– Delivered 12% Net Sales Growth in Fiscal 2021
–
– e.l.f. Cosmetics Gained 100 Basis Points of
Market Share in Nielsen U.S. Color Cosmetics in Fiscal 2021 –
– Provides Fiscal 2022 Outlook –
e.l.f. Beauty (NYSE: ELF) today announced results for the three
and twelve months ended March 31, 2021.
“Our fiscal 2021 results demonstrate that our business model and
competitive advantages are robust, as we strengthened our position
in a challenging environment,” said Tarang Amin, e.l.f. Beauty's
Chairman and Chief Executive Officer. “Our fourth quarter net sales
growth of 24% marked our ninth consecutive quarter of growth. For
the year, e.l.f. Cosmetics was the only top 5 U.S. color cosmetics
brand to post growth and gain share.”
“We’re pleased with our outstanding results and believe that we
can continue our business momentum in fiscal 2022 as we advance our
transformation to a multi-brand portfolio,” said Mandy Fields,
e.l.f. Beauty’s Chief Financial Officer. “We currently expect net
sales growth of 8-10% in fiscal 2022—at the top end of our
long-term economic model.”
Fourth Quarter Fiscal 2021 Review
For the three months ended March 31, 2021, compared to the three
months ended March 31, 2020:
- Net sales increased 24% to $92.7 million, primarily
driven by strength in e-commerce, international, and our national
retailers.
- Gross margin decreased approximately 110 basis points to
63.2%, with benefits from margin accretive product mix, cost
savings, and a mix shift to elfcosmetics.com offset by certain
costs related to retailer activity and space expansion, unfavorable
foreign exchange rates and increased inventory adjustments.
- Selling, general and administrative expenses
("SG&A") increased $10.8 million to $57.8 million or 62.4%
of net sales. Adjusted SG&A (SG&A excluding the
items identified in the reconciliation table below) was $51.3
million, or 55.3% of net sales. The increase in SG&A was
primarily due to investments in marketing and digital and increased
operational costs.
- The benefit for income taxes was $2.8 million.
- Net loss was $24.0 thousand on a GAAP basis. Adjusted
net income (net income excluding the items identified in the
reconciliation table below) was $8.6 million.
- Diluted earnings per share were $0.00 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 $0.16.
- Adjusted EBITDA (EBITDA excluding the items identified
in the reconciliation table below) was $12.9 million or 13.9% of
net sales.
Full Year Fiscal 2021 Review
For the twelve months ended March 31, 2021, compared to the
twelve months ended March 31, 2020:
- Net sales increased 12% to $318.1 million, primarily
driven by strength in e-commerce, international, and our national
retailers.
- Gross margin increased approximately 80 basis points to
64.8%, with benefits from margin accretive innovation, cost
savings, a mix shift to elfcosmetics.com, and price increases
partially offset by certain costs related to retailer activity and
space expansion, an increase in inventory adjustments, and the
impact of tariffs on goods imported from China.
- SG&A increased $37.0 million to $194.2 million or
61.0% of net sales. Adjusted SG&A was $165.1 million or
51.9% of net sales. The increase in SG&A was primarily due to
investments in marketing and digital, organizational costs related
to building out the Company's marketing, digital and innovation
capabilities, and increased operational costs mainly driven by the
increase in e-commerce sales.
- The benefit for income taxes was $2.5 million.
- Net income was $6.2 million on a GAAP basis. Adjusted
net income was $36.8 million.
- Diluted earnings per share were $0.12 on a GAAP basis.
Adjusted diluted earnings per share were $0.71.
- Adjusted EBITDA was $61.1 million or 19.2% of net
sales.
Balance Sheet
The Company ended fiscal 2021 with $57.8 million in cash and
cash equivalents and $110.3 million of long-term debt and finance
lease obligations, as compared to $46.2 million in cash and cash
equivalents and $126.1 million of long-term debt at the end of
fiscal 2020.
Fiscal 2022 Outlook
The Company is providing the following outlook for fiscal 2022.
When compared to fiscal 2021, the outlook for fiscal 2022 reflects
an expected 8-10% increase in net sales.
