Good morning. My name is Angel and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Regis Corporation Fiscal 2016 Second Quarter Earnings Call. [Operator Instructions] If anyone has not received a copy of today’s press release, please call Regis Corporation at 952-806-2154 and a copy will be sent to you immediately. If you wish to access the replay for this call, you may do so by dialing 1-888-203-1112, access code 9714235. The replay will be available 60 minutes after the conclusion of today’s call. I would like to remind everyone that to the extent the company’s statements or comments this morning represent forward-looking statements. I refer you to the risk factors and other cautionary factors in today’s news release as well as the company’s SEC filings. Reconciliation to non-GAAP financial measures mentioned in the following presentation, as well as others, can be found on their website at www.regiscorp.com. Speaking today will be Dan Hanrahan, Chief Executive Officer; and Steve Spiegel, Chief Financial Officer. After management has completed its review of the quarter, we will open the call for questions. [Operator Instructions] I’d now like to turn the call over to Mr. Hanrahan for his comments. Dan, you may begin.

Thank you, Angel. Good morning, everyone, and thank you for joining us today. With me are Steve Spiegel, our Executive Vice President and Chief Financial Officer; Eric Bakken, our Executive Vice President and Chief Administrative Officer; and Mark Fosland, our Senior Vice President of Finance. Our second quarter performance demonstrates continued progress in executing against our strategies. As we review the quarter in greater detail, you will see consistency in our message. Our vision to make Regis a place where stylists have successful and satisfying careers remains unchanged. Our continued focus on leadership development, technical education and asset protection will enable us to make Regis that place. Our strong field leaders are driving sustainable improvement by using tools, processes and metrics we provide to drive growth in their districts and salons quarter after quarter. As more of our leaders continue to positively comp and our business further stabilizes, investments we make in stylist hours will further contribute to longer-term growth and profitability. And as I’ve said in the past, while our progress is moving in the right direction, it will not be linear. I will now provide you with more detailed color on the second quarter. Second quarter same-store sales increased 220 basis points. Service same-store sales increased 90 basis points and retail same-store sales increased by 720 basis points, both driven by improving execution. Service and retail same-store sales trends improved across each of our concepts. SmartStyle and Supercuts remain our best service performers, posting service comps of 480 basis points and 180 basis points, respectively, in the second quarter. I was very pleased with what our team accomplished in the second quarter retail performance, driven by a strong holiday promotional assortment and increased combo sales, which are retail sales attached to a service ticket. During the second quarter,…

Thank you, Dan, and good morning. Before discussing our performance for the second quarter, I want to cover two housekeeping items. First, included in today’s press release as well as on our corporate website is a reconciliation bridging reported results to earnings as adjusted for the impact of discreet items for the second quarter of the current and prior years. Also on our website are revisions to our fiscal 2015 quarterly income statements. Second, the presence of evaluation allowance against most of our deferred tax assets affects comparability of reported and as adjusted results to prior periods, mainly as a result of tax benefits we claim for goodwill amortization, but do not recognize for GAAP purposes. Our income tax benefit for the six months ended December 31, 2015 of $1.4 million includes $1.9 million of non-cash tax benefits associated with goodwill amortization. The total non-cash tax expense related to this matter is expected to approach $8 million for the fiscal year ending June 30, 2016 and will continue annually in decreasing amounts as long as we have a deferred tax asset valuation allowance in place. As we’ve said in the past, the associated quarterly non-cash charge or benefit could fluctuate significantly as a result of how the effective tax rate is determined at interim periods. Since our press release and 10-Q include detailed explanations for our major P&L line items, I will focus my comments on our liquidity and financial position. In the first half of our fiscal year, we repurchased 6 million shares of our stock for $77 million at an average price approximating $12.90 per share, excluding transaction costs. At December 31, 2015, $34 million remained outstanding under our existing share repurchase authorization. In January, our Board of Directors authorized an additional $50 million for share repurchases. In…

[Operator Instructions] Your first question will come from the line of Jeff Stein of Northcoast Research.

My question is this. You’re obviously trying to achieve that balance between investing and payroll and driving comps. At what point do you believe you’ll reach that balance where we’re not going to see such a dramatic impact on your service margin? In other words, you can invest in payroll ahead of comps forever, but at some point there’s got to be a leveling off and where do you see that percentage and the timeframe?

