e.l.f. Beauty, Inc. · NYSE:ELF
e.l.f. Beauty — Q1 FY2021 Earnings Presentation
93 slides from e.l.f. Beauty's earnings presentation, Aug 5, 2020
Slide 1: Q1 FY 2021 Earnings Webcast
Q1 FY 2021 EARNINGS WEBCAST AUGUST 5, 2020
Slide 2: Forward-looking statements
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
T O D AY ’ S A GE NDA 1 2 3 Q1 FY 2021 NEW LIFESTYLE STRATEGIC RESULTS BEAUTY BRAND FRAMEWORK
Slide 5: Six consecutive quarters of net sales growth
S I X C ONS E C U T I V E Q U A R T E R S O F NE T SA LE S G RO WTH +16% +11% +7% +8% +8% +3% Q4 FY 19 Q1 FY 20 Q2 FY 20 Q3 FY 20 Q4 FY 20 Q1 FY 21 NET SALES GROWTH BY QUARTER, EXCLUDES E.L.F. STORES
Slide 6: Q1 FY net sales
Q 1 F Y 2 1 N E T SA LE S +8 % $ 65 MILLION
Slide 7: Q1 FY results
Q 1 F Y 2 1 R ESU LTS + 500 +7 % BPS 67 % $ 16 M GROSS MARGIN ADJUSTED EBITDA
Slide 8: Q1 FY21 share change, top color cosmetics brands
Q1 FY 2 1 S H AR E C H A N GE ( B P S ) - T O P 5 C O LO R C O SME TIC S BRA NDS E.L.F. E . L . F. +100 5.5% SHARE L’OREAL COVERGIRL -190 -190 REVLON MAYBELLINE -230 -250 NIELSEN XAOC L12 WEEKS ENDING 6/13/20
Slide 9: e.l.f. color outperforming category trends
O U T P E R F O R M I N G C ATE G O RY TRE NDS +13.0% E.L.F. +2.5% COLOR -3.8% -11.7% -13.1% -21.5% L24 Weeks L12 Weeks L4 Weeks NIELSEN XAOC ENDING 6/13/20
Slide 10: Executing on our five strategic imperatives
EX EC U T I N G O N O U R F I V E S TRATE G IC IM P E RATIVE S DRIVE DOUBLE LEADING FIRST TO COST BRAND DOWN PRODUC MASS S AV I N G S DEMAND D I G I TA L -TIVITY
Slide 11: Our mission: best of beauty accessible to every eye, lip and face
OUR MISSION: BEST OF BEAUTY ACCESSIBLE TO EVERY EYE, LIP AND FACE
Slide 12: Well positioned to continue to gain market share
W ELL P OS I T I O N E D T O C O N T I N U E TO G A IN MA RKE T SHA RE 1 2 3 VALUE DIGITAL ABILITY TO EQUATION ENGAGEMENT MOVE AT E.L.F. SPEED
Slide 13: Q1 FY 2021 Highlights
Q1 FY 2021 HIGHLIGHTS
Slide 14: Drive brand demand
DRIVE BRAND DEMAND
Slide 15: Our super powers
O U R S U P E R PO WE RS 100% FIRST PREMIUM UN- UNIVERSAL VEGAN & TO MASS QUALITY BELIEVABLE APPEAL CRUELTY-FREE HOLY GRAILS PRICE
Slide 16: Color cosmetics YoY $ sales growth
C OL O R C O S M E T I C S Y O Y $ SA LE S G RO WTH 20% 15% 13% 13% 10% 9% 0% 0% 0% -2% -10% -11% -12% -14% -20% E.L.F. SALES -30% -30% GOVERNMENT CATEGORY SALES STIMULUS IMPACT -38% -40% JAN 20 FEB 20 MAR 20 APR 20 MAY 20 JUN 20 NIELSEN XAOC ENDING 6/13/20
