E.l.f. Beauty, Inc. · NYSE:ELF
E.l.f. Beauty — Q2 FY2022 Earnings Presentation
84 slides from E.l.f. Beauty's earnings presentation, Nov 3, 2021
Slide 1: Q2 FY2022 Earnings Webcast
Q 2 F Y 2 0 2 2 E A R N ING S W EBC AS T N O V E MB E R 3, 2 0 21 S K I N
Slide 2: Forward-looking statements reminder
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: Today's Agenda
TODAY’S AGENDA 1 2 Q2 FY 2022 RESU LTS OUTLOOK
Slide 5: Q2 FY2022 Net Sales
+ 27 % $ 92 MILLION Q2 FY 2022 NET SALES
Slide 6: 11 Consecutive Quarters of Net Sales Growth
11 CONSECUTIVE QUARTERS OF NET SALES GROWTH +50% +27% +24% +16% +11% +10% +7% +8% +8% +7% +3% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY 19 FY 20 FY 20 FY 20 FY 20 FY 21 FY 21 FY 21 FY 21 FY 22 FY 22 NET SALES GROWTH BY QUARTER, EXCLUDING E.L.F. STORES (CLOSED IN FEBRUARY 2019)
Slide 7: Q2 FY2022 Adjusted EBITDA
+ 29 % $ 18 MILLION Q2 FY 2022 ADJUSTED EBITDA
Slide 8: Raising FY2022 Net Sales Guidance
RAISING FY 202 2 NET SALES G UIDA NCE
Slide 9: Digital Strength, Core Value Proposition, Adapt at e.l.f. Speed
DI G I TA L C O R E VA L UE A DA PT AT STR EN GT H P R O PO S I T I ON E .L.F. SPE ED
Slide 10: Color Cosmetics Category Sales Trend vs. 2019 Levels
C O L OR C OS M E T I C S C ATEG ORY S A L E S T R E N D VS . 2 01 9 LE VE LS 8% 2% 2% 0% -2% -1% -1% -2% -4% -8% -8% -9% -10% -12% -14% -15% -15% -15% -17% -17% -19% -20% -23% -29% -30% 20 20 20 20 20 20 21 21 21 21 21 B PR N G CT EC N R AY L PT JU FE A U JU JA O SE D A M M A YOY $ SALES GROWTH VS.
Slide 11: Sales Trend vs. 2019: Top Color Cosmetics Brands
SAL ES TREND VS . 2019 LEVELS: TOP 5 COLOR COS MET ICS B RANDS E.L.F. 30 +27% 22.5 15 7.5 0 MAYBELLINE -7.5 -2% L’OREAL -6% REVLON -15 COVERGIRL -10% -22.5 -15% Maybelline L'Oreal Cover Girl Revlon e.l.f. NIELSEN XAOC LATEST 12 WEEKS ENDING 9/11/2021, COLOR COSMETICS CATEGORY
Slide 12: 5.6% Market Share, +30 bps
5.6% MARKET SHARE +30 BPS NIELSEN XAOC LATEST 12 WEEKS ENDING 9/11/2021, COLOR COSMETICS CATEGORY
Slide 13: Share Trend vs. 2019: Top Color Cosmetics Brands
SHARE TREND (BPS) VS. 2019 LEVELS: TOP 5 COLOR COS MET ICS B RANDS E.L.F. 140 +120 105 70 35 0 -35 MAYBELLINE -20 -70 L’OREAL REVLON -105 -60 -70 -140 Maybelline L'Oreal COVERGIRL Cover Girl Revlon e.l.f. -140 NIELSEN XAOC LATEST 12 WEEKS ENDING 9/11/2021, COLOR COSMETICS CATEGORY
Slide 14: “ sy ~ . oO
“ sy ~ . oO
Slide 15: Slide 15
Slide 16: Drive Brand Demand, Leading Innovation, Driving Productivity
DRIVE DRIVING COST STEP UP LEADING BRAND P R O D U C T- S AV I N G S D I G I TA L I N N O VAT I O N DEMAND IVITY
Slide 17: Drive Brand Demand
DRI VE BR AND DEMA ND
Slide 18: Gaming, Music Transcending Beauty Boundaries
MUSIC GAMING TRANSCENDING BEAUTY BOUNDARIES ORIGINAL CONTENT BRAND-ON-BRAND CREATION PARTNERSHIPS
