Company: SBH
Filing Date: 2025-02-13
Form Type: 10-Q
Source: 0000950170-25-019869
Chunk: 30

Company: Sally Beauty Holdings, Inc.
Filing Date: 2025-02-13
Form: 10-Q
Item: Part I, Item 2
Chunk 30
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 Senior Notes compared to our 2025 Senior Notes, reflect a higher interest rate with a lower outstanding principle balance. See Note 10, Short-term and Long-term Debt, in Item 1 of this quarterly report for more information on our debt.

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Provision for Income Taxes

The effective tax rates were 26.4% and 25.9% for the three months ended December 31, 2024 and 2023, respectively. The increase in the effective tax rate was primarily due to foreign operations for which a tax benefit was not recognized.

In December of 2021, the Organization for Economic Cooperation and Development (OECD) established a framework, referred to as Pillar 2, designed to ensure large multinational enterprises pay a minimum 15 percent level of tax on the income arising in each jurisdiction in which they operate. The earliest effective date is for taxable years beginning after December 31, 2023, which for us is fiscal year 2025. Numerous jurisdictions in which Sally Beauty operates have enacted the OECD model rules or drafted legislation, including Belgium, Canada, France, Germany, Ireland, Italy, Netherlands, Spain, and the United Kingdom. The United States is not subject to Pillar 2. We do not expect this legislation to have a material impact on our consolidated financial statements. We will continue to monitor and evaluate new legislation and guidance, which could change our current assessment. 

Liquidity and Capital Resources

Overview

Our principal sources of liquidity are cash from operations, cash and cash equivalents and borrowings under our ABL facility. A substantial portion of our liquidity needs arise from funding the costs of our operations, working capital, capital expenditures, debt interest and principal payments. Additionally, under our share repurchase program (see below for more details) we will from time to time repurchase shares of our common stock on the open market to return value to our shareholders. At December 31, 2024, we had $588.2 million of available liquidity, which includes $482.7 million available for borrowing under our ABL facility and cash and cash equivalents of $105.5 million.

Our working capital (current assets less current liabilities) decreased $14.5 million, to $698.1 million at December 31, 2024, compared to $712.6 million at September 30, 2024. The decrease was primarily driven by lower inventory, as a result of a strategic reduction in slower moving products and the negative impacts of foreign exchange rates of $