Sally Beauty Holdings, Inc. Delivers Solid Results in the First Quarter

  Sally Beauty Holdings, Inc. Delivers Solid Results in the First Quarter

  *Consolidated net sales of $905.4 million, up 4.7%
  *Growth in same store sales of 2.8%
  *Gross margin expansion of 30 bps to reach 49.1%
  *Operating margin expansion of 40 bps to reach 13.5%
  *1Q13 net earnings of $59.0 million with earnings per share of $0.32
  *Adjusted EBITDA of $147.7 million, growth of 7.9%
  *Repurchased approximately $141 million of stock from October 1, 2012
    through January 31, 2013

Business Wire

DENTON, Texas -- February 7, 2013

Sally Beauty Holdings, Inc. (NYSE: SBH) (the “Company”) today announced solid
financial results for the fiscal 2013 first quarter. The Company will hold a
conference call today at 10:00 a.m. (Central) to discuss these results and its
business.

“Fiscal year 2013 is off to a good start with solid performance in the first
quarter from each of our business segments,” stated Gary Winterhalter,
Chairman, President and Chief Executive Officer. “We performed very well
during the quarter given our challenging year-over-year comparisons.
Consolidated sales in the fiscal 2013 first quarter grew 4.7% versus 9.0% in
the prior year first quarter. Gross profit margin expanded 30 basis points and
we achieved 10 basis points of SG&A leverage. Since October 1^st, we’ve
repurchased approximately $141 million, or 47%, of our existing $300 million
stock repurchase authorization."

FISCAL 2013 FIRST QUARTER FINANCIAL HIGHLIGHTS

Net Sales: For the fiscal 2013 first quarter, consolidated net sales were
$905.4 million, an increase of 4.7% from the fiscal 2012 first quarter. Fiscal
2013 first quarter sales increase is attributed to same store sales growth and
the addition of new stores. The impact from changes in foreign currency
exchange rates in the fiscal 2013 first quarter was not material. Consolidated
same store sales growth in the fiscal 2013 first quarter was 2.8%.

Gross Profit: Consolidated gross profit for the fiscal 2013 first quarter was
$444.4 million, an increase of 5.3% over gross profit of $421.9 million for
the fiscal 2012 first quarter. Gross profit as a percentage of sales was
49.1%, a 30 basis point improvement from the fiscal 2012 first quarter.

Selling, General and Administrative Expenses: For the fiscal 2013 first
quarter, consolidated selling, general and administrative (SG&A) expenses,
including unallocated corporate expenses and share-based compensation, were
$305.7 million, or 33.8% of sales, a 10 basis point improvement from the
fiscal 2012 first quarter metric of 33.9% of sales and total SG&A expenses of
$293.0 million. Fiscal 2013 first quarter SG&A expenses increased $12.7
million primarily due to expenses associated with the opening of new stores
such as rent, occupancy and payroll expenses.

Note: SG&A expenses include unallocated corporate expenses, as detailed in the
Company’s segment information on schedule B.

Interest Expense: Interest expense for the fiscal 2013 first quarter was $26.7
million, down $37.2 million from the fiscal 2012 first quarter of $64.0
million. Interest expense in the fiscal 2012 first quarter included $39.9
million of expense items, pre-tax, associated with the refinancing of the
Company’s senior notes and senior subordinated notes in the fiscal 2012 first
quarter. These interest expense items have been excluded from the Company’s
fiscal 2012 first quarter adjusted net earnings. See schedule C for a detailed
reconciliation of adjusted net earnings.

Provision for Income Taxes: Income taxes were $36.2 million for the fiscal
2013 first quarter versus $19.2 million in the fiscal 2012 first quarter. The
Company’s effective tax rate in the fiscal 2013 first quarter was 38.0% versus
38.9% in the fiscal 2012 first quarter.

The fiscal 2012 first quarter tax included a provision associated with
interest expense adjustments of $14.4 million and has been excluded from the
adjusted net earnings calculation. See schedule C for a detailed
reconciliation of 2012 adjusted net earnings.

In fiscal year 2013, the Company’s effective tax rate is expected to be in the
range of 36.5% to 37.5%.

