Olaplex Holdings, Inc. (NASDAQ:OLPX) Q4 2024 Earnings Conference Call March 4, 2025 9:00 AM ET Company Participants Allison Malkin – Investor Relations Amanda Baldwin – Chief Executive Officer Catherine Dunleavy – Chief Operating Officer and Chief Financial Officer Conference Call Participants Susan Anderson – Canaccord Genuity Olivia Tong – Raymond James Ashley Helgans – Jefferies Lauren Lieberman – Barclays Dana Telsey – Telsey Advisory Group Operator Greetings, and welcome to Olaplex Holdings, Inc. Fourt ...

Core Insights - Olaplex Holdings, Inc. reported revenue of $100.74 million for the quarter ended December 2024, indicating a year-over-year decline of 9.8% [1] - The earnings per share (EPS) for the same period was $0.01, down from $0.03 a year ago [1] Financial Performance - Revenue for the quarter was $100.74 million, reflecting a decrease of 9.8% compared to the previous year [1] - EPS decreased to $0.01 from $0.03 year-over-year [1]

Financial Performance - Net sales for Q4 2024 decreased by 9.8% to $100.7 million compared to Q4 2023[5] - Gross profit for Q4 2024 was $66.8 million, down 13.0% from $76.8 million in Q4 2023, with a gross profit margin of 66.3%[5] - Adjusted net income for Q4 2024 was $7.6 million, a decrease of 65.8% compared to $22.3 million in Q4 2023[6] - For the fiscal year 2024, net sales decreased by 7.8% to $422.7 million compared to $458.3 million in 2023[8] - The company reported a net income of $19.5 million for fiscal year 2024, down 68.3% from $61.6 million in 2023[8] - Adjusted EBITDA for the year ended December 31, 2024, was $129.665 million, down from $174.260 million in 2023, reflecting a decrease of approximately 25.5%[31] - Net income for the year ended December 31, 2024, was $19.522 million, a decrease of 68.3% compared to $61.587 million in 2023[29] - The company reported a net loss of $8.800 million for Q4 2024, compared to a net income of $14.101 million in Q4 2023[33] Guidance and Projections - Fiscal year 2025 guidance for net sales is projected between $410 million and $431 million, reflecting a decrease from the previous year's actual sales[11] - Adjusted EBITDA margin for fiscal year 2025 is expected to be between 20% and 22%, down from 30.7% in 2024[11] Cash and Assets - As of December 31, 2024, cash and cash equivalents increased to $586.0 million from $466.4 million in 2023[9] - Cash and cash equivalents at the end of 2024 were $585.967 million, up from $466.400 million at the end of 2023, representing a growth of about 25.5%[29] - Total current assets increased to $689.713 million as of December 31, 2024, from $613.196 million in 2023, reflecting an increase of approximately 12.5%[25] Inventory and Liabilities - Inventory at the end of Q4 2024 was $75.2 million, down from $95.9 million at the end of Q4 2023[9] - Long-term debt as of December 31, 2024, was $643.7 million, slightly down from $649.0 million in 2023[9] - Total liabilities decreased slightly to $893.321 million as of December 31, 2024, from $895.370 million in 2023[25] Expenses - Selling, general, and administrative expenses for the year ended December 31, 2024, were $181.685 million, an increase of 7.5% from $168.942 million in 2023[27] - SG&A expenses for Q4 2024 were $52.869 million, up from $49.172 million in Q4 2023, representing a 5.5% increase[33] Other Financial Metrics - Adjusted EBITDA margin for the year ended December 31, 2024, was 30.7%, compared to 38.0% in 2023, indicating a decline of 7.3 percentage points[31] - Adjusted gross profit margin for the year ended December 31, 2024, was 71.4%, unchanged from 2023[31] - Adjusted net income per share for Q4 2024 was $0.01, down from $0.03 in Q4 2023[33] Special Items - The company incurred a one-time payment of $3.5 million to a former distributor in the UAE during 2023 to establish a new partnership[33] - Amortization of intangible assets (excluding software) for the year ended December 31, 2024, was $50.073 million, slightly up from $49.075 million in 2023[33] - The company recorded organizational realignment costs of $2.920 million in Q4 2023[34] - Inventory write-off and disposal costs were incurred due to reformulation of a product, impacting financials in 2023[34] - The company is focused on global reformulation to streamline product offerings in compliance with regulations[34]

