Core Insights - e.l.f. Beauty reported strong fourth-quarter fiscal 2024 results, with both net sales and earnings exceeding expectations and improving from the previous year [1][2][3] Financial Performance - Adjusted earnings per share reached 53 cents, surpassing the Zacks Consensus Estimate of 35 cents, marking a 26.2% increase year-over-year [3] - Net sales surged 71.4% year-over-year to $321.1 million, exceeding the consensus estimate of $292 million, driven by robust performance in retail and e-commerce channels [3] Market Position - The company expanded its market share by 325 basis points, achieving its 21st consecutive period of growth in both net sales and market share [2] Profitability Metrics - Gross profit increased 76% year-over-year to $227.2 million, with gross margin expanding 180 basis points to 70.7% due to favorable foreign exchange effects and cost savings [4] - Adjusted EBITDA rose to $40.9 million from $21.2 million in the prior year, with the adjusted EBITDA margin increasing 140 basis points to 12.7% [6] Expense Management - Adjusted selling, general and administrative (SG&A) expenses increased 72.9% year-over-year to $196.9 million, with SG&A as a percentage of net sales decreasing by 50 basis points to 61.3% [5] Cash and Debt Position - The company ended the quarter with cash and cash equivalents of $108.2 million and long-term debt of $161.8 million, alongside total shareholders' equity of $642.6 million [9] Fiscal 2025 Outlook - For fiscal 2025, e.l.f. Beauty anticipates a 20-22% year-over-year increase in net sales, projecting net sales between $1.23 billion and $1.25 billion [10] - Adjusted EBITDA is expected to be between $285 million and $289 million, indicating growth from the previous year's $235 million [10] - Adjusted net income is forecasted between $187 million and $191 million, with adjusted earnings per share expected to be $3.20-$3.25 [11]

Core Insights - e.l.f. Beauty has achieved record growth, with shares rising 14% following the fiscal fourth quarter 2024 financial results [1] - The company generated over $1 billion in net sales for fiscal 2024, marking a 77% year-over-year growth [2] - e.l.f. Beauty has consistently gained market share for five consecutive years, leveraging social media effectively [2] Financial Performance - For fiscal 2025, management projects approximately 21% top-line growth, which is seen as a slowdown compared to previous years [3] - Adjusted earnings per share (EPS) guidance for the upcoming fiscal year is set at $3.20 to $3.25, compared to the reported full-year adjusted EPS of $3.18 [4] - Despite the anticipated slowdown in growth, the company is expected to maintain market share gains for a sixth year [3] Market Position and Strategy - e.l.f. Beauty's strength lies in its understanding of viral marketing, which is crucial in the cosmetics industry with low entry barriers [5] - The company’s ability to adapt to market trends and consumer behavior is a significant advantage over competitors [5]

