OLPX offered at $17-$19 per share later this week

Olaplex Holdings Inc. is a scientifically pushed magnificence firm primarily targeted on manufacturing luxurious haircare merchandise for the skilled haircare business. The firm’s portfolio consists of merchandise for each skilled and residential use, together with shampoos and conditioners, and bond multipliers. The firm has 100 patents. Its merchandise are based mostly on scientifically supported designs aimed at treating broken hair.

Olaplex just lately filed for an preliminary public providing (IPO) for shares of widespread inventory held by its two institutional shareholders. The firm submitted an S-1 registration type to the Securities and Exchange Commission (SEC) on Aug. 27, 2021. It has since submitted two amendments to the unique S-1, the most recent of which was submitted on Sept. 28, 2021. Although an actual date for the IPO was not disclosed within the unique S-1 or in both of the amendments, it’s anticipated to happen this week. The shares can be listed on the Nasdaq Global Select Market tier of the broader Nasdaq Stock Market below the ticker image “OLPX”.

A complete of 67.0 million shares of Olaplex’s widespread inventory is anticipated to be offered within the providing. The sellers of the inventory are the corporate’s two institutional shareholders, that are Advent International Corp. and Mousse Partners Ltd. However, if the IPO’s underwriters promote greater than 67.0 million shares, they’ve the choice to buy an extra 10.05 million shares. This possibility is sometimes called a “greenshoe possibility”. The opening value of the shares is anticipated to fall someplace inside the vary of $17.00-$19.00 per share, which might fetch Olaplex a valuation as excessive as $12.3 billion. All of the shares are being offered by present stockholders and the corporate won’t obtain any of the proceeds of the sale.

Following the completion of the IPO, funding funds affiliated with non-public fairness agency Advent International, which acquired Olaplex in January 2020, would beneficially personal roughly 79.6% of the mixed voting energy of Olaplex’s widespread inventory. Or Advent would personal 78.2% of the mixed voting energy if the underwriters train the greenshoe choice to buy the extra 10.05 million shares. This will make Olaplex a “managed firm”, which can be exempt from sure company governance necessities, such because the requirement to have an unbiased board of administrators or unbiased compensation committee.

Key Takeaways

Olaplex is a luxurious haircare firm specializing within the provision {of professional} haircare merchandise.
Olaplex will go public below the ticker “OLPX” later this week at an estimated value vary of $17.00-$19.00.
The firm’s two institutional shareholders are promoting a mixed 67.0 million shares. The underwriters of the IPO have an choice to buy an extra 10.05 million shares within the case that the variety of shares offered exceeds 67.0 million.
Olaplex is focusing on a valuation of $12.3 billion within the IPO, up from $1.5 billion reported earlier this yr.
The firm generated internet earnings of $49.4 million on $152.1 million in internet gross sales throughout its most up-to-date quarter ended June 30, 2021.

Olaplex was based by the corporate’s former Chief Executive Officer (CEO) Dean Christal. Christal’s mom labored as a licensed hairdresser and operated a home-based salon, and his father owned 26 magnificence distribution shops, offering the son with a deep understanding of the haircare enterprise. Christal went on to launch Olaplex in 2014, starting with a line of simply three merchandise offered solely to haircare professionals. The firm’s bond multiplying know-how was a novel innovation within the business, enabling hairdressers to restore broken hair and enhance haircare companies offered to their clientele.

Since the preliminary launch, Olaplex has additional developed its product line, now providing a collection of 11 totally different haircare merchandise via skilled, specialty retail, and direct-to-consumer (DTC) channels. The firm’s focus is providing science-based merchandise that deal with the remedy, upkeep, and safety of hair. Its product portfolio, supported by scores of patents, creates limitations to entry for rivals within the haircare enterprise and associated industries.

Olaplex is at present led by President, CEO, and Director JuE Wong. Wong, who has intensive expertise within the magnificence and shopper industries, was named CEO in January 2020. She has experience managing fast-growing companies. Tiffany Walden is chief working officer (COO), chief authorized officer, secretary, and director, and Eric Tiziani is the chief monetary officer (CFO).

Olaplex Financials

Olaplex offered current monetary leads to its second modification to its S-1 registration type. For the quarter ended June 30, 2021, the corporate’s internet earnings rose practically twenty-five occasions to $49.4 million in comparison with the identical interval a yr in the past. Net gross sales elevated 175.3% yr over yr (YOY) to $152.1 million. For all of 2020, internet earnings sank 35.5% regardless of income progress of 90.4%. Large curiosity bills damage Olaplex’s earnings.

The firm’s operations and monetary outcomes have been additionally affected by the COVID-19 pandemic. The outbreak of the coronavirus in early 2020 disrupted Olaplex’s retail shops, hair salons, manufacturing, and distribution. Many salons have been required to shut or function at lowered capability, which triggered a shift in demand from the corporate’s skilled gross sales channel to its specialty retail and DTC channels. Olaplex stated it has not skilled a decline in demand from DTC channels at the same time as restrictions have eased and salons have begun returning to extra regular capability.

Olaplex’s whole e-book worth, the distinction between its property and liabilities, as of June 30, 2021, was $627.4 million. Total money and money equivalents on the corporate’s stability sheet at the tip of the interval have been $76.4 million, which is up practically seven occasions in comparison with the tip of 2020.

Olaplex Key Financials

 
Q2 FY 2021
Q2 FY 2020

Net Sales ($M)
152.1
55.3

Net Income ($M)
49.4
2.0

Source: Olaplex S-1 (Amendement No. 2)

How Much is Olaplex Worth?

In June 2021, Bloomberg reported that Advent was exploring choices to promote Olaplex and was focusing on a valuation of at least $1.5 billion. Advent finalized its possession of Olaplex in early 2020, however the monetary particulars of that transaction weren’t disclosed. Advent owns 89.3% of Olaplex’s excellent shares. The different institutional shareholder, non-public fairness agency Mousse Partners, owns 6.8%.

In the approaching IPO, Advent is at present focusing on a valuation of $12.3 billion, which is dramatically greater than the valuation given to Olaplex just a few months in the past. That greater valuation relies on the proposed most opening share value of $19.00 disclosed within the second modification to Olaplex’s S-1 submitting and the roughly 648.1 million whole variety of shares that can be excellent following the IPO. Advent is providing 62.5 million shares on the market within the IPO and Mousse Partners is providing 4.5 million for a complete of 67.0 million shares.

Olaplex Key Competitors

The dimension of the worldwide haircare market is anticipated to develop from an estimated $92.5 billion in 2020 to $105.1 billion in 2025. Olaplex faces plenty of massive rivals together with France-based L’Oreal S.A. (OR.PA), U.Okay.-based Unilever PLC (ULVR), Germany-based Henkel AG & Co. KGaA (HEN3), and Japan-based Kao Corp. (KAO). Olaplex additionally competes with smaller, unbiased manufacturers and a number of the firm’s rivals have possession pursuits in retailers which are its prospects.

The Bottom Line

Luxury haircare firm Olaplex submitted its IPO registration type in late August. A complete of 67.0 million shares are being offered on the market, plus an extra 10.05 million shares if the underwriters’ greenshoe possibility is exercised. The shares can be listed on the Nasdaq below the ticker “OLPX” at an anticipated opening value between $17.00-$19.00. The IPO is anticipated to happen this week.

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