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 — J.P. Morgan Smid Cap Conference 2012
27 slides from Sally Beauty Holdings, Inc. (name To Be Changed From Sally Holdings, Inc.)'s conference presentation, Nov 28, 2012
Slide 1: J.P. Morgan Smid Cap Conference
J.P. Morgan Smid Cap Conference November 28, 2012 Gary Winterhalter, Chairman, President and CEO
Slide 2: Company Highlights
Company Highlights Sally Beauty Holdings is a leading international specialty retailer and distributor of professional beauty products Sally Beauty Supply in business for 50 years Annual revenue of over $3.5 billion Strong cash flow generation 4,499 stores located in 11 countries (1) Experie
Slide 3: Overview of Our Concepts
Overview of Our Concepts Consolidated Results Fiscal Year 2011 YoY Fiscal Year 2012 YoY Sales $3,269mm 12.1% Sales $3,524mm 7.8% Gross Profit Margin 48.8% 60 bps Gross Profit Margin 49.5% 70 bps GAAP EPS $1.14 46.2% GAAP EPS $1.24 8.8% Adjusted EPS $1.07 39.0% Adjusted EPS $1.42 (1) 32.7% Adjusted E
Slide 4: Our Customer
Our Customer Open-Line Retail Exclusive / Full-Service Distribution: 3,309 stores 1,190 stores 1,044 consultants Customers: Professional stylists Salons $ Value Retail Consumers $$$ High-end SBH plays an important role in the supply chain Note: Store count as of September 30, 2012. 4
Slide 5: Industry Channels of Distribution (U.S.)
Industry Channels of Distribution (U.S.) Mega-Salon Manufacturer direct to large-format salons Exclusive / Direct 13% (2) Full-Service $0.5B Manufacturer direct to Third party distribution manufacturer-owned to salons and beauty salons or “high-end” 11% (2) Professional professionals via sales salon
Slide 6: Stable & Consistent Industry Growth
Stable & Consistent Industry Growth $4.0 Recession Resistant Industry 2010-2011 growth of 6.0% ($ in billions) At manufacturer dollars U.S. Beauty Supply Industry has experienced steady growth with a CAGR of ~5%(1) Source: Professional Consultants & Resources, 2011 Study. (1) Based on manufacturer s
Slide 7: Our Leading U.S. Industry Position
Our Leading U.S. Industry Position U.S. professional beauty supply marketplace, in distribution dollars, was roughly $8.4 billion in 2011 (1) Sally Beauty Holdings estimated channel share 32% • Estimated 19% channel share (2) • Estimated 13% channel share (2) • Largest open-line retailer/distributor
Slide 8: Business Overview
SALLYBEAUTY HOLDINGS, INC. Business Overview
Slide 9: Sally Beauty Supply: Overview
Sally Beauty Supply: Overview Sally Beauty Supply global footprint 3,309(1) stores worldwide 2,638 stores in U.S. (including Puerto Rico) 671 stores in Canada, the UK, Ireland, Belgium, Netherlands, France, Germany, Spain, Chile & Mexico Average store size 1,700 sq. ft., 90% selling space
Slide 10: Sally Beauty Supply: Strong, Consistent Financial Track Record
Sally Beauty Supply: Strong, Consistent Financial Track Record Net Sales ($ in millions) Growth of 9.2% $2,400 $2,199 $2,012 $2,000 $1,835 $1,673 $1,696 $1,567 $1,600 $1,359 $1,419 $1,208 $1,296 $1,047 $1,132 $1,200 $800 $400 $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Same Store
Slide 11: Sally Beauty's Customer Profile
Sally Beauty’s Customer Profile Serves retail and professional customers ~90% of customers are women Professional customers work in small salon or “booth” renter Retail customer household income primarily $50k to $80k 34 to 65 years old is the primary customer age range 11
Slide 12: Sally Beauty Supply: Merchandise Offering
Sally Beauty Supply: Merchandise Offering Other Beauty Items Ethnic Products 8% Hair Care 22% 8% Brushes, Cutlery and Accessories 14% We offer a diversified mix of beauty products 22% Hair Color 10% Electrical Appliances 16% Skin and Nail Care Note: Percentage of sales by merchandise category for fi
Slide 13: Sally Beauty Supply Growth Initiatives
Sally Beauty Supply Growth Initiatives Growth Initiatives Worldwide Sally Beauty Supply Stores 4,000 3,158 3,309 3,032 Expand store base organically and 3,000 2,511 2,694 2,844 2,923 through acquisitions 2,000 Plan to grow store base 4 to 5 1,000 percent in FY2013 0 2006 2007 2008 2009 2010 2011
Slide 14: Grow Sally Beauty Supply Internationally
