Regis Corporation (RGS) Earnings Call Transcript & Summary

Thank you for joining. I'm John Jannarone, Editor-in-Chief of IPO Edge, here with my co-host Jarrett Banks. Today, we have not 1 or 2 but 3 C-suite executives from Regis, which is the largest Hair Salon operator in the world, a 100-year history doing some very exciting things, returning to profitability after COVID. We're talking about Big Data, the use of AI and a lot of other exciting stuff. Before we jump into all that and you meet today's 3 guests, I just want to remind everyone that we welcome questions, and the easiest way to submit those is right there on your Zoom portal. You can pop those in, and we'll get it in the last 10 or 15 minutes or so. Additionally, if you'd like to watch the replay, the easiest place to find it will be this afternoon on ipo-edge.com. You can also just look up the RGS ticker on Yahoo! Finance, your Bloomberg terminal, and it will appear to you there as well. With that, I'm going to pass the baton over to Jarrett, who's going to introduce Matt Doctor, who's the CEO. And shortly thereafter, his colleagues, Kersten and Jim. Jarrett, take it away.

Thanks, John, and welcome, everyone to the broadcast. I know we met in Orlando, and this is the second time meeting for us. Matt, let's start with you. Give us a little bit of your personal background and tell us what the opportunity is here.

Yes, absolutely. I appreciate John, Jarrett and thanks everybody who's tune in, listening and watching. So I started my career in finance. So I was an investment banker. I worked at JPMorgan in New York for a number of years, and I covered financial institutions. So interestingly enough, not even retail, not necessarily even franchising, A little bit of a world apart, but it was during and actually coming out of the financial crisis. So it was quite the time to build a foundation and finance there. From there, I moved in 2014 on to Burger King, where I ran all global development and franchisee performance for the Burger King brand. I had an opportunity to live around the world, accelerating our growth, both domestically and internationally as well as focusing on making sure franchisees business models are really strong. And eventually, Burger King became Restaurant Brands International through mergers with Tim Hortons and Popeyes and so on. After the merger I actually moved up to Canada for Tims where I led some development efforts there. So all that being said, I had a really good front row seat inside of a large global franchise or driving growth. After doing that for a number of years, I kind of always in the background of my mind, had a little bit of an entrepreneurial itch. I just never knew what I wanted to kind of branch into or get into from that, but I kind of always say after selling the dream of large-scale franchisee ownership for a number of years, I decided to give that a shot. So I ended up becoming a franchisee stepping on the other side of the preferred real table and really got a unique opportunity to get that perspective and see franchising really from all sides. And I think it's very unique to be able to see it through the lens of a franchisor, but also be on the ground as a franchisee. So my partners and I, we actually became the largest franchisee in the Tim Hortons system, got up to 83 restaurants, found an opportunity to sell during COVID. So we exited that business in 2020, and that kind of brings me around to reach just in the opportunity here. It's a little bit of an interesting story. I actually started at Regis as an independent contractor. And what I was helping with was the goal of making this transformation from and bringing home the transformation of our corporate salons going fully franchise. We had about 1,000 salons left at the time where I joined, and my whole goal was to wind that down and really kind of after being in the company for a few months, I kind of looked around. I was energized by the people. I saw the platform that we had with incredible brands. No doubt, was this business hit hard by the pandemic, absolutely. But I think, I was just really energized that I really wanted to be part of the solution, and I wanted to be part of the turnaround because of the platform and because of the opportunity, because of the brands we had. Because all the fundamental lying strengths of this business and the opportunity to work with folks like Kersten and Jim and the rest of the team, I was like, let's make this happen. So a couple of months into being a contractor, we made it official. I joined full time in February 2021. I became CEO of December '21, and here we are. So I think kind of that mix of finance franchising is relevant to kind of Regis at this point in time.

That's a really great story. I love hearing things like that. Give us an overview of Regis, including all the included brands in that like Supercuts? And where is the company at in its transformation.

