Coty Reports Solid Q1 Growth Fueled by Prestige Fragrances, Outperforming Beauty Market
Coty reported solid Q1 FY25 results with 2% reported revenue growth and 4.5% LFL growth. The company's performance was driven by strong growth in fragrances across all price points. Prestige segment revenues increased 5% reported and 7% LFL, while Consumer Beauty declined 3% reported with flat LFL growth. Gross margin expanded by 200 basis points to 65.5%. Reported operating income grew 20% to $237.8 million, while adjusted EBITDA remained flat at $360.1 million. The company maintained its FY25 outlook with expected LFL sales growth of 3-4% in H1.
Coty ha riportato solidi risultati per il primo trimestre dell'anno fiscale 25 con una crescita dei ricavi del 2% e un incremento delle vendite a parità di negozi del 4,5%. La performance dell'azienda è stata sostenuta da una forte crescita delle fragranze in tutte le fasce di prezzo. I ricavi del segmento Prestige sono aumentati del 5% riportato e del 7% a parità di negozi, mentre il segmento Consumer Beauty ha registrato un calo del 3% riportato con una crescita stabile a parità di negozi. Il margine lordo è aumentato di 200 punti base raggiungendo il 65,5%. L'utile operativo riportato è cresciuto del 20% raggiungendo 237,8 milioni di dollari, mentre l'EBITDA rettificato è rimasto stabile a 360,1 milioni di dollari. L'azienda ha confermato le previsioni per l'anno fiscale 25, prevedendo una crescita delle vendite a parità di negozi tra il 3% e il 4% nel primo semestre.
Coty reportó sólidos resultados del primer trimestre del año fiscal 25 con un crecimiento de ingresos del 2% y un incremento LFL del 4,5%. El rendimiento de la empresa fue impulsado por un fuerte crecimiento en fragancias en todos los puntos de precio. Los ingresos del segmento Prestige aumentaron un 5% reportado y un 7% LFL, mientras que la belleza del consumidor disminuyó un 3% reportado con un crecimiento LFL estable. El margen bruto se expandió en 200 puntos básicos hasta alcanzar el 65,5%. El ingreso operativo reportado creció un 20% alcanzando 237,8 millones de dólares, mientras que el EBITDA ajustado se mantuvo estable en 360,1 millones de dólares. La empresa mantuvo su perspectiva para el año fiscal 25, con un crecimiento esperado de ventas LFL del 3-4% en el primer semestre.
Coty는 FY25 1분기에 2%의 보고된 수익 성장과 4.5%의 LFL 성장을 기록하며 견고한 결과를 발표했습니다. 회사의 성장은 모든 가격대에서 향수의 강력한 성장에 의해 촉진되었습니다. 프레스티지 부문의 수익은 5% 증가했으며 7% LFL 증가를 기록했습니다. 반면, 소비자 뷰티 부문은 3% 감소했으며 LFL 성장은 보합세를 보였습니다. 총 마진은 200 베이시스 포인트 증가하여 65.5%에 도달했습니다. 보고된 운영 소득은 20% 증가하여 2억 3,780만 달러에 이르렀으며, 조정된 EBITDA는 3억 6,010만 달러로 유지되었습니다. 회사는 FY25 전망을 유지하며 상반기 LFL 매출 성장은 3-4%로 예상하고 있습니다.
Coty a annoncé des résultats solides pour le premier trimestre de l'exercice 25 avec une croissance des revenus de 2% et une croissance LFL de 4,5%. Les performances de l'entreprise ont été soutenues par une forte croissance des parfums dans tous les segments de prix. Les revenus du segment Prestige ont augmenté de 5% rapporté et de 7% LFL, tandis que la Beauté Consommateur a diminué de 3% rapporté, avec une croissance LFL stable. La marge brute a augmenté de 200 points de base pour atteindre 65,5%. Le résultat opérationnel rapporté a augmenté de 20% pour atteindre 237,8 millions de dollars, tandis que l'EBITDA ajusté est resté stable à 360,1 millions de dollars. L'entreprise a maintenu ses prévisions pour l'exercice 25, avec une croissance attendue des ventes LFL de 3-4% au premier semestre.
Coty berichtete solide Ergebnisse für das erste Quartal des Geschäftsjahres 25 mit einem Umsatzwachstum von 2% und einem Wachstum von 4,5% auf vergleichbarer Basis. Die Leistung des Unternehmens wurde durch starkes Wachstum im Bereich Düfte in allen Preispunkten unterstützt. Die Einnahmen im Prestige-Segment stiegen um 5% berichtet und um 7% auf vergleichbarer Basis, während die Verbraucherschönheit um 3% berichtet zurückging und ein stabiles LFL-Wachstum verzeichnete. Die Bruttomarge erweiterte sich um 200 Basispunkte auf 65,5%. Der berichtete Betriebsgewinn stieg um 20% auf 237,8 Millionen Dollar, während das bereinigte EBITDA bei 360,1 Millionen Dollar stabil blieb. Das Unternehmen bekräftigte seine Prognose für FY25 mit einer erwarteten LFL-Umsatzwachstumsrate von 3-4% im ersten Halbjahr.
- Gross margin expanded 200 basis points to 65.5%
- Operating income increased 20% to $237.8 million
- Reported net income improved to $79.6 million from a loss of $1.7 million
- Prestige segment grew 5% reported and 7% LFL
- Financial leverage ratio reduced by 0.4x versus previous year
- Consumer Beauty segment declined 3% on reported basis
- Asia Pacific revenues declined 5% both reported and LFL
- Free cash flow showed outflows of $7.9 million
- Total debt remains high at $4,002.2 million
- U.S. Consumer Beauty sell-in tracking below sell-out
Insights
The Q1 FY25 results demonstrate solid financial performance with key highlights including
Most notably, the company's financial leverage ratio improved to 3.4x, down 0.4x from last year, showing progress in debt management. The prestige fragrance segment remains particularly strong with
The outlook revision for FY25, targeting adjusted EBITDA growth at the lower end of
The beauty market dynamics show interesting shifts with prestige fragrances maintaining leadership despite moderating growth. The mass beauty segment's deceleration to low single digits and flat cosmetics performance signals a broader market normalization after post-pandemic peaks.
Coty's strategic positioning across price points, from mass to ultra-premium fragrances, provides resilience. The company's e-commerce penetration increase to nearly
The challenges in U.S. mass cosmetics and Chinese mainland markets highlight the importance of geographic diversification. The anticipated
Q1 Sales Inline with Pre-Announcement, With
Strong Gross Margin Expansion And Sustained Brand Investments
Reiterated FY25 EBITDA Underpinned by Accelerating Actions to Adapt Coty for Future Success
Coty Inc. (NYSE: COTY) (Paris: COTY) ("Coty" or "the Company") today announced its results for the first quarter of fiscal year 2025, ended September 30, 2024. The Company delivered continued sales and gross margin expansion in the first quarter, while continuing to invest behind its brands for the long term and execute across its strategic growth pillars.
In 1Q25, Coty's net revenues grew
Prestige Q1 net revenues increased
Consumer Beauty Q1 net revenues declined
By geography, EMEA net revenues increased
Coty delivered continued very strong gross margin expansion in the quarter. 1Q25 reported and adjusted gross margin of
Coty generated reported operating income of
Q1 reported net income of
Q1 adjusted EBITDA of
In Q1, cash flow from operating activities was
Updates on Strategic Pillars
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The prestige fragrance market remains an outperforming category in beauty, even as growth has moderated by a couple of percentage points exiting Q1 from the low double digit percentage growth in FY24 and the early part of Q1. Coty's prestige fragrance portfolio performed strongly, particularly in the EMEA and
Americas regions, and the Company's very strong growth in prestige fragrances, which grew6% as reported and9% LFL. Inthe United States , Coty's sell-out and sell-in growth was impacted by the very elevated comparisons of the prior year, which included the blockbuster launch of Burberry Goddess, Coty's biggest launch ever. In Q1, reported net revenue for the majority of Coty's leading prestige fragrance brands grew by a double-digit percentage. Coty continued to grow the Burberry Goddess franchise, which contributed to the to the Burberry brand's strong double-digit percentage reported net revenue growth. Marc Jacobs Daisy Wild and Cosmic Kylie Jenner remained top ranked fragrance innovation in their launch markets, reinforcing Coty's position as a leader in fragrance. In prestige cosmetics, Coty brands Burberry and Kylie Cosmetics each grew strongly in the quarter, while Gucci makeup declined due to weakness in the Chinese mainland and Asia Travel Retail.
