Good morning and thank you for joining the Regis Third Quarter 2025 Earnings Conference Call. I am your host Kersten Zupfer, Executive Vice President and Chief Financial Officer. I am joined today by our President and Chief Executive Officer, Matthew Doctor. All participants are in a listen-only mode and this conference is being recorded. I would like to remind everyone that the language on forward-looking statements included in our earnings release and 8-K filing also applies to our comments made on the call today. These documents can be found on our website, www.regiscorp.com/investorelations, along with a reconciliation of any non-GAAP financial measures mentioned on today's call with their corresponding GAAP measures. With that, I will now turn the call over to Matt Doctor.

Good morning, everyone, and thank you for being here. Today, we will update you on our key initiatives aimed at reshaping Regis for long-term growth and discuss our financial performance for the third fiscal quarter. We are undergoing a significant transformation to build a more resilient and efficient company, focusing on a sustainable business model that emphasizes operational stability and profitability at both corporate and salon levels, as well as strong cash flow generation. These efforts are designed to help us reverse previous declines in customer traffic, enhance our core operations, and enable both Regis and our franchisees to thrive in a changing market. This is a multi-year journey to stabilize and improve our business while returning to profitable and sustainable growth. We are already seeing positive outcomes from our actions over the past year, including a strengthened balance sheet, a return to profitability, and consistent positive operating cash flow, which signals a brighter future. These accomplishments reflect our team's dedication and execution. Today, Regis stands in a much stronger financial and operational position compared to a year ago, and we are optimistic that our current actions will contribute to building a healthier and more valuable company. As our transformation progresses, we believe the wider market will begin to recognize the value we are creating. Although this transformation will take time, we are confident that the cumulative impact of our initiatives will yield significant long-term benefits for our franchisees, customers, stylists, shareholders, and broader stakeholder community. The success of our efforts is further evidenced by today's reported results and emerging positive trends in our business. Compared to the third fiscal quarter of last year, adjusted EBITDA increased by 33%, and operating income rose by 23%. Both reported and adjusted earnings per share improved, transitioning from negative to positive, while we generated over $6 million in cash from operations during a traditionally weaker quarter seasonally. Year-to-date cash from operations has improved by $14 million compared to last year, marking our second consecutive quarter of positive cash flow for the first time since early 2018. This performance underscores the improving health of our business, demonstrating the effectiveness of our strategy to achieve an optimized balance between corporate-owned and franchise salons. A key part of our strategic plan has been the acquisition and integration of our largest franchisee, Alline Salon Group, completed in the last fiscal quarter. This merger was a proactive strategy by Regis aimed at enhancing our company-owned portfolio's strength, bringing significant financial and strategic benefits. While the Alline portfolio's contribution to overall results was modest in this quarter, given our focus on integration and planning for future strategies, we did observe improved same-store sales within Alline, moving from a 7.5% decline in January to a 2.7% decline in March. At the end of March, we implemented major strategic changes, including a new pay plan for stylists that enhances incentives and ensures clear paths for earnings based on service sales and profitability. I commend our team for flawlessly rolling out this compensation plan, alongside a systematic review of our service menus and pricing structures to enhance consistency and value. We've adjusted pricing on core services while making ancillary services more attractive, allowing stylists and salons to increase their overall sales. We've also begun showcasing service pricing across digital check-in platforms. These foundational efforts are crucial for streamlining operations and aligning incentives, and we are encouraged by early results, with April showing positive same-store sales and improved profit margins. Overall, we are confident in the long-term value our strategic transition will create. As we look at our total company performance, same-store sales saw a slight decline of 1.1% in the last quarter, influenced by the timing of Easter and ongoing softness in salon traffic and new customer visits. The Easter timing shift negatively impacted sales by approximately 1.1%, suggesting we would have been about flat for the quarter before this effect. In April, however, same-store sales improved, with Supercuts showing a 4.5% increase across the system compared to last year's April data. While it's important to be cautious about viewing this as a new baseline, we felt it necessary to share these developments given their context regarding our third quarter results. Supercuts achieved a 1.1% increase in same-store sales, reflecting its significant role in the overall company's performance, although we strive for higher results moving forward. SmartStyle faced a 7.4% decline, contributing about 20% to same-store sales, and our efforts there focus on rationalizing and remodeling towards a healthier salon base. We recognize that capturing more traffic, particularly from new customers, is vital for our plants for growth across all brands, while same-store sales are just one of several metrics guiding our transformation. Our main priorities remain enhancing traffic and sales, along with improving our foundation through data-driven decision-making. Even amidst the modest decline in same-store sales and store count, our disciplined cost management and capital allocation strategies mitigate financial impacts, allowing us to sustain our transformation. For example, a 1% decrease in same-store sales can reduce royalty revenue by about $550,000. Recently closed stores averaged around $120,000 in annual sales, resulting in approximately $6,500 of royalty revenue loss per closure. We maintain several operational levers to counter such challenges, and a 1% profit margin increase in our company-owned portfolio can yield significant profitability gains. Though I do not minimize the impact of salon closures, we have the flexibility and resilience to navigate these headwinds. Despite the difficulties we face, our decisive actions and continuous progress towards our growth strategy have driven us to increased profitability over the past years. As we conclude this quarter's overview, I want to reaffirm our commitment to advancing our transformation strategy while executing business growth across all profitability metrics. The Alline acquisition and our broader moves have set a solid foundation for our top-line turnaround. Looking ahead, our focus will be on optimizing our company-owned salon portfolio and finalizing a comprehensive strategy for the Supercuts brand, which is essential to reversing traffic trends and achieving net salon growth. The strategy encompasses evolving our brand perception, driving omnichannel growth through personalized marketing initiatives, and ensuring operational excellence. We are pleased with the performance of our Supercuts Rewards program and its impact on member sales and customer retention. We are also addressing salon experience quality through brand excellence standards and training initiatives. The Regis team is actively engaging in discussions with the Supercuts Franchise Council to share insights and progress. We plan to present detailed updates on this strategy alignment in future calls. As we move forward, our priorities are clear: to ensure operational and digital excellence, improve salon perception and performance, and invest in initiatives that deliver long-term stakeholder value. We believe that these strategic actions will position Regis to emerge stronger, competitive, and aligned with the evolving salon industry, ultimately creating value for all stakeholders. Now, I will turn the call over to Kersten for a detailed review of our third quarter financials.

