E.l.f. Beauty, Inc. · NYSE:ELF
E.l.f. Beauty — Q4 2023 Earnings Presentation
99 slides from E.l.f. Beauty's earnings presentation, May 24, 2023
Slide 1: Q4 FY2023 Earnings Webcast
Q 4 F Y 2 0 2 3 E A R N ING S WE BC A ST M AY 2 4 , 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: FY 2023 Results, FY 2024 Outlook
A GE N D A 1 2 FY 2023 FY 2024 RESULTS OUTLOOK
Slide 5: 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 6: FY 2023 Results
F Y 2 0 2 3 R E S U LTS +48 % +56 % NET SALES A DJU STE D E BITDA FY 2023
Slide 7: Seventeen Consecutive Quarters of Net Sales Growth
SEVEN TEEN C O N S E C U T I V E Q U A R T E RS O F NE T SA LE S G RO WTH +78 % +50 % +49 % +33 % +27 % +26 % +24 % +16 % +13 % +11 % +10 % +11 % +7% +8 % +8 % +7 % +3% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY 2020 FY 2021 FY 2022 FY 2023 NET SALES GROWTH BY QUARTER, EXCLUDING E.L.F. ST
Slide 8: Q4 Results
Q 4 R E S U LTS +78 % +470 +66 % BPS N ET S ALES GR O S S M ARG IN A DJU STE D E BITDA Q4 FY 2023 YEAR-OVER-YEAR, AS COMPARED TO Q4 FY 2022
Slide 9: Color Cosmetics Consumption Growth
C O N S U M P T IO N + 64 % +18% COLOR E.L.F. CATEGORY COSMETICS YOY CONSUMPTION GROWTH. NIELSEN XAOC LATEST 12 WEEKS ENDING 3/25/2023, COLOR COSMETICS CATEGORY
Slide 10: Top 5 Mass Cosmetics Brands $ Share
TOP 5 MASS COSMETICS BRANDS $ SHARE MAYBELLINE 17.7% 18 L’OREAL 13.5 12.8% E.L.F. COVERGIRL 9.5% 8.7% REVLON 9 6.5% 4.5 0 Maybelline L'Oreal Cover Girl Revlon e.l.f. NIELSEN XAOC LATEST 12 WEEKS ENDING 3/25/2023, COLOR COSMETICS CATEGORY
Slide 11: Top 5 Mass Cosmetics Brands Share Change
TOP 5 MASS COSMETICS BRANDS SHARE (BPS) VS. YEAR AGO E.L.F. +270 300 225 150 MAYBELLINE 75 L’OREAL +45 +25 0 -75 COVERGIRL Maybelline L'Oreal e.l.f. -35Girl Cover REVLON Revlon -70 NIELSEN XAOC LATEST 12 WEEKS ENDING 3/25/2023, COLOR COSMETICS CATEGORY
Slide 12: Skincare Consumption Growth
C O N S U M P T IO N + 55 % +12% SKINCARE E.L.F. CATEGORY SKIN YOY CONSUMPTION GROWTH. NIELSEN XAOC LATEST 12 WEEKS ENDING 3/25/2023, FACIAL SKINCARE CATEGORY
Slide 13: Recognition Over the Last Year
R E C O GN I T I O N O V E R THE LA ST Y E A R MOST LOVED BEAUTY BEAUTY BRAND MOST ENTREPRENEURIAL COMPANY OF THE YEAR CMOS AMERICA’S BEST MOST POWERFUL MARKETING INNOVATOR MIDSIZE COMPANIES BRAND OF THE YEAR
Slide 14: World's Most Innovative Companies of 2023
THE WORLD’S MOST INNOVATIVE COMPANIES OF 2023
Slide 15: Creating a Different Kind of Beauty Company
CREATING A DIFFERENT KIND OF BEAUTY COMPANY PURPOSE-LED RESULTS DRIVEN
Slide 16: Diverse Board of Directors
