e.l.f. Beauty, Inc.

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this Annual Report.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K.

Previous wording

The Company's family of brands includes e.l.f. Cosmetics, e.l.f. SKIN, Naturium, Well People and Keys Soulcare. The Company's brands are available online and across leading beauty, mass-market and specialty retailers. The Company has strong relationships with its retail customers such as Target, Walmart, Ulta Beauty, Amazon and other leading retailers that have enabled the Company to expand distribution both domestically and internationally.

Current wording

The Company's family of brands consists of e.l.f. Cosmetics, e.l.f. SKIN, rhode, Naturium, and Well People. The Company's brands are available online and across leading beauty, mass-market and specialty retailers. The Company has strong relationships with its retail customers such as Target, Walmart, Amazon, Sephora and other leading retailers that have enabled the Company to expand distribution both domestically and internationally.

Previous wording

Starting in July 2018, the US government announced a series of lists covering thousands of categories of Chinese origin products subject to US tariffs in addition to the tariffs that have historically applied to such products. The majority of our products are sourced and manufactured in China and have been subject to a US 25% tariff since May 2019. Furthermore, in March and April 2025, the Trump administration announced a series of additional tariffs on products from countries worldwide, some of which have been temporarily paused or reduced.

Current wording

The majority of our products are sourced and manufactured in China and have been subject to a US 25% tariff since May 2019. Throughout 2025 we were subject to a range of tariff rates on imports from China ranging from 25% to as high as 170%.

Previous wording

See the risk factor titled “Additional US tariffs or other restrictions placed on imports, retaliatory trade measures taken by other countries and resulting trade wars may have a material adverse impact on the Company’s financial condition and results of operations” included as part of Item 1A. Risk Factors of this Annual Report on Form 10-K for additional information regarding risk related to tariffs.

Current wording

See the risk factor titled “Changes in the US and international trade policies, including tariffs, trade restrictions and retaliatory trade measures taken by other countries and resulting trade wars may have a material adverse impact on our business, financial condition and results of operations” included as part of Item 1A. Risk factors of this Annual Report on Form 10-K for additional information regarding risk related to tariffs.

Previous wording

On October 4, 2023, we consummated our acquisition of Naturium LLC, a Delaware limited liability company (“Naturium”), and TCB-N Prelude Blocker Corp., a Delaware corporation (“Blocker”), pursuant to a Securities Purchase Agreement, dated August 28, 2023 (the "Purchase Agreement"), by and among the Company, e.l.f. Cosmetics, Inc., Naturium, Blocker and various sellers. Pursuant to the Purchase Agreement, we acquired all rights, title and interest in and to the outstanding equity securities of Naturium and Blocker for a purchase price of $333.0 million paid in cash and shares of our common stock (the "Acquisition"). See Note 3, “Acquisition,” in our consolidated financial statements for further details.

Current wording

On October 4, 2023, we consummated our acquisition of Naturium LLC, a Delaware limited liability company (“Naturium”), and TCB-N Prelude Blocker Corp., a Delaware corporation (“Blocker”), pursuant to a Securities Purchase Agreement, dated August 28, 2023 (the "Purchase Agreement"), by and among the Company, e.l.f. Cosmetics, Inc., Naturium, Blocker and various sellers. Pursuant to the Purchase Agreement, we acquired all rights, title and interest in and to the outstanding equity securities of Naturium and Blocker for a purchase price of $333.0 million paid in cash and shares of our common stock. See Note 3, “Acquisitions,” in the Notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Previous wording

We develop, market and sell beauty products under the e.l.f. Cosmetics, e.l.f. SKIN, Naturium, Well People and Keys Soulcare brands. Our net sales are derived from sales of these beauty products, net of provisions for sales discounts and allowances, product returns, markdowns and price adjustments.

Current wording

We develop, market and sell beauty products under the e.l.f. Cosmetics, e.l.f. SKIN, rhode, Naturium and Well People brands. Our net sales are derived from sales of these beauty products, net of provisions for sales discounts and allowances, product returns, markdowns and price adjustments.

Previous wording

Year over year changes in net sales is driven by a number of factors, including beauty category performance, levels of consumer spending, and our ability to drive awareness of and demand for our products. Within our existing retailer accounts, we are able to drive growth by increasing sales per linear foot supported by marketing investments and continued innovation, as well as through expanding space and door penetration. We seek to continue to grow through improved sales per linear foot in our existing space, expanded space allocation with our current retail accounts, as well as adding new retail customers.

