10-Q 1 sbh-10q_20221231.htm 10-Q sbh-10q_20221231.htm
0001368458 false --09-30 2023 Q1 P4Y 0001368458 2022-10-01 2022-12-31 xbrli:shares 0001368458 2023-01-27 iso4217:USD 0001368458 2022-12-31 0001368458 2022-09-30 iso4217:USD xbrli:shares 0001368458 2021-10-01 2021-12-31 0001368458 us-gaap:CommonStockMember 2022-09-30 0001368458 us-gaap:AdditionalPaidInCapitalMember 2022-09-30 0001368458 us-gaap:RetainedEarningsMember 2022-09-30 0001368458 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-09-30 0001368458 us-gaap:RetainedEarningsMember 2022-10-01 2022-12-31 0001368458 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-10-01 2022-12-31 0001368458 us-gaap:AdditionalPaidInCapitalMember 2022-10-01 2022-12-31 0001368458 us-gaap:CommonStockMember 2022-10-01 2022-12-31 0001368458 us-gaap:CommonStockMember 2022-12-31 0001368458 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001368458 us-gaap:RetainedEarningsMember 2022-12-31 0001368458 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-12-31 0001368458 us-gaap:CommonStockMember 2021-09-30 0001368458 us-gaap:AdditionalPaidInCapitalMember 2021-09-30 0001368458 us-gaap:RetainedEarningsMember 2021-09-30 0001368458 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-09-30 0001368458 2021-09-30 0001368458 us-gaap:RetainedEarningsMember 2021-10-01 2021-12-31 0001368458 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-10-01 2021-12-31 0001368458 us-gaap:AdditionalPaidInCapitalMember 2021-10-01 2021-12-31 0001368458 us-gaap:CommonStockMember 2021-10-01 2021-12-31 0001368458 us-gaap:CommonStockMember 2021-12-31 0001368458 us-gaap:RetainedEarningsMember 2021-12-31 0001368458 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-31 0001368458 2021-12-31 0001368458 us-gaap:ForeignExchangeContractMember 2022-10-01 2022-12-31 0001368458 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2022-10-01 2022-12-31 0001368458 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:OtherCurrentAssetsMember us-gaap:NondesignatedMember 2022-12-31 0001368458 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:OtherCurrentAssetsMember us-gaap:NondesignatedMember 2022-09-30 0001368458 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:OtherCurrentAssetsMember 2022-12-31 0001368458 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:OtherCurrentAssetsMember 2022-09-30 0001368458 us-gaap:FairValueMeasurementsRecurringMember 2022-12-31 0001368458 us-gaap:FairValueMeasurementsRecurringMember 2022-09-30 0001368458 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:AccruedLiabilitiesMember us-gaap:DesignatedAsHedgingInstrumentMember 2022-12-31 0001368458 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:AccruedLiabilitiesMember us-gaap:NondesignatedMember 2022-12-31 0001368458 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:AccruedLiabilitiesMember us-gaap:NondesignatedMember 2022-09-30 0001368458 us-gaap:SeniorNotesMember us-gaap:FairValueInputsLevel1Member 2022-12-31 0001368458 us-gaap:SeniorNotesMember us-gaap:FairValueInputsLevel1Member 2022-09-30 0001368458 sbh:TermLoanBMember us-gaap:FairValueInputsLevel2Member 2022-12-31 0001368458 sbh:TermLoanBMember us-gaap:FairValueInputsLevel2Member 2022-09-30 0001368458 sbh:ShareRepurchaseProgram2017Member 2017-08-31 0001368458 sbh:ShareRepurchaseProgram2017Member 2021-07-01 2021-07-31 0001368458 sbh:ShareRepurchaseProgram2017Member 2022-12-31 0001368458 sbh:ShareRepurchaseProgram2017Member 2022-10-01 2022-12-31 0001368458 sbh:ShareRepurchaseProgram2017Member 2021-10-01 2021-12-31 0001368458 us-gaap:AccumulatedTranslationAdjustmentMember 2022-09-30 0001368458 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2022-09-30 0001368458 sbh:AccumulatedForeignExchangeContractsMember 2022-09-30 0001368458 us-gaap:AccumulatedTranslationAdjustmentMember 2022-10-01 2022-12-31 0001368458 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2022-10-01 2022-12-31 0001368458 sbh:AccumulatedForeignExchangeContractsMember 2022-10-01 2022-12-31 0001368458 us-gaap:AccumulatedTranslationAdjustmentMember 2022-12-31 0001368458 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2022-12-31 0001368458 sbh:AccumulatedForeignExchangeContractsMember 2022-12-31 0001368458 us-gaap:LineOfCreditMember 2022-12-31 sbh:instrument 0001368458 currency:MXN us-gaap:DesignatedAsHedgingInstrumentMember 2022-12-31 0001368458 currency:EUR us-gaap:DesignatedAsHedgingInstrumentMember 2022-12-31 0001368458 currency:CAD us-gaap:DesignatedAsHedgingInstrumentMember 