Fiscal 2022 Outlook
Fiscal 2021
Net sales
$343-350 million
$318 million
Adjusted EBITDA
$66.0-67.5 million
$61.1 million
Adjusted effective tax rate
24-25%
16%
Adjusted net income
$35.0-36.8 million
$36.8 million
Adjusted diluted earnings per share
$0.64-0.67
$0.71
Weighted average diluted shares
outstanding
55 million
52 million
Webcast Details
The Company will hold a webcast to discuss the results from its
fourth quarter fiscal 2021 today, May 26, 2021, at 4:30 p.m.
Eastern Time. The webcast will be broadcasted live at
https://investor.elfbeauty.com/news-and-events/events. 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 stands with every eye, lip, face and paw. This
deep commitment to inclusive, accessible, cruelty-free beauty has
fueled the success of our namesake e.l.f. Cosmetics brand since
2004. With the addition of pioneering clean-beauty brand W3LL
PEOPLE and launch of the lifestyle beauty brand Keys Soulcare
created with Alicia Keys, we continue to strategically expand our
portfolio with brands that support our purpose and values. Our
family of brands is available online, and across leading beauty,
mass-market, and clean beauty specialty retailers.
Learn more by visiting investor.elfbeauty.com.
Note Regarding non-GAAP Financial Measures
This press release includes references to non-GAAP measures,
including, adjusted EBITDA, 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 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 costs or gains related to restructuring
of operations, stock-based compensation and other non-cash and
non-recurring costs. Such other non-cash or non-recurring costs
include proxy contest expenses, pre-launch costs to develop the
Company’s first new brand, Keys Soulcare, acquisition-related costs
for W3LL PEOPLE, and costs related to the automation of certain
warehouse and distribution activities. Adjusted SG&A excludes
costs related to stock-based compensation and other non-cash and
non-recurring costs. Such other non-cash or non-recurring costs
include proxy contest expenses, pre-launch costs to develop the
Company’s first new brand, Keys Soulcare, acquisition-related costs
for W3LL PEOPLE, and costs related to the automation of certain
warehouse and distribution activities. Adjusted effective tax rate
is the tax rate when excluding the pre-tax impact of costs or gains
related to restructuring of operations, stock-based compensation,
other non-cash and non-recurring costs, 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 costs or gains related
to restructuring of operations, stock-based compensation, other
non-cash and non-recurring costs, amortization of acquired
intangible assets and the tax impact of the foregoing adjustments.
Such other non-cash or non-recurring costs include proxy contest
expenses, pre-launch costs to develop the Company’s first new
brand, Keys Soulcare, acquisition-related costs for W3LL PEOPLE,
and costs related to the automation of certain warehouse and
distribution activities.
With respect to the Company’s expectations under “Fiscal 2022
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 2022 under
“Fiscal 2022 Outlook” above and those statements that the Company’s
business model and competitive advantages are robust; that the
Company’s position is strengthened; that the Company believes that
it will continue its business momentum in fiscal 2022 as it
advances its transformation to a multi-brand portfolio; and that
the Company expects net sales growth of 8-10% in fiscal 2022—at the
top end of its long-term economic model. 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; the
Company’s ability to effectively manage its SG&A and other
expenses; and the uncertainty regarding the impact of the COVID-19
pandemic. 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 and comprehensive income
(unaudited)
(in thousands, except share and
per share data)
Three months ended March
31,
Twelve months ended March
31,
2021
2020
2021
2020
Net sales
$
92,671
$
74,712
$
318,110
$
282,851
Cost of sales
34,071
26,648
111,912
101,728
Gross profit
58,600
48,064
206,198
181,123
Selling, general, and administrative
expenses
57,827
47,024
194,157
157,155
Restructuring expense (income)
2,641
—
2,641
(5,982
)
Operating (loss) income
(1,868
)
1,040
9,400
29,950
Other (expense) income, net
(54
)
(176
)
(1,620
)
426
Interest expense, net
(862
)
(1,387
)
(4,090
)
(6,307
)
(Loss) income before provision for income
taxes
(2,784
)
(523
)
3,690
24,069
Income tax benefit (provision)
2,760
182
2,542
(6,185
)
Net (loss) income
$
(24
)
$
(341
)
$
6,232
$
17,884
Comprehensive (loss) income
$
(24
)
$
(341
)
$
6,232
$
17,884