B O A R D O F D I RE C TO RS 2/3 1 4 OF PUBLIC COMPANIES 1/3 WOMEN (OUT OF 4,200) DIVERSE
Slide 17: #1 Teen Favorite Brand
#1 TEEN FAVORITE BRAND PIPER SANDLER TAKING STOCK WITH TEENS SURVEY, SPRING 2023
Slide 18: Teen Favorite Makeup Brand Ranking
1 22% 2 RARE BEAUTY 11% 3 MAYBELLINE 7% PIPER SANDLER TAKING STOCK WITH TEENS SURVEY, SPRING 2023 +900 4 L’OREAL 6% 5 FENTY BEAUTY 5% BPS 6 CHARLOTTE TILBURY 5% 7 TARTE 5% 8 NYX 3% 9 TOO FACED 2% 10 MAC 3%
Slide 19: Skincare Brand Among Teens
1 CERAVE 2 THE ORDINARY 3 CETAPHIL PIPER SANDLER TAKING STOCK WITH TEENS SURVEY, SPRING 2023 4 DRUNK ELEPHANT 5 LA ROCHE-POSAY #9 6 NEUTROGENA SKINCARE CLINIQUE 7 BRAND AMONG 8 CUROLOGY TEENS 9 10 AVEENO
Slide 20: Favorite Shopping Destination
1 ULTA 2 SEPHORA 3 TARGET PIPER SANDLER TAKING STOCK WITH TEENS SURVEY, SPRING 2023 4 WALMART #8 5 AMAZON FAV O RITE SHOPPING 6 CVS DESTINATION 7 SHEIN 8 9 WALGREENS 10 FENTY BEAUTY
Slide 21: Executing Our Five Strategic Imperatives
EX EC U T I N G O U R F I V E S T R ATE G IC IMPE RATIVE S BUILD DRIVE DELIVER POWER LEAD P R O F I TA B L E BRAND P R O D U C T- D I G I TA L I N N O VAT I O N GROWTH DEMAND IVITY
Slide 22: Build Brand Demand
BUILD BRAND DEMAND
Slide 23: Strength Across Platforms
S T R E N GT H A C R O S S PLATFO RMS NEW
Slide 24: Four-Time TikTok Billionaires
FOUR-TIME TIKTOK BILLIONAIRES 10 B 3B 19 B 15 B #EYESLIPSFACE #ELFMAGICACT #TIKTOKGGT #ELFITUP (2019) (2020) (2021) (2022)
Slide 25: BeReal
BeReal.
Slide 26: Our First-Ever TV Commercial
📺 OUR FIRST-EVER TV COMMERCIAL
Slide 27: Stickiest Stars in Beauty
S T I C K I E S T S TA R I N BE A U TY #1 #1 E.L.F. MASS COSMETICS COSMETICS SKU SKU FY 2023 INTERNAL CONSUMPTION | NIELSEN XAOC LATEST 12 WEEKS ENDING 3/25/2023
Slide 28: Stickiest Cultural Icon
STICKIEST CULTURAL ICON
Slide 29: Stickiest Sporting Event
ws ek FET eg TS ee an YS Te eee ed 44 a os co =. Seis 2 a ae ie i ell on 5 a : aa éy Sf) at, ay os o = lal + aries sean —_
Slide 30: Weeks of Concept and Execution
CONCEPT 3 WEEKS EXECUTION
Slide 31: Touchdown
TOUCHDOWN ()
Slide 32: 57 Billion Impressions
IMPRESSIONS 57 BILLION | #
Slide 33: Brand Sentiment
BRAND SENTIMENT #1 (OF 103 ADS) SOURCE: INFLUENTIAL
Slide 34: Purchase Consideration
PURCHASE CONSIDERATION + 64% WEEK OVER WEEK POST-GAME SOURCE: YOUGOV (2023)
Slide 35: e.l.f. Was Born to Disrupt
E.L.F. WAS BORN TO DISRUPT. IT’S IN OUR DNA.
Slide 36: 4B+ Impressions
4B+ IMPRESSIONS Bee |
Slide 37: 5B+ Impressions
5B+ IMPRESSIONS
Slide 38: 7B+ Impressions
TT TTT TRS EYES. LIPS. FACE. JEANS.
