E.l.f. Beauty, Inc. · NYSE:ELF
E.l.f. Beauty — Q2 2024 Earnings Presentation
95 slides from E.l.f. Beauty's earnings presentation, Nov 1, 2023
Slide 1: Q2 FY 2024 Earnings Webcast
Q2 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: Q2 Results, FY 2024 Outlook
AGENDA 1 2 Q2 RESULTS FY 2024 OUTLOOK
Slide 5: Q2 Results
Q2 RESULTS + 76 % + 570 +122% BPS NET SALES GROSS MAR GIN ADJUSTED EBITDA Q2 FY 2024 YEAR-OVER-YEAR, AS COMPARED TO Q2 FY 2023
Slide 6: 19 Consecutive Quarters of Net Sales Growth
19 CONSECUTIVE QUARTERS OF NET SALES GROWTH +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 7: 1 of 5 out of 274 companies with 19 quarters of >20% growth
1 OF 5 OUT OF 274 19 QUARTERS >20% GROWTH FACTSET, INCLUDES PUBLICLY TRADED COMPANIES IN THE XRT AND XLP INDICES
Slide 8: Significant Runway for Growth
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 COSMETICS SKINCARE INTERNATIONAL
Slide 9: Q2 Consumption: Color Category vs e.l.f. Cosmetics
Q2 CONSUMPTION + 51 % +3% COLOR CATEGORY E.L.F. COSMETICS YOY CONSUMPTION GROWTH. NIELSEN XAOC LATEST 12 WEEKS ENDING 10/7/2023, COLOR COSMETICS CATEGORY
Slide 10: Share Growth
SHARE GROWTH E.L.F. + 330 MAYBELLINE COVERGIRL REVLON L’OR EAL -50 -5 5 -30 -30 NIELSEN XAOC LATEST 12 WEEKS ENDING 10/7/2023, COLOR COSMETICS CATEGORY
Slide 11: Quarters of Share Gains in Cosmetics
1 OF 800 COSMETICS BRANDS 19 QUARTERS OF SHARE GAINS NIELSEN XAOC LATEST 12 WEEKS ENDING 9/9/2023, COLOR COSMETICS CATEGORY
Slide 12: More Than Doubled Our Category Share
M O R E T H A N D O U B L E D O U R C AT E G O RY S H A R E 10.3 % 7.0 % 5.5 % 5.6 % +330 4.4 % BPS +145 +110 +15 BPS BPS BPS 2019 2020 2021 2022 2023 E.L.F. MASS COSMETICS SHARE, NIELSEN XAOC LATEST 12 WEEKS ENDING 10/7/2023, COLOR COSMETICS CATEGORY
Slide 13: National and Target Share
18.7 % 10.3% #3 #1 NATIONAL TARGET NIELSEN XAOC LATEST 12 WEEKS ENDING 10/7/2023, COLOR COSMETICS CATEGORY
Slide 14: Q2 Consumption: Skincare Category vs e.l.f. Skin
Q2 CONSUMPTION + 129 % +10% SKINCARE CATEGORY E.L.F. SKIN YOY CONSUMPTION GROWTH. NIELSEN XAOC LATEST 12 WEEKS ENDING 10/7/2023, FACIAL SKINCARE CATEGORY
Slide 15: e.l.f. Skin Brand Rank and Share
E . L . F. S K I N + 80 BPS # 14 1.6% SHARE GAIN BRAND RANK $ SHARE NIELSEN XAOC LATEST 12 WEEKS ENDING 10/7/2023, FACIAL SKINCARE CATEGORY
Slide 16: Teen Favorite Cosmetics Brand
# 1 T E E N F AV O R I T E C O S M E T I C S B R A N D 01 29 % 02 Rare Beauty 13% 03 Maybelline 6% 04 Charlotte Tilbury 5% 05 L’Oreal 5% PIPER SANDLER TAKING STOCK WITH TEENS SURVEY, FALL 2023
Slide 17: Skincare Brand Among Teens
01 CeraVe 02 The Ordinary 03 La Roche-Posay 04 Cetaphil # 10 05 06 Glow Recipe Drunk Elephant 07 Neutrogena SKINCARE BRAND AMONG TEENS 08 Clinique 09 Bubble 10 PIPER SANDLER TAKING STOCK WITH TEENS SURVEY, FALL 2023
Slide 18: Favorite Shopping Destination
