elf Beauty Inc (ELF) 2017 Q1 法說會逐字稿

Greetings and welcome to the e.l.f Beauty First Quarter Fiscal 2017 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

大家好，歡迎參加 e.l.f Beauty 2017 財年第一季度收益電話會議。此時，所有參與者都處於只聽模式。正式演講之後將舉行問答環節。 （操作員指示）謹此提醒，本次會議正在錄製中。

I would now like to turn the conference over to your host Ms. Allison Malkin. Thank you. You may begin.

現在我想將會議交給主持人艾莉森·馬爾金女士。謝謝。你可以開始了。

Thank you. Good afternoon everyone. Thank you for joining us today to discuss e.l.f.'s first quarter 2017 earnings results. A copy of today's press release is available in the Investor Relations section of www.elfcosmetics.com. A recording of the call will also be available for 90 days on www.elfcosmetics.com.

謝謝。大家下午好。感謝您今天加入我們討論 e.l.f. 2017 年第一季度的盈利結果。今天新聞稿的副本可在 www.elfcosmetics.com 的投資者關係部分獲取。通話錄音也將在 www.elfcosmetics.com 上保留 90 天。

As a reminder, this call contains forward-looking statements that are based on Management's beliefs and assumptions, expectations, estimates and projections. These statements, including those relating to the Company's fiscal year 2017 outlook, are subject to known and unknown risks and uncertainties, and therefore actual results may differ materially.

提醒一下，本次電話會議包含基於管理層的信念和假設、期望、估計和預測的前瞻性陳述。這些陳述，包括與公司 2017 財年展望相關的陳述，受到已知和未知的風險和不確定性的影響，因此實際結果可能存在重大差異。

Important factors that may cause actual results to differ from those expressed or implied by such forward-looking statements 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.

今天的新聞稿和公司向 SEC 提交的文件中詳細介紹了可能導致實際結果與此類前瞻性陳述明示或暗示的結果不同的重要因素。此外，公司今天的演示文稿還包括基於非公認會計原則（Non-GAAP）的信息。我們建議您參閱今天的新聞稿，以了解非公認會計原則表述與最直接可比的公認會計原則衡量指標之間的差異。

With us from Management today are Tarang Amin, Chairman and Chief Executive Officer; and John Bailey, President and Chief Financial Officer. For today's call, Tarang will begin with an overview of our results and as typical for us, John and Tarang will than alternate sharing the progress we made against our growth strategy and providing additional detail related to our financial performance and guidance. This will be followed by a Q&A session. It is now my pleasure to turn the call over to Tarang.

今天與我們一起出席的還有管理層的董事長兼首席執行官 Tarang Amin；以及總裁兼首席財務官約翰·貝利 (John Bailey)。在今天的電話會議中，塔朗將首先概述我們的業績，按照我們的慣例，約翰和塔朗將輪流分享我們在增長戰略方面取得的進展，並提供與我們的財務業績和指導相關的更多細節。隨後將進行問答環節。現在我很高興將電話轉給塔朗。

Thanks, Allison, and good afternoon, everyone. We are pleased with our first quarter results, which are highlighted by a 15% increase in revenue, 748 basis point expansion in gross margin and adjusted EPS growth of 40%. And we continue to grow much faster than the overall mass color cosmetics category. According to IRI, in the 12 weeks ended March 19 e.l.f. grew consumption 18% versus the broader category declining 1%. We did see a slowdown April scanner data and as a dynamic growth company, you'll see month-to-month variability. We remain confident in the business and our initiatives and are reaffirming our guidance of 24% to 28% sales growth for the full year. These results reflect our team's dedication to our mission to make luxurious beauty accessible for all, and continued progress against our four growth strategies.

謝謝艾莉森，大家下午好。我們對第一季度的業績感到滿意，收入增長了 15%，毛利率增長了 748 個基點，調整後每股收益增長了 40%。我們的增長速度繼續快於整個大眾彩妝品類的增長速度。據 IRI 稱，截至 3 月 19 日的 12 週內，e.l.f.消費增長了 18%，而更廣泛的類別則下降了 1%。我們確實看到四月份掃描儀數據有所放緩，作為一家動態增長的公司，您會看到每月的變化。我們對業務和舉措仍然充滿信心，並重申全年銷售增長 24% 至 28% 的指導方針。這些結果反映了我們團隊致力於實現讓所有人都能享受奢華美容的使命，並在我們的四項增長戰略上不斷取得進展。

Our first strategy is to build a great brand. e.l.f. is a brand that make up enthusiasts love and we know how to engage them. During Q1, we held our most successful Beauty Scape influencer activation. We brought together 45 up incoming influencers to the South by Southwest festival. We create an immersive brand experience and further build our community, reaching the combined audience of 100 million. To further strengthen our engagement with consumers we invested in social standards, a social analytics Company. This provides us the ability to leverage algorithms and machine learning to garner insights from data across key social properties. With exclusivity within beauty believe this strategic relationship will help us identify up incoming influencers react faster to innovation trends and further strengthen the effectiveness of our social engagement efforts. We also continue to build our loyalty program Beauty Squad, which now has over 300,000 members. Even with this expanded base, we see average order value is 35% higher than for non-members.

我們的首要戰略是打造一個偉大的品牌。 e.l.f.是一個深受化妝品愛好者喜愛的品牌，我們知道如何吸引他們。第一季度期間，我們舉辦了最成功的 Beauty Scape 影響者激活活動。我們召集了 45 位新晉影響者參加西南偏南音樂節。我們創造身臨其境的品牌體驗，並進一步建立我們的社區，覆蓋總受眾達 1 億。為了進一步加強我們與消費者的互動，我們投資了一家社交分析公司“社會標準”。這使我們能夠利用算法和機器學習從關鍵社交屬性的數據中獲取見解。憑藉美容領域的排他性，相信這種戰略關係將幫助我們識別即將到來的影響者，對創新趨勢做出更快的反應，並進一步加強我們社會參與工作的有效性。我們還繼續建立我們的忠誠度計劃 Beauty Squad，目前已擁有超過 300,000 名會員。即使基數擴大，我們發現平均訂單價值仍比非會員高出 35%。

I'll turn it over to John to discuss progress on innovation and brand penetration.

