E.l.f. Beauty, Inc. · NYSE:ELF
E.l.f. Beauty — Q3 2024 Earnings Presentation
86 slides from E.l.f. Beauty's earnings presentation, Feb 6, 2024
Slide 1: Q3 FY 2024 Earnings Webcast
Q3 FY 2024 EARNINGS WEBCAST
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. Imp
Slide 3: Tarang Amin, Chairman & Chief Executive Officer
TARANG AMIN CHAIRMAN & CHIEF EXECUTIVE OFFICER
Slide 4: Agenda: Q3 Results, FY 2024 Outlook
AGENDA 1 2 Q3 RESULTS FY 2024 OUTLOOK
Slide 5: Q3 Results
Q3 RESULTS + 85 % + 350 +61% BPS NET SALES GROSS MAR GIN ADJUSTED EBITDA Q3 FY 2024 YEAR-OVER-YEAR, AS COMPARED TO Q3 FY 2023
Slide 6: Our Vision
OUR VISION TO CREATE A DIFFERENT KIND OF BEAUTY COMPANY BY BUILDING BRANDS THAT DISRUPT NORMS SHAPE CULTURE & CONNECT COMMUNITIES THROUGH POSITIVITY, INCLUSIVITY AND ACCESSIBILITY.
Slide 7: Exceptional, Consistent, Category-Leading Growth
EXCEPTIONAL CONSISTENT C AT E G O RY- L E A D I N G
Slide 8: 20 Consecutive Quarters of Net Sales Growth
20 CONSECUTIVE QUARTERS OF NET SALES GROWTH +85% +78% +76% +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 9: 1 of 5 out of 274 companies with 20 quarters of >20% growth
1 OF 5 OUT OF 274 20 QUARTERS >20% GROWTH FACTSET, INCLUDES PUBLICLY TRADED COMPANIES IN THE XRT AND XLP INDICES
Slide 10: Areas with Significant Runway for Growth
A R E A S W I T H S I G N I F I C A N T R U N W AY F O R G R O W T H
Slide 11: Color Cosmetics Consumption Growth
CONSUMPTION + 46 % +2% COLOR CATEGORY E.L.F. COSMETICS YOY CONSUMPTION GROWTH. NIELSEN XAOC LATEST 12 WEEKS ENDING 12/30/2023, COLOR COSMETICS CATEGORY
Slide 12: Share Growth vs Competitors
SHARE GROWTH E.L.F. + 305 MAYBELLINE COVERGIRL L’OR EAL -35 -4 0 -20 REVLON -70 NIELSEN XAOC LATEST 12 WEEKS ENDING 12/30/2023, COLOR COSMETICS CATEGORY
Slide 13: Quarters of Share Gains
1 OF 800 COSMETICS BRANDS 20 QUARTERS OF SHARE GAINS NIELSEN XAOC LATEST 12 WEEKS ENDING 12/30/2023, COLOR COSMETICS CATEGORY
Slide 14: Category Share
C AT E G O RY S H A R E 10.1 % 7.1 % 5.5 % 5.6 % 4.5 % 2019 2020 2021 2022 2023 E.L.F. MASS COSMETICS SHARE, NIELSEN XAOC LATEST 12 WEEKS ENDING 12/30/2023, COLOR COSMETICS CATEGORY
Slide 15: e.l.f. Cosmetics Share
E . L . F. C O S M E T I C S S H A R E ~19 % ~10% #3 #1 NATIONAL TARGET SHARE SHARE NIELSEN XAOC LATEST 24 WEEKS ENDING 12/30/2023, COLOR COSMETICS CATEGORY
Slide 16: Areas with Significant Runway for Growth
A R E A S W I T H S I G N I F I C A N T R U N W AY F O R G R O W T H
Slide 17: Skincare Consumption Growth
CONSUMPTION + 89 % +9 % SKINCARE CATEGORY E.L.F. SKIN YOY CONSUMPTION GROWTH. NIELSEN XAOC LATEST 12 WEEKS ENDING 12/30/2023, FACIAL SKINCARE CATEGORY
Slide 18: Skincare Brand Rank and Share Gain
+ 60 BPS # 14 1.4% SHARE GAIN BRAND RANK $ SHARE NIELSEN XAOC LATEST 12 WEEKS ENDING 12/30/2023, FACIAL SKINCARE CATEGORY
Slide 19: Skincare % of Retail Sales
S K I N C A R E % O F R E TA I L S A L E S ~9 % ~ 18 % E.L.F. E.L.F. + NATURIUM SKINCARE % OF E.L.F. BEAUTY RETAIL SALES. E.L.F. BEAUTY REPRESENTS FY 2023, NATURIUM REPRESENTS LTM AS OF JUNE 2023.
