As of September 2014, fiscal year-end

Transcription

1 As of September 2014, fiscal year-end

2 Company Highlights Sally Beauty Holdings is a leading international specialty retailer and distributor of professional beauty products Annual consolidated sales of over $3.8 billion Strong cash flow generation Approximately 4,828 stores located in 12 countries (1) Industry leading position with ~33% channel share Proven resilience in recessionary cycles Well-positioned for long-term growth Two distinct business segments

3 Consolidated Fiscal 2014 Results Company Highlights Net Sales Gross Margin Segments Customers Retail consumers 75% of sales Professional stylists, small salons, chair/suite rentals 25% of sales Stores Chair/suite rentals 65% of sales Full Service Sales - small to medium sized salons 35% of sales FY2014 Financials Sales of $2.3b, up 3.5% SSS up 1.3% vs. (0.6%) 13 Operating income of $431m Profit margin of 18.7% Sales of $1.4b, up 3.8% SSS growth of 3.5% vs. 4.2% Operating income of $217m Profit margin of 15.0%

4 Company Highlights Open-Line Retail Exclusive / Full-Service Distribution: 3,563 stores 1,265 stores 981 consultants Customers: Professional stylists Salons ` $ Value Retail Consumers $$$ High-end SBH plays an important role in the supply chain (1) Store count as of September 30, 2014, fiscal year-end

5 Industry Growth ($ in billions) $5.0 $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $- Recession Resistant Industry U.S. Salon Industry Product Sales (at wholesale $ s) $3.7 $3.8 $3.8 $3.3 $3.4 $3.5 $2.9 $2.9 $3.0 $3.1 $2.6 $2.7 $1.6 $1.7 $1.8 $2.0 $2.1 $2.2 $2.3 $2.4 $4.5 $4.6 $4.2 $ Growth of 2.7%

6 Business Segment Overview

7 Sally Beauty Supply: Overview Sally Beauty Supply global footprint 3,563 (1) stores worldwide 2,793 stores in U.S. (including Puerto Rico) 770 stores in Canada, the UK, Ireland, Belgium, Netherlands, France, Germany, Spain, Chile, Peru & Mexico Average store size 1,700 sq. ft., 90% selling space Professional open-line business - merchandise assortment not available through mass retailers Destination for Professional hair care and solutions (1) Store count as of September 30, 2014, fiscal year-end.

8 Sally Beauty Supply: Historical Sales Sally Beauty Supply Net Sales Growth of 3.5% $2,800 $2,400 $2,000 $1,600 $1,200 $800 $400 $0 $2,199 $2,230 $2,309 $2,012 $1,835 $1,567 $1,673 $1,696 $1,208 $1,296 $1,359 $1, Sally Beauty Supply Same Store Sales 8.0% 6.0% 4.0% 2.0% 2.7% 3.8% 2.4% 2.4% 2.7% 1.2% 2.1% 4.1% 6.3% 6.5% -0.6% 1.3% 0.0% -2.0%

9 Sally Beauty Supply: Merchandise Offering Other Beauty Items Ethnic Products 7% Hair Care 8% 22% We offer a diversified mix of beauty products Brushes, Cutlery and Accessories 14% 45% of Sales from Hair Care & Color Electrical Appliances 10% 23% Hair Color 17% Skin and Nail Care

10 Sally Beauty Supply Growth Initiatives Expand store base organically and through acquisitions; domestic and international Plan to grow store base 3 to 4 percent in FY2015 and beyond Increase customer traffic through loyalty programs and customer relationship management (CRM) Further expand Internet channel Drive gross margin expansion Customer mix shift to retail Shift to exclusive brands Low-cost sourcing Growth Initiatives Worldwide Sally Beauty Supply Stores 4,000 3,424 3,563 2,511 2,694 2,844 2,923 3,032 3,158 3,309 3,000 2,000 1, Growth 7.3% 5.6% 2.8% 3.7% 4.2% 4.8% 3.5% 3.4% 4.0% Sally Beauty Supply Store Economics US Capital Required $70k Average Inventory $85k Positive Contribution Margin 4 Months Cash Payback on Investment 2 Years

11 Sally Beauty Supply: International Opportunity Existing International Platform Long-Term Store Growth Potential (1) 770 Sally Beauty stores located in 11 countries Current Potential Stores located in Canada, the UK, Ireland, Belgium, France, the Netherlands, Germany, Spain, Chile, Peru & Mexico (Canada) (Mexico) 100 ~ ~250 25% of Sally Beauty Supply sales from international (UK / Ireland) 261 ~300 Sales mix differs from U.S./Canada UK/Europe ~80-85% professional ~15-20% retail (Belgium, France, Germany, Spain, Netherlands) (Chile) ~45 Mexico and South America almost 100% retail (1) Store count as of September 30, 2014, fiscal year-end (Peru) Other South American Countries 3 ~40 0 green field Total 770 ~1,500+

