The Estée Lauder Companies Reports Excellent Fiscal 2022 Results
The Estée Lauder Companies reported a 9% increase in net sales to $17.74 billion for fiscal year ending June 30, 2022. However, diluted EPS dropped to $6.55 from $7.79. Organic net sales grew 8% with significant contributions from the Americas and EMEA, alongside an impressive 30% growth in fragrance sales. Adjusted diluted EPS rose 12% in constant currency to $7.24. Despite a strong year, challenges from COVID-19 and operational disruptions in Asia impacted performance. The company anticipates strong organic sales growth for fiscal 2023.
- Net sales increased 9% to $17.74 billion.
- Organic net sales grew 8%, driven by robust growth in The Americas and EMEA.
- Adjusted diluted EPS rose 12% in constant currency to $7.24.
- Fragrance category saw a 30% sales increase.
- Diluted EPS decreased to $6.55, down 16% from the previous year.
- Net earnings fell to $2.39 billion from $2.87 billion.
- Fourth quarter net sales dropped 10% compared to the prior-year period.
Full Year Net Sales Increased
Organic
Strong Organic Sales Growth Expected in Fiscal 2023
The Company reported net earnings3 of
“La Mer, M·A·C, and
| _________________________________ |
1 Organic net sales represents net sales excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures; as well as the impact of currency translation. We believe that the Non-GAAP measure of organic net sales growth provides year-over-year sales comparisons on a consistent basis. See page 2 for reconciliations to GAAP. |
2 Online sales discussed throughout includes sales of our products from our websites and third-party platforms, as well as estimated sales of our products sold through our retailers’ websites. |
3 Net earnings attributable to |
Freda concluded, “We are very confident in the strength of our Company and in the vibrant long-term growth opportunity of prestige beauty, but recognize the environment remains complex and uncertain at this point in time. For fiscal 2023, we expect to deliver strong organic sales growth, fueled by our diversified growth engines and enticing innovation, and to take the opportunity in this volatile year to continue investing for our exciting future.”
COVID-19 Business Update
The COVID-19 pandemic continued to disrupt the Company’s operating environment globally, primarily impacting supply chain, inventory levels and other logistics during the year ended
Fiscal 2022 Results
Organic net sales growth represents net sales growth excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures (notably the acquisition of the majority interest in
Reconciliation between GAAP and Non-GAAP Net Sales Growth (Unaudited) |
||
|
|
|
|
Year Ended
|
|
As Reported - GAAP(1) |
9 |
% |
|
|
|
Organic, Non-GAAP(2) |
8 |
% |
Impact of acquisitions, divestitures and brand closures, net |
2 |
|
Impact of foreign currency translation |
(1 |
) |
Returns associated with restructuring and other activities |
— |
|
As Reported - GAAP(1) |
9 |
% |
(1)Includes returns associated with restructuring and other activities |
||
(2)Organic net sales growth represents net sales growth excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures (notably DECIEM and BECCA); as well as the impact of currency translation. |
||
Adjusted diluted earnings per common share excludes restructuring and other charges and adjustments as detailed in the following table.
Reconciliation between GAAP and Non-GAAP - Diluted Earnings Per Share (“EPS”)
|
||||||||
|
|
|
|
|||||
|
Year Ended |
|||||||
|
2022 |
2021 |
Growth |
|||||
As Reported EPS - GAAP(1) |
$ |
6.55 |
|
$ |
7.79 |
|
(16 |
)% |
|
|
|
|
|||||
Non-GAAP |
|
|
|
|||||
Restructuring and other charges |
|
.31 |
|
|
.48 |
|
|
|
Changes in fair value of contingent consideration |
|
— |
|
|
(.01 |
) |
|
|
Change in fair value of acquisition-related stock options (less the portion attributable to |
||||||||
redeemable noncontrolling interest) |
|
(.12 |
) |
|
.09 |
|
|
|
|
|
.50 |
|
|
.40 |
|
|
|
Other income |
|
— |
|
|
(2.30 |
) |
|
|
Adjusted EPS - Non-GAAP |
$ |
7.24 |
|
$ |
6.45 |
|
12 |
% |
Impact of foreign currency translation on earnings per share |
|
(.04 |
) |
|
|
|||
Adjusted Constant Currency EPS - Non-GAAP |
$ |
7.20 |
|
|
12 |
% |
||
(1)Includes restructuring and other charges and adjustments |
|
|
|
|||||
Net sales in most of the Company’s product categories and in EMEA were adversely impacted by a stronger
Total reported operating income was
-
Fiscal 2022:
$241 million $144 million $55 million -
Fiscal 2021:
$226 million $117 million $71 million $40 million -
The favorable impact of currency translation of
$21 million
Results by Product Category
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
Year Ended |
|||||||||||||||||
|
|
Percentage Change |
Operating
|
Percentage
|
||||||||||||||
($ in millions) |
2022 |
2021 |
Reported
|
Constant
|
2022 |
2021 |
Reported
|
|||||||||||
|
$ |
9,886 |
|
$ |
9,484 |
|
4 |
% |
4 |
% |
$ |
2,753 |
|
$ |
3,036 |
|
(9 |
)% |
Makeup |
|
4,667 |
|
|
4,203 |
|
11 |
|
12 |
|
|
133 |
|
|
(384 |
) |
100 |
+ |
Fragrance |
|
2,508 |
|
|
1,926 |
|
30 |
|
32 |
|
|
456 |
|
|
215 |
|
100 |
+ |
Hair Care |
|
631 |
|
|
571 |
|
11 |
|
12 |
|
|
(28 |
) |
|
(19 |
) |
(47 |
) |
Other |
|
49 |
|
|
45 |
|
9 |
|
9 |
|
|
— |
|
|
(2 |
) |
100 |
|
Subtotal |
$ |
17,741 |
|
$ |
16,229 |
|
9 |
% |
10 |
% |
$ |
3,314 |
|
$ |
2,846 |
|
16 |
% |
Returns/charges associated with |
