Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 6, 2024

e.l.f. Beauty, Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-37873

46-4464131

(State or other jurisdiction
of incorporation)

(Commission
File Number)

(IRS Employer
Identification Number)

570 10th Street

Oakland, CA 94607

(Address of principal executive offices, including Zip Code)

Registrant’s telephone number, including area code: (510) 778-7787

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ELF	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02			Results of Operations and Financial Condition.

On February 6, 2024, e.l.f. Beauty, Inc. (the “Company”) issued a press release announcing its financial results for the three and nine months ended December 31, 2023, a copy of which is attached hereto as Exhibit 99.1.

The information in this Item 2.02 of Current Report on Form 8-K and Exhibit 99.1 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Securities and Exchange Commission’s rules and regulations, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such a filing.


Item 9.01			Exhibits.

(d) Exhibits.


Exhibit No.						Description

99.1						Press release dated February 6, 2024
104						Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

e.l.f. Beauty, Inc.

Date: February 6, 2024

By:

/s/ Mandy Fields

Mandy Fields

Chief Financial Officer

Exhibit 99.1

e.l.f. Beauty Announces Third Quarter Fiscal 2024 Results

– Delivered 85% Net Sales Growth –

– e.l.f. Cosmetics Gained 305 Basis Points of Market Share –

– Raises Fiscal 2024 Outlook –

OAKLAND, California; February 6, 2024 — e.l.f. Beauty (NYSE: ELF) today announced results for the three and nine months ended December 31, 2023.

“Our vision is to create a different kind of beauty company and you can see that in the exceptional, consistent, category-leading growth we’ve delivered,” said Tarang Amin, e.l.f. Beauty’s Chairman and Chief Executive Officer. “In Q3, we grew net sales by 85% and market share by 305 basis points, marking our 20th consecutive quarter of growth in each. I’m extremely proud of our team and the progress we continue to make across color cosmetics, skin care and internationally.”

Three Months Ended December 31, 2023 Results

For the three months ended December 31, 2023, compared to the three months ended December 31, 2022:

•Net sales increased 85% to $270.9 million, primarily driven by strength in both retailer and e-commerce channels.

•Gross margin increased approximately 350 basis points to 71%, primarily driven by favorable foreign exchange impacts, improved transportation costs, cost savings and mix.

•Selling, general and administrative (“SG&A”) expenses increased $84.7 million to $160.1 million, or 59% of net sales. Adjusted SG&A (SG&A excluding the items identified in the reconciliation table below) increased $79.1 million to $147.3 million, or 54% of net sales. The increase in SG&A dollars was primarily due to an increase in marketing and digital spend, compensation and benefits, operations costs, retail fixturing and visual merchandising costs, depreciation and amortization and professional fees.

•Net income was $26.9 million on a GAAP basis. Adjusted net income (net income excluding the items identified in the reconciliation table below) was $42.9 million.

•Diluted earnings per share were $0.46 on a GAAP basis. Adjusted diluted earnings per share (diluted earnings per share calculated with adjusted net income excluding the items identified in the reconciliation table below) were $0.74.

•Adjusted EBITDA (EBITDA excluding the items identified in the reconciliation table below) was $59.1 million, or 22% of net sales, up 61% year over year.

Nine Months Ended December 31, 2023 Results

For the nine months ended December 31, 2023, compared to the nine months ended December 31, 2022:

•Net sales increased 80% to $702.8 million, primarily driven by strength in both retailer and e-commerce channels.

•Gross margin increased approximately 400 basis points to 71%, primarily driven by favorable foreign exchange impacts, cost savings and mix, improved transportation costs, and lower inventory adjustments, partially offset by costs associated with retailer activity and space expansion.

•SG&A increased $163.1 million to $364.2 million, or 52% of net sales. Adjusted SG&A increased $150.2 million to $329.5 million, or 47% of net sales. The increase in SG&A dollars was primarily due to an increase in marketing and digital spend, compensation and benefits, operations costs, retail fixturing and visual merchandising costs, depreciation and amortization and professional fees.

