REGIS CORPRGS
REGIS CORP Income Taxes Disclosure
INCOME TAXES
The components of income (loss) from continuing operations before income taxes are as follows:
| Fiscal Years | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Income (loss) before income taxes | ||||||||||||||||||||
| U.S. | $ | 2,709 | $ | 91,279 | $ | (10,204) | ||||||||||||||
| International | (1,173) | (1,343) | (1,794) | |||||||||||||||||
| $ | 1,536 | $ | 89,936 | $ | (11,998) | |||||||||||||||
The (benefit) provision for income taxes consists of:
| Fiscal Years | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Current: | ||||||||||||||||||||
| U.S. | $ | 252 | $ | 427 | $ | (219) | ||||||||||||||
| International | — | (77) | (428) | |||||||||||||||||
| Deferred (1): | ||||||||||||||||||||
| U.S. | (109,886) | 531 | (270) | |||||||||||||||||
| International | (5,862) | (12) | 262 | |||||||||||||||||
| $ | (115,496) | $ | 869 | $ | (655) | |||||||||||||||
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(1)The deferred income tax benefit in fiscal year 2025 is primarily due to the release of a prior year valuation allowance in the U.S. of $110.2 million and Canada of $6.1 million.
The (benefit) provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory rate to income (loss) from continuing operations before income taxes, as a result of the following:
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| Fiscal Years | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| U.S. statutory rate | 21.0 | % | 21.0 | % | 21.0 | % | ||||||||||||||
| State income taxes, net of federal income tax benefit | (16.5) | 2.3 | (2.7) | |||||||||||||||||
| Valuation allowance (1) | (7,897.3) | (21.9) | (12.9) | |||||||||||||||||
| Foreign income taxes at other than U.S. rates | (18.5) | (0.2) | (0.2) | |||||||||||||||||
| Uncertain tax positions | 0.7 | (0.1) | 6.7 | |||||||||||||||||
| Stock-based compensation | 24.9 | 0.2 | (2.7) | |||||||||||||||||
| Deferred tax rate remeasurement | (78.4) | — | (3.6) | |||||||||||||||||
| Executive compensation limitation | 10.0 | — | (0.9) | |||||||||||||||||
| Acquired deferred taxes | (2.3) | — | — | |||||||||||||||||
| Tax attribute expiration (2) | 428.4 | — | (1.1) | |||||||||||||||||
| Other, net (3) | 8.7 | (0.3) | 1.9 | |||||||||||||||||
| Effective tax rate | (7,519.3) | % | 1.0 | % | 5.5 | % | ||||||||||||||
(1)The change in valuation allowance for fiscal year 2025 primarily relates to a release of a majority of the U.S. prior year valuation allowance and a release of a portion of the Canadian prior year valuation allowance.
(2)The tax attribute expiration primarily relates to the expiration of a capital loss generated in fiscal year 2020, which was not offset by subsequent capital gains and is subject to a five-year carryforward period.
(3)The 8.7% of other, net in fiscal year 2025 includes the rate impact of the federal provision to return true-up and permanent adjustments of 6.2% and 2.5%, respectively. The (0.3)% of other, net in fiscal year 2024 does not include the rate impact of any items in excess of 5% of computed tax. The 1.9% of other, net in fiscal year 2023 includes the rate impact of the federal provision to return true-up and miscellaneous items of 1.3% and 0.6%, respectively.
