Economic Value Added (EVA)
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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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e.l.f. Beauty, Inc. pages available for free this week:
- Balance Sheet: Assets
- Cash Flow Statement
- Common-Size Income Statement
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Net Profit Margin since 2016
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Economic Profit
e.l.f. Beauty, Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes exhibited significant volatility over the analyzed periods. Starting from a positive value of approximately $26.4 million in 2020, it drastically declined to a minimal amount in 2021. This was followed by a sharp recovery, more than doubling by 2023 and reaching its highest level at approximately $132.2 million in 2024. Overall, the trend suggests substantial improvement in operational profitability after the low point in 2021.
- Cost of Capital
- The cost of capital showed a general increasing trend, starting at 17.63% in 2020 and peaking at just over 20% in 2023. It slightly decreased to 19.99% in the latest period. This indicates a rising expense or required return on invested capital over time, potentially reflecting changes in market conditions or company risk profile.
- Invested Capital
- Invested capital steadily increased throughout the observed years, from around $418 million in 2020 to $496 million in 2023, before nearly doubling to approximately $936 million in 2024. This substantial increase indicates expanded asset base and capital deployment, particularly marked in the last year.
- Economic Profit
- Despite managing positive NOPAT figures for most periods, economic profit remained negative across all years, ranging from approximately -$47.3 million in 2020 to a peak negative value of -$80.7 million in 2021. Although economic losses decreased somewhat subsequently, the company still recorded negative economic profit in 2024 at about -$55.0 million. This pattern suggests that returns generated did not sufficiently exceed the cost of capital.
- Summary and Insights
- The data reveals a company experiencing operational profitability challenges initially, with a low NOPAT in 2021, then showing strong improvement by 2024. However, the rising cost of capital coupled with increasing invested capital resulted in persistent negative economic profit, indicating value destruction relative to capital cost. The substantial growth in invested capital in the final year contrasts with the continued negative economic profit, which may warrant further examination regarding the efficiency of capital usage and strategic investments.
Net Operating Profit after Taxes (NOPAT)
e.l.f. Beauty, Inc., NOPAT calculation
US$ 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
= × =
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
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
= × 21.00% =
8 Elimination of after taxes investment income.
The analysis of the financial performance over the reported periods reveals significant fluctuations and an overall strong upward trend in profitability metrics.
- Net Income
- The net income experienced a notable decline from 17,884 thousand USD in 2020 to 6,232 thousand USD in 2021, indicating a decrease in profitability. However, from 2021 onwards, the net income showed a robust recovery and growth, rising substantially to 21,770 thousand USD in 2022 and accelerating sharply to 61,530 thousand USD in 2023. This growth continued into 2024, with net income reaching 127,663 thousand USD, reflecting a significant improvement in the company's earnings over the five-year span.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT followed a somewhat similar pattern, starting at 26,428 thousand USD in 2020 and dumping dramatically to 618 thousand USD in 2021, which suggests operational challenges or increased expenses during that year. Subsequently, NOPAT rebounded to 20,327 thousand USD in 2022 and increased strongly to 57,046 thousand USD in 2023. The upward trajectory persisted, with NOPAT climbing to 132,182 thousand USD in 2024, indicating enhanced operational efficiency and profitability after accounting for taxes.
Overall, the data indicates that despite a difficult year in 2021, both net income and NOPAT improved significantly in the following years, culminating in record-high results in 2024. This suggests effective management strategies, operational improvements, or market conditions that positively impacted profitability and operational performance.
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).
- Provision (benefit) for income taxes
- The provision for income taxes displayed notable volatility over the analyzed periods. In the year ending March 31, 2020, there was a positive provision amounting to 6,185 thousand US dollars, which turned into a tax benefit (negative provision) of 2,542 thousand US dollars in the subsequent year. The provision reverted to a positive figure of 3,661 thousand US dollars for the year ending March 31, 2022, then increased slightly to 2,544 thousand US dollars in 2023, followed by a substantial rise to 13,327 thousand US dollars in 2024. This substantial increase in 2024 suggests a significant rise in taxable income or changes in tax strategy or rates affecting the provision.
- Cash operating taxes
- Cash operating taxes exhibited a consistent upward trajectory throughout the analyzed timeline. Starting at 5,178 thousand US dollars in 2020, this figure increased year-over-year, reaching 7,044 thousand US dollars in 2021, 7,989 thousand US dollars in 2022, then 9,455 thousand US dollars in 2023. The most pronounced increase occurred between 2023 and 2024, when cash operating taxes nearly doubled to 18,383 thousand US dollars. This trend indicates increasing cash outflows related to tax obligations, potentially reflecting higher taxable profits, changes in tax regulations, or improved collection and payment practices.
