Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
e.l.f. Beauty, Inc., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 132,182 – 23.58% × 936,268 = -88,629
The analysis of economic profit from 2020 to 2024 reveals a persistent inability to generate value above the cost of capital, despite a significant acceleration in operating profitability toward the end of the period.
- Net Operating Profit After Taxes (NOPAT)
- A volatile but ultimately aggressive upward trend is observed in NOPAT. Following a sharp decline in 2021 to 618 thousand dollars, profitability recovered in 2022 and grew exponentially thereafter, reaching 132,182 thousand dollars by March 31, 2024. This indicates a substantial improvement in the core operational efficiency and earning power of the business.
- Invested Capital and Cost of Capital
- Invested capital remained relatively stable between 2020 and 2023, ranging from 418,026 to 496,463 thousand dollars, before nearly doubling to 936,268 thousand dollars in 2024. Simultaneously, the cost of capital has remained consistently high, fluctuating within a narrow band between 20.75% and 23.81%. The combination of a high capital charge and a massive increase in the capital base in 2024 has offset the gains made in operational profit.
- Economic Profit Trends
- Economic profit remained negative throughout the entire five-year period, indicating that the company did not generate sufficient returns to cover its cost of capital. While there was a period of narrowing losses between 2021 and 2023, the economic profit declined again to -88,629 thousand dollars in 2024. The increase in negative economic profit in the final year, despite record NOPAT, is directly attributable to the surge in invested capital multiplied by a high cost of capital.
In summary, while operational growth is accelerating rapidly, the scale of new investment and the high cost of capital continue to result in negative economic value added.
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Net Operating Profit after Taxes (NOPAT)
e.l.f. Beauty, Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in equity equivalents to net income.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 28,475 × 5.10% = 1,452
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 13,292 × 21.00% = 2,791
6 Addition of after taxes interest expense to net income.
7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 4,817 × 21.00% = 1,012
8 Elimination of after taxes investment income.
The financial trajectory between March 31, 2020, and March 31, 2024, is characterized by a sharp temporary contraction followed by a period of exponential growth in both bottom-line profitability and core operating efficiency.
- Net Income Trends
- Net income experienced a significant decline in 2021, falling to 6,232 thousand USD from 17,884 thousand USD in the previous year. Following this trough, a consistent upward trend is observed, with earnings accelerating rapidly to 61,530 thousand USD in 2023 and peaking at 127,663 thousand USD by March 31, 2024.
- Net Operating Profit After Taxes (NOPAT) Analysis
- NOPAT exhibited extreme volatility during the initial phase of the period. A severe compression occurred in 2021, where NOPAT dropped to 618 thousand USD from 26,428 thousand USD. This was followed by a robust recovery phase; NOPAT increased to 20,327 thousand USD in 2022 and surged to 132,182 thousand USD by 2024, indicating a substantial expansion in the company's ability to generate operating profits after tax.
- Operating Profitability and Growth Correlation
- The closely aligned movement between net income and NOPAT suggests that the overall profitability is primarily driven by operating performance. The acceleration observed from 2022 through 2024 indicates a scaling of operations and an improvement in operational margins. By the end of the period, the NOPAT figure slightly exceeded net income, confirming that the core business operations are the primary engine of value creation.
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Cash Operating Taxes
e.l.f. Beauty, Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
An analysis of the tax-related outflows reveals a consistent upward trajectory in cash operating taxes over the five-year period, contrasting with the higher volatility observed in the provision for income taxes. The disparity between accounting provisions and actual cash payments suggests significant timing differences and the impact of deferred tax items on the company's cash flow.
- Cash Operating Tax Trajectory
- Cash operating taxes have exhibited uninterrupted annual growth from March 31, 2020, through March 31, 2024. Starting at 5,178 thousand US dollars in 2020, payments increased steadily to 9,455 thousand US dollars by 2023. A substantial acceleration occurred in the final period, with cash operating taxes rising to 18,383 thousand US dollars in 2024, representing an approximate 94.5% increase over the preceding year.
- Income Tax Provision Volatility
- The provision for income taxes demonstrated significant fluctuations, unlike the linear growth of cash payments. A notable inversion occurred on March 31, 2021, where a tax benefit of 2,542 thousand US dollars was recorded. Following this, provisions remained relatively low through 2023 before spiking to 13,327 thousand US dollars in 2024. This volatility indicates that the non-cash accounting expense for taxes does not closely mirror the immediate cash requirements for tax settlement.
