– Delivered 26% Net Sales Growth –
– Gained 120 Basis Points of Market Share –
– Raises Fiscal 2023 Outlook –
e.l.f. Beauty (NYSE: ELF) today announced results for the three
months ended June 30, 2022.
“I am proud of the e.l.f. Beauty team for achieving our
fourteenth consecutive quarter of net sales growth,” said Tarang
Amin, e.l.f. Beauty's Chairman and Chief Executive Officer. “We
continue to significantly outperform our competition. In the first
quarter, we were the fastest growing top 5 color cosmetics brand
and expanded our market share by 120 basis points, according to
Nielsen. We are continuing to lean into our strengths—our core
value proposition, innovation engine, and ability to attract and
engage consumers—and are pleased to raise our Fiscal 2023
outlook.”
Three Months Ended June 30, 2022 Results
For the three months ended June 30, 2022, compared to the
three months ended June 30, 2021:
- Net sales increased 26% to $122.6 million, primarily
driven by strength in our national and international
retailers.
- Gross margin increased approximately 390 basis points to
68%, primarily driven by price increases, cost savings, and product
mix, which helped to mitigate the impact of higher transportation
costs in the quarter.
- Selling, general and administrative expenses
("SG&A") increased $10.8 million to $61.6 million or 50% of
net sales. Adjusted SG&A increased $9.4 million to $55.0
million, or 45% of net sales. The increase was primarily due to an
increase in compensation and benefits and marketing and digital
spend.
- The provision for income taxes was $4.6 million.
- Net income was $14.5 million on a GAAP basis.
Adjusted net income (net income excluding the items
identified in the reconciliation table below) was $21.1
million.
- Diluted earnings per share were $0.27 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 $0.39.
- Adjusted EBITDA (EBITDA excluding the items identified
in the reconciliation table below) was $31.7 million, or 26% of net
sales, up 46% year over year.
Balance Sheet
As of June 30, 2022, the Company had $72.2 million in cash and
cash equivalents and $89.7 million in long-term debt and finance
lease obligations, as compared to $63.4 million in cash and cash
equivalents and $95.3 million of long-term debt and finance lease
obligations as of June 30, 2021.
Updated Fiscal 2023 Outlook
The Company is providing the following updated outlook for
fiscal 2023. The updated outlook for fiscal 2023 reflects an
expected 14-16% year-over-year increase in net sales, as compared
to an expected 10-12% year-over-year increase previously.
Updated Fiscal 2023
Outlook
Previous Fiscal 2023
Outlook
Net sales
$448-456 million
$432-440 million
Adjusted EBITDA
$83.5-85.0 million
$80.5-82.0 million
Adjusted effective tax rate
25-26%
27-28%
Adjusted net income
$47.0-48.5 million
$43.5-45.5 million
Adjusted diluted earnings per share
$0.84-0.87
$0.78-0.81
Weighted average diluted shares
outstanding
56 million
56 million
Webcast Details
The Company will hold a webcast to discuss the results from its
first quarter fiscal 2023 today, August 3, 2022, at 4:30 p.m.
Eastern Time. The webcast will be broadcast 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, Inc. builds brands designed to disrupt industry
norms, shape culture and connect communities through positivity,
inclusivity and accessibility. Our deep commitment to clean,
cruelty free beauty at an incredible value has fueled the success
of our flagship brand e.l.f. Cosmetics since 2004 and driven our
portfolio expansion. Today, our multi-brand portfolio includes
e.l.f. Cosmetics, e.l.f. SKIN, pioneering clean beauty brand Well
People and Keys Soulcare, a groundbreaking lifestyle beauty brand
created with Alicia Keys. Our family of brands is available online
and across leading beauty, mass market and clean beauty specialty
retailers in the U.S., and has a growing international
presence.