Slide 39: Unaided Brand Awareness
U N A I D E D B R A N D AWA RE NE SS 48 % 43 % 33 % < 20 % E.L.F. L’OREAL COVERGIRL MAYBELLINE BOVITZ, INC. (2022 AUGUST) MAKEUP CATEGORY ATTITUDES & USAGE STUDY COMMISSIONED BY E.L.F. COSMETICS; CONFIDENTIAL & PROPRIETARY
Slide 40: Marketing ROI
MARKETING ROI
Slide 41: Power Digital
POWER DIGITAL
Slide 42: #1 Mass Cosmetics E-commerce Site
#1 MASS COSMETICS E-COMMERCE SITE
Slide 43: Digital Consumption Growth
DI G I TAL C ON S U M P T I O N >75% GROWTH FY 2023
Slide 44: Digital Commerce Penetration
DIGITAL COMMERCE PENETRATION 14 % 17 % FY 2022 FY 2023 % OF CONSUMPTION
Slide 45: Beauty Squad Loyalty Program
B E A U T Y S Q U A D L O YA LTY P RO G RA M 3.7M MEMBERS >25 % GROW TH FY 2023 GROWTH IN TOTAL ENROLLMENT VERSUS PY | BEAUTY SQUAD LOYALTY MEMBERS AS OF 3/31/2023
Slide 46: Loyalty % of Sales on elfcosmetics.com
O F S A L ES > 80 % LOYALTY % OF SALES ON ELFCOSMETICS.COM
Slide 47: Lead Innovation
LEAD INNOVATION
Slide 48: Holy Grails
H O LY GR A ILS $10 $7 $11 $10 VS$54 VS$31 VS$38 VS$38 PRESTIGE PRESTIGE PRESTIGE PRESTIGE
Slide 49: 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 50: Build Growing Franchises
BUILD GROWING FRANCHISES
Slide 51: Camo, Putty, Halo Glow, Power Grip Franchises
CAMO PUTTY HALO GLOW POWER GRIP FRANCHISE FRANCHISE FRANCHISE FRANCHISE CY 2019 CY 2020 CY 2021 CY 2022
Slide 52: Slide 52
Slide 53: Drive Productivity
DRIVE PRODUCTIVITY
Slide 54: Best in Class Productivity
thu ne BESTIN CLASS ala propuctiviry 7, Walmart-,<
Slide 55: Growth: Retail Partners
lef Jelf Jef Jelf Aim
Slide 56: Spring 2023 Expansion
SPRING 2023 EXPANSION EXPECTED SPACE EXPANSION IN A SUBSET OF RETAILER DOORS
Slide 57: Average Linear Feet per Store
AV E R A GE L I N E A R F E E T PE R STO RE ~ 20 FEET ~12 FEET ~8 ~7 FEET FEET TARGET ULTA WALMART LEGACY BRANDS FY 2023
Slide 58: Fall 2023 Expansion
FALL 2023 EXPANSION
Slide 59: Deliver Profitable Growth
DELIVER PROFITABLE GROWTH
Slide 60: Winning Formula
WINNING FORMULA INVESTING IN ADJUSTED EBITDA MARKETING MARGIN EXPANSION
Slide 61: Investing Along the Journey: People, Infrastructure
I N V E S T I N G A L O N G THE JO U RNE Y PEOPLE INFRASTRUCTURE
Slide 62: Only Public Beauty Company Granting Equity to Every Employee
ON LY P U B L I C B E A U T Y C O M PANY G RA NTING E Q U ITY T O E V E RY E M P L O Y E E , A NNU A LLY e.l.f. shareholder
Slide 63: 3-5X More Productive
SALES PER EMPLOYEE 3-5X PROFITS PER EMPLOYEE MORE PRODUCTIVE L'Oreal Estee lauder Coty Revlon e.l.f. L’OREAL ESTEE LAUDER COTY REVLON E.L.F. BEAUTY 2021 PROXIES
Slide 64: Employee Engagement
EMPLOYEE ENGAGEMENT 91 % 72 % +19 % E.L.F. CONSUMER BEAUTY GOODS CULTURE AMP
Slide 65: 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 66: Mass Cosmetics $7B Category
MASS COSMETICS $7 B CATEGORY NIELSEN XAOC LATEST 52 WEEKS ENDING 3/25/2023
Slide 67: 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 3/25/2023, COLOR COSMETICS CATEGORY
Slide 68: Mass Skincare $5B Category
MASS SKINCARE $5 B CATEGORY NIELSEN XAOC LATEST 52 WEEKS ENDING 3/25/2023
Slide 69: Overall Category Rank and Favorite Teen Brand
# 19 OVERALL CATEGORY RANK #9 FAVORITE TEEN BRAND NIELSEN XAOC 12 WEEKS ENDING 3/25/2023, FACIAL SKINCARE
Slide 70: Skincare Penetration
SKINCARE PENETRATION 8% ~20 % TRACKED ELFCOSMETICS.COM CHANNELS % PENETRATION OF CONSUMPTION, NIELSEN XAOC LATEST 52 WEEKS ENDING 3/25/2023
Slide 71: Skincare Holy Grails
S K I N C A R E H O LY G RA ILS $11 $14 $22 VS$38 VS$38 VS$80 PRESTIGE PRESTIGE PRESTIGE
Slide 72: International Whitespace
INTERNATIONAL WHITESPACE
Slide 73: International Growth
INTERNATIONAL 12 % >60% GROWTH % OF NET SALES IN FY 2023, YEAR OVER YEAR NET SALES GROWTH IN FY 2023
Slide 74: Market Rank: U.S., Canada, U.K.
