Regis Reports Third Quarter 2021 Improved Traffic Trends and Continued Progress in Key Initiatives

The Company Refranchised 126 Company-Owned Salons To Franchisees During Third Quarter And An Additional 109 Salons In Fourth Quarter To Date. As Of March 31, 2021, Approximately 87% Of The Company's Salon Portfolio Was Franchised

Over 1,700 Salons, Representing 35% Of U.S. Franchise Salons, Are Now Running Or Have Signed Contracts To Install Opensalon^® Pro

The Company Adopted A New Merchandising Strategy To Outsource Product Sales, As Part Of The Transition To An Asset-Light, Fully-Franchised Model

Regis Corporation (NYSE: RGS):

Regis Corporation (NYSE: RGS), a leader in the haircare industry, whose primary business is franchising, owning and operating technology-enabled hair salons, today reported a third quarter 2021 net loss from continuing operations of $10.8 million, or $0.30 loss per diluted share as compared to a net loss from continuing operations of $67.8 million, or $1.89 loss per diluted share in the third quarter of 2020. The Company’s third quarter 2021 reported results included $14.5 million of discrete items. Excluding discrete items, the Company reported third quarter 2021 adjusted net loss of $25.3 million, or $0.70 loss per diluted share as compared to adjusted net loss of $4.0 million, or $0.11 earnings per diluted share, for the same period last year. The year-over-year decrease in adjusted net income was driven primarily by the decrease in the gain from the sale of salons to franchisees of $14.2 million due to lower proceeds per salon in the current year. The elimination of adjusted net income that had been generated in the prior year period from the 519 company-owned salons that were sold and converted to the Company’s asset-light franchise portfolio over the past twelve months also contributed to the decline, but this was partially offset by significant reductions in general and administrative expense and marketing. Additionally, the Company estimates it lost approximately $23.7 million in revenue this quarter compared to $20.7 million in the prior year due to government-mandated salon closures and lower traffic due to the COVID-19 pandemic.

Total revenue in the quarter of $100.3 million decreased $53.5 million, or 34.8%, year-over-year driven primarily by the conversion of a net 519 company-owned salons to the Company's asset-light franchise portfolio over the past 12 months and due to the impact of the COVID-19 pandemic.

Third quarter adjusted EBITDA loss of $19.8 million decreased $26.4 million, versus adjusted EBITDA of $6.6 million in the same period last year. Excluding the $4.6 million adjusted loss and $9.6 million adjusted gain from the sale of company-owned salons during the current and prior year quarter, respectively, adjusted EBITDA loss of $15.2 million was $12.2 million unfavorable versus the same period last year. This was driven primarily by the elimination of adjusted EBITDA that had been generated in the prior year period from the 519 company-owned salons that were sold and converted to the Company’s asset-light franchise portfolio over the past twelve months and lower system-wide same-store sales due to the COVID-19 pandemic, partially offset by significant reductions in general and administrative expense and marketing spend.

Felipe Athayde, President and Chief Executive Officer, commented, "We are proud of the progress we have made against our key initiatives that will put us in the best position to optimize our brands and support our franchisees. While there is still much work to be done, we are putting in the hard work, not cutting corners, and taking the necessary steps to lay the right foundation for the future of Regis."

Third Quarter Segment Results

Third quarter Franchise revenue was $67.9 million, a $12.1 million, or 21.7% increase compared to the prior year quarter, and includes franchise rental income of $31.3 million. Royalties and fees were $23.5 million, a $14.8 million, or 170.6% increase versus the same period last year. Franchise fees contributed to $1.5 million of the increase, while advertising funds increased $13.4 million, primarily related to the refunding of fees in the prior year as a result of the COVID-19 pandemic. The increase in franchise fees and cooperative advertising was offset by lower royalties due to lower same-store sales primarily related to the COVID-19 pandemic. Product sales to franchisees of $13.1 million decreased $2.2 million versus the same period last year also due to lower same-store retail sales primarily related to the COVID-19 pandemic. Franchise adjusted EBITDA of $12.0 million increased $0.5 million, or 4.2% year-over-year primarily due an increase in franchise fees and a decrease in bad debt, partially offset by the decline in franchise same-store sales of 19.3% primarily related to the COVID-19 pandemic. Total franchise locations open at March 31, 2021 were 5,317 compared to 5,126 at March 31, 2020.

