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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 2022

-OR-

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File No. 1-33145

 

SALLY BEAUTY HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware

 

36-2257936

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

3001 Colorado Boulevard

 

 

Denton, Texas

 

76210

(Address of principal executive offices)

 

(Zip Code)

 

(940) 898-7500

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report): N/A

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading SymbolName of each exchange on which registered

Common Stock, $0.01 par valueSBHThe New York Stock Exchange

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No 

As of July 29, 2022, there were 107,016,939 shares of the issuer’s common stock outstanding.

 

 

 

 


 

TABLE OF CONTENTS

 

 

 


2


 

In this Quarterly Report, references to “the Company,” “Sally Beauty,” “our company,” “we,” “our,” “ours” and “us” refer to Sally Beauty Holdings, Inc. and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.

cautionary notice regarding forward-looking statements

Statements in this Quarterly Report on Form 10-Q and in the documents incorporated by reference herein which are not purely historical facts or which depend upon future events may constitute 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, which we refer to as the Exchange Act. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” or similar expressions may also identify such forward-looking statements. Forward-looking statements may relate to, among other things, the impact on our business, operations and financial results of the novel coronavirus (“COVID-19”) pandemic.

Readers are cautioned not to place undue reliance on forward-looking statements as such statements speak only as of the date they were made and 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. The most important factors which could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors in Item 1A contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021, which should be read in conjunction with the forward-looking statements in this report. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement.

The events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. As a result, our actual results may differ materially from the results contemplated by these forward-looking statements.

 

3


 

PART I — FINANCIAL INFORMATION

Item 1.  Financial Statements.

SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except par value data)

 

 

 

 

June 30,

2022

 

 

September 30,

2021

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

101,318

 

 

$

400,959

 

Trade accounts receivable, net

 

 

31,462

 

 

 

32,623

 

Accounts receivable, other

 

 

35,911

 

 

 

33,958

 

Inventory

 

 

1,014,622

 

 

 

871,349

 

Other current assets

 

 

59,806

 

 

 

44,686

 

Total current assets

 

 

1,243,119

 

 

 

1,383,575

 

Property and equipment, net of accumulated depreciation of $808,298 at

   June 30, 2022, and $767,403 at September 30, 2021

 

 

289,814

 

 

 

307,377

 

Operating lease assets

 

 

549,493

 

 

 

537,673

 

Goodwill

 

 

533,147

 

 

 

541,209

 

Intangible assets, excluding goodwill, net of accumulated amortization of

   $40,336 at June 30, 2022, and $38,957 at September 30, 2021

 

 

50,386

 

 

 

55,532

 

Other assets

 

 

19,907

 

 

 

21,766

 

Total assets

 

$

2,685,866

 

 

$

2,847,132

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

167,169

 

 

$

194

 

Accounts payable

 

 

279,359

 

 

 

291,632

 

Accrued liabilities

 

 

165,996

 

 

 

206,155

 

Current operating lease liabilities

 

 

159,452

 

 

 

156,234

 

Income taxes payable

 

 

2,985

 

 

 

10,666

 

Total current liabilities

 

 

774,961

 

 

 

664,881

 

Long-term debt

 

 

1,083,924

 

 

 

1,382,530

 

Long-term operating lease liabilities

 

 

421,072

 

 

 

404,147

 

Other liabilities

 

 

16,781

 

 

 

29,056

 

Deferred income tax liabilities, net

 

 

93,257

 

 

 

85,777

 

Total liabilities

 

 

2,389,995

 

 

 

2,566,391

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.01 par value. Authorized 500,000 shares; 107,017 and

   113,138 shares issued and 106,963 and 112,913 shares outstanding at

   June 30, 2022, and September 30, 2021, respectively

 

 

1,070

 

 

 

1,129

 

Preferred stock, $0.01 par value. Authorized 50,000 shares; none issued

 

 

 

 

 

 

Additional paid-in capital

 

 

2,339

 

 

 

17,286

 

Accumulated earnings

 

 

418,832

 

 

 

356,967

 

Accumulated other comprehensive loss, net of tax

 

 

(126,370

)

 

 

(94,641

)

Total stockholders’ equity

 

 

295,871

 

 

 

280,741

 

Total liabilities and stockholders’ equity

 

$

2,685,866

 

 

$

2,847,132

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


 

SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

 

$

961,467

 

 

$

1,022,387

 

 

$

2,853,105

 

 

$

2,884,737

 

Cost of goods sold

 

 

471,259

 

 

 

507,981

 

 

 

1,397,436

 

 

 

1,432,378

 

Gross profit

 

 

490,208

 

 

 

514,406

 

 

 

1,455,669

 

 

 

1,452,359

 

Selling, general and administrative expenses

 

 

390,961

 

 

 

386,481

 

 

 

1,156,082

 

 

 

1,143,738

 

Restructuring

 

 

44

 

 

 

508

 

 

 

1,143

 

 

 

1,371

 

Operating earnings

 

 

99,203

 

 

 

127,417

 

 

 

298,444

 

 

 

307,250

 

Interest expense

 

 

35,977

 

 

 

23,452

 

 

 

76,113

 

 

 

73,313

 

Earnings before provision for income taxes

 

 

63,226

 

 

 

103,965

 

 

 

222,331

 

 

 

233,937

 

Provision for income taxes

 

 

16,659

 

 

 

27,759

 

 

 

60,117

 

 

 

62,228

 

