Olaplex Holdings, Inc.

Greetings and welcome to the Olaplex Holdings first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Allison Malkin, Investor Relations. Allison, please go ahead.

Good morning, everyone. Welcome to our first quarter fiscal 2025 earnings call. Joining me today are Amanda Baldwin, Chief Executive Officer, and Katherine Dunleavy, Chief Operating Officer and Chief Financial Officer. Before we start, I would like to remind you that management will make certain statements today which are forward-looking, including statements about the outlook for the Olaplex business and other matters referenced in the company's earnings release issued today. Each forward-looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied by such statements. Additional information regarding these factors appears under the heading Cautionary Notes Regarding Forward-Looking Statements in the company's earnings release and the filings the company makes with the Securities and Exchange Commission that are available at www.sec.gov. and on the Investor Relations section of the company's website at ir.olaplex.com. The forward-looking statements on this call speak only as of the original date of this call, and we undertake no obligation to update or revise any of these statements. Also, during this call, management will discuss certain non-GAAP financial measures which management believes can be useful in evaluating the company's performance. The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures in the company's earnings release. A live broadcast of this call is also available on the investor relations section of the company's website at ir.olaplex.com. Additionally, during this call, management will refer to certain data points, estimates, and forecasts that are based on industry publications or other publicly available information, as well as our internal sources. The company has not independently verified the accuracy or completeness of the data contained in these industry publications and other publicly available information. Furthermore, this information involves assumptions and limitations and your caution not to give undue weight to these estimates. For today's call, Amanda will start by providing highlights of our first quarter performance and discussing the progress we have made on our strategic areas of focus. Then, Catherine will discuss our financial results and outlook. Following this, we will turn the call over to the operators to conduct the question and answer session. With that, I'll now turn the call over to Amanda.

Thank you, Allison. Good morning, everyone, and thank you for joining us today. We're pleased to share a solid start to the year with first quarter results that included net sales ahead of our expectations. We are encouraged by these early signs of progress and also recognize that there remains more work ahead. We believe that our performance this quarter reflects the early response to our Bonds and Beyond strategy, introduced at our year-end call as the next chapter in our transformation. As a reminder, our Bonds and Beyond vision for Olaplex begins with our original breakthrough science and professional channel heritage to position Olaplex as a foundational health and beauty company powered by breakthrough innovation that starts with and is inspired by the professional hairstylist. We believe that we participate in a category that is poised for continued growth and that overall consumer trends indicate that hair, beauty, health, and wellness are converging. As such, we believe our technology and original positioning allow us to focus on a uniquely important white space of highly efficacious hair care that is not just about band-aiding and is more than extreme damage repair, but about actually improving the overall health of the hair. With this in mind, we developed a strategic vision that is based on three pillars. First, move beyond damage repair and the bond building category we created to grow our addressable market and position Olaplex as a solution for everyday foundational hair health. Second, honor and empower the pro as the start of the flywheel of our business. The pro is both a powerful distribution channel as well as a source of authenticity and authority to our end consumer. which is integrated and nurtured properly, can separate us from the competition. Third, while our products have always created fans based on their efficacy, we know we must move beyond our prior solely clinical positioning to generate the emotional connection that drives lasting brand relevance, resilience, and love. As I have noted from the beginning, transformation doesn't happen overnight. It requires consistent execution, the ability to adapt, and a long-term mindset. but we're confident that the foundational work underway today will drive more sustainable results over time. And that in the first quarter, we began to see early validation of our approach. We believe that first quarter provided indicators that we're moving in the right direction. Before diving into our strategic progress, here's a summary of our first quarter results. Net sales of 97 million, down 1.9% year over year. with adjusted EBITDA of 25.7 million, a margin of 26.5%. We over-delivered sales compared to targets, which we believe reflects our retailer partners' support of a refreshed brand positioning and marketing plan. This drove higher than expected shipments during the quarter. In North America, where we focused our brand transformation efforts, we saw modest growth. International sales declined year over year, but came in ahead of expectations. with a more moderate decline compared to fourth quarter. We're taking a phased, disciplined approach to our international realignment that reflects both market potential and operational readiness while we focus on our transformation efforts in North America. Turning to performance by channel. Specialty retail led the way, with shipments ahead of plan, which, as I noted, reflected our partners' support of our Bond and Beyond strategy. Professional also exceeded expectations, driven by improving execution across key distributors. The channel, however, declined