Q2 2024 Waldencast PLC Earnings Call
Speaker Change: Thank you for watching.
Speaker Change: Greetings. Welcome to the Waluangcast Second Quarter in 1st half 2024 earnings call. At this time, all participants are in a listen-only mode.
Speaker Change: A question and answer session will follow the formal presentation. If anyone wants to require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Allison Malkin of ICR. Allison, you may begin.
Allison Malkin: Thank you, and welcome to the Walmingcast PLC, second quarter fiscal 2024 earnings call. With me today, our Michelle Brissette, founder and chief executive officer, and then, Wellman Freddy, chief financial officer.
Speaker Change: Through 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 second quarter, and first half performance, and provide our fiscal 2020-24 outlook.
Speaker Change: Following this, Michelle will share this strategic growth initiative for our milk make-up and o-boggian medical brands. After the prepare-re-marked, the operator will open the call to take question.
Speaker Change: 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 of Walmancast's business and other matters referenced in the company's earnings release issue yesterday.
Speaker Change: Each four-looking statement in subject to risk and uncertainties, back and cause abstract results we differently, some of those projected in or implied by such statement.
Speaker Change: 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 security and exchange commission.
Speaker Change: That are available at www.scc.gov and on the industrialization section of the company's website at ir.lovingcast.com
Speaker Change: And should be read in conjunction with the section entitled RIS factors in the company's annual report on form 20F file with the security and exchange commission on April 30, 2024.
Speaker Change: Before in 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.
Speaker Change: Also, during this call, management will discuss certain non-gap financial measures, which management believes can be useful in evaluating the company's performance.
Speaker Change: The presentation of non-gat measures should not be considered in isolation, or as a substitute for results prepared in accordance with gats.
Speaker Change: You will find additional information regarding the definition of these nine gaps by the National Measures and a reconciliation of these nine gaps to the most directly comparable gap measures in the company's learning through these.
Speaker Change: A live broadcast of this call is also available on the industrialization section of the company's website at IR.WalvinCast.com, which will remain available until the company's next earnings call. I will now turn the call over to Michelle Brissat.
Michelle Brissat: Thank you, Alyson, and good morning everyone. I am pleased to speak to you today and share our strong second quarter performance that so accelerated comparable growth of 25.7%.
Speaker Change: There is also a first quarter increase of 21 percent, and capped a very successful first half of the year. Our performance demonstrates the power of our multi-run cuts on the progress we are making to achieve our vision for world impact.
Speaker Change: The vision is to build a global-based in-class beauty and wellness platform that creates a requires accelerating skills, the next generation of high growth, highly profitable purpose-driven products.
Speaker Change: As you have heard in say before, we are a beauty pure player because beauty is a most beautiful thing in the streets. One that has shown in pressively consistent growth is strong profitability and resilient.
Speaker Change: The U.S. market for prestigious beauty remains strong up 8% for the first half. These photos, significant growth over the past two years of the category, continues to normalize following unprecedented growth.
Speaker Change: For the first half, prestige is Kingker, grew 7% and prestige make-up, grew 5%.
Speaker Change: To kind of know that this growth reflects an accelerated deforecation emerging in the beauty industry. I like it by the continued growth and prestige of the Tstumas and its indicative of the continued pre-mumination of the beauty category with consumers looking for higher levels of efficacy on performance.
Speaker Change: Our growth has far exceeded the categories of our brands, not many capano-budget-medical, are only at the beginning of their ambition to in-market the brands in the respective categories and are very well-positioned to deliver consistent growth over time.
Speaker Change: We have two of the most exciting bronze in the two biggest beauty categories. Make up number one and the skin care number two in the U.S. prestigious beauty market. Our bronze plates in the fastest growing sub-segment of these two categories. Presteach, clean, make up, and professional sciencelet is complete.
Speaker Change: Obagi Medical, I'll perform the U.S. Presteation Skincare Market by a factor of 5x. In the first half, and continues its clear advantage of the number 1, decision recommended medical-related skincare brand for top-ranked patients' needs.
Speaker Change: Leading in the most attractive fast growing subsignament of premium skin care.
Speaker Change: With his breakthrough path in the technology and transformative clinically proven results, it allows high loyalty for both consumer sensations and its perfect equalization to answer the growing consumer needs for high performance effective skincare will also pay the way for expansion to a category.
Speaker Change: No, make up, group 3 times faster than the US prestige make-up market in the first half. The brand, a cold-favorite Gen C brand benefits organically from an engaged and diverse community due to a cultural relevance and iconic products.
Speaker Change: If it's a leading clean makeup run, the number two clean run at the 4HWF and is quickly building a global photo wing with leadership positions on several international markets.
Speaker Change: No makeup has accomplished with its relevant promise of cool, clean makeup that works.
Speaker Change: But we're just at the beginning of our journey to building a best-in-class global multi-run portfolio. Today, we'll process two powerful brands that have garnered critical math while it's still having substantial runway for growth.
Speaker Change: With milk make-up and obligimatico, we have a solid foundation, a prestige scheme and color. With a core business in the US and a growing presence in Europe on the Asia-Pac region.
Speaker Change: We are achieving a strong growth in attractive channels and expects this moment to continue as we drive awareness of both brands beyond its core communities, continue to introduce more blockbuster innovations and expand into other regions and categories.
Speaker Change: Our increasing success with both brands and the power of our unique pure-play duty ecosystem gives us a distinct competitive strength in attracting other brands and founders to our platform.
Speaker Change: Our platform, built for scale and speed, will only get better as we create an acquire more bronze at a scale than profitably and efficient.
Speaker Change: I now I will turn the coke over to Manuel to review our financials and outfits.
Manuel: Thank you, Richard, and good morning everyone.
Manuel: And please, to share our strong second quarter and first half results for 2024 with you today.
Manuel: This results highlight the continued success of RFTATI YKIMI SHATIS and our commitment to deliver ensure all their value. Today, I'll focus on our adjusted financial measures.
Manuel: You can find a reconciliation to gap financial measures in our press release from yesterday and in the appendix of this morning's presentation.
Manuel: Let's dive into the highlights of our second quarter performance.
Manuel: We saw a robot 25.7% year over a year comparable group. We succeeded at the 21% growth we achieved in Q1. Aligning without prior guidance.
Manuel: We continue to see significant year-over-year expansion in our adjusted cross-profit margin.
Speaker Change: And we might entend other vintage, as you read the margin, position in as well to meet our annual profitability goals.
Speaker Change: A key point to note is that, as we have indicated in the past, why we monitor our business daily with the denominator and annual basis.
Speaker Change: This annual planning approach allows us to navigate quarterly fluctuations without compromising our strategic objectives.
Speaker Change: We are pleased to achieve this result despite the fact that in both brands we experienced outstops in some of our key products, particularly some of our key launches. I have strong consumer demand, outstrip our expectations.
Speaker Change: A specifically for second quarter, Ned Revenue was $63.3 million, reflecting to a 25.7% comparable growth for future 2020.
Speaker Change: Obaging medical and myth make-up achieved 30.9% and 20% growth respectively.
Speaker Change: I just as a gross profit came in at 47.5 million dollars with an adjusted gross margin of 75.0%. I'm not about 600 and the 50 basis point increase from Q2 to 2023.
Speaker Change: I just said that it done was $6.3 million up to $4 million from YouTube to 2023.
Speaker Change: As a strong revenue growth and Rosemarginet Pancho, more than offset important investments to support our team, marketing and set business drivers.
Speaker Change: Building on our strong second quarter of February 2020-24 has been excellent.
Speaker Change: For the first half of 2024, Ned Revenue was $101.6 million, marking a 23.1% increase from the first half of 2023.
Speaker Change: I just said it was profit increased by 36.4 percent to 99.5 million dollars. With the adjusted gross margin, a spend in significantly by 880 to 78.6 percent.
Speaker Change: I just said EBITDA rose by 27.2% to 17.7 million dollars. Reflected, a strong says growth and improved gross margins, which more than offset our investment spending.
Speaker Change: This led to an adjusted the bit of margin of 13.4% for the first half. Up front to a 0.7% in the same period last year.
Speaker Change: Now, looking at it.
Speaker Change: Our strong first-after-formant, the ongoing success of our growth strategy, and the operational efficiency that we have implemented, positioned as well to maintain our positive momentals throughout the year, and beyond.
Speaker Change: For the full year 2024, we expect comparable revenue growth we continue to accelerate. Be on the 25.7% increase we are so into you too. Racing our guidance to be getting into you one.