- Comparative Divergence and Convergence
- A significant divergence is observed between 2021 and 2023, where cash operating taxes consistently exceeded the reported tax provisions. In 2021, the gap was most pronounced, as the company recognized a tax benefit while simultaneously increasing its cash tax outflows to 7,044 thousand US dollars. By March 31, 2024, while both metrics increased sharply, the cash operating tax outflow of 18,383 thousand US dollars remained substantially higher than the provision of 13,327 thousand US dollars, indicating a continued trend of cash payments exceeding the period's accounting tax expense.
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Invested Capital
e.l.f. Beauty, Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
Invested capital exhibited a period of moderate growth between fiscal years 2020 and 2023, followed by a substantial acceleration in 2024. Total invested capital increased from US$ 418,026 thousand in 2020 to US$ 936,268 thousand by 2024, representing a significant expansion of the capital base utilized for operations.
- Stockholders' Equity Trends
- A consistent and accelerating upward trajectory is observed in stockholders' equity, which grew from US$ 242,171 thousand in 2020 to US$ 642,572 thousand in 2024. This steady accumulation suggests a strong internal generation of capital or external equity financing, serving as the primary driver of the invested capital base for the majority of the analyzed period.
- Debt and Lease Obligations
- Total reported debt and leases followed a contractionary trend from 2020 through 2023, declining from US$ 152,978 thousand to a low of US$ 82,167 thousand. This trend was abruptly reversed in 2024, where debt and leases increased to US$ 290,601 thousand, indicating a significant shift toward higher leverage in the most recent fiscal year.
- Invested Capital Composition and Growth
- The growth of the invested capital base remained relatively stable from 2020 to 2022, with a marginal increase of approximately 5%. Growth accelerated in 2023 to US$ 496,463 thousand before experiencing a sharp spike in 2024. The final year's increase to US$ 936,268 thousand was driven by the simultaneous expansion of both the equity base and a substantial increase in debt and lease obligations.
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Cost of Capital
e.l.f. Beauty, Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 10,335,864) | 10,335,864) | ÷ | 10,627,271) | = | 0.97 | 0.97 | × | 24.10% | = | 23.44% | ||
| Long-term debt, including current portion3 | 262,932) | 262,932) | ÷ | 10,627,271) | = | 0.02 | 0.02 | × | 6.83% × (1 – 21.00%) | = | 0.13% | ||
| Operating lease liability4 | 28,475) | 28,475) | ÷ | 10,627,271) | = | 0.00 | 0.00 | × | 5.10% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 10,627,271) | 1.00 | 23.58% | ||||||||||
Based on: 10-K (reporting date: 2024-03-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 5,610,256) | 5,610,256) | ÷ | 5,692,850) | = | 0.99 | 0.99 | × | 24.10% | = | 23.75% | ||
| Long-term debt, including current portion3 | 66,883) | 66,883) | ÷ | 5,692,850) | = | 0.01 | 0.01 | × | 6.17% × (1 – 21.00%) | = | 0.06% | ||
| Operating lease liability4 | 15,711) | 15,711) | ÷ | 5,692,850) | = | 0.00 | 0.00 | × | 2.60% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 5,692,850) | 1.00 | 23.81% | ||||||||||
Based on: 10-K (reporting date: 2023-03-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,287,478) | 1,287,478) | ÷ | 1,405,282) | = | 0.92 | 0.92 | × | 24.10% | = | 22.08% | ||
| Long-term debt, including current portion3 | 97,669) | 97,669) | ÷ | 1,405,282) | = | 0.07 | 0.07 | × | 2.31% × (1 – 21.00%) | = | 0.13% | ||
| Operating lease liability4 | 20,135) | 20,135) | ÷ | 1,405,282) | = | 0.01 | 0.01 | × | 2.70% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 1,405,282) | 1.00 | 22.24% | ||||||||||
Based on: 10-K (reporting date: 2022-03-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,473,056) | 1,473,056) | ÷ | 1,624,221) | = | 0.91 | 0.91 | × | 24.10% | = | 21.86% | ||
| Long-term debt, including current portion3 | 126,789) | 126,789) | ÷ | 1,624,221) | = | 0.08 | 0.08 | × | 3.23% × (1 – 21.00%) | = | 0.20% | ||
| Operating lease liability4 | 24,376) | 24,376) | ÷ | 1,624,221) | = | 0.02 | 0.02 | × | 2.80% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 1,624,221) | 1.00 | 22.09% | ||||||||||
Based on: 10-K (reporting date: 2021-03-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 828,650) | 828,650) | ÷ | 981,837) | = | 0.84 | 0.84 | × | 24.10% | = | 20.34% | ||