2022-12-31 0001368458 us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2022-12-31 0001368458 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:ForeignExchangeContractMember 2022-10-01 2022-12-31 0001368458 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:ForeignExchangeContractMember 2021-10-01 2021-12-31 0001368458 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:ForeignExchangeContractMember 2022-12-31 0001368458 sbh:VariableRateTrancheMember us-gaap:InterestRateCapMember sbh:SallyHoldingsMember 2017-07-31 0001368458 sbh:VariableRateTrancheMember us-gaap:InterestRateCapMember sbh:SallyHoldingsMember 2022-10-01 2022-12-31 sbh:derivative 0001368458 sbh:TermLoanBVariableTrancheMember us-gaap:InterestRateCapMember sbh:SallyHoldingsMember 2022-12-31 0001368458 sbh:VariableRateTrancheMember us-gaap:InterestRateCapMember sbh:SallyHoldingsMember 2021-10-01 2021-12-31 0001368458 currency:GBP us-gaap:NondesignatedMember 2022-12-31 0001368458 currency:CAD us-gaap:NondesignatedMember 2022-12-31 0001368458 currency:EUR us-gaap:NondesignatedMember 2022-12-31 0001368458 currency:MXN us-gaap:NondesignatedMember 2022-12-31 0001368458 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2022-12-31 0001368458 us-gaap:ForeignExchangeContractMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2022-10-01 2022-12-31 0001368458 us-gaap:ForeignExchangeContractMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2021-10-01 2021-12-31 0001368458 sbh:SallyBeautySupplyMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember 2021-10-01 2021-12-31 0001368458 sbh:BeautySystemsGroupMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember 2021-10-01 2021-12-31 0001368458 sbh:SallyBeautySupplyMember us-gaap:OperatingSegmentsMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember us-gaap:OperatingSegmentsMember 2021-10-01 2021-12-31 0001368458 sbh:BeautySystemsGroupMember us-gaap:OperatingSegmentsMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember us-gaap:OperatingSegmentsMember 2021-10-01 2021-12-31 0001368458 us-gaap:OperatingSegmentsMember 2022-10-01 2022-12-31 0001368458 us-gaap:OperatingSegmentsMember 2021-10-01 2021-12-31 0001368458 us-gaap:CorporateNonSegmentMember 2022-10-01 2022-12-31 0001368458 us-gaap:CorporateNonSegmentMember 2021-10-01 2021-12-31 xbrli:pure 0001368458 sbh:SallyBeautySupplyMember sbh:HairColorMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:HairColorMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:HairCareMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:HairCareMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:StylingToolsAndSuppliesMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:StylingToolsAndSuppliesMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:NailMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:NailMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:SkinAndCosmeticsMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:SkinAndCosmeticsMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:OtherBeautyItemsMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:OtherBeautyItemsMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:SallyBeautySupplyMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:HairCareMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:HairCareMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:HairColorMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:HairColorMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:StylingToolsAndSuppliesMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:StylingToolsAndSuppliesMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:SkinAndCosmeticsMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:SkinAndCosmeticsMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:NailMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:NailMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:OtherBeautyItemsMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:OtherBeautyItemsMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:BeautySystemsGroupMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember us-gaap:SalesRevenueNetMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:SallyBeautySupplyMember us-gaap:SalesRevenueNetMember us-gaap:SalesChannelDirectlyToConsumerMember us-gaap:EntityOperatedUnitsMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember us-gaap:SalesRevenueNetMember us-gaap:SalesChannelDirectlyToConsumerMember us-gaap:EntityOperatedUnitsMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:SallyBeautySupplyMember us-gaap:SalesRevenueNetMember us-gaap:SalesChannelThroughIntermediaryMember sbh:ECommerceMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember us-gaap:SalesRevenueNetMember us-gaap:SalesChannelThroughIntermediaryMember sbh:ECommerceMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:BeautySystemsGroupMember us-gaap:SalesRevenueNetMember us-gaap:SalesChannelDirectlyToConsumerMember us-gaap:EntityOperatedUnitsMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember us-gaap:SalesRevenueNetMember us-gaap:SalesChannelDirectlyToConsumerMember us-gaap:EntityOperatedUnitsMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:BeautySystemsGroupMember us-gaap:SalesRevenueNetMember us-gaap:SalesChannelThroughIntermediaryMember sbh:ECommerceMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember us-gaap:SalesRevenueNetMember us-gaap:SalesChannelThroughIntermediaryMember sbh:ECommerceMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:BeautySystemsGroupMember us-gaap:SalesRevenueNetMember us-gaap:SalesChannelThroughIntermediaryMember sbh:DistributorSalesConsultantsMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember us-gaap:SalesRevenueNetMember us-gaap:SalesChannelThroughIntermediaryMember sbh:DistributorSalesConsultantsMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:BeautySystemsGroupMember us-gaap:SalesRevenueNetMember us-gaap:SalesChannelThroughIntermediaryMember us-gaap:FranchisedUnitsMember us-gaap:ProductConcentrationRiskMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember us-gaap:SalesRevenueNetMember us-gaap:SalesChannelThroughIntermediaryMember us-gaap:FranchisedUnitsMember us-gaap:ProductConcentrationRiskMember 2021-10-01 2021-12-31 0001368458 sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember 2022-10-01 2022-12-31 0001368458 sbh:TransformationPlanMember 2021-10-01 2021-12-31 0001368458 sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember us-gaap:OtherRestructuringMember 2022-09-30 0001368458 sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember 2022-09-30 0001368458 sbh:SallyBeautySupplyMember sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:ClosingCostsLeasesMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:ClosingCostsPayrollExpensesMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:ImpairmentPropertyAndEquipmentMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:InventoryTransferCostsMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:ImpairmentOperatingLeaseAssetsMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember us-gaap:OtherRestructuringMember 2022-10-01 2022-12-31 0001368458 sbh:SallyBeautySupplyMember sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:ClosingCostsLeasesMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:ClosingCostsPayrollExpensesMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:ImpairmentPropertyAndEquipmentMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:InventoryTransferCostsMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:ImpairmentOperatingLeaseAssetsMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember us-gaap:OtherRestructuringMember 2022-10-01 2022-12-31 0001368458 sbh:BeautySystemsGroupMember sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember 2022-10-01 2022-12-31 0001368458 sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:InventoryTransferCostsMember 2022-10-01 2022-12-31 0001368458 sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember us-gaap:OtherRestructuringMember 2022-10-01 2022-12-31 0001368458 sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:ClosingCostsLeasesMember 2022-10-01 2022-12-31 0001368458 sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:ImpairmentPropertyAndEquipmentMember 2022-10-01 2022-12-31 0001368458 sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:ImpairmentOperatingLeaseAssetsMember 2022-10-01 2022-12-31 0001368458 sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:ClosingCostsLeasesMember 2022-12-31 0001368458 sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:ClosingCostsPayrollExpensesMember 2022-12-31 0001368458 sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember sbh:InventoryTransferCostsMember 2022-12-31 0001368458 sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember us-gaap:OtherRestructuringMember 2022-12-31 0001368458 sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember 2022-12-31