Financial Data and Key Metrics Changes - In fiscal '24, the company achieved net sales growth of 77%, with adjusted EBITDA growth of 101% and gross margin improvement of approximately 330 basis points [181][95] - The company ended the quarter with adjusted net income of $31 million, or $0.53 per diluted share, compared to $24 million or $0.42 per diluted share a year ago [62] - The company expects net sales growth of approximately 20% to 22% for fiscal '25, with adjusted EBITDA projected between $285 million to $289 million [98] Business Line Data and Key Metrics Changes - In Q4, e.l.f. Cosmetics grew 30% in tracked channels, significantly outperforming a category that was down 3% [16] - e.l.f. SKIN grew 38% in tracked channels, compared to a category growth of 2%, increasing its market share by 45 basis points [17] - Naturium contributed approximately 17 points to net sales growth in Q4, indicating strong performance since its acquisition [41] Market Data and Key Metrics Changes - International sales grew 115% in Q4, driven by strong performance in Canada and the U.K., where e.l.f. was the fastest-growing among the top 10 cosmetics brands [129] - The company increased its market share by 305 basis points, reaching a total market share of 10.5% in color cosmetics [181][26] - The average price point for e.l.f. products is about $6.50, significantly lower than legacy mass cosmetics brands [43] Company Strategy and Development Direction - The company plans to continue expanding its international presence, with recent successful launches in Italy and the Netherlands, and upcoming entries into Sephora Mexico [14][86] - The focus remains on color cosmetics, skin care, and international markets, with significant runway for growth in skin care where e.l.f. currently holds a 1.6% market share [27][46] - The company is committed to a disciplined marketing investment strategy, planning for marketing and digital investment at approximately 24% to 26% of net sales in fiscal '25 [29] Management's Comments on Operating Environment and Future Outlook - Management remains bullish on the color cosmetics category and expects to continue gaining market share despite macroeconomic uncertainties [100][154] - The company is optimistic about Q1 performance, expecting net sales growth to exceed the annual guidance range due to strong consumption trends [99][101] - Management emphasizes a cautious approach, taking it one quarter at a time while remaining confident in the company's growth trajectory [100][156] Other Important Information - The company has a strong liquidity position, ending the quarter with less than 1x leverage in terms of net debt-to-adjusted EBITDA [97] - The Beauty Squad Loyalty Program has over 4.8 million members, driving almost 80% of sales on the company's website [59] - The company is focused on diversifying boardroom representation through its Change The Board Game initiative [50][52] Q&A Session Summary Question: Can you provide insights on the guidance and growth expectations? - Management indicated a guidance of 20% to 22% net sales growth, building on a strong fiscal '24 performance [36][98] - The growth is expected to be unit-led, with a focus on maintaining strong market share [37] Question: How is the international expansion progressing? - International sales grew 115% in Q4, with significant demand noted in Canada and the U.K. [103][129] - The company plans to continue its disciplined rollout strategy in new markets [14] Question: What are the expectations for Naturium's performance? - Naturium is expected to have a full assortment at Ulta, and management is optimistic about its growth potential [114][165] - The brand is performing well, and the company is excited about its innovation pipeline [165] Question: How does the company view its marketing strategy? - The marketing investment is set at approximately 24% to 26% of net sales for fiscal '25, reflecting a commitment to driving growth [29][94] - Management believes that the marketing strategy has been effective, yielding strong ROI [77] Question: What are the expectations for gross margin and cost management? - The company expects gross margin to improve by approximately 10 basis points year-over-year, with some cost pressures anticipated in the first half of the year [68][127] - Management is focused on maintaining a balanced approach to cost management while driving growth [120][136]

Group 1: Earnings Performance - E.l.f. Beauty reported quarterly earnings of $0.53 per share, exceeding the Zacks Consensus Estimate of $0.35 per share, and up from $0.42 per share a year ago, representing an earnings surprise of 51.43% [1] - The company posted revenues of $321.14 million for the quarter ended March 2024, surpassing the Zacks Consensus Estimate by 9.81%, compared to year-ago revenues of $187.36 million [2] - Over the last four quarters, E.l.f. Beauty has consistently surpassed consensus EPS estimates [2] Group 2: Stock Performance and Outlook - E.l.f. Beauty shares have increased approximately 10.1% since the beginning of the year, while the S&P 500 has gained 11.6% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $1.18 on revenues of $298.99 million, and for the current fiscal year, it is $3.54 on revenues of $1.27 billion [7] Group 3: Industry Context - The Zacks Cosmetics industry is currently ranked in the bottom 41% of over 250 Zacks industries, indicating that the industry's outlook can significantly impact stock performance [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6]

Group 1 - Proactive provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The news team covers medium and small-cap markets, as well as blue-chip companies, commodities, and broader investment stories [3] - Proactive focuses on sectors such as biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto, and emerging digital and EV technologies [3] Group 2 - Proactive has a strong emphasis on technology adoption to enhance workflows and content production [4] - The company utilizes automation and software tools, including generative AI, while ensuring all content is edited and authored by humans [5]