Slide 20: Naturium Net Sales CAGR
+80 % NET SALES CAGR CAGR BASED ON AUG’23 CALENDAR YTD
Slide 21: Areas with Significant Runway for Growth
A R E A S W I T H S I G N I F I C A N T R U N W AY F O R G R O W T H
Slide 22: International Net Sales Growth
119% INTERNATIONAL NET SALES GROWTH Q3 FY 2024 YEAR-OVER YEAR INTERNATIONAL NET SALES GROWTH
Slide 23: International Penetration
I N T E R N AT I O N A L P E N E T R AT I O N 13 % 15 % Q3 FY 2023 Q3 FY 2024 % OF NET SALES
Slide 24: Brand Rank by Country
#3 #4 #6 #1 BRAND BRAND BRAND BRAND USA CANADA UK ITALY DOUGLAS NIELSEN, UK L52W ENDING 12/30/2023 AND CANADA L12W ENDING 12/30/2023. ITALY BASED ON DOUGLAS RETAIL STORES SINCE LAUNCH
Slide 25: Three Key Drivers of Our Results
THREE KEY DRIVERS OF OUR RESULTS VA L U E PROPOSITION DISRUPTIVE POWERHOUSE MARKETING ENGINE I N N O VAT I O N
Slide 26: Value Proposition
VA L U E PROPOSITION
Slide 27: Our Mission
OUR MISSION WE MAKE THE BEST OF BEAUTY ACCESSIBLE TO EVERY EYE, LIP, FACE AND SKIN CONCERN 27
Slide 28: e.l.f. Prices vs Prestige
$10 $7 $10 $11 VS $54 VS $31 VS $38 VS $28 PRESTIGE PRESTIGE PRESTIGE PRESTIGE
Slide 29: AUR Comparison
A U R C O M PA R I S O N > 20 $ > 9 $ ~ 6 $ E.L.F. COSMETICS TOP MASS BRANDS PRESTIGE BRANDS NIELSEN XAOC LATEST 52 WEEKS ENDING 12/30/2023, COLOR COSMETICS CATEGORY. CIRCANA LATEST 52 WEEKS ENDING 9/30/2023
Slide 30: Powerhouse Innovation
POWERHOUSE I N N O VAT I O N
Slide 31: Innovation Engine Has Built Category Leadership Over Time
I N N O VAT I O N E N G I N E H A S B U I LT C AT E G O R Y L E A D E R S H I P O V E R T I M E #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
Slide 32: Track Record of Building Growing Product Franchises
TRACK RECORD OF BUILDING GROWING PRODUCT FRANCHISES
Slide 33: Camo Liquid Blush vs Prestige
VS $ 23 PRESTIGE $7 CAMO LIQUID BLUSH
Slide 34: Glow Reviver Lip Oil vs Prestige
VS $ 40 PRESTIGE $8 GLOW REVIVER LIP OIL
Slide 35: 4th Mascara Launch in the Last 4 Years
4TH MASCARA LAUNCH IN THE LAST 4 YEARS 2021 2022 2023 2024 BIG MOOD L A S H B E AT S LASH ’N ROLL LASH XTNDR
Slide 36: e.l.f. Dollar Share in Lip and Mascara
E . L . F. D O L L A R S H A R E 10 % 3% 2% $ 1.2 B ~$ 1.0 B C AT E G O RY C AT E G O RY COSMETICS LIP MASCARA DOLLAR SHARE. NIELSEN XAOC LATEST 52 WEEKS ENDING 12/30/2023
Slide 37: Disruptive Marketing Engine
DISRUPTIVE MARKETING ENGINE
Slide 38: e.l.f.ing Entertaining
E . L . F. I N G E N T E R TA I N I N G
Slide 39: Launched First-Ever Experience on Roblox
L A U N C H E D F I R S T- E V E R E X P E R I E N C E O N R O B L O X
Slide 40: Roblox Branded Experience Stats
#1 BRANDED EXPERIENCE 96 % >4 M RATING PLAYS STATS AS OF JANUARY 2024
Slide 41: Latinx Community
L AT I N X COMMUNITY
Slide 42: Average Spend on Cosmetics
AV E R A G E S P E N D O N C O S M E T I C S +77 % HIGHER SPEND GENERAL POPULATION LATINX MINTEL, HISPANICS AND COLOR COSMETICS, JULY 2020, JOURNAL OF EXPOSURE SCIENCE & ENVIRONMENTAL EPIDEMIOLOGY, DIFFERENCES IN PERSONAL CARE PRODUCT USE BY RACE/ETHNICITY AMONG WOMEN IN CALIFORNIA, 2023
