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Sally Beauty Holdings Reports Q3 2024 Financial Results
Overview
Sally Beauty Holdings, Inc. (NYSE:SBH) ("the Company"), the leader in professional hair color, today announced its financial results for the third quarter ended June 30, 2024.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 | YoY % Change | Consensus Estimates | Variance to Estimates |
|---|---|---|---|---|---|
| Total Revenue | $942 million | $930 million | +1.2% | $931.68 million | +1.1% |
| GAAP Diluted EPS | $0.36 | $0.46 | -21.7% | $0.40 | -10.0% |
| Adjusted Diluted EPS | $0.45 | $0.49 | -8.2% | - | - |
| GAAP Operating Earnings | $72 million | $90.1 million | -20.1% | - | - |
| Adjusted Operating Earnings | $84 million | $89.8 million | -6.5% | - | - |
| Cash Flow from Operations | $48 million | - | - | - | - |
Interpretation: Sally Beauty Holdings reported respectable financial performance with a slight revenue increase of 1.2% year-over-year. However, the company missed earnings estimates with a GAAP diluted EPS of $0.36 compared to the anticipated $0.40, indicating challenges in meeting expected profitability.
Segment Revenue Performance
| Segment | Q3 2024 Revenue | Q3 2023 Revenue | YoY % Change | Q3 2024 Comparable Sales Change | Q3 2024 E-commerce Sales |
|---|---|---|---|---|---|
| Sally Beauty Supply | $536.5 million | $535 million | +0.3% | +0.7% | $37 million (7.0%) |
| Beauty Systems Group | $405.8 million | $396 million | +2.5% | +2.6% | $54 million (13.4%) |
Interpretation: Both major segments demonstrated positive sales figures, with Beauty Systems Group leading the surge with a 2.5% increase in net sales, reflecting effective innovation and territorial expansion activities. Sally Beauty Supply showed moderate growth, marked by improved traffic and conversion rates.
Operational Data
| Operational Metric | Q3 2024 Value | Notes |
|---|---|---|
| Consolidated Comparable Sales | +1.5% | Boosted by strategic initiatives |
| Global E-commerce Sales | $92 million | 9.7% of net sales |
| Consolidated Gross Margin | 51.0% | Flat year-over-year |
| SG&A Expenses | $408.7 million | Increased $24.5 million YoY |
| EBITDA | $116.8 million | Adjusted |
| Net Debt Leverage Ratio | 2.2x | As of June 30, 2024 |
Comments from Company Officers
"We are pleased to report solid third quarter results, including positive comparable sales in both our Sally Beauty and Beauty Systems Group segments," said Denise Paulonis, president and CEO. "Our strategic initiatives, focusing on performance marketing, marketplace expansions, and digital enhancements, are driving positive trends in our customer base. We remain committed to driving long-term profitable growth and shareholder value."
Dividends and Share Repurchase Program
The Company executed $10 million in share repurchases during the quarter.
Guidance
The Company maintains its full-year fiscal 2024 guidance, projecting flat net sales and comparable sales compared to the prior year, gross margin between 50.5% to 51.0%, adjusted operating margin of approximately 8.5%, operating cash flow of around $240 million, and capital expenditures of around $100 million.
Stock Price Movement
Following the earnings release, SBH's stock price saw a slight decrease of 0.42%.
In summary, despite the challenges indicated by a drop in EPS and increased SG&A expenses, Sally Beauty Holdings showed resilience through positive growth in major segments and maintained its forward guidance, reflecting an optimistic outlook for the remainder of fiscal 2024.
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