E.l.f. Beauty, Inc. · NYSE:ELF
E.l.f. Beauty — Q1 2024 Earnings Presentation
69 slides from E.l.f. Beauty's earnings presentation, Aug 1, 2023
Slide 1: Q1 FY2024 Earnings Webcast
Q 1 F Y 2 0 2 4 E A R N ING S WE BC A ST A U GU S T 1 , 2 0 2 3 S K I N
Slide 2: Forward-looking statements and non-GAAP notice
As a reminder, this call contains forward-looking statements that are based on management’s expectations – including those relating to the category trends and longer-term outlook – and are subject to known and unknown risks and uncertainties, and therefore, actual results may differ materially. Impo
Slide 3: Tarang P. Amin, Chairman & CEO
TARANG P. AMIN CHAIRMAN & CHIEF EXECUTIVE OFFICER
Slide 4: Agenda: Q1 FY2024 Results, Outlook
A GE N D A 1 2 Q1 FY 2024 RESULTS OUTLOOK
Slide 5: Eighteen consecutive quarters of net sales growth
EIG H TEEN C O N S E C U T I V E Q U A R T ERS O F NE T SA LE S G RO WTH +78 % +76 % +50 % +49 % +33 % +27 % +26 % +24 % +16 % +13 % +11 % +10 % +11 % +7% +8 % +8 % +7 % +3% FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 NET SALES GROWTH BY QUARTER, EXCLUDING E.L.F. STORES (CLOSED IN FEBRUARY 2019)
Slide 6: Quarters of >20% growth among public consumer companies
1 OF PUBLIC CONSUMER COMPANIES 5 (OUT OF 274) 18 QUARTERS OF >20% GROWTH FACTSET AS OF JUNE 26, 2023. REPRESENTS US COMPANIES IN “CONSUMER STAPLES” OR “CONSUMER DISCRETIONARY” GICS SECTORS
Slide 7: Q1 results
Q 1 R E S U LTS +76 % +280 +135 % BPS N ET GR O S S A DJU STE D S ALES M A R GI N E BITDA Q1 FY 2024 YEAR-OVER-YEAR, AS COMPARED TO Q1 FY 2023
Slide 8: Three key areas of white space
T H R E E K E Y A R E A S O F WHITE SPA C E INTERNATIONAL COSMETICS SKINCARE
Slide 9: Mass cosmetics consumption growth
M A S S C O S M E TIC S + 48 % +6% COLOR E.L.F. CATEGORY COSMETICS YOY CONSUMPTION GROWTH. NIELSEN XAOC LATEST 12 WEEKS ENDING 6/17/2023, COLOR COSMETICS CATEGORY
Slide 10: Top 5 mass cosmetics brands share change
TOP 5 MASS COSMETICS BRANDS SHARE (BPS) VS. YEAR AGO E.L.F. +260 300 225 150 75 0 L’OREAL REVLON -75 MAYBELLINE COVERGIRL Maybelline -35 -30 L'Oreal e.l.f. Cover Girl -25 Revlon -45 NIELSEN XAOC LATEST 12 WEEKS ENDING 6/17/2023, COLOR COSMETICS CATEGORY
Slide 11: Only brand to deliver share gains
ONLY BRAND OUT OF TO DELIVER 800 COSMETICS 18 QUARTERS OF BRANDS SHARE GAINS NIELSEN XAOC LATEST 12 WEEKS ENDING 6/17/2023, COLOR COSMETICS CATEGORY
Slide 12: e.l.f. category share overall and at Target
E . L . F. C AT E GO RY SHA RE ~ 18 % #3 #1 ~9.5% OVER ALL TARGET NIELSEN XAOC LATEST 12 WEEKS ENDING 6/17/2023, COLOR COSMETICS CATEGORY
