Coty to Receive an Upsized Shareholder Distribution From Wella of $250M at a Minimum

Rhea-AI Summary

Coty Inc. (NYSE: COTY) announced an expected shareholder distribution of $250 million from its equity stake in Wella, up from a prior estimate of $175 million. This increase follows Wella's refinancing plans. Coty intends to use these proceeds to fully redeem its EUR 550M 2023 unsecured bonds, accelerating its path toward a leverage target of approximately 4x by the end of fiscal year 2022. The company's net debt was $4.45B at the end of fiscal year 2021, with an adjusted EBITDA target of $1B for the current year.

Positive

• Expected shareholder distribution increased to $250 million from $175 million.
• Proceeds will help reduce debt by redeeming EUR 550M unsecured bonds.
• Aiming for a leverage ratio of ~4x by the end of CY22.
• Adjusted EBITDA target of approximately $1B for CY22.

Negative

• None.

Cash Proceeds to be Utilized For Debt Reduction, Accelerating the Progress to Reach its Leverage Target of ~4x Exiting CY22

NEW YORK--(BUSINESS WIRE)-- Coty Inc. (NYSE: COTY) ("Coty" or "the Company") today announced it now expects to receive a shareholder distribution of $250 million at a minimum from its equity stake in Wella, a significant increase from the prior expectation of approximately $175 million. The upsized shareholder distribution is due to Wella finalizing the intended use of proceeds from its recent refinancing. The Company expects to receive this shareholder distribution in the next two months.

As previously announced, Coty intends to utilize this distribution plus excess cash on the balance sheet to redeem its 2023 EUR 550M unsecured bonds in full, following the time that the bond call premium drops to par on April 15^th, 2022, thereby accelerating the Company’s deleveraging trajectory.

Importantly, this distribution represents a strong milestone to reaching Coty’s CY22 leverage ratio target of approximately 4x, as Coty’s net debt declines from the $4.45B exiting CY21 and the Company’s CY22 adjusted EBITDA approaches $1B. Coty continues to target leverage of approximately 2x exiting CY25.

Sue Y. Nabi, Coty’s Chief Executive Officer, stated, “Deleveraging our balance sheet remains a key priority at Coty and a driver of further value expansion. Following our strong deleveraging progress during 2Q22, the expected upsized shareholder distribution from Wella should be a meaningful step in the further reduction of debt.

While we continue to monitor global market conditions, I am very encouraged by our LFL revenue trends quarter-to-date. We remain confident in our guidance for mid teens LFL sales growth in 3Q22, assuming no significant deterioration in the demand backdrop. This is further evidence that our decision to step-up marketing reinvestment in 2Q22 is having the intended effect of accelerating our sales growth, and is an additional proof point of the virtuous cycle we have created.”

About Coty Inc.
Founded in Paris in 1904, Coty is one of the world’s largest beauty companies with a portfolio of iconic brands across fragrance, color cosmetics, and skin and body care. Coty serves consumers around the world, selling prestige and mass market products in more than 130 countries and territories. Coty and our brands empower people to express themselves freely, creating their own visions of beauty; and we are committed to making a positive impact on the planet. Learn more at coty.com or on LinkedIn and Instagram.

Cautionary Note Regarding Forward-looking Statements
The statements contained in this press release include certain “forward-looking statements” within the meaning of the securities laws. These forward-looking statements reflect Coty’s current views with respect to, among other things, its leverage targets and deleveraging plans, as well as its outlook, expected guidance, trends and strategic information. These forward-looking statements are generally identified by words or phrases, such as “anticipate,” “are going to,” “estimate,” “plan,” “project,” “expect,” “believe,” “intend,” “foresee,” “forecast,” “will,” “may,” “should,” “outlook,” “continue,” “target,” “aim,” “potential” and similar words or phrases. These statements are based on certain assumptions and estimates that Coty considers reasonable and are not guarantees of Coty’s future performance, but are subject to a number of risks and uncertainties, many of which are beyond Coty’s control, which could cause actual events or results to differ materially from such statements, including the factors identified in “Risk Factors” included in Coty’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021 and its subsequent quarterly reports on Form 10-Q. All forward-looking statements made in this press release are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this press release, and Coty does not undertake any obligation, other than as may be required by 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220301005695/en/

Investor Relations

Olga Levinzon

212-389-7733

Olga_Levinzon@cotyinc.com

Media

Antonia Werther

+31 621 394495

Antonia_Werther@cotyinc.com

 

Source: Coty Inc.

FAQ

What is the expected shareholder distribution for Coty from Wella?

Coty expects a shareholder distribution of $250 million from its equity stake in Wella.

How will Coty utilize the $250 million distribution?

Coty plans to use the distribution to fully redeem its EUR 550M unsecured bonds.

What is Coty's leverage target for the end of CY22?

Coty aims for a leverage ratio of approximately 4x by the end of fiscal year 2022.

What was Coty's net debt at the end of CY21?

Coty's net debt was $4.45 billion at the end of fiscal year 2021.

What is Coty's adjusted EBITDA target for CY22?

Coty is targeting an adjusted EBITDA of approximately $1 billion for fiscal year 2022.