     Regis Salons          $102,333       $94,246     $299,379      $281,350
     MasterCuts              39,640        36,084      116,874       106,419
     Trade Secret            43,394        41,029      135,172       122,669
     SmartStyle/Wal-Mart     32,904        23,303       89,965        63,069
     Strip Center
      (primarily Supercuts/
      Cost Cutters)          75,142        55,783      213,001       151,703
     International           23,234        24,822       70,099        77,369
     Franchise Revenue       14,263        12,795       41,223        37,446
                           $330,910      $288,062     $965,713      $840,025
 
 
                        REGIS CORPORATION (Nasdaq:   RGIS)
                           Consolidated Balance Sheet
                    (In thousands, except per share amounts)
 
                                                   (Unaudited)
                                                 March 31, 2001   June 30, 2000
     ASSETS
     Current assets:
      Cash                                            $24,598        $14,888
      Accounts receivable, net                         17,594         16,220
      Inventories                                     103,704         91,823
      Deferred income taxes                             9,169         10,160
      Other current assets                              7,829         10,713
 
        Total current assets                          162,894        143,804
 
     Property and equipment, net                      293,708        260,532
     Goodwill, net                                    246,468        208,724
     Other assets                                      17,363         15,295
 
        Total assets                                 $720,433       $628,355
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Current liabilities:
      Long-term debt, current portion                  $5,701         $9,983
      Accounts payable                                 32,447         34,216
      Accrued expenses                                 70,229         58,845
 
        Total current liabilities                     108,377        103,044
 
     Long-term debt                                   263,756        224,618
     Other noncurrent liabilities                      27,409         21,552
 
     Shareholders' equity:
     Common stock, $.05 par value; issued
      and outstanding, 41,322,142 and 40,702,707
      common shares at March 31, 2001 and
      June 30, 2000, respectively                       2,066          2,035
 
      Additional paid-in capital                      162,288        150,793
      Accumulated other comprehensive income          (5,695)        (2,274)
      Retained earnings                               162,232        128,587
 
        Total shareholders' equity                    320,891        279,141
 
        Total liabilities and shareholders' equity   $720,433       $628,355
 
 
                        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,
                             2001          2000          2001         2000
 
     SYSTEM-WIDE SALES     $480,483      $416,099   $1,405,664    $1,226,364
 
     Revenues:
     Company-owned salons:
      Service              $226,309      $196,156     $654,491      $570,468
      Product                90,338        79,111      269,999       232,111
                            316,647       275,267      924,490       802,579
     Franchise revenue:
      Royalties and fees      9,536         9,069       28,159        26,809
      Product sales           4,727         3,726       13,064        10,637
                             14,263        12,795       41,223        37,446
 
        Total revenues      330,910       288,062      965,713       840,025
 
     Operating expenses:
     Company-owned:
      Cost of service       129,510       112,256      375,501       324,943
      Cost of product        48,405        42,913      144,874       124,888
      Direct salon           28,725        24,146       82,182        69,533
      Rent                   44,478        38,639      129,024       111,419
      Depreciation           10,756         9,346       31,268        26,909
                            261,874       227,300      762,849       657,692
 
     Selling, general
      and administrative     33,400        30,843       99,678        89,491
 
     Depreciation and
      amortization            5,788         4,310       16,022        12,184
 
     Nonrecurring items                                                3,145
 
     Other (primarily
      franchise
      product costs)          3,473         2,827        9,593         8,113
 
     Total operating
      expenses              304,535       265,280      888,142       770,625
 
     Operating income        26,375        22,782       77,571        69,400
 
     Other income (expense):
      Interest              (5,492)       (4,187)     (16,328)      (11,542)
      Other, net                165           608        1,026         1,454
 
     Income before
      income taxes           21,048        19,203       62,269        59,312
 
     Income taxes           (8,515)       (7,586)     (24,934)      (24,250)
 
     Net income             $12,533       $11,617      $37,335       $35,062
 
     Net income per share:
       Basic                  $ .30         $ .29        $ .91         $ .86
       Diluted                $ .30         $ .28        $ .89         $ .84
 
     Weighted average common
      and common equivalent
      shares outstanding:
       Basic                 41,125        40,718       40,880        40,563
       Diluted               42,266        41,849       41,878        41,694
 
     Net income, excluding
      nonrecurring items    $12,533       $11,617      $37,335       $37,912
 
     Net income per diluted
      share, excluding
      nonrecurring items      $ .30         $ .28        $ .89         $ .91
 
 
 SOURCE  Regis Corporation