| Long-term debt, including current portion3 | 138,865) | 138,865) | ÷ | 981,837) | = | 0.14 | 0.14 | × | 3.24% × (1 – 21.00%) | = | 0.36% | ||
| Operating lease liability4 | 14,322) | 14,322) | ÷ | 981,837) | = | 0.01 | 0.01 | × | 3.70% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 981,837) | 1.00 | 20.75% | ||||||||||
Based on: 10-K (reporting date: 2020-03-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
e.l.f. Beauty, Inc., economic spread ratio calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | (88,629) | (61,182) | (77,324) | (95,266) | (60,292) | |
| Invested capital2 | 936,268) | 496,463) | 439,123) | 434,062) | 418,026) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -9.47% | -12.32% | -17.61% | -21.95% | -14.42% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Procter & Gamble Co. | 6.06% | 5.88% | 6.28% | 5.86% | — | |
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -88,629 ÷ 936,268 = -9.47%
4 Click competitor name to see calculations.
An analysis of the economic value added metrics reveals a period of consistent negative economic profit, although the relative efficiency of capital utilization has shown a recovery trend since 2021.
- Economic Profit Trends
- Economic profit remained negative throughout the five-year period ending March 31, 2024. The most significant deficit was recorded in 2021 at -95,266 thousand USD. While a recovery period followed, with losses narrowing to -61,182 thousand USD by 2023, the deficit widened again to -88,629 thousand USD in 2024.
- Invested Capital Growth
- Invested capital demonstrated a steady upward trajectory from 418,026 thousand USD in 2020 to 496,463 thousand USD in 2023. A substantial expansion occurred in 2024, with invested capital rising to 936,268 thousand USD, representing an 88.6% increase over the previous fiscal year.
- Economic Spread Ratio Analysis
- The economic spread ratio exhibited significant volatility before entering a period of consistent improvement. After reaching a nadir of -21.95% in 2021, the ratio improved incrementally each year, reaching -9.47% by March 31, 2024. Notably, the ratio improved in 2024 despite a simultaneous increase in absolute economic losses; this indicates that the substantial increase in the invested capital base diluted the negative impact of the economic profit deficit on the overall spread.
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Economic Profit Margin
e.l.f. Beauty, Inc., economic profit margin calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | (88,629) | (61,182) | (77,324) | (95,266) | (60,292) | |
| Net sales | 1,023,932) | 578,844) | 392,155) | 318,110) | 282,851) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -8.66% | -10.57% | -19.72% | -29.95% | -21.32% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Procter & Gamble Co. | 7.04% | 6.92% | 7.35% | 7.32% | — | |
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × -88,629 ÷ 1,023,932 = -8.66%
3 Click competitor name to see calculations.
The financial trajectory between 2020 and 2024 is characterized by substantial revenue expansion occurring alongside persistent negative economic profit. While the entity consistently failed to generate value above its cost of capital throughout the period, there is a visible trend of operational scaling that has mitigated the relative impact of these losses.
- Net Sales Performance
- An accelerating upward trend in net sales is observed, with revenues increasing from 282,851 thousand USD in 2020 to 1,023,932 thousand USD in 2024. This represents a significant expansion of market scale and top-line growth over the five-year period.
- Economic Profit Trends
- Absolute economic profit remained negative for all reported years, indicating that the company's operating returns did not cover the cost of invested capital. A notable decline occurred in 2021, where losses reached 95,266 thousand USD, followed by a gradual recovery through 2023. However, a reversal was observed in 2024, with economic profit decreasing again to -88,629 thousand USD.
- Economic Profit Margin Analysis
- Despite the volatility in absolute economic profit, the economic profit margin demonstrates a steady improvement since 2021. The margin moved from a low of -29.95% in 2021 to -8.66% in 2024. This trend suggests that the rapid growth in net sales is outpacing the growth of the capital charge, thereby reducing the proportional loss relative to revenue and narrowing the gap toward achieving positive economic value added.
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