Slides
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ICR Conference January 14, 2025
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1 1 Forward Looking Statements This presentation contains certain forward -looking statements within the meaning of the federal securities laws, including statements about the outlook of our business and industry and other matters referenced in our earnings release and SEC filings. All statements other than statements of historical fact contained in this presentation, including statements on our business strategy, plans, objectives, financial results, operating results, potential market and growth opportunities, or competitive position, are forward-looking statements. These forward-looking statements involve a number of risks and uncertainties, some of which management cannot predict, that could cause actual results to differ materially. Please refer to our SEC filings and earnings releases for a more detailed description of the risk factors that may affect our results. You should not rely upon forward -looking statements as predictions of future events. We have based the forward-looking statements contained in this presentation primarily on our current expectations and projections about future events and trends that we believe may impact our business, financial condition and operating results. Please note that these forward -looking statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise or publicly release the results of any revision to these forward -looking statements in light of new information, future events, or the occurrence of unanticipated events, except as required by law. Market data and industry information used through this presentation are based on management's knowledge of the industry and the good faith estimates of management. We also relied upon management's review of independent industry surveys and publications and other available information prepared by a number of third-party sources. All of the market data and industry information used in this presentation involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such data, information, and estimates. Although we believe that these sources are reliable, we cannot guarantee the accuracy or completeness of this information, and we have not independently verified the information provided by these or any other third -party sources referred to in this presentation. We make no representations or warranties as to the accuracy of any such statements, data, information, or estimates. Projections, assumptions, and estimates of our and our industry's future performance are subject to a high degree of uncertainty and risk. These uncertainties and risks, as well as other factors, could cause results to differ materially from those expressed in our estimates and beliefs and in the estimates prepared by third -parties.
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2 Carla Vernón Chief Executive Officer Welcome K ate Barton Chie f Growth Offic e r Dave L oretta Chi ef Fi nanci al Of f i cer Broadly experienced leadership team:
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Modern Brand + Modern CPG Carla Vernón, Chi ef Executi ve Of f i cer
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4 Strengthened Financial Foundation Modern Brand Dynamic leadership + Culture Scalable Growth A Modern CPG Company Poised for Growth
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• Founded in 2012 with the goal to create a new personal care company with clean ingredients and sustainability at its core • T he portf ol i o resonated wi th a new generati on of f ami l i es
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The Honest Company is a personal care company on a mission to challenge ingredients, ideals and industries so people can protect who they love .
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7 Consumers Have New Needs • Growing focus on ingredients and safety o Skin allergies among chi l dren have nearl y doubled since 1997 o 72% of consumers are concerned about the long -term effects of certain chemicals 2 • Market for sensitive skin products expected to nearl y doubl e by 2030 3 • Natural Personal Care expected to grow 3x faster than conventional 4 Children (0 -17) with a skin allergy the past 12 months over 3 year period 1 (% ) 1997- 1999 2000- 2002 2003- 2005 2006- 2008 2009- 2011 2012- 2014 2015- 2017 2018 6% 8% 10% 12% Global sensitive skincare products market size 3 ( $ in B) ‘22A ’23E ’24E ’25E ’26E ’27E ’28E ’29E ’30E Source: 1. CDC/NCHS, Nati onal Center for Heal th Stati sti cs, Nati onal Heal th I ntervi ew Survey; 2. Mi ntel Report Personal Care Con sumer – US – 2024; 3. KBV Research & AGP; 4. Persistence Market Research March 2023 & Mi ntel category reports for personal care categori es
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8 A higher standard of Clean that we call The Honest Standard Clean ingredients We ban 3,500+ ingredients In-house labs Innovative, proprietary formulas Toxicologist audited Rigorous research and testing 1 2 3 US1 EU2 24 ~2,000 3,500+ • No parabens • No sulfates • No phthalates • No synthetic fragrances • No petro-derived emollients • No PEGs • No mineral oil • No PFAS Number of ingredients not permitted in products 3 Source: 1. EWG, October 2022; 2. European Environmental Bureau, April 2022; 3. Internal proprietary data
