Hair care company with UCSB roots plans IPO
Olaplex, a hair care products company founded in Santa Barbara using technology developed by UCSB chemists, is planning an initial public stock offering.
The company filed a prospectus with the U.S. Securities and Exchange Commission on Aug. 27, but the filing gave no details on the price of the shares, the number of shares to be issued, or the date of the IPO. Olaplex expects to list its shares on the Nasdaq under the symbol OLPX.
The company said in its SEC filing that it does not plan to issue new shares, and the IPO consists of existing shareholders selling their shares. Olaplex’s current majority owner is the private equity firm Advent International, which bought the company from its founders in 2019 for an undisclosed price.
“Olaplex is in a quiet period and will not be able to comment at this time,” a company spokesperson said in an email to the Business Times on Sept. 3.
As of June 30, Olaplex had 82 employees. The company is fully remote, and was before the pandemic, so it does not have a physical headquarters. Its official headquarters on SEC filings is an address on Coast Village Road in Montecito.
Olaplex was founded in 2014 in Santa Barbara by Dean and Darcy Christal. The technology for the company’s products was developed by UCSB chemistry professor Craig Hawker and his former graduate student, Eric Pressly.
The company develops and manufactures shampoos, conditioners and specialty hair products, selling through national and international distributors and retailers. Olaplex said in its prospectus that it has experienced “significant” growth in recent years, and expanded its operations rapidly since its founding in 2014.
“The strength of our business model and ability to scale have created a compelling financial profile characterized by revenue growth and very strong profitability over the past two years that we believe is among the best in our industry,” the filing said.
After its IPO, Olaplex intends to expand its consumer base and it expects to grow its retail distribution by establishing commercial relationships with new customers, “where we see many untapped opportunities,” the company said in its SEC filing.
Olaplex’s net income dropped from $60.9 million in 2019 to $39.3 million in 2020, representing a 36% decrease. But its adjusted net income increased from $100.5 million in 2019 to $131.1 million in 2020, a 30% increase.
And net sales increased from $148.2 million in 2019 to $282.3 million in 2020, a 90% increase, according to SEC filings.
“Our recent rapid growth may not be sustainable or indicative of future growth, and we expect our growth rate to ultimately slow over time,” Olaplex said in its prospectus.
The company is focused on selling to both consumers and professional hairstylists. In 2020, a majority of Olaplex’s net sales were generated through the sale of its products to professional salon distributors.
In the six months that ended June 30, Olaplex said that Sephora, Beauty Systems Group and Amazon.com, Inc. each accounted for more than 10% of its net sales. Olaplex expects the three customers, as well as SalonCentric and a “small number” of others will continue to account for a large portion of its net sales for the foreseeable future.
Olaplex said that reliance on a limited number of customers for a large portion of its sales represents a risk going forward.
The ongoing global public health crisis has also significantly increased economic uncertainty, Olaplex said, stating that “the extent to which the COVID-19 pandemic could adversely affect our financial results will depend on future developments that are highly uncertain and difficult to predict.”