e.l.f. Beauty (ELF) 27 May 212021 Q4 Earnings call transcript

Thank you for joining us today to discuss e.l.f. Beauty's Fourth Quarter and Fiscal 2021 Results. I'm KC Katten, Vice President of Investor Relations. With me today are Tarang Amin, Chairman and Chief Executive Officer; and Mandy Fields, Senior Vice President and Chief Financial Officer. We encourage you to tune into our webcast presentation for the best viewing experience, which you can access on our website at investor.elfbeauty.com. could remarks release forward-looking the forward-looking and you'll factors our to please SEC statements. of to find earnings results our reports that many today from statements, contain refer where differ Since materially actual these cause filed with

In basis. presentation a company's the includes information addition, on presented today non-GAAP

Tarang. most turn reconciliation measure. With GAAP contains release between the earnings comparable over the differences the let directly me non-GAAP Our of presentation webcast to and the that,

I hope quarter Thank you're and XXXX you, recognizing afternoon, everyone. Beauty results I fourth KC, we'll our Today, the and XXXX. team. our by full that discuss to fiscal good well. fiscal start want e.l.f. outlook in for year

consecutive quarter net much growth. to of proud have fiscal be ninth XXXX. in sales We our of QX marked

the by was cosmetics pandemic, to cosmetics top strength of brand our growth. color WXLL Keys category COVID-XX advanced throughout year fiscal X.X% XXX We year-over-year. only share and affected In multi-brand of the post Cosmetics with of basis PEOPLE points model. the negatively was XXXX, underscored market, with launch the to of the portfolio recharge the the e.l.f. gain to Soulcare. only our the outperformance our color up And a While transformation five business five brand top

an black We're that that Since which XX% and inclusion. also board of founding, and we've a purpose, lead XX% every deep has representation. in of e.l.f. base, our paw. to We're the employee with over women face public continue companies diversity and our with to eye, milestone had We Beauty only representative all directors proud diverse and stands over lip, U.S. with commitment five Project a over Z one on Unicorn. accomplished women, estimated our millennial of this the We our reducing with of journey significant We focus an XX% packaging XXX,XXX five consumers on strategic young XX% unwavering executing of XX% year, excess achieved Gen over this a imperatives. pounds through serve. over sustainability is diverse and we is

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find sensation to boundaries. and campaigns of Face. moving song, with one viral challenge, to ways continue a engage the beauty history. most became our Eyes. original far global featuring TikTok community, first We music, remains innovative entertain our traditional we In our beyond hashtag TikTok which in Lips.

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votes great the category beauty skincare off many. brand global mix recognition Keys beyond global platform second [Video and to a the brand we're a continue the is Year Keys the of year, resonating out among over receiving Top our with consumers with by fourth is on with a reflecting year this brand spirit. Beauty's and press Instagram efforts The Marketers numerous to we're as set engagement recognized year, semi-annual brand of and teen one many number with new Keys product launch rank Alicia Most women. with focused with of are with Z. of Newsmaker above metrics our building to the win start. the Soulcare, and XX both the last since holistic and well body, appeal called one an so billion took impressions, just cosmetics away We're in important from Keys Year XX to We're for trending seeing spot, about particularly Gen few a a going to Presentation] growing excited multi-brand step of consumers portfolio brand in favorite Alicia months beauty lifestyle just is groundbreaking increased level survey as broad Soulcare men is brand All eight Powerful as engagement keyssoulcare.com. awards. encouraged the Sandler's Piper our carves This other launch. Brands, Soulcare, mind of on from averages. one in Soulcare wellness. Our well healthy care of We inspiration to We awards. an the in our of awards. transformation

our be messages are Our weekly to SMS one are newsletter subscriptions email our driving growing and of channels. strongest conversion text proving

encouraged to PEOPLE the the experience. excited packaging fresh about plant-powered the are first by imagery, brand. a beauty and we're great aspects price WXLL months, we're theme many provides we year and year In clean the starting our a The key the expression this transformed this media phase PEOPLE, was strategy, in-store recharge was brand, feel that as new to channels, this operating website, including brand. of coming momentum of social full Looking to We WXLL see. points,

Our year-over-year, Amazon, elfcosmetics.com, ago. new major with year loyalty are Squad triple-digits step from up Beauty fiscal On second has digital up dot-coms X.X consumers. X% These across XX% channels XX% XXXX, elfcosmetics.com year up over and this and is strategic members, imperative a up program. Squad shoppers to of on expanded consumption digital. were for consumers Digital strength our remains Beauty business, throughout a approximately year-over-year. skincare in total over-indexing our XX% of strong signups our now million retailer

rates average Our our almost on XX% loyalty higher drive sales of order values, members more have retention stronger frequently, and have purchase elfcosmetics.com.

