Q1 2025 Olaplex Holdings Inc Earnings Call

Dr.

Speaker Change: Greetings and welcome to the Olaplex Holdings First Quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad.

Speaker Change: As a reminder, this conference is being recorded. It is now my pleasure to introduce Allison Malkin, Investor Relations.

Allison, please go ahead.

Speaker Change: Good morning everyone. Welcome to our first quarter fiscal 2025 earnings call.

Speaker Change: Joining me today are Amanda Baldwin, Chief Executive Officer, and Catherine Dunleavy, Chief Operating Officer, and Chief Financial Officer

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 for the Olaplex business and other matters referenced in the company's earnings release issued today.

Speaker Change: Each board looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied by such statement.

Speaker Change: Additional information regarding these factors appears under the heading cautionary note regarding

Speaker Change: The board 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-GAAP financial measures which management personnel believes can be useful in evaluating the company's performance.

Speaker Change: The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for the results prepared in accordance with GAAP.

Speaker Change: You will find additional information regarding these non-gab financial measures and a reconciliation of these non-gab financial measures.

Speaker Change: to the most directly comparable GAAP measures in the company's earnings release. A live broadcast of this call is also available on the investor relations section of the company's website at ir.olaplex.com

Speaker Change: Additionally, during this call management will refer to certain data points estimates and forecasts that are based on industry publications or other publicly available information as well as our internal sources.

Speaker Change: The company has not independently verified the accuracy or completeness of the data contained in these industry publications and other publicly available information.

Speaker Change: Furthermore, disinformation involves assumptions and limitations and your caution not to give undue weight to these estimates. For today's call, Amanda will star by providing highlights of our first quarter performance and discussing the progress we have made on our strategic areas of focus.

Speaker Change: Then, Catherine will discuss our financial results and outlook. Following this, we will turn the call over to the operators to conduct the question and answer session. With that, I'll now turn the call over to Amanda.

Amanda Baldwin: Thank you, Allison. Good morning, everyone, and thank you for joining us today.

Amanda Baldwin: Replease to share a solid start to the year, with first quarter results that included net sales ahead of our expectations.

Amanda Baldwin: We are encouraged by these early signs of progress and also recognize that there remains more work ahead.

Amanda Baldwin: We believe that our performance this quarter reflects the early response to our bonds and beyond strategy introduced at our your end call as the next chapter in our transformation.

Amanda Baldwin: As a reminder, our bonds and beyond vision for Olaplex begins with our original breakthrough science and professional channel heritage to position Olaplex as a foundational health and beauty company powered by breakthrough innovation that starts with and is inspired by the professional hairstylist.

Amanda Baldwin: We believe that we participate in a category that is poised for continued growth, and that overall consumer trends indicate that hair, beauty, health, and wellness are converging.

Amanda Baldwin: As such, we believe our technology and original positioning allow us to focus on a uniquely important white space of highly efficacious hair care that is not just about bandating and is more than extreme damage repair but about actually improving the overall health of the hair.

Amanda Baldwin: But this in mind, we developed a strategic vision that is based on three pillars.

Amanda Baldwin: First, move beyond damage repair and the bond building category we created to grow our addressable market and position Olaplex as a solution for everyday foundational

Amanda Baldwin: Second, honor and empower the pro as the start of the flywheel of our business.

Amanda Baldwin: The Pro is both a powerful distribution channel as well as a source of authenticity and authority to our end consumer, which, if integrated and nurtured properly, can separate us from the competition.

Amanda Baldwin: Third, while our products have always created fans based on their efficacy, we know we must move beyond our prior solely clinical positioning to generate the emotional connection that drives lasting grant relevance, resilience, and love.

Amanda Baldwin: As I have noted from the beginning, transformation doesn't happen overnight.

Amanda Baldwin: It requires consistent execution, the ability to adapt, and a long-term mindset. But we're confident that the foundational work underway today will drive more sustainable results over time. And that in the first quarter, we began to see early validation of our approach.

Amanda Baldwin: We believe that first-quarter provided indicators that were moving in the right direction.

Amanda Baldwin: Before diving into our strategic progress, here's a summary of our first quarter results.

Amanda Baldwin: Net sales of $97 million, down 1.9% year-over-year, with adjusted EBDA of $25.7 million, a margin of 26.5%.

Amanda Baldwin: We over-delivered sales compared to targets which we believe reflects our retailer partners' support of a repressed brand positioning and marketing plan. This drove higher than expected shipments during the quarter.

Amanda Baldwin: In North America, where we focused our brand transformation efforts, we saw modest growth. International sales declined year-a-rear, but came in ahead of expectation, with a more moderate decline compared to fourth quarter.

Amanda Baldwin: We're taking a stage, disciplined approach to our international re-alignment that reflects both market potential and operational readiness while we focus on our transformation efforts in North America.

Turning to Performance by Channel

Amanda Baldwin: Specialty Retail led the way for shipments ahead of plans, which as I noted reflected our partner's support of our bond and beyond strategy.

