Regis (RGS) Q3 2025 Earnings Call May 13, 2025 08:30 AM ET Speaker0 Good morning, and thank you for joining the Regis third quarter twenty twenty five earnings conference call. I am your host, Kirsten Zupfer, Executive Vice President and Chief Financial Officer. I am joined today by our President and Chief Executive Officer, Matthew Doctor. All participants are in a listen only mode, and this conference is being recorded. I would like to remind everyone that the language on forward looking statements includ ...

Company Operations - As of March 31, 2025, Regis Corporation operated 4,087 locations, including 3,776 franchised salons and 311 company-owned salons[96]. - Regis Corporation had 1,860 employees as of March 31, 2025, with 1,666 acquired through the Alline Acquisition[96]. Financial Performance - System-wide revenue for the three months ended March 31, 2025, was $266.9 million, a decrease of 6.9% from $286.8 million in the same period of 2024[102]. - Total system-wide same-store sales decreased by 1.1% for the three months ended March 31, 2025, compared to an increase of 0.5% in the same period of 2024[102]. - Franchise revenue decreased by $9.9 million and $22.1 million during the three and nine months ended March 31, 2025, respectively, attributed to a decline in franchise salon count and negative same-store sales[128]. - Company-owned salon revenue increased by $17.7 million and $18.2 million during the three and nine months ended March 31, 2025, primarily driven by the Alline Acquisition[132]. - Company-owned salon adjusted EBITDA improved by $1.6 million and $2.8 million during the three and nine months ended March 31, 2025, respectively, mainly due to the Alline Acquisition[133]. Revenue Sources - Royalties decreased by $2.2 million, or 14.0%, during the three months ended March 31, 2025, primarily due to a decrease in franchise salon count and negative same-store sales[108]. - Franchise rental income decreased by $6.9 million, or 29.0%, during the three months ended March 31, 2025, primarily due to a decrease in franchise salon count[111]. - Advertising fund contributions decreased by $0.6 million, or 10.3%, during the three months ended March 31, 2025, primarily due to the decrease in franchise salon count[110]. Acquisitions and Impact - The Alline Acquisition resulted in the closure of 301 franchise salons, while 314 salons were acquired, impacting future royalty income[101]. - Company-owned salon revenue increased by $17.7 million, or 1,361.5%, during the three months ended March 31, 2025, primarily due to the Alline Acquisition[112]. Expenses and Costs - General and administrative expenses increased by $2.7 million, or 8.0%, for the nine months ended March 31, 2025, primarily due to severance costs and acquisition costs related to the Alline Acquisition[113][114]. - Rent expense rose by $3.0 million, or 69.8%, during the nine months ended March 31, 2025, mainly due to salon rent expenses from the Alline Acquisition[114]. Cash and Liquidity - Cash provided by operating activities was $7.0 million for the nine months ended March 31, 2025, compared to cash used of $7.1 million in the prior year, reflecting a lower cost structure and reduced working capital needs[143]. - As of March 31, 2025, cash and cash equivalents totaled $13.3 million, with $12.1 million in the United States and $1.2 million in Canada[138]. - The Company has a credit agreement with a minimum liquidity covenant of $10.0 million, with total available liquidity of $19.0 million as of March 31, 2025[139]. Debt and Interest - The debt to capitalization ratio was 64.8% as of March 31, 2025, down from 67.0% on June 30, 2024[147]. - Interest expense decreased by $3.7 million for the nine months ended March 31, 2025, primarily due to less debt outstanding compared to the prior year[120]. Stock Repurchase Program - The Board has authorized $650.0 million for the stock repurchase program since May 2000, with $54.6 million remaining outstanding as of March 31, 2025[148]. - Approximately 1.5 million shares have been repurchased for a total of $595.4 million by March 31, 2025[148]. - The company did not repurchase any shares during the nine months ended March 31, 2025, and does not anticipate future repurchases[148]. Risks and Market Conditions - The company faces numerous risks and uncertainties that could materially affect future results, including changes in consumer shopping trends and economic conditions[150]. - Market risks include changes in interest rates and foreign currency exchange rates, with no material changes reported since the last annual report[152].