Speaker Change: I just said it a margin is expected to land in the mid-T, aligned with our prior guidance and substantially higher than the 11.2% as she 2020-3.
Speaker Change: The simpleament comes even as we continue to invest in ourselves and marketing growth drivers.
Speaker Change: We expect the second half adjusted EBITDA to exceed first half results, both in absolute terms and as a percentage of revenue.
Speaker Change: Turn it now to our balance with a cash flow
Speaker Change: We end at the first half of 2024 with a solid financial position, with no near-term materials and unpoliquidity to fund our asset-light business model.
Speaker Change: As of June 30, 2024, cash and cash equivalent were $19.7 million.
Speaker Change: We also have $13 million available on our revolving credit facility, and net death total $155 million.
Speaker Change: We are shift positive operating cash flow, including non-recaring costs associated with legal and advisory fees.
Speaker Change: As of August 15th, 2024, Sheriff's Landing were 122.7 million, Compargo 122.2 million as of April 15th, 2024.
Mission: And now, I will turn the call over to Mission.
Mission: Thank you, Manuel. Now, let's look at the performance by Brown, starting with Mills makeup.
Speaker Change: From all shared with you, in the second quarter, meant to make up generated a net revenue of 28.7 million, an increase of 20% versus a year ago.
Speaker Change: Growth was driven by the increased boss and awareness of the brand, the success of our innovation and the continued strength in international markets.
Speaker Change: I'm president of the band, I'm in particular the fantastic success of our cooling water jelly things, launched led to some outstokes, which dumped the growth potential in the early part of the quark. That said, revenue accelerated over the end of the quark, their across geographies, has increased inventory levels to support the higher level of demand.
Speaker Change: A just as gross profit margin of 69.7% through an impressive 360 basis point versus Q2 last year. As we continue to deploy our operational efficiency playbook, I'm benefited from increased efficiency in sources and distribution, as well as a better management of our inventory.
Speaker Change: I just said EBITDA rose 48% to 5.7 million while I just said EBITDA margin of 90.8% expanded 370 basis points from the second quarter of 2023.
Speaker Change: As a strong revenue on gross margin expansion, was mitigated by increased sales and marketing investment in support of key launches that will set us up for acceleration in the second half.
Speaker Change: Now, for the first half, note makeup generated net revenue of 63.2 million, increasing 20.8% on the first half of 2023.
Speaker Change: adjusted gross profit goes 29.2% to 44.6 million with gross profit margin expansion of 460 basis points to 70.6%.
Speaker Change: And I just said EBITDA rose 23.4% to 15.7 million from 12.7 million in the first faculty of 2023, with adjusted EBITDA margin expanded to 24.9% of net revenue.
Speaker Change: News makeup is quickly becoming a true global powerhouse with consumers around the world embracing what we stand for and our consistent ability to deliver sought after innovation.
Speaker Change: The bronze swing pressy pearls across the ogre of Houston in the first half of the year, with a revenue of 50 and a half percent in North America, on the 33.3 percent international.
Speaker Change: Our vision for Milk Makeup is to do the number one choice of the next generation. You uniquely connecting with our needs, values and aspiration.
Speaker Change: Our mission is to create a space in beauty for all, always see our listening innovation, agility and self-expression.
Speaker Change: Our part is clear, guided by revision and anchored by our mission to create beauty for all.
Speaker Change: Number one, Delta Brown is highly relevant to our audience today and tomorrow. Two, nurture a global community of highly engaged consumers and partners.
Speaker Change: 3. Delight with products that are famous for unique and danjiri better, milk products are like no one else.
Speaker Change: For expand our presence through these two issues, always run building and community connecting.
Speaker Change: 5. Continue to fill the ground to deliver strong, profitable growth and lastly, lift our culture of creativity inside and out.
Speaker Change: Our North Star is our community of creatives listening to them, seeing them, understanding them. Feeling their creativity and self-expression, helping them live their loop. We are the tools on the RDR test. We inspire, we never prescribe.
Speaker Change: Our connection to our community and celebration of their self-expression, let me make up to double its early media value year and year, and climb seven runs versus January 2023. A true measure of its growing disability and awareness and an important predictor of a brand's future growth.
Speaker Change: Awareness during the outstanding social results across the two main metrics, larger community and higher engagement.
Speaker Change: Our new followers drew by 538,000 in the front half of 2024.
Speaker Change: which is an impressive 254% acceleration year and year. Well, as video views, almost double at 95% up to 89 million views within engagement jumping by 286%.
Speaker Change: This community social bus is amplified by strong editorial coverage with 5.4 billion press coverage impression in the front half of 2024, or which 1.4 billion is new parts alone, growing 60% year on year.
Speaker Change: featuring, in particular, our viral, cooling, water, jelly-tint, and our other launches in all major publications, and the illustration of the power of products that are famously unique, highly desirable, and perform up the delivers on consumers.
Speaker Change: This secret source of our product innovation is a single-minded focus on towards the deliverer our simple yet powerful consumer proposition of clean, cool, beauty that works.
Speaker Change: With a lever, never before seen innovation in formats that delivers strongly on the performance benefit and stay true to our brand and community values.
Speaker Change: Always vegan, clean and cool, D-free. Our products look and feel like no one else at our higher-income natural in the category that a time is a feel-singist.
Speaker Change: Over the years, we have built strong cold icons and a work we in front chises in Prime and Set and Sticks, and we will continue curing those strongholds.
Simone Biles: And when we're talking about our winning, our community will set a light to see 11 Olympic medal winner and the greatest gymnast of all time, Simone Viles.
Simone Biles: Using our best-selling hydrogrid primer as a first step on if you're getting ready with me of routine ahead of her impressive performance of the Paris Olympics last month.
Speaker Change: The greatest of all time, jizziness, wearing the greatest of all time primers means.
Speaker Change: In addition, to our stronghold in our core categories, in our independent, we're also delighting our community by spending into new high replenishment segments such as I, with a launch of Kush, Hyrule, Mascara, and Brautins, as well as in the lit with a latest shared extension of our OEC lit lost franchises.
Speaker Change: Moreover, we're still at a very beginning of our virus, many times sold out, one sold every 30 seconds, most of your were winning, cooling water jelly tint, driving a record boss, record community building and record sales, more exciting things to come in the franchise in the second half.
Speaker Change: Now, this French has enshrowered in editorial awards, which is strongly contributed with 22 awards that the brand has won year-to-date awards to you counting.
Speaker Change: He was also particularly exciting to all of us at Waldencast to have Milsnake and Nane by WWD as one of the most powerful beauty brands during the industry's roles.
Speaker Change: Our most recent market expansion continue to confirm the global appeal and the survivability of our milk maker brand. The quality of our products and our brand values resonate universal.
Speaker Change: Our launch is in the UK, Scandinavian, Latin America, are performing ahead of our expectations of evidence by the compelling stats you see on the screen.
Speaker Change: Now, from the world of milk make up, let's go to the world of high performances skincare with a budget medical.
Obagi Medical: Obagi Medical Deliveranora's founding quarter of growth with revenue 34.6 million representing comparable growth of 30.9% from the prior region.
Speaker Change: With a strong growth was driven by the progress made on our strategic priorities that focus on increasing digital channel sales, building our international business and accelerate our innovation with the introduction of highly effective blockbuster products.
Speaker Change: In order to make up, some of these growth was dampened by Aristotle's on key products as a strong demand of solid supply, which particularly impacted our U.S. decision-to-spend channel. Inventory levels on key Aristotle's items and now substantial improved and we expect acceleration in G3.
Speaker Change: A just growth profit total 27.4 million with a just growth margin expanding 850 basis points to 79.3%. From 70.8% in the second quarter of fiscal 2023.
Speaker Change: And strong sales growth combined with significant expansion and just across margin, more than offset the increased investment in business drivers leading to a just-it-epidar of 6.5 million, a 55.4% increase versus Q2.24%.
Speaker Change: I just said that with a margin expanded 230 basis points to 18.6% from 16.3% in the second quarter of Q-223.
Speaker Change: Now, looking at the first half of a genetic delivery net revenue of 68.4 million representing comparable growth of 25.4% from the first half of 2023.
Speaker Change: I just a gross profit rose to 54.9 million or 80.3% of net revenue versus 38.5 million or 67.4% of net revenue in the first half of 2020.
Speaker Change: These roles led to a just service hour 13.2 million, a 37.1% increase from the first half of fiscal 2023, with a just service hour, expanding to 19.3% from 16.9% in the
Speaker Change: Across the geographies of agi-medicates of balance growth with 37.6% increase in North America and a 35.2% increase internationally in the first half of 2024 compared to the prior year first half.
