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 – 23.64% × 936,268 = -89,127
The analysis of economic profit over the five-year period ending March 31, 2024, reveals a persistent inability to generate positive economic value, as economic profit remained negative across all observed years.
- Net Operating Profit After Taxes (NOPAT)
- A significant upward trend in NOPAT is observed following a sharp contraction in March 2021. After reaching a low of 618 thousand dollars, NOPAT grew consistently, escalating to 132,182 thousand dollars by March 2024. This trajectory indicates a substantial increase in operational efficiency and earnings power over the latter part of the period.
- Cost of Capital and Invested Capital
- The cost of capital remained high and relatively stable, ranging from 20.79% to 23.87%. Invested capital exhibited modest growth between 2020 and 2023, but experienced a rapid acceleration in March 2024, nearly doubling to 936,268 thousand dollars. This sharp increase in the capital base significantly elevated the total capital charge required to achieve a positive economic profit.
- Economic Profit Trends
- Economic profit remained negative throughout the duration of the analysis, signifying that NOPAT was insufficient to cover the cost of invested capital. While a recovery trend was visible between 2021 and 2023, where losses narrowed from -95,482 thousand dollars to -61,450 thousand dollars, this progress was reversed in 2024. The expansion of the invested capital base in the final year outweighed the gains in operational profit, leading to a deepened economic loss of -89,127 thousand dollars.
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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 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.
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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).
- 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.
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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.
- 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 $936.268 million as of March 2024. This substantial increase parallels the surge in total debt and leases, possibly indicating increased investments or assets financed by the higher debt levels. The overall trend suggests expansion or significant investment activities in the latest fiscal year.
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Cost of Capital
e.l.f. Beauty, Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 10,335,864) | 10,335,864) | ÷ | 10,627,271) | = | 0.97 | 0.97 | × | 24.16% | = | 23.49% | ||
| Long-term debt, including current portion3 | 262,932) | 262,932) | ÷ | 10,627,271) | = | 0.02 | 0.02 | × | 6.83% × (1 – 21.00%) | = | 0.13% | ||
| Operating lease liability4 | 28,475) | 28,475) | ÷ | 10,627,271) | = | 0.00 | 0.00 | × | 5.10% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 10,627,271) | 1.00 | 23.64% | ||||||||||
Based on: 10-K (reporting date: 2024-03-31).
1 US$ 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 | × | 24.16% | = | 23.81% | ||
| 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 | 23.87% | ||||||||||
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 | × | 24.16% | = | 22.13% | ||
| 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 | 22.29% | ||||||||||
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 | × | 24.16% | = | 21.91% | ||
| 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 | 22.14% | ||||||||||
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 | × | 24.16% | = | 20.39% | ||
| 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 | 20.79% | ||||||||||
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 | (89,127) | (61,450) | (77,545) | (95,482) | (60,485) | |
| Invested capital2 | 936,268) | 496,463) | 439,123) | 434,062) | 418,026) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -9.52% | -12.38% | -17.66% | -22.00% | -14.47% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Procter & Gamble Co. | 6.12% | 5.93% | 6.33% | 5.92% | — | |
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 × -89,127 ÷ 936,268 = -9.52%
4 Click competitor name to see calculations.
An analysis of the economic value added metrics reveals a consistent trend of negative economic profit from 2020 through 2024, indicating that the entity has not generated returns in excess of its cost of capital during this period. While the absolute economic profit has fluctuated, remaining within a range between -60.4 million and -95.5 million US dollars, there is a notable expansion in the capital base supporting these operations.
- Economic Profit Trends
- Economic profit remained negative throughout the five-year period. A peak deficit occurred in 2021 at -95.5 million US dollars, followed by a gradual recovery through 2023. However, this recovery was reversed in 2024, with the deficit widening again to -89.1 million US dollars.
- Invested Capital Growth
- Invested capital exhibited a steady upward trajectory, increasing from 418.0 million US dollars in 2020 to 496.5 million US dollars by 2023. A significant acceleration in capital investment is observed in 2024, where invested capital rose sharply to 936.3 million US dollars, representing an 88% increase over the previous year.
- Economic Spread Ratio Performance
- The economic spread ratio has remained negative, confirming that the return on invested capital is below the required rate of return. Despite the negative values, the ratio demonstrates a general trend of improvement, moving from -14.47% in 2020 to -9.52% in 2024. The sharp decline to -22.00% in 2021 represents the period of lowest efficiency relative to the cost of capital, while the subsequent move toward zero suggests a narrowing gap between the actual return and the cost of capital.
The combination of increasing invested capital and a narrowing negative economic spread ratio suggests that while the entity is scaling its operations and improving its relative efficiency, it has yet to reach the threshold of positive economic value creation.
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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 | (89,127) | (61,450) | (77,545) | (95,482) | (60,485) | |
| Net sales | 1,023,932) | 578,844) | 392,155) | 318,110) | 282,851) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -8.70% | -10.62% | -19.77% | -30.02% | -21.38% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Procter & Gamble Co. | 7.11% | 6.99% | 7.42% | 7.39% | — | |
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 × -89,127 ÷ 1,023,932 = -8.70%
3 Click competitor name to see calculations.
The financial performance between March 31, 2020, and March 31, 2024, is characterized by a significant divergence between absolute economic profit and the economic profit margin, occurring alongside aggressive revenue expansion.
- Net Sales Expansion
- A substantial and accelerating increase in net sales is observed, rising from 282,851 thousand USD in 2020 to 1,023,932 thousand USD in 2024. The growth trajectory intensified significantly in the final two years of the period, with sales nearly doubling between March 2023 and March 2024.
- Economic Profit Trends
- Economic profit remained consistently negative throughout the analyzed period, indicating that the entity did not generate returns exceeding its cost of capital. The absolute economic loss exhibited volatility, reaching its lowest point in 2021 at 95,482 thousand USD and ending the period at 89,127 thousand USD in 2024.
- Economic Profit Margin Progression
- The economic profit margin demonstrates a positive trend toward zero, despite the persistence of negative absolute values. After a peak deficit of -30.02% in 2021, the margin improved consistently over the subsequent three years, reaching -8.70% by March 31, 2024. This compression of the negative margin suggests that the scale of revenue growth is outpacing the increase in the cost of capital, leading to improved economic efficiency relative to sales volume.
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