Waldencast (WALD) Q1 2025 Earnings Call May 14, 2025 08:30 AM ET Speaker0 Good day, and welcome to the Waldencast First Quarter twenty twenty five Earnings Call. All participants will be in listen only mode. A question and answer session will follow the formal presentation. Please note that this event is being recorded. I will now hand you over to Alison Malkin, Partner ICR. You may proceed. Speaker1 Thank you and welcome to the Weldon Cast plc first quarter fiscal twenty twenty five earnings call. Here wit ...

European Wax Center (EWCZ) Q1 2025 Earnings Call May 14, 2025 08:00 AM ET Company Participants Bethany Johns - Director of IRChris Morris - Chairman & CEOThomas Kim - CFODana Telsey - CEO and Chief Research Officer Conference Call Participants Jonathan Komp - Senior Research AnalystJohn Heinbockel - Senior MD & Equity Research AnalystKorinne Wolfmeyer - Vice President & Senior Equity Research Analyst - Beauty and WellnessKelly Crago - AnalystSimeon Gutman - AnalystScot Ciccarelli - MD & Senior Research Anal ...

Financial Data and Key Metrics Changes - System wide sales for Q1 2025 reached $225.9 million, a 2.1% increase from $221.4 million in Q1 2024, driven by the shift in the Easter holiday and payment timing [23][6] - Same store sales grew by 70 basis points, but adjusting for the Easter shift, it would have been approximately flat [23][6] - Adjusted EBITDA increased by 7.2% to $18.8 million from $17.5 million in the prior year, with an adjusted EBITDA margin rising to 36.5% from 33.7% [25][26] - Adjusted net income rose by 10.3% to $9.5 million from $8.6 million in the previous year [26] Business Line Data and Key Metrics Changes - Total revenue decreased by approximately $400,000 or 90 basis points to $51.4 million, primarily due to lower retail and wholesale product revenue [24] - SG&A expenses increased by $1.9 million to $15.3 million, driven by higher stock-based compensation and executive severance costs [25] - Advertising expenses decreased by $1.4 million due to the timing of spend within the fiscal year [25] Market Data and Key Metrics Changes - The company ended Q1 with 1,062 centers, representing a 1% growth year over year, with five gross openings and ten closures resulting in five net center closures [22] - The company expects 10 to 12 gross openings and 40 to 60 center closures for the year, leading to 28 to 50 net center closures [29] Company Strategy and Development Direction - The company aims to focus on driving sales, improving four wall profitability, and reigniting unit growth as critical components for revitalizing long-term growth [10][19] - A data-rich digital-first marketing engine is being developed to enhance guest engagement and drive new guest acquisition [11][12] - The company is implementing a more sophisticated development approach focused on thoughtful, profitable expansion, identifying underpenetrated trade areas for future growth [17][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the uncertain consumer backdrop and supply chain environment but emphasizes strong fundamentals and proactive management [7][6] - The outlook for 2025 is reiterated, assuming a stable consumer environment, with expectations for system wide sales between $940 million and $960 million [28][30] - Management is confident in their ability to manage tariff impacts and maintain guidance despite macroeconomic challenges [31][34] Other Important Information - The company has made substantial progress in assembling a team of seasoned leaders to execute strategic priorities for 2025 and beyond [19][20] - The company is actively exploring alternative sourcing options to mitigate tariff impacts on product costs [31][44] Q&A Session Summary Question: Can you talk about the game plan going forward and the potential tariff impact? - Management is pleased with progress and sees stability in the business, with no material changes in promotional activity expected [39][41] - They are actively exploring all options to manage tariff exposure, including alternative sourcing [44] Question: What are you hearing from franchisees regarding center closures? - Franchisees are passionate about the brand, but the past few years have been tough, leading to underperforming centers [48][50] Question: Can you provide insight into the cost to build and return to net unit growth? - The increase in capital investment is attributed to inflationary pressures, with a focus on optimizing costs and operations [57] Question: What are the key themes for the upcoming franchise convention? - The convention will cover a full situation assessment, opportunities, and a plan to maximize potential [60] Question: How do you prioritize marketing, franchisee execution, and other factors? - The primary focus is on the marketing funnel and franchisee execution, followed by waxer consistency and consumer value [96][98] Question: What is the performance of underperforming stores versus healthy stores? - Underperforming stores are primarily an AUV issue, with various factors contributing to their performance [65][100]