Financial Performance - Consolidated revenue for Q3 2025 was $57.0 million, a 15.9% increase from $49.2 million in Q3 2024[10] - Operating income improved to $5.0 million, a 22.9% increase compared to $4.1 million in Q3 2024[14] - Adjusted EBITDA for Q3 2025 was $7.1 million, up 31.5% from $5.4 million in the same quarter last year[20] - Net income for Q3 2025 was $0.3 million, a significant improvement from a net loss of $2.3 million in Q3 2024[18] - Adjusted net income for Q3 2025 was $1.3 million, compared to an adjusted net loss of $1.4 million in the same period last year[6] - Total revenue for Q3 2025 was $56.96 million, compared to $49.18 million in Q3 2024, reflecting a year-over-year increase of approximately 15.5%[37] - The company reported a net income of $250,000 for Q3 2025, compared to a net loss of $2.33 million in Q3 2024[37] - Net income for the nine months ended March 31, 2025, was $7,042,000, a significant improvement from a net loss of $141,000 in the same period of 2024[40] Cash Flow and Liquidity - Cash from operations reached $6.2 million, an increase of $6.5 million from $(0.3) million in Q3 2024, marking the second consecutive quarter of positive cash flow[6] - The company ended Q3 2025 with $13.3 million in cash and cash equivalents, and $127.4 million in outstanding borrowings[29] - Net cash provided by operating activities for the nine months ended March 31, 2025, totaled $7.0 million, an improvement of $14.1 million from the prior year[29] - Cash provided by operating activities for the nine months ended March 31, 2025, was $6,986,000, compared to cash used of $7,130,000 in the same period of 2024[40] - The company reported a total cash balance of $32,508,000 at the end of the period, up from $14,816,000 at the end of the same period in 2024[40] - Net cash provided by operating activities for Q3 2025 was $6,198,000, a significant improvement from a cash outflow of $280,000 in Q3 2024[70] - The net cash provided by operating activities excluding Ad Fund for Q3 2025 was $3,829,000, compared to $411,000 in Q3 2024[70] Revenue Breakdown - Franchise revenue for Q3 2025 was $38.0 million, a decrease of 20.7% compared to the prior-year quarter[22] - The company-owned salon revenue for Q3 2025 was $19.0 million, a substantial increase from $1.3 million in Q3 2024[26] - Company-owned salon revenue for Q3 2025 was $19.0 million, an increase of $17.7 million year-over-year[27] - Year-to-date revenue for the company-owned salon segment reached $23.2 million, up $18.2 million compared to the previous year[27] - Adjusted franchise revenue for Q3 2025 was $15,935,000, with franchise adjusted EBITDA as a percent of adjusted franchise revenue at 39.4%, up from 33.5% in Q3 2024[66] Operational Metrics - Same-store sales for Supercuts increased by 4.5% in April 2025, following a 1.1% increase in Q3 2025 compared to the previous year[3] - Year-to-date consolidated revenue declined by 2.5% to $149.7 million, primarily due to lower non-margin franchise rental income[11] - System-wide same-store sales for the total portfolio decreased by 1.3% for the nine months ended March 31, 2025, compared to an increase of 1.4% in the same period of 2024[43] - Total North American salons decreased from 4,295 as of June 30, 2024, to 3,681 as of March 31, 2025, reflecting a decline of approximately 14.3%[45] - The total number of franchise salons decreased from 4,391 as of June 30, 2024, to 3,776 as of March 31, 2025, a decline of approximately 14%[45] - The company-owned salons increased from 17 as of June 30, 2024, to 311 as of March 31, 2025, indicating a significant expansion in company-owned locations[45] Adjusted Metrics - Adjusted EBITDA for company-owned salons improved by $1.6 million year-over-year to $843,000 in Q3 2025[28] - Year-to-date adjusted EBITDA for company-owned salons increased by $2.8 million year-over-year to $1.2 million[28] - Adjusted EBITDA for the nine months ended March 31, 2025, was $21,902,000, compared to $19,740,000 for the same period in 2024, representing an increase of 10.9%[54] - Adjusted operating income for the nine months ended March 31, 2025, was $19,621,000, an increase from $18,364,000 in the same period of 2024[68] - Franchise adjusted EBITDA for Q3 