Current wording

Year over year changes in net sales is driven by a number of factors, including beauty category performance, levels of consumer spending, innovation and our ability to drive awareness of and demand for our products. We seek to continue to grow with our retailers through improved sales per linear foot in our existing space, expanded space allocation, as well as adding new retail customers globally.

Previous wording

Our largest customers, Target, Walmart, Ulta Beauty and Amazon, accounted for 23%, 16%, 12%, and 12% respectively, of our net sales in the fiscal year ended March 31, 2025. No other individual customer accounted for 10% or more of our net sales in the fiscal year ended March 31, 2025. National and international retailers comprised 83% of our net sales. The remaining 17% came from e-commerce channels in the fiscal year ended March 31, 2025.

Current wording

Our largest customers, Target, Walmart, Amazon and Sephora, accounted for 18%, 13%, 11% and 10%, respectively, of our net sales in the fiscal year ended March 31, 2026. No other individual customer accounted for 10% or more of our net sales in the fiscal year ended March 31, 2026. National and international retailers comprised 76% of our net sales. The remaining 24% came from e-commerce channels in the fiscal year ended March 31, 2026.

Previous wording

The primary market for our products is in the United States, which accounted for 81% of our net sales in the fiscal year ended March 31, 2025. The remaining 19% was attributable to international markets, primarily the UK and Canada.

Current wording

The primary market for our products is in the United States, which accounted for 79% of our net sales in the fiscal year ended March 31, 2026. The remaining 21% was attributable to international markets, primarily the UK, Canada and Germany.

Previous wording

Interest expense primarily consists of cash interest and fees on our outstanding indebtedness. See “Financial condition, liquidity and capital resources” below and a description of our indebtedness in Note 8 to the Notes to consolidated financial statements in Part IV, Item 15 “Exhibits, financial statement schedules.”

Current wording

Interest expense primarily consists of cash interest and fees on our outstanding indebtedness. See “Financial condition, liquidity and capital resources” below and a description of our indebtedness in Note 8, “Debt,” in the Notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Previous wording

Net sales increased $289.6 million, or 28%, to $1,313.5 million in the fiscal year ended March 31, 2025, from $1,023.9 million in the fiscal year ended March 31, 2024. The increase was driven by strength across our retailer and e-commerce channels. Net sales increased $221.6 million, or 26%, in our retailer channels and $68.0 million, or 42%, in our e-commerce channels. From a price and volume perspective, a higher volume of units sold drove $246.1 million of the increase in net sales. A higher average item price and mix within retailer and e-commerce orders drove the remaining $43.5 million increase in net sales as compared to the fiscal year ended March 31, 2024.

Current wording

Net sales increased $323.0 million, or 25%, to $1,636.5 million in the fiscal year ended March 31, 2026, from $1,313.5 million in the fiscal year ended March 31, 2025. The rhode Acquisition contributed $293.5 million to our growth in the fiscal year ended March 31, 2026, with the remaining $29.5 million contributed from our existing business. The $323.0 million increase was driven by both our retailer and e-commerce channels. Net sales increased $178.3 million, or 16%, in our retailer channels and $144.7 million, or 63%, in our e-commerce channels. From a price and volume perspective, a higher average item price and mix drove $333.5 million increase in net sales as compared to the fiscal year ended March 31, 2025. This was partially offset by lower volume impacting sales by $10.5 million.

Previous wording

Gross profit increased $211.6 million, or 29%, to $935.7 million in the fiscal year ended March 31, 2025, compared to $724.1 million in the fiscal year ended March 31, 2024. Higher unit volume drove $174.0 million of the increase in gross profit, with the remaining increase of $37.6 million driven by higher average item price and mix. Gross margin was 71.2% in the fiscal year ended March 31, 2025 an increase of approximately 50 basis points as compared to 70.7% gross margin in the fiscal year ended March 31, 2024. The increase in gross margin rate was primarily driven by favorable foreign exchange impacts on goods purchased from China and cost savings, partially offset by mix.

Current wording

Gross profit increased $221.7 million, or 24%, to $1,157.3 million in the fiscal year ended March 31, 2026, compared to $935.7 million in the fiscal year ended March 31, 2025. Higher average item price and mix drove an increase of $229.2 million, offset by lower volume impacting gross profit by $7.5 million. Gross margin was 70.7% in the fiscal year ended March 31, 2026, a decrease of approximately 50 basis points as compared to 71.2% gross margin in the fiscal year ended March 31, 2025. The decrease in gross margin rate was primarily driven by tariffs, partially offset by pricing.

