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Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________________ FORM 10-Q ________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 001-40860 ________________________ Olaplex ...

Q1 2025 EARNINGS – MAY 8, 2025 DISCLAIMER General Disclaimer This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities of Olaplex Holdings, Inc. (the "Company"), nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. Forward Looking Statements This presentation includes certain forwar ...

Core Insights - Olaplex Holdings, Inc. reported revenue of $96.98 million for the quarter ended March 2025, reflecting a year-over-year decline of 2% [1] - The earnings per share (EPS) for the same period was $0.00, compared to $0.03 a year ago, indicating a significant drop [1] - The reported revenue exceeded the Zacks Consensus Estimate of $93.03 million by 4.24%, while the EPS fell short of the consensus estimate of $0.02 by 100% [1] Revenue Breakdown - Professional revenue was $34.50 million, surpassing the five-analyst average estimate of $33.48 million, but showing a year-over-year decline of 10.9% [4] - Direct-to-Consumer (DTC) revenue was $23.90 million, below the average estimate of $25.01 million, representing a year-over-year decrease of 7% [4] - Specialty retail revenue reached $38.60 million, exceeding the average estimate of $34.38 million, with a year-over-year increase of 12.2% [4] Stock Performance - Over the past month, Olaplex shares have returned +7.3%, while the Zacks S&P 500 composite has changed by +11.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - First quarter net sales were $97 million, a decline of 1.9% year over year, but ahead of internal expectations [10][30] - Adjusted EBITDA was $25.7 million, representing a margin of 26.5%, down from 35.9% a year ago [32][33] - Cash and cash equivalents increased to $580.9 million from $507.5 million in Q1 of fiscal 2024 [34] - Inventory decreased to $79.2 million, down $15.5 million from Q1 of fiscal 2024 [34] Business Line Data and Key Metrics Changes - Specialty retail sales grew 12% year over year to $38.6 million, driven by strong retailer support [31] - Professional channel sales declined 10.9% to $34.5 million, primarily due to softness in international markets [31] - Direct to consumer sales decreased 7.2% to $23.9 million, aligning with a strategy to reduce promotional intensity [32] Market Data and Key Metrics Changes - North America showed modest growth, while international sales declined year over year but were better than expected [11][30] - The U.S. represented 51% of total net sales, with international sales making up 49% [36] Company Strategy and Development Direction - The company introduced the "Bonds and Beyond" strategy, focusing on foundational hair health and innovation [7][8] - Strategic priorities include generating brand demand, harnessing innovation, and executing with excellence [13][22] - The company aims to enhance emotional connections with consumers and expand its product offerings [9][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the resilience of the beauty category despite macroeconomic challenges [48][49] - The company reaffirmed its 2025 guidance, expecting net sales to range from a decline of 3% to an increase of 2% compared to fiscal 2024 [41][40] - Management acknowledged the ongoing transformation and the need for disciplined execution [30][29] Other Important Information - The company invested $18.1 million in non-payroll sales and marketing, an increase of $4.8 million year over year [17] - The company paid down $300 million in debt, reducing its gross leverage ratio from around seven times to four times [34][40] Q&A Session Summary Question: Insights on DTC channel performance and customer engagement - Management noted a deliberate strategy shift in the DTC channel, focusing on promotional activity during key moments [46] - They remain optimistic about the DTC channel's role in the overall strategy [48] Question: Changes in outlook due to macro trends - Management reiterated confidence in the beauty category's resilience and the company's long-term vision [49] Question: Marketing initiatives and KPIs - Management highlighted early positive KPIs from the new marketing campaign, indicating strong engagement [57] Question: Specialty retail channel performance and inventory health - Management confirmed healthy inventory levels and attributed specialty retail growth to strong retailer support [63] Question: Promotional strategy across channels - Management emphasized a strategic approach to promotions, using them selectively rather than broadly [75] Question: Marketing spend cadence for the year - Management indicated that marketing spend would increase in the second quarter and continue throughout the year [98] Question: Tariff impact and inventory planning - Management expects minimal impact from tariffs and is proactively managing inventory levels [35][39]