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The global mass beauty market continues to grow at a low-single-digit pace, with outperformance by the mass fragrance category which is growing at a high-single-digit percentage, confirming that consumers continue to prioritize the fragrance category across price points. In Q1, Coty's mass fragrances outperformed the category, growing reported net revenues by a strong double-digit percentage fueled by adidas, Nautica, Beckham and Mexx, and Coty will continue to focus on amplifying its mass fragrance offerings to capture market share in this attractive category. At the same time, the global mass cosmetics category has decelerated to flattish performance, with moderate unit growth, and was further exacerbated by significant channel shifts, resulting in Coty's
U.S. Consumer Beauty sell-in tracking well below sell-out. Coty's Consumer Beauty e-commerce sales grew at a mid-single-digit percentage, ahead of the overall beauty market, as Coty continued to gain share in this critical channel. Coty social media advocacy strategy maintained momentum, with strong earned media value results for viral Consumer Beauty innovations including CoverGirl Simply Ageless Skin Perfector Essence, CoverGirl Eye Enhancer 3D mascara and Rimmel Thrill Seeker Extreme mascara.
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Coty continued to fuel its skincare strategy.
Lancaster delivered mid-single-digit percentage net revenue growth as it kicked off the brand's revamp inEurope , supported by its unique positioning as the photo-aging prevention and repair expert, the launch of its Golden Lift skincare range, and the expansion of Ligne Princiere into the European market. For Philosophy, active engagement with dermatologists and influencers, aided by its newly opened influencer studio inNew York , resulted in over70% growth in the brand's earned media value. Orveda continued to expand its footprint with the opening of the La Maison Orveda inNew York City , the next step in its brand building and distribution expansion.
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The e-commerce channel remains a strong growth channel for both Prestige and Consumer Beauty, and across all major regions. Coty e-commerce reported net revenues grew by a mid-single-digit percentage in Q1. As a result, e-commerce penetration increased approximately 40 basis points year-over-year to nearly
20% in Q1, with e-commerce penetration growth in both divisions. Coty's Prestige and Consumer Beauty brands continued to gain strong market share in the e-commerce channels in which the brands are present.
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The Company maintained strong momentum in growth engine markets and channels. Results in Coty's growth engine markets, which account for approximately
21% of total sales in Q1, continued grow strongly with low-single-digit percentage reported net revenue growth and double-digit percentage LFL net revenue growth, led by strength in LATAM,Africa ,Southeast Asia , includingIndia andNorth Asia . LFL growth in Q1 in Coty's growth engine markets includes a5% contribution fromArgentina , which experienced hyperinflation. Coty's global Travel Retail channel, which accounts for9% of the Company's sales in Q1, continued to expand led by theAmericas and EMEA, despite pressure in the Asia Travel Retail corridor.
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Coty continued to make progress on its sustainability agenda. Earlier this week, the Company published its FY24 Sustainability Report, which included key milestones, such as achieving a significant
65% reduction in Scope 3 air freight emissions versus the 2019 baseline, establishing ambitious new targets for sustainable packaging and water withdrawal, rejoining the Ellen MacArthur Foundation as a Network Member and achieving gender balance in leadership target ahead of its 2025 commitment.
Commenting on the operating results, Sue Nabi, Coty's CEO, said:
"As we enter FY25, the macroeconomic environment remains as complex as ever and the outsized growth of the last few years is now entering the normalization phase. Nevertheless, one thing is very clear: consumers continue to prioritize beauty in their spending routines, even as they pull back on many other consumer segments. And within the broader beauty backdrop, fragrances remain a top performing category. As a beauty leader, and increasingly as a beauty trendsetter, Coty remains at the forefront of fueling consumer desire and driving category growth through disruptive launches, new and improved formulations, and engaging activations and campaigns.
First, we continue to deliver sustained LFL sales growth. In fact, we are further building on our multi-year track record of outperformance. We have delivered LFL growth which is ahead of the leading global beauty players in 9 out of the last 13 quarters. This confirms that our growth is a result of our clear strategic vision, strong execution and our ability to seize on and develop beauty trends in each of our core categories. This strong operational and financial execution has been recognized by stakeholders, as we have achieved 11 consecutive financial upgrades from rating agencies since 2021.
Second, the fragrance market remains robust and remains a top performing category in beauty, with more consumers entering the category, using fragrances more often, and exploring with a variety of concentrations and formats. This reinforces our view that the structural drivers for the category will allow it to continue to grow inline to ahead of the underlying beauty market in the coming quarters and years. At Coty, as we continue to leverage our best-in-class end-to-end fragrance expertise and to set the trends in the industry, we are reinforcing our leadership in prestige fragrances while simultaneously unlocking more opportunities across the full price spectrum ranging from mass and masstige fragrances, all the way up to ultra premium and niche fragrances. In Q1, we delivered robust sales growth in each of these fragrance price tiers.
Third, we are step-changing our efforts to adapt Coty for future success in the ever more dynamic market environment. We are accelerating existing plans and adding new initiatives across all parts of the organization, whether its establishing centers of excellence for various operations, accelerating our speed to market, adapting our organizations for the increasingly omnichannel world, and maximizing the benefits of emerging technologies and artificial intelligence. Not only will these efforts enable Coty to lead in the beauty market of tomorrow, but they are also bringing additional savings in FY25 and beyond, supporting our ability to deliver our FY25 adjusted EBITDA target of close to double-digit growth.
Fourth, we will continue to play the full range of our brands and categories to capture growth opportunities and support sustained outperformance. We continue to grow our footprint across growth engine markets, expand our product range and distribution across skincare, prestige cosmetics, mass fragrances and ultra premium fragrances, and capture share in growth channels like e-commerce and travel retail.
And finally, as we continue to deliver strong profitability and free cash flow in FY25 and beyond, we will deploy this cash toward shareholder returns, further deleveraging, and amplifying Coty’s growth trajectory.
As we strengthen our position as a global beauty powerhouse, acting with the agility of smaller brands but also creating the beauty trends of today and tomorrow, Coty remains one of the most compelling investment opportunity in our industry."
1 For Scope 1 and 2 emissions. |
*Adjusted financial metrics used in this release are non-GAAP. See reconciliations of GAAP results to Adjusted results in the accompanying tables. |
** E-commerce penetration and contribution based on countries where e-com info is available covering approx. |
RESULTS AT A GLANCE
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Three Months Ended September 30,
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(in millions, except per share data) |
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Change YoY |
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COTY, INC. |
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Reported Basis |
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(LFL)(a) |
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Net revenues |
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$ |
1,671.5 |
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|
|
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Operating income - reported |
|
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237.8 |
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|
|
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Net income attributable to common shareholders - reported ** |
|
|
79.6 |
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> |
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Operating income - adjusted* |
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|
303.6 |
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—% |
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Net income attributable to common shareholders - adjusted* ** |
|
|
128.1 |
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|
|
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EBITDA - adjusted |
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360.1 |
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—% |
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EPS attributable to common shareholders (diluted) - reported |
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$ |
0.09 |
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N/A |
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EPS attributable to common shareholders (diluted) - adjusted* |
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$ |
0.15 |
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(a) LFL results for the three months ended September 30, 2024 include |
* These measures, as well as “free cash flow,” “adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA),” “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 Coty Inc. is net of the Convertible Series B Preferred Stock dividends. |
Outlook
Over the last several months, the beauty market has maintained solid momentum, though growth has moderated from the outsized double-digit growth of the last few years. Prestige fragrances remain an outperforming category, though growth has moderated by a couple of points exiting Q1. Mass beauty is now growing in the low single digits, with flattish performance in the mass cosmetics category. Within this backdrop, slower end demand and significant channel shifts in
The pace of category growth and consumer demand during the critical holiday period remains the central factor influencing the outlook for the second half, including retailer inventory levels and pace of re-orders. At present, Coty anticipates LFL growth in the second half to be relatively consistent with the first half, reflecting easier prior year comparisons and solid prestige fragrance performance on the one hand, and continued pressure in the Chinese mainland, Asia Travel Retail and
In this very dynamic beauty market environment, Coty is future proofing its organization and processes to better capture new opportunities, respond to changes in the market with more agility, and solidify Coty’s position as a beauty leader over the long term. Many of the workstreams are already under way, with an acceleration now in the timing of delivery, while others are newly initiated. Through the combination of these efforts, Coty now anticipates FY25 savings of over
Through the combination of continued sales growth, continuous gross margin expansion and increased cost savings for FY25 and beyond, while maintaining A&CP in the high 20s percentage, Coty expects FY25 adjusted EBITDA to grow near the lower end of its prior guidance of +9
Finally, Coty continues to expect FY25 free cash flow to grow by a double-digit percentage YoY to the low to mid
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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1Q25 reported net revenues of
increased$1,671.5 2% year-over-year, which reflected a5% increase in Prestige reported net revenues as well as a3% decrease in Consumer Beauty reported net revenues, a1% headwind from FX and a1% headwind from the divestiture of the Lacoste license. On a LFL basis, net revenues increased5% driven by a7% increase in Prestige, while Consumer Beauty revenues were flat.
