e.l.f.(ELF) - 2025 Q1 - Quarterly Report

Revenue and Sales Performance - Net sales increased by $108.1 million (50$324.5 million for the three months ended June 30, 2024, driven by strong performance in both retailer and e-commerce channels[76] - The company's e-commerce channel sales grew by $27.2 million (105$78.7 million (52%) to $231.3 million, with gross margin rising 80 basis points to 71$88.6 million (96%) to $180.6 million, primarily due to higher marketing and digital spend ($40.1 million) and increased compensation and benefits ($15.1 million)[78] - Net income decreased to$47.6 million (15% of net sales) from $53.0 million (24$109.0 million as of June 30, 2024, with $10.5 million available under the Amended Revolving Credit Facility[83] - Net cash provided by operating activities decreased to$1.3 million from $23.4 million in the prior year period, primarily due to a$75.5 million increase in working capital[85] - The company's working capital (excluding cash and cash equivalents) increased to $121.6 million as of June 30, 2024, compared to$69.8 million as of March 31, 2024[83] Tax and Financial Benefits - The company recorded a $0.3 million income tax benefit for the quarter, compared to a$6.7 million provision in the prior year period, driven by lower pre-tax income and discrete tax benefits[82] Credit Facilities and Borrowings - The company's Amended Revolving Credit Facility has a $100 million limit, with$10.5 million unused as of June 30, 2024[88] - The interest rate for the Amended Revolving Credit Facility and the Amended Term Loan Facility as of June 30, 2024 was approximately 6.7%[90] - The Incremental Term Loan under the Second Amendment allows borrowing up to $115.0 million with an interest rate of approximately 6.9% as of June 30, 2024[91][92] - The Incremental Term Loan amortizes at 5.00% per annum, with quarterly installments of 1.25% starting December 31, 2023[91] - The company transitioned from LIBOR to SOFR, with SOFR borrowings subject to a floor of 0% and a margin ranging from 1.25% to 2.125%[89] - The company used the Incremental Term Loan, cash from its balance sheet, and additional borrowings under the Amended Revolving Credit Facility to fund the Naturium acquisition and related expenses[91] Financial Covenants and Compliance - The Amended Credit Agreement includes covenants restricting dividends, stock repurchases, additional indebtedness, and asset sales, with compliance maintained as of June 30, 2024[92] Accounting and Risk Management - No material changes to contractual obligations, off-balance sheet arrangements, or critical accounting policies were reported[93] - Recent accounting pronouncements are disclosed in Note 2 to the unaudited condensed consolidated financial statements[94] - No material changes to primary risk exposures or market risk management were reported[95]