e.l.f. Beauty, Inc. (NYSE:ELF)

Inventory Turnover

The inventory turnover ratio demonstrates notable variability over the analyzed periods, fluctuating between lows of approximately 1.29 and highs near 2.32. Initially, the ratio saw a decline from 1.9 to around 1.52 by the end of 2020, followed by an increase peaking in early 2023. However, post early 2023, the turnover ratio exhibited a downward trend, suggesting a slower rate of inventory movement in recent quarters.

Receivables Turnover

The receivables turnover ratio generally oscillates between 6.74 and 9.64, with intermittent peaks and troughs. There were periods of reduction in turnover, such as in late 2020 and late 2022, indicating slower collection of receivables, whereas the ratio tends to improve intermittently, reflecting variable efficiency in managing receivables.

Payables Turnover

The payables turnover ratio displays considerable fluctuation, ranging from a low of about 3.62 to a high above 9.00. A significant increase was observed around mid-2022, reaching the highest ratio, which implies faster payments to suppliers during that time. From late 2022 onwards, the ratio decreased again, indicating a slower payment pace more recently.

Working Capital Turnover

Working capital turnover ratios remain mostly stable within a range of approximately 2.5 to 3.5 until mid-2023, when a marked and sharp increase was observed, reaching levels near 5.86. This suggests enhanced efficiency in utilizing working capital for generating sales, although values decreased slightly thereafter while remaining elevated relative to earlier periods.

Average Inventory Processing Period

This metric inversely correlates with inventory turnover, showing an initial increase with values peaking above 280 days, indicating lengthier inventory holding times. After peaking, the period shortened considerably but rebounded again in some recent quarters, reflecting varying inventory management practices and potential challenges in inventory movement.

Average Receivable Collection Period

The average receivable collection period fluctuates between 38 and 54 days, without a clear long-term trend. These variations suggest alternating periods of faster and slower collection cycles but generally maintain a consistent range, pointing to a relatively stable credit management approach.

Operating Cycle

The operating cycle follows a pattern similar to that of inventory processing and receivable collection periods, fluctuating roughly between 200 and 330 days. The extended cycles in some quarters indicate slower overall turnover of inventory to cash, while shorter cycles imply improved operational efficiency.

Average Payables Payment Period

This metric reveals a trend of decreasing payment periods from about 78 days down to approximately 40 days during mid-2022, followed by a subsequent increase reaching above 100 days in early 2024. The periods of extended payable terms may indicate a strategic delay in cash outflows to preserve liquidity, while shorter periods reflect faster payments.

Cash Conversion Cycle

The cash conversion cycle exhibits considerable variability between about 126 and 232 days. It demonstrates declines correlating with improvements in inventory movement and receivables collection, and increases that align with lengthened inventory holding and receivables periods. The recent trend shows some increase after a prior low, indicating a return to a longer duration in converting resources into cash.

Cost of Sales

The cost of sales exhibits a generally upward trajectory over the analyzed periods. Beginning at approximately $21.2 million in mid-2020, it rose consistently to reach a peak around $93.9 million by mid-2024. Notably, the increase accelerated from late 2022 onwards, with sharp quarterly growth, indicating rising expense associated with sales or higher sales volumes in this timeframe.

Inventory, Net

Net inventory levels show significant fluctuations with a long-term increasing trend. Initially, inventory was about $52.8 million in mid-2020, with some variation through 2021 and early 2022. From late 2022 onward, inventory experienced a pronounced escalation, rising steeply to approximately $199.6 million by mid-2024. This suggests either an accumulation of stock or possibly preparation for increased sales demand. The rapid buildup especially from mid-2023 to mid-2024 could imply strategic stockpiling or challenges in inventory turnover efficiency.

Inventory Turnover Ratio

The inventory turnover ratio, which reflects the efficiency of managing inventory relative to sales, shows considerable volatility. Starting near 1.9 in mid-2020, it declined to a low around 1.5–1.6 during much of 2020 and 2021, implying slower inventory movement relative to sales. The ratio improved somewhat in late 2021 and early 2023, reaching above 2.3 at times, indicating periods of stronger inventory management or faster sales. However, from late 2023 onward, the turnover ratio again declined to as low as 1.29 before slightly recovering, suggesting that inventory was moving more slowly relative to the cost of sales during this period. This trend aligns with the significant inventory build-up noted, implying potential buildup of unsold goods or slower sales absorption.