Yes. No, absolutely. So as kind of John alluded to, we are the largest owner and network of salon brands globally, over 5,000 locations, primarily North America, vast majority in the U.S., we do have a flagship brand in Canada and some locations in the U.K., but vast majority is U.S. based. For those who may not know of Regis as a holding company, you probably know of the brands that we have, given that they do have pretty good awareness. We really have 5 primary brands that we talk about. We do have more than that on a more regional basis. But as we think about 5 primary, they cover really a wide range of diverse demographics, which is why we kind of have those 5 and we talk about the 5. People ask, should it be less or but this is kind of the number that we see that covers the widest range of options and folks within these 5 unique brands, Supercuts being our largest by footprint, high awareness, known for a convenient haircut, a great value, like all of our brands really are. SmartStyle, this is our second largest brand by footprint. It's about 1,400 locations. It's captive to Walmart, a little more full service for the Walmart shopper at 1,400, probably 1 of the biggest, if not the biggest tenants within a Walmart. And we have some regional brands. We have a regional brand cost cutters, a little more full service as well, about 550 or so locations there. I mentioned our flagship brand in Canada. First Choice Haircutters, Canada born and bred as a leader over there in that segment, and Roosters, which is one that's a little bit more higher-end appointment-based barber shop [ mail leaning ]. So those are really our 5 primary brands. We do operate, as I kind of mentioned in the franchise model. So our salons are owned and operated by independent business folks, we have about 600 franchisees. And when we talk about that transformation, I kind of mentioned how I came in to look to wind down to finish from corporate to franchise. But in terms of -- this is a business that has undergone a big business model transformation. And this started years ago. In 2017, it was a decision to go from majority corporately owned salons to a fully franchised model. And that decision was really made through a few lenses. One being benefits operationally, this is a high-touch people business. and to have a local independent operators and that ownership mentality from an operational perspective, that was a big deal. So there's a lot of benefits to bring in franchisees to be stewards of our brands and our salons. There's benefits financially moving to a much more stable, predictable recurring revenue stream from royalties, a lot of financial benefits to much more streamlined business now, low CapEx, asset light, we talk about and just clean. We were in a distribution business no longer, so it's a lot cleaner and really from a value creation perspective. I think -- and we're not -- we don't need to be shy around things of that nature. No franchisors do trade at pretty good multiples given that predictability. So when you kind of put all that together, we saw a lot of benefits from that transformation. Where we are there? By and large, from a business model perspective, we're there, it's pretty much done. Out of our over 5,000 locations, we have 70 corporate salons. So really we're there from a fully franchise perspective. I will not say that the like overall turnaround transformation is complete. I think we're just kind of in the next phase of now we got to really think about optimizing our brands, optimizing our franchise businesses, optimizing our stylists and all those and even our business. So always like now kind of looking through the lens of the needs of our franchisees, customers and stylists as we go forward.

All right. Great. Quite a large footprints indeed. How do you differentiate yourself in an industry like this? And give us some of your competitive strengths.

