• OLAPLEX Reports First Quarter 2024 Results

    المصدر: Nasdaq GlobeNewswire / 02 مايو 2024 06:45:00   America/New_York

    NEW YORK, May 02, 2024 (GLOBE NEWSWIRE) -- Olaplex Holdings, Inc. (NASDAQ: OLPX) ("OLAPLEX" or the "Company") today announced financial results for the first quarter ended March 31, 2024.

    Amanda Baldwin, OLAPLEX’s Chief Executive Officer, commented: "Our first quarter results represent progress on the business transformation plan that we outlined earlier this year. I am encouraged with our performance to date and believe we are well-positioned to achieve our goals for 2024."

    For the first quarter 2024 compared to the first quarter 2023:

    • Net sales decreased 13.1% to $98.9 million;
      • By channel:
        • Professional decreased 19.9% to $38.7 million;
        • Specialty Retail decreased 1.2% to $34.4 million;
        • Direct-To-Consumer decreased 15.7% to $25.7 million;
      • Net sales increased 2.5% in the United States and decreased 24.3% internationally
    • Net income decreased 63.1% and adjusted net income decreased 34.4%;
    • Diluted EPS was $0.01 for the first quarter 2024, as compared to $0.03 for the first quarter 2023;
    • Adjusted Diluted EPS was $0.03 for the first quarter 2024, as compared to $0.05 for the first quarter 2023

    First Quarter 2024 Results

    (Dollars in $000’s, except per share data)     
     Q1 2024 Q1 2023 % Change
    Net Sales$98,906  $113,787   (13.1)%
    Gross Profit$71,343  $80,810   (11.7)%
    Gross Profit Margin 72.1%  71.0%  
    Adjusted Gross Profit$73,530  $82,576   (11.0)%
    Adjusted Gross Profit Margin 74.3%  72.6%  
    SG&A$40,437  $34,924   15.8%
    Adjusted SG&A$37,249  $32,904   13.2%
    Net Income$7,746  $20,964   (63.1)%
    Adjusted Net Income$20,584  $31,399   (34.4)%
    Adjusted EBITDA$35,484  $50,029   (29.1)%
    Adjusted EBITDA Margin 35.9%  44.0%  
    Diluted EPS$0.01  $0.03   (66.7)%
    Adjusted Diluted EPS$0.03  $0.05   (40.0)%
    Weighted Average Diluted Shares Outstanding 663,565,291   683,485,182   

    Adjusted gross profit, adjusted gross profit margin, adjusted SG&A, adjusted net income, adjusted EBITDA, adjusted EBITDA margin, and adjusted diluted EPS are measures that are not calculated or presented in accordance with generally accepted accounting principles in the United States ("GAAP"). For more information about how we use these non-GAAP financial measures in our business, the limitations of these measures, and a reconciliation of these measures to the most directly comparable GAAP measures, please see "Disclosure Regarding Non-GAAP Financial Measures" and the reconciliation tables that accompany this release.

    Balance Sheet
    As of March 31, 2024, the Company had $507.5 million of cash and cash equivalents, compared to $466.4 million as of December 31, 2023. Inventory at the end of the first quarter 2024 was $94.6 million, compared to $95.9 million at December 31, 2023. Long-term debt, net of current portion and deferred debt issuance costs was $647.7 million as of March 31, 2024, compared to $649.0 million as of December 31, 2023.

    Fiscal Year 2024 Guidance

    The Company is reiterating guidance for net sales, adjusted net income and adjusted EBITDA for fiscal year 2024, as initially disclosed by the Company on February 29, 2024. The Company's fiscal year 2024 guidance outlined below incorporates management's expectations regarding consumer demand, and investments and actions aimed at driving sell-through, improving upon foundational capabilities, and building a healthier brand.

