Q2 FY 2021 EARNINGS WEBCAST NOVEMBER 4, 2020 As a reminder, this call contains forward-looking statements that are based on management’s expectations – including those relating to the category trends and longer-term outlook – and are subject to known and unknown risks and uncertainties, and therefore, actual results may differ materially.
Important factors that may cause actual results to differ are detailed in today’s press release and the company’s SEC filings. In addition, the company’s presentation today includes information presented on a non-GAAP basis. We refer you to today’s press release for a reconciliation of the differences between the non-GAAP presentation and the most directly comparable GAAP measures. TARANG P. AMIN CHAIRMAN & CHIEF EXECUTIVE OFFICER TODAY’S AGENDA
1 2 3
Q2 FY 2021 GROWTH STRATEGIC RESULTS OPPORTUNITIES FRAMEWORK SEVEN CONSECUTIVE QUARTERS OF NET SALES GROWTH
+16%
+11%
+7% +8% +8% +7%
+3%
Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY 19 FY 20 FY 20 FY 20 FY 20 FY 21 FY 21
NET SALES GROWTH BY QUARTER, EXCLUDING E.L.F. STORES (CLOSED IN FEBRUARY 2019) Q2 FY 21 RESULTS
65% $14M GROSS ADJUSTED MARGIN EBITDA
+100 20% BPS MARGIN SHARE CHANGE (BPS) - TOP 5 COLOR COSMETICS BRANDS
E.L.F. E.L.F. +100 5.5% SHARE
L’OREAL MAYBELLINE -70 -80 COVERGIRL -110 REVLON -150
NIELSEN XAOC LATEST 12 WEEKS ENDING 10/3/2020 SINGLE BRAND MULTI-BRAND COMPANY HOUSE TREND DRIVEN PLANT POWERED DERMATOLOGIST DEVELOPED FOR EVERY EYE, FOR THE CLEAN FOR LIP AND FACE BEAUTY ENTHUSIAST HOLISTIC WELLNESS OUR SUPERPOWERS
CRUELTY PREMIUM ACCESSIBLE UNIVERSAL FREE QUALITY PRICES APPEAL EXECUTING ON OUR FIVE STRATEGIC IMPERATIVES
DRIVE DOUBLE LEADING COST BRAND DOWN INNOVATION PRODUC- SAVINGS DEMAND DIGITAL TIVITY DRIVE BRAND DEMAND +160% PRESS IMPRESSIONS
GEN-Z FAVORITE #
2FALL 2020 #4 FALL 2019
#8 FALL 2018 PIPER SANDLER ’TAKING STOCK WITH TEENS’ NEW
9M FOLLOWERS 10B VIEWS
6M VIDEO CREATES “AS AN EARLY INNOVATOR, E.L.F. SET THE BAR HIGH. WE’VE SEEN THEIR CREATIVITY SHINE IN A NUMBER OF CAMPAIGNS.”