Previous wording

SG&A expenses were $777.7 million in the fiscal year ended March 31, 2025, an increase of $203.2 million, or 35%, from $574.4 million in the fiscal year ended March 31, 2024. SG&A expenses as a percentage of net sales was 59% for the fiscal years ended March 31, 2025 and 56% for the fiscal year ended March 31, 2024. The increase on a dollar basis was primarily related to increased marketing and digital spend of $62.8 million, increased compensation and benefits expense of $60.3 million, increased operations costs of $23.2 million, increased retail fixturing and visual merchandising costs of $23.1 million, increased general and administrative costs of $18.9 million and increased depreciation and amortization of $13.9 million.

Current wording

SG&A expenses were $1,026.1 million in the fiscal year ended March 31, 2026, an increase of $248.4 million, or 32%, from $777.7 million in the fiscal year ended March 31, 2025. SG&A expenses as a percentage of net sales was 63% for the fiscal year ended March 31, 2026 and 59% for the fiscal year ended March 31, 2025. The increase on a dollar basis was primarily related to increased marketing, merchandising and distribution costs of $129.1 million, compensation and benefits expense of $55.1 million, increased depreciation and amortization of $35.0 million, increased professional fees of $20.6 million, and increased regulatory fees of $8.6 million.

Previous wording

Other income (expense), net was $1.2 million of income in the fiscal year ended March 31, 2024, as compared to $1.9 million of expense in the fiscal year ended March 31, 2023. The year-over-year variance is primarily due to an increase in unrealized gain in the fiscal year ended March 31, 2024 attributable to favorable foreign currency rate fluctuation.

Current wording

Other income, net was $2.8 million in the fiscal year ended March 31, 2026, as compared to other income, net of $1.3 million in the fiscal year ended March 31, 2025. The year-over-year variance is primarily due to an increase in income from insurance recovery, and a decrease in foreign currency exchange loss for the period primarily attributable to foreign currency rate fluctuations between the US dollar and both the euro and British pound.

Previous wording

Interest expense increased $6.8 million, or 97%, to $13.8 million in the fiscal year ended March 31, 2025, as compared to $7.0 million in the fiscal year ended March 31, 2024. The increase was primarily due to additional borrowings as well as higher interest costs and lower interest earned on our cash balances. See Note 8, “Debt,” in our consolidated financial statements for further details on our debt.

Current wording

Interest expense increased $21.5 million, to $35.3 million in the fiscal year ended March 31, 2026, as compared to $13.8 million in the fiscal year ended March 31, 2025. The year-over-year variance was primarily due to the Fifth Amendment which established the Term Facility and increased debt. See Note 8, “Debt,” in the Notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details on our debt.

Previous wording

The income tax provision was $33.4 million, or an effective rate of 23% for the twelve months ended March 31, 2025, as compared to a provision of $13.3 million, or an effective rate of 9% for the twelve months ended March 31, 2024. The change in the income tax provision was primarily driven by a decrease in discrete tax benefits of $14.3 million, primarily related to limitations on executive compensation deductions for certain stock-based compensation, partially offset by the tax effects of an increase in income before taxes of $4.5 million, resulting in a higher provision.

Current wording

The income tax provision was $14.1 million, or an effective rate of 35%, for the twelve months ended March 31, 2026, as compared to a provision of $33.4 million, or an effective rate of 23%, for the twelve months ended March 31, 2025. The change in the income tax provision was primarily driven by a decrease in income before the provision for income taxes of $105.0 million.

Previous wording

As of March 31, 2025, we had $148.7 million of cash and cash equivalents. In addition, as of March 31, 2025, we had borrowing capacity of $243.3 million under the Amended Revolving Credit Facility.

Current wording

As of March 31, 2026, we had $289.7 million of cash and cash equivalents. In addition, as of March 31, 2026, we had borrowing capacity of $243.3 million under the Amended Revolving Credit Facility.

Previous wording

Our primary working capital requirements are for product and product-related costs, payroll, rent, distribution costs and marketing. Fluctuations in working capital are primarily driven by the timing of when a retailer rearranges or restocks its products, expansion of space within our existing retailer base, expansion to new retailers, and the general seasonality of our business. As of March 31, 2025, we had working capital, excluding cash, of $214.8 million, compared to $69.8 million as of March 31, 2024. Working capital, excluding cash and debt, was $214.8 million and $170.1 million as of March 31, 2025 and March 31, 2024, respectively.

