Welcome to the Olaplex Business Update Conference Call. At this time, all participants are on a listen only mode. After the speakers presentations, there'll be a question and answer session. To ask a question at that time, please press star one one on your touchtone telephone. As a reminder, today's conference call is being recorded. I would now like to turn the call over to your host, Allison Malkin with ICR. Please go ahead. Thank you, and welcome to the Olaplex Business Update Call. With me today are JuE Wong, Chief Executive Officer, and Eric Tiziani, Chief Financial Officer. Before we start, I would like to remind you that management will make certain statements today which are forward-looking, including statements about the outlook of Olaplex's business and other matters referenced in the company's preliminary earnings release issued today. Each forward-looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those projected in or implied by such statements. Additional information regarding these factors appears under the heading Cautionary Note regarding forward-looking statements in the company's preliminary earnings release and in the company's filings that it makes with the Securities and Exchange Commission that are available at www.sec.gov and on the investor relations section of the company's website at ir.olaplex.com. The forward-looking statements on this call speak only as of the original date of this call, and we undertake no obligation to update or revise any of these statements. Also, during this call, management will discuss certain non-GAAP financial measures which management believes can be useful in evaluating the company's performance. The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for results compared in accordance with GAAP. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures in the company's preliminary earnings release. A live broadcast of this call is also available on the investor relations section of the company's website at ir.olaplex.com. I will now turn the call over to JuE Wong. Thank you, Allison, and good evening. Thank you for joining us on short notice. For today's call, I will review our revision to full year guidance, describe the developments that led to our business update, and provide insight into the actions we are taking to drive growth. I will also highlight the many opportunities we believe we have to further leverage our brand, science-based technology, and flexible operating platform to deliver what we expect to be strong sales growth and operating margins. Following my remarks, Eric will provide more detail on our financial performance and guidance. Then we will open the call to take questions. As outlined in our press release for fiscal 2022, we currently expect net sales in the range of $704 million-$711 million. This compares to our previous guidance range of $796 million-$826 million, and at the midpoint of this revised range represents growth of 18% over fiscal 2021 net sales of $598 million. Adjusted EBITDA is currently expected in the range of $425 million-$431 million. This compares to our previous guidance range of $504 million-$526 million and fiscal 2021 adjusted EBITDA of $409 million, and at the midpoint represents growth of 5% with an adjusted EBITDA margin of 60.5%. Let me share perspective of what caused this moderation in sales growth and how we are planning to address it. We believe there are two key reasons for the change in growth trajectory. First, we have seen a slowdown in sell-through momentum. We believe this has been driven by a combination of factors, including macroeconomic pressures have impacted both pro stylists and consumers, with the most pronounced impact being on our U.S. pro stylists. U.S. pros are buying less and buying closer to need as they report clients lengthening the time between salon visits and spending less for services and take-home products. In addition, we have seen increased competitive activity in our highly attractive core bond building space. Both newcomers and large hair care incumbents have extended into our category and have intensified promotional behavior. Olaplex has made a strategic decision to avoid over-promotion, instead prioritizing spending behind long-term sustainable brand health. In this context, it is important to note that we do not believe that any of our competitors represents a lasting threat to our competitive position. Moreover, while we believe our customer retention is best in class, the macroeconomic impact and competitive activity have put pressure on our ability to attract new consumers to the brand. The second driver of our change in performance is inventory rebalancing across partners. Our retail, DTC, and pro B2B customers are experiencing the same macroeconomic pressures and being impacted by the same sell-through trends, while at the same time, increasing their confidence in the supply chain. As a result, several are choosing to reduce weeks of supply on hand. This inventory strategy directly impacts our sell-in. While these pressures have impacted our business, we believe that we are well-positioned to pursue continued growth, and we will continue to nurture our long-term relationship with our professional community by continuing to support them and our customers through this challenging macroeconomic climate. We have aggressive near-term plans in place to address the factors that I just explained. Let me take you through some of our near-term plans. Starting with our plans to