8-K/A
REGIS CORP (RGS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 19, 2024
REGIS CORPORATION
(Exact name of registrant as specified in charter)
| Minnesota | 1-12725 | 41-0749934 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
3701 Wayzata Boulevard
Minneapolis, MN 55416
(Address of principal executive offices and zip code)
(952) 947-7777
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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, $0.05 par value | RGS | The Nasdaq Global Market |
| Rights to Purchase Series A Junior Participating Preferred Stock, $0.05 par value | RGS | The Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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 Section 13(a) of the Exchange Act. ☐
Regis Corporation
Current Report on Form 8-K
INTRODUCTORY NOTE
As previously disclosed, on December 19, 2024, Regis Corporation (“Regis” or the “Company”) transferred consideration to acquire 100 percent of the equity interests of Super C Group, LLC d/b/a Alline Salon Group (“Alline”), its largest franchisee, consisting of 314 salons.
This Amendment No. 1 on Form 8-K/A amends and supplements the current report on Form 8-K originally filed by the Company on December 19, 2024 (the “Original 8-K”) to include the financial information required by Item 9.01 of Form 8-K, including: (i) the audited consolidated financial statements of Alline as of and for its fiscal year ended December 31, 2023, (ii) the unaudited interim consolidated financial statements of Alline as of and for the nine months ended September 30, 2024, and (iii) certain unaudited pro forma financial information of the Company giving effect to the Alline acquisition. Except as otherwise provided herein, the disclosures made in the Original 8-K remain unchanged.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
The consolidated financial statements of Alline required by Item 9.01(a) of Form 8-K are attached as Exhibits 99.1 and 99.2 hereto and incorporated herein by reference.
(b) Pro Forma Financial Information.
The unaudited pro forma condensed combined balance sheet as of September 30, 2024 and the unaudited pro forma condensed combined statements of operations of Regis and Alline for the fiscal year ended June 30, 2024 and the three months ended September 30, 2024, are attached as Exhibit 99.3 hereto and incorporated herein by reference.
(d) Exhibits.
Exhibit
Number
* Previously filed
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| REGIS CORPORATION | ||
|---|---|---|
| Dated: March 7, 2025 | By: | /s/ Kersten D. Zupfer |
| Kersten D. Zupfer | ||
| Executive Vice President and Chief Financial Officer |
Document
Exhibit No. 23
CONSENT
We hereby consent to the incorporation by reference in the Registration Statements on Forms S-3 (File Nos. 333-252700, 333-125631, 333-100327, 333-102858, 333-116170, 333-87482, 333-51094, 333-78793, 333-89279, 333-90809, 333-31874, 333-57092 and 333-72200) and on Forms S-8 (File Nos. 333-283044, 333-249791, 333-228055, 333-227163, 333-214270, 333-214269, 333-170517, 333-163350, 333-123737 and 333-88938) of Regis Corporation of our report dated February 27, 2025 relating to the consolidated financial statements of Super C Group, LLC as of and for the years ended December 31, 2023 and December 31, 2022, which appears in this Current Report on Form 8-K.
/s/ CENKO, VENDITTELLI, HAYNES & TOKARZ, PLC
Minneapolis, Minnesota
March 7, 2025
allineauditedfs2023
allinereviewed093024
Document
Exhibit 99.2
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
As previously disclosed, on December 19, 2024, Regis Corporation (“Regis” or the “Company”) transferred consideration to acquire 100 percent of the equity interests of Super C Group, LLC d/b/a Alline Salon Group (“Alline”), its largest franchisee, consisting of 314 salons. Alline owned and operated 314 stores under the Cost Cutters, Holiday Hair, and Supercuts brand names of the Company pursuant to franchise agreements by and between certain subsidiaries of the Company and Alline for each such store. Pursuant to the Purchase Agreement, the Company entered into a mutual termination agreement terminating all such franchise agreements. Under the terms of the agreement, Regis paid cash consideration of approximately $19.0 million, stock consideration valued at $3.0 million, and additional amounts for working capital adjustments and transaction-related fees. The acquisition was accounted for as a business combination with the purchase price allocated on a preliminary basis using information available as of December 31, 2024, presented as of September 30, 2024. Assets acquired and liabilities assumed were recorded at estimated fair values based on management’s estimates, available information, and supportable assumptions that management considered reasonable.