Current wording

Our primary working capital requirements are for product and product-related costs, payroll, rent, distribution costs and marketing. Fluctuations in working capital are primarily driven by the timing of when a retailer rearranges or restocks its products, expansion of space within our existing retailer base, expansion to new retailers, and the general seasonality of our business. As of March 31, 2026, we had working capital, excluding cash, of $163.5 million, compared to $214.8 million as of

Previous wording

For the fiscal year ended March 31, 2023, net cash provided by operating activities was $101.9 million. This included net income, before deducting depreciation, amortization and other non-cash items, of $107.1 million and an increase in net working capital of $5.2 million. The change in net working capital was driven by a $22.4 million increase in accounts receivable, a $24.6 million increase in prepaid and other assets, and a $4.4 million decrease of other liabilities partially offset by a $43.0 million increase of accounts payable and accrued expenses, and a $3.2 million decrease in inventory.

Current wording

For the fiscal year ended March 31, 2026, net cash provided by operating activities was $212.5 million. This included net income, before deducting depreciation, amortization and other non-cash items of $262.0 million, partially offset by acquisition-related seller expenses of $47.1 million in connection with the rhode Acquisition, and an increase in working capital of $2.3 million. The increase in net working capital was primarily driven by a $67.4 million increase in prepaid and other assets and $17.5 million increase in accounts receivable, partially offset by a $75.3 million increase of accounts payable and accrued expenses and a $7.3 million decrease in inventory.

Previous wording

For the fiscal year ended March 31, 2024, net cash provided by operating activities was $71.2 million. This included net income, before deducting depreciation, amortization and other non-cash items of $205.5 million, partially offset by an increase in net working capital of $123.8 million and payment of acquisition-related seller expenses of $10.5 million in connection with the Acquisition. The increase in net working capital was primarily driven by a $93.9 million increase in inventory. The increase was reflective of building inventory to support net sales growth, as well as $10.0 million related to Naturium inventory, and $7.8 million related to a change in certain vendor arrangements where we now take ownership of inventory at shipment from China versus when it enters our U.S. distribution center. Additional changes in working capital include a $49.6 million increase in accounts receivable, a $55.2 million increase in prepaid and other assets, and a $6.3 million decrease in other liabilities, partially offset by an $81.2 million increase of accounts payable and accrued expenses.

Current wording

For the fiscal year ended March 31, 2024, net cash provided by operating activities was $71.2 million. This included net income, before deducting depreciation, amortization and other non-cash items of $205.5 million, partially offset by an increase in net working capital of $123.8 million and payment of acquisition-related seller expenses of $10.5 million in connection with the Naturium Acquisition. The increase in net working capital was primarily driven by a $93.9 million increase in inventory. The increase was reflective of building inventory to support net sales growth, as well as $10.0 million related to Naturium inventory, and $7.8 million related to a change in certain vendor arrangements where we now take ownership of inventory at shipment from China versus when it enters our US distribution center. Additional changes in working capital include a $49.6 million increase in accounts receivable, a $55.2 million increase in prepaid and other assets, and a $6.3 million decrease in other liabilities, partially offset by an $81.2 million increase of accounts payable and accrued expenses.

Previous wording

For the fiscal year ended March 31, 2024, net cash used in investing activities was $284.7 million. This includes $275.0 million paid for the Acquisition, net of cash acquired, capital expenditures related to fixturing, equipment and software of $8.7 million, and contributions to other investment of $1.0 million.

Current wording

For the fiscal year ended March 31, 2024, net cash used in investing activities was $284.7 million. This includes $275.0 million paid for the Naturium Acquisition, net of cash acquired, capital expenditures related to fixturing, equipment and software of $8.7 million, and contributions to other investment of $1.0 million.

Previous wording

On April 30, 2021, the Company amended and restated its prior credit agreement (such amended and restated credit agreement, as further amended, supplemented or modified from time to time, the “Amended Credit Agreement”) and refinanced all loans under the prior credit agreement. The Amended Credit Agreement has a five year term and consists of a revolving credit facility (the “Amended Revolving Credit Facility”) and a term loan facility (the “Amended Term Loan Facility”).

