Adds fast-growing, high performance skin care
disruptor to e.l.f. Beauty portfolio of brands
Advances e.l.f. Beauty’s mission to make the
best of beauty accessible to every eye, lip, face and skin
concern
Acquisition expected to be accretive to e.l.f.
Beauty’s EPS on an adjusted basis in fiscal 2024
e.l.f. Beauty (NYSE: ELF) has signed a definitive agreement to
acquire Naturium, a fast-growing, high performance skin care brand
for $355 million in a combination of cash and stock, furthering its
mission to make the best of beauty accessible to every eye, lip,
face and skin concern. The deal is expected to double e.l.f.
Beauty’s presence in skin care to approximately 18% of retail
sales. The transaction, which is subject to customary closing
conditions, is expected to close around September 30, 2023.
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“We are thrilled to welcome Naturium to the e.l.f. Beauty
family,” said Tarang Amin, e.l.f. Beauty’s Chairman and Chief
Executive Officer. “Naturium aligns with e.l.f. Beauty’s vision to
create a different kind of beauty company with brands built to
disrupt norms, shape culture and connect communities through
positivity, inclusivity and accessibility. Nearing two decades in
business, we continue to deliver exceptional results. In August, we
raised our Fiscal 2024 outlook after posting quarterly net sales
growth of 76%, marking 18 consecutive quarters of more than 20%
sales growth on average. e.l.f. SKIN is one of the fastest growing
skin care brands, and Naturium joining e.l.f. Beauty presents a
unique opportunity to significantly accelerate the potential we see
in skin care.”
Naturium was launched in 2019 by Los Angeles based brand
accelerator, The Center, and propelled further in 2020 with the
joining of one of the industry’s leading skin care authorities,
Susan Yara as a founder, as well as a minority investment in 2021
from the female-founded growth equity firm Prelude Growth Partners.
Naturium is driven by the belief that high performance skin care
should be and can be clinically effective, skin compatible and
affordable. The brand has seen exceptional growth, with net sales
growing at an approximately +80% CAGR over the last two years, and
approximately $90 million of net sales expected this year.1
Naturium is known for powerful ingredient-led formulas that
combine efficacy with an elevated skin care experience at an
accessible price point. Some of its best-selling products include
The Glow Getter Multi-Oil Hydrating Body Wash, Vitamin C Complex
Serum and Dew-Glow Moisturizer SPF 50. With an average selling
price of approximately $18, Naturium products are currently
available at Target, Amazon, naturium.com and select international
retailers. Naturium is one of Target’s fastest growing skin care
brands2 and was awarded Beauty Vendor of the Year in 2022.
“We have remained disciplined in pursuing strategic extensions
that can leverage our strengths and bring complementary
capabilities to e.l.f. Beauty,” continued Amin. “Naturium has built
something special. With efficacious products at accessible price
points and a community first mindset, Naturium reminds me of where
e.l.f. was when I became CEO over nine years ago. Naturium
demonstrates the same spirit, values and growth characteristics we
find in e.l.f."
“We’ve built an incredible brand, with numerous superstar
formulas, a dedicated community and a world class team in less than
four years,” said Susan Yara, Naturium’s Founder. “I have admired
e.l.f., and their deep commitment to being a different kind of
beauty company, for years now. They care about their community and
their employees, which is truly meaningful to me, especially as a
female founder. With our complementary missions and cultures, I
know e.l.f. Beauty will be the ideal partner as we expand our
reach, and continue to make high performance skin care accessible
for all.”
e.l.f. Beauty plans to continue to operate the Naturium business
from its headquarters in Los Angeles, CA, nurturing its
entrepreneurial spirit and maintaining the brand’s passionate team
of employees.
Transaction Details
The total purchase consideration is approximately $355 million,
subject to certain customary purchase price adjustments. e.l.f.
Beauty expects to finance the transaction using available cash on
hand, borrowings under e.l.f. Beauty’s existing credit facility and
approximately $70 million, or approximately 600,000 shares, of
e.l.f. Beauty stock issued directly to founders and key
management.
Naturium is expected to generate approximately $90 million of
net sales and $17 million in adjusted EBITDA this year.3 The
purchase price implies a multiple of approximately 4x net sales and
approximately 21x adjusted EBITDA.
e.l.f. Beauty expects Naturium to contribute approximately $48
million in net sales, approximately $9 million in adjusted EBITDA
and approximately $0.04 in adjusted EPS on a fully diluted basis in
fiscal 2024. Note that this considers Naturium’s contribution for
approximately half of e.l.f. Beauty’s fiscal year, based on the
expected timeline for the transaction to close around September 30,
2023.
Advisors
Latham & Watkins LLP is serving as e.l.f. Beauty’s legal
advisor. Financo Raymond James is serving as exclusive financial
advisor to Naturium and Sidley Austin LLP and Polsinelli LLP are
serving as Naturium’s legal advisors.
Conference Call Details
e.l.f. Beauty will hold a conference call to discuss the
acquisition at 8:00am Eastern Time today, August 29, 2023.
Interested parties may listen to the conference call via the live
webcast by accessing
https://investor.elfbeauty.com/news-and-events/events-and-presentations
or by calling 1-844-481-2823 or 1-412-317-1848. For those unable to
listen to the live broadcast, an archived version will be available
on the e.l.f. Beauty website.
Presentation slides have also been posted to e.l.f. Beauty’s
website at
https://investor.elfbeauty.com/news-and-events/events-and-presentations.
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 specialty retailers in
the U.S., and has a growing international presence.
Learn more by visiting https://investor.elfbeauty.com.
About Naturium
Driven by the belief that high-performance skin care should be
and can be clinically-effective, skin compatible and affordable,
Naturium was born. Naturium unlocks the benefits of natural
botanicals and powerful actives with innovative technology, by
formulating highly effective skin care formulas that work. Naturium
products are available at Target, Amazon, naturium.com and select
international retailers.
Note Regarding non-GAAP Financial Measure
With respect to the adjusted EBITDA and adjusted EPS
expectations above, the Company is not able to provide a
quantitative reconciliation of these forward-looking non-GAAP
financial measures to their most comparable GAAP financial measures
without unreasonable efforts. The Company cannot provide meaningful
estimates of the non-recurring charges and credits excluded from
adjusted EBITDA and adjusted EPS 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 expectations regarding
Naturium’s net sales and adjusted EBITDA and contributions to
e.l.f. Beauty’s net sales, adjusted EBITDA and adjusted EPS on a
fully diluted basis in fiscal 2024, and those statements regarding
the performance of the combined business. 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
occurrence of any event, change or other circumstances that could
give rise to the termination of the definitive agreement to acquire
Naturium; the possibility that various closing conditions for the
acquisition may not be satisfied or waived; the possibility of a
failure to obtain, delays in obtaining or adverse conditions
contained in regulatory or other required approvals; the failure of
the acquisition to close for any other reason; the amount of fees
and expenses related to the acquisition; the ability to achieve
projected financial results; 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.
____________________ 1
In the 12 month period ending March 31,
2024, on an annualized basis.
2
Target IRI TCN Reporting (May 2023).
3
In the 12 month period ending March 31,
2024, on an annualized basis.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230829531094/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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