 

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: DECEMBER 31, 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 January 27, 2023, there were 107,328,599 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.

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, 2022, 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)

 

 

 

 

December 31,

2022

 

 

September 30,

2022

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

99,071

 

 

$

70,558

 

Trade accounts receivable, net

 

 

32,671

 

 

 

34,102

 

Accounts receivable, other

 

 

42,741

 

 

 

38,175

 

Inventory

 

 

986,878

 

 

 

936,374

 

Other current assets

 

 

57,840

 

 

 

53,192

 

Total current assets

 

 

1,219,201

 

 

 

1,132,401

 

Property and equipment, net of accumulated depreciation of $849,202 at

   December 31, 2022, and $820,811 at September 30, 2022

 

 

288,732

 

 

 

297,876

 

Operating lease assets

 

 

542,806

 

 

 

532,177

 

Goodwill

 

 

532,514

 

 

 

526,066

 

Intangible assets, excluding goodwill, net of accumulated amortization of

   $28,820 at December 31, 2022, and $26,794 at September 30, 2022

 

 

50,963

 

 

 

50,315

 

Other assets

 

 

34,330

 

 

 

38,032

 

Total assets

 

$

2,668,546

 

 

$

2,576,867

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

65,171

 

 

$

68,658

 

Accounts payable

 

 

296,170

 

 

 

275,717

 

Accrued liabilities

 

 

142,785

 

 

 

161,065

 

Current operating lease liabilities

 

 

156,168

 

 

 

157,734

 

Income taxes payable

 

 

16,972

 

 

 

4,740

 

Total current liabilities

 

 

677,266

 

 

 

667,914

 

Long-term debt

 

 

1,082,175

 

 

 

1,083,043

 

Long-term operating lease liabilities

 

 

427,168

 

 

 

424,762

 

Other liabilities

 

 

22,748

 

 

 

22,427

 

Deferred income tax liabilities, net

 

 

85,891

 

 

 

85,085

 

Total liabilities

 

 

2,295,248

 

 

 

2,283,231

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.01 par value. Authorized 500,000 shares; 107,291 and

   107,024 shares issued and 107,284 and 106,970 shares outstanding at

   December 31, 2022, and September 30, 2022, respectively

 

 

1,073

 

 

 

1,070

 

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

 

 

 

 

 

 

Additional paid-in capital

 

 

8,329

 

 

 

4,241

 

Accumulated earnings

 

 

490,509

 

 

 

440,172

 

Accumulated other comprehensive loss, net of tax

 

 

(126,613

)

 

 

(151,847

)

Total stockholders’ equity

 

 

373,298

 

 

 

293,636

 

Total liabilities and stockholders’ equity

 

$

2,668,546

 

 

$

2,576,867

 

 

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

 

 

 

December 31,

 

 

 

2022

 

 

2021

 

Net sales

 

$

957,055

 

 

$

980,251

 

Cost of goods sold

 

 

468,481

 

 

 

480,122

 

Gross profit

 

 

488,574

 

 

 

500,129

 

Selling, general and administrative expenses

 

 

391,580

 

 

 

386,250

 

Restructuring

 

 

10,406

 

 

 

1,099

 

Operating earnings

 

 

86,588

 

 

 

112,780

 

Interest expense

 

 

17,923

 

 

 

20,241

 

Earnings before provision for income taxes

 

 

68,665

 

 

 

92,539

 

Provision for income taxes

 

 

18,328

 

 

 

23,701

 

Net earnings

 

$

50,337

 

 

$

68,838

 

Earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.47

 

 

$

0.61

 

Diluted

 

$

0.46

 

