10-Q 1 sbh-20240331.htm 10-Q 10-Q
falseQ220240001368458--09-30P3YApril 30, 20260001368458us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMembersbh:HairColorMember2024-01-012024-03-310001368458us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2023-10-012024-03-310001368458sbh:HairCareMemberus-gaap:ProductConcentrationRiskMembersbh:SallyBeautySupplyMemberus-gaap:SalesRevenueNetMember2023-10-012024-03-310001368458us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMember2023-01-012023-03-310001368458sbh:NailMemberus-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMember2024-01-012024-03-310001368458sbh:BeautySystemsGroupMember2023-10-012024-03-310001368458us-gaap:RetainedEarningsMember2023-09-300001368458sbh:ShareRepurchaseProgram2017Member2023-01-012023-03-310001368458us-gaap:NondesignatedMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AccruedLiabilitiesMember2024-03-310001368458us-gaap:CommonStockMember2023-01-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMembersbh:SkinAndCosmeticsMember2023-10-012024-03-310001368458us-gaap:NondesignatedMembercurrency:MXN2024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:SallyBeautySupplyMemberus-gaap:SalesRevenueNetMembersbh:HairColorMember2022-10-012023-03-310001368458sbh:SeniorNotesDueDecemberTwoThousandTwentyFiveMember2024-03-132024-03-130001368458sbh:ShareRepurchaseProgram2017Member2022-10-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2022-10-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMembersbh:HairColorMember2023-10-012024-03-310001368458us-gaap:DesignatedAsHedgingInstrumentMembercurrency:CAD2024-03-310001368458sbh:SeniorNotesDueTwoThousandThirtyTwoMember2024-02-272024-02-270001368458sbh:ShareRepurchaseProgram2017Member2024-03-310001368458sbh:StylingToolsAndSuppliesMemberus-gaap:ProductConcentrationRiskMembersbh:SallyBeautySupplyMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMemberus-gaap:EntityOperatedUnitsMemberus-gaap:SalesChannelDirectlyToConsumerMember2022-10-012023-03-310001368458us-gaap:CommonStockMember2023-09-300001368458sbh:ShareRepurchaseProgram2017Member2024-01-012024-03-310001368458us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMemberus-gaap:EntityOperatedUnitsMembersbh:SallyBeautySupplyMemberus-gaap:SalesChannelDirectlyToConsumerMember2022-10-012023-03-310001368458sbh:AccumulatedForeignExchangeContractsMember2023-09-300001368458us-gaap:LineOfCreditMember2024-03-310001368458us-gaap:ForeignExchangeContractMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2023-10-012024-03-310001368458us-gaap:NondesignatedMembercurrency:GBP2024-03-310001368458sbh:SeniorNotesDueTwoThousandThirtyTwoMember2024-02-270001368458us-gaap:CorporateNonSegmentMember2022-10-012023-03-310001368458us-gaap:OperatingSegmentsMembersbh:BeautySystemsGroupMember2024-01-012024-03-310001368458us-gaap:OperatingSegmentsMembersbh:SallyBeautySupplyMember2023-10-012024-03-310001368458us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMembersbh:HairColorMember2023-10-012024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMembersbh:OtherBeautyItemsMember2024-01-012024-03-310001368458us-gaap:AdditionalPaidInCapitalMember2022-09-300001368458sbh:SeniorNotesDueDecemberTwoThousandTwentyFiveMember2024-02-120001368458sbh:NailMemberus-gaap:ProductConcentrationRiskMembersbh:SallyBeautySupplyMemberus-gaap:SalesRevenueNetMember2023-10-012024-03-310001368458us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300001368458sbh:SallyHoldingsMemberus-gaap:InterestRateSwapMember2023-04-012023-04-300001368458us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001368458sbh:StylingToolsAndSuppliesMemberus-gaap:ProductConcentrationRiskMembersbh:SallyBeautySupplyMemberus-gaap:SalesRevenueNetMember2023-10-012024-03-310001368458us-gaap:ForeignExchangeContractMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2022-10-012023-03-310001368458us-gaap:CommonStockMember2022-09-300001368458us-gaap:RetainedEarningsMember2023-01-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2023-01-012023-03-310001368458sbh:ShareRepurchaseProgram2017Member2023-10-012024-03-310001368458sbh:SallyBeautySupplyMember2023-01-012023-03-310001368458us-gaap:CommonStockMember2024-01-012024-03-310001368458us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMembersbh:SkinAndCosmeticsMember2024-01-012024-03-310001368458us-gaap:NondesignatedMemberus-gaap:OtherCurrentAssetsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:ECommerceMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMemberus-gaap:SalesChannelThroughIntermediaryMember2022-10-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelThroughIntermediaryMemberus-gaap:FranchisedUnitsMember2022-10-012023-03-310001368458us-gaap:ForeignExchangeContractMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-10-012023-03-310001368458sbh:BeautySystemsGroupMember2022-10-012023-03-310001368458us-gaap:FairValueInputsLevel2Memberus-gaap:OtherAssetsMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001368458us-gaap:CorporateNonSegmentMember2023-10-012024-03-310001368458us-gaap:ForeignExchangeContractMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