Yes. So I think a lot of the strength is I want to kind of hit on our brands. I really do think our brands in and of themselves are strengths and the diversity within them. As I kind of mentioned, it was a strategic thought to get down to the smallest number that can service a wide range of demographics and the awareness that they all have, whether it be nationally or within their respective regions, I think, is really strong. . You kind of mentioned the segment. But I think the segment of itself that we're in is a strength, kind of that value segmentation. And the diversity of within that value segmentation is good. It's not just one type of person who fits the bill for value, you get anything ranging from someone who really cares about their haircut, looking for a great price, is someone looking just for convenience get me in and out. So I think there's a place for everyone in this segment that we're in. For us, personally, also getting a little more specific to Regis, I really like our model that I spoke about, having our franchise owners and the corresponding business model with that. Our team I mean, we have an incredible mix of legacy folks like Jim and Kersten, who have been here for a while with that great operational know-how to tap into that 100 year of history as well as there's been a lot of new complementary adds as well with kind of the franchising expertise. But if I think about what perhaps is the biggest strength that we have, I think it's our scale. I think it's our scale, I think it's our reach across the entire country. I think there's -- and this is something I really believe that we've only scratched the surface in. I think there's a lot of strength in numbers. There's strength in acting in uniformity as brands, as franchisees. I think there's power and strength in telling similar stories and messages. I believe being able to drive behavior versus reacting and having scale to be able to do that. When you have 5,000 locations talking about similar message, relaying similar things. I believe this is a really powerful tool at an awareness level that we have that you wouldn't be able to achieve with a one-off location. And as well as, Jarrett, I know we spoke about this a little bit in previous times, but the data that we have from the customers that come through our 5,000 locations that we can glean and that we can use. I'm telling you, I really think we have only begun to scratch the surface in leveraging all of this. And if I think about going forward and a big piece of the story, I think leveraging our scale to our benefits is something that we're just starting to tap into. It could be a really great catalyst as we move beyond.

That's a great answer, and we definitely want to get into some of those tech developments a little later in the conversation. Just could you give us some milestones that the company has achieved since you've taken over as CEO?

Yes, absolutely. And I speak about this on our conference calls, and I love opportunities to talk about these things because I honestly, we've done a lot, and I'm very proud of what we've done and really what's been a fairly short period of time. When I think about kind of the time line I gave of stepping in as CEO, we always made interim in December '21 and full-time permanent just a year ago. . And if I think about what's transpired since then, let's just start with the people aspect because this is a people business through and through, take a lot of pride in our internal team and our employee base and stabilizing that and having the right leadership team and folks dedicated to this business, our relationship with our franchisees, very, very proud of the progress that we've made. There's still work to be done, but building those bridges and relationships in that partnership between us, that has been a big undertaking that we've done a lot of over the past 1.5 years. Our business model shifts. We finalized that. I mean that was a big deal, as I said, we still had about 1,400 salons of just a couple of years ago. To get that really wound down and having the benefits of that and the P&L implications that it was actually hurting our business, having the kind of last ones that were a drag on profitability winding that down as a big deal focusing more on our core business, one thing that we touched on a little bit. And it's crazy to think about this, but Regis was actually in the tech business. And as I mentioned at the time, how it's really hard to be a technology company when that is your sole focus. It is even more hard when you're a hair care franchise who are trying to be a technology company as well. So to be able to kind of really streamline our business, we sold our OpenSalon Pro tech platform to Zenoti and partnered with them, who's got a decade-long experience and point-of-sale software solutions. I think they're going to be the right answer for us for the long term, but awesome to leave that up to the experts and have us be able to focus on what we do, which is hair. So that had a lot of great technologically operational and financial implications as we were able to sell that as a gain and that kind of helped into a dovetailing in what I'm going to say next and really stabilizing the business from 2 perspectives, a P&L perspective. When I took over the business, we came out of a year in 2021, where we lost close to $70 million in EBITDA. In fiscal '22, we broke even and now 3 quarters into our fiscal year, we're positive around 16 trending towards going to be able to do 19, 20 if we're just holding to where we've guided towards. Those are big step changes in stabilizations. And even from a capital structure perspective, we had a debt maturity coming up in March of '23. And so we were able to amend and extend that and push that maturity out to August '25. So I think there's just a ton of stabilization that's been done. I think this is going to be an ever ongoing journey as I talk about, okay, these are good steps, right? Relationships, stabilization, moving profitability, balance sheet. Is this the perfect place where we're going to want to be forever? No, but I think -- it's nice that we reached a period of stabilization. So now we can really start thinking about those next things on, okay, how do we take this EBITDA from where we are to beyond. How do we grow into the capital structure and find that ideal sweet spot. These are things we're ever going to be thinking about. And oh, by the way, in the midst of all of that, putting together a pretty exciting strategy on our core business aligned with our franchisees for the future as well. So those are all things that, like I said, it's a lot in a short period of time that we're proud of. And we'll sit back and we'll be proud of that. But by no means, and I say this all the time, by no means does that mean we're getting complacent because we know we still got work to do. We still absolutely have work to do.