2025 was $6,282,000, representing 16.5% of GAAP franchise revenue, compared to 12.8% in Q3 2024[66] - Franchise adjusted EBITDA for the nine months ended March 31, 2025, was $20,683,000, down from $21,346,000 in the same period of 2024[66] Capital Expenditures and Liabilities - The company incurred capital expenditures of $769,000 for the nine months ended March 31, 2025, compared to $372,000 in the same period of 2024[40] - Total assets as of March 31, 2025, were $511.25 million, down from $530.50 million as of June 30, 2024[36] - The company’s total liabilities decreased to $442.60 million as of March 31, 2025, from $473.71 million as of June 30, 2024[36] Stock-Based Compensation - Stock-based compensation for the nine months ended March 31, 2025, was $2,043,000, compared to $1,201,000 in the same period of 2024[68] Other Financial Adjustments - The change in Ad Fund Cash for Q3 2025 was a negative $2,369,000, contrasting with a positive $691,000 in Q3 2024[70] - Franchise rental income adjustments for the nine months ended March 31, 2025, totaled $(58,524,000), down from $(72,534,000) in the same period of 2024[66]

Financial Data and Key Metrics Changes - The company reported total second quarter revenues of $46.7 million, a decline of $4.3 million or 8.5% compared to the prior year, primarily due to a reduction in no-margin franchise rental income and advertising fund revenue [51][52] - Adjusted EBITDA for the second quarter was up 12.7% year-over-year to $7.1 million versus $6.3 million a year ago [25][59] - Earnings per diluted share was $2.63, compared to $0.43 in the prior year quarter, including income from discontinued operations of $7.4 million [26][56] Business Line Data and Key Metrics Changes - The company-owned segment adjusted EBITDA was $725,000 for the quarter, an improvement of $1.1 million from the same quarter last year, primarily related to the addition of salons from the Alline acquisition [61] - The core franchise business adjusted EBITDA was $6.4 million in the quarter, a $218,000 decrease compared to $6.6 million in the prior year quarter, primarily due to lower franchise revenue and franchise bad debt [60] Market Data and Key Metrics Changes - Same-store sales declined 1.6% in the second quarter, with Supercuts showing a positive 0.5% growth while SmartStyle experienced a 6.4% decline [19][22] - The salons that closed during the second quarter and those projected to close had a roughly 130 basis points drag on overall comps for the second quarter [24] Company Strategy and Development Direction - The acquisition of the Alline Salon Group is seen as a strategic move to stabilize and grow the company, with a focus on integrating company-owned salons to complement the franchise business [3][10] - The company aims to enhance brand positioning and identity, particularly for the Supercuts brand, to attract a younger demographic and improve stylist recruitment and retention [29][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in the sales environment but expressed optimism about the potential for growth and profitability through strategic initiatives and operational improvements [25][46] - The company is focused on driving traffic to salons and increasing frequency of visits, recognizing the need for continued efforts to unlock growth [25][42] Other Important Information - The Alline acquisition was completed for an initial consideration of $22 million, which included $19 million in cash and approximately 140,000 shares of common stock valued at $3 million [13][14] - The acquired salons contributed $2.7 million in revenue and $0.5 million in EBITDA in the less than two weeks post-acquisition [49] Q&A Session Summary Question: What are the expectations for same-store sales moving forward? - Management indicated that while same-store sales have faced challenges, they are focused on driving traffic and improving performance through various initiatives [25] Question: How does the company plan to integrate the Alline salons? - The integration of Alline salons is progressing well, with a strong emphasis on systems, people, and culture integration as critical for long-term success [44] Question: What are the key initiatives to improve brand performance? - The company is working on refreshing and modernizing the Supercuts brand, alongside implementing brand excellence standards across all brands to enhance the guest experience [30][36]