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]

第二个是品牌价值稀释。 笔者认为做品牌，最核心的一个功能就是全网控价； 大家好，这里是老苏控价； 全网乱价是品牌渠道管理失控的典型表现！就好像一辆车没了刹车，那不得乱套嘛！本质就是品牌对价格体系管不住了，市场秩序直接崩塌。 咱结合食品、酒水饮料、电子服装这些行业的现状来看，品牌要溃败和控价失效那可是直接挂钩的。 首先说说全网乱价对品牌的致命危害。 第一个就是渠道利益链断裂。低价倾销让线上线下经销商利润都倒挂了，就像某家电品牌，线上搞低价促销，线下门店的客流量一下子就少了30%，经销商 亏损率都达到40%了。 价格一乱，渠道冲突就来了，正规经销商利润受损，直接就不想合作了，这可不就恶性循环了嘛！ 消费者从低价渠道买了产品，就开始怀疑品牌的高端定位了。比如某美妆品牌，一级经销商线上乱价，"轻奢"形象直接受损，客群都往低价市场跑了。 长期低价下去，消费者直接就把它当成"廉价品"了，想涨价那比登天还难。 第三个是假货泛滥和信任危机。低价竞争把正品的利润空间挤没了，假货就趁机钻空子。五粮液鉴定发现线上12%的产品都是假货，其中77%还来自百亿补 贴渠道。 第一个是电商认知不足和传统模式惯性。传统品牌太依赖线下经销商体系 ...

Core Viewpoint - Sally Beauty Holdings, Inc. reported mixed results for Q2 of fiscal 2025, with earnings exceeding estimates but revenues declining due to macroeconomic challenges, prompting management to lower its full-year outlook [1][15]. Financial Performance - Adjusted earnings were 42 cents per share, surpassing the Zacks Consensus Estimate of 39 cents, and increased from 35 cents in the prior year [2]. - Consolidated net sales totaled $883.1 million, missing the consensus estimate of $901.1 million, and fell 2.8% year over year [2]. - Consolidated gross profit was $458.8 million, down 0.9% from $463.1 million in the prior year, while gross margin improved to 52%, up 100 basis points [5]. - Adjusted operating earnings rose to $75.2 million from $68.6 million in the previous year, with an adjusted operating margin expanding to 8.5% from 7.6% [7]. Sales Insights - Consolidated comparable sales declined 1.3%, influenced by external factors such as weather and macroeconomic uncertainty, although hair color products and digital marketplace growth provided some offset [3]. - Sally Beauty Supply segment net sales decreased 2.5% year over year to $500.6 million, while Beauty Systems Group net sales fell 3.2% to $382.6 million [8][9]. Cost Management - Adjusted SG&A expenses totaled $383.7 million, reflecting a $10.8 million decrease year over year, maintaining a flat percentage of sales at 43.4% [6]. - Adjusted EBITDA was $104.8 million, representing a 5.3% increase from the previous year, with an adjusted EBITDA margin of 11.9%, up 90 basis points [7]. Financial Health - The company ended the quarter with cash and cash equivalents of $92.2 million, long-term debt of $902.8 million, and total stockholders' equity of $699.8 million [11]. - Cash flow from operations was $51 million, with operating free cash flow at $32 million [11]. Future Outlook - For fiscal 2025, comparable sales are projected to range from flat to a 1% decline, with consolidated net sales expected to be nearly 75 basis points lower than comparable sales due to foreign exchange impacts [16]. - The adjusted operating margin is anticipated to be between 8% and 8.5% for fiscal 2025, revised down from earlier expectations [16].

