Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 04, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-40860 | |
Entity Registrant Name | Olaplex Holdings, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 87-1242679 | |
City Area Code | 310 | |
Local Phone Number | 691-0776 | |
Title of 12(b) Security | Common stock, par value $0.001 per share | |
Trading Symbol | OLPX | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 654,698,308 | |
Entity Central Index Key | 0001868726 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 378,418 | $ 322,808 |
Accounts receivable, net of allowances of $20,028 and $19,198 | 50,298 | 46,220 |
Inventory | 128,509 | 144,425 |
Other current assets | 13,398 | 8,771 |
Total current assets | 570,623 | 522,224 |
Property and equipment, net | 932 | 1,034 |
Intangible assets, net | 971,715 | 995,028 |
Goodwill | 168,300 | 168,300 |
Other assets | 11,354 | 11,089 |
Total assets | 1,722,924 | 1,697,675 |
Current Liabilities: | ||
Accounts payable | 13,666 | 9,748 |
Sales and income taxes payable, net | 0 | 3,415 |
Accrued expenses and other current liabilities | 24,649 | 17,107 |
Current portion of long-term debt | 6,750 | 8,438 |
Current portion of Related Party payable pursuant to Tax Receivable Agreement | 16,184 | 16,380 |
Total current liabilities | 61,249 | 55,088 |
Long-term debt | 651,678 | 654,333 |
Deferred tax liabilities | 2,754 | 1,622 |
Related Party payable pursuant to Tax Receivable Agreement | 189,391 | 205,675 |
Total liabilities | 905,072 | 916,718 |
Contingencies (Note 10) | ||
Stockholders’ equity (Notes 1 and 8): | ||
Common stock, $0.001 par value per share; 2,000,000,000 shares authorized, 654,530,828 and 650,091,380 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 654 | 649 |
Preferred stock, $0.001 par value per share; 25,000,000 shares authorized and no shares issued and outstanding | 0 | 0 |
Additional paid-in capital | 321,555 | 312,875 |
Accumulated other comprehensive income | 3,667 | 2,577 |
Retained earnings | 491,976 | 464,856 |
Total stockholders’ equity | 817,852 | 780,957 |
Total liabilities and stockholders’ equity | $ 1,722,924 | $ 1,697,675 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS - Parenthetical - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for credit losses | $ 20,028 | $ 19,198 |
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (shares) | 2,000,000,000 | 2,000,000,000 |
Common stock, shares, issued (shares) | 654,530,828 | 650,091,380 |
Common stock, shares, outstanding (shares) | 654,530,828 | 650,091,380 |
Preferred stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net sales | $ 109,241 | $ 210,903 | $ 223,028 | $ 397,099 |
Cost of sales: | ||||
Cost of product (excluding amortization) | 29,781 | 52,293 | 61,016 | 95,515 |
Amortization of patented formulations | 1,964 | 2,180 | 3,706 | 3,949 |
Total cost of sales | 31,745 | 54,473 | 64,722 | 99,464 |
Gross profit | 77,496 | 156,430 | 158,306 | 297,635 |
Operating expenses: | ||||
Selling, general, and administrative | 48,413 | 26,111 | 83,337 | 48,425 |
Amortization of other intangible assets | 10,324 | 10,295 | 20,647 | 20,561 |
Total operating expenses | 58,737 | 36,406 | 103,984 | 68,986 |
Operating income | 18,759 | 120,024 | 54,322 | 228,649 |
Interest expense, net | (10,206) | (8,694) | (20,749) | (20,154) |
Other expense, net | ||||
Loss on extinguishment of debt | 0 | 0 | 0 | (18,803) |
Other expense, net | (600) | (1,224) | (358) | (1,601) |
Total other expense, net | (600) | (1,224) | (358) | (20,404) |
Income before provision for income taxes | 7,953 | 110,106 | 33,215 | 188,091 |
Income tax provision | 1,797 | 22,391 | 6,095 | 38,415 |
Net income | $ 6,156 | $ 87,715 | $ 27,120 | $ 149,676 |
Net income per share: | ||||
Basic (in usd per share) | $ 0.01 | $ 0.14 | $ 0.04 | $ 0.23 |
Diluted (in usd per share) | $ 0.01 | $ 0.13 | $ 0.04 | $ 0.22 |
Weighted average common shares outstanding: | ||||
Weighted average common shares outstanding: Basic (in shares) | 654,345,056 | 648,973,952 | 653,045,245 | 648,894,417 |
Weighted average common shares outstanding: Diluted (in shares) | 680,349,161 | 691,365,072 | 682,107,732 | 692,985,088 |
Other comprehensive income: | ||||
Unrealized gain on derivatives, net of income tax effect | $ 1,647 | $ 0 | $ 1,090 | $ 0 |
Total other comprehensive income: | 1,647 | 0 | 1,090 | 0 |
Comprehensive income: | $ 7,803 | $ 87,715 | $ 28,210 | $ 149,676 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid in Capital | Accumulated Other Comprehensive Income | Retained Earnings |
Beginning balance, shares outstanding (in shares) at Dec. 31, 2021 | 648,794,041 | ||||
Beginning balance at Dec. 31, 2021 | $ 524,298 | $ 648 | $ 302,866 | $ 0 | $ 220,784 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 61,961 | 61,961 | |||
Conversion of cash settled units to stock appreciation rights | 1,632 | 1,632 | |||
Exercise of stock-settled stock appreciation rights (in shares) | 117,180 | ||||
Exercise of stock-settled stock appreciation rights | 348 | 348 | |||
Shares withheld and retired for taxes on exercise of stock settled appreciation rights (in shares) | (55,244) | ||||
Shares withheld and retired for taxes on exercise of stock-settled stock appreciation rights | (920) | (920) | |||
Share-based compensation expense | 1,696 | 1,696 | |||
Ending balance, shares outstanding (in shares) at Mar. 31, 2022 | 648,855,977 | ||||
Ending balance at Mar. 31, 2022 | 589,015 | $ 648 | 305,622 | 0 | 282,745 |
Beginning balance, shares outstanding (in shares) at Dec. 31, 2021 | 648,794,041 | ||||
Beginning balance at Dec. 31, 2021 | 524,298 | $ 648 | 302,866 | 0 | 220,784 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | $ 149,676 | ||||
Exercise of stock-settled stock appreciation rights (in shares) | 117,180 | ||||
Shares withheld and retired for taxes on exercise of stock settled appreciation rights (in shares) | (55,244) | ||||
Exercise of stock options (in shares) | 231,846 | ||||
Unrealized (loss) gain on derivatives (net of taxes) | $ 0 | ||||
Ending balance, shares outstanding (in shares) at Jun. 30, 2022 | 649,087,823 | ||||
Ending balance at Jun. 30, 2022 | 679,197 | $ 649 | 308,088 | 0 | 370,460 |
Beginning balance, shares outstanding (in shares) at Mar. 31, 2022 | 648,855,977 | ||||
Beginning balance at Mar. 31, 2022 | 589,015 | $ 648 | 305,622 | 0 | 282,745 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 87,715 | 87,715 | |||
Exercise of stock options (in shares) | 231,846 | ||||
Exercise of stock options | 740 | $ 1 | 739 | ||
Share-based compensation expense | 1,727 | 1,727 | |||
Unrealized (loss) gain on derivatives (net of taxes) | 0 | ||||
Ending balance, shares outstanding (in shares) at Jun. 30, 2022 | 649,087,823 | ||||
Ending balance at Jun. 30, 2022 | $ 679,197 | $ 649 | 308,088 | 0 | 370,460 |
