Greetings. And welcome to e.l.f. 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. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Willa McManmon. 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 elfcosmetics.com. A recording of the call will also be available for 90 days on elfcosmetics.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 from 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 e.l.f. 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 are 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 [e.l.f. amazing digital] campaign, which showcases the unique attributes of the e.l.f.’s brand. The digital assets support our missing to make the best of beautify accessible for every eye, lip and face. Since the campaign started, impressions and video completion are double our initial goals. These metrics indicate our messages resonating with consumers as you are choosing to watch our content to completion versus opting out. Since January, we’re seeing 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 shares gains with Nielsen reporting e.l.f. 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 brining new consumers to our retailers and to elfcosmetics.com. For the quarter, our ecommerce 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 e.l.f. consumer journey through digital technology. This will enable a better consumer experience, including a revamp 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 drug stores. This along will 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 out reach to influencers with box mailings and launch events featuring hero products like our new limited-edition jelly pop collection. The jelly pop launch was supportive of 500 influencers receiving a custom mini-e.l.f. jelly pop refrigerator to keep this playful collection cool during the hot summer months. Mega influencers posted positive reviews in content to over 58 million of their combined followers on Instagram. Jelly pop engagement on Instagram has been 7 times greater than our average posts. In addition to influence our 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 are leveraging our unique combination of cost quality and speed to drive our third imperative. Our focus on first to mass by providing prestige quality products at an extraordinary value. We are 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 elfcosmetics.com. We are 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 stores and Camo plus e.l.f.’s sponge flex towers in 1,500 Target locations. We continue to amplify these products through our digital marketing to truly make this a 360° 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 track channels, which include Target and Walmart, as well as our on-track channels such as Ulta. With the packaging and merchandising enhancements from Unicorn, we’re seeing 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 2027 set, where we will 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 e.l.f. stores in February. We expect to redeploy the $13.7 million in savings from this to our marketing and digital initiatives. In addition, we 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 expect 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.

Thank you, Tarang. I’ll now discuss the results for the first quarter of fiscal 2020 as compared to the three months ended June 30, 2018. Net sales of 60 million were up 7% from year-ago, excluding e.l.f. stores, driven by increased productivity across key retailers and strength on elfcosmetics.com. As Tarang discussed, we are pleased with the progress of our strategic imperative. The sales momentum we’re seeing behind our marketing and digital investments and the continued success of Project Unicorn. Gross margin of 62% was flat to prior year with margin accretive innovation, vendor concessions, and favorable foreign exchange rates offsetting the impact of 10% tariffs on Chinese goods, and the closure of our retail stores. Note that in Q1, our gross margins were not yet impacted by tariff at the 25% level, which cover most of our goods. On August 1, additional tariffs of 10% were announced effective September 1, which would impact our brushes and tools. We expect to offset the margin rate impact of tariffs through selective price increases, FX, and cost savings initiatives. On an adjusted basis, SG&A as a percentage of sales was 47%, compared to 49% of net sales in the same period of 2018, mainly driven by cost savings from the closure of our 22 e.l.f. stores, partially offset by increased investment in our marketing and digital initiatives. As discussed last quarter, we expect marketing plus e-commerce spend to be 10% to 12% of net so sales on a year. In Q1, marketing and e-commerce spend was 11% of net sales, compared to 6% in the year ago quarter. Adjusted EBITDA was up 12% at 14.5 million versus 13 million a year ago. Adjusted net income was 6.9 million or $0.14 per diluted share, compared to 6.5 million or $0.13 per diluted share a year ago. We generated 12.9 million of cash flow from operations in the quarter bringing our cash balance to 60.7 million as of June 30, 2019, compared to our cash balance of 17.4 million last year. The improvement was primarily driven by a disciplined working capital management across inventory and receivables, coupled with improved operating results. Last quarter, we announced the share repurchase program of up to $25 million. In Q1, we repurchased approximately 90,000 shares. As we evaluate our excess cash position, our capital allocation strategy remains unchanged. We plan to prioritize investment behind our key strategic initiatives to increase consumer awareness and build brand relevancy. We will also continue to evaluate strategic extension to leverage the investments we made in our platforms and to fuel long-term growth. We believe we are well-positioned to fund our initiatives through free cash flow and return excess cash to shareholders through our repurchase program. Now, turning to our fiscal 2020 guidance. Based on our strong Q1 results and an initial progress from our marketing and digital investments, we are raising our fiscal 2020 outlook. We expect net sales to be flat to down 4% versus fiscal 2019, excluding the impact of e.l.f. stores. This is up from the negative 4 to negative 8% range previously guided. From that post the upward revisions to our adjusted EBITDA, net income and EPS ranges. We expect adjusted EBITDA between 47 million and 50 million, adjusted net income between $19 million and $22 million, and adjusted EPS of $0.37 to $0.41 per share on a fully diluted basis with the share count of 52.5 million. Many of you are monitoring track channel data very closely and are encouraged by our recent trends. Our improved top line guidance balances the strength with recent price increases and lower pipeline and seasonal shipments. Let me provide some perspective on this. In late July, for the first time in e.l.f.’s history, we initiated a price increase impacting approximately a third of our SKUs to help mitigate the impact of 25% tariff. We have yet to see how this will affect our volume in the long term and sure have a better understanding coming out of the second quarter when we have more elasticity data. Additionally, in Q2 and Q3 of fiscal 2020, we will be cycling 10 million in pipeline and seasonal volume from 2018 that we do not anticipate having this year. Therefore, while they’re encouraged with the recent strength in the business, we are taking a balanced approach to the outlook. As I round out my first full quarter with the company, I can't tell you how proud I am to be a part of the amazing team behind this extraordinary brand. I look forward to updating you on our continued progress in the coming quarters. With that operator, you may open the call to questions.