improve sell-through momentum. First, while we cannot control the macroeconomic environment, we are proactively supporting our pro stylist community, just as we did during the pandemic. Specifically, we are relaunching our pro affiliate program. This program allows stylists to generate a commission by directing their clients to olaplex.com without having to stock our products in their salons. In addition to the affiliate program, we will be enhancing the tools that we provide to stylists, such as introducing less costly single-use packets for our professional products. This decreases the initial financial outlay for our products by stylists and gives them an opportunity to recoup more than 100% of their cost of goods after a single treatment. We will also be augmenting our education outreach. Second, as originally planned, we have doubled our marketing investment in Q3 and will continue to do so in Q4. Going forward, we have intensified our high-impact marketing activations to drive customer acquisition, including, for example, an out-of-home awareness building campaign ahead of holiday, focused on holiday sets. Increased sampling efforts across channels to get our products into the hands of more consumers. We know that given the outstanding efficacy of our products, our conversion rate on samples is extremely high, reaching 44% at one of our key retail partners. Enhanced exposure with several of our key retail partners. This will take many forms, including increased shelf space at some retailers. At Sephora, we will participate in sampling for Sephora's Buy Online, Pick Up in Store program, and also take part for the second time this year in their highly exclusive VIB birthday gift program. We are also working with our partners to create enhanced Olaplex retail toolkits, providing our retail partners with customized tools to arm their sales forces, including, for instance, but not limited to shelf talkers, educational materials, and signage. A full professional-focused social media campaign featuring our advocates, highlighting their art, and why they love Olaplex. New and exciting partnerships, including a collaboration with Equinox that gives us access to their member base, and we expect this will drive brand awareness and generate direct revenue. Third, with respect to olaplex.com, we will amplify our performance in two major ways. First, we intend to drive customers to the site with enhanced paid media, SEO, and CRM strategies. We will aim to increase conversion on-site through targeted site enhancements that are already underway. As it relates to inventory rebalancing, we anticipate that our partners will further evaluate their inventory on hand. We will partner with them to achieve mutually healthy inventory levels. In addition to these sell-through related actions, I would also note that several other near-term incremental growth opportunities have already been planned and are underway. Specifically, we are expanding distribution across the globe. We are currently finalizing plans, including naming a new master distributor for Southeast Asia. Expanding our presence in the pharmacy channel in France, launching the pharmacy channel in Italy, and launching travel retail in Europe. Looking to the long term, we expect to share more detail during our upcoming earnings call on November the ninth. For today, let me briefly share some of the highlights. Overall, we plan to focus on four major sources of growth. First, we will continue to disrupt with innovation. In our core haircare business, we have a multi-year plan to introduce complementary, non-cannibalizing, large prestige and professional hair segment products. We also continue to plan to enter into segments and category adjacencies. Second, we will amplify our channel coverage. In addition to pursuing net new distribution opportunities, as I have just described, we believe that we have significant opportunity for incremental growth in our current channels. Third, we will chart new geographies. Our priority international markets are Europe and Asia, and we have specific plans in place for new market entry and expansions. Finally, we will ignite our global brand. In addition to continuing the type of exciting marketing activities I previously outlined, we expect to increase our investments in global brand marketing. With these four key growth pillars in mind, we believe that we are extremely well-positioned to capture growth. We start from a position of strength in a resilient consumer beauty category with strong brand fundamentals. Despite the macro environment, the retail beauty market continues to grow. NPD reports first half 2022 increased 14% versus last year. While NPD has not yet released full Q3 data, US sales revenue for the prestige haircare category was up 29% from July to August 2022 versus the same period last year. Olaplex grew by 50% according to NPD's retail tracking service. Within this context, the Olaplex brand remains fundamentally strong. Our aided awareness has grown from mid-50s to mid-60s in less than a year during 2022, according to our independently sourced monthly brand health tracker. Our conversion from awareness to purchase is best in class, about 25% higher than peer brands. Our retention is also best in class, more than 35% higher than peer brands at one of our key retail partners, for example. Finally, our brand health tracker reveals that we are number one versus peer brands on the equities that consumers and pro stylists care about, including