It's a great answer. And speaking of positive EBITDA, Kersten, I'd like to turn to you for a second. Matt mentioned those 3 quarters in a row, positive EBITDA as well as several quarters of increased system-wide same-store sales. Could you give us your thoughts on what's leading to this improvement? And how do you keep delivering consistent profitability?

Yes. Thanks, Jarrett. I think you heard a lot of the answer from Matt. First and foremost, I mean, the change in the business model in terms of winding down the company-owned locations, the sale of the POS. We also wound down our product distribution business. So you have that just in terms of moving from an opco business to a franchise business. And then everything Matt highlighted what the company has achieved since taking the helm, but it's a culmination of all those things starting to come together in addition to a maniacal focus on G&A. So put those 3 kind of key pillars together and you drive profitability, and we've seen that in this fiscal year. The other thing, I guess, I would add is since Matt joined the organization as CEO, we've really focused on our partnership with our franchisees. And I feel like now more than ever, we're aligned on what the initiatives are with the company as well as with the franchisees and focusing on stylist retention, recruitment, customer retention, all of those obviously continue to drive profitability for the business. So like Matt said, we've made a lot of improvements. There's been a huge step change in profitability, and we're starting to see the business stabilize. But there's a lot to do yet and a huge opportunity for us to continue to grow the top line.

Yes. And I would also just underscore one thing there, guys, is that over the course of my 11 years, I've seen different takes on the business and different focuses. And I think really, for the first time, we have maniacal surgical focus, as Kersten just described. You talk about the stylist being the center. I mean, that is our productive asset. And all focuses on recruiting and retention, customer retention, driving those components through marketing and CRM and loyalty. And then the tech component that Matt talked about, highly focused on that, getting everyone migrated over to a very capable POS platform. The operational support that we provide our franchisees, we have -- to Matt's earlier point, there's some really talented people that really know this business well, and we're able to go out now more proactively and teach and train and assist and guide our owners on the business. And then wrap that all up with also what Kersten said, and that's this thing called relationship. The relationship in our business is borne out of a stylist and the customer in the chair. And that really permeates its way all the way through the business. And that business between franchise or franchisee is that relationship is critical, and we've taken that very seriously. And by no means am I ready to waive the checkered flag, but we have come a long way in that business. We have advisory councils that we work with very closely to ensure that we're partnered that we're on the same page. By no means are we out there just telling franchisees what we're going to do, we're really working with them to gain their insights. We have some very capable long-term legacy owners that have phenomenal insights on the business. And we definitely leverage that insight and that expertise.

That's a great additional point there, Jim. Kersten, how do you think about financial statements and some of the changes that we've discussed in the business?

That's a great question. Our financial statements, I think, can be easily misinterpreted with the change in the business model, there's a lot of what I'll call [indiscernible] in our financial statements, mean specifically, let's just talk about the revenue line. If you look at our P&L on a year-over-year basis, revenue is going down. And that's for a couple of different reasons. One, we've talked about us transitioning out of the opco salons, that revenue has come down, but those were unprofitable salons. So as revenue has come down, as we exited those locations, EBITDA has gone up. . And then secondly, we have accounting that impacts our P&L. So for example, the rent, we have rent revenue and rent expense that equal each other have no impact on profitability, but you see that rent line in revenue going down. So if you look at like total revenue, it looks like on a year-over-year basis, we're going down. What are investors and potential investors should be focused on is our core business revenue, which is royalties and fees. And when you look at that, there's an improvement on a year-over-year basis. So that's one example, Jarrett. The other example is on the balance sheet. We actually get this question all the time because I think when you screen Regis, you get not only our debt that we have on our balance sheet, but it's also pulling in the operating leases that from an accounting standpoint, we need to put on our balance sheet. And so, let me explain that a little bit, those are operating leases that Regis is on the head lease, but we sublease those to our franchisees. So those leases are serviced by our franchisees. They're paid for by our franchisees, right? So -- well, technically, it is a liability of Regis Corporation, and that's why it's on our balance sheet. It's not debt that we're servicing. So really, investors should be focused on the true debt level, which is [ $185 ] not $585 million. So I think there's a lot of confusion when you look at our financial statements and part of that is the change in the business model. Part of that is accounting that makes that confusing.

