Daniel J. Hanrahan - Chief Executive Officer & Director Steven M. Spiegel - Chief Financial Officer & Executive Vice President

Jeff S. Stein - Northcoast Research Partners LLC Stephanie Schiller Wissink - Piper Jaffray & Co (Broker) Jill Caruthers Nelson - Johnson Rice & Co. LLC

Good morning. My name is Jessica and I will be your conference facilitator today. Today's call is being recorded. At this time, I'd like to welcome everyone to the Regis Corporation's Fiscal 2015 Third Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. If anyone has not received a copy of today's press release, please call Regis Corporation at 952-806-2154 and a copy will be faxed to you immediately. If you wish to access the replay for this call, you may do so by dialing 1-888-203-1112, access code 6115573. The replay will be available 60 minutes after the conclusion of today's call. I would like to remind everyone that to the extent the company's statement or comments this morning represent forward-looking statements, I refer you to the risk factors and other cautionary factors in today's news release as well as the company's SEC filings. Reconciliation to non-GAAP financial measures mentioned in the following presentation as well as others can be found on their website at www.regiscorp.com. Speaking today will be Dan Hanrahan, Chief Executive Officer; and Steve Spiegel, Chief Financial Officer. After management has completed its review of the quarter, we will open the call for questions. I'd now like to turn the call over to Mr. Hanrahan for his comments. Dan, you may begin. Daniel J. Hanrahan - Chief Executive Officer & Director: Thank you, Jessica. Good morning, everyone, and thank you for joining us today. With me today are Steve Spiegel, our Executive Vice President and Chief Financial Officer; Eric Bakken, our Executive Vice President and Chief Administrative Officer; and Mark Fosland, our Senior Vice President of Finance. Before discuss our third quarter performance, I'd like you to know that today is Stylist Appreciation Day at Regis and I would like to take a moment to thank all of our stylists for their passion and energy in delivering great guest experiences day in and day out. Our stylists are the lifeline of our business and without them we wouldn't be in business. Last quarter I discussed two main themes. First, my continued confidence in Regis' future as we execute our strategy to build the leadership culture, to create a great environment for stylists to be successful and have satisfying careers, and second, my perspective around the level of work ahead of us to deliver sustainable growth in revenue and profits. As I discuss third quarter results, you will hear these two themes resonate in my comments and understand while our strategy is working, we still have work to do to turn Regis. In the third quarter, we continue to work on building the foundation from which to grow. We continue to focus on leadership development, technical education for stylists and asset protection as key pillars to fix the business. I remain encouraged by the positive results, more than half our field leaders are sustaining, where we have strong leaders executing our strategy in creating a positive culture in salons. We are seeing revenues increase. Tools and executional processes we developed in the hands of the right leaders are working. To achieve the broader scale turn, our underperforming field leaders, and there are still too many of them, need to grow and grow consistently. In these situations, we are providing additional training and development or upgrading talent as necessary. While our emphasis is on training all of our field and salon leaders to execute the strategy, we have a particular focus on those leaders who have yet to show revenue progress. We are transforming our culture into one defined by guest focus, enthusiasm, accountability and ownership that creates an environment for stylists to succeed. While we continue to make progress, we are not there yet. The process of transforming the culture in 7,000 salons and impacting over 40,000 employees is moving in the right direction but it is not linear. Third quarter result are reflective of this and we did not see a significant change in trends. Year-to-date, we continue to have just over half our district leaders, regional directors and regional vice presidents comping positively. Our best leaders continue to execute and are driving sustainable improvement by using the processes and metrics we provide to drive quarter after quarter growth in their districts and salons. Nearly 70% of the district leaders who grew their comps in the third quarter have been positive over the last three quarters. These leaders are becoming better at leading their salons and hiring and retaining their stylists as they lap easier comps from 2014. Supercuts and SmartStyle remain our best performers with a 1.3% service comp increase in the third quarter. During the third quarter, we continue to enhance our point-of-sale system in order to improve our guest and stylists experiences. Our November point-of-sale release delivered new levels of guest familiarity through digital integration with customer satisfaction programs, mobile and web check-in and more extensive guest data captured. Since its launch, over 350,000 guests have downloaded our Supercuts mobile app. We have also seen progress since launching our enhanced Supercuts website last quarter. Site visitation is up over 35%. Visitors are spending more time on our content-rich site and online check-ins continue to grow weekly. In both cases, the ability to locate salons and check-in online or using mobile devices reduces wait time for our guests and the time it takes for stylists to check guests in at our salons. My Salon Listens, our guest satisfaction measurement and feedback tool, launched last quarter to the entire Regis system. It's providing us with almost instant feedback from our guest. This tool enables our guest to provide ratings and commentaries about their service experience. Our leaders use