Grow Sally Beauty Supply Internationally Existing International Platform Long-Term Store Growth Potential (1) 671 Sally Beauty stores located in 10 Current Potential countries 81 ~250 (Canada) Stores located in Canada, the UK, Ireland, Belgium, France, Netherlands, Germany, 149 ~250 (Mexico) Spa
Slide 15: Beauty Systems Group: Overview
Beauty Systems Group: Overview Beauty Systems Group – 1,190 professional stores & 1,044 professional distributor sales consultants 1,031 company-operated / 159 franchised stores (Armstrong McCall) 1,044 professional distributor sales consultants Average store size 2,700 sq. ft. Sells to sa
Slide 16: BSG: Strong, Consistent Financial Track Record
BSG: Strong, Consistent Financial Track Record Net Sales ($ in millions) Growth of 5.4% $1,325 $1,400 $1,257 $1,200 $1,081 $954 $945 $975 $941 $1,000 $895 $802 $800 $616 $535 $600 $405 $400 $200 $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Same Store Sales Growth 20.0% 15.5% 16.0%
Slide 17: BSG: Merchandise Offering
BSG: Merchandise Offering Other Beauty Electrical Items Appliances 7% 5% Skin and Nail Care 10% We offer a diversified mix 36% Hair Care of beauty products not carried in Sally stores or Promotional 12% mass retail Items 30% Hair Color Note: Percentage of sales by merchandise category for fiscal yea
Slide 18: Beauty Supply Group Growth Initiatives
Beauty Supply Group Growth Initiatives Growth Initiatives BSG Stores 1,151 1,190 Expand store base organically 1,200 929 991 1,027 828 874 Further penetrate existing geographies 800 Enter new territories 400 Opened 39 net new stores in FY2012 0 Openings 2006 2007 2008 2009 2010 2011 2012 I
Slide 19: Consolidated Financial Results
Consolidated Financial Results
Slide 20: Strong Performance in Fiscal Year 2012
Strong Performance in Fiscal Year 2012 Consolidated Fiscal Year 2012 Results Same Store Sales 6.4% +30 bps Consolidated Sales $3,524m +7.8% Gross Profit Margin 49.5% +70 bps Adjusted EPS (1) $1.42 32.7% (1) Adjusted EBITDA (1) $591m 17.6% (1) Adjusted EPS and Adjusted EBITDA is a non-GAAP financial
Slide 21: Sales and EPS Growth for total Company
Sales and EPS Growth for total Company Sales EPS (ADJUSTED) ($ in millions) $3,524 $1.42 $3,500 $1.20 $3,269 $1.07 $3,000 $2,916 $1.00 $2,648 $2,637 $2,514 7.8% 32.7% $2,500 YoY YoY $0.80 $0.77 $2,000 $0.60 $0.52 $1,500 $0.44 $0.40 $0.32 $1,000 $0.20 $500 $0 $0.00 (1) FY07 FY08 FY09 FY10 FY11 FY12 2
Slide 22: Numerous Opportunities for Growth
Numerous Opportunities for Growth Increase Sales Productivity of our Stores Expand our Store Base Organically Grow Internationally Increase Operating Efficiency and Profitability Pursue Strategic Acquisitions 22
Slide 23: Increase Sales Productivity of Our Stores
Increase Sales Productivity of Our Stores Sally Beauty Supply Beauty Systems Group Customer Mix Customer Mix Increasing percentage of retail Increasing percentage of stylists customers shopping in the stores “Control” brands Higher margin sale Higher margin products Diversification a
Slide 24: Capital Deployment
Capital Deployment Excess cash expected to be returned to shareholders in the form of a dividend and/or stock repurchase program In fiscal 2012, stock repurchase authorizations total $500 million: • In May 2012, the Company repurchased approximately $200 million, or 7,551,444 shares • In August 2012
Slide 25: Solid Balance Sheet
Solid Balance Sheet No near-term maturities Long-term debt (as of 9/30/12) Amount % of In November 2011, refinanced Sr. and Sr. Sub ($mm) Total Debt Notes for $750mm of 6.875% Senior Notes due 2019 5.750% Senior Notes (FY2022) $859.3 53.3% 6.875% Senior Notes (FY2020) $750.0 46.5% In May 2012,
Slide 26: Investment Highlights
Investment Highlights Leader in Stable, Growing Professional Beauty Supply Channel Multi-channel Platform with Differentiated Value Proposition Solid Growth Potential Strong, Consistent Financial Track Record Significant Cash Flow Generation Experienced and Motivated Management Team 26
Slide 27: Addendum: Adjusted EBITDA Reconciliation
Addendum: Adjusted EBITDA Reconciliation Quarterly Adjusted EBITDA Reconciliation Adjusted EBITDA ($ in millions) FY06 FY07 FY08 FY09 FY10 FY11 FY12 Net Earnings (GAAP) $ 110.2 $ 44.5 $ 77.7 $ 99.1 $ 143.8 $ 213.7 $ 233.1 Interest expense, net of interest income 0.1 146.0 159.1 132.0 113.0 112.5 $ 1
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