Net (loss) income per share:
Basic
$
—
$
(0.01
)
$
0.13
$
0.37
Diluted
$
—
$
(0.01
)
$
0.12
$
0.35
Weighted average shares outstanding:
Basic
49,986,296
48,704,133
49,377,410
48,498,813
Diluted
52,960,699
51,045,588
51,994,145
50,817,143
e.l.f. Beauty, Inc. and
subsidiaries
Condensed consolidated balance
sheets
(unaudited)
(in thousands, except share and
per share data)
March 31, 2021
March 31, 2020
Assets
Current assets:
Cash and cash equivalents
$
57,768
$
46,167
Accounts receivable, net
40,185
29,721
Inventory, net
56,810
46,209
Prepaid expenses and other current
assets
15,381
10,263
Total current assets
170,144
132,360
Property and equipment, net
13,770
17,171
Intangible assets, net
94,286
102,410
Goodwill
171,620
171,321
Investments
2,875
2,875
Other assets
34,698
26,967
Total assets
$
487,393
$
453,104
Liabilities and stockholders'
equity
Current liabilities:
Current portion of long-term debt and
capital lease obligations
$
16,281
$
12,568
Accounts payable
15,699
12,390
Accrued expenses and other current
liabilities
41,351
26,165
Total current liabilities
73,331
51,123
Long-term debt and finance lease
obligations
110,255
126,088
Deferred tax liabilities
13,479
21,892
Long-term operating lease obligations
20,084
11,239
Other long-term liabilities
598
591
Total liabilities
217,747
210,933
Commitments and contingencies
Stockholders' equity:
Common stock, par value of $0.01 per
share; 250,000,000 shares authorized as of March 31, 2021 and March
31, 2020; 51,590,830 and 50,003,531 shares issued and outstanding
as of March 31, 2021 and March 31, 2020, respectively
504
489
Additional paid-in capital
774,441
753,213
Accumulated deficit
(505,299
)
(511,531
)
Total stockholders' equity
269,646
242,171
Total liabilities and stockholders'
equity
$
487,393
$
453,104
e.l.f. Beauty, Inc. and
subsidiaries
Condensed consolidated
statements of cash flows
(unaudited)
(in thousands)
Twelve months ended March
31,
2021
2020
Cash flows from operating
activities:
Net income
$
6,232
$
17,884
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
25,179
22,843
Restructuring expense (income)
2,641
(5,982
)
Stock-based compensation expense
19,682
15,488
Amortization of debt issuance costs and
discount on debt
847
747
Deferred income taxes
(8,584
)
2,443
Other, net
383
873
Changes in operating assets and
liabilities:
Accounts receivable
(10,529
)
2,504
Inventories
(10,937
)
(435
)
Prepaid expenses and other assets
(9,659
)
(6,500
)
Accounts payable and accrued expenses
17,472
5,962
Other liabilities
(3,252
)
(11,514
)
Net cash provided by operating
activities
29,475
44,313
Cash flows from investing
activities:
Acquisition, net of cash acquired
—
(25,923
)
Purchase of property and equipment
(6,474
)
(9,422
)
Net cash used in investing activities
(6,474
)
(35,345
)
Cash flows from financing
activities:
Proceeds from revolving line of credit
20,000
—
Repayment of revolving line of credit
(20,000
)
—
Repayment of long-term debt
(11,756
)
(9,488
)
Debt issuance costs paid
(334
)
—
Repurchase of common stock
—
(7,904
)
Cash received from issuance of common
stock
1,503
1,488
Other, net
(813
)
(771
)
Net cash used in financing activities
(11,400
)
(16,675
)
Net increase (decrease) in cash and cash
equivalents
11,601
(7,707
)
Cash and cash equivalents - beginning of
period
46,167
53,874
Cash and cash equivalents - end of
period
$
57,768
$
46,167
e.l.f. Beauty, Inc. and
subsidiaries
Reconciliation of GAAP net
income to non-GAAP adjusted EBITDA
(unaudited)
(in thousands)
Three months ended March
31,
Twelve months ended March
31,
2021
2020
2021
2020
Net income
$
(24
)
$
(341
)
$
6,232
$
17,884
Interest expense, net
862
1,387
4,090
6,307
Income (benefit) tax provision
(2,760
)
(182
)
(2,542
)
6,185
Depreciation and amortization
5,276
5,278
21,078
20,223
EBITDA
$
3,354
$
6,142
$
28,858
$
50,599
Restructuring expense (income) (a)
2,641
—
2,641
(5,982
)
Stock-based compensation
4,642
4,206
19,682
15,488
Other non-cash and non-recurring costs
(b)
2,266
1,357
9,897
2,505
Adjusted EBITDA
$
12,903
$
11,705
$
61,078
$
62,610
(a) Restructuring expense during the twelve months ended March
31, 2021 relates to the closure of the Company’s manufacturing
plant, including impairment of plant assets, the disposal of excess
inventory on hand at the plant, and the termination of
manufacturing plant employees. Restructuring income during the
twelve months ended March 31, 2020 relates to the e.l.f. retail
store closures. The year ended March 31, 2020 included a gain
related to settlement of outstanding lease liabilities equal to the
difference between the amount of cash disbursed and the outstanding
liability at the time of settlement.
