Summary of Waldencast Q1 2025 Earnings Call

1Key Financial Results and Metrics

Net Revenue: $65.4 million, a decline of 4.1% year-over-year.

Adjusted Gross Profit Margin: 76.4%, up 10 basis points from the previous year.

Adjusted EBITDA: $4.4 million, representing a margin of 6.7%.

Milk Makeup Revenue: Declined 15.1%, with a strong domestic performance offset by international challenges.

Obagi Medical Revenue: Increased 7.1% to $36.2 million, despite out-of-stock issues.

Cash Position: $10.8 million, with an additional $22.5 million available from a revolving credit facility.

Net Debt: Increased to $172.1 million from $154.2 million.

2Strategic Updates and Business Highlights

Brand Growth Initiatives: Focus on innovation and expansion for Milk Makeup and Obagi Medical, with successful product launches like Hydro Grip Gel Skin Tint.

Distribution Expansion: Milk Makeup launched in Ulta Beauty, contributing to high single-digit growth in U.S. retail sales.

Supply Chain Improvements: Ongoing restructuring to enhance operational efficiency and product availability.

Digital Growth: Both brands saw continued growth in digital channels, with Obagi benefiting from a successful consumer acquisition strategy.

3Forward Guidance and Outlook

Revenue Growth Target: Mid-teens growth for fiscal 2025.

Adjusted EBITDA Margin: Expected in the mid to high-teens.

Key Growth Drivers: Continued innovation, expansion in retail and digital channels, and improved fulfillment rates.

4Challenges and Points of Concern

Declining Revenue: Overall revenue decline due to tough comparisons from last year and a decelerating beauty market.

Supply Chain Disruptions: Out-of-stock issues for key products at Obagi, affecting growth.

International Performance: Milk Makeup faced challenges in international markets due to tough comparisons and inventory adjustments.

Macroeconomic Pressures: Anticipated pressure from softer consumer sentiment and potential tariff impacts on cost of goods.

5Notable Q&A Insights

Supply Chain Restructuring: Management emphasized the need for improved supply chain flexibility and responsiveness to meet demand.

Physician Channel Performance: No significant slowdown in the physician channel, but growth was tempered compared to last year due to changes in the Amazon business model.

Pricing Strategy: Management is monitoring tariff impacts and believes they can manage costs with selective price increases if necessary.

Ulta Beauty Launch: Early results from Ulta indicate strong performance and potential for further expansion within the retailer's network. Overall, Waldencast is navigating a challenging environment but remains optimistic about its growth potential, driven by strategic initiatives and brand strength.