Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 6, 2024

e.l.f. Beauty, Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-37873

46-4464131

(State or other jurisdiction
of incorporation)

(Commission
File Number)

(IRS Employer
Identification Number)

570 10th Street

Oakland, CA 94607

(Address of principal executive offices, including Zip Code)

Registrant’s telephone number, including area code: (510) 778-7787

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ELF	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02			Results of Operations and Financial Condition.

On November 6, 2024, e.l.f. Beauty, Inc. (the “Company”) issued a press release announcing its financial results for the three and six months ended September 30, 2024, a copy of which is attached hereto as Exhibit 99.1.

The information in this Item 2.02 of Current Report on Form 8-K and Exhibit 99.1 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Securities and Exchange Commission’s rules and regulations, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such a filing.


Item 9.01			Exhibits.

(d) Exhibits.


Exhibit No.						Description

99.1						Press release dated November 6, 2024
104						Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

e.l.f. Beauty, Inc.

Date: November 6, 2024

By:

/s/ Mandy Fields

Mandy Fields

Chief Financial Officer

Exhibit 99.1

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

– Delivered 40% Net Sales Growth –

– e.l.f. Cosmetics Gained 195 Basis Points of U.S. Market Share –

– Raises Fiscal 2025 Outlook –

OAKLAND, California; November 6, 2024 — e.l.f. Beauty (NYSE: ELF) today announced results for the three and six months ended September 30, 2024.

“Q2 marked another quarter of consistent, category-leading growth. In Q2, we delivered 40% net sales growth, fueled by 195 basis points of market share gains in the U.S. and 91% net sales growth internationally,” said Tarang Amin, e.l.f. Beauty’s Chairman and Chief Executive Officer. “This was our 23rd consecutive quarter of both net sales growth and market share gains. We continue to make progress across color cosmetics, skin care and international and believe our unique areas of advantage will fuel our ability to win in fiscal 2025 and beyond.”

Three Months Ended September 30, 2024 Results

For the three months ended September 30, 2024, compared to the three months ended September 30, 2023:

•Net sales increased 40% to $301.1 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 cost savings, favorable foreign exchange impacts, and price increases in our international markets, partially offset by mix and higher transportation costs.

•Selling, general and administrative (“SG&A”) expenses increased $74.0 million to $186.1 million, or 62% of net sales. Adjusted SG&A (SG&A excluding the items identified in the reconciliation table below) increased $62.5 million to $160.3 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, retail fixturing and visual merchandising costs, depreciation and amortization, and professional fees.

•Net income was $19.0 million on a GAAP basis. Adjusted net income (net income excluding the items identified in the reconciliation table below) was $45.0 million.

•Diluted earnings per share were $0.33 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 $0.77.

•Adjusted EBITDA (EBITDA excluding the items identified in the reconciliation table below) was $69.3 million, or 23% of net sales, up 15% year over year.

Six Months Ended September 30, 2024 Results

For the six months ended September 30, 2024, compared to the six months ended September 30, 2023:

•Net sales increased 45% to $625.6 million, primarily driven by strength in both retailer and e-commerce channels, in the U.S. and internationally.

•Gross margin increased approximately 60 basis points to 71%, primarily driven by cost savings, favorable foreign exchange impacts, and price increases in our international markets, partially offset by mix and inventory adjustments.

•SG&A increased $162.6 million to $366.7 million, or 59% of net sales. Adjusted SG&A increased $142.5 million to $324.7 million, or 52% 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, retail fixturing and visual merchandising costs, depreciation and amortization, and professional fees.

•Net income was $66.6 million on a GAAP basis. Adjusted net income was $109.3 million.

•Diluted earnings per share were $1.14 on a GAAP basis. Adjusted diluted earnings per share were $1.87.

•Adjusted EBITDA was $146.8 million, or 23% of net sales, up 9% year over year.

Liquidity

As of September 30, 2024, the Company had $96.8 million in cash and cash equivalents and $156.6 million of long-term debt and finance lease obligations, as compared to $167.8 million in cash and cash equivalents and $57.7 million of long-term debt and finance lease obligations as of September 30, 2023.

Updated Fiscal 2025 Outlook

The Company is providing the following updated outlook for fiscal 2025. The updated outlook for fiscal 2025 reflects an expected 28-30% year-over-year increase in net sales, as compared to an expected 25-27% increase previously.