Thank you. [Operator Instructions] Thank you. Our first question comes from the line of Steph Wissink with Jefferies. Please proceed.

Thanks. Good afternoon everyone. Mandy this question is for you. I looked at the first quarter and I annualized your EBITDA run rate, it would put the number close to the kind of 58 million versus your guidance, which hit the midpoint of about 48 million, could you just help us bridge that $10 million of whether it’s conservatism or some spending that you haven't done that you plan to do? How should we think about the Delta versus the run rate? And then Tarang, if I can just throw one in for you as well, just contextually? If we look at track channel data and we look at where your guidance would imply, how comfortable are you that you have enough inventory in the channel to keep the momentum going with respect to take away and consumption? Thank you.

Alright, Steph. I'll take the first part of the question. So, when looking at Q1, we really have some good news from the store closures and marketing. As we have said previously, those two for the year will offset one another. We didn't quite get to that 12% level in Q1 with marketing. So, I would say that would a piece that you would have to peel back if you’re trying to run rate somethings forward. Additionally, our margin rate, if you recall, with the closure of our stores, we said that our margin rate on the year will naturally be about 100 basis points lower. Well in fact this quarter, we had margin rate flat to last year. So, we were able to recoup some gains through FX and the vendor concessions and things like that that helped to keep margin rate in line. So, I would say, as you go back into your model, I would still say the 100 basis points from the store closures, you should keep in their as a downside on the margin rate, and then also, I would say that on the year we do plan to spend closer to that 12% on the marketing, just given the early success that we’ve seen.

And then on your second question, Steph, we are pleased with the strength that we’re seeing in track channel data and picking up share and are very comfortable in terms of our ability to having enough inventory to meet demand. I think, we’ve always had an approach where we carry enough inventory and have enough of a planning horizon where we can bring that inventory in and our customers are very efficient in that manner as well. So, we feel good right now in terms of our ability to continue to meet demand.

Thank you.

Thank you. Our next question comes from the line of Oliver Chen with Cowen & Co. Please proceed.

Hi, thank you. Regarding price increases, what was your approach to just trying to optimize the third of the skews that you picked and fixed and what are your thoughts in terms of how price increases may interplay with the level of in-stocks that you have and how satisfied are you within stock levels? Does that also relates to Project Unicorn? We love your thoughts?

Sure. Hi, Oliver. This is Tarang. Our approach on pricing was really go SKU by SKU and really analyze each SKU to see kind of where the competitors set manufacturers, and who else might face pricing pressure. In addition to taking a look at where did we have the best value equation. So, we really took it pretty – and we had a long-time kind of to look at this robust approach of kind of going by each SKU and saying, where do we have the most room. And we took pricing on those SKUs. In terms of the in-stock levels, I feel pretty good about kind of where we’re trending so far this year in terms of our ability to meet in-stock, certainly pricing will result in average unit retails going now up offset by units. And so, I wouldn't expect you to have a major impact on in-stock levels, I think those will stay healthy. And then the last thing I tell you is, it is a balanced approach. So, we’re not pricing fully to the tariffs, mainly because we also have FX, as well as the cost savings that we outlined on our call, in terms of being able to balance our approach to not all this pass through.