perceptions of quality, making hair healthier, being best for damaged hair, and being scientifically proven to benefit hair. Importantly, Olaplex has maintained its number one position across the categories in which we operate. As mentioned earlier, there is increased competitive activity in the bond building space, but Olaplex is the original category creator and continues to lead with its superior efficacy and innovation, as evidenced by the following ranking data. Olaplex was the number six brand in overall prestige beauty in first half 2022 per NPD. Olaplex was the number one selling brand in both the U.S. and U.K. prestige hair market in 2021 and through August 2022 per NPD. Olaplex had the top five best-selling products in the U.S. prestige hair market and the top four best-selling products in the U.K. prestige haircare market July to August of 2022 per NPD. Earned media value is another positive story. Olaplex held the top position in August with an EMV that was three times ahead of the number two hair brand and achieved the number four overall position in beauty, according to Tribe Dynamics. Year-to-date, Olaplex holds the top position for EMV in hair. We also have a proven track record delivering impressive reach and relevance on social media. This is best demonstrated by the record performance of our TikTok hashtag Olaplex Challenge, which currently sits at 9.2 billion views. This challenge alone garnered $17.2 million of our $23.3 million of earned media value in August. Per Tribe Dynamics, our August EMV gave us 191% month-over-month growth. In the past 10 months, we have grown our following. Our Facebook organic reach rose to 2.9 million, up from 1.3 million. Our Instagram has 2.3 million followers. In summary, as an agile business, we have already identified and put in place actions intended to accelerate demand. While the macroeconomic issues we have outlined present a headwind, we believe that we will continue to succeed as we support our community and serve our customers with excellence. We are confident that the combination of our highly talented team and competitive advantages, including a powerful brand, patent-protected, science-based technology, an asset-light business model, and a strong community of stylists and end consumers, has us uniquely positioned to not only navigate during this dynamic period, but be powerfully positioned for the future. For 2022, with our updated full year guidance, we expect to deliver an 18% increase in revenue and a 60.5% Adjusted EBITDA margin, each at the midpoint of our guidance range, with very strong cash flow generation. More importantly, we have initiatives in place that are expected to provide us with positive momentum as we turn the corner into 2023. We look forward to speaking with you in a few weeks during our third quarter earnings call to provide a more in-depth view of our performance and to outline the building blocks for growth. We remain confident in the future of Olaplex and expect our strategy to deliver long-term value for our stakeholders. Before I turn it over to Eric, I would like to provide a leadership update. After nearly seven remarkable years at Olaplex, Tiffany Walden is stepping away from day-to-day operations and transitioning from her role of Chief Operating Officer into a long-term advisory role effective today. As a Senior Advisor, she will continue to ensure a seamless transition of responsibility and continue supporting the business going forward. As part of this transition, she's also resigning from the Olaplex board. Tiffany has been with Olaplex since our earliest days and has made an indelible mark on the business. We are grateful for her tenure and impact and look forward to her continued partnership in her new advisory role. With this transition, we are taking the opportunity to adjust our leadership structure. We plan to create a new role of chief revenue officer and eliminate the COO role. We have already launched a comprehensive search for a candidate to lead our sales organization going forward and expect to share more at the appropriate time. In the interim, the sales organization will report directly to me. Additionally, the education team will now reside within our marketing division and will report to Charlotte Watson, Chief Marketing Officer. Now let me turn it over to Eric to talk about Q3 and the updated fiscal year 2022 guidance in more detail. Eric? Thank you, JuE, and good evening, everyone. Today, I'll provide you with our preliminary expectations for third quarter net sales and net income and share our updated outlook for fiscal 2022. Keep in mind the quarter recently closed, so these expectations for the third quarter are preliminary. We plan to report full third quarter results on November ninth. Let me start with the third quarter. As outlined in our press release, on a preliminary unaudited basis, we expect third quarter net sales of approximately $176.5 million, representing a 9.2% increase from net sales of $161.6 million in the third quarter last year. Breaking this down further, by channel, we expect professional sales to decline approximately 16% following a 57.6% increase in the third quarter last year, specialty retail to increase 60% following a 128.1% increase in the third quarter last year, and DTC to decline approximately 3% following an 86.9% increase in the third quarter last year. By geography, we expect the U.S. to decline 4% and international to increase 28%. In Q3, the miss to our expectations