Sally Beauty Holdings (NYSE:SBH) Q3 2023 Earnings Conference Call August 3, 2023 8:30 AM ET

Company Participants

Denise Paulonis - President, Chief Executive Officer

Marlo Cormier - Senior Vice President, Chief Financial Officer

Jeff Harkins - Vice President, Investor Relations

Conference Call Participants

Joanna - Cowen

Ashley Helgans - Jefferies

Olivia Tong - Raymond James

Operator

Good morning everyone and welcome to Sally Beauty Holdings conference call to discuss the company’s fiscal 2023 third quarter results.

All participants have been placed in a listen-only mode. After management’s prepared remarks, there will be a question and answer session. Additional instructions will be given at that time.

Now I would like to turn the call over to Jeff Harkins, Vice President of Investor Relations and Treasurer for Sally Beauty Holdings. Please go ahead.

Jeff Harkins

Thank you. Good morning everyone and thank you for joining us. With me on the call today are Denise Paulonis, President and Chief Executive Officer, and Marlo Cormier, Chief Financial Officer.

Before we begin, I would like to remind everyone that management’s remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10-K and other filings with the SEC. Any forward-looking statements made on this call represent our views only as of today and we undertake no obligation to update them.

The company has provided a detailed explanation and reconciliations of its adjusting items and non-GAAP financial measures in its earnings press release and on its website.

Now I’d like to turn the call over to Denise to begin the formal remarks.

Denise Paulonis

Thank you Jeff, and good morning everyone. Three quarters into our fiscal year, we are on track with our operating plans and the financial guidance we laid out at the beginning of the year. Engagement from our Sally and BSG customers remains strong and our core color category is growing in both segments.

In Q3, we delivered net sales of $931 million and strong gross margin performance of 51%. Additionally, SG&A expenses were below prior year, supported by a continued focus on cost efficiencies and the realized benefit of our store and distribution center optimization efforts. As a result, we delivered third quarter adjusted EBITDA of $119 million and free cash flow of $32 million.