    For Fiscal 2024:   
    (Dollars in millions)Fiscal Year 2024Fiscal Year 2023 Actual% change
    Net Sales$435-$463$458(5)% to 1%
    Adjusted Net Income*$87-$100$108(20)% to (8)%
    Adjusted EBITDA*$143-$159$174(18)% to (9)%

    The fiscal year 2024 net sales, adjusted net income and adjusted EBITDA guidance are approximations and are based on the Company’s plans and assumptions for the relevant period, including, but not limited to, the following:

    • Adjusted Gross Profit Margin:
      • The Company anticipates adjusted gross profit margin* in the range of 72.5% to 73.1% in fiscal year 2024, compared to 71.4% in fiscal year 2023, due primarily to the lapping of actions taken by the Company to address excess inventory in fiscal year 2023, as well as anticipated efficiencies derived from an internal cost savings program in fiscal year 2024, which is expected to more than offset modestly higher product costs.
    • Adjusted SG&A:
      • The Company expects adjusted SG&A* in the range of $172 million to $179 million in fiscal year 2024, an increase of $19 million to $26 million as compared to fiscal year 2023. The increase is expected to be primarily attributable to higher sales and marketing expenses and higher organizational costs due to annualizing the expense of headcount additions made during fiscal 2023.
    • Adjusted EBITDA Margin:
      • The Company expects adjusted EBITDA margin* in the range of 32.8% to 34.3% for fiscal year 2024.
    • Net Interest Expense:
      • The Company expects net interest expense to be approximately $32 million to $34 million during fiscal year 2024.
    • Adjusted Effective Tax Rate:
      • The Company expects an adjusted effective tax rate* of approximately 19.5% to 20.5% for fiscal year 2024.

    *Adjusted net income, adjusted EBITDA, adjusted gross profit margin, adjusted SG&A, adjusted EBITDA margin and adjusted effective tax rate are non-GAAP measures. See “Disclosure Regarding Non-GAAP Financial Measures” for additional information.

    Webcast and Conference Call Information

    The Company plans to host an investor conference call and webcast to review first quarter 2024 financial results at 9:00am ET/6:00am PT on May 2, 2024. The webcast can be accessed at https://ir.olaplex.com. The conference call can be accessed by calling (201) 689-8521 or (877) 407-8813 for a toll-free number. A replay of the webcast will remain available on the website for 90 days.

    About OLAPLEX

    OLAPLEX is an innovative, science-enabled, technology-driven beauty company with a mission to improve the hair health of its consumers. In 2014, OLAPLEX disrupted and revolutionized the prestige hair care category by creating innovative bond-building technology, which works by protecting, strengthening and relinking broken bonds in the hair during and after hair services. The brand’s proprietary, patent-protected ingredient works on a molecular level to protect and repair damaged hair. OLAPLEX’s award-winning products are sold through an expanding omnichannel model serving the professional, specialty retail, and direct-to-consumer channels.

    Cautionary Note Regarding Forward-Looking Statements

    This press release includes certain forward-looking statements and information relating to the Company that are based on the beliefs of management as well as assumptions made by, and information currently available to, the Company. These forward-looking statements include, but are not limited to, statements about: the Company’s financial position, operating results, growth, sales and profitability; the Company's financial guidance for fiscal year 2024, including net sales, adjusted net income, adjusted EBITDA, adjusted gross profit margin, adjusted SG&A, adjusted EBITDA margin, net interest expense, adjusted effective tax rate and non-employee marketing and advertising expenses; demand for the Company’s products; the Company’s product development pipeline and the impact of new product introductions, including the timing thereof; changes in the Company’s distribution; the Company’s business plans, strategies, investments, priorities and objectives, including the impact and timing thereof; the impact of the Company’s internal cost savings program; anticipated product costs and organizational costs; the Company’s sales, marketing and education initiatives and related investments, and the impact, focus and timing thereof; general economic trends; the Company’s employees and corporate culture; growth and expansion opportunities, including expansion in existing markets and into new markets; the Company's executive leadership changes; inventory levels; seasonality; and other statements contained in this press release that are not historical or current facts. When used in this press release, words such as "may," "will," “could," "should," "intend," "potential," "continue," "anticipate," "believe," "estimate," "expect," "plan," "target," "predict," "project," "forecast," "seek" and similar expressions as they relate to the Company are intended to identify forward-looking statements.

    The forward-looking statements in this press release reflect the Company’s current expectations and projections about future events and financial trends that management believes may affect the Company’s business, financial condition and results of operations. These statements are predictions based upon assumptions that may not prove to be accurate, and they are not guarantees of future performance. As such, you should not place significant reliance on the Company’s forward-looking statements. Neither the Company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements, including any such statements taken from third party industry and market reports.