	Updated Fiscal 2025 Outlook	Previous Fiscal 2025 Outlook
Net sales	$1,315-1,335 million	$1,280-1,300 million
Adjusted EBITDA	$304-308 million	$297-301 million
Adjusted effective tax rate	19-20%	20-21%
Adjusted net income	$205-208 million	$198-201 million
Adjusted diluted earnings per share	$3.47-3.53	$3.36-3.41
Fiscal year ending diluted shares outstanding	59 million	59 million

Webcast Details

The Company will hold a webcast to discuss the results from its second quarter fiscal 2025 today, November 6, 2024, 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 our unique areas of advantage will fuel our ability to win in fiscal 2025 and beyond. 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.

Investors:

Media:

KC Katten

Sam Critchell

VP, Corporate Development & Investor Relations

kkatten@elfbeauty.com

VP, Corporate Communications

scritchell@elfbeauty.com

e.l.f. Beauty, Inc. and subsidiaries

Condensed consolidated statements of operations

(unaudited)

(in thousands, except share and per share data)


	Three months ended September 30,				Six months ended September 30,
	2024		2023		2024		2023
Net sales	$	301,075	$	215,507	$	625,552	$	431,846
Cost of sales	87,016		63,142		180,210		126,909
Gross profit	214,059		152,365		445,342		304,937
Selling, general and administrative expenses	186,141		112,186		366,716		204,125
Operating income	27,918		40,179		78,626		100,812
Other income (expense), net	3,791		(1,062)		3,978		(663)
Impairment of equity investment	—		—		—		(1,720)
Interest (expense) income, net	(3,761)		623		(7,426)		964

Income before provision for income taxes	27,948		39,740		75,178		99,393
Income tax provision	(8,928)		(6,469)		(8,603)		(13,145)
Net income	$	19,020	$	33,271	$	66,575	$	86,248

Net income per share:
Basic	$	0.34	$	0.61	$	1.19	$	1.59
Diluted	$	0.33	$	0.58	$	1.14	$	1.50
Weighted average shares outstanding:
Basic	56,345,648		54,425,384		56,160,796		54,183,091
Diluted	58,482,530		57,438,152		58,517,993		57,308,342

e.l.f. Beauty, Inc. and subsidiaries

Condensed consolidated balance sheets

(unaudited)

(in thousands, except share and per share data)


	September 30, 2024		March 31, 2024		September 30, 2023
Assets
Current assets:
Cash and cash equivalents	$	96,768	$	108,183	$	167,763
Accounts receivable, net	146,559		123,797		86,683
Inventory, net	238,798		191,489		147,228
Prepaid expenses and other current assets	71,914		53,608		33,772
Total current assets	554,039		477,077		435,446
Property and equipment, net	15,563		13,974		7,624
Intangible assets, net	216,396		225,094		73,986
Goodwill	340,582		340,600		171,620
Other assets	110,435		72,502		58,260
Total assets	$	1,237,015	$	1,129,247	$	746,936

Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt	$	100,250	$	100,307	$	5,228
Accounts payable	93,617		81,075		63,736
Accrued expenses and other current liabilities	117,030		117,733		83,407
Total current liabilities	310,897		299,115		152,371
Long-term debt	156,648		161,819		57,735
Deferred tax liabilities	4,833		3,666		4,901
Long-term operating lease obligations	36,176		21,459		14,559
Other long-term liabilities	766		616		942
Total liabilities	509,320		486,675		230,508

Stockholders' equity:

Common stock, par value of $0.01 per share; 250,000,000 shares authorized as of September 30, 2024, March 31, 2024 and September 30, 2023; 56,331,038, 55,583,660 and 54,621,561 shares issued and outstanding as of September 30, 2024, March 31, 2024 and September 30, 2023, respectively	562		555		545
Additional paid-in capital	954,455		936,403		851,634
Accumulated other comprehensive income (loss)	439		(50)		—
Accumulated deficit	(227,761)		(294,336)		(335,751)
Total stockholders' equity	727,695		642,572		516,428
Total liabilities and stockholders' equity	$	1,237,015	$	1,129,247	$	746,936

e.l.f. Beauty, Inc. and subsidiaries

Condensed consolidated statements of cash flows

(unaudited)

(in thousands)


	Six months ended September 30,
	2024		2023
Cash flows from operating activities:
Net income	$	66,575	$	86,248
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and non-cash lease expense	23,803		12,311
Stock-based compensation expense	34,612		18,417
Amortization of debt issuance costs and discount on debt	276		149
Deferred income taxes	1,324		1,159
Impairment of equity investment	—		1,720