Slide 43: Spanish-Language Song with Manuel Turizo
TEAMED UP WITH MANUEL TURIZO TO LAUNCH A NEW ORIGINAL, S PA N I S H - L A N G U A G E S O N G T I T L E D “ O J O S . L A B I O S . C A R A . ” >2 B > 304 M #1 MEDIA IMPRESSIONS VIEWS AND PLAYS ON SPOTIFY STATS AS OF JANUARY 2024
Slide 44: True Crime Parody Documentary
R E L E A S E D A T R U E C R I M E PA R O D Y D O C U M E N TA RY
Slide 45: Documentary Impressions and Views
> 7.0 B IMPRESSIONS >2 M 4.5 YOUTUBE VIEWS RATING ON AMAZON STATS AS OF JANUARY 2024
Slide 46: Returning to the Big Game with National TV Spot
RETURNING TO THE BIG GAME WITH O U R F I R S T- E V E R N AT I O N A L T V S P O T 3X IMPRESSIONS N AT I O N A L T V S P O T 2023 2024
Slide 47: Stepped Up Marketing Investment Over Time
WE STEPPED UP OUR MARKETING INVESTMENT OVER TIME, GIVEN THE STRONG ROIS WE’VE SEEN 22 % 16 % 16 % 13 % 7% FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 % OF NET SALES
Slide 48: Unaided Awareness Has Doubled Since 2020
U N A I D E D AWA R E N E S S H A S D O U B L E D S I N C E 2 0 2 0 26 % 13 % 2020 2023 BOVITZ, INC. (2023 AUGUST) MAKEUP CATEGORY ATTITUDES & USAGE STUDY COMMISSIONED BY E.L.F. COSMETICS; CONFIDENTIAL & PROPRIETARY
Slide 49: Driving Awareness Remains an Opportunity vs Peers
D R I V I N G AWA R E N E S S R E M A I N S A N O P P O R T U N I T Y A S C O M PA R E D T O P E E R S 52 % 43 % 33 % 26 % E.L.F. L’ OREA L COVERGIRL MAYBELLINE BOVITZ, INC. (2023 AUGUST) MAKEUP CATEGORY ATTITUDES & USAGE STUDY COMMISSIONED BY E.L.F. COSMETICS; CONFIDENTIAL & PROPRIETARY
Slide 50: National Retailers
N AT I O N A L R E TA I L E R S
Slide 51: #1 Most Productive Cosmetics Brand
#1 MOST PRODUCTIVE COSMETICS BRAND
Slide 52: #1 Most Productive Cosmetics Brand
#1 MOST PRODUCTIVE COSMETICS BRAND
Slide 53: Space Expansion
S PA C E E X PA N S I O N E.L.F. E.L.F. NATURIUM SPRING 2024 SUMMER 2024 SPRING 2024 CVS WALMART SHOPPERS DRUG MART SHOPPERS DRUG MART BOOTS
Slide 54: Mandy Fields, SVP & Chief Financial Officer
MANDY FIELDS SVP & CHIEF FINANCIAL OFFICER
Slide 55: Agenda: Q3 Results, FY 2024 Outlook
AGENDA 1 2 Q3 RESULTS FY 2024 OUTLOOK
Slide 56: Net Sales
NET SALES + 85 % GROWTH UNITS AUR + 56 + 29 PPTS PPTS Q3 FY 2024 NET SALES
Slide 57: Digital Consumption Growth
DIGITAL CONSUMPTION >100 % GROWTH Q3 FY 2024
Slide 58: Digital Penetration
D I G I TA L P E N E T R AT I O N 18 % 24 % Q3 FY 2023 Q3 FY 2024 % OF CONSUMPTION
Slide 59: Beauty Squad Loyalty Program
B E A U T Y S Q U A D L O YA L T Y P R O G R A M >4.5M MEMBER S >30 % GROWTH Q3 FY 2024 GROWTH IN TOTAL ENROLLMENT VERSUS PY | BEAUTY SQUAD LOYALTY MEMBERS AS OF 12/31/2023
Slide 60: Strong Engagement on e.l.f. Mobile App
S T R O N G E N G A G E M E N T O N E . L . F. M O B I L E A P P 4.8 > 1.8 M RATING APP DOWNLOADS STATS AS OF JANUARY 2024
Slide 61: just dropped!
