Sally Beauty HoldingsCompany Overview

Company Highlights

Sally Beauty Holdings is a leading international specialty retailer and distributor of professional beauty products

Annual consolidated sales of over $3.8 billion

Strong cash flow generation

Over 5,070 stores located in 13 countries (1)

Industry leading position with ~33% channel share

Proven resilience in recessionary cycles

Well-positioned for long-term growth

Two distinct business segments

(1) As of June 30, 2016, fiscal 2016  third quarter.

Company Highlights

Consolidated Fiscal 2015 Results

Net Sales Gross Margin

Segments

Customers• Retail consumers

• 76% of sales• Professional stylists, small salons,

chair/suite rentals• 24% of sales

• Stores – Chair/suite rentals• 65% of sales

• Full Service Sales - small to medium sized salons

• 35% of sales

(1) The impact from unfavorable foreign currency exchange in the 2015 fiscal year was $87.3 million, or 2.3%(2) See Addendum for a reconciliation of this non‐GAAP financial measure.

3,750 stores worldwide (1)

Retail consumers (76% of sales) 

Professional stylists (24% of sales)

SalesSSS growthEBITEBIT margin

Segment

DistributionChannel

Customers

FY2015Financials

$2.3b1.7%$412m17.7%

Company Highlights

(1) As of June 30, 2016, fiscal 2016  third quarter.

SalesSSS growthEBITEBIT margin

Segment

DistributionChannel

Customers

FY2015Financials

1,322 stores (1)

947 direct sales consultants (1)

Professional stylists (chair/suite renters)

Salons (via BSG’s direct sales consultants)

$1.5b5.7%$231m15.4%

Company Highlights

(1) As of June 30, 2016, fiscal 2016  third quarter.

Company Highlights

Open‐Line Retail Exclusive / Full‐Service

3,750 stores 1,322 stores 947 consultants

Professional stylists

` Retail Consumers $$$ High-end$ Value

Customers:

Distribution:

SBH plays an important role in the supply chain

Salons

(1) As of June 30, 2016, fiscal 2016  third quarter.

Industry Growth

$1.6 $1.7 $1.8 

$2.0 $2.1 $2.2 $2.3 

$2.4 $2.6 $2.7 

$2.9 $2.9 $3.0 $3.1 

$3.3 $3.4 $3.5 

$3.7 $3.8 $3.8 $4.0 

$4.2 $4.5 $4.6 

$4.8 $4.9 

 $‐

 $1.0

 $2.0

 $3.0

 $4.0

 $5.0

 $6.0

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

($ in

 billions)

U.S. Salon Industry Product Sales(at wholesale $’s) Growth 

of 3.2%RecessionResistantIndustry

Source:  Professional Consultants & Resources, 2015 Study.(1)  Professional beauty supply channel size based upon a 2015 study of manufacturer‐level sales conducted by Professional Consultants & Resources. 

Business Segment Review

Sally Company Highlights

Sally Beauty global footprint

3,750(1) stores worldwide

2,902 stores in U.S. (including Puerto Rico)

848 stores in Canada, UK, Ireland, Belgium, Netherlands, France, Germany, Spain, Chile, Colombia, Peru & Mexico

Average store size 1,700 sq. ft., 90% selling space

Professional open-line business - merchandise assortment not available through mass retailers

Destination for professional quality haircare and solutions with a love it or return it guarantee Sally Beauty U.S. Store

(1) As of June 30, 2016, fiscal 2016  third quarter.

Sally Beauty: Marketing Initiatives

Sally Beauty: Marketing Initiatives

In Store Solution GuideDirect Mail Exterior Sign

Pro Flyer

TargetedDigital Ads

Email

Social Media

Sallybeauty.com

Access Hollywood

TV Morning Shows

BloggerNetwork

DigitalVideo

Beauty Box

Auto-Replenish CRM

Text

2.7%3.8%

2.4% 2.4% 2.7%

1.2%2.1%

4.1%

6.3% 6.5%

-0.6%1.3% 1.7% 2.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD16

$1,208 $1,296 $1,359 $1,419 $1,567 $1,673 $1,696 $1,835 $2,012

$2,199 $2,230 $2,309 $2,330

$1,781

$0$400$800

$1,200$1,600$2,000$2,400$2,800

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD16

Sally Beauty Net Sales

Sally Beauty Same Store Sales

Growth of 1.9% (1)

Sally Beauty Financials

(1) The unfavorable impact of foreign currency exchange on sales  for the first nine months of fiscal 2016 was $33.9 million.

