Regis Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the Regis Corporation first quarter fiscal year 2021 earnings call. My name is Anita and I will be your conference facilitator today. At this time, all participants are in a listen-only mode. Following management's presentation, we will conduct a question and answer session. If you would like to ask a question during this time, please press star one on your push button telephone. If you wish to withdraw your question, please press star and two. As a reminder, this call is being recorded for playback and will be available by approximately 12 p.m. Central Time today. I'll now turn the confluence over to Biz Maxine, AVP Finance. Please go ahead.

All right. Good morning, everyone, and thank you for joining us. On the call with me today, we have Felipe Atayde, our Chief Executive Officer, Kirsten Zepfer, the Chief Financial Officer, Eric Bakken, President of our Franchise Segment, and Amanda Ressence, our General Counsel. Before I turn the call over to Felipe, I would like to remind everyone that the language on the forward-looking statement included in our earnings release and 8K filing also apply to our comments made on the call today. These documents can be found on our website, www.regiscorp.com, Backslash Investor Relations. along with any reconciliation of non-GAAP financial measures mentioned on today's call with their corresponding GAAP measures. With that, I will now turn the call over to Felipe.

Thank you, Vince. Good morning, and thank you for joining us. My name is Felipe Atayde, and I'm the newly appointed president and CEO of Regus Corporation. I could not be more excited to be joining this amazing company, and even though these are obviously uncertain times, I believe times like these always open new opportunities. But before I talk about some of the opportunities I see, let me start by sharing my background with you. I spent almost a decade at Restaurant Brands International, a portfolio company of 3G Capital and parent company of the Burger King, Tim Hortons, and Popeyes brands. I joined Burger King shortly after the 3G acquisition and held positions in marketing, operations, and development across all three RBI brands. I served as president of Tim Hortons U.S., President of Burger King Latin America, and most recently as President of the Americas for Popeyes Louisiana Kitchen, where I led the launch of the Popeyes chicken sandwich in a successful revitalization of the brand, resulting in some of the largest same-store sales increases in the history of quick service restaurants. I also led the recovery of Popeyes following the COVID-19 pandemic. Many have asked why I'm excited to have made the transition to Regus, and the answer is simple. Regis' brands are in the business of making people look and feel their best. Hair carries the weight of people's identities. And because we cater to such an important human need, I believe core demands for hair salon services is and always will be inherently strong. Regis has already built the foundation that positions us well for growth, even in the current environment. And the opportunities around us today are very real. The way you see Regis today is exactly how I saw Burger King back in 2011 in terms of the magnitude of the value creation potential for our shareholders and of the wealth creation that can be achieved by our franchisees when we focus on franchise profitability. Existing Regis franchisees who are good partners of our brands and have the right infrastructure, competencies, and resources will have a tremendous opportunity to multiply their footprints both by driving new unit growth in their territories as well as by acting as consolidators were applicable. New hospitality-focused franchisees from different franchise systems will be recruited into our many brands, helping us elevate the level of our customer experience. We are well on our way to becoming a fully franchised business, and my main priority at this moment is to finish the re-franchising process started by Hume, which I plan to do at an accelerated speed. We have seen consistent high interest in the remaining salons left in the portfolio and have been approached by a few potential private equity players who see the current environment as a great opportunity to build a portfolio of hair salons, which can then serve as a platform for future consolidation and aggressive new unit growth. It is an avenue we're exploring to bring in new franchise owners. The hair salon industry in North America is incredibly fragmented. and it's mostly in the hands of independent players. There's a tremendous opportunity for salon chains to earn market share through brand differentiation, differentiation through technology, through marketing, or through advancement opportunities for our stylists. We are the largest hair salon network in the world. We own some of the most iconic brands in North America. We have a strong network of franchisees and a world-class in-house technology group that is not only developing innovative customer-facing technology, but also that will allow us to have a sophisticated business analytics platform based on transactional data from our salons via our Open Salon Pro POS system. This will make us into a much smarter company and allow us to use data analytics to design traffic-driving initiatives, drive product attachment in our salons, and create loyalty programs that will keep our customers coming back. My goal is to make Regus into a brand-led company that is in the business of supporting franchisees with a strong focus on their unit economics. In the franchising world, unsurprisingly, the brands which have grown the fastest are those that have been the most profitable. I consider this to be my most important learning for my 10 years in the restaurant industry. So Regus's obsession has to be and will be the profitability of our franchisees. Finally, I want to acknowledge that there's still work to do when it comes to our G&A as we transition to a fully franchised business model. I have engaged an outside consultant who I have known for many years and worked closely with in my recent days and who's already working with us on the implementation of a zero-based budgeting process at Regis, a process which I have been intimately familiar with in the past days. Zero-based budgeting will create better visibility and control over our expenses, increase accountability over budgets, and ensure expenses are aligned with our company's new business model and its respective priorities. Regus will run as one fully franchised company and no longer as corporate, top school, and franchise. Thank you very much. I appreciate you being on the call. And I will now turn it over to our Chief Financial Officer, Kirsten Zupcher.