Slide 13: Mass skincare consumption growth
M A S S S K I N C A RE + 127 % + 10 % SKINCARE E.L.F. CATEGORY SKIN YOY CONSUMPTION GROWTH. NIELSEN XAOC LATEST 12 WEEKS ENDING 6/17/2023, FACIAL SKINCARE CATEGORY
Slide 14: Skincare share gain and brand dollar share
+75 # 14 1.5 % BPS S H AR E G AIN BRAND $ SHA RE NIELSEN XAOC LATEST 12 WEEKS ENDING 6/17/2023, FACIAL SKINCARE CATEGORY
Slide 15: International net sales growth
INTERNATIONAL 79 % GROWTH Q1 FY 2024 YEAR-OVER YEAR INTERNATIONAL NET SALES GROWTH
Slide 16: UK and Canada consumption growth
UK C A NA DA 10 X 3X COLOR E.L.F. COLOR E.L.F. CATEGORY COSMETICS CATEGORY COSMETICS YOY CONSUMPTION GROWTH. NIELSEN, UK L26W ENDING 4/22/2023 AND CANADA L12W ENDING 3/25/2023
Slide 17: UK and Canada dollar share
#6 ~5 % UK & DO LLA R CANADA SHA RE NIELSEN, UK L26W ENDING 4/22/2023 AND CANADA L12W ENDING 3/25/2023
Slide 18: Drivers of our results
D R I V E R S O F O U R RE SU LTS VALUE PROPOSITION POWERHOUSE INNOVATION DISRUPTIVE MARKETING ENGINE
Slide 19: Value proposition
e.l.f.ing VALUE fantastic. PROPOSITION
Slide 20: Best of beauty accessible to every eye, lip, face and skin concern
BEST O F BEAUTY ACCESSIBLE TO EVERY EYE, LIP, FACE AND SKIN CONCERN
Slide 21: Holy grails
H O LY GR A ILS $10 $7 $10 $14 VS$54 VS$31 VS$38 VS$38 PRESTIGE PRESTIGE PRESTIGE PRESTIGE
Slide 22: AUR comparison
AUR COMPARISON > 20 $ ~ 9 $ ~ 6 $ E.L.F. TOP MASS PRESTIGE COSMETICS BRANDS BRANDS NIELSEN XAOC LATEST 52 WEEKS ENDING 6/17/2023, COLOR COSMETICS CATEGORY. CIRCANA LATEST 52 WEEKS ENDING 3/31/2023
Slide 23: Powerhouse innovation
Chapter slide update e.l.f.ing innovative. POWERHOUSE INNOVATION
Slide 24: Leadership across categories
LEADERSHIP ACROS S CATEGORIES #1 #1 #1 #1 #1 #1 #1 #1 SETTING HIGHLIGHT EYELASH PRIMER BRUSHES EYEBROW MULTI-EYE EYE PRIMER SPRAY /CONTOUR CURLER $ SHARE $ SHARE UNIT SHARE $ SHARE $ SHARE UNIT SHARE UNIT SHARE $ SHARE #2 #2 #2 #2 #2 #2 #2 #2 OTHER EYE EYELASH COSMETIC SPONGES CONCEALER BRONZER LIP
Slide 25: Build growing franchises
BUILD GROWING FRANCHISES
Slide 26: Liquid Poreless Putty Primer
VS $ 54 PRESTIGE $10 LIQUID PORELESS PUTTY PRIMER
Slide 27: Putty Color Correcting Eye Brightener
$6 PUTTY COLOR CORRECTING EYE BRIGHTENER
Slide 28: Suntouchable franchise
S U N T O U C H A B L E FRA NC HISE $14 $14 $14 VS$38 VS$38 VS$34 PRESTIGE PRESTIGE PRESTIGE
Slide 29: Disruptive marketing engine
DISRUPTIVE MARKETING ENGINE
Slide 30: Limited-edition collaboration with Mikayla Nogueira
