OLAPLEX HOLDINGS, INC. Q2 FY2024 earnings call

• Net sales were $103.9 million, showing sequential improvement from Q1. Adjusted EBITDA was $32 million with a margin of 30.8%. • Olaplex ranked highly in brand trackers and had four of the five best-selling prestige hair products in the first half of 2024. • Key initiatives include maximizing sales/marketing/education investments, strengthening capabilities/culture, and developing a long-term roadmap. • Progress made in marketing with increased investment, new product development like Olaplex bond shaping technology, and leadership additions with new COO and CMO.

Net sales for the second quarter were $103.9 million. Specialty retail net sales were up 22.4% compared to Q2 2023 to $36.4 million. Professional channel net sales were $33.4 million, down 18.4% year over year. Direct to consumer channel net sales decreased 11.5% to $34.1 million. US net sales increased 7.3% year over year, while international net sales declined 15.1% versus a year ago.

• Reiterates 2024 net sales in the range of $435 million to $463 million, adjusted EBITDA in the range of $143 million to $159 million, and adjusted net income in the range of $87 million to $100 million. • Expects improvement in the second half with sales and marketing investments, holiday kits in Q3, and new product launches.

• Impact of distributor rationalization, particularly in Europe, with potential short-term negative volume impact. • Sampling efforts and inventory obsolescence charges affecting gross margin. • Ongoing distribution cleanup work with uncertainties in full resolution.

Q: Dara Mohsenian asked about consumer survey insights on Olaplex brand extendability and payback from higher investments.

A: Amanda Baldwin discussed the perception study focusing on brand equity and innovation, and that marketing spend is being iterated on.

Q: Dana Telsey inquired about channel changes and gross margin details.

A: Amanda Baldwin talked about stabilization in consumer demand and Patrick Flaherty explained gross margin factors like sampling and inventory obsolescence.

Q: Susan Anderson asked about channel dynamics and pro channel strategy.

A: Amanda Baldwin mentioned macro shifts in the pro channel but emphasized the importance of the pro, and Patrick Flaherty spoke about sales trend stabilization.

Q: Kate Grafstein asked about distributor rationalization in Europe and diverted product in the US.

A: Amanda Baldwin stated the rationalization process is ongoing.

Q: Javier Escalante asked about distributor rationalization progress and stabilization of sales.

A: Amanda Baldwin discussed the ongoing rationalization process and stabilization based on loyal user base and demand for the product.