Professional also exceeded expectations. [inaudible]

driven by improving execution across key distributors.

Amanda Baldwin: The channel, however, declined versus prior year driven by international performance.

Amanda Baldwin: Director of Consumer Decline, versus last year, has been shifted from a more promotional strategy to driving brand story-telling and loyalty through our new site and accelerated both funnel digital marketing efforts.

Amanda Baldwin: We believe that there continues to be an opportunity to provide a unique and specialized approach on our branded websites as we progress in our transformation.

Amanda Baldwin: Let's now turn to discuss our 3 2025 strategic priorities outlined on our last call.

Generate brand demand, harness innovation, and execute with excellence.

First, generate brand-of-and [inaudible]

Amanda Baldwin: At Olaplex, brand demand is about more than increasing awareness. It's about creating emotional connections, deepening consumer engagement, and reinforcing our brand and product relevance in a competitive and evolving market.

Amanda Baldwin: We're doing so by staying grounded in our roots in professional hair care while changing how we show up, digitally, digitally, in-store, and across every touch point with our stylists and our customers.

The driving forces behind our brand evolution are to provide.

Amanda Baldwin: First, a visual identity that is elevated, dynamic, and relatable. During the quarter, we introduced Refresh Brand Visual that aimed to reflect who we are today, a brand rooted in science, guided by professionals, and built for foundational hair health.

Amanda Baldwin: Our new aesthetics highlights our innovation at the same time as color and warmth and shows a special bond between the clients and the stylists that has always been a part of our heritage.

Amanda Baldwin: Next, product storytelling that educates our community about our unique product benefits, emphasizing a more holistic view of foundational hair health.

Amanda Baldwin: For example, our new website now serves as both a storytelling and a conversion platform. It guides consumers through product routines, offers science and usage education, and helps customers build personalized

Amanda Baldwin: Across retail, we introduce updated in-store merchandising designed to educate consumers and assist them in clearly navigating our product offering.

Amanda Baldwin: Across Touchpoint, we're making our value proposition more clear, compelling and shoppable.

Amanda Baldwin: And, for the Professional Channel, we enhanced our presence at trade shows with updated booth design, signage, and sampling to support education and trial, and are now moving towards best-in-class education materials.

Amanda Baldwin: And finally an emotional connection that allows us to drive lasting brand relevance, resilience, and love.

Amanda Baldwin: Based on learning from our research last year, we saw a clear opportunity to elevate our brand storytelling to support the science and efficacy of our products from an additional angle.

Amanda Baldwin: This goes even further than our new visual identity to capture what we call the unapologetic confidence, which comes with a truly great hair day, powered by innovation, and the passion of our product.

Amanda Baldwin: To this end, in April, we launched our brand platform, Design to Defy.

Amanda Baldwin: As a guide for our future brand building efforts, this platform and its tagline a healthy foundation for endless possibilities captures our history and looks forward towards our future with a philosophy of innovation, creativity and confidence.

Amanda Baldwin: This effort launched to be an advertising campaign in film featuring actress and Bridgerton star Nicola Cochlan, creative entrepreneur and media personality Jenna Lyon, an Olympian sprinter and herdler, Sydney McLaughlin-Mavron, along with their personal hairstyle. Each of whom is an Olaplex ambassador.

Amanda Baldwin: This platform is a longer-term investment for which early indicators are encouraging. We drove nearly one billion press impressions on its launch, increased share of voice by five points, and increased our Google search volume, positive brand mentions, and social engagement.

Amanda Baldwin: In the first quarter, we invested 18.1 million in non-payroll sales and marketing, an increase of 4.8 million over the same period last year.

Amanda Baldwin: As our strategy continues to progress, we intend to further invest behind this platform and the three driving courses of our brand evolution.

Amanda Baldwin: In summary, our renewed focus on ethnicity, science-backed innovation and emotional storytelling is beginning to show us impact and we're excited about the momentum that we are working to build in our community across channels.

Moving to our second priority, harness innovation.

Amanda Baldwin: Innovation is the heartbeat of Olaplex. It's about building a scalable science-backed engine to create new products that drive category leadership, reinforce our brand promise, and deliver meaningful results for both professionals and consumers.

Amanda Baldwin: R-approved centers on foundational hair health, starting at the scalp and extending from root to tip.

Amanda Baldwin: Based on an R&D model anchored in a deep understanding of hair biology, we believe we are well positioned to be a leader in this space.

Amanda Baldwin: Over the past year, we've made improvements in how we develop, evaluate, and scale new product concepts.

Amanda Baldwin: We have built a cross-functional innovation team integrating science, product development, consumer insights, and professional feedback.

Amanda Baldwin: We establish clear innovation principles rooted in our brand DNA and our scientific capabilities.

Amanda Baldwin: And we streamlined our cross-functional processes, enhancing the speed of decision-making and sharpness and execution in our go-to-market.

Amanda Baldwin: We believe these improvements set the stage for a robust forward-looking pipeline.