Also on December 19, 2024, and concurrent with the Alline acquisition, Regis amended the 2024 Credit Agreement (the “2024 Credit Agreement Amendment”) for an additional $15.0 million in long-term debt in the form of a term loan. The term loan was provided on the same terms as the original term loan, with respect to maturity and interest rate margins. The $15.0 million in proceeds were used as consideration for the Alline acquisition.
The following unaudited pro forma combined condensed financial information (“Pro Forma Information”) is based on:
1.the historical consolidated financial information of Regis, which is included in Regis’ Annual Report on Form 10-K for the fiscal year ended June 30, 2024, and Regis’ Quarterly Report on Form 10-Q for the three months ended September 30, 2024, and
2.the historical consolidated financial information of Alline, which is included in Exhibits 99.1 and 99.2 to Regis’ Current Report on Form 8-K/A with which this Pro Forma Information is being filed (the “Form 8-K/A”). Due to different reporting dates between Regis and Alline, the Unaudited Pro Forma Combined Condensed Balance Sheet information is as of September 30, 2024, the three month Unaudited Pro Forma Combined Condensed Statement of Operations includes the three months ended September 30, 2024, for both Regis and Alline, and the Unaudited Pro Forma Combined Condensed Statement of Operations for the twelve months ended June 30, 2024, for Regis, and September 30, 2024, for Alline.
The Pro Forma Information has been prepared to give effect to (a) the Alline acquisition, as described above; (b) certain reclassifications to conform the historical financial statement presentation of Alline to Regis; and (c) certain other material related transactions, including financing with proceeds used to facilitate the Alline acquisition.
The unaudited pro forma Combined Condensed Balance Sheet as of September 30, 2024, gives effect to the transaction as if it had occurred on such date. The unaudited pro forma combined condensed statements of operations for the fiscal year ended June 30, 2024, gives effect to the Alline acquisition as if it had occurred on July 1, 2023. The unaudited pro forma combined condensed statements of operations for the three months ended September 30, 2024, gives effect to the Alline acquisition as if it had occurred on July 1, 2023.
The unaudited pro forma combined financial information is presented for informational purposes only. The unaudited pro forma combined financial information is not necessarily indicative of what the combined companies’ financial position or results of operations actually would have been had the Alline acquisition been completed at the dates indicated. In addition, the unaudited pro forma combined information does not purport to project the future financial position or operating results of the combined company. The unaudited pro forma combined condensed financial statements do not account for synergies resulting from the Alline acquisition or other costs relating to the integration of the two companies.
Exhibit 99.2
Exhibit 99.2
| REGIS CORPORATION | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET | |||||||||
| As of September 30, 2024 | |||||||||
| (Dollars in thousands) | |||||||||
| Historical Regis | Historical Alline | Transaction Accounting Adjustments | Note 3 | Pro Forma Combined | |||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 6,259 | $ | 7,746 | $ | (20,000) | a | $ | 2,628 |
| 15,000 | b | ||||||||
| (6,377) | c | ||||||||
| Receivables, net | 9,082 | 15 | (367) | d | 8,715 | ||||
| (15) | e | ||||||||
| Other current assets | 20,085 | 3,310 | 1,111 | f | 24,506 | ||||
| Total current assets | 35,426 | 11,071 | (10,648) | 35,849 | |||||
| Property and equipment, net | 3,342 | 7,455 | — | 10,797 | |||||
| Goodwill | 173,386 | 3,489 | (3,489) | g | 189,832 | ||||
| 16,446 | h | ||||||||