Net Earnings and Diluted Net Earnings Per Share (EPS) ^ (1): In the fiscal
2013 first quarter, net earnings were $59.0 million, a 95.7% increase over
fiscal 2012 first quarter GAAP net earnings of $30.1 million and a 5.9%
increase over fiscal 2012 first quarter adjusted net earnings of $55.7
million. Net earnings for the fiscal 2013 first quarter include a $1.2
million, pre-tax, credit related to a partial reversal of an accrual for the
settlement of litigation.

In the fiscal 2013 first quarter, diluted earnings per share were $0.32, a
100% increase over fiscal 2012 first quarter GAAP diluted earnings per share
of $0.16 and a 10.3% increase, when compared to fiscal 2012 first quarter
adjusted diluted earnings per share of $0.29.

Adjusted (Non-GAAP) EBITDA^(1): Adjusted EBITDA for the fiscal 2013 first
quarter was $147.7 million, an increase of 7.9% from $136.9 million for the
fiscal 2012 first quarter.

Financial Position, Capital Expenditures and Working Capital: Cash and cash
equivalents as of December 31, 2012, were $148.0 million. The Company’s
asset-based loan (ABL) revolving credit facility ended the fiscal 2013 first
quarter with no outstanding borrowings. The Company’s debt, excluding capital
leases, totaled $1.61 billion as of December 31, 2012.

For the fiscal 2013 first quarter, the Company’s capital expenditures totaled
$23.0 million. Capital expenditures for the fiscal year 2013 are projected to
be in the previously stated range of $85 million to $90 million, excluding
acquisitions.

Working capital (current assets less current liabilities) decreased $49.1
million to $637.4 million at December 31, 2012 compared to $686.5 million at
September 30, 2012. The ratio of current assets to current liabilities was
2.51 to 1.00 at December 31, 2012 compared to 2.44 to 1.00 at September 30,
2012.

Inventory as of December 31, 2012 was $752.4 million, an increase of $68.1
million or growth of 9.9% from December 31, 2011 inventory. This increase is
primarily due to sales growth from existing stores and additional inventory
from new store openings, holiday promotions and the U.K. warehouse initiative.

During the period of October 1, 2012 through January 31, 2013, the Company
repurchased (and subsequently retired) 5.8 million shares of its common stock
under its existing Share Repurchase Program at an aggregate cost of $140.6
million.

Business Segment Results:

Sally Beauty Supply

Fiscal 2013 First Quarter Results for Sally Beauty Supply

  *Sales of $558.8 million, up 4.2% from $536.4 million in the fiscal 2012
    first quarter. Sales growth was from net new store openings and same store
    sales.
  *Same store sales growth of 1.6% versus 8.0% in the fiscal 2012 first
    quarter.
  *Gross margin of 54.4%, a 50 basis point improvement from 53.9% in the
    fiscal 2012 first quarter.
  *Segment earnings of $106.1 million, up 5.0% from $101.1 million in the
    fiscal 2012 first quarter.
  *Segment operating margins increased 20 basis points to 19.0% of sales from
    18.8% in the fiscal 2012 first quarter.
  *Net store base increased by 127 over the fiscal 2012 first quarter for
    total store count of 3,332.

Sales growth in the fiscal 2013 first quarter was driven by new store openings
and same store sales. Gross profit margin expansion of 50 basis points
resulted from a shift in product and customer mix and low-cost sourcing
initiatives. Segment operating earnings and margin were positively impacted by
improvement in gross profit margin.

Beauty Systems Group

Fiscal 2013 First Quarter Results for Beauty Systems Group

  *Sales of $346.6 million, up 5.5% from $328.5 million in the fiscal 2012
    first quarter.
  *Same store sales growth of 5.6% versus 5.0% in the fiscal 2012 first
    quarter.
  *Gross margin of 40.4%, flat when compared to the fiscal 2012 first
    quarter.
  *Segment earnings of $48.8 million, up 12.5% from $43.3 million in the
    fiscal 2012 first quarter.
  *Segment operating margins increased by 90 basis points to 14.1% of sales
    from 13.2% in the fiscal 2012 first quarter.
  *Net store count was 1,193, an increase of 35 stores over the fiscal 2012
    first quarter.
  *Total BSG distributor sales consultants at the end of the fiscal 2013
    first quarter were 1,035 versus 1,125 at the end of the fiscal 2012 first
    quarter.