KATIE PURIS, MANAGING DIRECTOR, TIKTOK to be designed
#EYESLIPSFAMOUS PRODUCTS GONE VIRAL
CONGRATULATIONS KORY MARCHISOTTO CMO, E.L.F. BEAUTY & PRESIDENT, KEYS SOULCARE
UNAIDED BRAND AWARENESS
0.4 ~30 % POINT GAP 0.3
0.2
0.1
0 E.L.F. MAYBELLINE L’OREAL COVERGIRL REVLON (AVERAGE)
BOVITZ, INC. (2020, JUNE) MAKEUP CATEGORY ATTITUDES & USAGE STUDY COMMISSIONED BY E.L.F. COSMETICS; CONFIDENTIAL & PROPRIETARY KEYS SOULCARE UNVEILED IN SEPTEMBER 6.5B PRESS IMPRESSIONS TO DATE INSTAGRAM
W3LL PEOPLE BRAND RECHARGE LAUNCHED DOUBLE DOWN ON DIGITAL ~TRIPLE DIGIT GROWTH
Q2 FY 21 DIGITAL CONSUMPTION YEAR-OVER-YEAR GROWTH #1 MASS COSMETICS E-COMMERCE SITE DIGITAL COMMERCE PENETRATION
7 % 13 %
Q2 FY 20 Q2 FY 21 ~60% GROWTH IN NEW CONSUMERS SHOPPING ELFCOSMETICS.COM
YOY GROWTH IN NUMBER OF NEW CONSUMERS PURCHASING ON ELFCOSMETICS.COM, FROM 7/1/2020 TO 9/30/2020 BEAUTY SQUAD LOYALTY PROGRAM
2.1M MEMBERS
~40% GROWTH
BEAUTY SQUAD LOYALTY MEMBERS AS OF 9/30/2020 | Q2 FY 21 GROWTH IN TOTAL ENROLLMENT VERSUS PY ELFCOSMETICS.COM
~70% OF SALES FROM BEAUTY SQUAD MEMBERS KEYSSOULCARE.COM WENT LIVE ON SEPTEMBER 29TH INNOVATION OUR SUPERPOWERS
OUR SUPERPOWERS
CRUELTY PREMIUM ACCESSIBLE UNIVERSAL FREE QUALITY PRICES APPEAL STRENGTH IN CORE SEGMENTS #1 #1 #2 #2 #2 BRUSHES PRIMERS CONCEALER EYEBROW SPONGES $ SHARE $ SHARE $ SHARE UNIT SHARE $ SHARE NIELSEN XAOC LATEST 12 WEEKS ENDING 10/3/2020 BEAUTY SUPERHEROES
PRIMERS CONCEALER 37.8% $ SHARE 14.6% $ SHARE +3.9 $ SHARE POINTS +6.9 $ SHARE POINTS NIELSEN XAOC LATEST 12 WEEKS ENDING 10/3/2020
SKINCARE CONSUMPTION ELFCOSMETICS.COM
>2X GROWTH
YOY CONSUMPTION GROWTH - SKINCARE VS. COLOR COSMETICS
SKINCARE PENETRATION
8% ~25%
YTD FY 21 YTD FY 21
TRACKED CHANNELS ELFCOSMETICS.COM KEYS SOULCARE LAUNCH TIMELINE
DECEMBER 3, EARLY 2020 2021
FIRST 3 GLOBAL SKINCARE PRODUCTS COLLECTION LAUNCH (ONLINE) (ONLINE AND IN STORES) MULTI-CATEGORY MULTI-YEAR PRODUCT PIPELINE LEADING PRODUCTIVITY SALES GROWTH - TOP 5 COLOR COSMETICS BRANDS
E.L.F. +3% 7.5
0
-7.5
-15
-22.5 MAYBELLINE L’OREAL -19% -20% COVERGIRL -30 -24% Maybelline L'Oreal Cover Girl REVLONRevlon e.l.f. -30%
NIELSEN XAOC LATEST 12 WEEKS ENDING 10/3/2020 SHARE CHANGE (BPS) - TOP 5 COLOR COSMETICS BRANDS
E.L.F. E.L.F. 120 +100 5.5% 80 SHARE
40
0
-40
-80 L’OREAL MAYBELLINE -70 -120 -80 COVERGIRL -110 -160 REVLON Maybelline L'Oreal Cover Girl Revlon e.l.f. -150
NIELSEN XAOC LATEST 12 WEEKS ENDING 10/3/2020 PROJECT UNICORN INSPIRED MERCHANDISING PROGRAMS trending on EXPANDED FALL 2020 AVERAGE LINEAR FEET PER STORE