fiscal Cosmetics brushes, segments, success and approximately on our in make centers concealers, core third up e.l.f. half XXXX Our in saw strategic continued imperative innovation. primers, brows, sales. which leading our sponges,

in segments all gains and the number continue in market share have two drive one to We position each. five or

foundation helping brand the biggest drive CC within top quality categories QX, beyond momentum create prices. our Looking core our are we our to CC largest at Lash a Two In were Skincare focus e.l.f. Camo ability unique color which mascara, Cream two segments, of of prestige products to Mascara, it Cream and in major to remains portfolio. extraordinary cosmetics. Camo range and skincare our that continue selling leverage down launches our versus developed, Loud skin product. response in ingredients, collection a product The with X.X initial rituals. consumption soul on product in has Keys nine our five category. includes stars channels out incredible with nourishing ratings formulas, been for offerings and dermatologist average nurturing clean of category Soulcare of consumer the skincare X%. brand's was year track this was up overall fuels momentum further XX% The product and keyssoulcare.com. was

largest retail partners. sales Our fourth strategic national two imperative basis per e.l.f. Walmart on our Target, with industry-leading and Cosmetics is productivity at our its maintained driving productivity both foot customers. a

earned both the Walmart and pleased expansion space also are Ulta with we We with Beauty.

is XX is year. store and today retailer most the For share standing from longest three our less Target achieved yet last position of number This many and national legacy feet e.l.f. context, color than number about brands, on footprint up $X is significantly cosmetics developed the our average.

now fiscal And in Drug XXXX, in In which up ranks expansion in retailers. up this UK, we was number e.l.f. and shelf year, we footprint growth. approximately six the with the business. brand eight like about year, launched earned of mass Mart milestones last number XX% is expanded XX internationally, feet. Italy. Ulta achieved past post India with the with cosmetics in like e.l.f. only we Canada, space space average our new from Shoppers Walmart key and our is geographies of Our and new now to new Even eight about customers all make Cosmetics feet. top We XX international in opportunity in see

year XX We're against basis delivering FX Our savings cost fifth headwinds. brand with we saw related expansion strategic this gross to and is pleased pressure of margin points the growing investments. help tariffs imperative fuel

by to continues have lean rates. savings techniques manufacturing our to Our operations team generate that margin strong cost gross contributed

transferred related our successfully containers, cost, shipments a no is products across we COGS imbalancing the pursuing in competitive shortly. faced deliver some best costs. liquid in that PEOPLE number year, chain In asset-light this significant all pricing. about platform, our slowing our manufacturing delays. supply operations we companies, we're advantage We us our more of Mandy of brands. accessible into of The had savings, facility speed will other speak seeing China redeployed longer Additionally, Like believe more we're and COVID is enables operational which which unlocking to combination to quality a increasing our matters, WXLL scalable many our fill global this California. plant and transportation

suppliers our diversify fiscal engineering focus time. have on Thailand and with made can chain. existing business that chassis operations innings look end, progress supply in we has in and to imperatives deeper strategic a we investment the As new been team ways to supply decision into still over and chain we're with and have we XXXX, both We advantage case, China. The and multifunctional the work further to the stop five each. that leverage continue in both strengthen in terrific for started early believe on to revised we instead with got Taiwan To our we competitive and plan the our we

over Before why perspective let continue optimistic to fiscal I'm Mandy, can XXXX. provide more turn a momentum the that our of me I call into bit we

weeks. announced consumers TikTok Enthusiast a being recently live a like Got seven to media series platform over hashtag in three even views Gamers first now digital contestants days X compete Gamers of billion further continue America. and Talent and Got gaming gaming TikTok chance our billion follows just in of E.L.F. is to millions launch brands. largest they of pushing The their plan TikTok for a disruptive, $XX,XXX, we products. ING win North the generated course, new in as e.l.f. XX a Gaming, new partnership and First, This showcase fans talent views and few in Talent. to over with the in front To We week bring to frontiers

We plan like-minded to continue also with unexpected disruptors. partnerships

space one a see a amount The example, example, founder Haircare strategy Addicts. we're pivoting the plan and foundation, push gives announced in is white across entrepreneur, into [Video we Beauty our thing that geographies, As skin Atkin, brand still collaboration fourth like brand our with e.l.f. Jen and In just we that confidence Presentation] mascara of portfolio. Mane and our me April, Ouai categories portfolio. marketing to significant of treat second We for expanding larger to skincare. as categories, our in further skincare

entire also to and purchases require Keys ever you'll our the From Soulcare in skincare in geographical purchases we planned innovation in driven about We're generally and the skin We're excited excited Soulcare with represented both marketing U.S. impulse, While and we've a coming as Ulta's EU. retail color key. engage opening accelerating the first and new Keys is internationally, global often driven months, a both like the execution store eight Soulcare about In perspective, is sound education strategy for launch in e.l.f. doors sight way strategy. efficacy across are by Keys by the countries Douglas. are different XXXX. cosmetics see takeover and inspiration fiscal consumers.

realizing our XXXX of and full business we're in Looking fiscal in stages beyond. and the believe see opportunity ahead, potential the we significant still of early

speed Our have I'll strong now portfolio, are and call believe over Mandy. a pandemic the business the our future. brand digital to brighter ability more positioned an strength, we're core for value at fuel e.l.f. we performance. to and turn even to Today results diversified entering continued our proposition adapt with

e.l.f. highlights Cosmetics In by the the year year Tarang. and I fourth the versus driven for to you, results. outstanding fiscal spending Thank am prior share XXXX quarter Soulcare. brand, of pleased stimulus-related ongoing momentum net We the the quarter, sales of and ended year our Keys benefits fourth XX% grew launch full strong. from