| Other intangibles, net | 2,377 | 1,067 | (1,067) | i | 2,377 | ||||
| Right of use asset | 273,970 | 27,699 | (18,700) | j | 282,969 | ||||
| Other assets | 20,430 | 68 | (994) | k | 19,504 | ||||
| Total assets | $ | 508,931 | $ | 50,849 | $ | (18,452) | $ | 541,328 |
Exhibit 99.2
| REGIS CORPORATION | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET | |||||||||
| As of September 30, 2024 | |||||||||
| (Dollars in thousands) | |||||||||
| Historical Regis | Historical Alline | Transaction Accounting Adjustments | Note 3 | Pro Forma Combined | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 15,181 | $ | 1,222 | $ | — | $ | 16,403 | |
| Accrued expenses | 18,615 | 2,333 | (157) | l | 21,791 | ||||
| 1,000 | m | ||||||||
| Short-term lease liability | 67,161 | 7,275 | (5,093) | j | 69,343 | ||||
| Total current liabilities | 100,957 | 10,830 | (4,250) | 107,537 | |||||
| Long-term debt, net | 95,176 | 8,825 | 15,000 | b | 111,429 | ||||
| (8,825) | n | ||||||||
| 1,253 | p | ||||||||
| Long-term lease liability | 218,105 | 21,628 | (13,607) | j | 226,126 | ||||
| Other non-current liabilities | 38,295 | — | (606) | l | 39,689 | ||||
| 2,000 | m | ||||||||
| Total liabilities | 452,533 | 41,283 | (9,035) | 484,781 | |||||
| Shareholders' equity: | |||||||||
| Common stock | 114 | 7 | o | 121 | |||||
| Additional paid-in capital | 69,972 | 2,993 | o | 71,712 | |||||
| (1,253) | p | ||||||||
| Accumulated other comprehensive income | 8,736 | — | 8,736 | ||||||
| Accumulated deficit | (22,424) | (367) | d | (24,022) | |||||
| 763 | l | ||||||||
| (994) | k | ||||||||
| (1,000) | a | ||||||||
| Alline’s shareholders’ equity | 9,566 | (19,000) | a | — | |||||
| (6,377) | c | ||||||||
| (15) | e | ||||||||
| 1,111 | f | ||||||||
| (3,489) | g | ||||||||
| 16,446 | h | ||||||||
| (3,000) | m | ||||||||
| (3,000) | o | ||||||||
| (1,067) | i | ||||||||
| 8,825 | n | ||||||||
| Total shareholders' equity | 56,398 | 9,566 | (9,417) | 56,547 | |||||
| Total liabilities and shareholders' equity | $ | 508,931 | $ | 50,849 | $ | (18,452) | $ | 541,328 |
_______________________________________________________________________________
See accompanying Notes to unaudited Pro Forma Combined Condensed Financial Statements.
Exhibit 99.2
| REGIS CORPORATION | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS | |||||||||
| For the three months ended September 30, 2024 | |||||||||
| (Dollars and shares in thousands, except per share amounts) | |||||||||
| Historical Regis | Historical Alline | Transaction Accounting Adjustments | Note 4 | Pro Forma Combined | |||||
| Revenues: | |||||||||
| Royalties | $ | 15,646 | $ | — | $ | (1,141) | a | $ | 14,505 |
| Fees | 2,352 | — | (39) | b | 2,313 | ||||
| Advertising fund contributions | 5,641 | — | (250) | c | 5,391 | ||||
| Franchise rental income | 21,636 | — | (1,476) | d | 20,160 | ||||
| Company-owned salon revenue | 785 | 20,404 | — | 21,189 | |||||
| Total revenue | 46,060 | 20,404 | (2,906) | 63,558 | |||||
| Operating expenses: | |||||||||
| General and administrative | 14,034 | 2,406 | (29) | e | 15,270 | ||||
| (1,141) | f | ||||||||
| Rent | 1,064 | 2,721 | — | 3,785 | |||||
| Advertising fund expense | 5,641 | — | (250) | g | 5,391 | ||||
| Franchise rent expense | 21,636 | — | (1,476) | h | 20,160 | ||||
| Company-owned salon expense | 753 | 13,710 | — | 14,463 | |||||
| Depreciation and amortization | 446 | 808 | (321) | i | 933 | ||||
| Long-lived asset impairment | 352 | — | — | 352 | |||||
| Total operating expenses | 43,926 | 19,645 | (3,217) | 60,354 | |||||
| Operating income | 2,134 | 759 | 311 | 3,204 | |||||
| Other (expense) income: | |||||||||
| Interest expense | (4,846) | (193) | (550) | j | (5,396) | ||||
| 193 | k | ||||||||
| Other, net | 677 | 52 | — | 729 | |||||
| (Loss) Income from operations before income taxes | (2,035) | 618 | (46) | (1,463) | |||||
| Income tax benefit (expense) | 225 | (59) | (25) | m | 200 | ||||