Group 1: Trade Developments - A trade breakthrough between the U.S. and China has been achieved, resulting in a 90-day pause on reciprocal tariffs, reducing tariffs on Chinese imports from +145% to +30% and on U.S. exports from +125% to +10% [1] - This de-escalation in the trade war has positively impacted stock markets, with major indexes showing significant gains [2] - The likelihood of a permanent trade deal within the next 90 days could further boost market performance and reduce recession risks [3] Group 2: Market Reactions - The Dow is up +1075 points, S&P is +175 points, and Nasdaq is +800 points, indicating strong market enthusiasm following the trade news [2] - Amazon and Tesla shares have both increased over 8% in pre-market trading [2] - The probability of interest rate cuts by the Federal Reserve has decreased, with the first cut now expected to occur in September instead of July [3] Group 3: Economic Indicators - The Monthly U.S. Budget for April is expected to increase to $256 billion from $210 billion reported previously [4] - The upcoming Consumer Price Index (CPI) report is anticipated to show a month-over-month increase of +0.2% and a year-over-year decrease to +2.3% [5] Group 4: Earnings Reports - NRG Energy reported Q1 earnings of $2.62 per share, exceeding estimates by +45.6%, with revenues of $8.59 billion, up from $7.43 billion year-over-year [6] - Sally Beauty's earnings of 42 cents per share surpassed estimates by 3 cents, but revenues fell short at $883 million compared to the anticipated $901 million [6]

Core Insights - Sally Beauty reported revenue of $883.15 million for the quarter ended March 2025, reflecting a year-over-year decline of 2.8% and an EPS of $0.42, up from $0.35 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $901.1 million, resulting in a surprise of -1.99%, while the EPS exceeded the consensus estimate of $0.39 by 7.69% [1] Financial Performance Metrics - Comparable sales growth for Sally Beauty Supply was -0.3%, compared to the average estimate of 0.1% from three analysts [4] - Comparable sales growth for Beauty Systems Group was -2.7%, against the average estimate of -0.4% [4] - Consolidated comparable sales growth was -1.3%, compared to the average estimate of -0.1% [4] Store Metrics - The total number of stores at the end of the period was 4,446, slightly below the average estimate of 4,450 [4] - The number of stores for Sally Beauty Supply was 3,117, compared to the estimated 3,121 [4] - The Beauty Systems Group had 1,329 stores, matching the average estimate [4] Sales and Operating Income - Net sales for Sally Beauty Supply were $500.58 million, below the average estimate of $507.67 million, representing a year-over-year decline of 2.5% [4] - Net sales for Beauty Systems Group were $382.57 million, compared to the average estimate of $392.35 million, reflecting a year-over-year decline of 3.2% [4] - Operating income for Beauty Systems Group was $43.93 million, below the average estimate of $49.88 million [4] - Operating income for Sally Beauty Supply was $77.31 million, compared to the average estimate of $83.74 million [4] Stock Performance - Over the past month, shares of Sally Beauty have returned -3.8%, while the Zacks S&P 500 composite has changed by +3.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - The company reported a 10% increase in adjusted operating earnings and a 20% growth in adjusted earnings per share year-over-year despite a challenging external environment [5][21] - Consolidated net sales decreased by 2.8% to $883 million, with a comparable sales decline of 1.3% [21][22] - Adjusted operating margin expanded by 90 basis points to 8.5%, and adjusted EBITDA margin increased by 90 basis points to 11.9% [26][30] Business Line Data and Key Metrics Changes - In the Sally Beauty segment, net sales decreased by 2.5% to $500 million, with comparable sales roughly flat at -0.3% [27] - The BSG segment saw net sales decrease by 3.2% to $383 million, with comparable sales down 2.7% [29] - E-commerce sales for Sally increased by 21% year-over-year, while BSG's e-commerce sales represented 14% of segment net sales [27][29] Market Data and Key Metrics Changes - The company experienced a decline in purchasing behavior due to economic uncertainty and an unusually harsh flu season impacting both consumer and stylist segments [6][21] - E-commerce sales at constant currency were $94 million, up 6% year-over-year, representing 11% of total net sales [22] Company Strategy and Development Direction - The company is focused on enhancing customer centricity, growing high-margin owned brands, and increasing operational efficiency [9][19] - Strategic initiatives include digital marketplaces, licensed Colorist on Demand, product innovation, and a brand refresh for Sally [9][16] - The company is also expanding its Happy Beauty initiative, focusing on indie brands and key trends like Korean beauty [17] Management's Comments on Operating Environment and Future Outlook - Management noted that the latter part of Q2 reflected a more challenging external environment than anticipated, impacting consumer sentiment and spending [5][6] - The company expects sales trends to improve in the second half of the year, despite ongoing macroeconomic uncertainties [8][19] - Guidance for fiscal 2025 was adjusted to reflect a range of flat to down 1% for comparable sales, with net sales expected to be approximately 75 basis points lower than previously anticipated [33][34] Other Important Information - The company generated strong cash flow from operations of $51 million and maintained a healthy balance sheet with $92 million in cash [30][31] - A four-year extension to the share repurchase program was announced, with approximately $500 million remaining under the original authorization [32] Q&A Session Summary Question: Comparison of Sally division to BSG and e-commerce forecast - Management noted that both segments experienced lighter sales, but strategic initiatives contributed positively to comp sales [37][39] - E-commerce momentum is expected to continue with the expansion of marketplace strategies [42] Question: Store refresh performance and Happy Beauty growth - Initial results from the store refresh have been positive, with increased customer engagement noted [45] - Happy Beauty stores are performing well, and management is optimistic about future expansion [46] Question: Impact of tariff changes on consumer behavior - Management expressed hope that recent tariff news would reduce consumer uncertainty, but noted that consumer behavior remains to be seen [49][50] Question: Guidance change and segment trends - The guidance reflects current business trends, with BSG expected to recover while Sally's care business may remain softer [55][56] Question: Current promotional environment - Management feels confident in their strategy and is closely monitoring consumer sentiment for any necessary tactical adjustments [78] Question: Innovation driving traffic and conversion - Trends in glossing and press-on nails are driving traffic, with strong performance from various brands supporting these trends [82]