guest verbatim comments and satisfaction scores to deliver positive reinforcement and coaching moments to our stylists and efforts to provide exceptional guest experiences. You can go into any of our salons and see stylists printing their positive guest feedback and hanging it on the wall in the back room. The My Salon Listens tool is helping us create excitement around guest satisfaction that builds a performance culture we are working to create in the salons. In March, we launched national television advertising for Supercuts. I'm pleased with the quality of these ads and how well they capture the brand's positioning. If you haven't yet seen our ads, feel free to visit our supercuts.com website and take a look for yourself. They are topical, engaging, and support our corporate stores as well as our growing franchise business. Year-to-date, we have added 106 new franchisees to the system and opened 147 new franchise salons. These new franchisees are helping to expand the Supercuts footprint and contributing to revenue and cash flow increases. We also continue to seek growth from our very strong existing franchisee base. I would like to now move on to what we are continuing to do to turn the company. As I mentioned at the beginning of my comments, our three areas of focus remain leadership development, asset protection, and technical education. When implemented effectively, these initiatives will drive our growth by retaining top-performing salon managers and stylists. When we are executing well throughout the entire organization, they will provide Regis with distinct competitive advantages that come with our scale. Few if any salon companies in our industry can provide stylists leadership development, industry leading technical and experiential education programs, and as a result a wide variety of career opportunities. On the leadership development front, we launched several important training programs during the third quarter. We started by introducing the next phase of regional vice president and regional director leadership training which has shifted from basis foundational development to greater focus on operational excellence, salon level execution and strategic thinking. I mentioned in the past, we have done a good job changing the culture at the senior most levels of our field organization and that we need to move faster to change the culture at the district and salon levels. And we are now doing just that by leveraging training programs to integrate technical education with positive leadership developed for our district leaders and salon managers. Since our last call, we trained in excess of 500 district leaders, representing over half of our entire district leader group. This training focused on leadership foundational skills, promoting collaboration team work and best practices for growing revenues. This was the first leadership training; most of these district leaders have ever received. Future district leader development programs will evolve from becoming a better leader to making Regis the employer of choice in the category. In the fourth quarter, we will expand our curriculum to emphasis successful recruitment, on-boarding and retention of high performing salon managers in a multi-unit environment. We also piloted salon manager training during the third quarter, focused on stylist recruitment, on-boarding and retention, guest retention and basic salon operations. We are using learnings from these pilots to inform the future direction of salon manager training. As you can see, leadership development started at our most senior field levels and is working its way into our salons, where it can have the most influence on our performance. These efforts are designed to increase retention of salon managers and stylists and improve our salon level execution capabilities and guest satisfaction. Let's move on now to asset protection. Our asset protection team's goal is consistent with our overall strategy of creating an environment where stylists can have successful and satisfying careers. Asset protection is working together with our field leaders, contributing to the success of our salon managers and stylists. Through our asset protection awareness program and salon visits, they are training field leaders and stylists to make the right choices to optimize the individual success and revenues of Regis. Consequently they are helping align interests of stylists and shareholders to grow profitability. During the third quarter, the asset protection team conducted approximately 900 awareness training sessions and salon visits bringing our year-to-date total to approximately 2700. Sales improvements from these visits were sustained in the third quarter as our field leaders hold salons accountable for acceptable asset protection behaviors. The partnering of asset protection with our operational leaders is adding significant value to our organization and is a key part of our cultural transformation. We thoughtfully invested in this area to capitalize on the opportunity to grow revenues and profits at the salon level and results today continue to suggest, we will get a good return on these investments. Stylists are motivated when we help them develop their craft and a very important way to improve stylists retention is to provide relevant and meaningful technical education. Our human resources team is fulfilling this promise in several ways. First, we have been working to become more localized in a way we deliver and execute technical and experiential training by onboarding and aligning artistic directors with regional directors. We made progress onboarding new artistic directors and developing associated training programs and tools. The response of the training has been very good and we are building out the technical training team as fast as we can find the right people. Second, we continue to leverage our vendor partners to develop and pilot training programs for our people. These pilot programs have been successful, as evidenced by positive feedback we've received from our