FX ongoing delivered well EBITDA our We as adjusted as and gross and marketing to digital, with growth margin. increasing XX% investment in also headwinds

delivered broad-based to full fiscal sales and e-commerce, now across Let's net strength our of our international turn e.l.f. results. retailers. for We national growth year XXXX Cosmetics XX% with

We from saw mix of XX% approximately of accretive cost year savings prior launch full points and margin a Gross we year, gross compared benefited innovation, Soulcare and margin XX also margin elfcosmetics.com. the of WXLL Keys to from a basis was benefits PEOPLE. shift to up

of capabilities ago. adjusted digital We also much adjustments, Fiscal to to higher Marketing XXXX per approximately were offsetting space XX% was adjusted as operational year, behind or $X.XX and related FX of and $XX million diluted started $XX to an of e-commerce to was as sales related net year to net for XX% the approximately build-out $X.XX rates. On EBITDA million and well margin a investment years, year marketing, was retailer XX% a benefited was adjusted our relative as the EBITDA basis, by diluted expansion, of volume. last impact prior share investment income activity, innovation costs increased year percentage FX, Partially changing sales. a increased from to and these compared Adjusted so year was down XX% versus sales impact digital the $XX less X% of digital, compared although ago. per driven to costs we and million share benefits net to feel or headcount costs of as related primarily marketing SG&A XX%, the last inventory tariffs.

revolver. balance sitting million. We into to and remains in and over flexibility. hand, sheet taking we the pricing, loan the April, on of strong In able refinanced further $XXX our million bolster million to Our better cash existing credit We facility liquidity to conditions year our compared to at favorable and with cash a facility market a million the with with across improve facility revolving balance access $XX of terms $XX of combination our ended a opportunity including balance $XXX credit cash of $XXX term $XXX year our million were of advantage ago. million board, the

exited Our and on inventory where a year-over-year quarter. December ending million basis was planned than the balance as we $XX higher lower

and for priorities five our year to We extensions. remain on supporting focused behind strategic our expect our cash coming the investing strategic imperatives

for fiscal XXXX. let's Now our turn outlook to

a mid-to-high the compounded fiscal XXXX be growth and within year economic As adjusted outpacing over first EBITDA line with year reminder, the top three annual horizon. long-term net will targets growth that our single-digits model, growth which sales

ahead full our expect at approximately model. the of tracking we economic net to sales X% year, For or of growth XX% long-term

and and adjusted adjusted approximately XX million to million. $XX.X EBITDA sales of faster $XX EBITDA points We grow expect expansion net margin slightly resulting X in than to year-over-year EBITDA basis between adjusted

$X.XX per We $X.XX to expect income adjusted and $XX.X share. and diluted $XX of net EPS million adjusted million between

share to XXXX approximately We $XX to shares XX%. be approximately rate million fiscal expect tax of a count and fully our XX% diluted

Let provide little XXXX, color a more planning with assumptions top starting fiscal me with for our you line. the on

outlook momentum line for the Cosmetics top continued e.l.f. brand. Our reflects

sales We benefit There full year Keys key contribution Soulcare also PEOPLE. from momentum. and expect that from balancing WXLL year-over-year of net factors an are to increase two a

of fiscal our of compared in XXXX major typically enjoyed confirmation space decisions the significant First, Retailer the this and of don't Cosmetics space space gains XXXX. in to major as expansion retailer we e.l.f. we come outlook, any for we any in date later year assumed have space gains not call. as have fiscal

experienced shortages spoken port we demand. and many have as costs, XXXX. to that result a companies shipments through as we in work impacts, mentioned, This resulting of delays move China these other in container elevated from consumer monitor have we Tarang is delays congestion the as shipment closely We’ll recently about. fiscal as Second, and meet transportation

Turning now EBITDA. to adjusted

basis points points expansion basis margin approximately adjusted year-over-year. of XX We for are EBITDA X planning to

down rising headwinds material transportation face gross We as expect costs. year-over-year, growing will FX we be and margin and

gross We including portion select and can we impacts, initiatives. help cost are savings to price these pulling through levers of margin a offset where increases

a be standpoint, spending Of note, at top ongoing marketing margin be we're step to portfolio our in we marketing line XX% a this momentum. about, in pressured marketing the expansion the pressures basis spend growth we with start on non-marketing EBITDA continue we of the just to approximately we're fiscal pleased in XXXX strong of XXXX. of spend, benefit we for planning coupled we as lap gross SG&A is expect the QX, in a this ahead we with Keys drive sharper largely the of our as key adjusted margins from As and take excited stimulus pandemic. a Conversely, levels EBITDA of spend as summary, Soulcare percentage and and areas fiscal top of WXLL result most to in adjusted related in we digital expect cadence outstanding sales, In XX% QX, year-over-year planned expected QX result, during opportunities leverage to months From in last initial as XXXX. Both our about on we spoke will look to sales at margin year. year, lower a as as fiscal a scale results a and PEOPLE brands. our expect up

gives the may category, last are that questions. our call the the on the driving demonstrates to Our you and With and performance five an quarters, over operator, strategic basis absolute open for me results future. how now imperatives both nine relative to confidence

come will from will first the Instructions] Morgan [Operator Mohsenian begin Stanley. now Dara today We question-and-answer with Our question session.