||||||||||||||||||
restructuring and other activities |
|
(4 |
) |
|
(14 |
) |
|
|
|
(144 |
) |
|
(228 |
) |
|
|||
Total |
$ |
17,737 |
|
$ |
16,215 |
|
9 |
% |
10 |
% |
$ |
3,170 |
|
$ |
2,618 |
|
21 |
% |
Organic Net Sales Growth - Reconciliation to GAAP
|
||||||||
|
Year Ended |
|||||||
|
Organic
|
Impact of
|
Impact of
|
|
||||
|
— |
% |
4 |
% |
— |
% |
4 |
% |
Makeup |
12 |
|
— |
|
(1 |
) |
11 |
|
Fragrance |
32 |
|
— |
|
(2 |
) |
30 |
|
Hair Care |
12 |
|
— |
|
(1 |
) |
11 |
|
Other |
4 |
|
5 |
|
— |
|
9 |
|
Subtotal |
8 |
% |
2 |
% |
(1 |
)% |
9 |
% |
Returns associated with restructuring and other activities |
|
|
|
— |
|
|||
Total |
8 |
% |
2 |
% |
(1 |
)% |
9 |
% |
(1)Organic net sales growth represents net sales growth excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures (notably DECIEM and BECCA); as well as the impact of currency translation. |
||||||||
-
Skin care net sales grew in The
Americas , which was offset by a decline in the EMEA region. Net sales growth from La Mer, Clinique andBobbi Brown was offset by a decline fromEstée Lauder . High single-digit growth in the first nine months of the fiscal year was offset by the negative impacts from the increased COVID-related restrictions inChina in the fourth quarter, including the temporarily reduced capacity at the Company’s distribution facilities inShanghai , resulting in flat skin care growth for the fiscal year. - The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 4 percentage points to net sales growth.
-
Double-digit growth from La Mer was driven by strength among Chinese consumers in both mainland
China and travel retail. Net sales growth reflected increases in hero products, including Crème de la Mer and the upgrade to The Treatment Lotion. The launch of The Hydrating Infused Emulsion and targeted expanded consumer reach, including the launch on a new online platform in mainlandChina , also contributed to growth. - Clinique net sales growth was driven by strong demand for its hero products, including the Take The Day Off line of products and Even Better Clinical Radical Dark Spot Corrector + Interrupter, as well as the launch of Smart Clinical Repair Wrinkle Correcting Serum.
-
Bobbi Brown delivered strong double-digit skin care net sales growth in every region, led by robust demand from Chinese consumers. Net sales growth reflected increases in hero products, including Soothing Cleansing Oil and Vitamin Enriched Face Base. Successful performance during holiday and key shopping moments, as well as targeted consumer reach also contributed to growth. -
Estée Lauder skin care net sales declined, reflecting challenges in the second half of fiscal 2022 due to the resurgence of COVID-19 cases inAsia that led to increased restrictions.Estée Lauder was disproportionately impacted by the temporarily reduced capacity at the Company’s distribution facilities inShanghai in the fourth quarter. Difficult comparisons to the prior-year launch of the upgradedAdvanced Night Repair Synchronized Multi-Recovery Complex also impacted growth. -
Skin care operating income decreased, primarily from lower net sales related to the resurgence of COVID-19 cases in
Asia in the second half of fiscal 2022, as well as the year-over-year increase of goodwill and other intangible asset impairments of approximately$135 million
Makeup
-
Makeup net sales increased among most brands, reflecting continued recovery in western markets, increased usage occasions and easier comparisons to the prior year. The growth was led by increases from both M·A·C and
Estée Lauder . - M·A·C’s double-digit net sales growth was driven by hero products, such as Studio Fix, the launch of MACStack mascara, and successful social media campaigns to drive the makeup renaissance.
-
Double-digit net sales growth from
Estée Lauder was fueled by the Double Wear and Futurist foundation product lines, as well as the successful launch of Double Wear Sheer Long-Wear Makeup. -
Makeup operating income improved, primarily reflecting higher net sales and the year-over-year reduction of other intangible and long-lived asset impairments of approximately
$63 million
Fragrance
-
Net sales grew across every region and every fragrance brand, led by
Jo Malone London ,Tom Ford Beauty andLe Labo . -
Jo Malone London’s net sales grew strong double digits, primarily driven by strength in colognes, particularly in hero franchises like English Pear & Freesia as well as the launches of
House of Roses and the Blossoms Collection. Bath & Body and Home also delivered strong growth reflecting consumer habits developed during the pandemic. Successful performance during holiday and key shopping moments also contributed to growth. -
Tom Ford Beauty grew strong double digits, reflecting strength in its Signature and Private Blend fragrances, including Black Orchid andOud Wood . The launch of Ombre Leather Parfum also contributed to growth and helped drive the Ombre Leather franchise. -
Net sales from
Le Labo also rose strong double digits with growth in all regions, reflecting the recovery of brick-and-mortar, improved retail traffic, and targeted expanded consumer reach. Growth was driven by hero fragrances, such as Santal 33, as well as the successful launch of Thé Matcha 26. - Fragrance operating income increased, driven primarily by higher net sales, partially offset by strategic investments to support brick-and-mortar reopening.
