e.l.f. Beauty, Inc.

Greetings and welcome to Elk Beauty's first quarter fiscal 2020 earnings results. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to Willa McMadman. Thank you. Please begin.

Good afternoon, everyone. Thank you for joining us today to discuss e.l.f. Beauty's first quarter fiscal 2020 earnings results. A copy of today's press release is available in the Investor Relations section of e.l.fcosmetics.com. A recording of the call will also be available for 90 days on e.l.fcosmetics.com. 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 2020 outlook, are subject to known and unknown risks and uncertainties, and therefore, actual results may differ materially. Important factors that may cause actual results to differ 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. With me for management today are Tarang Amin, Chairman and Chief Executive Officer, and Mandy Fields, Senior Vice President and Chief Financial Officer. With that, I'll turn the call over to Tarang.

Good afternoon, and thank you for joining us. We're encouraged by our first quarter results with net sales of $60 million and adjusted EBITDA of $14.5 million. Excluding our stores, net sales were up 7% versus a year ago. We're pleased with the initial progress we're making on each of our strategic imperatives. We're in the early days of our brand recharge, and we like what we see so far. In turn, we're raising our fiscal 2020 guidance. Let me update you on progress we've made during the quarter across each imperatives. Our first two imperatives of driving demand in the brand and a major step up in digital are off to a fast start. In June, we launched our Elfing Amazing digital campaign, which showcases the unique attributes of the Elf brand. The digital assets support our mission to make the best of beauty accessible for every eye, lip, and face. Since the campaign started, impressions and video completion rates are double our initial goals. These metrics indicate our message is resonating with consumers as they are choosing to watch our content to completion versus opting out. Since January, we've seen double-digit improvements in our Google search and EMV trends relative to a cosmetics category that saw soft trends in these measures. Collectively, these efforts drove share gains, with Nielsen reporting elf dollar share in the last 12 weeks of 4.3%, up 50 basis points. Our brand has been highly responsive to our marketing efforts, and the lift in brand awareness is bringing new consumers to our retailers and to elfcosmetics.com. For the quarter, our e-commerce site saw double-digit increases in traffic, conversion, and revenue growth versus last year. In addition to bringing more people to the brand, we are transforming the elf consumer journey through digital technology. This will enable a better consumer experience, including a revamped Beauty Squad loyalty program. Beauty Squad, which has 1.3 million members, now features receipt scanning, allowing members to earn points for in-store purchases made at national retailers such as Walmart, Target, Ulta Beauty, and drugstores. This, along with other technology enhancements, will allow us to connect our consumer data to enable better personalization. In the first quarter, we continue to ramp up our targeted outreach to influencers with box mailings and launch events featuring hero products like our new limited edition Jelly Pop collection. The Jelly Pop launch was supported with 500 influencers receiving a custom mini elf Jelly Pop refrigerator to keep this playful collection cool during the hot summer months. Mega influencers posted positive reviews and content to over 58 million of their combined followers on Instagram. Jelly Pop engagement on Instagram has been seven times greater than our average post. In addition to influencer outreach, we have a steady calendar of monthly giveaways and collaborations supported with new digital content. All of this has helped grow our Instagram followers to over 4.7 million. We're leveraging our unique combination of cost, quality, and speed to drive our third imperative, a focus on first to mass by providing prestige quality products at an extraordinary value. We're focused on supporting our hero products like Poreless Putty Primer, which the UK Daily Mail recently called the best primer ever. In June, Poreless Putty Primer was the number one e.l.f. item at Target, Ulta, Walmart, and e.l.f.cosmetics.com. We're also leveraging the strength of our 16-hour camo concealer, which compares favorably to the leading concealer in prestige. We launched new camo displays in 1,500 Walmart doors and camo plus e.l.f. sponge flex towers in 1,500 target locations. We continue to amplify these products through our digital marketing to truly make this a 360-degree activation. Our fourth imperative, improving productivity at national retailers, is on track with Phase 1 of Project Unicorn complete across our largest national retail partners. During the quarter, we saw improvements in productivity within our tracked channels, which include Target and Walmart, as well as our untracked channels, such as Ulta. With the packaging and merchandising enhancements from Unicorn, we've seen growth across product segments. Phase 2 of Project Unicorn, which mostly covers brushes, starts this month in all channels. Phase 3 of Unicorn is planned for the spring 2020 sets, where we'll introduce more new items and better visual merchandising across retailers. Our fifth strategic imperative is generating cost savings to help offset our increased marketing spend. As a reminder, our most significant initiative was closing our 22 ELF stores in February. We expect to redeploy the $13.7 million in savings from this to our marketing and digital initiatives. In addition, we have started our Ontario-California distribution center automation and expect to be fully running by the end of September. Our U.S. liquid fill facility is on schedule and expected to be operational by the end of the fiscal year. We also continue to strengthen our China operations using lean manufacturing techniques. Combined, we expect these supply chain efforts to provide around $3 million in cost savings this year. With that update, I'll now turn the call over to Mandy to discuss our results and guidance in more detail.