Coty Announces its Intention to Gradually Recommence Shareholder Returns Alongside Expected Capital Structure Improvement
Coty Inc. (NYSE: COTY) announces plans to enhance shareholder value through a disciplined deleveraging strategy aimed at achieving a 2x leverage target by CY25. Currently, the company has reduced its leverage from approximately 7x to 4.7x. Coty is set to initiate a $200 million share buyback program in 2024, supported by total return swaps with banks. The firm aims to generate strong free cash flow and progressively resume equity distributions as it continues to strengthen its balance sheet.
- Reduced leverage from ~7x to 4.7x, indicating strong balance sheet improvement.
- Planned $200 million buyback program in 2024 to enhance shareholder value.
- Anticipates continued strong free cash flow generation.
- None.
Coty to Continue its Disciplined Deleveraging Trajectory Towards 2x by CY25, While Starting to Hedge Stock Price for Expected
Having made substantial progress in lowering its leverage from ~7x exiting FY21 to 4.7x exiting 3Q FY22, or approximately 3.6x when factoring in the value of its retained
As Coty progresses on its trajectory to reach its targeted leverage of approximately 2x by calendar 2025, this will open opportunities for Coty to gradually recommence shareholder distributions, within the scope of the Company’s financial policy. Coty has therefore entered into total return swaps in respect of its Class A Common Stock with several banks to hedge its potential exposure at around prevailing stock price trading levels over the applicable hedging periods for a planned
The last 2 years of strengthened operational performance and the de-risking of the capital structure, including both deleveraging and eliminating re-financing risk by extending the debt maturity profile, allow us to look conservatively towards the future and plan for shareholder distributions in calendar 2024. Today’s announcement underscores the progress we have made across each of these objectives, and our conviction in the levers at our disposal to deliver strong EBITDA and cash flow in the coming years in a variety of economic scenarios. As we continue to strengthen our balance sheet, while paving the way for shareholder value creation, it is clear that Coty is becoming a beauty powerhouse.”
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Cautionary Note Regarding Forward-looking Statements
The statements contained in this press release include certain “forward-looking statements” within the meaning of the securities laws. These forward-looking statements reflect Coty’s current views with respect to, among other things, its leverage targets and deleveraging plans, future equity distribution and share repurchase plans, as well as its outlook, expected guidance, trends and strategic information. These forward-looking statements are generally identified by words or phrases, such as “anticipate,” “are going to,” “estimate,” “plan,” “project,” “expect,” “believe,” “intend,” “foresee,” “forecast,” “will,” “may,” “should,” “outlook,” “continue,” “target,” “aim,” “potential” and similar words or phrases. These statements are based on certain assumptions and estimates that Coty considers reasonable and are not guarantees of Coty’s future performance, but are subject to a number of risks and uncertainties, many of which are beyond Coty’s control, which could cause actual events or results to differ materially from such statements, including the factors identified in “Risk Factors” included in Coty’s Annual Report on Form 10-K for the fiscal year ended
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