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 items. Such other
non-cash or non-recurring items historically include other legal
settlements, pre-launch costs to develop the Company’s brand, Keys
Soulcare, third-party costs related to M&A due diligence, and
amortization of internal-use software costs related to cloud
applications. Adjusted SG&A excludes costs related to
stock-based compensation and other non-cash and non-recurring
items. Such other non-cash or non-recurring items historically
include other legal settlements, pre-launch costs to develop the
Company’s brand, Keys Soulcare and third-party costs related to
M&A due diligence. 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 items, 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 items,
amortization of acquired intangible assets and the tax impact of
the foregoing adjustments. Such other non-cash or non-recurring
items, which historically include other legal settlements,
pre-launch costs to develop the Company’s brand and third-party
costs related to M&A due diligence.
With respect to the Company’s expectations under “Updated Fiscal
2023 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 2023 under
“Updated Fiscal 2023 Outlook” above and those statements that the
Company is continuing to lean into its strengths—its core value
proposition, innovation engine, and ability to attract and engage
consumers. 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,
2022
2021
Net sales
$
122,601
$
97,047
Cost of sales
39,616
35,141
Gross profit
82,985
61,906
Selling, general and administrative
expenses
61,555
50,749
Restructuring income
—
(14
)
Operating income
21,430
11,171
Other expense, net
(1,663
)
(162
)
Interest expense, net
(663
)
(745
)
Loss on extinguishment of debt
—
(460
)
Income before provision for income
taxes
19,104
9,804
Income tax provision
(4,635
)
(1,528
)
Net income
$
14,469
$
8,276
Comprehensive income
$
14,469
$
8,276
Net income per share:
Basic
$
0.28
$
0.16
Diluted
$
0.27
$
0.15
Weighted average shares outstanding:
Basic
51,707,160
50,544,573
Diluted
53,834,732
53,408,443
e.l.f. Beauty, Inc. and
subsidiaries
Condensed consolidated balance
sheets
(unaudited)
(in thousands, except share
and per share data)
June 30, 2022
March 31, 2022
June 30, 2021
Assets
Current assets:
Cash and cash equivalents
$
72,248
$
43,353
$
63,402
Accounts receivable, net
52,281
45,567
43,127
Inventory, net
70,339
84,498
54,528
Prepaid expenses and other current
assets
21,772
19,611
21,674
Total current assets
216,640
193,029
182,731
Property and equipment, net
9,339
10,577
15,561
Intangible assets, net
84,132
86,163
92,256
Goodwill
171,620
171,620
171,620
Investments
2,875
2,875
2,875
Other assets
29,251
30,368
33,349
Total assets
$
513,857
$
494,632
$
498,392
Liabilities and stockholders'
equity
Current liabilities:
Current portion of long-term debt and
capital lease obligations
$
5,793
$
5,786
$
32,247
Accounts payable
16,023
19,227
17,113
Accrued expenses and other current
liabilities
39,916
40,004
33,617
Total current liabilities
61,732
65,017
82,977
Long-term debt and finance lease
obligations
89,684
91,080
95,254
Deferred tax liabilities
13,538
9,593
17,750
Long-term operating lease obligations
14,637
15,744
19,053
Other long-term liabilities
817
769
736
Total liabilities
180,408
182,203
215,770
Commitments and contingencies
Stockholders' equity:
Common stock, par value of $0.01 per
share; 250,000,000 shares authorized as of June 30, 2022, March 31,
2022 and June 30, 2021; 52,424,445, 52,243,764 and 51,826,156
shares issued and outstanding as of June 30, 2022, March 31, 2022
and June 30, 2021, respectively
517
515
508
Additional paid-in capital
801,992
795,443
779,137
Accumulated deficit
(469,060
)
(483,529
)
(497,023
)
Total stockholders' equity
333,449
312,429
282,622
Total liabilities and stockholders'
equity
$
513,857
$
494,632
$
498,392
e.l.f. Beauty, Inc. and
subsidiaries
Condensed consolidated
statements of cash flows
(unaudited)
(in thousands)
Three months ended June
30,
2022
2021
Cash flows from operating
activities:
Net income
$
14,469
$
8,276