Okay. And just a follow-up regarding Beauty Squad. It was interesting in terms of your thoughts about making tweaks to that program, as well as capturing more data from the wholesale purchases through your partners. So, what kind of changes needed to be made and where do you see that program heading to drive more engagement et cetera?

Yes, this is Tarang again. We’ve been really pleased with Beauty Squad. I mean the 1.3 million members we have I think we shared previously come to our site more often spend more and are more loyal to the brand and so being able to enhance that program and kind of go from kind of points and dollar system that many of our members wanted, as well as the ability to connect their purchases, we believe really takes us to a new level on Beauty Squad. And we look forward to continue to tell you how we're able to better personalize their consumer experience and share perhaps more staff in terms of what it’s doing for us, but it is a pretty big milestone in our loyalty program, and one that we're very excited about given our presence in large national retailers, as well as our key sites.

Thank you. Best regards.

Thank you. Our next question comes from the line of Bill Chappell with SunTrust Robinson Humphrey. Please proceed.

Thanks, good afternoon.

Good afternoon.

Tarang, can you give us just a sense of where Project Unicorn is, do you feel like we are seeing 50%, 75% of the benefits, are there meaningful chunks of stores still to kind of convert and are you planning on doing that in the back half of the year?

Hi, Bill. Yes, we are feeling great about Project Unicorn and where we stand. So, Project Unicorn is our major shelf packaging and product initiative that has multiple phases. So, the first phase has been executed with the majority of our volume at national retail customers, where we were able to get new items, better packaging, better navigation, particularly to our market leading segments. We feel good about that and we’re obviously seeing that track numbers that you are able to track. On Phase 2, which is currently being implemented, we’re applying Project Unicorn to our brush and tools business, which is a pretty big segment for us. And then Phase 3, really impacts the spring of 2020 set. So, we will get even more new products on and continue to make enhancements to our visual merchandising approach, particularly in regards to making sure consumers are able to find our key product that's our first announced product. So, I think you are going to continue to hear us talk about Unicorn for quite some time, mainly because of the results we're seeing in the market.

Got it. And then Mandy, just the [Chinese wan] obviously has gone favorable even more so in the past just couple of weeks didn't know what you’re expecting or what you’re modelling in terms of how it affects your cost of goods sold for the remainder of the year?

Yes. You're right, we had some upside there and we're using that as an offset to the tariffs. And so that’s a part of our whole toolkit to help us offset the tariff.

Got it. But do you, I mean you put the price increases through before some of this move. So, I could maybe read that as a little bit of a benefit or cushion?

No. Because when we implemented the price increases before that additional 10% came out on brushes and tools. So, I would say that we’re all – we’re using it as a part of our toolkit and as we address tariffs.

Got it. Thank you.

Thank you. Our next question comes from the line of Andrea Teixeira with J.P. Morgan. Please proceed.

Hi, thank you. So, if you can just elaborate a little bit more on the 2020 guide, I guess in history you have faced your guidance with no additional shelf or no additional display, so I was wondering if that is the same practice you’re embedding here? Any particular for the new, I understand there is obviously puts and takes on the timing of Project Unicorn and some of these innovation, but the Poreless Primer and jelly pop as you called out in the prepared remarks, so it seems to me it is still conservative, even you are assuming some of the elasticity that Mandy discussed. So, I was wondering if you can elaborate more on pakers, you know the guide? And also, if you can squeeze a little bit of the international trends if you can tell us? Thank you.

Hi Andrea. Okay, so I’ll go ahead and take the first part of that and I’ll pass it to Tarang to talk the international piece. So, in terms of – if the guide is conservative or not, so I would say that, my original guidance was down 4 to down 8 last quarter when we came out and had our call. And from that we've taken it up to flat to down 4. So, certainly, reflecting some of the momentum that we're seeing in the business. But as I think about the price increases that we've just taken, we do need time to see how that plays out and how that impacts volume. So, we're taking a balanced approach with the guidance. I would call it more balanced than I would conservative.

And no shelf space increases, right, no additional shelf?