and shipments was disproportionately driven by two customer groups: U.S. professional and a U.S. pure-play e-commerce customer within DTC. These link to the year-over-year sales declines in the professional and DTC channels, as well as the pressure we saw specifically in the U.S. We saw a reduction in U.S. professional orders as we believe macroeconomic concerns are impacting the stylist community, and our key distributors chose to pull back on inventory levels in response to the lower sell-through trends. Despite this, per third-party data which we receive on a one-quarter lag, I wanna stress that through the second quarter, we are still gaining market share year-over-year in the U.S. professional channel. We've also seen a deceleration of sell-through trends in the U.S. retail and DTC channels related to slower market growth and increased competitive activity, including from discounting. In the third quarter, this was most acutely felt at a key U.S. DTC customer, which reduced orders to lower inventory levels, in part due to slower sell-through and in part to meet lower targeted levels of inventory on hand. I will also note that Q3 net sales in retail, DTC, and our international professional business benefited from a higher sell-in of holiday kits in 2022 versus 2021, which is part of what's driving retail, DTC, and international net sales growth to be stronger in Q3 than our projection for Q4. As a reminder, holiday kits, which are typically product bundles, are a traditional fourth quarter offering in the industry and are sold across channels, providing a good opportunity to attract new consumers to our brands. Turning to Q3 profit. We currently expect third quarter net income in the range of $59 million-$61 million, which compares to $56.6 million in the third quarter last year. Adjusted net income in the range of $71.3 million-$73.3 million, which compares to $74.4 million in the third quarter last year. Adjusted EBITDA is currently expected in the range of $100 million-$102 million compared to adjusted EBITDA of $106.8 million in the third quarter last year. These profit expectations include the flow-through impact from lower sales while maintaining our investments in marketing, R&D, and the organization to support future growth. They also include approximately $2 million of unfavorable transactional impact from foreign exchange rates. We further expect adjusted gross margin to be 74.1%-75.2% in Q3, reflecting the deleverage from our lower sales on our fixed warehousing costs and the higher proportion of sales from holiday kits. Inventory is expected to be in the range of $150 million-$152 million, an increase of $10 million-$12 million from the end of Q2 2022, and higher than planned due to the lower sales delivery. As it relates to the fourth quarter, while we have actions in place to accelerate growth, we believe it is prudent to plan for an increasingly difficult macroeconomic operating environment. With this in mind, we currently expect fourth quarter net sales in a range of $130 million-$137 million versus $166.5 million in the 2021 fourth quarter. As a reminder, last year's fourth quarter included $15 million in initial pipeline shipments for our launch into Ulta Beauty. At the midpoint of our fiscal 2022 sales guidance, our implied expectation for Q4 2022 sales growth is professional sales to decrease 4% as compared to growth of 9% in the fourth quarter of 2021, specialty retail to decrease 36% following an increase of 332% in the fourth quarter of 2021, and DTC to decrease 19% following an increase of 85% in the fourth quarter of 2021. U.S. to decrease 21% as compared to growth of 95% in the fourth quarter of 2021, and international to decrease 19% following an increase of 61% in the fourth quarter of 2021. Our revised guidance now assumes that we will not be able to lap the particularly robust sales lift that we experienced during the Q4 holiday period last year when we benefited from significant replenishment orders across our specialty retail and DTC channels at a time when we believe consumer demand was stronger and certain of our competitors struggled with consistent supply. In addition, we expect that further weakening in the global macro environment will lead to additional pressure on consumer demand and customer inventory reductions. As we look ahead, we remain highly profitable and cash generating with a healthy balance sheet to support our future growth plans. For the 2022 fiscal year, we expect net sales in the range of $704 million-$711 million, an 18% increase at the guidance midpoint, versus actual net sales of $598 million in fiscal 2021. Adjusted net income in the range of $303 million-$307 million, an 11% increase at the midpoint from an actual adjusted net income of $276 million in fiscal 2021. Adjusted EBITDA is expected in the range of $425 million-$431 million, a 5% increase at the midpoint from actual adjusted EBITDA of $409 million last year. As you would expect, we are taking actions in response to this quickly changing operating environment. We have already altered our sourcing plans and slowed procurement to match the new sales forecast. Over time, this will lower our own inventory to target levels, and the timing of this will depend on sell-through trends. We are also pushing forward with key savings initiatives in our supply chain, such as our new European manufacturer, as well as a new warehouse and logistics provider in the U.S. that we expect will generate significant cost