guys. Hey

in what what just us QX. drove So the you're to is of QX, be you're two couple recovery may the of rebound the category items touch category, sustainable the it, how Obviously as you're here your seeing above bit in post or terms some of side. out quarters? Can then and the so on that I help expectations far color the quarter? given wanted basis U.S. revenue over a cosmetics seeing looking looking months your back understand progressing And on next maybe quarter? fiscal on XXXX? How the months upside, in came few into to in you're you Thanks. just the in those you what So real of last

problem. no All Yes, right.

the growth. I'll ongoing start that that with will by momentum One off the QX. pleased key XX% Really saw start QX we're continue growth is the driven drove just I into XX% So in with with we was brand, that the QX. key drivers that have e.l.f. factors. and by four saying we very saw that we

I and Secondly, is third sales we quarter. stimulus. added shifting to pipeline that launch Keys QX that quarter. had out an we've This far would out impact. round largest stimulus of the of three the rounds, our also about was by last impact impact say of in into And so seen impact the also Soulcare that the to related also QX order to an had that the lastly, spoke that then also quarter

think roll related as say we underlying momentum the with stimulus of I but overall about off, some also we behind kind will stimulus well. saw quarter, we in stronger So things the certainly being talked pleased QX that would that

into on see continue And QX. so, you'll that

resurgence the And seeing definitely Okay. color category, on in we're question your cosmetics. on a then

up the I four time XX%, we up XX% was were that category weeks same think scanner over data, in in period. the last

the was stronger is would broader we're XXXX. category where But perspective to of back it results a e.l.f. even not seeing from view, still say in a I So on

to where I relative think it down XXXX. in X% was it's

we're by have lifted, still more seeing a restrictions and on into year was further vaccines, by get benefit, bullish last category this as but what we're encouraged we're stimulus some Certainly people are So as we retail, we recovery, go. encouraged people lapping quite overall. as back We're time, start seeing at to the get stimulus spending the stimulus even forward. we're as around of looking a going

issue containers, upside weeks cetera. here? Okay. the on more in shipment just something et And few as with linger Is demand in that if out that you if that year the of next there ability Or I the issues a could could short-term follow-up Thanks. forward? your is is retail expecting? of supply incremental products do versus what going look think And to terms about, potential you're for how actually you

Sure.

What our we're that So our other reflective even that's I facing say feel overall tend our you've confident companies, in you tell I in We out, containers, imbalances to balance periods supply. disruptions other that guidance at of we’re and had had where next global like and in the manufacture many us going strikes, least months. for and will capacity imbalance port history to imbalance we've is ability impact would is the terms to in products of seeing. few

XX% So takes balance revenue the any that of to the into and currently. consideration X% we're growth supply seeing

Thanks. Great.

comes question Sandler. with Erinn Piper next Murphy from Our

Great, bit if thanks. the brand. if specific out if could Soulcare quick will quarter kind there to you're I'm the abroad? sure move little then Good additional a shape And what for throughout afternoon. out you year, I the Thank you're in if if follow-up. a have we through you. And of is as the Mandy, My question roll retailers But like think I is you around thus – pipeline speak you Keys if far, not breaking year, guidance kind could internationally. the fill any particularly then of curious call the look response you could just more was Keys about as how help contribute. out us

we're really of with pleased the launch Keys So Soulcare. Erinn,

particularly pleased we had Instagram of As our mentioned from brand higher. key customers. in announced And seeing what remarks, since prepared I with we're over support the rates impressions, we've press the XX terms billion are engagement we're our in

weeks. that first they the a Beauty we brand at So were the Ulta our dedicated store time for in entire takeover XX the store of launch, was launch, front to it ever the

really they're As in doing brands. behind of procedure what plans an against on the their brand. we've has pleased the we’re that kind the Douglas to equally section, We're with with cap moved pleased end

shut accelerate brand. tell right will is, has Soulcare Keys internationally been I as move internationally internationally now a So definitely down. Europe of our you What global much

of our you'll some encouraged hear to more still talk did about internationally. rates as Keys So which that get Germany, but to in as months vaccination up move closed, as looks us a I'm particularly excited out see markets few there, for like start Douglas goes launches is we're better you what up. open

what Erinn, And question just Yes. then we quarters and the your impact are on to the seeing. on

not the we're the within can out we've breaking launches, guidance brands. So impact of pipeline But that new XX% is product revenue or for of that to things our of all I those that each provided. embedded say X%

pricing that a any Thanks percent quick its And of gone Mandy. you, margin you some have Thanks out? taken think were taking gross mitigating there you I for pricing. about curious skew if the to great. response, Okay, in Has on Mandy, you follow-up pressures for some price brand, what and is e.l.f. the base just so on of called just consumer much. you of been think factors any as

