Olaplex (OLPX) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $103.9 million, down 4.8% year-over-year, with sequential improvement and business stabilization; specialty retail grew while professional and DTC channels declined.

• The company maintained a strong industry position, ranking #1 or #2 in 17 of the top 18 premium haircare equities and holding four of the five best-selling prestige hair products YTD 2024.

• Significant investments were made in marketing, education, and R&D, with $16 million in non-payroll marketing expenses in Q2 and a renewed focus on content creation and brand consistency.

• Leadership was strengthened with new COO/CFO and CMO appointments, and a new patented Bond Shaping Technology was launched.

• The company continues to focus on brand growth, innovation, channel expansion, and international markets amid a challenging macroeconomic and competitive environment.

Financial highlights

• Q2 2024 net sales: $103.9 million (down 4.8% year-over-year); U.S. sales rose 7.3%, international sales fell 15.1%.

• Adjusted EBITDA was $32.1 million (30.8% margin), down from $36.7 million (33.6%) in Q2 2023.

• Adjusted gross margin was 71.9%, down 80 bps year-over-year; reported gross margin was 69.7%.

• Adjusted net income was $18.8 million ($0.03 per diluted share); reported net income was $5.8 million ($0.01 per diluted share).

• Ended Q2 with $507.9 million in cash and $646.4 million in long-term debt.

Outlook and guidance

• Full-year 2024 guidance reiterated: net sales $435–$463 million, adjusted EBITDA $143–$159 million, adjusted net income $87–$100 million.

• Adjusted gross profit margin expected at 72.5%–73.1%, adjusted EBITDA margin at 32.8%–34.3%.

• Non-payroll marketing expenses projected at $66–$70 million for FY 2024.

• Expect gross margin expansion in H2 2024, driven by lapping prior year obsolescence and cost savings.

• Anticipate increased SG&A, mainly from headcount and higher marketing spend.