stylists. Vendor sponsored training is an important part of our training strategy and we will continue to partner with our vendors to meet our stylists' ongoing training needs. Finally, a key part of the success of our Supercuts brand is a Supercuts-specific stylist technical training program. This program is industry leading and the reason our guests can confidently go to any Supercuts and count on a high quality experience. We have been expanding Supercuts technical education program to support growth in our franchise base. Before concluding, I would like to make one further comment on our third quarter performance. While we continue to make progress with our turnaround, adjusted EBITDA declined. Same-store sales growth remains the single most important contributing factor that will lead to EBITDA growth. Investments we are making to improve field leadership skills, stylist retention and execution capabilities will lead to delighted guests and ultimately same-store sales and cash flow growth. Because we are a people organization, investments we make often flow through our income statement instead of our balance sheet. These investments continue to build our foundation and will enable us to turn the business and provide significant operating leverage when successful. We remain focused on funding investments and managing inflation through disciplined cost management and rigorous review of all spending to ensure we continue to protect the strong balance sheet we have built. Our strategy in the hands of strong leaders is working, leveraging the foundation we are building across all of our salons will be what delivers the broad scaled turn. Sustained execution improvement, just over half of our business gives us confidence that tools and executional processes we developed in the hands of the right leaders, delivers stylists retention and revenue growth. While we recognize transforming the culture across our entire salon portfolio and stylist base takes time, the other half of our business must improve for Regis to grow overall. To that end, we remain focused on our strategy of developing our leaders, providing technical training to our stylists and helping stylists make the right decision through asset protection training. While our progress continues to move in the right direction, improvement in our results will not be linear. As we continue to develop and upgrade our leaders, the variability will smooth over time. I'd like to now turn the call over Steve. Steven M. Spiegel - Chief Financial Officer & Executive Vice President: Thank you, Dan, and good morning. Before discussing our performance for the third quarter, I want to remind you of two housekeeping items. First, included in today's press release as well as on our corporate website is a reconciliation with the reported results to earnings as adjusted for the impact of discrete items of the third quarter of the current and prior years. Second, the presence of a valuation allowance against most of our deferred tax assets, affects comparability of reported and as adjusted results to prior periods. Income tax expense for the quarter of $6.8 million includes a discrete non-cash charge of $2 million to establish valuation allowance against the majority of our Canadian deferred tax assets and a $4.3 million non-cash tax charge related to tax benefits, we claim for goodwill amortization and do not recognize for GAAP purposes. On a year-to-date basis, we recognized $10.9 million of non-cash charges relating to this goodwill amortization. While the accounting for this is highly technical, this non-cash tax expense should approximate $9 million for the full fiscal year as a portion of the expense taken to-date reverses in the fourth quarter. As I've mentioned in the past, this non-cash charge will continue annually in decreasing amounts as long as we have a deferred tax asset valuation allowance in place and can fluctuate significantly from quarter-to-quarter. In the third quarter, Regis reported a net loss of $3.7 million or $0.07 per diluted share. When considering, this includes a $0.07 per share unfavorable impact related to the non-cash effect of the deferred tax valuation allowance on income tax expense and net discrete expense, our results were essentially flat. Since our press release includes detailed explanations for our major P&L line items, my comments will bridge as adjusted results for the third quarter of fiscal 2015 with those of the third quarter of fiscal 2014. As adjusted EBITDA for the quarter came in at $22.8 million compared to $26 million in the prior year quarter. Excluding discrete impacts, third quarter diluted net loss per share as adjusted was $0.07 compared to a loss of $0.15 in the prior year quarter. This represents improvement of $0.11 per share when excluding the impact related to the deferred tax valuation allowance. This improvement was primarily driven by lower depreciation, improved salon productivity, lower interest expense, cost savings, higher franchise royalties and fees, and reduced health insurance costs. These were probably offset by lower sales comps, planned strategic investments around asset protection in human resources, higher incentives as we lapped an incentive-light year, minimum wage and other inflationary increases, the lapping of certain onetime benefits and lower non-cash equity and earnings of Empire Education Group. Moving on to liquidity, we remain focused on funding investments and managing inflation through disciplined cost management and rigorous review of all spending to ensure we continue to protect our strong balance sheet. To that end, our business generated close to $35 million of operating cash flow during the quarter. We finished the quarter with $213 million of cash, $120 million of total debt, and no outstanding borrowings under our $400 million revolving credit facility. This concludes the financial portion of the call. We would now like to answer any questions you may have. Jessica, can you please provide the instructions for the Q&A portion of the call?