•Net income was $113.1 million on a GAAP basis. Adjusted net income was $152.9 million.

•Diluted earnings per share were $1.97 on a GAAP basis. Adjusted diluted earnings per share were $2.66.

•Adjusted EBITDA was $193.8 million, or 28% of net sales, up 103% year over year.

Balance Sheet

As of December 31, 2023, the Company had $72.7 million in cash and cash equivalents and $164.4 million of long-term debt and finance lease obligations, as compared to $87.0 million in cash and cash equivalents and $62.2 million of long-term debt and finance lease obligations as of December 31, 2022.

Naturium Acquisition

On October 4, 2023, the Company closed the acquisition of Naturium, a fast-growing, high performance skin care brand, for $333.0 million in a combination of cash and Company stock. The acquisition furthers the Company’s mission to make the best of beauty accessible to every eye, lip, face and skin concern.

Updated Fiscal 2024 Outlook

The Company is providing the following updated outlook for fiscal 2024. The updated outlook for fiscal 2024 reflects an expected 69-71% year-over-year increase in net sales, as compared to an expected 55-57% increase previously.


	Updated Fiscal 2024 Outlook		Previous Fiscal 2024 Outlook
Net sales	$980-990 million		$896-906 million
Adjusted EBITDA	$218-220 million		$197-200 million
Adjusted effective tax rate	14	%	17-18%
Adjusted net income	$164-166 million		$144-146 million
Adjusted diluted earnings per share	$2.84-2.87		$2.47-2.50
Fiscal year ending diluted shares outstanding	58 million		58 million

Webcast Details

The Company will hold a webcast to discuss the results from its third quarter fiscal 2024 today, February 6, 2024, at 4:30 p.m. Eastern Time. The webcast will be broadcast live at https://investor.elfbeauty.com/news-and-events/events-and-presentations. For those unable to listen to the live broadcast, an archived version will be available at the same location.

About e.l.f. Beauty

e.l.f. Beauty, Inc. builds brands designed to disrupt norms, shape culture and connect communities through positivity, inclusivity and accessibility. A digitally disruptive brand from the start, we launched in 2004 selling premium-quality makeup for $1 online. Today, we have five visionary, purpose-driven brands, all of which make the best of beauty accessible to every eye, lip, face and skin concern. Our brand portfolio includes e.l.f. Cosmetics, e.l.f. SKIN, Naturium, Well People and Keys Soulcare. With a focus on clean, cruelty free and vegan products, we are also the first beauty company with a Fair Trade™ certified manufacturing facility. e.l.f. Beauty brands are sold online and at leading beauty, mass market, and specialty retailers in the U.S. and internationally.

Learn more at https://www.elfbeauty.com/

Note Regarding non-GAAP Financial Measures

This press release includes references to non-GAAP measures, including adjusted EBITDA, adjusted SG&A, adjusted net income and adjusted diluted earnings per share. The Company presents these non-GAAP measures because its management uses them as supplemental measures in assessing its operating performance, and believes they are helpful to investors, securities analysts and other interested parties in evaluating the Company’s performance. The non-GAAP measures included in this press release are not measurements of financial performance under GAAP and they should not be considered as alternatives to or substitutes for measures of performance derived in accordance with GAAP. In addition, these non-GAAP measures should not be construed as an inference that the Company’s future results will be unaffected by unusual or non-recurring items. These non-GAAP measures have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing the Company’s results as reported under GAAP. The Company’s definitions and calculations of these non-GAAP measures are not necessarily comparable to other similarly titled measures used by other companies due to different methods of calculation.

Adjusted EBITDA excludes expense or income related to stock-based compensation, impairment of equity investment, loss on extinguishment of debt and other non-cash and non-recurring items. Such other non-cash or non-recurring items include amortization of internal-use software costs related to cloud applications, costs related to the acquisition of Naturium, and cloud computing ERP implementation costs.