Summary Insights

The overall pattern indicates that while the cost of sales has steadily increased, the company has also accumulated inventory considerably, especially in the most recent periods. The declining inventory turnover ratio towards the latest quarters highlights potential inefficiencies or strategic stock increases that have not yet translated into proportional sales. This imbalance could reflect market demand shifts, supply chain strategies, or forecasting challenges. Continued monitoring of sales performance relative to inventory levels is advisable to optimize working capital and reduce carrying costs.

Net Sales

Net sales exhibited a consistent upward trend over the observed periods. Beginning at approximately $64.5 million as of June 30, 2020, sales increased steadily, reaching over $324 million by June 30, 2024. Notable seasonal fluctuations are visible, with higher sales around year-end quarters, particularly December. The growth accelerated significantly from March 2023 onwards, with quarterly sales increasing by large margins compared to earlier periods. This pattern indicates strong expansion and improved market performance over time.

Accounts Receivable, Net

The accounts receivable balance also increased consistently throughout the periods, starting near $29.8 million in mid-2020 and climbing to approximately $155.7 million by mid-2024. While the balance grew in line with net sales, the rate of increase appears somewhat more pronounced from early 2023, mirroring the surge in sales volume. This rising accounts receivable balance indicates greater credit extended to customers and may require attention to collections management to maintain liquidity.

Receivables Turnover Ratio

The receivables turnover ratio, which measures how efficiently the company collects receivables, fluctuated within a relatively narrow band between roughly 6.7 and 9.6 times per year. The ratio peaked at 9.64 in June 2020 and dipped to its lowest of 6.74 in December 2020, reflecting some temporary easing in collections or an increase in outstanding receivables relative to sales. Subsequent quarters show cyclical variation, with occasional declines followed by rebounds, but no clear long-term upward or downward trend is evident. In the most recent data, the turnover ratio remained near 7.27 to 8.27, suggesting stable, if not markedly improving, collection efficiency despite growing receivables and sales.

Summary

Overall, the data reveal robust growth in sales accompanied by a proportional increase in accounts receivable. The steady yet fluctuating receivables turnover ratio indicates reasonable ongoing management of credit and collections, although the growing receivables balance warrants continued attention to maintain cash flow health. The sales acceleration from 2023 onward underlines significant business expansion, while the relatively stable turnover ratio implies credit policies and collections have remained consistent despite rapid growth.

The analysis of the quarterly financial data reveals several key trends relating to cost of sales, accounts payable, and payables turnover ratios over the examined periods.

Cost of Sales

The cost of sales demonstrates a consistent upward trajectory throughout the observed quarters. Starting from approximately $21.2 million in the second quarter of 2020, the cost steadily increases each period with occasional sharper rises, reaching a peak close to $93.1 million by the second quarter of 2024. This trend suggests a continual growth in production or procurement expenses, likely associated with increased sales volume or rising input costs. The largest quarterly increments appear more pronounced in the recent periods, particularly from late 2022 onward, indicative of accelerated cost escalation.

Accounts Payable

Accounts payable figures show a more fluctuating pattern compared to cost of sales. Initially, there is a moderate decline from about $21.5 million in mid-2020 to roughly $15.7 million by the first quarter of 2021. This is followed by a recovery phase with values bouncing back and displaying a general upward climb from late 2021 onward. By the second quarter of 2024, accounts payable escalate significantly to near $80 million, marking a substantial increase in outstanding obligations. The marked rise in accounts payable in the last several quarters suggests either extended payment terms or increased purchasing on credit.

Payables Turnover Ratio

The payables turnover ratio exhibits considerable volatility across the periods under review. It starts around 4.67 in mid-2020, spikes to a peak of approximately 9.04 by mid-2022, and then declines sharply thereafter, falling to around 3.62 in late 2023 before a slight uptick to 4.12 by mid-2024. Higher turnover ratios in earlier years suggest more rapid payment cycles, while the decline in recent periods indicates a slower settlement of payables. This pattern could imply changing strategies in managing supplier payments or potential liquidity considerations impacting payment speeds.

Overall, the data portrays a scenario of increasing operational scale, as reflected by rising costs and elevated accounts payable balances. Concurrently, the variations in payables turnover indicate a shift toward longer payment terms or slower payables management in more recent quarters. These insights are essential for evaluating the company's cash flow dynamics and supplier relationship strategies over the period analyzed.

The analysis of the quarterly financial data reveals notable trends in working capital, net sales, and working capital turnover over the examined periods.

