Sally Beauty Holdings, Inc. Reports Fourth Quarter and Full Year Results

  Sally Beauty Holdings, Inc. Reports Fourth Quarter and Full Year Results

  *Net sales in 4Q13 of $906 million; FY2013 of over $3.6 billion
  *Same store sales growth in 4Q13 and FY2013; 0.4% and 0.8%, respectively
  *4Q13 diluted earnings per share of $0.38; FY2013 diluted earnings per
    share of $1.48
  *During fiscal 2013, repurchased $509.7 million, or 18.9 million shares of
    common stock

Business Wire

DENTON, Texas -- November 14, 2013

Sally Beauty Holdings, Inc. (NYSE: SBH) (the “Company”) today announced
financial results for the fourth quarter and fiscal year ended September 30,
2013. The Company will hold a conference call today at 10:00 a.m. (Central) to
discuss these results and its business.

“Fiscal 2013 was challenging due to comparisons against our record-breaking
growth in fiscal 2012 and soft traffic in our Sally U.S. retail business,”
stated Gary Winterhalter, Chairman, President and Chief Executive Officer.
“Nevertheless, our performance was solid and we executed on our strategic
initiatives, including our information technology projects in the U.S. and
Europe as well as the new U.K. distribution center. For 2013, we generated
$310 million in operating cash flow and repurchased approximately $510
million, or 19 million shares of our common stock. As we move into fiscal
2014, I believe that we’ve embarked on the right initiatives to gradually
improve retail traffic in the Sally U.S. stores and continue the strong
performance at BSG and our International businesses.”

Fiscal 2013 Fourth Quarter and Full Year 2013 Financial Highlights

Net Sales: For the fiscal 2013 fourth quarter, consolidated net sales were
$906.4 million, an increase of 2.7% from the fiscal 2012 fourth quarter. The
fiscal 2013 fourth quarter sales increase is primarily attributed to the
addition of new stores and growth in BSG’s full service business. The impact
from changes in foreign currency exchange rates in the fiscal 2013 fourth
quarter was not material. Consolidated same store sales growth in the fiscal
2013 fourth quarter was 0.4% compared to 4.3% in the fiscal 2012 fourth
quarter.

Consolidated net sales for fiscal year 2013 were over $3.6 billion, an
increase of 2.8% from fiscal year 2012. The impact from foreign currency
exchange in the 2013 fiscal year was not material. Fiscal 2013 sales increased
primarily due to the addition of new stores and same stores sales growth.
Consolidated same store sales growth in fiscal year 2013 was 0.8% compared to
6.4% in fiscal year 2012.

Gross Profit: Consolidated gross profit for the fiscal 2013 fourth quarter was
$449.4 million, an increase of 2.1% over gross profit of $440.2 million for
the fiscal 2012 fourth quarter. Gross profit as a percentage of sales (gross
profit margin) was 49.6%, a 30 basis point decline from the fiscal 2012 fourth
quarter. Consolidated gross profit margin in the fiscal 2013 fourth quarter
was down over the prior year due to difficult comparisons against a record
high gross profit margin in BSG due to the timing of vendor allowances in the
fiscal 2012 fourth quarter.

For fiscal year 2013, consolidated gross profit was $1.8 billion, an increase
of 3.0% over fiscal 2012 gross profit. Gross profit as a percentage of sales
was 49.6%, a 10 basis point improvement from fiscal year 2012.

In fiscal 2013, gross profit margin improved in both business segments driven
by favorable changes in product and customer mix.

Selling, General and Administrative Expenses: For the fiscal 2013 fourth
quarter, consolidated selling, general and administrative (SG&A) expenses,
including unallocated corporate expenses and share-based compensation, were
$301.9 million, or 33.3% of sales, a 130 basis point improvement from the
fiscal 2012 fourth quarter metric of 34.6% of sales and total SG&A expenses of
$305.5 million. Fiscal 2012 fourth quarter SG&A expenses include a charge of
$10.2 million related to a litigation settlement.