Thanks, Matt. As a quick note, before going through the results, our fiscal 2025 third quarter results include the results of approximately 300 salons that we acquired from Alline in December of 2024 during our second quarter of fiscal year 2025. As a reminder, our results for the quarter reflect contributions from Alline but prior year results do not. As Matt discussed, we are focused on improving profitability and generating cash from operations as we implement key foundational changes designed to reignite growth. Our third quarter results demonstrate meaningful progress on both fronts. For the third quarter, we delivered a 23% increase in operating income and generated approximately $6.2 million in cash from operations. Total third quarter revenue was $57 million, an increase of 15.9% or $7.8 million compared to the prior year. This increase was primarily driven by increase in revenue from company-owned salons as a result of the Alline acquisition. This increase was partially offset by declines in franchise revenues stemming from the closure of unprofitable franchise locations. The closures along with a modest 1.1% decline in same-store sales resulted in lower franchise rental income and lower advertising fund revenues which provide no contribution margin and royalty revenues. To put the change in same-store sales in perspective, as Matt noted, we estimate that a 1% change in franchise same-store sales represents an annual EBITDA impact of approximately $585,000, underscoring that a modest decline in same-store sales has a relatively minor effect on our profitability on an EBITDA basis. During the third quarter, we had 49 net closures primarily related to underperforming stores. Each was significantly lower trailing 12-month sales volumes than our top-performing locations. The performance gap between these closed stores and our highest performing units was approximately $350,000, underscoring the strong potential within our system and highlighting the opportunity we have to further enhance profitability margins and cash flow generation as we continue executing our transformation strategy. As we have discussed in the past, we expect calendar 2025 to be the last year of closures in the order of magnitude compared to previous years. One additional item to note as it relates to salon count as part of our disclosures is the shift of approximately 300 locations from franchise to corporate salon counts, as a result of the Alline acquisition. So while we are showing 761 less franchise salons, these do not all represent closures but rather a mix of closures and franchise to company-owned shift. In terms of profitability, we reported GAAP operating income of $5 million, an increase of 22% compared to $4.1 million in the year ago quarter. This increase was primarily driven by operating income contribution from the Alline salons, shuttering of underperforming franchise locations and diligent management of our general and administrative expenses. As a percentage of revenue, G&A was 22.8% in the third quarter of fiscal year 2024 to 19.6% in the current year quarter. This decrease in the G&A as a percentage of revenue was primarily due to an increase in revenue from the Alline acquisition. Income from continuing operations was $250,000 compared to a loss from continuing operations of $2.4 million in the year ago quarter. This improvement was driven primarily by lower interest expense. Turning to our adjusted results. As a reminder, in the first quarter of fiscal year 2025, we made a change to our methodology to exclude stock-based compensation expense when presenting our adjusted results. All adjusted results in the current year and prior years have been adjusted to reflect this presentation. We believe our adjusted results provide a more representative view of the business. Reconciliations of our GAAP results to our adjusted non-GAAP results can be found in our press release. For the third quarter, our consolidated adjusted EBITDA was $7.1 million compared to $5.4 million in the prior year quarter. The $1.7 million improvement was primarily due to favorable Alline salon EBITDA, lower