Member Info for Hosai

Rev B bought this brand out of bankruptcy late Feb 2022, so none of the acquistion effects were in the FY2022 results. It seemed like it was quite a popular brand but only went bust mostly due to the covid lockdown.

It says this - "BH will be re-energised with Revolution Beauty's new products, taking advantage of the duo's relationships in the US, UK, and internationally. The acquisition is expected to generate minimal sales during the first half of the financial year ending February 28, 2023 as Revolution Beauty onboards new BH suppliers, builds stock levels, and integrates BH into its operations."

Therefore sounds like will only be starting to see the benefits around September 2022 onwards, however "BH generated US$55.8mln in net revenue in 2019" so should be material relative to Rev B revenue. BH also has 3.7 million instagram followers.

Yet another thing to add to the expansions that weren't in the FY2022 results.

https://www.proactiveinvestors.co.uk/companies/news/975118/revolution-beauty-acquires-bh-cosmetics-for-us-3-9mln-975118.html

13 of the 24 Fortnite products on the US site are sold out - https://www.revolutionbeauty.us/makeup/collaborations/revolution-x-fortnite.list?pageNumber=1

Knowles their FY starts 1st March so Q1 ends at the end of May.

Their debt is actually pretty small at £32 million for a company of their size and potential (though cash is small too obv).

I'd have thought Bob has enough clout as an industry heavyweight could easily raise say £50 million cash as debt if he wanted and pay off the £32 million if they became problematic? Plus some of the £32 million is owed to one of the largest shareholders the former chairman.

Net debt has remained fairly stable despite what must have been a lot of spending to fund recent large expansions.

It says net debt was £21 million at end of April 23 (cash - £11 million, debt £32 million).

Whilst net debt was £16.1 million in November, it was £21.2 million end of July 2022. So has actually improved since 9 months ago despite what must have been a large spend to launch into over 2,500 Walmarts recently and to a smaller extent Primark too.

Back when they were a private company at 1/3/2021 they had £75 million net debt (£5.5 million cash, £79.6 million debt), obviously they reduced debt at IPO, but shows they have had times lived with much worse net debt. On 1st Jan 2020 they had £63 million net debt.

End of Feb 2022 they had £8 million net debt so biggest spend seemed to be between then and July but as I said fairly stable since then.

Technically speaking we've finished Q1 FY2024 in 4 days so would be interesting to get more update on that as it sounded promising from the little said in the rns. Don't know how they will present the interims as they surely must know the actual results for the whole of FY2023 with it ending end of Feb 2023. Maybe just give a very detailed and certain "outlook"?

That could be the type of thing announced at capital markets day?

Says in results - "The US became our largest market, with a robust rollout across Walgreens and a new partnership with Target". This is not factoring in them launching into 2,500 Walmart stores now!

Imagine if they took on a joint US listing, Bob did say "We are well aware of the ELF valuations and aspire to be regarded alongside them."

Interesting to note the 35% revenue growth actually was more than ELFs revenue growth for FY2022 - (ELF grew 23%), however ELF maintained a 19% EBITDA margin and made £60.5 million EBITDA whereas we obv made an 800k EBITDA loss.

Obv there was a one off in terms of EBITDA for Rev B though with the £11.3 million stock provision which arguably related more to a previous year. They said "Going forwards, the stock provision charge in the year is not expected to have such a significant impact on margin as in FY22. There was also a "stand impairment" that related more to a prior year but not sure how much this cost impacted things £ wise.

It would be hard to beat ELFs 2023 year though - they grew sales by 48% to £468.8 million and maintained 20% EBITDA margin (made £94.6 million EBITDA).

The last FY2023 prediction by Rev B was back in August and they said - "For the full year to 28 February 2023, we now expect between £215m - £225m net sales and adj. EBITDA of between £18m - £20m."

ELFs 2023 results makes me think Rev Bs will have at-least met these targets, to get to their revenue target of £220 million only required a 19% increase in sales. With all the expansion in this year they could have beaten this imo.

EBITDA is a question mark however it seems most of the adjustments were in the FY2022 results. Worth noting the new CFO was with Rev B for 9-10 months of the FY2023 year. Also it says exiting CVS cost was meant planned to be in FY2023 but were now put in FY2022, therefore this EBITDA cost will no longer be in FY2023 (not clear how much it was though). I would guess they will meet the EBITDA target but obv is a guess.

Obv we don't have to be matching ELF considering they are currently valued at $5.5 billion (£4.46 billion) or over 75 Rev Beautys.

At-least the 3.4 % management incentive dilution would make it even harder for Boohoo + founders to try and get this cheap (if that ever indeed was a plan).

Not sure that's quite true Silverlight as it was expressed here as "uncertainty". However from what I could understand it was mostly around uncertainty relating to the lenders tolerating the accounts delay and the issues with the previous accounts, therefore I'd have thought they would have stepped in by now if this was to be an issue considering now we finally have the accounts and a whole new management team.