Yes, similar internationally, and our the and effect time we price we took talked to up in is some about smaller, a has as our it took. for skews. now, I show pricing, price shelf, – can pricing we'll quarter. pricing about much to recall, at can this say And we last that that lever, is did that of for third we that July just in of we U.S. that that time did using in round talk on And in a so May that, at pricing say XXXX. take increase we increase not a take XXXX about took I

we I U.S. larger May. took say is So internationally would here in a the increase versus this in what price

So on definitely in a about help to to that is coming have months. some more looking FX to, the headwinds that offset we've we're and lever say we'll of spoken the

Great. you. Thank

Yes.

with Andrea J.P. Morgan. Our question next comes from Teixeira

us to much congrats you, helpful the I could be if XXX been XXX how that And you're your the I bps and all right? would you appreciate XXXX. you're about to – think baking will comeback, it Thank give assuming So in. fiscal disruptions. bps commentary back it But then I come to looking to you break disruptions the be best the or have the on by quarter. we supply I of think give related a we've and outlook thinking Soulcare for an and us want understand in not at I'm then single-digit on both around I the diluted understand you you your Mandy, the don't chain and from PEOPLE? have can then contribution underlying And that of organic, down from idea with mid thing but you're the brand, in that, WXLL shares. number if Keys if follow-up the Is impact

Yes.

Okay.

pleased on to a do on we in will at said to understand stimulus impact take trends on right, with me where data first we're that really the that to kind e.l.f. little and prepared on momentum because investors underlying as cycling let I of brand. the I we’re we're we have look in expect now e.l.f. like that Nielsen, stimulus. So of through, analysts be to I Nielsen think have lot And the trying on pulse seeing the that base volatile, I top remarks, that of a we seeing of a say question go we just the a bit underlying lot the stimulus our looking moving brand. we're by the brand. get and would that, a say trends parts

And packaging PEOPLE, where for strong we WXLL we're and growth would and it from we that's PEOPLE, build e.l.f. an and if as – expect standpoint. about with a positioned about WXLL of recharge momentum that's internationally PEOPLE, showing I up is just Soulcare, there brand. feel to also have So describe behind Keys up the it this how more build with incremental, launch Keys you broadly, will that you're WXLL at and said, year certainly be then shelf. that thinking impact. will that kind be an We

brands. give color the additional that's of our can each you So behind I

tell each our but significant you I rates is, carry is our a Yes. we of of imbalance, And impacting what then it's on benefits the now, retailers have the fulfillment inventory. of container one right definitely amount

are a So healthy. seen levels, we those in-stock impact terms pretty haven't still of yet major in

And forward, containers we'll front in. that so, as report particularly terms we balance what learn and managed out of that in through that, imbalance through we'd get half year. in the on able will more we've And as embedded to go we our we'll and more it we'll be the see, of hopeful guidance

high position And monitor like launches, critical initial much – summer in summer, we that June a Yes. as the - for as On about sounds is second be as rates December the very And confident for the hopefully said, you way have the like a calendar it just feel I again. you which be you what that, be but you you from mean, you’re better to fall. Is then obviously better summer to with, you you if that confident then that to feel what's were quarter. late said your would beginning, is few not the to going the thinking? will, we the should going saying bad happen quarter launches, quarter right, by

which monitor still we'll we resets, so usually it. it's summer. would key hope. fall during what dynamic a I That's you we mean, which a the tell is What ship I situation, is part,

make time. And of be Mandy our that able and supplementing set pressures can some sure properly those on about. shelves to the reflected with that's are some cost talked in air freight We that shipments to

– representative last what helpful. be year us And of the of compensation, be puts takes the dilute one all a SBC bit may – not Can you one think year that's understand fiscal not shares help higher, and and of parts. – And moving obviously the your thing was last I little those are may last there? Tarang last what number like

Yes, Andrea.

Just on XX our share was fully that QX you if the we count look count provided, million diluted share shares. around at

so rate add out, where our diluted in. count, the share burn that's many additionally, have exited appreciation we in can we down count in we million shares If also X%, then And added so had price, talked XX and our about anti-diluted you QX. have the on going recall share the into so in to the share turned evergreen, you an that being to

that And to that that's for XXXX how XX we're million range getting so, fiscal of kind

perfect. okay, much. you on. reasons, pass so the for I'll Also Thank it

Yes.

DA Our with next comes Bolton Weiser Linda from question Davidson.

thank you. Hi, Yes.