G&A expenses, subleased revenue and currency gains, partially offset by a decline in royalties. Our adjusted G&A was $10.2 million in the third quarter of fiscal year 2025, down from $10.7 million in the year ago quarter. Adjusted G&A, excluding $1.1 million of G&A associated with the Alline salons was $9.1 million, an improvement of $1.6 million year-over-year. We remain committed to diligent management of our corporate G&A expenses. The Alline acquisition adds approximately $4.5 million to $5 million in incremental annual G&A expense. For fiscal year 2025, we expect adjusted G&A, including Alline to be approximately $40.5 million. We expect our run rate for G&A to be in the range of $43 million to $45 million. Adjusted EBITDA for our franchise segment was $6.3 million in the quarter, a $157,000 increase compared to $6.1 million in the prior year quarter. Adjusted EBITDA for our company-owned salon segment improved $1.6 million year-over-year to $843,000 for the quarter, primarily as a result of an increased number of salons from the Alline acquisition. Turning to cash flows. For the 3 months ended March 31, 2025, we generated $6.2 million in cash from operations which is an improvement of $6.5 million compared to the third quarter of fiscal year 2024. This brings our year-to-date total cash from operations to $7 million, an improvement of $14.1 million compared to the first 9 months of fiscal year 2024. The increase in cash generation was driven by Alline operating profitability, lower use of working capital and lower cash interest. It is important to note that our cash from operations includes $2.4 million and $5.8 million of cash related to the advertising fund for the 3 and 9 months ended March 31, 2025, respectively. These amounts are restricted and not available for general corporate use. However, our recent quarter results are starting to reflect our cash-generating potential. We continue to expect positive cash generation for the remainder of fiscal year 2025. Now that we are generating cash after several years of cash usage, we are thoughtfully evaluating capital allocation strategies. In the near term, this includes paying down our debt in connection with the excess cash flow sweep provision of our credit agreement, building a cash balance while also identifying opportunities to deploy capital in ways that we believe will create long-term value. In terms of liquidity, as of March 31, 2025, we had $19 million of available liquidity which consists of our availability under our revolving credit agreement and $13.3 million of unrestricted cash and cash equivalents. The $19 million of available liquidity is net of our $10 million minimum liquidity covenant. As of the end of the third quarter, we had $127.4 million in outstanding debt, excluding deferred financing costs and the value of warrants plus accrued paid-in-kind interest. As a reminder, in accordance with GAAP, our balance sheet includes approximately $255.9 million of operating lease liabilities related to franchise salon leases. These leases have a weighted average remaining term of less than 5 years and the obligations are serviced by our franchisees. So as long as the franchisees continue to meet their lease payments as they historically have, it is our view that these amounts should not be considered part of our debt position. We expect these liabilities will continue to decrease as the leases mature and as we continue to move away from franchise leases. As Matt discussed, our third quarter performance reflects meaningful progress in our transformation journey. With improved profitability and positive cash generation, we are building momentum and laying the groundwork for long-term value creation. Thank you for your continued support and interest in Regis. We look forward to updating you on our progress next quarter. Please feel free to reach out to investor relations at regiscorp.com to discuss any questions related to the business or quarterly results. This concludes the Regis third quarter fiscal year 2025 earnings call and we will now take questions that were submitted as well as some live Q&A.