    Forward-looking statements involve known and unknown risks, inherent uncertainties and other factors that are difficult to predict which may cause the Company’s actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements, including, without limitation: competition in the beauty industry; the Company’s ability to effectively maintain and promote a positive brand image, expand its brand awareness and maintain consumer confidence in the quality, safety and efficacy of its products; the Company’s ability to anticipate and respond to market trends and changes in consumer preferences and execute on its growth strategies and expansion opportunities, including with respect to new product introductions; the Company’s ability to accurately forecast customer and consumer demand for its products; the Company's dependence on the success of its long-term strategic plan; the Company’s ability to limit the illegal distribution and sale by third parties of counterfeit versions of its products or the unauthorized diversion by third parties of its products; the Company's dependence on a limited number of customers for a large portion of its net sales; the Company’s ability to develop, manufacture and effectively and profitably market and sell future products; the Company’s ability to attract new customers and consumers and encourage consumer spending across its product portfolio; the Company’s ability to successfully implement new or additional marketing efforts; the Company’s relationships with and the performance of its suppliers, manufacturers, distributors and retailers and the Company’s ability to manage its supply chain; impacts on the Company’s business from political, regulatory, economic, trade and other risks associated with operating internationally; the Company’s ability to manage its executive leadership changes and to attract and retain senior management and other qualified personnel; the Company’s reliance on its and its third-party service providers’ information technology; the Company’s ability to maintain the security of confidential information; the Company’s ability to establish and maintain intellectual property protection for its products, as well as the Company’s ability to operate its business without infringing, misappropriating or otherwise violating the intellectual property rights of others; the outcome of litigation and regulatory proceedings; the impact of changes in federal, state and international laws, regulations and administrative policy; the Company’s existing and any future indebtedness, including the Company’s ability to comply with affirmative and negative covenants under its credit agreement; the Company’s ability to service its existing indebtedness and obtain additional capital to finance operations and its growth opportunities; volatility of the Company’s stock price; the Company’s “controlled company” status and the influence of investment funds affiliated with Advent International, L.P. over the Company; the impact of an economic downturn and inflationary pressures on the Company’s business; fluctuations in the Company’s quarterly results of operations; changes in the Company’s tax rates and the Company’s exposure to tax liability; and the other factors identified under the heading “Risk Factors” in Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") and in the other documents that the Company files with the SEC from time to time.

    Many of these factors are macroeconomic in nature and are, therefore, beyond the Company’s control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company’s actual results, performance or achievements may vary materially from those described in this press release as anticipated, believed, estimated, expected, intended, planned or projected. The forward-looking statements in this press release represent management’s views as of the date hereof. Unless required by law, the Company neither intends nor assumes any obligation to update these forward-looking statements for any reason after the date hereof to conform these statements to actual results or to changes in the Company’s expectations or otherwise.

    Disclosure Regarding Non-GAAP Financial Measures

    In addition to the financial measures presented in this release in accordance with GAAP, the Company has included certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted effective tax rate, adjusted gross profit, adjusted gross profit margin, adjusted SG&A and adjusted diluted EPS. Management believes these non-GAAP financial measures, when taken together with the Company’s financial results presented in accordance with GAAP, provide meaningful supplemental information regarding the Company’s operating performance and facilitate internal comparisons of its historical operating performance on a more consistent basis by excluding certain items that may not be indicative of its business, results of operations or outlook. In particular, management believes that the use of these non-GAAP measures may be helpful to investors as they are measures used by management in assessing the health of the Company’s business, determining incentive compensation and evaluating its operating performance, as well as for internal planning and forecasting purposes.

    The Company calculates adjusted EBITDA as net income, adjusted to exclude: (1) interest expense, net; (2) income tax provision; (3) depreciation and amortization; (4) share-based compensation expense; (5) non-ordinary inventory adjustments; (6) non-ordinary costs and fees; (7) non-ordinary legal costs; and (8) Tax Receivable Agreement liability adjustments. The Company calculates adjusted EBITDA margin by dividing adjusted EBITDA by net sales. The Company calculates adjusted net income as net income, adjusted to exclude: (1) amortization of intangible assets (excluding software); (2) non-ordinary costs and fees; (3) non-ordinary legal costs; (4) non-ordinary inventory adjustments; (5) share-based compensation expense; (6) Tax Receivable Agreement liability adjustment; and (7) tax effect of non-GAAP adjustments. The Company calculates adjusted effective tax rate as effective income tax rate, adjusted to exclude the tax effect of non-GAAP adjustments referenced in item (7) of the immediately preceding sentence. The Company calculates adjusted gross profit as gross profit, adjusted to exclude: (1) non-ordinary inventory adjustments and (2) amortization of patented formulations pertaining to the acquisition of the Olaplex, LLC business in 2020 by certain investment funds affiliated with Advent International, L.P. and other investors (the "Acquisition"). The Company calculates adjusted gross profit margin by dividing adjusted gross profit by net sales. The Company calculates adjusted SG&A as SG&A, adjusted to exclude: (1) share-based compensation expense; (2) non-ordinary legal costs; and (3) non-ordinary costs and fees. The Company calculates adjusted basic and diluted EPS as adjusted net income divided by weighted average basic and diluted shares outstanding, respectively. Please refer to "Reconciliation of Non-GAAP Financial Measures to GAAP Equivalents" located in the financial supplement in this release for further information regarding these adjustments for the periods presented.

