ELF e l f Beauty Inc

– Delivered 50% Net Sales Growth –

– e.l.f. Cosmetics Gained 260 Basis Points of Market Share –

– Raises Fiscal 2025 Outlook –

e.l.f. Beauty (NYSE: ELF) today announced results for the three months ended June 30, 2024.

“We are off to a strong start this fiscal year, delivering 50% net sales growth and 260 basis points of market share gains in Q1,” said Tarang Amin, e.l.f. Beauty’s Chairman and Chief Executive Officer. “This marked our 22nd consecutive quarter of both net sales growth and market share gains--putting e.l.f. Beauty in a rarified group of high growth consumer companies. We continue to make progress across color cosmetics, skin care and international and believe our unique areas of advantage will fuel our ability to win in fiscal 2025 and beyond.”

Three Months Ended June 30, 2024 Results

For the three months ended June 30, 2024, compared to the three months ended June 30, 2023:

• Net sales increased 50% to $324.5 million, primarily driven by strength in both retailer and e-commerce channels.

• Gross margin increased approximately 80 basis points to 71%, primarily driven by favorable foreign exchange impacts, lower transportation costs, price increases in our international markets, cost savings and mix, partially offset by inventory adjustments.

• Selling, general and administrative (“SG&A”) expenses increased $88.6 million to $180.6 million, or 56% of net sales. Adjusted SG&A (SG&A excluding the items identified in the reconciliation table below) increased $80.0 million to $164.4 million, or 51% of net sales. The increase in SG&A dollars was primarily due to an increase in marketing and digital spend, compensation and benefits, operations costs, retail fixturing and visual merchandising costs, professional fees, and depreciation and amortization.

• Net income was $47.6 million on a GAAP basis. Adjusted net income (net income excluding the items identified in the reconciliation table below) was $64.3 million.

• Diluted earnings per share were $0.81 on a GAAP basis. Adjusted diluted earnings per share (diluted earnings per share calculated with adjusted net income excluding the items identified in the reconciliation table below) were $1.10.

• Adjusted EBITDA (EBITDA excluding the items identified in the reconciliation table below) was $77.4 million, or 24% of net sales, up 4% year over year.

Liquidity

As of June 30, 2024, the Company had $109.0 million in cash and cash equivalents and $159.2 million of long-term debt and finance lease obligations, as compared to $142.5 million in cash and cash equivalents and $59.6 million of long-term debt and finance lease obligations as of June 30, 2023.

Updated Fiscal 2025 Outlook

The Company is providing the following updated outlook for fiscal 2025. The updated outlook for fiscal 2025 reflects an expected 25-27% year-over-year increase in net sales, as compared to an expected 20-22% increase previously.

 

Updated Fiscal 2025 Outlook

 

Previous Fiscal 2025 Outlook

Net sales

$1,280-1,300 million

 

$1,230-1,250 million

Adjusted EBITDA

$297-301 million

 

$285-289 million

Adjusted effective tax rate

20-21%

 

20-21%

Adjusted net income

$198-201 million

 

$187-191 million

Adjusted diluted earnings per share

$3.36-3.41

 

$3.20-3.25

Fiscal year ending diluted shares outstanding

59 million

 

59 million

Webcast Details

The Company will hold a webcast to discuss the results from its first quarter fiscal 2025 today, August 8, 2024, at 4:30 p.m. Eastern Time. The webcast will be broadcast live at https://investor.elfbeauty.com/news-and-events/events-and-presentations. For those unable to listen to the live broadcast, an archived version will be available at the same location.

About e.l.f. Beauty

e.l.f. Beauty (NYSE: ELF) is fueled by a vision to be a different kind of company that disrupts norms, shapes culture and connects communities through positivity, inclusivity and accessibility. Our mission is to make the best of beauty accessible to every eye, lip, face and skin concern, through our brands e.l.f. Cosmetics, e.l.f. SKIN, Keys Soulcare, Well People and Naturium. We are committed to our superpowers of delivering premium-quality products at accessible prices with universal appeal that are clean, vegan, cruelty free and Fair Trade certified.