Gross Margin:
-
1Q25 reported gross margin of
65.5% increased 200 basis points year-over-year. The improvement in reported gross margin was mainly driven by the benefit from premiumization, pricing actions, easing inflation, excess & obsolescence reduction and supply chain savings. 1Q25 adjusted gross margin of65.5% increased by 200 basis points from63.5% in the prior year.
Reported Profit:
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1Q25 reported operating income of
increased by$237.8 million 20% from the prior year driven by higher sales and gross profit. 1Q25 reported operating margin was$197.5 million 14.2% reflecting 220 basis points of margin expansion year-over-year. The improvement in reported operating margin was driven by strong gross margin expansion in the quarter.
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1Q25 reported net income of
increased from net loss of$79.6 million in the prior year. Reported net income reflected$1.7 million discrete one-time non-cash tax impact to the prior year quarter from a change in the Swiss statutory rate as well as an$24 million negative impact from the mark-to market on the equity swap compared with a negative impact of$32 million in the prior year. 1Q25 reported net income margin of$58 million 4.8% increased 490 basis points year-over-year.
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1Q25 reported EPS of
increased from$0.09 . The increase in reported EPS was primarily due to the higher reported net income as well as the discrete one-time non-cash tax impact of$0.00 to the prior year quarter from a change in the Swiss statutory rate and a lower negative impact from the equity swap mark-to-market of$0.03 , compared with a$0.03 negative impact from the equity swap mark-to-market in the prior year.$0.06
Adjusted Profit:
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1Q25 adjusted operating income of
increased slightly from$303.6 million in the prior year. 1Q25 adjusted operating margin of$302.2 million 18.2% was 20 basis points lower year-over-year compared with18.4% driven by stronger investments behind our strategic priorities. -
1Q25 adjusted EBITDA of
was flat year-over-year. Adjusted EBITDA margin of$360.1 million 21.5% decreased by 50 basis points driven by stronger investments behind our strategic priorities. -
1Q25 adjusted net income of
increased from$128.1 million in the prior year reflecting the discrete one-time non-cash tax impact to the prior year quarter from a change in the Swiss statutory rate and a lower negative impact from the equity swap mark-to-market than in the prior year. 1Q25 adjusted net income margin of$74.1 million 7.7% increased from4.5% in the prior year. -
1Q25 adjusted EPS of
increased from adjusted EPS of$0.15 in the prior year. 1Q25 adjusted EPS was higher year-over-year due to the discrete one-time non-cash tax impact of$0.09 to the prior year quarter from a change in the Swiss statutory rate and a negative impact from the equity swap mark-to-market of$0.03 , compared with a$0.03 negative impact from equity swap mark-to-market in the prior year.$0.06
Operating Cash Flow:
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1Q25 cash from operations totaling
decreased from$67.4 million during the same period in the prior year.$186.2 million -
1Q25 free cash outflow of
decreased from free cash flow of$7.9 million in the prior year driven by the$124.0 million decrease in operating cash flow and a$118.8 million increase in capex.$13.1 million - The lower Q1 cash from operating activities and free cash flow was further pressured by the phasing of order placement made by retailers, which took place at the end of the quarter and resulted in higher receivables at quarter end, as well as the phasing of payables.
Financial Net Debt:
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Total debt of
on September 30, 2024 increased from$4,002.2 million on June 30, 2024. This resulted in a total debt to net income ratio of 21.1x.$3,913.7 million -
Financial net debt of
on September 30, 2024 increased from$3,718.6 million on June 30, 2024. This resulted in financial leverage of 3.4x, up slightly from 3.3x at the end of the prior quarter.$3,612.9 million -
The value of Coty's retained
25.8% Wella stake remained at quarter-end, supporting Coty's economic net debt of$1,085.0 million .$2,633.6 million
First Quarter Business Review by Segment*
Prestige
In 1Q25, Prestige net revenues of
The prestige fragrance category continues to outperform the overall beauty market across
In 1Q25, the Prestige segment generated reported operating income of
Consumer Beauty
In 1Q25, Consumer Beauty net revenues of
Coty's mass fragrance brands grew reported net revenues by a strong double-digit percentage supported by very strong growth in adidas, Nautica, Beckham and Mexx. In addition, Coty's Brazilian brands, Risque, a color cosmetics brand, and Paixao, a body care brand each grew reported net revenues, which partially offset lower overall body care revenues in
In 1Q25, the Consumer Beauty segment generated reported operating income of
First Quarter Fiscal 2025 Business Review by Region*
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In 1Q25,
Americas net revenues of , or$693.5 million 41% of Coty sales, decreased2% on a reported basis driven by a5% negative impact from FX as well as lower Consumer Beauty segment revenues, which were impacted by the softness in theU.S. color cosmetics market and body care inBrazil , partially offset by mid-single-digit percentage reported growth in the Prestige segment. While reported net revenues in theU.S. were lower, reported net revenues grew inLatin America ,Canada and the regional Travel Retail channel. On a LFL basis,Americas net revenues increased by4% in the first quarter supported by high-single-digit percentage growth in the Prestige segment and included a2% contribution fromArgentina , which experienced hyperinflation.
EMEA
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In 1Q25, EMEA net revenues of
, or$787.8 million 47% of Coty sales, increased8% on a reported basis driven by high-single-digit percentage reported net revenue growth in Prestige, mid-single-digit percentage reported net revenue growth in Consumer Beauty and a2% FX benefit partially offset by a2% headwind from the divestiture of the Lacoste license. On a LFL basis, EMEA net revenues increased by8% in the first quarter. The regional performance was supported by reported net revenue growth in nearly all markets and the regional Travel Retail channel.
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In 1Q25,
Asia Pacific net revenues of , or$190.2 million 11% of Coty sales, decreased5% on a reported basis driven by declines in Prestige coupled with a1% headwind from the divestiture of the Lacoste license partially offset by a1% benefit from FX. On a LFL basis,Asia Pacific net revenues decreased5% in the first quarter. Reported net revenues declined in the region in both divisions driven by the challenging market dynamics in the Chinese mainland and the regional Travel Retail channel, but these declines were partially offset by reported net revenue growth in otherAsia Pacific markets.
Noteworthy Company Developments
Other noteworthy company developments include:
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On September 12, 2024, Coty announced the opening of the Orveda brand’s first flagship boutique in
the United States , La Maison Orveda New York City. Located on the Upper East Side neighborhood ofManhattan , the stand-alone spa and boutique will showcase the best of the Orveda’s world-renowned facials and skincare as well as high-end fragrances with an immersive room dedicated to the newly launched INFINIMENT COTYPARIS collection. - On September 24, 2024, Coty announced the launch of its first Scientific Advisory Board, which brings together globally renowned scientific experts from diverse technical disciplines, selected for their unique expertise and contribution to cutting-edge research. The Board will convene twice a year to inform and inspire breakthrough innovations within Coty’s R&D specialists, and therefore strengthen Coty’s efforts to shape the future of skincare.
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On November 4, 2024, Coty announced the publication of its FY24 Sustainability Report. The report highlighted key milestones, including Coty achieved a significant
65% reduction in Scope 3 air freight emissions, Coty established ambitious new targets for sustainable packaging and water withdrawal, Coty rejoined the Ellen MacArthur Foundation as a Network member and Coty achieved gender balance in leadership target ahead of its 2025 commitment.