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
5,724
6,222
Restructuring income
—
(14
)
Stock-based compensation expense
6,542
4,280
Amortization of debt issuance costs and
discount on debt
91
118
Deferred income taxes
3,945
4,271
Loss on extinguishment of debt
—
460
Other, net
21
97
Changes in operating assets and
liabilities:
Accounts receivable
(6,727
)
(2,971
)
Inventories
14,158
2,320
Prepaid expenses and other assets
(3,258
)
(7,131
)
Accounts payable and accrued expenses
(3,442
)
(7,419
)
Other liabilities
(945
)
(1,017
)
Net cash provided by operating
activities
30,578
7,492
Cash flows from investing
activities:
Purchase of property and equipment
(241
)
(2,336
)
Net cash used in investing activities
(241
)
(2,336
)
Cash flows from financing
activities:
Proceeds from revolving line of credit
—
26,480
Proceeds from long-term debt
—
25,581
Repayment of long-term debt
(1,250
)
(50,775
)
Debt issuance costs paid
—
(1,064
)
Cash received from issuance of common
stock
2
463
Other, net
(194
)
(207
)
Net cash (used in) provided by financing
activities
(1,442
)
478
Net increase in cash and cash
equivalents
28,895
5,634
Cash and cash equivalents - beginning of
period
43,353
57,768
Cash and cash equivalents - end of
period
$
72,248
$
63,402
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,
2022
2021
Net income
$
14,469
$
8,276
Interest expense, net
663
745
Income tax provision
4,635
1,528
Depreciation and amortization
4,693
5,121
EBITDA
$
24,460
$
15,670
Restructuring income (a)
—
(14
)
Stock-based compensation
6,542
4,280
Loss on extinguishment of debt (b)
—
460
Other non-cash and non-recurring items
(c)
679
1,302
Adjusted EBITDA
$
31,681
$
21,698
(a) Restructuring income during the three months ended June 30,
2021, relates to the closure of the Company’s manufacturing plant,
including impairment of assets, the disposal of excess inventory on
hand at the plant, the termination of manufacturing employees and
sub lease income.
(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 items, which
historically include other legal settlements, pre-launch costs to
develop the Company’s brand, Keys Soulcare, third-party costs
related to M&A due diligence, and amortization of internal-use
software costs related to cloud applications.
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,
2022
2021
Selling, general and administrative
expenses
$
61,555
$
50,749
Stock-based compensation
(6,549
)
(4,190
)
Other non-cash and non-recurring items
(a)
—
(997
)
Adjusted selling, general and
administrative expenses
$
55,006
$
45,562
(a) Represents various non-cash or non-recurring items, which
historically include other legal settlements, pre-launch costs to
develop the Company’s brand, Keys Soulcare, and third-party costs
related to M&A due diligence.
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,
2022
2021
Net income
$
14,469
$
8,276
Restructuring income (a)
—
(14
)
Stock-based compensation
6,542
4,280
Other non-cash and non-recurring items
(b)
—
997
Loss on extinguishment of debt (c)
—
460
Amortization of acquired intangible assets
(d)
2,031
2,031
Tax Impact (e)
(1,917
)
(1,745
)
Adjusted net income
$
21,125
$
14,285
Weighted average number of shares
outstanding – diluted
53,834,732
53,408,443
Adjusted diluted earnings per share
$
0.39
$
0.27
(a) Restructuring income during the three months ended June 30,
2021, relates to the closure of the Company’s manufacturing plant,
including impairment of assets, the disposal of excess inventory on
hand at the plant, the termination of manufacturing employees and
sub lease income.
(b) Represents various non-cash or non-recurring items, which
historically include other legal settlements, pre-launch costs to
develop the Company’s brand, Keys Soulcare, and third-party costs
related to M&A due diligence.
(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 and trademarks.
(e) Represents the tax impact of the above adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220803005683/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
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