Slide 17: Search demand outpacing the category
S EAR C H D E M A N D O U T PA CING THE C ATE G O RY E.L.F. +1.5% CATEGORY -9.5% Q1 FY 21 YOY GOOGLE SEARCH DEMAND
Slide 18: Press mentions
*333% PRESS MENTIONS 10107 @allure.com @ intheknew.com ed beauty products fc summer glow vi : Oe ) at EI, Cosmetic is for eveyone a Ha phe New Bronzers and highlighters = Collaboration Inspired ; 7s THE NO. 1 BEST- by Dogs, R: aed nna that low with SELLING PRIMER IN * and Glitter re U.S. COSTS ONLY
Slide 19: 5.5M Instagram followers
elfcosmetics 5.5M INSTAGRAM FOLLOWERS
Slide 20: #eyeslipsface most viral campaign in TikTok US history
#EYESLIPSFACE MOST VIRAL CAMPAIGN IN TIKTOK US HISTORY
Slide 21: Focused on entire digital ecosystem
F OC U S E D O N E N T I R E D IG ITA L E C O SY STE M NEW
Slide 22: Chipotle brand collaboration
C H I P O T L E B R A N D C OLLA BO RATIO N
Slide 23: Chipotle collaboration results
4 MINS. TO SELL OUT 100% NEW CONSUMERS +3M TIKTOK VIEWS +350M PRESS IMPRESSIONS
Slide 24: Attracting new consumers to the brand
ATTRA C T I N G N E W C O N S U ME RS TO TH E BRA ND 56 % PURCHASERS AT RETAIL WERE NEW SHOPPERS 65 % PURCHASERS AT ELFCOSMETICS.COM WERE NEW SHOPPERS NUMERATOR | ELFCOSMETICS.COM, FROM 3/1/2020 TO 6/1/2020
Slide 25: Highly engaged beauty consumers
HIGHLY ENGAGED BEAUTY CONSUMERS 1.5X MORE SPEND THAN NON-E.L.F. PURCHASERS BOVITZ, INC. (2020, JUNE) MAKEUP CATEGORY ATTITUDES & USAGE STUDY COMMISSIONED BY E.L.F. COSMETICS; CONFIDENTIAL & PROPRIETARY
Slide 26: Major step up in digital
MAJOR STEP UP IN DIGITAL
Slide 27: Digital commerce penetration
DIGITAL C OMMER C E P E NE T RAT I O N 11% 17% FY 20 Q1 FY 21
Slide 28: Triple digit growth
TRIPLE DIGIT GROWTH Q1 FY 21 DIGITAL CONSUMPTION
Slide 29: Beauty Squad loyalty program
BEAUTY S QU AD LOYA LT Y P RO G RA M 2M MEMBERS +150% GROWTH BEAUTY SQUAD LOYALTY MEMBERS TO DATE | Q1 FY 21 GROWTH IN NEW MEMBER ACQUISITIONS VERSUS PY
Slide 30: Countries where e.l.f. is available
elfcosmetics.com/eu elfcosmetics.com/de COUNTRIES WHERE E.L.F. IS AVAILABLE
Slide 31: First to mass product
FIRST TO MASS PRODUCT
Slide 32: Slide 32
Slide 33: Slide 33
Slide 34: CBD collection
CBD COLLECTION
Slide 35: KIN AND MAINTAIN ELASTICITY Wilt
KIN AND MAINTAIN ELASTICITY Wilt NFUSED GEL MOISTURIZER = QUENCH Yolt SUPERHYDRATE STURIZER F Bi ALANE NTA THIS CENTELLA, AS! 150, ANTL-REDNES: WERMASK . th nil NIACINAMIDE FOR A CLE. CLEANSE, CLARIFY AND LIFT AND LIFT IMPURITIES wi SUPERCLARIFY A CLEANSER WITH CLARIFYING NIACINAMIDE
