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 FY2020 Earnings Presentation
26 slides from Sally Beauty Holdings, Inc. (name To Be Changed From Sally Holdings, Inc.)'s earnings presentation, February 2020
Slide 1: Welcome to the New Sally. New Look. New Experience.
WELCOME TO THE NEW SALLY. NEW LOOK. NEW EXPERIENCE. Sally Beauty Holdings, Inc. As of December 31, 2019
Slide 2: Company Highlights
Company Highlights Differentiated industry position: 1 Equal Share with All Grocery; Just Below All Drug hair color and hair care Strong owned and exclusive brand 44% Owned/Exclusive Brand (SBS) 2 penetration 51% Owned/Exclusive Brand (BSG) (1) 3 North American and Global Reach 5,000+ Location
Slide 3: Consolidated Fiscal 2019 Results
Consolidated Fiscal 2019 Results Net Sales Gross Margin Segments % of Sales 59.2% 40.8% % of Segment Operating 60.5% 39.5% Earnings 3 (1) See Addendum for a reconciliation of this non-GAAP financial measure.
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 3,703 stores 1,369 stores 740 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 FY2019 SSS 0.4% Financials EBIT $366m EBIT margin 16.0% 5
Slide 6: Business Segment Highlights
Business Segment Highlights Segment Distribution Stores and e-commerce for licensed professionals Channel Direct sales consultants and e-commerce for salons Professional stylists (chair/suite renters) Customers Salons (via BSG’s direct sales consultants) Sales $1.6b FY2019 SSS 0.2% Financials EBIT $
Slide 7: Our Transformation Reflects the Industry
Our Transformation Reflects the Industry Changing Retail and Beauty Sector Sally Beauty Holdings’ Playbook Increased competition Playing to win with in the retail beauty our customers: Hair space Color & Care Increased investment Improving our in stores and retail technology fundamentals Transformat
Slide 8: Transformation Plan
Transformation Plan OVERALL Be the undisputed expert and leader in hair color and hair care for the STRATEGY consumer and the professional Focus marketing and merchandising efforts in our differentiated core – Hair Color and Hair Care • Build brands jointly with influencers Play to win with • Expand
Slide 9: Our Transformation Plan is Built Based on Priorities
Our Transformation Plan is Built Based on Priorities Bricks & Mortar to Omnichannel Retailer 18 19 20 21 22 Segregated, Slow Distribution Nodes to Flexible Replenishment 18 19 20 21 22 Core Retail Operations From Brute Force Manual Process to Technology-Enabled 18 19 20 21 22 Old School “Supply” Mar
Slide 10: Business Segment Review
Business Segment Review 10
Slide 11: Sally Beauty Highlights
Sally Beauty Highlights Sally Beauty global footprint (1) 3,703 stores worldwide 2,794 stores in U.S. (including Puerto Rico) 909 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 12: Sally Beauty Product Mix
Sally Beauty Product Mix Other Beauty Items ~50% of Multicultural Hair Care Sales are Products 8% Hair Color 7% 20% Hair Care We offer a diversified Salon Supplies and mix of beauty products Accessories 7% with a focus on hair color and care 14% Styling Tools 29% Hair Color 15% Skin and Nail Care *F
Slide 13: Sally International
Sally International Existing International Platform Store Count by Geography (1) 909 Sally stores located in 11 countries (UK / Ireland) 263 Stores located in Canada, Mexico, Chile, Peru, UK, Ireland, Belgium, France, the (Mexico) 249 Netherlands, Germany, and Spain ~25% of Sally sales from in
