Olaplex (OLPX) - 2024 Q4 - Annual Report

Financial Performance - Net sales for the year ended December 31, 2024, were $422.67 million, a decrease of 7.8$458.3 million in 2023[296]. - Gross profit for 2024 was $292.29 million, down from$318.63 million in 2023, reflecting a gross margin of approximately 69.2%[296]. - Operating income decreased to $66.94 million in 2024, compared to$108.22 million in 2023, indicating a decline of 38.2%[296]. - Net income for 2024 was $19.52 million, a significant drop of 68.3$61.59 million in 2023[296]. - Total current assets increased to $689.71 million in 2024 from$613.2 million in 2023, representing a growth of 12.5%[293]. - Total assets as of December 31, 2024, were $1.77 billion, slightly up from$1.74 billion in 2023[293]. - The company reported a basic net income per share of $0.03 for 2024, down from$0.09 in 2023[296]. - Selling, general, and administrative expenses rose to $181.69 million in 2024, an increase of 7.3$168.94 million in 2023[296]. - Net income for the year ended December 31, 2024, was $19.522 million, a decrease of 68.3$61.587 million in 2023 and a significant drop from $244.072 million in 2022[301]. - The weighted average common shares outstanding for basic net income per share increased to 661,980,612 in 2024 from 654,592,923 in 2023, while diluted shares decreased to 665,397,655 from 677,578,245[421]. Cash Flow and Liquidity - The company maintained a strong cash position with cash and cash equivalents of$585.97 million as of December 31, 2024, compared to $466.4 million in 2023[293]. - Net cash provided by operating activities for 2024 was$143.068 million, down 19.4% from $177.532 million in 2023[301]. - Cash and cash equivalents at the end of 2024 were$585.967 million, up from $466.400 million in 2023, indicating a net increase of$119.567 million[301]. - Net cash used in operating activities was $(1,466) thousand for 2024, a reversal from net cash provided of$21,888 thousand in 2023[433]. - Cash flows from financing activities resulted in a net cash provided of $1,466 thousand in 2024, contrasting with$(21,888) thousand used in 2023[433]. Debt and Interest - As of December 31, 2024, the company had $656.4 million of outstanding variable rate loans under the 2022 Term Loan Facility, with a 1$6.6 million over the next 12 months[276]. - The 2022 Term Loan Facility has a principal amount of $675 million, with$656,438 million outstanding as of December 31, 2024[369]. - Interest expense for the years ended December 31, 2024, 2023, and 2022 was $59.6 million,$58.0 million, and $44.0 million, respectively, indicating a year-over-year increase of 2.8$656.4 million, with an estimated fair value of $620.3 million[377]. - The Company recognized a$3.4 million reduction in interest expense during 2024 due to interest rate cap settlements, partially offset by $1.1 million related to amortization of interest rate cap premiums[380]. Taxation - The company is subject to income taxes in the U.S. and the U.K., and changes in tax laws or regulations could materially affect operating results and financial conditions[176]. - The total provision for income taxes for the year ended December 31, 2024, was$7.39 million, compared to $15.13 million in 2023, reflecting a decrease of 51.1$189.3 million, with payments expected to continue through 2041[346]. - The Tax Receivable Agreement liability as of December 31, 2024, was $189.3 million, with$177.5 million recorded in long-term liabilities[390]. Inventory and Sales - Inventory as of December 31, 2024, was $75.17 million, down from$95.92 million in 2023[355]. - The company recorded inventory write-offs of $7.8 million,$15.2 million, and $8.2 million for the years ended December 31, 2024, 2023, and 2022, respectively[355]. - The company recognized net sales reductions for estimated and actual returns of$6.7 million, $9.2 million, and$10.0 million for the years ended December 31, 2024, 2023, and 2022, respectively[326]. - Three customers accounted for 39% of the company's total net sales during the year ended December 31, 2024, compared to two customers representing 21% in 2023[337]. - Net sales in the United States for 2024 were $210.61 million, compared to$207.68 million in 2023 and $397.56 million in 2022[354]. Operational Risks - The company is dependent on outsourced functions, and failures by external service providers could adversely affect business operations[182]. - The company’s operations could be disrupted by natural disasters, public health crises, or political instability, particularly affecting supply chains[183]. - The company utilizes Professional Employer Organizations (PEOs) for employment functions, and failures by these entities could result in significant liabilities[186]. - The company has not engaged in hedging foreign currency transactions to date, and does not anticipate a material effect on financial statements from a 10$11.123 million in 2024 from $9.072 million in 2023, reflecting a rise of 22.5$1.77 per share[407]. - The Company recognized a compensation expense of $1.6 million in selling, general, and administrative expenses prior to the modification date[395]. - The fair value of the SARs on the modification date was based on a share price of$17.06, with an expected volatility of 30%[396]. Legal Proceedings - The company intends to vigorously defend against pending legal proceedings, including a consolidated securities class action and derivative actions[416][417][418]. - The company has not recognized any probable or reasonably estimable losses associated with pending legal proceedings as of December 31, 2024[420].