| 59 | m | ||||||||
| (Loss) income from continuing operations | (1,810) | 559 | (12) | (1,263) | |||||
| Income from discontinued operations | 957 | — | — | 957 | |||||
| Net (loss) income | $ | (853) | $ | 559 | $ | (12) | $ | (306) |
Exhibit 99.2
| REGIS CORPORATION | |||||||
|---|---|---|---|---|---|---|---|
| UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS | |||||||
| For the three months ended September 30, 2024 | |||||||
| (Dollars and shares in thousands, except per share amounts) | |||||||
| Historical Regis | Historical Alline | Transaction Accounting Adjustments | Note 4 | Pro Forma Combined | |||
| Net loss per share: | |||||||
| Basic: | |||||||
| Loss from continuing operations | $ | (0.77) | $ | (0.51) | |||
| Income from discontinued operations | 0.41 | 0.39 | |||||
| Net loss per share | $ | (0.36) | $ | (0.12) | |||
| Diluted: | |||||||
| Loss from continuing operations | $ | (0.77) | $ | (0.51) | |||
| Income from discontinued operations | 0.41 | 0.39 | |||||
| Net loss per share, diluted | $ | (0.36) | $ | (0.12) | |||
| Weighted average common and common equivalent shares outstanding: | |||||||
| Basic | 2,343 | 141 | l | 2,484 | |||
| Diluted | 2,343 | 141 | 2,484 |
_______________________________________________________________________________
See accompanying Notes to unaudited Pro Forma Combined Condensed Financial Statements.
Exhibit 99.2
| REGIS CORPORATION | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS | |||||||||
| (Dollars and shares in thousands, except per share amounts) | |||||||||
| Historical Regis for the year ended June 30, 2024 | Historical Alline for the year ended September 30, 2024 | Transaction Accounting Adjustments | Note 4 | Pro Forma Combined | |||||
| Revenues: | |||||||||
| Royalties | $ | 64,098 | $ | — | $ | (4,681) | a | $ | 59,417 |
| Fees | 10,189 | — | (157) | b | 10,032 | ||||
| Product sales to franchisees | 451 | — | — | 451 | |||||
| Advertising fund contributions | 25,663 | — | (1,000) | c | 24,663 | ||||
| Franchise rental income | 95,258 | — | (5,905) | d | 89,353 | ||||
| Company-owned salon revenue | 7,323 | 83,835 | — | 91,158 | |||||
| Total revenue | 202,982 | 83,835 | (11,743) | 275,074 | |||||
| Operating expenses: | |||||||||
| Cost of product sales to franchisees | 436 | — | — | 436 | |||||
| General and administrative | 45,387 | 10,410 | (114) | e | 51,002 | ||||
| (4,681) | f | ||||||||
| Rent | 5,525 | 11,509 | — | 17,034 | |||||
| Advertising fund expense | 25,663 | — | (1,000) | g | 24,663 | ||||
| Franchise rent expense | 95,258 | — | (5,905) | h | 89,353 | ||||
| Company-owned salon expense | 5,080 | 56,554 | — | 61,634 | |||||
| Depreciation and amortization | 3,945 | 3,964 | (1,284) | i | 6,625 | ||||
| Long-lived asset impairment | 798 | — | — | 798 | |||||
| Total operating expenses | 182,092 | 82,437 | (12,984) | 251,545 | |||||
| Operating income | 20,890 | 1,398 | 1,241 | 23,529 | |||||
| Other (expense) income: | |||||||||
| Interest expense | (25,393) | (1,213) | (2,201) | j | (27,594) | ||||
| 1,213 | k | ||||||||
| Gain on extinguishment of long-term debt | 94,611 | — | — | 94,611 | |||||
| Other, net | (172) | 177 | — | 5 | |||||
| Income from operations before income taxes | 89,936 | 362 | 253 | 90,551 | |||||
| Income tax expense | (869) | (208) | (896) | m | (1,765) | ||||
| 208 | m | ||||||||
| Income from continuing operations | 89,067 | 154 | (435) | 88,786 | |||||
| Income from discontinued operations | 1,993 | — | — | 1,993 | |||||
| Net income | $ | 91,060 | $ | 154 | $ | (435) | $ | 90,779 |
Exhibit 99.2
| REGIS CORPORATION | |||||||
|---|---|---|---|---|---|---|---|
| UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS | |||||||
| (Dollars and shares in thousands, except per share amounts) | |||||||
| Historical Regis for the year ended June 30, 2024 | Historical Alline for the year ended September 30, 2024 | Transaction Accounting Adjustments | Note 4 | Pro Forma Combined | |||