Other, net	18		221
Changes in operating assets and liabilities:
Accounts receivable	(21,221)		(18,812)
Inventory	(45,071)		(65,904)
Prepaid expenses and other assets	(48,863)		(27,090)
Accounts payable and accrued expenses	5,188		45,112
Other liabilities	(4,192)		(2,261)
Net cash provided by operating activities	12,449		51,270

Cash flows from investing activities:

Purchase of property and equipment	(2,409)		(1,465)

Other, net	(93)		—
Net cash used in investing activities	(2,502)		(1,465)

Cash flows from financing activities:



Repayment of long-term debt	(5,375)		(2,500)
Debt issuance costs paid	—		(665)
Repurchase of common stock	(17,076)		—
Proceeds from exercise of stock options	533		750




Other, net	(58)		(405)
Net cash used in financing activities	(21,976)		(2,820)

Effect of exchange rate changes on cash and cash equivalents	614		—

Net (decrease) increase in cash and cash equivalents	(11,415)		46,985
Cash and cash equivalents - beginning of period	108,183		120,778
Cash and cash equivalents - end of period	$	96,768	$	167,763

e.l.f. Beauty, Inc. and subsidiaries

Reconciliation of GAAP net income to non-GAAP adjusted EBITDA

(unaudited)

(in thousands)


	Three months ended September 30,				Six months ended September 30,
	2024		2023		2024		2023
Net income	$	19,020	$	33,271	$	66,575	$	86,248
Interest expense (income), net	3,761		(623)		7,426		(964)
Income tax provision	8,928		6,469		8,603		13,145
Depreciation and amortization	10,242		5,586		19,300		10,173
EBITDA	$	41,951	$	44,703	$	101,904	$	108,602
Stock-based compensation	21,648		11,217		34,612		18,417
Impairment of equity investment (a)	—		—		—		1,720



Other non-cash and non-recurring items (b)	5,730		4,498		10,247		5,979

Adjusted EBITDA	$	69,329	$	60,418	$	146,763	$	134,718

(a) Represents an impairment of equity investment recorded during the six months ended September 30, 2023.

(b) Represents other non-cash or non-recurring items, which include amortization of internal-use software costs related to

cloud applications, costs related to the acquisition of Naturium, and cloud computing ERP implementation costs.

e.l.f. Beauty, Inc. and subsidiaries

Reconciliation of GAAP SG&A to non-GAAP adjusted SG&A

(unaudited)

(in thousands)


	Three months ended September 30,				Six months ended September 30,
	2024		2023		2024		2023
Selling, general and administrative expenses	$	186,141	$	112,186	$	366,716	$	204,125


Stock-based compensation	(21,644)		(11,190)		(34,602)		(18,413)


Other non-recurring items (a)	(4,226)		(3,189)		(7,430)		(3,541)
Adjusted selling, general and administrative expenses	$	160,271	$	97,807	$	324,684	$	182,171

(a) Represents other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of

Naturium.

e.l.f. Beauty, Inc. and subsidiaries

Reconciliation of GAAP net income to non-GAAP adjusted net income

(unaudited)

(in thousands, except share and per share data)


	Three months ended September 30,				Six months ended September 30,
	2024		2023		2024		2023
Net income	$	19,020	$	33,271	$	66,575	$	86,248


Stock-based compensation	21,648		11,217		34,612		18,417



Other non-recurring items (a)	4,226		3,189		7,430		3,541
Impairment of equity investment (b)	—		—		—		1,720


Amortization of acquired intangible assets (c)	4,349		2,027		8,698		4,055

Tax Impact (d)	(4,248)		(2,559)		(8,002)		(3,955)
Adjusted net income	$	44,995	$	47,145	$	109,313	$	110,026

Weighted average number of shares outstanding – diluted	58,482,530		57,438,152		58,517,993		57,308,342
Adjusted diluted earnings per share	$	0.77	$	0.82	$	1.87	$	1.92

(a) Represents other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of

Naturium.

(b) Represents an impairment of equity investment recorded during the six months ended September 30, 2023.

(d) Represents the tax impact of the above adjustments.

Cover Page	Feb. 06, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Nov. 06, 2024
Entity Registrant Name	e.l.f. Beauty, Inc.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-37873
Entity Tax Identification Number	46-4464131
Entity Address, Address Line One	570 10th Street
Entity Address, City or Town	Oakland
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94607
City Area Code	510
Local Phone Number	778-7787
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	ELF
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Central Index Key	0001600033
Amendment Flag	false