Core Insights - Olaplex Holdings, Inc. reported financial results for Q4 and fiscal year 2024, indicating a challenging year with significant declines in net sales and profitability [1][2][3]. Financial Performance - Q4 2024 net sales decreased by 9.8% to $100.7 million compared to Q4 2023 [4][5]. - Gross profit for Q4 2024 was $66.8 million, down 13.0% from $76.8 million in Q4 2023, resulting in a gross profit margin of 66.3% [4][5]. - Adjusted net income for Q4 2024 was $7.6 million, a decrease of 65.8% from $22.3 million in Q4 2023 [4][5]. - For the fiscal year 2024, net sales were $422.7 million, down 7.8% from $458.3 million in 2023 [6][5]. - The company reported a net income of $19.5 million for the fiscal year 2024, a decline of 68.3% compared to $61.6 million in 2023 [6][5]. Sales Channel Performance - Specialty Retail sales increased by 5.7% to $28.8 million in Q4 2024, while Professional sales decreased by 27.1% to $31.0 million [5]. - Direct-To-Consumer sales fell by 2.5% to $40.9 million in Q4 2024 [5]. - For the fiscal year 2024, Specialty Retail sales increased by 5.4% to $142.3 million, while Professional sales decreased by 19.3% to $145.3 million [5]. Balance Sheet Highlights - As of December 31, 2024, the company had cash and cash equivalents of $586.0 million, up from $466.4 million a year earlier [7]. - Inventory at the end of Q4 2024 was $75.2 million, down from $95.9 million at the end of 2023 [7]. Fiscal Year 2025 Guidance - The company expects fiscal year 2025 net sales to be between $410 million and $431 million, reflecting a cautious outlook for the first quarter [8][9]. - Adjusted gross profit margin for fiscal year 2025 is projected to be between 70.5% and 71.5% [9]. Company Overview - Olaplex is a health and beauty company known for its innovative hair care products, leveraging its Complete Bond Technology™ to enhance hair health [12].

Core Viewpoint - Olaplex Holdings, Inc. reported financial results for Q4 and fiscal year 2024, showing a decline in net sales and net income compared to the previous year, while expressing optimism about future strategies and business transformation efforts [2][5][8]. Financial Results Summary Fourth Quarter 2024 vs. Fourth Quarter 2023 - Net sales decreased by 9.8% to $100.7 million [4] - Gross profit decreased by 13.0% to $66.8 million, with a gross profit margin of 66.3% [4] - Net loss was $8.8 million compared to a net income of $14.1 million in Q4 2023, representing a 162.4% decrease [4][5] - Adjusted net income decreased by 65.8% to $7.6 million [4][5] - Adjusted EBITDA decreased by 51.4% to $17.5 million, with an adjusted EBITDA margin of 17.4% [4][5] Fiscal Year 2024 vs. Fiscal Year 2023 - Net sales decreased by 7.8% to $422.7 million [6] - Gross profit decreased by 8.3% to $292.3 million, with a gross profit margin of 69.2% [6] - Net income decreased by 68.3% to $19.5 million [6] - Adjusted net income decreased by 30.1% to $75.7 million [6] - Adjusted EBITDA decreased by 25.6% to $129.7 million, with an adjusted EBITDA margin of 30.7% [6] Balance Sheet Overview - As of December 31, 2024, cash and cash equivalents increased to $586.0 million from $466.4 million in 2023 [7] - Inventory decreased to $75.2 million from $95.9 million [7] - Long-term debt slightly decreased to $643.7 million from $649.0 million [7] Fiscal Year 2025 Guidance - The company expects net sales for fiscal year 2025 to be between $410 million and $431 million [9] - Adjusted gross profit margin is projected to be between 70.5% and 71.5% [9] - Adjusted EBITDA margin is expected to be between 20% and 22% [9]

Core Insights - Olaplex Holdings, Inc. (OLPX) is expected to report break-even quarterly earnings per share, reflecting a 100% decline compared to the same period last year [1] - Analysts forecast revenues of $87.6 million for the quarter, indicating a year-over-year decrease of 21.6% [1] - The consensus EPS estimate has remained unchanged over the last 30 days, suggesting stability in analysts' reassessments [1] Revenue Projections - Analysts estimate 'Revenue- Professional' will reach $29.54 million, a decrease of 30.5% from the prior-year quarter [4] - 'Revenue- DTC' is projected at $34.43 million, reflecting an 18% year-over-year decline [4] - The consensus for 'Revenue- Specialty retail' is $23.51 million, indicating a change of -13.9% year over year [4] Stock Performance - Over the past month, Olaplex shares have recorded a return of -3.9%, compared to a -2.2% change in the Zacks S&P 500 composite [5] - Based on its Zacks Rank 3 (Hold), Olaplex is expected to perform in line with the overall market in the upcoming period [5]

