Financial Data and Key Metrics Changes - The company reported net revenue of $65.4 million, a decline of 4.1% year-over-year [10] - Adjusted gross profit margin remained strong at 76.4%, an increase of 10 basis points year-over-year [10] - Adjusted EBITDA was $4.4 million, reflecting a margin of 6.7% [10] Business Line Data and Key Metrics Changes - Milk Makeup experienced a revenue decline of 15.1%, but domestic performance was solid, driven by the successful launch of Hydro Grip Gel Skin Tint [11][12] - Obagi Medical achieved net revenue of $36.2 million, increasing 7.1% from the previous year, despite out-of-stock issues [13] Market Data and Key Metrics Changes - The company noted strong growth in attractive channels, including professional, specialty, retail, and online, with expectations for continued momentum [9] - Milk Makeup's U.S. retail sales showed high single-digit growth, particularly due to the launch at Ulta [12][16] Company Strategy and Development Direction - The company is focused on strengthening its supply chain and achieving cost efficiency while enhancing flexibility to meet demand [7][19] - The strategic growth initiatives include expanding Milk Makeup and Obagi Medical brands, driving innovation, and increasing community engagement [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing key drivers such as breakthrough innovation, digital channel expansion, and improved product availability [19][20] - The company remains cautious about the macroeconomic environment, anticipating some pressure from softer consumer sentiment and spending [21] Other Important Information - The company has a cash position of $10.8 million and an additional $22.5 million available on its revolving credit facility [23] - Net debt increased to $172.1 million, primarily due to refinancing costs [24] Q&A Session Summary Question: Can you expand on the supply chain restructuring for Obagi? - Management indicated that the supply chain needs to be more responsive and flexible, with ongoing efforts to streamline operations [42][44] Question: What is driving the slowdown in the physician channel? - Management clarified that the slowdown is not due to fewer visits but rather a lack of tailwinds from the previous year's Amazon business conversion [47][49] Question: Can you provide insights on sell-through trends for Obagi and Milk? - Management noted a significant difference between sell-in and sell-through for Milk, with high single-digit retail sales growth, while Obagi's model is based on sell-through [52][54] Question: What is the expected impact of tariffs on costs? - Management stated that even with potential tariff increases, the impact is manageable due to low exposure to China, with possible low to mid-single-digit price increases being evaluated [64][66] Question: How is SG&A expected to change with sales growth? - Management expects SG&A to grow in absolute terms but with substantial operational leverage, keeping it flattish as a percentage of sales [68][70] Question: What are the marketing investment strategies moving forward? - Management plans to increase investments in top-of-funnel advertising for Milk and expand consumer outreach for Obagi, focusing on long-term competitive advantage [74][75]

Financial Performance - Q1 2025 net revenue was $65.4 million, representing a 4.1% decline from Q1 2024 [4][10] - Adjusted gross margin improved to 76.4%, an increase of 10 basis points year-over-year [5][10] - Adjusted EBITDA for Q1 2025 was $4.4 million, or 6.7% of net revenue, reflecting a significant decline of 61.5% compared to Q1 2024 [6][10] Brand Performance - Milk Makeup's net revenue decreased by 15.1% to $29.3 million, impacted by the previous year's successful product launch and inventory reductions [12][13] - Obagi Medical achieved net revenue of $36.2 million, up 7.1% from $33.8 million in Q1 2024, driven by strong direct-to-consumer sales [13][10] Strategic Initiatives - The company is increasing marketing investments by high teens percentage to build brand equity and support long-term growth objectives [3][5] - Milk Makeup's entry into Ulta Beauty and the launch of Hydro Grip Gel Tint are expected to drive future sales growth [3][12] Liquidity and Debt - Waldencast secured a new $205 million five-year credit facility, enhancing financial flexibility and extending debt maturity to March 2030 [7][8] - As of March 31, 2025, the company held $10.8 million in cash and cash equivalents and had a net debt of $172.1 million [8][10] Outlook - The company aims for mid-teens net revenue growth and an adjusted EBITDA margin in the mid-to-high teens for fiscal 2025 [14][15]

Core Points - Waldencast plc is set to release its First Quarter Fiscal 2025 results on May 13, 2025, after the U.S. market closes [1] - A conference call to discuss these results will take place on May 14, 2025, at 8:30 am ET, with participation details provided for investors and analysts [2] Company Overview - Waldencast aims to establish a global best-in-class beauty and wellness operating platform by developing, acquiring, and scaling purpose-driven brands [3] - The company's brand-led business model focuses on customer proximity, business agility, and market responsiveness while preserving each brand's unique identity [3] - The initial step towards this vision involved the business combination with Obagi Medical and Milk Makeup, allowing brands to leverage operational scale and expertise in managing global beauty brands [3]