Conference Call
Coty Inc. will issue pre-recorded remarks on November 6, 2024 at approximately 4:45 PM (ET) / 10:45 PM (CET) and will hold a live question and answer session on November 7, 2024 beginning at 10:30 AM (ET) / 4:30 PM (CET). The pre-recorded remarks and live question and answer session will be available at http://investors.coty.com. The dial-in number for the live question and answer session is 1-800-245-3047 in the
About Coty Inc.
Founded in
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, 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 Company’s future operations and strategy (including the expected implementation and related impact of its strategic priorities), ongoing and future cost efficiency, optimization and restructuring initiatives and programs, expectations of the impact of inflationary pressures and the timing, magnitude and impact of pricing actions to offset inflationary costs, strategic transactions (including their expected timing and impact), expectations and/or plans with respect to joint ventures (including Wella and the timing and size of any related divestiture, distribution or return of capital), the Company’s capital allocation strategy and payment of dividends (including suspension of dividend payments and the duration thereof and any plans to resume cash dividends on common stock or to continue to pay dividends in cash on preferred stock and expectations for stock repurchases), investments, licenses and portfolio changes, product launches, relaunches or rebranding (including the expected timing or impact thereof), plans for growth in growth engine markets, channels and other white spaces, synergies, savings, performance, cost, timing and integration of acquisitions, future cash flows, liquidity and borrowing capacity (including any refinancing or deleveraging activities), timing and size of cash outflows and debt deleveraging, the timing and extent of any future impairments, and synergies, savings, impact, cost, timing and implementation of the Company’s ongoing strategic transformation agenda (including operational and organizational structure changes, operational execution and simplification initiatives, fixed cost reductions, continued process improvements and supply chain changes), the impact, cost, timing and implementation of e-commerce and digital initiatives, the expected impact, cost, timing and implementation of sustainability initiatives (including progress, plans, goals and our ability to achieve sustainability targets), the wind down of the Company’s operations in
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the Company’s ability to successfully implement its multi-year strategic transformation agenda and 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 stabilizing its consumer beauty brands through leading innovation and improved execution, accelerating its prestige fragrance brands and ongoing expansion into prestige cosmetics, building a comprehensive skincare portfolio, enhancing its organizational growth capabilities including digital, direct-to-consumer (“DTC”) and research and development, expanding its presence in growth channels, in
China and other growth engine markets, and establishing Coty as an industry leader in sustainability) 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 in the Company's skincare and prestige cosmetics portfolios, any relaunched or rebranded products and the anticipated costs and discounting associated with such relaunches and rebrands, and consumer receptiveness to the Company's current and future marketing philosophy and consumer engagement activities (including digital marketing and media) and the Company's ability to effectively manage its production and inventory levels in response to demand;
- 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, and the fair value of the equity investment;
- the impact of any future impairments;
- 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 transformation agenda, its global business strategies, the integration and management of the Company's strategic partnerships, 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 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 or similar public health events 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 and any change in our stock repurchase plans;
- 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 and Kim 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) and management of the partnerships, the Company's relationships with Kylie Jenner and Kim Kardashian, the Company's ability to protect trademarks and brand names, litigation or investigations by governmental authorities, and changes in law, regulations and policies that affect King Kylie LLC ("King Kylie") and/or KKW 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 King Kylie and/or 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 in the Company's skincare and prestige cosmetics portfolios;
- changes in the demand for the Company’s products due to declining or depressed global or regional economic conditions, and declines in consumer confidence or spending, whether related to the economy (such as austerity measures, tax increases, high fuel costs, or higher unemployment), wars and other hostilities and armed conflicts, natural or other disasters, weather, pandemics, security concerns, terrorist attacks or other factors;
-
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 escalation or expansion thereof, armed conflict in theMiddle East , the outcome ofU.S. elections, changes in theU.S. tax code and/or other jurisdictions where the Company operates (including recent and pending implementation of the global minimum corporate tax (part of the “Pillar Two Model Rules”) that may impact the Company's tax liability in the European Union), and recent changes and future changes in tariffs, retaliatory or trade protection measures, trade policies and other international trade regulations in theU.S. , the European Union andAsia and in other regions where the Company operates, potential regulatory limits on payment terms in the European Union, future changes in sanctions regulations, regulatory uncertainty impacting the wind-down of our business inRussia , recent and future changes in regulations impacting the beauty industry, including regulatory measures addressing products, formulations, raw materials and packaging, and recent and future regulatory measures restricting or otherwise impacting the use of web sites, mobile applications or social media platforms that the Company uses in connection with its digital marketing and e-commerce activities; - currency exchange rate volatility and currency devaluation and/or inflation;
- our ability to implement and maintain pricing actions to effectively mitigate increased costs and inflationary pressures, and the reaction of customers or consumers to such pricing actions;
- 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 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 the Company's joint ventures or strategic partnerships;
- the Company’s ability to manage seasonal factors and other variability and to anticipate future business trends and needs;
- disruptions in the availability and distribution of raw materials and components needed to manufacture the Company's products, and the Company's ability to effectively manage its production and inventory levels in response to supply challenges;
-
disruptions in operations, sales and in other areas, including due to disruptions in our supply chain, restructurings and other business alignment activities, manufacturing or information technology systems, labor disputes, extreme weather and natural disasters, impact from public health events, the outbreak of war or hostilities (including the war in
Ukraine and armed conflict in theMiddle East (including the Red Sea conflict) and any escalation or expansion thereof), the impact of global supply chain challenges or other disruptions in the international flow of goods, 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; - the Company's ability to adapt its business to address climate change concerns, including through the implementation of new or unproven technologies or processes, and to respond to increasing governmental and regulatory measures relating to environmental, social and governance matters, including expanding mandatory and voluntary reporting, diligence and disclosure, as well as new taxes (including on energy and plastic), new diligence requirements and the impact of such measures or processes on its costs, business operations and strategy;
- 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;
- increasing dependency on information technology, including as a result of remote working practices, and the Company’s ability or the ability of any of the third-party service providers the Company uses to support its business, 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 similar state laws, the Brazil General Data Protection Law, and the China Data Security Law and Personal Information 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;
- the distribution and sale by third parties of counterfeit and/or gray market versions of the Company’s products;
- the impact of the Company's ongoing strategic transformation agenda and continued process improvements on the Company’s relationships with key customers and suppliers and certain material contracts;
- the Company’s relationship with JAB Beauty 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
- 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 Annual Report on Form 10-K for the year ended June 30, 2024 and other periodic reports the Company has filed and may file with the SEC from time to time.
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 Net Revenues”.
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 Coty Inc., (as well as adjusted operating income margin and adjusted EBITDA margin, which are calculated by dividing Adjusted operating income from Coty Inc. and Adjusted EBITDA from Coty Inc., respectively, by net revenues) exclude 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 and adjusted EBITDA margin, 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 Coty Inc. and Adjusted net income attributable to Coty Inc. per common share are adjusted for certain interest and other (income) expense and deemed preferred stock dividends, as described below, and the related tax effects of each of the items used to derive Adjusted net income as such charges are not used by our management in assessing our operating performance period-to-period.
Adjusted Performance Measures reflect adjustments based on the following items:
- Costs related to acquisition and divestiture activities: The Company has excluded 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 has excluded the 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, our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of operating performance.
- Asset impairment charges: The Company has excluded 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 supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
- Amortization expense: The Company has 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 supplements 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.
- Gain on sale and early license termination: We have excluded the impact of gain on sale and early license termination as such amounts are inconsistent in amount and frequency and are significantly impacted by the size of the sale and early license termination.
-
Costs related to market exit: We have excluded the impact of direct incremental costs related to our decision to wind down our business operations in
Russia . We believe that these direct and incremental costs are inconsistent and infrequent in nature. Consequently, our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
- Gains on sale of real estate: The Company has excluded the impact of Gains on sale of real estate as such amounts are inconsistent in amount and frequency and are significantly impacted by the size of the sale. Our management believes that the adjustment of these items supplements 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 supplements 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 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 well as expenses related to potential or actual sales transactions reducing equity investments, 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. Such transactions do not reflect our operating results and we have excluded the impact as our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
- 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 noncontrolling 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.