Hair Care
- Hair care net sales rose across every region, reflecting increases from both Aveda and Bumble and bumble as brick-and-mortar recovered from prior-year closures related to COVID-19 through much of the world.
- Aveda’s growth reflected the continued success of its hero franchises, including Botanical Repair and Nutriplenish, as well as the relaunch of Full Spectrum Semi-Permanent Treatment Hair Color and the launch of Botanical Repair Strengthening Overnight Serum.
- Double-digit net sales growth at Bumble and bumble primarily reflected growth in hero franchises and the launches of Thickening Plumping Mask and Thickening Go Big Plumping Treatment. Targeted expanded consumer reach also contributed to growth.
- Hair care operating results declined reflecting strategic investments to support the brick-and-mortar recovery and targeted expanded consumer reach, partially offset by higher net sales.
Results by (Unaudited) |
||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
Year Ended |
|||||||||||||||||
|
|
Percentage Change |
Operating Income |
Percentage
|
||||||||||||||
($ in millions) |
2022 |
2021 |
Reported
|
Constant
|
2022 |
2021 |
Reported
|
|||||||||||
The |
$ |
4,623 |
|
$ |
3,797 |
|
22 |
% |
21 |
% |
$ |
1,159 |
|
$ |
518 |
|
100 |
+% |
|
|
7,681 |
|
|
6,946 |
|
11 |
|
12 |
|
|
1,360 |
|
|
1,335 |
|
2 |
|
|
|
5,437 |
|
|
5,486 |
|
(1 |
) |
(1 |
) |
|
795 |
|
|
993 |
|
(20 |
) |
Subtotal |
$ |
17,741 |
|
$ |
16,229 |
|
9 |
% |
10 |
% |
$ |
3,314 |
|
$ |
2,846 |
|
16 |
% |
Returns/charges associated with restructuring |
||||||||||||||||||
and other activities |
|
(4 |
) |
|
(14 |
) |
|
|
|
(144 |
) |
|
(228 |
) |
37 |
|
||
Total |
$ |
17,737 |
|
$ |
16,215 |
|
9 |
% |
10 |
% |
$ |
3,170 |
|
$ |
2,618 |
|
21 |
% |
Organic Net Sales Growth - Reconciliation to GAAP (Unaudited) |
||||||||
|
Year Ended 2022 vs. 2021 |
|||||||
|
Organic
|
Impact of
|
Impact of
|
|
||||
The |
16 |
% |
5 |
% |
1 |
% |
22 |
% |
|
10 |
|
2 |
|
(1 |
) |
11 |
|
|
(2 |
) |
1 |
|
— |
|
(1 |
) |
Subtotal |
8 |
% |
2 |
% |
(1 |
)% |
9 |
% |
Returns associated with restructuring and other activities |
|
|
|
— |
|
|||
Total |
8 |
% |
2 |
% |
(1 |
)% |
9 |
% |
(1)Organic net sales growth represents net sales growth excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures (notably DECIEM and BECCA); as well as the impact of currency translation. |
||||||||
The
-
Net sales grew strong double digits in
the United States ,Canada andLatin America as brick-and-mortar retail traffic recovered during the year. Net sales increased in every product category and in nearly every distribution channel. - The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 5 percentage points to net sales growth.
- Brick-and-mortar net sales increased strong double digits, benefiting from the year-over-year increase in open retail locations, as well as improved traffic.
-
In
North America , net sales growth was led by makeup, which was disproportionately impacted by the greater challenges stemming from the COVID-19 pandemic in the prior-year period, as well as continued growth in fragrance. -
In
Latin America , net sales grew in nearly every market and product category. -
Operating income in The
Americas increased, primarily reflecting higher net sales, the year-over-year reduction of goodwill, other intangible and long-lived asset impairments of$129 million
-
Net sales grew in nearly every market, led by the
United Kingdom . The growth reflects strong double-digit recovery in brick-and-mortar compared to the prior year when retail traffic was more negatively impacted by COVID-19. - The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 2 percentage points to net sales growth.
- Net sales from most emerging markets in the region increased double digits, driven by the brick-and-mortar recovery.
- Net sales grew double digits in makeup, fragrance and haircare, partly reflecting the return of more social activities and in-store services.
-
Global travel retail net sales increased year-over-year reflecting continued growth from
Asia/Pacific despite increased travel restrictions beginning inMarch 2022 that particularly impactedHainan . Travel retail net sales also grew from EMEA and TheAmericas driven by increased traffic as COVID-19 restrictions were lifted. - Operating income increased, reflecting brick-and-mortar recovery, partially offset by an increase in the intercompany royalty expense related to the growth in our travel retail business.
-
Net sales declined slightly, reflecting variability in recovery and COVID restrictions across the region. Net sales growth in more than half of the markets in the region was offset by increased COVID-19 restrictions during the second half of fiscal 2022. Mid-single-digit growth in the first nine months of the fiscal year was offset by the negative impacts from the increased COVID-related restrictions in
China in the fourth quarter, including the temporarily reduced capacity at the Company’s distribution facilities inShanghai , resulting in a modest decline inAsia/Pacific growth for the fiscal year. - The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 1 percentage point to net sales growth.
- Net sales declines in makeup and skin care were only partly offset by net sales growth from fragrance and hair care in the region.
- Net sales declined in brick-and-mortar due to soft traffic in areas most impacted by rising cases of COVID-19. Strong double-digit online growth partly offset the decline in brick-and-mortar as the Company and many retailers continued to capture consumer demand online.