No shelf space other than what we've already previously disclosed in terms of we have been picking up space at Ulta in the subset of their doors. We have been rolling up the brand in Walgreens and Boots in the UK. And so just those are the two things that we've previously disclosed. We're right now, in this time of year, in conversations with our retailers for what 2020 – calendar 2020 shelf sets look like. And we usually talk about that on one of the future calls in terms of how, in particular, when we set our guidance in terms of how that's progressing. But obviously, we're in a very strong position right now, both in terms of our business momentum relative to the category, the level of innovation we have and how we're engaging consumers. That may be relates to your last question, which was how we're doing internationally. We continue to be pleased with what we’re seeing internationally, I'd say are probably core focus country right now is the UK. You heard me talk about kind of the UK Daily Mail calling our Poreless Putty Primer the best primer ever. We also have great momentum if I think about our longest standing retail customer there is Superdrug. We have very strong comps at Superdrug. Boots is rolling up the brand, as I mentioned previously. And our own site in the UK or elfcosmetics.com site is exhibiting very strong growth. So, it gives us great hope in terms of our continued roll out internationally, but we are taking a similar disciplined approach as we did in the U.S. So, we're currently testing the brand in a number of retailers in Germany and also are very excited about our early days in China e-commerce and our ability to kind of sell there and maintain our cruelty-free status.

Great. Thank you so much. I’ll pass it on.

Thank you. Our next question comes from the line of Mark Astrachan with Stifel. Please proceed.

Hi, this is Kimberly on from Mark. We had a quick question just on price increases. Are those already on the shelf? And can we see those in the most recent two-week scanner data, or was that later to come and then also the price is consistent with what your competitors have done?

So, hi, Kimberly, this is Tarang. Let me take that. So, what we've reflected right now in pricing is, we lead on elfcosmetics.com. So, if you go on elfcosmetics.com, you will see higher prices than even some of the retailers we’re in current implementation with a number of our retailers. So, at some retailers you'll see price already reflected. Others, you won't. What I can tell you is, we will not ship product at – unless it's at the higher price, less POS come into us. And so, we're in implementation phase. And I'd say, related to the scanner question, I don't think you're going to see that much of it in the scanner quite yet. But over the next couple of months, certainly, you'll see the pricing reflected. And as I mentioned earlier, we would expect and you will see average unit retails go up and units go down related to that.

Okay, great. Thank you. And then just one more if I can. In the scanner data, we’ve seen that year-to-date skincare sales are almost as big as full-year for 2018. So, do you have any insights on how big that can get in time? What's driving it? Is it all really trial and discovery of the brand, or do you have any insights around like repeat purchases and loyalty as a brand?

Sure. We're really pleased with skincare. It's a major strategic kind of imperative of ours in terms of kind of within our overall portfolio. As you know, Global skincare is bigger than Global color cosmetics, the category trends and skincare at least over the last couple of years have been stronger. And we're no exception in terms of being able to kind of ride the strength of the category, but maybe even more so given the level of innovation we have. So, what's really driving our skincare is the – our unique ability to bring prestige quality to extraordinary value. And while skincare is higher on an average unit retail basis than our color cosmetics are, it still comes in at a tremendous value relative to some of the key prestige and mass players in the category. I’m particularly excited with the success we've had this year on Hello Hydration, our – is our first entry into kind of our hydration creams and that's done extremely well. And so, I think you're going to continue to see momentum on skincare, particularly as we expand distribution, skincare started with us at Target. As I mentioned on the call last quarter, Ulta has now taken skincare full chain off of a successful test and we continue to roll up skincare to more of customers. So, I personally and very bullish on skincare for the future, but we look forward to continue to talk about it.

Okay, thanks.

Thank you. Our next question comes from the line of Erinn Murphy with Piper Jaffray. Please proceed.

Great. Thanks, and good afternoon. I guess, my question is around the digital business. It was a really nice double-digit growth. Can you just talk about what you think is really driving some of the improvements there? And then is the double-digit pace kind of how we should see that business kind of folding through the balance of the year? And then I guess, Mandy, for you. Just going back to the Q1 beat versus the guide, just looking at the top line $5 million beat, $11 million lift to the full-year, I recognize you're not looking at incremental shelf space. But should we just assume that slightly second-half weighted, that's just based on the Walmart – or excuse me, the Ulta as well as the boots kind of business that you're transacting with and kind of rolling out there, just trying to understand that? Thank you.