Slide 36: Skin care consumption trends
SKIN C AR E C ON SU M P T I O N T RE ND S +47% +19% +32% >100% E LFC O SM E TIC S.C O M -7% -17% CATEGORY E.L.F. L4W L4W L4W ENDING ENDING ENDING Q1 FY 21 4/18 5/16 6/13 NIELSEN XAOC, SKIN CARE
Slide 37: Strength in core segments
STR EN G TH I N C ORE S E G M E NT S #1 IN PRIMERS #1 IN BRUSHES #1 #2 & #3 BROW PENCILS 36.2% $ SHARE 34.7% $ SHARE 11.0% UNIT SHARE +6.5 $ SHARE PTS +0.8 $ SHARE PTS +2.0 UNIT SHARE PTS NIELSEN XAOC L52 WEEKS ENDING 6/13/20
Slide 38: Beauty superheroes
BEAU TY SU P E RH E RO E S PUTTY PRIMER FRANCHISE CAMO CONCEALER FRANCHISE 15.8% $ SHARE OF PRIMERS 15.0% $ SHARE OF CONCEALERS +15 $ SHARE POINTS +13 $ SHARE POINTS NIELSEN XAOC L12 WEEKS ENDING 6/13/20
Slide 39: Putty primer rankings
#1 PORELESS PUTTY PRIMER #4 LUMINOUS PUTTY PRIMER #7 MATTIFYING PUTTY PRIMER NIELSEN XAOC L12 WEEKS ENDING 6/13/20, RANK WITHIN PRIMER CATEGORY
Slide 40: Sold out in less than days on elfcosmetics.com
S O L D O UT I N L E S S T H A N 5 D AY S O N E L F CO S M E T I CS .CO M
Slide 41: Leading productivity
LEADING PRODUCTIVITY
Slide 42: Expanding this fall
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Slide 43: Expanding this fall
es a nals > Sg Leah ~ | holy hydrotions aon ee hydrating. satin finish ~ Nie
Slide 44: Expanding this fall
EXPANDING THIS FALL
Slide 45: Skin care penetration
S K I N C AR E P EN E T RAT I O N 6% 9% 25 % FY 20 Q1 FY 21 Q1 FY 21 TRACKED CHANNELS ELFCOSMETICS.COM
Slide 46: Cost savings
COST SAVINGS
Slide 47: Supply chain fully operational after 5 weeks
SUPPLY CHAIN FULLY OPERATIONAL AFTER 5 WEEKS
Slide 48: W3LL PEOPLE: COGS savings, invest in brand, sharpen pricing
W3LL P E O P L E COGS SAVINGS INVEST IN SHARPEN BRAND RECHARGE PRICING
Slide 49: Strategic extensions
STRATEGIC EXTENSIONS
Slide 50: W3LL PEOPLE
W3LL PEOPLE
Slide 51: EWG-verified products
40 EWG-VERIFIED PRODUCTS
Slide 52: Slide 52
Slide 53: Because all people can be well people
Because all people can be well people.
Slide 54: New lifestyle beauty brand
NEW LIFESTYLE BEAUTY BRAND
Slide 55: Slide 55
Slide 56: Let it Fuel You
————_——_— of W: Let it Fuel You Hwee x
Slide 57: Slide 57
Slide 58: What makes us different is also what makes us wildly, boldly, marvelously who we were born to be
“What makes us different is also what makes us wildly, boldly, and marvelously who we were born to be.”