Beginning balance, shares outstanding (in shares) at Dec. 31, 2022 | 650,091,380 | 650,091,380 | |||
Beginning balance at Dec. 31, 2022 | $ 780,957 | $ 649 | 312,875 | 2,577 | 464,856 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 20,964 | 20,964 | |||
Exercise of stock-settled stock appreciation rights (in shares) | 109,620 | ||||
Exercise of stock-settled stock appreciation rights | 326 | 326 | |||
Shares withheld and retired for taxes on exercise of stock settled appreciation rights (in shares) | (83,501) | ||||
Shares withheld and retired for taxes on exercise of stock-settled stock appreciation rights | (390) | (390) | |||
Exercise of stock options (in shares) | 3,659,267 | ||||
Exercise of stock options | 3,299 | $ 4 | 3,295 | ||
Share-based compensation expense | 2,018 | 2,018 | |||
Unrealized (loss) gain on derivatives (net of taxes) | (557) | (557) | |||
Ending balance, shares outstanding (in shares) at Mar. 31, 2023 | 653,776,766 | ||||
Ending balance at Mar. 31, 2023 | $ 806,617 | $ 653 | 318,124 | 2,020 | 485,820 |
Beginning balance, shares outstanding (in shares) at Dec. 31, 2022 | 650,091,380 | 650,091,380 | |||
Beginning balance at Dec. 31, 2022 | $ 780,957 | $ 649 | 312,875 | 2,577 | 464,856 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | $ 27,120 | ||||
Exercise of stock-settled stock appreciation rights (in shares) | 109,620 | ||||
Shares withheld and retired for taxes on exercise of stock settled appreciation rights (in shares) | (83,501) | ||||
Exercise of stock options (in shares) | 4,413,328 | ||||
Unrealized (loss) gain on derivatives (net of taxes) | $ 1,090 | ||||
Ending balance, shares outstanding (in shares) at Jun. 30, 2023 | 654,530,828 | 654,530,828 | |||
Ending balance at Jun. 30, 2023 | $ 817,852 | $ 654 | 321,555 | 3,667 | 491,976 |
Beginning balance, shares outstanding (in shares) at Mar. 31, 2023 | 653,776,766 | ||||
Beginning balance at Mar. 31, 2023 | 806,617 | $ 653 | 318,124 | 2,020 | 485,820 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 6,156 | 6,156 | |||
Exercise of stock options (in shares) | 754,062 | ||||
Exercise of stock options | 798 | $ 1 | 797 | ||
Share-based compensation expense | 2,634 | 2,634 | |||
Unrealized (loss) gain on derivatives (net of taxes) | $ 1,647 | 1,647 | |||
Ending balance, shares outstanding (in shares) at Jun. 30, 2023 | 654,530,828 | 654,530,828 | |||
Ending balance at Jun. 30, 2023 | $ 817,852 | $ 654 | $ 321,555 | $ 3,667 | $ 491,976 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 27,120 | $ 149,676 |
Adjustments to reconcile net income to net cash from operations provided by operating activities: | ||
Amortization of patent formulations | 3,706 | 3,949 |
Amortization of other intangibles | 20,647 | 20,561 |
Inventory write-off and disposal | 6,167 | 4,324 |
Depreciation of fixed assets | 230 | 152 |
Amortization of debt issuance costs | 906 | 636 |
Deferred taxes | 1,240 | (3,537) |
Share-based compensation expense | 4,652 | 3,423 |
Loss on extinguishment of debt | 0 | 18,803 |
Other operating | 530 | 0 |
Changes in operating assets and liabilities, net of effects of acquisition (as applicable): | ||
Accounts receivable, net | (4,078) | (40,566) |
Inventory | 10,657 | (45,657) |
Other current assets | (4,627) | 3,856 |
Accounts payable | 3,918 | 1,532 |
Accrued expenses and other current liabilities | 4,047 | 10,901 |
Other assets and liabilities | (28) | 0 |
Net cash provided by operating activities | 75,087 | 128,053 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (128) | (75) |
Purchase of intangible assets | (500) | 0 |
Purchase of software | (1,368) | (870) |
Net cash used in investing activities | (1,996) | (945) |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options | 4,097 | 740 |
Payments for shares withheld and retired for taxes and exercise price for stock-settled share appreciation rights | (64) | (572) |
Payment to pre-IPO stockholders pursuant to tax receivable agreement | (16,452) | 0 |
Principal payments for 2022 Term Loan Facility, and principal payments and prepayment fees for 2020 Term Loan Facility | (5,062) | (778,692) |
Proceeds from the issuance of 2022 Term Loan Facility | 0 | 675,000 |
Payments of debt issuance costs | 0 | (11,944) |
Net cash used in financing activities | (17,481) | (115,468) |
Net increase in cash and cash equivalents | 55,610 | 11,640 |
Cash and cash equivalents - beginning of period | 322,808 | 186,388 |
Cash and cash equivalents - end of period | 378,418 | 198,028 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | 9,511 | 35,176 |
Cash paid during the year for interest | 29,344 | 13,491 |
Supplemental disclosure of noncash activities: | ||
Cash-settled units liability reclassification to additional paid in capital | $ 0 | $ 1,632 |
NATURE OF OPERATIONS AND BASIS
NATURE OF OPERATIONS AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS AND BASIS OF PRESENTATION | NATURE OF OPERATIONS AND BASIS OF PRESENTATION Olaplex Holdings, Inc. (“Olaplex Holdings” and, together with its subsidiaries, the “Company”) is a Delaware corporation that was incorporated on June 8, 2021. Olaplex Holdings is organized as a holding company and operates indirectly through its wholly owned subsidiaries, Penelope and Olaplex, Inc., which conducts business under the name “Olaplex”. Olaplex is an innovative, science-enabled, technology-driven beauty company that is focused on delivering its patent-protected prestige hair care products to professional hair salons, retailers and everyday consumers. Olaplex develops, manufactures and distributes a line of hair care products developed to address three key uses: treatment, maintenance and protection. Basis of Presentation The accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim Condensed Consolidated Financial Statements furnished reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. The unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying footnotes included in the Company’s 2022 Form 10-K. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Estimates and Assumptions Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of estimates and assumptions include: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, variable consideration, and other obligations such as product returns and refunds; loss contingencies; the fair value of share-based options and stock settled stock appreciation rights (“SARs”); the fair value of and/or potential impairment of goodwill and intangible assets for the Company’s reporting unit; the fair value of the Company’s interest rate cap; useful lives of the Company’s tangible and intangible assets; allowance for promotions; estimated income tax and tax receivable payments; the net realizable value of, and demand for the Company’s inventory. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements established a framework for measuring fair value and established a three-level valuation hierarchy for disclosure of fair value measurements as follows: Level 1 —Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. The Company’s Level 1 assets consist of its marketable securities. Level 2 —Observable quoted prices for similar assets or liabilities in active markets and observable quoted prices for identical assets or liabilities in markets that are not active. Level 3 —Unobservable inputs that are not corroborated by market data. Cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are reflected at carrying value, which approximates fair value due to the short-term maturity. The Company’s long-term debt is recorded at its carrying value in the Condensed Consolidated Balance Sheets, which may differ from fair value. The Company’s interest rate cap is recorded at its Level 3 fair value in the Condensed Consolidated Balance Sheets. Accounting Policies There have been no material changes in significant accounting policies as described in the Company’s Consolidated Financial Statements for the year ended December 31, 2022. Constructive Retirement of Common Stock Repurchases When the Company's common stock is retired or purchased for constructive retirement for net share settlement of stock options, any excess purchase price over par value is allocated between additional paid-in-capital, to the extent that previous net gains from sales or retirements are included therein, and the remainder to retained earnings. Tax Receivable Agreement As part of the IPO, the Company entered into the Tax Receivable Agreement under which the Company will be required to pay to the Pre-IPO Stockholders 85% of the federal, state or local tax cash savings that the Company actually realizes on its taxable income following the IPO, as a result of the amortization of intangible assets and capitalized transaction costs that existed as of the date of the IPO. Under the Tax Receivable Agreement, generally the Company will retain the benefit of the remaining 15% of the applicable tax savings. The Tax Receivable Agreement liability is calculated based on current tax laws and the assumption that the Company and its subsidiaries will earn sufficient taxable income to realize the full tax benefits subject to the Tax Receivable Agreement. Updates to the Company’s blended state tax rate and allocation of U.S. versus foreign sourced income may impact the established liability and changes to that established liability would be recorded to other income (expense) in the period the Company made the determination regarding the applicable change. The Company expects that future payments under the Tax Receivable Agreement relating to the Pre-IPO Tax Assets could aggregate to $205.6 million over the 13-year remaining period under the Tax Receivable Agreement. Payments under the Tax Receivable Agreement, which began in the year ended December 31, 2022, are not conditioned upon the parties’ continued ownership of equity in the Company. Reclassifications Certain amounts presented have been reclassified within “Note 6 - Accrued Expenses and Other Current Liabilities” as of December 31, 2022 to conform with the current period presentation, including a prior year reclassification from Other accrued expenses and current liabilities to Accrued advertising. The reclassifications had no effect on the Company’s Total current liabilities. |
NET SALES
NET SALES | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
NET SALES | NET SALES The Company distributes products in the U.S. and internationally through professional distributors in the salon channel, directly to retailers for sale in their physical stores and e-commerce sites, and direct-to-consumer (“DTC”) through sales to third-party e-commerce customers and through its own Olaplex.com website. As such, the Company’s three business channels consist of professional, specialty retail and DTC as follows: For the Three Months Ended For the Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net sales by Channel: Professional $ 40,940 $ 105,489 $ 89,337 $ 182,548 Specialty retail 29,767 64,229 64,626 128,501 DTC 38,534 41,185 69,065 86,050 Total net sales $ 109,241 $ 210,903 $ 223,028 $ 397,099 Revenue by major geographic region is based upon the geographic location of customers who purchase the Company’s products. The majority of net sales are transacted in U.S. Dollars, the Company’s functional and reporting currency. During the three and six months ended June 30, 2023 and June 30, 2022, the Company’s net sales to consumers in the United States and International regions were as follows: For the Three Months Ended For the Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net sales by Geography: United States $ 50,099 $ 121,320 $ 97,761 $ 241,430 International 59,142 89,583 125,267 155,669 Total net sales $ 109,241 $ 210,903 $ 223,028 $ 397,099 United Kingdom (“U.K.”) net sales for the three and six months ended June 30, 2023 were 9% of total net sales, and for the three and six months ended June 30, 2022 were 8% of total net sales. No international country exceeded 10% of total net sales for the three and six months ended June 30, 2023 and June 30, 2022. |
INVENTORY
INVENTORY | 6 Months Ended |
Jun. 30, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Inventory as of June 30, 2023 and December 31, 2022 consisted of the following: June 30, 2023 December 31, 2022 Raw materials and packaging components $ 38,627 $ 36,194 Finished goods 89,882 108,231 Inventory $ 128,509 $ 144,425 During the three and six months ended June 30, 2023, the Company recorded write-offs of $3.6 million and $6.2 million of inventory due to product obsolescence, respectively. The Company did not record write-offs for product obsolescence during the same periods ended June 30, 2022. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Goodwill and intangible assets are comprised of the following: June 30, 2023 Estimated Gross Carrying Accumulated Net Carrying Amount Brand name 25 years $ 952,000 $ (132,438) $ 819,562 Product formulations 15 years 136,500 (31,532) 104,968 Customer relationships 20 years 53,000 (9,216) 43,784 Software 3 years 4,290 (889) 3,401 Total finite-lived intangibles 1,145,790 (174,075) 971,715 Goodwill Indefinite 168,300 — 168,300 Total goodwill and other intangibles $ 1,314,090 $ (174,075) $ 1,140,015 December 31, 2022 Estimated Gross Accumulated Net Carrying Amount Brand name 25 years $ 952,000 $ (113,394) $ 838,606 Product formulations 15 years 136,000 (26,998) 109,002 Customer relationships 20 years 53,000 (7,892) 45,108 Software 3 years 2,922 (610) 2,312 Total finite-lived intangibles 1,143,922 (148,894) 995,028 Goodwill Indefinite 168,300 — 168,300 Total goodwill and other intangibles $ 1,312,222 $ (148,894) $ 1,163,328 The amortization of the Company’s brand name, customer relationships and software is recorded to Amortization of other intangible assets in the Condensed Consolidated Statements of Operations and Comprehensive Income. A portion of Amortization of patented formulations is capitalized to Inventory in the Condensed Consolidated Balance Sheets, and the remainder is recorded to Amortization of patented formulations in the Condensed Consolidated Statements of Operations and Comprehensive Income. Amortization of the Company’s definite-lived intangible assets for the three and six months ended June 30, 2023 and 2022 was as follows: For the Three Months Ended For the Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Amortization of patented formulations $ 1,964 $ 2,180 $ 3,706 $ 3,948 Amortization expense, brand name and customer relationships 10,186 10,182 20,368 20,365 Amortization expense, software 138 113 279 196 Amortization of other intangible assets 10,324 10,295 20,647 20,561 Amortization of patented formulations capitalized to inventory $ 303 $ 86 $ 828 $ 585 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 6 Months Ended |
Jun. 30, 2023 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses as of June 30, 2023 and December 31, 2022 consisted of the following: June 30, 2023 December 31, 2022 Accrued advertising 7,784 1,356 Accrued legal settlement 5,250 — Accrued professional fees 3,750 3,187 Accrued freight 2,251 3,283 Deferred revenue 2,077 2,015 Payroll liabilities 1,749 4,092 Other accrued expenses and current liabilities 1,708 2,360 Accrued interest 80 814 Accrued expenses and other current liabilities $ 24,649 $ 17,107 During the six months ended June 30, 2023, the Company accrued approximately $3.9 million related to a pending settlement of a copyright matter. The Company expects to recover this settlement amount under its general liability insurance policy. An offset to the liability related to the insurance receivable is recorded in “Other current assets” on the Company’s Condensed Consolidated Balance Sheet as of June 30, 2023. |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT The Company’s Long-Term Debt as of June 30, 2023 and December 31, 2022 consisted of the following: June 30, 2023 December 31, 2022 Long-term debt Credit Agreement, dated as of February 23, 2022 (the “2022 Credit Agreement”) $675 Million 7-Year Senior Secured Term Loan Facility (the “2022 Term Loan Facility”) $ 666,563 $ 671,625 $150 Million 5-Year Senior Secured Revolving Credit Facility (the “2022 Revolver”) (1) — — Debt issuance costs (8,135) (8,854) Total term loan debt 658,428 662,771 Less: Current portion (6,750) (8,438) Long-term debt, net of debt issuance costs and current portion $ 651,678 $ 654,333 (1) As of June 30, 2023 and December 31, 2022, the Company did not have outstanding amounts drawn on the 2022 Revolver, including letters of credit and swingline loan sub-facilities. As of June 30, 2023, the Company had $150 million of available borrowing capacity under the 2022 Revolver. The interest rate on outstanding debt under the 2022 Term Loan Facility was 8.70% per annum as of June 30, 2023. The interest rates for all facilities under the 2022 Credit Agreement are calculated based upon the Company’s election among (a) adjusted term SOFR plus an additional interest rate spread, (b) with respect to a borrowing in Euros under the 2022 Revolver, a euro interbank offered rate plus an additional interest rate spread, or (c) an “Alternate Base Rate” (as defined in the 2022 Credit Agreement) plus an additional interest rate spread. Interest expense, net, inclusive of debt amortization, for the three months ended June 30, 2023 and June 30, 2022 was $10.2 million and $8.7 million respectively, and for the six months ended June 30, 2023 and June 30, 2022 was $20.7 million and $20.2 million, respectively. The fair value of the Company’s long-term debt is based on the market value of its long-term debt instrument. Based on the inputs used to value the long-term debt, the Company’s long-term debt is categorized within Level 2 in the fair value hierarchy. As of June 30, 2023, the carrying amount of the Company’s long-term debt under the 2022 Credit Agreement was $658.4 million, and the fair value of the Company’s long-term debt was $626.6 million. As of December 31, 2022, the carrying amount of the Company’s long-term debt under the 2022 Credit Agreement was $662.8 million, and the fair value of the Company’s long-term debt was $624.6 million. The 2022 Credit Agreement includes, among other things, customary negative and affirmative covenants (including reporting, financial and maintenance covenants) and events of default (including a change of control) for facilities of this type. In addition, the 2022 Credit Agreement includes a springing first lien leverage ratio financial covenant, which is applicable only to the lenders under the 2022 Revolver. The Company was in compliance with its financial covenants on June 30, 2023 and December 31, 2022. The 2022 Term Loan Facility and the 2022 Revolver are secured by substantially all of the assets of Olaplex, Inc. and the other guarantors, subject to certain exceptions and thresholds. Interest Rate Cap Transaction The Company’s results are subject to risk from interest rate fluctuations on borrowings under the 2022 Credit Agreement, including the 2022 Term Loan Facility. The Company may, from time to time, utilize interest rate derivatives in an effort to add stability to interest expense and to manage its exposure to interest rate movements. On August 11, 2022, the Company entered into an interest rate cap transaction (the “interest rate cap”) in connection with the 2022 Term Loan Facility, with a notional amount of $400 million. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate applicable to the transaction, in exchange for an up-front premium paid by the Company. The Company has designated the interest rate cap as a cash-flow hedge for accounting purposes. For derivatives designated, and that qualify, as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings, as documented at hedge inception in accordance with the Company’s accounting policy election. The table below presents the fair value of the Company’s derivative financial instruments, which are classified within Other assets on the Company’s Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022. June 30, 2023 December 31, 2022 Fair value, interest rate cap asset $ 5,493 $ 5,042 During the three and six months ended June 30, 2023, the Company’s interest rate cap generated an unrecognized pre-tax gain of $1.7 million and $1.0 million, respectively, recorded in Accumulated Other Comprehensive Income on the Company’s Condensed Consolidated Balance Sheets. During the same periods, the Company also recognized a $0.9 million and $1.5 million