Regis Corporation Q2 FY2026 earnings call

• Focus remains on building a durable, modern, and disciplined Regis to sustain cash generation and create long-term value. • Adjusted EBITDA was $8 million in Q2, up $900k y-o-y, with YTD adjusted EBITDA at $16 million, up $1.2 million. • Generated $1.5 million unrestricted cash from operations in Q2 and $3.9 million YTD. • Supercuts has seen improvements in loyalty participation, digital engagement, and brand standards; company-owned salons had 4.3% sales growth in Q2 with pricing adjustments and labor optimization. • SmartStyle faces performance challenges but focus is on stabilization; technology initiatives include leveraging POS, loyalty/CRM, and AI for process efficiency. • Organizational simplification and resource reallocation to enhance execution speed and accountability.

For the second quarter, adjusted EBITDA was $8 million, an increase of $900,000 year-over-year. Franchise segment adjusted EBITDA was $6.2 million in the quarter, a $173,000 decrease compared to the prior year quarter, with franchise adjusted EBITDA as a percentage of franchise revenue at 16.5%, up from 14.8% the prior year. Company-owned salon segment adjusted EBITDA improved by $1.1 million year-over-year to $1.8 million for the quarter, primarily due to the Alline acquisition. Consolidated same-store sales for the quarter declined modestly by 0.10%, while Supercuts delivered 2% year-to-date same-store sales growth and consolidated same-store sales increased 0.4%.

• Anticipate meaningful increase in unrestricted cash from core operations in FY2026 compared to FY2025, supported by operational strength, full year of acquired company-owned salon results, and absence of onetime expenses. • Marketing plans for FY2026 to deploy ad fund cash to support growth initiatives. • Expect lease liabilities to decrease over time as leases mature and franchise leases are reduced.

• Traffic remains the most significant challenge and primary drag on top line performance. • Closures of underperforming franchise locations, with a $350,000 gap between top-performing and underperforming units highlighting the need for further profitability and cash flow enhancement through transformation strategy execution.

Q: On Alline stores, what is the initiative to improve performance?

A: Jim Lain stated there are three components: refinement of the pay plan, pricing adjustments (including catching up on price taken earlier and adjusting commensurate tiers), and labor optimization using AI to address overstaffing/understaffing based on sales by hour data.

Q: Regarding store closures and Alline stores, is the closure guidance relative to previous fiscal year?

A: Kersten Zupfer confirmed that closures in the second half of fiscal year 2026 are expected to be in the same range as the first half, and the reduction of Alline stores from franchise to company-owned is about a 50% reduction from the previous fiscal year's closure amount.

Q: Can you share preliminary high-level feedback on potential replacement lenders' rates for refinancing?

A: Kersten Zupfer stated she can't share specific rates or details of discussions but mentioned initial conversations with potential advisers and will keep shareholders informed as progress is made.

Q: Can you walk through major new insights or initiatives to address foot traffic goals?

A: Jim Lain mentioned focus on lead measures like paid media for customer acquisition, loyalty membership growth, online booking, 90-day customer retention, and transactions with valid email; also leaning into CRM and loyalty to maintain customer stickiness.

Q: Are you planning to add cost-cutter locations and why is loyalty adoption lagging in SmartStyle and cost cutters?

A: Jim Lain said there's no all-out effort to add cost-cutter locations but some conversions are happening where appropriate; loyalty adoption is lagging in SmartStyle and cost cutters because it started later, but it's growing, and the strategy is to deploy Supercuts' loyalty wins to other brands.