Slide 19: Teamed Up with Tierra Whack to Launch Big Mood Mascara
TEAMED UP WITH TIERRA WHACK TO LAUNCH BIG MOOD MASCARA
Slide 20: #1 Eye Product on elfcosmetics.com
#1EYE PR ODUCT ON ELFCOSMETICS.C OM BEST MA SCA RA BEA UTY STEA L
Slide 21: Pop Culture Moment on Jeopardy
POP CULTURE MOMENT ON JEOPARDY
Slide 22: Launched a New e.l.f. Value Campaign
LAUNCHED A NEW E.L.F. VALUE CAMPAIGN
Slide 23: 66% Said Price Is Most Important When Purchasing Makeup
INTERNAL STUDY 66% SAID PRICE IS MOST IMPORTANT WHEN PURCHASING MAKEUP BOVITZ, INC. (2020, JUNE) MAKEUP CATEGORY ATTITUDES & USAGE STUDY COMMISSIONED BY E.L.F. COSMETICS
Slide 24: Gen-Z Favorite Makeup
GEN-Z #1 AMONG AVERAGE FAVORITE INCOME TEENS MAKEUP #2 BRAND OVERALL PIPER SANDLER TAKING STOCK WITH TEENS SURVEY, FALL 2021
Slide 25: Best Performing Beauty Company in 2021, Large Cap
BEST PERFORMING BEAUTY COMPANY IN 2021, LARGE CAP
Slide 26: ~6B Press Impressions
849 wi tTE® FEATURING SKIN TRANSFORMATION CREAM wear SOULCARE | Try Hundreds of Skincare Products a Year, But These 15 Are My Holy Grails ~6B m7 PRESS IMPRESSIONS
Slide 27: Alicia Keys at the Met Gala with Keys Soulcare
ALICIA KEYS AT THE MET GALA WITH KEYS SOULCARE > TRAFFIC TO KEYSSOULCARE.COM +45%
Slide 28: Best Body Oil
BEST BOD Y OIL
Slide 29: Consumer Insights Study
CONSUMER INSIGHTS STU DY
Slide 30: Brand Appeal Is High; Product Differentiators Resonating
BRAND APPEAL IS HIGH PRODUCT DIFFERENTIATORS ARE RESONATING
Slide 31: Major Step Up in Digital
MAJOR STEP U P IN DIGITAL
Slide 32: Triple Digit Growth
TRIPLE DI GIT GROW TH Q2 FY 2022 DIGITAL CONSUMPTION GROWTH ON 2-YEAR STACK BASIS VS. 2019 LEVELS
Slide 33: Digital Commerce Penetration
DIG ITAL COMMERCE PENETR ATION 8% 12 % Q2 Q2 FY 2020 FY 2022
Slide 34: New Consumers Shopping elfcosmetics.com
>50% NEW CONSUMERS SHOPPING ELFCOSMETICS.COM % OF NEW CONSUMERS PURCHASING ON ELFCOSMETICS.COM, Q2 FY 2022
Slide 35: >2.6M Beauty Squad Loyalty Members
E.L.F. COSMETICS BEAUTY SQUAD LOYALTY PROGRAM >2.6M MEMBER S ~ 30 % GR OWTH ~ 70 % OF SA LES ON ELFCOSMETIC S.COM BEAUTY SQUAD LOYALTY MEMBERS AS OF 9/30/2021 | Q2 FY 2022 GROWTH IN TOTAL ENROLLMENT VERSUS PY
Slide 36: Launched Beauty Squad 2.0: Recharged Loyalty Program
LAUNCHED BEAUTY SQUAD 2.0: RECHARGED LOYALTY PROGRAM
Slide 37: Leading Innovation
LEADIN G INNOVATIO N
Slide 38: Our Superpowers
OUR SUPERPOWERS CRUELTY PREMIUM ACCESSIBLE BROAD FREE QUALITY PRICES APPEAL
Slide 39: Strength in Core Segments
STRENG TH IN C ORE SEGMENT S #1 #1 #2 #2 #2 NIELSEN XAOC LATEST 12 WEEKS ENDING 9/11/2021, EXCLUDES PRIVATE LABEL BRUSHES PRIMERS CONCEALER EYEBROW SPONGES $ SHARE $ SHARE $ SHARE UNIT SHARE $ SHARE
Slide 40: Skincare Focus
SKINCARE FOCUS a