Adjusted SG&A excludes expense related to stock-based compensation and other non-recurring items. Such other non-recurring items includes other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of Naturium.

Adjusted effective tax rate is the tax rate when excluding the pre-tax impact of expense or income related to stock-based compensation, other non-cash and non-recurring items, impairment of equity investment, loss on extinguishment of debt, amortization of acquired intangible assets, as well as the related tax impact for these items, calculated utilizing the statutory rate for where the impact was incurred.

Adjusted net income excludes expense or income related to stock-based compensation, other non-recurring items, impairment of equity investment, loss on extinguishment of debt, amortization of acquired intangible assets and the tax impact of the foregoing adjustments. Such other non-recurring items, which include other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of Naturium.

With respect to the Company’s expectations under “Updated Fiscal 2024 Outlook” above, the Company is not able to provide a quantitative reconciliation of the adjusted EBITDA, adjusted net income and adjusted diluted earnings per share guidance non-GAAP measures to the corresponding net income and diluted earnings per share GAAP measures without unreasonable efforts. The Company cannot provide meaningful estimates of the non-recurring charges and credits excluded from these non-GAAP measures due to the forward-looking nature of these estimates and their inherent variability and uncertainty. For the same reasons, the Company is unable to address the probable significance of the unavailable information.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, including those statements relating to the Company's outlook for fiscal 2024 under “Updated Fiscal 2024 Outlook” above. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, actual results and the timing of selected events may differ materially from those expectations. Factors that could cause actual results to differ materially from those in the forward looking statements include, among other things, the risks and uncertainties that are described in the Company's most recent Annual Report on Form 10-K, as updated from time to time in the Company's SEC filings, as well as the Company’s ability to effectively compete with other beauty companies; the Company’s ability to successfully introduce new products; the Company's ability to successfully address any difficulties and challenges encountered in connection with its acquisition of Naturium, including the integration of Naturium's business with the Company's business; the Company’s ability to attract new retail customers and/or expand business with its existing retail customers; the Company’s ability to optimize shelf space at its key retail customers; the loss of any of the Company’s key retail customers or if the general business performance of its key retail customers declines; and the Company’s ability to effectively manage its SG&A and other expenses. Potential investors are urged to consider these factors carefully in evaluating the forward-looking statements. These forward-looking statements speak only as of the date hereof. Except as required by law, the Company assumes no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Investors:

Media:

KC Katten

Melinda Fried

VP, Corporate Development & Investor Relations, e.l.f. Beauty

kkatten@elfbeauty.com

Head of Corporate Communications, e.l.f. Beauty

mfried@elfbeauty.com

e.l.f. Beauty, Inc. and subsidiaries

Condensed consolidated statements of operations

(unaudited)

(in thousands, except share and per share data)


	Three months ended December 31,				Nine months ended December 31,
	2023		2022		2023		2022
Net sales	$	270,943	$	146,537	$	702,789	$	391,487
Cost of sales	78,986		47,812		205,895		130,217
Gross profit	191,957		98,725		496,894		261,270
Selling, general and administrative expenses	160,121		75,434		364,246		201,172
Operating income	31,836		23,291		132,648		60,098
Other income (expense), net	2,565		730		1,902		(2,195)
Impairment of equity investment	—		—		(1,720)		—
Interest expense, net	(3,985)		(463)		(3,021)		(1,912)
Loss on extinguishment of debt	—		(176)		—		(176)
Income before provision for income taxes	30,416		23,382		129,809		55,815
Income tax provision	(3,528)		(4,277)		(16,673)		(10,531)
Net income	$	26,888	$	19,105	$	113,136	$	45,284