For fiscal year 2013, SG&A expenses, including $117.1 million of unallocated
corporate expenses and share-based compensation, were $1.2 billion, or 33.2%
of sales, compared to fiscal year 2012 metric of 33.5% of sales and total SG&A
expenses of $1.2 billion. Fiscal year 2012 SG&A expenses include a $10.2
million charge related to a litigation settlement.

Fiscal year 2013 SG&A expenses did not increase materially over fiscal year
2012. Although the Company continued its investments in loyalty programs and
information technology initiatives, as well as the opening of new stores and
acquisitions, during fiscal year 2013, the Company took measures to lower
costs due to softer-than-expected sales in the Sally U.S. business.

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

Interest Expense: Interest expense, net of interest income, for the fiscal
2013 fourth quarter was $27.2 million, up $2.0 million from the fiscal 2012
fourth quarter of $25.2 million.

For fiscal year 2013, interest expense, net of interest income, was $107.7
million, down $30.7 million from the fiscal year 2012 interest expense of
$138.4 million. Interest expense in fiscal year 2012 included $43.2 million in
charges in connection with the Company’s debt refinancing initiatives.
Detailed explanations of these charges are provided in the Company’s non-GAAP
financial measures reconciliations on Schedule C.

Provision for Income Taxes: For the fiscal 2013 fourth quarter, income taxes
were $36.1 million. The effective tax rate for the fiscal 2013 fourth quarter
was 35.8% compared to 29.2% for the fiscal 2012 fourth quarter. In the fiscal
2012 fourth quarter, a limited restructuring occurred for U.S. income tax
purposes. This tax planning opportunity resulted in the recognition of $10.3
million in income tax benefits.

For fiscal year 2013, income taxes were $151.5 million versus $127.9 million
in fiscal 2012. The Company’s effective tax rate for fiscal year 2013 was
36.7% compared to 35.4% for fiscal 2012.

Net Earnings and Diluted Net Earnings Per Share (EPS) ^ (1): Net earnings were
$64.8 million in the fiscal 2013 fourth quarter, compared to fiscal 2012
fourth quarter GAAP net earnings of $65.6 million and adjusted net earnings of
$72.2 million, down 1.2% and down 10.2%, respectively. Adjusted net earnings
for the fiscal 2012 fourth quarter excluded a $10.2 million charge, before
taxes, related to a litigation settlement.

Diluted earnings per share for the fiscal 2013 fourth quarter were $0.38
compared to fiscal 2012 fourth quarter GAAP diluted earnings per share of
$0.35 and adjusted diluted earnings per share of $0.39, an increase of 8.6%
and a decrease of 2.6%, respectively.

Net earnings were $261.2 million in fiscal year 2013, compared to fiscal year
2012 GAAP net earnings of $233.1 million and adjusted net earnings of $267.2
million, an increase of 12.1% and a decrease of 2.3%, respectively.

Diluted earnings per share in fiscal year 2013 were $1.48 compared to fiscal
year 2012 GAAP diluted earnings per share of $1.24 and adjusted diluted
earnings per share of $1.42, an increase of 19.4% and 4.2%, respectively.

Fiscal year 2012 adjusted net earnings includes adjustments of $34.2 million,
net of tax, and are described in detail on Schedule C.

Adjusted (Non-GAAP) EBITDA^(1): Adjusted EBITDA for the fiscal 2013 fourth
quarter was $151.1 million, an increase of 2.1% from $148.0 million for the
fiscal 2012 fourth quarter.

Fiscal year 2013 Adjusted EBITDA was $611.8 million, an increase of 3.5% from
$591.1 million in fiscal 2012.

^(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.

Financial Position, Capital Expenditures and Working Capital: Cash and cash
equivalents as of September 30, 2013, were $47.1 million. The Company ended
fiscal year 2013 with a $76.0 million balance on its asset-based loan (ABL)
revolving credit facility. Borrowing capacity on the ABL facility was
approximately $382.3 million at the end of fiscalyear 2013. The Company’s
debt, excluding capital leases, totaled $1.686 billion as of September 30,
2013. Net cash provided by operating activities for fiscal year 2013 was
$310.5 million.

During the fiscal 2013 fourth quarter, the Company repurchased (and
subsequently retired) a total of 3.8 million shares of its common stock at an
aggregate cost of $102.5 million.

