Coty Reports 3Q22 Sales Growth Ahead of Expectations and Progress Across All Metrics
Coty Inc. (NYSE: COTY) reported a strong third quarter for FY22, with net revenues rising 15% to $1.19 billion, driven by robust growth in its Prestige segment, which surged 21%. Adjusted EBITDA reached $182.5 million, and adjusted EPS improved to $0.03. Gross margins expanded significantly, reflecting effective pricing strategies and product mix, despite inflationary pressures. The company reaffirmed its revenue and profit guidance for FY22, raising adjusted EPS projections to $0.23-0.27. Coty is progressing on debt reduction, with financial net debt decreasing by over $200 million to $4.24 billion.
- 3Q22 net revenues increased by 15% year-over-year to $1.19 billion.
- Prestige segment sales rose 21% and Consumer Beauty sales grew 8%.
- Adjusted EBITDA reached $182.5 million, stable year-over-year.
- Gross margin expanded by 240 basis points YoY to 64.3%.
- Raised FY22 adjusted EPS guidance to $0.23-0.27, up from $0.22-0.26.
- Financial net debt decreased by over $200 million to $4.24 billion.
- Temporary supply constraints affected CoverGirl's performance.
- Consumer Beauty reported an operating loss of $20.4 million, up from $9.1 million last year.
Strong Sales Momentum in Both Divisions, Fueled by
Meaningful and Continuous Gross Margin Expansion Despite Challenging Environment
Continued Progress on Deleveraging
FY22 Revenue and Profit Reaffirmed, with Adjusted EPS Guidance Raised
In Q3, Coty's sales increased
Coty's Prestige segment reported very robust sales growth of
Consumer Beauty revenues increased
Despite the challenged inflationary environment, Coty continued to generate strong gross margin expansion in the quarter, while also maintaining an increased level of media investment to further fuel revenue and sell-out growth. In Q3, reported gross margins expanded by 240 bps YoY to
Financial Net Debt improved by over
Commenting on the operating results,
"Our Q3 earnings mark the seventh consecutive quarter of Coty reporting results inline to ahead of expectations. I am extremely proud of the organization for delivering these results, and outperforming the overall beauty market, in an increasingly volatile environment. This confirms that Coty has the brands and the people to win in the beauty market, guided by our strategic priorities of delivering above-market sales growth and expanding gross margin, allowing for brand reinvestment, profit expansion and continued deleveraging.
Our market-leading Q3 LFL sales growth in both Prestige and Consumer Beauty confirm that our decision to step up media investment during Q2 has proven to be the right one. Importantly, our gross margins also showed solid expansion during the quarter, allowing us to maintain a strong level of media investment, while also delivering significant profit performance. The success of the virtuous cycle we have created is even more evident when looking at our year-to-date results, and the strong growth we are delivering across sales, gross margin, media investments, and profitability. I am also pleased to say that Q3 marks another quarter of improvement on debt reduction and free cash flow, with our leverage now at 4.7x and well on track to drive our leverage towards 4x by end of CY22.
During Q3, we continued to execute on each of our strategic pillars. I am pleased to say that our Consumer Beauty business continued to gain market share globally for the 5th consecutive month, a milestone that this business had not achieved in the previous 5 years. Underpinning this market share momentum is our phased approach to brand repositioning, which began with CoverGirl last spring, followed by Rimmel and
We maintained outstanding trends within our Prestige fragrance business, even as we further reduced low quality sales, as consumers globally continue to gravitate towards the fragrance category, and our recent innovations continued to resonate with consumers. Meanwhile, we are as confident as ever regarding our expansion into prestige cosmetics, as Gucci Beauty, Burberry, and Kylie continue to deliver great results with plenty of room ahead to further build out both distribution and the product portfolios.
In parallel, we continued to progress in building out our skincare footprint, our third strategic pillar. I am very pleased to say that
Our momentum across Digital - our fourth strategic pillar - continued to build, including double digit e-commerce sales growth, global momentum in brand livestreaming and social commerce, viral activations on
As we enter the final two months of FY22, the environment remains highly dynamic. Coty is benefiting from several category and market tailwinds led by fragrances, though at the same time, we and the industry face lockdowns in
We remain confident in our short-term and medium-term ambitions, as we continue to strengthen our position as a true global beauty powerhouse."
*Adjusted financial metrics used in this release are non-GAAP. See reconciliations of GAAP results to Adjusted results in the accompanying tables. |
1Based on fair market value, reflecting the Wella capital structure as of |
|
E-commerce revenues and penetration cover the vast majority of Coty’s markets and exclude certain markets like Travel Retail in EMEA and |
Highlights
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3Q22 net revenues increased
15% as reported and19% on a LFL basis. Net revenue trends were driven by strong growth in both Prestige and Consumer Beauty. -
Reported operating income totaled
in 3Q22.$57.1 million -
3Q22 adjusted operating income increased to
, with a margin of$113.6 million 9.6% , up from in the prior year as depreciation declined.$102.2 million -
3Q22 adjusted EBITDA was
and stable YoY, with a margin of$182.5 million 15.4% . -
3Q22 reported EPS was
. Adjusted EPS of$0.06 , improved from$0.03 last year.$0.01 -
Consistent with previous outlook comments, net savings were relatively neutral in Q3, bringing to YTD total to over
.$90 million -
3Q22 free cash flow of
improved by$(22.2) million from last year driven by higher net income on a cash basis and one-time benefits related to the Wella TSA exit.$196.2 million -
Financial Net Debt was
, decreased by over$4,237.7 million sequentially, supported by the shareholder distribution from Wella and bringing the financial leverage to 4.7x. Economic Net Debt totaled$200 million at quarter end.$3,212.7 million -
As previously announced, Wella completed a refinancing of its existing debt in order to fund a shareholder distribution, which resulted in approximately
of cash proceeds to Coty in Q3, with an additional approximately$210 million expected to be distributed by end of June. The Company has since utilized this distribution and cash on hand to recall and fully pay down its 2023 Euro notes a year ahead of schedule.$30 million
Outlook
Coty's strong revenues and sell-out momentum YTD, with LFL sales growth of +
Coty continues to expect FY22 adjusted EBITDA of
With the strong YTD EPS delivery, Coty raises its FY22 adjusted EPS guidance to
In addition, the Company continues to target leverage towards 4x exiting CY22 and approximately 2x exiting CY25.
Financial Results*
Refer to “Non-GAAP Financial Measures” for discussion of the non-GAAP financial measures used in this release; reconciliations from reported to adjusted results can be found at the end of this release.
Revenues:
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3Q22 reported net revenues of
increased$1,186.2 million 15% year-over-year, including a negative foreign exchange (FX) impact of4% . LFL revenue increased19% , driven by a25% increase in Prestige and a10% increase in Consumer Beauty. -
Year-to-date reported net revenues of
increased$4,136.1 16% year-over-year, including a negative FX impact of1% . LFL revenue increased17% , driven by LFL increases in Prestige of22% , and Consumer Beauty of8% .
Gross Margin:
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3Q22 reported gross margin of
64.3% increased from61.9% in the prior-year period, while adjusted gross margin of64.6% increased from62.2% in 3Q21. The increase was driven by positive intra-category mix-shift, including in both Prestige and Consumer Beauty, price and mix management, and better absorption on improved volumes. -
Year-to-date reported gross margin of
64.0% increased from59.6% , while adjusted gross margin of64.2% increased from59.7% in the prior year period. The increase was due to positive mix-shift, including in both Prestige and Consumer Beauty, and improved volumes.
Operating Income and EBITDA:
-
3Q22 reported operating income of
improved from a reported operating loss of$57.1 million in the prior year due to a$1.4 million reduction in acquisition and divestiture related expenses, a$26.4 million real estate sale gain, an$21.8 million reduction in restructuring and other business realignment costs, and higher gross margin, partially offset by higher SG&A expenses stemming from increased marketing investment.$8.8 million -
3Q22 adjusted operating income of
rose from$113.6 million in the prior year, driven by a$102.2 million reduction in depreciation expense, with the adjusted EBITDA of$12 million stable with the prior year as higher sales and gross profit was offset by higher A&CP. For 3Q22, the adjusted operating margin was$182.5 million 9.6% , while the adjusted EBITDA margin was15.4% . -
Year-to-date reported operating income from Continuing Operations of
increased from a reported operating loss of$318.3 million due to lower restructuring and other business realignment costs, reduced acquisition and divestiture-related expenses, increased sales, the real estate gain, and a higher gross margin, partially offset by higher SG&A expenses. Year-to-date adjusted operating income for Continuing Operations increased$50.4 million 41% to , with a margin of$550.4 million 13.3% , while the adjusted EBITDA totaled , growing$772.9 million 22% YoY, with a margin of18.7% .
Net Income:
-
3Q22 reported net income of
improved from a net loss of$49.6 million in the prior year, primarily due to the aforementioned increase in reported operating income.$1.2 million -
The 3Q22 adjusted net income of
increased from$27.0 million in the prior year period, primarily due to a$5.2 million reduction in preferred dividends.$31 million -
Year-to-date reported net income of
compared to net income of$341.5 million in the prior year. Year-to-date adjusted net income of$54.8 million increased from$237.8 million in the prior year.$97.6 million
Earnings Per Share (EPS) - diluted:
-
3Q22 reported earnings per share of
improved from a reported earnings per share of$0.06 in the prior year.$0.00 -
3Q22 adjusted EPS of
improved from$0.03 in the prior year.$0.01 -
Year-to-date reported earnings per share of
rose from$0.42 in the prior year.$0.07 -
Year-to-date adjusted EPS of
increased from$0.29 in the prior year.$0.13
Operating Cash Flow:
-
3Q22 cash from operations totaling
improved from a cash outflow of$24.8 million in the prior-year period, reflecting an increase in net income on a cash basis as well as one-time benefit from the exit of the Wella TSA. Year-to-date operating cash flow totaled$(186.3) million , an increase of$759.5 million from the same period of the prior year.$473.1 million -
3Q22 free cash outflow of
improved from a free cash outflow of$(22.2) million in the prior year driven by the$(218.4) million improvement in operating cash flow and a$211.1 million decrease in capex. Year-to-date free cash flow of$15 million increased by$626.5 million from the prior year.$483.8 million
Financial Net Debt:
-
Financial Net Debt of
on$4,237.7 million March 31, 2022 , decreased from on$4,454.2 million December 31, 2021 . The decrease was driven primarily by the Wella shareholder distribution of and proceeds from real estate divestitures of$210 million .$38 million
Third Quarter Business Review by Segment*
Prestige
In 3Q22, Prestige net revenues of
During Q3, the Prestige fragrance category across
Coty continued to make further strides expanding in the white space areas of Prestige cosmetics and skincare during 3Q. Prestige cosmetics sales nearly doubled during the quarter and YTD, driven by strong performances of Gucci makeup, Kylie cosmetics, and Burberry makeup. In skincare,
The Prestige segment generated a reported operating income of
Consumer Beauty
In 3Q22, Consumer Beauty net revenues of
During the quarter, the total Coty Consumer Beauty business continued to gain market share globally, driven by particularly strong performance of color cosmetics, which increased share by close to 100bps over the last 5 consecutive months. In the
In
The Consumer Beauty reported operating loss was
Third Quarter Fiscal 2022 Business Review by Region*
-
In 3Q22,
Americas net revenues of , or$479.9 million 40% of Coty sales, increased17% as reported and17% LFL. This was driven by strong growth of both Prestige and Consumer Beauty. The Prestige performance continued to benefit from very robust fragrance category trends in theU.S. , coupled with the strong performance of Coty's recent fragrance innovations, particularly Gucci Beauty and Burberry. Consumer Beauty was driven by solid growth in key brands CoverGirl andSally Hansen .