Core Insights - Obagi Medical has launched a new product, Retinol + PHA Refining Night Cream, which combines Entrapped Retinol and Polyhydroxy Acid (PHA) for enhanced skin renewal and improved complexion [3][4] - The product is designed to be effective yet gentle, making it suitable for individuals with sensitive skin or those new to retinoids [4][5] - Clinical studies show significant improvements in skin texture and tone, with a 2.3x increase in participants feeling comfortable in their skin after eight weeks of use [6][7] Product Details - The Retinol + PHA Refining Night Cream utilizes a slow-release delivery system for retinol, minimizing irritation while maximizing efficacy [4][5] - The formulation includes eight additional dermatologically recognized ingredients to support hydration and skin resilience [6][11] - The product is priced at $135 and will be available for purchase on Obagi's website starting May 5, 2025 [6] Clinical Efficacy - A four-week clinical study demonstrated a 29% increase in skin smoothness and a 10% improvement in skin tone evenness among participants [11] - 90% of users reported visibly smoother skin texture, and 90% observed a reduction in the appearance of blemishes [11] Company Background - Obagi Medical is recognized as the fastest-growing professional skincare brand in the U.S. in 2024, with a legacy of over 35 years in advanced skincare [8][9] - The brand is known for its physician-recommended skincare solutions, particularly for addressing hyperpigmentation, fine lines, and wrinkles [8][9]

