Sally Beauty Holdings, Inc. (name To Be Changed From Sally Holdings, Inc.) · NYSE:SBH
Sally Beauty Holdings, Inc. (name To Be Changed From Sally Holdings, Inc.) — Sally Beauty Holdings — Investor Presentation (September 2018)
28 slides from Sally Beauty Holdings, Inc. (name To Be Changed From Sally Holdings, Inc.)'s investor presentation, September 2018
Slide 1: Strength in Beauty
Sally Beauty Holdings, Inc. STRENGTH [ IN BEAUTY ] As of December 2017 As of September 2018 1
Slide 2: Company Highlights
Company Highlights HEADER Sally Beauty Holdings is a leading international specialty retailer and distributor • Lorem ipsum dolorof sitprofessional amet, pro veribeauty delenitiproducts and supplies eu, quaerendum conclusionemque Industry leadingqui, adipiscing reprimique an pro. Ex eos illum posi
Slide 3: Consolidated Fiscal 2018 Results
Consolidated Fiscal 2018 Results Net Sales Gross Margin Segments Sales 59.3% 40.7% Segment Operating 60.2% 39.8% Earnings (1) See Addendum for a reconciliation of this non-GAAP financial measure. 3
Slide 4: Go To Market
Go To Market Suppliers/ Third party and owned brands Exclusive, third party Vendors: not available in mass retail professional-only brands Distributors: Open-Line Retail Exclusive / Full-Service Distribution 3,761 stores 1,395 stores 820 consultants Channel (1) Consumers: Professional stylists Salon
Slide 5: Business Segment Highlights
Business Segment Highlights Segment Distribution Channel Retail stores and E-commerce Retail consumers ~ 70% of sales Customers Professional stylists ~ 30% of sales Sales $2.3b FY2018 SSS growth -1.5% Financials EBIT $363m EBIT margin 15.5% 5
Slide 6: Business Segment Highlights
Business Segment Highlights Segment Distribution Stores for licensed professionals Channel Direct sales consultants for salons Customers Professional stylists (chair/suite renters) Salons (via BSG’s direct sales consultants) Sales $1.6b FY2018 SSS growth -1.5% Financials EBIT $240m EBIT margin 15.0%
Slide 7: Resilient Industry
Resilient Industry U.S. Salon Industry Product Sales Growth of 1.8% (at wholesale $’s) $6.0 Recession $5.7 Resistant $5.3 $5.1 $5.0 Industry $4.8 $4.5 $4.0 $4.0 $3.8 $3.5 ($ in billions) $3.3 $2.9 $3.0 $3.0 $2.6 $2.3 $2.1 $2.0 $1.8 $1.6 $1.0 $- 2018E 2019E 2020E 1990 1991 1992 1993 1994 1995 1996 19
Slide 8: Historically Low Exposure to Digital Disruptions
Historically Low Exposure to Digital Disruptions Development Growth Shakeout Maturity 100% Online share % 0% Online penetration <10% 11-30% 31-50% >50% Not impacted Store growth towards zero Store growth turning negative Markets settle and growth rates Sales converge Online is a complement
Slide 9: Business Segment Review
Business Segment Review 9
Slide 10: Sally Beauty Highlights
Sally Beauty Highlights Sally Beauty global footprint (1) 3,761 stores worldwide 2,849 stores in U.S. (including Puerto Rico) 912 stores in Canada, Mexico, Chile, Peru, UK, Ireland, Belgium, Netherlands, France, Germany, and Spain Average store size 1,700 sq. ft., 90% selling space Profe
Slide 11: Sally Beauty Product Mix
Sally Beauty Product Mix ~50% of Sales are Other Beauty Hair Color Items Hair Care Multicultural 8% Products Hair Care 7% 21% Salon Supplies and 7% We offer a diversified Accessories mix of beauty products 14% Styling Tools 27% Hair Color 16% Skin and Nail Care *Fiscal year 2018 11
Slide 12: Sally International
Sally International Existing International Platform Store Count by Geography (1) 912 Sally stores located in 11 countries Stores located in Canada, Mexico, Chile, (UK / Ireland) 267 Peru, UK, Ireland, Belgium, France, the Netherlands, Germany, and Spain 237 (Mexico) ~26% of Sally sales from in
Slide 13: Sally Beauty Historical Sales
Sally Beauty Historical Sales Sally Beauty Net Sales (1) $2,800 $2,309 $2,330 $2,365 $2,345 $2,334 $2,400 $2,199 $2,230 $2,012 $2,000 $1,835 $1,673 $1,696 $1,567 $1,600 $1,359 $1,419 $1,200 $800 $400 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sally Beauty Same Store Sal
Slide 14: Beauty Systems Group Highlights
Beauty Systems Group Highlights Beauty Systems Group – 1,395(1) professional-only stores & professional distributor sales consultants 1,228 company-operated / 167 franchised stores (Armstrong McCall) 820 professional distributor sales consultants Average store size 2,600 sq. ft. Sells excl