Company Operations - As of December 31, 2024, Regis Corporation operated 4,248 locations, including 3,925 franchised salons and 323 company-owned salons[92]. - A net 152 franchise salons closed in the six months ended December 31, 2024, in addition to the 314 salons acquired as part of the Alline acquisition[97]. Financial Performance - System-wide revenue for the three months ended December 31, 2024, was $274.1 million, a decrease of 6.3% compared to $292.4 million in the same period of 2023[98]. - Total system-wide same-store sales decreased by 1.6% for the three months ended December 31, 2024, compared to an increase of 1.9% in the same period of 2023[98]. - Franchise revenue decreased by $6.0 million, or 12.2%, during the three months ended December 31, 2024, primarily due to a decrease in franchise salon count and negative same-store sales[124]. - Franchise same-store sales declined by 1.5% for the three months ended December 31, 2024, compared to an increase of 1.9% in the same period of 2023[122]. - Company-owned salon revenue increased by $1.7 million, or 95.6%, during the three months ended December 31, 2024, primarily due to the acquisition of Alline[107]. - Company-owned salon revenue increased by $1.7 million, or 94.4%, during the three months ended December 31, 2024, primarily driven by the Alline acquisition[129]. - Cash provided by operating activities was $0.8 million during the six months ended December 31, 2024, compared to a cash use of $6.9 million in the same period of 2023[140]. Revenue and Expenses - Royalties decreased by $1.0 million, or 6.3%, during the three months ended December 31, 2024, primarily due to a decrease in franchise salon count[103]. - Franchise rental income decreased by $4.1 million, or 17.0%, during the three months ended December 31, 2024, due to a decrease in franchise salon count[106]. - Advertising fund contributions decreased by $1.3 million, or 19.1%, during the three months ended December 31, 2024, primarily due to lower contribution rates[105]. - Fees increased by $0.4 million, or 16.1%, during the three months ended December 31, 2024, primarily due to terminated franchise fees related to Alline salons[104]. - General and administrative expenses decreased by $0.6 million, or 5.1%, for the three months ended December 31, 2024, primarily due to lower headcount[108]. - Rent expense increased by $0.8 million, or 57.4%, during the three months ended December 31, 2024, primarily due to the lapping of prior year franchisee rent benefits[109]. - Interest expense decreased by $1.3 million, or 21.3%, for the three months ended December 31, 2024, primarily due to less debt outstanding compared to the same period in 2023[116]. Assets and Liabilities - The franchise reporting unit had goodwill of $172.4 million as of December 31, 2024, compared to $173.1 million as of June 30, 2024[95]. - The Company recorded long-lived asset impairment charges of $0.4 million during the six months ended December 31, 2024, compared to $0.2 million in the same period of 2023[115]. - As of December 31, 2024, cash and cash equivalents were $10.2 million, with $9.4 million in the United States and $0.8 million in Canada[134]. - The debt to capitalization ratio was 65.5% as of December 31, 2024, down from 67.0% as of June 30, 2024[144]. Stock Repurchase Program - The Board has authorized a total of $650.0 million for the stock repurchase program since May 2000, with $595.4 million spent to repurchase approximately 1.5 million shares by December 31, 2024[145]. - As of December 31, 2024, there is $54.6 million remaining under the approved stock repurchase program, but the Company does not anticipate repurchasing shares in the foreseeable future[145]. Risks and Uncertainties - The Company faces numerous risks and uncertainties that could materially affect future results, including changes in consumer shopping trends and economic conditions[147]. - Market risks include exposure to changes in interest rates and foreign currency exchange rates, with no material changes reported since the last annual report[149].