-
In mainland
China , net sales was close to flat year-over-year as the impact from the rise in COVID-19 restrictions was mostly offset by very strong growth in the first half of fiscal 2022. Net sales benefited from successful programs during key shopping events, including the 11.11 Global Shopping Festival and the 6.18 Mid-Year Shopping Festival, where the Estée Lauder brand was ranked the #1 prestige beauty flagship store on both Tmall and JD. -
Operating income decreased, due entirely to the fiscal 2022 other intangible asset impairment of
$230 million
Cash Flows
-
For the twelve months ended
June 30, 2022 , net cash flows provided by operating activities were$3.04 billion $3.63 billion -
Capital Expenditures increased to
$1.04 billion $0.64 billion Japan , online capabilities, the Company’s freestanding stores and counters at retailers to support new and existing distribution and information technology enhancements as well as investments to support the reopening of the Company’s offices located around the world, which were previously closed due to COVID-19. -
The Company ended the year with
$3.96 billion $3.15 billion
Fourth Quarter Results
-
For the three months ended
June 30, 2022 , the Company reported net sales of$3.56 billion 10% decrease compared with$3.94 billion 8% . -
Strong growth in The
Americas where improved foot traffic in brick-and-mortar drove net sales growth in every category was more than offset by the negative impacts from the increased COVID-related restrictions inChina that affected travel and retail traffic as well as temporarily reducing capacity at the Company’sShanghai distribution facilities. In addition, the Company suspended commercial activities inRussia andUkraine after the invasion ofUkraine . As a result, net sales declined in bothAsia/Pacific and EMEA. -
Net earnings4 were
$52 million $.14 . In the prior-year quarter, the Company reported net earnings4 of$1.02 billion $2.76 -
During the three-months ended
June 30, 2022 , the Company recorded restructuring and other charges, other intangible asset impairments, and expense relating to the change in fair value of acquisition-related stock options that, combined, resulted in an unfavorable impact of$128 million $101 million $.28 per diluted share, as detailed on page 18. The prior-year period results include restructuring and other charges, changes in contingent consideration, goodwill, other intangible and long-lived asset impairments, acquisition-related stock option expense (less the portion attributable to redeemable noncontrolling interest), and other income primarily related to a gain on a previously held equity investment in DECIEM that, combined, resulted in a favorable impact of$696 million $731 million $1.98 -
Excluding restructuring and other charges and adjustments referred to in the previous bullet, adjusted diluted net earnings per common share for the three months ended
June 30, 2022 was$.42 , a decrease from adjusted diluted net earnings per common share of$.78 in the three months endedJune 30, 2021 . Adjusted diluted net earnings per common share was$.43 in constant currency.
| _________________________________ |
4 Net earnings attributable to |
Outlook for Fiscal 2023 First Quarter and Full Year
The Company enters the fiscal year during a volatile period of record inflation, supply chain disruptions, strengthening
The full year outlook reflects the following assumptions and expectations:
- More balanced growth across categories, regions and channels as the impacts of COVID-19 restrictions begin to abate.
- Targeted expanded distribution throughout the year to retailers that provide broader consumer reach.
-
A continued gradual resumption of global international travel, including to
Hainan . - Inflationary pressures, including higher transportation and logistics costs, are negatively impacting both cost of sales and operating expenses in fiscal 2023. The Company expects to mitigate most of the impact to its business and costs through strategic price increases, mix optimization and cost savings in other areas.
- Incremental savings from the Post-COVID Business Acceleration Program and reinvestment in advertising and capabilities.
-
Full-year effective tax rate of approximately
23% . -
Net cash flows provided by operating activities are forecast to be between
$3.1 billion $3.2 billion 6.5% of projected sales to support the continued build out of the manufacturing facility inJapan and continued investment in customer facing capital including counters and online technologies.
The Company is mindful of ongoing risks related to the COVID-19 pandemic as well as risks related to the effects of the global macro environment, including the risk of recession; currency volatility; increasing inflationary pressures; supply chain disruptions; social and political issues; regulatory matters, including the imposition of tariffs and sanctions; geopolitical tensions; and global security issues. The Company is also mindful of inflationary pressures on our cost base and is monitoring the impact on consumer preferences.
Full Year Fiscal 2023
Sales Outlook
-
Reported net sales are forecasted to increase between
3% and5% versus the prior-year period. This range includes:-
The negative impact of
1% from the termination of the Company’s license agreements for the Donna Karan New York,DKNY ,Michael Kors ,Tommy Hilfiger and Ermenegildo Zegna product lines effectiveJune 30, 2022 . -
A negative impact of
1% related toRussia andUkraine . -
A negative
3% due to foreign currency translation, as well as an additional1% due to certain impacts of foreign currency transactions in key international travel retail markets.
-
The negative impact of
-
Organic net sales, which excludes returns associated with restructuring and other activities; non-comparable impacts from acquisitions, divestitures and brand closures; as well as the impact of currency translation, are forecasted to increase between
7% and9% . This includes the negative impacts related toRussia andUkraine , as well as foreign currency transactions, noted above.
Earnings per Share Outlook
-
Reported diluted net earnings per common share are projected to be between
$7.11 $7.33 $7.39 $7.54 -
Adjusted diluted earnings per common share are expected to increase between
5% and7% on a constant currency basis. Currency exchange rates are volatile and difficult to predict. UsingJuly 31, 2022 spot rates for fiscal 2023:-
The negative currency impact equates to about
$.20 of diluted earnings per share. -
The impact from certain foreign currency transactions in key international travel retail markets is expected to negatively impact adjusted diluted earnings per common share growth by
6% .