我會將其交給約翰討論創新和品牌滲透方面的進展。

Thanks, Tarang. Our second strategy is to lead innovation. We believe our depth and breadth of high quality innovation at an extraordinary value sets us apart from other brands. In Q1, we had 21 product launches including 9 first to mass products that formerly could only be found in prestige outlets at much higher prices. Among these launches. We introduced an expansion of our skin care portfolio with our first beauty device the e.l.f. Massaging Eye Wand. Our Eye Wand retails for $25 with comparable prestige products selling for over [$130]. We are encouraged by initial sales and reviews on elfcosmetics.com. We also continued our product collaborations launching a new lip palette with Iris Beilin and influencer with over 1.3 million followers. This collaboration is another great example of our speed to market as we went from idea the selling online in 13 weeks. Our third strategy is to expand brand penetration. In national retailers, we're pleased with the progress of resetting shelves at target for our 50% expansion in shelf space and continue to see strong growth at Walmart. Also building on our early success at ulta.com. Ulta shared publicly that they will be testing e.l.f in a small subset of their stores later this year. We are pleased with the growth of our relationship with this leading retailer. Our direct business, which includes both elfcosmetics.com and e.l.f. stores continues to be a growth driver and generates awareness, engagement, insights and validation for new products. On elfcosmetics.com we continue to improve content and creative and add personalization and shopping tools to enhance the overall experience.

謝謝，塔朗。我們的第二個戰略是引領創新。我們相信，高質量創新的深度和廣度以及非凡的價值使我們有別於其他品牌。第一季度，我們推出了 21 款產品，其中包括 9 款首次進入大眾市場的產品，而這些產品以前只能在高檔商店以更高的價格找到。在這些發射中。我們推出了首款美容設備 e.l.f.，擴展了我們的護膚產品組合。按摩眼部棒。我們的 Eye Wand 零售價為 25 美元，而同類知名產品的售價超過 [130 美元]。 elfcosmetics.com 上的初步銷售和評論令我們深受鼓舞。我們還繼續與擁有超過 130 萬粉絲的影響者 Iris Beilin 合作推出新的唇彩盤。這次合作是我們上市速度的另一個很好的例子，因為我們在 13 週內就產生了在線銷售的想法。我們的第三個戰略是擴大品牌滲透率。在全國零售商中，我們對貨架空間擴大 50% 的目標重新調整貨架的進展感到滿意，並繼續看到沃爾瑪的強勁增長。我們還以 ulta.com 的早期成功為基礎。 Ulta 公開表示，他們將在今年晚些時候在一小部分商店中測試 e.l.f。我們對與這家領先零售商的關係的發展感到高興。我們的直接業務包括 elfcosmetics.com 和 e.l.f.商店仍然是增長的驅動力，並為新產品帶來認知度、參與度、洞察力和驗證。在 elfcosmetics.com 上，我們不斷改進內容和創意，並添加個性化和購物工具以增強整體體驗。

As an example, we launched a foundation finder that help consumers find the best products for them and grew our online foundation sales by over 30%. In our stores, we saw a strong response to our beauty technique demos, with our associates helping consumers achieve on-trend looks with curated product bundles. These demos are another way to engage with our guests and highlight our latest products. We are excited about the focused expansion of our international business and are pleased to announce the Q2 introduction of e.l.f into superdrug, one of the leading cosmetic retailers in the UK. We have already seen an up swell on social media in that market and look forward to the launch. I'll now turn it back to Tarang to discuss our operational progress.

例如，我們推出了粉底查找器，幫助消費者找到最適合他們的產品，並使我們的在線粉底銷售額增長了 30% 以上。在我們的商店中，我們看到對我們的美容技術演示的強烈反響，我們的員工通過精選的產品包幫助消費者實現流行的外觀。這些演示是與客人互動並突出我們最新產品的另一種方式。我們對國際業務的集中擴張感到興奮，並很高興地宣布第二季度將 e.l.f 引入英國領先的化妝品零售商之一 superdrug。我們已經看到社交媒體在該市場的崛起，並期待著它的推出。現在我將把它轉回塔朗討論我們的運營進展。

Thanks, John. Our fourth strategy is to drive world-class operations. We continue to make investments in the team and infrastructure to scale the business. We set up a third-party distribution center in the UK to service our entry into superdrug, our UK e-commerce business as well as potential future expansion in Europe. Our penetration into the supply chains of our customers along with our investment in inventory has enabled us to maintain over 98% fill rates for our key customers and having stock levels above 97%. In summary, we had a good start to the year. I'll now turn it back to John to discuss our financial progress and outlook for 2017.

謝謝，約翰。我們的第四個戰略是推動世界一流的運營。我們繼續對團隊和基礎設施進行投資以擴大業務。我們在英國設立了第三方分銷中心，為我們進入超級藥物、英國電子商務業務以及未來在歐洲的潛在擴張提供服務。我們對客戶供應鏈的滲透以及對庫存的投資使我們能夠保持主要客戶超過 98% 的填充率，並且庫存水平超過 97%。總而言之，我們今年開了一個好頭。現在我將把話題轉回給 John，討論我們 2017 年的財務進展和前景。

Thanks, Tarang. For the first quarter, net sales increased 15% to $60.6 million, which is notable given the significant amount of pipeline shipments for shelf resets in the first quarter last year. Gross margin expanded from 56% to 63%, primarily driven by our innovation in Sweeten the Mix program, the benefit of FX and the freight benefit of approximately 200 basis points that we do not expect continue. On an adjusted basis, SG&A as a percentage of sales was 49% compared to 40% in the first quarter of 2016, reflecting public company expenses and continued strategic investments in people, infrastructure and brand building, including the expansion of our direct business. Adjusted EBITDA with $11.7 million, compared to a $11.6 million in the first quarter of 2016. Adjusted net income with $4.4 million or $0.09 per share based on a fully diluted share count of $49.5 million. This compares to $3.1 million or $0.06 per share in Q1 2016.