Core Viewpoint - E.l.f. Beauty achieved its first billion-dollar fiscal year with a 77% increase in sales, but shares fell due to lower growth expectations [1][2]. Financial Performance - The company reported a net income of $14.53 million (25 cents per share) for the fourth fiscal quarter, down from $16.25 million (29 cents per share) a year earlier. Adjusted earnings were 53 cents per share [1][8]. - Sales for the fourth quarter reached $321.1 million, a 71% increase from $187.4 million a year prior. For the full year, sales totaled $1.02 billion, marking a 77% growth [2]. Future Guidance - E.l.f. expects net sales between $1.23 billion and $1.25 billion, representing a 20% to 22% increase, which is below analysts' expectations of $1.27 billion (27.4% growth). Adjusted net income is forecasted to be between $187 million and $191 million, with adjusted earnings between $3.20 and $3.25 per share, also below analyst expectations [4]. Industry Context - Ulta Beauty's CEO indicated a cooling demand in the cosmetics sector, which negatively impacted E.l.f. and other beauty stocks. This sentiment suggests a potential moderation in growth for the beauty industry [5][6].

Financial Performance Overview [Fourth Quarter Fiscal 2024 Performance](index=1&type=section&id=Fourth%20Quarter%20Fiscal%202024%20Performance) In Q4 FY2024, e.l.f. Beauty achieved a 71% increase in net sales to $321.1 million, driven by strong performance in retailer and e-commerce channels. Gross margin improved to 71%, and the company marked its 21st consecutive quarter of net sales and market share growth, expanding its market share by 325 basis points - Marked the **21st consecutive quarter of net sales growth** and expanded market share by **325 basis points** in Q4[2](index=2&type=chunk) Q4 Fiscal 2024 Key Financial Metrics | Metric | Q4 FY2024 | Q4 FY2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $321.1M | $187.4M | +71% | | Gross Margin | 71% | 69% | +180 bps | | Net Income (GAAP) | $14.5M | $16.2M | -10.6% | | Adjusted Net Income | $30.8M | $23.8M | +29.4% | | Diluted EPS (GAAP) | $0.25 | $0.29 | -13.8% | | Adjusted Diluted EPS | $0.53 | $0.42 | +26.2% | | Adjusted EBITDA | $40.9M | $21.2M | +93% | [Full Year Fiscal 2024 Performance](index=1&type=section&id=Full%20Year%20Fiscal%202024%20Performance) For the full fiscal year 2024, the company delivered record performance, with net sales surpassing $1 billion, a 77% increase year-over-year. Gross margin expanded by 330 basis points to 71%, and Adjusted EBITDA more than doubled, growing 101% to $234.7 million - Achieved over **$1 billion in net sales** for the first time, marking the strongest year of net sales growth on record[1](index=1&type=chunk)[2](index=2&type=chunk) - e.l.f. Cosmetics brand gained market share for the **fifth consecutive year**[1](index=1&type=chunk) Full Year Fiscal 2024 Key Financial Metrics | Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,023.9M | $578.8M | +77% | | Gross Margin | 71% | 67% | +330 bps | | Net Income (GAAP) | $127.7M | $61.5M | +108% | | Adjusted Net Income | $183.8M | $91.8M | +100% | | Diluted EPS (GAAP) | $2.21 | $1.11 | +99% | | Adjusted Diluted EPS | $3.18 | $1.66 | +92% | | Adjusted EBITDA | $234.7M | $116.8M | +101% | Financial Position and Strategic Moves [Balance Sheet Summary](index=3&type=section&id=Balance%20Sheet%20Summary) As of March 31, 2024, the company held $108.2 million in cash and cash equivalents, a decrease from $120.8 million the previous year. Long-term debt and finance lease obligations increased significantly to $161.8 million from $60.9 million, largely reflecting financing for strategic initiatives Balance Sheet Highlights (as of March 31) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $108.2M | $120.8M | | Long-term debt and finance lease obligations | $161.8M | $60.9M | [Naturium Acquisition](index=3&type=section&id=Naturium%20Acquisition) On October 4, 2023, e.l.f. Beauty completed the acquisition of Naturium, a high-growth skincare brand, for $333.0 million in cash and stock. This strategic