Financial Data and Key Metrics Changes - First quarter net sales were $97 million, a decline of 1.9% year over year, but ahead of internal expectations [10][31] - Adjusted EBITDA was $25.7 million, representing a margin of 26.5%, down from 35.9% a year ago [33] - Cash and cash equivalents increased to $580.9 million from $507.5 million in Q1 of fiscal 2024 [35] - Inventory decreased to $79.2 million, down $15.5 million from Q1 of fiscal 2024 [35] Business Line Data and Key Metrics Changes - Specialty retail sales grew 12% year over year to $38.6 million, driven by strong retailer support [32] - Professional channel sales declined 10.9% to $34.5 million, largely due to softness in international markets [32] - Direct to consumer sales declined 7.2% to $23.9 million, aligning with a strategy to reduce promotional intensity [33] Market Data and Key Metrics Changes - North America saw modest growth, while international sales declined year over year but were better than expected [11][31] - The U.S. represented 51% of total net sales, with international sales making up 49% [36] Company Strategy and Development Direction - The company is focusing on a "Bonds and Beyond" strategy to position itself as a foundational health and beauty company [6][7] - Strategic vision is based on three pillars: moving beyond damage repair, empowering professionals, and creating emotional connections with consumers [8][9] - Plans to launch two to three strategic products annually, supported by strong consumer education and stylist engagement [22] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the beauty category's resilience despite macroeconomic challenges [49] - The company is committed to executing its strategy and maintaining its 2025 guidance, reflecting confidence in its long-term vision [29][41] - Management acknowledges the ongoing complexity of operating through change but sees early signs of progress in transformation efforts [30] Other Important Information - The company invested $18.1 million in non-payroll sales and marketing, an increase of $4.8 million year over year [17] - The company has reduced outstanding debt by $300 million, lowering its gross leverage ratio and unlocking estimated annual interest savings of $20 million [35] Q&A Session Summary Question: Insights on DTC channel customer acquisition and retention - Management noted a deliberate strategy change in the DTC channel, focusing on using promotions strategically during key moments [47][48] Question: Changes in outlook due to macro trends - Management remains optimistic about the beauty category's resilience and reiterated guidance for the year [51][52] Question: Marketing initiatives and KPIs - Management highlighted early positive KPIs from the new marketing campaign, indicating a focus on emotional connections with consumers [59][60] Question: Specialty retail channel performance and inventory - Management confirmed healthy inventory levels and attributed specialty retail growth to strong retailer support and belief in the brand's future [65][66] Question: Promotional strategy across channels - Management clarified that the strategy to reduce promotional intensity applies across all channels, focusing on strategic use during critical moments [76][78] Question: Marketing spend cadence for the year - Management indicated that marketing spend would increase in the second quarter, with a focus on executing the brand strategy [101] Question: Tariff impacts and inventory planning - Management expects any tariff impacts to be modest and is proactively managing inventory to mitigate potential issues [36][41]

[First Quarter 2025 Financial Highlights](index=1&type=section&id=First%20Quarter%202025%20Financial%20Highlights) [Performance Summary](index=1&type=section&id=Performance%20Summary) Olaplex reported a solid start to 2025, with first-quarter sales exceeding expectations, progressing on its transformation and "Bonds and Beyond" strategy - CEO Amanda Baldwin highlighted a solid start to the year, with **Q1 sales surpassing expectations** and continued progress on the company's transformation strategy[3](index=3&type=chunk) [Key Financial Results (Q1 2025 vs Q1 2024)](index=1&type=section&id=Key%20Financial%20Results%20%28Q1%202025%20vs%20Q1%202024%29) In Q1 2025, net sales decreased slightly by **1.9% to $97.0 million** year-over-year, driven by declines in Professional and Direct-To-Consumer channels, partially offset by Specialty Retail growth Q1 2025 vs Q1 2024 Financial Performance (in thousands) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $96,978 | $98,906 | (1.9)% | | Gross Profit | $67,356 | $71,343 | (5.6)% | | Net Income | $465 | $7,746 | (94.0)% | | Adjusted EBITDA | $25,664 | $35,484 | (27.7)% | | Diluted EPS | $0.00 | $0.01 | (100.0)% | Q1 2025 Net Sales by Channel (in thousands) | Channel | Q1 2025 | % Change YoY | | :--- | :--- | :--- | | Specialty Retail | $38,600 | 12.0% | | Professional | $34,500 | (10.9)% | | Direct-To-Consumer | $23,900 | (7.2)% | - Geographically, net sales in the United States increased by **0.6%**, while international sales decreased by **4.5%** in Q1 2025[7](index=7&type=chunk) [Balance Sheet and Financial Position](index=1&type=section&id=Balance%20Sheet%20and%20Financial%20Position) As of March 31, 2025, Olaplex maintained a strong cash position with **$580.9 million** in cash and cash equivalents, and subsequently made a **$300.0 million** voluntary debt repayment Balance Sheet Highlights (in millions) | Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $580.9 | $586.0 | | Inventory | $79.2 | $75.2 | | Long-term debt, net | $642.4 | $643.7 | - On May 1, 2025, the company voluntarily repaid **$300.0 million** of its outstanding long-term debt using cash on hand, without incurring prepayment penalties[6](index=6&type=chunk) [Fiscal Year 2025 Guidance](index=3&type=section&id=Fiscal%20Year%202025%20Guidance) [Guidance Overview](index=3&type=section&id=Guidance%20Overview) The company reiterated its full-year 2025 guidance, factoring in ongoing investments in demand generation, innovation, and talent, with Q2 reflecting incremental marketing investments - The company reiterated its fiscal year 2025 guidance, which incorporates continued investments in R&D, marketing, and talent to generate demand and strengthen execution[8](index=8&type=chunk) - The guidance assumes the current consumer spending environment and no material impact from tariffs[8](index=8&type=chunk) [Guidance Metrics](index=3&type=section&id=Guidance%20Metrics) For fiscal year 2025, Olaplex projects net sales between **$410 million and $431 million**, with Adjusted Gross Profit Margin between **70.5% and 71.5%**, and Adjusted EBITDA Margin between **20% and 22%** Fiscal Year 2025 Guidance | Metric | 2025 Guidance | 2024 Actual | | :--- | :--- | :--- | | Net Sales (in millions) | $410 - $431 | $423 | | Adjusted Gross Profit Margin | 70.5% to 71.5% | 71.4% | | Adjusted EBITDA Margin | 20% to 22% | 30.7% | [Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Consolidated%20Financial%20Statements%20%28Unaudited%29) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets stood at **$1,770,924 thousand**, total liabilities were **$892,595 thousand**, and stockholders' equity increased to **$878,329 thousand** Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $703,856 | $689,713 | | Total assets | $1,770,924 | $1,767,723 | | Total current liabilities | $65,556 | $64,654 | | Total liabilities | $892,595 | $893,321 | | Total stockholders' equity | $878,329 | $874,402 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2025, net sales were **$97.0 million** and gross profit **$67.4 million**, with increased operating expenses leading to a significant drop in operating income to **$8.5 million** and net income to **$0.5 million** Q1 Statement of Operations Summary (in thousands) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $96,978 | $98,906 | | Gross profit | $67,356 | $71,343 | | Total operating expenses | $58,880 | $51,726 | | Operating income | $8,476 | $19,617 | | Net income | $465 | $7,746 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, net cash used in operating activities was **$2.9 million**, a reversal from Q1 2024, resulting in a net decrease in cash and cash equivalents of **$5.1 million** for the quarter Q1 Statement of Cash Flows Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(2,917) | $43,707 | | Net cash used in investing activities | $(996) | $(1,084) | | Net cash used in financing activities | $(1,161) | $(1,517) | | Net (decrease) increase in cash and cash equivalents | $(5,074) | $41,106 | [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) [Disclosure and Reconciliation](index=4&type=section&id=Disclosure%20and%20Reconciliation) The company provides non-GAAP measures like Adjusted EBITDA and Gross Profit to offer a clearer view of core operating performance, with Q1 2025 Adjusted EBITDA at **$25.7 million** and a **26.5%** margin - Management believes non-GAAP measures provide meaningful supplemental information regarding operating performance and facilitate internal comparisons by excluding certain non-indicative items[16](index=16&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $465 | $7,746 | | Adjusted EBITDA | $25,664 | $35,484 | | Adjusted EBITDA margin | 26.5% | 35.9% | Reconciliation of Gross Profit to Adjusted Gross Profit (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Gross profit | $67,356 | $71,343 | | Adjusted gross profit | $69,748 | $73,530 | | Adjusted gross profit margin | 71.9% | 74.3% | Reconciliation of SG&A to Adjusted SG&A (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | SG&A | $47,987 | $40,437 | | Adjusted SG&A | $44,349 | $37,249 |

