E.l.f. Beauty, Inc. · NYSE:ELF
E.l.f. Beauty — Q2 2023 Earnings Presentation
67 slides from E.l.f. Beauty's earnings presentation, Nov 2, 2022
Slide 1: Q2 FY2023 Earnings Webcast
Q 2 F Y 2 0 2 3 E A R N ING S W EBC AS T N O V E MB E R 2, 2 0 22 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: Q2 FY2023 Results and Outlook
A G E N DA 1 2 Q2 FY 2023 RESU LTS OUTLOOK
Slide 5: Q2 Results
Q 2 R E S U LTS +33 % +190 +47 % BPS N ET S ALE S GR O S S MARG IN A DJU STED EBITDA Q2 FY 2023 YEAR-OVER-YEAR, AS COMPARED TO Q2 FY 2022
Slide 6: Fifteen Consecutive Quarters of Net Sales Growth
FI F T EEN C O N S E C U T I V E Q U A R T E RS OF NET SA LE S G RO WTH +50% +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 FY 19 FY 20 FY 20 FY 20 FY 20 FY 21 FY 21 FY 21 FY 21 FY 22 FY 22 FY 22 FY 22 FY 23 FY 23 NET SALES GROWTH BY QUA
Slide 7: Consumption: Color Cosmetics Category
C O N S U M PT ION + 27 % +5% COLOR E.L.F. CATEGORY COSMETICS YOY CONSUMPTION GROWTH. NIELSEN XAOC LATEST 12 WEEKS ENDING 9/10/2022, COLOR COSMETICS CATEGORY
Slide 8: Top 5 Mass Cosmetics Brands Share vs. Year Ago
TOP 5 MASS COSMETICS BRAND S SHARE (BPS ) VS. Y EAR A GO E.L.F. +115 120 90 MAYBELLINE +65 60 L’OREAL +35 30 0 -30 COVERGIRL -15 -60 REVLON Maybelline L'Oreal Cover Girl Revlon -40 e.l.f. NIELSEN XAOC LATEST 12 WEEKS ENDING 9/10/2022, COLOR COSMETICS CATEGORY
Slide 9: Consumption: Skincare Category
C O N S U M PT ION + 44 % +15% SKINCARE E.L.F. CATEG ORY SKIN YOY CONSUMPTION GROWTH. NIELSEN XAOC LATEST 12 WEEKS ENDING 9/10/2022, FACIAL SKINCARE CATEGORY
Slide 10: Q2 Highlights
Q2 HIGHLIGHTS
Slide 11: Launched First-Ever Impact Report
LA UN C HE D FI R S T- E VE R IM PA CT RE PORT
Slide 12: ere FIRST. ESR |
ere FIRST. ESR | Ansys WATCH pele ee
Slide 13: #1 Teen Favorite Brand
#1 TEEN FAVORITE BRAND PIPER SANDLER TAKING STOCK WITH TEENS SURVEY, SPRING 2022
Slide 14: Teen Brand Share Survey
16% 11% 7% 5% 4% 4% 4% 3% 3% 3% 10 1 2 3 4 5 6 7 8 9 +500 BPS PIPER SANDLER TAKING STOCK WITH TEENS SURVEY, SPRING 2022
Slide 15: #9 Favorite Shopping Destination
10 1 2 3 4 5 6 7 8 9 FAV OR ITE SHOPPING DESTINATION #9 PIPER SANDLER TAKING STOCK WITH TEENS SURVEY, SPRING 2022
Slide 16: Drivers of Q2 Results
D R I VE R S O F Q 2 RE SULTS VA LUE PROPOS ITION INNOVATION ENGIN E ATTR ACT & EN GAG E CONS UMERS
Slide 17: Value Proposition
1 e.l.f.ing fantastic. VALUE PROPOSITION
Slide 18: Best of Beauty Accessible to Every Eye, Lip, Face and Skin Concern
BEST OF BEAUTY ACCESSIBLE TO EVERY EYE, LIP, FACE AND SK IN CON CERN
Slide 19: Holy Grails Price Comparison
H O LY GR A ILS $10 $7 $11 VS $52 VS $30 VS $36
Slide 20: e.l.f. OMG
E. L.F. OM G Discover best-selling products that won’t break the bank.
Slide 21: Price Comparison: e.l.f. vs Mass and Prestige
AUR COMPA RISON ~ 22 $ ~ 9 $ ~ 5 $ E.L .F. MAS S PRESTIGE COSMETICS BRANDS BRANDS NIELSEN XAOC LATEST 52 WEEKS ENDING 9/10/2022, COLOR COSMETICS CATEGORY. NPD LATEST 52 WEEKS ENDING 6/30/22
Slide 22: Innovation Powerhouse
Chapter slide update 2 e.l.f.ing innovative. INNOVATION POWERHOUSE
Slide 23: Leadership in Core Segments
LEADERSH IP IN CORE SEGMEN TS #1 #1 #1 #2 #2 #2 #2 BRUSHES PRIMERS SETTING EYE CONCEALER EYEBROW SPONGES SPRAY SHADOW NIELSEN XAOC LATEST 12 WEEKS ENDING 9/10/2022 $ SHARE $ SHARE $ SHARE $ SHARE $ SHARE UNIT SHARE $ SHARE
Slide 24: Best of Beauty Queens
“BEST OF BEAU TY” QU EENS E.L.F. E.L.F. KEYS SOUL CARE BR OW LIFT PUTTY BR ONZER CO MFORTING TI NTED LIP BAL M
Slide 25: Best of Beauty Queens
“BEST OF BEAU TY” QU EENS 2016 20 17 2017 20 18 20 19 20 19 2020 20 21 2021 20 22 20 22 20 22
Slide 26: Power Grip Primer vs.
VS $10 $ 34 POWER GRIP PRIMER
Slide 27: Halo Glow Liquid Filter vs.
VS $ 46 $14 HALO GLOW LIQUID FILTER
Slide 28: Beauty Squad Loyalty Program
BEAU TY S QUAD L OYALTY PROGRA M 3.2M MEMBER S >20 % GR OW TH Q2 FY 2023 GROWTH IN TOTAL ENROLLMENT VERSUS PY | BEAUTY SQUAD LOYALTY MEMBERS AS OF 9/30/2022
Slide 29: Track Record of Driving Share Leadership Through Innovation
TRAC K RECORD OF DRIVING SHARE LEADERSHIP THROUG H INNOVATION #1 PRIMER BRAND 46 % SHARE NIELSEN XAOC LATEST 12 WEEKS ENDING 9/10/2022
Slide 30: Track Record of Driving Share Leadership Through Innovation
TRAC K RECORD OF DRIVING SHARE LEADERSHIP THROUG H INNOVATION MINERAL PORELESS PORELESS MATTE & ACNE POWER INFUSED FACE PUTTY LUMINOUS FIGHTING GRIP PRIMER PRIMER PRIMER PUTTY PUTTY PRIMER
Slide 31: Creating Sustaining Franchises Across Categories
CREATING SUSTAINING FRA NCHISES ACROSS CATEGORIES
Slide 32: Putty Franchise
elf PUTTY BLUSH elf PUTTY BLUSH
Slide 33: Attract & Engage Consumers
3 e.l.f.ing magnetic. ATTRACT & ENGAGE CONSUMERS
Slide 34: Four-Time TikTok Billionaires
FOUR-TIME TIKTOK BILLIONAIRES 9B 3B 18 B 14 B #EYESLIPSFACE #ELFMAGICACT #TIKTOKGGT #ELFITUP (2019) (2020) (2021) (2022)
Slide 35: BeReal
BeReal. elf | elf
Slide 36: Marketing & Digital Investment
M A R K E T I N G & D I G I TA L INV ESTM ENT 16 % 16 12 8 7% 4 0 FY 2019 FY 2022 MARKETING & DIGITAL SPEND AS % OF NET SALES