Slide 14: 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 $2,293 $2,400 $2,199 $2,230 $2,012 $2,000 $1,835 $1,696 $1,600 $1,200 $800 $400 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Sally Beauty Same Store Sales 8.0% 6.3% 6.5% 6.0% 4.1% 4.0% 2.1
Slide 15: Beauty Systems Group Highlights
Beauty Systems Group Highlights Beauty Systems Group – 1,369(1) professional-only stores & professional distributor sales consultants 1,225 company-operated / 144 franchised stores (Armstrong McCall) 740 professional distributor sales consultants Average store size 2,600 sq. ft. Sells excl
Slide 16: Beauty Systems Group Product Mix
Beauty Systems Group Product Mix Other Beauty Items Promotional Items 6% Hair Care 8% Skin and We offer a diversified mix of Nail Care 35% 8% beauty products not carried in Sally stores or mass retail 3% Styling Tools ~75% of 40% Sales are Hair Color Hair Care Hair Color *Fiscal year 2019 16
Slide 17: Beauty Systems Group Historical Sales
Beauty Systems Group Historical Sales BSG Net Sales (1) $1,800 $1,588 $1,593 $1,599 $1,583 $1,600 $1,445 $1,505 $1,325 $1,392 $1,400 $1,257 $1,200 $1,081 $941 $1,000 $800 $600 $400 $200 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 BSG Same Store Sales Growth 8.0% 6.2% 6.1% 5.5% 5.7% 5.5
Slide 18: Consolidated Financials
“\ Ih it Consolidated Financials 18
Slide 19: Consolidated Sales and Adj. EPS
Consolidated Sales and Adj. EPS Consolidated Sales (1) EPS (adjusted) (2) $2.50 $4,500 $2.26 $2.16 $3,953 $3,938 $3,933 $3,876 $4,000 $3,834 $3,754 $3,622 $2.00 $3,524 $3,500 $1.80 $3,269 $1.72 $3,000 $2,916 $1.53 $1.53 $1.48 $2,637 $1.50 $1.42 $2,500 $1.07 $2,000 $1.00 $0.77 $1,500 $0.52 $1,000 $0.
Slide 20: Q1 FY20 Financial Results
Q1 FY20 Financial Results Q1 FY20 Financial Results • Net sales of $980m, decrease of 0.9% vs. prior year Consolidated same store sales (0.3%) Beauty Systems Group same store sales +1.2% Third consecutive quarter of positive same store sales Segment revenue reached all-time quarterly high
Slide 21: Steady Cash Flow Generation
Steady Cash Flow Generation SBH Free Cash Flow ($m) (1) Cash conversion (%) (2) 37% 39% 32% 32% 41% 49% 40% $286.5 $253.7 $239.2 $225.6 $228.0 $194.3 $202.3 2013A 2014A 2015A 2016A 2017A 2018A 2019A (1) Free Cash Flow defined as cash flow from operations minus capital expenditures; See Addendum for
Slide 22: Capital Structure
Capital Structure Long-Term Capital Structure AMOUNT % OF ($MM) TOTAL DEBT TERM LOAN B (FY2024) $707.8 44.4% No near-term maturities 5.500% SENIOR NOTES (FY2024) $197.4 12.4% 5.625% SENIOR NOTES (FY2026) $687.9 43.2% Targeted consolidated leverage ratio TOTAL DEBT $1,593.1 100.0% (Net Debt/EBITD
Slide 23: Capital Structure
Capital Structure Over past six years, $1.3 billion of capital allocated to share 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 year
Slide 24: Appendix
SALLY pnotove Gncko Sally Sf APPENDIX 24
Slide 25: EBITDA and EPS Reconciliation
EBITDA and EPS Reconciliation Adjusted EBITDA FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Net Earnings (GAAP) $ 99.1 $ 143.8 $ 213.7 $ 233.1 $ 261.2 $ 246.0 $ 235.1 $ 222.9 $ 215.1 $ 258.0 $ 271.6 Interest expense, net of interest income 132.0 113.0 112.5 138.4 107.7 116.3 116.8 144.2 132
Slide 26: Free Cash Flow
Free Cash Flow Cash Flow Reconciliation 2013 2014 2015 2016 2017 2018 2019 Cash Flow from Operations $ 310.5 $ 316.0 $ 300.8 $ 351.0 $ 343.3 $ 372.7 $ 320.4 Less: Capital Expenditures $ 84.9 $ 76.8 $ 106.5 $ 148.7 $ 89.6 $ 86.1 $ 92.4 Free Cash Flow $ 225.6 $ 239.2 $ 194.3 $ 202.3 $ 253.7 $ 286.5 $
Sally Beauty Holdings — Q1 FY2020 Earnings Presentation on 6ix