Sally Beauty Holdings Reports First Quarter Fiscal 2026 Results | SBH Stock News

Q1 Consolidated Net Sales Increased 0.6%; Consolidated Comparable Sales FlatQ1 GAAP Diluted EPS Decreased 22%; Adjusted Diluted EPS Increased 12%Q1 Cash Flow from Operations of $93 Million Deployed to Invest for Growth, Strengthen Balance Sheet and Return Value to ShareholdersCompany Raises Low End of Fiscal 2026 EPS GuidancePLANO, Texas--(BUSINESS WIRE)--Sally Beauty Holdings, Inc. (NYSE: SBH) (the “Company”), the leader in professional hair color, today announced financial results for its first quarter ended December 31, 2025. The Company will hold a conference call today at 7:30 a.m. Central Time to discuss these results and its business.“Our first quarter performance marks a strong start to fiscal 2026,” said Denise Paulonis, president and chief executive officer. “We achieved top line results that met our expectations, maintained healthy gross margins and delivered adjusted EPS growth of 12% - consistent with our long-term financial algorithm. Our robust cash flow from operations enabled us to invest for growth, reduce debt and return value to shareholders. We also made continued progress on our strategic initiatives designed to accelerate growth and increase profitability.”Fiscal 2026 First Quarter SummaryConsolidated net sales of $943 million, an increase of 0.6% compared to the prior year;Consolidated comparable sales were flat;Global e-commerce sales of $111 million, representing 11.7% of net sales;GAAP gross margin expansion of 40 basis points to 51.2%;Adjusted Gross Margin expansion of 50 basis points to 51.3%;GAAP selling, general and administrative expenses of $407 million, an increase of $31 million compared to the prior year;Adjusted Selling, General and Administrative Expenses of $404 million, an increase of $6 million compared to the prior year;GAAP operating earnings of $76 million and GAAP operating margin of 8.1%;Adjusted Operating Earnings of $80 million and Adjusted Operating Margin of 8.5%;GAAP diluted net earnings per share of $0.45, a decrease of 22% compared to the prior year;Adjusted Diluted Net Earnings Per Share of $0.48, an increase of 12% compared to the prior year;Cash flow from operations of $93 million and Free Cash Flow of $57 million; andCompleted $20 million in term loan repayment and $21 million in share repurchases.Balance Sheet and Cash FlowAs of December 31, 2025, the Company had cash and cash equivalents of $157 million and no outstanding borrowings under its asset-based revolving line of credit. At fiscal year-end, inventory was $979 million, down 2.7% versus a year ago.First quarter cash flow from operations was $93 million and Free Cash Flow totaled $57 million. During the first quarter, the Company utilized its cash flow to repay $20 million of term loan B debt and repurchase 1.4 million shares under its share repurchase program at an aggregate cost of $21 million. The Company ended the first quarter with a net debt leverage ratio of 1.5x.Fiscal 2026 First Quarter Segment ResultsSally BeautyBeauty Systems Group(In thousands, except percentages)Q1 FY26Q1 FY25Growth/(Decline)Q1 FY26Q1 FY25Growth/(Decline)Net Sales$531,601$525,4461.2%$411,567$412,449(0.2)%Comparable Sales Growth/(Decline)0.1%1.7%(160) bps(0.2)%1.4%(160) bpsGross Margin59.8%59.6%20 bps40.2%39.7%50 bpsOperating Earnings$77,897$79,874(2.5)%$53,907$50,4696.8%Operating Margin14.7%15.2%(50) bps13.1%12.2%90 bps Fiscal Year 2026 Guidance*Second QuarterConsolidated Net Sales$895 million to $905 million (1)Comparable SalesUp 0.5% to 1.5%Adjusted Operating Earnings$68 million to $71 millionAdjusted Diluted EPS$0.39 to $0.42(1) Assumes approximately 100 basis points of favorable impact from expected foreign currency ratesFull YearPrior FY26 GuidanceUpdated FY26 GuidanceConsolidated Net Sales$3.71 billion to $3.77 billion (1)No changeComparable SalesFlat to up 1%No changeAdjusted Operating Earnings$328 million to $342 millionNo changeAdjusted Diluted EPS$2.00 to $2.10 (2)$2.02 to $2.10 (2)Capital ExpendituresApproximately $100 millionNo changeFree Cash FlowApproximately $200 millionNo change(1) Assumes approximately 50 basis points of favorable impact from expected foreign currency rates(2) Assumes 50% of Free Cash Flow goes towards share repurchases (Free Cash Flow defined as GAAP cash flows from operating activities less payments for capital expenditures)*The Company does not provide a reconciliation for forward-looking non-GAAP financial measures where it is unable to provide a meaningful or accurate calculation or estimation of its reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the occurrence and the financial impact of various items that have not yet occurred, are out of the Company’s control or cannot be reasonably predicted. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.Conference Call and Where You Can Find Additional InformationThe Company will hold a conference call and live webcast at approximately 7:30 a.m. Central Time today, February 9, 2026, to discuss its financial results and its business. During the conference call, the Company may discuss and answer one or more questions concerning business and financial matters and trends affecting the Company. The Company’s responses to these questions, as well as other matters discussed during the conference call, may contain or constitute material information that has not been previously disclosed.Participants can listen to the live webcast of the conference call by accessing the investor relations section of the Company’s website at sallybeautyholdings.com/investor-relations/events-and-presentations/events-calendar, or through our third-party host at SBH Q1 Earnings Webcast. To join the conference call, participants can pre-register to receive a dial-in number and unique PIN using the following link: Pre-register SBH Q1 Earnings Call. Pre-registration can be completed at any time up to and following the call start time.A replay will be available on the Company’s investor relations website after 10:00 a.m. Central Time on February 9, 2026, through February 9, 2027.About Sally Beauty Holdings, Inc.Sally Beauty Holdings, Inc. (NYSE: SBH), as the leader in professional hair color, sells and distributes professional beauty supplies globally through its Sally Beauty and Beauty Systems Group segments. Sally Beauty stores offer up to 7,000 products for hair color, hair care, nails, and skin care through proprietary brands such as Ion®, Bondbar®, Strawberry Leopard®, Generic Value Products®, Inspired by Nature® and Silk Elements® as well as professional lines such as Wella®, Clairol®, OPI®, L’Oreal®, Wahl® and Babyliss Pro®. Beauty Systems Group stores, branded as Cosmo Prof® or Armstrong McCall® stores, along with its outside sales consultants, sell up to 8,000 professionally branded products including Paul Mitchell®, Wella®, Matrix®, Schwarzkopf®, Kenra®, Goldwell®, Joico®, Amika® and Moroccanoil®, intended for use in salons and for resale by salons to retail consumers. For more information about Sally Beauty Holdings, Inc., please visit sallybeautyholdings.com/investor-relations.Cautionary Notice Regarding Forward-Looking StatementsStatements in this news release and the schedules hereto that are not purely historical facts or that depend upon future events may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of words such as “believes,” “projects,” “expects,” “can,” “may,” “estimates,” “should,” “plans,” “targets,” “intends,” “could,” “will,” “would,” “anticipates,” “potential,” “confident,” “optimistic,” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, guidance, expectations and future plans. Forward-looking statements can also be identified by the fact that these statements do not relate strictly to historical or current matters.Readers are cautioned not to place undue reliance on forward-looking statements as such statements speak only as of the date they were made. Any forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements, including the “Risk Factors” described under Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, and other filings with the U.S. Securities and Exchange Commission. Consequently, all forward-looking statements in this release are qualified by the factors, risks and uncertainties contained therein. We assume no obligation to publicly update or revise any forward-looking statements.Use of Non-GAAP Financial MeasuresThis news release and the schedules