Speaker Change: In the U.S., we saw outside growth from our digital channels and a stronger performance from our innovation. Internationally, we are very pleased to continue to establish a variety of medical presence in Southeast Asia and expect to build on this moment to live here.
Speaker Change: Our vision for biomedical is to be the number one physician-defense dermatological brand in the world, providing targeted solutions to professionals and consumers that deliver transformative visual results.
Speaker Change: We are proud to be leading US physician recommended brands for top 3 skin concerns for physicians and patients. After 3 patients, fine lines and wrinkles and sagging skin loss of elasticity.
Speaker Change: These conditions account for roughly 2-3rds of efficiency on this pent category.
Speaker Change: A growth of strategy follows three pillars.
Speaker Change: First, strengthen our professional dermatological skincare brand DNA. Second, accelerate cutting-edge science-back innovation that delivers transformative results.
Speaker Change: I'm sure the World Brown Awareness and Food Trends, to reach more consumers domestically and internationally.
Speaker Change: Now, when we acquired the branch, one of our clearly stated growth opportunities was to modernize the branch and are shared into a new area of the mathematical skin care that will delight both our physicians, our consumers.
Speaker Change: I am pleased with a program we have made and excited to share with you small slides of what we are rolling on to the market.
Speaker Change: Our radiometric brown positioning is anchoring four core pillars that are also the four cornerstones of our iconic Obaging Medical Square.
Speaker Change: First, science is the answer. At a biomedical, science has always been the foundation of our brand. Our science and clinical results have been trusted by physicians for more than 35 years.
Speaker Change: But science is never settled and neither are we. Always pushing to innovate, test and research beyond our best to discover better ways to transform our skin.
Speaker Change: Second, I Your Standards are our standards.
Speaker Change: We know our products are transformative because we hold ourselves for higher standards where clinical improvement is just a starting point. We go beyond clinical with our rigorous testing and data back results to prove it's transformative power of each and every one of our products.
Operator: Greetings. Welcome to the Waldencast Second Quarter and First Half 2024 earnings call. At this time, all participants are in a listen-only mode.
Operator: A question and answer session will follow the formal presentation. If anyone wants to require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded.
Speaker Change: 3. Where diverse by the sound. An important won't be because value, with pioneer clinical testing against entire six-poucher skin inspection and continues to develop products systematically tested on every skin tone and type.
Alison Malcolm: I will now turn the conference over to Alison Malcolm of ICR. Alison, you may begin. Thank you and welcome to the Waldencast PLC Second Quarter fiscal 2024 earnings call. With me today are Michelle Bressett, founder and chief executive officer and then Wellman Freddie, chief financial officer.
Speaker Change: And fourth, trust is always on trend. Think we put our products just work. And that's why generations of consumers and physicians are on the world have trusted us with their skin and their reputation for 35 years.
Michelle Bressett: 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 second quarter and first half performance and provide our fiscal 2024 outlook. Following this, Michelle will share this strategic growth initiative for our milk makeup and obadi medical brand.
Speaker Change: That is how we deliver tenytally proven science that this will transform a few souls on all skin tones.
Speaker Change: Thanks for cutting-edge science on medical-drading ingredients, developed in partnership with 39 research and development partners and leveraging World and Cast Open Development Ecosystem.
Speaker Change: With a leading clinical testing program having conducted 320 non-styles, a 100% test and a two-ten different test performed for innovation.
Alison Malcolm: After the prepared remarks, the operator will open the call to take question. Before we start, I would like to remind you that management will make certain statements today, which are for looking, including statements about the outlook of Waldencast business and other matters referenced in the company's earnings release issued yesterday. Each for looking statement is subject to risk and uncertainties that could cause actual results to differ materially from those projected in or implied by such statements.
Speaker Change: Many of you have spoken to us over the years, or the various elements of the brand names, the word in need of a research, and we're happy to present to you the honor refresh, a lit frog that we believe is a strengthest of all you medical leadership position.
Speaker Change: The strength of our original position brought to life as a iconic logo on square adapted to all touch forms to communicate science, performance, and how we stand as unique in your body.
Alison Malcolm: Additional information regarding these statements appears under the heading cautionary note regarding for 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.fc.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 on form 20F file with the securities and exchange commission on April 30th, 2024.
Speaker Change: We did our typography, photography, or product and packaging.
Speaker Change: Bring your new brand universe in a immersive way in and out of the institution office for an elevated experience that reflects the authority and performance we're known for.
Speaker Change: An identity and court in our medical blue as we increase more consumer meal attachments in and out of decisions office to make it uniquely memorable relevant and compelling.
Speaker Change: A new elevated style that is spotlighted as a heart of our brand, science and performance, while educating our community on the poultry field and superiority of our range.
Speaker Change: and make it more accessible to professionals and consumers alike.
Alison Malcolm: Before 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-gab financial measures, which management believes can be useful in evaluating the company's performance. The presentation of non-gab measures should not be considered in isolation or as a substitute for results prepared in accordance with gaps. You will find additional information regarding the definition of these non-gab financial measures and a reconciliation of these non-gab to the most directly comparable gap measures in the company's earnings release.
Speaker Change: One of the first innovations that is fully benefiting from the new, brand positioning, and an image is a new launch in our strategic, elastic, firm franchise.
Speaker Change: Launching one of our greatest inhalations of our bringing medical, great listing to new heights.
Speaker Change: We will be extending our best feeling, a last-earn franchise with a launch of a last-earn lift-up and scope facial moisturizer. Technical improvement to basically lift and scope facial contours in only six weeks.
Speaker Change: An Sparkner, a large-use-arm advanced-sealer concentrate, clinically proven to visibly reduce the appearance of fine lines with a single application.
Speaker Change: To blow up our innovations, playing in one of the top-skinkest segments of the Physician Channel, delivering visible clinical approval and results.
Operator: A live broadcast of this call is also available on the investor relations section of the company's website at ir.waldencast.com which will remain available until the company's next earnings call.
Speaker Change: The new Elastirum list at UNESCO, Moisturizer, expands her portfolio in the heartline of anti-aging and day-creen category, a format where we currently underindex.
Michelle Bressett: I will now turn the call over to the Shelby set. Thank you, Alison, and good morning everyone. I am pleased to speak to you today and share our strong second quarter performance that so accelerated comparable growth of 25.7%.
Speaker Change: It comes super charged with a clinical dossier showing product efficacy in a sleetelach-3 weeks of use and visceral transformations with information for and afters. The perfect launch factor communicate are medical authority in and out of that practitioner's office.
Michelle Bressett: There is a first quarter in Greece of 21% and kept a very successful first half of the year. Our performance demonstrates the power of our multi-run platform and the progress we're making to achieve our vision for Waldencast. This vision is to build 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. As you have heard me say before, we're a beauty-to-player because beauty is the most beautiful of industries.
Speaker Change: New, a last year in Mabad's field of concentrate is a non-injectable instant fine-line filler within progressive clinical results after a single application. And further improved for an after eight weeks showing a 19% reduction in the appearance of fine lines on four-hurt lines.
Speaker Change: And lastly, we'll continue the moment of by racing Brunner Wernish with a Bajim Medical. We are excited because we're just a TV Genie.
Speaker Change: Obagi Medical is today the number three fastest growing air and media value beauty brands. We've picked further accelerations with investing role to drivers and deployed a new branding packaging and of course medical grading innovation.
Michelle Bressett: One that has shown impressive inconsistent growth is strong profitability and resilience. The US market for prestige beauty remains strong up 8% for the first half. We follow significant growth over the past two years as the category continues to normalize following unprecedented growth. For the first half, prestige skinker grew 7% and prestige makeup grew 5%. Terkanah knows that this growth reflects an accelerated defrocation emerging in the beauty industry. I like it by the continued growth in prestige that is to mass and is indicative of the continuous pre-munization of the beauty category with consumers looking for higher levels of efficacy and performance.
Speaker Change: As you can see, we are more excited than ever about our business and our growth projects. We have two powerful high growth compelling brands, perfectly positioned in the most attractive segment of the beauty business. We are now focused on a stepping up our investment in our brands under the development of our communities.
Speaker Change: This combination of a strong community engagement and seductive high-performance products.
Speaker Change: He's driving increased the old demand for our bronze, which couple with a power of our welding, gas platform, and talent and teams have a well-position to drive long-term profitable growth.