Learn more at https://www.elfbeauty.com/

Note Regarding non-GAAP Financial Measures

This press release includes references to non-GAAP measures, including adjusted EBITDA, adjusted SG&A, adjusted net income and adjusted diluted earnings per share. The Company presents these non-GAAP measures because its management uses them as supplemental measures in assessing its operating performance, and believes they are helpful to investors, securities analysts and other interested parties in evaluating the Company’s performance. The non-GAAP measures included in this press release are not measurements of financial performance under GAAP and they should not be considered as alternatives to or substitutes for measures of performance derived in accordance with GAAP. In addition, these non-GAAP measures should not be construed as an inference that the Company’s future results will be unaffected by unusual or non-recurring items. These non-GAAP measures have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing the Company’s results as reported under GAAP. The Company’s definitions and calculations of these non-GAAP measures are not necessarily comparable to other similarly titled measures used by other companies due to different methods of calculation.

Adjusted EBITDA excludes expense or income related to stock-based compensation, impairment of equity investment, and other non-cash and non-recurring items. Such other non-cash or non-recurring items include amortization of internal-use software costs related to cloud applications, costs related to the acquisition of Naturium, and cloud computing ERP implementation costs.

Adjusted SG&A excludes expense related to stock-based compensation and other non-recurring items. Such other non-recurring items includes other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of Naturium.

Adjusted effective tax rate is the tax rate when excluding the pre-tax impact of expense or income related to stock-based compensation, other non-cash and non-recurring items, impairment of equity investment, amortization of acquired intangible assets, as well as the related tax impact for these items, calculated utilizing the statutory rate for where the impact was incurred.

Adjusted net income excludes expense related to stock-based compensation, other non-recurring items, impairment of equity investment, amortization of acquired intangible assets and the tax impact of the foregoing adjustments. Such other non-recurring items include other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of Naturium.

With respect to the Company’s expectations under “Updated Fiscal 2025 Outlook” above, the Company is not able to provide a quantitative reconciliation of the adjusted EBITDA, adjusted net income and adjusted diluted earnings per share guidance non-GAAP measures to the corresponding net income and diluted earnings per share GAAP measures without unreasonable efforts. The Company cannot provide meaningful estimates of the non-recurring charges and credits excluded from these non-GAAP measures due to the forward-looking nature of these estimates and their inherent variability and uncertainty. For the same reasons, the Company is unable to address the probable significance of the unavailable information.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, including those statements relating to the Company's outlook for fiscal 2025 under “Updated Fiscal 2025 Outlook” above and those statements that we believe our unique areas of advantage will fuel our ability to win in fiscal 2025 and beyond. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, actual results and the timing of selected events may differ materially from those expectations. Factors that could cause actual results to differ materially from those in the forward looking statements include, among other things, the risks and uncertainties that are described in the Company's most recent Annual Report on Form 10-K, as updated from time to time in the Company's SEC filings, as well as the Company’s ability to effectively compete with other beauty companies; the Company’s ability to successfully introduce new products; the Company’s ability to attract new retail customers and/or expand business with its existing retail customers; the Company’s ability to optimize shelf space at its key retail customers; the loss of any of the Company’s key retail customers or if the general business performance of its key retail customers declines; and the Company’s ability to effectively manage its SG&A and other expenses. Potential investors are urged to consider these factors carefully in evaluating the forward-looking statements. These forward-looking statements speak only as of the date hereof. Except as required by law, the Company assumes no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

e.l.f. Beauty, Inc. and subsidiaries

Condensed consolidated statements of operations

(unaudited)

(in thousands, except share and per share data)

 

 

Three months ended June 30,

 

 

 

2024

 

 

 

2023

 

Net sales

 

$

324,477

 

 

$

216,339

 

Cost of sales

 

 

93,194

 

 

 

63,767

 

Gross profit

 

 

231,283

 

 

 

152,572

 

Selling, general and administrative expenses

 

 

180,575

 

 

 

91,939

 

Operating income

 

 

50,708

 

 

 

60,633

 

Other income, net

 

 

187

 

 

 

399

 

Impairment of equity investment

 

 

—

 

 

 

(1,720

)

Interest (expense) income, net

 

 

(3,665

)

 

 

341

 

Income before provision for income taxes

 

 

47,230

 

 

 

59,653

 

Income tax benefit (provision)

 

 

325

 

 

 

(6,676

)

Net income

 

$

47,555

 

 

$

52,977

 

 

 

 

 

 

Net income per share:

 

 

 

 