Financial Performance - The company reported net sales of $96.978 million for Q1 2025, a decrease of 1.9% compared to $98.906 million in Q1 2024 [3][5] - Gross profit for the quarter was $67.356 million, down 5.6% from $71.343 million in the same period last year [3][5] - Net income significantly declined to $0.465 million, a 94% drop from $7.746 million in Q1 2024, resulting in diluted EPS of $0.00 compared to $0.01 in the prior year [3][5][26] Operational Highlights - Specialty Retail sales increased by 12.0% to $38.6 million, while Professional and Direct-To-Consumer channels saw declines of 10.9% and 7.2%, respectively [5] - The company had $580.9 million in cash and cash equivalents as of March 31, 2025, slightly down from $586.0 million at the end of 2024 [4] Debt Management - On May 1, 2025, the company voluntarily repaid $300 million of long-term debt using available cash, with no prepayment penalties incurred [6] Guidance for Fiscal Year 2025 - The company reiterated its guidance for fiscal year 2025, expecting net sales between $410 million and $431 million, adjusted gross profit margin of 70.5% to 71.5%, and adjusted EBITDA margin of 20% to 22% [7][8] - The guidance reflects management's expectations regarding investments in demand generation, innovation, and execution capabilities [7] Strategic Focus - The CEO emphasized the company's commitment to navigating a dynamic environment and investing in strategic priorities to drive growth [2]

Company Overview - Olaplex Holdings, Inc. is a foundational health and beauty company that focuses on innovative hair care solutions, particularly through its Complete Bond Technology™ [3] - Founded in 2014, Olaplex has transformed the prestige hair care market and offers a comprehensive range of hair health products sold globally through various channels [3] Upcoming Financial Results - The company plans to report its first quarter fiscal 2025 financial results on May 8, 2025, before the market opens [1] - An investor conference call and webcast will be held on the same day at 9:00am ET/6:00am PT to discuss the financial results [2] - The webcast will be accessible via the company's investor relations website, and a replay will be available for 90 days [2]

While Olaplex's (NASDAQ: OLPX ) share price has been fairly range bound over the past 12 months, the business continues to face headwinds. A new CEO and a shift in strategy may have renewed investor optimism butRichard Durant is the leader of Narweena, an asset manager focused on finding market dislocations that are the result of a poor understanding of a businesses long-term prospects. Narweena believes that excess risk adjusted returns can be achieved by identifying businesses with secular growth opportun ...