01 Sephora 02 Ulta 03 Target 04 Amazon #8 05 06 Walmart SHEIN 07 CVS FAVORITE SHOPPING DESTINATION 08 09 Sally 10 T.J. Maxx PIPER SANDLER TAKING STOCK WITH TEENS SURVEY, FALL 2023
Slide 19: International Net Sales Growth
157% INTERNATIONAL NET SALES GROWTH Q2 FY 2024 YEAR-OVER YEAR INTERNATIONAL NET SALES GROWTH
Slide 20: Outpacing Category Growth in Canada and the UK
O U T PA C I N G C AT E G O RY G R O W T H I N C A N A D A A N D T H E U K 10X 7X CATEGORY E.L.F. CATEGORY E.L.F. CANADA UK YOY CONSUMPTION GROWTH. NIELSEN, UK L26W ENDING 4/22/2023 AND CANADA L12W ENDING 7/15/2023
Slide 21: Canada Brand Share
#4 7% BRAND SHARE CANADA NIELSEN, UK L26W ENDING 4/22/2023 AND CANADA L12W ENDING 7/15/2023
Slide 22: UK Brand Share
#6 5% BRAND SHARE UK NIELSEN, UK L26W ENDING 4/22/2023 AND CANADA L12W ENDING 7/15/2023
Slide 23: Focus on Our Five Strategic Imperatives
F O C U S O N O U R F I V E S T R AT E G I C I M P E R AT I V E S BUILD POWER LEAD DRIVE DELIVER BRAND DEMAND DIGITAL INNOVATION PRODUCTIVITY PROFITABLE GROWTH
Slide 24: Build Brand Demand
BUILD BRAND DEMAND
Slide 25: Disruptive Marketing Engine
DISRUPTIVE MARKETING ENGINE
Slide 26: Leaning into Gaming with Loser Fruit Collaboration
LEANING INTO GAMING WITH LAUNCH OF L I M I T E D E D I T I O N M A K E U P C O L L A B O R AT I O N W I T H L O S E R F R U I T
Slide 27: Dove Further into Entertainment and Short-Form Content
D O V E F U R T H E R I N T O E N T E R TA I N M E N T A N D S H O R T- F O R M D I G I TA L C O N T E N T
Slide 28: Record Setting Collaboration
RECORD SETTING C O L L A B O R AT I O N
Slide 29: Dirty Pillows Collaboration with Jennifer Coolidge
RELEASE OF LIMITED EDITION “DIRTY PILLOWS” C O L L A B O R AT I O N W I T H J E N N I F E R C O O L I D G E
Slide 30: Highest Ever Media Impressions for a Product Collaboration
H I G H E S T E V E R M E D I A I M P R E S S I O N S F O R A P R O D U C T C O L L A B O R AT I O N 5B + 7B + 11B + 4B + IMPRESSIONS IMPRESSIONS IMPRESSIONS IMPRESSIONS
Slide 31: Sold Out in Under 2 Hours
SOLD OUT IN <2 HOURS >40% NEW PURCHASERS
Slide 32: Marketing Investment
MARKETING INVESTMENT 22-24 % 16 % 7% FY 2019 FY 2022 FY 2024 OUTLOOK % OF NET SALES
Slide 33: e.l.f. Marketing ROI
E . L . F. MARKETING ROI M U LT I P L E S A B O V E I N D U S T RY B E N C H M A R K S
Slide 34: Brand Satisfaction
B R A N D S AT I S FA C T I O N 80 % 64 % 2020 2023 BOVITZ, INC. (2023 AUGUST) MAKEUP CATEGORY ATTITUDES & USAGE STUDY COMMISSIONED BY E.L.F. COSMETICS; CONFIDENTIAL & PROPRIETARY
Slide 35: Unaided Awareness
U N A I D E D AWA R E N E S S 26 % 13 % 2020 2023 BOVITZ, INC. (2023 AUGUST) MAKEUP CATEGORY ATTITUDES & USAGE STUDY COMMISSIONED BY E.L.F. COSMETICS; CONFIDENTIAL & PROPRIETARY
Slide 36: Opportunity to Drive Further Progress on Unaided Awareness
O P P O R T U N I T Y T O D R I V E F U R T H E R P R O G R E S S O N U N A I D E D AWA R E N E S 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 37: First-Ever Community-Led Brand Campaign in the U.K.
