sholk molecular diagnostics presentation final.ppt idea...
TRANSCRIPT
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Idea performance
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Update 7/2/13
• The deterioration in business fundamentals continues as the L3M comparable
salon sales decline of -1.4% YoY (vs. -1.9% last quarter) and investment in higher
stylist hours caused LTM Adj. EBITDA drop to ~$130m
• Results in an implied EV to LTM Adj. EBITDA multiple of ~7.5x for Restructured
Regis
Restructured Regis enterprise value Restructured Regis EBITDA
Current share price $16.66 LTM NA salon revenue 1,911
Common shares outstanding 56.7 Consolidated LTM adj. EBITDA 138
Shares underlying convertible senior notes 11.2 Less: International salon LTM adj. EBITDA 7
Shares underlying options 0.0 Adj. EBITDA 131
Fully diluted shares 67.9 Adj. EBITDA margin 6.9%
Market capitalization 1,131
Implied EV/EBITDA 7.5x
Add:
Credit line borrowings ($400m capacity) 100
Equipment and leasehold notes payable 10
Other notes payable 0
Convertible senior notes assumed converted @ $15.35 172.5
Less:
Cash 180
Enterprise value 1,061
Less:
International salons (UK) For sale 30
Empire Education Group Fix / for sale 45
Implied Restructured Regis enterprise value 985
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Update 7/2/13
• At 7.5x LTM EBITDA and roughly 10.0x forward EBITDA (assuming a depressed
L3M EBITDA margin of 5.3% going forward), market participants are clearly pricing
in continued improvement in comparable salon sales to above 0%
*Excludes divested Hair Club operations FYE 06/30 FYE 06/30 Last QE 9/30 QE 12/31 QE 3/31 QE 6/30 QE 9/30 QE 12/31 QE 3/31
2011 2012 12 months 2011 2011 2012 2012 2012 2012 2013
Services 1,695.4 1,643.9 1,585.7 415.0 404.0 413.0 411.9 393.4 388.3 392.1
Products 447.5 440.0 421.0 106.8 112.9 113.2 107.2 102.3 108.2 103.2
Royalties and fees 37.3 38.3 38.6 9.6 9.2 9.8 9.7 9.7 9.6 9.6
Total revenue 2,180.2 2,122.2 2,045.3 531.3 526.1 535.9 528.8 505.4 506.2 504.9
Cost of service 972.9 941.7 936.3 235.7 231.4 239.4 235.2 232.5 234.3 234.3
Cost of product 225.2 221.6 216.2 53.0 57.0 56.9 54.7 53.1 55.1 53.3
Site operating expenses 211.8 206.2 206.2 54.8 51.5 50.8 49.1 52.3 51.0 53.7
General and administrative 246.6 233.6 221.9 63.1 60.9 54.7 55.0 56.2 54.8 55.9
Rent 333.1 331.8 327.0 82.2 83.2 82.2 84.2 81.5 80.6 80.8
Depreciation and amortization 92.2 88.9 86.9 22.1 22.1 22.4 22.4 20.7 21.9 22.0
Adjusted operating expenses 2,081.7 2,023.8 1,994.6 510.9 506.1 506.2 500.6 496.4 497.6 500.0
Adjusted operating income 98.5 98.5 50.7 20.5 20.1 29.7 28.3 8.9 8.6 4.9
Add: depreciation and amortization 92.2 88.9 86.9 22.1 22.1 22.4 22.4 20.7 21.9 22.0
Adjusted EBITDA 190.6 187.4 137.6 42.6 42.2 52.0 50.6 29.6 30.5 26.9
Reference:
Service margin 42.6% 42.7% 41.0% 43.2% 42.7% 42.0% 42.9% 40.9% 39.7% 40.2%
Product margin 49.7% 49.6% 48.6% 50.3% 49.5% 49.7% 48.9% 48.1% 49.1% 48.4%
Operating margin 4.5% 4.6% 2.5% 3.9% 3.8% 5.5% 5.3% 1.8% 1.7% 1.0%
EBITDA margin 8.7% 8.8% 6.7% 8.0% 8.0% 9.7% 9.6% 5.9% 6.0% 5.3%
Comparable salon sales growth -1.7% -3.1% -3.4% -3.3% -3.9% -3.3% -3.1% -1.9% -1.4%
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Update 7/2/13
• To own the stock at this valuation, you must believe management’s turnaround
strategies are rational and can be executed such that comp sales improve
materially from here (1% comp sales change equals ~$9m EBITDA change)
• That said, the behavioral clues suggestive of turnaround progress are mixed
• Negative?: Starboard Value, the activist fund that initiated the turnaround,
reduced its RGS long position in Q4’12 to ~1m shares, from ~2.75m shares
• Positive?: RGS amended its poison pill on 6/13/13 so that owners can breach
the 15% ownership threshold without triggering the pill, which suggests either
Birch Run (PM on RGS board) or Fidelity are looking to add here
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Update 3/4/13
• L3M comparable salon sales decline of -1.9% YoY (vs. -3.1% last quarter) and
investment in higher stylist hours behind LTM Adj. EBITDA drop of $25m to $155-
$160m (margin drop from over 9.5% to roughly 8%)
• Results in implied EV to LTM Adj. EBITDA multiple of 5.5x
Restructured Regis enterprise value Restructured Regis EBITDA
Current share price $17.91 LTM NA salon revenue 1,938
Common shares outstanding 56.6 Consolidated LTM adj. EBITDA 165
Shares underlying convertible senior notes 11.2 Less: International salon LTM adj. EBITDA 7
Shares underlying options 0.0 Adj. EBITDA 158
Fully diluted shares 67.8 Adj. EBITDA margin 8.1%
Market capitalization 1,215
Implied EV/EBITDA 5.5x
Add:
Senior term notes 94
Equipment and leasehold notes payable 12
Other notes payable 0
Convertible senior notes assumed converted @ $15.35 172.5
Less:
Cash 218
Enterprise value 1,102
Less:
Hair Club for Men value Sold July 2012 156
International salons (UK) For sale 35
Empire Education Group Fix / for sale 47
Implied Restructured Regis enterprise value 864
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Update 3/4/13
• If investment in stylist hours does not drive traffic and L3M Adj. EBITDA margin of
6.1% were forward run-rate, back-of-envelope EBITDA is roughly $120m giving
Restructured Regis a current implied EV/EBITDA multiple of 7.0x-7.5x
• If $120m were new run-rate, current 5.5x LTM multiple would result in share price
of ~$15, implying downside of 20%
Restructured Regis EV/EBITDA multiple assuming lower future EBITDA
LTM NA salon revenue 1,938
L3M adj. EBITDA margin 6.1%
Implied run-rate EBITDA 119
Implied Restructured Regis enterprise value 864
Implied EV/EBITDA multiple 7.3x
Downside potential
LTM adjusted EBITDA multiple 5.5x
Implied run-rate EBITDA 119
Future enterprise value 652
Implied future market cap 1,003
Fully diluted shares 68
Implied future share price $14.78
Current share price $17.91
Downside -17%
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Update 3/4/13
• While continued comp store sales declines are a risk, the follow-the-leader-style
implementation of value-priced salon best practices should lead to stabilized sales
and profits (though mall-based salon business warrants further attention given
lagging SSS growth performance in recent quarter)
• Assuming the turnaround occurs, potential stock price upside of 30%-90% (see
Slide 12 for EBITDA growth assumption rationale)
Valuation
Run-rate EBITDA 158
Add: growth potential 60 90
Pro-forma EBITDA 218 248
5.5x 5.5x 6.0x 8.0x
Restructured Regis enterprise value 1,192 1,357 1,307 1,983
Add:
Hair Club for Men value 156 156 156 156
International salons (UK) 35 35 35 35
Empire Education Group 47 47 47 47
Total enterprise value 1,430 1,594 1,545 2,221
Less: Net debt (assume conversion of conv. sr. notes) (113) (113) (113) (113)
Equity value 1,543 1,708 1,658 2,334
Fully diluted shares 67.8 67.8 67.8 67.8
Implied share price $22.75 $25.17 $24.44 $34.40
Current share price $17.91 $17.91 $17.91 $17.91
Return potential 27% 41% 36% 92%
Current multiple Normalized multiple range
Buy Regis Corp (RGS) common stock
Doug Bennett
October 5, 2012
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Thesis
• Regis Corporation, an owner, operator and franchisor of hair salons, is in the early
stages of an activist-led restructuring that will likely improve EBITDA in the core
North American salons business by 40%-75%
• The potential upside in EBITDA and accompanying expansion of the current 4.8x
multiple to a more appropriate growth multiple implies 30%-100%+ upside in Regis
common stock (RGS), while downside risk would likely require multiple contraction
• The favorable upside potential, low likelihood of EBITDA decline from the current
trough level and low financial risk suggests RGS is an attractive long position for a
concentrated portfolio
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Background
• 8/16/11: Activist investment firm Starboard Value sends letter to Regis board
outlining fundamental reasons for stock underperformance, announces intention to
nominate 3 directors at FY2011 annual meeting• http://www.sec.gov/Archives/edgar/data/716643/000092189511001799/0000921895-11-001799-index.htm