Slide 59: Coming 2021
COMING 2021
Slide 60: Multi-year multi-category product pipeline
MULTI-YEAR MULTI-CATEGORY PRODUCT PIPELINE
Slide 61: Dr. Renee Snyder
DR. RENEE SNYDER Board-certified Dermatologist Associate Professor, University of Texas School of Medicine Practice in medical dermatology & skin rejuvenation W3LL PEOPLE Co-Founder E.L.F. BEAUTY family member
Slide 62: Strategic framework
STRATEGIC FRAMEWORK
Slide 63: The bold disruptor with a kind heart
THE BOLD DISRUPTOR WITH A KIND HEART. INCLUSIVE, ACCESSIBLE, CRUELTY-FREE BEAUTY. LIFESTYLE BEAUTY BRAND
Slide 64: Lifestyle beauty brand
LIFESTYLE BEAUTY BRAND TREND DRIVEN MASS BEAUTY PLANT POWERED MASSTIGE BEAUTY CRAFTED WITH ALICIA KEYS FOR EVERY EYE, FOR THE CLEAN FOR LIP AND FACE BEAUTY ENTHUSIAST HOLISTIC WELLNESS
Slide 65: Lifestyle beauty brand: price and distribution positioning
PRESTIGE PRICE LIFESTYLE ACCESSIB LE DISTRIBUTION EXC LUS IVE DIST RIB U TION BEAUTY BRAND MASS PRICE
Slide 66: Moving at e.l.f. speed
MOVING AT E.L.F. SPEED
Slide 67: Digital strength + core value proposition = outpace the category
D I G I TAL + C O R E VA LU E = O U TPA C E STR EN G TH P R O P O S I T IO N THE C ATE G O RY
Slide 68: Mandy Fields, SVP & Chief Financial Officer
MANDY FIELDS SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Slide 69: Today's Agenda
T O D AY ’ S A GE NDA 1 2 3 Q 1 F INANCIA L P ER SP ECT I V E S T RAT E G I C R ESULTS ON C U R R E NT E X T E NS I O NS EN VI R ON M E NT
Slide 70: Q1 FY net sales
Q 1 F Y 2 1 N E T SA LE S +8 % $ 65 MILLION
Slide 71: Color cosmetics YoY $ sales growth
C OL O R C O S M E T I C S Y O Y $ SA LE S G RO WTH 20% 15% 13% 13% 10% 9% 0% 0% 0% -2% -10% -11% -12% -14% -20% E.L.F. SALES -30% -30% GOVERNMENT CATEGORY SALES STIMULUS IMPACT -38% -40% JAN 20 FEB 20 MAR 20 APR 20 MAY 20 JUN 20 NIELSEN XAOC ENDING 6/13/20
Slide 72: Q1 FY21 share change, top color cosmetics brands
Q1 FY 2 1 S H AR E C H A N GE ( B P S ) - T O P 5 C O LO R C O SME TIC S BRA NDS E.L.F. E . L . F. +100 5.5% SHARE L’OREAL COVERGIRL -190 -190 REVLON MAYBELLINE -230 -250 NIELSEN XAOC L12 WEEKS ENDING 6/13/20
Slide 73: Q1 FY gross margin
Q 1 F Y 2 1 G R O S S M A R GI N E LFC O SM E TIC S.C O M LESS + 500 P RO M O T I O NA L BPS S T RO NG E R G RO S S M A RG I N 67 %
Slide 74: Gross margin drivers
GR O S S M A R GI N DRIVE RS MA RG IN A C C RE TIVE E-COMMERCE MIX RE TA IL P RIC E FX INC RE A SE S
Slide 75: Adjusted SG&A
A D J U S T E D SG &A 51% 47 % Q1 FY 20 Q1 FY 21
Slide 76: Marketing & digital investment
MAR K ETI N G & D I GI TA L TA RG E T I N VES TM E N T RA NG E 11% 12-14% Q1 FY 21
Slide 77: Q1 FY adjusted EBITDA
Q 1 F Y 2 1 A D J U STE D E BITDA +7 % $ 16 MILLION
Slide 78: 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 $9M $0.14 $0.17 $7M Q1 FY 20 Q1 FY 21 Q1 FY 20 Q1 FY 21
Slide 79: Strong liquidity
S T R O N G L I QU IDITY > 100 $ MILLION C AS H O N H A N D + R E V O LV ING C RE DIT FA C ILITY
Slide 80: Cash priorities
C AS H P R I O RI T I E S I N V E S T I NG FO R TI F Y I N G FU E LING B E H I N D FIVE TH E B ALAN C E LO NG - TE RM S T R AT E G IC S H EET G RO WTH I M P E R AT I VE S
