E.l.f. Beauty, Inc. · NYSE:ELF
E.l.f. Beauty — Q3 2023 Earnings Presentation
72 slides from E.l.f. Beauty's earnings presentation, Feb 1, 2023
Slide 1: Q3 FY 2023 Earnings Webcast
Q 3 F Y 2 0 2 3 E A R N ING S WE BC A ST F E B R U A RY 1, 2 0 2 3 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: Q3 FY 2023 Results and Outlook
A GE N D A 1 2 Q3 FY 2023 RESULTS OUTLOOK
Slide 5: Q3 Results
Q 3 R E S U LTS +49 % +180 +69 % BPS N ET S ALES GR O S S M ARG IN A DJU STE D E BITDA Q3 FY 2023 YEAR-OVER-YEAR, AS COMPARED TO Q3 FY 2022
Slide 6: Sixteen Consecutive Quarters of Net Sales Growth
S I X TEEN C O N S E C U T I V E Q U A R T E RS O F NE T SA LE S G RO WTH +50% +49% +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 Q3 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 FY 23 NET SAL
Slide 7: Color Cosmetics Category Consumption
C O N S U M P T IO N + 36 % +8% COLOR E.L.F. CATEGORY COSMETICS YOY CONSUMPTION GROWTH. NIELSEN XAOC LATEST 12 WEEKS ENDING 12/3/2022, COLOR COSMETICS CATEGORY
Slide 8: Top 5 Mass Cosmetics Brands Share
TOP 5 MASS COSMETICS BRANDS SHARE (BPS) VS. YEAR AGO E.L.F. +150 160 120 MAYBELLINE +85 80 L’OREAL +40 40 REVLON +5 0 -40 Maybelline L'Oreal Cover Girl COVERGIRL Revlon e.l.f. -40 NIELSEN XAOC LATEST 12 WEEKS ENDING 12/3/2022, COLOR COSMETICS CATEGORY
Slide 9: Skincare Category Consumption
C O N S U M P T IO N + 34 % +6% SKINCARE E.L.F. CATEGORY SKIN YOY CONSUMPTION GROWTH. NIELSEN XAOC LATEST 12 WEEKS ENDING 12/3/2022, FACIAL SKINCARE CATEGORY
Slide 10: Highlights
HIGHLIGHTS
Slide 11: Awards and Recognition
MOST LOVED BEAUTY MOST POWERFUL MARKETING INNOVATOR COMPANY BRAND OF THE YEAR BEAUTY BRAND AMERICA’S BEST OF THE YEAR MIDSIZE COMPANIES
Slide 12: Creating a Different Kind of Beauty Company
CREATING A DIFFERENT KIND OF BEAUTY COMPANY PURPOSE-LED RESULTS DRIVEN
Slide 13: Board of Directors
BOARD OF DIRECTORS 1 4 OF PUBLIC COMPANIES (OUT OF 4,200) 2/3WOMEN 1/3 DIVERSE
Slide 14: Drivers of Q3 Results
D R I V E R S O F Q 3 RE SU LTS VALUE PROPOSITION POWERHOUSE INNOVATION DISRUPTIVE MARKETING ENGINE
Slide 15: Value Proposition
1 e.l.f.ing VALUE fantastic. PROPOSITION
Slide 16: Best of Beauty Accessible to Every Concern
BEST O F BEAUTY ACCESSIBLE TO EVERY EYE, LIP, FACE AND SKIN CONCERN
Slide 17: Holy Grails Price Comparison
H O LY GR A ILS $10 $7 $11 $10 VS $54 VS $31 VS $36 VS $36
Slide 18: Accessible Distribution, Prestige Quality
ACCESSIB LE DISTRIBUTION PRESTIGE PRICE EXC LUS IVE DIST RIB U TION DRIVING CATEGORY EXPANSION MASS PRICE
Slide 19: Poreless Putty Primer Price Comparison
VS $ 52 $8 PORELESS PUTTY PRIMER PRICE AT LAUNCH DATE
Slide 20: Unit Volume: Putty Primer Category
UNI T V O L U M E : P U T T Y PRIM E R C ATE G O RY 9X PRESTIGE COMPARISON PORELESS PUTTY PRIMER INTERNAL ESTIMATES
Slide 21: Camo Concealer Price Comparison
VS $ 31 $7 CAMO CONCEALER
Slide 22: Unit Volume: Concealer Category