• For more background on Starboard Value, see Appendix I
• 10/12/11: Starboard files a more detailed presentation outlining Regis’ problems
and proposed solutions• Regis had among the highest gross margin in specialty retail but the lowest EBIT margin
• Company plagued by bad investment and financing decisions and an entrenched, richly
paid management and board
• Starboard outlined plan to divest non-core assets, drive same-store sales through
adoption of salon industry best practices and restructure the business to reduce
overheard/improve scalability• http://www.sec.gov/Archives/edgar/data/716643/000092189511001953/dfan14a106297096_10122011.htm
• 10/27/11: Starboard wins proxy contest and nominees are elected to the board• http://www.sec.gov/Archives/edgar/data/716643/000110465911060172/0001104659-11-060172-index.htm (note
negative “Say-on-pay” voting results)
• 10/27/11 - Present: Old management out, new CEO in, 2 of 4 non-core businesses
sold, field teams restructured and salon management best practices are being
implemented
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Current valuation
• Excluding the value of non-core businesses sold or slated for sale, the market
implies a ~$880m value for the core, “Restructured Regis” enterprise, or roughly
4.8x LTM EBITDA of ~$185m
Restructured Regis enterprise value Restructured Regis EBITDA
Current share price $18.38 LTM revenue 1,981
LTM reported EBIT 165
Common shares outstanding 57.4
Shares underlying convertible senior notes 11.2 Add:
Shares underlying options 0.0 Reported unallocated corp. operating expenses (173)
Fully diluted shares 68.6 Regis salons impairment charge 68
Market capitalization 1,262 Accelerated POS system depreciation 16
Senior management restructuring and severance 10
Add: Professional fees 5
Senior term notes 111 Field restructure and other 3
Equipment and leasehold notes payable 15 Deferred compensation 2
Other notes payable 0 Self-insurance reserve adjustments 1
Convertible senior notes assumed converted @ $15.35 172.5 Pure Beauty note receivable (recovery) reserve (1)
Less: Legal settlements (1)
Cash 112 Adjusted EBIT 95
Enterprise value 1,276 Adj. operating margin 4.8%
Less: Add: estimated NA salon D&A 89
Provalliance JV value Sold May 2012 104 Adjusted EBITDA 184
Hair Club for Men value Sold July 2012 164 Adj. EBITDA margin 9.3%
International salons (UK) For sale 35
Empire Education Group For sale 95 Implied EV/EBITDA 4.8x
Implied Restructured Regis enterprise value 879
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Core North American salon operations
• Unit-level EBITDA (excluding unallocated corporate overhead) has fallen as a
result of same store sales declines, primarily due to declining guest counts, in
addition to an inefficient operating structure
North American salons revenue growth factors 2006 2007 2008 2009 2010 2011 2012
Revenue:
Regis 481.8 498.6 514.2 475.0 438.0 434.2 414.8
MasterCuts 174.7 174.3 176.0 170.3 166.8 165.7 159.6
Trade Secrets 262.9 NA NA NA NA NA NA
SmartStyle 413.9 462.3 507.3 529.8 533.1 531.1 514.1
SuperCuts 703.3 287.4 305.1 310.9 314.7 321.9 343.8
Promenade NA 489.6 581.5 631.7 608.0 577.0 548.9
Total revenue 2,036.5 1,912.2 2,084.2 2,117.7 2,060.6 2,029.9 1,981.1
Reported EBIT 256.6 259.4 285.9 275.6 219.9 166.7 165.4
EBIT margin 12.6% 13.6% 13.7% 13.0% 10.7% 8.2% 8.3%
Add: non-cash / one-time expenses 0.0 0.0 6.1 0.0 35.3 74.1 67.7
Adj. EBIT 256.6 259.4 292.0 275.6 255.2 240.8 233.1
Adj. EBIT margin 12.6% 13.6% 14.0% 13.0% 12.4% 11.9% 11.8%
Add: Est. D&A 97.1 89.8 95.2 100.8 95.0 91.7 88.7
Est. N.A. Salon EBITDA 353.7 349.2 387.1 376.4 350.2 332.5 321.8
EBITDA margin 17.4% 18.3% 18.6% 17.8% 17.0% 16.4% 16.2%
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Restructuring initiatives
• Regis’ activist-controlled board completed an extensive study of Regis’ business
shortly after taking control of the company
• Analyzed customer transactions
• Spoke with customers about in-salon experience
• Interviewed employees and franchise owners
• Researched industry best practices to understand how competition was
succeeding