Amanda Baldwin: Our 2025 Innovation Journey began with the launch of our scouts longevity treatment in late February .

Amanda Baldwin: This product is an intentional extension into scalp health, a critical foundation for long-term hair vitality, and the fastest growing category in premium hair care, and Persecanna growing at twice the rate of the overall prestige hair care category.

Amanda Baldwin: We design this formula to provide superior results with an ultralight scalp serum that strengthens the scalp barrier, the original bismino technology, and promotes healthy hair from the start.

Amanda Baldwin: Later this year, we plan to expand this platform with a professional scalp service treatment designed to address the specific needs of the scalp during an insolent visit, further developing our strategy to support the pro through new salon-only services.

Amanda Baldwin: In addition, just last week we launched number four and five fine, a wash care system tailored to the needs of fine hair.

Amanda Baldwin: Our existing numbers four and five were the top selling Christie shampoo and conditioner in the U.S. in 2024 according to Serkana data and we had heard feedback from our pros and our committee that there was an opportunity to develop a second formula specifically designed for fine hair.

Amanda Baldwin: These fine hair formulas address the top two concerns of these consumers. Strength and volume, with a customized formulation that calibrates cleansing and conditioning ratios to deliver best and class results for those with this hair type.

Amanda Baldwin: Overall, we believe science-led innovation is a sustainable growth lever that enables us to strengthen our authority, expand our portfolio, and build deeper, more lasting connections with both consumers and professionals.

Amanda Baldwin: with fewer than 30 skews in our current lineup. We see substantial white space for expansion.

Amanda Baldwin: Looking ahead, we're focused on delivering 2-3 strategic product launches annually, each supported by strong consumer education, stylist engagement, and omnichannel activation.

Turning to our third strategic priority. Execute with X1.

Amanda Baldwin: This priority is about developing operational rigor while building a future-ready organization and team. Disciplined, efficient, agile, and the line to support our strategy across Markets, Channel, and customer touch point.

Amanda Baldwin: As we continue to evolve as both a brand and a business, we remain focused on two core areas under this

Amanda Baldwin: First, streamlining and modernizing our business processes, and second, executing a globally aligned to go to market strategy.

Let me provide an update on it.

First, Improving Business Proposities

and moving business processes requires a strong team. [inaudible]

Amanda Baldwin: As noted on our last call, we now have a strong leadership team in place across marketing, innovation, sales, operations and finance.

Amanda Baldwin: In 2025, we're expanding key capabilities across the organization and an effort to tool sustainable growth and scale execution.

Amanda Baldwin: One such example is the addition of a new leader of our education department, a critical addition as we continue to enhance our training and education programs for both professional and retail partners.

Amanda Baldwin: As stated when I first joined the business, there's important work to do to more effectively deliver product knowledge, deepen brand advocacy and empower our partners to succeed with Olaplex, which we are now in a better position to accelerate.

Amanda Baldwin: As we transform our company, we've been implementing changes that evolve our core business processes to streamline operations, embed accountability, and enable faster data-driven decision making and cross-functional effectiveness.

These efforts are starting to pay off. [inaudible]

Amanda Baldwin: We've now delivered two consecutive quarters of financial outperforming, which we believe is a result of more efficient and thorough planning, inventory management, and demand forecasting.

Amanda Baldwin: or enhancing cross-functional coordination, fostering better alignment between innovation, marketing, supply chain and sales to drive a stronger go-to-market process.

Amanda Baldwin: And lastly, we are simplifying systems and implementing tools that give us earlier insight into data which is improving execution across everything from digital marketing to financial reporting.

Amanda Baldwin: While there is still significant work underway, improved process discipline is a key enabler and more pleased with our progress to date.

Amanda Baldwin: Our second focus under this strategic priority is about international execution.

Amanda Baldwin: Over the past several months, we have been conducting a comprehensive evaluation of our international business and our partners within each region.

Amanda Baldwin: The result is a more targeted and strategic go-to-market strategy, one that is intended to allow us to scale efficiently with the right partner while preserving local relevance.

Amanda Baldwin: Rather than build a one-size-fits-all model, or applying a tiered approach, the balance is direct investment with strong local partnership.

Amanda Baldwin: We believe this will better enable us to align resources, or they will have the most impact, while still delivering a consistent brand experience worldwide.

Amanda Baldwin: and Focus Margaret, which includes some we managed firsthand on others that are operated through a single distributor or making direct investments across marketing, education and sales to drive long-term growth.

Amanda Baldwin: In other regions, we intend to collaborate with trusted distribution partners to build the brand with tailored support, clear guidelines, and consistent storytelling.

Amanda Baldwin: Our objective over time is to scale across geographies with a streamlined process and communication tools that provide better partnerships, guidance and execution for all of our partners.

Amanda Baldwin: We believe this approach will allow us to maintain global consistency, support high potential regions, and scale with intention, all without losing sight of the unique dynamics of each market.