efficiencies in 2023 and beyond. This should provide more fuel to invest back into the business. As Julie described in more detail, we are implementing near-term actions aimed at accelerating demand in the current environment, and we are executing against the long-term growth pillars that we believe will position us well for future sustained growth. Overall, we expect fiscal 2022 to be another year of strong growth, profitability, and cash generation. We look forward to updating you on our progress when we report actual third quarter results in November. Thank you for your interest. Operator, we are now ready for questions. Thanks. Again, ladies and gentlemen, if you'd like to ask a question, please press star one one on your touchtone telephone. Again, to ask a question, please press star one one. We do ask that you please limit yourself to one question, and then you may rejoin the queue. Our first question comes from Jonna Kim of Cowen. Your line is open. Long term, although it's still intact, the guidance that you provided during IPO, just in light of what's happening, do you continue to see revenue bouncing back 20% plus longer term and, you know, EBITDA margin in the high 50%? Just curious your thoughts on that. Thank you very much. Hi, Jonna. It's Eric here. I'll take that. Thanks for the question. You know, our focus today was updating the guidance on fiscal 2022. You know, with our revised 2022 guidance, we actually remain ahead in absolute sales dollars than what we contemplated at the time of our IPO last September. Our growth accelerated even faster than we planned to get to this point against the backdrop of a very different and more challenging macroeconomic environment. We expect to provide 2023 guidance and updated medium-term targets at the appropriate time in 2023, but we believe we're still in the early stages of the long-term growth for this company. Thank you. Our next question comes from Andrea Teixeira of JP Morgan. Your line is open. For the fourth quarter, if I understood it correctly, even retail, you're expecting to be down, I believe if I got it correctly, north of 30% for the fourth quarter. I know you, I think you had a much worse, I mean, a very tough comparison of 330%. That being said, the dollar amount in the fourth quarter, if my math is correct, it would be around $40 million, much, much lower than the 74 that I think, if my math is correct, for the third quarter. I just wanna understand. I understand that you shipped your holiday kits in the third quarter, but just wanna make sure that I get why the fourth quarter is actually reading much worse, and then your inventory levels at the midpoint, $151 million, is significantly above what you were tracking before. If we can talk about that and the reasons for Tiffany to leave, that would be wonderful. Thank you. Andrea, I'd like to take your first question. I didn't quite hear the beginning of it. Were you asking specifically about retail or overall Q4? I apologize. Andrea, please dial one one again for me. You know what? I'll just take- Her line is open. I'm back. Hello? Can you hear me? Yeah. Andrea, sorry I didn't quite catch the beginning of your question. It didn't come through the call. Were you asking specifically about retail for Q4 or in general? Yeah, thank you, Eric. Yes. I mean, I was taken out of the queue. I think the fourth quarter in general, of course, it shows overall a huge decline. It's if my math is correct, your embedded decline for the fourth quarter is about 19% in the midpoint. That's right. Yeah, when you look at the components, I understand the professional deceleration, but the retail, when you gave at the end of the call, you gave what's implied by channel in the fourth quarter. I think you meant 36% in retail. I guess understandably so, it's the highest comp that you have. From a dollar perspective, it implies about $40 million in the fourth quarter from $74 million in the third quarter. Yes. That deceleration is pretty steep. I wanna see what's leading to that. Yeah. Thank you for that. Thanks for repeating the question. I'll start by saying I encourage you to look at H2 to take out some of the quarterly noise, and that's true across channels. But for retail specifically, I'll give a few reasons for that fourth quarter absolute sales number. One, it's lapping of Ulta pipeline versus the prior year. That's the $15 million in pipeline shipments that we noted for the launch of Ulta Beauty in Q4 last year. Second, we sold more of our holiday kits for the season in Q3 2022 versus across Q3 and Q4 last year in 2021. Third, we're lapping this particularly strong holiday season last year when we had strong replenishment orders, when consumer demand was stronger and we believe certain competitors struggled with supply. Specifically on retail, you noted the comp there, which was 332% growth in specialty retail in the fourth quarter last year. We're now signaling in this guidance that while we're seeing a lift across channels, we're not gonna lap the very strong growth that we saw in the same quarter last year, and this is reflected in our guidance. Thank you. Our next question comes from Jonathan Keypour of Bank of America. Your line is open. Mr. Keypour, please make sure your phone isn't on mute. Hello. Can you guys hear me okay? Your line is open, yep. Thank you. Sorry, technical difficulties, I guess. My questions are around the advertising and promotion dollars you guys are gonna be spending. I guess, typically, you know, paid