Thank you, Dan and Steve. The question-and-answer session will begin at this time. We'll take our first question from Jeff Stein with Northcoast Research. Jeff S. Stein - Northcoast Research Partners LLC: Good morning guys. Just two questions real quickly. First of all Dan in your released you talked a lot about leadership development training and I'm just kind of curious how we should think about the impact this is going to have on your cost structure on a go forward basis? And secondly just taking a look at your comp-store sales by division, MasterCuts kind of jumps off the page as an underperformer as well as your Regis division. Since MasterCuts is kind of a value-based business, why do you think they are lagging so far behind Supercuts and what do you think – or what corrective measures do you think need to be taken to narrow the performance gap between your mall-based salons and the rest of the company? Thank you. Daniel J. Hanrahan - Chief Executive Officer & Director: Thanks Jeff. I'll start with the leadership development, training and the cost structure. We've been very careful that you heard Steve talk about in his comments to make sure that we manage all of our investments, whether they're capital investments, or they're investments that pass through our P&L very, very careful. And if you take a step back and you look at what we've done over the last few years and go back to 2011 and look at where G&A is today. G&A is down – corporate G&A – G&A is down about $30 million and during that time, we've put an asset protection organization in place. We've put a human resources organization in place. We're adding a technical training team and we're doing all of the leadership development and training. So we've been very, very careful to make sure that we're funded within the G&A cost that we have. And if you look to our field G&A, when we made the move from a branded approach to managing the field to a geographic approach, there was also substantial G&A savings there. So we've watched this very carefully and we'll continue to watch it. In terms of comp stores by division, I'll start with Supercuts and SmartStyle. When we look at the business and we look at where we're going to make our investments to do the best we can to drive traffic into the stores. And we believe a large part of our turn is driven by good leaders executing well. But having said that, we looked at Supercuts and we looked at SmartStyle and between the two of them and when you add our franchise salons in there, that's about 5000 salons. And it gives us the opportunity to leverage things like the mobile apps that I talked about earlier for Supercuts, the websites that we've built for both Supercuts and SmartStyle, the brand positioning work that we've done for both. And so we went after where we could have the biggest impact. And so the combination of good leadership and I will say that our marketing team has done a terrific job. The marketing that they've done for SmartStyle and Supercuts has also helped us. In regards the mall based, we made a move few months ago where we asked Ken Warfield to step up and take Regis on. And what we've seen it's early, so it's too early to say that Ken has had any significant – made any significant improvement there. But I had spent quite a bit of time with Ken in salons in his asset protection role and I watched the impact that he had and his natural leadership ability. So that's a next step and we will be investing in a website for Regis in this coming year. And we will be doing the same thing for MasterCuts. And then just one last comment on MasterCuts because I think it's a insightful question, is that where we've got leaders, they've been able to grow the business in MasterCuts as well. It's not just Supercuts and SmartStyle but good leaders have made an impact there. So we do see a difference, even in our MasterCuts business between good leaders and leaders that aren't as strong. Jeff S. Stein - Northcoast Research Partners LLC: Great. Thank you. Daniel J. Hanrahan - Chief Executive Officer & Director: You bet. Thanks, Jeff.