Financial Performance - Consolidated revenue for Q2 fiscal 2025 was $46.7 million, a decrease of $4.3 million or 8.4% compared to Q2 fiscal 2024[4] - Same-store sales decreased by 1.6% in Q2 fiscal 2025 compared to the same period last year[4] - Net income for Q2 fiscal 2025 was $7.6 million, or $2.71 per diluted share, compared to $1.0 million, or $0.43 per diluted share in Q2 fiscal 2024[12] - Adjusted EBITDA for Q2 fiscal 2025 was $7.1 million, an increase of $0.8 million or 12.7% compared to $6.3 million in Q2 fiscal 2024[13] - Franchise revenue in Q2 fiscal 2025 was $43.3 million, a decrease of $6.0 million or 12.2% compared to the prior year quarter[15] - Company-owned salon revenue increased to $3.5 million in Q2 fiscal 2025, up $1.7 million from the prior year[19] - Adjusted net income for Q2 fiscal 2025 was $1.7 million, compared to an adjusted net loss of $0.4 million in the prior year[4] - Total revenue for the three months ended December 31, 2024, was $46.719 million, a decrease of 8.6% compared to $51.053 million for the same period in 2023[29] - Net income for the six months ended December 31, 2024, was $6.792 million, compared to $2.191 million for the same period in 2023, representing a significant increase[32] - The company reported operating income of $5.497 million for the three months ended December 31, 2024, up from $4.779 million in the same period of 2023[29] - Reported net income for the three months ended December 31, 2024, was $7,645, compared to $997 for the same period in 2023, representing a significant increase[49] - Adjusted EBITDA for the three months ended December 31, 2024, was $7,140, up from $6,295 in the same period of 2023, indicating a growth of 13.5%[49] - Adjusted earnings per share for the three months ended December 31, 2024, was $0.61, compared to a loss of $0.18 in the same period of 2023[56] Cash Flow and Debt - Cash provided by operating activities for the first half of fiscal 2025 totaled $0.8 million, an improvement of $7.6 million from the same period last year[21] - The company ended Q2 fiscal 2025 with $10.2 million in cash and cash equivalents and $126.4 million in outstanding borrowings[21] - Long-term debt increased to $111.532 million as of December 31, 2024, from $99.545 million as of June 30, 2024[28] - Cash and cash equivalents at the end of the period were $27.054 million, down from $29.313 million at the beginning of the period[32] - The company reported a net cash provided by financing activities of $7.673 million for the six months ended December 31, 2024[32] Operational Changes - The Alline acquisition, completed on December 19, 2024, is expected to enhance profitability and cash flow for Regis[1] - As of December 31, 2024, Regis Corporation operated 4,248 locations, including franchised and corporate salons[25] - Total North American salons decreased from 4,295 as of June 30, 2024, to 3,830 as of December 31, 2024, reflecting a decline of 10.8%[38] - The company-owned salons increased from 17 as of June 30, 2024, to 323 as of December 31, 2024, following the acquisition of 314 salons[38][39] - Total franchise and company-owned salons decreased from 4,408 as of June 30, 2024, to 4,248 as of December 31, 2024, a decline of 3.6%[38] Expenses and Income - General and administrative expenses for the three months ended December 31, 2024, were $11.155 million, slightly down from $11.772 million in the same period of 2023[29] - Reported general and administrative expenses for the three months ended December 31, 2024, were $11,155, down from $11,772 in the same period of 2023[52] - The company experienced a decrease in franchise rental income to $20.022 million for the three months ended December 31, 2024, compared to $24.087 million in the same period of 2023[29] Strategic Focus - The company plans to continue focusing on enhancing operational performance through non-GAAP measures to provide better insights into ongoing performance[42] - Franchise adjusted EBITDA as a percentage of GAAP franchise revenue increased to 14.8% for the three months ended December 31, 2024, compared to 13.5% in the same period of 2023[60] - System-wide same-store sales decreased by 1.6% for the three months ended December 31, 2024, compared to an increase of 1.9% in the same period of 2023[35]