Michelle Bressett: Our growth has far exceeded the category as our brands meet up on a budget medical are only the beginning of their ambition to market leading brands in the respective categories and are very well positioned to deliver consistent growth over time. We have two of the most exciting brands in the two biggest beauty categories, makeup number one and a skinker number two in the US prestige beauty market. Our brands create in the fastest growing sub segments of these two categories prestige clean makeup and professional science led skinker.
Speaker Change: I'm always thankful for the continuous support of our consumers, investors, partners and employees, and everyone who shares our dream of building a global-based in-class, putain wellness operating platform.
Speaker Change: Overall, we continue to expect our efforts to lead to long-term value creation for all wall-link-a-state holders.
Speaker Change: And with that, I will turn the call over to the operator to begin the Q&A portion of the call.
Speaker Change: i
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation total indicate your line is in the question queue.
Michelle Bressett: Obadi medical outperform the US prestige skinker market by a factor of 5x in the first half and continuously clear advantage of the number one decision recommended medical ability skinker brand for top-ranked patients needs. Leading in the most attractive fast growing sub segment of premium skinker with his breakthrough patented technology and transformative clinically proven results. It allows high loyalty from both consumers and physicians and it is perfectly positioned to answer the growing consumer needs for high performance effective skinker while also paving the way for expansion to a category. No makeup group three times faster than the US prestige makeup market in the first half.
Speaker Change: You may press star 2 to remove your question from the queue.
Speaker Change: For participants using speaker equipment and maybe necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question and one follow-up question. May re-cute for additional questions.
Speaker Change: One moment, please, while we pull for your questions.
Speaker Change: Our first questions come from the line of Ashley Helgans with Jeffery's, please
Sydney: Hi, this is Sydney on for Ashley. I was just wondering if you can talk a little bit about the promotional environment, kind of what you, what you've seen in our expecting going forward. And then also just any color you can share on the Innovation Pipeline in 2H. Thanks.
Michelle Bressett: Brand a cold favorite Gen. C brand benefits organically from an engage and diverse community due to its cultural relevance and iconic products. It is a leading clean makeup run the number two clean brand at support us and is quickly building a global following with leadership positions in several international markets. No makeup has accomplished this through its relevant promise of cool clean makeup that works.
Speaker Change: I say thank you, thank you for the call, breaking the question into the parts. Our bronze are relatively unexposed to promote channel fluctuations in the case of physician and expense of a genetic call.
Speaker Change: If we run and the market runs relatively soon, the risk of motion is relatively crisis and flexible. And in the case of milk, the segment of the market has been relatively
Michelle Bressett: But we're just at the beginning of our journey to building a best in class global multi brand portfolio today we possess two powerful brands that have garnered critical mass while still having substantial wrong way for growth. We have a solid foundation in prestige, skin and color with a core business in the US and a growing presence in Europe and the Asia-Pac region. We are achieving a strong growth in attractive channels and expects this moment to continue as we drive awareness of both brands beyond its core communities, continue to introduce more blockbuster innovations and expand into other regions and categories.
Speaker Change: You know, flat in terms of promotion, we don't see any significant substantial amount of increase of promotion or net price erosion as a consequence of flat.
Speaker Change: For many innovation sample, which is what is driving our bronze, we are, as you saw, we have an incredible
Speaker Change: have one of innovation on both runs and frankly we are super excited what is coming and have two. So we continue to accelerate the innovation on both runs. It's a key spot of our strategy and I think innovation so far has been delivering the living very well.
Michelle Bressett: Our increasing success with both brands and the power of our unique pure-play beauty ecosystem gives us a distinct competitive strength in attracting other brands and founders to our platform. Our platform built for scale and speed will only get better as we create and acquire more brands and scale them profitably and efficiently.
Olivia Taughn: Thank you. Our next question is coming from the line of Olivia Taughn with the Raymond James. Please for a seat with your questions.
Speaker Change: That's the same, that's the same, that's the same, and which is the best, the best thing I've knew grossed.
Manuel Freddie: And now I will turn the coke over to Manuel to review our financials and outcomes. Thank you, Michel and good morning everyone. I am pleased to share our strong second quarter and first half results for 2024 with you today. These results highlight the continued success of our strategic initiatives and our commitment to delivering shareholder value. Today, I will focus on our adjusted financial measures. You can find a reconciliation to gap financial measures in our press release from yesterday and in the appendix of this morning's presentation.
Speaker Change: And also how you think about the abdominal organ expansion opportunity, recognizing, of course, the expectations for an improved second half on both those violators. So you're leaving us all your breaking up. Could you please repeat your question?
Speaker Change: Sure, I'll be a little louder too.
Speaker Change: I was hoping you could talk a little bit about what you think of as a steady state revenue gross and how you think about the EBITDA margin expansion opportunity from here, recognizing of course you talked about a second half doing better than Q2 or second half doing better than first half.
Speaker Change: But I come to eat the dog.
Speaker Change: Particularly given the volatility in the past would be helpful to do that. So that's the first question. Second question is around.
Manuel Freddie: Let's dive into the highlights of our second quarter performance. We saw a robust 25.7% year-over-year comparable group which exceeded the 21% growth we achieved in 2021. Aligning with our prior guidance. We continue to see significant year-over-year expansion in our adjusted growth profit margin. And we maintain a double digit a bit of margin, positioning as well to meet our annual profitability goals. A key point to note is that as we have indicated in the past, why we monitor our business daily, we plan on it on an annual basis.
Speaker Change: You know, just a competition in your categories. We've obviously seen some deceleration in the category after a very strong period of growth. So if you could just talk about competitive environment, both in for milk and also for abazi in the Durham skin care area. And then lastly just what what you're doing.
Speaker Change: I'll restock that you've been feeling well. Thank you.
Speaker Change: Thank you, Olivia. On the first part of your question, I'm going to steady state the revenue growth as you can. We provide a guide us for the year without providing a guide us.
Speaker Change: Beyond that, but I think, or we are seeing, it's an acceleration, as we've come to get an acceleration on the back half.
Manuel Freddie: This annual planning approach allows us to navigate quarterly fluctuations without compromising our strategic objectives. We are pleased to achieve this result despite the fact that in both brands we experience out of stocks in some of our key products, particularly some of our key launches, as strong consumer demand outstrip our expectations. Specifically for second quarter, net revenue was 63.3 million dollars, reflecting 25.7% comparable growth for Q2 2023. Obagi medical and milk makeup achieved 30.9% and 20% growth respectively.
Speaker Change: from the Q2 number.
Speaker Change: I think we expect an algorithm of a company that is high growth on certain way-life head of market growth. And EBIDAS, you saw, we continue to build EBIDAS to...
Speaker Change: to what our destination is structural economics. So we expect an complicated issue in the past, we expect a long-term basis on a steady state basis. We already have...
Speaker Change: It's structural economics in the company that are
Speaker Change: Compare a lot in many cases superior to best in class beauty from a girls margin perspective which is only going to help us build our everyday as we continue to grow our balance. Hours very simply.
Speaker Change: It's a growth story. We're going to use a growth of growth as you can see at a very accelerated pace, which what is already the engine of the company, which is the growth far-ging.
Manuel Freddie: Adjusted growth profit came in at $47.5 million, with an adjusted growth margin of 75.0%. And note of all $650 basis points increased from Q2 2023. Adjusted debit down was $6.3 million, up to $4 million from Q2 2023. As a strong revenue growth and growth margin expansion, more than offset important investments to support our team, marketing and sales business drivers. Building on our strong second quarter, our fair staff 2024 has been excellent.
Speaker Change: level that is very attractive. So as we grow the company, we will continue to execute what is our virtuous cycle, which is revenue growth translated to very strong growth, margin growth, reading vested into business drivers with marketing and sales.
Speaker Change: That's further the rough growth and the loot DNA for the liver increases in the beta.
Speaker Change: In just a competition in the category, I mean beauty is always been a very competitive market. It is a market of competition, but frankly, as I said before, we do not think too much of competition, where such as small companies in the whole scheme of things in the beauty market, that are limitation to grow.
Manuel Freddie: For the first half of 2024, net revenue was $131.6 million, marking a 23.1% increase from the first half of 2023. Adjusted growth profit increased by 36.4% to 99.5 million dollars. With the adjusted growth margin, expanding significantly by 890 basis point to 75.6%. Adjusted EBITDA rose by 27.2% to 17.7 million dollars, reflected strong sales growth and improved growth margins, which more than offset our investment spending. These led to an adjusted EBITDA margin of 13.4% for the first half.