EMEA
-
In 3Q22, EMEA net revenues of
, or$548.2 million 46% of Coty sales, increased16% as reported and23% LFL. The performance was driven by double-digit increases in both Prestige and Consumer Beauty, as markets cycled COVID-related restrictions in the prior year period. At the same time, Coty portfolio continued to perform strongly fueled by market share gains in Gucci Beauty, Burberry and Hugo Boss in Prestige, and Rimmel andMax Factor in Consumer Beauty.
-
In 3Q22,
Asia Pacific net revenues of , or$158.1 million 13% of Coty sales, increased9% as reported and10% LFL, with growth fueled by substantial expansion in regional Travel Retail, surpassing pre-COVID levels. During the quarter, China sales started off strong during January and February, but declined during March due COVID-related restrictions.
*As previously disclosed, we have realigned our reportable segments to a principally product category-based structure, comprised of a Prestige business segment and a Consumer Beauty business segment. In addition, we have amended the definition of stock compensation expense for use in certain Non-GAAP Financial Measures. In order to reflect these changes, the Company has recast reported net revenue by segment, reported operating income (loss) by segment, adjusted operating income (loss) by segment and total, adjusted EBITDA by segment, and total adjusted income (loss) before income taxes and total adjusted net income (loss) from continuing operations for all comparative periods shown. |
Noteworthy Company Developments
Other noteworthy company developments include:
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On
February 8 ,Sally Hansen unveiled an advanced virtual try-on tool, a first-to-market application ofPerfect Corp.'s AgileHand Technology, which allows consumers to easily experience hundreds ofSally Hansen nail color options in an augmented reality environment, available from any mobile device.
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On
April 1 ,Graeme Carter joined Coty as the Company's new Chief Global SupplyChain Officer , based inAmsterdam . As Chief Global SupplyChain Officer , Graeme is leading the end-to-end Global Supply Chain function from planning to manufacturing to warehousing and distribution. He is also working closely with Dr.Shimei Fan to collaborate on sustainability issues and on reducing the environmental impact of Coty’s supply chain. Graeme comes with significant prior experience atAVON , Amazon, P&G, and Unilever. As Chief Operations Officer atAVON , Graeme successfully transformed the Supply Chain to be even more consumer centric and sustainable, whilst implementing stronger systems and capabilities alongside talent development programs. Prior toAVON , Graeme managed DTC cutting-edge logistics operations at Amazon; and before that, he spent 25 years at P&G across all areas of Supply Chain, including manufacturing and TPM management.
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On
April 27 , the Company announced that after careful consideration, including analysis of relevantU.S. ,U.K. , and other applicable regulation, Coty decided to wind down its Russian operations starting immediately. In calendar 2021, Coty’s sales inRussia , including local Travel Retail, accounted for a little over3% of the Company’s sales and a mid-single digit percentage of adjusted EBITDA.
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Forward Looking Statements
Certain statements in this Earnings Release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company's current views with respect to, among other things, the impact of COVID-19 and potential recovery scenarios, the Company’s comprehensive transformation agenda (the “Transformation Plan”), strategic planning, targets and outlook for future reporting periods (including the extent and timing of revenue, expense and profit trends and changes in operating cash flows and cash flows from operating activities and investing activities), the impact of the Wella divestiture and the related transition services (the “Wella TSA”), the wind down of the Company’s operations in
- the impact of COVID-19 (or future similar events), including demand for the Company’s products, illness, quarantines, government actions, facility closures, store closures or other restrictions in connection with the COVID-19 pandemic, and the extent and duration thereof, the widespread distribution of effective vaccines, related impact on the Company's ability to meet customer needs and on the ability of third parties on which the Company relies, including its suppliers, customers, contract manufacturers, distributors, contractors, commercial banks and joint-venture partners, to meet their obligations to the Company, in particular collections from customers, the extent that government funding and reimbursement programs in connection with COVID-19 are available to the Company, and the ability to successfully implement measures to respond to such impacts;
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the Company’s ability to successfully implement its multi-year Transformation Plan, including its management realignment, reporting structure changes, operational and organizational changes, and the initiatives to further reduce the Company’s cost base, and to develop and achieve its global business strategies (including mix management, select price increases, more disciplined promotions, and foregoing low value sales), compete effectively in the beauty industry, achieve the benefits contemplated by its strategic initiatives (including revenue growth, cost control, gross margin growth and debt deleveraging) and successfully implement its strategic priorities (including innovation performance in prestige and mass channels, strengthening its positions in core markets, accelerating its digital and e-commerce capabilities, building on its skincare portfolio, and expanding its presence in
China ) in each case within the expected time frame or at all; - the Company’s ability to anticipate, gauge and respond to market trends and consumer preferences, which may change rapidly, and the market acceptance of new products, including new products related to Kylie Jenner’s or Kim Kardashian West’s existing beauty businesses, any relaunched or rebranded products and the anticipated costs and discounting associated with such relaunches and rebrands, and consumer receptiveness to our current and future marketing philosophy and consumer engagement activities (including digital marketing and media);
- use of estimates and assumptions in preparing the Company’s financial statements, including with regard to revenue recognition, income taxes (including the expected timing and amount of the release of any tax valuation allowance), the assessment of goodwill, other intangible and long-lived assets for impairments, the market value of inventory, the fair value of the equity investment, and the fair value of acquired assets and liabilities associated with acquisitions;
- the impact of any future impairments;
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managerial, transformational, operational, regulatory, legal and financial risks, including diversion of management attention to and management of cash flows, expenses and costs associated with the Company's response to COVID-19, the Transformation Plan, the Wella TSA, the integration of the strategic partnerships with
Kylie Jenner andKim Kardashian West , and future strategic initiatives, and, in particular, the Company's ability to manage and execute many initiatives simultaneously including any resulting complexity, employee attrition or diversion of resources; - the timing, costs and impacts of divestitures and the amount and use of proceeds from any such transactions;
- future divestitures and the impact thereof on, and future acquisitions, new licenses and joint ventures and the integration thereof with, our business, operations, systems, financial data and culture and the ability to realize synergies, manage supply chain challenges and avoid future supply chain and other business disruptions, reduce costs (including through the Company’s cash efficiency initiatives), avoid liabilities and realize potential efficiencies and benefits (including through our restructuring initiatives) at the levels and at the costs and within the time frames contemplated or at all;
- increased competition, consolidation among retailers, shifts in consumers’ preferred distribution and marketing channels (including to digital and prestige channels), distribution and shelf-space resets or reductions, compression of go-to-market cycles, changes in product and marketing requirements by retailers, reductions in retailer inventory levels and order lead-times or changes in purchasing patterns, impact from COVID-19 on retail revenues, and other changes in the retail, e-commerce and wholesale environment in which the Company does business and sells its products and the Company’s ability to respond to such changes (including its ability to expand its digital, direct-to-consumer and e-commerce capabilities within contemplated timeframes or at all);
- the Company and its joint ventures’, business partners’ and licensors’ abilities to obtain, maintain and protect the intellectual property used in its and their respective businesses, protect its and their respective reputations (including those of its and their executives or influencers), public goodwill, and defend claims by third parties for infringement of intellectual property rights;
- any change to the Company’s capital allocation and/or cash management priorities, including any change in the Company’s dividend policy or, if the Company's Board declares dividends, the Company’s stock dividend reinvestment program;
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any unanticipated problems, liabilities or integration or other challenges associated with a past or future acquired business, joint ventures or strategic partnerships which could result in increased risk or new, unanticipated or unknown liabilities, including with respect to environmental, competition and other regulatory, compliance or legal matters, and specifically in connection with the strategic partnerships with
Kylie Jenner andKim Kardashian , risks related to the entry into a new distribution channel, the potential for channel conflict, risks of retaining customers and key employees, difficulties of integration (or the risks associated with limiting integration),ability to protect trademarks and brand names, litigation or investigations by governmental authorities, and changes in law, regulations and policies that affectKKW Holdings , LLC’s (“KKW Holdings”) business or products, including risk that direct selling laws and regulations may be modified, interpreted or enforced in a manner that results in a negative impact to KKW Holdings’ business model, revenue, sales force or business; - the Company’s international operations and joint ventures, including enforceability and effectiveness of its joint venture agreements and reputational, compliance, regulatory, economic and foreign political risks, including difficulties and costs associated with maintaining compliance with a broad variety of complex local and international regulations;
- the Company’s dependence on certain licenses (especially in the fragrance category) and the Company’s ability to renew expiring licenses on favorable terms or at all;
- the Company’s dependence on entities performing outsourced functions, including outsourcing of distribution functions, and third-party manufacturers, logistics and supply chain suppliers, and other suppliers, including third-party software providers, web-hosting and e-commerce providers;
- administrative, product development and other difficulties in meeting the expected timing of market expansions, product launches, re-launches and marketing efforts, including in connection with new products related to Kylie Jenner’s or Kim Kardashian West’s existing beauty businesses;
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global political and/or economic uncertainties, disruptions or major regulatory or policy changes, and/or the enforcement thereof that affect the Company’s business, financial performance, operations or products, including the impact of the war in
Ukraine and any related escalation or expansion thereof, Brexit (and related business or market disruption), upcoming elections inBrazil , the currentU.S. administration, changes in theU.S. tax code, and recent changes and future changes in tariffs, retaliatory or trade protection measures, trade policies and other international trade regulations in theU.S. , theEuropean Union andAsia and in other regions where the Company operates; recent and future changes in sanctions regulations including in connection with the war inUkraine and any escalation or expansion thereof; - currency exchange rate volatility and currency devaluation and/or inflation;
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the number, type, outcomes (by judgment, order or settlement) and costs of current or future legal, compliance, tax, regulatory or administrative proceedings, investigations and/or litigation, including litigation relating to the tender offer by