versus prior year, driven by international performance. Direct-to-consumer declined versus last year as we shifted from a more promotional strategy to driving brand storytelling and loyalty through our new site and accelerated full-funnel digital marketing efforts. We believe that there continues to be an opportunity to provide a unique and specialized approach on our branded websites as we progress in our transformation. Let's now turn to discuss our three 2025 strategic priorities outlined on our last call. Generate brand demand, harness innovation, and execute with excellence. First, generate brand demand. At Olaplex, brand demand is about more than increasing awareness. It's about creating emotional connections, deepening consumer engagement, and reinforcing our brand and product relevance in a competitive and evolving market. We're doing so by staying grounded in our roots in professional hair care while changing how we show up digitally, digitally, in-store, and across every touch point with our stylists and our customers. The driving forces behind our brand evolution are to provide first, a visual identity that is elevated, dynamic, and relatable. During the quarter, we introduced refreshed brand visuals that aim to reflect who we are today, a brand rooted in science, guided by professionals, and built for foundational hair health. Our new aesthetic highlights our innovation at the same time as color and warmth and shows a special bond between the client and the stylist that has always been a part of our heritage. Next, product storytelling that educates our community about our unique product benefits emphasizing a more holistic view of foundational hair health. For example, our new website now serves as both a storytelling and a conversion platform. It guides consumers through product routines, offers science and usage education, and helps customers build personalized regimens. Across retail, we introduce updated in-store merchandising designed to educate consumers and assist them in clearly navigating our product offerings. Across touchpoints, we're making our value proposition more clear, compelling, and shoppable. And for the professional channel, we enhanced our presence at trade shows with updated booth design, signage, and sampling to support education and trial, and are now moving towards best-in-class education materials. And finally, an emotional connection that allows us to drive lasting brand relevance, resilience, and love. Based on learning from our research last year, we saw clear opportunities to elevate our brand storytelling to support the science and efficacy of our products from an additional angle. This goes even further than our new visual identity to capture what we call the unapologetic confidence, which comes with a truly great hair day, powered by innovation and the passion of our pros. To this end, in April, we launched our brand platform, Design to Defy. As a guide for our future brand building efforts, this platform and its tagline, a healthy foundation for endless possibilities, captures our history, and looks forward towards our future with a philosophy of innovation, creativity, and confidence. This effort launched via an advertising campaign and film featuring actress and Bridgerton star, Nicola Coughlin, creative entrepreneur and media personality, Jenna Lyons, and Olympian sprinter and hurdler, Sydney McLaughlin-Lebrun, along with their personal hairstylist, each of whom is an Olaplex ambassador. This platform is a longer-term investment for which early indicators are encouraging. We drove nearly 1 billion press impressions on its launch, increased share of voice by five points, and increased our Google search volume, positive brand mentions, and social engagement. In the first quarter, we invested 18.1 million in non-payroll sales and marketing, an increase of 4.8 million over the same period last year. As our strategy continues to progress, we intend to further invest behind this platform and the three driving forces of our brand evolution. In summary, our renewed focus on authenticity, science-backed innovation, and emotional storytelling is beginning to show its impact, and we're excited about the momentum that we are working to build in our community across channels. Moving to our second priority, Harness Innovation. Innovation is the heartbeat of Olaplex. It's about building a scalable, science-backed engine to create new products that drive category leadership, reinforce our brand promise, and deliver meaningful results for both professionals and consumers. Our approach centers on foundational hair health, starting at the scalp and extending from root to tip. Based on an R&D model anchored in a deep understanding of hair biology, we believe we are well positioned to be a leader in this space. Over the past year, we've made improvements in how we develop, evaluate, and scale new product concepts. We have built a cross-functional innovation team, integrating science, product development, consumer insights, and professional feedback. We established clear innovation principles rooted in our brand DNA and our scientific capabilities, and we streamlined our cross-functional processes, enhancing the speed of decision-making and sharpness in execution in our go-to-market. We believe these improvements set the stage for a robust, forward-looking pipeline. Our 2025 innovation journey began with the launch of our scalp longevity treatment in late February. This product is an intentional extension into scalp health, a critical foundation for long-term hair vitality and the fastest growing category in premium hair care, and Persicana growing at twice the rate of the overall prestige hair care category. We designed this formula to provide superior results with an ultra-light scalp serum that strengthens the scalp barrier via our original Visamino technology and promotes healthy hair from the start. Later this year, we plan to expand this platform with a professional scalp service treatment designed to address the specific needs of the scalp during an in-salon visit, further developing our strategy to support the pro through new salon-only