Speaker Change: It's only our own ability to create great consumer proposals that are interesting and compelling to consumers, combined with our own ability to execute.
Speaker Change: The market is always incompatible, it is a competitive market but there is not a winner that takes full market, it is a expandable consumption category.
Speaker Change: And what a competition is a point of information, frankly, is not thing to much of competition. We think more of how do we create great breakthrough organisations, like for example, what we don't know, Mike Kempkelli's, which is we invented a completely new product that is in fairly seductive and interesting for consumers. That really has no competition. And as I call it, we benefited from entrepreneurs impact on our top-line growth, our sales, and our social and community metrics.
Manuel Freddie: Up front 12.7% in the same period last year. Now, looking ahead, our strong first half performance, the ongoing success of our growth strategy and the operational efficiencies that we have implemented, positioned us well to maintain our positive momentum throughout the year and beyond. For the full year 2024, we expect comparable revenue growth will continue to accelerate, beyond the 25.7% increase we saw in Q2, raising our guidance communicated in Q1. Adjusted EBITDA margin is expected to land in the mid-tier, aligned with our prior guidance, and substantially higher than the 11.2% as achieved in 2023. This improvement comes even as we continue to invest in ourselves and marketing growth drivers. We expect a second half adjusted EBITDA to exceed first half results, both in absolute terms and as a percentage of revenue.
Speaker Change: And lastly, now that the rest of the world was a bit of a headwind in Q2, frankly, in some ways we were victims of our own success. Things, particularly like makeup or things like jelly, are particularly difficult to forecast when you are creating a new to the world.
Speaker Change: a procession.
Speaker Change: And we could have grown substantially more on the basis of that.
Speaker Change: of those autostokes. A sinking at a bargey, our innovation was performed better than we expected. But in fairness, we also were managing.
Speaker Change: our base inventory a bit tighter.
Speaker Change: I'm perhaps we should up with hindsight 2020.
Speaker Change: In terms of, in terms of on a go forward basis, I think most of the are stock.
Speaker Change: Issues are behind where we still can jelly and you.
Manuel Freddie: Turning now to our balance sheet and cash flow, we ended the first half of 2024 with a solid financial position, with no near-term opportunities and ample liquidity to fund our asset-light business model. As of June 30th, 2024, cash and cash equivalence were 19.7 million dollars. We also have 30 million dollars available on our evolving credit facility, and net debt total 155 million dollars. We have achieved positive operating cash flow, excluding non-recarring costs associated with legal and advisory fees. As of August 15th, 2024, share of standing were 122.7 million, compared to 122.2 million as of April 15th, 2024.
Speaker Change: A word to go to lead to a Sephora, or to one of our other human have to fight.
Speaker Change: For one of the jellies, as you had to fight a little bit before, you will see inventory and consumer buying this inventory in a rapid pace.
Speaker Change: But we still have a little bit of an effect, we still have a little bit of an effect on how it stops, particularly on your budget business in Q1. But substantially, substantially less than what we saw in Q2.
Libyan: Thanks for the question, Libyan.
Speaker Change: Thank you as a reminder, if you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: Our next question is coming from the line of Linda Boltonwizer with DA Davidson. Please proceed with your questions.
Linda Boltonwizer: Yes, hi. Congratulations on the great growth. So I'm a curious.
Linda Boltonwizer: I didn't catch, if you were kind of talking about the advertising and promo ratios in each of the brands, maybe you don't want to disclose those. But maybe you can give us a sense for if you feel the spending levels as a ratio are kind of where you want. It's to be for the each of the two brands or do you envision even further increase an A&P kind of in the future years.
Michelle Bressett: And now, I will turn the call over to Michelle. Thank you, Manuel. Now, let's look at the performance by Brown starting with milk makeup. As Manuel shared with you, in the second quarter, milk makeup generated a net revenue of 28.7 million, an increase of 20% versus a year ago. Growth was driven by the increased boss and awareness of the Brown, the success of our innovation and the continued strength in international markets.
Linda Boltonwizer: Thank you, Linda. Thank you for the question. So, we think that, so we, since we started the journey two years ago, as you know, Linda, we've accelerated quite substantially the level of.
Michelle Bressett: Unprecedented demand and in particular the fantastic success of our cooling water jelly systems launched led to some out of stocks which dampen the growth potential in the early part of the quarter. That set revenue accelerated toward the end of the quarter across geographies as we increase inventory levels to support the higher level of demand. Adjusted growth profit margin of 69.7% grew and impressive 360 basis points versus Q2 last year. As we continue to deploy our operational efficiency playbook and benefit it from increased efficiencies in sources and distribution as well as better management or inventory.
Linda Boltonwizer: marketing investment as we build our bronze. We certainly expect a fast tool to continue to invest even further than we invested in half one, which was already a substantial increase.
Linda Boltonwizer: There's just my ears last year, but what we follow is a very strong ROI, mindset behind that.
Linda Boltonwizer: that marketing is best.
Linda Boltonwizer: In terms of on a long-term basis, are we at the level of marketing investment a long-term long, we believe that I think there is a still substantial room to grow, support both in terms of a percent of sales, as well as absolute values of continued to build the business. But that is part of our...
Michelle Bressett: Adjusted EBDA rose 48% to 5.7 million while adjusted EBDA margin of 90.8% expanded 370 basis points from the second quarter of 2023. As a strong revenue on gross margin expansion was mitigated by increased sales and marketing investment in support of key launches that will set us up for acceleration in the second half. Now for the first half note makeup generated net revenue of 63.2 million increasing 20.8% from the first half of 2023.
Speaker Change #101: kind of dare to circle in what we do is we invest with drive-operation efficiency which we're investing in this as drivers to drive the top of the road and I load our DNA.
Speaker Change #101: So, in both cases, in both rounds, we expect to continue to increase our market support and self-support on both rounds.
Speaker Change #101: That with resulting, as I said, increases in our, in our EBITDA countries.
Michelle Bressett: Adjusted gross profit rose 29.2% to 44.6 million with gross profit margin expansion of 460 basis points to 70.6%. And adjusted EBDA rose 23.4% to 15.7 million from 12.7 million in the first half of 2023 with adjusted EBDA margin expanding to 24.9% of net revenue. Mill's makeup is quickly becoming a true global powerhouse with consumers around the world embracing what we stand for and our consistent ability to deliver sought after innovation. The brand, so impressive growth across geographies in the first half of the year, with revenue of 15.5% in North America and 33.3% in international.
Speaker Change #102: Okay, and just let us follow up in terms of Obajie, maybe it's a reminder, it's Obajie using distributors pretty much in all of its international markets or just some of them. And can you just explain to us, like, do we need to worry about, like?
Speaker Change #103: How should we think about just how you execute there internationally on O'Bajay? Thanks.
Speaker Change #104: Thanks. Thanks.
Speaker Change #105: So, our international structure today is relatively simple. As you know, we internalize the distribution of a body in Southeast Asia. So, in Southeast Asia, what we use is our own.
Speaker Change #105: subsidiary now, moving from in all the students of the mall that we have in South Asia for all day.
Michelle Bressett: Our vision for milk makeup is to the number one choice of the next generation. You're neatly connecting with our needs, values and aspirations. Our mission is to create a space in beauty for all, always fearless in innovation, agility and self-expression. Our path is clear guided by our addition and anchored by our mission to create beauty for all.
Speaker Change #105: The challenges and international relations we had with other students in 2022 that is now fully behind us and now we have our own subsidiary in Southeast Asia. Every other international market.
Speaker Change #106: We use distributors. And what we do is we have a very strict monitoring in those distributors from a selling cell through and cell out basis.
Michelle Bressett: Number one, build a brand that is highly relevant to our audience today and tomorrow. Two, nurture a global community of highly engaged consumers and partners. Three, delight with products that are famously unique and tangibly better. Milk products are like no one else's. Four, expand our presence through distributionalists, always brand building and community connecting. Five, continue to fuel the brand to deliver strong profitable growth and lastly, lethal culture of creativity inside and out.
Speaker Change #106: For most institutes, just now, we'll have sell out for all the students in terms of all the major institutes that we have a very strong.
Speaker Change #107: monitor, if it's a lean filter, and if it's a loud interface, it can have a loud. So, we do not have any concerns about too much inventory on distributors at Intrational Lab.
Speaker Change #108: The international footprint, just to finalize, is where I journey on that, on the other these students, the outside of Southeast Asia, these teachers.
Speaker Change #109: And just frankly, we have some excellent students or partners on their own students that we need to execute a bit of a change on a go-to-market structure, which we're doing over the next couple of years or so, so we turn to the foundation that we put a more efficient student to them all.