move aims to strengthen the company's skincare portfolio and support its mission of making quality beauty accessible - Closed the acquisition of skincare brand Naturium on **October 4, 2023**[5](index=5&type=chunk) - The total consideration for the acquisition was **$333.0 million**, paid through a combination of cash and company stock[5](index=5&type=chunk) Future Outlook [Fiscal 2025 Guidance](index=3&type=section&id=Fiscal%202025%20Guidance) The company projects strong continued growth for fiscal 2025, forecasting a 20-22% increase in net sales to a range of $1,230-$1,250 million. Adjusted EBITDA is expected to be between $285-$289 million, with adjusted diluted EPS anticipated in the range of $3.20-$3.25 Fiscal 2025 Outlook vs. Fiscal 2024 Actuals | Metric | Fiscal 2025 Outlook | Fiscal 2024 Actuals | | :--- | :--- | :--- | | Net sales | $1,230 - $1,250 M | $1,024 M | | Adjusted EBITDA | $285 - $289 M | $235 M | | Adjusted net income | $187 - $191 M | $184 M | | Adjusted diluted EPS | $3.20 - $3.25 | $3.18 | - The outlook for fiscal 2025 reflects an expected **20-22% increase in net sales** compared to fiscal 2024[6](index=6&type=chunk) Detailed Financial Statements (GAAP) [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations detail the company's financial performance, showing a significant increase in net sales from $578.8 million in FY2023 to $1,023.9 million in FY2024. Net income more than doubled, rising from $61.5 million to $127.7 million Consolidated Statements of Operations (Year-End) | (in thousands) | Twelve months ended March 31, 2024 | Twelve months ended March 31, 2023 | | :--- | :--- | :--- | | Net sales | $1,023,932 | $578,844 | | Gross profit | $724,096 | $390,396 | | Operating income | $149,678 | $68,143 | | Net income | $127,663 | $61,530 | | Diluted EPS | $2.21 | $1.11 | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2024, reflects significant growth, with total assets nearly doubling to $1.13 billion from $595.6 million in the prior year. This growth was driven by increases in goodwill and intangible assets, largely due to the Naturium acquisition, and financed through increased debt and equity Consolidated Balance Sheet Highlights | (in thousands) | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Total current assets | $477,077 | $303,325 | | Total assets | $1,129,247 | $595,601 | | Total current liabilities | $299,115 | $107,976 | | Total liabilities | $486,675 | $184,584 | | Total stockholders' equity | $642,572 | $411,017 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For fiscal year 2024, net cash provided by operating activities was $71.2 million, a decrease from $101.9 million in the prior year, primarily due to significant investments in inventory and accounts receivable to support growth. Net cash used in investing activities was $284.7 million, mainly for the Naturium acquisition, while financing activities provided $200.9 million Consolidated Cash Flow Summary (Year-End) | (in thousands) | Twelve months ended March 31, 2024 | Twelve months ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $71,154 | $101,883 | | Net cash used in investing activities | ($284,660) | ($1,723) | | Net cash provided by (used in) financing activities | $200,945 | ($22,735) | | Net (decrease) increase in cash | ($12,595) | $77,425 | | Cash and cash equivalents - end of period | $108,183 | $120,778 | Non-GAAP Financial Measures and Reconciliations [Explanation of Non-GAAP Measures](index=4&type=section&id=Explanation%20of%20Non-GAAP%20Measures) The company utilizes non-GAAP measures such as adjusted EBITDA, adjusted SG&A, and adjusted net income to provide supplemental insight into its operating performance. These measures exclude items like stock-based compensation, acquisition-related costs, and other non-recurring expenses to facilitate comparison - The company presents non-GAAP measures because management uses them as supplemental tools to assess operating performance and believes they are helpful for investors[12](index=12&type=chunk) - Key adjustments to derive