Yes. And it's an opportunity for us to do, quite frankly, probably a better job of, right? So as we think about how we're laying this out, how we're talking about it, it's something that we're ever ongoing thinking about how do we make this a little more clear and focus on the right metrics. So those are the things that we're cognizant of as we continue to move forward.

Great. Important distinctions to be made and glad that you're using our platform to do that. Matt, now let's get into some of the key priorities for the business in this year and next year. And particularly, you've touched on this a little bit, but let's talk about the technology, the data, the scale, how this can all come together?

Yes. Absolutely. So I'm trying to keep things -- trying to keep things pretty simple and focused. On our own house side, have we been doing, it's continuing to manage that G&A figure, continuing to wind down the company-owned salons. I mean that's kind of the Regis side of the house, always ongoing, as Jim mentioned, and we touched on continuing to foster relationships with the franchisees, that will never stop. But really, it's -- now let's turn our focus to driving profitable sales, like I don't want to say just sales for sales sake. But profitable sales for our franchisees with focus on the 2 biggest levers there, still focusing on how do we recruit and retain stylists the best we possibly can, how do we have the story of why folks who want to work for our brands, and how do we make sure that, that story is being told in relevant places. So it's just not falling on deaf ears. And then really, there's been a bit of a shift. I think it's time to start thinking about how we drive more customer traffic into our salons. I think we've done a lot of foundational work on muscle that was needed to set ourselves up to be able to do so, start having that right story for recruiting, start investing in our visits back to the beauty schools and colleges, start having great fundamental foundational elements of customer retention, muscle that we didn't really have is focused on much before, we start talking and implementing things like CRM and loyalty. So we have -- when we drive new guests or lapsed guests, we can look to keep them, which is so important. And then to your point, Jarrett like leveraging our size, scale, data completing the rollout of our technology solutions Zenoti because that's going to be a major key and unlock to be able to do a lot of the things that we're talking about. Having a loyalty program built in is going to be key, the right POS engine for that is key, which our technology part will be able to do that, to be able to outreach to our customers and really get a sense of what they're saying and to start creating a good 2-way dialogue that we haven't had in the past just to learn more from them to keep that relationship going before and after they're in the chair and not just stop when they're there. We're learning a lot through our data that we have a great opportunity to bring folks back. Like there's a lot of people who come into our salons and they're one and done, like the power of being able to talk to them entice them back in for just one more incremental visit is huge. So really just really focusing on finish the tech rollout, which would be a major unlock to ensuring that we're building those strengths and relationships with our customers to drive traffic which then ultimately has a lot of byproduct into stylist retention, if they're busier, they're going to stay and recruitment, if it's busy, they're going to want to come. So really focused on those 3 main priorities for our broader business and continuing to watch our own home from a G&A and corporate salon perspective. And just to touch a little bit on going into the future and some innovation and not gathering too much away. But I kind of alluded this to a little bit on the last call. Yes, like a lot of our focus is on that. But hey, maybe there's some things that we should consider that are stretches of our brands. Are there services we're not offering that maybe we should think about that can drive incremental revenue to our box? Is there geographies that we're not in that they have really interesting untapped opportunity there. Things that we're kind of working on, is there a new image for some of our brands and maybe very interesting. Are there ways to bring technology into the experience beyond how it already is that may have incremental. So things like that, I'm going to be purposely vague on. But I want folks to know that, hey, there are other things that we're thinking about that could be new and exciting on top of driving our core business as well.