For the fiscal 2013 year, the Company repurchased (and subsequently retired) a
total of 18.9 million shares of its common stock at an aggregate cost of
$509.7 million. As of September 30, 2013, the Company has approximately $457
million remaining under its $700 million stock repurchase plan authorization
announced on March 5, 2013.

For the full year ended September 30, 2013, the Company’s capital
expenditures, excluding acquisitions, totaled $84.9 million.

Working capital (current assets less current liabilities) decreased $213.4
million to $473.2 million at September 30, 2013, compared to $686.5 million at
September 30, 2012. Working capital in fiscal year 2012 includes $150 million
of cash from debt issuance on September 5, 2012. The ratio of current assets
to current liabilities was 1.87 to 1.00 at September 30, 2013, compared to
2.44 to 1.00 at September 30, 2012.

Inventory as of September 30, 2013 was $808.3 million, an increase of $73.0
million or growth of 9.9% from September 30, 2012 inventory. This increase is
primarily due to sales growth from new store openings and new product
offerings.

Business Segment Results:

Sally Beauty Supply

Fiscal 2013 Fourth Quarter Results for Sally Beauty Supply

  *Sales of $556.1 million, up 0.2% from $554.7 million in the fiscal 2012
    fourth quarter. The favorable impact of foreign currency exchange on net
    sales was $1.0 million, or 0.2% of sales.
  *Same store sales declined 1.5% versus growth of 3.8% in the fiscal 2012
    fourth quarter.
  *Gross margin of 54.9%, a 10 basis point improvement from 54.8% in the
    fiscal 2012 fourth quarter.
  *Segment operating earnings of $107.3 million, up 7.8% from $99.5 million
    in the fiscal 2012 fourth quarter. Segment operating margins increased 140
    basis points to 19.3% of sales from 17.9% in the fiscal 2012 fourth
    quarter. In the fiscal 2012 fourth quarter, segment operating results were
    negatively impacted by a $10.2 million charge related to a litigation
    settlement.

Sales growth in the fiscal 2013 fourth quarter was driven by new store
openings and growth in the international business which were largely offset by
a same store sales decline in the Sally U.S. business. Gross profit margin
expansion of 10 basis points resulted from improvement in the international
business.

Fiscal 2013 Results for Sally Beauty Supply

  *Sales of $2.2 billion, up 1.4% over fiscal year 2012. The impact of
    foreign currency exchange was not material for the year.
  *Same store sales declined 0.6% versus growth of 6.5% in fiscal year 2012.
  *Sales from international locations (Mexico, Canada, the United Kingdom,
    Ireland, Belgium, the Netherlands,  France, Germany, Spain and Chile)
    represented 23% of segment sales versus 22% in fiscal 2012.
  *Gross margin of 54.9%, up 30 bps from 54.6% in fiscal 2012.
  *Segment operating earnings of $437.0 million, up 1.7% from $429.5 million
    in fiscal 2012. Segment operating margins increased 10 basis points to
    19.6% of sales from 19.5% in fiscal 2012.
  *Net store base increased by 115 or 3.5% for total store count of 3,424.
    Store growth in the U.S. business was 2.7% while store growth in the
    international business was 6.4%.

Sales growth in fiscal 2013 was driven by new store openings and growth in the
international business while partially offset by a same store sales decline in
the Sally U.S. business. Gross profit margin improvement of 30 bps resulted
from the favorable shift in product and customer mix and low-cost sourcing
initiatives in the U.S. business and improvement in the international
business.

Beauty Systems Group

Fiscal 2013 Fourth Quarter Results for Beauty Systems Group

  *Sales of $350.3 million, up 6.9% from $327.8 million in the fiscal 2012
    fourth quarter. The impact of unfavorable foreign currency exchange on net
    sales was $1.5 million, or 0.4% of sales.
  *Same store sales growth of 5.2% versus 5.5% in the fiscal 2012 fourth
    quarter.
  *Gross margin of 41.1%, down 50 basis points from 41.6% in the fiscal 2012
    fourth quarter.
  *Segment operating earnings of $49.2 million, up 4.4% from $47.1 million in
    the fiscal 2012 fourth quarter.
  *Segment operating margins declined by 40 basis points to 14.0% of sales
    from 14.4% in the fiscal 2012 fourth quarter.