L A U N C H E D F I R S T- E V E R C O M M U N I T Y L E D B R A N D C A M PA I G N I N T H E U . K .
Slide 38: Power Digital
POWER D I G I TA L
Slide 39: Digital Consumption Growth
DIGITAL CONSUMPTION >75 %GROWTH Q2 FY 2024
Slide 40: Digital Penetration
D I G I TA L P E N E T R AT I O N 16 % 17 % Q2 FY 2023 Q2 FY 2024 % OF CONSUMPTION
Slide 41: e.l.f. Mobile App
E . L . F. M O B I L E A P P 4.8 1.6 M STAR RATING APP DOWNLOADS >90 % OF TRANSACTIONS FROM BEAUTY SQUAD
Slide 42: 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 >4.1M MEMBER S >25 % GROWTH Q2 FY 2024 GROWTH IN TOTAL ENROLLMENT VERSUS PY | BEAUTY SQUAD LOYALTY MEMBERS AS OF 9/30/2023
Slide 43: Loyalty: elfcosmetics.com Sales
L O YA LT Y > 80 % ELFCOSMETICS.COM SALES
Slide 44: Lead Innovation
LEAD I N N O VAT I O N
Slide 45: Unique Ability to Deliver Holy Grails
U N I Q U E A B I L I T Y T O D E L I V E R “ H O LY G R A I L S ” $10 $7 $10 $11 VS $54 VS $31 VS $38 VS $28 PRESTIGE PRESTIGE PRESTIGE PRESTIGE
Slide 46: Slide 46
Slide 47: 11th Consecutive Year Winning an Allure Best of Beauty Award
11TH CONSECUTIVE YEAR E.L.F BEAUTY HAS WON A N A L L U R E B E S T O F B E A U T Y AWA R D 2011 2013 2014 2015 2016 2017 2017 2018 2019 2019 2020 2021 2021 2022 2022 2022 NIELSEN XAOC LATEST 52 WEEKS ENDING 10/7/2023
Slide 48: Leadership Across Segments
LEADERSHIP ACROSS SEGMENTS #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 EYE COSMETIC EYELASH COSMETIC SPONGES CONCEALER BRONZER LIP
Slide 49: Drive Productivity
DRIVE PRODUCTIVITY
Slide 50: i rn
i rn BUT Eta y { Walmart >,<
Slide 51: Space Expansion
S PA C E E X PA N S I O N SPRING 2024 SHOPPERS DRUG MART BOOTS FALL 2023 ULTA BEAUTY SPRING 2023 CVS TARGET WALGREENS WALMART CVS SHOPPERS DRUG MART
Slide 52: Launched e.l.f. in Italy with Douglas
L A U N C H E D E . L . F I N I TA LY W I T H D O U G L A S
Slide 53: Outdoor In-Store Experiential
OUTDOOR IN-STORE EXPERIENTIAL
Slide 54: Douglas Italy Novita Display
—- NOVITA — MARCHI PROFUMI xo, elf. Your beauty BFF is here! AA @ douglas.it G
Slide 55: Deliver Profitable Growth
DELIVER P R O F I TA B L E GROWTH
Slide 56: Investing in Marketing, Expanding EBITDA Margin
INVESTING IN MARKETING E X PA N D I N G DRIVE TOPLINE EBITDA MARGIN GROWTH
Slide 57: Drivers of Increased Profitability