#3 #7 #7 C A NA DA U .K. U.S. NIELSEN: U.S. COLOR COSMETICS FOR L12W ENDING 3/25/2023, CANADA COSMETICS & COS ACCESSORIES FOR L12W ENDING 12/31/2022, UK L52W ENDING 12/31/2022
Slide 75: Mandy Fields, SVP & CFO
MANDY FIELDS SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Slide 76: Net Sales Growth
NE T SA LE S +78% GROWTH 50 PPTS 28 PPTS UNITS AUR Q4 FY 2023 Q4 FY 2023
Slide 77: Gross Margin
G RO SS M A RG IN 69 % +470 BPS Q4 FY 2023
Slide 78: Adjusted SG&A
ADJUSTED SG&A 57 % 61 % Q4 Q4 FY 2022 FY 2023 % OF NET SALES
Slide 79: Marketing & Digital Investment
MARKETING & DIGITAL INVESTMENT 33 % 17 % Q4 Q4 FY 2022 FY 2023 % OF NET SALES
Slide 80: Marketing and Digital % of Net Sales
MARK ETI N G AN D D I GI TA L 22 % OF NET SALES FY 2023
Slide 81: Adjusted EBITDA
+66 % GROWTH $ 21 M ADJUSTED EBITDA Q4 FY 2023
Slide 82: 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 $ 24M $ 0.42 $ 7M $ 0.13 Q4 Q4 Q4 Q4 FY 2022 FY 2023 FY 2022 FY 2023
Slide 83: FY 2023 Net Sales and Adjusted EBITDA Growth
+48 % +56 % NE T S A L E S A DJU STE D E BITDA FY 2023 YEAR-OVER-YEAR GROWTH
Slide 84: Balance Sheet & Cash Flow
wW 8 BALANCE SHEET & CASH FLOW
Slide 85: Cash Balance
$ 121 M CASH BALANCE FY 2023 FY 2023
Slide 86: Inventory
S8iIMm INVENTORY FY 2023
Slide 87: Free Cash Flow
$ 100 M FREE CASH FLOW FY 2023
Slide 88: Cash Priorities
C A S H P R I O RITIE S PEOPL E + ERP TRANSITION WO RKING DISTRIBU TIO N IN F RA STRU C TU R E TO SAP C A PITA L C A PA C ITY
Slide 89: Fiscal 2024 Outlook
ADJUSTED TAX RATE NET SALES 21% TO 22% + 22 TO 24 % AVERAGE SHARES FISCAL 2024 ADJUSTED EBITDA ~57M OUTLOOK $ 144.5M TO $ 147.5M ADJUSTED EPS ADJUSTED NET INCOME $ 1.73 TO $ 1.76 $ 98.5M TO $ 100.5M
Slide 90: Top Line Outlook
T O P L I N E O UTLO O K Q1 GROWTH > 22-24 % FY 2023 OUTLOOK
Slide 91: Balanced Outlook
ian BALANCED OUTLOOK
Slide 92: Gross Margin Outlook
GR O S S M A R GI N O U TLO O K + 100 BPS FY 2024 OUTLOOK, YEAR OVER YEAR GROSS MARGIN CHANGE
Slide 93: Gross Margin Outlook Drivers
GR O S S M A R GI N O U TLO O K + 100 COST SAVINGS MARGIN-ACCRETIVE MIX BPS SPACE EXPANSION RETAILER ACTIVITY FX RATES TRANSPORTATION COSTS FY 2024 OUTLOOK
Slide 94: Adjusted EBITDA Growth Outlook
A D J U S T E D E B I T DA G RO WTH +56 % +24 26 % TO GROWTH GROWTH FY 2023 FY 20 2 4 O U TLO O K FY 2024 OUTLOOK
Slide 95: Marketing & Digital Investment Outlook
MARKETING & DIGITAL INVESTMENT 22 % 22-24 % FY 2024 FY 2023 OUTLOOK % OF NET SALES
Slide 96: Adjusted EBITDA Margin Leverage
+ 30 BPS ADJUSTED EBITDA MARGIN LEVERAGE FY 2024 OUTLOOK
Slide 97: Long Term Growth Potential
LONG TERM GROWTH POTENTIAL
Slide 98: Profitable Growth, Financial Strength, White Space Opportunity
profitab le growth. financial a c e strength. wh i t e s p r t u n i t y. oppo
Slide 99: Q4 FY2023 Earnings Webcast
Q 4 F Y 2 0 2 3 E A R N ING S WE BC A ST M AY 2 4 , 2 0 2 3 S K I N