As of September 2014, fiscal year-end Company Highlights Sally - - PowerPoint PPT Presentation
As of September 2014, fiscal year-end Company Highlights Sally Beauty Holdings is a leading international specialty retailer and distributor of professional beauty products Annual consolidated sales of over $3.8 billion Strong cash flow
As of September 2014, fiscal year-end
Sally Beauty Holdings is a leading international specialty retailer and distributor of professional beauty products
Annual consolidated sales of over $3.8 billion
Strong cash flow generation
Approximately 4,828 stores located in 12 countries (1)
Industry leading position with ~33% channel share
Proven resilience in recessionary cycles
Well-positioned for long-term growth
Two distinct business segments
Consolidated Fiscal 2014 Results Net Sales Gross Margin
Segments Customers FY2014 Financials
chair/suite rentals
sized salons
Open-Line Retail Exclusive / Full-Service 3,563 stores 1,265 stores 981 consultants
Professional stylists
`
Retail Consumers $$$ High-end $ Value
Customers: Distribution:
SBH plays an important role in the supply chain Salons
(1) Store count as of September 30, 2014, fiscal year-end
$1.6 $1.7 $1.8 $2.0 $2.1 $2.2 $2.3 $2.4 $2.6 $2.7 $2.9 $2.9 $3.0 $3.1 $3.3 $3.4 $3.5 $3.7 $3.8 $3.8 $4.0 $4.2 $4.5 $4.6
$- $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 $5.0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
($ in billions)
(at wholesale $’s)
Growth
Recession Resistant Industry
Sally Beauty Supply global footprint
3,563(1) stores worldwide 2,793 stores in U.S. (including Puerto Rico)
770 stores in Canada, the UK, Ireland,
Belgium, Netherlands, France, Germany, Spain, Chile, Peru & Mexico
Average store size 1,700 sq. ft., 90% selling
space
Professional open-line business -
merchandise assortment not available through mass retailers
Destination for Professional hair care
and solutions
(1) Store count as of September 30, 2014, fiscal year-end.
2.7% 3.8% 2.4% 2.4% 2.7% 1.2% 2.1% 4.1% 6.3% 6.5%
1.3%
0.0% 2.0% 4.0% 6.0% 8.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
$1,208 $1,296 $1,359 $1,419 $1,567 $1,673 $1,696 $1,835 $2,012 $2,199 $2,230 $2,309 $0 $400 $800 $1,200 $1,600 $2,000 $2,400 $2,800 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Sally Beauty Supply Net Sales Sally Beauty Supply Same Store Sales
Growth
7% 8% 14% 10% 17% 23% 22%
Hair Care Hair Color Skin and Nail Care Electrical Appliances Brushes, Cutlery and Accessories Other Beauty Items
We offer a diversified mix of beauty products
Ethnic Products
45% of Sales from Hair Care & Color
Expand store base organically and through acquisitions; domestic and international
Plan to grow store base 3 to 4 percent in FY2015 and beyond
Increase customer traffic through loyalty programs and customer relationship management (CRM) Further expand Internet channel Drive gross margin expansion
Customer mix shift to retail Shift to exclusive brands Low-cost sourcing
Growth Initiatives
2,511 2,694 2,844 2,923 3,032 3,158 3,424 3,563 3,309 1,000 2,000 3,000 4,000 2006 2007 2008 2009 2010 2011 2012 2013 2014
Worldwide Sally Beauty Supply Stores Sally Beauty Supply Store Economics US
Capital Required $70k Average Inventory $85k Positive Contribution Margin 4 Months Cash Payback on Investment 2 Years
7.3% 5.6% 2.8% 3.7% 4.2% 4.8% 3.5% Growth
3.4% 4.0%
770 Sally Beauty stores located in 11 countries
Stores located in Canada, the UK, Ireland, Belgium, France, the Netherlands, Germany, Spain, Chile, Peru & Mexico
25% of Sally Beauty Supply sales from
international
Sales mix differs from U.S./Canada
UK/Europe
~80-85% professional ~15-20% retail
Mexico and South America almost 100% retail
Existing International Platform Long-Term Store Growth Potential (1)
(Canada)
~250
(Mexico)
180 ~250
(UK / Ireland)
261 ~300
(Belgium, France, Germany, Spain, Netherlands)
187 600-800
(Chile)
39 ~45 Potential Current 100
Other South American Countries
green field
Total
770 ~1,500+
(Peru)
3 ~40
(1) Store count as of September 30, 2014, fiscal year-end
Beauty Systems Group – 1,265(1) (professional
stores & 981 professional distributor sales consultants 1,104 company-operated / 161 franchised stores (Armstrong McCall) 981 professional distributor sales consultants
Average store size 2,700 sq. ft. Sells to salons and salon professionals Professional exclusive / full-service business –
includes merchandise assortment of premium brands sold through salons and not available in mass or at Sally stores
LoxaBeauty.com, the online retail solution for
salon/stylists, launched in March 2014
(1) Store count as of September 30, 2014, fiscal year-end
$616 $802 $895 $954 $945 $975 $941 $1,081 $1,257 $1,325 $1,392 $1,445 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
BSG Net Sales
4.6% 8.5% (0.6%) 4.1% 10.1% 6.9% 1.0% 6.2% 5.5% 6.1% 4.2% 3.5% (4.0%) 0.0% 4.0% 8.0% 12.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
BSG Same Store Sales Growth
Growth
(1) Store count as of September 30, 2014, fiscal 2014 third quarter.
