– Delivered 50% Net Sales Growth –
– Gained 20 Basis Points of Market Share in
Nielsen U.S. Color Cosmetics –
– Raises Fiscal 2022 Guidance –
e.l.f. Beauty (NYSE: ELF) today announced results for the three
months ended June 30, 2021.
“I’m proud of the e.l.f. Beauty team for delivering exceptional
first quarter results, highlighted by 50% net sales growth,” said
Tarang Amin, e.l.f. Beauty's Chairman and Chief Executive Officer.
“We've seen consumer demand for color cosmetics inflect positively
and we continue to outperform our competitors. In the first
quarter, e.l.f. Cosmetics was the only top 5 U.S. color cosmetics
brand to post growth and gain share relative to pre-pandemic
levels, per Nielsen. Our products are resonating and our brand
momentum and category outperformance is strong.”
“We’re raising our fiscal 2022 outlook given our outstanding
first quarter results and our expectations for continued momentum
across our brand portfolio,” said Mandy Fields, e.l.f. Beauty’s
Chief Financial Officer. “Our marketing and digital initiatives are
delivering strong return on investment, and we’re leaning into
these programs to fuel our growth.”
Three Months Ended June 30, 2021 Results
For the three months ended June 30, 2021, compared to the
three months ended June 30, 2020:
- Net sales increased 50% to $97.0 million, primarily
driven by strength in our national and international
retailers.
- Gross margin decreased approximately 340 basis points to
63.8%, primarily driven by unfavorable foreign exchange rates,
elevated transportation costs and an increase in inventory
adjustments.
- Selling, general and administrative expenses
("SG&A") increased $10.4 million to $50.7 million or 52.3%
of net sales. Adjusted SG&A (SG&A excluding the
items identified in the reconciliation table below) increased $12.4
million to $45.6 million, or 46.9% of net sales. The increase in
SG&A was primarily due to investments in marketing and digital
and increased operational costs.
- The provision for income taxes was $1.5 million.
- Net income was $8.3 million on a GAAP basis. Adjusted
net income (net income excluding the items identified in the
reconciliation table below) was $14.3 million.
- Diluted earnings per share were $0.15 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 $0.27.
- Adjusted EBITDA (EBITDA excluding the items identified
in the reconciliation table below) was $21.7 million or 22.4% of
net sales, up 40% year over year.
Balance Sheet
As of June 30, 2021, the Company had $63.4 million in cash and
cash equivalents and $95.3 million in long-term debt and finance
lease obligations, as compared to $54.2 million in cash and cash
equivalents and $122.7 million of long-term debt and finance lease
obligations as of June 30, 2020.
Fiscal 2022 Outlook
The Company is providing the following updated outlook for
fiscal 2022. When compared to fiscal 2021, the updated outlook for
fiscal 2022 reflects an expected 12-14% increase in net sales, as
compared to an expected 8-10% increase previously.
Updated Fiscal 2022
Outlook
Original Fiscal 2022
Outlook
Net sales
$357-364 million
$343-350 million
Adjusted EBITDA
$66.5-68.0 million
$66.0-67.5 million
Adjusted effective tax rate
24-25%
24-25%
Adjusted net income
$36.0-37.5 million
$35.0-36.8 million
Adjusted diluted earnings per share
$0.65-0.68
$0.64-0.67
Weighted average diluted shares
outstanding
55 million
55 million
Webcast Details
The Company will hold a webcast to discuss the results from its
first quarter fiscal 2022 today, August 4, 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, loss on extinguishment of
debt 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, costs related
to the automation of certain warehouse and distribution activities,
and amortization related to certain cloud computing costs. 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, loss on
extinguishment of debt, 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 consumer
demand for color cosmetics is inflecting positively, that the
Company’s products are resonating and brand momentum and category
outperformance is strong, and that the Company expects continued
momentum across its brand portfolio. 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 June
30,
2021
2020
Net sales
$
97,047
$
64,527
Cost of sales
35,141
21,186
Gross profit
61,906
43,341
Selling, general and administrative
expenses
50,749
40,332
Restructuring income
(14
)
—
Operating income
11,171
3,009
Other expense, net
(162
)
(30
)
Interest expense, net
(745
)
(1,468
)
Loss on extinguishment of debt
(460
)
—
Income before provision for income
taxes
9,804
1,511
Income tax (provision) benefit
(1,528
)
1
Net income
$
8,276
$
1,512
Comprehensive income
$
8,276
$
1,512
Net income per share:
Basic
$
0.16
$
0.03
Diluted
$
0.15
$
0.03
Weighted average shares outstanding:
Basic
50,544,573
48,924,454
Diluted
53,408,443
50,939,938
e.l.f. Beauty, Inc. and
subsidiaries
Condensed consolidated balance
sheets
(unaudited)
(in thousands, except share and
per share data)
June 30, 2021
March 31, 2021
June 30, 2020
Assets
Current assets:
Cash and cash equivalents
$
63,402
$
57,768
$
54,224
Accounts receivable, net
43,127
40,185
29,825
Inventory, net
54,528
56,810
52,752
Prepaid expenses and other current
assets
21,674
15,381
8,714
Total current assets