hereto include the following financial measures that have not been calculated in accordance with accounting principles generally accepted in the United States, (“GAAP”), and are therefore referred to as non-GAAP financial measures: (1) Adjusted Gross Margin; (2) Adjusted Selling, General and Administrative Expenses; (3) Adjusted EBITDA and EBITDA Margin; (4) Adjusted Operating Earnings and Operating Margin; (5) Adjusted Net Earnings; (6) Adjusted Diluted Net Earnings Per Share; and (7) Free Cash Flow. We have provided definitions below for these non-GAAP financial measures and have provided tables in the schedules hereto to reconcile these non-GAAP financial measures to the comparable GAAP financial measures.Adjusted Gross Margin – We define the measure Adjusted Gross Margin as GAAP gross margin excluding the inventory write-off from the Company’s European operations in connection with the fuel for growth initiative for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures.Adjusted Selling, General and Administrative Expenses – We define the measure Adjusted Selling, General and Administrative Expenses as GAAP selling, general and administrative expenses excluding the costs related to the Company’s fuel for growth initiative and expenses related to the Company’s corporate headquarters relocation for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures.Adjusted EBITDA and EBITDA Margin – We define the measure Adjusted EBITDA as GAAP net earnings before depreciation and amortization, interest expense, income taxes, share-based compensation, costs related to the Company’s fuel for growth initiative and expenses related to the Company’s corporate headquarters relocation for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures. Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of net sales.Adjusted Operating Earnings and Operating Margin – Adjusted operating earnings are GAAP operating earnings that exclude the costs related to the Company’s fuel for growth initiative and expenses related to the Company’s corporate headquarters relocation for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures. Adjusted Operating Margin is Adjusted Operating Earnings as a percentage of net sales.Adjusted Net Earnings – Adjusted net earnings is GAAP net earnings that exclude the tax-effected costs related to the Company’s fuel for growth initiative and tax-effected expenses related to the Company’s corporate headquarters relocation for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures.Adjusted Diluted Net Earnings Per Share – Adjusted diluted net earnings per share is GAAP diluted earnings per share that exclude the tax-effected costs related to the Company’s fuel for growth initiative and tax-effected expenses related to the Company’s corporate headquarters relocation for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures.Free Cash Flow – We define the measure Free Cash Flow as GAAP net cash provided by operating activities less payments for capital expenditures (net). We believe Free Cash Flow is an important liquidity measure that provides useful information to investors about the amount of cash generated from operations after taking into account payments for capital expenditures (net).We believe that these non-GAAP financial measures provide valuable information regarding our earnings and business trends by excluding specific items that we believe are not indicative of the ongoing operating results of our businesses, providing a useful way for investors to make a comparison of our performance over time and against other companies in our industry.We have provided these non-GAAP financial measures as supplemental information to our GAAP financial measures and believe these non-GAAP measures provide investors with additional meaningful financial information regarding our operating performance and cash flows. Our management and Board of Directors also use these non-GAAP measures as supplemental measures to evaluate our businesses and the performance of management, including the determination of performance-based compensation, to make operating and strategic decisions, and to allocate financial resources. We believe that these non-GAAP measures also provide meaningful