Sally Beauty Holdings considering refinancing options for its debt

By Jennifer Lanning Drey

Portland, Ore., Feb. 4 - Sally Beauty Holdings, Inc. is proactively considering its refinancing options and the conditions of the debt markets, despite not currently needing to make any changes to its debt structure, Mark Flaherty, chief financial officer of Sally, said Thursday during its earnings conference call for the first quarter of fiscal 2010.

"We are in the enviable position of not needing to do anything with our debt at this time," Flaherty said.

The CFO said the company would provide more insight regarding its thoughts on a potential refinancing in the months ahead.

Sally ended the first quarter with cash and cash equivalents of $31.8 million at Dec. 31 and a zero balance on its asset-based loan revolving credit facility. Borrowing capacity on the ABL facility was approximately $328.9 million at the end of the first quarter.

The company had $1.7 billion of debt excluding capital leases at Dec. 31.

In January, Sally made a mandatory $22.3 million repayment on its senior term loan, Gary Winterhalter, the company's chief executive officer, said during the call.

The company posted first-quarter consolidated net sales of $704.9 million, up more than 9% from the same period of fiscal 2009. Same-store sales grew 3.8% during the period, as compared to the prior-year first quarter.

Adjusted EBITDA increased 7.1% in the first quarter to $87.4 million, versus adjusted EBITDA of $81.6 million in the first quarter of fiscal 2009.

Net cash provided by operating activities in the first quarter was $19.8 million.

"We had a strong first quarter and a good start to the new fiscal year. We believe we will have another year of strong performance, generating revenue growth and gross margin expansion and strong cash flow," Winterhalter said.

Sally Beauty is a Denton, Texas-based specialty retailer and distributor of professional beauty supplies.

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