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 reconciliations of: (i) adjusted EBITDA (and adjusted EBITDA margin) and adjusted operating income (and adjusted operating income margin) to net income (and net income margin), and (ii) adjusted segment operating income (and adjusted segment operating income margin) to segment operating income (and segment operating income margin), see the tables entitled “Reconciliation of Reported Net Income (Loss) to Adjusted Operating Income and Adjusted EBITDA” and "Reconciliations of Segment Reported Operating Income (Loss) to Segment Adjusted Operating Income (Loss) and Segment Adjusted EBITDA, respectively." 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 Coty Inc.” For a reconciliation of adjusted net income and adjusted net income margin to net income (and net income margin), 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"), 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.”
We operate on a global basis, with the majority of our net revenues generated outside of the
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 -
COTY INC.
SUPPLEMENTAL SCHEDULES INCLUDING NON-GAAP FINANCIAL MEASURES
FIRST QUARTER BY SEGMENT (COTY INC)
|
|
Three Months Ended September 30, |
|
|
||||||||||||||||||||
|
|
Net Revenues |
|
Change |
Reported Operating Income
|
|
Adjusted Operating Income |
|||||||||||||||||
(in millions) |
|
|
2024 |
|
|
2023 |
|
Reported
|
|
LFL(a) |
|
|
2024 |
|
Change |
|
Margin |
|
|
2024 |
|
Change |
|
Margin |
Prestige |
|
$ |
1,114.1 |
|
$ |
1,064.7 |
|
|
|
|
|
$ |
241.5 |
|
|
|
22 % |
|
$ |
279.7 |
|
|
|
|
Consumer Beauty |
|
|
557.4 |
|
|
576.7 |
|
( |
|
|
|
|
14.0 |
|
( |
|
3 % |
|
|
23.9 |
|
( |
|
|
Corporate |
|
|
— |
|
|
— |
|
N/A |
|
N/A |
|
|
(17.7) |
|
|
|
N/A |
|
|
— |
|
N/A |
|
N/A |
Total |
|
$ |
1,671.5 |
|
$ |
1,641.4 |
|
|
|
|
|
$ |
237.8 |
|
|
|
14 % |
|
$ |
303.6 |
|
|
|
|
(a) |
LFL results for the three months ended September 30, 2024 include |
|
Adjusted EBITDA |
|||||
|
|
Three Months Ended
|
||||
(in millions) |
|
|
2024 |
|
|
2023 |
Prestige |
|
$ |
307.6 |
|
$ |
287.6 |
Consumer Beauty |
|
|
52.5 |
|
|
72.7 |
Corporate |
|
|
— |
|
|
— |
Total |
|
$ |
360.1 |
|
$ |
360.3 |
FIRST QUARTER FISCAL 2025 BY REGION
Coty, Inc.
|
|
Three Months Ended September 30, |
||||||||||
|
|
Net Revenues |
|
Change |
||||||||
(in millions) |
|
|
2024 |
|
|
2023 |
|
Reported
|
|
LFL(a) |
||
|
|
$ |
693.5 |
|
$ |
708.0 |
|
(2 |
)% |
|
4 |
% |
EMEA |
|
|
787.8 |
|
|
732.2 |
|
8 |
% |
|
8 |
% |
|
|
|
190.2 |
|
|
201.2 |
|
(5 |
)% |
|
(5 |
)% |
Total |
|
$ |
1,671.5 |
|
$ |
1,641.4 |
|
2 |
% |
|
4 |
% |
(a) |
Americas LFL results for the three months ended September 30, 2024 include |
COTY INC. & SUBSIDIARIES |
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
|
Three Months Ended
|
||||||
(in millions, except per share data) |
|
2024 |
|
|
|
2023 |
|
Net revenues |
$ |
1,671.5 |
|
|
$ |
1,641.4 |
|
Cost of sales |
|
576.9 |
|
|
|
599.5 |
|
as % of Net revenues |
|
34.5 |
% |
|
|
36.5 |
% |
Gross profit |
|
1,094.6 |
|
|
|
1,041.9 |
|
Gross margin |
|
65.5 |
% |
|
|
63.5 |
% |
|
|
|
|
||||
Selling, general and administrative expenses |
|
808.0 |
|
|
|
767.4 |
|
as % of Net revenues |
|
48.3 |
% |
|
|
46.8 |
% |
Amortization expense |
|
48.1 |
|
|
|
48.6 |
|
Restructuring costs |
|
0.7 |
|
|
|
28.4 |
|
Operating income |
|
237.8 |
|
|
|
197.5 |
|
as % of Net revenues |
|
14.2 |
% |
|
|
12.0 |
% |
Interest expense, net |
|
61.8 |
|
|
|
69.8 |
|
Other expense, net |
|
43.3 |
|
|
|
76.6 |
|
Income before income taxes |
|
132.7 |
|
|
|
51.1 |
|
as % of Net revenues |
|
7.9 |
% |
|
|
3.1 |
% |
Provision for income taxes |
|
42.0 |
|
|
|
40.9 |
|
Net income |
|
90.7 |
|
|
|
10.2 |
|
as % of Net revenues |
|
5.4 |
% |
|
|
0.6 |
% |
Net income attributable to noncontrolling interests |
|
2.1 |
|
|
|
1.1 |
|
Net income attributable to redeemable noncontrolling interests |
|
5.7 |
|
|
|
7.5 |
|
Net income attributable to Coty Inc. |
$ |
82.9 |
|
|
$ |
1.6 |
|
Amounts attributable to Coty Inc. |
|
|
|
||||
Net income |
$ |
82.9 |
|
|
$ |
1.6 |
|
Convertible Series B Preferred Stock dividends |
|
(3.3 |
) |
|
|
(3.3 |
) |
Net (loss) income attributable to common stockholders |
$ |
79.6 |
|
|
$ |
(1.7 |
) |
|
|
|
|
||||
Earnings per common share: |
|
|
|
||||
Basic for Coty Inc. |
$ |
0.09 |
|
|
$ |
— |
|
Diluted for Coty Inc.(a) |
$ |
0.09 |
|
|
$ |
— |
|
Weighted-average common shares outstanding: |
|
|
|
||||
Basic |
|
867.9 |
|
|
|
854.3 |
|
Diluted(a)(b) |
|
875.3 |
|
|
|
854.3 |
|
|
|
|
|
||||
Depreciation - Coty Inc. |
$ |
56.5 |
|
|
$ |
58.1 |
|
(a) |
Diluted EPS is adjusted by the effect of dilutive securities, including awards under the Company's equity compensation plans, the convertible Series B Preferred Stock, and the Forward Repurchase Contracts. When calculating any potential dilutive effect of stock options, Series A Preferred Stock, restricted stock, RSUs and PRSUs, the Company uses the treasury method and the if-converted method for the Convertible Series B Preferred Stock and the Forward Repurchase Contracts. The treasury method typically does not adjust the net income attributable to Coty Inc., while the if-converted method requires an adjustment to reverse the impact of the preferred stock dividends of |
|
|
|
|
(b) |
For the three months ended September 30, 2024, outstanding stock options with rights to purchase 3.5 million shares of Common Stock were anti-dilutive and excluded from the computation of diluted EPS. For the three months ended September 30, 2023, outstanding stock options, Series A Preferred Stock, restricted stock, and RSUs were excluded from the computation of diluted loss per share due to the net loss incurred during the period. |
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 September 30, 2024 |
|||||||||
|
COTY INC. |
|||||||||
(in millions) |
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|||||
Net revenues |
$ |
1,671.5 |
|
|
$ |
— |
|
$ |