just dropped! when you're stealing clothes j from your sister’s room | and find your — missing mascara bq Gr » Add comment... @e < Q elf is so affordable like just buy y.._ Search
Slide 62: Gross Margin
71% GROSS MARGIN + 350 BPS Q3 FY 2024 GROSS MARGIN
Slide 63: Q3 FY 2024 Gross Margin Drivers
FAVORABLE FX RATES IMPROVED TRANSPORTATION COSTS MARGIN ACCRETIVE MIX COST SAVINGS Q3 FY 2024 GROSS MARGIN DRIVERS
Slide 64: Adjusted SG&A
ADJUSTED SG&A 54 % 47 % Q3 FY 2023 Q3 FY 2024 % OF NET SALES
Slide 65: Marketing & Digital Investment
M A R K E T I N G & D I G I TA L I N V E S T M E N T 26 % 17 % Q3 FY 2023 Q3 FY 2024 % OF NET SALES
Slide 66: Marketing & Digital FY 2024 Outlook
FY 2024 OUTLOOK MARKETING & DIGITAL 22-24 % OF NET SALES FY 2024 OUTLOOK
Slide 67: Adjusted EBITDA
+ 61 % $ 59 M ADJUSTED EBITDA 22 % ADJUSTED EBITDA MARGIN Q3 FY 2024
Slide 68: Adjusted Net Income & Adjusted EPS
ADJUSTED NET INCOME & ADJUSTED EPS $ 43 M $ 0.74 $ 27 M $ 0.48 Q3 FY 2023 Q3 FY 2024 Q3 FY 2023 Q3 FY 2024
Slide 69: Balance Sheet & Cash Flow
BALANCE SHEET & CASH FLOW
Slide 70: Cash on Hand
$72M CASH ON HAND ENDING CASH BALANCE, Q3 FY 2024
Slide 71: Inventory
$205M INVENTORY STRONG EARLIER ADDED CONSUMER OWNERSHIP NATURIUM DEMAND OF INVENTORY INVENTORY Q3 FY 2024
Slide 72: Liquidity and Naturium Acquisition
CASH ON HAND ACCESS TO EXISTING CREDIT FACILITY ~600K SHARES OF E.L.F. BEAUTY STOCK NATURIUM ACQUISITION
Slide 73: Net Debt / LTM Adjusted EBITDA
<1.0X NET DEBT / LTM ADJUSTED EBITDA Q3 FY 2024
Slide 74: Cash Priorities
CASH PRIORITIES INVESTING SUPPORTING IN GROWTH STRATEGIC INITIATIVES EXTENSIONS
Slide 75: Growth Initiatives
PEOPLE + SAP INFRASTRUCTURE TRANSITION INITIATIVES DISTRIBUTION WORKING CAPACITY CAPITAL
Slide 76: Fiscal 2024 Outlook
AVERAGE SHARES NET SALES ~58M + 69% TO 71% ADJUSTED TAX RATE FISCAL 2024 ADJUSTED EBITDA ~14% OUTLOOK $ 218M TO $ 220M ADJUSTED EPS ADJUSTED NET INCOME $ 2.84 TO $ 2.87 $ 164M TO $ 166M
Slide 77: Expected Q4 Net Sales Growth
+ 48-53 % EXPECTED Q4 NET SALES GROWTH IMPLIED Q4 FY 2024 EXPECTED NET SALES GROWTH
Slide 78: FY 2024 Gross Margin Outlook
FY 2024 GROSS MARGIN OUTLOOK COST SAVINGS + 280 SPACE EXPANSION MARGIN-ACCRETIVE MIX BPS RETAILER ACTIVITY FX RATES TRANSPORTATION COSTS FY 2024 OUTLOOK, EXPECTED YEAR OVER YEAR GROSS MARGIN CHANGE
Slide 79: FY 2024 Adjusted EBITDA Growth Outlook
FY 2024 OUTLOOK ADJ. EBITDA GROWTH +87-88 % FY 2024 OUTLOOK, EXPECTED YEAR OVER YEAR ADJUSTED EBITDA GROWTH
Slide 80: FY 2024 Adjusted EBITDA Margin Leverage
FY 2024 OUTLOOK ADJ. EBITDA MARGIN LEVERAGE +200 BPS FY 2024 OUTLOOK, EXPECTED YEAR OVER YEAR ADJUSTED EBITDA MARGIN EXPANSION
Slide 81: Drivers of Adjusted EBITDA Margin Expansion
D R I V E R S O F A D J . E B I T D A M A R G I N E X PA N S I O N NET GROS S LEVERAGE SALES MARGIN NON-MARKETING GROWTH EXPANSION SG&A
Slide 82: Flywheel Approach to Driving Profitable Growth
F LY W H E E L A P P R O A C H T O D R I V I N G P R O F I TA B L E G R O W T H INVESTING IN MARKETING E X PA N D I N G DRIVE TOPLINE EBITDA MARGIN GROWTH
Slide 83: Exceptional, Consistent, Category-Leading Growth
EXCEPTIONAL CONSISTENT C AT E G O RY- L E A D I N G
Slide 84: Slide 84
Slide 85: Different Kind of Company
DIFFERENT KIND OF C O M PA N Y PURPOSE-LED R E S U LT S - D R I V E N
Slide 86: SOULCARE
SOULCARE