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.
- Total Reported Debt & Leases
- The total reported debt and leases showed a declining trend from March 31, 2020, through March 31, 2023, decreasing from $152.978 million to $82.167 million. This represents a substantial reduction in debt and lease obligations over this period. However, as of March 31, 2024, there was a significant increase to $290.601 million, indicating a sharp rise in leverage or financing commitments in the most recent year.
- Stockholders' Equity
- Stockholders' equity demonstrated consistent growth over the five-year period. Starting at $242.171 million in March 2020, it increased steadily each year, reaching $642.572 million by March 2024. This reflects a strong accumulation of equity, potentially through retained earnings and/or capital infusions, suggesting an improvement in the company's net assets and financial strength.
- Invested Capital
- Invested capital rose gradually from $418.026 million in March 2020 to $496.463 million in March 2023. Notably, there was a considerable jump to $936.268 million as of March 2024. This substantial increase parallels the surge in total debt and leases, possibly indicating increased investments or assets financed by the higher debt levels. The overall trend suggests expansion or significant investment activities in the latest fiscal year.
Cost of Capital
e.l.f. Beauty, Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-03-31).
1 US$ 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 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Procter & Gamble Co. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- Economic profit exhibits a fluctuating but overall negative trend throughout the observed periods. It reached its lowest point in the year ending March 31, 2021, at -80,730 thousand US dollars, followed by a partial recovery in the subsequent year to -62,469 thousand US dollars. The value further improved in the year ending March 31, 2023, declining in absolute negative terms to -43,116 thousand US dollars, but then deteriorated again in the latest period to -55,004 thousand US dollars. This indicates persistent challenges in generating positive economic value despite some intermittent improvements.
- Invested Capital
- Invested capital shows a steady increase over the five-year span. Starting at 418,026 thousand US dollars in 2020, the figure rises consistently each year, reaching 496,463 thousand US dollars by March 31, 2023. The most pronounced increase occurs in the final year, with invested capital nearly doubling to 936,268 thousand US dollars. This suggests a significant scaling up of invested resources, possibly reflecting expanded operations or increased asset base.
- Economic Spread Ratio
- The economic spread ratio remains negative throughout the analyzed periods, albeit with a clear improving trend. It starts at -11.31% in 2020, worsens in 2021 to -18.6%, and then steadily improves in the following years to -14.23% in 2022, -8.68% in 2023, and finally -5.87% in 2024. Although still below zero, this gradual improvement indicates a narrowing gap between returns on invested capital and the cost of capital.
- Overall Assessment
- The data reveals a company investing increasingly larger amounts of capital but continuing to experience negative economic profits and returns below the cost of capital. However, improvements in economic profit and economic spread ratio in recent years suggest some progress in operational efficiency or profitability. The sharp increase in invested capital in the latest year may represent strategic growth initiatives, though the corresponding dip in economic profit highlights the need to monitor the effectiveness of these investments in generating value.
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 | ||||||
| Net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Procter & Gamble Co. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
The financial data reveals several notable trends and insights over the analyzed periods.
- Net Sales
- Net sales exhibited a consistent and substantial growth trend throughout the periods. Starting at $282.9 million in 2020, sales increased steadily each year, reaching over $1.0 billion by 2024. This represents a significant expansion in revenue, more than tripling within the five-year span, indicative of strong market demand, successful product positioning, or effective sales strategies.
- Economic Profit
- Economic profit remained negative across all years, indicating that the company did not generate returns above its cost of capital during this period. The economic loss was largest in 2021 at approximately -$80.7 million, followed by a moderate improvement in 2022 and a further reduction in losses in 2023. However, there was a slight deterioration again in 2024, with economic profit worsening to about -$55.0 million after its lowest point in 2023. This suggests ongoing challenges in achieving value creation despite increasing sales.
- Economic Profit Margin
- The economic profit margin, which shows economic profit as a percentage of net sales, reflects a similar pattern to economic profit. The margin was most negative in 2021 at -25.38%, indicating high inefficiency or elevated costs relative to sales. From 2021 onward, the margin improved significantly, reaching -5.37% by 2024. While still negative, this margin improvement signals progress toward better profitability and operational efficiency, although the company has yet to achieve a positive margin.
In summary, the company demonstrated robust revenue growth over the five-year period but struggled to convert sales growth into positive economic profit. Although the economic profit and its margin improved notably after 2021, persistent negative values suggest that cost management or capital efficiency will require continued attention to achieve sustainable value creation.