Basic

 

$

0.85

 

 

$

0.98

 

Diluted

 

$

0.81

 

 

$

0.93

 

Weighted average shares outstanding:

 

 

 

 

Basic

 

 

55,973,914

 

 

 

53,938,136

 

Diluted

 

 

58,551,423

 

 

 

57,175,870

 

e.l.f. Beauty, Inc. and subsidiaries

Condensed consolidated balance sheets

(unaudited)

(in thousands, except share and per share data)

 

 

 

June 30, 2024

 

March 31, 2024

 

June 30, 2023

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

109,034

 

 

$

108,183

 

 

$

142,549

 

Accounts receivable, net

 

 

155,701

 

 

 

123,797

 

 

 

90,531

 

Inventory, net

 

 

199,563

 

 

 

191,489

 

 

 

98,053

 

Prepaid expenses and other current assets

 

 

66,162

 

 

 

53,608

 

 

 

39,276

 

Total current assets

 

 

530,460

 

 

 

477,077

 

 

 

370,409

 

Property and equipment, net

 

 

14,040

 

 

 

13,974

 

 

 

7,581

 

Intangible assets, net

 

 

220,745

 

 

 

225,094

 

 

 

76,013

 

Goodwill

 

 

340,600

 

 

 

340,600

 

 

 

171,620

 

Other assets

 

 

98,987

 

 

 

72,502

 

 

 

32,258

 

Total assets

 

$

1,204,832

 

 

$

1,129,247

 

 

$

657,881

 

 

 

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current portion of long-term debt and capital lease obligations

 

$

102,938

 

 

$

100,307

 

 

$

5,431

 

Accounts payable

 

 

79,989

 

 

 

81,075

 

 

 

53,237

 

Accrued expenses and other current liabilities

 

 

116,878

 

 

 

117,733

 

 

 

51,037

 

Total current liabilities

 

 

299,805

 

 

 

299,115

 

 

 

109,705

 

Long-term debt and finance lease obligations

 

 

159,234

 

 

 

161,819

 

 

 

59,612

 

Deferred tax liabilities

 

 

7,910

 

 

 

3,666

 

 

 

5,855

 

Long-term operating lease obligations

 

 

33,637

 

 

 

21,459

 

 

 

10,137

 

Other long-term liabilities

 

 

656

 

 

 

616

 

 

 

870

 

Total liabilities

 

 

501,242

 

 

 

486,675

 

 

 

186,179

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, par value of $0.01 per share; 250,000,000 shares authorized as of June 30, 2024, March 31, 2024 and June 30, 2023; 56,387,461, 55,583,660 and 54,417,579 shares issued and outstanding as of June 30, 2024, March 31, 2024 and June 30, 2023, respectively

 

 

563

 

 

 

555

 

 

 

543

 

Additional paid-in capital

 

 

949,817

 

 

 

936,403

 

 

 

840,181

 

Accumulated other comprehensive loss

 

 

(9

)

 

 

(50

)

 

 

—

 

Accumulated deficit

 

 

(246,781

)

 

 

(294,336

)

 

 

(369,022

)

Total stockholders' equity

 

 

703,590

 

 

 

642,572

 

 

 

471,702

 

Total liabilities and stockholders' equity

 

$

1,204,832

 

 

$

1,129,247

 

 

$

657,881

 

e.l.f. Beauty, Inc. and subsidiaries

Condensed consolidated statements of cash flows

(unaudited)

(in thousands)

 

 

 

Three months ended June 30,

 

 

 

2024

 

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

Net income

 

$

47,555

 

 

$

52,977

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation, amortization and non-cash lease expense

 

 

11,134

 

 

 

5,637

 

Stock-based compensation expense

 

 

12,964

 

 

 

7,200

 

Amortization of debt issuance costs and discount on debt

 

 

138

 

 

 

75

 

Deferred income taxes

 

 

5,108

 

 

 

2,113

 

Impairment of equity investment

 

 

—

 

 

 

1,720

 

Other, net

 

 

(127

)

 

 

71

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

(31,815

)

 

 

(22,615

)

Inventory

 

 

(8,074

)

 

 

(16,729

)

Prepaid expenses and other assets

 

 

(30,500

)

 

 

(8,094

)

Accounts payable and accrued expenses

 

 

(3,107

)

 