information for investors and securities analysts to evaluate our historical and prospective financial performance. These non-GAAP measures should not be considered a substitute for or superior to GAAP results. Furthermore, the non-GAAP measures presented by us may not be comparable to similarly titled measures of other companies.Supplemental SchedulesSegment Information1Non-GAAP Financial Measures Reconciliations2Non-GAAP Financial Measures Reconciliations; Adjusted EBITDA andFree Cash Flow3Store Count and Comparable Sales4 SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIESCondensed Consolidated Statements of Earnings(In thousands, except per share data)(Unaudited) Three Months Ended December 31,20252024Percentage Change Net sales$943,168$937,8950.6%Cost of products sold459,909461,055(0.2)%Gross profit483,259476,8401.3%Selling, general and administrative expenses407,324376,5208.2%Operating earnings75,935100,320(24.3)%Interest expense14,62017,442(16.2)%Earnings before provision for income taxes61,31582,878(26.0)%Provision for income taxes15,75821,865(27.9)%Net earnings$45,557$61,013(25.3)% Earnings per share:Basic$0.47$0.60(21.7)%Diluted$0.45$0.58(22.4)% Weighted average shares:Basic97,804102,021Diluted100,765104,974Basis Point ChangeComparison as a percentage of net salesConsolidated gross margin51.2%50.8%40Selling, general and administrative expenses43.2%40.1%310Consolidated operating margin8.1%10.7%(260) Effective tax rate25.7%26.4%(70) SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIESCondensed Consolidated Balance Sheets(In thousands)(Unaudited)December 31September 3020252025 Cash and cash equivalents$157,185$149,162Trade and other accounts receivable104,267116,562Inventory978,789987,575Other current assets45,44448,154Total current assets1,285,6851,301,453Property and equipment, net280,350284,284Operating lease assets642,276646,698Goodwill and other intangible assets593,929593,692Other assets48,53844,969Total assets$2,850,778$2,871,096 Current maturities of long-term debt$4,000$4,000Accounts payable208,481224,507Accrued liabilities158,576184,641Current operating lease liabilities157,102158,566Income taxes payable14,0114,260Total current liabilities542,170575,974Long-term debt, including capital leases842,531861,974Long-term operating lease liabilities537,594538,426Other liabilities21,98521,026Deferred income tax liabilities, net82,93379,489Total liabilities2,027,2132,076,889Total stockholders’ equity823,565794,207Total liabilities and stockholders’ equity$2,850,778$2,871,096 Supplemental Schedule 1SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIESSegment Information(In thousands)(Unaudited) Three Months Ended December 31,20252024PercentageChangeNet sales:Sally Beauty Supply ("Sally")$531,601$525,4461.2%Beauty Systems Group ("BSG")411,567412,449(0.2)%Total net sales$943,168$937,8950.6% Operating earnings:Sally$77,897$79,874(2.5)%BSG53,90750,4696.8%Segment operating earnings131,804130,3431.1% Unallocated expenses (1)55,86930,02386.1%Interest expense14,62017,442(16.2)%Earnings before provision for income taxes$61,315$82,878(26.0)% Segment gross margin:20252024Basis Point ChangeSally59.8%59.6%20BSG40.2%39.7%50 Segment operating margin:Sally14.7%15.2%(50)BSG13.1%12.2%90Consolidated operating margin8.1%10.7%(260) (1) Unallocated expenses, including share-based compensation expense, consist of corporate and shared costs and are included in selling, general and administrative expenses. Additionally, unallocated expenses include costs associated with our Fuel for Growth initiative and a gain from the sale of our corporate headquarters during the three months ended December 31, 2024. Supplemental Schedule 2SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIESNon-GAAP Financial Measures Reconciliations(In thousands, except per share data)(Unaudited) Three Months Ended December 31, 2025As Reported(GAAP)Fuel for Growth and Other (1)Corporate HQRelocation (2)As Adjusted(Non-GAAP) Cost of products sold$459,909$(907)$—$459,002Consolidated gross margin51.2%51.3%Selling, general and administrative expenses407,324(1,180)(1,833)404,311SG&A expenses, as a percentage of sales43.2%42.9%Operating earnings75,9352,0871,83379,855Operating margin8.1%8.5%Interest