• Key deficiencies in the in-salon guest experience were identified in the study
• Customers were leaving primarily because their expectations were not met in
terms of service and salon experience
• Competitors were more consistently meeting these expectations
• Certain Regis brands were competing with each other
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Restructuring initiatives – sales growth
• Improve quality of stylist service / improve stylist retention• Stylist compensation will now include a guest retention component
• Repeat guests will generate compensation for original stylist
• Salon/field managers will focus on supporting and mentoring stylists; “distracting” HR
and local-level marketing responsibilities will be transferred to specialists• Many salon and field managers usually begin as outstanding stylists – this initiative will allow
them to spend more time in the salon, focusing on what they do best
• Additional corporate operations and HR staff will be funded by increasing the span of control of
regional managers and district leaders, who will now be eligible for a performance-based bonus
(stakeholder incentive misalignment a major problem pre-restructuring)
• Updated, third-party POS system fully implemented by end of CY2012• Enhanced customer demographic info
• Will allow customers to remotely monitor wait times at local Regis salons with a
smartphone app (they are copying successful first-mover Great Clips)
• First CRM program implemented• Will allow analysis of customer lifetime value and retention
• Management will use customer data to make more informed marketing decisions (i.e.
type and level of promotion required to drive positive NPV customer trials)
• Prior to activists taking control, the company did not capture customer data
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Restructuring initiatives – sales growth
• Management states in the recent 10K: “Although we have generally been
experiencing negative same-store sales we believe our strategy of focusing on the
in-salon guest experience will improve same-store sales.”
• Same-store sales will likely grow as salon chain management best practices are
implemented• Company-owned SuperCuts and the concepts under the Promenade umbrella materially
underperform franchised stores • SuperCuts average salon sales (franchised - $340k ; corporate - $270k)
• Promenade avg. salon sales (franchised - $280k ; corporate - $245k)
• Combined, these concepts account for 45% of Restructured Regis revenue
• Company-owned salons in the $17-$22 haircut segment (79% of Restructured Regis
revenue) materially underperform stores of other salon chains• Great Clips and Sports Clips do $306k and $318k avg. sales per salon vs. Regis’ $230k-$280k
North American salons revenue growth factors 2006 2007 2008 2009 2010 2011 2012
Acquisitions (previous twelve months) 4.4% 4.5% 4.6% 3.7% 0.8% 1.2% 0.7%
Same-store sales 1.1% 0.9% 1.8% -2.9% -3.3% -1.8% -3.2%
New stores 3.3% 2.6% 2.4% 2.0% 0.8% 0.6% 1.3%
Foreign currency 0.4% 0.2% 0.8% -0.9% 0.5% 0.5% 0.0%
Franchise revenues -0.1% 0.0% 0.1% -0.1% 0.0% 0.0% 0.0%
Closed salons -0.4% -0.4% -0.4% -0.5% -0.4% -1.4% -2.3%
Other -1.1% -0.6% 1.1%
Total 8.7% 7.8% 9.3% 1.3% -2.7% -1.5% -2.4%
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Restructuring initiatives – sales growth
• Regis management has indicated EBITDA rises around $9 million for each 1%
increase in same store sales
• Company-owned SuperCuts and Promenade concepts are underperforming
franchises and competitors’ concepts by 15%-25% on a sales per salon basis
• If comparable stores sales were to rise by 15% in this segment representing 45% of
Restructured Regis revenue, EBITDA would rise by ~$60m
• The other concepts, especially those in the $17-$22 haircut segment representing
79% of Restructured Regis revenue, should also see some lift in sales from
implementation of salon management best practices
• If the entire company experiences just a 10% comp lift over the next few years,
current run-rate EBITDA would rise by ~$90m, roughly 50% higher than the current
