– Delivered 23% Net Sales Growth in Fiscal 2022
–
– Gained Market Share for Third Consecutive
Year –
– Provides Fiscal 2023 Outlook for 10-12% Net
Sales Growth –
e.l.f. Beauty (NYSE: ELF) today announced results for the three
and twelve months ended March 31, 2022.
“Our outstanding results in fiscal 2022 underscore e.l.f.’s core
value proposition and deep connection with our consumers,” said
Tarang Amin, e.l.f. Beauty's Chairman and Chief Executive Officer.
"I am so proud of how our team continues to execute in this dynamic
environment. We grew net sales by 23% year over year while building
market share according to Nielsen. We were the only top 5 color
cosmetics brand to grow sales and share above pre-pandemic levels
by a wide margin. We believe our competitive advantages and
differentiated brand portfolio will continue to fuel our
momentum.”
Fourth Quarter Fiscal 2022 Review
For the three months ended March 31, 2022, compared to the three
months ended March 31, 2021:
- Net sales increased 13% to $105.1 million, primarily
driven by strength in our national and international
retailers.
- Gross margin increased approximately 100 basis points to
64.2%, primarily driven by cost savings, margin accretive mix, and
price increases, partially offset by unfavorable foreign exchange
rates and increased transportation costs.
- Selling, general and administrative expenses
("SG&A") increased $7.5 million to $65.3 million or 62.1%
of net sales. Adjusted SG&A (SG&A excluding the
items identified in the reconciliation table below) was $60.5
million, or 57.5% of net sales. The year over year increase in
SG&A dollars was primarily related to compensation, benefits,
and marketing investments.
- The benefit for income taxes was $0.4 million.
- Net income was $1.6 million on a GAAP basis. Adjusted
net income (net income excluding the items identified in the
reconciliation table below) was $6.9 million.
- Diluted earnings per share were $0.03 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 $0.13.
- Adjusted EBITDA (EBITDA excluding the items identified
in the reconciliation table below) was $12.8 million or 12.2% of
net sales.
Full Year Fiscal 2022 Review
For the twelve months ended March 31, 2022, compared to the
twelve months ended March 31, 2021:
- Net sales increased 23% to $392.2 million, primarily
driven by strength in our national and international
retailers.
- Gross margin decreased approximately 65 basis points to
64.2%, primarily driven by unfavorable foreign exchange rates and
elevated transportation costs. These items were partially offset by
price increases, cost savings and margin accretive mix.
- SG&A increased $27.8 million to $221.9 million or
56.6% of net sales. Adjusted SG&A was $199.8 million or
51.0% of net sales. The year over year increase in SG&A dollars
was primarily due to marketing investments, compensation, and
benefits.
- The provision for income taxes was $3.7
million.
- Net income was $21.8 million on a GAAP basis.
Adjusted net income was $45.2 million.
- Diluted earnings per share were $0.41 on a GAAP basis.
Adjusted diluted earnings per share were $0.84.
- Adjusted EBITDA was $74.7 million or 19.0% of net sales,
up 22% year over year.
Balance Sheet
The Company ended fiscal 2022 with $43.4 million in cash and
cash equivalents and $91.1 million of long-term debt and finance
lease obligations, as compared to $57.8 million in cash and cash
equivalents and $110.3 million of long-term debt and finance lease
obligations at the end of fiscal 2021.
Fiscal 2023 Outlook
The Company is providing the following outlook for fiscal 2023.
When compared to fiscal 2022, the outlook for fiscal 2023 reflects
an expected 10-12% increase in net sales.
“We’re pleased with our exceptional fiscal 2022 results and
believe that we can continue our business momentum into fiscal
2023,” said Mandy Fields, e.l.f. Beauty’s Chief Financial
Officer.
Fiscal 2023 Outlook
Fiscal 2022
Net sales
$432-440 million
$392 million
Adjusted EBITDA
$80.5-82.0 million
$74.7 million
Adjusted effective tax rate
27-28%
20%
Adjusted net income
$43.5-45.5 million
$45.2 million
Adjusted diluted earnings per share
$0.78-0.81
$0.84
Weighted average diluted shares
outstanding
56 million
54 million
Webcast Details
The Company will hold a webcast to discuss the results from its
fourth quarter fiscal 2022 today, May 25, 2022, at 4:30 p.m.
Eastern Time. The webcast will be broadcast live at
https://investor.elfbeauty.com/news-and-events/events. 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 industry
norms, shape culture and connect communities through positivity,
inclusivity and accessibility. Our deep commitment to clean,
cruelty-free beauty with unparalleled quality for the price has
fueled the success of our flagship brand e.l.f. Cosmetics since
2004 and driven our portfolio expansion. Today, our portfolio of
brands includes e.l.f. Cosmetics, e.l.f. SKIN, pioneering
clean-beauty brand Well People and Keys Soulcare, a groundbreaking
lifestyle beauty brand created with Alicia Keys. Our family of
brands is available online, and across leading beauty, mass market
and clean beauty specialty retailers.
Learn more by visiting https://investor.elfbeauty.com.
Note Regarding non-GAAP Financial Measures
This press release includes references to non-GAAP measures,
including adjusted EBITDA, 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 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 costs or gains related to restructuring
of operations, stock-based compensation, loss on extinguishment of
debt and other non-cash and non-recurring costs. Such other
non-cash or non-recurring costs include proxy contest expenses and
other legal settlements, pre-launch costs to develop the Company’s
brand, Keys Soulcare, acquisition-related costs for Well People,
third-party costs related to M&A due diligence, costs related
to the automation of certain warehouse and distribution activities,
and amortization of internal-use software costs related to cloud
applications. Adjusted SG&A excludes costs related to
stock-based compensation and other non-cash and non-recurring
costs. Such other non-cash or non-recurring costs include proxy
contest expenses and other legal settlements, pre-launch costs to
develop the Company’s brand, Keys Soulcare, acquisition-related
costs for Well People, third-party costs related to M&A due
diligence, and costs related to the automation of certain warehouse
and distribution activities. Adjusted effective tax rate is the tax
rate when excluding the pre-tax impact of costs or gains related to
restructuring of operations, stock-based compensation, other
non-cash and non-recurring costs, 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 costs or gains related
to restructuring of operations, stock-based compensation, loss on
extinguishment of debt, other non-cash and non-recurring costs,
amortization of acquired intangible assets and the tax impact of
the foregoing adjustments. Such other non-cash or non-recurring
costs include proxy contest expenses, pre-launch costs to develop
the Company’s brand, Keys Soulcare, acquisition-related costs for
Well People, and costs related to the automation of certain
warehouse and distribution activities.
With respect to the Company’s expectations under “Fiscal 2023
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 2023 under
“Fiscal 2023 Outlook” above, those statements that the Company
continues to execute in a dynamic environment, those statements
that the Company believes its competitive advantages and
differentiated brand portfolio will continue to fuel its momentum,
and those statements that the Company believes it can continue its
business momentum into fiscal 2023. 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 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; the Company’s
ability to effectively manage its SG&A and other expenses; and
the uncertainty regarding the impact of the COVID-19 pandemic.
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.
e.l.f. Beauty, Inc. and
subsidiaries
Condensed consolidated
statements of operations and comprehensive income (loss)
(unaudited)
(in thousands, except share and
per share data)
Three months ended March
31,
Twelve months ended March
31,
2022
2021
2022
2021
Net sales
$
105,135
$
92,671
$
392,155
$
318,110
Cost of sales
37,635
34,071
140,423
111,912
Gross profit
67,500
58,600
251,732
206,198
Selling, general and administrative
expenses
65,332
57,827
221,912
194,157
Restructuring expense (income)
(18
)
2,641
50
2,641
Operating income (loss)
2,186
(1,868
)
29,770
9,400
Other expense, net
(484
)
(54
)
(1,438
)
(1,620
)
Interest expense, net
(529
)
(862
)
(2,441
)
(4,090
)
Loss on extinguishment of debt
—
—
(460
)
—
Income (loss) before provision for income
taxes
1,173
(2,784
)
25,431
3,690
Income tax benefit (provision)
383
2,760
(3,661
)
2,542
Net income (loss)
$
1,556
$
(24
)
$
21,770
$
6,232
Comprehensive income (loss)
$
1,556
$
(24
)
$
21,770
$
6,232
Net income per share:
Basic
$
0.03
$
—
$
0.43
$
0.13
Diluted
$
0.03
$
—
$
0.41
$
0.12
Weighted average shares outstanding:
Basic
51,273,325
49,986,296
50,940,808
49,377,410
Diluted
53,778,530
52,960,699
53,654,303
51,994,145
e.l.f. Beauty, Inc. and
subsidiaries
Condensed consolidated balance
sheets
(unaudited)
(in thousands, except share and
per share data)
March 31, 2022
March 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
43,353
$
57,768
Accounts receivable, net
45,567
40,185
Inventory, net
84,498
56,810
Prepaid expenses and other current
assets
19,611
15,381
Total current assets
193,029
170,144
Property and equipment, net
10,577
13,770
Intangible assets, net
86,163
94,286
Goodwill
171,620
171,620
Investments
2,875
2,875
Other assets
30,368
34,698
Total assets
$
494,632
$
487,393
Liabilities and stockholders'
equity
Current liabilities:
Current portion of long-term debt and
capital lease obligations
$
5,786
$
16,281
Accounts payable
19,227
15,699
Accrued expenses and other current
liabilities
40,004
41,351
Total current liabilities
65,017
73,331
Long-term debt and finance lease
obligations
91,080
110,255
Deferred tax liabilities
9,593
13,479
Long-term operating lease obligations
15,744
20,084
Other long-term liabilities
769
598
Total liabilities
182,203
217,747
Commitments and contingencies
Stockholders' equity:
Common stock, par value of $0.01 per
share; 250,000,000 shares authorized as of March 31, 2022 and March
31, 2021; 52,243,764 and 51,590,830 shares issued and outstanding
as of March 31, 2022 and March 31, 2021, respectively
515
504
Additional paid-in capital
795,443
774,441
Accumulated deficit
(483,529
)
(505,299
)
Total stockholders' equity
312,429
269,646
Total liabilities and stockholders'
equity
$
494,632
$
487,393
e.l.f. Beauty, Inc. and
subsidiaries
Condensed consolidated
statements of cash flows
(unaudited)
(in thousands)
Twelve months ended March
31,
2022
2021
Cash flows from operating
activities:
Net income
$
21,770
$
6,232
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
27,083
25,179
Restructuring expense
50
2,641
Stock-based compensation expense
19,646
19,682
Amortization of debt issuance costs and
discount on debt
394
847
Deferred income taxes
(3,701
)
(8,584
)
Loss on extinguishment of debt
460
—
Other, net
496
383
Changes in operating assets and
liabilities:
Accounts receivable
(5,597
)
(10,529
)
Inventories
(27,655
)
(10,937
)
Prepaid expenses and other assets
(10,555
)
(9,659
)
Accounts payable and accrued expenses
1,498
17,472
Other liabilities
(4,376
)
(3,252
)
Net cash provided by operating
activities
19,513
29,475
Cash flows from investing
activities:
Purchase of property and equipment
(4,818
)
(6,474
)
Net cash used in investing activities
(4,818
)
(6,474
)
Cash flows from financing
activities:
Proceeds from revolving line of credit
26,480
20,000
Repayment of revolving line of credit
(26,480
)
(20,000
)
Proceeds from long-term debt
25,581
—
Repayment of long-term debt
(54,525
)
(11,756
)
Debt issuance costs paid
(1,064
)
(334
)
Cash received from issuance of common
stock
1,677
1,503
Other, net
(779
)
(813
)
Net cash used in financing activities
(29,110
)
(11,400
)
Net (decrease) increase in cash and cash
equivalents
(14,415
)
11,601
Cash and cash equivalents - beginning of
period
57,768
46,167
Cash and cash equivalents - end of
period
$
43,353
$
57,768
e.l.f. Beauty, Inc. and
subsidiaries
Reconciliation of GAAP net
income to non-GAAP adjusted EBITDA
(unaudited)
(in thousands)
Three months ended March
31,
Twelve months ended March
31,
2022
2021
2022
2021
Net income (loss)
$
1,556
$
(24
)
$
21,770
$
6,232
Interest expense, net
529
862
2,441
4,090
Income (benefit) tax provision
(383
)
(2,760
)
3,661
(2,542
)
Depreciation and amortization
5,694
5,276
22,403
21,078
EBITDA
$
7,396
$
3,354
$
50,275
$
28,858
Restructuring (income) expense (a)
(18
)
2,641
50
2,641
Stock-based compensation
5,048
4,642
19,646
19,682
Loss on extinguishment of debt (b)
—
—
460
—
Other non-cash and non-recurring (c)
386
2,266
4,256
9,897
Adjusted EBITDA
$
12,812
$
12,903
$
74,687
$
61,078
(a) Restructuring (income) expense during
the three and twelve months ended March 31, 2022 relates to the
closure of the Company’s manufacturing plant, including impairment
of assets, the disposal of excess inventory on hand at the plant,
the termination of manufacturing employees and sub lease
income.