謝謝，塔朗。第一季度的淨銷售額增長了 15%，達到 6,060 萬美元，考慮到去年第一季度貨架重置帶來的大量管道發貨，這一點值得注意。毛利率從 56% 擴大到 63%，主要是由於我們在 Sweeten the Mix 計劃中的創新、外彙的好處以及我們預計不會持續的大約 200 個基點的貨運好處。調整後，SG&A 佔銷售額的百分比為 49%，而 2016 年第一季度為 40%，反映了上市公司費用以及在人員、基礎設施和品牌建設方面的持續戰略投資，包括直接業務的擴張。調整後 EBITDA 為 1,170 萬美元，而 2016 年第一季度為 1,160 萬美元。調整後淨利潤為 440 萬美元，即每股 0.09 美元（基於完全稀釋後的股數 4,950 萬美元）。相比之下，2016 年第一季度的淨利潤為 310 萬美元，即每股 0.06 美元。

From a balance sheet perspective, we ended the quarter with an inventory balance of $76.9 million, reflecting an increase in our fastest moving items. In terms of our full-year outlook, we are reaffirming the guidance that we provided last quarter. As a reminder for 2017, we expect net sales of $285 million to $295 million, representing year-over-year growth of 24% to 28%. Adjusted EBITDA of $61 million to $64 million, adjusted net income of $21 million to $23 million and adjusted pro forma diluted EPS of $0.40 to $0.43 and 53.1 million diluted shares.

從資產負債表的角度來看，本季度末我們的庫存餘額為 7,690 萬美元，反映出我們移動最快的商品有所增加。就我們的全年展望而言，我們重申了上季度提供的指導。回顧 2017 年，我們預計淨銷售額為 2.85 億至 2.95 億美元，同比增長 24% 至 28%。調整後的EBITDA 為6100 萬美元至6400 萬美元，調整後的淨利潤為2100 萬美元至2300 萬美元，調整後的備考稀釋後每股收益為0.40 美元至0.43 美元，稀釋後股票為5310 萬美元。

In closing, we are pleased with our start to the fiscal year 2017 and believe we are well positioned to deliver on our objectives. I'd now like to ask the operator to open the call for questions.

最後，我們對 2017 財年的開局感到滿意，並相信我們有能力實現我們的目標。我現在想請接線員打開提問電話。

At this time, we will be conducting a question-and-answer session. (Operator Instructions) Oliver Chen, Cowen and Company.

此時，我們將進行問答環節。 （操作員說明）Oliver Chen，Cowen and Company。

Regarding the inventory, the build was pretty substantial, just what are some guidelines for going forward and how do you feel confident in that relative to the sales growth? Also on the gross margin side, in the context is Sweeten the Mix, could you update us on what is underlying with average unit retail like this year versus last or how that's [inter] playing like-for-like versus new product introductions?

關於庫存，庫存量相當可觀，未來有哪些指導方針？相對於銷售增長，您對此有何信心？另外，在毛利率方面，在“甜蜜混合”的背景下，您能否向我們介紹一下今年與去年相比平均單位零售的基本情況，或者與新產品推出相比，[內部]的表現如何？

Oliver, it's John. With respect to the inventory balance, as we talked on the call last quarter, one of the things that we did in the fall this past year was proactively decided to take up our inventory in our fastest moving items. And a little bit of context there, we had just come off the movement of our warehouse from the East Coast in New Jersey to the West Coast in Ontario, California. And wanted to make sure that we were able to adequately service demand and stay in fill rate with retailers. We've been quite pleased with where those fill rates have been. But as we mentioned, we probably did overshoot a little bit in terms of that inventory balance. That said, where we were sitting a little bit heavy was in our fastest moving items. So great degree of confidence and those inventory levels normalizing throughout the year without any unnatural acts.

奧利弗，這是約翰。關於庫存平衡，正如我們在上個季度的電話會議上所談到的那樣，我們在去年秋天所做的一件事就是主動決定佔用我們最快移動的商品的庫存。這裡有一點背景信息，我們剛剛將倉庫從新澤西州東海岸搬到加利福尼亞州安大略省西海岸。並希望確保我們能夠充分滿足需求並保持零售商的供應率。我們對這些填充率非常滿意。但正如我們所提到的，就庫存平衡而言，我們可能確實有點超支了。也就是說，我們坐得有點重的地方是我們移動最快的物品。如此巨大的信心和庫存水平全年正常化，沒有任何不自然的行為。

And on this Sweeten the Mix side, it continues to be a great program for us. For those who aren't familiar, Sweeten the Mix is a systematic consumer led the way that we think about driving gross margin in the business. It really does start with the consumer first and has a couple of key components, one which is consistently launching innovation, which is core to the e.l.f. model at margin profiles that are accretive to that of the overall company, and the other which is looking across the existing range of products and finding places where we can deliver a tangible incremental consumer benefit, but also take up gross margin at the same time. It continues to be a great source of gross margin expansion for us and we're quite pleased with the expansion that we saw in the first quarter.