media hadn't been a part of Olaplex's strategy. That seems to be changing now. I'm just wondering what gives you the confidence that those expenditures will be able to generate growth. You know, in light of you guys mentioning again on this call the earned media dollars, you know, if we take the earned media dollars at face value, that also seems to not have been able to generate the kind of growth we were hoping for. I just wonder, you know, with the outlays you guys are planning, what is different and where. Sort of why should we have faith that that will be able to move the needle? This is JuE Wong, Jonathan Keypour. Thank you for the question. I'll take this. You know, let me just clarify. We are growing, right? It's +18% over 2021, fiscal year of 2021, and this is against a backdrop of very challenging macroeconomic climate. As well as you have seen heavier discounting from the competitive set, plus an inventory rebalancing situation because supply chain conditions have improved. While we, against that backdrop, are still growing, and more importantly, you're right. You know, we have spent and really invested in our marketing. If you look at where we are spending, we are spending to make sure that we can actually look at returns on those investments, whether it's through out-of-home advertising, through billboard, where we can actually drive customers specifically to the location because there's a call to action. We are able to do sampling, where we are actually have the best return, you know, as high as 44% in a couple of specific retail partners situation. Our confidence level is when you are seeing the kind of earned media value that we have and the interaction that the brand has, where it's driving into best-in-class retention, it gives us a lot of confidence that we can still continue to really make sure that our customers will continue to work with us. With the more sort of, what we call traditional advertising on a digital platform, we can definitely work with acquiring more new customers. That also can be seen through the sampling piece of our initiatives. Thank you. Our next question comes from Dana Telsey of Telsey Advisory Group. Your line is open. Hi. Good afternoon, everyone. Julie, can you expand on some of the initiatives that you're putting in place to drive growth and the timeline to reaccelerate? Eric or Julie, can you talk about pricing given the initiatives that you had done and how you're thinking about the promotional environment going forward? Lastly, the inventory levels, how you see them progressing as we go through the first half of calendar 2023. Thank you. Thank you, Dana. What I'm going to do is this, I'm gonna take your first three questions, and then I'm gonna pass it to Eric to answer your last question. Let's kind of like break down the marketing activations, and most of these are really near term so that we can make an impact and address, you know, the current situation, the current macro environment that we are seeing. When we talk about the sampling program, that is already being underway because this is where people are going to try the samples. They like it, they're gonna come back into store during the holiday season to either replenish or to try the product. When we talk about the out-of-home advertising, we have a Times Square billboard where there's millions of customers or millions of people walking through the location, being able to see what are we offering for the holiday set. We are really focusing on the Q3, Q4 period. More importantly, we are also having activations with the professional stylist. We are reactivating our professional affiliate program, where we are able to help them maintain sell-through with their clients without carrying in inventory. We did that during the pandemic, and it was one of our most successful programs. Because even when at that time, where pro was 50% of our business, we were able to more than close to double our business for that year, with 50% of pro being kind of in shelter in place. Finally, I would like to say in terms of the discounting piece of it, we have been very deliberate. You have heard us say several times, you know, in interactions with yourself, that what is important is that we deliver performance and support of the claims that we're making on our product. When we deliver the performance, that's what our customer wants. It is not about just discounting it to hurt the brand in the long term. Ultimately, what we do believe is when we do participate in any kind of promotion, it is for customer acquisition, and it's also to allow customers to really look at the regimen built for our brand. With that, I'll turn it over to Eric. Thanks, Julie, and thanks, Dana. I'll take that inventory question. As we mentioned, we've already altered our sourcing plans and flow of procurement to match the new sales forecast. You know, as the sales forecast came down, you know, our inventory level did go up higher than we had originally planned. Over time, because of these actions, these will lower our inventory levels to target levels, and the timing of that will be over the course of 2023. Thank you. That is all the time we have for questions. I would like to. Yes. Thank you everyone, you know, for taking the time. As I said, it's short notice. We look forward to speaking with you when we speak with you on November the ninth on our Q3 results. Thank you. This does conclude today's conference. Thank you all for participating. You may now disconnect.