| Net income per share: | |||||||
| Basic: | |||||||
| Income from continuing operations | $ | 38.08 | $ | 35.80 | |||
| Income from discontinued operations | 0.85 | 0.80 | |||||
| Net income per share | $ | 38.93 | $ | 36.60 | |||
| Diluted: | |||||||
| Income from continuing operations | $ | 37.50 | $ | 35.29 | |||
| Income from discontinued operations | 0.84 | 0.79 | |||||
| Net income per share, diluted | $ | 38.34 | $ | 36.08 | |||
| Weighted average common and common equivalent shares outstanding: | |||||||
| Basic | 2,339 | 141 | l | 2,480 | |||
| Diluted | 2,375 | 141 | 2,516 |
_______________________________________________________________________________
See accompanying Notes to unaudited Pro Forma Combined Condensed Financial Statements.
Exhibit 99.2
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited pro forma financial statements should be read in conjunction with (1) our unaudited consolidated financial statements and accompanying notes included in our Quarterly Report on Form 10-Q for the three months ended September 30, 2024, filed with the SEC on November 6, 2024; and (2) our audited consolidated financial statements and accompanying notes in our Annual Report on Form 10-K as of and for the year ended June 30, 2024, as filed with the SEC on August 28, 2024. Due to different reporting dates between Regis and Alline, the combined condensed balance sheet information is as of September 30, 2024, the three month combined condensed statement of operations includes the three months ended September 30, 2024, for both Regis and Alline, and the combined condensed statement of operations for the twelve months ended June 30, 2024, for Regis, and September 30, 2024, for Alline.
The accompanying unaudited pro forma combined financial information presents the pro forma combined financial position and results of operations of the combined company based upon the historical financial statements of Regis and Alline, after giving effect to the Alline acquisition adjustments described in these notes, and is intended to reflect the impact of the Alline acquisition on Regis. Certain amounts in Alline’s historical financial statements have been reclassified to conform to Regis’ presentation:
As of September 30, 2024
| (Dollars in thousands) | Historical Alline Before Reclassifications | Reclassifications | Notes | Historical Alline After Reclassifications | |||
|---|---|---|---|---|---|---|---|
| Accounts receivable, net of allowance | $ | 15 | $ | (15) | i. | $ | — |
| Receivables, net | — | 15 | i. | 15 | |||
| Inventory | 2,059 | (2,059) | ii. | — | |||
| Prepaid expenses and other current assets | 1,251 | (1,251) | ii. | — | |||
| Other current assets | — | 3,310 | ii. | 3,310 | |||
| Other assets - deposits | 68 | (68) | iii. | — | |||
| Other assets | — | 68 | iii. | 68 | |||
| Current portion of lease liabilities | 7,275 | (7,275) | iv. | — | |||
| Short-term lease liability | — | 7,275 | iv. | 7,275 | |||
| Accrued compensation | 1,615 | (1,615) | v. | — | |||
| Accrued interest | 43 | (43) | v. | — | |||
| Restructuring reserve | 113 | (113) | v. | — | |||
| Other accrued liabilities | 562 | (562) | v. | — | |||
| Accrued expenses | — | 2,333 | v. | 2,333 | |||
| Long-term debt - bank | 8,825 | (8,825) | vi. | — | |||
| Long-term debt, net | — | 8,825 | vi. | 8,825 | |||
| Long-term lease liabilities, net of current portion | 21,628 | (21,628) | vii. | — | |||
| Long-term lease liability | — | 21,628 | vii. | 21,628 |
_______________________________________________________________________________
i.To reclassify accounts receivable.
ii.To reclassify inventory and prepaid expenses to other current assets.
iii.To reclassify deposits to other assets.
Exhibit 99.2
iv.To reclassify short-term lease liability.
v.To reclassify accrued expenses.
vi.To reclassify long-term debt.
vii.To reclassify long-term lease liability.
