Regis Corp. (NYSE:RGS) Q3 2018 Earnings Conference Call - Final Transcript

May 01, 2018 • 10:00 am ET

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Regis Corp. (NYSE:RGS) Q3 2018 Earnings Conference Call - Final Transcript

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Q & A
Executive
Andrew Lacko

Analyst
Dusty Henderson

Okay. And then, thinking about the 900 Supercuts that were referenced, that were just called out, possibly to be franchised. Is there a big institutional purchaser that has appetite for those domestic stores?

Executive
Hugh E. Sawyer

I'll let Eric take that one. He's been leading that effort.

Executive
Eric Bakken

Yeah. I mean, it's -- we think that's the best brand in the industry and there is a lot of interest from a lot of folks, from existing franchisees who are very successful today, to new operators that have had success in business and are well capitalized to more multi-unit type of operators that run big businesses, big franchise businesses and are looking to diversify. So, we've had interest from all of those folks in Supercuts.

Executive
Hugh E. Sawyer

But Eric and I are -- Eric's very careful and I am too about who we choose to do business with. And the cost of the quality of the brand and the quality of these salons, we will -- we are in the luxurious position of being able to pick and choose who we want to do business with and we're in no rush and we're being thoughtful and careful and -- to make sure that we build a great business.

And remember that we're making tremendous progress in franchise under Eric's leadership and he hasn't been at it that long. So, he only became President of Franchise on a full-time basis a few months ago. So, you look at these results that's -- and I typically am encouraged by franchise because I know we're just getting started. There will be a lot of organic growth.

Analyst
Dusty Henderson

Yeah, I agree. The results in that segment are terrific.

Executive
Hugh E. Sawyer

Yeah, they really are.

Analyst
Dusty Henderson

If you keep growing the franchise base, that'll lower the parent company obligation for the MLB advertising, correct? There's like a big pool of advertising funds somewhere that the franchisees are contributing?

Executive
Eric Bakken

Yeah, that's true. So we -- the way Supercuts is structured, company-owned stores contribute at the same level as franchise locations. That's a 5% ad fund. So, each store contributes the same amount. So you're right, that will be funded more by franchise locations as we go forward to the extent that we add additional franchised units in Supercuts.

Executive
Hugh E. Sawyer

But it's also true to say, Eric, isn't it, that as you add organic salons to the mix, that the overall size of the ad fund increases?

Executive
Eric Bakken

Absolutely, yeah. As we grow the existing business and add additional organic locations, that will increase the size of the ad fund, yes.

Operator
Operator

And that concludes today's question-and-answer session. I'd like to turn the conference back over to Mr. Hugh Sawyer for any additional or closing remarks.

Executive
Hugh E. Sawyer

Well, thanks so much, everyone, for the great questions and for your interest and support. And we look forward to talking to you again at the end of the year. Have a great day.

Operator
Operator

And that does conclude today's conference. Thank you for your participation. You may now disconnect.