Regis : FY 2021 Q3 Non-GAAP

REGIS CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION

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 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 and the reconciliation of the selected U.S. GAAP to non-GAAP financial measures, which are included below.

Information concerning potential factors that could affect future financial results is set forth in the Company's Annual Report on Form 10-K for the year ended June 30, 2020. 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-livedasset impairment
• TBG restructuring
• Goodwill impairment
• Gain on distribution centers
• Goodwill derecognition
• TBG discontinued operations
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REGIS CORPORATION

Reconciliation Of Selected U.S. GAAP To Non-GAAP Financial Measures

(Dollars in thousands, except per share data)

(Unaudited)

Reconciliation of U.S. GAAP operating loss and U.S. GAAP net loss to equivalent non-GAAP measures

				Three Months Ended			Nine Months Ended
				March 31,			March 31,
	U.S. GAAP financial line item		2021			2020			2021			2020
U.S. GAAP revenue			$	100,267	$	153,783	$	315,983	$	609,586
U.S. GAAP operating loss			$	(18,541)	$	(59,399)	$	(76,886)	$	(76,771)
Non-GAAP operating expense adjustments (1)
Employee litigation reserve	Site operating expenses		-			-			-			(600)
Professional fees	General and administrative		480			(138)			3,422			223
Severance	General and administrative		848			5,136			3,239			8,053
CEO transition	General and administrative		300			-			(994)			-
Corporate office transition	Rent		-			515			-			919
Lease liability benefit	Rent		(3,009)			-			(11,295)			-
Lease termination fees	Rent		(147)			-			6,523			-
Real estate fees	Rent		158			-			534			-
Asset retirement obligation	Depreciation and amortization		774			-			3,447			-
Long-lived asset impairment	Long-lived asset impairment		833			-			9,817			-
TBG restructuring	TBG restructuring		-			146			-			2,368
Goodwill impairment	Goodwill impairment		-			40,164			-			40,164
Total non-GAAP operating expense adjustments				237			45,823			14,693			51,127
Non-GAAP operating loss (1)			$	(18,304)	$	(13,576)	$	(62,193)	$	(25,644)
U.S. GAAP net loss			$	(10,847)	$	(67,541)	$	(78,991)	$	(97,787)
Non-GAAP net income adjustments:
Non-GAAP revenue adjustments				-			-			-			-
Non-GAAP operating expense adjustments				237			45,823			14,693			51,127
Gain on distribution centers	Interest income and other, net		(14,878)			-			(14,878)			-
Corporate office transition	Interest income and other, net		-			-			-			(2,513)
Goodwill derecognition	Interest income and other, net		-			17,486			-			76,966
Income tax impact on Non-GAAP adjustments (2)	Income taxes		148			509			4			(12,541)
TBG discontinued operations, net of income tax	Loss from discontinued operations,		-			(301)			-			(753)
net of tax
Total non-GAAP net income adjustments				(14,493)			63,517			(181)			112,286
Non-GAAP net (loss) income			$	(25,340)	$	(4,024)	$	(79,172)	$	14,499

_______________________________________________________________________________

1. Adjusted operating margins for the three months ended March 31, 2021 and 2020 were (18.3)% and (8.8)%, and were (19.7)% and (4.2)% for the nine months ended March 31, 2021 and 2020, respectively, and are calculated as non-GAAP operating loss divided by U.S. GAAP revenue for each respective period.
2. Based on projected statutory effective tax rate analyses, the non-GAAP tax provision was calculated to be approximately 1% for the three and nine months ended March 31, 2021, respectively, and 22% for the three and nine months ended March 31, 2020, respectively, for all non-GAAP operating expense adjustments.

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REGIS CORPORATION

Reconciliation Of Selected U.S. GAAP To Non-GAAP Financial Measures

(Dollars in thousands, except per share data)

(Unaudited)

Reconciliation of U.S. GAAP net loss per diluted share to non-GAAP net (loss) income per diluted share

		Three Months Ended March 31,			Nine Months Ended March 31,
		2021			2020			2021			2020
U.S. GAAP net loss per diluted share	$	(0.301)	$	(1.884)	$	(2.199)	$	(2.719)
Employee litigation reserve (1)		-			-			-			(0.013)
Professional fees (1)		0.014			(0.003)			0.094			0.005
Severance (1)		0.023			0.112			0.089			0.169
CEO Transition (1)		0.008			-			(0.027)			-
Corporate office transition (1)		-			0.011			-			(0.034)
Lease liability benefit (1)		(0.083)			-			(0.311)			-
Lease termination fees (1)		(0.004)			-			0.180			-
Real estate fees (1)		0.004			-			0.015			-
Asset retirement obligation (1)		0.021			-			0.095			-
Long-lived asset impairment (1)		0.023			-			0.270			-
TBG restructuring (1)		-			0.003			-			0.050
Goodwill impairment (1)		-			0.863			-			0.833
Goodwill derecognition (1)		-			0.373			-			1.629
Gain on distribution centers (1)		(0.409)			-			(0.410)			-
TBG discontinued operations, net of tax		-			(0.008)			-			(0.020)
CARES Act		-			0.409			-			0.395
Tax asset valuation		-			0.012			-			0.012
Impact of change in weighted average shares (3)		-			-			-			0.084
Non-GAAP net (loss) income per diluted share (2)	$	(0.704)		$	(0.112)		$	(2.204)		$	0.391
U.S. GAAP Weighted average shares - basic		36,011			35,815			35,929			35,958
U.S. GAAP Weighted average shares - diluted		36,011			35,815			35,929			35,958
Non-GAAP Weighted average shares - diluted (3)		36,011			35,815			35,929			37,103