7%

8%

14%

9%

16%

25%

22%

Hair Care

Hair Color

Skin and Nail Care

ElectricalAppliances

Brushes,Cutlery andAccessories

Other BeautyItems

We offer a diversified mix of beauty products 

EthnicProducts

47% of Sales from Hair Care & Color

*Fiscal  year 2015 

Sally Beauty Product Mix

Expand store base organically and through acquisitions; domestic and international

Plan is to grow net store base approximately 3 percent in FY2016

Increase customer traffic through loyalty programs and customer relationship management (CRM)

Further enhance e-commerce platform

Growth Initiatives

2,511 2,694 2,844 2,923 3,032 3,158 3,424 3,5633,309

0

1,000

2,000

3,000

4,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Worldwide Sally Beauty Stores

Sally Beauty Store Economics US

Capital Required $70k

Average Inventory $85k

Positive Contribution Margin 4 Months

Cash Payback on Investment 2 Years

Growth

3,673

7% 6% 3% 4% 4% 5% 4% 3% 4% 3%

Sally Beauty Store Economics

848 Sally Beauty stores located in 13 countries

Stores located in Canada, the UK, Republic of Ireland, Belgium, France, the Netherlands, Germany, Spain, Chile, Colombia, Peru & Mexico

24% of Sally Beauty sales from international

Sales mix differs from U.S./Canada

UK/Europe

~80-85% professional ~15-20% retail

Mexico and South America almost 100% retail

Existing International Platform Long‐Term Store Growth Potential 

(Canada)~250

(Mexico)211 ~250

(UK / Ireland)261 ~300

(Belgium, France, Germany, Spain, Netherlands)

194 600‐800

(Chile)41 ~45

PotentialCurrent

118

(Colombia)

6

Total 848 ~1,500+

(Peru)~4017

~50

Sally Beauty Growth Initiatives

(1) As of June 30, 2016, fiscal 2016  third quarter.

U.S.

Chile, S.A.

United KingdomPeru, S.A.

Store designs vary by country and customer demographic

Sally Beauty: Growth Initiatives

Beauty Systems Group – 1,322(1) (professional stores & 944 professional distributor sales consultants

1,157 company-operated / 165 franchised stores (Armstrong McCall)

947 professional distributor sales consultants

Average store size 2,700 sq. ft.

Sells to salons and salon professionals

Professional exclusive / full-service business –includes merchandise assortment of premium brands sold through salons and not available in mass retail or Sally Beauty stores

LoxaBeauty.com, the online retail solution for salon/stylists

BSG Company Highlights

(1) As of June 30, 2016, fiscal 2016  third quarter.

$616 $802

$895 $954 $945 $975 $941 $1,081

$1,257 $1,325 $1,392 $1,445 $1,505

$1,196

$0$200$400$600$800

$1,000$1,200$1,400$1,600

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD16

BSG Net Sales 

4.6%

8.5%

(0.6%)

4.1%

10.1%

6.9%

1.0%

6.2% 5.5% 6.1%4.2% 3.5%

5.7%6.8%

(4.0%)

0.0%

4.0%

8.0%

12.0%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD16

BSG Same Store Sales Growth 

Growth of 6.5%

BSG Financials

(1) The unfavorable impact of foreign currency exchange on sales  for nine months of fiscal 2016 was $9.8 million, or 0.8%.

We offer a diversified mix of beauty products not carried in Sally stores or mass retail

8%5%

10%

11%

33%

35%

Hair Care

Skin and Nail Care

ElectricalAppliances

PromotionalItems

Other BeautyItems

Hair Color

*Fiscal  year 2015 

BSG Product Mix

828 874 929 991 1,0271,151 1,190 1,245

0

400

800

1,200

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Expand store base organically Further penetrate existing geographies

Enter new territories

Exclusive distribution

Expand gross margins as sales

shift to the stores

Fold-in acquisition opportunities Capital Required $80k

Average Inventory $150k

Positive Contribution Margin 4 Months

Cash Payback on Investment 2 Years

Growth Initiatives

BSG Store Economics

Growth

1,265

Organic

Acquisition

Store GrowthStore Growth1,294

6 46 44 16 36 39 39 43 20 22

0 0 11 46 0 85 0 12 0 7

6% 6% 7% 4% 12% 3% 5% 2% 2%

BSG Store Economics

Consolidated Results

Long‐term debt (as of 6/2016)

$850 

$200 

$750 

 $‐

 $100

 $200

 $300

 $400

 $500

 $600

 $700

 $800

 $900

 $1,000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

No near-term maturities

In November 2015, refinanced entire $750 million of 6.875% Senior Notes due 2019 with $750 million of 5.625% Senior Notes due 2025

Targeted consolidated pro forma leverage ratio (Net Debt/EBITDA) of approximately 2.75x

Ample liquidity

Strong cash flow

$500 million asset-based revolving credit facility Committed through July 2018

Long‐term debt maturities ($ millions)

Consolidated Debt

AMOUNT($MM) 

% OFTOTAL DEBT 

REVOLVING ABL FACILITY $0.0 0.0%5.750% SENIOR NOTES (FY2022) $850.0 47.4%5.625% SENIOR NOTES (FY2026) $750.0 41.5%5.500% SENIOR NOTES (FY2024) $200.0 11.1%

