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01/11 11:27
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Net Revenue (Q3 2024) $70.2 million, a 34.6% increase year-over-year, driven by increased consumer demand for Obagi Medical and Milk Makeup brands and improved stock availability.
Net Revenue (First Nine Months 2024) $201.8 million, a 26.9% increase year-over-year, reflecting strong sales growth across both brands.
Adjusted Gross Profit (Q3 2024) $51.4 million, with a gross profit margin of 73.2%, a 400 basis point increase year-over-year, due to higher margin distribution channels and lower inventory obsolescence.
Adjusted EBITDA (Q3 2024) $11.4 million, a 134% increase year-over-year, with an adjusted EBITDA margin of 16.3%, reflecting strong revenue momentum and operational leverage.
Adjusted Gross Profit (First Nine Months 2024) $150.9 million, a 37% increase year-over-year, with an adjusted gross profit margin of 74.8%, a 720 basis point improvement.
Adjusted EBITDA (First Nine Months 2024) $29.1 million, a 54.9% increase year-over-year, with an adjusted EBITDA margin of 14.4%, a 290 basis point increase from the prior year.
Milk Makeup Net Revenue (Q3 2024) $31.5 million, a 23.5% increase year-over-year, driven by increased awareness and international expansion.
Milk Makeup Adjusted Gross Profit Margin (Q3 2024) 66.6%, a decline of 340 basis points year-over-year, due to a shift in product mix and timing of sales.
Milk Makeup Adjusted EBITDA (Q3 2024) $8.5 million, nearly doubling year-over-year, with an adjusted EBITDA margin of 27.1%, expanding 1,040 basis points.
Obagi Medical Net Revenue (Q3 2024) $38.7 million, a 45.5% increase year-over-year, driven by successful product launches and improved inventory levels.
Obagi Medical Adjusted Gross Profit Margin (Q3 2024) 78.6%, a 1,010 basis point increase year-over-year, due to strong sales growth and improved operational efficiency.
Obagi Medical Adjusted EBITDA (Q3 2024) $7.5 million, a 129.7% increase year-over-year, with an adjusted EBITDA margin of 19.3%, expanding 770 basis points.
New Product Launches: Milk Makeup launched Hydro Grip and Glow and Kush High Roller brow and mascara, expanding its product offerings.
Product Line Expansion: Milk Makeup expanded its product line with new shades of Cooling Water Jelly Tints.
Innovation in Product Development: Obagi Medical launched ELASTIDERM Lift Up & Sculpt Facial Moisturizer and Advanced Filler Concentrate, enhancing its product portfolio.
Market Expansion: Milk Makeup expanded its global visibility with new partnerships with four European retailers and launched in India.
International Growth: Obagi Medical is gradually re-establishing its presence in Southeast Asia and has seen strong growth in North America and internationally.
Operational Efficiency: Adjusted EBITDA rose 134% to 16.3% of net revenue, reflecting strong revenue momentum and operational leverage.
Gross Margin Improvement: Adjusted gross profit margin rose 400 basis points to 73.2% in Q3 2024.
Strategic Growth Initiatives: Waldencast aims to build a global multi-brand portfolio through acquisitions and brand development.
Focus on Brand Autonomy: Waldencast preserves the brand DNA of acquired brands while providing operational support.
Inventory Challenges: Despite improved inventory levels, the company anticipates ongoing out-of-stock issues affecting growth into Q1 next year.
Regulatory Investigation Costs: A significant portion of cash is currently allocated to cover non-recurring costs associated with an ongoing regulatory investigation.
Competitive Pressures: The beauty market is experiencing normalization, with competitive pressures noted in the makeup and skincare segments, although the company remains optimistic about its growth potential.
Tariff Impacts: While tariffs are not expected to have a substantial impact on gross margins, the company is prepared to shift sourcing to mitigate any potential effects.
Retailer Caution: There is observed caution among retailers regarding inventory management, particularly outside North America, which may affect sell-in levels.
Market Saturation: The beauty industry remains competitive with many brands, but the company sees opportunities for growth through acquisitions and brand development.
Strategic Growth Initiatives: Waldencast is focused on building a global best-in-class beauty and wellness platform by creating, acquiring, accelerating, and scaling high-growth, purpose-driven brands. The company aims to expand its portfolio with brands that align with its operational scale and infrastructure.
Operational Efficiency: The company emphasizes operational efficiency to drive gross margin expansion and reinvest savings into sales and marketing to sustain top-line growth.
Brand Development: Waldencast aims to attract indie brands by preserving their brand DNA while providing operational support to enhance profitability and growth.
Innovation Pipeline: Milk Makeup and Obagi Medical are set to continue their innovation strategies, with a focus on launching new products that resonate with consumer needs and preferences.
Fiscal 2024 Outlook: Waldencast reaffirms its guidance for fiscal 2024, expecting comparable net revenue growth to accelerate beyond the 25.7% increase seen in Q2 2024.
Adjusted EBITDA Margin: The company anticipates the adjusted EBITDA margin to land in the mid-teens range, significantly higher than the 11.2% margin achieved in 2023.
Revenue Expectations: For the first nine months of 2024, net revenue reached $201.8 million, reflecting a 26.9% increase in comparable growth.
CapEx and Cash Flow: Waldencast maintains an asset-light business model, resulting in efficient cash flow management and limited capital expenditures.
Adjusted EBITDA: Adjusted EBITDA rose 134% to $11.4 million, representing 16.3% of net revenue.
Net Revenue: Net revenue was $70.2 million, a 34.6% increase in comparable growth.
Cash and Cash Equivalents: As of September 30th, 2024, cash and cash equivalents totaled $17.6 million.
Revolving Credit Facility: $30 million available on the revolving credit facility.
Net Debt: Net debt totaled $154 million.
Shares Outstanding: As of November 15, 2024, shares outstanding were 122.9 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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