reduction, respectively, in interest expense related to the Company’s receipt of funds as a result of an interest rate cap settlement with the Company’s counterparty, partially offset by $0.3 million and $0.5 million, respectively, related to amortization of the interest rate cap premium paid by the Company in connection with the interest rate cap. The Company did not have an interest rate cap agreement in place during the three and six months ended June 30, 2022. The Company performed an initial effectiveness assessment on the interest rate cap and determined it to be an effective hedge of the cash flows related to the interest rate payments on the 2022 Term Loan Facility. The hedge is evaluated qualitatively on a quarterly basis for effectiveness. Changes in fair value are recorded in Accumulated Other Comprehensive Income and periodic settlements of the interest rate cap will be recorded in interest expense along with the interest on amounts outstanding under the 2022 Term Loan Facility. Payment of the up-front premium of the interest rate cap is included within Other assets and liabilities within cash flows from operating activities on the Company’s Condensed Consolidated Statements of Cash Flows. The Company does not hold or issue derivative financial instruments for trading purposes, nor does it hold or issue leveraged derivative instruments. By using derivative financial instruments to hedge exposures to interest rate fluctuations, the Company exposes itself to counterparty credit risk. The Company manages exposure to counterparty credit risk by entering into derivative financial instruments with highly rated institutions that can be expected to fully perform under the terms of the applicable contracts. |
EQUITY
EQUITY | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
EQUITY | EQUITY During the six months ended June 30, 2023, the Company issued 109,620 shares of its common stock upon vesting and settlement of net stock-settled SARs. The Company repurchased 83,501 of outstanding shares of its common stock for the net settlement of SARs for payment of taxes related to such SARs, which were accounted for as a share retirement. Additionally, during the six months ended June 30, 2023, the Company issued 4,413,328 shares of its common stock as a result of stock options exercised. During the six months ended June 30, 2022, the Company converted 886,950 cash-settled units into SARs, with a fair value liability of $1,632 reclassified from Accrued expenses and other current liabilities to Additional paid-in capital. The Company issued 117,180 shares of its common stock upon vesting and settlement of net stock-settled SARs. The Company repurchased 55,244 of outstanding shares of its common stock for the net settlement of SARs for payment of taxes related to such SARs, which were accounted for as a share retirement. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS In July 2020, the Company entered into an agreement with CI&T, an information technology and software company, in which certain investment funds affiliated with Advent International Corporation, the holder of a majority of the Company’s common stock (collectively the “Advent Funds”), hold a greater than 10% equity interest. During the three and six months ended June 30, 2023, the Company paid CI&T $6 and $12, respectively. During the three and six months ended June 30, 2022, the Company paid CI&T $22 and $27, respectively. The Company engaged CI&T for services related to the development, maintenance and enhancement of the Olaplex professional application, as well as other digital marketing services, all of which were negotiated on an arm’s length basis and on market terms. Tax Receivable Agreement In connection with the Reorganization Transactions, the Company entered into the Tax Receivable Agreement with the Pre-IPO Stockholders. See further discussion in “Note 2 – Summary of Significant Accounting Policies – Tax Receivable Agreement”. During the three and six months ended June 30, 2023, the Company made a payment to the Pre-IPO Stockholders of $16.6 million as required pursuant to the terms of the Tax Receivable Agreement. During the three and six months ended June 30, 2022, the Company did not make a payment to the Pre-IPO Stockholders. |
CONTINGENCIES
CONTINGENCIES | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES From time to time, the Company is subject to various legal actions arising in the ordinary course of business. The Company cannot predict with reasonable assurance the outcome of these legal actions brought against the Company as they are subject to uncertainties. Accordingly, any settlement or resolution in these legal actions may occur and affect the Company’s net income in such period as the settlement or resolution. Pending Legal Proceedings: On November 17, 2022, a putative securities class action was filed against the Company and certain of its current and former officers and directors in the United States District Court for the Central District of California, captioned Lilien v. Olaplex Holdings, Inc. et al. , No. 2:22-cv-08395. A consolidated complaint was filed on April 28, 2023, which names as additional defendants the underwriters for the Company’s IPO and various stockholders that sold shares of common stock of the Company in the IPO. The action is brought on behalf of a putative class of purchasers of the Company’s common stock in or traceable to the Company’s IPO and asserts claims under Sections 11, 12, and 15 of the Securities Act of 1933. The action seeks certification of the putative class, compensatory damages, attorneys’ fees and costs, and any other relief that the court determines is appropriate. The defendants moved to dismiss the consolidated complaint on July 19, 2023. The underwriter defendants have notified the Company of their intent to seek indemnification from the Company pursuant to the IPO underwriting agreement regarding the claims asserted in this action. The Company intends to vigorously defend the pending lawsuit. On February 9, 2023, twenty-eight plaintiffs filed Albahae, et al. v. Olaplex Holdings, Inc., et al., No. 2:23-cv-00982, a complaint alleging personal and economic injury and asserting claims for breach of warranty, negligence/gross negligence, products liability, unjust enrichment, and violations of California False Advertising Law and Unfair Competition Law, against the Company and Cosway Company, Inc., the Company’s primary contract manufacturer, in the United States District Court for the Central District of California. On March 2, 2023, the plaintiffs amended the complaint to include seventy-three additional plaintiffs. The plaintiffs allege that certain ingredients used in some Company products have purportedly caused irritation or posed a hazard to consumers, and that the Company engaged in