May 01, 2018 • 10:00 am ET



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Hugh E. Sawyer

cash flow negative company-owned salon portfolio; the operational turnaround of our underperforming company-owned salons by institutionalizing execution as a core competency; the utilization of technology to transform the business; thoughtful investments to support growth through better advertising content, digital advertising and leveraging broader channels of distribution for improved content through new relationships, our digital advertising programs, and social media; efforts to upgrade stylist recruitment, training and retention; the vigorous elimination of non-essential, non-customer-facing costs; and the revitalization of our guest experience in our local salons.

We believe the initiatives we executed during a busy third quarter will help advance our aspiration to build a high-performing business here at Regis. And as we've reported, we completed the operational restructuring of our company-owned salon portfolio by closing 597 non-performing cash flow negative SmartStyle salons at the end of January. The SmartStyle restructuring was accomplished in what I believe was an exceptional manner by our cross-functional field and corporate teams, and we have preserved our good relationship with Walmart.

We also signed an industry-exclusive multi-year sponsorship with Major League Baseball to support the growth of both company-owned and franchised Supercut salons. With the start of the 2018 baseball season, Supercuts became the official hair salon, the official hairstylists and a proud partner of Major League Baseball. Major League Baseball's opening week kicked off with a Supercuts presence across all MLB channels and leading sports networks including, MLB.TV, MLB social platforms, game of the day sponsorships and advertising content on MLB Network and ESPN.

In addition, Supercuts launched a branded ready-to-go feature that captures the best ready-to-go moments in baseball, including first-time rookie hits and player and team matchups. And as many of you are aware, a few weeks ago, we joined our MLB partners, and we're honored they opened the NYSE and to celebrate the start of a new baseball season.

With the Supercuts sponsorship, we now have access to MLB's core marketing platforms, including broadcast, digital, mobile and social as well as a group of tickets we hold to the All-Star game, the playoffs, the World Series and other premier events that we intend to use for customer sweepstakes. I believe this will prove to be a terrific long-term relationship for Supercuts, our franchisees and for Regis. As I've said previously, I really do think it's a home run for the company.

In previous calls, I've been consistent in saying we would utilize technology to transform the business with an objective to improve the experience for our customers and our stylists, to increase efficiencies to lower cost and to provide cutting-edge capabilities to support our franchisees. We have been taking our first steps toward using technology to transform our business and I thought you might be interested in a brief update.

Some of those steps include; establishing a capital structure that will allow us to make thoughtful investments in technology; recruiting management and board leadership who not only understand the current technology landscape but are plugged into transformative business technology. We