1,671.5 |
|
Gross profit |
|
1,094.6 |
|
|
|
— |
|
|
1,094.6 |
|
Gross margin |
|
65.5 |
% |
|
|
|
|
65.5 |
% |
|
Operating income |
|
237.8 |
|
|
|
65.8 |
|
|
303.6 |
|
as % of Net revenues |
|
14.2 |
% |
|
|
|
|
18.2 |
% |
|
Net income attributable to common stockholders |
|
79.6 |
|
|
|
48.5 |
|
|
128.1 |
|
as % of Net revenues |
|
4.8 |
% |
|
|
|
|
7.7 |
% |
|
Adjusted EBITDA |
|
|
|
|
|
360.1 |
|
|||
as % of Net revenues |
|
|
|
|
|
21.5 |
% |
|||
|
|
|
|
|
|
|||||
EPS (diluted) |
$ |
0.09 |
|
|
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|||||
Adjusted diluted EPS includes |
||||||||||
|
|
|
|
|
|
|||||
|
Three Months Ended September 30, 2023 |
|||||||||
|
COTY INC. |
|||||||||
(in millions) |
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|||||
Net revenues |
$ |
1,641.4 |
|
|
$ |
— |
|
$ |
1,641.4 |
|
Gross profit |
|
1,041.9 |
|
|
|
— |
|
|
1,041.9 |
|
Gross margin |
|
63.5 |
% |
|
|
|
|
63.5 |
% |
|
Operating income |
|
197.5 |
|
|
|
104.7 |
|
|
302.2 |
|
as % of Net revenues |
|
12.0 |
% |
|
|
|
|
18.4 |
% |
|
Net (loss) income attributable to common stockholders |
|
(1.7 |
) |
|
|
75.8 |
|
|
74.1 |
|
as % of Net revenues |
|
(0.1 |
%) |
|
|
|
|
4.5 |
% |
|
Adjusted EBITDA |
|
|
|
|
|
360.3 |
|
|||
as % of Net revenues |
|
|
|
|
|
22.0 |
% |
|||
|
|
|
|
|
|
|||||
EPS (diluted) |
$ |
— |
|
|
|
|
$ |
0.09 |
|
|
Adjusted diluted EPS includes |
(a) See “Reconciliation of Reported Net Income, Adjusted Operating Income and Adjusted EBITDA for Coty Inc” and “Reconciliation of Reported Net Income to Adjusted Net Income” for a detailed description of adjusted items. |
RECONCILIATION OF REPORTED NET INCOME TO ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA
COTY INC. |
|
Three Months Ended September 30, |
|||||||||
(in millions) |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
Net income |
|
$ |
90.7 |
|
|
$ |
10.2 |
|
|
> |
|
Net income margin |
|
|
5.4 |
% |
|
|
0.6 |
% |
|
|
|
Provision (benefit) for income taxes |
|
|
42.0 |
|
|
|
40.9 |
|
|
3 |
% |
Income (loss) before income taxes |
|
$ |
132.7 |
|
|
$ |
51.1 |
|
|
> |
|
Interest expense, net |
|
|
61.8 |
|
|
|
69.8 |
|
|
(11 |
%) |
Other income, net |
|
|
43.3 |
|
|
|
76.6 |
|
|
(43 |
%) |
Reported Operating income |
|
$ |
237.8 |
|
|
|
197.5 |
|
|
20 |
% |
Reported operating income (loss) margin |
|
|
14.2 |
% |
|
|
12.0 |
% |
|
|
|
Amortization expense (a) |
|
|
48.1 |
|
|
|
48.6 |
|
|
(1 |
%) |
Restructuring and other business realignment costs (b) |
|
|
0.7 |
|
|
|
27.3 |
|
|
(97 |
%) |
Stock-based compensation |
|
|
17.0 |
|
|
|
29.7 |
|
|
(43 |
%) |
(Gain) on sale of real estate |
|
|
— |
|
|
|
(1.7 |
) |
|
100 |
% |
Early license termination and market exit costs |
|
|
— |
|
|
|
0.8 |
|
|
(100 |
%) |
Total adjustments to reported operating income |
|
|
65.8 |
|
|
|
104.7 |
|
|
(37 |
%) |
Adjusted Operating income |
|
$ |
303.6 |
|
|
$ |
302.2 |
|
|
— |
% |
Adjusted operating income margin |
|
|
18.2 |
% |
|
|
18.4 |
% |
|
|
|
Adjusted depreciation (c) |
|
|
56.5 |
|
|
|
58.1 |
|
|
(3 |
%) |
Adjusted EBITDA |
|
$ |
360.1 |
|
|
$ |
360.3 |
|
|
— |
% |
Adjusted EBITDA margin |
|
|
21.5 |
% |
|
|
22.0 |
% |
|
|
RECONCILIATIONS OF SEGMENT REPORTED OPERATING INCOME (LOSS) TO SEGMENT ADJUSTED OPERATING INCOME (LOSS) AND SEGMENT ADJUSTED EBITDA
OPERATING INCOME, ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA- PRESTIGE SEGMENT
|
Three Months Ended
|
|
|
|||||||
(in millions) |
|
2024 |
|
|
|
2023 |
|
|
Change % |
|
Reported operating income |
$ |
241.5 |
|
|
$ |
221.6 |
|
|
9 |
% |
Reported operating income margin |
|
21.7 |
% |
|
|
20.8 |
% |
|
|
|
Amortization expense |
|
38.2 |
|
|
|
38.7 |
|
|
(1 |
%) |
Total adjustments to reported operating income |
|
38.2 |
|
|
|
38.7 |
|
|
(1 |
%) |
Adjusted operating income |
$ |
279.7 |
|
|
|
260.3 |
|
|
7 |
% |
Adjusted operating income margin |
|
25.1 |
% |
|
|
24.4 |
% |
|
|
|
Adjusted depreciation |
|
27.9 |
|
|
|
27.3 |
|
|
2 |
% |
Adjusted EBITDA |
$ |
307.6 |
|
|
|
287.6 |
|
|
7 |
% |
Adjusted EBITDA margin |
|
27.6 |
% |
|
|
27.0 |
% |
|
|
OPERATING INCOME, ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA- CONSUMER BEAUTY SEGMENT
|
Three Months Ended
|
|
|
|||||||
(in millions) |
|
2024 |
|
|
|
2023 |
|
|
Change % |
|
Reported operating income |
$ |
14.0 |
|
|
$ |
32.0 |
|
|
(56 |
)% |
Reported operating income margin |
|
2.5 |
% |
|
|
5.5 |
% |
|
|
|
Amortization expense |
|
9.9 |
|
|
|
9.9 |
|
|
0 |
% |
Total adjustments to reported operating income |
|
9.9 |
|
|
|
9.9 |
|
|
0 |
% |
Adjusted operating income |
$ |
23.9 |
|
|
|
41.9 |
|
|
(43 |
%) |
Adjusted operating income margin |
|
4.3 |
% |
|
|
7.3 |
% |
|
|
|
Adjusted depreciation |
|
28.6 |
|
|
|
30.8 |
|
|
(7 |
%) |
Adjusted EBITDA |
$ |
52.5 |
|
|
|
72.7 |
|
|
(28 |
%) |
Adjusted EBITDA margin |
|
9.4 |
% |
|
|
12.6 |
% |
|
|
OPERATING LOSS, ADJUSTED OPERATING LOSS AND ADJUSTED EBITDA- CORPORATE SEGMENT
|
Three Months Ended
|
|
|
|||||||
(in millions) |
|
2024 |
|
|
|
2023 |
|
|
Change % |
|
Reported operating loss |
$ |
(17.7 |
) |
|
$ |
(56.1 |
) |
|
68 |
% |
Reported operating income (loss) margin |
|
N/A |
|
|
|
N/A |
|
|
|
|
Restructuring and other business realignment costs |
|
0.7 |
|
|
|
27.3 |
|
|
(97 |
%) |
Stock-based compensation |
|
17.0 |
|
|
|
29.7 |
|
|
(43 |
%) |
Loss on sale of real estate |
$ |
— |
|
|
$ |
(1.7 |
) |
|
100 |
% |
Early license termination and market exit costs |
$ |
— |
|
|
$ |
0.8 |
|
|
(100 |
%) |
Total adjustments to reported operating income |
|
17.7 |
|
|
|
56.1 |
|
|
(68 |
%) |
Adjusted operating loss |
$ |
— |
|
|
$ |
— |
|
|
N/A |
|
Adjusted operating income margin |
|
N/A |
|
|
|
N/A |
|
|
|
|
Adjusted depreciation |
|
— |
|
|
|
— |
|
|
N/A |
|
Adjusted EBITDA |
$ |
— |
|
|
$ |
— |
|
|
N/A |
|
Adjusted EBITDA margin |
|
N/A |
|
|
|
N/A |
|
|
|
RECONCILIATION OF REPORTED INCOME BEFORE INCOME TAXES AND EFFECTIVE TAX RATES TO ADJUSTED INCOME BEFORE INCOME TAXES AND ADJUSTED EFFECTIVE TAX RATES FOR COTY INC.