Working Capital

Working capital exhibits a general upward trend from mid-2020 through mid-2024, increasing from approximately $88.3 million to about $230.7 million. There are periods of more accelerated growth, specifically between mid-2021 and mid-2023, with a peak nearing $283.1 million reported in September 2023. However, a significant decline follows this peak in December 2023, dropping to around $152.0 million before subsequently rising again by mid-2024.

Net Sales

Net sales consistently increase throughout the observed timeframe, starting at $64.5 million in mid-2020 and reaching $324.5 million by mid-2024. The growth is steady with occasional periods of acceleration, particularly from late 2021 onward. Sales rose sharply in early 2023, achieving a notable high in June 2024. This steady increase indicates successful revenue expansion over the nearly four-year period.

Working Capital Turnover Ratio

The working capital turnover ratio shows a declining trend from 3.26 in June 2020 down to approximately 2.55 by September 2022. This indicates that working capital was being used less efficiently relative to sales during this period. From this point forward, the ratio fluctuates mildly with a slight recovery to about 2.96 by March 2023. A sharp and significant increase occurs during the last few quarters, with the ratio peaking at 5.86 in December 2023, followed by a slight decline, remaining elevated around 4.91 by mid-2024. This late surge suggests improved efficiency in utilizing working capital for generating sales, potentially influenced by the large dip in working capital during the same timeframe.

Inventory Turnover Ratio

The inventory turnover ratio exhibits notable fluctuations over the analyzed periods, ranging between a low of 1.29 and a high of 2.32. Initially, the ratio showed a declining trend from 1.9 in mid-2020 to 1.52 at the end of 2020, indicating slower inventory movement. This was followed by a recovery and peak at 2.32 in early 2023, suggesting improved efficiency in inventory management. However, the ratio declined again reaching its lowest point of 1.29 near the end of 2023, before slightly rebounding to 1.65 by mid-2024. The observed volatility indicates variable inventory turnover efficiency, potentially influenced by changing sales volumes or inventory management practices across quarters.

Average Inventory Processing Period

The average inventory processing period, expressed in days, inversely correlates with the inventory turnover ratio. It peaked at 240 days at the end of 2020, indicating longer holding periods for inventory during that time. Subsequently, the period decreased to a low of 158 days by mid-2021, aligning with the increased turnover ratio, and further stabilized around 158 to 177 days through early 2023. However, the processing period notably extended again subsequently, reaching a high of 283 days by late 2023. The period then slightly shortened but remained elevated above 220 days in mid-2024. This lengthening of inventory processing time reflects slower inventory movement and potential accumulation, which could be related to diminished demand or supply chain issues during these intervals.

Overall Trends and Insights

The inverse relationship between the inventory turnover ratio and the average inventory processing period throughout the periods suggests consistent patterns where higher turnover corresponds with lower days of inventory held, and vice versa. The initial half of the observation period showcases improvement in inventory efficiency, followed by a phase of deterioration starting in late 2022 and persisting into mid-2024. This downward trend in inventory efficiency may warrant attention to inventory management, demand forecasting, or market conditions affecting the company's ability to efficiently convert inventory into sales.

The receivables turnover ratio demonstrates variability over the observed periods with a general tendency to fluctuate between approximately 6.74 and 9.64. Notably, the turnover ratio peaked early in the dataset and experienced a decline thereafter, with intermittent recoveries. The most recent values suggest a slight decline compared to some prior quarters, indicating potential challenges in collecting receivables efficiently.

Correspondingly, the average receivable collection period exhibits an inverse relationship with the receivables turnover ratio. The number of days required to collect receivables increased from 38 days initially to peaks near 50 days at various points in the timeline. This pattern indicates a lengthening in the time customers take to pay, which could impact cash flow and working capital management.

Receivables Turnover Ratio

Shows a declining trend after reaching a high in the earlier quarters, with periodic improvements but generally lower values in the later periods.

Average Receivable Collection Period

Displays an increasing trend over the quarters, with fluctuations but an overall rise to around 50 days in recent quarters, signifying slower collection efficiency.

Relationship Between Metrics

The inverse correlation between the two metrics is evident, where a decrease in turnover ratio aligns with an increase in the average collection period, indicating slower cash inflow from receivables over time.

In summary, these trends suggest a gradual deterioration in the effectiveness of receivables management, with increasing days to collect payments and a decreased frequency of receivables turnover. These developments may warrant closer monitoring and possibly the implementation of enhanced credit and collection policies to improve liquidity and reduce credit risk exposure.