2023-01-012023-03-310001368458us-gaap:ForeignExchangeContractMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2024-01-012024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:SallyBeautySupplyMemberus-gaap:SalesRevenueNetMembersbh:SkinAndCosmeticsMember2022-10-012023-03-3100013684582023-10-012023-12-310001368458us-gaap:NondesignatedMemberus-gaap:OtherCurrentAssetsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001368458us-gaap:RetainedEarningsMember2023-03-310001368458us-gaap:AccumulatedTranslationAdjustmentMember2023-10-012024-03-310001368458us-gaap:OperatingSegmentsMembersbh:SallyBeautySupplyMember2023-01-012023-03-310001368458us-gaap:DesignatedAsHedgingInstrumentMembercurrency:MXN2024-03-3100013684582022-10-012022-12-310001368458sbh:BeautySystemsGroupMember2024-01-012024-03-3100013684582023-09-3000013684582024-05-030001368458sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember2022-10-012023-03-310001368458sbh:NailMemberus-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMember2023-01-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMembersbh:SkinAndCosmeticsMember2023-01-012023-03-310001368458us-gaap:ValuationTechniqueDiscountedCashFlowMembersbh:BeautySystemsGroupMember2023-09-300001368458sbh:NailMemberus-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2023-01-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:DistributorSalesConsultantsMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelThroughIntermediaryMember2023-10-012024-03-310001368458us-gaap:AdditionalPaidInCapitalMember2022-12-310001368458sbh:SeniorNotesDueDecemberTwoThousandTwentyFiveMember2024-02-270001368458us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001368458sbh:NailMemberus-gaap:ProductConcentrationRiskMembersbh:SallyBeautySupplyMemberus-gaap:SalesRevenueNetMember2022-10-012023-03-310001368458us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-10-012022-12-310001368458sbh:StylingToolsAndSuppliesMemberus-gaap:ProductConcentrationRiskMembersbh:SallyBeautySupplyMemberus-gaap:SalesRevenueNetMember2022-10-012023-03-310001368458sbh:HairCareMemberus-gaap:ProductConcentrationRiskMembersbh:SallyBeautySupplyMemberus-gaap:SalesRevenueNetMember2023-01-012023-03-310001368458sbh:SallyBeautySupplyMember2024-03-310001368458us-gaap:CommonStockMember2022-12-310001368458us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMember2023-10-012024-03-310001368458sbh:HairCareMemberus-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310001368458us-gaap:CommonStockMember2023-10-012023-12-310001368458us-gaap:CorporateNonSegmentMember2024-01-012024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMembersbh:DistributorSalesConsultantsMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelThroughIntermediaryMember2023-01-012023-03-310001368458sbh:SallyBeautySupplyMember2023-10-012024-03-310001368458sbh:SeniorNotesDueTwoThousandThirtyTwoMember2024-02-120001368458us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-10-012023-12-310001368458sbh:HairCareMemberus-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMember2022-10-012023-03-310001368458us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001368458us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001368458us-gaap:RetainedEarningsMember2022-09-300001368458us-gaap:RetainedEarningsMember2024-01-012024-03-310001368458sbh:AccumulatedForeignExchangeContractsMember2023-10-012024-03-310001368458sbh:SallyHoldingsMembersbh:VariableRateTrancheMemberus-gaap:InterestRateCapMember2022-10-012023-03-3100013684582023-10-012024-03-310001368458us-gaap:ForeignExchangeContractMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001368458currency:EURus-gaap:DesignatedAsHedgingInstrumentMember2024-03-310001368458sbh:SeniorNotesDueDecemberTwoThousandTwentyFiveMember2024-02-272024-02-2700013684582022-10-012023-03-310001368458us-gaap:ValuationTechniqueDiscountedCashFlowMembersbh:BeautySystemsGroupMemberus-gaap:MeasurementInputLongTermRevenueGrowthRateMember2023-09-300001368458sbh:TermLoanBDueTwoThousandAndThirtyMemberus-gaap:FairValueInputsLevel2Member2023-09-300001368458us-gaap:AdditionalPaidInCapitalMember2022-10-012022-12-310001368458sbh:BeautySystemsGroupMember2024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMembersbh:OtherBeautyItemsMember2022-10-012023-03-310001368458us-gaap:AdditionalPaidInCapitalMember2023-10-012023-12-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelThroughIntermediaryMemberus-gaap:FranchisedUnitsMember2024-01-012024-03-310001368458sbh:SeniorNotesDueTwoThousandThirtyTwoMember2023-10-012024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:SallyBeautySupplyMemberus-gaap:SalesRevenueNetMember2022-10-012023-03-310001368458us-gaap:OperatingSegmentsMembersbh:SallyBeautySupplyMember2022-10-012023-03-310001368458us-gaap:InterestRateSwapMember2024-03-310001368458us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:EntityOperatedUnitsMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelDirectlyToConsumerMember2023-01-012023-03-310001368458sbh:SeniorNotesDueDecemberTwoThousandTwentyFiveMember2024-02-122024-02-120001368458us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