I think that's really smart. Kersten, SG&A has been a bright spot. Could you tell us about some areas where you're seeing increased efficiencies and where you're focusing your investment spend at the moment?

Yes, you're right. G&A has been a bright spot for us. And just to put some numbers around it, we've taken $66 million of G&A out of the P&L since fiscal year '20. Our entire organization has done an outstanding job finding efficiencies with -- and not compromising the support that we can provide to our franchisees. In fact, we've actually increased our level of field support. And provided more and even improved tools for our franchisees and their teams. So we flattened out the organization. In some cases, we've had to be a little bit scrappy and nimble, right, and be flexible with our G&A dollars. It's -- we're super thoughtful about how we spend those dollars and focus those G&A dollars on areas that will continue to drive traffic and drive the business, as we've talked about earlier in this call, retention of customers and stylists recruiting. I mean those are areas we're very focused on and ensuring that our G&A dollars are being spent wisely there. .

Great. I want to bring Jim back into the conversation. You recently held an event in Las Vegas for stylists. What can you tell us about that? And will there be more in the future?

Yes. Thanks, Jarrett, a pretty cool deal. We have placed a great deal of focus on education. And if you -- I've been in hundreds of salons and spent thousands of hours with stylists. And when you ask them, what can I do for you today or for your near future, the question is always the same. I want to be able to advance my craft and my capability. And that's a key aspect to retention, which is so critical in today's job market, especially in the styling world. We developed as part of our initiatives that we've all kind of spoken to today. We've got to focus on our stylist recruiting and retention, and that word, retention, what keeps them, what makes it sticky, what makes them want to hang out with us. And having spent many years in this industry, we would have these events and training events over the course of each year that would make a significant difference. No one would want to leave because they couldn't wait to go to the next event where they're going to get training and some fun and some recognition. And so we've really brought that from what we did on the corporate side. Now we've brought it over to the franchise side of the business. And we just kicked it off in this last the event in Las Vegas was Supercuts focused. Over 800 stylists and owners attended. And it's put on -- we have an incredible Head of Education, Senior Vice President, Jamie Suarez, who has been in the industry for a very long time and an expert extremely well-known and is the architect of these events. And he and his team of artistic directors host the event, along with all of our key vendors. It's at a big hotel in Vegas. So you get all the cool Vegas lights and fun and all that, that brings and stylists just love it. We all love it, to be honest. And the event is -- it's about retention, it's about education. It's about being part of something bigger. And it's a monstrous success for us. We have another event coming up in June in Miami, where we're going to bring in another large group of owners and another large group of stylists. And the intent is to create kind of regularity and expectation of this that when you're part of this Regis system and part of the Regis brands and you're a stylist, you get to be part of this cool stuff and very, very less apt to want to kind of migrate to another place, another home. We try to create the culture and that family kind of -- that's the other beauty of having franchise ownership you can really -- the owners can create a real kind of cozy family culture that is so critical to the DNA and the mindset of a stylist. So yes, the events are great. We're looking forward to the one in June, and we've got more on the docket coming.

Yes. And just to piggyback off that a little bit. This was another example of collaboration with our franchisees, right? This is something that hey, this is not something that came from our minds and like, hey, guys, let's throw a big event. This was working with them to say, "Hey, what are some things that can really differentiate us and get people talking. And a lot of the dialogue post that event from franchisees is, "Hey, all of the folks who went -- I mean, keeping a productive stylist is key because the rehire somebody who had that was that productive is a big undertaking. So retention is just as important, if not more important, than recruiting itself at this point, especially from some of your best and your best. These are going back into salons. Stylists are energized when they go back in. The teams are energized as the idea they can end up being on this trip as well. So it's really an awesome ecosystem. And it's a great opportunity for us to learn, right? To be around 800-plus stylists and owners to hear firsthand, "Hey, this is what's going well. These are the challenges. This is -- and we can kind of test our own theories out a little bit, too. This is what we're working on, what we all think. So it's just a great differentiator. And another thing that you get when we talk about advantages at scale, it's only something companies like us can put on versus a one-off location .