Third quarter revenue for the Company-owned salon segment decreased $65.6 million, or 67.0%, versus the prior year to $32.3 million. The year-over-year decline in revenue was driven by the decrease of a net 519 salons sold and converted to the Company's franchise portfolio over the past 12 months, the closure of a net 470 unprofitable salons over the past 12 months and a decline in revenue due to the COVID-19 pandemic.

Third quarter adjusted EBITDA decreased $12.1 million, or 1,736.0%, versus the same period last year driven primarily by the elimination of EBITDA that had been generated in the prior year period from the 519 company-owned salons that were sold and converted to the Company's franchise portfolio over the past 12 months, the impacts of the COVID-19 pandemic, and the decline in service and product margins, partially offset by a decrease in general and administrative expense and marketing spend.

Other Key Events

• Continued migration of the Company's proprietary cloud-based salon management and point-of-sale technology solution, Opensalon^® Pro. Over 1,200 salons, or 25%, of our franchise salons, are now running on Opensalon^® Pro and an additional 500 have signed contracts to install Opensalon^® Pro in the fourth quarter.
• As part of the Company's transformation to focus on managing and nurturing brands, and in line with a capital-light business, a new merchandise strategy to outsource product distribution was adopted. The Company’s exit out of the product distribution business is expected to occur in late 2021 and is anticipated to positively impact franchisees by providing them with access to industry-leading pricing, loyalty programs, promotional benefits, educational assets, and ongoing support. The Company remains committed to its private label brands, including Designline^®, Blossom^® Pure Haircare and a new men’s line called Prototype™, and distributors will carry these lines to sell exclusively to Regis franchisees.
• The Company continues to make meaningful progress on its multi-year strategy to convert to a fully-franchised model. During the third quarter, it sold and transferred 126 company-owned salons and in April it sold and transferred 109 company-owned salons.
• The impact of the transactions closed in the quarter is as follows:

Non-GAAP reconciliations:

For GAAP to non-GAAP reconciliations, please refer to the attached section titled "Non-GAAP Reconciliations." A complete reconciliation of reported earnings to adjusted earnings is included in this press release and is available on the Company’s website at www.regiscorp.com.

Earnings Webcast

Regis Corporation will host a conference call via webcast discussing third quarter results on May 6, 2021, at 9 a.m., Central time. Interested parties are invited to participate in the live webcast by registering for the event at www.regiscorp.com. A replay of the presentation will be available on our website at www.regiscorp.com/investor-relations.

About Regis Corporation

Regis Corporation (NYSE:RGS) is a leader in beauty salons and cosmetology education. As of March 31, 2021, the Company franchised, owned or held ownership interests in 6,221 worldwide locations. Regis’ franchised and corporate locations operate under concepts such as Supercuts^®, SmartStyle^®, Cost Cutters^®, Roosters^® and First Choice Haircutters^®. Regis maintains an ownership interest in Empire Education Group in the U.S. For additional information about the Company, including a reconciliation of certain non-GAAP financial information and certain supplemental financial information, please visit the Investor Information section of the corporate website at www.regiscorp.com.