Net earnings

 

$

46,567

 

 

$

76,206

 

 

$

162,214

 

 

$

171,709

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.44

 

 

$

0.68

 

 

$

1.48

 

 

$

1.52

 

Diluted

 

$

0.43

 

 

$

0.66

 

 

$

1.46

 

 

$

1.50

 

Weighted-average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

106,940

 

 

 

112,739

 

 

 

109,238

 

 

 

112,605

 

Diluted

 

 

108,526

 

 

 

114,927

 

 

 

110,907

 

 

 

114,274

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net earnings

 

$

46,567

 

 

$

76,206

 

 

$

162,214

 

 

$

171,709

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(27,384

)

 

 

6,617

 

 

 

(34,645

)

 

 

23,734

 

Interest rate caps, net of tax

 

 

2,050

 

 

 

471

 

 

 

2,328

 

 

 

646

 

Foreign exchange contracts, net of tax

 

 

432

 

 

 

(191

)

 

 

588

 

 

 

(1,211

)

Other comprehensive (loss) income, net of tax

 

 

(24,902

)

 

 

6,897

 

 

 

(31,729

)

 

 

23,169

 

Total comprehensive income

 

$

21,665

 

 

$

83,103

 

 

$

130,485

 

 

$

194,878

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Total

 

 

Common Stock

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders’

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Equity

 

Balance at September 30, 2021

 

112,913

 

 

$

1,129

 

 

$

17,286

 

 

$

356,967

 

 

$

(94,641

)

 

$

280,741

 

Net earnings

 

 

 

 

 

 

 

 

 

 

68,838

 

 

 

 

 

 

68,838

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,751

)

 

 

(3,751

)

Share-based compensation

 

 

 

 

 

 

 

3,958

 

 

 

 

 

 

 

 

 

3,958

 

Stock issued for equity awards

 

795

 

 

 

8

 

 

 

7,364

 

 

 

 

 

 

 

 

 

7,372

 

Employee withholding taxes paid

   related to net share settlement

 

(56

)

 

 

(1

)

 

 

(1,136

)

 

 

 

 

 

 

 

 

(1,137

)

Repurchases and cancellations of

   common stock

 

(3,675

)

 

 

(36

)

 

 

(27,472

)

 

 

(47,492

)

 

 

 

 

 

(75,000

)

Balance at December 31, 2021

 

109,977

 

 

$

1,100

 

 

$

 

 

$

378,313

 

 

$

(98,392

)

 

$

281,021

 

Net earnings

 

 

 

 

 

 

 

 

 

 

46,808

 

 

 

 

 

 

46,808

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,076

)

 

 

(3,076

)

Share-based compensation

 

 

 

 

 

 

 

2,032

 

 

 

 

 

 

 

 

 

2,032

 

Stock issued for equity awards

 

111

 

 

 

1

 

 

 

423

 

 

 

 

 

 

 

 

 

424

 

Employee withholding taxes paid

   related to net share settlement

 

(1

)

 

 

 

 

 

(15

)

 

 

 

 

 

 

 

 

(15

)

Repurchases and cancellations of

   common stock

 

(3,157

)

 

 

(32

)

 

 

(2,440

)

 

 

(52,856

)

 

 

 

 

 

(55,328

)

Balance at March 31, 2022

 

106,930

 

 

$

1,069

 

 

$

 

 

$

372,265

 

 

$

(101,468

)

 

$

271,866

 

Net earnings

 

 

 

 

 

 

 

 

 

 

46,567

 

 

 

 

 

 

46,567

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,902

)

 

 

(24,902

)

Share-based compensation

 

 

 

 

 

 

 

2,113

 

 

 

 

 

 

 

 

 

2,113

 

Stock issued for equity awards

 

35

 

 

 

1

 

 

 

253

 

 

 

 

 

 

 

 

 

254

 

Employee withholding taxes paid

   related to net share settlement

 

(2

)

 

 

 

 

 

(27

)

 

 

 

 

 

 

 

 

(27

)

Balance at June 30, 2022

 

106,963

 

 

$

1,070

 

 

$

2,339

 

 

$

418,832

 

 

$

(126,370

)

 

$

295,871

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

Total

 

 

Common Stock

 

Paid-in

 

 

 

 

Accumulated

 

 

 

 

Comprehensive

 

 

 

 

Stockholders’

 

 

Shares

 

 

 

 

Amount

 

 

 

 

Capital

 

 

 

 

Earnings

 

 

 

 

Loss

 

 

 

 

Equity

 

Balance at September 30, 2020

 

112,405

 

 

 

 

$

1,124

 

 

 

 

$

1,913

 

 

 

 

$

117,109

 

 

 

 

$

(104,703

)

 

 

 

$

15,443

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

57,191

 

 

 

 

 

 

 

 

 

 

57,191

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23,588

 

 

 

 

 

23,588

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

2,893

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,893

 

Stock issued for equity awards

 

158

 

 

 

 

 

2

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee withholding taxes paid

   related to net share settlement

 

(25

)

 

 

 

 

(1

)

 

 

 

 

(248

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(249

)

Balance at December 31, 2020

 

112,538

 

 

 

 

$

1,125

 

 

 

 

$

4,556

 

 

 

 

$

174,300

 

 

 

 

$

(81,115

)

 

 

 

$

98,866

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38,312

 

 

 

 

 

 

 

 

 

 

38,312

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,316

)

 

 

 

 

(7,316

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

2,648