Regis president: balance sheet offers flexibility to operate and grow

By Jennifer Lanning Drey

Savannah, Ga., June 28 - Regis Corp. has a strong balance sheet that provides the company the flexibility needed to both manage and grow the business, Randy Pearce, Regis' president, said during a Tuesday presentation at the Oppenheimer consumer conference in Boston.

Regis generates predictable cash flow because its customers tend to pay for hair services and products using cash. The cash collected from stores also allows Regis to operate on very little working capital, he said.

The company estimates it will post adjusted EBITDA of $225 million for fiscal 2011, which closes on June 30.

Its "dry powder" includes a $300 million revolving credit facility with no outstanding borrowings and $145 million of cash, Pearce said.

"We have a strong balance sheet and are properly capitalized to execute on our strategies in the current environment," Andy Larew, Regis' director of investor relations and finance, said later in the presentation.

The company will be discussing how it can start a program to return capital to shareholders at its next board meeting, Pearce said.

Larew also noted that acquisitions have been a large part of Regis' historical growth, but the company expects to have a smaller focus on acquisitions in fiscal 2012. Regis has budgeted $25 million for acquisitions in fiscal 2012.

A large portion of the company's acquisitions relate to franchise buybacks.

Larew also said Regis expects the sales environment to improve but remain challenging in fiscal 2012. Accordingly, the company is projecting same-store sales in a range of minus- one to plus-one, he said.

Fiscal 2012 EBITDA is expected to be in the range of $222 million to $242 million.

Regis has an estimated 2% of worldwide market share and 4% of the North American share, leaving plenty of opportunity to expand in the years ahead, Pearce said.

Minneapolis-based Regis is a hair care salon franchise company.

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