U N I T V O L U M E : C O N C E A LE R C ATE G O RY 2X PRESTIGE COMPARISON CAMO CONCEALER INTERNAL ESTIMATES
Slide 23: Innovation Powerhouse
Chapter slide update 2 e.l.f.ing innovative. INNOVATION POWERHOUSE
Slide 24: Leadership in Core Segments
LEADERSHIP IN CORE SEGMENTS #1 #1 #1 #1 #2 #2 #2 BRUSHES PRIMERS SETTING EYEBROW EYE CONCEALER SPONGES SPRAY SHADOW NIELSEN XAOC LATEST 52 WEEKS ENDING 12/3/2022 $ SHARE $ SHARE $ SHARE UNIT SHARE UNIT SHARE $ SHARE $ SHARE
Slide 25: Putty Primer Franchise
PUTTY PRIMER FRANCHISE
Slide 26: Camo Franchise
elf CAMO cc CREAM COLOR CORRECTING SPULL-COVERAGE CAMO FRANCHISE
Slide 27: Power Grip Franchise
POWER GRIP PRIMER + 4% NIACINAMIDE — ( 1 ) | - f = Ny, GRIP FRANCHISE 4 4awldd diad aiMOd
Slide 28: Power Grip Primer Price Comparison
VS $10 $ 36 POWER GRIP PRIMER
Slide 29: Primer SKU Rankings
#1 #2 #1 PRIMER SKU PRIMER MASS COSMETICS MASS COSMETICS PRESTIGE BEAUTY NIELSEN LATEST 52 WEEKS ENDING 12/3/2022, THE NPD GROUP/U.S. PRESTIGE BEAUTY TOTAL MEASURED MARKET, FACE PRIMER PRODUCT SALES, 12 MONTHS ENDING DECEMBER 2022
Slide 30: Primer Brand Rankings
#1 #1 BRAND BRAND MASS PRIMERS PRESTIGE PRIMERS NIELSEN LATEST 52 WEEKS ENDING 12/3/2022, THE NPD GROUP/U.S. PRESTIGE BEAUTY TOTAL MEASURED MARKET, FACE PRIMER DIVISION SALES, 12 MONTHS ENDING DECEMBER 2022
Slide 31: Innovation Opportunities
INNOVATION OPPORTUNITIES 31
Slide 32: e.l.f. Dollar Share by Category
E . L . F. D O L L A R SHA RE ~7 % ~1% ~1% ~1% MASCARA LIP SKINCARE COLOR COSMETICS DOLLAR SHARE. NIELSEN XAOC LATEST 12 WEEKS ENDING 12/3/2022
Slide 33: Significant White Space in Large Segments of Beauty
S I G N I F I C AN T W H I T E S PA C E I N L A RG E SE G ME NTS O F BE A U TY $ 900 M $ 500 M $5 B M AS C AR A L I P C O L OR SK INC A RE CATEGORY SIZE, NIELSEN XAOC LATEST 52 WEEKS ENDING 12/3/2022
Slide 34: Disruptive Marketing Engine
3 DISRUPTIVE MARKETING ENGINE
Slide 35: The Weather Channel Campaign
The Weather Channel
Slide 36: 5.7B Impressions
5.7B IMPRESSIONS ne “so suascrie = ADWEK ‘Signin (Subseribe) Q @ markerincpive MEN } its Halo Glow | : 4 : E.L.f. forecasts ‘glow storm’ tock (!!) With a Hilarious Meghan 8 ei ip sch a Euarotis Megha Meghan Trainor Teams with The Weather Channel, with e.l.f. Cosmetics and | Lf. Cosmetics, Meghan Meg
Slide 37: Marketing & Digital Investment
MA R K E T I N G & D I GI TAL INVE STME NT 17-19% 18 16 % 13.5 9 7% 4.5 0 Untitled FY 2023 1 FY 2019 FY 2022 OUTLOOK % OF NET SALES
Slide 38: Exceptional ROI Results
EXCEPTIONAL ROI RESULTS
Slide 39: Drivers of Q3 Results
D R I V E R S O F Q 3 RE SU LTS VALUE PROPOSITION POWERHOUSE INNOVATION DISRUPTIVE MARKETING ENGINE
Slide 40: Whitespace Opportunity with U.S. Retail Partners
WH I TES PA C E O P P O R T U N I T Y W ITH U .S. RE TA IL PA RTNE RS
Slide 41: International Whitespace
INTERNATIONAL WHITESPACE 13 % ~80% GROWTH % OF NET SALES IN Q3 FY 2023, YEAR OVER YEAR NET SALES GROWTH IN Q3 FY 2023
Slide 42: Market Rank in U.S., Canada and U.K.