在 Sweeten the Mix 方面，它對我們來說仍然是一個很棒的計劃。對於那些不熟悉的人來說，Sweeten the Mix 是一個系統性的消費者，引領了我們考慮提高業務毛利率的方式。它確實以消費者為先，並有幾個關鍵組成部分，其中之一是不斷推出創新，這是 e.l.f. 的核心。一個模型的利潤率可以增加整個公司的利潤，另一個模型則審視現有的產品系列，尋找可以為消費者帶來切實增量利益的地方，同時也佔用毛利率。它仍然是我們毛利率擴張的重要來源，我們對第一季度的擴張感到非常滿意。

Okay. Just a follow-up on last question. On your two major wholesale partners, could you give us parameters about the -- going forward and how you're thinking about space versus comp growth, and if there is any nuances and sell-in versus sell-out that we should think about as we look at our quarters in our models?

好的。只是最後一個問題的後續。關於你們的兩個主要批發合作夥伴，您能否向我們提供有關未來發展的參數，以及您如何考慮空間與競爭增長，以及是否存在任何細微差別以及我們應該考慮的銷售與銷售我們看看我們的模型中的宿舍？

Yes, Oliver, this is Tarang. I'll take that. So if you take a look at our two main customers -- leading customers in Target and Walmart. At Target, we had announced last quarter that we were awarded 50% more space and we've been in the process of setting those shelves that would expect to kind of complete in the second quarter of this year. And so, we do see a combination of both space gain there, as well as our continued benefit of the innovation that we put into that space. Walmart, as we've mentioned, has a more continual process in terms of how they are going to increase space. So we'll continue to see space gains at Walmart as well. But really the gains that we're seeing there right now, lot of them are based on the innovation that we put on those shelves. So you're going to see a pretty good balance really with both customers, combination of our innovation driving, better productivity, as well as continue to pick-up more space, given what we're able to do in their categories. In terms of consumer profile we bring, as well as the growth that we're able to drive.

是的，奧利弗，這是塔朗。我會接受的。因此，如果你看一下我們的兩個主要客戶——塔吉特和沃爾瑪的主要客戶。在塔吉特，我們上季度宣布獲得了 50% 的額外空間，並且我們一直在設置這些貨架，預計將在今年第二季度完成。因此，我們確實看到了該領域空間收益的結合，以及我們在該領域投入的創新帶來的持續收益。正如我們所提到的，沃爾瑪在如何增加空間方面有一個更加持續的過程。因此，我們也將繼續看到沃爾瑪的空間增長。但實際上我們現在看到的成果，其中很多都是基於我們放在貨架上的創新。因此，考慮到我們在他們的類別中能夠做的事情，您將看到與兩個客戶真正實現了相當好的平衡，結合了我們的創新驅動、更高的生產力以及繼續獲得更多的空間。就我們帶來的消費者形像以及我們能夠推動的增長而言。

Thank you. And great job on Beauty Squad. Best regards.

謝謝。美容小隊的工作也很棒。此致。

Erinn Murphy, Piper Jaffray.

艾琳·墨菲，派珀·賈弗雷。

Thanks. Good afternoon. I guess, I wanted to focus similar to Oliver's question, which is on the first quarter alone. So with the 15% top line growth, could you break out for us how much, what can be incremental that you saw from targeted seems just based on the way you shapes the year a lot of that incremental linear footage is really going to be more Q2 focus. Just trying to understand there's any way to kind of break out the like-for-like versus the distribution for that 15% topline.

謝謝。下午好。我想，我想關注與奧利弗的問題類似的問題，該問題僅針對第一季度。因此，隨著 15% 的收入增長，您能否為我們透露一下您從目標中看到的增量是多少，似乎只是基於您塑造這一年的方式，很多增量線性鏡頭實際上會更多第二季度重點。只是想了解有什麼方法可以打破 15% 營收的同類分佈與分佈情況。

Erinn, it's John. So, just a quick note to refresh the group that the target pipeline for that shelf space expansion, in other words, the initial sell into the customer to eventually put that on the shelf went out in the fourth quarter of 2016. So you don't see any impact to the Company from that shelf space gain and given that those shelves continue to be step through the second quarter, won't see any meaningful impact from a replenishment perspective either. We're quite pleased with the growth in Q1 of 2017. As we mentioned on the last call, part of the reason that that were 15%, which is slightly lower than the full-year guidance, is that we are comping a significant pipeline quarter from Q1 of 2016. We did not have very much pipeline at all for shelf resets and that will be a continued dynamic with this Company where certain retailers will take pipeline in the fourth quarter, certain retailers will take it in the first quarter, and depending what's happening with each of those individual retailers the size and scope of that pipeline can vary. That's why we try and focus folks on the full year given those quarterly dynamics that are in here into the business.

艾琳，是約翰。因此，請快速提醒大家，貨架空間擴展的目標渠道，換句話說，最初向客戶銷售以最終將其上架的產品已於 2016 年第四季度停止。我們認為貨架空間的增加對公司沒有任何影響，而且考慮到這些貨架在第二季度繼續逐步增加，從補貨的角度來看也不會看到任何有意義的影響。我們對2017 年第一季度的增長感到非常滿意。正如我們在上次電話會議中提到的，這一增長率為15%（略低於全年指導）的部分原因是我們正在製定一個重要的管道從2016 年第一季度開始。我們根本沒有太多用於貨架重置的管道，這將是該公司的持續動態，某些零售商將在第四季度採取管道，某些零售商將在第一季度採取管道，並且根據每個零售商的情況，渠道的規模和範圍可能會有所不同。這就是為什麼我們嘗試將人們的注意力集中在全年，考慮到業務中的季度動態。

Okay. That's helpful. And then exciting to hear about the opportunities in the UK, could you just maybe talk a little bit more about kind of what that could look like with Superdrug over the next year or so. And then other opportunities now that you're there and I noticed on your Instagram story, so definitely a lot more viral there in the London market in particular. Just curious on how we should think about that opportunity. And then was there anything specific in the inventory build Q4 year-over-year versus Q1 year-over-year dedicated to accounts like Ulta or Superdrug if you go in to the UK? Just trying to understand any new distribution pieces that we wouldn't contemplate before.