Current wording

On April 30, 2021, we amended and restated our prior credit agreement (such amended and restated credit agreement, as further amended, supplemented or modified from time to time, the “Amended Credit Agreement”) and refinanced all loans under the prior credit agreement. The Amended Credit Agreement has a five year term and consists of a $100.0 million revolving credit facility (the “Amended Revolving Credit Facility”) and a $100.0 million term loan facility.

Previous wording

The Amended Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict our ability to pay dividends and distributions or repurchase our capital stock, incur additional indebtedness, create liens on assets, engage in mergers or consolidations and sell or otherwise dispose of assets. The Amended Credit Agreement also includes reporting, financial and maintenance covenants that require us to, among other things, comply with certain consolidated total net leverage ratios and consolidated fixed charge coverage ratios.

Current wording

The Amended Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict our ability to pay dividends and distributions or repurchase capital stock, incur additional indebtedness, create liens on assets, engage in mergers or consolidations and sell or otherwise dispose of assets. The Amended Credit Agreement also includes reporting, financial and maintenance covenants that require us to, among other things, comply with certain consolidated total net leverage ratios and consolidated fixed charge coverage ratios.

Previous wording

On August 28, 2023, the Company entered into the Second Amendment to the Amended and Restated Credit Agreement (the “Second Amendment”). Pursuant to the Second Amendment, the Company borrowed incremental term loans in a principal amount equal to $115.0 million under the Amended Credit Agreement (the “Incremental Term Loan”). The Incremental Term Loan bore interest at a rate per annum equal to, at the Company’s election, adjusted term SOFR or an alternate base rate as set forth in the Second Amendment, plus an interest rate margin, based on consolidated total net leverage ratio levels, ranging from, (i) in the case of SOFR loans, 1.50% to 2.375%; provided that if SOFR is less than 0.00%, such rate shall be deemed to be 0.00%, and (ii) in the case of alternate base rate loans, 0.50% to 1.375%; provided that if the alternate base rate is less than 1.00%, such rate shall be deemed to be 1.00%. The Incremental Term Loan amortized at 5.00% per annum payable in equal quarterly installments of 1.25% per annum, commencing with the fiscal quarter ended on December 31, 2023. The Company used the Incremental Term Loan together with cash from its balance sheet and additional borrowings under our Amended Revolving Credit Facility to consummate the Acquisition (as defined in Note 3 hereto) and to pay related fees and expenses in connection with the Acquisition and Second Amendment.

Current wording

Second Amendment to Amended Credit Agreement

Previous wording

On August 26, 2024, the Company entered into the Third Amendment to Amended and Restated Credit Agreement (the “Third Amendment”). Pursuant to the Third Amendment, the Company increased our capacity to make restricted payments, provided that after giving effect to any such payment, the Company complies with a certain consolidated total net leverage ratio.

Current wording

On August 26, 2024, we entered into the Third Amendment to Amended and Restated Credit Agreement (the “Third Amendment”). Pursuant to the Third Amendment, we increased our capacity to make restricted payments, provided that after giving effect to any such payment, we comply with a certain consolidated total net leverage ratio.

Previous wording

On March 3, 2025, the Company entered into the Fourth Amendment to Amended and Restated Credit Agreement and First Amendment to Pledge and Security Agreement (the “Fourth Amendment”). The Fourth Amendment, among other things, established a revolving credit facility in an aggregate principal amount of $500 million (the “New Revolving Facility”), refinanced the existing indebtedness under the Existing Credit Agreement and reduced the interest rate margin for loans. Additionally, certain baskets under the Amended Credit Agreement were increased as part of the Fourth Amendment. The proceeds of the New Revolving Facility are available to e.l.f Cosmetics and certain our other subsidiaries of the Company for working capital, capital expenditures and other general corporate purposes, including to finance acquisitions and investments permitted under the Amended Credit Agreement and other permitted distributions on account of our equity interests of the Company and its subsidiaries. In addition, up to $35 million of the New Revolving Facility is available for issuing letters of credit. The maturity date of the New Revolving Facility is March 3, 2030. The unused balance of the New Revolving Credit Facility as of March 31, 2025 was $243.3 million.

