e.l.f. Beauty Announces Third Quarter Fiscal 2025 Results

Business Wire 6-Feb-2025 4:05 PM

– Delivered 24th Consecutive Quarter of Net Sales Growth and Market Share Gains –

– Updates Fiscal 2025 Outlook –

e.l.f. Beauty (NYSE:ELF) today announced results for the three and nine months ended December 31, 2024.

"I'm proud of the e.l.f. Beauty team for delivering another quarter of consistent, category-leading growth. In Q3, we grew net sales 31% and gained 220 basis points of market share in the U.S.," said Tarang Amin, e.l.f. Beauty's Chairman and Chief Executive Officer. "We believe we are still in the early innings of unlocking the whitespace we see across digital, color cosmetics, skin care and international."

Three Months Ended December 31, 2024 Results

For the three months ended December 31, 2024, compared to the three months ended December 31, 2023:

• Net sales increased 31% to $355.3 million, primarily driven by strength in both our retailer and e-commerce channels, in the U.S. and internationally.
• Gross margin increased approximately 40 basis points to 71%, primarily driven by favorable foreign exchange impacts on goods purchased from China, cost savings and inventory adjustments, partially offset by mix and higher transportation costs.
• Selling, general and administrative ("SG&A") expenses increased $58.1 million to $218.2 million, or 61% of net sales. Adjusted SG&A (SG&A excluding the items identified in the reconciliation table below) increased $45.5 million to $192.9 million, or 54% of net sales. The increase in SG&A dollars was primarily due to an increase in marketing and digital spend, compensation and benefits, operations costs, general administrative expense, retail fixturing and visual merchandising costs, and depreciation and amortization.
• Other expense, net increased 306% to $5.3 million, primarily driven by an increase in foreign currency exchange loss attributable to foreign currency rate fluctuation between the British pound and US dollar.
• Net income was $17.3 million on a GAAP basis. Adjusted net income (net income excluding the items identified in the reconciliation table below) was $43.0 million.
• Diluted earnings per share were $0.30 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 $0.74.
• Adjusted EBITDA (EBITDA excluding the items identified in the reconciliation table below) was $68.7 million, or 19% of net sales, up 16% year over year.

Nine Months Ended December 31, 2024 Results

For the nine months ended December 31, 2024, compared to the nine months ended December 31, 2023:

• Net sales increased 40% to $980.9 million, primarily driven by strength in both retailer and e-commerce channels, in the U.S. and internationally.
• Gross margin increased approximately 50 basis points to 71%, primarily driven by cost savings and favorable foreign exchange impacts on goods purchased from China, partially offset by inventory adjustments and mix.
• SG&A increased $220.7 million to $584.9 million, or 60% of net sales. Adjusted SG&A increased $188.1 million to $517.6 million, or 53% of net sales. The increase in SG&A dollars was primarily due to an increase in marketing and digital spend, compensation and benefits, operations costs, general administrative expense, retail fixturing and visual merchandising costs, and depreciation and amortization.
• Other expense, net increased 168% to $1.3 million, primarily driven by an increase in foreign currency exchange loss attributable to foreign currency rate fluctuation between the British pound and US dollar.
• Net income was $83.8 million on a GAAP basis. Adjusted net income was $152.3 million.
• Diluted earnings per share were $1.43 on a GAAP basis. Adjusted diluted earnings per share were $2.61.
• Adjusted EBITDA was $215.5 million, or 22% of net sales, up 11% year over year.

Liquidity

As of December 31, 2024, the Company had $73.8 million in cash and cash equivalents and $154.1 million of long-term debt, as compared to $72.7 million in cash and cash equivalents and $164.4 million of long-term debt as of December 31, 2023.

Updated Fiscal 2025 Outlook

"Given softer than expected trends in January, we are taking a prudent approach and lowering our outlook for the final quarter of our fiscal year. Our updated outlook for fiscal 2025 reflects an expected 27-28% year-over-year increase in net sales, as compared to an expected 28-30% increase previously," said Mandy Fields, e.l.f. Beauty's Chief Financial Officer.

Webcast Details

The Company will hold a webcast to discuss the results from its third quarter fiscal 2025 today, February 6, 2025, at 4:30 p.m. Eastern Time. The webcast will be broadcast live at https://investor.elfbeauty.com/stock-and-financial/events-and-presentations. 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 (NYSE:ELF) is fueled by a belief that anything is e.l.f.ing possible. e.l.f. is a different kind of company that disrupts norms, shapes culture and connects communities, through positivity, inclusivity and accessibility. The mission is clear: to make the best of beauty accessible to every eye, lip and face. e.l.f. Beauty and its brands, e.l.f. Cosmetics, e.l.f. SKIN, Keys Soulcare, Well People and Naturium, are led by purpose, driven by results and elevated by superpowers. e.l.f. Beauty offers e.l.f. clean and vegan products, all double-certified by PETA and Leaping Bunny as cruelty free, and proudly stands as the first beauty company with Fair Trade Certified™ facilities. With a kind heart at the center of e.l.f.'s ethos, the company donates 2% of net profits to organizations that make positive impacts.

Learn more at https://www.elfbeauty.com/

Note Regarding non-GAAP Financial Measures

This press release includes references to non-GAAP measures, including adjusted EBITDA, adjusted SG&A, 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 or substitutes for 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 expense or income related to stock-based compensation, impairment of equity investment, and other non-cash and non-recurring items. Such other non-cash or non-recurring items include amortization of internal-use software costs related to cloud applications, costs related to the acquisition of Naturium, and cloud computing ERP implementation costs.

Adjusted SG&A excludes expense related to stock-based compensation and other non-recurring items. Such other non-recurring items include other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of Naturium.

Adjusted effective tax rate is the tax rate when excluding the pre-tax impact of expense or income related to stock-based compensation, other non-cash and non-recurring items, impairment of equity investment, 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 expense related to stock-based compensation, other non-recurring items, impairment of equity investment, amortization of acquired intangible assets and the tax impact of the foregoing adjustments. Such other non-recurring items include other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of Naturium.

With respect to the Company's expectations under "Updated Fiscal 2025 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 2025 under "Updated Fiscal 2025 Outlook" above and those statements that we believe we are still in the early innings of unlocking the whitespace we see across digital, color cosmetics, skin care and international. 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; and the Company's ability to effectively manage its SG&A and other expenses. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250206928640/en/

Investors: KC Katten VP, Corporate Development & Investor Relations kkatten@elfbeauty.com

Media: Sam Critchell VP, Corporate Communications scritchell@elfbeauty.com