misrepresentation with respect to those products. The plaintiffs seek actual and consequential damages, punitive damages, restitution in the form of disgorgement of profits, attorneys’ fees and costs, and any other relief that the court determines is appropriate. On April 17, 2023, the Company moved to dismiss and to sever the plaintiffs’ claims. On July 11, 2023, the Court granted the Company’s motion to sever and dismissed all but the first named plaintiff. The Court also dismissed the operative complaint with leave to re-file on the grounds that it now contained allegations that were not relevant to the claims of the one, remaining plaintiff. On July 24, 2023, the remaining plaintiff filed a notice, voluntarily dismissing her claims without prejudice. Any potential loss associated with these pending legal proceedings is not probable or reasonably estimable at this time. As of June 30, 2023 and December 31, 2022, the Company was not subject to any other currently pending legal matters or claims that could have a material adverse effect on its financial position, results of operations, or cash flows should such litigation be resolved unfavorably. |
NET INCOME PER SHARE
NET INCOME PER SHARE | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | NET INCOME PER SHARE The following is a reconciliation of the numerator and denominator in the basic and diluted net income per common share computations: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Numerator: Net income $ 6,156 $ 87,715 $ 27,120 $ 149,676 Denominator: Weighted average common shares outstanding – basic 654,345,056 648,973,952 653,045,245 648,894,417 Dilutive common equivalent shares from equity options 26,004,105 42,391,120 29,062,487 44,090,671 Weighted average common shares outstanding – diluted 680,349,161 691,365,072 682,107,732 692,985,088 Net income per share: Basic $ 0.01 $ 0.14 $ 0.04 $ 0.23 Diluted $ 0.01 $ 0.13 $ 0.04 $ 0.22 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||||
Net income | $ 6,156 | $ 20,964 | $ 87,715 | $ 61,961 | $ 27,120 | $ 149,676 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim Condensed Consolidated Financial Statements furnished reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. The unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying footnotes included in the Company’s 2022 Form 10-K. |
Estimates and Assumptions | Estimates and Assumptions Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of estimates and assumptions include: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, variable consideration, and other obligations such as product returns and refunds; loss contingencies; the fair value of share-based options and stock settled stock appreciation rights (“SARs”); the fair value of and/or potential impairment of goodwill and intangible assets for the Company’s reporting unit; the fair value of the Company’s interest rate cap; useful lives of the Company’s tangible and intangible assets; allowance for promotions; estimated income tax and tax receivable payments; the net realizable value of, and demand for the Company’s inventory. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements established a framework for measuring fair value and established a three-level valuation hierarchy for disclosure of fair value measurements as follows: Level 1 —Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. The Company’s Level 1 assets consist of its marketable securities. Level 2 —Observable quoted prices for similar assets or liabilities in active markets and observable quoted prices for identical assets or liabilities in markets that are not active. Level 3 —Unobservable inputs that are not corroborated by market data. Cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are reflected at carrying value, which approximates fair value due to the short-term maturity. The Company’s long-term debt is recorded at its carrying value in the Condensed Consolidated Balance Sheets, which may differ from fair value. The Company’s interest rate cap is recorded at its Level 3 fair value in the Condensed Consolidated Balance Sheets. |
Constructive Retirement of Common Stock Repurchases | Constructive Retirement of Common Stock Repurchases When the Company's common stock is retired or purchased for constructive retirement for net share settlement of stock options, any excess purchase price over par value is allocated between additional paid-in-capital, to the extent that previous net gains from sales or retirements are included therein, and the remainder to retained earnings. |
Tax Receivable Agreement | Tax Receivable Agreement As part of the IPO, the Company entered into the Tax Receivable Agreement under which the Company will be required to pay to the Pre-IPO Stockholders 85% of the federal, state or local tax cash savings that the Company actually realizes on its taxable income following the IPO, as a result of the amortization of intangible assets and capitalized transaction costs that existed as of the date of the IPO. Under the Tax Receivable Agreement, generally the Company will retain the benefit of the remaining 15% of the applicable tax savings. The Tax Receivable Agreement liability is calculated based on current tax laws and the assumption that the Company and its subsidiaries will earn sufficient taxable income to realize the full tax benefits subject to the Tax Receivable Agreement. Updates to the Company’s blended state tax rate and allocation of U.S. versus foreign sourced income may impact the established liability and changes to that established liability would be recorded to other income (expense) in the period the Company made the determination regarding the applicable change. The Company expects that future payments under the Tax Receivable Agreement relating to the Pre-IPO Tax Assets could aggregate to $205.6 million over the 13-year remaining period under the Tax Receivable Agreement. Payments under the Tax Receivable Agreement, which began in the year ended December 31, 2022, are not conditioned upon the parties’ continued ownership of equity in the Company. |
Reclassifications | Reclassifications Certain amounts presented have been reclassified within “Note 6 - Accrued Expenses and Other Current Liabilities” as of December 31, 2022 to conform with the current period presentation, including a prior year reclassification from Other accrued expenses and current liabilities to Accrued advertising. The reclassifications had no effect on the Company’s Total current liabilities. |
NET SALES (Tables)