Core Viewpoint - Regis Corporation announced the acquisition of Alline Salon on December 19, 2024, which is expected to enhance earnings significantly, providing approximately $14.8 per share of value to shareholders based on a 12x multiple of the projected earnings accretion of $4.3 million [1] Group 1 - The acquisition of Alline Salon is projected to yield an earnings accretion of about $4.3 million [1] - The transaction is valued at approximately $14.8 per share based on a 12x earnings multiple [1]

Earnings and Financial Performance - The company generated franchise revenue in line with projections, and Adjusted EBITDA was approximately $1 million higher than expected [1] Analyst's Position and Background - The analyst has over 20 years of experience in stressed and distressed investing across private and public markets, and was previously a partner at a multi-billion dollar hedge fund [1] - The analyst is close to a 5% holder of the company's shares and was previously an activist investor who filed a 13D [3] Disclosure and Relationship - The analyst has a beneficial long position in the company's shares through stock ownership, options, or other derivatives [2] - The analyst has no business relationship with any company whose stock is mentioned in the article [2]

Financial Data and Key Metrics Changes - Total first quarter revenues were $46.1 million, a decline of $7.3 million from the prior year, primarily due to a reduction in franchise rental income and advertising fund revenue [30] - Same-store sales in Q1 decreased by 1.1% compared to the prior year's quarter [5][31] - Adjusted EBITDA for the quarter was $7.6 million, down from $8.1 million a year ago, with adjusted EBITDA margins expanding by two percentage points to 40% [5][37] - Adjusted earnings per share for the quarter was $0.93, compared to $0.71 in the prior year, while reported GAAP earnings per share was a loss of $0.36, down from earnings of $0.51 in the prior year [6] Business Line Data and Key Metrics Changes - Core franchise business achieved adjusted EBITDA of $8 million, a decrease of $600,000 compared to the prior year [39] - Company-owned segment reported a loss of $300,000 for the quarter, an improvement of $200,000 from the same quarter last year [39] Market Data and Key Metrics Changes - The company closed a net 41 franchise locations and eight company-owned locations in the first quarter [31] - The average trailing 12-month sales volume of closed franchise locations was $140,000, compared to a top quartile salon average of $460,000, indicating significant performance gaps [31] Company Strategy and Development Direction - The company is focused on increasing operational rigor and optimizing its digital platform to drive traffic back to salons and improve franchisee sales and profitability [9][18] - A brand excellence standards initiative has been launched to enhance the guest experience across salons, with a focus on uniformity in service and salon upkeep [10][12] - The company is implementing a loyalty program and has completed the rollout of the Zenoti point-of-sale system to enhance digital engagement with guests [19][24] Management's Comments on Operating Environment and Future Outlook - Management believes the current initiatives are critical for long-term success and is optimistic about the potential for adjusted EBITDA growth in fiscal 2025 despite ongoing challenges [29] - The company anticipates that the pace of salon closures will slow in the coming years, with 2025 expected to be the last year of significant closures [33] Other Important Information - The company reported a GAAP operating income of $2.1 million in the first quarter, down from $7.4 million in the prior year, driven by lower core business revenue and increased G&A expenses [34] - As of September 30, the company had $21.9 million of available liquidity, including $15.7 million of revolver capacity and $6.3 million of cash [42] Q&A Session Summary - No specific questions or answers were provided in the transcript regarding the Q&A session [45]

