Waldencast plc

Greetings. Welcome to the WaltonCast fourth quarter and fiscal year 2024 earnings call. This time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded. At this time, it's now my pleasure to introduce Allison Malkin with Investor Relations. Thank you, Allison. You may now begin.

Thank you and welcome to the WaldenCast PLC fourth quarter and fifth per year 2024 earnings call. Here with me today are Michelle Brissett, founder and chief executive officer, and Manuel Manfredi, chief financial officer. For today's call, Michelle will begin with an update on our business and vision and discuss the company's performance within the context of the beauty market. Manuel will follow with a review of the fourth quarter and full year performance and provide our fiscal 2025 outlook. Following this, Michelle will share the strategic growth initiatives for our milk makeup and Obagi medical brands. After the prepared remarks, the operator will open the call to take questions. I would like to remind you that management will make certain statements today, which are forward-looking in nature, including statements regarding the outlook of WalmanCast business and other matters referenced in the company's earnings relief that was issued yesterday. Each forward-looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those projected in or implied by such statements. Additional information regarding these statements appears under the heading Cautionary Note Regarding Forward-Looking Statements in the company's earnings release and in the company's filing that it 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.waldencast.com and should be read in conjunction with the section entitled risk factors in the company's annual report for 2023 on form 20F filed with the Securities and Exchange Commission on April 30th, 2024. 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 measures should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. You will find additional information regarding the definition of these non-GAAP financial measures and a reconciliation of these non-GAAP to the most directly comparable GAAP measures in the company's earnings release. With that, let me now turn the call over to Michel Brissett.

Thank you, Alison, and good morning, everyone. It is a pleasure to be here today and share our fiscal year 2024 financial performance. This has been a year of transformation for our group, one where we have strengthened our capabilities and celebrated many successes across our brands. Before we start, let's have a look at the health of the beauty market. In the context of an uneven consumer market, beauty remains resilient and has shown consistent growth over the years with expectations of this trend continuing in the future. In 2024, prestige beauty grew 7%. While this rate of growth has normalized post the effects of COVID, the increase in 2024 is still ahead of historical levels and supported by the same historical trend of premiumization. In the categories where we're present, prestige makeup grew 5%, while professional skincare showed a strong growth of 8%, well ahead of prestige skincare at 2%. Once again, The beauty consumer has shown incredible resilience despite external uncertainties, and our industry continues to thrive, launching brands and products that increasingly meet consumer needs and desires. We are building a global best-in-class beauty and wellness platform that creates, acquires, accelerates, and scales the next generation of high-growth, highly profitable, purpose-driven brands. Simply put, we are capitalizing on the increasing strength of our operating platform, the power of our brands, and our proven executional capability to deliver consistently strong growth at increasing rates of profitability. We expect this to continue to pay dividends as we further drive our operational efficiency and invest in selling and marketing drivers to sustain and accelerate our top-line momentum. Today, we have two of the most exciting brands that are substantially outperforming the market in the two biggest beauty categories, makeup number one and skincare number two, in the U.S. prestige beauty. Our brands participate in the most attractive sub-segments of these two categories, prestige makeup and professional science-led skincare. Their superpower is high consumer affinity and strong brand equity in the respective markets, amplified by our strong innovation capability and superior returns on business library investments. Not makeup, It's a cult favorite Gen Z brand that benefits organically from an engaged community due to its cultural relevance and iconic products. It is a leading clean makeup brand with 2.8 million Instagram followers that is growing five times faster than the market in the U.S. It is also quickly building a global following with leadership positions in several international markets, demonstrating its universal appeal and efficient expansion potential. Obagi Medical continues its clear advantage as the number one U.S. physician-recommended medical-grade skincare brand for top-ranked patients' needs, pigmentation, fine lines and wrinkles, and sagging skin. Leads in the most attractive, fast-growing segment of premium skincare. Obagi Medical consistently delivers breakthrough technology for transformative, clinically proven results to answer the needs of physicians and patients alike. Both groups show high loyalty to the brand. The strength of the Obagi brand, which we acquired a bit over two years ago, combined with our acceleration of innovation, our efficient investment in business drivers, and our go-to-market expertise have meaningfully propelled the brand's growth. We're very proud that Obagi Medical, the pioneer brand of the physician-dispensed professional skincare industry, is today the fastest-growing brand among the top 10 professional skincare brands in the U.S. And this is only the beginning. as we believe Obagi Medical is perfectly positioned to answer globally the growing consumer needs for high-performance, effective skincare, while also paving the way for expansion into new categories. At Waldencast, we've built a powerful and repeatable formula for growth and profitability, what we call the Waldencast Flywheel Effect. It is a simple yet highly effective model, but executing it consistently requires deep industry expertise and strong capabilities. It all starts with foundation. Strong brands in high-growth, structurally attractive beauty subcategories, like Milk Makeup and Obagi. These are brands that don't just offer great products. They forge deep, authentic connections with our communities, often beyond just functional benefits. And by being part of Waldencast, they gain access to greater opportunities for growth and value creation. Once a brand joins our portfolio, our first priority is driving operational efficiencies. with a sharp focus on expanding gross margins. And we'll do this without compromising. In fact, we aim to enhance consumer perceived product quality and also accelerate innovation. We then reinvest these savings into sales and marketing business drivers, which fuel further top-line growth, further enhancing gross margin and delivering operational leverage by diluting fixed costs to produce robust profit growth. As you will see in this presentation, we have delivered on these objectives in a big way. This Waldenkos flywheel effect is already paying dividends, even if we're very much at the beginning of our journey. In fiscal year 2024, we outpaced the top three best-in-class competitors and grew three and a half times faster than the average of our peer group. Our adjusted gross margin stands 430 basis points above the industry average. even as the ability to reinvest in higher ROI business drivers that fuel further growth. As a result, despite making significant investments in the group's capabilities, we achieved a strong operational leverage, expanding our adjusted EBITDA margin significantly to reach 14.7% in 2024. So where are we today and what comes next? Our platform today has two brands, Makeup and Obagi Medical, which participate in a limited segment of the vast, vast, vast beauty space. We're aiming to build a multi-brand platform that will encompass over time all the strategic key categories, geographies, channels, and price points. We're just getting started. Let me now turn the presentation over to Manuel to review our financial results and outlook.