Amanda Baldwin: Overall, what we do recognize that it will take time to get to full capacity. We expect this effort to give us a sustainable international model that leverages our successes and learnings in North America to deliver long-term growth.

Amanda Baldwin: Across all of our strategic priority, execution remains a critical enabler of our growth.

Amanda Baldwin: We believe this improved execution will allow us to facilitate financial performance and create the operational stability and flexibility needed to deliver on our bonds and beyond strategy.

Amanda Baldwin: We'll continue to report on our progress, I believe we're now moving in the right direction.

Amanda Baldwin: In summary, first quarter marked a solid start to the year, reflected what we believe are early positive signs behind our new strategy.

Amanda Baldwin: We're realistic about the challenges ahead, particularly in a dynamic macro environment. But confident in our long-term vision, the strength of our brand, the resilience of the premium haircare category and the capabilities we are building.

Amanda Baldwin: We're reaffirming our 2025 guidance as Catherine will discuss in more detail and remain focused on disciplined executions across our three 2025 strategic priorities.

Katherine: And with that, I'll turn it over to Catherine to walk through our financials.

Katherine: Thank you, Amanda, and good morning everyone. Our first quarter financial results reflect what we believe is early traction in our transformation efforts as well as the ongoing complexity of operating through change.

Katherine: While we are encouraged by the signs of progress, we remain clear that we are still in the early stages of executing our strategy and that much of the work to unlock long-term growth is still ahead of us.

Katherine: That said, our net sales performance came in ahead of internal expectations, which we believe is a sign that the foundational actions we've taken across brand, innovation, and operational execution are beginning to show up in our financials.

Katherine: First quarter, net sales, or 97 million, a 1.9% decline year-over-year, but ahead of where we expected to land.

Katherine: Growth and specialty retail and better than expected results in a professional channel helped offset expected declines in our direct consumer channel.

Katherine: Modest growth in North America, where we are further along in our transformation, helped offset continued softness in our international markets as we began to realign our global good and market strategy.

Katherine: By channel, specialty retail with a bright spot, growing 12 percent year-over-year to 38.6 Fueled by a strong retailer response to our brand refresh and updated merchandising.

Katherine: Professional channel sales declined 10.9% to 34.5 million, largely driven by continued softness in international markets.

Katherine: However, we saw encouraging signs in North America where we are further along in our transformation.

Katherine: Direct-to-consumer sales declined 7.2% to 23.9 million in line with our strategy to reduce promotional intensity.

Katherine: Adjust the gross margin for the quarter was 71.9%, down 240 BCs points from the prior year.

Katherine: This was anticipated and largely reflects our new innovation, products introduced in late 2024 and early 2025 that have not yet reached full production scale or margin efficiency.

S-GNA was 48.0 million, and increased at 7.6 million year-year.

Katherine: This increase is aligned with her strategic priorities and primarily reflects investment in brand marketing and the rollout of our new identity and building capability across the organization.

Katherine: We believe these investments are necessary to support or transformation and re-remain committed to managing spend with discipline and a clear focus on ROI.

Adjusted EBDA was 25.7 million, representing a 26.5% margin.

This compares to 35.9% a year ago. This compares to 35.9% a year ago.

Katherine: While lower year-ever year, our adjusted EBITDA margin remains healthy, particularly given the strategic investments we are making to position our business for sustainable long-term growth.

Turning to a review of the balance sheet

Katherine: We continue to operate from a position of strength supported by an asset-like business model, a quarter-end cash and cash equivalence for $580.9 million up from $507.5 million in Q1 at fiscal 2024.

Katherine: Inventory was 79.2 million, down 15.5 million, from 94.6 million, and Q1, a physical 2024.

Katherine: We feel good about the composition and content of our inventory and continue to carefully manage stock levels in support of new product launches and refreshed merchandising.

Katherine: In recognition of our strong cash position, following quarter end, we utilize 300 million in cash to reduce outstanding debt, lowering our growth leverage ratio to around four times, from around seven times, and unlocking an estimated 20 million in annual interest savings.

Katherine: This reinforces our commitment to capital discipline and balance sheet optimization.

Let me shift to the topic of tariff. [inaudible]

Katherine: We are a North America-focused organization. As to understand the situation today, we expect Paris to have a relatively modest impact.

Katherine: To put this in perspective, 95% of our finished goods, sold in the US, are manufactured in the US.

Katherine: We have European manufacturing capabilities which currently produce about 5% of our US sold finished goods.

Katherine: In the first quarter, the U.S. represented 51 percent of our total net sales with international sales representing 49 percent of net sales.

Katherine: The EU represents the largest portion of our international sales with no country outside the U.S. representing more than 10% of total net sales.

Katherine: In addition, we have limited direct tariff exposure in raw materials and components with less than 1% of our product sourcing costs imported to the US from China

Katherine: Additionally, we source packaging into the US from Taiwan, Korea, and the EU, all of which are less than 3% of our cocks.

Katherine: Although no tariffs have been announced on EU nor UK imports, I will note that the majority of EU product is produced in the US.