好的。這很有幫助。然後令人興奮的是聽到英國的機會，您能否再多談談 Superdrug 在未來一年左右的情況。然後還有其他機會，現在你在那裡，我在你的 Instagram 故事上註意到了，所以肯定有更多的病毒式傳播，尤其是在倫敦市場。只是好奇我們應該如何看待這個機會。那麼，如果您進入英國，第四季度的庫存建設與去年同期相比，針對 Ulta 或 Superdrug 等客戶的庫存建設是否有任何具體內容？只是想了解我們以前不會考慮的任何新的發行版。

Erinn, I will take the first part and I will let John talk about inventory. So we're really excited about our launch into Superdrug. As background, we've been in the UK through our e-commerce business for a few years now and have a really great following in the UK as a direct business. Superdrug as you know is one of the leading retailers of beauty products in the UK. And we're quite excited about the partnership that we're doing in terms of our launch there as you've seen some of the Instagram and other social buzz that you see out there, UK consumers are also quite excited and so as we enter into in the second quarter, we have big plans with them. And from an inventory perspective what I'd say is our overall increase in balances reflects our expectations, both across new distribution as well as delivery to some of our existing accounts. So no specific granularity that I'd call out there.

艾琳，我將進行第一部分，我將讓約翰談論庫存。因此，我們對 Superdrug 的推出感到非常興奮。作為背景，我們通過電子商務業務進入英國已有幾年，並且作為直接業務在英國擁有非常多的追隨者。如您所知，Superdrug 是英國領先的美容產品零售商之一。我們對我們在英國的推出所進行的合作感到非常興奮，因為你已經看到了一些 Instagram 和其他社交熱議，英國消費者也非常興奮，所以當我們進入時進入第二季度，我們與他們有宏偉的計劃。從庫存角度來看，我想說的是，我們的餘額總體增長反映了我們的預期，無論是新的分銷還是向我們的一些現有賬戶的交付。所以我沒有提出具體的粒度。

Jon Andersen, William Blair.

喬恩·安德森，威廉·布萊爾。

Good afternoon and thanks. Tarang, you mentioned in the prepared comments that there's been some variability month-to-month in the consumption data. Could you talk a little bit about what drives that or has been driving that and maybe what you've seen more recently relative to consumption data? Thanks.

下午好，謝謝。 Tarang，您在準備好的評論中提到，消費數據每月存在一些變化。您能否談談是什麼推動了這一趨勢或一直在推動這一趨勢，以及您最近看到的與消費數據相關的內容？謝謝。

Yes, sure. I say first of all just backing up our approach is one of annual guidance and we're confident in our 24% to 28% sales growth number for this year. So we start there and then kind of as you break in the quarters, as John said, there could be some variability quarter-to-quarter, (inaudible) was in the prior period and what we're selling in. What I tell you on the periods shorter than that, is you do see quite a bit of variability and bouncing around we've seen that for quite some time. So we pay less attention to that and more to the fundamental building blocks of our business, which is a combination of innovation that we can bring to the marketplace, particularly first to mass innovation as well as the white space we have both in terms of distribution space as well as our own direct business and international. So you won't necessarily see similar to the very mature businesses a more direct correlation between kind of what you're seeing at latest scanner versus overall, I think the best period for that. It's probably the first quarter where we saw an 18% consumption gain versus minus one for the category, pretty confident in our total year number.

是的，當然。我想說，首先，支持我們的方法是年度指導之一，我們對今年 24%​​ 至 28% 的銷售增長數字充滿信心。因此，我們從這裡開始，然後就像約翰所說的那樣，季度與季度之間可能會有一些變化，（聽不清）是在上一時期以及我們所銷售的產品中。我告訴你的是在比這更短的時期，你確實看到了相當多的變化和反彈，我們已經看到這種情況很長一段時間了。因此，我們不太關注這一點，而是更多地關注我們業務的基本組成部分，這是我們可以為市場帶來的創新的組合，特別是首先是大規模創新以及我們在分銷方面擁有的空白空間空間以及我們自己的直接業務和國際業務。因此，您不一定會看到與非常成熟的企業類似的情況，您在最新掃描儀上看到的內容與總體內容之間存在更直接的相關性，我認為這是最好的時期。這可能是第一季度我們看到該類別的消費增長了 18%，而該類別的消費增長為負，這對我們的全年數字非常有信心。

Great, that's helpful. On the business that you're adding in the UK Are there any margin implications positive or negative relative to kind of Company average.

太好了，很有幫助。關於您在英國增加的業務，相對於公司平均水平，利潤率是否存在正面或負面的影響？

No, I mean, I'd say we generally do a pretty good job across our customers set of having pretty consistent margins.

不，我的意思是，我想說，我們在客戶群體中總體上做得很好，擁有相當穩定的利潤。

And then in the direct business, can you update us on just the kind of the online growth that you're experiencing, I know you're doing a lot there as you described, I mean, is the online part of the business maintaining its relative proportion of overall sales and then if there's any update on the store count e.l.f. stores I'm talking about and expansion plans for the balance of the year. Thank you.

然後在直接業務方面，您能否向我們介紹一下您正在經歷的在線增長情況，我知道您在這方面做了很多工作，正如您所描述的，我的意思是，業務的在線部分是否保持其總體銷售額的相對比例，然後商店計數e.l.f. 是否有任何更新。我正在談論的商店以及今年剩餘時間的擴張計劃。謝謝。

Hey, Jon, it's John. So overall, as you're familiar with the story, we only speak to our direct business and don't comment on quarter-to-quarter changes and growth rates. But what I can tell you is, we're quite excited about each side of the direct business, both in terms of overall growth, but more importantly, what they represent back to the overall company from a strategic standpoint. Our e-com business is doing very well. And our stores also as we're coming off of 2016 with the number of new openings that were geared towards the back half, we're quite pleased with how those stores have come out of the gate in the consumer reception that we've seen. In terms of openings in cadence, I think we've talked publicly that we will open anywhere between five and 15 stores per year. 2016 was obviously on the heavy year-end of that spectrum, and as I mentioned, back-half weighted. What we talked about for 2017 is a lighter opening year relative to that overall range. But overall, continue to be quite enthusiastic about the direct business.