Slide 81: Fiscal 2021 guidance remains suspended
FISCAL 2021 GUIDANCE REMAINS SUSPENDED
Slide 82: Short-term uncertainty, return to normalcy
SHORT-TERM RETURN TO LONG-TERM UNCERTAINTY NORMA LCY MODEL
Slide 83: Long-term economic model
L O N G- T E R M E C O N O M IC M O DE L Scenario #1 Scenario #2 WITHOU T significant space W I T H significant space gains gains or strategic extensions and strategic extensions SA L E S L O W T O M I D S I N GLE MID TO HIG H SING LE D I GI T N E T S A L E S C AG R DIG IT NE T SA LE S C A G R A D J
Slide 84: Tarang P. Amin, Chairman & CEO
TARANG P. AMIN CHAIRMAN & CHIEF EXECUTIVE OFFICER
Slide 85: We have the right team
MANDY FIELDS RICHARD F. BARUCH JR. TARANG P. AMIN SENIOR VICE PRESIDENT & SENIOR VICE PRESIDENT & CHAIRMAN & CEO CHIEF FINANCIAL OFFICER CHIEF COMMERCIAL OFFICER WE HAVE THE RIGHT TEAM 73 % 60 % 46 % FEMALE MILLENNIAL DIVERSE SCOTT K. MILSTEN KORY MARCHISOTTO FANNY XU SENIOR VICE PRESIDENT, GENERAL
Slide 86: We have the right team
TARANG P. AMIN LAUREN COOKS LEVITAN RICHELLE P. PARHAM CHAIRMAN & CEO WE HAVE THE RIGHT TEAM 1 9OF 67 % PUBLIC COMPANIES WOMEN ON BOARD BETH M. PRITCHARD KIRK L. PERRY LEAD INDEPENDENT DIRECTOR SABRINA L. SIMMONS WITH OVER OF DIRECTORS (OUT OF 4,800 PUBLIC COMPANIES) MAUREEN C. WATSON RICHARD G. WOL
Slide 87: We know our consumers and how to engage them
MASSIVE AUDIENCE REACH #1 MASS E-COMMERCE SITE 37 M 8.9M 30 M TOTAL E.L.F. TOTAL SOCIAL FOLLOWER BASE FOLLOWERS (ACROSS TOP PLATFORMS) ANNUAL TRAFFIC $68M EMV (FY 21 Q1) +13% YOY (US+UK+APP) GEN Z PREFERENCE 17M #4 FAVORITE TEEN BRAND UNIQUE ANNUAL VISITORS WE KNOW OUR (UP FROM #6 LAST YEAR) (US+UK+
Slide 88: We know how to make products people want
#1 BRUSH BRAND #1 FACE BRUSHES #1 EYE BRUSHES #1 PRIMER BRAND #1 AND #2 PRIMERS WE KNOW HOW TO MAKE PRODUCTS PEOPLE WANT #1 100+ new items per year #2 and #3 EYEBROW PENCILS 300+ ideas in pipeline Highly integrated innovation team #1 Robust insights from SETTING SPRAY BRAND #1 mass e-commerce site #
Slide 89: We move at e.l.f. speed
WE MOVE AT E.L.F. SPEED From concept to digital commerce in as few as 13 weeks First to market, first to mass
Slide 90: We have world-class operations
30 69 THIRD PARTY SUPPLIERS E.L.F. SHANGHAI FROM FILLERS TO EMPLOYEES IN PRODUCT COMPONENT DEVELOPMENT, SOURCING SUPPLIERS IN CHINA AND QUALITY WE HAVE WORLD-CLASS BEST COMBINATION OF OPERATIONS COST + QUALITY + SPEED Horizontal integration with like-minded suppliers provides utmost control Dedicate
Slide 91: We know how to win in market
WE KNOW HOW TO WIN IN MARKET From 11K to 110K total linear feet in retail in last 5 years Highest productivity of sales per linear foot in Target & Walmart Highly experienced team partnering DISTRIBUTED IN OVER strategically with leading global retailers 25 K RETAIL DOORS NIELSEN XAOC L12 WEEKS ENDI
Slide 92: We know how to build brands
WE KNOW HOW TO BUILD BRANDS From a mono-brand company to a multi-brand house Selectively pursuing acquisitions and incubating new brands
Slide 93: Thank you
THANK YOU