Slide 15: Beauty Systems Group Highlights
Beauty Systems Group Highlights Other Beauty Items Promotional 7% Items Hair Care 8% Skin and 34% Nail Care We offer a diversified mix of 9% beauty products not carried in Sally stores or mass retail 4% Styling Tools 38% ~70% of Sales are Hair Color Hair Color *Fiscal year 2018 Hair Care 15
Slide 16: Beauty Systems Group Highlights
Beauty Systems Group Highlights BSG Net Sales (1) $1,800 $1,588 $1,593 $1,599 $1,600 $1,445 $1,505 $1,325 $1,392 $1,400 $1,257 $1,200 $1,081 $954 $945 $975 $941 $1,000 $895 $800 $600 $400 $200 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 BSG Same Store Sales Growth 12.0%
Slide 17: Consolidated Financials
Consolidated Financials 17
Slide 18: Consolidated Sales and Adj. EPS
Consolidated Sales and Adj. EPS Sales (1) EPS (adjusted) (2) $2.50 $4,500 $2.16 $3,953 $3,938 $3,933 $4,000 $3,754 $3,834 $3,622 $2.00 $3,524 $1.80 $3,500 $3,269 $1.72 $2,916 $1.53 $1.53 20% $3,000 $1.48 $1.50 $1.42 $2,637 YoY $2,500 $1.07 $2,000 $1.00 $0.77 $1,500 $0.52 $1,000 $0.50 $500 $0 $0.00 2
Slide 19: Q4 FY18 and Fiscal YTD Results
Q4 FY18 and Fiscal YTD Results Q4 FY18 Financial Results Fiscal YTD Financial Results • Reported EPS of $0.46, growth of 70.4% • Reported EPS of $2.08, growth of 33.3% Includes benefits of U.S. Tax Reform Includes benefits of U.S. Tax Reform • Adjusted EPS of $0.51, growth of 13.3% • Adjusted EP
Slide 20: Steady Cash Flow Generation
Steady Cash Flow Generation SBH Free Cash Flow ($m) (1) Cash conversion (%) (2) 39% 37% 39% 32% 32% 41% 49% $286.5 $253.7 $239.2 $228.5 $225.6 $202.3 $194.3 2012A 2013A 2014A 2015A 2016A 2017A 2018A (1) Free Cash Flow defined as cash flow from operations minus capital expenditures; See Addendum for
Slide 21: Capital Allocation
Capital Allocation Over past five years, $1.2 billion of capital allocated to stock repurchases In August 2017, launched a new share repurchase program to repurchase up to $1.0 billion, at the discretion of the Board of Directors, of common stock through the end of fiscal year 2021 Going forward, ca
Slide 22: Consolidated Debt
Consolidated Debt Long-term capital structure AMOUNT % OF ($MM) TOTAL DEBT No near-term maturities TERM LOAN B (FY2024) $844.5 47.1% 5.500% SENIOR NOTES (FY2024) $200.0 11.1% July 2017, successfully refinanced 5.625% SENIOR NOTES (FY2026) $750.0 41.8% $850m high yield debt with lower-rate TOTAL
Slide 23: Long-Term Strategy
SAL proiove saly Goo EES fil Long-Term Strategy RE:CQLOR FREE UP RESOURCES INVEST IN THE CUSTOMER EXPERIENCE + Indirect procurement poe Better training and pay for our store teams Private label sourcing + Reducing overhead costs and (RY Faster, seamless checkout Inspiring eCommerce and in-store expe
Slide 24: Short-Term Tactical Plan
SALLY pro}puo sally Gineico BEAUTY Play to win with our customers Improving our retail fundamentals Advancing our digital commerce capabilities Continuing to drive costs out of the business Re-focusing marketing and merchandising efforts in our differentiated core of the business — hair color and ha
Slide 25: SBH Highlights
SBH Highlights Attractive beauty retail sector underpinned by growing and 1 resilient beauty category Greater resilience to online disruption vis-a-vis most other 2 retail verticals Track record of strong profitable growth coupled with 3 attractive business model and economics Strong cash flow gener
Slide 26: Appendix
SALLY proypuo sally (sincico Tisan APPENDIX 26
Slide 27: EBITDA and EPS Reconciliation
EBITDA and EPS Reconciliation Adjusted EBITDA FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Net Earnings (GAAP) $ 44.5 $ 77.7 $ 99.1 $ 143.8 $ 213.7 $ 233.1 $ 261.2 $ 246.0 $ 235.1 $ 222.9 $ 215.1 $ 258.0 Interest expense, net of interest income 146.0 159.1 132.0 113.0 112.5 138.4 107.
Slide 28: Free Cash Flow
Free Cash Flow 2013 2014 2015 2016 2017 2018 Cash Flow from Operations $ 310.5 $ 316.0 $ 300.8 $ 351.0 $ 343.3 $ 372.7 Less: Capital Expenditures $ 84.9 $ 76.8 $ 106.5 $ 148.7 $ 89.6 $ 86.1 Free Cash Flow $ 225.6 $ 239.2 $ 194.3 $ 202.3 $ 253.7 $ 286.5 28
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