Three months ended September 30, 2024
| (Dollars in thousands) | Historical Alline Before Reclassifications | Reclassifications | Notes | Historical Alline After Reclassifications | |||
|---|---|---|---|---|---|---|---|
| Net sales | $ | 20,404 | $ | (20,404) | i. | $ | — |
| Company-owned salon revenue | 20,404 | i. | 20,404 | ||||
| Cost of sales | 3,755 | (3,755) | ii. | — | |||
| Payroll expenses | 9,955 | (9,955) | ii. | — | |||
| Company-owned salon expense | 13,710 | ii. | 13,710 | ||||
| General and administrative expenses | 2,406 | (2,406) | iii. | — | |||
| General and administrative | 2,406 | iii. | 2,406 | ||||
| Lease expenses | 2,721 | (2,721) | iv. | — | |||
| Rent | 2,721 | iv. | 2,721 | ||||
| Amortization | 732 | (732) | v. | — | |||
| Impairment | 76 | (76) | v. | — | |||
| Depreciation and amortization | 808 | v. | 808 | ||||
| Interest income | 52 | (52) | vi. | — | |||
| Other, net | 52 | vi. | 52 |
Twelve months ended September 30, 2024
| (Dollars in thousands) | Historical Alline Before Reclassifications | Reclassifications | Notes | Historical Alline After Reclassification | |||
|---|---|---|---|---|---|---|---|
| Net sales | $ | 83,835 | $ | (83,835) | i. | $ | — |
| Company-owned salon revenue | 83,835 | i. | 83,835 | ||||
| Cost of sales | 15,935 | (15,935) | ii. | — | |||
| Payroll expenses | 40,619 | (40,619) | ii. | — | |||
| Company-owned salon expense | 56,554 | ii. | 56,554 | ||||
| General and administrative expenses | 10,410 | (10,410) | iii. | — | |||
| General and administrative | 10,410 | iii. | 10,410 | ||||
| Lease expenses | 11,509 | (11,509) | iv. | — | |||
| Rent | 11,509 | iv. | 11,509 | ||||
| Amortization | 3,207 | (3,207) | v. | — | |||
| Impairment | 757 | (757) | v. | — | |||
| Depreciation and amortization | 3,964 | v. | 3,964 | ||||
| Interest income | 177 | (177) | vi. | — | |||
| Other, net | 177 | vi. | 177 |
_______________________________________________________________________________
i.To reclassify net sales to company-owned salon revenue.
ii.To reclassify payroll expenses and cost of sales to company-owned salon expense.
iii.To reclassify general and administrative expense.
Exhibit 99.2
iv.To reclassify lease expenses to rent expense.
v.To reclassify amortization and impairment expenses to depreciation and amortization expense.
vi.To reclassify interest income to other, net.
The unaudited pro forma combined financial information is presented for informational purposes only. The unaudited pro forma combined financial information is not necessarily indicative of what the combined companies’ financial position or results of operations actually would have been had the Alline acquisition been completed at the dates indicated. In addition, the unaudited pro forma combined information does not purport to project the future financial position or operating results of the combined company. The unaudited pro forma combined condensed financial statements do not account for synergies resulting from the Alline acquisition or other costs relating to the integration of the two companies.
The allocation of the purchase price to the assets acquired and liabilities assumed in the Pro Forma Information is based on management’s preliminary valuation estimates and are subject to revisions, which may be material.
2. PURCHASE PRICE ALLOCATION
The fair value of total consideration transferred by the Company is $24.6 million, as detailed below.
| Consideration | (Dollars in thousands) | |
|---|---|---|
| Cash, net of cash acquired (1) | $ | 18,631 |
| Equity instruments (140,552 of Regis common shares) (2) | 3,000 | |
| Contingent consideration arrangement (preliminary estimate) (3) | 3,000 | |
| Fair value of total consideration | $ | 24,631 |
Exhibit 99.2
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(1)Includes cash transferred of $20.0 million, net of cash acquired of $1.4 million.
(2)The number of common shares (140,552) issued as part of the consideration paid for Alline was determined by dividing the $3.0 million by the 30-trading day volume weighted average price of the common stock as reported on the Nasdaq Global Market as of and including December 17, 2024.