treating a can it. sort about treating does little a me skincare And to it as fourth less marketing what a overall that maybe needing of brand? color mean, both? kind the can as about Thanks. fourth your effect you behind you mean you comment you investment of brand, more mean get kind more give just as talk boosting just So what bit on sounds brand that by of – halo I like

year look Sure, this fiscal that that if Linda. last XX%, in a in channel momentum X%. track skincare, up sales fact, We've take you seen at and skin great in down category a e.l.f. was was

skincare launched on Obviously This high Soulcare Keys of e.l.f., have So reflects strategic for we've on category growing momentum for plans strategy. been part portfolio. having some hopes our of quite was as overall as time and the skincare. first executing just importance we a skincare

in reflects XX% impact digital we're percent So it is – than that marketing marketing the for sales. consistent the reflection skincare just XX% overall color to doesn't It staying as a to – of marketing and a that cosmetics. skincare, approach our necessarily percent as different levels,

and we're our own history While by driven driven impulse skincare finding education. is color cosmetics, through really and efficacy often trend, by purchases are

that taking really we've success been really differently that of than cosmetics, the having. so I builds skincare color really And think approach treating on

then Great. there geographically about in launch Is to on any line? the up skews talked timeframe the just coming for And further Thank year. of additional you. line, expansion you've next Keys Soulcare the

focused approach is Keys its in beauty true conversation. lifestyle was two ways. a content, addition in it's in have Soulcare, we and Linda, in One different it brand multi-category is on that, There to But scope. community

body announced range, you'll body. category new in and we be a skincare, three piece today where the categories next out be So see with follow-up products additional skews. that think that I in is there our started with in They’ll other we will coming

you'll innovation the on continue Keys to We robust a year. of product a stream that have new Soulcare pipeline see news throughout

Is little fourth I we a flow projected, balance. got better a you've question your any a cash had there than Great. and on cash in healthy was quarter nice bit And then actually just guess the thought repurchase that on off there? you've to returning are gotten acquisitions to of thoughts share ground, additional kind and the what and your Keys kind what Alicia your now PEOPLE thoughts relaunched are the WXLL of, the

Linda. Hi,

So PEOPLE strategic acquisition From focused on overall strategic WXLL really have at supporting as very our hands supporting on are kind on we imperatives Keys front, our Soulcare our with it's point are – just and been the first are and our forward with front also last PEOPLE. share repurchase WXLL is our our – priority backing PEOPLE. year, of priorities extensions, standpoint, to thoughtful list, that and we Keys full this but are cash that up we and cash we just an something look feel priorities, on acquisition being WXLL that

thing we think Linda not And think of, tuck-in of acquisitions, capability other team think success about in potential And kind a the time. brand it's we up of only I is, incubating with when I new the we add the our have only strategic I also brands. shows that of Keys would stood extensions, Soulcare year's it's

portfolio brands with interested definitely product portfolio, enhancing or other acquire our we we're kind So either of in-house. that in build brand

Thank very much. great. Okay, you

Wissink next Our Steph Jefferies. with from question comes

Thank question have tracking sales the you. pressure. EBITDA gross afternoon, Good and with together, I margin a everyone. on growth just even the

than in the is period this grow to first sales. mentioned you year Mandy, faster three EBITDA think I a target

do comes try pressured to If you back than to is you your guidance what that that the less to source from, the upside or see to of be expect to spend were gross sales where drive likely upside line? margins embeds,

gross always feel It's balance. Steph. a question, the pressures We for real. margin like do Thanks are the

pulled to And help so toolkit of pressures. levers margin other we why our within that's have offset those gross some

focusing leverage. So expenses the SG&A deliver to the of five just within to points pricing help XX on non-marketing that EBITDA that we basis took

Now on a view was we period. three-year our what talked about long-term as three-year that outpacing think economic over out model, and we about look that so EBITDA with

so be on. And to continue focused what we that's

growth. I it quarter things delivering a as take EBITDA year So that time one in And we a we'll pressures, even and materialize. leverage great talking just at still are of kind we demonstrating cost see with feel how great about

specificity around going QX remind up it modeling could, I if be last that that year-over-year, year-over-year, given us marketing step purposes? like to Mandy, Can what was could you that kind was just think I look function just mentioning down gave of you some for below your year. threshold

Sure.

year, last of of the that recall, kind let's back you if investment. year was pulled of beginning COVID on So marketing so QX here, had in last we've see and really our

was marketing sales going you're see of some only in So step to investment QX. year XX% last up there, our

step certainly So we this about the there a for year. to QX in XX% to talked expect so year, XX% of up see

you much. Thank very

Yes.

comes question next Bill Truist with from Our Chappell Securities.

Good Thanks. afternoon.

Good afternoon.

at little the now. I this that talk has pulling least the terms the Hey domestic manufacturing? Tarang, process, mean up long stay you plug can little giving gross to surprised a more kind Does Are anything project going in you're you're find it's Just, from about a bit margin away know a decision out the of that elsewhere? of to year savings into you cost permanently domestic so potential the of manufacturing? Did walk you expansion?

California, three and the third the really advantage U.S. and supplier diversification say One Yes. time supply of really was our chain reduction. first cost terms speed. we're was plant overall Well, I Southern We foremost, have operations combination the originally would case business of it with things. and in two Bill, on lead and done we happy quality our savings, based on was in cost,

number to COVID-related that Now of had delays a related plant delays. faced

to we're that of what evaluated actually profile lot chain able full from we that get to able it be was the and we a to into time get money of going the the rest supply by the realize cost our potential. to determined work, take So engineering to really its facility more relative

that interested Now having money have to business diversification not put from time easy decision let's in the standpoint in a supply said remain we that, lead the of though reduction. so of not that our into pursue, advantage was chain. let's rest relative more We an saying and facility

out. still remain business domestic in leverages manufacturing terms in power as multifunctional And face we time China. the so same we as Taiwan start suppliers on would both And California the diversification long up say, diversification, as manufacturing new that in or other open I mentioned, and I the pans will that delays on the of our team in but we COVID-related of the gives have us sources facility, front, Southern that the case Thailand did

we I'd And have the to say, looking we can operations. in the strengthen wasn't how advantage our just particular So always that further see in it we're case facility.