L I M I TED - ED I TI O N C O L L A B O R AT I O N WITH MIKAY LA NO G U E IRA >17M FOLLOWERS ONE OF THE MOST POWERFUL INFLUENCERS IN BEAUTY
Slide 31: 18 minute sellout, record site visits
🚀 18 MINUTE SELLOUT 🔥 RECORD SITE VISITS 🤩 75% NEW PURCHASERS
Slide 32: Leaned further into entertainment and short-form digital content
L EANED F U R T H E R I N T O E N T E R TA I N M E N T & SHORT-FORM DIGITAL CONTENT
Slide 33: >20B impressions
>20B IMPRESSIONS Jennifer Coolidge Shares Her Hilariously Relatable Morning Routine For e.1f. ‘osmetics’ “Vanity able Talk’ ns Hill Holl HOW E.L.F. GOT CHRIS OLSEN AND IAN PAGET TO OPEN UP FORITS ‘MAKEUP OVER MAKEUP’ SERIES Madw SUBSCRIBE LIFESTYLE > STYLE Chris Olsen & lan Paget Reconnect to Discus
Slide 34: Creating a different kind of beauty company
CREATING A DIFFERENT KIND OF BEAUTY COMPANY
Slide 35: Launched new purpose-driven series
LAU N C H E D N E W P U R P OSE - DRIVE N SE RIE S
Slide 36: Donated $75,000
DONATED $75,000 C THE HIDDEN OPPONENT
Slide 37: Commitment to donate 2% of profits each year
COMMITMENT TO DONATE 2% OF PROFITS EACH YEAR DRIVE POSITIVE IMPACT IN OUR COMMUNITIES
Slide 38: Competitive moat
COMPETITIVE MOAT https://www.pngwing.com/en/free-png-bvxvi
Slide 39: Cosmetics and skincare brands by sales
>1, 800 COSMETICS & SKINCARE BRANDS 58 >$25M IN SALES 28 >$100M IN SALES NIELSEN XAOC LATEST 3 YEARS ENDING 6/17/2023, COLOR COSMETICS AND FACIAL SKINCARE CATEGORIES
Slide 40: Our superpowers
OUR SUPERPOWERS PREMIUM ACCESSIBLE BROAD VEGAN CRUELTY E.L.F. FAIR TRADE QUALITY PRICES APPEAL FREE CLEAN CERTIFIED
Slide 41: Superpowers: engagement model, supply chain, innovation engine
SUPERPOWERS e ’s no . ther ike e.l.f a c el ENGAGEMENT p l SUPPLY MODEL CHAIN INNOVATION ENGINE
Slide 42: Mandy Fields, SVP & CFO
MANDY FIELDS SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Slide 43: Agenda: Q1 FY2024 Results, Outlook
A GE N D A 1 2 Q1 FY 2024 RESULTS OUTLOOK
Slide 44: Net sales growth
NE T SA LE S +76% GROWTH 56 PPTS 20 PPTS UNITS AUR Q1 FY 2024
Slide 45: Digital consumption growth
DI G I TAL C ON S U M P T I O N >100% GROWTH Q1 FY 2024
Slide 46: Digital commerce penetration
DIGITAL COMMERCE PENETRATION 14 % 18 % Q1 Q1 FY 2023 FY 2024 % OF CONSUMPTION
Slide 47: Beauty Squad loyalty program members
B E A U T Y S Q U A D L O YA LTY P RO G RA M 3.9M MEMBERS >25 % GROW TH Q1 FY 2024 GROWTH IN TOTAL ENROLLMENT VERSUS PY | BEAUTY SQUAD LOYALTY MEMBERS AS OF 6/31/2023
Slide 48: Loyalty percent of sales on elfcosmetics.com