Michelle Bressett: Our North Star is our community of creatives, listening to them, seeing them, understanding them, feeling their creativity and self-expression, helping them lift their loop. We are the tools and the artists, we inspire, we never prescribe. Our connection to our community and celebration of their self-expression, let milk makeup to double its earned media value year and year and climb seven runs versus January 2023. A true measure of his growing disability and awareness and an important predictor of a brand's future growth.
Speaker Change #109: But overall, we have no concerns about any kind of rebuild whatsoever on international issues.
Speaker Change #109: Okay, thanks a lot.
Speaker Change #110: Thank you very much.
Speaker Change #110: Thank you very much.
Speaker Change #111: Thank you. Our next questions come from the line of Dana tells me with tells the advisory group, please proceed with your questions.
Speaker Change #111: i
Michelle Bressett: Awareness driven by outstanding social results across the two main metrics, larger community and higher engagement. Our new followers grew by 538,000 in the front half of 2024, which is an impressive 254% acceleration year and year. Most video views, almost double at 95% up to 89 million views with engagement jumping by 286%. This community's social bus is amplified by strong editorial coverage with 5.4 billion press coverage impression in the front half of 2024, of which 1.4 billion is new products alone growing 60% year and year, featuring in particular our viral cooling water jelly tint and our other launches in all major publications.
Speaker Change #112: Dan, I could you check if you're self muted, please.
Dana Tells: Yes, hi, good morning, everyone.
Dana Tells: As you think about this, hi. I think about the drivers of the Stronger Smartgen expansion that you had in the International Expansion that Milk and Obadiar are seeing. What's driving that? How do you think about the growth going forward and what it could mean for the business? Thank you.
Speaker Change #114: Thank you, Dana. On gross margin, the story remains the same, and it's a little bit different by brown by the story remains.
Speaker Change #115: In the case of Ojo Baji is the fundamental leader by two things. One is a very strong and favorable channel mix, so we develop our digital channels on Ojo Baji. And the second one is operational efficiency that we continue to build on those things.
Michelle Bressett: An illustration of the power of products that are famously unique, highly desirable and performance of delivers on consumer needs. The secret source of our product innovation is a single-minded focus on products that deliver on our simple yet powerful consumer proposition of clean cool beauty that works. With the liver, never before seen innovation in formats that deliver strongly on the performance benefit and stay true to our brand and community values. Always vegan, clean and cruelty-free.
Speaker Change #115: As you know, we are already in a very high gross margin level and think we are about the definition.
Speaker Change #115: level of obliging in transogross margin. I think any future efficiency, whether it is still to have a spot of that operational efficient, we plan to reinvest it into product and formulation and in a quite quality offering to work also. So we expect.
O'Badie: O'Badie, to a rough sea, at its destination. Milk, as you saw, with a distance that was gross margin in the 40s, when we bought it. And now, it's approximating where we wanted, and so on. So destination is in driven, it's a primarily slow-operation on efficiency. So it is, it is, it continues to build that operation on efficiency, a bit of mix.
Michelle Bressett: Our products look and feel like no one else and are highly recognized in the category that at times is a sea of sameness. Over the years, we have built strong cold items and award-winning franchises in prime and set and sticks and we will continue curing those strong holds. And what we're talking about award-winning are communities with set alike to see 11 Olympic medal winner and the greatest gymnast of all times human vile using our best-selling hydro group primer as a first step on her get ready with me routine ahead of her impressive performance at the Paris Olympics last month.
O'Badie: all the details of how you build a great operating market.
Speaker Change #117: And thanks for highlighting the point of Rosmargin, because that at the end of the day is the engine of the company. And as we grow the business at that very attractive, very low-gross margin, it allows us a substantial amount of fuel to reinvest in building our brands and deliver profitability over time.
Speaker Change #117: In the case of international, a little bit different, again, by brand, because the moments are different.
Michelle Bressett: The greatest of all time gymnasts wearing the greatest of all-time primaries. In addition to our stronghold in our core categories in opinion intended, we're also delighting our community by expanding into new high replenishment segments such as with a launch of kush, Hyrule, Mascara and Brautins as well as in lit with the latest shit extension of our Odyssey lit gloss franchise. Moreover, we're still at the very beginning of our vials many times sold out, one sold every 30 seconds, multi award-winning, cooling water jelly tint, driving a record boss, record community building and record sales.
Speaker Change #117: We have some substantial growth coming on milk if you saw this off on the result as we.
Speaker Change #117: Most of it is really productivity driven, it's productivity out of our own businesses. But we have some modest distribution expansion. We enter the UK market not long ago, but it's theoretically modest in it.
Speaker Change #117: In the number of stores where we are in the very well and exceeding our expectations of how it's performing.
Speaker Change #117: In the UK, we also expanded the distribution of footprint in Scandinavia with liquef and in a fantastic success. We talk about the last quarter of...
Speaker Change #117: lines and lines and lines of consumers waiting to write me out as we expand it. And also a small but important expansion into Latin America, particularly in Chile, Colombia.
Michelle Bressett: More exciting things to come in these franchise in the second half. Now, these franchise has enshrined in editorial awards, which is strongly contributed to a 22 awards that the brand has won year-to-date awards through counting. It was also particularly exciting to all of us at Waldencast to have mills make up name by WWD as one of the most powerful beauty brands fueling the industry's roles. Our most recent market expansion continues to confirm the global appeal and desirability of our make-up brand. The quality of our products and our brand values resonate universally. Our launches in the UK, Scandinavia and Latin America are performing ahead of our expectations of evidence by the compelling stats you see on the screen.
Speaker Change #117: And Mexico, where with Blushbar that has really not tremendous success in which as we saw in the presentation, we saw before. We are the number one or two brand in the store for both market, which is validating.
Speaker Change #117: Just a universal appeal of the make-for-end across the world and there's much more to come in the future. In the case of old Badge, as I said, we have a bit of a be-for-cated model. One is our...
Speaker Change #117: If you're on distributors outside of the US, which is everywhere outside the US, with access on Southeast Asia, which will continue to build.
Speaker Change #117: For my strengths of strength, are we investing the brand, professional lives, we're managing those distributors, realising some of those distributors. There's still a bit of work to do that we need to do at the next two or three years at.
Michelle Bressett: Now, from the world of milk make up, let's go to the world of high performance skincare with Ovagi Medical. Ovagi Medical delivered an outstanding quarter of growth with revenue 34.6 million representing comparable growth of 30.9% from the prior reader. This strong growth was driven by the progress made on our strategic priorities that focused on increasing digital channel sales, building our international business, and accelerating our innovation with the introduction of highly effective blockbuster products.
Speaker Change #117: strengthening that distribution network, look for internalization or appropriate et cetera. And then we have solidization, where we are rebuilding our business and solidization after the collapse, if you want, of our formerly future, and we're very pleased with that progress.
Speaker Change #117: We launched in the first initial in Vietnam in November of last year, and we expanded into Thailand, Singapore and the USA India.
Speaker Change #117: And this is performance as well and we have now an internalized model that allows us to have a much better profitability on a growing basis as we capture all the margin on that's what I think.
Manuel Freddie: In order to make up, some of these growth was dampened by out of stocks on key products as a strong demand outstrips supply, which particularly impacted our U.S, physician-based channel. Inventory levels on key out of stock items and now substantially improved and we expect acceleration in G3. Adjusted growth profit total 27.4 million with adjusted growth margin expanded 850 basis points to 79.3% from 70.8% in the second quarter of fiscal 2023. And strong sales growth combined the significant expansion in adjusted growth margin more than not said the increased investment in business drivers leading to adjusted a bit of 6.5 million a 55.4% increase versus Q2 2023. Adjusted a bit of margin expanded 230 basis points to 18.6% from 16.3% in the second quarter of Q2 2023.
Speaker Change #117: Thank you. We have reached the end of our question and answer session. I would now like to hand the call back over to Michelle Brouset for any closing comments.
Michelle Brouset: Thank you very much. Well, thank you everybody for joining us today. We're very excited about the due-to-results and the closing of the hotline and as we communicate it on the earnings release work.
Speaker Change #119: Very, very confident about our outlook for the year and thank you very much for being here and for your support. Have a good day.
Speaker Change #120: Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
Manuel Freddie: Now looking at the first half of Ovagi Medical delivered net revenue of 68.4 million representing compatible growth of 25.4% from the first half of 2023. Adjusted growth profit rose to 54.9 million or 80.3% of net revenue versus 38.5 million or 67.4% of net revenue in the first half of 2023. These roles led to adjusted a bit of 13.2 million a 37.1% increase from the first half of fiscal 2023 with adjusted a bit of margin expanding to 19.3% from 16.9% in the fiscal 2023 first half.