expense14,620——14,620Earnings before provision for income taxes61,3152,0871,83365,235Provision for income taxes (3)15,75852947116,758Net earnings$45,557$1,558$1,362$48,477 Earnings per share: (4)Basic$0.47$0.02$0.01$0.50Diluted$0.45$0.02$0.01$0.48 Three Months Ended December 31, 2024As Reported(GAAP)Fuel for Growth and Other (1)Corporate HQRelocation (2)As Adjusted(Non-GAAP) Cost of products sold$461,055$—$—$461,055Consolidated gross margin50.8%50.8%Selling, general and administrative expenses376,520(4,869)26,640398,291SG&A expenses, as a percentage of sales40.1%42.5%Operating earnings100,3204,869(26,640)78,549Operating margin10.7%8.4%Interest expense17,442——17,442Earnings before provision for income taxes82,8784,869(26,640)61,107Provision for income taxes (3)21,8651,247(6,851)16,261Net earnings$61,013$3,622$(19,789)$44,846 Earnings per share: (4)Basic$0.60$0.04$(0.19)$0.44Diluted$0.58$0.03$(0.19)$0.43 (1) Fuel for Growth and other represents expenses primarily related expenses associated with our Fuel for Growth program and other non-recurring items. (2) For the three months ended December 31, 2025, corporate HQ relocation primarily represents duplicate rent expense on the new office prior to our relocation from our Denton corporate headquarters and expenses in connection with the relocation of our headquarters. For the three months ended December 31, 2024, corporate HQ relocation primarily represents the gain on the sale of our Denton corporate headquarters and certain assets within. (3) The provision for income taxes was calculated using the applicable tax rates for each country, while excluding the tax benefits for countries where the tax benefit is not currently deemed probable of being realized. (4) The sum of the earnings per share may not equal the full amount due to rounding of the calculated amounts. Supplemental Schedule 3 SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIESNon-GAAP Financial Measures Reconciliations, Continued(In thousands)(Unaudited) Three Months Ended December 31,Adjusted EBITDA:20252024PercentageChange Net earnings$45,557$61,013(25.3)%Add:Depreciation and amortization23,63225,565(7.6)%Interest expense14,62017,442(16.2)%Provision for income taxes15,75821,865(27.9)%EBITDA (non-GAAP)99,567125,885(20.9)%Share-based compensation7,5556,05324.8%Fuel for Growth and Other2,0874,869(57.1)%Corporate HQ Relocation1,833(26,640)106.9%Adjusted EBITDA (non-GAAP)$111,042$110,1670.8% Basis PointChangeAdjusted EBITDA as a percentage of net salesAdjusted EBITDA margin11.8%11.7%10 Free Cash Flow:20252024Percentage ChangeCash flows from operating activities$93,239$33,459178.7% Less:Payments for capital expenditures35,78420,07878.2%Plus:Proceeds from sales of property and equipment (1)—43,574—Free cash flow (non-GAAP)$57,455$56,9550.9% (1) Represents the proceeds from the sale of our corporate headquarters.Supplemental Schedule 4 SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIESStore Count and Comparable Sales(Unaudited) As of December 31,20252024Change Number of stores:Sally3,0903,123(33)BSG:Company-operated stores1,1941,199(5)Franchise stores131131—Total BSG1,3251,330(5)Total consolidated4,4154,453(38) Number of BSG salon business consultants (1)590639(49) (1) BSG salon business consultants (SBC) include 182 and 191 sales consultants employed by our franchisees at December 31, 2025 and 2024, respectively.Three Months Ended December 31,20252024Basis PointChangeComparable sales growth (decline):Sally0.1%1.7%(160)BSG(0.2)%1.4%(160)Consolidated0.0%1.6%(160) Our comparable sales include sales from stores that have been operating for 14 months or longer as of the last day of a month and e-commerce revenue. Additionally, our comparable sales include sales to franchisees and full-service sales. Our comparable sales amounts exclude the effect of changes in foreign exchange rates and sales from stores relocated until 14 months after the relocation. Revenue from acquired stores is excluded from our comparable sales calculation until 14 months after the acquisition.View source version on businesswire.com: https://www.businesswire.com/news/home/20260209107164/en/Jeff HarkinsInvestor Relations940-297-4131jharkins@sallybeauty.comSource: Sally Beauty Holdings, Inc.