Sales growth for the Beauty Systems Group was primarily driven by growth in
same store sales, net new store openings and the franchise business. Segment
operating earnings and margin growth is primarily due to sales growth and
improvement in SG&A leverage.

^(1)A detailed table reconciling 2013 and 2012 GAAP net earnings to adjusted
net earnings, adjusted EPS and adjusted EBITDA is included in Supplemental
Schedule C.

Conference Call and Where You Can Find Additional Information

As previously announced, at approximately 10:00 a.m. (Central) today the
Company will hold a conference call and audio webcast to discuss its financial
results and its business. During the conference call, the Company may discuss
and answer one or more questions concerning business and financial matters and
trends affecting the Company. The Company’s responses to these questions, as
well as other matters discussed during the conference call, may contain or
constitute material information that has not been previously disclosed.
Simultaneous to the conference call, an audio webcast of the call will be
available via a link on the Company’s website,
investor.sallybeautyholdings.com. The conference call can be accessed by
dialing 800-288-8976 (International: 612-332-0725). The teleconference will be
held in a “listen-only” mode for all participants other than the Company’s
current sell-side and buy-side investment professionals. If you are unable to
listen in to this conference call, the replay will be available at about 12:00
p.m. (Central) February 7, 2013 through February 14, 2013 by dialing
1-800-475-6701 or if international dial 320-365-3844 and reference the
conference ID number 280171. Also, a website replay will be available on
investor.sallybeautyholdings.com.

About Sally Beauty Holdings, Inc.

Sally Beauty Holdings, Inc. (NYSE: SBH) is an international specialty retailer
and distributor of professional beauty supplies with revenues of $3.5 billion
annually. Through the Sally Beauty Supply and Beauty Systems Group businesses,
the Company sells and distributes through 4,500 stores, including
approximately 200 franchised units, throughout the United States, the United
Kingdom, Belgium, Chile, France, the Netherlands, Canada, Puerto Rico, Mexico,
Ireland, Spain and Germany. Sally Beauty Supply stores offer more than 6,000
products for hair, skin, and nails through professional lines such as Clairol,
L’Oreal, Wella and Conair, as well as an extensive selection of proprietary
merchandise. Beauty Systems Group stores, branded as CosmoProf or Armstrong
McCall stores, along with its outside sales consultants, sell up to 9,800
professionally branded products including Paul Mitchell, Wella, Sebastian,
Goldwell, Joico, and Aquage which are targeted exclusively for professional
and salon use and resale to their customers. For more information about Sally
Beauty Holdings, Inc., please visit sallybeautyholdings.com.

            Cautionary Notice Regarding Forward-Looking Statements

Statements in this news release and the schedules hereto which are not purely
historical facts or which depend upon future events may be forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,”
“project,” “target,” “can,” “could,” “may,” “should,” “will,” “would,” or
similar expressions may also identify such forward-looking statements.

Readers are cautioned not to place undue reliance on forward-looking
statements as such statements speak only as of the date they were made. Any
forward-looking statements involve risks and uncertainties that could cause
actual events or results to differ materially from the events or results
described in the forward-looking statements, including, but not limited to,
risks and uncertainties related to: the highly competitive nature of, and the
increasing consolidation of, the beauty products distribution industry;
anticipating changes in consumer preferences and buying trends and managing
our product lines and inventory; potential fluctuation in our same store sales
and quarterly financial performance; our dependence upon manufacturers who may
be unwilling or unable to continue to supply products to us; the possibility
of material interruptions in the supply of beauty supply products by our
manufacturers; products sold by us being found to be defective in labeling or
content; compliance with laws and regulations or becoming subject to
additional or more stringent laws and regulations; product diversion; the
operational and financial performance of our franchise-based business; the
success of our Internet-based business; successfully identifying acquisition
candidates and successfully completing desirable acquisitions; integrating
businesses acquired in the future; opening and operating new stores
profitably; the impact of the health of the economy upon our business; the
success of our cost control plans; protecting our intellectual property
rights, specifically our trademarks; conducting business outside the United
States; disruption in our information technology systems; severe weather,
natural disasters or acts of terrorism; the preparedness of our accounting and
other management systems to meet financial reporting and other requirements
and the upgrade of our financial reporting system; being a holding company,
with no operations of our own, and depending on our subsidiaries for cash; our
substantial indebtedness; the possibility that we may incur substantial
additional debt in the future; restrictions and limitations in the agreements
and instruments governing our debt; generating the significant amount of cash
needed to service all of our debt and refinancing all or a portion of our
indebtedness or obtaining additional financing; changes in interest rates
increasing the cost of servicing our debt; the potential impact on us if the
financial institutions we deal with become impaired; and the
representativeness of our historical consolidated financial information with
respect to our future financial position, results of operations or cash flows.