Cottage Holdco B.V. (the “Cottage Tender Offer”) and product liability cases (including asbestos and talc-related litigation for which indemnities and/or insurance may not be available), distributor or licensor litigation, and compliance, litigation or investigations relating to our strategic partnerships; - the Company’s ability to manage seasonal factors and other variability and to anticipate future business trends and needs;
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disruptions in operations, sales and in other areas, including due to disruptions in our supply chain, restructurings and other business alignment activities, the Wella divestiture and related carve-out and transition activities, manufacturing or information technology systems, labor disputes, extreme weather and natural disasters, impact from COVID-19 or similar global public health events, the outbreak of war or hostilities (including the war in
Ukraine and any escalation or expansion thereof), impact of global supply chain challenges, and the impact of such disruptions on the Company’s ability to generate profits, stabilize or grow revenues or cash flows, comply with its contractual obligations and accurately forecast demand and supply needs and/or future results; - restrictions imposed on the Company through its license agreements, credit facilities and senior unsecured bonds or other material contracts, its ability to generate cash flow to repay, refinance or recapitalize debt and otherwise comply with its debt instruments, and changes in the manner in which the Company finances its debt and future capital needs;
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increasing dependency on information technology, including as a result of remote working in response to COVID-19, and the Company’s ability to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, including ransomware attacks, costs and timing of implementation and effectiveness of any upgrades or other changes to information technology systems, and the cost of compliance or the Company’s failure to comply with any privacy or data security laws (including the
European Union General Data Protection Regulation, the California Consumer Privacy Act and the Brazil General Data Protection Law) or to protect against theft of customer, employee and corporate sensitive information; - the Company's ability to attract and retain key personnel and the impact of senior management transitions and organizational structure changes;
- the distribution and sale by third parties of counterfeit and/or gray market versions of the Company’s products;
- the impact of the Transformation Plan as well as the Wella Transaction on the Company’s relationships with key customers and suppliers and certain material contracts;
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the Company’s relationship with
Cottage Holdco B.V. , as the Company’s majority stockholder, and its affiliates, and any related conflicts of interest or litigation; - the Company’s relationship with KKR, whose affiliate KKR Bidco is an investor in the Wella Business, and any related conflicts of interest or litigation;
- future sales of a significant number of shares by the Company’s majority stockholder or the perception that such sales could occur; and
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other factors described elsewhere in this document and in documents that the Company files with the
SEC from time to time.
When used herein, the term “includes” and “including” means, unless the context otherwise indicates, “including without limitation”. More information about potential risks and uncertainties that could affect the Company’s business and financial results is included under the heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Quarterly Report on Form 10-Q for the period ended
All forward-looking statements made in this release are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this release, and the Company does not undertake any obligation, other than as may be required by applicable law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise.
Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance unless expressed as such, and should only be viewed as historical data.
Non-GAAP Financial Measures
The Company operates on a global basis, with the majority of net revenues generated outside of the
The Company presents period-over-period comparisons of net revenues on a constant currency basis as well as on an organic (LFL) basis. The Company believes that organic (LFL) better enables management and investors to analyze and compare the Company's net revenues performance from period to period. For the periods described in this release, the term “like-for-like” describes the Company's core operating performance, excluding the financial impact of (i) acquired brands or businesses in the current year period until we have twelve months of comparable financial results, (ii) the divested brands or businesses or early terminated brands, generally, in the prior year non-comparable periods, to maintain comparable financial results with the current fiscal year period and (iii) foreign currency exchange translations to the extent applicable. For a reconciliation of organic (LFL) period-over-period, see the table entitled “Reconciliation of Reported Net Revenues to Like-For-Like
The Company presents operating income, operating income margin, gross profit, gross margin, effective tax rate, net income, net income margin, net revenues, EBITDA, and EPS (diluted) on a non-GAAP basis and specifies that these measures are non-GAAP by using the term “adjusted” (collectively the Adjusted Performance Measures). The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in tables below. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for or superior to, financial measures reported in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies, including companies in the beauty industry, may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
Adjusted operating income/Adjusted EBITDA from continuing operations excludes restructuring costs and business structure realignment programs, amortization, acquisition- and divestiture-related costs and acquisition accounting impacts, stock-based compensation, and asset impairment charges and other adjustments as described below. For adjusted EBITDA, in addition to the preceding, we exclude the adjusted depreciation as defined below. We do not consider these items to be reflective of our core operating performance due to the variability of such items from period-to-period in terms of size, nature and significance. They are primarily incurred to realign our operating structure and integrate new acquisitions, and exclude divestitures, and fluctuate based on specific facts and circumstances. Additionally, Adjusted net income attributable to
Adjusted Performance Measures reflect adjustments based on the following items:
- Costs related to acquisition and divestiture activities: The Company excludes acquisition- and divestiture-related costs and the accounting impacts such as those related to transaction costs and costs associated with the revaluation of acquired inventory in connection with business combinations because these costs are unique to each transaction. Additionally, for divestitures, the Company excludes write-offs of assets that are no longer recoverable and contract related costs due to the divestiture. The nature and amount of such costs vary significantly based on the size and timing of the acquisitions and divestitures, and the maturities of the businesses being acquired or divested. Also, the size, complexity and/or volume of past transactions, which often drives the magnitude of such expenses, may not be indicative of the size, complexity and/or volume of any future acquisitions or divestitures.
- Restructuring and other business realignment costs: The Company excludes costs associated with restructuring and business structure realignment programs to allow for comparable financial results to historical operations and forward-looking guidance. In addition, the nature and amount of such charges vary significantly based on the size and timing of the programs. By excluding the referenced expenses from the non-GAAP financial measures, management is able to further evaluate the Company’s ability to utilize existing assets and estimate their long-term value. Furthermore, management believes that the adjustment of these items supplement the GAAP information with a measure that can be used to assess the sustainability of the Company’s operating performance.
- Asset impairment charges: The Company excludes the impact of asset impairments as such non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Our management believes that the adjustment of these items supplement the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
- Amortization expense: We have excluded the impact of amortization of finite-lived intangible assets, as such non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Our management believes that the adjustment of these items supplement the GAAP information with a measure that can be used to assess the sustainability of our operating performance. Although we exclude amortization of intangible assets from our non-GAAP expenses, our management believes that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets.
- Loss/(Gain) on divestitures and Gain on sale of real estate: The Company excludes the impact of Loss/(gain) on divestitures and gain on sale of real estate as such amounts are inconsistent in amount and frequency and are significantly impacted by the size of divestitures and sale of real estate. Our management believes that the adjustment of these items supplement the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
- Stock-based compensation: Although stock-based compensation is a key incentive offered to our employees, we have excluded the effect of these expenses from the calculation of adjusted operating income and adjusted EBITDA. This is due to their primarily non-cash nature; in addition, the amount and timing of these expenses may be highly variable and unpredictable, which may negatively affect comparability between periods.
- Depreciation and Adjusted depreciation: Our adjusted operating income excludes the impact of accelerated depreciation for certain restructuring projects that affect the expected useful lives of Property, Plant and Equipment, as such charges vary significantly based on the size and timing of the programs. Further, we have excluded adjusted depreciation, which represents depreciation expense net of accelerated depreciation charges, from our adjusted EBITDA. Our management believes that the adjustment of these items supplement the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
- Other (income) expense: We have excluded the write-off of deferred financing fees and discounts that resulted from the pay down of our term debt from the proceeds of the Wella sale, due to the requirements of the 2018 Coty Credit Agreement, as amended. Our management believes these costs do not reflect our underlying ongoing business, and the adjustment of such costs helps investors and others compare and analyze performance from period to period. We have also excluded the impact of pension curtailment (gains) and losses and pension settlements as such events are triggered by our restructuring and other business realignment activities and the amount of such charges vary significantly based on the size and timing of the programs. Further, we have excluded the change in fair value of the investment in Wella, as our management believes these unrealized (gains) and losses do not reflect our underlying ongoing business, and the adjustment of such impact helps investors and others compare and analyze performance from period to period. We have excluded the gain on the exchange of Series B Preferred Stock. The transaction was entered into to simplify our capital structure and do not reflect our underlying ongoing business.
- Noncontrolling interest: This adjustment represents the after-tax impact of the non-GAAP adjustments included in Net income attributable to noncontrolling interests based on the relevant non-controlling interest percentage.
- Tax: This adjustment represents the impact of the tax effect of the pretax items excluded from Adjusted net income. The tax impact of the non-GAAP adjustments is based on the tax rates related to the jurisdiction in which the adjusted items are received or incurred. Additionally, adjustments are made for the tax impact of any intra-entity transfer of assets and liabilities.
-
Deemed Preferred Stock Dividends: We have excluded preferred stock deemed dividends related to the First Exchange and the Second Exchange from our calculation of adjusted net income attributable to
Coty Inc. These deemed dividends are non-monetary in nature, the transactions were entered into to simplify our capital structure and do not reflect our underlying ongoing business. Management believes that this adjustment helps investors and others compare and analyze our performance from period to period.
