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01/11 11:22
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects strong financial performance with significant revenue and profit growth, despite challenges in the competitive and economic landscape. Management's confidence in innovation and market strategy, particularly with new product launches, suggests positive future prospects. The new credit facility enhances financial flexibility, and the shareholder return plan remains stable. Although there are concerns about regulatory expenses and supply chain issues, the overall sentiment is positive, likely leading to a stock price increase.
Net Revenue (Q4 2024) $72.1 million, a 29.4% increase year-over-year, driven by balanced performance across brands, with Milk Makeup growing 31.9% and Obagi Medical growing 27.7%.
Adjusted Gross Profit (Q4 2024) $52.6 million, a 30.7% increase from $40.3 million in Q4 2023, with adjusted gross profit margin stable at 73%.
Adjusted EBITDA (Q4 2024) $11.2 million, doubled from Q4 2023, with an adjusted EBITDA margin expansion of 530 basis points to 15.5%, reflecting strong revenue momentum and improved operational leverage.
Net Revenue (Fiscal Year 2024) $273.9 million, a 27.5% increase year-over-year.
Adjusted Gross Profit (Fiscal Year 2024) $203.6 million, a 35.3% increase from 2023, with adjusted gross profit margin of 74.3%, a 530 basis point improvement year-over-year.
Adjusted EBITDA (Fiscal Year 2024) $40.3 million, a 65.1% increase from fiscal 2023, with adjusted EBITDA margin expanding to 14.7%, a 350 basis point increase from 11.2% in 2023.
Adjusted EBITDA to Cash Conversion Ratio (Fiscal Year 2024) 78.8%, achieved through effective working capital management.
Cash Position (End of 2024) $14.8 million, with an additional $30 million available on the revolving credit facility.
Net Debt (End of 2024) $154.2 million.
Shares Outstanding (as of February 28, 2025) 122.7 million shares.
New Credit Facility Secured a new $205 million five-year credit facility, providing greater financial flexibility and extending debt maturity profile through 2030.
New Product Launches: Milk Makeup introduced Jelly skincare, the first jelly serum stick, and Hydro Grip Gel Tint, a long-lasting skin tint, both aimed at expanding their product offerings.
Brand Expansion: Milk Makeup expanded its distribution by launching in over 600 Ulta Beauty locations, enhancing its market presence.
Innovation: Obagi Medical launched new products including the Super Antioxidant Serum and Moisture Restore Hydration Replenishing Cream, targeting consumer needs.
Market Positioning: Milk Makeup is growing five times faster than the overall beauty market, while Obagi Medical is the fastest growing among the top 10 professional skincare brands in the U.S.
Operational Efficiency: Adjusted EBITDA margin expanded to 14.7%, reflecting improved operational leverage despite increased investments.
Cash Conversion: Achieved an adjusted EBITDA to cash conversion ratio of 78.8%, indicating effective working capital management.
Strategic Growth Initiatives: Waldencast aims to build a multi-brand platform encompassing key categories and geographies, leveraging the Waldencast Flywheel Effect for growth.
Regulatory Investigation: A significant portion of the company's cash is currently being used to cover non-recurring expenses associated with an ongoing regulatory investigation, which may impact cash generation until resolved.
Competitive Pressures: The beauty market is experiencing competitive pressures, with the company needing to maintain its growth rate and market share against top competitors.
Supply Chain Challenges: There are indications of inventory adjustments among retail partners, which could affect revenue growth in the short term.
Economic Factors: The company operates in an uneven consumer market, which poses risks to sustained growth despite the overall resilience of the beauty industry.
Strategic Growth Initiatives: Waldencast is focused on building a global beauty and wellness platform that creates, acquires, accelerates, and scales high-growth, purpose-driven brands. The company aims to expand its multi-brand platform across key categories, geographies, channels, and price points.
Milk Makeup Growth Strategy: Milk Makeup's growth strategy includes expanding brand awareness, launching market-disrupting beauty innovations, and broadening its footprint in both online and offline channels.
Obagi Medical Growth Strategy: Obagi Medical's strategy focuses on enhancing brand identity, driving science-backed innovation, and increasing brand awareness and footprint to fuel its physician-centered ecosystem.
Fiscal 2025 Revenue Growth: Waldencast anticipates net revenue growth in the mid-teens for fiscal 2025.
Adjusted EBITDA Margin Outlook: The company expects adjusted EBITDA margin to expand into the mid to high teens in fiscal 2025.
Q1 2025 Revenue Expectations: Net revenue for Q1 2025 is expected to be relatively flat due to inventory adjustments and the timing of product launches.
Long-term Financial Position: Waldencast expects to improve cash generation following the resolution of ongoing regulatory investigations, enhancing its financial position and capital structure.
Share Count: As of February 28, 2025, there were 122.7 million shares outstanding.
Credit Facility: Secured a new $205 million five-year credit facility, which includes a $175 million term loan and a $30 million revolving credit facility.
Net Debt: Net debt totaled $154.2 million.
The earnings call presents a mixed picture: strong cost management and improved margins are positive, but declining revenues, increased net debt, and challenges in international sales for Milk Makeup are concerning. The Q&A highlighted operational disruptions and unclear management responses. While optimistic guidance and strategic growth initiatives could support future growth, the current financials and uncertainties balance the overall sentiment to neutral.
The earnings call reflects strong financial performance with significant revenue and profit growth, despite challenges in the competitive and economic landscape. Management's confidence in innovation and market strategy, particularly with new product launches, suggests positive future prospects. The new credit facility enhances financial flexibility, and the shareholder return plan remains stable. Although there are concerns about regulatory expenses and supply chain issues, the overall sentiment is positive, likely leading to a stock price increase.
The earnings call presents strong financial performance with significant revenue and EBITDA growth for both Milk Makeup and Obagi Medical. Despite a slight decline in Milk Makeup's gross margin, the overall financial health is robust, supported by improved operational efficiencies. The Q&A highlights optimism in innovation and minimal tariff impact, with plans to manage gross margins effectively. While management avoided specific details on brand awareness, the overall sentiment remains positive due to strong growth metrics and strategic initiatives, suggesting a likely positive stock price movement in the short term.
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