The components of the net deferred tax assets and liabilities are as follows:
| June 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (Dollars in thousands) | ||||||||||||||
| Deferred tax assets: | ||||||||||||||
| Payroll and payroll related costs | $ | 4,929 | $ | 5,422 | ||||||||||
| Net operating loss carryforwards | 136,471 | 138,691 | ||||||||||||
| Tax credit carryforwards | 37,443 | 37,647 | ||||||||||||
| Capital loss carryforwards | 1,027 | 5,879 | ||||||||||||
| Deferred franchise fees | 3,395 | 5,301 | ||||||||||||
| Operating lease liabilities | 57,492 | 74,409 | ||||||||||||
| Interest expense carryforward | 13,289 | 8,200 | ||||||||||||
| Other | 2,580 | 6,346 | ||||||||||||
| Subtotal | 256,626 | 281,895 | ||||||||||||
| Valuation allowance | (60,460) | (181,759) | ||||||||||||
| Total deferred tax assets | $ | 196,166 | $ | 100,136 | ||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Goodwill and intangibles | $ | (34,087) | $ | (35,509) | ||||||||||
| Operating lease assets | (57,149) | (73,809) | ||||||||||||
| Other | (2,426) | (2,220) | ||||||||||||
| Total deferred tax liabilities | (93,662) | (111,538) | ||||||||||||
| Net deferred tax asset (liability) | $ | 102,504 | $ | (11,402) | ||||||||||
At June 30, 2025, the Company has tax-effected federal, state, Canada, and U.K. net operating loss carryforwards of approximately $100.2 million, $26.9 million, $9.1 million and $0.3 million, respectively. The Company's federal loss carryforward consists of $9.6 million that will expire in fiscal year 2038 and $90.6 million that has no expiration. The state loss carryforwards consist of $23.4 million that will expire from fiscal years 2026 to 2045 and $3.5 million that has no expiration. The federal and state loss carryforwards reported in the financial statements are reduced for uncertain tax positions by $17.6 million and $2.0 million, respectively. The Canada loss carryforward will expire from fiscal years 2036 to 2045. The U.K. loss carryforward has no expiration.
The Company's tax credit carryforward of $37.4 million primarily consists of Work Opportunity Tax Credits that will expire from fiscal years 2031 to 2044.
The Company's prior year capital loss carryforward of $5.9 million expired in fiscal year 2025. The current year capital loss carryforward will expire in fiscal year 2030.
The Company considers the earnings of certain non-U.S. subsidiaries to be indefinitely invested outside the U.S. Accordingly, we have not recorded deferred taxes related to the U.S. federal and state income taxes and foreign withholding taxes on approximately $0.02 million of undistributed earnings of foreign subsidiaries, which have been reinvested outside the U.S. As a result of the Tax Cuts and Jobs Act of 2017, taxes payable on the remittance of such earnings is expected to be minimal.
The Company files tax returns and pays tax primarily in the U.S., Canada, and the U.K., as well as states, cities, and provinces within these jurisdictions. With limited exceptions, due to net operating loss carryforwards, the Company's federal, state, and foreign tax returns are open to examination for all years since 2014, 2013, and 2016, respectively.
A rollforward of the unrecognized tax benefits is as follows:
| Fiscal Years | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (Dollars in thousands) | ||||||||||||||
| Balance at beginning of period | $ | 21,232 | $ | 21,393 | ||||||||||
| Additions based on tax positions related to the current year | 3 | 3 | ||||||||||||
| Additions based on tax positions of prior years | 8 | 12 | ||||||||||||
| Reductions on tax positions related to the expiration of the statute of limitations | (49) | (176) | ||||||||||||
| Balance at end of period | $ | 21,194 | $ | 21,232 | ||||||||||
If the Company were to prevail on all unrecognized tax benefits recorded, a net benefit of approximately $0.7 million would be recorded in the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense. The Company recorded interest and penalties of approximately $0.1 million, $0.1 million, and $0.1 million, as reductions to the accrual, net of the respective reversal of previously accrued interest and penalties during fiscal years 2025, 2024, and 2023, respectively. As of June 30, 2025, the Company had accrued interest and penalties related to unrecognized tax benefits of $0.7 million. This amount is not included in the gross unrecognized tax benefits noted above.
It is reasonably possible the amount of the unrecognized tax benefit with respect to certain of our unrecognized tax positions will increase or decrease during the next fiscal year. However, an estimate of the amount or range of the change cannot be made at this time.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Sep 3, 2025 | Showing above |
| 2024 | Aug 28, 2024 | |
| 2023 | Aug 23, 2023 | |
| 2022 | Aug 23, 2022 | |
| 2021 | Aug 26, 2021 | |
| 2020 | Aug 31, 2020 | |
| 2019 | Aug 27, 2019 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.