The Company has provided a quantitative reconciliation of the difference between the non-GAAP financial measures and the financial measures calculated and reported in accordance with GAAP. For a reconciliation of adjusted gross profit to gross profit, adjusted EPS (diluted) to EPS (diluted), and adjusted net revenues to net revenues, see the table entitled “Reconciliation of Reported to Adjusted Results for the Consolidated Statements of Operations.” For a reconciliation of adjusted operating income to operating income and adjusted operating income margin to operating income margin, see the tables entitled “Reconciliation of Reported Operating Income (Loss) to Adjusted Operating Income” and "Reconciliation of Reported Operating Income (Loss) to Adjusted Operating Income by Segment." For a reconciliation of adjusted effective tax rate to effective tax rate, see the table entitled “Reconciliation of Reported Income (Loss) Before Income Taxes and Effective Tax Rates to Adjusted Income Before Income Taxes and Adjusted Effective Tax Rates.” For a reconciliation of adjusted net income and adjusted net income margin to net income (loss), see the table entitled “Reconciliation of Reported Net Income (Loss) to Adjusted Net Income.”
The Company also presents free cash flow, adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA"), immediate liquidity, Financial Net Debt and Economic Net Debt. Management believes that these measures are useful for investors because it provides them with an important perspective on the cash available for debt repayment and other strategic measures and provides them with the same measures that management uses as the basis for making resource allocation decisions. Free cash flow is defined as net cash provided by operating activities less capital expenditures; adjusted EBITDA is defined as adjusted operating income, excluding adjusted depreciation and non-cash stock-based compensation. Net debt or Financial Net Debt (which the Company referred to as "net debt" in prior reporting periods) is defined as total debt less cash and cash equivalents, and Economic Net Debt is defined as total debt less cash and cash equivalents less the value of the Wella Stake. For a reconciliation of Free Cash Flow, see the table entitled “Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow,” for adjusted EBITDA, see the table entitled “Reconciliation of Adjusted Operating Income to Adjusted EBITDA” and for Financial Net Debt and Economic Net Debt, see the tables entitled “Reconciliation of Total Debt to Financial Net Debt and Economic Net Debt.” Further, our immediate liquidity is defined as the sum of available cash and cash equivalents and available borrowings under our Revolving Credit Facility (please see table "Immediate Liquidity").
These non-GAAP measures should not be considered in isolation, or as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
To the extent that the Company provides guidance, it does so only on a non-GAAP basis and does not provide reconciliations of such forward-looking non-GAAP measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including adjustments that could be made for restructuring, integration and acquisition-related expenses, amortization expenses, non-cash stock-based compensation, adjustments to inventory, and other charges reflected in our reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.
- Tables Follow -
|
|||||||||||||||||||
SUPPLEMENTAL SCHEDULES INCLUDING NON-GAAP FINANCIAL MEASURES(a) |
|||||||||||||||||||
|
|||||||||||||||||||
RESULTS AT A GLANCE |
|||||||||||||||||||
|
|
Three Months Ended |
Nine Months Ended |
||||||||||||||||
(in millions, except per share data) |
|
|
|
Change YoY |
|
|
Change YoY |
||||||||||||
CONTINUING OPERATIONS |
|
|
|
Reported
|
|
(LFL) |
|
|
Reported
|
|
(LFL) |
||||||||
Net revenues |
|
$ |
1,186.2 |
|
15 |
% |
|
19 |
% |
$ |
4,136.1 |
|
16 |
% |
|
17 |
% |
||
Operating income - reported |
|
|
57.1 |
|
|
>100 |
% |
|
|
|
318.3 |
|
|
>100 |
% |
|
|
||
Operating income - adjusted* |
|
|
113.6 |
|
|
11 |
% |
|
|
|
550.4 |
|
|
41 |
% |
|
|
||
EBITDA - adjusted |
|
|
182.5 |
|
|
— |
% |
|
|
|
772.9 |
|
|
22 |
% |
|
|
||
Net income attributable to common shareholders - reported** |
|
|
49.6 |
|
|
>100 |
% |
|
|
|
341.5 |
|
|
>100 |
% |
|
|
||
Net income attributable to common shareholders - adjusted* ** |
|
|
27.0 |
|
|
>100 |
% |
|
|
|
237.8 |
|
|
>100 |
% |
|
|
||
EPS attributable to common shareholders (diluted) - reported |
|
$ |
0.06 |
|
|
N/A |
|
|
|
$ |
0.42 |
|
|
>100 |
% |
|
|
||
EPS attributable to common shareholders (diluted) - adjusted* |
|
$ |
0.03 |
|
|
>100 |
% |
|
|
$ |
0.29 |
|
|
>100 |
% |
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders - reported ** |
|
|
50.3 |
|
|
>100 |
% |
|
|
|
346.0 |
|
|
>100 |
% |
|
|
||
Net income attributable to common shareholders - adjusted* ** |
|
|
27.0 |
|
|
>100 |
% |
|
|
|
237.8 |
|
|
(2 |
)% |
|
|
||
EPS attributable to common shareholders (diluted) - reported |
|
$ |
0.06 |
|
|
>100 |
% |
|
|
$ |
0.42 |
|
|
>100 |
% |
|
|
||
EPS attributable to common shareholders (diluted) - adjusted* |
|
$ |
0.03 |
|
|
>100 |
% |
|
|
$ |
0.29 |
|
|
(9 |
%) |
|
|
* These measures, as well as “free cash flow,” “adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA),” "immediate liquidity," “financial net debt,” and "economic net debt" are Non-GAAP Financial Measures. Refer to “Non-GAAP Financial Measures” for discussion of these measures. Reconciliations from reported to adjusted results can be found at the end of this release. |
** Net income for |
THIRD QUARTER BY SEGMENT (CONTINUING OPERATIONS) |
||||||||||||||||||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||||||||||||||||||
|
|
Net Revenues |
|
Change |
Reported Operating Income
|
|
Adjusted Operating Income |
|||||||||||||||||||||||||||
(in millions) |
|
2022 |
|
2021 |
|
Reported Basis |
|
LFL |
2022 |
|
Change |
|
Margin |
|
2022 |
|
Change |
|
Margin |
|||||||||||||||
Prestige |
|
$ |
726.4 |
|
$ |
601.3 |
|
21 |
% |
|
25 |
% |
$ |
83.8 |
|
|
>100 |
% |
|
12 |
% |
|
$ |
123.1 |
|
|
53 |
% |
|
17 |
% |
|||
Consumer Beauty |
|
|
459.8 |
|
|
|
426.5 |
|
|
8 |
% |
|
10 |
% |
|
(20.4 |
) |
|
<(100 |
%) |
|
(4 |
)% |
|
|
(9.5 |
) |
|
<(100 |
%) |
|
(2 |
%) |
|
Corporate |
|
|
— |
|
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
(6.3 |
) |
|
85 |
% |
|
N/A |
|
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
Total |
|
$ |
1,186.2 |
|
|
$ |
1,027.8 |
|
|
15 |
% |
|
19 |
% |
$ |
57.1 |
|
|
>100 |
% |
|
5 |
% |
|
$ |
113.6 |
|
|
11 |
% |
|
10 |
% |
|
|
Nine Months Ended |
||||||||||||||||||||||||||||||||
|
|
Net Revenues |
|
Change |
Reported Operating Income
|
|
Adjusted Operating Income |
|||||||||||||||||||||||||||
(in millions) |
|
2022 |
|
2021 |
|
Reported Basis |
|
LFL |
2022 |
|
Change |
|
Margin |
|
2022 |
|
Change |
|
Margin |
|||||||||||||||
Prestige |
|
$ |
2,605.1 |
|
$ |
2,149.5 |
|
21 |
% |
|
22 |
% |
$ |
357.5 |
|
|
>100 |
% |
|
14 |
% |
|
$ |
482.2 |
|
47 |
% |
|
19 |
% |
||||
Consumer Beauty |
|
|
1,531.0 |
|
|
|
1,418.0 |
|
|
8 |
% |
|
8 |
% |
|
34.3 |
|
|
33 |
% |
|
2 |
% |
|
|
68.2 |
|
|
7 |
% |
|
4 |
% |
|
Corporate |
|
|
— |
|
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
(73.5 |
) |
|
71 |
% |
|
N/A |
|
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
Total |
|
$ |
4,136.1 |
|
|
$ |
3,567.5 |
|
|
16 |
% |
|
17 |
% |
$ |
318.3 |
|
|
>100 |
% |
|
8 |
% |
|
$ |
550.4 |
|
|
41 |
% |
|
13 |
% |