~11 FEET
WALMART TARGET ULTA
FY 2020 EXPANDING SPRING 2021 EXPANDING SPRING 2021 EXCLUSIVE NATIONAL RETAIL PARTNER IN THE U.S. 6 OF BEST-SELLING SKUS NOW FEATURED IN ULTA BEAUTY STORES COST SAVINGS COST SAVINGS
STRONG GROSS MARGIN
LEAN MANUFACTURING COST PER UNIT
-15%
REDUCTION IN AVERAGE COST/UNIT FOR CAMO CONCEALER SINCE LAUNCH EW LL PEOPLE
COGS SAVINGS
INVEST IN SHARPEN BRAND RECHARGE PRICING STRATEGIC FRAMEWORK BEST OF BEAUTY ACCESSIBLE TO EVERY EYE, LIP AND FACE THE BOLD DISRUPTOR WITH A KIND HEART. INCLUSIVE, ACCESSIBLE, CRUELTY-FREE BEAUTY. LEVERAGE INVESTMENTS IN TEAM AND INFRASTRUCTURE EXCLUSIVE DISTRIBUTION ~$20-40 AUR MASS PRICE PRESTIGE PRICE PRESTIGE ~$20 AUR
~$5 AUR ACCESSIBLE DISTRIBUTION ACCESSIBLE MOVING AT E.L.F. SPEED
LEANING INTO POSITIONING DIGITAL STRENGTH OURSELVES TO AND CORE VALUE CONTINUE TO GAIN PROPOSITION MARKET SHARE MANDY FIELDS SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER TODAY’S AGENDA
1 2
Q2 FY 2021 FISCAL 2021 RESULTS GUIDANCE Q2 FY 21 NET SALES
+7% $72 MILLION COLOR COSMETICS SALES GROWTH
20% 15% 15% 12% 12% 11% 10% 5% 2% 2% 0% 0% 0% -1%
-10% -10% -11% -12% -11% -15% -16% -15%
-20% E.L.F. -28% -30% COLOR COSMETICS GOVERNMENT CATEGORY -35% STIMULUS IMPACT
-40% JAN 20 FEB 20 MAR 20 APR 20 MAY 20 JUN 20 JUL 20 AUG 20 SEPT 20 OCT 20
YOY $ SALES GROWTH, NIELSEN XAOC ENDING 10/3/2020 +100 BPS 65% GROSS MARGIN
Q2 FY 21 ADJUSTED SG&A
51% 51%
Q2 FY 20 Q2 FY 21 MARKETING & DIGITAL 1H FY 2021 INVESTMENT
15% 14% 12-14%
Q2 FY 20 Q2 FY 21 Q2 FY 21 ADJUSTED EBITDA
20% $14 MARGIN MILLION ADJUSTED NET INCOME ADJUSTED EPS
$8M $8M $0.15 $0.16
Q2 FY 20 Q2 FY 21 Q2 FY 20 Q2 FY 21 STRONG LIQUIDITY
> $90 MILLION
CASH ON HAND + REVOLVING CREDIT FACILITY CASH BALANCE
$59M $41M
Q2 FY 20 Q2 FY 21 CASH PRIORITIES
INVESTING IN KEYS EW LL PEOPLE FIVE STRATEGIC SOULCARE BRAND IMPERATIVES LAUNCH RECHARGE NET SALES ADJUSTED EBITDA +5% TO 7% $57M TO $60M
FISCAL 2021 GUIDANCE
ADJUSTED EPS ADJUSTED NET INCOME $0.59 TO $0.63 $31M TO $33M NET SALES DRIVERS
MACRO VOLATILITY
SPACE EXPANSION TOUGH COMPARES
E-COMMERCE MERCHANDISING
KEYS SOULCARE FX
GM BENEFIT GM HEADWIND KEYS SOULCARE - FY 2021
NET SALES MODEST CONTRIBUTION GROSS MARGIN ~NEUTRAL TO CORPORATE GM MARKETING $5-6M NET SALES GROWTH EBITDA MARGINS
Q3>Q4 Q3>Q4 LONG-TERM ECONOMIC MODEL
MID TO OUTPACE HIGH SINGLE SALES DIGITS GROWTH
NET SALES CAGR ADJUSTED EBITDA CAGR
CAGR REPRESENTS EXPECTATIONS OVER A 3 YEAR TIME FRAME, FROM FY 2022 TO FY 2024 INCLUSIVE. ACCESSIBLE. CRUELTY FREE. THANK YOU