ELF Beauty Inc (ELF)

“For fiscal ‘24, I don’t see any risk at all related to the project because we don’t plan to implement until we get into fiscal ‘25.”

“So, I think over time, you will continue to see us pick up more space with each of our key national retailers.”

“I think it’s fair to assume, given the outside sales growth that we expect in Q1 that your EBITDA margins could be stronger in Q1 versus where we have pegged them for the year.”

“So, this is a temporary – next couple of months, I continue to see elevated out of stocks.”

“Our outlook implies adjusted EBITDA margin leverage of approximately 30 basis points year-over-year.”

“With the combination of our top line momentum and strong marketing ROI, we’re planning to increase marketing and digital investment to approximately 22% to 24% of net sales in fiscal ‘24 as compared to 22% in fiscal ‘23.”

“Our outlook implies adjusted EBITDA growth of approximately 24% to 26% versus prior year, on top of the strong 56% growth we delivered in fiscal ‘23.”

“We expect gross margin benefits from lower transportation costs, favorable FX rates, margin accretive mix and cost savings to offset costs related to retailer activity and space expansion.”

“Turning to gross margin. In fiscal ‘24, we expect our gross margin to be up approximately 100 basis points year-over-year.”

“In Q1, we expect our net sales growth to come in well ahead of our 22% to 24% annual growth, reflecting the ongoing strong consumption trends we are seeing.”

“We expect a fully diluted average share count of approximately 57 million shares and our fiscal ‘24 adjusted tax rate to be approximately 21% to 22%.”

“For the full year, we expect net sales growth of approximately 22% to 24%, adjusted EBITDA between $144.5 million to $147.5 million, adjusted net income between $98.5 million to $100.5 million, and adjusted EPS of $1.73 to $1.76 per diluted share.”

“We expect to continue our free cash flow generation in fiscal ‘24.”

“We expect to recover in Q1 and build inventory through fiscal ‘24 to support our holy grail launches and core franchises.”

“Even with this ongoing investment, we expect to continue to deliver adjusted EBITDA margin expansion in fiscal ‘24.”

“But if things perform better than we expect, we certainly could see that be a margin driver over the year as well.”

“I think it’s safe to assume for Q1 that the quarter – we don’t give quarterly guidance, but I think to just give you some color, the 50% that you’re seeing out of scanner data right now, or better, could be where Q1 comes in overall just given what we’re seeing on the untracked side of the business right now as well.”

“Susan, this is Tarang. We're not ready yet to give FY '24 guidance on marketing, but what I would tell you is, we're highly comfortable with the 17% to 19% range we have this year.”

“So they will have some periodic new items that we'll be looking to chase, but overall, we remain highly confident in terms of our ability to meet the demand that we're seeing.”

“So I'm highly confident of our ability to continue to not only pick up more space, but also optimize that space.”

“The easing cost environment gives me further confidence in our ability to continue to expand our adjusted EBITDA margins.”

“Right now, pricing is not on the docket for us to take again.”

“As you know, it takes some time for our inventory to turn through those lower costs since we capitalize the freight with the inventory. And so, as we think about the coming quarters, it certainly should be a tailwind for us as we as we think about cost and gross margin.”

“Even in Q4, still above last year is what's implied in our outlook and again, 200 basis points higher on the year.”

“And then I would say, the other thing layered on there are cost related – one-time costs really related to space gains that will flow through in Q4 as well.”

“Now there will be some out of stocks on certain viral sensations.”

“In terms of the key puts and takes for the year, we expect gross margin improvement from the price increases implemented in March of last year, margin accretive mix and cost savings to more than offset the impact of higher transportation costs and cost associated with space gains relative to prior year.”

“Lastly, we continue to expect a fully diluted share count of approximately 56 million shares at year-end.”

“We expect our fiscal '23 adjusted tax rate to be approximately 19% as compared to 22% to 23% previously.”

“We expect adjusted net income between $75.5 million to $77 million, up from $59 million to $60.5 million previously and adjusted EPS of $1.37 to $1.40 per diluted share, up from $1.07 to $1.10 previously.”

“We expect adjusted EBITDA between $110.5 million to $112 million, up from $93.5 million to $95 million previously.”

“We expect our cash priorities for the year to remain on investing behind our growth initiatives and supporting strategic extensions.”

“The other thing that we're looking at is on the FX side. We source a majority of our products from China, and as we've seen favorability there, that could be a tailwind for us as well from a gross margin standpoint.”

“So we talked a little bit about transportation cost easing and that – if those should sustain would be a tailwind for us as we head into fiscal '24.”

“Significant whitespace remains across cosmetics and skin care, both domestically and internationally to support our expected top line growth.”

“We do not have an additional price increase on the horizon.”

“So I would say our outlook bakes in that we see continued growth in the e-commerce channel, not at the tune of 75%, but still solid growth for the outlook.”

“Yes. So when we look at the gross margin implied for the second half, I would say that we do -- last year, we had a higher gross margin, if you recall, in Q3 because we walked away from the holiday program. And we do usually see it step down into Q4. So I think that's a fine seasonality to assume as you think about your model.”

“And I do think that will be a little bit of a tailwind for us here and into fiscal '24.”

“Well, certainly for this year, I think we definitely see it. We'll have to wait until May when we give our 2024 guidance in terms of where we see the ranges in. But what I'd tell you is our objective is going to be continued strong investment behind our brands and delivering the EBITDA margin that we talked about, and I'm glad to be able to do so this year.”

“So our guidance implies for the second half of 19% from a net sales standpoint, which is continued strength.”

“We also continue to expect to deliver leverage in our adjusted EBITDA margin.”