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||||||
(in millions) |
|
Income
|
|
(Benefit)
|
|
Effective tax
|
|
Income
|
|
Provision
|
|
Effective tax
|
||||||||
Reported Income before income taxes |
|
$ |
132.7 |
|
|
$ |
42.0 |
|
31.7 |
% |
|
$ |
51.1 |
|
|
$ |
40.9 |
|
80.0 |
% |
Adjustments to Reported Operating Income (a) |
|
|
65.8 |
|
|
|
|
|
|
|
104.7 |
|
|
|
|
|
||||
Change in fair value of investment in Wella Business (c) |
|
|
— |
|
|
|
|
|
|
|
(4.0 |
) |
|
|
|
|
||||
Other adjustments (d) |
|
|
(0.3 |
) |
|
|
|
|
|
|
3.9 |
|
|
|
|
|
||||
Total Adjustments (b) |
|
|
65.5 |
|
|
|
15.3 |
|
|
|
|
104.6 |
|
|
|
27.1 |
|
|
||
Adjusted Income before income taxes |
|
$ |
198.2 |
|
|
$ |
57.3 |
|
28.9 |
% |
|
$ |
155.7 |
|
|
$ |
68.0 |
|
43.7 |
% |
The adjusted effective tax rate was
(a) See a description of adjustments under “Reconciliation of Reported Net Income to Adjusted Operating Income and Adjusted EBITDA for Coty Inc. |
(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 unrealized (gain) loss recognized for the change in the fair value of the investment in Wella. |
(d) For the three months ended September 30, 2024, this primarily represents recovery of previously written-off non-income tax credits and the amortization of basis differences in certain equity method investments. For the three months ended September 30, 2023, this primarily represents divestiture-related costs related to our equity investments and the amortization of basis differences in certain equity method investments. |
RECONCILIATION OF REPORTED NET INCOME TO ADJUSTED NET INCOME FOR COTY INC.
|
Three Months Ended September 30, |
|||||||||
(in millions) |
|
2024 |
|
|
|
2023 |
|
|
Change |
|
Net income attributable to Coty Inc. |
$ |
82.9 |
|
|
$ |
1.6 |
|
|
> |
|
Convertible Series B Preferred Stock dividends (c) |
|
(3.3 |
) |
|
|
(3.3 |
) |
|
— |
% |
Reported Net income (loss) attributable to common stockholders |
$ |
79.6 |
|
|
$ |
(1.7 |
) |
|
> |
|
% of Net revenues |
|
4.8 |
% |
|
|
(0.1 |
%) |
|
|
|
Adjustments to Reported Operating income (a) |
|
65.8 |
|
|
|
104.7 |
|
|
(37 |
%) |
Change in fair value of investment in Wella Business (d) |
|
— |
|
|
|
(4.0 |
) |
|
100 |
% |
Adjustments to other expense (e) |
|
(0.3 |
) |
|
|
3.9 |
|
|
<( |
|
Adjustments to noncontrolling interests (b) |
|
(1.7 |
) |
|
|
(1.7 |
) |
|
— |
% |
Change in tax provision due to adjustments to Reported Net income (loss) attributable to Coty Inc. |
|
(15.3 |
) |
|
|
(27.1 |
) |
|
44 |
% |
Adjusted Net income attributable to Coty Inc. |
$ |
128.1 |
|
|
$ |
74.1 |
|
|
73 |
% |
% of Net revenues |
|
7.7 |
% |
|
|
4.5 |
% |
|
|
|
|
|
|
|
|
|
|||||
Per Share Data |
|
|
|
|
|
|||||
Adjusted weighted-average common shares |
|
|
|
|
|
|||||
Basic |
|
867.9 |
|
|
|
854.3 |
|
|
|
|
Diluted (c)(f) |
|
899.0 |
|
|
|
867.3 |
|
|
|
|
Adjusted Net income attributable to Coty Inc. per Common Share |
|
|
|
|
|
|||||
Basic |
$ |
0.15 |
|
|
$ |
0.09 |
|
|
|
|
Diluted (c) |
$ |
0.15 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|||||
|
||||||||||
Adjusted diluted EPS includes |
(a) |
See a description of adjustments under “Net Income, Adjusted Operating Income and Adjusted EBITDA 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) |
Diluted EPS is adjusted by the effect of dilutive securities, including awards under the Company's equity compensation plans, the convertible Series B Preferred Stock and the Forward Repurchase Contracts, if applicable. When calculating any potential dilutive effect of stock options, Series A Preferred Stock, restricted stock, PRSUs and RSUs, the Company uses the treasury method and the if-converted method for the Convertible Series B Preferred Stock and the Forward Repurchase Contracts. The treasury method typically does not adjust the net income attributable to Coty Inc. while the if-converted method requires an adjustment to reverse the impact of the preferred stock dividends and the impact of fair market value (gains)/losses for contracts with the option to settle in shares or cash, if dilutive, on net income applicable to common stockholders during the period. |
|
|
|
|
(d) |
The amount represents the unrealized (gain) loss recognized for the change in the fair value of the investment in Wella Company. |
|
|
|
|
(e) |
For the three months ended September 30, 2024, this primarily represents recovery of previously written-off non-income tax credits and the amortization of basis differences in certain equity method investments. For the three months ended September 30, 2023, this primarily represents divestiture-related costs related to our equity investments and the amortization of basis differences in certain equity method investments. |
|
|
|
|
(f) |
Adjusted Diluted EPS is adjusted by the effect of dilutive securities. For the three months ended September 30, 2024 and 2023, no dilutive shares of the Forward Repurchase Contracts were included in the computation of adjusted diluted EPS as their inclusion would be anti-dilutive. Accordingly, we did not reverse the impact of the fair market value losses/(gains) for contracts with the option to settle in shares or cash of |
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
COTY INC. |
|
Three Months Ended
|
||||||
(in millions) |
|
|
2024 |
|
|
|
2023 |
|
Net cash provided by operating activities |
|
$ |
67.4 |
|
|
$ |
186.2 |
|
Capital expenditures |
|
|
(75.3 |
) |
|
|
(62.2 |
) |
Free cash flow |
|
$ |
(7.9 |
) |
|
$ |
124.0 |
|
RECONCILIATION OF TOTAL DEBT TO FINANCIAL NET DEBT AND ECONOMIC NET DEBT
COTY INC. |
|
As of |
|
(in millions) |
|
September 30, 2024 |
|
Total debt1 |
|
$ |
4,002.2 |
Less: Cash and cash equivalents |
|
|
283.6 |
Financial Net debt |
|
$ |
3,718.6 |
Less: Value of Wella stake |
|
|
1,085.0 |
Economic Net debt |
|
$ |
2,633.6 |
1 Total debt is derived from footnote 9 from the Form 10-Q for the quarter-ended September 30, 2024 and includes both the Company's short-term and long-term debt (including the current portion of long-term debt) |
RECONCILIATION OF TTM(a) NET INCOME TO TTM ADJUSTED EBITDA
|
Three Months Ended |
Twelve months ended |
|||
|
December 31,
|
March 31,
|
June 30,
|
September 30,
|
September 30,
|
(in millions) |
|
|
|
|
|
Net income (loss) from continuing operations |
|
|
|
|
|
Provision (benefit) for income taxes on continuing operations |
|
|
|
|
|
Income (loss) from continuing operations before income taxes |
|
|
|
|
|
Interest expense, net |
|
|
|
|
|
Other (income) expense, net |
|
|
|
|
|
Reported operating income from continuing operations |
|
|
|
|
|
Amortization expense |
|
|
|
|
|
Restructuring and other business realignment costs |
|
|
|
|
|
Stock-based compensation |
|
|
|
|
|
Early license termination and market exit costs |
$— |
|
|
$— |
|
(Gain) Loss on sale of real estate |
|
$— |
$— |
$— |
|
Total adjustments to reported operating loss |
|
|
|
|
|
Adjusted operating income |
|
|
|
|
|
Add: Adjusted depreciation(b) |
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
(a) |