嘿，喬恩，我是約翰。總的來說，正如您所熟悉的那樣，我們只談論我們的直接業務，不會對季度與季度的變化和增長率發表評論。但我可以告訴你的是，我們對直接業務的各個方面都感到非常興奮，無論是在整體增長方面，還是更重要的是，從戰略角度來看，它們對整個公司的代表意義。我們的電子商務業務做得很好。我們的商店也隨著 2016 年下半年的新開張數量的增加而增長，我們對這些商店在我們所看到的消費者接待中的表現感到非常滿意。就開業節奏而言，我認為我們已經公開表示，我們每年將開設 5 到 15 家商店。 2016 年顯然是該領域最沉重的一年，正如我提到的，後半段加權。我們所討論的 2017 年是相對於整體範圍而言開局較為清淡的一年。但總體而言，人們對直營業務仍然充滿熱情。

(Operator Instructions) Bill Chappell, SunTrust Robinson Humphrey.

（操作員說明）Bill Chappell，SunTrust Robinson Humphrey。

This is actually Stephanie on for Bill. Just looking at the top line and maybe you could give a little bit more color on how the mix is changing, so skincare and new product launches are driving the majority of the growth kind of similar to prior years? And then just kind of similar to that, maybe if you give a little more color on the growth in the quarter and how much of that was attributable to the existing stores and new distribution gains, which really any additional color there would be great. Thanks.

這實際上是斯蒂芬妮為比爾代言的。只要看看頂線，也許你可以對組合的變化提供更多的信息，那麼護膚品和新產品的發布正在推動大部分增長，與前幾年類似？然後與此類似，也許如果您對本季度的增長給予更多的說明，以及其中有多少歸因於現有商店和新的分銷收益，那麼任何額外的說明都會很棒。謝謝。

We generally don't give that level of detail in terms of -- kind of within the mix of our assortment. I mean, what I can tell you is new items do fuel our overall program just given how much we're known for our innovation. And so, I'd say, we've see no difference there in terms of continue to see items resonating with consumers. And so, I'd say, we feel good about the growth profile that we're seeing in -- certainly for the full year that we look forward. And on the existing versus new distribution, while we haven't given clear numbers, I'd say, it's heavily weighted in the first quarter towards existing.

我們通常不會在我們的分類組合中提供如此詳細的信息。我的意思是，我可以告訴你的是，考慮到我們因創新而聞名，新項目確實為我們的整體計劃提供了動力。因此，我想說，在繼續看到產品與消費者產生共鳴方面，我們沒有看到任何差異。因此，我想說，我們對我們所看到的增長狀況感到滿意——當然是我們期待的全年增長。關於現有發行版與新發行版，雖然我們沒有給出明確的數字，但我想說，第一季度它對現有發行版的權重很大。

Shannon Coyne, BMO Capital Markets.

Shannon Coyne，BMO 資本市場。

I have a question on the cash flow, it looks like your free cash flow was negative this quarter and I get the inventory piece. And sorry if I missed this, but it looks like accounts payable, accrued expenses was (inaudible) cash. And just wondering what that was and if you expect free cash flow to be positive next quarter or how we should think about that going forward?

我有一個關於現金流的問題，看起來你們本季度的自由現金流為負，我得到了庫存部分。抱歉，如果我錯過了這一點，但看起來應付賬款、應計費用是（聽不清）現金。只是想知道那是什麼，以及您是否預計下個季度的自由現金流為正，或者我們應該如何考慮未來的情況？

Shannon, it's John. So we don't provide specific granularity to cash flow. What I'd tell you is, we feel great about the outlook for the year from a cash perspective. In terms of liquidity, we have over $25 million of liquidity available to us and you'll see from quarter-to-quarter, whether it is inventory building or dynamics between AR and AP, those numbers move around.

香農，這是約翰。因此，我們不提供現金流的具體粒度。我要告訴你的是，從現金角度來看，我們對今年的前景感到樂觀。在流動性方面，我們擁有超過 2500 萬美元的可用流動性，您會看到每個季度，無論是庫存建設還是 AR 和 AP 之間的動態，這些數字都會發生變化。

Okay. And then just one more question, can you talk at all about the profitability of the (inaudible) stores and what you're seeing there? That's all I have. Thanks.

好的。還有一個問題，您能談談（聽不清）商店的盈利能力以及您在那裡看到的情況嗎？這就是我的全部。謝謝。

Yes. So we don't get into breaking out for [a while] economics of our stores, and just given the role of that source play. What I can tell you is our stores are profitable. And more than the profitability and growth that they drive really back to what they represent to the overall Company in terms of consumer engagement and awareness continue to be powerful drivers for us.

是的。因此，我們暫時不會討論我們商店的經濟效益，只是考慮到源頭扮演的角色。我可以告訴你的是我們的商店是盈利的。他們帶來的盈利能力和增長不僅體現在消費者參與度和認知度方面，還真正體現在整個公司，這仍然是我們的強大推動力。

Mark Astrachan, Stifel.

馬克·阿斯特拉坎，斯蒂菲爾。

Wanted to ask about gross margin, and if you could give a bit more specifics in terms of drivers by item, I think, which you called out in the release, I'm just try to get a sense of sustainability relative to sort of what we've seen like as we talked about FX being some benefit in past. I mean is that big part, little part and same thing with sort of the other stuff? And yes, I have a follow-up.