Slide 41: Skincare Consumption
SKI NC A RE C ON S U M P T I ON +22% +7% E.L.F. SKINCARE C AT E G O RY YOY CONSUMPTION GROWTH. NIELSEN XAOC LATEST 12 WEEKS ENDING 9/11/2021
Slide 42: Growing Awareness
#13 GROWING AWARENESS FALL 2021 #17 FALL 2020 PIPER SANDLER TAKING STOCK WITH TEENS SURVEY, FALL 2021
Slide 43: Launched Skincare for w3llpeople
LAUNCHED SKINCARE FOR W3LL PEOPLE
Slide 44: w3llpeople Accelerated Our Efforts in Clean Beauty
W3LL PEOPLE ACCELERATED OUR EFFORTS IN CLEAN BEAUTY CLEAN BEA UTY
Slide 45: Dr. Renée Snyder
DR. RENÉE SNYDER BOAR D-CERTIFIED DER MATOLOGIST CO- F OUNDER, W3L L PEOPLE HELPED CR EATE KEY S SOU LCAR E
Slide 46: 100% Clean: 1650+ Ingredients We Do Not Use
E.L.F. COSMETICS 100% CLEA N 1650+ I NGREDIEN TS WE DO NOT USE REFORMULATED 350+ SKUS
Slide 47: Adding to Our Superpowers
A D D I N G T O O UR SU PE RPOW ERS PREMIUM ACCESSIBLE CLEAN VEGAN CRUELTY QUALITY PRICES FREE
Slide 48: Driving Productivity
DRIVING PRODU CTIVITY
Slide 49: Continue to See Shelf Space Opportunities
CONTINUE TO SEE SHELF SPACE OPPORTUNITIES
Slide 50: e.l.f. Cosmetics Space Expansion
E.L.F. COS METICS SPACE EXPANSION FAL L 2 0 2 1 S P R I NG 20 2 2 SPRING 2 0 22
Slide 51: International
INTERNATION AL
Slide 52: Sales Trend: Top 10 U.K. Mass Color Cosmetics Brands
SALES TR END - TOP 10 U.K . MAS S COLOR COSMETICS BRANDS MAYBELLINE -1% RIMMEL -14% L’OREAL -12% MAX FACTOR -22% REVOLUTION -30% #8 COLLECTION -9% 2021 REVLON -21% E.L.F. +30% +30% BARRY M -13% PRIVATE LABEL -24% -30 -22.5NIELSEN UK, -15LATEST 52 WEEKS -7.5 ENDING 7/3/2021 0 7.5 15 22.5 30
Slide 53: Global Retail Strategy
GLOBAL RETAIL STRAT EGY 53
Slide 54: Cult Beauty and Douglas retail partners
cult BEAUTY tt beauty LOUGLAS
Slide 55: w3llpeople gained first in-line placement at Ulta Beauty
W3LL PEOPLE G AINED IT S F IRST IN-LINE PL ACEMENT IN A S UB - SET OF U LTA BEAU TY STORES, SPRING 2022
Slide 56: Cost Savings
COST SAVIN GS
Slide 57: Global Container Imbalance
GLOBAL CON TAINER IMBALANCE
Slide 58: Ability to Operate Through Uncertainty
ABILITY T O OPERATE THROUGH UNCERTAINTY FOREGO 2021 HOL IDAY PROGR AM T O > INVE NTORY ~95% I N S TOCK LEV ELS
Slide 59: Strategic Framework
STRATEGIC FRAMEWORK
Slide 60: e.l.f. Beauty Mission
E.L.F. BEAUTY MISSION BEST OF BEA UT Y ACCES SI BLE TO EVERY EYE, LI P A ND FA CE
Slide 61: Portfolio of Complementary Yet Distinct Brands
PORTFOLIO OF C OMPLEMENTARY YET D IST INCT BRANDS ACCESSIB LE DISTRIBUTION PRESTIGE PRICE EXC LUSIVE D ISTRIBU TION ~$ 23 AU R ~$17 AUR ~$ 9 AUR ~$5 AU R MASS PRICE
Slide 62: We build brands designed to disrupt industry norms
We build brands designed to disrupt industry norms, shape culture and connect communities through positivity, inclusivity and accessibility.