Net income per share:
Basic	$	0.49	$	0.36	$	2.08	$	0.87
Diluted	$	0.46	$	0.34	$	1.97	$	0.82
Weighted average shares outstanding:
Basic	55,140,887		52,707,406		54,503,518		52,239,761
Diluted	58,030,115		55,840,137		57,550,094		54,906,065

e.l.f. Beauty, Inc. and subsidiaries

Condensed consolidated balance sheets

(unaudited)

(in thousands, except share and per share data)


	December 31, 2023		March 31, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	72,705	$	120,778	$	87,021
Accounts receivable, net	121,061		67,928		66,237
Inventory, net	204,504		81,323		81,250
Prepaid expenses and other current assets	56,630		33,296		28,382
Total current assets	454,900		303,325		262,890
Property and equipment, net	12,805		7,874		8,726
Intangible assets, net	230,658		78,041		80,071
Goodwill	340,165		171,620		171,620
Investments	1,155		2,875		2,875
Other assets	68,601		31,866		29,743
Total assets	$	1,108,284	$	595,601	$	555,925

Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt and capital lease obligations	$	100,394	$	5,575	$	5,690
Accounts payable	72,917		31,427		32,049
Accrued expenses and other current liabilities	129,628		70,974		49,798

Total current liabilities	302,939		107,976		87,537
Long-term debt and finance lease obligations	164,403		60,881		62,177
Deferred tax liabilities	4,281		3,742		7,783
Long-term operating lease obligations	21,720		11,201		12,329
Other long-term liabilities	717		784		795
Total liabilities	494,060		184,584		170,621

Stockholders' equity:

Common stock, par value of $0.01 per share; 250,000,000 shares authorized as of December 31, 2023, March 31, 2023 and December 31, 2022; 55,412,234, 53,770,482 and 53,165,462 shares issued and outstanding as of December 31, 2023, March 31, 2023 and December 31, 2022, respectively	553		535		528
Additional paid-in capital	922,592		832,481		823,021
Accumulated other comprehensive loss	(58)		—		—
Accumulated deficit	(308,863)		(421,999)		(438,245)

Total stockholders' equity	614,224		411,017		385,304
Total liabilities and stockholders' equity	$	1,108,284	$	595,601	$	555,925

e.l.f. Beauty, Inc. and subsidiaries

Condensed consolidated statements of cash flows

(unaudited)

(in thousands)


		Nine months ended December 31,
		2023		2022
Cash flows from operating activities:
Net income		$	113,136	$	45,284
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		24,247		16,496
Stock-based compensation expense		29,459		21,833
Amortization of debt issuance costs and discount on debt		290		271
Deferred income taxes		(1,684)		(1,819)
Impairment of equity investment		1,720		—
Acquisition-related seller expenses		(10,549)		—
Loss on extinguishment of debt	—	—		176

Other, net		27		(1)
Changes in operating assets and liabilities:
Accounts receivable		(45,878)		(20,620)
Inventory		(106,898)		3,248
Prepaid expenses and other assets		(50,696)		(15,223)
Accounts payable and accrued expenses		84,733		22,610
Other liabilities		(3,768)		(3,254)
Net cash provided by operating activities		34,139		69,001

Cash flows from investing activities:
Acquisition, net of cash acquired		(274,973)		—
Purchase of property and equipment		(5,984)		(1,647)


Net cash used in investing activities		(280,957)		(1,647)

Cash flows from financing activities:
Proceeds from revolving line of credit		89,500		—

Proceeds from long-term debt		115,000		—
Repayment of long-term debt		(5,188)		(28,750)
Debt issuance costs paid		(665)		—

Cash received from issuance of common stock		2,893		5,652




Other, net		(489)		(588)
Net cash provided by (used in) financing activities		201,051		(23,686)

Effect of exchange rate changes on cash and cash equivalents		(56)		—

Net (decrease) increase in cash, cash equivalents and restricted cash		(45,823)		43,668
Cash, cash equivalents and restricted cash - beginning of period		120,778		43,353
Cash, cash equivalents and restricted cash - end of period		$	74,955	$	87,021

e.l.f. Beauty, Inc. and subsidiaries

Reconciliation of GAAP net income to non-GAAP adjusted EBITDA

(unaudited)