Please use the Raise Hand to ask questions. Good morning, Bill Charters. Please introduce yourself and take your computer off of mute.

Hi, it's Bill Charters with Sabal Capital Management. Thanks for taking my question. Great quarter. My first question is about the accounting for Alline. I noticed the royalty fees are down, and I want to clarify the owned economics, which I see are up about $800,000. Does this indicate that while the royalty fees decrease, the company-owned EBITDA is closer to $9.8 million? I'm factoring in the royalty fees along with the original $5.8 million you mentioned in your guidance when the deal was made. I just want to clear that up.

Sure. I can take that. No, that's exactly right. You will see the royalties come down in the franchise segment and then the EBITDA go up in the company-owned segment. So that's exactly how that…

Okay. So then that $800,000 of positive, that must have had a lot of onetime items or something included in it because it seems kind of low. Or were there a lot of company-owned stores that outside of Alline that were a massive cash drag this quarter? Just trying to understand that a little better.

Yes, Matt here. Thank you for the question. I can provide more details about Alline for the quarter. Much of Q1 focused on planning, launching strategy, and stabilizing sales. As I mentioned last quarter, they initially lagged behind in sales. However, we observed significant progress from January to March, leading to a positive turnaround in April, which influenced the results. Additionally, we faced challenges with pay plans and changes in price adjustments, as we were managing the effects of a previous price increase. This opened up a chance to adjust pricing. The changes to the pay plans were necessary for the business and aimed to address minimum wage pressures. Since all these adjustments were made at the end of March, just before the month's close, we dealt with sales pressures and minimum wage increases, along with past pricing adjustments from one and a half years ago. These elements impacted the quarter significantly. With the implementation of these changes and the improvements observed in April, we expect to see sales and profit margins start to build, leading to an increase in EBITDA. It's important to note that this quarter is historically low in profitability, with January and February typically being weaker months. Moreover, severe weather, particularly in the Midwest during February, impacted our entire system, especially in the Midwest and Northeast regions. Several factors contributed to the quarter's results, but we are witnessing a lot of positive momentum and the right changes, ensuring that we properly implemented everything by the end of the quarter.

Okay, great. Then the other question I have is quarter-to-quarter, it looks like the stores went from 4,248 to 4,087; so net 161 store decline. And I think almost 90-something stores were just from the SmartStyle. Do you have any updates on the store closings for this year? I mean that's kind of in line with what you said in the beginning of the fiscal quarter to get down to around 4,000 or a little bit lower. Do you have any updates on that number for this year and next year?

Yes. I don’t have much more to add on that front. It’s in line with what I mentioned regarding the anticipated closures. We’re seeing it happen at about that pace, and I don’t have additional insights beyond that. Looking ahead, we expect a significant reduction as well. I want to refer back to earlier in the call when I spoke about the levers and the resilience of the business to adapt and overcome challenges. As we continue to grow and develop the business, there are questions regarding the closure outlook and broader guidance. I want to emphasize that we are considering what information to provide and when. This business has experienced many changes over the past few years, and we want to ensure we have a solid understanding before making statements about future guidance. It’s important for us to align on this and recognize the direction we’re headed collectively, whether it’s annual guidance or a broader picture of what this business can achieve through strategic execution. I don’t want to imply that we’re withholding guidance and it will simply be reduced. I do want to convey that we are contemplating markers and details about the future of our business. We plan to communicate that at the appropriate time, possibly during the next quarter at our fiscal year-end results, once we have more business traction.