for write saw? And off just that no or down charge I picture that there's that

charge we do $X.X Bill, a that in million of Yes. QX we related have restructuring that took closure. to

entirety? the was that And

right. That's

space Got gains. doesn't it. gears include as on at space gains, switching I your Mandy, And shelf then guidance said, just you shelf look the any

fall, chance more just it's time the are in in fall. I gains of is or if new But think not next where of is for to the you're get more this the saying months, going and I'm right shelf couple in would spring And – you there gains of? fall space is a you're the a past whole that you're ones space you're that expecting over in process the kind what we know bigger that get that space. lot a existing the of shelf in velocity that we'd

Yes.

So remain that gains. we usually do have confirmation such But I because said, of a space at do in point. our of We baked shelf indication no into once I we record like will our space gains of remarks, guidance track have prepared this that gains believe and getting we each year. hopeful haven't shelf just we

spring And decisions, this summer. are really little for bit later this the made Bill, a

innovation last share appeal. grew we're so And says, the consumer momentum amount and the our overall of pipeline have, year, given quite hopeful we as only we Mandy productivity, not that our

on So to get we terms stronger We guidance want space. our of just space. than stand, in think, ability to with I more shelf stood shelf cloud ever expectations we've didn't

it's the the So throughout a more clean from space. get of guidance no on we confirmation And we'd year. if did standpoint update space,

Got so it. Thanks much.

Yes.

with from Andersen Blair. William comes question Jon next Our

on WXLL one one have quick PEOPLE. afternoon good just I everybody. Hey,

going could if but as plans PEOPLE gaining about you a on, distribution restage this talk a there's it little been describe WXLL you could for If more you'll your sounds bit like that's well. new year, if be

the the to retailers one expand trade could of acquisition, you perhaps of distribution brand. your the at the that theses particularly with was for I that think time national leverage relationships,

So around PEOPLE WXLL plans see you kind just and as growth color for of some the your Thanks. what more it. underpins this year

Jon. Sure,

encouraged are we plans we highly So focus really with on, areas. WXLL are key PEOPLE, that There four the have.

to brand the to seeing new rollout we everything recharging that entirely brand WXLL its similar packaging an is what you'll expression start the next PEOPLE, over months. few on positioning and First you did from e.l.f. with see

really WXLL out on our that new innovation, the in second third is strength is putting coming I'd platform. those The products innovation building PEOPLE out. it and product some leveraging assortment say, our start of you'll on operating seeing the

pricing more historically we most to sharper looking have And and Feel customers. part like brand with COG And Ulta, space were we every would it that reformulate Target. recharge. other able then conscious beauty that Target onto is focus developed. were is the PEOPLE on to already further range, where move of key fourth that significant we’ll So then Target savings operating initiative single distribution, basically we was Ulta, we to the Ulta. I product in our and go at within the brand to platform, say element realize put Ulta WXLL our into distribution. is leverage and the be

momentum Keys great we're PEOPLE our Soulcare the across last with And now clean. e.l.f. pleased we door the own feel is in So space. then WXLL the and out plans dramatically seeing say clean thing fully the beauty I we're would accelerated PEOPLE. also really came right that in WXLL

clean was own the brand. that founders instrumental terms really e.l.f. WXLL with is of its way Snyder, development of of dermatologist of Dr. Renée our journey. on the well One PEOPLE, in

as next e.l.f. see you'll the months, think few in be XXX% I clean well.

So got WXLL there kind benefits growth that company the to beyond are see other brand. momentum we PEOPLE of in the

for the help. Thanks point. Great

Rupesh comes from next question Oppenhimer. with Our Parikh

question. my taking for Thanks

dot-com, anything maybe was out skincare surprising just back buying be stickiness you are your you consumers reopening. on makeup as And you're there. seeing just look then now, this comments e.l.f. I also I to as as at if may business behavior you go So want the if or consumer to seeing well? curious look at

Sure.

about what more say we'd with We've out expect. it's things the up consistent back to talked opened I'd there. back behavior. there's go People vaccines reopening, long as as So, normal on

and and now are before see category in it. we were that kind where in color especially the during resurgence cosmetics You'd pandemic strong seeing very but out a much we on e.l.f. of of trends, coming

hopeful competitors not is it I that's years So Mascara, the makes category on and of also was Sky new seeing, Infallible we're on that's Maybelline’s few as seeing two out but a some in pleased only our there, of still lot the a where said, innovation like really back, I'd of category, Foundation but as level coming key items. kind of the High ago, L'Oréal’s say not trends only e.l.f., driven the but not by consumers we

consumers, online is throughout a consumers. new we we a our category. almost We year. in our it fiscal triple-digits big last And for few It had all real was strength there e.l.f. business, believe which in the I of think new was drivers year. the quite up category, bring then seeing terms of that'll one that the like XX% So And more broader the into for definitely consumers great always of thing activity

