XML 37 R17.htm IDEA: XBRL DOCUMENT
v3.25.0.1

LONG-TERM DEBT | 12 Months Ended
--- | ---
Dec. 31, 2024
Debt Disclosure [Abstract] |
LONG-TERM DEBT | LONG-TERM DEBT The Company’s Long-Term Debt as of December 31, 2024 and December 31, 2023 consisted of the following:
| December 31, 2024 |  | December 31, 2023
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”) | $ | 656,438 |  |  | $ | 663,188 |
$150 Million 5-Year Senior Secured Revolving Credit Facility (the “2022 Revolver”)(1) | — |  |  | — |
Debt issuance costs | (5,976) |  |  | (7,415) |
Total term loan debt | 650,462 |  |  | 655,773 |
Less: Current portion | (6,750) |  |  | (6,750) |
Long-term debt, net of debt issuance costs and current portion | $ | 643,712 |  |  | $ | 649,023 |
(1) As of December 31, 2024 and December 31, 2023, the Company did not have any outstanding amounts drawn on the 2022 Revolver, including letters of credit and swingline loan sub-facilities. As of December 31, 2024, the Company had $150 million of available borrowing capacity under the 2022 Revolver. 2020 Credit Agreement On January 8, 2020, Olaplex, Inc., together with Penelope Intermediate Corp. acting as the parent guarantor, entered into a secured credit agreement (the “Original Credit Agreement”), consisting of a $450.0 million term loan facility (the “2020 Term Loan Facility”) and a $50.0 million revolving facility (the “2020 Revolver”), which included a $10.0 million letter of credit sub-facility and a $5.0 million swingline loan sub-facility. In addition, on December 18, 2020, Olaplex, Inc. entered into a First Incremental Amendment to the Original Credit Agreement (the “Amendment,” and together with the Original Credit Agreement, the “2020 Credit Agreement”) to increase the 2020 Term Loan Facility by $350.0 million and increase the 2020 Revolver capacity by $1.0 million to a revised $800.0 million 2020 Term Loan Facility and $51.0 million 2020 Revolver. The 2020 Credit Agreement was fully repaid and refinanced by the 2022 Credit Agreement on February 23, 2022. The unused balance of the 2020 Revolver as of December 31, 2021 was $51.0 million. Under the Original Credit Agreement, Olaplex, Inc. incurred original issue discount (“OID”) costs of $10.0 million, and $0.5 million of third-party issuance costs. In connection with the incremental borrowing pursuant to the Amendment, Olaplex, Inc. incurred OID costs of $3.5 million and third-party issue costs of $1.6 million. 2022 Credit Agreement On February 23, 2022, Olaplex, Inc., an indirect wholly owned subsidiary of Olaplex Holdings, Inc., together with Penelope Intermediate Corp. acting as the parent guarantor, entered into a Credit Agreement, dated as of February 23, 2022 (the “2022 Credit Agreement”), by and among Olaplex, Inc., Penelope Intermediate Corp, Goldman Sachs Bank USA (“Goldman Sachs”), as administrative agent (the “Administrative Agent”), collateral agent and swingline lender, and each lender and issuing bank from time to time party thereto (the “Lenders”). The 2022 Credit Agreement refinanced and replaced the 2020 Credit Agreement with a seven-year $675.0 million senior-secured term loan facility (the “2022 Term Loan Facility”) and a five-year $150.0 million senior-secured revolving credit facility (the “2022 Revolver”), which includes a $25.0 million letter of credit sub-facility and a $25.0 million swingline loan sub-facility. The refinancing of the 2020 Credit Agreement resulted in recognition of loss on extinguishment of debt of $18.8 million which is comprised of $11.0 million in deferred financing fee write off, and $7.8 million of prepayment fees for the 2020 Credit Agreement. The Company incurred costs directly related to the 2022 Credit Agreement of $11.9 million, consisting primarily of lender fees of $1.7 million and third-party fees of $10.2 million during the year ended December 31, 2022. These fees were allocated between the 2022 Revolver and the 2022 Term Loan Facility. 2022 Term Loan Facility fees are capitalized and recorded as a reduction of the carrying amount of non-current debt, and 2022 Revolver fees are capitalized and recorded as Other Assets on the balance sheet. The 2022 Term Loan Facility bears interest at a rate of one-month adjusted SOFR + initially 3.75% per annum (with a 0.25% leverage based step-down, tied to achieving a first lien net leverage ratio of 1.20x), and matures on February 23, 2029. The 2022 Revolver bears interest at a rate of adjusted SOFR for dollar denominated borrowings + initially 3.75% (with a 0.25% leverage based step-down, tied to achieving a first lien net leverage ratio of 1.20x), and matures on February 23, 2027. The 2022 Term Loan Facility is repayable in mandatory quarterly installments equal to $1.7 million, with the balance payable at maturity. The 2022 Term Loan Facility and 2022 Revolver can each be prepaid at any time without any penalty or premium (subject to any applicable breakage costs). The 2022 Term Loan Facility is subject to customary mandatory prepayments with respect to excess cash flow, net proceeds from non-ordinary course asset dispositions and the issuance of additional non-permitted debt or certain refinancing debt, in each case as set forth in the 2022 Credit Agreement. The 2022 Credit Agreement contains a number of covenants that, among other things, restrict Olaplex, Inc.’s ability to (subject to certain exceptions) (i) pay dividends and distributions or repurchase its capital stock, (ii) prepay, redeem, or repurchase certain indebtedness, (iii) incur additional indebtedness and guarantee indebtedness, (iv) create or incur liens, (v) engage in mergers, consolidations, liquidations or dissolutions, (vi) sell, transfer or otherwise dispose of assets, (vii) make investments, acquisitions, loans or advances and (viii) enter into certain transactions with affiliates. The 2022 Credit Agreement also includes, among other things, customary affirmative covenants (including reporting covenants) and events of default (including a change of control) for facilities of this type, subject to certain exceptions and thresholds set forth in the 2022 Credit Agreement. 