_______________________________________________________________________________

1. Based on projected statutory effective tax rate analyses, the non-GAAP tax provision was calculated to be approximately 1% for the three and nine months ended March 31, 2021, respectively, and 22% for the three and nine months ended March 31, 2020, respectively, for all non-GAAP operating expense adjustments.
2. Total is a recalculation; line items calculated individually may not sum to total due to rounding.
3. Non-GAAPnet (loss) income per share reflects the weighted average shares associated with non-GAAP net (loss) income, which includes the dilutive effect of common stock equivalents. The earnings per share impact of the adjustments for the nine months ended March 31, 2020 included additional shares for common stock equivalents of 1.1 million. The impact of the adjustments described above result in the impact of the common stock equivalents to be dilutive to the non-GAAP net income per share. For the three and nine months ended March 31, 2021 and the three months ended March 31, 2020, the impact of the adjustments described above resulted in a non-GAAP net loss, therefore, the impact of the common stock equivalents is not dilutive.
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REGIS CORPORATION

Reconciliation Of Reported U.S. GAAP Net Income (Loss) To Adjusted EBITDA, A Non-GAAP Financial Measure

(Dollars in thousands)

(Unaudited)

Adjusted EBITDA

EBITDA represents U.S. GAAP net (loss) income for the respective period excluding interest expense, income taxes and depreciation and amortization expense. The Company defines adjusted EBITDA, as EBITDA excluding identified items impacting comparability for each respective period. For the three and nine months ended March 31, 2021, the items impacting comparability consisted of the items identified in the non-GAAP reconciling items for the respective periods. The impacts of the income tax provision adjustments associated with the above items are already included in the U.S. GAAP reported net (loss) income to EBITDA reconciliation, therefore there is no adjustment needed for the reconciliation from EBITDA to adjusted EBITDA.

				Three Months Ended March 31, 2021
		Franchise			Company-			Corporate		Consolidated (1)
				owned
Consolidated reported net income (loss), as reported (U.S. GAAP)	$	11,960	$	(12,623)	$	(10,184)	$	(10,847)
Interest expense, as reported		-			-			3,163			3,163
Income taxes, as reported		-			-			(333)			(333)
Depreciation and amortization, as reported		333			1,687			1,600			3,620
Long-lived asset impairment, as reported		22			811			-			833
EBITDA (as defined above)	$	12,315		$	(10,125)		$	(5,754)		$	(3,564)
Professional fees		-			-			480			480
Severance		-			-			848			848
CEO transition		-			-			300			300
Lease liability benefit		(308)			(2,701)			-			(3,009)
Lease termination fees		-			(147)			-			(147)
Real estate fees		-			158			-			158
Gain on distribution centers		-			-			(14,878)			(14,878)
Adjusted EBITDA, non-GAAP financial measure	$	12,007		$	(12,815)		$	(19,004)		$	(19,812)
				Three Months Ended March 31, 2020
		Franchise			Company-			Corporate		Consolidated (1)
				owned
Consolidated reported net income (loss), as reported (U.S. GAAP)	$	11,082	$	(50,661)	$	(27,962)	$	(67,541)
Interest expense, as reported		-			-			1,712			1,712
Income taxes, as reported		-			-			(979)			(979)
Depreciation and amortization, as reported		292			9,799			268			10,359
EBITDA (as defined above)	$	11,374	$	(40,862)		$	(26,961)		$	(56,449)
Professional fees		-			-			(138)			(138)
Severance		-			-			5,136			5,136
Corporate office transition		-			-			515			515
TBG restructuring		146			-			-			146
Goodwill impairment, as reported		-			40,164			-			40,164
Goodwill derecognition		-			-			17,486			17,486
TBG discontinued operations, net of income tax		-			-			(301)			(301)
Adjusted EBITDA, non-GAAP financial measure	$	11,520		$	(698)		$	(4,263)		$	6,559

_______________________________________________________________________________

1. Consolidated EBITDA margins for the three months ended March 31, 2021 and 2020 were (3.6)% and (36.7)%, respectively, and are calculated as EBITDA (as defined above) divided by U.S. GAAP revenue for each respective period. Consolidated adjusted EBITDA margins for the three months ended March 31, 2021 and 2020 were (19.8)% and 4.3%, respectively, and are calculated as adjusted EBITDA divided by U.S. GAAP revenue for each respective period.

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