Sales growth for Beauty Systems Group was driven by growth in same store
sales, new store openings and the full service business. Consolidated gross
profit margin in the fiscal 2013 fourth quarter was down over the prior year
due to difficult comparisons against a record high gross profit margin in BSG
due to the timing of vendor allowances in the fiscal 2012 fourth quarter.
Segment operating earnings growth is primarily due to sales growth and SG&A
leverage. Segment operating margins are down primarily due to a decline in
gross margin.

Fiscal 2013 Results for Beauty Systems Group

  *Sales of $1.4 billion, up 5.1% from $1.3 billion in fiscal 2012. The
    impact of foreign currency exchange on net sales was not material for the
    year.
  *Same store sales growth of 4.2% versus 6.1% in fiscal 2012.
  *Gross margin of 41.1%, up from 41.0% in fiscal 2012, a 10 basis point
    improvement.
  *Segment operating earnings of $200.5 million, up 9.7% from $182.7 million
    in fiscal 2012.
  *Segment operating margins increased to 14.4% of sales from 13.8% in fiscal
    2012, a 60 basis point improvement.
  *Net store base increased by 55 or 4.6% for total store count of 1,245,
    including 161 franchised locations.
  *Total BSG distributor sales consultants at the end of fiscal 2013 were 982
    versus 1,044 at the end of fiscal 2012.

Sales growth in fiscal year 2013 for the Beauty Systems Group was primarily
due to same store sales growth and new store openings. Gross margin expansion
was primarily due to improved sales and product mix, and expansion in new and
existing territories. Segment earnings growth is primarily due to sales
growth, gross profit improvement and SG&A leverage.

Fiscal Year 2014 Outlook

  *Fiscal year 2014 consolidated same store sales growth is expected to be in
    the range of 1% to 3%, and assumes a gradual sales improvement in the
    Sally U.S. retail business throughout fiscal year 2014.
  *Consolidated gross profit margin expansion is expected to be in the range
    of 30 bps to 40 bps and assumes a gradual sales improvement in the Sally
    U.S. retail business throughout fiscal year 2014.
  *Fiscal year 2014 unallocated corporate expenses, including approximately
    $19 million in share-based compensation, are expected to be in the range
    of $135 million to $140 million.
  *Consolidated SG&A as a percent of sales is expected to be in the range of
    33.3% to 33.5%, higher than fiscal 2013 due to investments made to enter
    new countries, higher compensation due in part to expanding Sally’s
    marketing staff and continued investments in marketing initiatives.
  *The effective tax rate for fiscal year 2014 is expected to be in the range
    of 36.5% to 37.5%.
  *Capital expenditures for fiscal year 2014 are projected to be in the range
    of $85 million to $90 million.
  *Consolidated organic store growth of 3% to 4%.

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 800-230-1092 (International: 612-332-0107). 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 this conference call, the replay will be available at about 12:00
p.m. (Central) November 14, 2013 through November 28, 2013 by dialing
1-800-475-6701 or if international dial 320-365-3844 and reference the
conference ID number 307628. 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 $3.6 billion
annually. Through the Sally Beauty Supply and Beauty Systems Group businesses,
the Company sells and distributes through 4,700 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 offers up to 10,000
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 10,000
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 or third-party distributors; 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 e-commerce business; successfully identifying
acquisition candidates and successfully completing desirable acquisitions;
integrating acquired businesses; opening and operating new stores profitably;
the impact of in the health of the economy upon our business; the success of
our cost control plans; protecting our intellectual property rights,
particularly our trademarks; the risk that our products may infringe on the
intellectual property of others; conducting business outside the United
States; disruption in our information technology systems; severe weather,
natural disasters or acts of violence or 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, including secured 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 costs and effects of litigation.