(a) As previously disclosed, we have realigned our reportable segments to a principally product category-based structure, comprised of a Prestige business segment and a Consumer Beauty business segment. In addition, we have amended the definition of stock compensation expense for use in certain Non-GAAP Financial Measures. In order to reflect these changes, the Company has recast reported net revenue by segment, reported operating income (loss) by segment, adjusted operating income (loss) by segment and total, adjusted EBITDA by segment, and total adjusted income (loss) before income taxes and total adjusted net income (loss) from continuing operations for all comparative periods shown. |
|
|
Adjusted EBITDA |
||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in millions) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Prestige |
|
$ |
155.9 |
|
$ |
117.1 |
|
$ |
589.9 |
|
$ |
436.3 |
||||
Consumer Beauty |
|
|
26.6 |
|
|
|
66.3 |
|
|
|
183.0 |
|
|
|
198.2 |
|
Corporate |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
182.5 |
|
|
$ |
183.4 |
|
|
$ |
772.9 |
|
|
$ |
634.5 |
|
THIRD QUARTER FISCAL 2022 BY REGION |
||||||||||||||||||||||||||||
Continuing Operations |
||||||||||||||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||
|
|
Net Revenues |
|
Change |
|
Net Revenues |
|
Change |
||||||||||||||||||||
(in millions) |
|
2022 |
|
2021 |
|
Reported Basis |
|
LFL |
|
2022 |
|
2021 |
|
Reported Basis |
|
LFL |
||||||||||||
|
|
$ |
479.9 |
|
|
$ |
409.6 |
|
|
17 |
% |
|
17 |
% |
|
$ |
1,648.5 |
|
|
$ |
1,419.7 |
|
|
16 |
% |
|
16 |
% |
EMEA |
|
|
548.2 |
|
|
|
473.0 |
|
|
16 |
% |
|
23 |
% |
|
|
1,970.4 |
|
|
|
1,712.3 |
|
|
15 |
% |
|
17 |
% |
|
|
|
158.1 |
|
|
|
145.2 |
|
|
9 |
% |
|
10 |
% |
|
|
517.2 |
|
|
|
435.5 |
|
|
19 |
% |
|
18 |
% |
Total |
|
$ |
1,186.2 |
|
$ |
1,027.8 |
|
15 |
% |
|
19 |
% |
|
$ |
4,136.1 |
|
$ |
3,567.5 |
|
16 |
% |
|
17 |
% |
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||||
(in millions, except per share data) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||||
Net revenues |
$ |
1,186.2 |
|
|
$ |
1,027.8 |
|
|
$ |
4,136.1 |
|
|
$ |
3,567.5 |
|
|
Cost of sales |
|
423.1 |
|
|
|
391.7 |
|
|
|
1,489.0 |
|
|
|
1,440.6 |
|
|
as % of Net revenues |
|
35.7 |
% |
|
|
38.1 |
% |
|
|
36.0 |
% |
|
|
40.4 |
% |
|
Gross profit |
|
763.1 |
|
|
|
636.1 |
|
|
|
2,647.1 |
|
|
|
2,126.9 |
|
|
Gross margin |
|
64.3 |
% |
|
|
61.9 |
% |
|
|
64.0 |
% |
|
|
59.6 |
% |
|
|
|
|
|
|
|
|
|
|||||||||
Selling, general and administrative expenses |
|
659.3 |
|
|
|
545.6 |
|
|
|
2,154.5 |
|
|
|
1,770.5 |
|
|
as % of Net revenues |
|
55.6 |
% |
|
|
53.1 |
% |
|
|
52.1 |
% |
|
|
49.6 |
% |
|
Amortization expense |
|
50.2 |
|
|
|
62.2 |
|
|
|
158.6 |
|
|
|
189.4 |
|
|
Restructuring costs |
|
(6.8 |
) |
|
|
— |
|
|
|
1.5 |
|
|
|
89.7 |
|
|
Acquisition-and divestiture- related costs |
|
3.3 |
|
|
|
29.7 |
|
|
|
14.2 |
|
|
|
127.7 |
|
|
Operating income (loss) |
|
57.1 |
|
|
|
(1.4 |
) |
|
|
318.3 |
|
|
|
(50.4 |
) |
|
as % of Net revenues |
|
4.8 |
% |
|
|
(0.1 |
%) |
|
|
7.7 |
% |
|
|
(1.4 |
%) |
|
Interest expense, net |
|
62.9 |
|
|
|
50.3 |
|
|
|
183.6 |
|
|
|
171.6 |
|
|
Other income, net |
|
(60.6 |
) |
|
|
(62.5 |
) |
|
|
(572.9 |
) |
|
|
(50.7 |
) |
|
Income (loss) from continuing operations before income taxes |
|
54.8 |
|
|
|
10.8 |
|
|
|
707.6 |
|
|
|
(171.3 |
) |
|
as % of Net revenues |
|
4.6 |
% |
|
|
1.1 |
% |
|
|
17.1 |
% |
|
|
(4.8 |
%) |
|
Provision (benefit) for income taxes on continuing operations |
|
0.5 |
|
|
|
(19.2 |
) |
|
|
164.5 |
|
|
|
(304.9 |
) |
|
Net income from continuing operations |
|
54.3 |
|
|
|
30.0 |
|
|
|
543.1 |
|
|
|
133.6 |
|
|
as % of Net revenues |
|
4.6 |
% |
|
|
2.9 |
% |
|
|
13.1 |
% |
|
|
3.7 |
% |
|
Net income (loss) from discontinued operations |
|
0.7 |
|
|
|
(17.3 |
) |
|
|
4.5 |
|
|
|
(148.2 |
) |
|
Net income (loss) |
|
55.0 |
|
|
|
12.7 |
|
|
|
547.6 |
|
|
|
(14.6 |
) |
|
Net (loss) income attributable to noncontrolling interests |
|
(0.9 |
) |
|
|
(9.4 |
) |
|
|
(2.3 |
) |
|
|
(11.5 |
) |
|
Net income attributable to redeemable noncontrolling interests |
|
2.3 |
|
|
|
6.5 |
|
|
|
8.9 |
|
|
|
12.2 |
|
|
Net income (loss) attributable to |
$ |
53.6 |
|
|
$ |
15.6 |
|
|
$ |
541.0 |
|
|
$ |
(15.3 |
) |
|
Amounts attributable to |
|
|
|
|
|
|
|
|||||||||
Net income (loss) from continuing operations |
$ |
52.9 |
|
|
$ |
32.9 |
|
|
$ |
536.5 |
|
|
$ |
132.9 |
|
|
Convertible Series B Preferred Stock dividends |
|
(3.3 |
) |
|
|
(34.1 |
) |
|
|
(195.0 |
) |
|
|
(78.1 |
) |
|
Net income (loss) from continuing operations attributable to common stockholders |
$ |
49.6 |
|
|
$ |
(1.2 |
) |
|
$ |
341.5 |
|
|
$ |
54.8 |
|
|
Net income from discontinued operations |
|
0.7 |
|
|
|
(17.3 |
) |
|
|
4.5 |
|
|
|
(148.2 |
) |
|
Net income (loss) attributable to common stockholders |
$ |
50.3 |
|
|
$ |
(18.5 |
) |
|
$ |
346.0 |
|
|
$ |
(93.4 |
) |
|
|
|
|
|
|
|
|
|
|||||||||
Earnings per common share: |
|
|
|
|
|
|
|
|||||||||
Basic for Continuing Operations |
$ |
0.06 |
|
|
$ |
— |
|
|
$ |
0.42 |
|
|
$ |
0.07 |
|
|
Diluted for Continuing Operations(a)(b) |
$ |
0.06 |
|
|
$ |
— |
|
|
$ |
0.42 |
|
|
$ |
0.07 |
|
|
Basic for |
$ |
0.06 |
|
|
$ |
(0.02 |
) |
|
$ |
0.42 |
|
|
$ |
(0.12 |
) |
|
Diluted for |
$ |
0.06 |
|
|
$ |
(0.02 |
) |
|
$ |
0.42 |
|
|
$ |
(0.12 |
) |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|||||||||
Basic |
|
838.4 |
|
|
|
765.4 |
|
|
|
814.8 |
|
|
|
764.6 |
|
|
Diluted(a)(b) |
|
852.9 |
|
|
|
765.4 |
|
|
|
827.5 |
|
|
|
932.1 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Depreciation - Continuing Operations |
$ |
71.8 |
|
|
$ |
84.3 |
|
|
$ |
230.9 |
|
|
$ |
246.7 |
|
(a) |
Diluted EPS is adjusted by the effect of dilutive securities, including awards under our equity compensation plans and the convertible Series B Preferred Stock. When calculating any potential dilutive effect of stock options, Series A Preferred Stock, restricted stock and RSUs we use the treasury method and the if-converted method for the Convertible Series B Preferred Stock. The treasury method typically does not adjust the net income attributable to |
(b) |
For the three months ended |
RECONCILIATION OF REPORTED TO ADJUSTED RESULTS FOR THE CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
These supplemental schedules provide adjusted Non-GAAP financial information and a quantitative reconciliation of the difference between the Non-GAAP financial measure and the financial measure calculated and reported in accordance with GAAP. |
||||||||||||||||
|
Three Months Ended |
|
|
|||||||||||||
|
CONTINUING OPERATIONS |
|
|
|||||||||||||
(in millions) |
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
|
|||||||||
Net revenues |
$ |
1,186.2 |
|
|
$ |
— |
|
|
$ |
1,186.2 |
|
|
|
|||
Gross profit |
|
763.1 |
|
|
|
3.1 |
|
|
|
766.2 |
|
|
|
|||
Gross margin |
|
64.3 |
% |
|
|
|
|
64.6 |
% |
|
|
|||||
Operating income |
|
57.1 |
|
|
|
56.5 |
|
|
|
113.6 |
|
|
|
|||
as % of Net revenues |
|
4.8 |
% |
|
|
|
|
9.6 |
% |
|
|
|||||
Net income |
|
49.6 |
|
|
|
(22.6 |
) |
|
|
27.0 |
|
|
|
|||
as % of Net revenues |
|
4.2 |
% |
|
|
|
|
2.3 |
% |
|
|
|||||
Adjusted EBITDA |
|
|
|
|
|
182.5 |
|
|
|
|||||||
as % of Net revenues |
|
|
|
|
|
15.4 |
% |
|
|
|||||||
|
|
|
|
|||||||||||||
Net income attributable to |
|
50.3 |
|
|
|
(23.3 |
) |
|
|
27.0 |
|
|
|
|||
|
|
|
|
|
|
|
|
|||||||||
EPS (diluted) |
$ |
0.06 |
|
|
|
|
$ |
0.03 |
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
|
Three Months Ended |
|||||||||||||||
|
CONTINUING OPERATIONS |
|
Discontinued
|
|||||||||||||
(in millions) |
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
Adjusted
|
|||||||||
Net revenues |
$ |
1,027.8 |
|
|
$ |
— |
|
|
$ |
1,027.8 |
|
|
$ |
— |
|
|
Gross profit |
|
636.1 |
|
|
|
3.1 |
|
|
|
639.2 |
|
|
|
— |
|
|
Gross margin |
|
61.9 |
% |
|
|
|
|
62.2 |
% |
|
|
— |
% |
|||
Operating (loss) income |
|
(1.4 |
) |
|
|
103.6 |
|
|
|
102.2 |
|
|
|
— |
|
|
as % of Net revenues |
|
(0.1 |
%) |
|
|
|
|
9.9 |
% |
|
|
N/A |
|
|||
Net income (loss) |
|
(1.2 |
) |
|
|
6.4 |
|
|
|
5.2 |
|
|
|