182,731
170,144
145,515
Property and equipment, net
15,561
13,770
16,146
Intangible assets, net
92,256
94,286
100,379
Goodwill
171,620
171,620
171,321
Investments
2,875
2,875
2,875
Other assets
33,349
34,698
25,832
Total assets
$
498,392
$
487,393
$
462,068
Liabilities and stockholders'
equity
Current liabilities:
Current portion of long-term debt and
capital lease obligations
$
32,247
$
16,281
$
13,187
Accounts payable
17,113
15,699
21,484
Accrued expenses and other current
liabilities
33,617
41,351
22,560
Total current liabilities
82,977
73,331
57,231
Long-term debt and finance lease
obligations
95,254
110,255
122,701
Deferred tax liabilities
17,750
13,479
21,478
Long-term operating lease obligations
19,053
20,084
11,400
Other long-term liabilities
736
598
550
Total liabilities
215,770
217,747
213,360
Commitments and contingencies
Stockholders' equity:
Common stock, par value of $0.01 per
share; 250,000,000 shares authorized as of June 30, 2021, March 31,
2021 and June 30, 2020; 51,826,156, 51,590,830 and 50,708,699
shares issued and outstanding as of June 30, 2021, March 31, 2021
and June 30, 2020, respectively
508
504
491
Additional paid-in capital
779,137
774,441
758,236
Accumulated deficit
(497,023
)
(505,299
)
(510,019
)
Total stockholders' equity
282,622
269,646
248,708
Total liabilities and stockholders'
equity
$
498,392
$
487,393
$
462,068
e.l.f. Beauty, Inc. and
subsidiaries
Condensed consolidated
statements of cash flows
(unaudited)
(in thousands)
Three months ended June
30,
2021
2020
Cash flows from operating
activities:
Net income
$
8,276
$
1,512
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
6,222
6,429
Restructuring income
(14
)
—
Stock-based compensation expense
4,280
4,627
Amortization of debt issuance costs and
discount on debt
118
214
Deferred income taxes
4,271
(414
)
Loss on extinguishment of debt
460
—
Other, net
97
72
Changes in operating assets and
liabilities:
Accounts receivable
(2,971
)
(174
)
Inventories
2,320
(6,543
)
Prepaid expenses and other assets
(7,131
)
1,065
Accounts payable and accrued expenses
(7,419
)
5,891
Other liabilities
(1,017
)
(856
)
Net cash provided by operating
activities
7,492
11,823
Cash flows from investing
activities:
Purchase of property and equipment
(2,336
)
(1,155
)
Net cash used in investing activities
(2,336
)
(1,155
)
Cash flows from financing
activities:
Proceeds from revolving line of credit
26,480
20,000
Repayment of revolving line of credit
—
(20,000
)
Proceeds from long term debt
25,581
—
Repayment of long-term debt
(50,775
)
(2,475
)
Debt issuance costs paid
(1,064
)
(334
)
Cash received from issuance of common
stock
463
398
Other, net
(207
)
(200
)
Net cash provided by (used in) financing
activities
478
(2,611
)
Net increase in cash and cash
equivalents
5,634
8,057
Cash and cash equivalents - beginning of
period
57,768
46,167
Cash and cash equivalents - end of
period
$
63,402
$
54,224
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,
2021
2020
Net income
$
8,276
$
1,512
Interest expense, net
745
1,468
Income tax provision (benefit)
1,528
(1
)
Depreciation and amortization
5,121
5,360
EBITDA
$
15,670
$
8,339
Restructuring income (a)
(14
)
—
Stock-based compensation
4,280
4,627
Loss on extinguishment of debt (b)
460
—
Other non-cash and non-recurring costs
(c)
1,302
2,577
Adjusted EBITDA
$
21,698
$
15,543
(a) Restructuring income during the three
months ended June 30, 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.
(b) Loss on extinguishment of debt
includes the write-off of existing debt issuance costs and certain
fees paid related to the amended credit agreement.
(c) 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, costs related to the
automation of certain warehouse and distribution activities, and
amortization related to certain cloud computing 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,
2021
2020
Selling, general, and administrative
expenses
$
50,749
$
40,332
Stock-based compensation
(4,190
)
(4,627
)
Other non-cash and non-recurring costs
(a)
(997
)
(2,577
)
Adjusted selling, general, and
administrative expenses
$
45,562
$
33,128
(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 June
30,
2021
2020
Net income
$
8,276
$
1,512
Restructuring income (a)
(14
)
—
Stock-based compensation
4,280
4,627
Other non-cash and non-recurring costs
(b)
997
2,577
Loss on extinguishment of debt (c)
460
—
Amortization of acquired intangible assets
(d)
2,031
2,031
Tax Impact (e)
(1,745
)
(2,130
)
Adjusted net income
$
14,285
$
8,617
Weighted average number of shares
outstanding – diluted
53,408,443
50,939,938
Adjusted diluted earnings per share
$
0.27
$
0.17
(a) Restructuring expense during the three
months ended June 30, 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.
(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) Loss on extinguishment of debt
includes the write-off of existing debt issuance costs and certain
fees paid related to the amended credit agreement.
(d) Represents amortization expense of
acquired intangible assets consisting of customer relationships,
trademarks and favorable leases.
(e) Represents the tax impact of the above
adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210804005963/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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