Our next question will from Steph Wissink with Piper Jaffray. Stephanie Schiller Wissink - Piper Jaffray & Co (Broker): Good morning everyone. We just have a couple of questions. First, just as a follow-up to the prior question regarding marketing effectiveness, can you just help us appreciate where your marketing spend was and where it is, maybe where it's going in terms of the mediums where you're finding some effectiveness and then by different channel if you're thinking about it that way, just help maybe frame up the grid for how marketing is being used? And then the second question just respect to the competitive landscape, if you could talk about what you're seeing out there, whether its real estate or marketing and pricing related that would be very helpful? Thank you. Daniel J. Hanrahan - Chief Executive Officer & Director: Okay. So marketing effectiveness. You know, our marketing has been fairly promotional in years past Steph. So when we did something marketing-related, it was usually coupon-related. And where we've been spending our marketing money since is on developing tools that both our guests can use and our stylists can use. So, you know, the one that – couple that I'm really excited about is the mobile app and the website. Seeing the number of people in just such a short amount of time that we're up over 350,000 people signing up for our mobile app is really exciting. And same thing with the number of people coming through our website at Supercuts to sign in for their experience has been really strong and we just launched a national TV campaign with Supercuts. So instead of being just so promotionally-oriented, we're spending more of our money developing these tools. The My Salon Listens tool that I referenced in my comments is a terrific tool because it allows us to get instantaneous feedback. If we have a guest email, we get instantaneous feedback from a guest on their experience and so the stylist knows right away if it was a – did she deliver a good experience, is there a room for improvement and so that's another very valuable tool. So we're spending our money more in those areas than in just dollars off or cents off. And when you have – when we're starting to get all of these email addresses, and you combine that with the power of a really well-done website, we can now put offers in front of people. And it doesn't necessarily have to be an offer, we can start creating engagement with our brands with people on products, on different haircuts, and it just allows us to have a much better conversation with a guest digitally than we had in the past when we were only offering a discount of some type. In terms of competitive landscape, in real estate, we have been building out stores for our franchisees and our real estate team has done a terrific job. As I mentioned, we've opened 147 new Supercuts stores year-to-date and our team is doing a nice job of finding the space. It obviously varies market by market and it's not always easy in any given market and some markets are easier than others, but we've built a really good team there that has their finger on the pulse of what's going on in the markets we're growing in so I've got a lot of confidence in them. In terms of pricing, which I think was your other question. We haven't seen significant changes in pricing. We've got a pretty sophisticated tool that allows us to know what pricing is market by market obviously in our salons, been in all the other chain salons, so we haven't seen anybody do anything significant on pricing and in certain areas we've seen prices go up a little bit, but overall it's been relatively flat. Stephanie Schiller Wissink - Piper Jaffray & Co (Broker): Great. Just two more, with respect to the cost side of the model, outside of labor inflation, are there any other offsets that we should be thinking about whether it is real estate rents or other that might help at the salon productivity level? And then just a curiosity question around style trends, in your history you've seen a couple of periods where you've had nice style tailwinds and I'm just curious if there's anything in the cut or color space that might benefit both the Regis chain but also some of your value chains on the cutting side from a style trend set standpoint? Daniel J. Hanrahan - Chief Executive Officer & Director: Let me take style. I am quite a bit more stylist than Steve is and then I'll flip it to Steve for cost. You know we believe that given our size that we can have an influence on style and we made a – we hired an artistic director. Man's name is Jamie Suarez and came out of our salons. And I've said in a number of the training programs, this district leader training programs that I was referencing earlier, which is really the first leadership training development our district leaders have had and I've watched the reaction to the leadership training and the excitement and their enthusiasm for becoming better at their job. But a portion of that is also around technical training and I watched Jamie deliver the style information and then we partner with one of our largest vendors on this. And I watched the style information that they provide and so I've not seen anything that is certainly anything that we're going to run into that's going to cause us headwinds. I can't prognosticate if there's anything in there that's going to cause tailwinds but I can tell you that between our vendor partners and Jamie, I think we have a pretty good handle on style and where it's going. And an important part of our training is whatever that style is, is to be able to deliver that guest experience right away, when the guest walks in. We don't want to be behind the eight ball and say, jeez; we don't know how to do that. So that's an important part of what we're doing, but I don't see anything there that's a headwind. And you know I think as we get better at the technical training I think that becomes a natural tailwind for our business. And then I'll flip it to Steve on the cost question. Steven M. Spiegel - Chief Financial Officer & Executive Vice President: Sure. And in terms of gaining productivity at the margin level, I think the main driver we look to is labor productivity and clearly our objective is to make sure that we're matching stylist staffing with guest demand and trying to achieve that perfect balance, you know between those two. Below the margin line, the best thing we can do beside all the rigorous cost control that we've been doing over the past several years is grow, because we'll get a significant amount of leverage out of our growth. Stephanie Schiller Wissink - Piper Jaffray & Co (Broker): Thanks, gentlemen. Best of luck. Daniel J. Hanrahan - Chief Executive Officer & Director: Thank you. Steven M. Spiegel - Chief Financial Officer & Executive Vice President: Thank you.