我想問一下毛利率，如果你能在逐項驅動因素方面提供更多細節，我想，你在新聞稿中提到了這一點，我只是想了解一下相對於什麼的可持續性當我們過去談到外匯有一些好處時，我們已經看到了這一點。我的意思是，大的部分、小部分和其他東西是一樣的嗎？是的，我有一個後續行動。

Sure. So really pleased with the expansion in gross margin in the first quarter of 748 basis points, primarily that was driven by the Sweeten the Mix innovation program that we have some of the same underlying drivers. There are two other variables that we called out, one which was a [freight] benefit that we don't expect to continue for 2017 of 200 basis points. The other as you noted was FX and that was about 200 basis point impact as well. So relative to that 100 basis point per year of expansion that we have talked about in terms of our algorithm, the kind of core innovation proposition still well ahead of that and driving most of that.

當然。我們對第一季度毛利率增長 748 個基點感到非常高興，這主要是由 Sweeten the Mix 創新計劃推動的，我們有一些相同的潛在驅動因素。我們還指出了另外兩個變量，其中一個是[運費]收益，我們預計 2017 年這種收益不會持續 200 個基點。正如您所指出的，另一個是外匯，這也產生了約 200 個基點的影響。因此，相對於我們在算法方面討論的每年 100 個基點的擴張，這種核心創新主張仍然遠遠領先並推動了大部分。

Great, thanks for that. And then just going back to the previous question or on the previous questions on sales and your confidence in achieving the guidance for the year. I guess acknowledging one-month doesn't make a trend for sure, but the most recent data showed a fairly pronounced slowdown. So I guess, what specifically give you confidence that you're going to be able to hit the numbers which you did and maybe putting in a different way, is anything changed in your assumptions about new distribution, whether it's international into Superdrug or Ulta brick and mortar that wouldn't show up in the data that gives increased confidence in that?

太好了，謝謝你。然後回到上一個問題或之前關於銷售的問題以及您對實現今年指導的信心。我想承認一個月並不能確定是一種趨勢，但最新的數據顯示了相當明顯的放緩。所以我想，是什麼讓你有信心能夠達到你所做的數字，也許以不同的方式，是你對新發行的假設發生了任何變化，無論是國際化的 Superdrug 還是 Ulta brick和迫擊砲不會出現在數據中，從而增加對此的信心？

Yes, so I'd say we're quite confident our 24% to 28% guidance we've given, in terms of kind of what correlates what doesn't, if you look at our business, we've got a good -- pretty good percentage that isn't in track channels at all. So whether it be a direct business or international business Ulta, Amazon, lot of the dot com. So there's a number of I'd call it growth levers that you won't see kind of in scanner to began with. But beyond that I'd say even more significantly is the white space we have in front of us both in terms of distribution as well as space gain, much of which is not showing up in the scanner that you look at particularly if you looking at a one-month period. So I would say fundamental building blocks similar to kind of what we took you through last year, nothing is really changed in those building blocks in terms of our assumptions it's quite balanced between distribution, space expansion as well as kind of the continued productivity of our innovation.

是的，所以我想說，我們對我們給出的 24% 到 28% 的指導非常有信心，就相關性和不相關性而言，如果你看看我們的業務，我們有一個很好的 - - 相當不錯的百分比根本不在軌道頻道中。因此，無論是直接業務還是國際業務（Ulta、亞馬遜、很多互聯網公司）。因此，有很多我稱之為增長槓桿的東西，你一開始在掃描儀中是看不到的。但除此之外，我想說更重要的是我們面前的空白，無論是在分佈還是空間增益方面，其中大部分都沒有顯示在您查看的掃描儀中，特別是當您查看時一個月的時間。因此，我想說的是，基本構建模塊與我們去年帶您經歷的類似，就我們的假設而言，這些構建模塊沒有真正改變，它在分佈、空間擴展以及我們的持續生產力之間相當平衡。創新。

Andrea Teixeira, JPMorgan.

安德里亞·特謝拉，摩根大通。

Good afternoon. So, could you comment more on the [tests] that you would post making with your products, and you said later this year the tests and decisions would only probably happen in 2018. And so if it's not obviously baked in your guidance and is that fair to say that? And related to that, if your take away measured by [ARI] finished plus 18 while you grew 15 and I know you're basing on obviously a easier comp, it implies some inventory reductions right at the trade. So your guidance seems conservative, especially as you face much easier comps and with the announcement of Superdrug in the UK that I'm assuming is not part of a guidance. So could you help us bridge these factors and I'll come back with my follow-up.

下午好。那麼，您能否對您將發布的產品製作的[測試]發表更多評論，並且您說過今年晚些時候的測試和決定可能只會在2018 年進行。因此，如果您的指導中沒有明顯考慮到這一點，那麼這麼說公平嗎？與此相關的是，如果你的外賣按[ARI] 衡量，而你的收入增長了15，而你的收入增加了18，而且我知道你的基礎顯然是更簡單的比較，那麼這意味著交易中的庫存會減少。因此，您的指導似乎很保守，尤其是當您面臨更容易的比較時，並且在英國宣布 Superdrug，我認為這不是指導的一部分。那麼您能否幫助我們彌合這些因素，我會回來進行後續跟進。

Yes, Andrea, I'll take the alter with the test comment and then Tarang can take the second part. So we talked about the fact here, more accurately Ulta spoke about the fact that we would be testing in a small subset of their stores this year. We have not yet actually launched that test within Ulta. So up until now, our business with them has been on ulta.com. And as we mentioned, very pleased with the progress on ulta.com, which in many ways isn't that surprising, just given the overlap that we have with them from a consumer perspective, and the fact that that they're excited to test the brand with us. So, we will give more color and context as that distribution sets, but nothing that we would point to or update on relative to the physical and store tests.