Katherine: We have been proactively working to address potential impacts that may occur due to tariff. These include sourcing adjustments, we are exploring alternative suppliers outside of effective regions with particular focus on domestic partners for certain components.

Katherine: Operational Sexibility. We are working closely with our manufacturing partners to ensure they have adequate access to raw materials and to build contingency plans to limit our supply team disruption.

Katherine: and pricing levers. We are evaluating selective pricing adjustments where elasticity and brand positioning allow.

Katherine: Whilst too early to quantify the exact impact of potential tear of change, given the details remain fluid, we are modeling a range of outcomes and will strive to mitigate the cost impacts through these levers.

Katherine: We enter 2025 with a clear vision and a strategic plan and our first quarter results reflect that we are executing with intention, investing with purpose and building momentum.

Katherine: We remain focused on value creation and are confident in the steps we're taking to position

Amanda Baldwin: As Amanda noted, we are maintaining our full year 2025 guidance, which reflects the confidence we have in our strategy and our early correction we're seeing across priorities.

Amanda Baldwin: In addition, our guidance incorporates the current consumer spending environment, and at this point assumes no material impact from tariffs, given that our situation remains fluid, and we can't reasonably estimate the downstream effects on consumer behavior that may arise.

Amanda Baldwin: Well, this is the mind for fiscal year 2025. We continue to expect net sales and the range of minus three to plus two percent versus fiscal 2024.

Amanda Baldwin: Adjusted gross margin between 70.5% and 71.5% and adjusted EBDA margin of 20% to 22%.

Amanda Baldwin: And while we plan our business annually and give guidance accordingly, we would like to provide a reminder that our marketing spend began ramping in a lot of part of the first quarter and we expect this to continue into the second quarter as we fully launch our design to defy campaigns and support the launch of 4-5-5.

Amanda Baldwin: In summary, we have made a lot of progress in just a year's time and we believe we are well positioned to achieve our 2025 expectations.

Amanda Baldwin: Olaplex remains a powerful brand backed by science and is loved for its ability to wrote, hair, and scalp held.

Amanda Baldwin: With a large global consumer base and professional community and strong support from our partners around the world, we are positioned to deliver on our bonds and beyond strategy and to achieve our ambition, establish Olaplex as a foundational health and beauty company.

Amanda Baldwin: That concludes our prepared remarks. Operator, we're now ready to take questions.

Speaker Change: Thank you. We'll now be conducting a question and answer session.

Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your hand step before pressing the star keys.

Speaker Change: In the interest of time, we ask the participants to limit themselves to one question and one follow-up.

One moment, please, while we pull for questions.

Thank you very much.

Thank you.

Our first question is from Dana Kim with T.D. Callin'

Thank you very much.

Speaker Change: Thank you for taking my question. We love additional color just based on your data in the TTC channel. Are you seeing any...

Speaker Change: A increase in the new customer acquisition front, and what are you seeing in terms of the retention and just engagement from the existing consumers?

Speaker Change: And then just one another question, has your outlook for the remainder of the year changed at all just given the current macro trends? How would you sort of think about the remainder of the year? Now, your outlook when you gave in the last quarter. Thank you so much.

Thank you.

Speaker Change: I'll start with those. Good to hear your voice and be ready. So first and foremost, I think as we...

Speaker Change: to give a little bit of perspective about the DTC channel and what we saw in that happened in the first quarter. It was a very deliberate change to our strategy and as we thought about our assortment and kind of how we're using promotional activity in that channel.

Speaker Change: And as we thought about the transformation overall in our business, we felt like we could do the things that we really talked about from the very beginning, which is to use promotions during key moments, keep ample moment and to use them surgically. And so that's really what you see in that direct consumer business, best of strategy that we really believe is the right thing for us going forward as we think about. Thank you very much.

Speaker Change: that channel in particular in the broader ecosystem. So that's really how I would position our thinking, what we've seen in those results. And now that we really have a brand new site, which is a very important thing that we needed. Our digital media efforts are up and running. We're very optimistic about the role that that channel plays in our forward strategy. .

Speaker Change: with respect to our broader tape on the macro environment right now, which is I think what you're alluding to.

I'd say a few things. [inaudible]

Speaker Change: First and foremost, beauty is a resilient category. This is a category that time and again has proven that it can withstand a lot of change in the consumer macro environment. We need to keep our eyes on it obviously but we remain optimistic about what the category as a whole is.

Speaker Change: Hair Care, as we've talked about in terms of our broader strategy and why we believe so strongly in Olaplex's position going forward, is at an early stage of its growth. So there is some good momentum that we want to take advantage of as the consumer shifts in that category. [inaudible]

The third thing I would say is that...

Speaker Change: We're in the middle of a transformation and we're really focused on our long-term goals. We have the flexibility to do that. We now have the vision to be able to do that. And so that's why we are reiterating our guidance today and the things that I'll let Catherine allude to and speak about is kind of where we're achieving within that range. Thank you very much.