NET SALES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | As such, the Company’s three business channels consist of professional, specialty retail and DTC as follows: For the Three Months Ended For the Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net sales by Channel: Professional $ 40,940 $ 105,489 $ 89,337 $ 182,548 Specialty retail 29,767 64,229 64,626 128,501 DTC 38,534 41,185 69,065 86,050 Total net sales $ 109,241 $ 210,903 $ 223,028 $ 397,099 For the Three Months Ended For the Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net sales by Geography: United States $ 50,099 $ 121,320 $ 97,761 $ 241,430 International 59,142 89,583 125,267 155,669 Total net sales $ 109,241 $ 210,903 $ 223,028 $ 397,099 |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory as of June 30, 2023 and December 31, 2022 consisted of the following: June 30, 2023 December 31, 2022 Raw materials and packaging components $ 38,627 $ 36,194 Finished goods 89,882 108,231 Inventory $ 128,509 $ 144,425 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | Goodwill and intangible assets are comprised of the following: June 30, 2023 Estimated Gross Carrying Accumulated Net Carrying Amount Brand name 25 years $ 952,000 $ (132,438) $ 819,562 Product formulations 15 years 136,500 (31,532) 104,968 Customer relationships 20 years 53,000 (9,216) 43,784 Software 3 years 4,290 (889) 3,401 Total finite-lived intangibles 1,145,790 (174,075) 971,715 Goodwill Indefinite 168,300 — 168,300 Total goodwill and other intangibles $ 1,314,090 $ (174,075) $ 1,140,015 December 31, 2022 Estimated Gross Accumulated Net Carrying Amount Brand name 25 years $ 952,000 $ (113,394) $ 838,606 Product formulations 15 years 136,000 (26,998) 109,002 Customer relationships 20 years 53,000 (7,892) 45,108 Software 3 years 2,922 (610) 2,312 Total finite-lived intangibles 1,143,922 (148,894) 995,028 Goodwill Indefinite 168,300 — 168,300 Total goodwill and other intangibles $ 1,312,222 $ (148,894) $ 1,163,328 |
Schedule of Finite-Lived Intangible Assets Amortization Expense | Amortization of the Company’s definite-lived intangible assets for the three and six months ended June 30, 2023 and 2022 was as follows: For the Three Months Ended For the Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Amortization of patented formulations $ 1,964 $ 2,180 $ 3,706 $ 3,948 Amortization expense, brand name and customer relationships 10,186 10,182 20,368 20,365 Amortization expense, software 138 113 279 196 Amortization of other intangible assets 10,324 10,295 20,647 20,561 Amortization of patented formulations capitalized to inventory $ 303 $ 86 $ 828 $ 585 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses as of June 30, 2023 and December 31, 2022 consisted of the following: June 30, 2023 December 31, 2022 Accrued advertising 7,784 1,356 Accrued legal settlement 5,250 — Accrued professional fees 3,750 3,187 Accrued freight 2,251 3,283 Deferred revenue 2,077 2,015 Payroll liabilities 1,749 4,092 Other accrued expenses and current liabilities 1,708 2,360 Accrued interest 80 814 Accrued expenses and other current liabilities $ 24,649 $ 17,107 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | The Company’s Long-Term Debt as of June 30, 2023 and December 31, 2022 consisted of the following: June 30, 2023 December 31, 2022 Long-term debt Credit Agreement, dated as of February 23, 2022 (the “2022 Credit Agreement”) $675 Million 7-Year Senior Secured Term Loan Facility (the “2022 Term Loan Facility”) $ 666,563 $ 671,625 $150 Million 5-Year Senior Secured Revolving Credit Facility (the “2022 Revolver”) (1) — — Debt issuance costs (8,135) (8,854) Total term loan debt 658,428 662,771 Less: Current portion (6,750) (8,438) Long-term debt, net of debt issuance costs and current portion $ 651,678 $ 654,333 (1) As of June 30, 2023 and December 31, 2022, the Company did not have outstanding amounts drawn on the 2022 Revolver, including letters of credit and swingline loan sub-facilities. As of June 30, 2023, the Company had $150 million of available borrowing capacity under the 2022 Revolver. |
Schedule of Derivative Assets at Fair Value | The table below presents the fair value of the Company’s derivative financial instruments, which are classified within Other assets on the Company’s Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022. June 30, 2023 December 31, 2022 Fair value, interest rate cap asset $ 5,493 $ 5,042 |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following is a reconciliation of the numerator and denominator in the basic and diluted net income per common share computations: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Numerator: Net income $ 6,156 $ 87,715 $ 27,120 $ 149,676 Denominator: Weighted average common shares outstanding – basic 654,345,056 648,973,952 653,045,245 648,894,417 Dilutive common equivalent shares from equity options 26,004,105 42,391,120 29,062,487 44,090,671 Weighted average common shares outstanding – diluted 680,349,161 691,365,072 682,107,732 692,985,088 Net income per share: Basic $ 0.01 $ 0.14 $ 0.04 $ 0.23 Diluted $ 0.01 $ 0.13 $ 0.04 $ 0.22 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jun. 08, 2021 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | ||
Tax receivable agreement, percent of savings for holders | 85% | |
Tax receivable agreement, percent of tax benefits retained by company | 15% | |
Tax receivable agreement | $ 205.6 | |
Related party transaction, term of agreement (in years) | 13 years |
NET SALES - Narrative (Details)
NET SALES - Narrative (Details) - businessChannel | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Number of business channels | 3 | 3 | ||
United Kingdom | Geographic Concentration Risk | Revenue Benchmark | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration risk, percentage | 9% | 8% | 9% | 8% |
NET SALES - Schedule of Disaggr
NET SALES - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total net sales | $ 109,241 | $ 210,903 | $ 223,028 | $ 397,099 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net sales | 50,099 | 121,320 | 97,761 | 241,430 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net sales | 59,142 | 89,583 | 125,267 | 155,669 |
Professional | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net sales | 40,940 | 105,489 | 89,337 | 182,548 |
Specialty retail | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net sales | 29,767 | 64,229 | 64,626 | 128,501 |
DTC | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net sales | $ 38,534 | $ 41,185 | $ 69,065 | $ 86,050 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |||||
Raw materials and packaging components | $ 38,627 | $ 38,627 | $ 36,194 | ||
Finished goods | 89,882 | 89,882 | 108,231 | ||
Inventory | 128,509 | 128,509 | $ 144,425 | ||
Inventory write-off and disposal | $ 3,600 | $ 0 | $ 6,200 | $ 0 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Schedule of Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 1,145,790 | $ 1,143,922 |
Accumulated Amortization | (174,075) | (148,894) |
Net Carrying Amount | 971,715 | 995,028 |
Goodwill | 168,300 | 168,300 |