Additional factors that could cause actual events or results to differ
materially from the events or results described in the forward-looking
statements can be found in our most recent Annual Report on Form 10-K for the
year ended September 30, 2012, as filed with the Securities and Exchange
Commission. Consequently, all forward-looking statements in this release are
qualified by the factors, risks and uncertainties contained therein. We assume
no obligation to publicly update or revise any forward-looking statements.

Note Concerning Non-GAAP Measurement Tools

We have provided detailed explanations of our non-GAAP financial measures in
our Form 8-K filed this morning, which is available on our website.

                                              
Supplemental Schedules
                                                  
Consolidated Statement of Earnings                A
Segment Information                               B
Non-GAAP Financial Measures Reconciliations       C
Store Count and Same Store Sales                  D
Selected Financial Data and Debt                  E

                                                             
                                                                     
       Supplemental Schedule A
       SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
       Consolidated Statements of Earnings
       (In thousands, except per share data)
       (Unaudited)
                                                                     
                                 Three Months Ended
                                 December 31,
                             2012             2011             % CHG
                                                                     
       Net sales                 $  905,441        $  864,815        4.7    %
       Cost of products
       sold and                 461,073        442,958      4.1    %
       distribution
       expenses
       Gross profit                 444,368           421,857        5.3    %
       Selling, general
       and                          305,689           293,014        4.3    %
       administrative
       expenses ^(1)
       Depreciation and         16,808         15,553       8.1    %
       amortization
       Operating                    121,871           113,290        7.6    %
       earnings
       Interest expense         26,725         63,961       -58.2  %
       ^(2)
       Earnings before
       provision for                95,146            49,329         92.9   %
       income taxes
       Provision for            36,163         19,195       88.4   %
       income taxes
       Net earnings           $  58,983       $  30,134       95.7   %
                                                                     
       Earnings per
       share:
       Basic                     $  0.33           $  0.16           106.3  %
       Diluted                   $  0.32           $  0.16           100.0  %
                                                                     
       Weighted average
       shares:
       Basic                        178,346           184,689
       Diluted                  183,386        190,208      
                                                                     Basis Pt
                                                                     Chg
       Comparison as a
       % of Net sales
       Sally Beauty
       Supply Segment               54.4     %        53.9     %     50
       Gross Profit
       Margin
       BSG Segment
       Gross Profit                 40.4     %        40.4     %     0
       Margin
       Consolidated
       Gross Profit                 49.1     %        48.8     %     30
       Margin
       Selling, general
       and                          33.8     %        33.9     %     (10    )
       administrative
       expenses
       Consolidated
       Operating Profit             13.5     %        13.1     %     40
       Margin
       Net Earnings                 6.5      %        3.5      %     300
       Margin
                                                                     
       Effective Tax                38.0     %        38.9     %     (90    )
       Rate
                                                             
                                                                     
       Selling, general and administrative expenses include share-based
^(1)   compensation of $9.1 million and $8.0 million for the three months
       ended December 31, 2012 and 2011, respectively.
                                                                     
       For the three months ended December 31, 2011, interest expense includes
       a loss on extinguishment of debt of $34.6 million in connection with
^(2)   the Company's December 2011 redemption of its senior notes due 2014 and
       senior subordinated notes due 2016 with the proceeds of the Company's
       senior notes due 2019 issued in November 2011.