TOTAL DEBT $1,800.00 100.0% 

$0.33

$0.44$0.52

$0.77

$1.07

$1.42$1.48

$1.53 $1.53

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

2007 2008 2009 2010 2011 2012 2013 2014 2015

FlatYoY

$2,514 $2,648 $2,637

$2,916

$3,269 $3,524 $3,622

$3,754 $3,834

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

2007 2008 2009 2010 2011 2012 2013 2014 2015

Sales EPS (adjusted)

2.2%YoY

(1)

(1) FY15 includes $87.3 million, or 230 points of growth, of unfavorable F(X) exchange rates

Consolidated Financials

Adjusted EBITDA FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15Net Earnings (GAAP) 44.5$      77.7$      99.1$      143.8$      213.7$      233.1$      261.2$    246.0$       235.1$     

Interest expense, net of interest income 146.0      159.1 132.0 113.0 112.5 138.4 107.7 116.3 116.8Provision for income taxes 38.0 46.2 65.7 84.1 122.2 127.9 151.5 144.7 143.4Depreciation and amortization 42.6 48.5 47.1 51.1 59.7 64.7 72.2 79.7 89.4Share‐based compensation 13.1 10.2 8.6 12.8 15.6 16.9 19.2 22.1 16.8Transaction expenses  (1) 21.5 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐Sales‐based service fee charged by Alberto‐Culver 3.8 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐Expenses  from data security incidents ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2.5 5.6Germany restructure ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 5.3Litigation settlement and non‐recurring charges ‐ ‐ ‐ ‐ (21.3)         10.2           ‐ ‐ ‐

Adjusted EBITDA 309.5$   341.7$   352.5$   404.8$      502.5$      591.1$      611.8$    611.3$       612.4$     

Adjusted net earnings and adjusted diluted earnings per shareNet Earnings (GAAP) 44.5$      77.7$      99.1$      143.8$      213.7$      233.1$      261.2$    246.0$       235.1$     

Marked‐tomarket adjustment for certain interest rate swaps 3.0 4.6 ‐ (2.4) ‐ ‐ ‐ ‐ ‐Expenses  associated with the spin‐off from Alverto Culver 13.4 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐Loss  on extinguishment of debt ‐ ‐ (5.3) ‐ ‐ 37.8 ‐ ‐ ‐Interest expense on redeemed debt ‐ ‐ ‐ ‐ ‐ 5.1 ‐ ‐ ‐Amortization of deferred financing costs ‐ ‐ ‐ ‐ ‐ 0.2 ‐ ‐ ‐Litigation settlement and non‐recurring items, net (2) ‐ ‐ ‐ ‐ (21.3) 10.2 ‐ ‐ ‐Loss  from securiy breach incidents ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2.5 5.6Management transition costs ‐ ‐ ‐ ‐ ‐ ‐ ‐ 3.5 ‐Germany restructure ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 5.3Tax provision for the adjustments  to net earnings (1.4) (1.7) 2.1 0.9 7.9 (19.2) ‐ (2.3) (4.0)

Adjusted net earnings 59.5$      80.6$      95.9$      142.3$      200.3$      267.2$      261.2$    249.7$       241.9$     Diluted adjusted net earnings  per share (non‐GAAP):  0.33$      0.44$      0.52$      0.77$        1.07$        1.42$        1.48$      1.53$          1.15$       Diluted GAAP net earnings  per share: 0.24$      0.42$      0.54$      0.78$        1.14$        1.24$        1.48$      1.51$          1.13$       

(1) Transaction expenses  of $21.5 for separation of the Company from Alberto‐Culver in November 2006.(2) Results  for the nine months  ended June 30, 2011, reflect a $27.0 million benefit of a l itigation settlement and non‐recurring charges  of $5.7 mill ion. 

Addendum: Non‐GAAP Reconciliations

Cautionary Notice Regarding Forward‐Looking Statements

Statements in this presentation 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 and effectively responding to changes in consumer preferences and buying trends in a timely manner; 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 products by our third‐party manufacturers or distributors; products sold by us being found to be defective in labeling or content; compliance with current laws and regulations or becoming subject to additional or more stringent laws and regulations; the success of our e‐commerce businesses; product diversion to mass retailers or other unauthorized resellers; the operational and financial performance of our franchise‐based business; successfully identifying acquisition candidates and successfully completing desirable acquisitions; integrating acquired businesses; 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, particularly our trademarks; the risk that our products may infringe on the intellectual property of others or that we may be required to defend our intellectual property rights; conducting business outside the United States; disruption in our information technology systems; a significant data security breach, including misappropriation of our customers’ or employees’ confidential information, and the potential costs related thereto; the negative impact on our reputation and loss of confidence of our customers, suppliers and others arising from a significant data security breach; the costs and diversion of management attention required to investigate and remediate a data security breach; the ultimate determination of the extent or scope of the potential liabilities relating to our 2015 data security incident; our ability to attract or retain highly skilled management and other personnel; 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 existing financial reporting system; being a holding company, with no operations of our own, and depending on our subsidiaries for cash; our ability to execute and implement our common stock repurchase program; 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.

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 filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10‐K for the year ended September 30, 2015, 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.

Cautionary Notice Regarding Forward‐Looking Statements