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 - Net sales for the second quarter were $106.3 million, representing a 2.3% increase year over year, with adjusted EBITDA of $24.6 million and a margin of 23.1% [8][28][34] - Adjusted gross profit margin for the quarter was 73.2%, down 50 basis points year to date from the prior year [34] - Adjusted SG&A was $54.3 million for the quarter, reflecting an increase of $18.9 million year over year, primarily due to investments in sales and marketing [34][36] - Adjusted EBITDA for the year to date was $50.2 million, representing a 24.7% margin, compared to 33.3% margin year to date a year ago [34][36] Performance by Business Line - Professional channel sales grew 12.1% year over year to $37.4 million, with net sales approximately flat year to date [29][30] - Specialty retail sales declined 16.7% year over year to $30.4 million, with net sales down approximately 3% year to date [30] - Direct to consumer sales increased 12.8% year over year to $38.5 million, up approximately 4% year to date [31] Market Data and Key Metrics Changes - Year to date, U.S. net sales are up low single digits, while international sales are down low single digits [32] - The company noted that inventory levels at key customers are healthy, indicating a positive outlook for future sales [30] Company Strategy and Development Direction - The company has three strategic priorities for 2025: generate brand demand, harness innovation, and execute with excellence [9][20] - Significant investments in marketing, totaling $45.4 million year to date, have been made to drive brand demand and improve sell-through rates [10][34] - The company is transitioning to a tiered international strategy to better manage unique market characteristics and enhance local partnerships [24][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the transformation process is ongoing and that while progress has been made, there is still work to be done to achieve long-term success [7][27] - The company maintains its full-year 2025 guidance, expecting net sales to range from a decline of 3% to an increase of 2% compared to fiscal year 2024 [36][37] - Management expressed confidence in the changes being implemented to position the company for long-term growth despite the challenges of transformation [39][40] Other Important Information - The company has launched several new products in 2025, including the Scalp Longevity Treatment and Fine Bond Maintenance products, which have received positive market reception [18][19] - The company is enhancing its presence at key trade shows and has implemented a new education program to better connect with professionals in the industry [16][21] Q&A Session Summary Question: Expectations for third quarter sales decline in specialty retail channel - Management explained that the decline is expected due to a shift in sell-ins and a more even distribution of holiday shipments between the third and fourth quarters [44][46] Question: Insights on promotional environment and expectations for the back half of the year - Management emphasized a strategic approach to promotions, focusing on key events rather than continuous promotional activities [48][50] Question: Key learnings from refreshed marketing strategy - Management highlighted positive feedback on the brand's visual identity and the effectiveness of the new marketing platform [55][58] Question: Performance in the professional channel in the U.S. versus international - Management noted consistency in trends across channels and emphasized the importance of executing strategies learned in North America in international markets [70][72] Question: Progress on distributor rationalization process in international markets - Management indicated that they are moving from planning to execution in international markets, focusing on building sustainable revenues [83][85]