Slide 37: Marketing ROI Multiples Above Industry Benchmarks
MARKETING ROI MULTIPLES ABOVE INDUSTRY BENCHMARKS
Slide 38: New Frontiers, New Audiences, New Platforms
NEW FRONTIERS NEW AUDIENCES NEW PLATFORMS
Slide 39: Marketing and Digital: 17-19% of Net Sales
MA RK ETI N G A N D D I GI TA L 17-19 % OF NET SALES FY 2023 OUTLOOK
Slide 40: Space Expansion
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Slide 41: Expected Space Expansion in a Subset of Retailer Doors
FALL 20 22 EX PANSION SPRING 2023 EXPANSION EXPECTED SPACE EXPANSION IN A SUBSET OF RETAILER DOORS
Slide 42: Our Superpowers
e.l.f.ing heroic. OUR SUPERPOWERS
Slide 43: Continuing to Add to Our Superpowers
CON TINU ING TO A DD TO OUR SUP ERP OWER S PREMIUM ACCESSIBLE CRUELTY E.L.F. QUALITY PRICES FREE CLEAN
Slide 44: Fair Trade Certified Program
we’ve joined the Fair Trade Certified™ program! FAIR TRADE CERTIFIED FACTORY
Slide 45: Our Superpowers
OUR SUPERPOWERS PREMIUM ACCESSIBLE BROAD CRUELTY VEGAN E.L.F. FAIR TRADE QUALITY PRICES APPEAL FREE CLEAN CERTIFIED
Slide 46: Mandy Fields, SVP & Chief Financial Officer
MANDY FIELDS SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Slide 47: Net Sales Growth
N ET S A L E S +33% GROW TH Q2 FY 2023
Slide 48: Digital Consumption Growth
DI G ITA L CON S U M P T I O N >75% GROWTH Q2 FY 2023
Slide 49: Digital Commerce Penetration
DIG ITAL COMMERCE PENETR ATION 12 % 15 % Q2 FY 2022 Q2 FY 2023 % OF CONSUMPTION
Slide 50: Gross Margin
GR OS S M AR G I N 65 % +190 BPS Q2 FY 2023
Slide 51: Gross Margin Drivers
GR O S S MA R G I N DRIVE RS + 190 MARGIN ACCRETIV E MIX COST SAVINGS BPS TRANSPO RTATI ON CO STS INVENTORY ADJUSTMENTS PRICE INCR EASES Q2 FY 2023
Slide 52: Adjusted SG&A
ADJ USTED SG&A 49 % 46 % Q2 Q2 FY 2022 FY 2023
Slide 53: Marketing & Digital Investment
MARKETING & DIG ITAL INVEST M ENT 16 % 16 % Q2 Q2 FY 2022 FY 2023 % OF NET SALES
Slide 54: Marketing and Digital: 17-19% of Net Sales
MA RK E TING A ND DIGITA L 17-19 % OF N ET SALES FY 2023 OUTLOOK
Slide 55: Adjusted EBITDA
22 % MARGIN $ 27 M ADJUSTED EBITDA Q2 FY 2023
Slide 56: Adjusted Net Income and Adjusted EPS
AD J US T ED N E T I N C OM E A DJU STED EP S $ 20M $ 0.36 $ 11M $ 0.21 Q2 Q2 Q2 Q2 FY 2022 FY 2023 FY 2022 FY 2023
Slide 57: Cash Balance
$ 85 M CASH BALANCE Q2 FY 2023
Slide 58: Inventory
$ 81 M INVENTORY Q2 FY 2023
Slide 59: Free Cash Flow
$ 42 M FREE CASH FLOW Q2 FY 2023-TO-DATE
Slide 60: Cash Priorities
C A S H P R IO RITIES IN V ES TI N G I N S U PP O R TING RE TIRING G RO WTH S T R AT EG IC P ORTIO N IN I TI AT I VES E X T E N S IONS O F DEB T
Slide 61: Fiscal 2023 Outlook
NET SALES ADJUSTED EBITDA +22 % TO 24 % $ 93.5M TO $ 95M FISCAL 2023 OUTLOOK ADJUSTED EPS ADJUSTED NET INCOME $ 1.07 TO $ 1.10 $ 59M TO $ 60.5M
Slide 62: Topline Outlook
TO P LI N E O UT L O OK Q2 PERFORMANCE SPACE GAINS MOMENTUM FY 2023 OUTLOOK
Slide 63: Gross Margin Outlook
GR O S S M A R GI N O U TLO OK + 175 BPS FY 2023 OUTLOOK, YEAR OVER YEAR GROSS MARGIN CHANGE
Slide 64: Gross Margin Drivers
GR O S S MA R G I N DRIVE RS P RI CE M A R GIN C OST I N CR EA S E S A C C R E T I V E M IX SAVING S FY 2023 OUTLOOK
Slide 65: Adjusted EBITDA Outlook
A D J U S T E D E B I T D A O U TLO OK +12 TO14 % +25 TO 27 % G R O WT H G ROWT H PR I O R C URRE NT FY 2023 OUTLOOK
Slide 66: Adjusted EBITDA Margin Leverage
+ 50 BPS ADJUST ED EBITDA MARGIN LEVER AGE FY 2023 OUTLOOK
Slide 67: Q2 FY2023 Earnings Webcast
Q 2 F Y 2 0 2 3 E A R N ING S W EBC AS T N O V E MB E R 2, 2 0 22 S K I N