-
The negative currency impact equates to about
First Quarter Fiscal 2023
Sales Outlook
-
Reported net sales are forecasted to decrease between
10% and8% versus the prior-year period. This range includes the negative impacts from the termination of the Company’s license agreements for the Donna Karan New York,DKNY ,Michael Kors ,Tommy Hilfiger and Ermenegildo Zegna product lines effectiveJune 30, 2022 , the negative impact related toRussia andUkraine , and the negative impact from foreign currency translation, as well as certain impacts of foreign currency transactions in key international travel retail markets. -
Organic net sales, which excludes returns associated with restructuring and other activities; non-comparable impacts from acquisitions, divestitures and brand closures; as well as the impact of currency translation, are forecasted to decrease between
6% and4% . This includes the negative impacts related toRussia andUkraine , as well as foreign currency transactions, noted above.
Earnings per Share Outlook
-
Reported diluted net earnings per common share are projected to be between
$1.16 $1.28 $1.22 $1.32 -
Adjusted diluted earnings per common share are expected to decrease between
34% and28% on a constant currency basis. Currency exchange rates are volatile and difficult to predict. UsingJuly 31, 2022 spot rates for the first quarter of fiscal 2023:-
The negative currency impact equates to about
$.04 of diluted earnings per share. -
The impact from certain foreign currency transactions in key international travel retail markets is expected to negatively impact adjusted diluted earnings per common share growth by
5% .
-
The negative currency impact equates to about
Reconciliation between GAAP and Non-GAAP - Net Sales Growth
|
||||
|
|
|
||
|
Three Months Ending |
Twelve Months Ending |
||
|
|
|
||
As Reported - GAAP(1) |
( |
%) |
|
% |
|
|
|
||
Organic, Non-GAAP(2) |
( |
%) |
|
% |
Impact of acquisitions, divestitures and brand closures |
(1 |
) |
(1 |
) |
Impact of foreign currency translation |
(3 |
) |
(3 |
) |
Returns associated with restructuring and other activities |
— |
|
— |
|
As Reported - GAAP(1) |
( |
%) |
|
% |
(1)Includes returns associated with restructuring and other activities |
||||
(2)Organic net sales growth represents net sales growth excluding returns associated with restructuring and other activities; non-comparable impacts of already announced acquisitions, divestitures and brand closures (i.e., certain of your designer fragrances); as well as the impact of currency translation. |
||||
(F)Represents forecast |
||||
Reconciliation between GAAP and Non-GAAP - Diluted Earnings Per Share (“EPS”)
(Unaudited) |
|||||||||
|
|
|
|
|
|
|
|||
|
Three Months Ending |
Twelve Months Ending |
|||||||
|
|
|
|
|
|||||
|
2022(F) |
2021 |
Growth |
2023(F) |
2022 |
Variance |
|||
Forecasted/As Reported EPS - GAAP(1) |
|
$ |
1.88 |
( |
|
$ |
6.55 |
|
|
|
|
|
|
|
|
|
|||
Non-GAAP |
|
|
|
|
|
|
|||
Restructuring and other charges |
.04 - .06 |
|
.01 |
|
.21 - .28 |
|
.31 |
|
|
Change in fair value of acquisition-related |
|
|
|
|
|||||
stock options (less the portion attributable to |
|
|
|
|
|||||
redeemable noncontrolling interest) |
— |
|
— |
|
— |
|
(.12 |
) |
|
Other intangible and long-lived asset impairments |
— |
|
— |
|
— |
|
.50 |
|
|
Forecasted/Adjusted EPS - Non-GAAP |
|
$ |
1.89 |
( |
|
$ |
7.24 |
|
|
Impact of foreign currency translation |
.04 |
|
|
.20 |
|
|
|||
Forecasted Adjusted Constant Currency EPS - |
|
|
|
|
|||||
Non-GAAP |
|
|
( |
|
|
|
|||
(1)Includes restructuring and other charges and adjustments |
|||||||||
(F)Represents forecast |
|||||||||
Conference Call
Cautionary Note Regarding Forward-Looking Statements
Statements in this press release, in particular those in “Outlook,” as well as remarks by the CEO and other members of management, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may address our expectations regarding sales, earnings or other future financial performance and liquidity, other performance measures, product introductions, entry into new geographic regions, information technology initiatives, new methods of sale, our long-term strategy, restructuring and other charges and resulting cost savings, and future operations or operating results. These statements may contain words like “expect,” “will,” “will likely result,” “would,” “believe,” “estimate,” “planned,” “plans,” “intends,” “may,” “should,” “could,” “anticipate,” “estimate,” “project,” “projected,” “forecast,” and “forecasted” or similar expressions.