And consumers. so retaining has our those focus on been real

And Beauty loyalty of I’m total I Squad remarks, our Beauty program loyalty mentioned as the Beauty had members. for our skincare, year-over-year stronger are we've as Squad in on the So to as which well almost pleased has up affinity loyalty with progress in well. overall Squad basket definitely consumers XX% having as prepared members, particularly been a building new great the terms

on. Okay, great. Thank you. I'll pass it

Mark from comes Astrachan question next Our Stifel. with

idea marketing whole guess Yes, the category, that of in maybe directional to kind separation e.l.f. good thanks does ultimately lead over then of sort skincare, of of placement everyone. shelf makeup that within and afternoon into for time the I directionally this even that One follow-ups. it products specifically and more terms some you're the couple what space of on from keeping going the said that? for So this you year about XX% XX%, mind think drive think A&P holistically factors you on in in do investment a sort had year? first quarter. be or spend I how of of, that the to then separately spend to up lot guess, And finishes I spend where

factors if said, change And and apply do So and down what bit it quickly that? influence can that to? in how need that XQ, how as you you a XQ about would think you XQ, I

Sure.

space, we number potential, e.l.f. see expansion So of new not only definitely but the shelf items. in skin,

skincare X% XX% overall, percentage portfolio our I've calls about that on Amazon X%, of of think yet think, as single-digits prior to channels our in cited a X%, skin in I I e.l.f. sales. it's close track and elfcosmetics.com is

if and shelf. look a going a what's on biggest is at skincare on difference So retail number in online you the versus of take our items

a of had already strategy retailer onto fall resets assortment we've the So skincare with even getting coming of up shelves. more our

skincare on comfortable what of that, been addition, to our I'd opportunity the or with Mandy And increase XX%. we're say, an e.l.f. see space, in increasing Ulta where Target kind on use XX% we both sets at we both more the both earn the in what well as you footprint In overall with able more to of in in skincare we've where like space. momentum places into we getting within then department, Beauty, skincare, marketing areas, assortment housed but do that as that add to our drive side as as is to the similar skincare housed opportunity set, is

said approach brand, rate And on by percent way the it targeting is, so go And the that we for goes a that as a we sales has as through. different it hand-in-hand with brand. much marketing really we're brand pretty we each

just add to it of a with it the turning that off able we turning are to business. terms And the spend, have we because and move in I completely digital flows ebbs quickly XXX% or that, would Mark on of pretty

about great of managing year. that feel percentage So over how course the we're the

you. Thank

Teixeira Andrea J.P. Our next a question Morgan. is from follow-up with

like confirm I taking what to pricing. you want Mandy on the said for just follow-up. you my Thank

be don't U.S. pricing a said that less took So pricing will but of than about you international. And little a understand you to third when I in to want you the the bit quantify alluded SKUs. you XXXX

of May, first so So in not we we thinking, think another fiscal starting quarter in and just embedded is on be your guide? XXXX part how impacted? And going – in should that follow-up price of magnitude how So e-commerce. is increases positively now you can to your be obviously if also about

So wrong. I think me correct I understood Tarang, if I'm

if of You can said growth, you you give XX%, retail.com that but helpful, quantify, be the member both you growth will your and can own in elf.com. us the Beauty but e-commerce, did Squad quantify number

Okay.

take question. So pricing I will the

so in again, broader but about, terms impact, internationally. in the talked of have small it's So we U.S.,

is you think our roughly international of If XX% about business.

roughly playbook XXXX, we the You now took took that, same well. could as we've it's that we assume that in when applied internationally

this saw when that we did as have again, will not the to still providing that not of heavily as So that because large Andrea, in we consumers. business, be XXXX. but it some we're impact our for going, an impact we're pricing we to pulling lever value as not we're want And sure

to that pricing value we're just with way not to also delivering FX so maintain we headwinds offset And take that up all with so the to of some going balance wanting that our consumers. these

on I'm out that thinking But quarter when about we potential right next able report report now. earnings. be we'll impact So that's to how it

business triple-digits. business, total on we e-commerce of our was e-commerce our online, on business. XX% year finished about your up question our And the total where was it then And

e-commerce I roughly our year think XX% before, – is X% FYXXXX finished year the business. in it's in of only at above in FYXXXX the

a well-balanced between that retailer.com definitely saw we and And Amazon. growth growth there. elfcosmetics.com, was So great rates

all look saw three major our we the across we growth So areas of at that on. business online

That's helpful. you. Thank

Amin This Tarang like any question-and-answer concludes to for I'd back to closing remarks. call the session. our turn over

believe We thanks the us August today. is we'll team and e.l.f. of you forward to the our at to speaking collaborated Blair share. grateful pandemic confident well. when upcoming strategy. navigate and future challenges William discuss our conferences, at joining you and and in the our our long-term for so of market results. bright some I'm our with quarter I Well, be and build Beauty, remain seeing in incredible for Piper Sandler you Thank first look who've

presentation. for The conference attending you has now concluded. today's Thank

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