— |
|
|
as % of Net revenues |
|
(0.1 |
%) |
|
|
|
|
0.5 |
% |
|
|
— |
% |
|||
Adjusted EBITDA |
|
|
|
|
|
183.4 |
|
|
|
— |
|
|||||
as % of Net revenues |
|
|
|
|
|
17.8 |
% |
|
|
— |
% |
|||||
|
|
|
|
|||||||||||||
Net income attributable to |
|
(18.5 |
) |
|
|
23.7 |
|
|
|
5.2 |
|
|
|
|||
|
|
|
|
|
|
|
|
|||||||||
EPS (diluted) |
$ |
(0.02 |
) |
|
|
|
$ |
0.01 |
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
(a) See “Reconciliation of Reported Operating Income (Loss) to Adjusted Operated Income” and “Reconciliation of Reported Net (Loss) Income to Adjusted Net Income” for a detailed description of adjusted items. |
RECONCILIATION OF REPORTED TO ADJUSTED RESULTS FOR THE CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
These supplemental schedules provide adjusted Non-GAAP financial information and a quantitative reconciliation of the difference between the Non-GAAP financial measure and the financial measure calculated and reported in accordance with GAAP. |
||||||||||||||||
|
Nine Months Ended |
|
|
|||||||||||||
|
CONTINUING OPERATIONS |
|
|
|||||||||||||
(in millions) |
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
|
|||||||||
Net revenues |
$ |
4,136.1 |
|
|
$ |
— |
|
|
$ |
4,136.1 |
|
|
|
|||
Gross profit |
|
2,647.1 |
|
|
|
8.4 |
|
|
|
2,655.5 |
|
|
|
|||
Gross margin |
|
64.0 |
% |
|
|
|
|
64.2 |
% |
|
|
|||||
Operating (loss) income |
|
318.3 |
|
|
|
232.1 |
|
|
|
550.4 |
|
|
|
|||
as % of Net revenues |
|
7.7 |
% |
|
|
|
|
13.3 |
% |
|
|
|||||
Net income (loss) |
|
341.5 |
|
|
|
(103.7 |
) |
|
|
237.8 |
|
|
|
|||
as % of Net revenues |
|
8.3 |
% |
|
|
|
|
5.7 |
% |
|
|
|||||
Adjusted EBITDA |
|
|
|
|
|
772.9 |
|
|
|
|||||||
as % of Net revenues |
|
|
|
|
|
18.7 |
% |
|
|
|||||||
|
|
|
|
|||||||||||||
Net loss (income) attributable to |
|
346.0 |
|
|
|
(108.2 |
) |
|
|
237.8 |
|
|
|
|||
|
|
|
|
|
|
|
|
|||||||||
EPS (diluted) |
$ |
0.42 |
|
|
|
|
$ |
0.29 |
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
|
Nine Months Ended |
|||||||||||||||
|
CONTINUING OPERATIONS |
|
Discontinued
|
|||||||||||||
(in millions) |
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
Adjusted
|
|||||||||
Net revenues |
$ |
3,567.5 |
|
|
$ |
— |
|
|
$ |
3,567.5 |
|
|
$ |
986.3 |
|
|
Gross profit |
|
2,126.9 |
|
|
|
3.1 |
|
|
|
2,130.0 |
|
|
|
663.8 |
|
|
Gross margin |
|
59.6 |
% |
|
|
|
|
59.7 |
% |
|
|
67.3 |
% |
|||
Operating (loss) income |
|
(50.4 |
) |
|
|
441.3 |
|
|
|
390.9 |
|
|
|
222.3 |
|
|
as % of Net revenues |
|
(1.4 |
%) |
|
|
|
|
11.0 |
% |
|
|
22.5 |
% |
|||
Net (loss) income |
|
54.8 |
|
|
|
42.8 |
|
|
|
97.6 |
|
|
|
145.0 |
|
|
as % of Net revenues |
|
1.5 |
% |
|
|
|
|
2.7 |
% |
|
|
14.7 |
% |
|||
Adjusted EBITDA |
|
|
|
|
|
634.5 |
|
|
|
222.3 |
|
|||||
as % of Net revenues |
|
|
|
|
|
17.8 |
% |
|
|
22.5 |
% |
|||||
|
|
|
|
|||||||||||||
Net (loss) income attributable to |
|
(93.4 |
) |
|
|
336.0 |
|
|
|
242.6 |
|
|
|
|||
|
|
|
|
|
|
|
|
|||||||||
EPS (diluted) |
$ |
(0.12 |
) |
|
|
|
$ |
0.32 |
|
|
|
|||||
(a) See “Reconciliation of Reported Operating Income (Loss) to Adjusted Operated Income” and “Reconciliation of Reported Net (Loss) Income to Adjusted Net Income” for a detailed description of adjusted items. |
||||||||||||||||
|
||||||||||||||||
(b) Discontinued operations for the fiscal year 2021 includes activity only through |
RECONCILIATION OF REPORTED OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA |
||||||||||||||||||||||
CONTINUING OPERATIONS |
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||
(in millions) |
|
2022 |
|
2021 |
|
Change |
|
2022 |
|
2021 |
|
Change |
||||||||||
Reported Operating income (loss) |
|
$ |
57.1 |
|
|
$ |
(1.4 |
) |
|
>100 |
% |
|
$ |
318.3 |
|
|
$ |
(50.4 |
) |
|
>100 |
% |
% of Net revenues |
|
|
4.8 |
% |
|
|
(0.1 |
%) |
|
|
|
|
7.7 |
% |
|
|
(1.4 |
%) |
|
|
||
Amortization expense (a) |
|
|
50.2 |
|
|
|
62.2 |
|
|
(19 |
%) |
|
|
158.6 |
|
|
|
189.4 |
|
|
(16 |
%) |
Restructuring and other business realignment costs (b) |
|
|
(3.7 |
) |
|
|
5.1 |
|
|
<(100 |
%) |
|
|
9.6 |
|
|
|
97.4 |
|
|
(90 |
%) |
Stock-based compensation |
|
|
28.5 |
|
|
|
6.6 |
|
|
>100 |
% |
|
|
164.3 |
|
|
|
26.8 |
|
|
>100 |
% |
Acquisition- and divestiture-related costs (c) |
|
|
3.3 |
|
|
|
29.7 |
|
|
(89 |
%) |
|
|
14.2 |
|
|
|
127.7 |
|
|
(89 |
%) |
(Gain) on sale of real estate (d) |
|
|
(21.8 |
) |
|
|
— |
|
|
N/A |
|
|
|
(114.6 |
) |
|
|
— |
|
|
N/A |
|
Total adjustments to reported operating income (loss) |
|
|
56.5 |
|
|
|
103.6 |
|
|
(45 |
%) |
|
|
232.1 |
|
|
|
441.3 |
|
|
(47 |
%) |
Adjusted Operating income |
|
$ |
113.6 |
|
|
$ |
102.2 |
|
|
11 |
% |
|
$ |
550.4 |
|
|
$ |
390.9 |
|
|
41 |
% |
% of Net revenues |
|
|
9.6 |
% |
|
|
9.9 |
% |
|
|
|
|
13.3 |
% |
|
|
11.0 |
% |
|
|
||
Adjusted depreciation (e) |
|
|
68.9 |
|
|
|
81.2 |
|
|
(15 |
%) |
|
|
222.5 |
|
|
|
243.6 |
|
|
(9 |
%) |
Adjusted EBITDA |
|
$ |
182.5 |
|
|
$ |
183.4 |
|
|
0 |
% |
|
$ |
772.9 |
|
|
$ |
634.5 |
|
|
22 |
% |
% of Revenues |
|
|
15.4 |
% |
|
|
17.8 |
% |
|
|
|
|
18.7 |
% |
|
|
17.8 |
% |
|
|
(a) |
In the three months ended |
In the nine months ended |
|
(b) |
In the three months ended |
In the nine months ended |
|
(c) |
In the three months ended |
In the nine months ended |
|
(d) |
In the three months ended |
In the nine months ended |
|
(e) |
In the three months ended |
In the nine months ended |
RECONCILIATION OF REPORTED INCOME (LOSS) BEFORE INCOME TAXES AND EFFECTIVE TAX RATES TO ADJUSTED INCOME BEFORE INCOME TAXES AND ADJUSTED EFFECTIVE TAX RATES FOR CONTINUING OPERATIONS |
||||||||||||||||||||||
|
|
Three Months Ended |
|
Three Months Ended |
||||||||||||||||||
(in millions) |
|
(Loss)
|
|
(Benefit)
|
|
Effective tax
|
|
(Loss)
|
|
Provision
|
|
Effective tax
|
||||||||||
Reported Income before income taxes - Continuing Operations |
|
$ |
54.8 |
|
|
$ |
0.5 |
|
0.9 |
% |
|
$ |
10.8 |
|
|
$ |
(19.2 |
) |
|
(177.8 |
)% |
|
Adjustments to Reported Operating Income (a) |
|
|
56.5 |
|
|
|
|
|
|
|
103.6 |
|
|
|
|
|
||||||
Change in fair value of investment in Wella Business (c) |
|
|
(60.7 |
) |
|
|
|
|
|
|
(63.5 |
) |
|
|
|
|
||||||
Other adjustments (d) |
|
|
0.4 |
|
|
|
|
|
|
|
(2.5 |
) |
|
|
|
|
||||||
Total Adjustments (b) |
|
|
(3.8 |
) |
|
|
17.0 |
|
|
|
|
|
37.6 |
|
|
|
28.3 |
|
|
|
||
Adjusted Income before income taxes - Continuing Operations |
|
$ |
51.0 |
|
|
$ |
17.5 |
|
|
34.3 |
% |
|
$ |
48.4 |
|
|
$ |
9.1 |
|
|
18.8 |
% |
The adjusted effective tax rate was |
||||||||||||||||||||||
|
|
Nine Months Ended |
|
Nine Months Ended |
||||||||||||||||||
(in millions) |
|
(Loss)
|
|
(Benefit)
|
|
Effective tax
|
|
(Loss)
|
|
Provision
|
|
Effective tax
|
||||||||||
Reported Income (Loss) before income taxes - Continuing Operations |
|
$ |
707.6 |
|
|
$ |
164.5 |
|
|
23.2 |
% |
|
$ |
(171.3 |
) |
|
$ |
(304.9 |
) |
|
178.0 |
% |
Adjustments to Reported Operating Income (a) |
|
|
232.1 |
|
|
|
|
|
|
|
441.3 |
|
|
|
|
|
||||||
Change in fair value of investment in Wella Business (c) |
|
|
(579.0 |
) |
|
|
|
|
|
|
(63.5 |
) |
|
|
|
|
||||||
Other adjustments (d) |
|
|
(2.5 |
) |
|
|
|
|
|
|
5.7 |
|
|
|
|
|
||||||
Total Adjustments (b) (e) |
|
|
(349.4 |
) |
|
|
(91.0 |
) |
|
|
|
|
383.5 |
|
|
|
333.3 |
|
|
|
||
Adjusted Income before income taxes - Continuing Operations |
|
$ |
358.2 |
|
|
$ |
73.5 |
|
|
20.5 |
% |
|
$ |
212.2 |
|
|
$ |
28.4 |
|
|
13.4 |
% |
(a) | See a description of adjustments under “Adjusted Operating Income (Loss) for Continuing Operations.” |
(b) | The tax effects of each of the items included in adjusted income are calculated in a manner that results in a corresponding income tax expense/provision for adjusted income. In preparing the calculation, each adjustment to reported income is first analyzed to determine if the adjustment has an income tax consequence. The provision for taxes is then calculated based on the jurisdiction in which the adjusted items are incurred, multiplied by the respective statutory rates and offset by the increase or reversal of any valuation allowances commensurate with the non-GAAP measure of profitability. |