Factors that could cause actual results to differ materially from our forward-looking statements include the following:
(1) |
|
increased competitive activity from companies in the skin care, makeup, fragrance and hair care businesses; |
(2) |
|
the Company’s ability to develop, produce and market new products on which future operating results may depend and to successfully address challenges in the Company’s business; |
(3) |
|
consolidations, restructurings, bankruptcies and reorganizations in the retail industry causing a decrease in the number of stores that sell the Company’s products, an increase in the ownership concentration within the retail industry, ownership of retailers by the Company’s competitors or ownership of competitors by the Company’s customers that are retailers and our inability to collect receivables; |
(4) |
|
destocking and tighter working capital management by retailers; |
(5) |
|
the success, or changes in timing or scope, of new product launches and the success, or changes in timing or scope, of advertising, sampling and merchandising programs; |
(6) |
|
shifts in the preferences of consumers as to where and how they shop; |
(7) |
|
social, political and economic risks to the Company’s foreign or domestic manufacturing, distribution and retail operations, including changes in foreign investment and trade policies and regulations of the host countries and of |
(8) |
|
changes in the laws, regulations and policies (including the interpretations and enforcement thereof) that affect, or will affect, the Company’s business, including those relating to its products or distribution networks, changes in accounting standards, tax laws and regulations, environmental or climate change laws, regulations or accords, trade rules and customs regulations, and the outcome and expense of legal or regulatory proceedings, and any action the Company may take as a result; |
(9) |
|
foreign currency fluctuations affecting the Company’s results of operations and the value of its foreign assets, the relative prices at which the Company and its foreign competitors sell products in the same markets and the Company’s operating and manufacturing costs outside of |
(10) |
|
changes in global or local conditions, including those due to volatility in the global credit and equity markets, natural or man-made disasters, real or perceived epidemics, supply chain challenges, inflation, or increased energy costs, that could affect consumer purchasing, the willingness or ability of consumers to travel and/or purchase the Company’s products while traveling, the financial strength of the Company’s customers, suppliers or other contract counterparties, the Company’s operations, the cost and availability of capital which the Company may need for new equipment, facilities or acquisitions, the returns that the Company is able to generate on its pension assets and the resulting impact on funding obligations, the cost and availability of raw materials and the assumptions underlying the Company’s critical accounting estimates; |
(11) |
|
impacts attributable to the COVID-19 pandemic, including disruptions to our global business; |
(12) |
|
shipment delays, commodity pricing, depletion of inventory and increased production costs resulting from disruptions of operations at any of the facilities that manufacture the Company’s products or at the Company’s distribution or inventory centers, including disruptions that may be caused by the implementation of information technology initiatives, or by restructurings; |
(13) |
|
real estate rates and availability, which may affect the Company’s ability to increase or maintain the number of retail locations at which the Company sells its products and the costs associated with the Company’s other facilities; |
(14) |
|
changes in product mix to products which are less profitable; |
(15) |
|
the Company’s ability to acquire, develop or implement new information and distribution technologies and initiatives on a timely basis and within the Company’s cost estimates and the Company’s ability to maintain continuous operations of such systems and the security of data and other information that may be stored in such systems or other systems or media; |
(16) |
|
the Company’s ability to capitalize on opportunities for improved efficiency, such as publicly-announced strategies and restructuring and cost-savings initiatives, and to integrate acquired businesses and realize value therefrom; |
(17) |
|
consequences attributable to local or international conflicts around the world, as well as from any terrorist action, retaliation and the threat of further action or retaliation; |
(18) |
|
the timing and impact of acquisitions, investments and divestitures; and |
(19) |
|
additional factors as described in the Company’s filings with the |
|
||
| The Company assumes no responsibility to update forward-looking statements made herein or otherwise. | ||
ELC-F
ELC-E