(in thousands)


	Three months ended December 31,				Nine months ended December 31,
	2023		2022		2023		2022
Net income	$	26,888	$	19,105	$	113,136	$	45,284
Interest expense, net	3,985		463		3,021		1,912
Income tax provision	3,528		4,277		16,673		10,531
Depreciation and amortization	10,272		4,386		20,445		13,399
EBITDA	$	44,673	$	28,231	$	153,275	$	71,126
Stock-based compensation	11,042		7,257		29,459		21,833
Impairment of equity investment (a)	—		—		1,720		—

Loss on extinguishment of debt (b)	—		176		—		176

Other non-cash and non-recurring items (c)	3,378		938		9,357		2,403

Adjusted EBITDA	$	59,093	$	36,602	$	193,811	$	95,538

(a) Represents an impairment of equity investment recorded during the nine months ended December 31, 2023.

(b) Loss on extinguishment of debt includes the write-off of existing debt issuance costs and certain fees paid related to the

amended credit agreement.

(c) Represents other non-cash or non-recurring items, which include amortization of internal-use software costs related to

cloud applications, costs related to the acquisition of Naturium, and cloud computing ERP implementation costs.

e.l.f. Beauty, Inc. and subsidiaries

Reconciliation of GAAP SG&A to non-GAAP adjusted SG&A

(unaudited)

(in thousands)


	Three months ended December 31,				Nine months ended December 31,
	2023		2022		2023		2022
Selling, general and administrative expenses	$	160,121	$	75,434	$	364,246	$	201,172


Stock-based compensation	(11,051)		(7,239)		(29,464)		(21,810)


Other non-recurring items (a)	(1,726)		—		(5,267)		—
Adjusted selling, general and administrative expenses	$	147,344	$	68,195	$	329,515	$	179,362

(a) Represents other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of

Naturium.

e.l.f. Beauty, Inc. and subsidiaries

Reconciliation of GAAP net income to non-GAAP adjusted net income

(unaudited)

(in thousands, except share and per share data)


	Three months ended December 31,				Nine months ended December 31,
	2023		2022		2023		2022
Net income	$	26,888	$	19,105	$	113,136	$	45,284


Stock-based compensation	11,042		7,257		29,459		21,833



Other non-recurring items (a)	2,056		—		5,597		—
Impairment of equity investment (b)	—		—		1,720		—

Loss on extinguishment of debt (c)	—		176		—		176
Amortization of acquired intangible assets (d)	6,128		2,031		10,183		6,093

Tax Impact (e)	(3,219)		(1,767)		(7,174)		(5,402)
Adjusted net income	$	42,895	$	26,802	$	152,921	$	67,984

Weighted average number of shares outstanding – diluted	58,030,115		55,840,137		57,550,094		54,906,065
Adjusted diluted earnings per share	$	0.74	$	0.48	$	2.66	$	1.24

(a) Represents other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of

Naturium.

(b) Represents an impairment of equity investment recorded during the nine months ended December 31, 2023.

(c) Loss on extinguishment of debt includes the write-off of existing debt issuance costs and certain fees paid related to the

amended credit agreement.

(d) Represents amortization expense of acquired intangible assets consisting of customer relationships and trademarks.

(e) Represents the tax impact of the above adjustments.

Cover Page	Feb. 06, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Feb. 06, 2024
Entity Registrant Name	e.l.f. Beauty, Inc.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-37873
Entity Tax Identification Number	46-4464131
Entity Address, Address Line One	570 10th Street
Entity Address, City or Town	Oakland
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94607
City Area Code	510
Local Phone Number	778-7787
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	ELF
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Central Index Key	0001600033
Amendment Flag	false