 

$

0.60

 

Weighted-average shares:

 

 

 

 

 

 

 

 

Basic

 

 

107,140

 

 

 

111,995

 

Diluted

 

 

109,460

 

 

 

113,968

 

 

 

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

 

 

 

December 31,

 

 

 

2022

 

 

2021

 

Net earnings

 

$

50,337

 

 

$

68,838

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

25,941

 

 

 

(4,509

)

Interest rate caps, net of tax

 

 

203

 

 

 

278

 

Foreign exchange contracts, net of tax

 

 

(910

)

 

 

480

 

Other comprehensive income (loss), net of tax

 

 

25,234

 

 

 

(3,751

)

Total comprehensive income

 

$

75,571

 

 

$

65,087

 

 

 

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, 2022

 

106,970

 

 

$

1,070

 

 

$

4,241

 

 

$

440,172

 

 

$

(151,847

)

 

$

293,636

 

Net earnings

 

 

 

 

 

 

 

 

 

 

50,337

 

 

 

 

 

 

50,337

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

25,234

 

 

 

25,234

 

Share-based compensation

 

 

 

 

 

 

 

5,135

 

 

 

 

 

 

 

 

 

5,135

 

Stock issued for equity awards

 

404

 

 

 

4

 

 

 

78

 

 

 

 

 

 

 

 

 

82

 

Employee withholding taxes paid

   related to net share settlement

 

(90

)

 

 

(1

)

 

 

(1,125

)

 

 

 

 

 

 

 

 

(1,126

)

Balance at December 31, 2022

 

107,284

 

 

$

1,073

 

 

$

8,329

 

 

$

490,509

 

 

$

(126,613

)

 

$

373,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

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

7


SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three Months Ended December 31,

 

 

 

2022

 

 

2021

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net earnings

 

$

50,337

 

 

$

68,838

 

Adjustments to reconcile net earnings to net cash provided (used)

    by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

25,285

 

 

 

24,421

 

Share-based compensation expense

 

 

5,135

 

 

 

3,958

 

Amortization of deferred financing costs

 

 

648

 

 

 

932

 

Impairment of long-lived assets, including operating lease assets

 

 

2,103

 

 

 

 

Loss on disposal of equipment and other property

 

 

77

 

 

 

3

 

Deferred income taxes

 

 

889

 

 

 

1,867

 

Changes in (exclusive of effects of acquisitions):

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

2,270

 

 

 

2,841

 

Accounts receivable, other

 

 

(3,817

)

 

 

(1,724

)

Inventory

 

 

(38,019

)

 

 

(137,326

)

Other current assets

 

 

(4,018

)

 

 

(446

)

Other assets

 

 

4,074

 

 

 

1,371

 

Operating leases, net

 

 

(10,392

)

 

 

6,475

 

Accounts payable and accrued liabilities

 

 

7,606

 

 

 

16,729

 

Income taxes payable

 

 

12,460

 

 

 

18,166

 

Other liabilities

 

 

313

 

 

 

(11,790

)

Net cash provided (used) by operating activities

 

 

54,951

 

 

 

(5,685

)

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Payments for property and equipment, net of proceeds

 

 

(25,007

)

 

 

(26,390

)

Acquisitions, net of cash acquired

 

 

 

 

 

(319

)

Net cash used by investing activities

 

 

(25,007

)

 

 

(26,709

)

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

229,000

 

 

 

 

Repayments of long-term debt, including prepayment costs

 

 

(233,927

)

 

 

(1,421

)

Payments for common stock repurchased

 

 

 

 

 

(75,000

)

Proceeds from equity awards

 

 

60

 

 

 

7,372

 

Employee withholding taxes paid related to net share settlement of equity awards

 

 

(1,125

)

 

 

(1,136

)

Net cash used by financing activities

 

 

(5,992

)

 

 

(70,185

)

Effect of foreign exchange rate changes on cash and cash equivalents

 

 

4,561

 

 

 

(240

)