001368458sbh:ShareRepurchaseProgram2017Member2021-07-012021-07-310001368458us-gaap:ProductConcentrationRiskMembersbh:SallyBeautySupplyMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310001368458sbh:SallyHoldingsMemberus-gaap:InterestRateSwapMember2024-03-310001368458us-gaap:CommonStockMember2022-10-012022-12-310001368458sbh:SallyBeautySupplyMember2024-01-012024-03-310001368458us-gaap:ForeignExchangeContractMember2023-10-012024-03-310001368458us-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-03-310001368458sbh:HairCareMemberus-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2023-10-012024-03-310001368458us-gaap:CommonStockMember2023-03-310001368458sbh:SallyHoldingsMemberus-gaap:InterestRateSwapMember2024-01-012024-03-310001368458currency:EURus-gaap:NondesignatedMember2024-03-310001368458us-gaap:CorporateNonSegmentMember2023-01-012023-03-310001368458us-gaap:InterestRateSwapMember2023-09-3000013684582022-09-300001368458us-gaap:ForeignExchangeContractMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001368458sbh:HairCareMemberus-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMember2024-01-012024-03-310001368458us-gaap:AdditionalPaidInCapitalMember2023-09-300001368458us-gaap:ProductConcentrationRiskMembersbh:ECommerceMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMemberus-gaap:SalesChannelThroughIntermediaryMember2024-01-012024-03-310001368458us-gaap:InterestRateSwapMember2023-10-012024-03-310001368458sbh:SallyBeautySupplyMember2022-10-012023-03-310001368458us-gaap:ForeignExchangeContractMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2023-10-012024-03-310001368458us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMembersbh:OtherBeautyItemsMember2022-10-012023-03-310001368458us-gaap:RetainedEarningsMember2022-12-310001368458us-gaap:CommonStockMember2023-12-310001368458us-gaap:AccumulatedTranslationAdjustmentMember2023-09-300001368458sbh:BeautySystemsGroupMember2023-01-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:DistributorSalesConsultantsMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelThroughIntermediaryMember2022-10-012023-03-310001368458sbh:StylingToolsAndSuppliesMemberus-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310001368458us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMembersbh:DistributorSalesConsultantsMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelThroughIntermediaryMember2024-01-012024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMembersbh:HairColorMember2023-01-012023-03-310001368458us-gaap:RetainedEarningsMember2024-03-310001368458us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2024-03-310001368458sbh:SallyHoldingsMemberus-gaap:InterestRateSwapMember2023-10-012024-03-310001368458us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AccruedLiabilitiesMember2024-03-310001368458sbh:ShareRepurchaseProgram2017Member2017-08-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelThroughIntermediaryMemberus-gaap:FranchisedUnitsMember2023-10-012024-03-3100013684582023-01-012023-03-310001368458us-gaap:OperatingSegmentsMember2023-01-012023-03-310001368458us-gaap:FairValueMeasurementsRecurringMember2023-09-300001368458us-gaap:CommonStockMember2024-03-310001368458sbh:SallyHoldingsMemberus-gaap:InterestRateSwapMember2023-04-300001368458us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMembersbh:SkinAndCosmeticsMember2023-10-012024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMembersbh:SkinAndCosmeticsMember2022-10-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMembersbh:HairColorMember2024-01-012024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMembersbh:SkinAndCosmeticsMember2024-01-012024-03-310001368458us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001368458us-gaap:RetainedEarningsMember2022-10-012022-12-310001368458us-gaap:RetainedEarningsMember2023-10-012023-12-310001368458us-gaap:ValuationTechniqueDiscountedCashFlowMembersbh:BeautySystemsGroupMemberus-gaap:MeasurementInputDiscountRateMember2023-09-300001368458sbh:NailMemberus-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2022-10-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:ECommerceMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMemberus-gaap:SalesChannelThroughIntermediaryMember2023-01-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2023-10-012024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMemberus-gaap:EntityOperatedUnitsMemberus-gaap:SalesChannelDirectlyToConsumerMember2024-01-012024-03-310001368458sbh:NailMemberus-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2023-10-012024-03-310001368458sbh:StylingToolsAndSuppliesMemberus-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2023-10-012024-03-310001368458us-gaap:OperatingSegmentsMember2023-10-012024-03-310001368458us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMembersbh:HairColorMember2023-01-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMembersbh:ECommerceMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelThroughIntermediaryMember2024-01-012024-03-310001368458sbh:NailMemberus-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310001