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                           Twelve Months Ended
                   September 30,                                September 30,
                2013          2012          % CHG     2013            2012            % CHG
                                                                                                    
Net sales          $ 906,435       $ 882,557       2.7  %       $ 3,622,216       $ 3,523,644       2.8   %
Cost of
products sold
and               457,077     442,321    3.3  %     1,826,953     1,780,385    2.6   %
distribution
expenses
Gross profit         449,358         440,236       2.1  %         1,795,263         1,743,259       3.0   %
Selling,
general and          301,931         305,469       -1.2 %         1,202,709         1,179,206       2.0   %
administrative
expenses ^(1)
Depreciation
and               19,340      16,906     14.4 %     72,192        64,698       11.6  %
amortization
Operating            128,087         117,861       8.7  %         520,362           499,355         4.2   %
earnings
Interest          27,185      25,172     8.0  %     107,695       138,412      -22.2 %
expense ^(2)
Earnings
before               100,902         92,689        8.9  %         412,667           360,943         14.3  %
provision for
income taxes
Provision for     36,090      27,059     33.4 %     151,516       127,879      18.5  %
income taxes
Net earnings     $ 64,812     $ 65,630     -1.2 %    $ 261,151      $ 233,064      12.1  %
                                                                                                    
Net earnings
per share:
Basic              $ 0.39          $ 0.36          8.3  %       $ 1.52            $ 1.27            19.7  %
Diluted            $ 0.38          $ 0.35          8.6  %       $ 1.48            $ 1.24            19.4  %
                                                                                                    
Weighted
average
shares:
Basic                166,204         179,911                      171,682           183,420
Diluted           170,734     185,425              176,159       188,610      
                                                   Basis                                            Basis
                                                   Pt Chg                                           Pt Chg
Comparison as
a % of Net
sales
Sally Beauty
Supply Segment       54.9    %       54.8    %     10             54.9      %       54.6      %     30
Gross Profit
Margin
BSG Segment
Gross Profit         41.1    %       41.6    %     (50  )         41.1      %       41.0      %     10
Margin
Consolidated
Gross Profit         49.6    %       49.9    %     (30  )         49.6      %       49.5      %     10
Margin
Selling,
general and          33.3    %       34.6    %     (130 )         33.2      %       33.5      %     (30   )
administrative
expenses
Consolidated
Operating            14.1    %       13.4    %     70             14.4      %       14.2      %     20
Profit Margin
Net Earnings         7.2     %       7.4     %     (20  )         7.2       %       6.6       %     60
Margin
                                                                                                    
Effective Tax        35.8    %       29.2    %     660            36.7      %       35.4      %     130
Rate
                                                                             
                                                                                                          

       Selling, general and administrative expenses include share-based
^(1)  compensation of $3.7 million and $3.1 million for the three months
       ended September 30, 2013 and 2012; and $19.2 million and $16.9 million
       for the twelve months ended September 30, 2013 and 2012, respectively.
       
       Interest expense is net of interest income of $0.2 million for the
       twelve months ended September 30, 2013 and 2012. For the twelve months
^(2)   ended September 30, 2012, interest expense includes losses on
       extinguishment of debt aggregating $37.8 million in connection with the
       Company's December 2011 redemption of outstanding notes and its May
       2012 repayment in full of a senior term loan.
       

                                                        
Supplemental Schedule B
                                                                                    
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
Segment Information
(In thousands)
(Unaudited)
                                                                                                  
                 Three Months Ended                           Twelve Months Ended
                 September 30,                                September 30,
              2013          2012          % CHG     2013            2012            % CHG
Net sales:
Sally Beauty     $ 556,086       $ 554,719       0.2  %       $ 2,230,028       $ 2,198,468       1.4   %
Supply
Beauty
Systems         350,349     327,838    6.9  %     1,392,188     1,325,176    5.1   %
Group
Total net      $ 906,435    $ 882,557    2.7  %    $ 3,622,216    $ 3,523,644    2.8   %
sales
                                                                                                  
Operating
earnings:
Sally Beauty     $ 107,303       $ 99,497        7.8  %       $ 437,018         $ 429,520         1.7   %
Supply ^(1)
Beauty
Systems         49,185      47,108     4.4  %     200,492       182,699      9.7   %
Group
Segment
operating      $ 156,488    $ 146,605    6.7  %    $ 637,510      $ 612,219      4.1   %
earnings
                                                                                                  