CONSOLIDATED STATEMENT OF EARNINGS
|
|||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||
|
Three Months Ended
|
Percentage
|
|
Year Ended
|
Percentage
|
||||||||||||
($ in millions, except per share data) |
2022 |
2021 |
|
2022 |
2021 |
||||||||||||
Net sales(A) |
$ |
3,561 |
|
$ |
3,936 |
|
(10 |
)% |
|
$ |
17,737 |
|
$ |
16,215 |
|
9 |
% |
Cost of sales(A) |
|
1,031 |
|
|
986 |
|
5 |
|
|
|
4,305 |
|
|
3,834 |
|
12 |
|
Gross profit |
|
2,530 |
|
|
2,950 |
|
(14 |
) |
|
|
13,432 |
|
|
12,381 |
|
8 |
|
Gross margin |
|
71.0 |
% |
|
74.9 |
% |
|
|
|
75.7 |
% |
|
76.4 |
% |
|
||
|
|
|
|
|
|
|
|
||||||||||
Operating expenses |
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative(B) |
|
2,334 |
|
|
2,610 |
|
(11 |
) |
|
|
9,888 |
|
|
9,371 |
|
6 |
|
Restructuring and other charges(A) |
|
92 |
|
|
32 |
|
100 |
+ |
|
|
133 |
|
|
204 |
|
(35 |
) |
|
|
— |
|
|
— |
|
— |
|
|
|
— |
|
|
54 |
|
(100 |
) |
Impairment of other intangible and long-lived assets(C) |
|
25 |
|
|
74 |
|
(66 |
) |
|
|
241 |
|
|
134 |
|
80 |
|
Total operating expenses |
|
2,451 |
|
|
2,716 |
|
(10 |
) |
|
|
10,262 |
|
|
9,763 |
|
5 |
|
Operating expense margin |
|
68.8 |
% |
|
69.0 |
% |
|
|
|
57.9 |
% |
|
60.2 |
% |
|
||
|
|
|
|
|
|
|
|
||||||||||
Operating income |
|
79 |
|
|
234 |
|
(66 |
) |
|
|
3,170 |
|
|
2,618 |
|
21 |
|
Operating income margin |
|
2.2 |
% |
|
5.9 |
% |
|
|
|
17.9 |
% |
|
16.1 |
% |
|
||
|
|
|
|
|
|
|
|
||||||||||
Interest expense |
|
42 |
|
|
42 |
|
— |
|
|
|
167 |
|
|
173 |
|
(3 |
) |
Interest income and investment income, net |
|
11 |
|
|
11 |
|
— |
|
|
|
30 |
|
|
51 |
|
(41 |
) |
Other components of net periodic benefit cost |
|
— |
|
|
— |
|
— |
|
|
|
(2 |
) |
|
12 |
|
(100 |
+) |
Other income(D) |
|
— |
|
|
847 |
|
(100 |
) |
|
|
1 |
|
|
847 |
|
(100 |
) |
Earnings before income taxes |
|
48 |
|
|
1,050 |
|
(95 |
) |
|
|
3,036 |
|
|
3,331 |
|
(9 |
) |
Provision for income taxes |
|
(2 |
) |
|
35 |
|
(100 |
+) |
|
|
628 |
|
|
456 |
|
38 |
|
Net earnings |
|
50 |
|
|
1,015 |
|
(95 |
) |
|
|
2,408 |
|
|
2,875 |
|
(16 |
) |
Net earnings(loss) attributable to noncontrolling interests |
|
1 |
|
|
(4 |
) |
100 |
+ |
|
|
(7 |
) |
|
(12 |
) |
42 |
|
Net earnings(loss) attributable to redeemable |
|
|
|||||||||||||||
noncontrolling interest |
|
1 |
|
|
7 |
|
(86 |
) |
|
|
(11 |
) |
|
7 |
|
(100 |
+) |
Net earnings attributable to The |
|
|
|||||||||||||||
|
$ |
52 |
|
$ |
1,018 |
|
(95 |
)% |
|
$ |
2,390 |
|
$ |
2,870 |
|
(17 |
)% |
|
|
|
|
|
|
|
|
||||||||||
Net earnings attributable to The |
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||||
Basic |
$ |
.15 |
|
$ |
2.81 |
|
(95 |
)% |
|
$ |
6.64 |
|
$ |
7.91 |
|
(16 |
)% |
Diluted |
$ |
.14 |
|
$ |
2.76 |
|
(95 |
)% |
|
$ |
6.55 |
|
$ |
7.79 |
|
(16 |
)% |
|
|
|
|
|
|
|
|
||||||||||
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
||||||||||
Basic |
|
358.0 |
|
|
362.9 |
|
|
|
|
360.0 |
|
|
362.9 |
|
|
||
Diluted |
|
361.6 |
|
|
368.5 |
|
|
|
|
364.9 |
|
|
368.2 |
|
|
||
|
|
|
|
|
|
|
|
||||||||||
(A)In
The Company substantially completed initiatives approved under the Leading Beauty Program (the “LBF Program”) through fiscal 2021. Additional information about the LBF Program is included in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended |
||||
|
|
|
|
|
(B)For the three and twelve months ended
The Company recorded |
||||
|
||||
(C)During the fiscal 2022 third quarter, given the lower-than-expected results from international expansion to areas that continue to be impacted by COVID-19, the Company made revisions to the internal forecasts relating to its GLAMGLOW reporting unit. The Company concluded that the changes in circumstances in the reporting unit triggered the need for an interim impairment review of its trademark intangible asset.
During the fiscal 2022 third quarter, given the lower-than-expected growth within key geographic regions and channels for Dr.Jart+ that continue to be impacted by the spread of COVID-19 variants and resurgence in cases and the potential future impacts relating to the uncertainty of the duration and severity of COVID-19 impacting the financial performance of the brand, the lower than expected growth in key retail channels for DECIEM, and the lower than expected results from international expansion to areas that continue to be impacted by COVID-19 for Too Faced, the Company made revisions to the internal forecasts relating to its Dr.Jart+, DECIEM and Too Faced reporting units.
The Company concluded that the changes in circumstances in the reporting units triggered the need for interim impairment reviews of their trademarks and goodwill. These changes in circumstances were also an indicator that the carrying amounts of Dr.Jart+’s, DECIEM’s and Too Faced’s long-lived assets, including customer lists, may not be recoverable. Accordingly, the Company performed interim impairment tests for the trademarks and a recoverability test for the long-lived assets as of