Net increase (decrease) in cash and cash equivalents

 

 

28,513

 

 

 

(102,819

)

Cash and cash equivalents, beginning of period

 

 

70,558

 

 

 

400,959

 

Cash and cash equivalents, end of period

 

$

99,071

 

 

$

298,140

 

Supplemental Cash Flow Information:

 

 

 

 

 

 

 

 

Interest paid

 

$

26,758

 

 

$

35,034

 

Income taxes paid

 

$

3,081

 

 

$

3,978

 

Capital expenditures incurred but not paid

 

$

5,542

 

 

$

3,594

 

 

 

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

 

 

 


 

8


 

Sally Beauty Holdings, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.

Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated interim financial statements of Sally Beauty Holdings, Inc. and its subsidiaries included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the SEC. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC, although we believe that the disclosures included herein are adequate for the interim period presented. These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022. In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments that are of a normal recurring nature and which are necessary to present fairly our consolidated financial position as of December 31, 2022, and September 30, 2022, and our consolidated results of operations, consolidated comprehensive income, consolidated cash flows and consolidated statements of stockholders’ equity for the three months ended December 31, 2022 and 2021.

Principles of Consolidation

The unaudited condensed consolidated interim financial statements include all accounts of Sally Beauty Holdings, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. All amounts are in U.S. Dollars.

Accounting Policies

We adhere to the same accounting policies in the preparation of our condensed consolidated interim financial statements as we do in the preparation of our full year consolidated financial statements. As permitted under GAAP, interim accounting for certain expenses, including income taxes, is based on full-year assumptions. For interim financial reporting purposes, income taxes are recorded based upon our estimated annual effective income tax.

Use of Estimates

In order to present our financial statements in conformity with GAAP, we are required to make certain estimates and assumptions that impact our interim financial statements and supplementary disclosures. These estimates may use forecasted financial information based on reasonable information available, however are subject to change in the future. Significant estimates and assumptions are part of our accounting for sales allowances, deferred revenue, valuation of inventory, amortization and depreciation, intangibles and goodwill, and other reserves. We believe these estimates and assumptions are reasonable; however, they are based on management’s current knowledge of events and actions, and changes in facts and circumstances may result in revised estimates and impact actual results.


9


 

 

2.

Revenue Recognition

Substantially all of our revenue is derived through the sale of merchandise at the point-of-sale. Revenue is recognized net of estimated sales returns and sales taxes. We estimate sales returns based on historical data.

Changes to our contract liabilities, which are included in accrued liabilities in our condensed consolidated balance sheets, for the periods were as follows (in thousands):

 

 

 

 

 

 

Three Months Ended December 31,

 

 

 

 

 

 

 

2022

 

 

2021

 

Beginning Balance

 

 

 

 

 

$

13,460

 

 

$

16,744

 

Loyalty points and gift cards issued but not redeemed, net of estimated breakage

 

 

6,291

 

 

 

5,842

 

Revenue recognized from beginning liability

 

 

(4,489

)

 

 

(3,509

)

Ending Balance

 

 

 

 

 

$

15,262

 

 

$

19,077

 

See Note 10, Segment Reporting, for additional information regarding the disaggregation of our sales revenue.

3.

Fair Value Measurements

We measure on a recurring basis and disclose the fair value of our financial instruments under the provisions of ASC Topic 820, Fair Value Measurement, as amended (“ASC 820”). We define “fair value” as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level hierarchy for measuring fair value and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date.

The three levels of that hierarchy are defined as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities;

Level 2 - Pricing inputs are other than quoted prices in active markets, included in Level 1, that are either directly or indirectly observable; and

Level 3 - Unobservable pricing inputs in which little or no market activity exists, therefore requiring an entity to develop its own model with estimates and assumptions.