(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 various non-cash or
non-recurring items, including proxy contest expenses and other
legal settlements, pre-launch costs to develop the Company’s brand,
Keys Soulcare, acquisition-related costs for Well People,
third-party costs related to M&A due diligence, costs related
to the automation of certain warehouse and distribution activities,
and amortization of internal-use software costs related to cloud
applications.
e.l.f. Beauty, Inc. and
subsidiaries
Reconciliation of GAAP
SG&A to non-GAAP adjusted SG&A
(unaudited)
(in thousands)
Three months ended March
31,
Twelve months ended March
31,
2022
2021
2022
2021
Selling, general, and administrative
expenses
$
65,332
$
57,827
$
221,912
$
194,157
Stock-based compensation
(4,964
)
(4,458
)
(19,336
)
(19,493
)
Other non-cash and non-recurring (a)
83
(2,094
)
(2,765
)
(9,544
)
Adjusted selling, general, and
administrative expenses
$
60,451
$
51,275
$
199,811
$
165,120
(a) Represents various non-cash or
non-recurring items, including proxy contest expenses and other
legal settlements, pre-launch costs to develop the Company’s brand,
Keys Soulcare, acquisition-related costs for Well People,
third-party costs related to M&A due diligence, and costs
related to the automation of certain warehouse and distribution
activities.
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 March
31,
Twelve months ended March
31,
2022
2021
2022
2021
Net income (loss)
$
1,556
$
(24
)
$
21,770
$
6,232
Restructuring (income) expense (a)
(18
)
2,641
50
2,641
Stock-based compensation
5,048
4,642
19,646
19,682
Other non-cash and non-recurring (b)
(83
)
2,094
2,765
9,544
Loss on extinguishment of debt (c)
—
—
460
—
Amortization of acquired intangible assets
(d)
2,030
2,030
8,123
8,123
Tax Impact (e)
(1,604
)
(2,762
)
(7,596
)
(9,434
)
Adjusted net income
$
6,929
$
8,621
$
45,218
$
36,788
Weighted average number of shares
outstanding - diluted
53,778,530
52,960,699
53,654,303
51,994,145
Adjusted diluted earnings per share
$
0.13
$
0.16
$
0.84
$
0.71
(a) Restructuring (income) expense during
the three and twelve months ended March 31, 2022 relates to the
closure of the Company’s manufacturing plant, including impairment
of assets, the disposal of excess inventory on hand at the plant,
the termination of manufacturing employees and sub lease
income.
(b) Represents various non-cash or
non-recurring items, including proxy contest expenses and other
legal settlements, pre-launch costs to develop the Company’s brand,
Keys Soulcare, acquisition-related costs for Well People,
third-party costs related to M&A due diligence, and costs
related to the automation of certain warehouse and distribution
activities.
(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,
trademarks and favorable leases.
(e) Represents the tax impact of the above
adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220525005687/en/
Investors: KC Katten VP, Corporate Development & Investor
Relations, e.l.f. Beauty KKatten@elfbeauty.com
Media: Melinda Fried Head of Corporate Communications, e.l.f.
Beauty mfried@elfbeauty.com
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