We offer a diversified mix of beauty products not carried in Sally stores or mass retail
7% 6% 10% 12% 31% 35% Hair Care Skin and Nail Care Electrical Appliances Promotional Items Other Beauty Items Hair Color
828 874 929 991 1,027 1,151 1,190 400 800 1,200 2006 2007 2008 2009 2010 2011 2012 2013 2014
Expand store base organically
Further penetrate existing geographies Enter new territories
Expand gross margins as sales shift
to the stores Improve profitability
Optimize distribution network Continue integration efforts Broaden offerings with new suppliers
Seek potential fold-in acquisition
Capital Required $80k Average Inventory $150k Positive Contribution Margin 4 Months Cash Payback on Investment 2 Years
Growth Initiatives BSG Store Economics
5.6% 6.2% 6.7% 3.6% 12.0% 3.4% 4.6%
Growth
1,245 6 46 44 16 36 11 46
Organic Acquisition
39 85 39 43 12
Store Growth
Store Growth
1.6%
20 1,265
Long-term debt (as of 9/30/14)
Amount ($mm) % of Total Debt 5.750% Senior Notes (FY2022) $857.4 47.4% 6.875% Senior Notes (FY2019) $750.0 41.5% Other (1) $0.1 0.1% Total Debt $1,807.5 100.0% $750 $857 $200
$- $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
No near-term maturities
In November 2011, refinanced Sr. and Sr. Sub Notes for $750mm of 6.875% Senior Notes due 2019 In May 2012, refinanced the Term Loan B with $700mm of 5.75% Senior Notes due 2021
Targeted consolidated pro forma leverage ratio of
2.0x – 2.5x
Ample liquidity
Strong cash flow ABL Revolver of $500 million
Refinanced July 26, 2013; lowered rate and increased availability to $500 million
October 2013, issued $200 million aggregate
principal amount of 5.50% Senior Notes due 2023.
5.500% Senior Notes (FY2023) $200.0 11.0% Revolving ABL facility $0.0 0.0%
Long-term debt Maturity
$2,514 $2,648 $2,637 $2,916 $3,269
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 $0.32 $0.44 $0.52 $0.77 $1.07 $1.42 $1.48 $1.53 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 2007 2008 2009 2010 2011 2012 2013 2014
3.6% YoY
$3,524 $3,622
2.0%
YoY
Sales
EPS (adjusted)
$3,754
Adjusted EBITDA FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY2014 Net Earnings (GAAP) 110.2 $ 44.5 $ 77.7 $ 99.1 $ 143.8 $ 213.7 $ 233.1 $ 261.2 $ 246.0 $ Interest expense, net of interest income 0.1 146.0 159.1 132.0 113.0 112.5 138.4 $ 107.7 $ 116.3 $ Provision for income taxes 69.9 38.0 46.2 65.7 84.1 122.2 127.9 $ 151.5 $ 144.7 $ Depreciation and amortization 38.0 42.6 48.5 47.1 51.1 59.7 64.7 $ 72.2 $ 79.7 $ Share-based compensation 5.2 13.1 10.2 8.6 12.8 15.6 16.9 $ 19.2 $ 22.1 $ Transaction expenses (1a, 1b) 41.5 21.5
28.9 3.8
Litigation settlement and non-recurring charges
10.2
293.8 $ 309.5 $ 341.7 $ 352.5 $ 404.8 $ 502.5 $ 591.1 $ 611.8 $ 611.3 $ Adjusted net earnings and adjusted diluted earnings per share Net Earnings (GAAP) 143.8 $ 213.7 $ 233.1 $ 261.2 $ 246.0 $ Marked-tomarket adjustment for certain interest rate swaps (2.4) $
Interest expense on redeemed debt
Amortization of deferred financing costs
Litigation settlement and non-recurring items, net (2) (21.3) 10.2 Loss from securiy breach incident 2.5 Management transition costs 3.5 Tax provision for the adjustments to net earnings 0.9 7.9 (19.2) (2.3) Adjusted net earnings 142.3 $ 200.3 $ 267.2 $ 261.2 $ 249.7 $ Diluted adjusted net earnings per share (non-GAAP): 0.77 $ 1.07 $ 1.42 $ 1.48 $ 1.53 $ Diluted GAAP net earnings per share: 0.78 $ 1.14 $ 1.24 $ 1.48 $ 1.51 $ (1a) Transaction expenses of $41.5 for termination of the Regis transaction. (1b) Transaction expenses of $21.5 for separation of the Company from Alberto-Culver in November 2006.
(2) Results for the nine months ended June 30, 2011, reflect a $27.0 million benefit of a litigation settlement and non-recurring charges of $5.7 million.