12 Beauty Systems Group: Overview Beauty Systems Group 1,265 (1) (professional stores & 981 professional distributor sales consultants 1,104 company-operated / 161 franchised stores (Armstrong McCall) 981 professional distributor sales consultants Average store size 2,700 sq. ft. Sells to salons and salon professionals Professional exclusive / full-service business includes merchandise assortment of premium brands sold through salons and not available in mass or at Sally stores LoxaBeauty.com, the online retail solution for salon/stylists, launched in March 2014 (1) Store count as of September 30, 2014, fiscal year-end

13 BSG: Strong, Consistent Financial Track Record BSG Net Sales Growth of 3.8% $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 $1,392 $1,445 $1,325 $1,257 $1,081 $895 $954 $945 $975 $802 $941 $ BSG Same Store Sales Growth 12.0% 10.1% 8.5% 8.0% 6.9% 6.2% 5.5% 6.1% 4.6% 4.1% 4.2% 3.5% 4.0% 1.0% 0.0% (0.6%) (4.0%) (1) Store count as of September 30, 2014, fiscal 2014 third quarter.

14 BSG: Merchandise Offering We offer a diversified mix of beauty products not carried in Sally stores or mass retail Skin and Nail Care Promotional Items Electrical Appliances 10% 12% 6% Other Beauty Items 7% Hair Care 35% 31% Hair Color

15 Growth Initiatives Expand store base organically Further penetrate existing geographies Enter new territories Expand gross margins as sales shift to the stores Improve profitability Optimize distribution network Continue integration efforts Broaden offerings with new suppliers 1, Organic Acquisition Growth BSG: Industry Growth Store Growth Store Growth 991 1,027 1,151 1, % 6.2% 6.7% 3.6% 12.0% 3.4% 4.6% 1.6% BSG Store Economics 1,245 1,265 Capital Required $80k Average Inventory $150k Seek potential fold-in acquisition opportunities Positive Contribution Margin Cash Payback on Investment 4 Months 2 Years

16 Consolidated Results

17 Solid Balance Sheet No near-term maturities In November 2011, refinanced Sr. and Sr. Sub Notes for $750mm of 6.875% Senior Notes due 2019 In May 2012, refinanced the Term Loan B with $700mm of 5.75% Senior Notes due 2021 Targeted consolidated pro forma leverage ratio of 2.0x 2.5x Long-term debt (as of 9/30/14) Revolving ABL facility Amount ($mm) $0.0 % of Total Debt 0.0% 5.750% Senior Notes (FY2022) $ % 6.875% Senior Notes (FY2019) $ % 5.500% Senior Notes (FY2023) $ % Other (1) $ % Total Debt $1, % Ample liquidity Strong cash flow ABL Revolver of $500 million Refinanced July 26, 2013; lowered rate and increased availability to $500 million October 2013, issued $200 million aggregate principal amount of 5.50% Senior Notes due $1,000 $900 $800 $700 $600 $500 $400 Long-term debt Maturity $750 $857 $300 $200 $200 $100 $

18 Sales and EPS Growth for total Company Sales EPS (adjusted) $3,500 $3,000 $2,500 $2,000 $2,648 $2,637 $2,514 $2,916 $3,269 $3,524 $3,622 $3, % YoY $1.60 $1.40 $1.20 $1.00 $0.80 $0.77 $1.07 $1.42 $1.48 $ % YoY $1,500 $0.60 $0.44 $0.52 $1,000 $0.40 $0.32 $500 $0.20 $0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 $

19 Addendum: Reconciliations

20 Addendum: Adjusted EBITDA Reconciliation Adjusted EBITDA FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY2014 Net Earnings (GAAP) $ $ 44.5 $ 77.7 $ 99.1 $ $ $ $ $ Interest expense, net of interest income $ $ $ Provision for income taxes $ $ $ Depreciation and amortization $ 64.7 $ 72.2 $ 79.7 Share-based compensation $ 16.9 $ 19.2 $ 22.1 Transaction expenses (1a, 1b) Sales-based service fee charged by Alberto-Culver Expenses from data security incident Litigation settlement and non-recurring charges (27.0) Adjusted EBITDA $ $ $ $ $ $ $ $ $ Adjusted net earnings and adjusted diluted earnings per share Net Earnings (GAAP) $ $ $ $ $ Marked-tomarket adjustment for certain interest rate swaps $ (2.4) - - Loss on extinguishment of debt Interest expense on redeemed debt Amortization of deferred financing costs Litigation settlement and non-recurring items, net (2) (21.3) 10.2 Loss from securiy breach incident 2.5 Management transition costs 3.5 Tax provision for the adjustments to net earnings (19.2) (2.3) Adjusted net earnings $ $ $ $ $ Diluted adjusted net earnings per share (non-gaap): $ 0.77 $ 1.07 $ 1.42 $ 1.48 $ 1.53 Diluted GAAP net earnings per share: $ 0.78 $ 1.14 $ 1.24 $ 1.48 $ 1.51 (1a) Transaction expenses of $41.5 for termination of the Regis transaction. (1b) Transaction expenses of $21.5 for separation of the Company from Alberto-Culver in November (2) Results for the nine months ended June 30, 2011, reflect a $27.0 million benefit of a litigation settlement and non-recurring charges of $5.7 million.