Speaker Change: We will again remain focused on executing, focused on making sure that our brand is out there in the most obvious way, and that we're really representing our products for the incredible strength that they have.

Speaker Change: Yeah, just add a couple things at first on the dot com part.

Speaker Change: As Amanda discussed, this was a deliberate strategy, and the results were expected.

Speaker Change: And then as we are thinking about our guidance for the whole year, we are encouraged by our first quarter results and the early signs of progress that we believe they represent. And as we think about the rest of the year.

Speaker Change: Our ability, the hip top and the range, is directly tied to the feet with which we execute on the three priorities. Generate brands, demand, harness innovation, and execute with excellence.

Speaker Change: We feel confident in the new brand positioning and expect a lot of innovation that a man had talked about to drive the man. And we've made a lot of progress on metrics as I talked about in the past where monitoring closely and reacting to what's working is a world confident in the range for the rest of the year.

Thank you so much.

Now our next question is from Ashley Helgans with Jeffries.

Speaker Change: Hi, this is Sydney Enfer, Ashley. Thank you for taking our question. Can you talk about what you're seeing from marketing initiatives in terms of KPIs, and then how do you see these marketing efforts translating differently, maybe between the US or internationally, or between the pro versus retail channels? Thank you.

Speaker Change: Great question, good morning, Sydney. So with respect to making sure that we all understand where we are in that marketing journey.

Speaker Change: when we were on our last call, that was right after we had relaunched the brand and we had updated our visual identity, we had just relaunched the website here in across the globe and we were in the midst of what the global rollout of the brand upgrade.

Speaker Change: What's happened since then is an additional program that we talked about today which is really what I would characterize as our upper-frontal brand positioning and work that we needed to do to really drive the emotional connection.

Speaker Change: that we've been speaking about from the beginning, that was really missing in our brand, and that's the design to justify platform. And I would characterize that again as an upper funnel, longer term investment. That began in April . So we're still in early stages of that.

Speaker Change: As I talked about earlier this morning, we've seen some really nice KPIs out of the gate in terms of the impressions, the Google search, the social engagement around that campaign. But as I'm sure you know, upper funnel brand building marketing is not an overnight thing and we're in the midst of a transformation that we do expect to take time.

Speaker Change: So, but again, early signs were optimistic about what we've seen thus far.

Speaker Change: With respect to international, that's a business that, as we've articulated, were in a realignment phase, so there are certain areas where we'll actually have the new visual identity in the next few months, we'll allow it across the globe.

Speaker Change: The marketing engine will take our time as we really align those markets that we have the right infrastructure that we have the right partners to really engage in what I would characterize as a more aggressive marketing effort. But that is a work in progress. I'm pleased with the pace that we're moving out there. I think we have clarity around. [inaudible]

Speaker Change: What their right partners are. We spend a lot of time making sure that we have the right abilities internally to be able to execute on that so that whatever we're [inaudible]

Speaker Change: Coming up with here in our domestic market, we're able to translate effectively across the globe and that has to do with really making sure we have the right handoff points, the right communication, the right partner at the other end, things that are what I would call sort of wiring.

Speaker Change: from our US-based business into our international business. So as we've spoken about that, that is something that's coming up to full capacity. We haven't put a timeline on that, but I think we're moving at a good pace and we know what the end game looks like there. [inaudible]

Working

Our next question is from Susan Anderson with Canacorn D'annuity.

Thank you for joining us.

Susan Anderson: Hi, good morning. Thanks for taking my question. Nice job on the quarter. I guess the one to ask about the Spec Retail Channel definitely thought some better growth than we were expecting. I'm curious, was there a lot of restocking there? How did your cell and perform versus the cellos? And then also, how are you feeling about inventory at retail? We have heard some.

Susan Anderson: De-talking from other players out there. I'm just curious what you're seeing. Thanks.

Susan Anderson: Great, great question as well. Good morning, Susan. So I would say our inventory is in a healthy position in our regional partners. That's important to stay right out of the gate.

Susan Anderson: What you've seen in that upside-in specialty retail is really related to we send a lot of time and I believe I was talking about this probably even in my first call last year about how important it was to spend time with our retailer partners to really make sure that they understood that

Susan Anderson: Our future vision, that they understood what we were doing in our innovation pipeline, that we had the right team in place to be able to execute properly with them, and we've made a lot of progress on that. So that's really what you're seeing in those numbers is...

Susan Anderson: Their belief and their enthusiasm for what the road ahead looks like in Olaplex. So that, and as we said before, we're really in the early phase of that, so there's a lot to come as we've just launched 4-5-5, that's a very large initiative for us and if we look to the rest of the year.

Speaker Change: Okay, great. Thanks. And then maybe if I could just ask about the new brand Refresh Curie of how it's been received by consumers, I guess, both in store. We've noticed definitely a lot more pop in the brand, but then also online. And if there's any, you're seeing any better conversion as a result or social media bags. Thanks.

Speaker Change: Yeah, it's been a rare place with how it's been received both by consumers as well as by professional community and the best way I can articulate it.