 

2,014

 

Other liabilities

 

 

(1,995

)

 

 

(1,015

)

Net cash provided by operating activities

 

 

1,281

 

 

 

23,354

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchase of property and equipment

 

 

(786

)

 

 

(616

)

Other, net

 

 

(93

)

 

 

—

 

Net cash used in investing activities

 

 

(879

)

 

 

(616

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Repayment of long-term debt

 

 

—

 

 

 

(1,250

)

Cash received from issuance of common stock

 

 

464

 

 

 

485

 

Other, net

 

 

(56

)

 

 

(202

)

Net cash provided by (used in) financing activities

 

 

408

 

 

 

(967

)

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

41

 

 

 

—

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

851

 

 

 

21,771

 

Cash and cash equivalents - beginning of period

 

 

108,183

 

 

 

120,778

 

Cash and cash equivalents - end of period

 

$

109,034

 

 

$

142,549

 

e.l.f. Beauty, Inc. and subsidiaries

Reconciliation of GAAP net income to non-GAAP adjusted EBITDA

(unaudited)

(in thousands)

 

 

 

Three months ended June 30,

 

 

 

2024

 

 

 

2023

 

Net income

 

$

47,555

 

 

$

52,977

 

Interest expense (income), net

 

 

3,665

 

 

 

(341

)

Income tax (benefit) provision

 

 

(325

)

 

 

6,676

 

Depreciation and amortization

 

 

9,058

 

 

 

4,587

 

EBITDA

 

$

59,953

 

 

$

63,899

 

Stock-based compensation

 

 

12,964

 

 

 

7,200

 

Impairment of equity investment (a)

 

 

—

 

 

 

1,720

 

Other non-cash and non-recurring items (b)

 

 

4,517

 

 

 

1,481

 

Adjusted EBITDA

 

$

77,434

 

 

$

74,300

 

(a)

Represents an impairment of equity investment recorded during the three months ended June 30, 2023.

(b)

Represents other non-cash or non-recurring items, which include amortization of internal-use software costs related to cloud applications, costs related to the acquisition of Naturium, and cloud computing ERP implementation costs.

e.l.f. Beauty, Inc. and subsidiaries

Reconciliation of GAAP SG&A to non-GAAP adjusted SG&A

(unaudited)

(in thousands)

 

 

 

Three months ended June 30,

 

 

 

2024

 

 

 

2023

 

Selling, general and administrative expenses

 

$

180,575

 

 

$

91,939

 

Stock-based compensation

 

 

(12,958

)

 

 

(7,223

)

Other non-recurring items (a)

 

 

(3,204

)

 

 

(352

)

Adjusted selling, general and administrative expenses

 

$

164,413

 

 

$

84,364

 

(a)

Represents other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of Naturium.

e.l.f. Beauty, Inc. and subsidiaries

Reconciliation of GAAP net income to non-GAAP adjusted net income

(unaudited)

(in thousands, except share and per share data)

 

 

 

Three months ended June 30,

 

 

 

2024

 

 

 

2023

 

Net income

 

$

47,555

 

 

$

52,977

 

Stock-based compensation

 

 

12,964

 

 

 

7,200

 

Other non-recurring items (a)

 

 

3,204

 

 

 

352

 

Impairment of equity investment (b)

 

 

—

 

 

 

1,720

 

Amortization of acquired intangible assets (c)

 

 

4,349

 

 

 

2,028

 

Tax Impact (d)

 

 

(3,754

)

 

 

(1,396

)

Adjusted net income

 

$

64,318

 

 

$

62,881

 

 

 

 

 

 

Weighted average number of shares outstanding – diluted

 

 

58,551,423

 

 

 

57,175,870

 

Adjusted diluted earnings per share

 

$

1.10

 

 

$

1.10

 

(a)

Represents other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of Naturium.

(b)

Represents an impairment of equity investment recorded during the three months ended June 30, 2023.

(c)

Represents amortization expense of acquired intangible assets consisting of customer relationships and trademarks.

(d)

Represents the tax impact of the above adjustments.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240808433013/en/

Investors: KC Katten VP, Corporate Development & Investor Relations, e.l.f. Beauty kkatten@elfbeauty.com

Media: Melinda Fried Head of Corporate Communications, e.l.f. Beauty mfried@elfbeauty.com