It actually varies quite a bit and it’s not inconsistent with anything that we’ve seen in our business so far. We’ve got good leaders, investments that we’ve been making are already paying off. And you know what, we essentially look at the investment paying off as this, we can grow revenues and hours at the same rate and we look at leverage when we can get revenue to grow faster than hours. And then when hours grow as faster than rate, I mean, there are still for a while there it’s still adding value. But we’re seeing it happen with leaders, so I can’t give you an exact time that we’re going to turn that corner, but our good leaders took those hours invested and turned that into increased contribution at the salon level right away. And we’re opening – so we started to open the door further and further and we’re seeing our leaders that are in development and growing also making good progress there and we haven’t invested hours at the same rate in our leaders that still need to make a lot of progress that we need to upgrade. So I can’t give any exact date, but I can tell you we’ve got a laser-like focus on this right down to the salon level and we’re being very cautious about doing it. But we do need if we’re going to get traffic growth, the guest traffic growth and we’re going to get long-term sustainable profitability, we’ve got to get our hours up. And there’s a couple of benefits to that, the biggest being if you can provide more hours to stylists, you’re most likely to retain them. And retention, stylist retention is a huge driver of our growth.

So when you’re adding stylists, are you doing it – I guess, when you’re adding payroll hours, are you still doing it profitably but at a lower margin?

It depends on the salon. Yes, I got the question, it’s a smart one. It depends on the salon, it depends on the leader. So our objective obviously is to add them profitably. We don’t mind at this point seeing our margins go down a little bit because what we’d like to do is see the contribution at the salon level grow. We’re early at it. This is a new step for us. I think it’s a very, very important one so that we can begin to grow the top line of this business and grow the profitability. So again, I refer back to my previous answer, it really depends on the leader and their ability to turn it into profitable hours. Now, one of the things we do is we don’t necessarily just hire new stylists. Adding hours might be better scheduling, it might be giving your best stylist more hours. So we’re very, very thoughtful about how we do it. And I think we’re getting better and better on it. What we do do is that if we find a salon that’s out of balance, we pull back on it and get it more in line because that will happen too. With 7,000 salons as we’re starting to grow hours, some of our younger leaders that probably deal a little more development got out ahead of themselves a little bit, so we reeled it back in. And I think with Mark Fosland and his finance team supporting the field, we’re just going to get better and better at this overtime.

And your next question will come from the line of Steph Wissink from Piper Jaffray.

This is [Wolfe] calling in for Steph; unfortunately I was on mute. I have a couple of quick questions for you, the first being there have been comments historically about releasing some company-owned sites prior to franchise partners. Do you have any update on that program and where we’re in the overall real estate rationalization phase? And then secondarily, can you comment quickly on Wal-Mart’s announced store closures and whether they have any impact on you and if you could quantify it?

I’ll start with I believe your first question was about selling company-owned sites to franchisees. We have been doing that overtime. As we think through our real estate and rationalize our real estate, we go through a number of steps. First, we look at it and see if it’s something that we can turn around. And if we feel it’s something we can turn around, we make sure that our team is focused on that and doing all the right things. Second is we look very hard at the real estate. And if it’s good real estate, we know that that’s a decision that now has to come down to is this something that we’ve got the right people in place to turn around or can we turn that into quicker cash flow by selling it to a franchisee. And then the decision is made to either hang on to it ourselves or go out to the franchisee and at that point we begin the sales process with our franchisee. What’s happening is actually pretty good news for us overtime as we’ve been able to sell a relatively small number, but it’s generated incremental cash flow for us. But the good news is that number is becoming smaller and smaller. So as we continue to improve the business, we have fewer and fewer good real estate situations where we’re trying to sell them to franchisees. So it’s a good program and our franchisees like it. We’ve got a good partnership with our franchisees, but overtime our goal is to bring that down to zero because that will mean that we’re operating the salons well. And then to the Wal-Mart question, we’ve got a terrific relationship with Wal-Mart. They worked with us very well on this. It was just a handful of salons and it’s a de minimus impact. What we did is worked hard and our main focus on that was to make sure that we could place all our stylists in other salons and we were able to do that. So it’s nothing that is going to impact our business.

This concludes the Q&A portion of the call. I will now turn the conference back to Dan.

Thanks, Angel. Thanks everybody for dialing in today. We look forward to talking to you at the end of our third quarter. Have a great day.