Financial Data and Key Metrics Changes - The company reported first-half net sales of $203 million, approximately flat year over year, with a strong adjusted EBITDA margin of 24.7% despite significant investments in marketing and personnel [69][70] - Cash flow from operations generated $18 million year to date, with a healthy balance sheet showing approximately $289 million in cash and $352 million in debt [70] - The company paid down $300 million of debt in April, unlocking an estimated $20 million in annual interest savings [70] Business Line Data and Key Metrics Changes - Year-to-date sales remained flat, but sell-through improved sequentially, albeit slowly [5] - The company launched three new innovations in the first half of 2025 compared to only one in the same period of 2024 [56] - The No. 4 and No. 5 Fine products became the top-selling prestige shampoo and conditioner in the U.S. in 2024, with new formulas tailored for fine hair addressing strength and volume concerns [58] Market Data and Key Metrics Changes - The premium hair care market is projected to grow at a CAGR of 6% to 7% from 2024 to 2028, with premium hair care representing only 20% of the overall hair care market in 2024 [7][8] - The U.S. wellness economy reached $1.8 trillion, indicating a growing consumer focus on health and wellness [9] Company Strategy and Development Direction - The company aims to broaden its addressable market by moving beyond damage repair to foundational hair health, positioning itself as an everyday choice for consumers [10][11] - The strategy is built on three pillars: generating brand demand, harnessing innovation, and executing with excellence [23] - The company is focused on building a strong emotional connection with consumers to enhance brand relevance and resilience [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's transformation progress and solid first-half results, while acknowledging the need for continued work to improve the business [24][73] - The company maintained its fiscal year guidance, expecting net sales to range from -3% to +2% compared to fiscal year 2024 [71] Other Important Information - The company announced the acquisition of Provala Bioscience, marking its first acquisition in over 10 years, aimed at developing transformative bio-inspired technologies [61] - The company has implemented AI-supported demand planning tools and enhanced data science capabilities to improve internal processes [66] Q&A Session Summary Question: What are the expectations for the second half of 2025? - The company expects second-half net sales to be more weighted towards the fourth quarter, with third-quarter net sales anticipated to decline by high single digits year over year, offset by strong high single-digit growth in the fourth quarter [71][72] Question: How is the company addressing international markets? - The company is reorganizing its international teams by key geographies and accounts, implementing a tiered approach to focus investments in high-potential markets while maintaining global consistency [68][69] Question: What is the company's approach to innovation? - The company plans to leverage over 10 years of experience in developing breakthrough innovations, aiming for two to three strategic product launches annually, supported by consumer education and stylist engagement [56][55]

Financial Data and Key Metrics Changes - For Q4 2024, the company reported net sales of $100.7 million, a decline of 9.8% from the same quarter last year [33] - Full-year net sales were $422.7 million, representing a decline of 7.8% from 2023, with adjusted EBITDA at $129.7 million and an adjusted EBITDA margin of 30.7% [15][32] - Adjusted gross profit margin for Q4 was 68.6%, down from 70.6% in Q4 2023, impacted by higher promotional activity and warehousing costs [38] Business Line Data and Key Metrics Changes - Specialty retail sales in Q4 increased by 5.7% to $28.8 million compared to Q4 2023, driven by improved North America sell-through during the holiday season [36] - Direct-to-consumer (D2C) channel sales decreased by 2.5% year-over-year, with growth at olaplex.com offset by strategic international rationalization [37] - Professional channel sales declined by 27.1% year-over-year, reflecting the company's focus on partnering with fewer but stronger international distributors [38] Market Data and Key Metrics Changes - The company regained the number one position in earned media value among US hair care brands in December [21] - Olaplex had the number one set in US prestige hair care during the 2024 holiday season according to Circana data [18] Company Strategy and Development Direction - The company is focused on three transformation priorities: maximizing sales and marketing impact, strengthening capabilities and culture, and developing a long-term roadmap [15][22] - The strategic vision, "Bonds and Beyond," aims to move beyond damage repair to foundational hair health, empowering professionals and creating emotional connections with consumers [49][54] - The company plans to invest aggressively in talent and marketing to support its 2025 strategic priorities, which include generating brand demand, harnessing innovation, and executing with excellence [44][59] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2024 was a year of transformation with net sales and adjusted EBITDA below 2023 levels, but expressed confidence in future growth driven by marketing investments and product innovation [13][44] - The company expects net sales in 2025 to range from a decline of 3% to an increase of 2% compared to 2024, with a focus on North America leading performance [45][94] Other Important Information - The company ended 2024 with a strong balance sheet, cash and cash equivalents increased to $586 million from $466.4 million at the end of fiscal 2023 [42] - Inventory declined by 20.7% to $75.2 million, reflecting improved operating discipline [42] Q&A Session Summary Question: Insights on the professional channel and competition - Management emphasized the importance of the professional channel as both a revenue source and marketing vehicle, noting the need for effective product support and community building [78][81] Question: International business distributor strategy - Management is focused on rationalizing partnerships with fewer, stronger distributors to enhance international growth, emphasizing the importance of effective partnerships [87][90] Question: Fiscal 2025 outlook and product readiness - Management expressed confidence in product innovation and brand positioning to drive demand, with a focus on execution and marketing effectiveness [98][100] Question: Marketing investments and customer acquisition - Management noted that brand building takes time and emphasized a balanced marketing approach to create long-term brand demand [110][112] Question: Trends in the professional channel and international strategy - Management indicated stabilization in professional channel trends post-COVID and highlighted the need for localized strategies in international markets [120][126] Question: Pricing strategy and customer reactions - Management discussed a thoughtful approach to pricing, balancing innovation with maintaining gross margins while responding to customer feedback [132][134]