368458sbh:GoldwellMember2023-10-012024-03-310001368458sbh:StylingToolsAndSuppliesMemberus-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2023-01-012023-03-310001368458sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember2024-01-012024-03-310001368458us-gaap:ForeignExchangeContractMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2024-03-310001368458us-gaap:OperatingSegmentsMembersbh:BeautySystemsGroupMember2023-01-012023-03-310001368458sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember2023-01-012023-03-310001368458us-gaap:NondesignatedMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AccruedLiabilitiesMember2023-09-300001368458us-gaap:OperatingSegmentsMembersbh:BeautySystemsGroupMember2023-10-012024-03-310001368458us-gaap:OperatingSegmentsMember2024-01-012024-03-3100013684582023-12-310001368458us-gaap:ProductConcentrationRiskMemberus-gaap:EntityOperatedUnitsMembersbh:SallyBeautySupplyMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelDirectlyToConsumerMember2024-01-012024-03-310001368458us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMembersbh:OtherBeautyItemsMember2024-01-012024-03-310001368458us-gaap:AccumulatedTranslationAdjustmentMember2024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMembersbh:ECommerceMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelThroughIntermediaryMember2023-01-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMembersbh:ECommerceMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelThroughIntermediaryMember2022-10-012023-03-310001368458us-gaap:FairValueInputsLevel2Memberus-gaap:OtherAssetsMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:ECommerceMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMemberus-gaap:SalesChannelThroughIntermediaryMember2023-10-012024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMembersbh:OtherBeautyItemsMember2023-01-012023-03-310001368458us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMembersbh:OtherBeautyItemsMember2023-01-012023-03-310001368458us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMembersbh:SkinAndCosmeticsMember2023-01-012023-03-310001368458us-gaap:AdditionalPaidInCapitalMember2023-03-310001368458us-gaap:OperatingSegmentsMembersbh:BeautySystemsGroupMember2022-10-012023-03-310001368458sbh:TermLoanBDueTwoThousandAndThirtyMemberus-gaap:FairValueInputsLevel2Member2024-03-310001368458sbh:SallyHoldingsMembersbh:VariableRateTrancheMemberus-gaap:InterestRateCapMember2017-07-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMembersbh:ECommerceMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelThroughIntermediaryMember2023-10-012024-03-3100013684582022-12-310001368458sbh:StylingToolsAndSuppliesMemberus-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMember2023-01-012023-03-310001368458sbh:DistributionCenterConsolidationAndStoreOptimizationPlanMember2023-10-012024-03-3100013684582024-01-012024-03-310001368458us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembersbh:SallyBeautySupplyMembersbh:OtherBeautyItemsMember2023-10-012024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:SallyBeautySupplyMemberus-gaap:EntityOperatedUnitsMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelDirectlyToConsumerMember2023-10-012024-03-310001368458sbh:AccumulatedForeignExchangeContractsMember2024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelThroughIntermediaryMemberus-gaap:FranchisedUnitsMember2023-01-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMembersbh:HairColorMember2022-10-012023-03-310001368458us-gaap:FairValueMeasurementsRecurringMember2024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310001368458us-gaap:FairValueInputsLevel1Memberus-gaap:SeniorNotesMember2024-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMembersbh:OtherBeautyItemsMember2023-10-012024-03-310001368458us-gaap:RetainedEarningsMember2023-12-310001368458us-gaap:OperatingSegmentsMembersbh:SallyBeautySupplyMember2024-01-012024-03-310001368458us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-10-012024-03-310001368458sbh:HairCareMemberus-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2022-10-012023-03-3100013684582024-03-3100013684582023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMemberus-gaap:EntityOperatedUnitsMemberus-gaap:SalesChannelDirectlyToConsumerMember2023-10-012024-03-310001368458us-gaap:NondesignatedMembercurrency:CAD2024-03-310001368458us-gaap:FairValueInputsLevel1Memberus-gaap:SeniorNotesMember2023-09-300001368458sbh:StylingToolsAndSuppliesMemberus-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2022-10-012023-03-310001368458us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001368458sbh:HairCareMemberus-gaap:ProductConcentrationRiskMembersbh:BeautySystemsGroupMemberus-gaap:SalesRevenueNetMember2023-01-012023-03-310001368458us-gaap:ProductConcentrationRiskMembersbh:SallyBeautySupplyMemberus-gaap:EntityOperatedUnitsMemberus-gaap:SalesRevenueNetMemberus-gaap:SalesChannelDirectlyToConsumerMember2023-01-012023-03-310001368458us-gaap:OperatingSegmentsMember2022-10-012023-03-31xbrli:puresbh:Derivativexbrli:sharessbh:Instrumentiso4217:USDxbrli:sharesiso4217:USD