    Please refer to "Reconciliation of Non-GAAP Financial Measures to GAAP Equivalents" located in the financial supplement in this release for a reconciliation of these non-GAAP metrics to their most directly comparable financial measure stated in accordance with GAAP.

    This release includes forward-looking guidance for adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted gross profit margin, adjusted effective tax rate and adjusted SG&A. The Company is not able to provide, without unreasonable effort, a reconciliation of the guidance for adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted gross profit margin, adjusted effective tax rate and adjusted SG&A to the most directly comparable GAAP measure because the Company does not currently have sufficient data to accurately estimate the variables and individual adjustments included in the most directly comparable GAAP measure that would be necessary for such reconciliations, including (a) income tax related accruals in respect of certain one-time items, (b) costs related to potential debt or equity transactions, and (c) other non-recurring expenses that cannot reasonably be estimated in advance. These adjustments are inherently variable and uncertain and depend on various factors that are beyond the Company's control and as a result it is also unable to predict their probable significance. Therefore, because management cannot estimate on a forward-looking basis without unreasonable effort the impact these variables and individual adjustments will have on its reported results in accordance with GAAP, it is unable to provide a reconciliation of the non-GAAP measures included in its fiscal 2024 guidance.


    CONDENSED CONSOLIDATED BALANCE SHEETS
    (in thousands, except shares)
    (Unaudited)
     
     March 31,
    2024    		 December 31,
    2023
    Assets   
    Current Assets:   
    Cash and cash equivalents$507,506  $466,400 
    Accounts receivable, net of allowances of $19,079 and $21,465 25,807   40,921 
    Inventory 94,643   95,922 
    Other current assets 11,541   9,953 
    Total current assets 639,497   613,196 
    Property and equipment, net 1,241   930 
    Intangible assets, net 935,917   947,714 
    Goodwill 168,300   168,300 
    Other assets 8,416   10,198 
    Total assets$1,753,371  $1,740,338 
        
    Liabilities and stockholders’ equity   
    Current Liabilities:   
    Accounts payable$17,222  $7,073 
    Sales and income taxes payable 4,923   9,067 
    Accrued expenses and other current liabilities 18,156   20,576 
    Current portion of long-term debt 6,750   6,750 
    Current portion of Related Party payable pursuant to Tax Receivable Agreement 12,675   12,675 
    Total current liabilities 59,726   56,141 
    Long-term debt 647,695   649,023 
    Deferred tax liabilities 2,678   3,016 
    Related Party payable pursuant to Tax Receivable Agreement 185,496   185,496 
    Other liabilities 2,065   1,694 
    Total liabilities 897,660   895,370 
        
    Contingencies   
        
    Stockholders’ equity (Notes 1 and 9):   
    Common stock, $0.001 par value per share; 2,000,000,000 shares authorized, 661,283,677 and 660,731,935 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 675   671 
    Preferred stock, $0.001 par value per share; 25,000,000 shares authorized and no shares issued and outstanding —   — 
    Additional paid-in capital 319,843   316,489 
    Accumulated other comprehensive income 1,004   1,365 
    Retained earnings 534,189   526,443 
    Total stockholders’ equity 855,711   844,968 
    Total liabilities and stockholders’ equity$1,753,371  $1,740,338 



    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
    (amounts in thousands, except per share and share data)
    (Unaudited)
      