(3)The contingent consideration arrangement requires Regis to pay the former owners of Alline additional cash consideration if certain 4-Wall EBITDA or Adjusted EBITDA thresholds are met for each of the three subsequent annual earnout periods as well as a cumulative 4-Wall EBITDA or Adjusted EBITDA threshold for the cumulative three subsequent annual earnout periods. The potential undiscounted amount of all future payments that Regis could be required to make under the contingent consideration arrangement is between $0 and $3.0 million. Regis recognized a provisional fair value of $3.0 million on the acquisition date and as of December 31, 2024, which is included in accrued expenses ($1.0 million) and other non-current liabilities ($2.0 million) in the unaudited Condensed Consolidated Balance Sheet as of December 31, 2024. The fair value of the contingent consideration arrangement is provisional while the Company completes its fair value assessment. The 4-Wall EBITDA is defined as EBITDA excluding general and administrative expenses.
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of the acquisition date:
| Consideration | (Dollars in thousands) | |
|---|---|---|
| Current assets | $ | 3,640 |
| Property and equipment | 7,414 | |
| Goodwill (1) | 16,594 | |
| Right of use assets | 7,292 | |
| Other assets | 56 | |
| Assumed current liabilities | (2,352) | |
| Assumed lease liabilities | (8,013) | |
| Fair value of total consideration | $ | 24,631 |
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(1)Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill that will be recorded as part of the acquisition of Alline includes the following:
a.the expected synergies and other benefits that we believe will result from combining the operations of Alline with the operations of Regis;
b.any intangible assets that do not qualify for separate recognition.
Goodwill is not amortized and is deductible for tax purposes. All of the goodwill related to the acquisition of Alline is related to our company-owned operating segment. The Company has not yet obtained all the information required to finalize the valuations of the assets acquired and liabilities assumed, primarily because of the proximity of the acquisition date to the balance sheet date of December 31, 2024. As such, we expect that goodwill could change from the amount noted above.
3. PRO FORMA COMBINED CONDENSED BALANCE SHEET ADJUSTMENTS
a.Adjustment for cash transferred for purchase price and fees paid to acquire Alline.
b.To record proceeds on long-term debt issued in connection with the Alline acquisition.
Exhibit 99.2
c.Adjustment for Alline cash not acquired.
d.To eliminate balances due from Alline.
e.To eliminate balances due from Regis.
f.To record service inventory existing as of September 30, 2024, to Alline balance sheet.
g.To eliminate Alline’s pre-acquisition goodwill.
h.To record goodwill resulting from the Alline acquisition.
i.To remove Alline’s intangible franchise rights.
j.To remove right-of-use asset balances for leases previously recorded on Regis’ books.
k.To remove capitalized broker fees related to Alline.
l.To eliminate short-term and long-term deferred revenue related to Alline franchise fees.
m.To record short-term and long-term contingent purchase price liability.
n.Adjustment for Alline debt not acquired.
o.To record issuance of Regis common stock in connection with the Alline acquisition.
p.To record stock warrants issued in connection with the additional $15.0 million long-term debt incurred as part of the Alline acquisition.
4. PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS ADJUSTMENTS
a.To eliminate revenue related to royalties paid by Alline to Regis.
b.To eliminate fee revenue earned by Regis from Alline.
c.To eliminate advertising fund contributions received by Regis from Alline.
d.To eliminate Alline-related franchise rental income received by Regis.
e.To remove capitalized broker fee expenses related to Alline.
f.Adjustment to remove the Alline royalty expense.
g.To eliminate Alline-related advertising fund expenses paid by Regis on behalf of Alline.
h.To eliminate franchise rental expense paid by Regis for Alline.
i.To eliminate amortization of Alline’s intangible assets amortization.
j.To recognize interest expense related to additional debt of $15.0 million incurred by Regis.
k.To eliminate interest expense related to Alline’s long-term debt.
Exhibit 99.2
l.Represents common shares issued in conjunction with the acquisition.
m.To account for the impact of consolidating Alline into Regis’ tax structure. For the fiscal year ended June 30, 2024, to recognize state income tax expense due to loss carryforward limitations in states where Alline has a significant presence, in a period with significant income from the debt cancellation.