 

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: MARCH 31, 2024

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)

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value

SBH

The 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

Number of shares of common stock outstanding as of May 3, 2024: 103,514,140

 

 


 

TABLE OF CONTENTS

 

Page

PART I — FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements

4

 

 

Condensed Consolidated Balance Sheets

4

Condensed Consolidated Statements of Earnings

5

Condensed Consolidated Statements of Comprehensive Income

6

Condensed Consolidated Statements of Stockholders’ Equity

7

Condensed Consolidated Statements of Cash Flows

8

Notes to Condensed Consolidated Financial Statements

9

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3. Quantitative and Qualitative Disclosures About Market Risk

24

Item 4. Controls and Procedures

24

 

PART II — OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

25

Item 1A. Risk Factors

25

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.

25

Item 5. Other Information

25

Item 6. Exhibits

26

 

 

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, 2023, 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)

 

 

 

March 31,
2024

 

 

September 30,
2023

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

97,174

 

 

$

123,001

 

Trade accounts receivable, net

 

 

34,693

 

 

 

33,421

 

Accounts receivable, other

 

 

52,868

 

 

 

42,454

 

Inventory

 

 

1,039,752

 

 

 

975,218

 

Other current assets

 

 

55,836

 

 

 

53,903

 

Total current assets

 

 

1,280,323

 

 

 

1,227,997

 

Property and equipment, net of accumulated depreciation of $833,581 at
   March 31, 2024, and $
780,212 at September 30, 2023

 

 

273,175

 

 

 

297,779

 

Operating lease assets

 

 

562,770

 

 

 

570,657

 

Goodwill

 

 

534,494

 

 

 

533,081

 

Intangible assets, excluding goodwill, net of accumulated amortization of
   $
31,821 at March 31, 2024, and $30,587 at September 30, 2023

 

 

54,088

 

 

 

55,171

 

Other assets

 

 

41,692

 

 

 

40,565

 

Total assets

 

$

2,746,542

 

 

$

2,725,250

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current maturities of long-term debt

 

$

66,164

 

 

$

4,173

 

Accounts payable

 

 

289,606

 

 

 

258,884

 

Accrued liabilities

 

 

150,002

 

 

 

163,366

 

Current operating lease liabilities

 

 

137,631

 

 

 

150,479

 

Income taxes payable

 

 

366

 

 

 

2,355

 

Total current liabilities

 

 

643,769

 

 

 

579,257

 

Long-term debt

 

 

978,360

 

 

 

1,065,811

 

Long-term operating lease liabilities

 

 

458,030

 

 

 

455,071

 

Other liabilities

 

 

21,626

 

 

 

23,139

 

Deferred income tax liabilities, net

 

 

93,907

 

 

 

93,224

 

Total liabilities

 

 

2,195,692

 

 

 

2,216,502

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.01 par value. Authorized 500,000 shares; 103,514 and
   
106,266 shares issued and shares outstanding at March 31, 2024, and
   September 30, 2023, respectively

 

 

1,035

 

 

 

1,063

 

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

 

 

 

 

 

 

Additional paid-in capital

 

 

 

 

 

5,677

 

Accumulated earnings

 

 

666,647

 

 

 

624,772

 

Accumulated other comprehensive loss, net of tax

 

 

(116,832

)

 

 

(122,764

)

Total stockholders’ equity

 

 

550,850

 

 

 

508,748

 

Total liabilities and stockholders’ equity

 

$

2,746,542

 

 

$

2,725,250

 

 

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

 

 

Six Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net sales

 

$

908,361

 

 

$

918,712

 

 

$

1,839,663

 

 

$

1,875,767

 

Cost of goods sold

 

 

445,289

 

 

 

450,373

 

 

 

909,415

 

 

 

918,854

 

Gross profit

 

 

463,072

 

 

 

468,339

 

 

 

930,248

 

 

 

956,913

 

Selling, general and administrative expenses

 

 

403,435

 

 

 

389,657

 

 

 

801,573

 

 

 

781,237

 

Restructuring

 

 

63

 

 

 

7,274

 

 

 

(22

)

 

 

17,680

 

Operating earnings

 

 

59,574

 

 

 

71,408

 

 

 

128,697

 

 

 

157,996

 

Interest expense

 

 

20,523

 

 

 

16,685

 

 

 

37,837

 

 

 

34,608

 