Manuel Freddie: Across the Ovagi Medical so balanced growth with a 37.6% increase in North America and a 35.2% increase internationally in the first half of 2024 compared to the prior year first half. In the US we saw outside growth from our digital channels and a strong performance from our innovation. Internationally we're very pleased to continue to establish Ovagi Medical's presence in Southeast Asia and expect to build on this momentum this year.
Michelle Bressett: Ovagi Medical is to be the number one sufficient expenditure methodological grant in the world providing targeted solutions to professionals and consumers that delivered transformative visible results. We're proud to be leading US physician recommended brands for the top three skin concerns for physicians and patients. Hyperpipentation, fine lines and wrinkles and sagging skin walls of elasticity. These conditions account for roughly two thirds of the physician dispensed category.
Michelle Bressett: A growth strategy follows three pillars. First, strengths in our professional dermatological skincare brand DNA. Second, accelerate cutting edge science-bag innovation that delivers transformative results. And third, grow brand awareness and footprint to reach more consumers domestically and internationally. Now, when we acquired the brand, one of our really stated growth opportunities was to modernize the brands and archer it into a new area of their dermatological skin care that will delight both our physicians and our consumers.
Michelle Bressett: I am pleased with the program we have made and excited to share with you small slides of what we are rolling onto the market. Our ovagine medical brand positioning is anchoring in four core pillars that are also the four cornerstones of our iconic ovagine medical square. First, science is the answer. Our ovagine medical science has always been the foundation of our brand. Our science and clinical results have been trusted by physicians for more than 35 years.
Michelle Bressett: But science is never settled and neither are we. Always pushing to innovate tests and research beyond our best to discover better ways to transform our skin. Second, higher standards are our standards. We know our products are transformative because we hold ourselves to a higher standard where clinically proven is just a starting point. We go beyond clinical with a rigorous testing and data-packed results to prove the transformative power of each and every one of our products.
Michelle Bressett: Three, where diverse by the sound. An important, well-digged value with pioneered clinical testing against the entire six Patrick's skin inspection and continue to develop products systematically tested on every skin tone and type. And fourth, trust is always on the side. Think we put our products just work and that's why generations of consumers and physicians around the world have trusted us with their skin and back visible transformative results on all skin tones.
Michelle Bressett: Thanks for cutting edge science and medical-draighting credence developed in partnership with 39 research and development partners and leveraging world and caste open development ecosystem. With a leading clinical testing program having conducted 329 studies, 100 product tests and a two 10 different tests perform per innovation. Many of you have spoken to us over the years of the various elements of the brand mix.
Michelle Bressett: They were in need of a research and we're happy to present to you the honor, refresh, elite frog that will be the strengthest of graduate medical leadership position. The strength of our graduate medical position brought to life is our iconic logo and square adapted to all touch points to communicate science, performance and how we stand as uniquely ovation. Be it in our typography, photography or product and packaging. Bring our new brand universe in an immersive way in and out of the physician office for an elevated experience that reflects the authority and performance we're known for.
Michelle Bressett: An identity anchored in our medical blue as we increase more consumer media touch points in and out of the physician office to make it uniquely memorable, relevant and compelling, a new elevated style that is put like the heart of our brand science and performance while educating our community on the potency and superiority of our range and make it more accessible to professionals and consumers alike.
Michelle Bressett: One of the first innovations that is fully benefitting from the new brand positioning and imagery is a new launch in our strategic elastiderm franchise launching one of our greatest innovations so far bringing medical great listing to new heights. We will be extending our best selling elastiderm franchise with a launch of elastiderm lift-up and scope facial moisturizer, technically proven to basically lift and scope facial contours in only six weeks and its partner elastiderm advanced cellular concentrate, clinically proven to visibly reduce the appearance of fine lines with a single application.
Michelle Bressett: Two broad pasturing innovations playing in one of the top skinker segments of the physician channel delivering visible clinically proven results. The new elastiderm lift-up and scope moisturizer, the sponsor portfolio in the hard line of anti-aging and day-cream category, a format where we currently under index, comes supercharged with a clinical dossier showing product efficacy in as little as three weeks of use and visible transformations we can for and after. The perfect launch pack to communicate our medical authority in and out of that practitioner's office.
Michelle Bressett: New elastiderm advanced cellular concentrate is a non-injectable, instant fine line filler with impressive clinical results after a single application and further improvement after eight weeks showing a 19% reduction in the appearance of fine lines and for her lines.
Michelle Bressett: And lastly, we'll continue the moment of by raising brana awareness with OVajimedico. We are excited because we're just at the beginning. OVajimedico is today the number three fastest growing air and media value beauty brands. We expect further acceleration of the investing of drivers and deployed a new branding, packaging and of course medical grade innovation. As you can see, we are more excited than ever about our business and our growth prospects. We have two powerful high growth compelling brands perfectly positioned in the most subtracted segments of the beauty business.
Michelle Bressett: We're now focused on stepping up our investment in our brands and the development of our communities. This combination of a strong community engagement of seductive high performance products is driving increased global demand for our brands which couple with the power of our woven gas platform and talented teams have a well-position to drive long-term profitable growth.
Michelle Bressett: I'm always thankful for the continued support of our consumers, investors, partners and employees and everyone who shares a dream of building a global based-in-class beauty and wellness operating platform. Overall, we continue to expect our efforts to lead to long-term value creation for all woven gas stakeholders.
Operator: With that, I will turn the call over to the operator to begin the Q&A portion of the call. Thank you.
Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone. Keypad. A confirmation don't indicate your line isn't the question of cue. You may press star 2 to remove your question from the cue. For participants using speaker equipment and maybe necessary to pick up your handset before pressing the star keys.
Operator: We ask that you please limit yourself to one question and one follow-up question. May re-cue for additional questions. One moment please while we pull for your questions.
Sydney: Our first questions come from the line of Ashley Helgans with Jeffries. Please proceed with your questions. Hi, this is Sydney on for Ashley.
Michelle Bressett: I was just wondering if you can talk a little bit about the promotional environment and kind of what you've seen in our expecting going forward. And then also just any color you can share on the innovation pipeline in 2-H. Thank you. I say thank you. Thank you for the call.
Michelle Bressett: Right in the question in two parts. Our brands are relatively unexposed to promotional fluctuations. In the case of physician dispense or vagimedical. If we run and the market runs relatively standardized promotions is a relatively price inflexible. And in the case of milk, the segment of the market has been relatively flat in terms of promotion. We don't see any significant substantial amount of increase in promotion or net price erosion as a consequence of that.
Michelle Bressett: From an innovation sample, which is what is driving our brands, we have an incredible half-one of innovation on both brands and frankly, we are super excited what is coming and have to. So we continue to accelerate the innovation on both brands. It's a key part of our strategy. And I think the innovation so far has been delivering very well. Thank you.
Olivia Tom: Our next question has come from the line of Olivia Tom with Raymond James. Please proceed with your question. I think it would be helpful to understand what you have as sort of a figure of new growth. And also how you think about the Dhammurian expansion opportunity. Recognizing, of course, the expectations for an improved second half on both those lines. Sorry Olivia. Sorry you're breaking up. Could you please repeat your question? Oh, sorry.
Olivia Tom: Sure. I'll be a little louder too. I was hoping you could talk a little bit about what you think of as a steady state revenue growth and how you think about the EBITDA margin expansion opportunity from here. Recognizing, of course, that you talked about a second half doing better than Q2 or second half doing better than first half when it comes to EBITDA, particularly given the volatility in the past. It would be helpful to do that.
Michelle Bressett: So that's the first question. Second questions are around just a competition in your categories. We've obviously seen some decelerations in the category after a very strong period of growth. So if you could just talk about competitive environment, both been in for milk and also for a body in the Durham skincare area. And then lastly, just what your gratitude for the out of stocks that you've been dealing with. Thank you. Yeah. Thank you, Olivia.
Michelle Bressett: On the first part of your question, kind of steady state revenue growth, as you can we provide a guidance for the year, not for other guidance beyond that. But I think what we are seeing is an acceleration, as we've come into that acceleration on the back half from the Q2 number. I think we expect an algorithm of a company that is high growth, and certainly well ahead of market growth. And EBITDA, as you saw, we continue to build EBITDA to to our destination structural economics.