Financial Performance - Consolidated revenue for Q1 fiscal 2025 was $46.1 million, a decrease of $7.3 million or 13.7% compared to $53.4 million in Q1 fiscal 2024[2] - Net loss for Q1 fiscal 2025 was $0.9 million, or a loss of $0.36 per diluted share, compared to a net income of $1.2 million, or $0.51 per diluted share in the same period last year[7] - Adjusted net income for Q1 fiscal 2025 was $2.6 million, an increase of $0.9 million or 52.9% from $1.7 million in the prior year[2] - Adjusted EBITDA for Q1 fiscal 2025 was $7.6 million, a decline of $0.5 million or 6.2% from $8.1 million in Q1 fiscal 2024[8] - Operating income for the three months ended September 30, 2024, was $2,134,000, down from $7,434,000 in the prior year, representing a decline of 71.3%[21] - Reported net loss for the three months ended September 30, 2024, was $(853) thousand, compared to a net income of $1,194 thousand for the same period in 2023[30] Sales and Revenue Trends - Same-store sales decreased by 1.1% year-over-year, compared to an increase of 1.8% in the prior year[3] - System-wide same-store sales decreased by 1.1% for the three months ended September 30, 2024, compared to an increase of 2.4% in the same period of the previous year[23] - Franchise revenue decreased by $6.1 million, or 11.9%, to $45.3 million in Q1 fiscal 2025 compared to $51.4 million in the prior year[10] - GAAP franchise revenue for the three months ended September 30, 2024, was $45,275 thousand, down from $51,436 thousand in the same period of 2023[35] - Adjusted franchise revenue for the three months ended September 30, 2024, was $17,998 thousand, compared to $19,543 thousand in the prior year[35] Salon Operations - Company-owned salon revenue declined by $1.1 million to $0.8 million, driven by the closure of 47 loss-generating salons[13] - Total franchise salons decreased to 4,350 from 4,745, a reduction of 395 salons year-over-year[9] - The number of total franchise salons decreased to 4,350 as of September 30, 2024, from 4,391 as of June 30, 2024, a decrease of 0.9%[24] - The company-owned salons decreased to 9 as of September 30, 2024, down from 17 as of June 30, 2024, a reduction of 47.1%[24] Cash and Liabilities - The company ended Q1 fiscal 2025 with $6.3 million in cash and cash equivalents and $110.4 million in outstanding borrowings[15] - Total current assets decreased to $35,426,000 as of September 30, 2024, down from $42,050,000 as of June 30, 2024, reflecting a decline of 15.7%[20] - Total liabilities decreased to $452,533,000 as of September 30, 2024, from $473,709,000 as of June 30, 2024, a reduction of 4.5%[20] - Cash and cash equivalents decreased to $6,259,000 as of September 30, 2024, down from $10,066,000 as of June 30, 2024, a decline of 37.7%[20] Adjusted Metrics - Adjusted EBITDA margin improved to 40% in Q1 fiscal 2025 from 38% in the prior year, reflecting better cost management[2] - Adjusted EBITDA for the three months ended September 30, 2024, was $7,636 thousand, down from $8,093 thousand in the prior year[30] - Adjusted net income for the three months ended September 30, 2024, was $2,591 thousand, compared to $1,679 thousand for the same period in 2023[32] - Adjusted earnings per share for the three months ended September 30, 2024, was $0.93, an increase from $0.71 in the prior year[33] - Franchise adjusted EBITDA as a percent of adjusted franchise revenue was 44.4% for the three months ended September 30, 2024, compared to 44.0% in the prior year[35] Other Financial Details - Stock-based compensation expense included in adjusted EBITDA was $1,430 thousand for the three months ended September 30, 2024, up from $630 thousand in the prior year[30] - Discrete items impacting adjusted EBITDA included one-time professional fees and legal settlements, totaling $2,597 thousand for the three months ended September 30, 2024[30] - The company plans to exclude stock-based compensation expenses from adjusted EBITDA calculations starting in fiscal year 2025, retroactively applied to prior periods[30]