services. In addition, just last week, we launched number four and five fines, a wash care system tailored to the needs of fine hair. Our existing numbers four and five were the top selling prestige shampoo and conditioner in the U.S. in 2024, according to Circona data. And we had heard feedback from our pros in our community that there was an opportunity to develop a second formula specifically designed for fine hair. These fine hair formulas address the top two concerns of these consumers, strength and volume. with a customized formulation that calibrates cleansing and conditioning ratios to deliver best-in-class results for those with this hair type. Overall, we believe science-led innovation is a sustainable growth lever that enables us to strengthen our authority, expand our portfolio, and build deeper, more lasting connections with both consumers and professionals. With fewer than 30 SKUs in our current lineup, we see substantial white space for expansion. Looking ahead, we're focused on delivering two to three strategic product launches annually, each supported by strong consumer education, stylist engagement, and omni-channel activation. Turning to our third strategic priority, execute with excellence. This priority is about developing operational rigor while building a future-ready organization and team, disciplined, efficient, agile, and aligned to support our strategy across markets, channels, and customer touchpoints. As we continue to evolve as both a brand and a business, we remain focused on two core areas under this pillar. First, streamlining and modernizing our business processes. And second, executing a globally aligned go-to-market strategy. Let me provide an update on each. First, improving business processes. Improving business processes requires a strong team. As noted on our last call, we now have a strong leadership team in place across marketing, innovation, sales, operations, and finance. In 2025, we're expanding key capabilities across the organization in an effort to fuel sustainable growth and scale execution. One such example is the addition of a new leader of our education department, a critical addition as we continue to enhance our training and education programs for both professional and retail partners. As stated when I first joined the business, we have important work to do to more effectively deliver product knowledge, deepen brand advocacy, and empower our partners to succeed with Olaplex, which we are now in a better position to accelerate. As we transform our company, we've been implementing changes that evolve our core business processes to streamline operations, embed accountability, and enable faster data-driven decision-making and cross-functional effectiveness. These efforts are starting to pay off. We've now delivered two consecutive quarters of financial outperformance, which we believe is the result of more efficient and thorough planning, inventory management, and demand forecasting. We're enhancing cross-functional coordination, fostering better alignment between innovation, marketing, supply chain, and sales to drive a stronger go-to-market process. And lastly, we are simplifying systems and implementing tools that give us earlier insight into data, which is improving execution. across everything from digital marketing to financial reporting. While there is still significant work underway, improved process discipline is a key enabler and we're pleased with our progress to date. Our second focus under the strategic priority is about international execution. Over the past several months, we've been conducting a comprehensive evaluation of our international visits and our partners within each region. The result is a more targeted and strategic go-to-market strategy, one that is intended to allow us to scale efficiently with the right partners while preserving local relevance. Rather than build a one-size-fits-all model, we're applying a tiered approach that balances direct investment with strong local partnerships. We believe this will better enable us to align resources where they will have the most impact while still delivering a consistent brand experience worldwide. In focus markets, which include some we manage firsthand and others that are operated through a single distributor, we're making direct investments across marketing, education, and sales to drive long-term growth. In other regions, we intend to collaborate with trusted distribution partners to build the brand with tailored support, clear guidelines, and consistent storytelling. Our objective over time is to scale across geographies with a streamlined process and communication tools that provide better partnerships, guidance, and execution for all of our partners. We believe this approach will allow us to maintain global consistency, support high potential regions, and scale with intention, all without losing sight of the unique dynamics of each market. Overall, while we do recognize that it will take time to get to full capacity, we expect this effort to give us a sustainable international model that leverages our successes and learnings in North America to deliver long-term growth. Across all of our strategic priorities, execution remains a critical enabler of our growth. We believe this improved execution will allow us to facilitate financial performance and create the operational stability and flexibility needed to deliver on our Bonds and Beyond strategy. We'll continue to report on our progress and believe we're now moving in the right direction. In summary, first quarter marked a solid start to the year. and reflected what we believe are early positive signs behind our renewed strategy. We're realistic about the challenges ahead, particularly in a dynamic macro environment, but confident in our long-term vision, the strength of our brand, the resilience of the premium haircare category, and the capabilities we are building. We're reaffirming our 2025 guidance, as Catherine will discuss in more detail, and remain focused on disciplined execution across our three 2025 strategic priorities. And with that, I'll turn it over to Catherine to walk through our financials.