D R I V E R S O F I N C R E A S E D P R O F I TA B I L I T Y NET GROS S LEVERAGE SALES MARGIN NON-MARKETING GROWTH EXPANSION SG&A
Slide 58: Investing in Our Infrastructure
INVESTING IN OUR INFRASTRUCTURE
Slide 59: Closed on the Acquisition of Naturium in October
C L O S E D O N T H E A C Q U I S I T I O N O F N AT U R I U M I N O C T O B E R
Slide 60: High Performance Skincare Accessible to All
HIGH PERFORMANCE SKINCARE ACCESSIBLE TO ALL
Slide 61: Skincare Penetration
S K I N C A R E P E N E T R AT I O N ~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 62: Naturium Net Sales CAGR
+80 % NET SALES CAGR CAGR BASED ON AUG’23 CALENDAR YTD
Slide 63: Focus on Our Five Strategic Imperatives
F O C U S O N O U R F I V E S T R AT E G I C I M P E R AT I V E S BUILD POWER LEAD DRIVE DELIVER BRAND DEMAND DIGITAL INNOVATION PRODUCTIVITY PROFITABLE GROWTH
Slide 64: Different Kind of Beauty Company
DIFFERENT KIND OF B E A U T Y C O M PA N Y PURPOSE-LED RESULTS-DRIVEN
Slide 65: e.l.a. Beauty Fiscal 2023 Impact Report
E.L.A BEAUTY FISCAL 2023 IMPACT REPORT
Slide 66: Best Companies to Work For
BEST COMPANIES TO WORK FOR
Slide 67: Mandy Fields, SVP & Chief Financial Officer
MANDY FIELDS SVP & CHIEF FINANCIAL OFFICER
Slide 68: Agenda: Q2 Results, FY 2024 Outlook
AGENDA 1 2 Q2 RESULTS FY 2024 OUTLOOK
Slide 69: Q2 FY 2024 Net Sales Growth
+ 76 % GROWTH Q2 FY 2024 NET SALES
Slide 70: Net Sales Growth: Units and AUR
+ 76 % GROWTH UNITS AUR + 56 + 20 PPTS PPTS Q2 FY 2024 NET SALES
Slide 71: Q2 FY 2024 Gross Margin
71 % +570 BPS Q2 FY 2024 GROSS MARGIN
Slide 72: Q2 FY 2024 Gross Margin Drivers
LOWER INVENTORY ADJUSTMENTS FAVORABLE FX RATES IMPROVED TRANSPORTATION COSTS MARGIN ACCRETIVE MIX COST SAVINGS RETAILER ACTIVITY SPACE EXPANSION Q2 FY 2024 GROSS MARGIN DRIVERS
Slide 73: Adjusted SG&A
ADJUSTED SG&A 46 % 45 % Q2 FY 2023 Q2 FY 2024 % OF NET SALES
Slide 74: 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 21 % 16 % Q2 FY 2023 Q2 FY 2024 % OF NET SALES
Slide 75: Marketing & Digital of Net Sales: FY 2024 Outlook
MARKETING & DIGITAL 22-24 % OF NET SALES FY 2024 OUTLOOK
Slide 76: Adjusted EBITDA and Margin
+ 122 % $ 60 M ADJUSTED EBITDA 28 % ADJUSTED EBITDA MARGIN Q2 FY 2024
Slide 77: Adjusted Net Income & Adjusted EPS
ADJUSTED NET INCOME & ADJUSTED EPS $ 47 M $ 0.82 $ 20 M $ 0.36 Q2 FY 2023 Q2 FY 2024 Q2 FY 2023 Q2 FY 2024
Slide 78: Drivers of Increased Profitability