Sure. Hi, Erinn. This is Tarang. I’ll take your first question and then Mandy will take the second. So, on our digital business, we're also really pleased with the double-digit growth we're seeing in traffic, conversion, and sales. And what I tell you is driving there are the strategic imperatives I described earlier, specifically, kind of our step-up in marketing and digital support, engaging more consumers and influencers and bringing attention to the brand. I'd say, equally important is the focus of that spend also being on our key first to mass product. So, I highlighted a couple of them, whether it be the Poreless Putty Primer or our Camo Concealers. So, even some of our limited-edition exclusives, like our Jelly Pop, those are driving real consumer interest in the brand. And we're amplifying that kind of – that go through our surround sound approach, which basically brings more consumers to the site. And then lastly, although, it's not as sexy to talk about, I'd say many of the improvements we've made from a technology standpoint and digitally, I talked about kind of the some of the technology underpinning kind of our revamp Beauty Squad program. Other things that we're doing there is also helping us with our conversion and some of the personalization initiatives. So, there's quite a bit going on digitally. I mean, obviously, the digitally native brand, that's always been important to us. And it's great to step it up even to a different level.

Yes. And on the second part of your question, Erinn, on how to think about the balance of the year. So, I think I mentioned this earlier. But as you think about Q2, Q3, Q4, we do have the pricing that just rolled out at the end of July. So, we are waiting to see how that impacts volumes. Certainly, the space games that Tarang mentioned will help to offset some of that and as well as that seasonal pipeline that we mentioned that we were cycling. So, that's kind of how the balance of the year should frame up within our guidance.

Okay. And then if I could just add one on Jelly Pop. I mean, it feels like that's been a really successful launch out of the gate. Can you just talk about if it's attracting a new consumer to the offline? Thanks.

Sure. So, we love what we’ve seen on Jelly Pop, I talked about some of the engagement numbers on Jelly Pop, both in terms of that surround sound kind of approach to our marketing and digital, how it's attracted a number of – attention from a number of influencers, who in turn kind of, I think, reached over 58 million just on Instagram alone, as well as a level of engagement. I'd say just another example of strength we have in our innovation pipeline and being able to amplify that pipeline. And to your specific question on new users, we've seen with all of these big new launches, whether it be Poreless Putty Primer, Jelly Pop, Camo Concealer. They bring significantly more new users to the franchise. I think the percentage that we've talked previously on Poreless Putty Primer and we're seeing a similar trend on Jelly Pop is, I think 70% of the traffic we're getting on the site related to those products are new consumers. So, we feel really good about that as well.

Great. Thank you, guys.

Thank you, Erinn.

Thank you. Our next question comes from the line of Rupesh Parikh with Oppenheimer & Company. Please proceed.

Good afternoon. This is actually Erica Eiler on for Rupesh. Thanks for taking our question. So, I was wondering if you could comment on what you're seeing in the mass category lately in terms of overall category growth rates?

Yes, this is Tarang. So, I'd say, the mass category continues to be soft in color cosmetics and quite strong in skincare. And that's a continuation for a trend we've now seen for quite some time. I'll be honest with you; I'm surprised how long mass color cosmetics has been soft. So, our point of view is, we’ll continue to take share, hope to continue to take share kind of in that market based on the strategic imperatives I outlined.

Okay, great. And then we're seeing more and more personalization popping up across the beauty space and then with beauty brands. You talked a little bit about the scanner receipts, have that enabled you to elaborate more personalization. Can you maybe talk about how you’re capitalizing on this trend as we sit here today?

Sure. So, if I look at our own migration on personalization, it first came from some of the technology I talked about that had better algorithms and better approaches, particularly as we re-platformed our site and we're able to tap into other capabilities to be able to just get better product recommendations and better learning algorithms to figure out kind of based on what you bought, what else you might like. Going from there to actually getting much better consumer profiles to be able to be able to customize recommendations to what the behavior of that particular consumer is, I'm especially excited now that we're able to tie that consumer data together with their purchases at large national retailers as well that wouldn’t be even that much better in terms of being able to understand our consumers, and really to be able to make better, not only recommendations, but also curate better products in terms of what would meet their needs, as well as the overall experience. I mean, this is a connected consumer journey. So, it also goes to kind of what messages are we serving up based on what they're needed. And we've had some experience even in our current campaign, where the content we're just providing much greater digital content, where if you love animals, we can get one of our cruelty-free messages if you really care a lot about our value, our ability to be able to customize some of the core brand attributes. So, we're – I'd say, we still have a long way to go, but I'm pleased with our initial progress.

Okay, great. Thanks so much. I'll pass it on.

Thank you. Our next question comes from the line of Linda Bolton Weiser with D.A. Davidson. Please proceed.

Hi. We noticed your product on shelf at Kohl's. Can you comment on [indiscernible] here in the entire chain? And also, this is interesting, because it's a massive retailer rather than Nash [ph]. So, can you like give some color on how your assortment differs in Kohl's versus at the mass retailers? Thanks.