(c) | The amount represents the realized and unrealized gain recognized for the change in the fair value of the investment in Wella. |
(d) |
For the three months ended |
For the nine months ended |
|
(e) |
The total tax impact on adjustments in the prior period includes a |
RECONCILIATION OF REPORTED NET INCOME TO ADJUSTED NET INCOME FOR CONTINUING OPERATIONS |
||||||||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||||||||
(in millions) |
2022 |
|
2021 |
|
Change |
|
2022 |
|
2021 |
|
Change |
|||||||||||
Net income from Continuing Operations, net of noncontrolling interests |
$ |
52.9 |
|
|
$ |
32.9 |
|
|
61 |
% |
|
$ |
536.5 |
|
|
$ |
132.9 |
|
|
>100 |
% | |
Convertible Series B Preferred Stock dividends (c) |
|
(3.3 |
) |
|
|
(34.1 |
) |
|
90 |
% |
|
|
(195.0 |
) |
|
|
(78.1 |
) |
|
<(100 |
%) | |
Reported Net income attributable to Continuing Operations |
$ |
49.6 |
|
|
$ |
(1.2 |
) |
|
>100 |
% |
|
$ |
341.5 |
|
|
$ |
54.8 |
|
|
>100 |
% | |
% of Net revenues |
|
4.2 |
% |
|
|
(0.1 |
%) |
|
|
|
|
8.3 |
% |
|
|
1.5 |
% |
|
|
|||
Adjustments to Reported Operating Income (a) |
|
56.5 |
|
|
|
103.6 |
|
|
(45 |
%) |
|
|
232.1 |
|
|
|
441.3 |
|
|
(47 |
%) |
|
Change in fair value of investment in Wella Business (d) |
|
(60.7 |
) |
|
|
(63.5 |
) |
|
<(100 |
%) |
|
|
(579.0 |
) |
|
|
(63.5 |
) |
|
<(100 |
%) | |
Adjustments to other expense (e) |
|
0.4 |
|
|
|
(2.5 |
) |
|
>100 |
% |
|
|
(2.5 |
) |
|
|
5.7 |
|
|
<(100 |
%) | |
Adjustments to noncontrolling interests (b) |
|
(1.8 |
) |
|
|
(2.9 |
) |
|
38 |
% |
|
|
(5.3 |
) |
|
|
(7.4 |
) |
|
28 |
% |
|
Change in tax provision due to adjustments to Reported Net income attributable to Continuing Operations |
|
(17.0 |
) |
|
|
(28.3 |
) |
|
40 |
% |
|
|
91.0 |
|
|
|
(333.3 |
) |
|
>100 |
% | |
Adjustment for deemed Series B Preferred Stock dividends related to the First and Second Exchanges (c) (f) |
|
— |
|
|
|
— |
|
|
N/A |
|
|
|
160.0 |
|
|
|
— |
|
|
N/A |
|
|
Adjusted Net income attributable to Continuing Operations |
$ |
27.0 |
|
|
$ |
5.2 |
|
|
>100 |
% |
|
$ |
237.8 |
|
|
$ |
97.6 |
|
|
>100 |
% | |
% of Net revenues |
|
2.3 |
% |
|
|
0.5 |
% |
|
|
|
|
5.7 |
% |
|
|
2.7 |
% |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Per Share Data |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted weighted-average common shares |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic |
|
838.4 |
|
|
|
765.4 |
|
|
|
|
|
814.8 |
|
|
|
764.6 |
|
|
|
|||
Diluted (c) (f) |
|
852.9 |
|
|
|
765.4 |
|
|
|
|
|
827.5 |
|
|
|
932.1 |
|
|
|
|||
Adjusted Net income (loss) attributable to Continuing Operations per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic |
$ |
0.03 |
|
|
$ |
0.01 |
|
|
|
|
$ |
0.29 |
|
|
$ |
0.13 |
|
|
|
|||
Diluted (c) |
$ |
0.03 |
|
|
$ |
0.01 |
|
|
|
|
$ |
0.29 |
|
|
$ |
0.13 |
|
|
|
(a) | See a description of adjustments under “Adjusted Operating Income (Loss) for Continuing Operations.” |
(b) | The amounts represent the after-tax impact of the non-GAAP adjustments included in Net income attributable to noncontrolling interest based on the relevant noncontrolling interest percentage in the Condensed Consolidated Statements of Operations. |
(c) |
Adjusted Diluted EPS is adjusted by the effect of dilutive securities, including awards under our equity compensation plans and the convertible Series B Preferred Stock. For the three and nine months ended |
(d) | The amount represents the realized and unrealized gain recognized for the change in the fair value of the investment in Wella. |
(e) |
For the three months ended |
For the nine months ended |
|
(f) |
For the nine months ended |
RECONCILIATION OF REPORTED NET INCOME (LOSS) TO ADJUSTED NET INCOME FOR COTY INC. |
||||||||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||||||||
(in millions) |
2022 |
|
2021 |
|
Change |
|
2022 |
|
2021 |
|
Change |
|||||||||||
Net income from |
$ |
53.6 |
|
|
$ |
15.6 |
|
|
>100 |
% |
|
$ |
541.0 |
|
|
$ |
(15.3 |
) |
|
>100 |
% | |
Convertible Series B Preferred Stock dividends (c) |
|
(3.3 |
) |
|
|
(34.1 |
) |
|
90 |
% |
|
|
(195.0 |
) |
|
|
(78.1 |
) |
|
<(100 |
%) | |
Reported Net income attributable to |
$ |
50.3 |
|
|
$ |
(18.5 |
) |
|
>100 |
% |
|
$ |
346.0 |
|
|
$ |
(93.4 |
) |
|
>100 |
% | |
% of Net revenues |
|
4.2 |
% |
|
|
(1.8 |
%) |
|
|
|
|
8.4 |
% |
|
|
(2.1 |
%) |
|
|
|||
Adjustments to Reported Operating income (a) |
|
56.5 |
|
|
|
103.6 |
|
|
(45 |
%) |
|
|
232.1 |
|
|
|
442.8 |
|
|
(48 |
%) |
|
Adjustments to loss on sale of business (g) |
|
(1.3 |
) |
|
|
27.5 |
|
|
<(100 |
%) |
|
|
(6.1 |
) |
|
|
246.6 |
|
|
<(100 |
%) | |
Change in fair value of investment in Wella Business (d) |
|
(60.7 |
) |
|
|
(63.5 |
) |
|
4 |
% |
|
|
(579.0 |
) |
|
|
(63.5 |
) |
|
(100 |
%) |
|
Adjustments to other expense (e) |
|
0.4 |
|
|
|
(2.5 |
) |
|
>100 |
% |
|
|
(2.5 |
) |
|
|
5.7 |
|
|
<(100 |
%) | |
Adjustments to noncontrolling interests (b) |
|
(1.8 |
) |
|
|
(2.9 |
) |
|
38 |
% |
|
|
(5.3 |
) |
|
|
(7.4 |
) |
|
28 |
% |
|
Change in tax provision due to adjustments to Reported Net income (loss) attributable to |
|
(16.4 |
) |
|
|
(38.5 |
) |
|
57 |
% |
|
|
92.6 |
|
|
|
(288.2 |
) |
|
>100 |
% | |
Adjustment for deemed Series B Preferred Stock dividends related to the First and Second Exchanges (c) (f) |
|
— |
|
|
|
— |
|
|
N/A |
|
|
|
160.0 |
|
|
|
— |
|
|
N/A |
|
|
Adjusted Net income attributable to |
$ |
27.0 |
|
|
$ |
5.2 |
|
|
>100 |
% |
|
$ |
237.8 |
|
|
$ |
242.6 |
|
|
(2 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Per Share Data |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted weighted-average common shares |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic |
|
838.4 |
|
|
|
765.4 |
|
|
|
|
|
814.8 |
|
|
|
764.6 |
|
|
|
|||
Diluted (c) (f) |
|
852.9 |
|
|
|
765.4 |
|
|
|
|
|
827.5 |
|
|
|
932.1 |
|
|
|
|||
Adjusted Net income attributable to |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic |
$ |
0.03 |
|
|
$ |
0.01 |
|
|
|
|
$ |
0.29 |
|
|
$ |
0.32 |
|
|
|
|||
Diluted (c) |
$ |
0.03 |
|
|
$ |
0.01 |
|
|
|
|
$ |
0.29 |
|
|
$ |
0.32 |
|
|
|
(a) | See a description of adjustments under “Adjusted Operating Income (loss) for Coty Inc.” |
(b) | The amounts represent the after-tax impact of the non-GAAP adjustments included in Net income attributable to noncontrolling interest based on the relevant noncontrolling interest percentage in the Condensed Consolidated Statements of Operations. |
(c) |
Adjusted Diluted EPS is adjusted by the effect of dilutive securities, including awards under our equity compensation plans and the convertible Series B Preferred Stock. For the three and nine months ended |
(d) | The amount represents the realized and unrealized gain recognized for the change in the fair value of the investment in Wella. |
(e) |
For the three months ended |
For the nine months ended |
|
(f) |
For the nine months ended |
(g) | This amount reflects certain working capital adjustments related to the sale of the Wella Business. |
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW |
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
(in millions) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net cash provided by operating activities |
|
$ |
24.8 |
|
|
$ |
(186.3 |
) |
|
$ |
759.5 |
|
|
$ |
286.4 |
|
Capital expenditures |
|
|
(47.0 |
) |
|
|
(32.1 |
) |
|
|
(133.0 |
) |
|
|
(143.7 |
) |
Free cash flow |
|
$ |
(22.2 |
) |
|
$ |
(218.4 |
) |
|
$ |
626.5 |
|
|
$ |
142.7 |
|
RECONCILIATION OF TOTAL DEBT TO ECONOMIC NET DEBT |