Regulatory Compliance and Investigations - The company is subject to an ongoing SEC investigation related to the restatement of financial results and material weaknesses in internal controls, which may lead to litigation and increased costs [52]. - Compliance with SEC and Nasdaq requirements is critical, as failure to meet these standards could lead to regulatory penalties or delisting [43]. - The company has incurred substantial costs related to the SEC investigation and may continue to do so, regardless of the outcome [53]. - On May 4, 2023, the company received a notice from Nasdaq for non-compliance with timely filing requirements, which could lead to delisting if not resolved [136]. - The company has regained compliance with Nasdaq's filing requirements as of March 21, 2024, but is under a "Mandatory Panel Monitor" for one year [137]. - The company is subject to FTC rules and state consumer protection laws, and failure to substantiate product claims could result in enforcement actions that harm business operations [197]. - The company is subject to the U.K. Bribery Act and FCPA, which impose strict compliance requirements that could lead to penalties if violated [125]. - The company has policies in place to comply with anti-corruption laws, but cannot guarantee that all employees and partners will adhere to these regulations [128]. - Legal proceedings and investigations could materially and adversely affect the company's financial condition and operations, potentially harming its reputation [119]. - The company is currently not involved in any pending litigation that could materially impact its business, aside from an SEC investigation [122]. Financial Performance and Risks - Material weaknesses in internal control over financial reporting have been identified, which could impact the accuracy and timeliness of financial disclosures [55]. - The company faces risks related to cash flow and liquidity, with challenges such as declining sales and increased competition potentially weakening financial stability [38]. - The company recorded a non-cash impairment charge of $68.7 million for the Obagi Skincare business due to discrepancies between projected and actual performance post-acquisition [80]. - The company expects capital and operating expenditures to increase over the next several years as it expands its international footprint and distribution channels [74]. - The Milk Makeup business has a history of operating losses and may face challenges in achieving profitability despite increasing distribution channels [73]. - The company's quarterly operating results have historically been variable, influenced by factors such as consumer spending and operational challenges [71]. - The company may not achieve anticipated benefits from acquisitions due to integration challenges and potential unanticipated costs [69]. - The company faces risks in managing inventory for Obagi products, which could materially affect operations and financial condition if demand forecasts are inaccurate [84]. - The company relies on Waldencast LP for cash flow, with no independent means of generating revenue, making it dependent on distributions for paying taxes and expenses [86]. - The company may face significant costs and management distraction due to potential investigations or enforcement actions related to anti-corruption laws [129]. Market and Competitive Landscape - Future growth and profitability of the Obagi Skincare and Milk Makeup businesses depend on successfully implementing the growth strategy, which includes significant investments in innovation and marketing [60]. - The cosmetics industry is highly competitive, and failure to adapt to shifting consumer trends could result in reduced sales and profitability [46]. - Operating in international markets exposes the company to risks such as economic instability and currency fluctuations, which can impact market access and profitability [40]. - The cosmetics industry is highly competitive, with many competitors possessing greater financial and marketing resources, potentially affecting Obagi's growth prospects [173]. - New product introductions carry risks, including potential rejection by consumers or retailers, which could hinder sales objectives and growth [174]. International Expansion and Regulatory Challenges - International expansion is a core growth strategy, with significant investments in Southeast Asia, including the acquisition of Obagi Vietnam, but challenges such as declining revenues and regulatory hurdles exist [94]. - The company is exposed to risks from currency fluctuations and trade disputes as it increases its share of revenue from international sales [97]. - Regulatory changes in international markets, particularly regarding product classifications and safety standards, could significantly impact operations and growth [98]. - The company aims to expand Obagi product sales in international markets, necessitating separate regulatory approvals in non-U.S. jurisdictions [217]. - Regulatory approval processes vary by country, and failure to obtain necessary approvals could materially harm the business [218]. - The introduction of new regulations, such as MoCRA, could complicate compliance for Milk Makeup products, potentially increasing operational costs [226]. Product and Supply Chain Risks - The company relies on third-party partners for manufacturing and distribution, making it vulnerable to disruptions that could harm operations and reputation [45]. - The company relies on third-party contract manufacturers (CMOs) for product production, which subjects it to regulatory compliance risks that could adversely affect operations and financial results [188]. - The reliance on CMOs for compliance with manufacturing regulations introduces risks that could lead to customer complaints and regulatory enforcement actions, adversely affecting the company's reputation and financial condition [190]. - The company is exposed to risks related to supply chain disruptions, including reliance on third-party suppliers for production and packaging [181]. - Rising fuel and freight costs could increase shipping expenses, adversely affecting gross margins and profitability [183]. Shareholder and Securities Matters - The company may issue additional securities without shareholder approval, potentially diluting existing shareholders' interests [139]. - The company’s securities may experience volatility due to various factors, including market conditions and shareholder actions [134]. - The concentration of voting power with members of the Sponsor and Cedarwalk may adversely affect the price of the company's securities [143]. - The company does not intend to pay cash dividends for the foreseeable future, focusing on retaining future earnings for business development [153]. - The company has outstanding warrants to purchase an aggregate of 29,533,282 Class A ordinary shares at an exercise price of $11.50 per share, expiring on July 27, 2027 [141]. Compliance with Data Protection Laws - Compliance with evolving privacy and data protection laws is complex and costly, with potential penalties for noncompliance that could adversely affect operations [100]. - The California Consumer Privacy Act (CCPA) went into effect on January 1, 2020, increasing compliance costs and potential liabilities for companies handling personal information [101]. - The California Privacy Rights Act (CPRA), effective January 1, 2023, expands the CCPA and introduces additional obligations, potentially increasing compliance costs and regulatory exposure [101]. - The EU General Data Protection Regulation (GDPR) imposes fines ranging from €10 million to €20 million or 2% to 4% of annual global revenue for breaches, whichever is higher [103]. - The U.K. GDPR imposes separate fines ranging from £8.7 million to £17.5 million or 2% to 4% of total worldwide annual revenue for violations [103]. - The cross-border data transfer landscape is evolving, with new regulations potentially increasing compliance costs and affecting business operations [105]. - The U.K. implemented its own international data transfer agreement in March 2022, requiring organizations to use specific agreements for data transfers to non-adequate third countries [106]. - Increased regulation of cookies and tracking technologies may lead to substantial costs and impact online activities, including user targeting capabilities [108]. - The introduction of the Data (Use and Access) Bill in the U.K. could lead to increased compliance costs and regulatory enforcement risks if approved [109].

Financial Performance - FY 2024 - Waldencast's Net Revenue reached $273.9 million, with a Comparable Net Revenue Growth of 27.5%[39] - The Adjusted Gross Profit was $203.6 million, representing a 74.3% Adjusted Gross Margin[39] - Adjusted EBITDA stood at $40.3 million, resulting in a 14.7% Adjusted EBITDA Margin[39] - Adjusted Free Cash Flow was $31.7 million, with an Adjusted EBITDA to Adjusted Free Cash Flow Conversion of 78.8%[41] Financial Performance - Q4 2024 - Net Revenue for Q4 2024 was $72.1 million, showing a 29.4% Comparable Net Revenue Growth[36] - Adjusted Gross Profit for Q4 reached $52.6 million, with a 73.0% Adjusted Gross Margin[36] - Adjusted EBITDA for Q4 was $11.2 million, resulting in a 15.5% Adjusted EBITDA Margin[36] Brand Performance - FY 2024 - Obagi Medical's Net Revenue was $149.3 million, with a Comparable Net Revenue Growth of 30.7% and an Adjusted EBITDA of $30.5 million[80] - Milk Makeup's Net Revenue was $124.6 million, with an Adjusted EBITDA of $29.1 million[80] Future Outlook - For FY 2025, the company anticipates mid-teens Net Revenue growth and mid-to-high teens Adjusted EBITDA Margin[45]