                                                              
                                                                     
       Supplemental Schedule B
                                                                     
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
Segment Information
(In thousands)
(Unaudited)
                                                                     
                                Three Months Ended
                                December 31,
                             2012              2011            % CHG
       Net sales:
       Sally Beauty             $   558,816        $  536,358        4.2    %
       Supply
       Beauty Systems            346,625        328,457      5.5    %
       Group
       Total net sales        $   905,441      $  864,815      4.7    %
                                                                     
       Operating
       earnings:
       Sally Beauty             $   106,087        $  101,067        5.0    %
       Supply
       Beauty Systems            48,753         43,326       12.5   %
       Group
       Segment
       operating              $   154,840      $  144,393      7.2    %
       earnings
                                                                     
       Unallocated
       corporate                    (23,918  )        (23,072  )     3.7    %
       expenses ^(1)
       Share-based                  (9,051   )        (8,031   )     12.7   %
       compensation
       Interest expense          (26,725  )      (63,961  )    -58.2  %
       ^ (2)
       Earnings before
       provision for          $   95,146       $  49,329       92.9   %
       income taxes
                                                                     
       Segment                                                       Basis Pt
       operating profit                                              Chg
       margin:
       Sally Beauty                 19.0     %        18.8     %     20
       Supply
       Beauty Systems               14.1     %        13.2     %     90
       Group
       Consolidated
       operating profit          13.5     %      13.1     %    40     
       margin
                                                                     
^(1)   Unallocated expenses consist of corporate and shared costs.
                                                                     
       For the three months ended December 31, 2011, interest expense includes
       a loss on extinguishment of debt of $34.6 million in connection with
^(2)   the Company's December 2011 redemption of its senior notes due 2014 and
       senior subordinated notes due 2016 with the proceeds of the Company's
       senior notes due 2019 issued in November 2011.

                                                              
                                                                     
       Supplemental Schedule C
                                                                     
       SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
       Non-GAAP Financial Measures Reconciliations
      (In thousands, except per share data)
      (Unaudited)
                                                                     
                                    Three Months Ended
                                    December 31,
                                 2012          2011             % CHG
       Adjusted EBITDA:
       Net earnings (per            $  58,983      $  30,134         95.7   %
       GAAP)
       Add:
       Depreciation and                16,808         15,553         8.1    %
       amortization
       Share-based                     9,051          8,031          12.7   %
       compensation ^(1)
       Interest expense                26,725         63,961         -58.2  %
       ^(2)(3)
       Provision for                36,163       19,195       88.4   %
       income taxes
       Adjusted EBITDA            $  147,730    $  136,874      7.9    %
       (Non-GAAP)
                                                                     
                                                                     
       Net earnings (per            $  58,983      $  30,134
       GAAP)
       Add (Less):
       Loss on
       extinguishment of               -              34,558
       debt ^(2)
       Interest expense on             -              5,149
       redeemed debt ^(3)
       Amortization of
       deferred financing              -              229
       costs
       Tax provision for
       the adjustments to           -            (14,377  )    
       net earnings ^(4)
       Adjusted net
       earnings, excluding        $  58,983     $  55,693       5.9    %
       non-recurring items
       (Non-GAAP)
                                                                     
       Adjusted earnings
       per share
       (Non-GAAP):
       Basic                        $  0.33        $  0.30           10.0   %
       Diluted                      $  0.32        $  0.29           10.3   %
                                                                     
       Weighted average
       shares:
       Basic                           178,346        184,689
       Diluted                         183,386        190,208
                                                                     
       Share-based compensation for the three months ended December 31, 2012
^(1)   and 2011 includes $5.9 million and $5.3 million, respectively, of
       accelerated expense related to certain retirement-eligible employees
       who are eligible to continue vesting awards upon retirement.
                                                                     
       For the three months ended December 31, 2011, interest expense includes
       $34.6 million in connection with the Company's December 2011 redemption
       of its senior notes due 2014 and senior subordinated notes due 2016,
^(2)   with the proceeds of the Company's senior notes due 2019 issued on
       November 8, 2011. This amount includes a premium paid to redeem the
       senior notes and the senior subordinated notes, as well as unamortized
       deferred financing costs expensed in connection with the redeemed
       notes.
                                                                     
       For the three months ended December 31, 2011, interest expense includes
       interest on the senior notes and senior subordinated notes after
^(3)   November 8, 2011 and until their redemption of $5.1 million, as well as
       interest on the Company's new senior notes. This pro-forma adjustment
       assumes the senior notes and senior subordinated notes were redeemed on
       November 8, 2011.
                                                                     
       The tax provisions for the adjustments to net earnings
^(4)   were calculated using an estimated effective tax rate of
       36.0%.

