Sally Beauty Holdings, Inc. (NYSE:SBH) Q2 2024 Earnings Conference Call May 9, 2024 8:30 AM ET

Company Participants

Jeff Harkins - Vice President, Investor Relations and Treasurer
Denise Paulonis - President and Chief Executive Officer
Marlo Cormier - Chief Financial Officer

Conference Call Participants

Oliver Chen - Cowen
Olivia Tong - Raymond James
Ashley Helgans - Jefferies
Simeon Gutman - Morgan Stanley

Operator

Good morning, everyone and welcome to the Sally Beauty Holdings Conference Call to discuss the company’s Second Quarter Fiscal 2024 Results. [Operator Instructions] 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’d 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 obligations 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. Our teams navigated dynamic sales trends during the second quarter while continuing to execute against our strategic priorities and deliver engaging experiences for our customers. Net sales came in at the lower end of our expectations at $908 million, down 1% and comparable sales declined 1.5%. Our sales results reflect notable strength and momentum in our BSG segment, offset by softer sales performance at Sally amidst weather challenges in January and ongoing customer frugality. Adjusted gross margin was 51%, which came in lower than we anticipated due to higher promotional penetration as well as an unfavorable sales mix shift out of our highest margin Sally U.S. business. .

We continue to execute solid cost controls with adjusted SG&A of 1% versus last year, in line with our expectations. The business generated solid cash flow from operations of $37 million, allowing us to return value to shareholders via continued share repurchase activity. We also strengthened the balance sheet with the refinancing of our 2025 senior unsecured notes. More on that later from Marlo.