e.l.f.(ELF)2024-08-09 00:27Financial Data and Key Metrics - Q1 net sales grew 50% year-over-year, driven by broad-based strength across national and international retailers as well as digital commerce [20] - Gross margin increased by approximately 80 basis points to 71% in Q1, benefiting from favorable foreign exchange impacts, lower transportation costs, and cost savings [22] - Adjusted EBITDA for Q1 was 64 million or 63 million or 297 million to 3.36 to 700 million in retail sales, with a competitive moat formed by its unique advantages [7] - The company continues to innovate, with new product launches like the Soft Glam Satin Foundation and Naturium's Glow Getter Body Oil, which sold out in ten days [11][12] Management Commentary on Operating Environment and Future Outlook - Management remains bullish on the company's ability to drive market share gains in both color cosmetics and skincare, as well as continued international expansion [33] - The company expects adjusted EBITDA growth to accelerate in the second half of fiscal 2025 as it cycles the inclusion of Naturium and sees more normalized marketing investment [23] - Management highlighted the company's strong unit growth, with e.l.f. being the only top five cosmetics brand to grow units in Q1 [10] Other Important Information - The company's Beauty Squad Loyalty Program reached over 5 million members, with enrollment growing 30% year-over-year [21] - e.l.f. became the first beauty brand to test real-world commerce on Roblox, enhancing credibility and visibility among key audiences [17] - The company is investing in its ERP transition to SAP and expanding distribution capacity to support strong consumer demand [25][60] Q&A Session Summary Question: Growth Drivers and Consumer Sentiment - Growth in Q1 was driven by both new distribution and strength in existing distribution, with international growth contributing significantly [32] - Management noted that while consumers are becoming more selective, they are choosing e.l.f., with growth across all channels [33] Question: International Expansion Opportunities - The company's international strategy involves partnering with leading retailers in each market, with recent successes in the UK, Canada, and new markets like Germany [35] Question: Q2 Growth and Tariff Impact - Q2 growth is expected to be slightly above the annual outlook of 25% to 27%, with no immediate impact from potential tariffs in fiscal 2025 [39][40] Question: Trade Down and Marketing ROI - The company does not see significant trade-down effects, with its value proposition driving growth across all segments [45] - Marketing ROI remains strong, with unaided brand awareness increasing from 13% in 2020 to 33% in 2024 [47] Question: Shelf Space Opportunities and Guidance - The company sees significant shelf space opportunities in the U.S., particularly at Walmart and Target, with plans to expand further [51] - Germany and Australia are new additions to the guidance, reflecting the company's international expansion [54] Question: Inventory Management and ERP Transition - The company has proactively increased inventory levels to meet strong consumer demand and is transitioning to SAP for its ERP system, with a planned launch in spring [59][60] Question: International Margins - International margins are expected to be accretive as the company scales, with no tariffs on imports into those markets [63] Question: Q2 Sales Guidance and Profit Margins - Q2 sales growth is expected to be slightly above the annual range, with flattish gross margins and a focus on marketing investment [66][69] Question: Naturium Performance and Promotional Activity - Naturium contributed 16 percentage points to net sales growth in Q1 and is performing ahead of expectations, with no significant increase in promotional activity observed [73][76] Question: Naturium Rollout at Ulta - Naturium's rollout at Ulta is progressing well, with plans to focus on existing U.S. retailers before further international expansion [80][81]