Sure. Hi, Linda, this is Tarang. So, we've been in Kohl's starting last year we entered and it was really being approached by them as they did a survey of brands that their consumers wanted to see e.l.f. popped in that assessment. And so, we've been in Kohl's. We're in full chain and we're pleased with our business and our partnership together. It's part of our – as I look for channel-by-channel, it’s part of what I would describe as a specialty channel, obviously, our biggest specialty channel player is Ulta Beauty. But we have been historically in Old Navy and other specialty players. And I would say, what we ask every retailer to do regardless of channel is carry some of our core items. So, the majority of the items that Kohl's would carry would be similar to other retailers. And then each retailer likes to have some that they will uniquely carry or be able to kind of merchandise and drive and Kohl's is no different than that. But again, it's still relatively early. We're still in our first year at Kohl's and we're pleased with what we see.

Thank you very much.

Thank you. Our next question comes from the line of Bonnie Herzog with Wells Fargo. Please proceed.

Hi, thank you. I had a quick follow-on question on your guidance. I guess, I'm wondering if there's any upside to your top line guidance. Would you guys consider reinvesting it, or let it flow through to the bottom line?

Yes. So, the guidance, Bonnie, I would say, again, we've increased from down 4 to 8, up to the flat to negative 4, and that's kind of where we see the world today. Certainly, if there's upside to sales if things start to outpace, we are making those decisions as we see momentum in the business. And let's say that our guidance is as we see the world today.

Okay. And then I had a question circling back on tariffs. I just was wondering if you guys could talk a little bit further on the pricing that you took. And I guess what I'm trying to understand is the magnitude, the actual percentage price increase that – you mentioned that you've taken to offset the increase in tariffs. Thinking about the context, because I think it's the most you've ever taken – you haven't taken a lot of pricing historically. So, I guess, I'm trying to understand what could be the elasticity known? How you think this will stick? I know, you mentioned it early, but any color on that, or confidence of why you think it will be absorbed, will be helpful? And then, wondering if you've been successful in getting any vendor concessions? And then finally, what's your ability or maybe willingness to move manufacturing out of China? Thanks.

Okay. So, I'll take the first one and then will pass it over to Tarang. So, on the pricing piece, so in regards to tariffs, we really have the three levers that we have to pull. We have vendor concessions or cost savings, FX and then pricing. And so, we're not going to give the percentage increase that we took on pricing for competitive reasons. But I will echo what Tarang said earlier is that, we did not recoup the full impact of the tariffs through pricing. So, we took pricing on about a third of our SKUs, and that is one of the levers within the toolkit to help us offset the tariff impact.

Yes. And to your point in terms of their ability to stick, I think we're hearing already a number of competitors also announcing kind of pricing and having been in consumer for a very long time, I mean, done dozens of price increases is about as straightforward as it goes from a pricing standpoint. There's a known kind of external kind of tariff attacks. Most people will pass those through. I like our approach to being quite balanced and how we're doing it. We're not putting it 100% on pricing. We are relying on FX, as well as our cost savings to do it. So, I like the approach. But as, Mandy said, it's also one of the things it's balancing our guidance, the strength you're currently seeing, along with kind of pricing and the $10 million of pipeline and see some of that we're cycling next year. And then last, in terms of our supply chain, it's one of the things we take great pride in over 15 years. We've built, I believe the best combination of cost, quality and speed in our industry. And a lot of that advantage comes from what we've been able to build in China, tariff or no tariff. And we continue to make progress and improvements in terms of our core operations there, as I mentioned, our lean manufacturing techniques. But in addition to that, we've always looked more globally in terms of where should we manufacture and how do we want to operate. And so that includes a number of initiatives that we initiated prior to any tariff. So, if I think of our automation of our distribution centers that was done well before, same with our U.S. liquid fill plant that we're building and should have an operation by the end of our fiscal year, that was done well in advance. And it really is a matter of just us continuing to get more efficient, being able to take those, take our cost savings and make sure that we’re investing in the best value equation for the consumer and the marketing that we'd like to do. So, I feel good about our approach, feel good about kind of where we currently stand. And then I think, we'll certainly be updating people over the next couple of years in terms of what we see in the overall market.

Okay. Thank you.

Thank you. [Operator Instructions] Thank you. We have no further questions in queue at this time. Allow me to hand the floor back over to Tarang Amin for closing remarks.

Great. Well, thanks again, everyone, for joining us. While we're still in the early days of our brand recharge, we’re encouraged by the consumer and customer response and look forward to updating you on our next call. Thanks, everyone.

Thank you. This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.