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 these affirmative and negative covenants on December 31, 2024. 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. Olaplex, Inc. must pay the Administrative Agent, on account of the Lenders under the 2022 Revolver, a quarterly commitment fee based upon the product of (i) the applicable rate as described below and (ii) the average daily amount of the unused revolving commitments. Olaplex, Inc. also must pay the issuing banks customary fees based upon the amount available to be drawn under such letters of credit. The applicable rate for the commitment fee described in the immediately preceding paragraph is equal to (x) 0.50% if the First Lien Leverage Ratio is greater than 1.20:1.00, (y) 0.375% if the First Lien Leverage Ratio is less than or equal to 1.20:1.00 but greater than 0.70:1.00, and (z) 0.25% if the First Lien Leverage Ratio is less than or equal to 0.70:1.00. At December 31, 2024, the future repayments of principal amounts of the Company’s 2022 Term Loan Facility, excluding the effects of debt issuance costs, for the next five years were as follows:
Year Ending December 31, |  | Amount
2025 |  | $ | 6,750 |
2026 |  | 6,750 |
2027 |  | 6,750 |
2028 |  | 6,750 |
2029 |  | 629,438 |
Total |  | $ | 656,438 |
The interest rate on outstanding debt under the 2022 Term Loan Facility was 8.0% per annum as of December 31, 2024. The interest rates for all facilities under the 2022 Credit Agreement are calculated based upon the Company’s election among (a) adjusted term secured overnight financing rate (“SOFR”) (subject to a 0.50% floor with respect to the 2022 Term Loan Facility, and a 0% floor with respect to the 2022 Revolver) plus an additional interest rate spread, (b) with respect to a borrowing in Euros under the 2022 Revolver, a euro interbank offered rate (subject to a 0% floor) plus an additional interest rate spread, or (c) an “Alternate Base Rate” (as defined in the 2022 Credit Agreement) (subject to a 1.50% floor with respect to the 2022 Term Loan Facility, and a 1.00% floor with respect to the 2022 Revolver) plus an additional interest rate spread. Interest expense, inclusive of debt amortization, for the years ended December 31, 2024, 2023 and 2022 was $59.6 million, $58.0 million and $44.0 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 December 31, 2024, the carrying amount, excluding debt issuance costs, and estimated fair value of the Company’s long-term debt was $656.4 million and $620.3 million, respectively. As of December 31, 2023, the carrying amount, excluding debt issuance costs, and estimated fair value of the Company’s long-term debt was $663.2 million and $615.1 million, respectively. Olaplex Holdings, Inc. and each of its wholly owned subsidiaries that are direct or indirect parent companies of Olaplex, Inc. are holding companies with no other meaningful operations, cash flows, assets or liabilities other than (i) the equity interests in Olaplex, Inc. and (ii) with respect to Olaplex Holdings, Inc., liabilities associated with the Company's Tax Receivable Agreement. See “Note 2 - Summary of significant accounting policies” to the Company’s Consolidated Financial Statements of this Annual Report. Interest Rate Cap Transactions 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 fluctuations. See further discussion in “Note 6 - Fair Value Measurement” to the Company’s Consolidated Financial Statements of this Annual Report. During the year ended December 31, 2024, the Company’s Interest Rate Caps generated an unrecognized pre-tax loss of $2.8 million, recorded in Accumulated other comprehensive income on the Company’s Consolidated Balance Sheets. During the same period, the Company also recognized a $3.4 million reduction in interest expense related to the Company’s receipt of funds as a result of the interest rate cap settlements with the Company’s counterparty, partially offset by $1.1 million of interest expense related to amortization of the interest rate cap premiums paid by the Company in connection with the Interest Rate Caps. During the year ended December 31, 2023, the Company’s 2022 Interest Rate Cap generated an unrecognized pre-tax loss of $1.8 million, recorded in Accumulated other comprehensive income on the Company’s Consolidated Balance Sheets. During the same period, the Company also recognized a $4.2 million reduction in interest expense related to the Company’s receipt of funds as a result of the interest rate cap settlements with the Company’s counterparty, partially offset by $1.1 million of interest expense related to amortization of the interest rate cap premium paid by the Company in connection with the 2022 Interest Rate Cap. The Company performed an initial effectiveness assessment on the Interest Rate Caps and determined them each 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. 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. Payments of the up-front premium of the Interest Rate Caps are included within prepaid expenses and other current assets and other assets and liabilities within the cash flows from operating activities on the Company’s 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.

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for long-term debt. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 470 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/470/tableOfContent + Details
Name: | us-gaap_LongTermDebtTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration