e.l.f. Beauty Announces Third Quarter Fiscal 2021 Results

Rhea-AI Summary

e.l.f. Beauty (ELF) announced its Q3 results for the period ending December 31, 2020, reporting a 10% net sales increase to $88.6 million compared to $80.8 million in Q3 2019. The growth was driven by e-commerce and retail strength. However, net income fell to $4.3 million from $8.0 million year-over-year. For the nine months, net sales rose 8% to $225.4 million, with an updated fiscal 2021 outlook predicting a 7-9% sales increase. Gross margins showed mixed trends, and SG&A costs rose significantly due to increased marketing and digital investments.

Positive

• Net sales increased 10% to $88.6 million in Q3 2020.
• E-commerce and international sales contributed to growth.
• Fiscal 2021 outlook revised to a 7-9% increase in net sales.

Negative

• Net income decreased to $4.3 million from $8.0 million in Q3 2019.
• SG&A expenses rose to $50.8 million, 57% of net sales, up from 49%.
• Adjusted EBITDA decreased by 14% to $18.3 million in Q3 2020.

e.l.f. Beauty (NYSE: ELF) today announced results for the three and nine months ended December 31, 2020.

“Our core value proposition and product innovation continue to resonate with consumers,” said Tarang Amin, e.l.f. Beauty's Chairman and Chief Executive Officer. “Of the top five color cosmetics brands in the U.S., e.l.f. grew the most share in the quarter. We also advanced our transformation to a multi-brand portfolio with the launch of our Keys Soulcare skincare collection.”

“I’m proud of the e.l.f. Beauty team for delivering eight consecutive quarters of net sales growth. Our brand building efforts and digital focus fueled our growth before and during the pandemic, and we believe position us well for the future,” added Amin.

Three Months Ended December 31, 2020 Results

Net sales increased 10%, or $7.8 million, to $88.6 million, as compared to $80.8 million in the three months ended December 31, 2019. The increase was driven by strength in e-commerce, international, and our national retailers.

Gross margin decreased 50 basis points to 64%, as compared to 65% in the three months ended December 31, 2019. Gross margin benefited from margin accretive product mix and cost savings, a mix shift to elfcosmetics.com, and to a lesser degree, a favorable foreign exchange rate impact. Offsetting these benefits were certain costs related to retailer activity and space expansion.

Selling, general and administrative expenses ("SG&A") were $50.8 million, or 57% of net sales, as compared to $39.6 million, or 49% of net sales in the three months ended December 31, 2019. Adjusted SG&A (SG&A excluding the items identified in the reconciliation table below) was $43.3 million, or 49% of net sales, as compared to $35.8 million, or 44% of net sales in the three months ended December 31, 2019. The increase was primarily due to investments in marketing and digital, headcount costs from building out the Company's marketing, digital and innovation capabilities, and increased operational costs driven by the increase in e-commerce sales.

The provision for income taxes was $0.5 million, as compared to a provision of $3.0 million in the three months ended December 31, 2019. The change was primarily driven by a decrease in income before taxes of $6.2 million and an increase in discrete tax benefit of $1.1 million, primarily related to stock-based compensation.

Net income was $4.3 million, or $0.08 per diluted share, as compared to net income of $8.0 million, or $0.16 per diluted share in the three months ended December 31, 2019.

Adjusted net income (net income excluding the items identified in the reconciliation table below) was $11.6 million, or $0.22 per diluted share, as compared to adjusted net income of $12.2 million, or $0.24 per diluted share in the three months ended December 31, 2019.

Adjusted EBITDA (EBITDA excluding the items identified in the reconciliation table below) decreased 14% to $18.3 million from $21.4 million in the three months ended December 31, 2019.

Nine Months Ended December 31, 2020 Results

Net sales increased 8%, or $17.3 million, to $225.4 million, as compared to $208.1 million in the nine months ended December 31, 2019. The increase was driven by strength in e-commerce, international, and our national retailers.

Gross margin increased 150 basis points to 65%, as compared to 64% in the nine months ended December 31, 2019. This increase was primarily driven by a combination of margin accretive product mix and cost savings, price increases implemented in Summer 2019, a favorable foreign exchange impact, and a shift in sales mix to elfcosmetics.com, partially offset by the impact of tariffs on goods imported from China and certain costs related to retailer reset activity and space expansion.

SG&A was $136.3 million, or 60% of net sales, as compared to $110.1 million, or 53% of net sales in the nine months ended December 31, 2019. Adjusted SG&A was $113.7 million, or 50% of net sales, as compared to $97.8 million, or 47% of net sales in the nine months ended December 31, 2019. The increase was primarily due to increased headcount costs from building out the Company's marketing, digital and innovation capabilities, investments in marketing and digital, proxy contest costs, and increased operational costs driven by the increase in e-commerce sales.

The provision for income taxes was $0.2 million, as compared to a provision of $6.4 million in the nine months ended December 31, 2019. The change was primarily driven by a decrease in income before taxes of $18.1 million and an increase in discrete tax benefit of $1.8 million, primarily related to stock-based compensation.

Net income was $6.3 million, or $0.12 per diluted share, as compared to net income of $18.2 million, or $0.36 per diluted share, in the nine months ended December 31, 2019.

Adjusted net income was $28.3 million, or $0.55 per diluted share, as compared to adjusted net income of $26.8 million, or $0.53 per diluted share, in the nine months ended December 31, 2019.

Adjusted EBITDA decreased 5% to $48.2 million from $50.9 million in the nine months ended December 31, 2019.

Balance Sheet

As of December 31, 2020, the Company had $35.4 million in cash and cash equivalents, as compared to $74.7 million as of December 31, 2019. As of December 31, 2020, long-term debt and finance lease obligations totaled $114.4 million, as compared to $129.2 million as of December 31, 2019.

Fiscal 2021 Outlook

The Company is providing the following updated outlook for fiscal 2021. When compared to net sales in fiscal 2020, the updated outlook reflects an expected 7-9% increase in net sales in fiscal 2021, as compared to 5-7% previously.

	New Fiscal 2021 Outlook	Original Fiscal 2021 Outlook
Net sales	$304-308 million	$297-303 million
Adjusted EBITDA	$59-60 million	$57-60 million
Adjusted net income	$33-34 million	$31-33 million
Adjusted diluted EPS	$0.63-0.64	$0.59-0.63

Webcast Details

The Company will hold a webcast to discuss the results from its third quarter fiscal 2021 today, February 3, 2021, at 4:30 p.m. Eastern Time. The webcast will be broadcasted 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 stands with every eye, lip, face and paw. This deep commitment to inclusive, accessible, cruelty-free beauty has fueled the success of our namesake e.l.f. Cosmetics brand since 2004. With the addition of pioneering clean-beauty brand W3LL PEOPLE and launch of the lifestyle beauty brand Keys Soulcare created with Alicia Keys, we continue to strategically expand our portfolio with brands that support our purpose and values. Our family of brands is available online, and across leading beauty, mass-market, and clean beauty specialty retailers.

Learn more by visiting 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 EPS. 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 and other non-cash and non-recurring costs. Such other non-cash or non-recurring costs include proxy contest expenses, pre-launch costs to develop the Company’s first new brand, Keys Soulcare, acquisition-related costs for W3LL PEOPLE, and costs related to the automation of certain warehouse and distribution activities. 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, pre-launch costs to develop the Company’s first new brand, Keys Soulcare, acquisition-related costs for W3LL PEOPLE, and costs related to the automation of certain warehouse and distribution activities. Adjusted net income excludes costs or gains related to restructuring of operations, stock-based compensation, 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 first new brand, Keys Soulcare, acquisition-related costs for W3LL PEOPLE, and costs related to the automation of certain warehouse and distribution activities.

