Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) provides management's perspective on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. This MD&A should be read in conjunction with the MD&A included in our June 30, 2025, Annual Report on Form 10-K and other documents filed or furnished with the SEC during the current fiscal year.
MD&A includes certain non-GAAP measures. The following items have been excluded from our non-GAAP adjusted EBITDA results: stock-based compensation expense, discontinued operations, one-time professional fees and legal settlements, severance expense, the benefit from lease liability decreases in excess of previously impaired right of use asset, lease termination fees, and asset retirement obligation costs.
MANAGEMENT'S OVERVIEW
Regis Corporation (NasdaqGM:RGS) is a leader in the beauty salon industry. As of March 31, 2026, the Company franchised or owned 3,770 locations, primarily in North America. Our locations consisted of 3,497 franchised salons and 273 company-owned salons. Regis’ franchised and corporate locations operate under concepts such as Supercuts®, SmartStyle®, Cost Cutters®, Roosters® and First Choice Haircutters®. As of March 31, 2026, the Company had 1,655 employees of which 1,497 were acquired as part of the Alline acquisition.
CRITICAL ACCOUNTING ESTIMATES
There have been no material changes to our critical accounting estimates from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
Goodwill
The Company assesses goodwill impairment on an annual basis, during the Company's fourth fiscal quarter, and between annual assessments if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. An interim impairment analysis was not required in the three months ended March 31, 2026. As of March 31, 2026, and June 30, 2025, the franchise reporting unit had goodwill of $172.8 million and $173.1 million, respectively, and the company-owned reporting unit had goodwill of $10.3 million as of both March 31, 2026, and June 30, 2025.
Our significant accounting policies can be found in Note 1 to the Consolidated Financial Statements contained in Part II, Item 8 of the June 30, 2025, Annual Report on Form 10-K. There have been no changes to our critical accounting policies from those disclosed on our Form 10-K for the year ended June 30, 2025.
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RESULTS OF OPERATIONS
System-wide results
Our results are impacted by our system-wide sales, which include sales by all points of distribution, whether owned by our franchisees or the Company. While we do not record sales by franchisees as revenue, and such sales are not included in our unaudited Condensed Consolidated Financial Statements, we believe that this operating measure is important in obtaining an understanding of our financial performance. We believe system-wide sales information aids in understanding how we derive royalty revenue and in evaluating performance. In the nine months ended March 31, 2026, a net 150 franchise salons and 21 company-owned salons have closed.
The following table summarizes system-wide revenue and system-wide same-store sales by concept:
Three Months Ended March 31, Nine Months Ended March 31,
2026 2025 2026 2025
(Dollars in millions)
System-wide revenue $ 261.1 $ 266.9 $ 796.6 $ 826.4
Supercuts 5.0 % 1.1 % 3.2 % 0.8 %
SmartStyle (3.3) (7.4) (4.6) (6.8)
Portfolio Brands 1.4 (0.9) 0.8 (1.5)
Total system-wide same-store sales (1) 2.6 % (1.1) % 1.1 % (1.3) %
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(1)System-wide same-store sales are calculated as the total change in sales for system-wide franchise and company-owned locations that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly system-wide same-store sales are the sum of the system-wide same-store sales computed on a daily basis. Franchise salons that do not report daily sales are excluded from same-store sales. System-wide same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.
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Condensed Consolidated Results of Operations (Unaudited)
The following table sets forth, for the periods indicated, certain information derived from our unaudited Condensed Consolidated Statements of Operations. The percentages are computed as a percent of total consolidated revenues, except as otherwise indicated, and the increase (decrease) is measured in basis points. Variances calculated on amounts shown in millions may result in rounding differences.