Average Inventory Processing Period

The average inventory processing period shows noticeable fluctuations over the observed quarters. Beginning at 192 days in mid-2020, it increased significantly to a peak of 240 days by the end of 2020. This was followed by a decline to 158 days by mid-2021. From there, the period again rose, reaching a high of 283 days at the end of 2023. The most recent figures indicate a decrease to 221 days by mid-2024. This variability suggests intermittent changes in inventory management efficiency or demand patterns, with periods of both rapid inventory turnover and slower processing.

Average Receivable Collection Period

The average receivable collection period remains relatively stable throughout the timeline, generally oscillating between 38 and 54 days. There is a slight peak of 54 days at the end of 2020 followed by mostly modest variations, typically around the mid-40s range. The data suggest consistent credit management practices, maintaining a steady timeframe for collecting receivables despite fluctuations in other operational metrics.

Operating Cycle

The operating cycle, which combines inventory processing and receivables collection periods, reflects the patterns observed in its components. It peaked at 294 days at the close of 2020, coinciding with the highest inventory processing period. A subsequent decline followed, bottoming near 201-217 days in early 2023. However, the cycle then extended again, peaking at 333 days at the end of 2023, before reducing to 271 days by mid-2024. These trends indicate periods of lengthening and contracting operating cycles, largely driven by inventory dynamics, which affect the cash-to-cash conversion efficiency.

Payables Turnover Ratio

The payables turnover ratio demonstrated a fluctuating trend over the observed periods. Initially, there was a gradual increase from 4.67 to a peak of 7.36 by June 30, 2021, indicating a faster rate of paying off payables. Subsequently, the ratio experienced volatility, reaching a high of 9.04 by June 30, 2022, before decreasing steadily to lower levels around 3.62 to 4.12 in the most recent quarters of 2023 and 2024. Overall, the turnover ratio reflects inconsistent payment speeds, with a tendency toward slower payments in the later quarters.

Average Payables Payment Period (Number of Days)

The average payables payment period inversely correlates with the turnover ratio, showing a decrease from 78 days in mid-2020 to a low near 40 days by June 2022, highlighting an acceleration in payment of payables during this interval. However, from late 2022 onward, the payment period extended significantly, peaking at around 101 days by December 31, 2023, before slightly decreasing to 89 days by June 30, 2024. This elongation of payment periods in recent quarters suggests a strategic shift towards more extended credit terms or slower payments.

Overall Insights

The analysis suggests a dynamic approach to managing accounts payable. The initial period showed an improvement in payment efficiency, with faster turnover and shorter payment periods, possibly to maintain supplier relations or capital efficiency. In contrast, the recent increase in payment days coupled with declines in turnover ratio indicates a possible tightening of cash flow management or renegotiation of payment terms to preserve liquidity. These shifts could reflect responses to broader economic conditions or internal cash flow priorities.

The financial data reveals notable fluctuations in the company's working capital efficiency metrics over the analyzed periods.

Average Inventory Processing Period

The inventory processing period exhibited significant variability. Initially, it rose from 192 days to a peak of 240 days by the end of 2020, signaling slower inventory turnover. A subsequent decline occurred in early 2021, reaching a low of 158 days by mid-2021, suggesting improved inventory management. Nonetheless, intermittent increases followed, with the period reaching its highest point of 283 days by late 2023 before decreasing again to 221 days in mid-2024. This pattern indicates ongoing challenges in maintaining consistent inventory turnover rates.

Average Receivable Collection Period

The receivable collection period remained relatively stable, fluctuating between 38 and 54 days. There were minor increases and decreases without a definitive trend, generally hovering around the mid-40s range. This stability suggests consistent credit and collection policies over time.

Average Payables Payment Period

The payables payment period experienced considerable volatility. Initially declining from 78 days in mid-2020 to 50 days around mid-2021, it then rose sharply, peaking at 101 days in late 2023. It slightly retracted toward the latest period but remained elevated at 89 days in mid-2024. This trend indicates a strategic extension of payment terms or delayed payments during the latter periods, which may have implications for supplier relationships and cash flow management.

Cash Conversion Cycle

The cash conversion cycle mirrored the patterns in inventory and payables periods. After climbing from 152 days to 224 days by the end of 2020, it declined steadily to 126 days by early 2023, reflecting improved operational efficiency. However, it surged again to 232 days in late 2023 before settling around 180 days in mid-2024. These fluctuations suggest challenges in synchronizing inventory turnover, receivables collection, and payables payment to optimize cash flow.

Overall, the data illustrates periods of improved operational efficiency interspersed with challenges in inventory management and payment practices. The extended inventory periods and increased payables in recent quarters may warrant closer monitoring to sustain liquidity and operational effectiveness.