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 — Q1 2018 Earnings Presentation
26 slides from Sally Beauty Holdings, Inc. (Name to Be Changed From Sally Holdings, Inc.)'s earnings presentation, March 2018
Slide 1: Strength in Beauty
Sally Beauty Holdings, Inc. STRENGTH [ IN BEAUTY ] As of December 2017 As of December 2017 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 2017 Results
Consolidated Fiscal 2017 Results Net Sales Gross Margin Segments Sales 59.5% 40.5% 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 3,787 stores 1,390 stores 875 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 FY2017 SSS growth -1.6% Financials EBIT $385m EBIT margin 16.4% 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 FY2017 SSS growth 1.3% Financials EBIT $255m EBIT margin 16.0%
Slide 7: Resilient Industry
Resilient Industry U.S. Salon Industry Product Sales Growth (at wholesale $’s) of 3.4% $6.0 Recession Resistant $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 $- 2017E 2018E 2019E 1990 1991 1992 1993 1994 1995 1996 1997 1998 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) 3,787 stores worldwide 2,883 stores in U.S. (including Puerto Rico) 904 stores in Canada, UK, Ireland, Belgium, Netherlands, France, Germany, Spain, Chile, Peru & Mexico Average store size 1,700 sq. ft., 90% selling space Professi
Slide 11: Sally Beauty Product Mix
Sally Beauty Product Mix ~50% of Sales are Other Beauty Hair care Items Hair color Multicultural 9% Hair Care Products 8% 21% Brushes, Cutlery and 8% We offer a diversified Accessories mix of beauty products 13% 26% Electrical Appliances 15% Hair Color Skin and Nail Care *Fiscal year 2017 11
Slide 12: Sally International
Sally International Existing International Platform Store Count by Geography (1) 904 Sally stores located in 11 countries Stores located in Canada, UK, Ireland, (UK / Ireland) 266 Belgium, France, the Netherlands, Germany, Spain, Chile, Peru & Mexico 230 (Mexico) ~27% of Sally sales from inter
Slide 13: Sally Beauty Historical Sales
Sally Beauty Historical Sales Sally Beauty Net Sales (1),(2) $2,800 $2,309 $2,330 $2,365 $2,345 $2,400 $2,199 $2,230 $2,012 $2,000 $1,835 $1,673 $1,696 $1,567 $1,600 $1,359 $1,419 $1,296 $1,200 $800 $400 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sally Beauty Same Store
Slide 14: Beauty Systems Group Highlights
Beauty Systems Group Highlights Beauty Systems Group – 1,390(1) professional-only stores & professional distributor sales consultants 1,223 company-operated / 167 franchised stores (Armstrong McCall) 875 professional distributor sales consultants Average store size 2,700 sq. ft. Sells excl
Slide 15: Beauty Systems Group Highlights
Beauty Systems Group Highlights Other Beauty Items Hair Care Promotional Items 8% 8% Skin and Nail Care We offer a diversified mix of 8% 33% beauty products not carried in Sally stores or mass retail 6% Electrical Appliances 37% ~70% of Sales are Hair Color Hair care *Fiscal year 2017 Hair color 15
Slide 16: Beauty Systems Group Highlights
Beauty Systems Group Highlights BSG Net Sales (1),(2) $1,800 $1,588 $1,593 $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 $802 $800 $600 $400 $200 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 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) $2.00 $4,500 $1.80 $1.80 $1.72 $3,953 $3,938 $4,000 $3,754 $3,834 $3,622 $1.60 $1.53 $1.53 $3,524 $1.48 $3,500 $1.42 5% $3,269 $1.40 YoY $2,916 $3,000 $2,648 $2,637 $1.20 $1.07 $2,500 $1.00 $2,000 $0.77 $0.80 $1,500 $0.60 $0.52 $0.44 $1,00
Slide 19: Q1 Financial Results
Q1 Financial Results Q1 Financial Results • Reported EPS of $0.65, growth of 66.7% Includes $0.24 related to net benefits of U.S. Tax Reform(1) • Adjusted EPS of $0.68, growth of 74.4% Includes $0.24 related to net benefits of U.S. Tax Reform(1) • Net sales of $995m, (0.5%) vs. prior year Same
Slide 20: Consolidated Debt
Consolidated Debt Long-term capital structure AMOUNT % OF ($MM) TOTAL DEBT No near-term maturities TERM LOAN B (FY2024) $848.6 47.2% 5.500% SENIOR NOTES (FY2024) $200.0 11.1% July 2017, successfully refinanced 5.625% SENIOR NOTES (FY2026) $750.0 41.7% $850m high yield debt with lower-rate TOTAL
Slide 21: Steady Cash Flow Generation
Steady Cash Flow Generation SBH Free Cash Flow ($m) (1) Cash conversion (%) (2) 39% 37% 39% 32% 32% 41% $254.8 $239.2 $228.5 $225.6 $202.3 $194.3 2012A 2013A 2014A 2015A 2016A 2017A (1) Free Cash Flow defined as cash flow from operations minus capital expenditures; See Addendum for reconciliation of
Slide 22: Capital Deployment
Capital Deployment Over past five years, $1.6 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 Cash used per yea
Slide 23: 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 24: Appendix
SALLY Pro}ouO sally (ineico WET \ | APPENDIX 24
Slide 25: EBITDA and EPS Reconciliation
EBITDA and EPS Reconciliation Adjusted EBITDA FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 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 Interest expense, net of interest income 146.0 159.1 132.0 113.0 112.5 138.4 107.7 116.3 116.8
Slide 26: Free Cash Flow
Free Cash Flow 2012 2013 2014 2015 2016 2017 Cash Flow from Operations $ 297.6 $ 310.5 $ 316.0 $ 300.8 $ 351.0 $ 344.4 Less: Capital Expenditures $ 69.1 $ 84.9 $ 76.8 $ 106.5 $ 148.7 $ 89.6 Free Cash Flow $ 228.5 $ 225.6 $ 239.2 $ 194.3 $ 202.3 $ 254.8 26
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