Sally Beauty (subsidiary issuer): Adj EBITDA declined a hair; maintain Marketweight

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Sally Beauty (subsidiary issuer): Adj EBITDA declined a hair; maintain Marketweight

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Sally Beauty (subsidiary issuer)

Adj EBITDA declined a hair; maintain

Marketweight

Earnings Review

Limited upside; maintain Marketweight 11 May 2026

We maintain our Marketweight on both the 6.75s and the SBH Term Loan-B as we High Yield Credit

continue to hold a favorable view on both Sally Beauty and the beauty industry but see United States

limited upside at current trading levels. We see opportunities for improved profitability Retailing

ahead, including: (1) cost savings; (2) new categories such as fragrance; and (3) store

refreshes. However, the 6.75s trade at a yield-to-worst of 5.7%, 20 bps inside of the BB

William M. Reuter

Index (5.6%). We see limited ability for spreads to tighten and maintain our Research Analyst

Marketweight. We maintain our Marketweight on the SBH Term Loan-B as attractive BofAS+1 646 855 6363

fundamentals are offset by limited upside given: (1) a modest yield of 5.2% and (2) a william.m.reuter@bofa.com

price of $100.75 (callable now at par). Michael DeRienzo

Research Analyst

2Q26 EBITDA was above our estimate BofAS+1 646 855 7973

michael.derienzo@bofa.com

2Q26 Adj EBITDA decreased $1 million to $104 million due to elevated operating costs,

partially offset by (1) modest comparable sales growth and (2) gross margin expansion.

Results were solidly above our estimate of $97 million. Sales increased 2% to $903 Sally Holdings LLC (SBH)

Key Data 2Q2025A 2Q2026A LTMmillion with comparable sales growth of 1%. Comparable sales by segment: Sally Beauty

Supply (SBS) +3% and BSG flat. Adj gross margin increased 80 bps to 52.8% driven by Operating (US$ mm)

the Fuel for Growth program.