Earnings before provision for income taxes

 

 

39,051

 

 

 

54,723

 

 

 

90,860

 

 

 

123,388

 

Provision for income taxes

 

 

9,807

 

 

 

13,862

 

 

 

23,226

 

 

 

32,190

 

Net earnings

 

$

29,244

 

 

$

40,861

 

 

$

67,634

 

 

$

91,198

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.28

 

 

$

0.38

 

 

$

0.64

 

 

$

0.85

 

Diluted

 

$

0.27

 

 

$

0.37

 

 

$

0.63

 

 

$

0.83

 

Weighted-average shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

104,276

 

 

 

107,453

 

 

 

105,117

 

 

 

107,294

 

Diluted

 

 

107,080

 

 

 

109,706

 

 

 

107,881

 

 

 

109,499

 

 

 

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

 

 

Six Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net earnings

 

$

29,244

 

 

$

40,861

 

 

$

67,634

 

 

$

91,198

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(6,928

)

 

 

9,445

 

 

 

7,449

 

 

 

35,386

 

Interest rate swap, net of tax

 

 

1,584

 

 

 

 

 

 

(1,504

)

 

 

 

Interest rate caps, net of tax

 

 

 

 

 

(2,163

)

 

 

 

 

 

(1,960

)

Foreign exchange contracts, net of tax

 

 

468

 

 

 

(1,017

)

 

 

(13

)

 

 

(1,927

)

Other comprehensive income (loss), net of tax

 

 

(4,876

)

 

 

6,265

 

 

 

5,932

 

 

 

31,499

 

Total comprehensive income

 

$

24,368

 

 

$

47,126

 

 

$

73,566

 

 

$

122,697

 

 

 

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, 2023

 

106,266

 

 

$

1,063

 

 

$

5,677

 

 

$

624,772

 

 

$

(122,764

)

 

$

508,748

 

Net earnings

 

 

 

 

 

 

 

 

 

 

38,390

 

 

 

 

 

 

38,390

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

10,808

 

 

 

10,808

 

Share-based compensation

 

 

 

 

 

 

 

5,118

 

 

 

 

 

 

 

 

 

5,118

 

Stock issued for equity awards

 

722

 

 

 

7

 

 

 

209

 

 

 

 

 

 

 

 

 

216

 

Employee withholding taxes paid
   related to net share settlement

 

(192

)

 

 

(2

)

 

 

(1,738

)

 

 

 

 

 

 

 

 

(1,740

)

Repurchases and cancellations of
   common stock

 

(1,939

)

 

 

(19

)

 

 

(9,266

)

 

 

(10,915

)

 

 

 

 

 

(20,200

)

Balance at December 31, 2023

 

104,857

 

 

$

1,049

 

 

$

 

 

$

652,247

 

 

$

(111,956

)

 

$

541,340

 

Net earnings

 

 

 

 

 

 

 

 

 

 

29,244

 

 

 

 

 

 

29,244

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,876

)

 

 

(4,876

)

Share-based compensation

 

 

 

 

 

 

 

3,964

 

 

 

 

 

 

 

 

 

3,964

 

Stock issued for equity awards

 

184

 

 

 

2

 

 

 

1,396

 

 

 

 

 

 

 

 

 

1,398

 

Employee withholding taxes paid
   related to net share settlement

 

(1

)

 

 

(1

)

 

 

(19

)

 

 

 

 

 

 

 

 

(20

)

Repurchases and cancellations of
   common stock

 

(1,526

)

 

 

(15

)

 

 

(5,341

)

 

 

(14,844

)

 

 

 

 

 

(20,200

)

Balance at March 31, 2024

 

103,514

 

 

$

1,035

 

 

$

 

 

$

666,647

 

 

$

(116,832

)

 

$

550,850

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Net earnings

 

 

 

 

 

 

 

 

 

 

40,861

 

 

 

 

 

 

40,861

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

6,265

 

 

 

6,265

 

Share-based compensation

 

 

 

 

 

 

 

3,838

 

 

 

 

 

 

 

 

 

3,838

 

Stock issued for equity awards

 

266

 

 

 

3

 

 

 

1,638

 

 

 

 

 

 

 

 

 

1,641

 

Employee withholding taxes paid
   related to net share settlement

 

(1

)

 

 

 

 

 

(15

)

 

 

 

 

 

 

 

 

(15

)

Balance at March 31, 2023

 

107,549

 

 

$

1,076

 

 

$

13,790

 

 

$

531,370

 

 

$

(120,348

)

 

$

425,888

 

 

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)

 

 

 

Six Months Ended March 31,

 

 

 

2024

 

 

2023

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net earnings

 

$

67,634

 

 

$

91,198

 

Adjustments to reconcile net earnings to net cash provided
    by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