||||
|
|
As of |
||
(in millions) |
|
|
||
Total debt |
|
$ |
4,906.3 |
|
Less: Cash and cash equivalents |
|
|
668.6 |
|
Financial Net debt |
|
$ |
4,237.7 |
|
Less: Value of Wella stake |
|
|
1,025.0 |
|
Economic Net debt |
|
$ |
3,212.7 |
|
IMMEDIATE LIQUIDITY |
||||
|
|
As of |
||
(in millions) |
|
|
||
Cash and cash equivalents |
|
$ |
668.6 |
|
Unutilized revolving credit facility |
|
|
1,989.9 |
|
Immediate Liquidity |
|
$ |
2,658.5 |
|
RECONCILIATION OF ADJUSTED OPERATING INCOME TO ADJUSTED EBITDA |
||||
|
|
Twelve months ended |
||
|
|
|
||
(in millions) |
|
CONTINUING
|
||
Adjusted operating income (a) |
|
$ |
595.7 |
|
Add: Adjusted depreciation(b) |
|
|
304.7 |
|
Adjusted EBITDA |
|
$ |
900.4 |
|
(a) |
Adjusted operating income for the twelve months ended |
(b) |
Adjusted depreciation for the twelve months ended |
FINANCIAL NET DEBT/ADJUSTED EBITDA |
||||
|
|
|
||
Financial Net Debt - |
|
$ |
4,237.7 |
|
Adjusted EBITDA - Continuing operations |
|
|
900.4 |
|
Financial Net Debt/Adjusted EBITDA |
|
|
4.71 |
|
RECONCILIATION OF REPORTED NET REVENUES TO LIKE-FOR-LIKE |
||||||||||||
|
|
Three Months Ended |
||||||||||
Net Revenues Change YoY |
|
Reported Basis |
|
Constant Currency |
|
Impact from
|
|
LFL |
||||
Prestige |
|
21 |
% |
|
25 |
% |
|
— |
% |
|
25 |
% |
Consumer Beauty |
|
8 |
% |
|
10 |
% |
|
— |
% |
|
10 |
% |
Total Continuing Operations |
|
15 |
% |
|
19 |
% |
|
— |
% |
|
19 |
% |
|
||||||||||||
|
|
Nine Months Ended |
||||||||||
Net Revenues Change YoY |
|
Reported Basis |
|
Constant Currency |
|
Impact from
|
|
LFL |
||||
Prestige |
|
21 |
% |
|
22 |
% |
|
— |
% |
|
22 |
% |
Consumer Beauty |
|
8 |
% |
|
8 |
% |
|
— |
% |
|
8 |
% |
Total Continuing Operations |
|
16 |
% |
|
17 |
% |
|
— |
% |
|
17 |
% |
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(in millions) |
|
|
|
|
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
668.6 |
|
$ |
253.5 |
||
Restricted cash |
|
|
31.6 |
|
|
|
56.9 |
|
Trade receivables, net |
|
|
479.2 |
|
|
|
348.0 |
|
Inventories |
|
|
643.1 |
|
|
|
650.8 |
|
Prepaid expenses and other current assets |
|
|
381.7 |
|
|
|
473.9 |
|
Total current assets |
|
|
2,204.2 |
|
|
|
1,783.1 |
|
Property and equipment, net |
|
|
740.3 |
|
|
|
918.1 |
|
|
|
|
4,025.2 |
|
|
|
4,118.1 |
|
Other intangible assets, net |
|
|
4,139.2 |
|
|
|
4,463.0 |
|
Equity investments |
|
|
1,038.9 |
|
|
|
1,276.2 |
|
Operating lease right-of-use assets |
|
|
351.4 |
|
|
|
318.5 |
|
Other noncurrent assets |
|
|
769.9 |
|
|
|
814.4 |
|
TOTAL ASSETS |
|
$ |
13,269.1 |
|
|
$ |
13,691.4 |
|
|
|
|
|
|
||||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
1,280.5 |
|
|
$ |
1,166.1 |
|
Short-term debt and current portion of long-term debt |
|
|
516.5 |
|
|
|
24.2 |
|
Other current liabilities |
|
|
1,399.2 |
|
|
|
1,225.1 |
|
Total current liabilities |
|
|
3,196.2 |
|
|
|
2,415.4 |
|
Long-term debt, net |
|
|
4,316.9 |
|
|
|
5,401.0 |
|
Long-term operating lease liabilities |
|
|
307.3 |
|
|
|
269.3 |
|
Other noncurrent liabilities |
|
|
1,441.5 |
|
|
|
1,423.1 |
|
TOTAL LIABILITIES |
|
|
9,261.9 |
|
|
|
9,508.8 |
|
|
|
|
|
|
||||
CONVERTIBLE SERIES B PREFERRED STOCK |
|
|
142.4 |
|
|
|
1,036.3 |
|
REDEEMABLE NONCONTROLLING INTERESTS |
|
|
71.9 |
|
|
|
84.1 |
|
|
|
|
3,598.7 |
|
|
|
2,860.7 |
|
Noncontrolling interests |
|
|
194.2 |
|
|
|
201.5 |
|
Total equity |
|
|
3,792.9 |
|
|
|
3,062.2 |
|
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY |
|
$ |
13,269.1 |
|
|
$ |
13,691.4 |
|
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
|
Nine Months Ended
|
|||||||
|
2022 |
|
2021 |
|||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|||||
Net income (loss) |
$ |
547.6 |
|
|
$ |
(14.6 |
) |
|
|
|
|
|
|||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|||||
Depreciation and amortization |
|
389.5 |
|
|
|
436.1 |
|
|
Non-cash lease expense |
|
55.6 |
|
|
|
61.6 |
|
|
Deferred income taxes |
|
48.6 |
|
|
|
(238.8 |
) |
|
Provision (releases) for bad debts |
|
2.6 |
|
|
|
(9.6 |
) |
|
Provision for pension and other post-employment benefits |
|
11.9 |
|
|
|
8.3 |
|
|
Share-based compensation |
|
164.3 |
|
|
|
28.9 |
|
|
Gains on disposals of long-term assets |
|
(111.1 |
) |
|
|
— |
|
|
(Gain) loss on sale of business in discontinued operations |
|
(6.1 |
) |
|
|
246.6 |
|
|
Realized and unrealized gains from equity investments, net |
|
(576.7 |
) |
|
|
(60.9 |
) |
|
Other |
|
16.3 |
|
|
|
71.5 |
|
|
Change in operating assets and liabilities, net of effects from purchase of acquired companies: |
|
|
|
|||||
Trade receivables |
|
(161.4 |
) |
|
|
(57.3 |
) |
|
Inventories |
|
(10.1 |
) |
|
|
114.2 |
|
|
Prepaid expenses and other current assets |
|
23.0 |
|
|
|
(133.0 |
) |
|
Accounts payable |
|
137.3 |
|
|
|
(137.8 |
) |
|
Accrued expenses and other current liabilities |
|
246.4 |
|
|
|
64.8 |
|
|
Operating lease liabilities |
|
(54.8 |
) |
|
|
(104.4 |
) |
|
Other assets and liabilities, net |
|
36.6 |
|
|
|
10.8 |
|
|
Net cash provided by operating activities |
|
759.5 |
|
|
|
286.4 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|||||
Capital expenditures |
|
(133.0 |
) |
|
|
(143.7 |
) |
|
Proceeds from sale of long-term assets |
|
169.7 |
|
|
|
4.3 |
|
|
Proceeds from sale of discontinued business, net of cash disposed |
|
— |
|
|
|
2,374.1 |
|
|
Proceeds from contingent consideration from sale of discontinued business |
|
34.0 |
|
|
|
— |
|
|
Return of capital from equity investments |
|
210.7 |
|
|
|
448.0 |
|
|
Proceeds from sale of business, net of cash disposed |
|
— |
|
|
|
27.0 |
|
|
Payment for equity investment and related asset acquisition |
|
— |
|
|
|
(200.0 |
) |
|
Termination of currency swaps designated as net investment hedges |
|
— |
|
|
|
(37.6 |
) |
|
Net cash used in investing activities |
|
281.4 |
|
|
|
2,472.1 |
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|||||
Net proceeds from short-term debt, original maturity less than three months |
|
4.8 |
|
|
|
0.5 |
|
|
Proceeds from revolving loan facilities |
|
444.3 |
|
|
|
2,147.9 |
|
|
Repayments of revolving loan facilities |
|
(1,114.7 |
) |
|
|
(2,963.7 |
) |
|
Proceeds from issuance of other long-term debt |
|
500.0 |
|
|
|
— |
|
|
Repayments of term loans and other long term debt |
|
(256.1 |
) |
|
|
(2,162.0 |
) |
|
Dividend payment on Class A Common Stock |
|
(1.3 |
) |
|
|
(1.5 |
) |
|
Dividend payment on Convertible Series B Preferred Stock |
|
(52.5 |
) |
|
|
— |
|
|
Proceeds from issuance of Convertible Series B Preferred Stock |
|
— |
|
|
|
227.2 |
|
|
Net (repayments for) proceeds from foreign currency contracts |
|
(94.1 |
) |
|
|
20.3 |
|
|
Purchase of remaining mandatorily redeemable noncontrolling interest |
|
(7.1 |
) |
|
|
— |
|
|
Distributions to noncontrolling interests, redeemable noncontrolling interests and mandatorily redeemable financial instruments |
|
(15.1 |
) |
|
|
(6.3 |
) |
|
Payment of deferred financing fees |
|
(39.3 |
) |
|
|
— |
|
|
All other |
|
(11.6 |
) |
|
|
(4.8 |
) |
|
Net cash provided by financing activities |
|
(642.7 |
) |
|
|
(2,742.4 |
) |
|
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
(8.4 |
) |
|
|
(10.1 |
) |
|
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
389.8 |
|
|
|
6.0 |
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period |
|
310.4 |
|
|
|
352.0 |
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period |
$ |
700.2 |
|
|
$ |
358.0 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220509005272/en/
Investor Relations
olga_levinzon@cotyinc.com
Media
Antonia_Werther@cotyinc.com
Source:
FAQ
What were the key financial results for Coty in Q3 2022?
How did Coty's Prestige and Consumer Beauty segments perform in Q3 2022?
What is Coty's adjusted EPS guidance for FY22?
How much did Coty's financial net debt decrease in Q3 2022?