Current wording

On March 3, 2025, we entered into the Fourth Amendment to Amended and Restated Credit Agreement and First Amendment to Pledge and Security Agreement (the “Fourth Amendment”). The Fourth Amendment, among other things, established a revolving credit facility in an aggregate principal amount of $500.0 million (the “Revolving Credit Facility”), refinanced the existing indebtedness under the Amended Credit Agreement and reduced the interest rate margin for loans. Additionally, certain baskets under the Amended Credit Agreement were increased as part of the Fourth Amendment. The proceeds of the Revolving Credit Facility are available to e.l.f. Cosmetics and certain of our other subsidiaries for working capital, capital expenditures and other general corporate purposes, including to finance acquisitions and investments permitted under the Amended Credit Agreement and other permitted distributions on account of our and our subsidiaries’ equity interests. In addition, up to $35.0 million of the Revolving Credit Facility is available for issuing letters of credit. The maturity date of the Revolving Credit Facility is March 3, 2030.

Previous wording

The Fourth Amendment also amended the Pledge and Security Agreement, dated as of December 23, 2016 among the Company, certain subsidiaries of the Company, and the Agent pursuant to which certain covenants and thresholds set forth therein were amended, amongst other changes.

Current wording

The Fourth Amendment also amended the Pledge and Security Agreement, dated as of December 23, 2016, among us, certain of our subsidiaries, and the Agent pursuant to which certain covenants and thresholds set forth therein were amended, amongst other changes.

Previous wording

Loans under the New Revolving Facility will bear interest at a rate per annum equal to, at e.l.f Cosmetics’ election: SOFR or an alternate base rate as set forth in the Fourth Amendment, plus an interest rate margin, to be based on consolidated total net leverage ratio levels, ranging from, (i) in the case of SOFR loans, 1.125% to 1.875%; provided that if SOFR is less than 0.00%, such rate shall be deemed to be 0.00%, and (ii) in the case of alternate base rate loans, 0.125% to 0.875%; provided that if the alternate base rate is less than 1.00%, such rate shall be deemed to be 1.00%.

Current wording

Loans under the Amended Credit Agreement will bear interest at a rate per annum equal to, at e.l.f. Cosmetics’ election: SOFR (subject to a 0.00% floor) or an alternate base rate (subject to a 1.00% floor) as set forth in the Fifth Amendment, plus an interest rate margin, to be determined based on consolidated total net leverage ratio levels, ranging from, (i) in the case of SOFR loans, 1.50% to 2.25%, and (ii) in the case of alternate base rate loans, 0.50% to 1.25%.

Previous wording

Our consolidated financial statements included elsewhere in this Annual Report have been prepared in accordance with US generally accepted accounting principles. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are more fully described in the Note 2 to consolidated financial statements in Part IV, Item 15. “Exhibits, financial statement schedules,” we believe that the following accounting policies and estimates are critical to our business operations and understanding of our financial results.

Current wording

Our consolidated financial statements included elsewhere in this Annual Report have been prepared in accordance with US generally accepted accounting principles. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are more fully described in Note 2, “Summary of significant accounting policies,” in the Notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe that the following accounting policies and estimates are critical to our business operations and understanding of our financial results.

Previous wording

We assess potential impairments to our long-lived assets, which include property and equipment, retail product displays, and amortizable intangible assets, whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of an asset is measured by a comparison of the carrying amount of an asset group to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds the fair value of the asset. There were no impairment charges recorded on long-lived assets during the fiscal years ended March 31, 2025, March 31, 2024 or March 31, 2023.

Current wording

We assess potential impairments to our long-lived assets, which include property and equipment, retail product displays, and amortizable intangible assets, whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of an asset is measured by a comparison of the carrying amount of an asset group to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds the fair value of the asset. There were no material impairment charges recorded on long-lived assets during the fiscal years ended March 31, 2026, March 31, 2025 or March 31, 2024.

Previous wording

We have several stock award plans, which are described in detail in Note 12 to consolidated financial statements in Part IV, Item 15. “Exhibits, financial statement schedules.” We account for stock based compensation under ASC 718, “Compensation-Stock Compensation.” We recognize expense over the requisite service period of the award, net of an estimate for the impact of award forfeitures.

Current wording

We have several stock award plans, which are described in detail in Note 12, “Stock-based compensation,” in the Notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. We account for stock-based compensation under Accounting Standards Codification (“ASC”) 718, “Compensation-Stock Compensation.” We recognize expense over the requisite service period of the award, net of an estimate for the impact of award forfeitures.

Previous wording

See Note 2, Summary of significant accounting policies to the Notes to consolidated financial statements in Part IV, Item 15. “Exhibits, Financial Statement Schedules” for information regarding new accounting pronouncements.

Current wording

See Note 2, “Summary of significant accounting policies,” in the Notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information regarding new accounting pronouncements.