D R I V E R S O F I N C R E A S E D P R O F I TA B I L I T Y NET GROS S LEVERAGE SALES MARGIN NON-MARKETING G ROWTH EXPANSION SG&A
Slide 79: Balance Sheet & Cash Flow
BALANCE SHEET & CASH FLOW
Slide 80: Inventory
$147M INVENTORY +$29M +37M DEMAND TAKING OWNERSHIP EARLIER DRIVEN FROM SUPPLIERS Q2 FY 2024
Slide 81: Cash on Hand
$168M CASH ON HAND ENDING CASH BALANCE, Q2 FY 2024
Slide 82: Free Cash Flow
$27M FREE CASH FLOW Q2 FY 2024
Slide 83: Cash and Credit Facility; Naturium Acquisition Funding
$355M CASH ON HAND ACCESS TO EXISTING CREDIT FACILITY $72M EQUITY NATURIUM ACQUISITION
Slide 84: Net Debt / Adjusted EBITDA Post Naturium
<1.5X NET DEBT / ADJUSTED EBITDA ESTIMATED PRO FORMA LEVERAGE POST NATURIUM ACQUISITION
Slide 85: Cash Priorities
CASH PRIORITIES INVESTING SUPPORTING IN GROWTH STRATEGIC INITIATIVES EXTENSIONS
Slide 86: Fiscal 2024 Outlook
AVERAGE SHARES NET SALES ~58M + 55% TO 57% ADJUSTED TAX RATE ADJUSTED EBITDA 17% TO FISCAL 2024 $ 197M TO 18% OUTLOOK $ 200M ADJUSTED EPS ADJUSTED NET INCOME $ 2.47 TO $ 2.50 $ 144M TO $ 146M
Slide 87: Naturium Expected Contribution
A N N U A L I Z E D E S T I M AT E S $90M NET SALES $17M ADJ. EBITDA EXPECTED Q3 AND Q4 CONTRIBUTION $48M NET SALES $9M ADJ. EBITDA $0.04 ADJ. EPS EXPECTED Q3 AND Q4 CONTRIBUTION IN THE PERIOD ENDING 3/31/2024
Slide 88: Planning Assumptions
- PLANNING | ASSUMPTIONS.
Slide 89: Organic Net Sales Growth Outlook
+ 46-48 % ORGANIC NET SALES GROWTH IMPLIED FY 2024 EXPECTED NET SALES GROWTH, EXCLUDING NATURIUM
Slide 90: Tracked vs Untracked Channels
50% UNTRACKED TRACKED CHANNELS CHANNELS E.L.F. BEAUTY TRACKED CHANNELS % OF TOTAL E.L.F. BEAUTY CONSUMPTION POST NATURIUM ACQUISTION
Slide 91: e.l.f. Tracked Channel Growth
E . L . F. T R A C K E D 2 - Y E A R S TA C K CHANNEL GROWTH GROWTH Q1 +54% +80% Q2 +57% +94% Q3- Q4 ~20-50% ~90% YOY CONSUMPTION GROWTH, NIELSEN XAOC COLOR COSMETICS CATEGORY. Q1 = L12W 6/17, Q2 = L12W ENDING 10/7
Slide 92: Gross Margin Outlook
GROSS MARGIN OUTLOOK COST SAVINGS + 225 SPACE EXPANSION MARGIN-ACCRETIVE MIX BPS RETAILER ACTIVITY FX RATES TRANSPORTATION COSTS FY 2024 OUTLOOK, YEAR OVER YEAR GROSS MARGIN CHANGE
Slide 93: Adjusted EBITDA Growth Outlook
ADJ. EBITDA GROWTH +69-71 % CURRENT OUTLOOK FY 2024 OUTLOOK
Slide 94: Adjusted EBITDA Margin Leverage
ADJ. EBITDA MARGIN LEVERAGE +190 BPS FY 2024 OUTLOOK
Slide 95: Soulcare
SOULCARE