Financial instruments measured at fair value on recurring basis

Consistent with the fair value hierarchy, we categorized our financial assets and liabilities as follow:

(in thousands)

 

Classification

 

Fair Value Hierarchy Level

 

December 31,

2022

 

 

September 30,

2022

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

 

 

 

 

 

 

 

 

 

 

 

Non-designated cash flow hedges

 

Other current assets

 

Level 2

 

$

4,463

 

 

$

294

 

Interest rate caps

 

Other current assets

 

Level 2

 

 

3,627

 

 

 

3,860

 

Total assets

 

 

 

 

 

$

8,090

 

 

$

4,154

 

.

 

 

 

 

 

 

 

 

 

 

 

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

 

 

 

 

 

 

 

 

 

 

 

Designated cash flow hedges

 

Accrued liabilities

 

Level 2

 

$

1,930

 

 

$

 

Non-designated cash flow hedges

 

Accrued liabilities

 

Level 2

 

 

4,045

 

 

 

79

 

Total liabilities

 

 

 

 

 

$

5,975

 

 

$

79

 

The fair value for interest rate caps and foreign exchange contracts were measured using widely accepted valuation techniques, such as discounted cash flow analyses and observable inputs, such as market interest rates and foreign exchange rates.

10


 

Other fair value disclosures

The carrying amounts of cash equivalents, trade and other accounts receivable and accounts payable and borrowing under our ABL facility approximate their respective fair values due to the short-term nature of these financial instruments. Carrying amounts and the related estimated fair value of our long-term debt, excluding capital lease obligations and debt issuance costs, are as follows:

 

 

 

 

December 31, 2022

 

 

September 30, 2022

 

(in thousands)

 

Fair Value Hierarchy Level

 

Carrying Value

 

 

Fair Value

 

 

Carrying Value

 

 

Fair Value

 

Long-term debt, excluding capital leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior notes

 

Level 1

 

$

679,961

 

 

$

652,763

 

 

$

679,961

 

 

$

639,163

 

Term loan B

 

Level 2

 

 

406,125

 

 

 

403,587

 

 

 

407,500

 

 

 

398,331

 

Total long-term debt

 

 

 

$

1,086,086

 

 

$

1,056,350

 

 

$

1,087,461

 

 

$

1,037,494

 

 

The fair value of term loan B was measured using quoted market prices for similar debt securities in active markets or widely accepted valuation techniques, such as discounted cash flow analyses, using observable inputs, such as market interest rates.

4.

Stockholders’ Equity

Share Repurchases

In August 2017, our Board of Directors (“Board”) approved a share repurchase program authorizing us to repurchase up to $1.0 billion of its common stock, subject to certain limitations governed by our debt agreements. In July 2021, our Board approved a term extension of the share repurchase program for the four-year period ending September 30, 2025. As of December 31, 2022, we had authorization of approximately $595.8 million of additional potential share repurchases remaining under our share repurchase program. For the three months ended December 31, 2022, we did not repurchase shares under our share repurchase program. For the three months ended December 31, 2021, we repurchased 3.7 million shares of common stock at a total cost of $75.0 million.

Accumulated Other Comprehensive Income (Loss)

The change in accumulated other comprehensive loss (“AOCL”) was as follows (in thousands):

 

 

Foreign Currency Translation Adjustments

 

 

Interest Rate Caps

 

 

Foreign Exchange Contracts

 

 

Total

 

 

Balance at September 30, 2022

 

$

(153,128

)

 

$

1,960

 

 

$

(679

)

 

$

(151,847

)

 

Other comprehensive income (loss) before

    reclassification, net of tax

 

 

25,941

 

 

 

155

 

 

 

(608

)

 

 

25,488

 

 

Reclassification to net earnings, net of tax

 

 

 

 

 

48

 

 

 

(302

)

 

 

(254

)

 

Balance at December 31, 2022

 

$

(127,187

)

 

$

2,163

 

 

$

(1,589

)

 

$

(126,613

)

 

The tax impact for the changes in other comprehensive loss and the reclassifications to net earnings was not material.

5.

Weighted-Average Shares

The following table sets forth the reconciliation of basic and diluted weighted-average shares (in thousands):