Unallocated
corporate          (24,702 )       (25,694 )     -3.9 %         (97,947   )       (96,012   )     2.0   %
expenses
^(2)
Share-based        (3,699  )       (3,050  )     21.3 %         (19,201   )       (16,852   )     13.9  %
compensation
Interest        (27,185 )    (25,172 )   8.0  %     (107,695  )    (138,412  )   -22.2 %
expense ^(3)
Earnings
before
provision      $ 100,902    $ 92,689     8.9  %    $ 412,667      $ 360,943      14.3  %
for income
taxes
                                                                                                  
Segment
operating                                        Basis                                            Basis
profit                                           Pt Chg                                           Pt Chg
margin:
Sally Beauty       19.3    %       17.9    %     140            19.6      %       19.5      %     10
Supply
Beauty
Systems            14.0    %       14.4    %     (40  )         14.4      %       13.8      %     60
Group
Consolidated
operating       14.1    %    13.4    %   70        14.4      %    14.2      %   20    
profit
margin
                                                                                                        

^(1)  For the twelve months ended September 30, 2012, the Sally Beauty Supply
       segment reflect a $10.2 million charge from a litigation settlement.
       
^(2)   Unallocated expenses consist of corporate and shared costs.
       
       For the twelve months ended September 30, 2012, interest expense
^(3)   includes losses on extinguishment of debt aggregating $37.8 million in
       connection with the Company's December 2011 redemption outstanding
       notes and its May 2012 repayment in full of a senior term loan.
       


Supplemental Schedule C
                                                                               
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
Non-GAAP Financial Measures Reconciliations
(In thousands, except per share data)
(Unaudited)
                                                                                             
                   Three Months Ended                          Twelve Months Ended
                   September 30,                               September 30,
                2013        2012          % CHG      2013        2012          % CHG
Adjusted
EBITDA:
Net earnings       $ 64,812      $ 65,630        -1.2  %       $ 261,151     $ 233,064       12.1  %
(per GAAP)
Add:
Depreciation
and                  19,340        16,906        14.4  %         72,192        64,698        11.6  %
amortization
Share-based
compensation         3,699         3,050         21.3  %         19,201        16,852        13.9  %
^(1)
Interest
expense              27,185        25,172        8.0   %         107,695       138,412       -22.2 %
^(2)(3)
Litigation
settlement           -             10,194        N/A             -             10,194        N/A
^(4)
Provision for     36,090     27,059     33.4  %     151,516    127,879    18.5  %
income taxes
Adjusted
EBITDA           $ 151,126   $ 148,011    2.1   %    $ 611,755   $ 591,099    3.5   %
(Non-GAAP)
                                                                                             
                                                                                             
Net earnings       $ 64,812      $ 65,630                      $ 261,151     $ 233,064
(per GAAP)
Add (Less):
Losses on
extinguishment       -             -                             -             37,789
of debt ^(2)
Interest
expense on           -             -                             -             5,149
redeemed debt
^(3)
Amortization
of deferred          -             -                             -             229
financing
costs
Litigation
settlement           -             10,194                        -             10,194
^(4)
Tax provision
for the
adjustments to    -          (3,670  )              -          (19,210 )   
net earnings
^(5)
Adjusted net
earnings,
excluding        $ 64,812    $ 72,154     -10.2 %    $ 261,151   $ 267,215    -2.3  %
non-recurring
items
(Non-GAAP)
                                                                                             
Adjusted net
earnings per
share
(Non-GAAP):
Basic              $ 0.39        $ 0.40          -2.5  %       $ 1.52        $ 1.46          4.1   %
Diluted            $ 0.38        $ 0.39          -2.6  %       $ 1.48        $ 1.42          4.2   %
                                                                                             
Weighted
average
shares:
Basic                166,204       179,911                       171,682       183,420
Diluted              170,734       185,425                       176,159       188,610
                                                                                             

       Share-based compensation for the twelve months ended September 30, 2013
^(1)  and 2012 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 twelve months ended September 30, 2012, interest expense
       includes losses on extinguishment of debt aggregating $37.8 million in
       connection with the Company's December 2011 redemption of outstanding
^(2)   notes and its May 2012 repayment in full of a senior term loan. This
       amount includes a premium paid to redeem the notes, as well as
       unamortized deferred financing costs expensed in connection with the
       notes redeemed and the loan repaid.
       