Three Months Ended March 31, Nine Months Ended March 31,
2026 2025 2026 2025 2026 2025 2026 2025
(dollars in millions) % of Total Revenue Increase (Decrease) (dollars in millions) % of Total Revenue Increase (Decrease)
Royalties $ 13.2 $ 13.5 25.2 % 23.7 % 150 $ 40.9 $ 44.0 24.3 % 29.4 % (510)
Fees 1.9 2.4 3.6 4.2 (60) 5.4 7.7 3.2 5.1 (190)
Advertising fund contributions 5.2 5.2 9.9 9.1 80 16.1 16.3 9.6 10.9 (130)
Franchise rental income 13.0 16.9 24.8 29.6 (480) 47.6 58.5 28.2 39.1 (1,090)
Company-owned salon revenue 19.1 19.0 36.5 33.3 320 58.5 23.2 34.7 15.5 1,920
General and administrative 10.0 11.2 19.1 19.6 (50) 31.6 36.4 18.8 24.3 (550)
Rent 3.6 4.1 6.9 7.2 (30) 10.4 7.3 6.2 4.9 130
Advertising fund expense 5.2 5.2 9.9 9.1 80 16.1 16.3 9.6 10.9 (130)
Franchise rent expense 13.0 16.9 24.8 29.6 (480) 47.6 58.5 28.2 39.1 (1,090)
Company-owned salon expense (1) 14.0 13.8 26.7 24.2 250 42.5 16.5 25.2 11.0 1,420
Depreciation and amortization 0.9 0.7 1.7 1.2 50 2.5 1.6 1.5 1.1 40
Long-lived asset impairment — — — — — — 0.4 — 0.3 (30)
Operating income (2) 5.7 5.0 10.9 8.8 210 17.8 12.7 10.6 8.5 210
Interest expense (5.0) (5.1) (9.5) (8.9) 60 (15.6) (14.8) (9.3) (9.9) (60)
Gain on earn-out liability — — — — — 1.0 — 0.6 — 60
Other, net 0.2 0.3 0.4 0.5 (10) 1.0 0.7 0.6 0.5 10
Income tax (expense) benefit (3) (0.2) — 17.7 (0.4) N/A (1.7) 0.1 40.0 6.2 N/A
Income (loss) from continuing operations (2) 0.7 0.3 1.3 0.5 80 2.5 (1.4) 1.5 (0.9) 240
Income from discontinued operations — — — — — — 8.4 — 5.6 (560)
Net income (2) 0.7 0.3 1.3 0.5 80 2.5 7.0 1.5 4.7 (320)
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(1)Includes cost of services and products sold to guests in our company-owned salons. Excludes general and administrative expense, rent and depreciation and amortization related to company-owned salons.
(2)Total is a recalculation; line items calculated individually may not sum to total due to rounding.
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(3)Computed as a percent of income (loss) from continuing operations before income taxes. The income tax basis point change is noted as not applicable (N/A) because the discussion within the MD&A is related to the effective income tax rate.
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Three and Nine Months Ended March 31, 2026, Compared with Three and Nine Months Ended March 31, 2025
Royalties
During the three and nine months ended March 31, 2026, royalties decreased $0.3 million and $3.1 million, or 2.2% and 7.0%, respectively, primarily due to a decrease in franchise salon count caused by franchise salon closures. The decrease for the nine months ended March 31, 2026, includes a greater impact from the Alline acquisition conversion of franchise salons to company-owned as these salons converted in December 2024.
Fees
During the three months ended March 31, 2026, fees decreased $0.5 million, or 20.8%, primarily due to salon closures. During the nine months ended March 31, 2026, fees decreased $2.3 million, or 29.9%, as a result of salon closures in the current year, as well as terminated franchise fees related to the Alline acquisition in the prior year period.
Advertising Fund Contributions
During the three months ended March 31, 2026, advertising fund contributions remained flat compared to the prior year period. During the nine months ended March 31, 2026, advertising fund contributions decreased $0.2 million, or 1.2%, primarily due to lower salon count.
Franchise Rental Income
During the three and nine months ended March 31, 2026, franchise rental income decreased $3.9 million and $10.9 million, or 23.1% and 18.6%, respectively, primarily due to franchisees signing their own leases and the decrease in franchise salon count.
Company-Owned Salon Revenue
During the three months ended March 31, 2026, company-owned salon revenue increased $0.1 million, or 0.5%, primarily due to the closure of underperforming salons. During the nine months ended March 31, 2026, company-owned salon revenue increased $35.3 million, from $23.2 million to $58.5 million, due to the increase in company-owned salon count related to the Alline acquisition.
General and Administrative
General and administrative expense for the three and nine months ended March 31, 2026, decreased $1.2 million and $4.8 million, or 10.7% and 13.2%, respectively, primarily due to lower corporate compensation expenses in the current year period and lapping of education events, offset partially by increased company-owned general and administrative expense.
Rent
During the three months ended March 31, 2026, rent expense decreased $0.5 million, or 12.2%, primarily due to the closure of underperforming company-owned salons. During the nine months ended March 31, 2026, rent expense increased $3.1 million, or 42.5%, primarily as a result of rent expense associated with the salons from the Alline acquisition.