Michelle Bressett: So we expect, and I communicated this in the past, we expect a long-term basis on our steady state basis. We already have structural economics in the company that are comparable in many cases superior to best-in-class beauty from a growth margin perspective, which is only going to help us build our EBITDA as we continue to grow our brands. Hours, very simply, is a growth story. We continue to grow the brands, as you can see, at a very accelerated pace, which what is already the engine of the company, which is the growth margin level that is very, very attractive.
Michelle Bressett: So as we grow the company, we will continue to execute what is our virtuous cycle, which is revenue growth translated to very strong growth, margin growth, reinvested into business drivers of marketing and sales that further growth, and the LUT-GNA to deliver increases in EBITDA. In just a competition the category I mean beauty is always been a very competitive market. It is it is a market of competition but frankly as I said before we do not think too much of a competition where such a small company.
Michelle Bressett: In the whole scheme of things in the beauty market that are limitation to grow is only our own ability to create a great consumer propositions that are interesting and compelling to consumers combined with our own ability to execute. So the market beauty market is always in competitive. It is a competitive market but there is is not a winner takes a market is a expandable consumption category and competition is a point of information frankly not think too much of competition.
Michelle Bressett: We think more of how do we create great break free propositions like for example what we don't need Mike and Kelly's which is invented a completely new product that is incredibly is that is active and interesting for consumers that really has not competition and as a concept only we benefited from our tremendous impact on our top line growth ourselves and our social and community metrics. And last thing out of stocks out of stock was a bit of a head win in Q2 frankly in some ways we were victims of our own success.
Michelle Bressett: Things particularly like makeup or things like jelly is a particularly difficult to forecast when you are creating a new to the world proposition and we could agree on substantially more on the basis of that. But of those out of stocks. Same thing in our body we were our innovation was performed better than we expected. But in in fairness we also were managing our base inventory a bit tighter than perhaps we should have with with hindsight 2020.
Michelle Bressett: So in terms of in terms of when I go forward basis I think most of the out of stock issues are behind we are crystal and jellies and if you where to go to wait was a four or to one of our other you have to fight for one of the jellies that you had to fight a little bit before you will see inventory and consumers buying this inventory at a rapid pace. But we still have a little bit of an effect we still have a little bit of an effect on other stocks particularly on your budget business in Q3 but substantially substantially less than what we saw in Q2. Thanks for the question. Thank you as a reminder if you would like to ask a question please press star one on your telephone keypad.
Linda Bolton Wiser: Our next questions come from the line of Linda Bolton wiser with DA Davidson please proceed with your questions. Yes, hi congratulations on the great growth. So I was curious.
Michelle Bressett: I didn't catch if you were kind of talking about the advertising and promo ratios in each of the brands maybe you don't want to disclose those but maybe you can give us a sense for if you feel the spending levels as a ratio or kind of where you want it to be for the each of the two brands or do you envision even further increase in AMP kind of in the future years. Thank you Linda thank you for the question so we think that so we since we started the journey two years ago as you know Linda we've accelerated quite substantially the level of marketing investment as we build our brands we certainly expect has to continue to invest even further than we invested in half one which was already a substantial increase.
Michelle Bressett: There's just like years last year but what we follow is a very small ROI mindset behind that that marketing is bad in just a phone a long term basis are we at the level of marketing investment a long term now we believe that I think there is still substantial room to grow support both in terms of a percent of sales as well as absolute value to continue to to build the business but that is part of our kind of there to circle in what we do is we invest with dry operation efficiency which we invest in this as drivers to drive the top and roll and I loot RG. So in both cases, in both brands, we expect to continue to increase our marketing support and sales support on both brands. But with resulting as I said, in increases in our in our EBDA countries.
Michelle Bressett: Okay, and just want to follow up in terms of Obaji, maybe it could remind us just is Obaji using distributors pretty much in all of international markets or just some of them and can you just explain to us like do we need to worry about like too much inventory in the distributor channel or how should we think about just how you execute there internationally on Obaji, thanks. Thanks. So our international structure today is relatively simple.
Michelle Bressett: As you know, we internalized the distribution of Obaji in Southeast Asia. So in Southeast Asia, what we use is our own subsidiary now. Moving from in all this to the mall that we have in Southeast Asia for all the the challenges and in terms of relations we had with that distributor in 2022 that is now fully behind us. And now we have our own subsidiary in Southeast Asia and every other international market, we use distributors.
Michelle Bressett: And what we do is we have a very strict monitoring in those distributors from a selling sell through and sell out basis. For most distributors, we don't have sell out for for all distributors in turn as well, all the major distributors, we have a very strong monitoring selling through and in sell out in place of who we can have sell out. So we do not have any concerns about too much inventory on distributors at international level.
Michelle Bressett: The international footprint and just to to to finalize is we're not journey on that on the older distributors outside of Southeast Asia. And just frankly, we have some excellent distributors or partners on there are some distributors where we need to execute a bit of a change on go to market structure, which we're doing over the next couple of years or so as we transition that into a more efficient distributed mall. But overall, we have no concerns about inventory bill whatsoever on international distribution. Okay, thanks a lot. Thank you, Linda. Thank you.
Dana Telly: Our next questions come from the line of Dana Telly with Telly Advisory Group. Please proceed with your questions. Dana, could you check if you're self muted, please? Yes, hi, good morning, everyone. As you think about these, hi, as you think about the drivers of the strong growth margin expansion that you had in the international expansion that milk and obadi are seeing, what's driving that? How do you think about the growth going forward and what it could mean for the business?
Dana Telly: Thank you. Thank you, Dana. On growth margin, the story remains the same and it's a little bit different by brand, but story remains the same in the case of obadi is fundamental during by two things. One is a very strong and favorable channel mix as we develop our digital channels on obadi and the second one is operational efficiency that we continue to build, business. As you know, we are already at a very high growth margin level and think we are about at the destination level of emerging in terms of growth margin.
Dana Telly: I think any future efficiency, whether it's still to have as part of that operational efficient, we plan to reinvest it into product and formulation and and acquired quality offering to work also so we expect. Even the 40s when we bought it and now it's approximating what we wanted in terms of destination is driven primarily through operational efficiency. So it is it is continue to build that operational efficiency a bit of mix all the kind of detail of how do you build a great operating margin and and and thankful highlight in the point of those margin because that at the end of the day is the engine of the company and as we grow the business at that very attractive level of growth margin.
Dana Telly: It allows us a substantial amount of field to reinvest in building our brands and and deliver profitability over time. In the case of international a little bit different again by brand because the models are different. We have some substantial growth coming on milk as you saw from the results as we most of it is really productivity driven is productivity out of our own. But we have some modest distribution expansion so you know we enter the UK market not long ago but it's a theoretically modest in it in a number of stores where we are and so in very well and exceeding our expectations on how it's performing in the UK.
Dana Telly: Today we also expanded a distribution of footprint is Scandinavia with Lico and it's been a fantastic success. We talked about the last quarter of lines and lines and lines of consumers waiting to buy milk as we expanded and also a small but important expansion into Latin America particularly in Chile, Colombia and Mexico where with Blaspar that has been a tremendous success in which as we saw in the presentation. We saw before we are the number one or two brand in the store for those might which is validating just a universal appeal of the milk brand across the world and there's much more to come in the future.
Dana Telly: In the case of our body I think as I said we have a bit of a deforcated model. One is our distributor business outside of the US which is everybody everywhere outside the US with exceptional Southeast Asia which continues to build from a strength to strength that we invest in the brand professionalize the world managing those distributors. There's still a bit of work to do that we need to do the next two or three years at strengthening that distribution network look for internalization or appropriate et cetera.
Dana Telly: And then we have Southeast Asia where as you know we are rebuilding our business in Southeast Asia after the collapse if you want of our former distributor and we're very pleased with that progress. We launched in initially in Vietnam in November of last year and now we've expanded into Thailand, Singapore and also in India and the business is performing very well. And we have now an internalized model that allows us to have a much better profitability on a growing basis as we capture all the margin on that supply chain. Thank you.
Operator: We have reached the end of our question and answer session.
Michelle Bressett: I would like to hand the call back over to Michelle Rousset for any closing comments. Thank you very much. Well, thank you everybody for joining us today. We're very excited about the due to results and the closing of half one. And as we communicated on the earnings release, we're very, very confident about our outlook for the year. And thank you very much for being here and for your support.
Operator: Have a good day. Thank you.
Operator: This does conclude today's teleconference. We appreciate your participation.
Operator: You may disconnect your lines at this time. Enjoy the rest of your day.