                                                               
                                                                      
       Supplemental Schedule D
                                                                      
       SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
       Store Count and Same Store Sales
       (Unaudited)
                                                                      
                                                                      
                                       As of December 31,            
                                       2012           2011          CHG
                                                                      
       Number of retail stores
       (end of period):
       Sally Beauty Supply:
       Company-operated stores         3,306           3,180          126
       Franchise stores                26             25            1     
       Total Sally Beauty              3,332           3,205          127
       Supply
       Beauty Systems Group:
       Company-operated stores         1,034           1,002          32
       Franchise stores                159            156           3     
       Total Beauty System             1,193          1,158         35    
       Group
       Total                           4,525          4,363         162   
                                                                      
       BSG distributor sales
       consultants (end of             1,035           1,125          (90   )
       period) ^(1)
                                                             
                                       2012           2011
       First quarter                                                  Basis Pt
       company-operated same                                          Chg
       store sales growth ^(2)
       Sally Beauty Supply             1.6     %       8.0     %      (640  )
       Beauty Systems Group            5.6     %       5.0     %      60
       Consolidated                    2.8     %       7.1     %      (430  )
                                                                      
                                                                      
^(1)   Includes 352 and 409 distributor sales consultants as reported by our
       franchisees at December 31, 2012 and 2011, respectively.
                                                                      
       Same stores are defined as company-operated stores that have been open
       for 14 months or longer as of the last day of a month. Our same store
       sales calculation includes internet-based sales for the periods
^(2)   presented and the impact of store expansions, but does not generally
       include the sales of stores relocated until 14 months after the
       relocation. The sales of stores acquired are excluded from our same
       store sales calculation until 14 months after the acquisition.

                            
                                                
    Supplemental Schedule E
                                                    
    SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
    Selected Financial Data and Debt
   (In thousands)
   (Unaudited)
                                                       
                                 December 31, 2012     September 30, 2012
    Financial condition
    information (at period
    end):
    Working capital              $   637,411           $     686,519
    Cash and cash                    147,997                 240,220
    equivalents
    Property and equipment,          212,787                 202,661
    net
    Total assets                     1,969,931               2,065,800
    Total debt, including            1,616,709               1,617,230
    capital leases
    Total stockholders'              ($157,192  )            ($115,085    )
    (deficit) equity
                                                
                                                       
                                 As of
                                 December 31, 2012     Interest Rates
    Debt position excluding
    capital leases (at
    period end):
                                                       (i) Prime + 1.25-1.75%
                                                       or
    Revolving ABL facility       $   -                 (ii) LIBOR + 2.25-2.75%
                                                      
    Senior notes due 2019            750,000           6.875%
                                                       
    Senior notes due 2022            859,077           5.750%
    ^(1)
                                                       
    Other ^(2)                      2,163            4.05% to 5.79%
    Total debt                   $   1,611,240  
                                                
                                                       
    Debt maturities,
    excluding capital leases
    Twelve months ending
    December 31,
    2013                         $   1,177
    2014                             929
    2015                             57
    2016-2019                    -
    Thereafter ^(1)                 1,609,077  
    Total debt                   $   1,611,240  

       Amount, at December 31, 2012, includes unamortized premium of $9.1
^(1)  million related to notes in an aggregate principal amount of $150.0
       million issued in September 2012. The 5.75% interest rate relates to
       notes in an aggregate principal amount of $850.0 million.
       
^(2)   Represents pre-acquisition debt of businesses acquired.

Contact:

Sally Beauty Holdings, Inc.
Karen Fugate, 940-297-3877
Investor Relations