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9 Single • Powerful • Brand Across Aisles Conventional CPGs Many Brands • Multiple Categories Category 1 Brand A Brand B Brand C Brand D Brand E Brand F Brand G Category 2 Category 3 Category 4 Category 5 Category 6 Category 7 Honest is a Branded House One Brand • Many Categories Baby Personal Care Wipes Diapers WellnessSkincare Cosmetics Apparel
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10 2021 The Honest Company IPO The Honest Journey 2023 New management team in place 2023 - 2025 Transformation Initiative bearing fruit Tomorrow Continued scale and business model maximization
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Scalable Growth Kate Barton, Chief Growth Officer
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12 Revolutionized Baby Care Brought modern designs to diaper category Launched organic apparel to match diapers Created baby spa moments Baby gifting Online community
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13 natural brand in baby personal care1 #1 Household penetration growi ng at +4% 4 Year CAGR3 Top ranked purpose -d rive n personal care brand 6 L argest share ga ine r in natural wi pes1 All p rod uc t segments i n baby growing share 2 c lima te-p le d ge frie nd ly mascara on A mazon 4 #1 Oprah’s Favorite Things 5: “Fam J ams ” 4 years in a row Source: 1. Ci rcana MULO data, L52 weeks ending 09/29/24; 2. Ci rcana MULO + Amazon S ta c klineL52 weeks ending 09/29/24; 3. Numerator Data L4 years through September 2024; 4. Amazon S ta c klinedata 2025 YTD; 5. Oprahdai l y.com December 4, 2024; 6. I ndependent third -party data from November 2020 Our Portfolio
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14 Distribution expansion a focal point of growth Increasing Total Distribution Points reflects the most significant growth opportunity Distribution remains underpenetrated relative to competition Innovation supports our objective of increased availability 1 2 3
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15 Widely available with room to grow .com Our retail partners today Multiple levels of opportunity Stores Doors Aisles Shelves Facings Innovation Scalable Growth
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16 Large runway for growth into more doors Scalable Growth | Doors 2024 year-end total doors selling Honest Leading Competitor ~93,000 ~45,000 ~19,000 ~65,000 Source: Circana MULO data, last 12 weeks ending 12/29/24
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17 Hero products under -distributed Scalable Growth | Facings Source: Circana MULO data, last 12 weeks ending 12/29/24 Hydrogel Cream 288 Ct. Wip e s L avender Bubbl e Bath Di apers S ize 1 Club Box Max ACV % by SKU Honest Key Competitor 19 10 33 34 82 88 52 87
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18 Opportunity for larger presence on shelf Scalable Growth | Facings Source: Circana MULO data, last 12 weeks ending 12/29/24 11 4 7 61 14 33 Average products on shelf per store selling Honest Key Competitor Di apers Wip e s Faci al Ski ncare
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Strengthened Financial Foundation Dave Loretta, Chief Financial Officer
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20 Honest is on a transformation journey 2023 Transform 2025 Strengthen 2026+ Grow & Scale Brand Maximization – leverage brand to drive growth through innovation & improved marketing Margin Enhancement – expand margins through mix and cost savings activities Operating Discipline – build a culture of executional excellence
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21 Transformation Initiative delivering strong results Strengthened financial foundation | FYTD Q3 2024 +10% YTD Revenue growth1 +$33M YTD Adj. EBITDA growth1 +14% YTD TDP growth2 +1,000 bps YTD Gross Margin increase1 High-performing practices from leading CPG, Tech and Retail $53M Cash $0 Debt Brand Maximization Margin Enhancement Operating Discipline Source: 1. FY24 Q3 10-Q; 2. Circana MULO data, 9/30/24
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22 Achieved Adj. EBITDA profitability Strengthened financial foundation Q4 2023 Q1 2024 Q2 2024 Q3 2024 Source: Company Financials: 10-Q and 10-K $7.1 $7.6 $2.6 Q3 2023 ($1.1) Quarterly Adj. EBITDA ($ in M) $4.3
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23 Financial Reporting Q3 2024 Earnings Highlights Q3 2024 Results YTD 2024 Results 2024 Guidance Revenue +15% vs. LY +10% vs. LY +High Single Digit percentage growth vs. LY Gross Margin % + 710 bps vs. LY + 1035 bps vs. LY Adj. EBITDA +$8M vs. LY +$33M vs. LY Positive Adj. EBITDA $20M to $22M range
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Appendix
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25 Reconciliation of GAAP and Non -GAAP Financial Measures Appendix Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023 Q1 2024 Q2 2024 Q3 2024 Net income (loss) ($18.9) ($13.4) ($8.1) $1.1 ($39.2) ($1.4) ($4.1) $0.2 Interest and other (income) expense, net 0.2 0.0 0.1 (0.0) 0.3 0.0 0.0 (0.1) Income tax provision 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 Depreciation and amortization 0.7 0.7 0.7 0.7 2.7 0.7 0.7 0.7 Stock-based compensation 3.8 6.4 3.7 1.9 15.8 2.5 8.9 2.2 Securities Litigation expense 1.2 1.8 1.4 0.4 4.7 0.4 1.3 4.1 CEO and CFO transition expense 1.3 0.0 0.8 0.0 2.1 0.2 0.7 0.0 Restructuring costs 1.4 0.4 0.4 0.1 2.2 0.0 0.0 0.0 Payroll tax expense related to stock -based compensation 0.1 0.0 0.0 0.0 0.1 0.2 0.1 0.1 Adj. EBITDA ($10.3) ($4.1) ($1.1) $4.3 ($11.2) $2.6 $7.6 $7.1 Adjusted EBITDA ($ millions) Source: Company Financials: 10-Q and 10-K