$180m-$190m run-rate• Despite a 10% comp lift, Regis salon sales would still be below those of its franchisee-
and competitor-owned salons
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Restructuring initiatives – expense reduction
• Expense reductions implemented in late FY2012 will drive $25m in net expense
reductions in the next 12 months• Management indicates more expense cuts are likely this year, one analyst mentioned the
company guiding an additional $10m in annual savings
• Implies a pro-forma operating margin of 6.0%-6.5%, which appears rational relative to
most indirect comps identified in the RGS proxy
• The company will reduce 50+ brands with individual field teams to 10-15 brands
operating under 4 standard operating models• Consistent, quality service at a competitive price drives sales, not the salon name
• Will increase marketing efficiency
• New model is more standardized and scalable than the piecemeal structure it replaces
Pro-forma EBIT / EBITDA margins Comparable company Enterprise Value ($m) LTM EBIT margin LTM EBITDA margin
RADIOSHACK CORP 440 0.6% 5.4%
LTM operational EBIT 95 JACK IN THE BOX INC 1,715 5.1% 10.9%
Add: expense cuts 25 35 Restructured Regis (pro-forma) 1,272 6.6% 11.0%
Run-rate EBIT (assuming flat sales) 120 130 GAMESTOP CORP-CLASS A 2,679 6.8% 8.1%
% of revenue 6.1% 6.6% PAPA JOHN'S INTL INC 1,256 7.3% 9.8%
CRACKER BARREL OLD COUNTRY 1,937 7.4% 9.7%
Add: D&A 89 89 BRINKER INTERNATIONAL INC 3,169 8.3% 12.6%
Run-rate EBITDA 209 219 PETSMART INC 7,730 8.8% 12.1%
% of revenue 10.5% 11.0% FOOT LOCKER INC 4,846 9.0% 9.7%
ADVANCE AUTO PARTS INC 5,171 11.0% 13.6%
STARBUCKS CORP 36,139 13.0% 18.0%
SERVICE CORP INTERNATIONAL 4,774 16.4% 23.8%
AUTOZONE INC 17,360 18.9% 21.4%
H&R BLOCK INC 4,687 21.4% 22.9%
DINEEQUITY INC 2,669 23.9% 27.6%
Median 3,928 8.9% 12.4%
Source: Bloomberg
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Implications for run-rate EBITDA
• In sum, run-rate EBITDA (assuming no new salons) could rise $85m-$125m over
the next couple of years to $270m-$310m
• Assuming flat sales, expense cuts will yield Restructured Regis $25m-$35m in additional
EBITDA
• EBITDA could rise another $60m-$90m assuming same-store sales rise as Regis copies
aspects of its better run competitors’ business models
• Cumulative EBITDA growth of 40%-75%
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Potential multiple expansion
• If EBITDA stabilizes and begins growing, the current depressed EV/EBITDA
multiple of 4.8x is likely to expand to the 6.0x-8.0x range of a steady, modestly
growing specialty retailer • Only secularly impaired Gamestop and Radioshack trade at a cheaper valuation
• Value-priced salons operating according to industry best practices exhibit little risk of
secular decline
• Competitive advantages vs. predominantly mom-and-pop competitors suggest growth
potential (See Appendix II)
• Activist investors holding concentrated positions control the board and are
incentivized to sell the company once stabilized• One easy exit captures fair trading value plus a control premium
• An ideal private equity candidate if stabilized, a cash cow with low capital requirements
Comparable company Enterprise Value ($m) EV/EBITDA LTM EV/Sales LTM
GAMESTOP CORP-CLASS A 2,679 3.4x 0.3x
RADIOSHACK CORP 440 4.0x 0.1x
Restructured Regis (pro-forma) 879 4.8x 0.4x
ADVANCE AUTO PARTS INC 5,171 6.0x 0.8x
FOOT LOCKER INC 4,846 7.6x 0.8x
CRACKER BARREL OLD COUNTRY 1,937 7.6x 0.8x
JACK IN THE BOX INC 1,715 8.3x 0.8x
SERVICE CORP INTERNATIONAL 4,774 8.3x 2.0x
BRINKER INTERNATIONAL INC 3,169 8.7x 1.1x
AUTOZONE INC 17,360 9.4x 2.0x
DINEEQUITY INC 2,669 9.5x 2.7x
PETSMART INC 7,730 9.7x 1.2x
PAPA JOHN'S INTL INC 1,256 10.1x 1.0x
STARBUCKS CORP 36,139 16.0x 2.8x
H&R BLOCK INC 4,687 1.7x
Median 3,928 8.3x 1.1x
Source: Bloomberg
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Valuation and return potential
• At the current depressed 4.8x EV/EBITDA multiple for Restructured Regis, EBITDA
growth would result in a 30%-50% stock return over the next few years ($24-$27
per share range)