     Three Months Ended
    March 31,
      2024   2023 
    Net sales$98,906  $113,787 
    Cost of sales:   
    Cost of product (excluding amortization) 25,376   31,235 
    Amortization of patented formulations 2,187   1,742 
    Total cost of sales 27,563   32,977 
    Gross profit 71,343   80,810 
    Operating expenses:   
    Selling, general, and administrative 40,437   34,924 
    Amortization of other intangible assets 11,289   10,323 
    Total operating expenses 51,726   45,247 
    Operating income 19,617   35,563 
    Interest expense (14,504)  (13,918)
    Interest income 6,203   3,375 
    Other (expense) income, net (947)  242 
    Income before provision for income taxes 10,369   25,262 
    Income tax provision 2,623   4,298 
    Net income$7,746  $20,964 
    Net income per share:   
    Basic$0.01  $0.03 
    Diluted$0.01  $0.03 
    Weighted average common shares outstanding:   
    Basic 660,821,930   651,730,993 
    Diluted 663,565,291   683,485,182 
        
    Other comprehensive loss:   
    Unrealized loss on derivatives, net of income tax effect$(361) $(557)
    Total other comprehensive loss (361)  (557)
    Comprehensive income$7,385  $20,407 



    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (amounts in thousands)
    (Unaudited)
     
     Three Months Ended
    March 31,
      2024   2023 
    Cash flows from operating activities   
    Net income$7,746  $20,964 
    Adjustments to reconcile net income to net cash provided by operating activities: 35,961   27,125 
    Net cash provided by operating activities 43,707   48,089 
    Net cash used in investing activities (1,084)  (631)
    Net cash used in financing activities (1,517)  (926)
    Net increase in cash and cash equivalents 41,106   46,532 
    Cash and cash equivalents - beginning of period 466,400   322,808 
    Cash and cash equivalents - end of period$507,506  $369,340 


    Reconciliation of Non-GAAP Financial Measures to GAAP Equivalents

    The following tables present a reconciliation of net income, gross profit and SG&A, as the most directly comparable financial measure stated in accordance with U.S. GAAP, to adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, adjusted gross profit margin, adjusted SG&A, adjusted net income and adjusted net income per share for each of the periods presented.

     Three Months Ended
    March 31,
    (in thousands) 2024   2023 
    Reconciliation of Net Income to Adjusted EBITDA   
    Net income$7,746  $20,964 
    Depreciation and amortization of intangible assets 13,626   12,180 
    Interest expense, net 8,301   10,543 
    Income tax provision 2,623   4,298 
    Share-based compensation 3,183   2,018 
    Inventory write off and disposal(1) —   24 
    Executive reorganization cost(2) 5   2 
    Adjusted EBITDA$35,484  $50,029 
    Adjusted EBITDA margin 35.9%  44.0%


     Three Months Ended
    March 31,
    (in thousands) 2024   2023 
    Reconciliation of Gross Profit to Adjusted Gross Profit   
    Gross profit$71,343  $80,810 
    Amortization of patented formulations 2,187   1,742 
    Inventory write off and disposal(1) —   24 
    Adjusted gross profit$73,530  $82,576 
    Adjusted gross profit margin 74.3%  72.6%


     Three Months Ended
    March 31,
    (in thousands) 2024   2023 
    Reconciliation of SG&A to Adjusted SG&A   
    SG&A$40,437  $34,924 
    Share-based compensation (3,183)  (2,018)
    Executive reorganization cost(2) (5)  (2)
    Adjusted SG&A$37,249  $32,904 



     Three Months Ended
    March 31,
    (in thousands, except per share data) 2024   2023 
    Reconciliation of Net Income to Adjusted Net Income   
    Net income$7,746  $20,964 
    Amortization of intangible assets (excluding software) 12,369   11,923 
    Share-based compensation 3,183   2,018 
    Inventory write off and disposal(1) —   24 
    Executive reorganization cost(2) 5   2 
    Tax effect of adjustments (2,719)  (3,532)
    Adjusted net income$20,584  $31,399 
    Adjusted net income per share:   
    Basic$0.03  $0.05 
    Diluted$0.03  $0.05 
            
    (1) The inventory write-off and disposal costs relate to unused stock of a product that the Company reformulated in June 2021 as a result of regulation changes in the E.U. In the interest of having a single formulation for sale worldwide, the Company reformulated on a global basis and is disposing of unused stock.       
    (2) Represents ongoing benefit payments associated with the departure of the Company's Chief Operating Officer that occurred in fiscal year 2022.       
            

    Contacts:
    Investors:

    Patrick Flaherty
    Vice President, Investor Relations
    patrick.flaherty@olaplex.com

    Financial Media:

    Lisa Bobroff
    Vice President, Global Communications & Consumer Engagement
    lisa.bobroff@olaplex.com


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