Yes. I think that would be great, especially in light of the fact that you don't have sell-side coverage, that type of guidance would be greater range for EBITDA. I think that would really help the market understand the drivers. Because I mean that $800,000 number of the company-owned stores being depressed, I mean you're doing very well. This is a very good quarter because of that. I mean, considering it's almost like $10 million from the Alline company-owned EBITDA. So that's great. The other question I have is can you give us more color on the impact of the remodeled stores on same-store sales? Like what is the impact? And how quickly does that happen when stores go through the refresh or remodel period?

Yes. I'll take this in kind of in 2 parts. It's really the majority of the remodel that has been done over the course of the past few years. It's really been more concentrated to 1 brand which is SmartStyle. And that's really because of just the structures of the lease and all the Walmart stores themselves that have been remodeling which in turn drives our stores to have to remodel as well. So that's really the brand where the majority of the remodels have been done. For those kind of 350 to 400 that remodeled, we've seen a modest lift, call it, 5% from the time of remodel. But I also kind of want to put this in a broader context of not only this brand where we think we can further optimize that and grow the sales of that portfolio over time. But as it relates to other brands, especially in Supercuts, we talk about a holistic transformation agenda, a refresh and remodel effort is certainly a piece of those pillars and coming up with the right prototype right now is where a lot of the efforts are being put towards as part of that overall brand refresh. I guess 2 interesting data points that I know some of us have talked about but I don't think we've talked about it on calls, maybe regarding a couple of salons that we remodeled in our corporate portfolio maybe close to a couple of years ago in Chicago, where we tested to see that if we could elevate salons that really had strong underlying factors like tenured dedicated staff, high traffic, high volume, if we could elevate the look and feel of the salon and enable us into a price increase. That was a theory that we had. I know we just did it in 2 but in those 2, we saw 20% plus sustained price increases there. And again, just 2 data points. But it's a theory that if we can replicate elsewhere for like a top-tier remodel, leveraging a strong base is something we're going to explore. So right now, there's just a whole effort going on of this piece regarding the transformation agenda and we're going to look to pilot some of the work coming out of that effort in the Alline salons in the back half of this calendar year across all the brands there, not just Supercuts.

Okay. Sounds good. I guess the last question I have is, kind of you alluded to before. So I see the cash has just increased on the balance sheet. You could pay down debt. And then you alluded to something redeploy it. And I know you can't buy stock due to the credit agreement in this as of right now. But would you be tucking in further franchisees? What would be the use? And how is your priorities? Is it number one, to pay down debt? Number two, look for these one-offs? If you can just provide more color on just what are you going to do with the cash as it starts coming in?

Yes, I appreciate that question. We take our responsibility as stewards of capital seriously. There are certain situations where it makes sense for us to reduce debt based on our agreement with our lender, and we will be using cash to do that. This is a priority for us. Additionally, maintaining a cash balance and liquidity is wise, especially as we continue to navigate our strategies with Alline and Supercuts. We want to see what opportunities arise and identify where to invest while ensuring we have resources available for that, as well as exploring other ways to create value. Ultimately, I want our business needs to guide our capital allocation decisions, and we are still in the early stages of that, as indicated by our ongoing strategic roadmap work. We have been focused on Alline for five months now and have many exciting initiatives planned. We need to assess what the business requires to drive growth for Alline and Supercuts. If we identify opportunities for significant returns, we will certainly pursue them. The positive news is that we are beginning to generate cash, which is encouraging, as it hasn't always been the case over the last three years. We remain focused on our business needs, will continue to reduce debt, and do not have plans for broader franchise acquisitions at this time. We are satisfied with our current portfolio and intend to optimize and manage it effectively for now. As we have in the past, we will approach any decisions seriously and focus on the highest return on investment opportunities.

Okay. Great. Yes. I mean it was a great quarter. Hopefully, this is the inflection point and you can add from here. But all of these initiatives and stuff seem to be starting to take hold. So, good job and thanks. I don't have any other questions.

Great. Thanks.

Thanks, Bill. This concludes the Q&A session of the call today. We appreciate your interest in Regis Corporation and have a nice day. Thanks.