Company Participation - Olaplex Holdings, Inc. will participate in the Raymond James 46 Annual Institutional Investors Conference on February 26, 2025 [1] - The presentation will be hosted by Amanda Baldwin, CEO, and Catherine Dunleavy, COO and CFO, on March 5, 2025, at 9:50 am ET [2] Company Overview - Olaplex is a health and beauty company founded in 2014, known for its innovative hair care products [3] - The company revolutionized the prestige hair care market with its Complete Bond Technology™, which protects and strengthens hair during and after services [3] - Olaplex offers a full suite of hair health formulas and sells its products globally through various channels, including professional, specialty retail, and direct-to-consumer [3]

Company Overview - Olaplex Holdings, Inc. is a technology-driven beauty company focused on improving hair health through innovative bond-building technology [3] - The company revolutionized the prestige hair care category in 2014 by creating products that protect, strengthen, and relink broken hair bonds [3] - Olaplex's proprietary ingredients operate on a molecular level to repair damaged hair, and its products are sold through an expanding omnichannel model [3] Upcoming Financial Results - The company plans to report its fourth quarter and fiscal 2024 financial results on March 4, 2025, before the market opens [1] - An investor conference call and webcast will be held on the same day at 9:00 am ET/6:00 am PT to review the financial results [2] - The webcast will be accessible on the company's investor relations website, and a replay will be available for 90 days [2]

Group 1 - Olaplex Holdings, Inc. (NASDAQ: OLPX) has shown impressive financial performance from 2020 to 2023, indicating strong business growth potential [1] - The company is making new investments in the Lashbond Building Serum Market and expanding distribution agreements globally [1] - The company focuses on small and medium cap companies in Europe, the United States, and South America, with a particular interest in mature industries such as mining, oil and gas, and real estate [1] Group 2 - The company has a beneficial long position in its shares, indicating confidence in its future performance [2] - The article expresses the author's personal opinions and does not provide financial advice [2] - Seeking Alpha emphasizes that past performance is not a guarantee of future results and that views expressed may not reflect the platform as a whole [3]

Financial Data and Key Metrics Changes - The company reported third quarter net sales of $119.1 million, a decline of 3.6% year-over-year, although this represented sequential improvement from Q2 [8][40] - Adjusted EBITDA was $44.6 million, with an adjusted EBITDA margin of 37.5%, down from 41.7% a year ago [8][45] - The company revised its fiscal year 2024 guidance, now expecting net sales in the range of $405 million to $415 million, down from the previous range of $435 million to $463 million [9][48] Business Line Data and Key Metrics Changes - Specialty retail sales decreased by 1.3% year-over-year to $42.6 million, reflecting increased competitive intensity [41] - Professional channel net sales fell by 12.6% year-over-year to $42.2 million, primarily due to weaker international demand [41] - Direct-to-consumer sales increased by 6.8% year-over-year to $34.3 million, driven by strong sell-in ahead of a major customer promotion [42] Market Data and Key Metrics Changes - The international business underperformed expectations, leading to a revision in guidance [8][49] - The U.S. market showed consistent sell-through trends at key accounts, but overall demand lift from new marketing investments has not yet materialized [40][50] Company Strategy and Development Direction - The company is focusing on a transformation strategy for 2024, prioritizing long-term health and building a stronger foundation [9][10] - Key strategic initiatives include maximizing sales and marketing investments, strengthening capabilities and culture, and developing a long-term roadmap [21][34] - The company is rationalizing its international distributor network to enhance brand equity and streamline operations [14][62] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the beauty market remains healthy but highly competitive, with expectations of increased promotional activity during the holiday season [19][20] - The company is optimistic about its brand strength and the potential for future growth despite current challenges [11][36] - Management emphasized the importance of marketing investments for long-term success and brand positioning [20][55] Other Important Information - The adjusted gross profit margin improved to 70.8%, up 110 basis points from the previous year, driven by favorable inventory management [43] - The company ended the third quarter with $538.8 million in cash and cash equivalents, indicating strong cash generation capabilities [47] Q&A Session Summary Question: Insights on overall consumer health and international business - Management noted that salon visits have not changed significantly, and there is a need to support stylists to encourage more frequent visits [59] - The enthusiasm for the brand remains strong internationally, but closer partnerships with distributors are necessary for better market penetration [61][62] Question: Expectations for marketing efforts to yield results - Management indicated that while new product launches are showing promise, a broader lift across the entire portfolio is still needed [63][64] Question: Impact of international realignment on sales - International business is the primary driver of the revised fourth quarter guidance, with expectations for stabilization in the future [67][68] Question: Cost structure and SG&A guidance - Management confirmed that continued investment in marketing is essential, even as SG&A expenses are expected to rise [71][72] Question: Competitive landscape and consumer confusion - Management acknowledged the need for clearer communication of the brand's unique science and efficacy to combat consumer confusion [87][89]