non-GAAP figures include excluding expenses related to stock-based compensation, impairment of equity investment, loss on extinguishment of debt, amortization of acquired intangibles, and other non-recurring items like acquisition and ERP implementation costs[13](index=13&type=chunk)[14](index=14&type=chunk)[16](index=16&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) For fiscal year 2024, GAAP Net Income of $127.7 million was reconciled to an Adjusted EBITDA of $234.7 million. Key adjustments included adding back interest, taxes, depreciation & amortization, as well as $40.6 million in stock-based compensation and $13.1 million in other non-recurring items Reconciliation to Adjusted EBITDA (Year-End) | (in thousands) | Twelve months ended March 31, 2024 | Twelve months ended March 31, 2023 | | :--- | :--- | :--- | | Net income (GAAP) | $127,663 | $61,530 | | EBITDA | $178,180 | $84,108 | | Stock-based compensation | $40,625 | $29,117 | | Other non-cash and non-recurring items | $13,061 | $3,380 | | Adjusted EBITDA (Non-GAAP) | $234,741 | $116,781 | [Reconciliation of SG&A to Adjusted SG&A](index=11&type=section&id=Reconciliation%20of%20SG%26A%20to%20Adjusted%20SG%26A) GAAP Selling, General, and Administrative (SG&A) expenses for fiscal year 2024 were $574.4 million. After excluding $40.6 million in stock-based compensation and $7.4 million in non-recurring items (like ERP implementation and acquisition costs), Adjusted SG&A was $526.4 million Reconciliation to Adjusted SG&A (Year-End) | (in thousands) | Twelve months ended March 31, 2024 | Twelve months ended March 31, 2023 | | :--- | :--- | :--- | | SG&A expenses (GAAP) | $574,418 | $322,253 | | Stock-based compensation | ($40,609) | ($29,005) | | Other non-recurring items | ($7,401) | — | | Adjusted SG&A (Non-GAAP) | $526,408 | $293,248 | [Reconciliation of Net Income to Adjusted Net Income](index=12&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income) The company's fiscal year 2024 GAAP Net Income of $127.7 million was adjusted to $183.8 million on a non-GAAP basis. Major adjustments included adding back stock-based compensation ($40.6 million) and amortization of acquired intangibles ($15.0 million), net of tax impacts Reconciliation to Adjusted Net Income (Year-End) | (in thousands) | Twelve months ended March 31, 2024 | Twelve months ended March 31, 2023 | | :--- | :--- | :--- | | Net income (GAAP) | $127,663 | $61,530 | | Stock-based compensation | $40,625 | $29,117 | | Amortization of acquired intangible assets | $15,047 | $8,122 | | Adjusted net income (Non-GAAP) | $183,766 | $91,813 | | Adjusted diluted EPS | $3.18 | $1.66 |

Core Viewpoint - E.l.f. Beauty (ELF) has a strong track record of exceeding earnings estimates and is well-positioned for future earnings surprises, particularly in its upcoming quarterly report [1][4]. Earnings Performance - In the last reported quarter, E.l.f. Beauty achieved earnings of $0.74 per share, surpassing the Zacks Consensus Estimate of $0.59 per share, resulting in a surprise of 25.42% [2]. - In the previous quarter, the company was expected to earn $0.54 per share but delivered $0.82 per share, leading to a surprise of 51.85% [2]. Earnings Estimates and Predictions - Earnings estimates for E.l.f. Beauty have been trending upward, influenced by its history of earnings surprises [4]. - The company currently has an Earnings ESP of +1.32%, indicating that analysts have recently become more optimistic about its earnings prospects [7]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat in the upcoming report scheduled for May 22, 2024 [7]. Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [5]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [6].

Wall Street expects a year-over-year decline in earnings on higher revenues when e.l.f. Beauty (ELF) reports results for the quarter ended March 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on May 22, 2024, might help the stock move higher if these key numbers are better than expect ...

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