This press release contains or may contain “forward-looking statements” within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this document reflect management’s best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, “may,” “believe,” “project,” “forecast,” “expect,” “estimate,” “anticipate,” and “plan.” In addition, the following factors could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. These uncertainties include a potential material adverse impact on our business and results of operations as a result of the uncertain duration and severity of the COVID-19 pandemic, as well as the health and risk appetite of our stylists, customers and employees to return to the salon environment; the continued ability of the Company to implement its strategy, priorities and initiatives including the re-engineering of our corporate and field infrastructure; Opensalon® Pro may not yield the intended results on timing and amounts due to the COVID-19 pandemic, efforts by our current third-party back office management system vendor to make it difficult for our franchisees to convert to our new company-owned system and the pending litigation with that third-party vendor; the impact of the COVID-19 pandemic on our key suppliers; the ability to address rent obligations incurred during the government-mandated hibernation of our salons related to the COVID-19 pandemic and the ability to obtain long-term rent concessions; the ability to operate or sell the salons transferred back from TBG; the outcome of the review by the administrator in TBG's insolvency proceedings in the United Kingdom; compliance with credit facility covenants and access to the existing revolving credit facility; our and our franchisees' ability to attract, train and retain talented stylists; financial performance of our franchisees; success of the sale of salons to franchisees; if our capital investments in technology do not achieve appropriate returns; our ability to manage cyber threats and protect the security of potentially sensitive information about our guests, employees, vendors or Company information; the ability of the Company to maintain a satisfactory relationship with Walmart; the impact of recent actions by Walmart; marketing efforts to drive traffic to our franchisees' salons; changes in regulatory and statutory laws including increases in minimum wages; our ability to maintain and enhance the value of our brands; premature termination of agreements with our franchisees; reliance on information technology systems; reliance on external vendors; consumer shopping trends and changes in manufacturer distribution channels; competition within the personal hair care industry; continued ability to compete in our business markets; the continued ability to maintain an effective system of internal controls over financial reporting; changes in tax exposure; failure to standardize operating processes across brands; financial performance of Empire Education Group; the continued ability of the Company to implement cost reduction initiatives; changes in economic conditions; changes in consumer tastes and fashion trends; failure at our distribution centers; exposure to uninsured or unidentified risks; reliance on our management team and other key personnel; new merchandising strategy or other factors not listed above. Additional information concerning potential factors that could affect future financial results is set forth under Item 1A on Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.

Non-GAAP Reconciliations:

We believe our presentation of non-GAAP operating loss, net (loss) income, net (loss) income per diluted share, and other non-GAAP financial measures provides meaningful insight into our ongoing operating performance and an alternative perspective of our results of operations. Presentation of the non-GAAP measures allows investors to review our core ongoing operating performance from the same perspective as management and the Board of Directors. These non-GAAP financial measures provide investors an enhanced understanding of our operations, facilitate investors’ analyses and comparisons of our current and past results of operations and provide insight into the prospects of our future performance. We also believe the non-GAAP measures are useful to investors because they provide supplemental information that research analysts frequently use to analyze financial performance.

The method we use to produce non-GAAP results is not in accordance with U.S. GAAP and may differ from methods used by other companies. These non-GAAP results should not be regarded as a substitute for corresponding U.S. GAAP measures, but instead should be utilized as a supplemental measure of operating performance in evaluating our business. Non-GAAP measures do have limitations as they do not reflect certain items that may have a material impact upon our reported financial results. As such, these non-GAAP measures should be viewed in conjunction with our financial statements prepared in accordance with U.S. GAAP.

Non-GAAP reconciling items for the three and nine months ended March 31, 2021 and 2020:

The following information is provided to give qualitative and quantitative information related to items impacting comparability. Items impacting comparability are not defined terms within U.S. GAAP. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies. We determine the items to consider as “items impacting comparability” based on how management views our business, makes financial, operating and planning decisions and evaluates the Company’s ongoing performance. The following items have been excluded from our non-GAAP results:

• Employee litigation reserve
• Professional fees
• Severance expense
• CEO transition
• Corporate office transition
• Benefit from lease liability decrease in excess of previously impaired ROUA ("Lease Liability Benefit")
• Lease termination fees
• Real estate fees
• Asset retirement obligations
• Long-lived asset impairment
• TBG restructuring
• Goodwill impairment
• Gain on distribution centers
• Goodwill derecognition
• TBG discontinued operations