Advertising Fund Expense
During the three months ended March 31, 2026, advertising fund expense remained flat compared to the prior year period. During the nine months ended March 31, 2026, advertising fund expense decreased $0.2 million, or 1.2%, primarily due to lower salon count.
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Franchise Rent Expense
During the three and nine months ended March 31, 2026, franchise rent expense decreased $3.9 million and $10.9 million, or 23.1% and 18.6%, respectively, primarily due to franchisees signing their own leases and the decrease in franchise salon count.
Company-Owned Salon Expense
Company-owned salon expense, for the three and nine months ended March 31, 2026, increased $0.2 million and $26.0 million from $13.8 million to $14.0 million and from $16.5 million to $42.5 million, respectively, primarily due to the Alline acquisition in the prior year period.
Depreciation and Amortization
Depreciation and amortization for the three and nine months ended March 31, 2026, increased $0.2 million and $0.9 million, or 28.6% and 56.3%, respectively, primarily due to depreciation expense associated with the assets acquired in the Alline acquisition.
Long-Lived Asset Impairment
In the three and nine months ended March 31, 2026, the Company did not record any long-lived asset impairments. In the nine months ended March 31, 2025, the Company recorded long-lived asset impairment charges of $0.4 million related to the right-of-use asset associated with the corporate office lease.
Interest Expense
For the three months ended March 31, 2026, interest expense decreased $0.1 million or 2.0%, primarily due to declining interest rates. The $0.8 million increase in interest expense for the nine months ended March 31, 2026, was primarily due to higher debt outstanding, offset partially by declining rates. Cash interest decreased $0.2 million for the three months ended March 31, 2026, and remained flat for the nine months ended March 31, 2026, compared to the prior year periods.
Gain on Earn-Out Liability
The $1.0 million gain on earn-out liability in the nine months ended March 31, 2026, is due to a change in the estimated fair value expected to be paid in conjunction with the Alline acquisition.
Other, Net
Other, net primarily relates to corporate sublease income and foreign currency gains and losses. Other, net decreased $0.1 million and increased $0.3 million, respectively, in the three and nine months ended March 31, 2026, primarily due to foreign currency gains and losses adjustments.
Income Tax (Expense) Benefit
During the three months ended March 31, 2026, the Company recognized a tax expense of $0.2 million, with a corresponding effective tax rate of 17.7%, as compared to recognizing a small tax benefit with a corresponding effective tax rate of (0.4)% during the three months ended March 31, 2025. During the nine months ended March 31, 2026, the Company recognized a tax expense of $1.7 million, with a corresponding effective tax rate of 40.0%, as compared to recognizing a tax benefit of $0.1 million, with a corresponding effective tax rate of 6.2% during the nine months ended March 31, 2025. See Note 5 to the unaudited Condensed Consolidated Financial Statements.
Income from Discontinued Operations
Income from discontinued operations in the nine months ended March 31, 2025, relates to proceeds received from the sale of OSP related to the number of salons migrating to the Zenoti platform. See Note 3 to the unaudited Condensed Consolidated Financial Statements.
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Results of Operations by Segment
Based on our internal management structure, we report two segments: franchise and company-owned salons. See Note 12 to the unaudited Condensed Consolidated Financial Statements. Significant results of continuing operations are discussed below for each of these segments.
Franchise Salons
Three Months Ended March 31, Nine Months Ended March 31,
2026 2025 Decrease (1) 2026 2025 Decrease (1)
(Dollars in millions) (Dollars in millions)
Royalties $ 13.2 $ 13.5 $ (0.3) $ 40.9 $ 44.0 $ (3.1)
Fees 1.9 2.4 (0.5) 5.4 7.7 (2.3)
Advertising fund contributions 5.2 5.2 — 16.1 16.3 (0.2)
Franchise rental income 13.0 16.9 (3.9) 47.6 58.5 (10.9)
Total franchise revenue (1) $ 33.3 $ 38.0 $ (4.7) $ 110.0 $ 126.5 $ (16.5)
Franchise same-store sales (2) 2.0 % (0.7) % 0.8 % (1.1) %
Franchise adjusted EBITDA $ 6.2 $ 6.3 $ (0.1) $ 18.9 $ 20.7 $ (1.8)
Total franchise salons 3,497 3,776 (279)
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(1)Total is a recalculation; line items calculated individually may not sum to total due to rounding.