Speaker Change: is that the response has been, this is Olaplex that I've always thought it could be. And because it was very important to us to make sure that we were harnessing our original brand story, that we were harnessing the place that we came from, the born-in-the-lab watch to the chair. I think we're really bringing that to life. We're bringing that to life. [inaudible]

Speaker Change: Again, that's a starting point. It's not the ending point and we're right now we're in a place where we can I feel confident that we can really turn on a marketing engine much more effectively than we could before because

It's not just about-

Speaker Change: How the money that you spend is also about how you're spending at the visuals that you're using. We operate in a very visually driven category and now we have the right toolkit to be able to go and really invest behind our marketing going forward. So this is this is to put us in the game for the sake and we're excited to be there.

Speaker Change: Yeah, and I would just add to your comment or question on a self-drug is that Q1 2025.

Speaker Change: Cell Through, improved compared to Q1 2024. And we expect to deliver continued improvement in that cell through trend as we go throughout the year, particularly as our marketing that Amanda just described ramped in the second quarter beyond.

Speaker Change: Okay, great. Thanks so much. Good luck, the rest of the year.

Thank you. Thanks.

Our next question is from Kate Grafston with Barglaes [inaudible]

Speaker Change: Hi, thanks. So you talked about the plan to reduce promotional intensity in the DTC channel. Is this also the plan across the other channels as well? And then if you can also talk about the promotional environment in general, what you're seeing in both the US and international. Thank you.

Thank you for watching!

Speaker Change: As has always been our intention to promotionality and leveraging promotions is certainly a part of a toolkit to building a brand in the beauty space.

Speaker Change: We believe that we want to use those during tensile moments that are critical for our retail or partners.

Speaker Change: We've done that again last year. We'll continue to do that going forward. And then we want to have the same sort of approach on our GTC channel. That's really about one of those critical moments. How am I using it surgically? It is an important tool. And so it's really about just being more strategic and how we're using it at the right time versus having something that's more everyday. Yeah.

Speaker Change: So that's really been the shift that we saw on the DTC and that was kind of in the master plan of as we think about

Speaker Change: What we're doing as a business and what we're doing as a brand is that we're really building a brand and building a marketing engine while you're also making sure that you're using promotions in a strategic way. So getting both of those working at the same time.

Speaker Change: co-herently across Omni Channel. We have an incredible new chief revenue officer, Michelle Brett, who joined us in December , and she's really helped a lot to think about how we're using different channels and how we're really thinking about things on the channel and each piece of the puzzle working to support.

Speaker Change: The Other, so that's really something that we're excited to see come to fruition at this point.

Speaker Change: and as we think about the full-year guidance, we've left room within our range to do just as a man, just that we are going to use the lever, add a leadership team, reacting to those metrics that I talked about earlier to...

Speaker Change: Increase or pull back on functionality depending on what we see in the market.

Dana Telsey: Our next question is from Dana Telsey with Telsey Advisory Group

Dana Telsey: Hi, good morning. It's funny around a month ago I was walking in Soho on a Saturday, very early Saturday morning and I saw a line outside where you were having an event or an activation and so I see what's happening with your marketing.

Speaker Change: As you think of marketing spend dollars Amanda, how you thinking of...

Speaker Change: Cadence throughout the year, how you're thinking of what marketing should be over the long term given what you're building now with the more new effective category launches too. And then, Catherine, you think about the margins, the puts and takes to the drivers, whether expense dollars or how you're thinking of the buckets of gross margin as we move forward, especially in the environment that's...

Speaker Change: Certainly more fragile. And lastly, just on inventory, how you're planning inventory go forward. Thank you.

Thanks, Dana. For those who are not honest. I'm in a...

Speaker Change: Soho of one Saturday that I think Dana's referring to our bond house, which was a...

Speaker Change: We're really our first large consumer engagement effort. We had something called the leave-in if you call back in September of last year, which was focused on our leave-in conditioner and that was very successful, also had its own line around the block. And then we did something called the Bond House, which was supporting the launch of our Design to Defy campaign. It was a three day event that started with something for influencers, our pro community. And then was open to the public all weekend in which.

Speaker Change: People could really experience the full range of what the new brand looks like from a foundational hair health wall to really explain the science, you could get a scalp scan and understand the state of your own hair. Have them.

Speaker Change: Here touch up from our pro community and of course the photo moment because it's not an IRL activation without a photo moment so that was I think definitely something that's an example of how we're thinking about. [inaudible] I'm sorry, I'm sorry, I'm sorry, I'm sorry

Speaker Change: As I talked about this morning, that it's more than awareness, but it's about creating brand love, brand engagement, the right energy in the right room. Those are certainly physical places where you can see it, and then that needs to translate across our digital channels, which is really where we spend the majority of our media money. And how do we really take that story and expand it across those who maybe aren't on this in this so-called storm?

Speaker Change: So that's a great perspective on how we're thinking about marketing. We certainly have now, as I mentioned, that we have our brand in the right place, we can start to do things like that and you'll continue to see that from us.