Financial Data and Key Metrics Changes - In Q4 2024, net revenue reached $72.1 million, reflecting a 29.4% increase in comparable growth [26] - For the full year 2024, net revenue was $273.9 million, a 27.5% increase in comparable growth [29] - Adjusted EBITDA for Q4 doubled to $11.2 million, with an adjusted EBITDA margin expansion of 530 basis points year-over-year to 15.5% [27] - Adjusted EBITDA for the full year grew 65.1% to $40.3 million, with an adjusted EBITDA margin of 14.7%, marking a 350 basis point increase from 2023 [30] Business Line Data and Key Metrics Changes - Milk Makeup generated Q4 net revenue of $29.9 million, a 31.9% increase, and for the fiscal year, net revenue was $124.6 million, up 24% from 2023 [39][41] - Obagi Medical recorded Q4 net revenue of $42.2 million, representing a 27.7% growth, and for the fiscal year, net revenue was $149.3 million, a 30.7% increase [56][58] Market Data and Key Metrics Changes - The Prestige Beauty market grew 7% in 2024, with Prestige Makeup growing 5% and Professional Skincare growing 8% [11][12] - Waldencast's brands outpaced the top three competitors, growing three and a half times faster than the average of their peer group [21][66] Company Strategy and Development Direction - The company aims to build a multi-brand platform encompassing strategic key categories, geographies, channels, and price points [23] - The Waldencast Flywheel Effect is a strategy focused on operational efficiency, expanding gross margins, and reinvesting savings into sales and marketing [19][21] - The company is focused on premiumization and the confluence of beauty, aesthetics, and wellness as key growth drivers [88] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of beauty consumers despite a changing macro environment, noting that premium beauty continues to perform well [92][94] - For fiscal year 2025, the company anticipates mid-teens net revenue growth and further expansion of adjusted EBITDA margin into the mid to high teens [36] Other Important Information - The company secured a new $205 million five-year credit facility, enhancing financial flexibility and extending debt maturity through 2030 [35] - The adjusted EBITDA to cash conversion ratio was 78.8% in 2024, supported by effective working capital management [31] Q&A Session Summary Question: Can you provide details on the cadence of innovation and confidence in sales acceleration? - Management indicated that Q1's flat guidance is due to the anniversary of a significant launch and retail inventory adjustments, with expectations for strong acceleration throughout the year [70][72] Question: What are the marketing strategies for both brands this year? - Management plans to increase marketing investments, focusing on broader paid campaigns for Milk Makeup and direct consumer advertising for Obagi [82][86] Question: How is the macro environment affecting consumer health? - Management noted that while the macro environment is changing, beauty consumers remain resilient, with a continued desire for premium products [92][94] Question: Are there any impacts from the Ulta launch on Sephora? - Management confirmed that there is no loss of space at Sephora due to the Ulta launch, although some cannibalization may occur [124][103]

