MINNEAPOLIS - Regis Corporation (NASDAQ:RGS), a prominent player in the haircare industry, has successfully refinanced its debt, securing a new $105 million senior secured credit facility with TCW Asset Management Company LLC and Midcap Financial Trust. This move has allowed the company to reduce its outstanding debt by over $80 million and is expected to save approximately $7 million in annual cash interest.
The fresh capital structure includes a term loan that will mature on June 24, 2029, and a $25 million revolving credit facility, which will become fully available to the company after the transition of its outstanding letters of credit. Regis Corporation's President and CEO, Matthew Doctor, highlighted that this strategic refinancing marks a significant step in the company's journey towards sustainable growth and increased shareholder value.
The doctor emphasized the importance of the company's comprehensive strategic review, which led to the refinancing agreement. The move is expected to bolster the company's balance sheet and enhance financial flexibility, paving the way for business transformation efforts, including improvements in customer experience, technology adoption, and support for stylists and franchisees.
The investment from TCW and Midcap demonstrates their confidence in Regis's long-term business prospects. The company plans to provide further updates on its progress during its fiscal fourth quarter 2024 earnings call.
Regis Corporation operates several well-known hair salon brands, including Supercuts®, SmartStyle®, Cost Cutters®, Roosters®, and First Choice Haircutters®, with a total of 4,557 franchised or owned locations as of March 31, 2024.
Jefferies LLC acted as the financial advisor, while Weil, Gotshal & Manges LLP served as legal counsel to Regis for this transaction.
This article is based on a press release statement from Regis Corporation.
In other recent news, Regis Corporation reported a minor uptick in same-store sales by 0.5% this quarter, with a year-to-date increase of 1.4%. The company's adjusted EBITDA for the quarter reached $5 million, showing an improvement from the previous year.
Despite a decrease in the number of franchisee stores, Regis Corporation is introducing new initiatives, such as the Zenoti point-of-sale system and the Regis Education Playground for stylist training, to enhance customer experience and manage expenses effectively.
The company has seen a decline in revenue due to lower franchise rental and advertising income. However, it managed to improve operating income. Regis Corporation expects to achieve significant savings in G&A expenses, projecting $5 million in savings for fiscal 2024 compared to fiscal 2023. The company maintains a strong liquidity position, with $36.7 million available as of March 31, 2024.
These recent developments indicate Regis Corporation's focus on executing its strategic plan to improve the balance sheet and position the business for growth. The company is also committed to cash management and returning to cash generation.
InvestingPro Insights
Regis Corporation's recent refinancing initiative is a pivotal moment for the company as it aims to strengthen its financial position and support its strategic growth plans. To provide a deeper understanding of the company's current financial health and market performance, here are some key insights based on real-time data and InvestingPro Tips:
InvestingPro data shows that Regis Corporation has a market capitalization of $11.56 million USD and a gross profit margin of 37.21% for the last twelve months as of Q3 2024. Despite the positive gross profit margin, the company's revenue has declined by 14.1% over the same period, reflecting some of the challenges it faces in the highly competitive haircare market.
Moreover, the stock has experienced significant volatility, with a price total return of -75.62% over the last year, signaling potential concerns for investors. However, it's worth noting that there has been a significant return over the last week, with an 8.57% price total return, indicating some recent investor optimism.
InvestingPro Tips suggest that Regis Corporation operates with a significant debt burden and is quickly burning through cash. These insights are particularly relevant as the company navigates its debt restructuring and strives for operational efficiency. Analysts also anticipate a sales decline in the current year and do not expect the company to be profitable within this timeframe.
For investors and analysts seeking a comprehensive view of Regis Corporation's financial outlook, there are additional InvestingPro Tips available at https://www.investing.com/pro/RGS. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a total of 15 additional InvestingPro Tips that can provide further guidance on investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.