Trailing twelve months (TTM) net income from continuing operations, reported operating income, adjusted operating income, and adjusted EBITDA represents the summation of each of these financial metrics for the quarters ended December 31, 2023, March 31, 2024, June 30, 2024, and September 30, 2024. |
|
|
|
|
(b) |
Adjusted depreciation for the twelve months ended September 30, 2024 represents depreciation expense for Coty Inc for the period, excluding accelerated depreciation. |
COMPARISON OF TOTAL DEBT/NET INCOME FROM CONTINUING OPERATIONS TO FINANCIAL NET DEBT/ADJUSTED EBITDA
|
|
|
Numerator |
||||
|
|
|
Total Debt |
Financial Net Debt(c) |
|||
|
|
|
$ |
4,002.2 |
$ |
3,718.6 |
|
Denominator |
TTM Net income from continuing operations(b) |
$ |
189.9 |
|
21.1 |
N/R(d) |
|
TTM Adjusted EBITDA(a) |
$ |
1,090.9 |
N/R(d) |
|
3.4 |
(a) |
TTM Adjusted EBITDA for the twelve months ended September 30, 2024 represents the summation of Adjusted EBITDA for each of the quarters ended September 30, 2024, June 30, 2024, March 31, 2024, and December 31, 2023. For a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA for each of those periods, see the table entitled "Reconciliation of TTM of Net Income to Adjusted Operating Income to Adjusted EBITDA" for each of those periods. |
|
|
|
|
(b) |
TTM net income from continuing operations for the twelve months ended September 30, 2024 represents the summation of net income from continuing operations for each of the quarters ended September 30, 2024, June 30, 2024, March 31, 2024, and December 31, 2023. |
|
|
|
|
(c) |
Financial Net Debt equals Total Debt minus Cash and cash equivalents as of September 30, 2024. See table titled "Reconciliation of Total Debt to Financial Net Debt and Economic Net Debt". |
|
|
|
|
(d) |
Not relevant. |
RECONCILIATION OF REPORTED NET REVENUES TO LIKE-FOR-LIKE NET REVENUES
|
|
Three Months Ended September 30, 2024 vs. Three Months Ended September 30, 2023
|
||||||||||
Net Revenues Change YoY |
|
Reported Basis |
|
Constant Currency |
|
Impact from
|
|
LFL(b) |
||||
Prestige |
|
5 |
% |
|
5 |
% |
|
(2 |
)% |
|
7 |
% |
Consumer Beauty |
|
(3 |
)% |
|
— |
% |
|
— |
% |
|
— |
% |
Total Continuing Operations |
|
2 |
% |
|
3 |
% |
|
(1 |
)% |
|
4 |
% |
(a) |
The Company had an early license termination with Lacoste and concluded the sell-off period at the end of the second quarter of fiscal 2024. In calculating the QTD YoY LFL revenue change, to maintain comparability, we have excluded the first quarter of fiscal 2024 Lacoste contribution. |
|
|
|
|
(b) |
LFL results for the three months ended September 30, 2024 include |
COTY INC. & SUBSIDIARIES |
||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||
(in millions) |
|
September 30,
|
|
June 30,
|
||
ASSETS |
|
|
|
|
||
Current assets: |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
283.6 |
|
$ |
300.8 |
Restricted cash |
|
|
23.9 |
|
|
19.8 |
Trade receivables, net |
|
|
703.5 |
|
|
441.6 |
Inventories |
|
|
782.5 |
|
|
764.1 |
Prepaid expenses and other current assets |
|
|
440.2 |
|
|
437.2 |
Total current assets |
|
|
2,233.7 |
|
|
1,963.5 |
Property and equipment, net |
|
|
715.6 |
|
|
718.9 |
Goodwill |
|
|
3,983.7 |
|
|
3,905.7 |
Other intangible assets, net |
|
|
3,612.5 |
|
|
3,565.6 |
Equity investments |
|
|
1,089.6 |
|
|
1,090.6 |
Operating lease right-of-use assets |
|
|
264.6 |
|
|
255.3 |
Other noncurrent assets |
|
|
616.3 |
|
|
582.9 |
TOTAL ASSETS |
|
$ |
12,516.0 |
|
$ |
12,082.5 |
|
|
|
|
|
||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||
Current liabilities: |
|
|
|
|
||
Accounts payable |
|
$ |
1,323.3 |
|
$ |
1,405.6 |
Short-term debt and current portion of long-term debt |
|
|
3.3 |
|
|
3.0 |
Other current liabilities |
|
|
1,311.0 |
|
|
1,193.2 |
Total current liabilities |
|
|
2,637.6 |
|
|
2,601.8 |
Long-term debt, net |
|
|
3,934.4 |
|
|
3,841.8 |
Long-term operating lease liabilities |
|
|
223.9 |
|
|
218.7 |
Other noncurrent liabilities |
|
|
1,247.0 |
|
|
1,172.5 |
TOTAL LIABILITIES |
|
|
8,042.9 |
|
|
7,834.8 |
|
|
|
|
|
||
CONVERTIBLE SERIES B PREFERRED STOCK |
|
|
142.4 |
|
|
142.4 |
REDEEMABLE NONCONTROLLING INTERESTS |
|
|
98.8 |
|
|
93.6 |
Total Coty Inc. stockholders’ equity |
|
|
4,045.2 |
|
|
3,827.1 |
Noncontrolling interests |
|
|
186.7 |
|
|
184.6 |
Total equity |
|
|
4,231.9 |
|
|
4,011.7 |
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY |
|
$ |
12,516.0 |
|
$ |
12,082.5 |
COTY INC. & SUBSIDIARIES |
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
|
Three Months Ended
|
||||||
|
|
2024 |
|
|
|
2023 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
||||
Net income |
$ |
90.7 |
|
|
|
10.2 |
|
|
|
|
|
||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
104.6 |
|
|
|
106.8 |
|
Non-cash lease expense |
|
15.6 |
|
|
|
15.8 |
|
Deferred income taxes |
|
19.1 |
|
|
|
22.8 |
|
Provision for bad debts |
|
2.7 |
|
|
|
1.0 |
|
Provision for pension and other post-employment benefits |
|
2.7 |
|
|
|
2.5 |
|
Share-based compensation |
|
17.0 |
|
|
|
29.7 |
|
Other |
|
59.2 |
|
|
|
80.9 |
|
Change in operating assets and liabilities: |
|
|
|
||||
Trade receivables |
|
(251.6 |
) |
|
|
(190.8 |
) |
Inventories |
|
2.5 |
|
|
|
(9.9 |
) |
Prepaid expenses and other current assets |
|
2.1 |
|
|
|
(47.4 |
) |
Accounts payable |
|
(80.5 |
) |
|
|
(22.4 |
) |
Accrued expenses and other current liabilities |
|
80.4 |
|
|
|
183.8 |
|
Operating lease liabilities |
|
(13.6 |
) |
|
|
(16.0 |
) |
Other assets and liabilities, net |
|
16.5 |
|
|
|
19.2 |
|
Net cash provided by operating activities |
|
67.4 |
|
|
|
186.2 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
||||
Capital expenditures |
|
(75.3 |
) |
|
|
(62.2 |
) |
Payment for acquisition of license agreement |
|
(2.0 |
) |
|
|
— |
|
Net cash used in investing activities |
|
(77.3 |
) |
|
|
(62.2 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
||||
Proceeds from revolving loan facilities |
|
319.4 |
|
|
|
834.0 |
|
Repayments of revolving loan facilities |
|
(322.6 |
) |
|
|
(962.0 |
) |
Proceeds from issuance of other long-term debt |
|
— |
|
|
|
1,284.3 |
|
Repayments of term loans and other long term debt |
|
— |
|
|
|
(1,186.6 |
) |
Dividend payments on Common Stock and Convertible Series B Preferred Stock |
|
(3.3 |
) |
|
|
(3.3 |
) |
Net proceeds from (payments of) foreign currency contracts |
|
5.4 |
|
|
|
(4.0 |
) |
Payments related to forward repurchase contracts |
|
(6.7 |
) |
|
|
(3.9 |
) |
Payment of deferred financing fees |
|
(2.0 |
) |
|
|
(36.0 |
) |
All other |
|
(0.6 |
) |
|
|
(1.1 |
) |
Net cash used in financing activities |
|
(10.4 |
) |
|
|
(78.6 |
) |
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
7.2 |
|
|
|
(11.5 |
) |
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
(13.1 |
) |
|
|
33.9 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period |
|
320.6 |
|
|
|
283.8 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period |
$ |
307.5 |
|
|
$ |
317.7 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20241106455962/en/
For more information:
Investor Relations
Olga Levinzon, +1 212 389-7733
olga_levinzon@cotyinc.com
Media
Antonia Werther, +31 621 394495
antonia_werther@cotyinc.com
Source: Coty
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