“In terms of the key drivers for the year, we expect the combination of price increases, margin accretive mix and cost savings to support our gross margin improvement.”

“Lastly, we expect a fully diluted share count of approximately 56 million shares at year-end.”

“We expect our cash priorities for the year to remain on investing behind our growth initiatives and supporting strategic extensions.”

“We're encouraged with the tracked channel data that we're seeing right now, seeing 40% growth phenomenal. Given that, we do think that our net sales guidance. We'll wait a little bit more towards Q3 versus Q4, if I were modeling that. But I think it's prudent for us not to assume a 40% run rate continues for the balance of the year.”

“I think we’ve had a pretty good track record over the years of picking up space and I would expect that to continue.”

“We expect Q2 to be lower than that due to the shift in marketing spend out of Q1 and into Q2.”

“From a cadence perspective, we expect balance of year adjusted EBITDA margins to be in the mid teens, largely due to our normal quarterly seasonality.”

“Like many companies, we do expect cost pressures to weigh on adjusted EBITDA margin this year.”

“We expect the combination of price increases, margin accretive mix and cost savings to offset elevated transportation costs.”

“We continue to expect double digit top line growth in each quarter of fiscal ‘23.”

“Lastly, we continue to expect a fully diluted share count of approximately 56 million shares.”

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

“We continue to expect marketing and digital investment to be approximately 17% to 19% of net sales in fiscal ‘23.”

“We’ve not embedded any tariff relief in our outlook. Therefore any rollback in tariffs will be a significant tailwind to our gross margin over time.”

“We do believe we're a beneficiary, not only in terms of taking share from other mass brands, but from gaining volume from some of the prestige players as well, particularly given the type of innovation we have and the strength of that innovation, we believe that we are actually benefiting both from share gains, as well as pulling from the prestige buyers as well.”

“Yes, we do expect our operating cash flows to be stronger this year.”

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

“After significant variability in consumption trends over the past year from the combination of COVID and stimulus-related spending, we believe our weekly sales levels have rebased to higher and more normalized go-forward rates.”

“We've successfully navigated a variety of supply chain challenges throughout the years, and expect to do so in fiscal '22.”

“While still early, price elasticity is better than expected, underscoring the power of our brands.”

“As Mandy said, come August we'll have a much clearer picture of who followed us on pricing, what that looks like, and again, are pleased with our initial elasticities and hope that holds.”

“But in terms of overall availability, our capacity, our ability to get product, we're highly confident of our ability to do that and meet demand that we're seeing.”

“We don't typically see anything like that, like a forward buyer or anything like that from our customers. So no, we don't really expect to see anything like that.”

“And the nature of that is, we will still have some holiday kits. They definitely have a role, and there's consumer excitement... But a much bigger focus on our core products.”

“But overall consumption trends are actually stronger than what we expected for Q3 and I think bode well for the rest of our fiscal year.”

“Despite not having most of our holiday program, we expect Q4 to look similar to Q3 on a two-year stack basis at approximately 23% growth.”

“And our fiscal 2022 adjusted tax rate to be approximately 22% to 23%.”

“We still expect a fully diluted share count of approximately $55 million shares.”

“We expect adjusted EBITDA between $70 million and $72 million, adjusted net income between $40 million and $42 million and adjusted EPF of $0.73 to $0.76 per diluted share.”

“We expect our cash priorities to remain on investing behind our five strategic imperatives and supporting strategic extensions.”

“We continue to expect marketing and digital to come in at 15% to 17% of net sales for the year.”

“Given the rate of flow-through on these freight costs and overall favorable mix, we now expect gross margin for the back half to come in flat to last year.”

“So again, it's going to be driven by those higher ocean freight costs, the FX impact as we've talked with some slight offset with pricing, as we talked about.”

“I would say we've embedded into our guidance, elevated costs through the balance of this fiscal year.”

“But overall we feel good about our ability to meet consumer demand.”

“As discussed in August, while we expect top-line growth to continue in Q3, we expect Nielsen track channel data to likely show some periods of share losses, given volatility in the base, and the lack of our annual holiday program.”

“Against this backdrop of global cost pressures, we still expect to deliver healthy growth in adjusted EBITDA up 9% to 11% year over year.”

“However, it remains a dynamic environment and we believe it's prudent to continue to plan for supply chain constraints and elevated costs to impact us into the second half.”

“We expect a fully diluted share count of approximately 55 million shares and our fiscal 2022 tax rate to be approximately 23% to 24%.”

“We continue to expect adjusted EBITDA between $66.5 million to $68 million, adjusted net income between $36 million and $37.5 million and adjusted EPS of $0.65 to $0.68 per diluted share.”

“We now expect net sales growth of approximately 14% to 16% versus fiscal 2021, up from 12% to 14% previously.”

“That said, given these headwinds, we continue to expect gross margin to end the year below fiscal 2021.”

“Yeah. And I'd see on the color category, similar approach we've taken. We're just being prudent in terms of not counting on a massive rebound right away.”

“In terms of top line and the outlook, we really expect those trends to continue on the e.l.f. business.”

“we still anticipate healthy adjusted EBITDA growth in fiscal 2022 and remain focused on expanding our adjusted EBITDA margins over the next three years.”

“We're pleased to be targeting top line growth well above that range this year.”

“As a reminder, fiscal 2022 will be the first year within our three-year long-term economic model, which targets compounded annual top line growth in the mid-to-high single-digits with adjusted EBITDA growth outpacing net sales growth over that horizon.”

“This is expected to result in an approximately $6 million reduction to net sales, largely in Q3.”

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