55,017

 

 

 

50,347

 

Share-based compensation expense

 

 

9,082

 

 

 

8,973

 

Amortization of deferred financing costs

 

 

1,272

 

 

 

1,311

 

Loss on early extinguishment of debt

 

 

2,037

 

 

 

601

 

Impairment of long-lived assets, including operating lease assets

 

 

 

 

 

1,765

 

Loss on disposal of equipment and other property

 

 

3

 

 

 

2

 

Deferred income taxes

 

 

171

 

 

 

862

 

Changes in (exclusive of effects of acquisitions):

 

 

 

 

 

 

Trade accounts receivable

 

 

(1,054

)

 

 

4,632

 

Accounts receivable, other

 

 

(10,141

)

 

 

(5,805

)

Inventory

 

 

(59,741

)

 

 

(68,355

)

Other current assets

 

 

(1,412

)

 

 

6,053

 

Other assets

 

 

(1,792

)

 

 

2,201

 

Operating leases, net

 

 

(2,072

)

 

 

(14,286

)

Accounts payable and accrued liabilities

 

 

32,314

 

 

 

108

 

Income taxes payable

 

 

(1,842

)

 

 

434

 

Other liabilities

 

 

(1,516

)

 

 

(393

)

Net cash provided by operating activities

 

 

87,960

 

 

 

79,648

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

Payments for property and equipment, net of proceeds

 

 

(44,659

)

 

 

(42,181

)

Acquisitions, net of cash acquired

 

 

(218

)

 

 

 

Net cash used by investing activities

 

 

(44,877

)

 

 

(42,181

)

Cash Flows from Financing Activities:

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

1,056,000

 

 

 

853,000

 

Repayments of long-term debt

 

 

(1,076,054

)

 

 

(898,093

)

Debt issuance costs

 

 

(8,332

)

 

 

(4,726

)

Proceeds from equity awards

 

 

1,614

 

 

 

1,723

 

Payments for common stock repurchased

 

 

(40,400

)

 

 

 

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

 

 

(1,760

)

 

 

(1,141

)

Net cash used by financing activities

 

 

(68,932

)

 

 

(49,237

)

Effect of foreign exchange rate changes on cash and cash equivalents

 

 

22

 

 

 

2,832

 

Net decrease in cash and cash equivalents

 

 

(25,827

)

 

 

(8,938

)

Cash and cash equivalents, beginning of period

 

 

123,001

 

 

 

70,558

 

Cash and cash equivalents, end of period

 

$

97,174

 

 

$

61,620

 

Supplemental Cash Flow Information:

 

 

 

 

 

 

Interest paid

 

$

48,253

 

 

$

35,191

 

Income taxes paid

 

$

32,007

 

 

$

32,077

 

Capital expenditures incurred but not paid

 

$

16,992

 

 

$

5,466

 

 

 

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, 2023. 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 March 31, 2024, and September 30, 2023, our consolidated results of operations, consolidated comprehensive income and consolidated statements of stockholders’ equity for the three and six months ended March 31, 2024 and 2023, and consolidated cash flows for the six months ended March 31, 2024 and 2023.

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.

2. Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to enhance segment disclosures for annual and interim consolidated financial statements, including significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”). For public companies, the amendments in the update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of this update, but do not expect the update to impact our consolidated results of operations or financial position.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to expand disclosures in an entity’s income tax rate reconciliation table and the disaggregation of taxes paid in U.S. and foreign jurisdictions. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of this update, but do not expect the update to impact our consolidated results of operations or financial position.

 

9


 

3. 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):

 

 

 

 

 

 

Six Months Ended March 31,

 

 

 

 

 

 

 

2024

 

 

2023

 

Beginning Balance

 

 

 

 

 

$

14,038

 

 

$

13,460

 

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

 

 

8,700

 

 

 

9,327

 

Revenue recognized from beginning liability

 

 

(9,997

)

 

 

(8,370

)

Ending Balance

 

 

 

 

 

$

12,741

 

 

$

14,417

 

See Note 11, Segment Reporting, for additional information regarding the disaggregation of our sales revenue.

 

4. 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

 

March 31,
2024

 

 

September 30,
2023

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

 

 

 

 

 

 

 

 

 

Non-designated cash flow hedges

 

Other current assets

 

Level 2

 

$

483

 

 

$

1,160

 

Interest rate swap

 

Other assets

 

Level 2

 

 

2,920

 

 

 

4,668

 

Total assets

 

 

 

 

 

$

3,403

 

 

$

5,828

 

.