Thank you.

Speaker Change: And then I'll ask your EBITDA questions. I think what's most important for us?

Speaker Change: and for you to know is that we are very focused in 2025 on executing our strategy, generating brand-a-man harness innovation, execute with excellence, and we have a strong balance sheet, and this is going to allow us to invest.

Speaker Change: Straight through, interbulence, or whatever reason that may be caused.

Speaker Change: This actually might be a competitive advantage for us because we're not going to have to pull back when others might.

Thank you.

Speaker Change: Of course, we'll always be watching what's happening, and we'll make smart investments, but driven by ROI, but our plan is to stay on strategy.

Speaker Change: And in regards to inventory, we carefully manage our inventory, but as I mentioned in the past we've gotten even better with our processes and our metrics to allow us to have inventory in the right place.

Speaker Change: Given what's happening in the world, we're looking at needy building inventory in right places to make sure that we finish through the terrorist situation and are getting our balance. She allows us to do that and we'll look back to you with what we've done as we go through the year.

Thank you.

Our next question is from Shovana Chowdhury with Becky Morgyn.

Speaker Change: Hi, thanks for taking her a question. You commented that your shelter has been improving year over year and the inventory at trade is healthy. However, underlying global beauty category consumption has been disillusioned and that's also embedded in your guidance.

Speaker Change: But can you specifically speak to the latest underlying Prestige Haircare category consumption trends, both here in the U.S. and what you're seeing in the international markets? And have your consumption rates exceeding the quarter held up in the several weeks in Q2 thus far. Thank you.

Speaker Change: Thanks for the question. Really what I would go back to is for where we are in our overall transformation, we're really thinking about the long term.

Speaker Change: to keep focused and keep everyone updated as we see what unfolds within the consumer macro environment which obviously is dynamic and we need to keep our eyes on it.

May I crack on another question if okay?

So you? [inaudible]

Speaker Change: Adet provided a lot of good details around tariffs and everything that you're expecting like.

Speaker Change: But can you give us a sense of the magnitude of any incremental growth tariffs, headwinds just so that we can get an understanding of what it looks like? I mean, understand it's relatively smaller than most others out there?

Speaker Change: I'm sorry, I'm not quite picking up the, it's very a little bit hard to hear. Do you mind repeating the question?

Speaker Change: Sure. I was just saying that you've provided a lot of details, but then if you can give us a sense of the magnitude of the gross tariff number, headwind actually, that you may be seeing, that needs to be mitigated just to get a sense of what it's like.

Speaker Change: Oh, right. Okay. Thank you. Thank you for repeating it. We're North America focused business and as such we expect any impact to be relatively small. We're not providing an exact number, but it's not something that is going to change our strategy or or or.

Cossess, did you, anything that we haven't already discussed?

Now our next question is from Korinne Wolfmeyer, with Piper Sandler

Hey, good morning, team. Thank you for taking a question.

Speaker Change: I'd like to touch a little bit more on the marketing spend cadence for the remainder of the year so it sounds like there was a bit of a pickup.

Speaker Change: toward the end of the quarter, heading into Q2. How should we be thinking about the cadence of the spend then over the next several quarters? And should we anticipate any additional pickups as we get through the back half of the year. Thank you.

Speaker Change: Oh, sure, I'll take that one. So, you know, the marketing center, as Amanda just mentioned, really started in the back half of the first quarter. We expect that spend to pick up in the second quarter. And then, you know, through the rest of the year, you know, I'll just reiterate what we are expecting for our guidance range.

Speaker Change: That's about what I can tell you because we don't provide specific quarterly guidance, but we did want to share that the second quarter will be a full quarter of impact compared to the first.

Speaker Change: Okay, thank you. And then if I could just ask quickly on cash plans, so you sound pretty confident in your current cash position, obviously it sets you up well with the current pair of situation and inventory planning and you have paid on some debt. Any additional plans, you know, regarding the cash usage that we could be thinking about in terms of driving greater shareholder returns? Thank you. Yeah.

Speaker Change: Yeah, thanks for the question. We were pleased to be able to pay down 300 million of debt right after the first quarter.

Speaker Change: And we thought that that was a really good use of funds for the shareholders, saves 20 million or maybe even a little bit more, depending on rates in the future of...

Speaker Change: of cash payments that we don't have to make to the bank.

Speaker Change: and so we're pleased with that. And, you know, just reiterating our guidance. We don't provide specific cash forecasting, but we're reiterating our guidance. And so we paid down the debt and we feel pretty pretty, uh, accountable about the health of the business.

Great. Thank you.

Thank you. There are no further questions at this time.

Speaker Change: I would like to hand the floor back over to Amanda Baldwin for any closing comments.

Amanda Baldwin: Thank you, everyone, for joining us this morning. We really appreciate your interest in Olaplex, and we hope to look forward to seeing many of you at any upcoming conferences and when we report our second quarter results later this year.

Have a great day.

Speaker Change: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.