(b) Represents various non-cash or non-recurring costs,
including proxy contest expenses, pre-launch costs to develop the
Company’s first new brand, Keys Soulcare, acquisition-related costs
for W3LL PEOPLE, and costs related to the automation of certain
warehouse and distribution activities.
e.l.f. Beauty, Inc. and
subsidiaries
Reconciliation of GAAP
SG&A to non-GAAP adjusted SG&A
(unaudited)
(in thousands)
Three months ended March
31,
Twelve months ended March
31,
2021
2020
2021
2020
Selling, general, and administrative
expenses
$
57,827
$
47,024
$
194,157
$
157,155
Stock-based compensation
(4,458
)
(4,206
)
(19,493
)
(15,488
)
Other non-cash and non-recurring costs
(a)
(2,094
)
(1,357
)
(9,544
)
(2,380
)
Adjusted selling, general, and
administrative expenses
$
51,275
$
41,461
$
165,120
$
139,287
(a) Represents various non-cash or non-recurring costs,
including proxy contest expenses, pre-launch costs to develop the
Company’s first new brand, Keys Soulcare, acquisition-related costs
for W3LL PEOPLE, and costs related to the automation of certain
warehouse and distribution activities.
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 March
31,
Twelve months ended March
31,
2021
2020
2021
2020
Net (loss) income
$
(24
)
$
(341
)
$
6,232
$
17,884
Restructuring expense (income) (a)
2,641
—
2,641
(5,982
)
Stock-based compensation
4,642
4,206
19,682
15,488
Other non-cash and non-recurring costs
(b)
2,094
1,357
9,544
2,505
Amortization of acquired intangible assets
(c)
2,030
1,824
8,123
6,984
Tax Impact (d)
(2,762
)
(1,699
)
(9,434
)
(4,691
)
Adjusted net income
$
8,621
$
5,347
$
36,788
$
32,188
Weighted average number of shares
outstanding - diluted
52,960,699
51,045,588
51,994,145
50,817,143
Adjusted diluted earnings per share
$
0.16
$
0.10
$
0.71
$
0.63
(a) Restructuring expense during the twelve months ended March
31, 2021 relates to the closure of the Company’s manufacturing
plant, including impairment of plant assets, the disposal of excess
inventory on hand at the plant, and the termination of
manufacturing plant employees. Restructuring income during the
twelve months ended March 31, 2020 relates to the e.l.f. retail
store closures. The year ended March 31, 2020 included a gain
related to settlement of outstanding lease liabilities equal to the
difference between the amount of cash disbursed and the outstanding
liability at the time of settlement.
(b) Represents various non-cash or non-recurring costs,
including proxy contest expenses, pre-launch costs to develop the
Company’s first new brand, Keys Soulcare, acquisition-related costs
for W3LL PEOPLE, and costs related to the automation of certain
warehouse and distribution activities.
(c) Represents amortization expense of acquired intangible
assets consisting of customer relationships, trademarks and
favorable leases.
(d) Represents the tax impact of the above adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210526006046/en/
Investors: KC Katten VP, Investor Relations, e.l.f. Beauty
KKatten@elfbeauty.com
Media: Brittany Fraser ICR, Inc. elfpr@icrinc.com
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