With respect to the Company’s expectations under “Fiscal 2021 Outlook” above, the Company is not able to provide a quantitative reconciliation of the adjusted EBITDA, adjusted net income and adjusted diluted EPS guidance non-GAAP measures to the corresponding net income and diluted EPS 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 2021 under “Fiscal 2021 Outlook” above and the Company’s belief that the Company’s brand building efforts and digital focus position the Company well for the future. 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
(unaudited)
(in thousands, except share and per share data)
		Three months ended December 31,								Nine months ended December 31,
		2020				2019				2020				2019
Net sales		$	88,562			$	80,760			$	225,439			$	208,139
Cost of sales		31,443				28,240				77,841				75,080
Gross profit		57,119				52,520				147,598				133,059
Selling, general and administrative expenses		50,828				39,632				136,330				110,131
Restructuring expense (income)		—				8				—				(5,982		)
Operating income		6,291				12,880				11,268				28,910
Other (expense) income, net		(677		)		(335		)		(1,566		)		602
Interest expense, net		(855		)		(1,560		)		(3,228		)		(4,920		)
Income before provision for income taxes		4,759				10,985				6,474				24,592
Income tax provision		(462		)		(2,983		)		(218		)		(6,367		)
Net income		$	4,297			$	8,002			$	6,256			$	18,225
Comprehensive income		$	4,297			$	8,002			$	6,256			$	18,225
Net income per share:
Basic		$	0.09			$	0.16			$	0.13			$	0.38
Diluted		$	0.08			$	0.16			$	0.12			$	0.36
Weighted average shares outstanding:
Basic			49,459,837				48,525,904				49,178,138				48,430,871
Diluted		52,335,821				50,966,550				51,675,651				50,741,492

e.l.f. Beauty, Inc. and subsidiaries
Condensed consolidated balance sheets
(unaudited)
(in thousands, except share and per share data)
		December 31, 2020				March 31, 2020				December 31, 2019
Assets
Current assets:
Cash and cash equivalents		$	35,439			$	46,167			$	74,740
Accounts receivable, net		44,555				29,721				35,082
Inventory, net		68,567				46,209				48,382
Prepaid expenses and other current assets		11,728				10,263				8,054
Total current assets		160,289				132,360				166,258
Property and equipment, net		16,790				17,171				16,487
Intangible assets, net		96,317				102,410				91,893
Goodwill		171,620				171,321				157,264
Investments		2,875				2,875				2,875
Other assets		33,014				26,967				21,474
Total assets		$	480,905			$	453,104			$	456,251
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt and capital lease obligations		$	15,250			$	12,568			$	11,939
Accounts payable		20,108				12,390				19,589
Accrued expenses and other current liabilities		31,322				26,165				29,767
Total current liabilities		66,680				51,123				61,295
Long-term debt and finance lease obligations		114,421				126,088				129,236
Deferred tax liabilities		16,247				21,892				17,633
Long-term operating lease obligations		18,370				11,239				5,084
Other long-term liabilities		585				591				556
Total liabilities		216,303				210,933				213,804
Commitments and contingencies
Stockholders' equity:
Common stock, par value of $0.01 per share; 250,000,000 shares authorized as of December 31, 2020, March 31, 2020 and December 31, 2019; 51,240,997, 50,003,531 and 49,914,987 shares issued and outstanding as of December 31, 2020, March 31, 2020 and December 31, 2019, respectively		497				489				486
Additional paid-in capital		769,380				753,213				753,151
Accumulated deficit		(505,275		)		(511,531		)		(511,190		)
Total stockholders' equity		264,602				242,171				242,447
Total liabilities and stockholders' equity		$	480,905			$	453,104			$	456,251

e.l.f. Beauty, Inc. and subsidiaries
Condensed consolidated statements of cash flows
(unaudited)
(in thousands)
		Nine months ended December 31,
		2020				2019
Cash flows from operating activities:
Net income		$	6,256			$	18,225
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		18,808				16,863
Restructuring income		—				(5,982		)
Stock-based compensation expense		15,040				11,282
Amortization of debt issuance costs and discount on debt		641				565
Deferred income taxes		(5,684		)		880
Other, net		54				410
Changes in operating assets and liabilities:
Accounts receivable		(14,870		)		(3,027		)
Inventories		(22,351		)		(4,603		)
Prepaid expenses and other assets		(5,013		)		(3,260		)
Accounts payable and accrued expenses		11,421				17,628
Other liabilities		(2,352		)		(11,181		)
Net cash provided by operating activities		1,950				37,800
Cash flows from investing activities:
Purchase of property and equipment		(3,958		)		(7,073		)
Net cash used in investing activities		(3,958		)		(7,073		)
Cash flows from financing activities:
Proceeds from revolving line of credit		20,000				—
Repayment of revolving line of credit		(20,000		)		—
Repayment of long-term debt		(8,663		)		(7,013		)
Debt issuance costs paid		(334		)		—
Repurchase of common stock		—				(3,546		)
Cash received from issuance of common stock		882				1,272
Other, net		(605		)		(574		)
Net cash used in financing activities		(8,720		)		(9,861		)
Net (decrease) increase in cash and cash equivalents		(10,728		)		20,866
Cash and cash equivalents - beginning of period		46,167				53,874
Cash and cash equivalents - end of period		$	35,439			$	74,740

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,
		2020				2019				2020				2019
Net income		$	4,297			$	8,002			$	6,256			$	18,225
Interest expense, net		855				1,560				3,228				4,920
Income tax provision		462				2,983				218				6,367
Depreciation and amortization		5,179				5,009				15,802				14,945
EBITDA		$	10,793			$	17,554			$	25,504			$	44,457
Restructuring expense (income) (a)		—				8				—				(5,982		)
Stock-based compensation		5,028				3,352				15,040				11,282
Other non-cash and non-recurring costs (b)		2,519				516				7,631				1,148
Adjusted EBITDA		$	18,340			$	21,430			{ "@context": "https://schema.org", "@type": "FAQPage", "name": "e.l.f. Beauty Announces Third Quarter Fiscal 2021 Results FAQs", "mainEntity": [ { "@type": "Question", "name": "What are e.l.f. Beauty's Q3 2020 earnings results?", "acceptedAnswer": { "@type": "Answer", "text": "e.l.f. Beauty reported Q3 2020 net sales of $88.6 million, a 10% increase year-over-year, with net income at $4.3 million." } }, { "@type": "Question", "name": "How did e.l.f. Beauty perform over the nine months ended December 31, 2020?", "acceptedAnswer": { "@type": "Answer", "text": "Over nine months, e.l.f. Beauty saw an 8% increase in net sales to $225.4 million." } }, { "@type": "Question", "name": "What is e.l.f. Beauty's outlook for fiscal 2021?", "acceptedAnswer": { "@type": "Answer", "text": "The company anticipates a 7-9% increase in net sales for fiscal 2021, up from the previous estimate of 5-7%." } } ] } FAQ What are e.l.f. Beauty's Q3 2020 earnings results? e.l.f. Beauty reported Q3 2020 net sales of $88.6 million, a 10% increase year-over-year, with net income at $4.3 million. How did e.l.f. Beauty perform over the nine months ended December 31, 2020? Over nine months, e.l.f. Beauty saw an 8% increase in net sales to $225.4 million. What is e.l.f. Beauty's outlook for fiscal 2021? The company anticipates a 7-9% increase in net sales for fiscal 2021, up from the previous estimate of 5-7%. e.l.f. Beauty, Inc. NYSE:ELF ELF Rankings #1104 Ranked by Market Cap N/A Ranked by Dividends ELF Latest News Nov 21, 2024 e.l.f. Beauty Issues Statement Refuting Unsubstantiated Short-Seller Report Nov 18, 2024 e.l.f. Cosmetics is Causing an e.l.f.ing Racket at the Billie Jean King Cup Nov 13, 2024 e.l.f. Cosmetics and Beekman 1802 Join Forces for World Kindness Day in Roblox Nov 6, 2024 e.l.f. Beauty Announces Second Quarter Fiscal 2025 Results Oct 28, 2024 Keys Soulcare Unveils Enhancing Shades of Let Me Glow Illuminating Serum ELF Stock Data Market Cap 6.82B Float 54.85M Insiders Ownership 2.64% Institutions Ownership 101.49% Short Percent 8.73% Industry Household & Personal Products Sector Perfumes, Cosmetics & Other Toilet Preparations Website Link Country United States of America City OAKLAND Explore About Rhea-AI Sitemap Legal Terms of Use Cookie Notice Privacy Policy Links RSS feed Patreon Discord Server Facebook Reddit Google News © 2020-2024 StockTitan.net