Among the series of consumer products companies releasing earnings call mostly for the fourth quarter and full year 2016 financial reports, cosmetics company e.l.f Beauty Inc., which stands for eyes, lips, face, joins in with the companies that exhibited strong and promising growth within the quarter and fiscal year.
On Wednesday, e.l.f. Cosmetics, known for its cheap-priced but quality cosmetic products, released its fourth quarter and full year financial results, beating most analyst expectations and showing promising data and 2017 outlook.
e.l.f. Q4 and FY2016 Earnings
During the fourth quarter of 2016, e.l.f Beauty saw impressive growth in net sales of 17% or an increase of $11 million year-over-year, to $76.4 million. Meanwhile, gross margin increased from 54% in 2015 to 59% in 2015, attributed to strong margin accretive innovation.
Its adjusted net income came in 36% higher at $9.4 million, or $0.19 per diluted share, with the numbers better from the Q4 2015 results of $6.9 million, or $0.13 per diluted share, while GAAP-based net income was at $6.6 million, or $0.13 per share. The adjusted EBITDA also grew from $17.6 million to $22.1 million.
However, the company’s expenses (SG&A) also increased during the quarter by 40% of net sales due to its continued investments made targeted at supporting long-term growth of the cosmetics company. According to e.l.f., the $2 million of the costs and expenses included on the SG&A does not entirely represent expenses of the company’s ongoing operations.
For the full year data, e.l.f. net sales grew by 20%, or $38.2 million, to $229.6 million, mostly due to strong sales growth across its leading national retailers as well as the company’s direct businesses. Gross margin also climbed to 58% also as a result of accretive innovation.
Look on a GAAP basis, the company’s net loss due to common stockholders was reported at $497.5 million, or $39.47 per share, which was based from the 12.6 million share e.l.f. currently, has. Meanwhile, for the full year adjusted net income, the company increased by 33% to $18.2 million, or $0.36 per share. The full year SG&A also grew by 48% due to the company’s various innovative actions taken during the course of the year, mainly for long-term growth purposes.
In 2016, e.l.f.’s balance sheet reported better numbers at $15.3 million in cash, and inventory came in at $69.4 million.
Due to previous strong revenue growth, e.l.f. provided an optimistic outlook for 2017, further impressing investor and attracting more bulls in the market. For net sales, e.l.f. expects a growth of $285 – 295 million(28%), with an adjusted net income of $21 – 23 million, and adjusted EBITDA of $61 – 64 million, and an adjusted diluted EPS of $0.40 – 0.43 target (19% increase).
“This strong performance reflects progress executing our mission to make luxurious beauty accessible to all women. Our first to mass innovation and authentic brand appeals to some of the best consumers in cosmetics – young, diverse, make-up enthusiasts. With strength across leading national retailers and our direct business, we expect net sales growth in 2017 of 24% to 28%,” stated e.l.f. Beauty chairman and CEO Tarang Amin.
ELF Stock Overview
Following the upbeat earnings call from the makeup company, investors turned bullish over the stock sending it to skyrocket during the afterhours and premarket trading on Thursday. So far, ELF stock has already soared 20.51% in premarket trading, sending it to a fresh high of $30.40 per share. The stock opened in the market at $29.50, up by $4.29, or 16.96%.
e.l.f. Beauty Inc.’s stock (NYSE: ELF) is relatively new in the stock market, having just launched its IPO last September 22, 2016 at the New York Stock Exchange.
Upon the ELF stock’s initial opening on the market, the company immediately saw its stock surge as high as 50% from its initial price offer of $17 to its traded value at $25 per share, extremely satisfying investor sentiments over a consumer products IPO launch.
In 2015, the makeup company’s retail sales skyrocketed 43%, which was faster than bigger drugstore makeup brands in the industry like Revlon and L’Oreal given that e.l.f. Beauty then only covered around 2.3% of the American mass cosmetics market.
At the start of the year, ELF stock previously saw its value in the market to decline and have reached as low as $24.03 in the beginning of February and was down over 8% over the month before rallying again by at least 5% on February 8. However, by the start of March, investors began to be bearish towards the stock again, sending it to plunge and closed on Wednesday at $25.30, down by 2.39% or $0.62 per share.
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