(2)Franchise same-store sales are calculated as the total change in sales for franchise locations that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly franchise same-store sales are the sum of the franchise same-store sales computed on a daily basis. Franchise salons that do not report daily sales are excluded from same-store sales. Franchise same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.
Three and Nine Months Ended March 31, 2026, Compared with Three and Nine Months Ended March 31, 2025
Franchise Revenue
Franchise revenue decreased $4.7 million and $16.5 million during the three and nine months ended March 31, 2026, primarily due to the decrease in franchise rental income due to franchisees signing their own leases, and the decrease in franchise salon count.
Franchise Adjusted EBITDA
During the three and nine months ended March 31, 2026, franchise adjusted EBITDA totaled $6.2 million and $18.9 million, a decrease of $0.1 million and $1.8 million, respectively, compared to the three and nine months ended March 31, 2025. The decline in the three and nine months ended March 31, 2026, was primarily due to decreases in royalties and fees, offset partially by decreased general and administrative expenses.
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Company-Owned Salons
Three Months Ended March 31, Nine Months Ended March 31,
2026 2025 Increase (Decrease) (1) 2026 2025 Increase (1)
(Dollars in millions) (Dollars in millions)
Company-owned salon revenue $ 19.1 $ 19.0 $ 0.1 $ 58.5 $ 23.2 $ 35.3
Company-owned same-store sales comps 9.6 % (6.8) % 5.1 % (6.7) %
Company-owned salon adjusted EBITDA $ 1.4 $ 0.8 $ 0.6 $ 4.8 $ 1.2 $ 3.6
Total company-owned salons 273 311 (38)
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(1)Total is a recalculation; line items calculated individually may not sum to total due to rounding.
Three and Nine Months Ended March 31, 2026, Compared with Three and Nine Months Ended March 31, 2025
Company-Owned Salon Revenue
During the three months ended March 31, 2026, company-owned salon revenue increased $0.1 million, primarily due to the closure of underperforming salons. Company-owned salon revenue increased $35.3 million during the nine months ended March 31, 2026, primarily due to the impact of the Alline acquisition.
Company-Owned Salon Adjusted EBITDA
In the three and nine months ended March 31, 2026, company-owned salon adjusted EBITDA improved $0.6 million and $3.6 million, respectively, primarily due to income generated by the salons acquired in the Alline acquisition in the current year periods.
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LIQUIDITY AND CAPITAL RESOURCES
The Company has a credit agreement with TCW Asset Management Company, LLC, and MidCap Financial Trust, which matures in June 2029. In addition to a $10.0 million minimum liquidity covenant, the agreement includes typical provisions and financial covenants, including leverage and fixed-charge coverage ratio covenants. The agreement was amended in December 2024 in connection with the Alline acquisition.
Sources of Liquidity
Funds generated by operating activities, available cash and cash equivalents and our credit agreement are our most significant sources of liquidity. The Company believes it has sufficient liquidity, cash on hand and borrowing capacity to meet its obligations in the next twelve months and until maturity of the credit agreement in June 2029.
As of March 31, 2026, cash and cash equivalents were $22.9 million, with $21.9 million and $1.0 million within the United States and Canada, respectively.
As of March 31, 2026, the Company's borrowing arrangements include a $116.4 million term loan, $9.7 million of paid-in-kind interest and a $25.0 million revolving credit facility that matures in June 2029. As of March 31, 2026, the unused available credit under the revolving credit facility was $19.0 million, and total available liquidity, net of the $10.0 million minimum liquidity covenant, was $31.9 million. See Note 9 to the unaudited Condensed Consolidated Financial Statements.
Uses of Cash
The Company closely manages its liquidity and capital resources. The Company's liquidity requirements depend on key variables, including the performance of the business, the level of investment needed to support its business strategies, credit facilities and borrowing arrangements, and working capital management.
Cash Requirements
The Company's most significant contractual cash requirements as of March 31, 2026, were lease commitments and interest payments. See Notes 8 and 9 to the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
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Cash Flows
Cash Flows from Operating Activities
During the nine months ended March 31, 2026, cash provided by operating activities was $8.9 million compared to $7.0 million in the nine months ended March 31, 2025, primarily due to higher operating income in the current year period, offset partially by cash accumulated in the ad fund in the prior year.