> 80 % LOYALTY % OF SALES ON ELFCOSMETICS.COM E L F C O S M E T I CS.C O M SALES
Slide 49: Gross margin
G R OS S M A R GI N 71 % +280 BPS Q1 FY 2024
Slide 50: Adjusted SG&A
ADJUSTED SG&A 45 % 39 % Q1 Q1 FY 2023 FY 2024 % OF NET SALES
Slide 51: Marketing and digital investment
MARKETING & DIGITAL INVESTMENT 16 % 16 % Q1 Q1 FY 2023 FY 2024 % OF NET SALES
Slide 52: Marketing and digital outlook
MAR K ETI N G A N D D I GI TA L 22-24 % OF NET SALES FY 2024 OUTLOOK
Slide 53: Adjusted EBITDA
+ 135% GROWTH $ 74 M ADJUSTED EBITDA Q1 FY 2024
Slide 54: Adjusted net income and adjusted EPS
AD J US TED N E T I N C O M E A DJU STE D E PS $ 63M $ 1.10 $ 21M $ 0.39 Q1 Q1 Q1 Q1 FY 2023 FY 2024 FY 2023 FY 2024
Slide 55: Drivers of profitability
D R I V E R S O F P R O FITA BILITY NET GROSS LEVERAGE SALES MARGIN IN NON MKTG GROWTH EXPANSION SG&A
Slide 56: Balance sheet & cash flow
wW 8 BALANCE SHEET & CASH FLOW
Slide 57: Cash
$ 143 M CASH ENDING CASH BALANCE, Q1 FY 2024 FY 2023
Slide 58: Inventory
$ 98 M INVENTORY Q1 FY 2024
Slide 59: Free cash flow
$ 23 M FREE CASH FLOW Q1 FY 2024
Slide 60: Cash priorities
C A S H P R I O RITIE S INVESTING SUPPORTING IN GROWTH STRATEGIC INITIATIVES EXTENSIONS
Slide 61: Fiscal 2024 outlook
AVERAGE SHARES NET SALES ~57M + 37% TO 39% ADJUSTED TAX RATE FISCAL 2024 ADJUSTED EBITDA 17% TO 18% OUTLOOK $ 171M TO $ 174M ADJUSTED EPS ADJUSTED NET INCOME $ 2.19 TO $ 2.22 $ 125M TO $ 127M
Slide 62: Top line outlook: Q1 performance, ongoing momentum
T O P L I N E O UTLO O K Q1 PERFORMANCE ONGOING MOMENTUM FY 2024 OUTLOOK
Slide 63: Gross margin outlook
GR O S S M A R GI N O U TLO O K + 150 BPS FY 2024 OUTLOOK, YEAR OVER YEAR GROSS MARGIN CHANGE
Slide 64: Gross margin outlook drivers
GR O S S M A R GI N O U TLO O K + 150 COST SAVINGS MARGIN-ACCRETIVE MIX BPS SPACE EXPANSION RETAILER ACTIVITY FX RATES TRANSPORTATION COSTS FY 2024 OUTLOOK
Slide 65: Adjusted EBITDA growth outlook
A D J U S T E D E B I T DA G RO WTH +56 % +46 49 % TO GROWTH GROWTH FY 2023 FY 20 2 4 O U TLO O K FY 2024 OUTLOOK
Slide 66: Adjusted EBITDA margin leverage
+ 150 BPS ADJUSTED EBITDA MARGIN LEVERAGE FY 2024 OUTLOOK
Slide 67: Drivers of FY2024 outlook
D R I V E R S O F F Y 2 0 24 O U TLO O K NET GROSS LEVERAGE SALES MARGIN IN NON MKTG GROWTH EXPANSION SG&A FY 2024 OUTLOOK
Slide 68: Three key areas of white space
T H R E E K E Y A R E A S O F WHITE SPA C E INTERNATIONAL COSMETICS SKINCARE
Slide 69: Q1 FY2024 Earnings Webcast
Q 1 F Y 2 0 2 4 E A R N ING S WE BC A ST A U GU S T 1 , 2 0 2 3 S K I N