We'll go next to Jill Nelson with Johnson Rice. Jill Caruthers Nelson - Johnson Rice & Co. LLC: Good morning. Just... Daniel J. Hanrahan - Chief Executive Officer & Director: Good morning. Jill Caruthers Nelson - Johnson Rice & Co. LLC: Hi, just to follow-up on the last question just on labor productivity. You saw service margins in the quarter at flat despite putting up a service comp decline. And I think in previous conversions you had talked about you would get to kind of a breakeven point if you saw – you needed a positive 1%, 1.5% comps. If you could maybe just talk about what happened in the quarter and if we should expect flattish margins on a slight comp decline going forward? Steven M. Spiegel - Chief Financial Officer & Executive Vice President: Sure, well, we don't usually give any kind of guidance going forward, but what happened in the quarter was, our margins were helped by productivity in terms of stylist hours relative to the decline in our sales comps. And in addition to that, we saw some benefit from healthcare costs. Offsetting that, we were impacted by minimum wage and other inflationary increases and on top of that we're lapping an incentive light year and so the combination of the goods and the bads offset one another. Jill Caruthers Nelson - Johnson Rice & Co. LLC: Okay. And I know you just recently hired a new chief merchant, if you could just talk about kind of what are you seeing, any new trends on the product side. And also we're seeing more professional hair care brands opening up to selling online, how you think about that impacting the business? Daniel J. Hanrahan - Chief Executive Officer & Director: So I'll take that one. Yeah, we were very lucky to land Annette Miller and she is a terrific merchant and I think that over time Annette will have a real strong impact in our business. She hasn't been around that long yet and she's still digging in and looking at it, but I'm already seen what I think will be value from Annette. In terms of products online, I think – when I look at our retail opportunity and I look at the number of guests that pass through our doors and the amount of products we sell, I think that there is an awful lot of opportunity for us to improve our retail business with the smart merchant coming in and better execution at the salon level. I have seen that they're selling online. I don't think that that's having a big impact on us at this point. I do believe that our biggest opportunity is better execution at the salon level on our side. Jill Caruthers Nelson - Johnson Rice & Co. LLC: Okay. And then just last one. With the board reloading your buyback program, take you back to, I guess, the end of 2013 when you updated your capital allocation program. You talked about the buyback kind of being the top priority once the business has stabilized. If you could just kind of talk about that now and kind of – those key metrics that bring you to the conclusion of stabilization? Thank you. Daniel J. Hanrahan - Chief Executive Officer & Director: So we reloaded share repurchase authorization and just to be consistent with the capital allocation policy that we put out back in November of 2013. And we will buyback based on how we feel about protecting our balance sheet. The most important thing that was in that capital allocation policy, we were going to keep a very, very strong balance sheet. And we've done that and we'll buy back as we see the opportunity. In terms of, you know how we feel about the business I'll go back to my comments. What we've seen is that the good leaders executing the strategy are getting good results. And what we need to do is we need to continue to develop and train and where necessary we have to upgrade the leaders that aren't getting the results yet. So what gives us confidence about our business is that we can see that the strategy works and in the hands of the people we actually get nice improvement in our comps and we see not only revenue growth but we see contribution growth at the salon level. So that's why we feel like we're on the right path and we're confident in our strategy. Jill Caruthers Nelson - Johnson Rice & Co. LLC: Appreciate it. Thank you.

Thank you. This concludes the Q&A portion of the call. I will now turn the conference back to Dan. Daniel J. Hanrahan - Chief Executive Officer & Director: Thanks, Jessica. Thank you everyone for your questions and for dialing in and coming in through the web for the call. We'll look forward to talking to you again towards the end of August. Have a great day.

Ladies and gentlemen, this concludes our conference call for today. If you wish to access the replay for this presentation, you may do so by visiting regiscorp.com that is regiscorp.com in the Investor Relations section of the website or by dialing 1-888-203-1112, access code 6115573. Thank you all for participating, and have a nice day. All parties now disconnect.