 

 

 

 

 

 

 

 

 

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

 

 

 

 

 

 

 

 

 

Designated cash flow hedges

 

Accrued liabilities

 

Level 2

 

$

1,301

 

 

$

 

Non-designated cash flow hedges

 

Accrued liabilities

 

Level 2

 

 

685

 

 

 

397

 

Total liabilities

 

 

 

 

 

$

1,986

 

 

$

397

 

The fair value of each asset and liability 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 finance lease obligations, debt issuance costs and original issue discounts, are as follows:

 

 

 

 

March 31, 2024

 

 

September 30, 2023

 

(in thousands)

 

Fair Value Hierarchy Level

 

Carrying Value

 

 

Fair Value

 

 

Carrying Value

 

 

Fair Value

 

Long-term debt, excluding finance lease obligations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior notes

 

Level 1

 

$

600,000

 

 

$

593,250

 

 

$

679,961

 

 

$

662,962

 

Term loan B due 2030

 

Level 2

 

 

396,000

 

 

 

395,505

 

 

 

398,000

 

 

 

398,000

 

Total long-term debt

 

 

 

$

996,000

 

 

$

988,755

 

 

$

1,077,961

 

 

$

1,060,962

 

 

The fair values of our term loans were 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.

5. 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 our common stock, subject to certain limitations governed by our debt agreements. In July 2021, our Board approved a term extension of our share repurchase program to September 30, 2025. As of March 31, 2024, we had approximately $540.8 million of additional share repurchase authorizations remaining under our share repurchase program. For the three and six months ended March 31, 2024, we repurchased 1.5 million and 3.5 million shares of our common stock at a total cost of $20.0 million and $40.0 million, respectively, excluding the impact of excise taxes. For the three and six months ended March 31, 2023, we did not repurchase shares under our share repurchase program.

Accumulated Other Comprehensive Loss

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

 

 

Foreign Currency Translation Adjustments

 

 

Interest Rate Swap

 

 

Foreign Exchange Contracts

 

 

Total

 

 

Balance at September 30, 2023

 

$

(124,846

)

 

$

3,716

 

 

$

(1,634

)

 

$

(122,764

)

 

Other comprehensive income (loss) before
    reclassification, net of tax

 

 

7,449

 

 

 

152

 

 

 

(2,042

)

 

 

5,559

 

 

Reclassification to net earnings, net of tax

 

 

 

 

 

(1,656

)

 

 

2,029

 

 

 

373

 

 

Balance at March 31, 2024

 

$

(117,397

)

 

$

2,212

 

 

$

(1,647

)

 

$

(116,832

)

 

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

6. Weighted-Average Shares

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

 

 

Three Months Ended
March 31,

 

 

Six Months Ended
March 31,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Weighted-average basic shares

 

 

104,276

 

 

 

107,453

 

 

 

105,117

 

 

 

107,294

 

Dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

Stock option and stock award programs

 

 

2,804

 

 

 

2,253

 

 

 

2,764

 

 

 

2,205

 

Weighted-average diluted shares

 

 

107,080

 

 

 

109,706

 

 

 

107,881

 

 

 

109,499

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anti-dilutive options excluded from our computation of diluted shares

 

 

1,733

 

 

 

1,964

 

 

 

1,754

 

 

 

1,964

 

 

11


 

7. Goodwill and Intangible Assets

During the three months ended March 31, 2024, we completed our annual assessments for impairment of goodwill and indefinite-lived intangible assets. For our goodwill testing, we performed a qualitative analysis and determined that there was no indication of impairment requiring further quantitative testing. No material impairment losses were recognized in the current or prior periods presented in connection with our goodwill and intangible assets.

At September 30, 2023, we determined that due to the recent decline in the Company's share price and market capitalization, among other factors, a quantitative assessment was required. Based on our September 30, 2023, quantitative assessment using a discounted cash flow, we estimated the fair value for our BSG reporting unit to be approximately 18% more than its carrying value. The critical assumptions used as part of our evaluation included a projected long-term revenue growth rate of 2.0% and a discount rate of 11.25%, based on a weighted-average cost of capital analysis (adjusted for company specific risk). Our September 30, 2023, quantitative assessment indicated that the fair value of our SBS segment was substantially higher than its carrying value. Goodwill allocated to our SBS and BSG reporting units, which are also defined as our SBS and BSG segment, was $84.9 million and $449.6 million, respectively, as of March 31, 2024.

 

 

 

Three Months Ended
March 31,

 

 

Six Months Ended
March 31,

 

(in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Intangible assets amortization expense

 

$

791

 

 

$

866

 

 

$

1,651

 

 

$

1,875

 

 

For the six months ended March 31, 2024, changes in goodwill reflects the effects of foreign currency exchange rates of $1.8 million and adjustments of $0.4 million from the completion of our Goldwell of NY, Inc. acquisition fair value assessment. Additionally, the changes to other intangibles included effects of foreign currency exchange rates of $0.8 million.

8. Accrued Liabilities