Financial Data and Key Metrics Changes - Net revenue for Q4 reached $72.1 million, a 29.4% increase year-over-year, with Milk Makeup growing 31.9% and Obagi Medical growing 27.7% [18][19] - For the full fiscal year, net revenue was $273.9 million, a 27.5% increase compared to the previous year [20] - Adjusted EBITDA for Q4 doubled to $11.2 million, with an adjusted EBITDA margin of 15.5%, reflecting strong revenue momentum [19][21] - Adjusted gross profit for the full year rose to $203.6 million, a 35.3% increase, with an adjusted gross profit margin of 74.3% [20][21] Business Line Data and Key Metrics Changes - Milk Makeup generated Q4 net revenue of $29.9 million, a 31.9% increase, with adjusted EBITDA rising to $4.8 million [28][30] - Obagi Medical achieved Q4 net revenue of $42.2 million, a 27.7% increase, with adjusted EBITDA of $9.8 million [38][39] - For the fiscal year, Milk Makeup's net revenue was $124.6 million, a 24% increase, while Obagi Medical's net revenue was $149.3 million, a 30.7% increase [30][39] Market Data and Key Metrics Changes - The prestige beauty market grew 7% in 2024, with professional skincare growing 8% and prestige makeup growing 5% [7][8] - The company noted that its brands are outperforming the market, with Milk Makeup growing five times faster than the overall beauty market rate [14][47] Company Strategy and Development Direction - The company aims to build a multi-brand platform encompassing various strategic categories and geographies, focusing on operational efficiency and brand equity [12][16] - The growth strategy for Milk Makeup includes expanding brand awareness, launching innovative products, and broadening distribution both online and offline [31][34] - Obagi Medical's strategy focuses on dermatological brand DNA, cutting-edge innovation, and increasing brand awareness to fuel growth [40][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of beauty consumers despite a changing macro environment, emphasizing premiumization trends [72] - The company anticipates strong performance in 2025, expecting mid-teens net revenue growth and further expansion of adjusted EBITDA margins [25][26] Other Important Information - The company secured a new $205 million credit facility, enhancing financial flexibility and extending debt maturity [24] - Cash position at the end of 2024 was $14.8 million, with an additional $30 million available on the revolving credit facility [23] Q&A Session Summary Question: Can you provide details on the cadence of innovation and confidence in sales acceleration? - Management highlighted that Q1's flat guidance is due to anniversary effects of previous successful launches and retail inventory adjustments, with expectations for strong sequential growth throughout the year [50][52][54] Question: What are the marketing strategies for the year? - Management plans to increase marketing investments, focusing on broader paid campaigns while maintaining organic growth strategies [61][63] Question: How is the macro environment affecting consumer health? - Management noted that the beauty industry remains resilient, with consumers continuing to spend on premium products despite some normalization in growth rates [70][72] Question: Will the Ulta launch affect Sephora sales? - Management confirmed that there is no loss of space at Sephora due to the Ulta launch, and the overall impact is expected to be incremental [88][90]

Core Insights - Waldencast achieved significant growth in Q4 2024, with net revenue of $72.1 million, representing a 30.8% increase year-over-year, and a 29.4% increase in comparable net revenue growth [5][12] - The company reported an adjusted EBITDA of $11.2 million, doubling from Q4 2023, reflecting strong operational performance and effective cost management [8][16] - Obagi Medical was recognized as the fastest-growing professional skincare brand in the US for 2024, driven by increased brand awareness and successful product innovations [3][13] Financial Performance - For the year ended December 31, 2024, Waldencast's net revenue reached $273.9 million, a 27.5% increase in comparable net revenue growth compared to 2023 [15][19] - The gross profit for FY 2024 was $191.7 million, with an adjusted gross profit margin of 74.3%, improving by 530 basis points from the previous year [15][19] - The net loss for FY 2024 improved to $48.6 million from $106.0 million in FY 2023, primarily due to operational growth and reduced non-recurring costs [16][19] Brand Highlights - Obagi Medical's Q4 2024 net revenue was $42.2 million, up from $32.5 million in Q4 2023, with a comparable net revenue growth of 27.7% [13][19] - Milk Makeup's Q4 2024 net revenue increased by 31.9% to $29.9 million, supported by initial shipments to Ulta Beauty and growing consumer demand [20][19] - Both brands have introduced innovative products, contributing to their growth and market presence [3][20] Strategic Initiatives - Waldencast secured a new $205 million credit facility to enhance financial flexibility and extend debt maturity, supporting its strategic priorities [10][2] - The company plans to continue expanding its distribution footprint, including the launch of Milk Makeup in over 600 Ulta Beauty locations in spring 2025 [3][18] - Waldencast aims for mid-teens net revenue growth in FY 2025, with expectations for further expansion of adjusted EBITDA margins [17][18]

Group 1 - Waldencast plc will release its Fourth Quarter and Fiscal Year 2024 results on March 18, 2025, after the U.S. market closes [1] - A conference call to discuss the results is scheduled for March 19, 2025, at 8:30 am ET, with participation details provided for investors and analysts [2] - The company aims to build a global beauty and wellness platform by developing and scaling purpose-driven brands, having completed a business combination with Obagi Skincare and Milk Makeup in July 2022 [3] Group 2 - Waldencast's business model focuses on brand-led operations, ensuring customer proximity and market responsiveness while maintaining brand distinctiveness [3] - The platform offers operational scale, expertise in managing global beauty brands, and a balanced portfolio to mitigate category fluctuations [3]