Yes. We take advantage of them. We have all those folks that we have the kind of their focus for a few days. We'll bring the owners in as we will have done and we're actually expanding this for the Miami trip where we'll have owner tracks. So the owners can come in and know well test drives some ideas to Matt's point. We'll talk about, hey, we're thinking about this and marketing we want to kind of walk you through it. Here's what we're doing in technology. I'll bring in the ops team, and we'll talk about, "Hey, we're going to bring up some franchisees, and we're going to talk about some best practices that we think are scalable that we think that you can all benefit from. And so we really -- this becomes kind of this multifaceted approach, all kind of wrapped around the stylist event that gets them extraordinarily excited and it checks that important box that advancement of my craft and my capabilities so.

That's a great segue into my next question, Jim. How are you innovating in product, service, technology and training to elevate your salon performance?

Yes, great question. And there's a lot there, a lot we're doing and a lot yet to go, when you look at the components, you look at education, and I can't stress education enough. But when you talk about education, there's kind of 2 aspects of education. There's the in-person, hands-on training which actually in the industry, if you take a look at competition, you're starting to see less and less of the hands-on in-person type training. Another reason that makes those events so special because we're all there together, and you actually get to see the trainer actually cut the hair, color the hair and do what they're doing. But there's also the digital side of that. And I am particularly impressed with the work that the organization has done. This is something Jamie has also done in the last 3, 4 years. We have a significant digital library. We call it the education playground of virtual training hundreds of short vignettes that teach stylists right on their phone. They can see how to do a certain kind of fade clipper cut or a baliage or a certain type of style. So what we have found from an innovation standpoint is we want to make sure we don't lose sight of the hands-on component. We think that's a major differentiator for us. And at the same time, we have the efficiencies and the simplicity and the speed of offering a digital solution as well. When you take a look -- so that's on the -- just on the training side. So a big, big focus there. When you look at the POS system side, to our points about going with Zenoti, a very capable POS platform, there's a lot there that it is slowly going to come to the forefront. But our ability, how we manage appointments, monitor appointments, monitor schedules ensuring that there's predictability in schedules and accuracy in schedules. This is really important to us stylists, especially in today's post-COVID world. Flexibility of staffing, flexibility -- a lot of moms work for us with small children with education and daycare. So we have to manage that process effectively. And the platform that we have with Zenoti is going to give us that capability to be incredibly efficient in that arena. And one other -- as just an example, we have an automated salon answering system, a phone answering system, IVR, you're probably familiar with and the interactive voice response. It makes it so that if you think of a salon, you've got 3 stylists working, they're all cutting hair. The last thing you want to do is a stylist is set everything down and have to walk up and answer the phone. So we've contracted with a vendor, and we're working at offering now. We now have the solution is being scaled to our franchisees. And when you take a look at the math on it, you look at the number of minutes that are saved for a stylist not having to go answer the phone, and the phone is able to actually -- the response is able to handle that situation and save stylist time has a magnificent effect and a multiple effect across the system on time saved. So a few things, monitoring product sales, another kind of nod to the Zenoti system. Our product sales, the professional beauty products that we sell in addition to our services are an important part of our business and the system being able to track the sales of the top-selling items to accurately reorder inventory and maintain supply chain is a really critical aspect of the business. And all of that through technology and the innovation that we have with Zenoti is going to make a pretty significant difference for us as we look into the near future. So some pretty cool stuff happening.

Great. I'm going to pass the baton to my colleague, John here. We're going to take questions from the audience.