Slide 63: Mandy Fields, SVP & Chief Financial Officer
MANDY FIELDS SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Slide 64: Q2 FY2022 Net Sales
+ 27 % $ 92 MILLION Q2 FY 2022 NET SALES
Slide 65: Gross Margin
63 % GROSS MARGIN Q2 FY 2022
Slide 66: Gross Margin Drivers
GR O S S MA R G I N DRIVE RS M A RG IN CO ST P R IC E FX TRA NSPORT AC C RE T I VE SAVI N G S I N C R E A SE S RATES C OSTS MIX Q2 FY 2022
Slide 67: Adjusted SG&A
ADJ USTED SG&A 51 % 49 % Q2 Q2 FY 2021 FY 2022
Slide 68: Marketing & Digital Investment
MARKETING & DIGITAL INVESTMENT 15 % 16 % Q2 Q2 FY 2021 FY 2022 MARKETING & DIGITAL INVESTMENT AS A % OF NET SALES
Slide 69: $18M Adjusted EBITDA
20 % MARGIN $ 18M ADJUSTED EBITDA Q2 FY 2022
Slide 70: Adjusted Net Income and Adjusted EPS
AD J US T ED N E T I N C OM E A DJU STED EP S $ 11M $ 0.21 $ 8M $ 0.16 Q2 Q2 Q2 Q2 FY 2021 FY 2022 FY 2021 FY 2022
Slide 71: Strong Liquidity
STRONG LIQUIDIT Y ~ 130 $ MILLION C AS H O N H A N D + R E VO LV ING C REDIT FA CILITY Q2 FY 2022
Slide 72: Cash Balance
C A S H B A L ANC E $ 41 M $ 42 M Q2 FY 2021 Q 2 FY 2 02 2
Slide 73: Inventory
INVENTORY $ 77M $ 64M Q2 Q2 FY 2021 FY 2022
Slide 74: Inventory Drivers
INVENTORY DRIVERS L ON GE R H I GH E R K EY S C ONTINU E D L EA D T R A N S P OR TAT I O N SO ULC A RE & BU SINESS TI ME S COSTS W E LL PE OPLE MO ME NTU M
Slide 75: Cash Priorities
C A S H P R IO RITIES I NV E S T I N G I N SU P P ORTING F IV E S T R AT E GI C STRATE GIC I M P E RAT I VE S E XTE NSIO NS
Slide 76: Fiscal 2022 Outlook
NET SALES ADJUSTED EBITDA +14 % TO 16 % $ 66.5M TO $ 68.0M FISCAL 2022 OUTLOOK ADJUSTED EPS ADJUSTED NET INCOME $ 0.65 TO $ 0.68 $ 36.0M TO $ 37.5M
Slide 77: Raised Top-Line Outlook
RAISED TOP-LI NE OUTLOOK
Slide 78: Dynamic Supply Chain Environment
DY NAM IC SUP PLY CHAIN ENVI RONMEN T
Slide 79: FY2022 Adjusted EBITDA Outlook
A D J U S T E D EBITDA $ 66.5 – $ 68.0 MILLION FY 2022 OUTLOOK
Slide 80: FY2022 Adjusted EBITDA Growth Outlook
A D J U S T E D EBITDA +9-11% YOY GR OWTH FY 2022 OUTLOOK
Slide 81: FY2022 Commentary: Mitigate Impact
M I T I GAT E I M PAC T COST NON- M A RKE TING S AV I N GS SG &A S PE ND FY 2022 COMMENTARY
Slide 82: Net Sales Outlook: Q3 to Q4
CYCLING +24% Q3>Q4 Q4 FY21 NET SALES OUTLOOK NO HOLIDAY NIELSEN PROGRAM VOLATILITY
Slide 83: Inclusive. Accessible. Cruelty Free.
I N C L U S IV E . A C C E S S I B LE . CRU E LTY FREE . S K I N
Slide 84: Questions
QUEST IONS