       For the twelve months ended September 30, 2012, interest expense
       includes interest of $5.1 million on outstanding notes after November
^(3)   8, 2011 and until their redemption in full, as well as interest on the
       Company's new senior notes due 2019 issued on that date. This pro-forma
       adjustment assumes the notes were redeemed on November 8, 2011.
       
^(4)   Results for the twelve months ended September 30, 2012, reflect a $10.2
       million charge from a litigation settlement.
       
       The tax provisions for the adjustments to net earnings were calculated
^(5)   using an estimated effective tax rate of 36.0% in the twelve months
       ended September 30, 2012.
       


Supplemental Schedule D
                                                           
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
Store Count and Same Store Sales
(Unaudited)
                                                                  
                                          As of September 30,   
                                          2013      2012      CHG
                                                                  
Number of retail stores (end of
period):
Sally Beauty Supply:
Company-operated stores                   3,403       3,284       119
Franchise stores                          21         25         (4      )
Total Sally Beauty Supply                 3,424       3,309       115
Beauty Systems Group:
Company-operated stores                   1,084       1,031       53
Franchise stores                          161        159        2       
Total Beauty System Group                 1,245      1,190      55      
Total                                     4,669      4,499      170     
                                                                  
BSG distributor sales consultants         982         1,044       (62     )
(end of period) ^(1)
                                                         
                                          2013      2012
Fourth quarter company-operated same                              Basis Pt Chg
store sales growth (decline) ^(2)
Sally Beauty Supply                       -1.5  %     3.8   %     (530    )
Beauty Systems Group                      5.2   %     5.5   %     (30     )
Consolidated                              0.4   %     4.3   %     (390    )
                                                                  
Fiscal year ended September 30
company-operated same store sales                                 Basis Pt Chg
growth (decline) ^(2)
Sally Beauty Supply                       -0.6  %     6.5   %     (710    )
Beauty Systems Group                      4.2   %     6.1   %     (190    )
Consolidated                              0.8   %     6.4   %     (560    )
                                                                          

^(1)  Includes 321 and 356 distributor sales consultants as reported by our
       franchisees at September 30, 2013 and 2012, respectively.
       
       For the purpose of calculating our same store sales metrics, we compare
       the current period sales for stores open for 14 months or longer as of
       the last day of a month with the sales for these stores for the
       comparable period in the prior fiscal year. Our same store sales are
^(2)   calculated in constant U.S. dollars and include internet-based sales
       and the effect of store expansions, if applicable, but do 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)
                                                                 
                                            As of September 30,
                                            2013                 2012
Financial condition
information (at
period end):
Working capital                             $  473,164           $ 686,519
Cash and cash                                  47,115              240,220
equivalents
Property and                                   229,540             202,661
equipment, net
Total assets                                   1,950,086           2,065,800
Total debt,
including capital                              1,690,703           1,617,230
leases
Total stockholders'                            ($303,479  )        ($115,085 )
(deficit) equity
                                                        
                                                                 
Debt position
excluding capital                           At September 30,
leases:
                         Interest Rates     2013
                                                                 
                         (i) Prime +
Revolving ABL            0.50-0.75% or      $  76,000
facility                 (ii) LIBOR +
                         1.50-1.75%
Senior notes due         6.875%                750,000
2019
Senior notes due         5.750% ^(1)           858,381
2022 ^(1)
Other ^(2)               4.93% to 5.79%       1,310      
Total debt                                  $  1,685,691  
                                                        
                                                                 
Debt maturities
excluding capital
leases:
Twelve months ending
September 30,
2014                                        $  77,203
2015                                           107
2016-2018                                      -
Thereafter ^(1)                               1,608,381  
Total debt                                  $  1,685,691  
                                                                 

       Includes unamortized premium of $8.4 million related to notes issued in
^(1)  September 2012 with an aggregate principal amount of $150.0 million.
       The 5.75% interest rate relates to notes in the 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