E.l.f. Beauty sees $50 million windfall in tariff refunds as profits surge 100%

E.l.f. Beauty 's profits nearly doubled during its fiscal first quarter thanks to a windfall of cash it received in tariff refunds from the federal government, the company said Wednesday.

In the three months ended June 30, E.l.f. received about $50 million in tariff refunds, plus some interest payments related to the duties that were struck down by the Supreme Court, leading its net income to grow by about 100% and its gross margin to grow by 14 percentage points compared to the prior year.

"Our plan is to fully reinvest that money in both pricing, to have a superior value proposition, as well as increased marketing across our entire portfolio of brands," CEO Tarang Amin told CNBC in an interview. "We feel we never should have had the tariffs to begin with, so let's invest in our brands to drive the strength that we see."

While the company is still waiting for around $8 million in additional refunds, the major impact to profitability seen during the quarter will be a one-time blip that won't continue moving forward.

Here's how the cosmetics company performed during the quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

The company's reported net income for the three-month period that ended June 30 was $66.6 million, or $1.12 per share, compared with $33.3 million, or 58 cents per share, a year earlier. Adjusting for non-recurring charges related to taxes and stock-based compensation, E.l.f. posted earnings of $1.75 per share.

Sales rose to $479.4 million, up about 36% from $353.7 million a year earlier.

The strong results led E.l.f. to raise both its full-year revenue guide and full-year adjusted earnings per share outlook. The brand is now expecting sales to be between $1.94 billion and $1.97 billion, beating expectations of $1.86 billion and up from a prior range of between $1.84 billion and $1.87 billion, according to LSEG.