Cash Flows from Investing Activities
During the nine months ended March 31, 2026, cash used in investing activities of $1.4 million was primarily due to capital expenditures. During the nine months ended March 31, 2025, cash used in investing activities of $10.9 million was primarily related to the $18.6 million used in the Alline acquisition, partially offset by proceeds from the sale of OSP of $8.5 million.
Cash Flows from Financing Activities
During the nine months ended March 31, 2026, cash used in financing activities was $1.7 million, primarily as a result of the repayment of long-term debt of $2.4 million, partially offset by proceeds from the issuance of common stock. During the nine months ended March 31, 2025, cash provided by financing activities was $7.2 million, primarily as a result of $15.0 million of proceeds from the issuance of long-term debt and $4.3 million of borrowings under the revolving credit facility partially offset by repayments of the revolving credit facility of $10.2 million.
Financing Arrangements
See Note 9 of the Notes to the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, and Note 8 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, for additional information regarding our financing arrangements.
Debt to Capitalization Ratio
Our debt to capitalization ratio, calculated as the principal amount of debt, including paid-in-kind interest accrued, as a percentage of the principal amount of debt and shareholders' equity at fiscal quarter end, was as follows:
Debt to Capitalization (1)
March 31, 2026 40.2 %
June 30, 2025 40.3 %
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(1)Excludes the long-term lease liability as that liability is offset by the ROU asset.
Share Repurchase Program
In May 2000, the Board approved a stock repurchase program with no stated expiration date. Since that time and through March 31, 2026, the Board has authorized $650.0 million to be expended for the repurchase of the Company's stock under this program. All repurchased shares become authorized but unissued shares of the Company. The Company last purchased shares through this program in fiscal year 2020. As of March 31, 2026, a total accumulated 1.5 million shares have been cumulatively repurchased for $595.4 million. At March 31, 2026, $54.6 million remain outstanding under the approved stock repurchase program. The Company does not expect to repurchase shares in fiscal year 2026.
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SAFE HARBOR PROVISIONS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Quarterly Report on Form 10-Q, as well as information included in, or incorporated by reference from, future filings by the Company with the Securities and Exchange Commission and information contained in written material, press releases and oral statements issued by or on behalf of the Company contains or may contain "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 document 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. Such forward-looking statements are often identified herein by use of words including, but not limited to, "may," "will," "believe," "project," "forecast," "expect," "estimate," "anticipate," and "plan." These uncertainties include a potential material adverse impact on our business and results of operations as a result of changes in consumer shopping trends and changes in manufacturer distribution channels; laws and regulations could require us to modify current business practices and incur increased costs including increases in minimum wages; changes in the general economic environment; changes in consumer tastes, hair product innovation, fashion trends and consumer spending patterns; our ability to realize the anticipated benefits of the Alline acquisition; reliance on franchise royalties and overall success of our franchisees’ salons; our salons' dependence on a third-party supplier agreement for merchandise; our and our franchisees' ability to attract, train and retain talented stylists and salon leaders; the success of our franchisees, which operate independently; data security and privacy compliance and our ability to manage cyber threats and protect the security of potentially sensitive information about our guests, franchisees, employees, vendors or Company information; the ability of the Company to maintain a satisfactory relationship with Walmart; marketing efforts to drive traffic to our franchisees' and company-owned salons; our ability to maintain and enhance the value of our brands; reliance on legacy information technology systems; reliance on external vendors; the use of social media; the effectiveness of our enterprise risk management program; potential challenges with the planning or implementation of our new enterprise resource planning system; our ability to minimize risks associated with owning and operating additional salons; ability to generate sufficient cash flow to satisfy our debt service obligations; compliance with covenants in our financing arrangement; premature termination of agreements with our franchisees; the continued ability of the Company to implement cost reduction initiatives and achieve expected cost savings; continued ability to compete in our business markets; potential liabilities related to the employee retention credit received by Alline; reliance on our management team and other key personnel; the ability to attract and retain key personnel; the continued ability to maintain an effective system of internal control over financial reporting; changes in tax exposure; the ability of our Tax Preservation Plan to protect the future availability of the Company's tax assets; potential litigation and other legal or regulatory proceedings; or other factors not listed above. Additional information concerning potential factors that could affect future financial results is set forth under Item 1A on Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q, and 8-K and Proxy Statements on Schedule 14A.
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