#4 #7 #8 C A NA DA U .K. U.S. NIELSEN: U.S. COLOR COSMETICS FOR L52W ENDING 12/3/2022, CANADA COSMETICS & COS ACCESSORIES FOR L52W ENDING 12/31/2022, AND UK L52W ENDING 1/1/2022
Slide 43: Our Superpowers
e.l.f.ing heroic. OUR SUPERPOWERS
Slide 44: Our Superpowers
OUR SUPERPOWERS PREMIUM ACCESSIBLE BROAD CRUELTY VEGAN E.L.F. FAIR TRADE QUALITY PRICES APPEAL FREE CLEAN CERTIFIED
Slide 45: Mandy Fields, SVP & CFO
MANDY FIELDS SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Slide 46: Net Sales Growth +49%
N ET S AL E S +49% GROWTH Q3 FY 2023
Slide 47: Digital Consumption Growth
DI G I TAL C ON S U M P T I O N >75% GROWTH Q3 FY 2023
Slide 48: Digital Commerce Penetration
DIGITAL COMMERCE PENETRATION 14 % 17 % Q3 FY 2022 Q3 FY 2023 % OF CONSUMPTION
Slide 49: Beauty Squad Loyalty Program
B E A U T Y S Q U A D L O YALTY P RO G RA M 3.5M MEMBERS >25 % GROW TH Q3 FY 2023 GROWTH IN TOTAL ENROLLMENT VERSUS PY | BEAUTY SQUAD LOYALTY MEMBERS AS OF 12/31/2022
Slide 50: Amazon and .com Sales
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Slide 51: Gross Margin
G RO SS M A RG IN 67 % +180 BPS Q3 FY 2023
Slide 52: Gross Margin Drivers
GR O S S M A R GI N DRIVE RS + 180 COST SAVINGS MARGIN BPS INVENTORY ADJUSTMENTS ACCRETIVE MIX SPACE EXPANSION PRICE INCREASES Q3 FY 2023
Slide 53: Adjusted SG&A
ADJUSTED SG&A 50 % 47 % Q3 Q3 FY 2022 FY 2023 % OF NET SALES
Slide 54: Marketing & Digital Investment
MARKETING & DIGITAL INVESTMENT 17 % 15 % Q3 Q3 FY 2022 FY 2023 % OF NET SALES
Slide 55: Marketing and Digital Outlook
MAR K ETI N G A N D D I GI TA L 17-19 % OF NET SALES FY 2023 OUTLOOK
Slide 56: Adjusted EBITDA
25 % MARGIN $ 37 M ADJUSTED EBITDA Q3 FY 2023
Slide 57: 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 $ 27M $ 0.48 $ 13M $ 0.24 Q3 Q3 Q3 Q3 FY 2022 FY 2023 FY 2022 FY 2023
Slide 58: Balance Sheet & Cash Flow
* * BALANCE SHEET & CASH FLOW
Slide 59: Cash Balance
$ 87 M CASH BALANCE Q3 FY 2023
Slide 60: Inventory
$ 81 M INVENTORY Q3 FY 2023
Slide 61: In-Stock Rates
> 95 % IN-STOCK RATES Q3 FY 2023
Slide 62: Free Cash Flow
$ 67 M FREE CASH FLOW Q3 FY 2023-TO-DATE
Slide 63: Debt Paydown
$ 25 M DEBT PAYDOWN Q3 FY 2023
Slide 64: Cash Priorities
C A S H P R I O RITIE S I NV E S T I N G I N SU P P O RTING GR O W T H STRATE G IC I N I T I AT I V E S E X TE NSIO NS
Slide 65: Fiscal 2023 Outlook
NET SALES ADJUSTED EBITDA +38 % TO 39 % $ 110.5M TO $ 112M FISCAL 2023 OUTLOOK ADJUSTED EPS ADJUSTED NET INCOME $ 1.37 TO $ 1.40 $ 75.5M TO $ 77M
Slide 66: Drivers of Raised Top Line Outlook
D R I V E R S O F R A I S E D T O P LINE O U TLO O K Q3 PERFORMANCE MOMENTUM FY 2023 OUTLOOK
Slide 67: Net Sales Growth Outlook
Q 4 N E T S A LE S + 42-46 % GROWTH FY 2023 OUTLOOK
Slide 68: Gross Margin Outlook
GR O S S M A R GI N O U TLO O K + 200 BPS FY 2023 OUTLOOK, YEAR OVER YEAR GROSS MARGIN CHANGE
Slide 69: Gross Margin Drivers
GR O S S M A R GI N DRIVE RS PRICE MARGIN COST TRANSPORTATION SPACE INCREASES ACCRETIVE MIX SAVINGS COSTS GAINS FY 2023 OUTLOOK
Slide 70: Adjusted EBITDA Growth Outlook
A D J U S T E D E B I T DA G RO WTH +25 27 % TO +48 50 % TO GROWTH GROWTH PRIOR C U RRE NT FY 2023 OUTLOOK
Slide 71: Adjusted EBITDA Margin Leverage
+ 150 BPS ADJUSTED EBITDA MARGIN LEVERAGE FY 2023 OUTLOOK
Slide 72: Q3 FY 2023 Earnings Webcast
Q 3 F Y 2 0 2 3 E A R N ING S WE BC A ST F E B R U A RY 1, 2 0 2 3 S K I N