"At Superdrug, following the successful

launch of Plex Haircare in 319 stores,

we were delighted to have extended

the range to all 800 Superdrug stores

for March 2022."

Even more future sales here that it sounds like mostly won't have been in the FY2022 results.

It's a bit confusing with the links I gave below launch dates and the rns which indicates earlier launches than the links for some however I think the links I gave for Wallgreens/Boots etc were significant expansions in terms of items even if Rev B hadalready established a presence there earlier in the year.

Also in terms of the loss and the £11.3 million stock provision - "Going forwards, the stock

provision charge in the year is not

expected to have such a significant

impact on margin as in FY22.

So when you take account of the goodwill impairment, stock provision and IPO costs the loss is no worse or even slightly better than the previous year (though only assuming there weren't one off in the previous year).

This isn't too bad considering they grew revenue in this same year by 35%.

""Pretax loss, however, widens to GBP44.9 million from GBP17.8 million."

£21.9 million of this increased loss was a one off - "Statutory loss before tax of

£44.9m, reflects the impact of

impairment of goodwill arising

from the purchase of Medichem

(£13m) and exceptional IPO costs

(£8.9m)"

"the firm would be "reliant on its lenders not requiring immediate repayment of the outstanding loan or obtaining alternative finance in order to continue to operate as a going concern".

You would have thought the lenders would have already done this if they were going to? Now there is a completely new management team and a CEO many will view as a safe pair of hands.

They could still hopefully report positive EBITDA for year ending Feb 2023 , they say so far in Q1 FY2024 they are generating positive EBITDA. The stock provisioning £11.3 million increase for FY2022 sounded sort of like a one off?

Just re-posting this below regarding launches that have happened after FY2022 ended, I think Wallgreens mostly aren't in FY2022 results at-least according to the link I saw.

Here are the recent launches:

1. Launch in 65 Primark stores from April 2023 (lets hope this increases) - https://www.dailyrecord.co.uk/lifestyle/fashion-beauty/primark-sends-beauty-fans-wild-29796258

2. New launch into 2,500 Walmart stores from April 2023 - Rev B president called it "a new relationship with Walmart". https://uk.fashionnetwork.com/news/Revolution-beauty-launches-at-walmart-in-us,1486156.html

In addition also launched a fortnite range on Rev B website from 19th May and in exclusively in Walmart from 27th May.

3. Launches into 2,800 Walgreens stores from late May 2022 - Reb B said "expanding into more stores and bigger stands from July." Therefore this won't be in FY2022 results but will have 1-2 months in interim results - https://www.theretailbulletin.com/health-and-beauty/revolution-beauty-expands-into-select-walgreens-stores-and-online-19-05-2022/

4. Exclusive Ulta Beauty IRL range launch - Late July 2022 - Won't be in FY2022 results, 1 month in interim results.

https://www.beautypackaging.com/issues/temp2022/view_breaking-news/makeup-revolution-introduces-new-irl-filter-foundation/

5. Launched in 300 Boots stores and online at end of Feb 2022 - This won't be in end of year FY2022 results but will be fully in interim.

https://www.boots-uk.com/newsroom/news/makeup-revolution-is-coming-to-boots/

This means in terms of the results we are waiting for, out of these 5 none will be in FY2022 results.

Interims will have -

Boots for full 6 months

1 month of Ulta Beauty IRL range

1-2 months of Wallgreens.

The outlook will be all of these three in full moving forward annualized, plus Primark and Walmart.

Elf now up to $5.51 billion (£4.47 billion) - valuation equivalent of over 75 Rev Beautys.

Elf 2023 revs = $578 million (£469 million) and EBITDA $116 million (£94 million).

Rev B 2023 revs £220 million (as far as we know) and EBITDA (£18-19 million).

Therefore if we go with EBITDA they are 5 times higher, plus net cash position of $60 (£48.7 million) whereas Rev B £21 million net debt gives around £70 million swing to Elf too so worth another 1-2 Rev B multiples.

That explains 7 of the multiples, I'm sure with them being listed in US and the great growth can bring it up to say 10. Still would leave 65 of the multiples.

65 more Rev B multiples would get us to £3.835 billion or £12.35 a share. I'm not saying Rev B is getting there but it's just fun to point out.

I spoke too soon, Elf now up 17% at $5.41 billion (£4.39 billion), went up by £190 million or 3.2 Revolution Beauty market caps since I updated a few hours ago.

Elf Beauty now at $5.16 billion (£4.2 billion) market cap.

Bob Holt in his reply to me said - "We are well aware of the ELF valuations and aspire to be regarded alongside them."

Wouldn't hurt with them being currently 71 times higher than Rev B. Obv it's correct that ELF should be valued higher but I would say on the figures more like 5 times higher would make sense rather than 71 times!