• At a valuation closer in line with its stable specialty retail peers, combined EBITDA
growth and multiple expansion could move the stock 50%-100%+ ($30-$40 per
share range)Valuation
LTM adj. EBITDA 184
Add: expense cuts 25 35
Run-rate EBITDA 209 219
Add: growth potential 60 90
Pro-forma EBITDA 269 309
4.8x 4.8x 6.0x 8.0x
Restructured Regis enterprise value 1,285 1,476 1,613 2,471
Add:
Provalliance JV value 104 104 104 104
Hair Club for Men value 164 164 164 164
International salons (UK) 35 35 35 35
Empire Education Group 95 95 95 95
Total enterprise value 1,683 1,874 2,011 2,868
Less: Net debt (assume conversion of conv. sr. notes) 15 15 15 15
Equity value 1,668 1,859 1,996 2,854
Fully diluted shares 68.6 68.6 68.6 68.6
Implied share price $24.30 $27.08 $29.08 $41.57
Current share price $18.38 $18.38 $18.38 $18.38
Return potential 32% 47% 58% 126%
Current multiple Normalized multiple range
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Valuation and return potential
• Around 10% of newly hired CEO Daniel Hanrahan’s first-year compensation is
20,000 shares of restricted stock which vest only if the stock has traded above $35
per share for 20 consecutive trading days sometime in the next 5 years• A potential clue as to where the Board thinks the stock can realistically trade
• Recently appointed board member’s investment firm, Birch Run Capital, increased
position $10m to $117m around $18 per share in the three trading days after the
10-K was released on 8/29/12• Purchases were made immediately after an earnings quiet period, and after the director
had examined the company’s turnaround progress as a board member since 8/1/12
• The fund’s RGS position accounted for 50% of Birch Run’s long equity portfolio prior to
the recent open market purchases (credit and other AUM unknown)
• Work sample suggests a Birch Run is a quality firm:
(http://kerrisdalecap.com/commentary/?page_id=107&pid=268)
New CEO Daniel Hanrahan's first-year compensation $ value % of total
Base salary 850,000 12.4%
125% bonus 1,062,500 15.4%
Long-term equity incentive program 2,250,000 32.7%
Special equity award 2,016,500 29.3%
20,000 restricted shares if RGS stock hits $35 700,000 10.2%
Total 6,879,000 100%
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Appendix I: Starboard Value
• Recently spun out of Ramius Capital ($9b+ AUM) – Cowen Group (COWN) subsid.• Good historical performance
• Spun out of Cowen Group due to potential conflict of interest (investment banking,
activist investing under same roof) – Cowen maintains equity stake
• http://www.starboardvalue.com/
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Appendix II: Competitive advantages and growth opp.
• Regis is the largest salon chain operator in the US, but it and its franchisees only
operate 9,300 of the 94,000 salon and barber shops with paid employees in the US• Regis’ LTM sales of $2 billion represent roughly 9% of this $22 billion annual market
• As the largest operator, Regis still holds under 5% market share in the $41 billion
total salon and barber shop market, which includes 900,000 additional non-
employer based salon establishments (i.e. individual owner/operators, chair
lessors, chair lessees, at-home hair stylists [$19 billion in collective sales])
• If new management can successfully realign incentives so Regis’ “boxes”
consistently deliver convenient salon services at a competitive price, Regis can
resume growth• Regis’ scale allows it to offer employees upward mobility and better benefits relative to
smaller competitors
• Advantage over mom-and-pop competitors in retailing hair products• Scale allows discounted purchases vs. mom-and-pop (i.e. $10 MSRP shampoo is sourced at
$3 per bottle vs. $5 for mom-and-pop)
• Product retailing is 10%-35% of total salon revenue across Regis concepts
• Scale allows the company to grow and respond to threats early through acquisition• Salons and small groups of salons typically sell for 3.0x-5.0x EBITDA
• Competitor Great Clips has grown comparable store sales for 30 straight quarters and
brisk new salon growth continues – a better run Regis could do the same