Gross Carrying Amount | 1,314,090 | 1,312,222 |
Net Carrying Amount | $ 1,140,015 | $ 1,163,328 |
Brand name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 25 years | 25 years |
Gross Carrying Amount | $ 952,000 | $ 952,000 |
Accumulated Amortization | (132,438) | (113,394) |
Net Carrying Amount | $ 819,562 | $ 838,606 |
Product formulations | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 15 years | 15 years |
Gross Carrying Amount | $ 136,500 | $ 136,000 |
Accumulated Amortization | (31,532) | (26,998) |
Net Carrying Amount | $ 104,968 | $ 109,002 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 20 years | 20 years |
Gross Carrying Amount | $ 53,000 | $ 53,000 |
Accumulated Amortization | (9,216) | (7,892) |
Net Carrying Amount | $ 43,784 | $ 45,108 |
Software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 3 years | 3 years |
Gross Carrying Amount | $ 4,290 | $ 2,922 |
Accumulated Amortization | (889) | (610) |
Net Carrying Amount | $ 3,401 | $ 2,312 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Schedule of Amortization of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Product formulations | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 1,964 | $ 2,180 | $ 3,706 | $ 3,948 |
Amortization of patented formulations capitalized to inventory | 303 | 86 | 828 | 585 |
Other Intangible Assets | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | 10,324 | 10,295 | 20,647 | 20,561 |
Brand Name and Customer Relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | 10,186 | 10,182 | 20,368 | 20,365 |
Software | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 138 | $ 113 | $ 279 | $ 196 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Accrued advertising | $ 7,784 | $ 1,356 |
Accrued legal settlement | 5,250 | 0 |
Accrued professional fees | 3,750 | 3,187 |
Accrued freight | 2,251 | 3,283 |
Deferred revenue | 2,077 | 2,015 |
Payroll liabilities | 1,749 | 4,092 |
Other accrued expenses and current liabilities | 1,708 | 2,360 |
Accrued interest | 80 | 814 |
Accrued expenses and other current liabilities | $ 24,649 | $ 17,107 |
ACCRUED EXPENSES AND OTHER CU_4
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Narrative (Details) $ in Millions | Jun. 30, 2023 USD ($) |
Payables and Accruals [Abstract] | |
Loss contingency accrual | $ 3.9 |
LONG-TERM DEBT - Schedule of Lo
LONG-TERM DEBT - Schedule of Long-term Debt Instruments (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Feb. 23, 2022 |
Debt Instrument [Line Items] | |||
Debt issuance costs | $ (8,135,000) | $ (8,854,000) | |
Total term loan debt | 658,428,000 | 662,771,000 | |
Less: Current portion | (6,750,000) | (8,438,000) | |
Long-term debt, net of debt issuance costs and current portion | 651,678,000 | 654,333,000 | |
2022 Credit Agreement | Line of Credit | Secured Debt | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | 666,563,000 | 671,625,000 | |
Maximum borrowing capacity | $ 675,000,000 | ||
Long-term debt, term (in years) | 7 years | ||
2022 Credit Agreement | Line of Credit | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | 0 | $ 0 | |
Maximum borrowing capacity | $ 150,000,000 | $ 150,000,000 | |
Long-term debt, term (in years) | 5 years |
LONG-TERM DEBT - Narrative (Det
LONG-TERM DEBT - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Aug. 11, 2022 | |
Debt Instrument [Line Items] | ||||||
Interest expense, debt | $ 10,200,000 | $ 8,700,000 | $ 20,700,000 | $ 20,200,000 | ||
Long-term debt | 658,428,000 | 658,428,000 | $ 662,771,000 | |||
Long-term debt, fair value | 626,600,000 | 626,600,000 | $ 624,600,000 | |||
Interest expense, net | 10,206,000 | 8,694,000 | 20,749,000 | 20,154,000 | ||
Interest Rate Cap | Designated as Hedging Instrument | ||||||
Debt Instrument [Line Items] | ||||||
Derivative, notional amount | $ 400,000,000 | |||||
Interest Rate Cap | Fair Value, Inputs, Level 3 | Designated as Hedging Instrument | Accumulated Other Comprehensive Income | ||||||
Debt Instrument [Line Items] | ||||||
Unrealized gain on derivatives | 1,700,000 | 1,000,000 | ||||
Reduction in interest expenses | 900,000 | (1,500,000) | ||||
Interest expense, net | $ 300,000 | $ 0 | $ 500,000 | $ 0 | ||
2022 Credit Agreement | Line of Credit | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, interest rate, effective percentage | 8.70% | 8.70% |
LONG-TERM DEBT - Schedule of De
LONG-TERM DEBT - Schedule of Derivative Assets at Fair Value (Details) - Interest Rate Cap - Designated as Hedging Instrument - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | Aug. 11, 2022 |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Fair value, interest rate cap asset | $ 400,000 | ||
Other Assets | Fair Value, Inputs, Level 3 | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Fair value, interest rate cap asset | $ 5,493 | $ 5,042 |
EQUITY - Narrative (Details)
EQUITY - Narrative (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Equity [Line Items] | ||
Exercise of stock-settled stock appreciation rights (in shares) | 109,620 | 117,180 |
Shares withheld and retired for taxes on exercise of stock settled appreciation rights (in shares) | 83,501 | 55,244 |
Options exercised (in shares) | 4,413,328 | 231,846 |
Cash settled units converted to stock appreciation rights (in shares) | 886,950 | |
Stock Appreciation Rights (SARs) | ||
Equity [Line Items] | ||
Cash settled units converted to stock appreciation rights, fair value liability reclassified to APIC | $ 1,632 |
RELATED PARTY TRANSACTIONS - Na
RELATED PARTY TRANSACTIONS - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Related Party Transaction [Line Items] | ||||
Payments for tax receivable agreement | $ 16,600 | $ 0 | $ 16,600 | $ 0 |
Services Related to the Development, Maintenance and Enhancement of the Company's Professional Application | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction, amounts of transaction | $ 6 | $ 22 | $ 12 | $ 27 |
CONTINGENCIES - Narrative (Deta
CONTINGENCIES - Narrative (Details) - plaintiff | Mar. 02, 2023 | Feb. 09, 2023 |
Commitments and Contingencies Disclosure [Abstract] | ||
Number of plaintiffs | 73 | 28 |
NET INCOME PER SHARE (Details)
NET INCOME PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator: | ||||||
Net income | $ 6,156 | $ 20,964 | $ 87,715 | $ 61,961 | $ 27,120 | $ 149,676 |
Denominator: | ||||||
Weighted average common shares outstanding - basic (in shares) | 654,345,056 | 648,973,952 | 653,045,245 | 648,894,417 | ||
Dilutive common equivalent shares from equity options | 26,004,105 | 42,391,120 | 29,062,487 | 44,090,671 | ||
Weighted average common shares outstanding – diluted (in shares) | 680,349,161 | 691,365,072 | 682,107,732 | 692,985,088 | ||
Net income per share: | ||||||
Basic (in usd per share) | $ 0.01 | $ 0.14 | $ 0.04 | $ 0.23 | ||
Diluted (in usd per share) | $ 0.01 | $ 0.13 | $ 0.04 | $ 0.22 |