是的，Andrea，我將接受測試評論的更改，然後 Tarang 可以接受第二部分。所以我們在這裡討論了這個事實，更準確地說，Ulta 討論了我們今年將在他們的一小部分商店進行測試的事實。我們尚未在 Ulta 內實際啟動該測試。所以到目前為止，我們與他們的業務一直在 ulta.com 上進行。正如我們所提到的，我們對 ulta.com 的進展感到非常滿意，這在很多方面都不足為奇，只是考慮到我們從消費者的角度與他們有重疊，而且他們很高興進行測試我們的品牌。因此，我們將提供更多的顏色和上下文作為該分佈集，但我們不會指出或更新相對於物理和商店測試的內容。

And then in terms of your question regarding kind of the consumption data versus our net sales. First of all, for our net sales, as John mentioned, we're anniversarying quite a high period last year of shipments. I think, we've shipped over, I think is over 35% growth last year in the first quarter, primarily kind of driven by a lot of pipeline shipments. And this year, we don't really have a much pipeline in the first quarter, so little explains over the 15%. And then the consumption growth, I think it's been pretty consistent in terms of the level that it's above where the category is. And so, we continue to see good growth from a category standpoint and we continue to take share in the marketplace. I think, in the 12 weeks ending March 19, we had a 3.8% dollar share in the total multi outlet data set, compared to [3.2% share] last year. So we continue to build share and continue drive consumption. And as we mentioned, there are number of things in our business model that are beyond kind of track channels, that gives us confidence in the year guidance.

然後就您關於消費數據與我們的淨銷售額的問題而言。首先，對於我們的淨銷售額，正如約翰提到的，我們正在慶祝去年出貨量相當高的時期。我認為，去年第一季度我們的發貨量增長了 35% 以上，這主要是受到大量管道發貨的推動。今年，我們在第一季度實際上並沒有太多的渠道，因此幾乎無法解釋超過 15% 的情況。然後是消費增長，我認為就其高於該類別的水平而言，它是相當一致的。因此，從類別的角度來看，我們繼續看到良好的增長，並且我們繼續在市場中佔據份額。我認為，在截至 3 月 19 日的 12 週內，我們在多渠道數據集中的美元份額為 3.8%，而去年的份額為 3.2%。因此，我們繼續擴大份額並繼續推動消費。正如我們所提到的，我們的商業模式中有很多東西超出了軌道渠道的範圍，這讓我們對今年的指導充滿信心。

Yes, thank you. That's helpful. So one think to follow-up on SG&A, but I just want to make sure before I go into SG&A. The Superdrug is not included right in the guidance?

是的，謝謝。這很有幫助。因此，有人認為要跟進 SG&A，但我只想在討論 SG&A 之前確定一下。 Superdrug 沒有包含在指南中嗎？

We don't actually speak to what is and isn't included in the guidance, Andrea. But needless to say that as we set out the guidance for the year and including the reaffirmation that we've given today. There are assumptions that are made for both what we would do with existing customers, as well as new customers that would be brought online.

安德里亞，我們實際上並沒有談論指南中包含和未包含的內容。但不用說，當我們制定今年的指導方針並包括我們今天重申的內容時。我們對現有客戶以及在線新客戶的處理方式做出了一些假設。

Okay. The SG&A question is regarding the -- when you adjust SG&A which obviously you guided for that, I mean an increase investment in infrastructure. You've got about $29 million in SG&A for the first quarter, is that the new level we should be looking? Obviously it's baked some growth also in your guidance, but I just want to know on a recurrent basis before you go into the second half of the year, which I'm assuming a much bigger ramp up of SG&A, like we should be looking at a minimum of $29 million adjusted for (inaudible) items right?

好的。 SG&A 問題是關於——當你調整 SG&A 時，顯然你是為此指導的，我的意思是增加對基礎設施的投資。第一季度的 SG&A 約為 2900 萬美元，這是我們應該尋找的新水平嗎？顯然，你的指導也帶來了一些增長，但我只想在你進入下半年之前定期了解一下，我假設 SG&A 會有更大的增長，就像我們應該考慮的那樣至少為（聽不清）項目調整了2900 萬美元，對嗎？

Yes. So what I would say is, we don't provide quarterly guidance on those metrics. But as you mentioned, Andrea, this is a story of continued investment, notably in brand building, but also areas like infrastructure and people. And so, as we take a look at our outlook for the year, our guidance does imply continued investment and redeployment of gross margin dollars back into some of those areas, including brand building. So don't want to speak to minimum, so what the right levels are. But I would say, just leave you with the fact that you will see continued investment from this point forward.

是的。所以我想說的是，我們不會提供有關這些指標的季度指導。但正如您提到的，安德里亞，這是一個持續投資的故事，特別是在品牌建設方面，還有基礎設施和人員等領域。因此，當我們審視今年的前景時，我們的指導確實意味著繼續投資並將毛利率資金重新部署到其中一些領域，包括品牌建設。所以不想談論最低限度，那麼正確的水平是多少。但我想說的是，讓您知道從現在開始您將看到持續的投資。

Ladies and gentlemen, we have reached the end of our question-and-answer session. I would like to turn the call back over to Mr. Tarang Amin for closing remarks.

女士們先生們，我們的問答環節已經結束了。我想將電話轉回給塔朗·阿明先生致閉幕詞。

Thanks again for joining us. We'll be presenting at the William Blair Growth Stock Conference in June, and we look forward to discussing our second quarter results in August. Thanks, everyone.

再次感謝您加入我們。我們將在 6 月舉行的威廉·布萊爾成長股會議上發表演講，並期待在 8 月討論我們的第二季度業績。感謝大家。

Thanks, everyone.

感謝大家。

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

今天的會議到此結束。此時您可以斷開線路。感謝您的參與。