Financial Data and Key Metrics Changes - The company reported a 10% increase in adjusted operating earnings and a 20% growth in adjusted earnings per share year-over-year despite a challenging external environment [4] - Consolidated net sales decreased by 2.8% to $883 million, impacted by a 110 basis point unfavorable foreign currency effect [20] - Adjusted operating margin increased by 90 basis points to 8.5%, while adjusted EBITDA margin also rose by 90 basis points to 11.9% [24] Business Line Data and Key Metrics Changes - In the Sally Beauty segment, net sales decreased by 2.5% to $500 million, with comparable sales roughly flat at -0.3% [25] - The BSG segment saw net sales decrease by 3.2% to $383 million, with comparable sales down 2.7% [27] - E-commerce sales for Sally increased by 21% year-over-year to $41 million, representing 8% of segment net sales [25] Market Data and Key Metrics Changes - E-commerce sales globally were $94 million, up 6% year-over-year, accounting for 11% of total net sales [21] - The company experienced a decline in comparable sales due to external factors such as a harsh flu season and macroeconomic uncertainty [20][27] Company Strategy and Development Direction - The company is focused on enhancing customer centricity, growing high-margin owned brands, and increasing operational efficiency [9] - Strategic initiatives include digital marketplaces, licensed Colorist on Demand, and product innovation, which contributed to a 225 basis point comp sales growth before macro pressures [14] - The company is rolling out a brand refresh to modernize its image and attract new customer segments [15] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer sentiment and spending were impacted by economic uncertainty, particularly in the latter part of Q2 [5] - The company anticipates improving sales trends in the BSG segment as the flu season subsides [7] - Guidance for Q3 and full-year outlook reflects expectations of flat to down 1% comparable sales, with adjusted operating margin projected between 8% to 8.5% [31] Other Important Information - The company has a strong balance sheet with $92 million in cash and no outstanding borrowings [28] - A four-year extension to the share repurchase program was announced, with approximately $500 million remaining under the original authorization [30] Q&A Session Summary Question: Comparison of Sally division to BSG and e-commerce forecast - Management noted that both segments experienced lighter sales, but strategic initiatives contributed positively to comp sales growth [34][36] Question: Store refresh performance and Happy Beauty initiative - Initial results from the store refresh have been positive, with increased customer engagement noted [42] Question: Impact of tariff changes on consumer behavior - Management expressed hope that recent tariff news would reduce consumer uncertainty and improve spending habits [46] Question: Guidance change and segment performance outlook - The guidance reflects current trends, with expectations of recovery in the BSG segment and continued strength in color sales for Sally [52][54] Question: Current promotional environment and consumer sentiment - Management feels confident in their strategy but is closely monitoring consumer behavior for potential adjustments [76]