During the fiscal 2022 fourth quarter, based on the Company’s annual goodwill and other indefinite-lived intangible asset impairment testing as of
The total other intangible asset impairment charges recorded for the twelve months ended |
||||
During
During the fiscal 2021 fourth quarter, based on the Company’s annual goodwill and other indefinite-lived intangible asset impairment testing as of
The total goodwill and other intangible asset impairment charges recorded for the twelve months ended
During
During the fiscal 2021 fourth quarter, the Company also recognized
The total long-lived asset impairment charges recognized for the twelve months ended |
||||
For the three and twelve months ended |
||||
|
||||
(D)In conjunction with the increased investment in DECIEM in |
||||
Returns and Charges Associated With Restructuring and Other Activities and Other Adjustments
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
|
Three Months Ended |
||||||||||||||||||
|
Sales
|
Cost of
|
Operating Expenses |
Total |
After
|
Diluted
|
|||||||||||||
(In millions, except per share data) |
Restructuring
|
Other Charges/
|
|||||||||||||||||
Leading |
$ |
— |
$ |
— |
$ |
1 |
|
$ |
3 |
|
$ |
4 |
|
$ |
3 |
|
$ |
.01 |
|
PCBA Program |
|
1 |
|
7 |
|
85 |
|
|
3 |
|
|
96 |
|
|
76 |
|
|
.21 |
|
Change in fair value of acquisition-related stock |
|||||||||||||||||||
options |
|
|
|
|
3 |
|
|
3 |
|
|
3 |
|
|
.01 |
|
||||
Other intangible asset impairments |
|
|
|
|
25 |
|
|
25 |
|
|
19 |
|
|
.05 |
|
||||
Total |
$ |
1 |
$ |
7 |
$ |
86 |
|
$ |
34 |
|
$ |
128 |
|
$ |
101 |
|
$ |
.28 |
|
|
|
|
|
|
|
|
|
||||||||||||
|
Year Ended |
||||||||||||||||||
|
Sales
|
Cost of
|
Operating Expenses |
Total |
After
|
Diluted
|
|||||||||||||
(In millions, except per share data) |
Restructuring
|
Other Charges/
|
|||||||||||||||||
Leading |
$ |
— |
$ |
2 |
$ |
(1 |
) |
$ |
16 |
|
$ |
17 |
|
$ |
13 |
|
$ |
.04 |
|
PCBA Program |
|
4 |
|
5 |
|
109 |
|
|
9 |
|
|
127 |
|
|
100 |
|
|
.27 |
|
Change in fair value of acquisition-related stock |
|||||||||||||||||||
options |
|
|
|
|
(55 |
) |
|
(55 |
) |
|
(43 |
) |
|
(.12 |
) |
||||
Other intangible asset impairments |
|
|
|
|
241 |
|
|
241 |
|
|
183 |
|
|
.50 |
|
||||
Other income |
|
|
|
|
(1 |
) |
|
(1 |
) |
|
(1 |
) |
|
— |
|
||||
Total |
$ |
4 |
$ |
7 |
$ |
108 |
|
$ |
210 |
|
$ |
329 |
|
$ |
252 |
|
$ |
.69 |
|
|
|
|
|
|
|
|
|
||||||||||||
|
Three Months Ended |
|||||||||||||||||||
|
Sales
|
Cost of
|
Operating Expenses |
Total |
After
|
Diluted
|
||||||||||||||
(In millions, except per share data) |
Restructuring
|
Other Charges/
|
||||||||||||||||||
Leading |
$ |
— |
$ |
4 |
|
$ |
(8 |
) |
$ |
5 |
|
$ |
1 |
|
$ |
1 |
|
$ |
— |
|
PCBA Program |
|
4 |
|
(3 |
) |
|
34 |
|
|
1 |
|
|
36 |
|
|
26 |
|
|
.07 |
|
Changes in fair value of contingent consideration |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|||||
Acquisition-related stock option expense |
|
|
|
|
40 |
|
|
40 |
|
|
31 |
|
|
.09 |
|
|||||
|
||||||||||||||||||||
impairments |
|
|
|
|
74 |
|
|
74 |
|
|
58 |
|
|
.16 |
|
|||||
Other income |
|
|
|
|
(847 |
) |
|
(847 |
) |
|
(847 |
) |
|
(2.30 |
) |
|||||
Total |
$ |
4 |
$ |
1 |
|
$ |
26 |
|
$ |
(727 |
) |
$ |
(696 |
) |
$ |
(731 |
) |
$ |
(1.98 |
) |
|
|
|
|
|
|
|
|
|||||||||||||
|
Year Ended |
|||||||||||||||||||
|
Sales
|
Cost of
|
Operating Expenses |
Total |
After
|
Diluted
|
||||||||||||||
(In millions, except per share data) |
Restructuring
|
Other Charges/
|
||||||||||||||||||
Leading |
$ |
— |
$ |
8 |
|
$ |
(15 |
) |
$ |
14 |
|
$ |
7 |
|
$ |
6 |
|
$ |
.02 |
|
PCBA Program |
|
14 |
|
2 |
|
|
201 |
|
|
4 |
|
|
221 |
|
|
170 |
|
|
.46 |
|
Changes in fair value of contingent consideration |
|
|
|
|
(2 |
) |
|
(2 |
) |
|
(2 |
) |
|
(.01 |
) |
|||||
Acquisition-related stock option expense |
|
|
|
|
40 |
|
|
40 |
|
|
31 |
|
|
.09 |
|
|||||
|
||||||||||||||||||||
impairments |
|
|
|
|
188 |
|
|
188 |
|
|
148 |
|
|
.40 |
|
|||||
Other income |
|
|
|
|
(847 |
) |
|
(847 |
) |
|
(847 |
) |
|
(2.30 |
) |
|||||
Total |
$ |
14 |
$ |
10 |
|
$ |
186 |
|
$ |
(603 |
) |
$ |
(393 |
) |
$ |
(494 |
) |
$ |
(1.34 |
) |
Results by Product Category
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
Three Months Ended |
|||||||||||||||||
|
|
Percentage Change |
Operating Income
|
Percentage
|
||||||||||||||
($ in millions) |
2022 |
2021 |
Reported
|
Constant
|
2022 |
2021 |
Reported
|
|||||||||||
|
$ |
1,883 |
|
$ |
2,371 |
|
(21 |
)% |
(18 |
)% |
$ |
287 |
|
$ |
583 |
|
(51 |
)% |
Makeup |
|
993 |
|
|
960 |
|
3 |
|
7 |
|
|
(95 |
) |
|
(269 |
) |
65 |
|
Fragrance |
|
521 |
|
|
448 |
|
16 |
|
22 |
|
|
10 |
|
|
(33 |
) |
100 |
+ |
Hair Care |
|
156 |
|
|
153 |
|
2 |
|
5 |
|
|
(20 |
) |
|
(9 |
) |
(100 |
+) |
Other |
|
9 |
|
|
8 |
|
13 |
|
13 |
|
|
(3 |
) |
|
(1 |
) |
(100 |
+) |
Subtotal |
$ |
3,562 |
|
$ |
3,940 |
|
(10 |
)% |
(7 |
)% |
$ |
179 |
|
$ |
271 |
|
(34 |
)% |
Returns/charges associated with |
|
|||||||||||||||||
restructuring and other activities |
|
(1 |
) |
|
(4 |
) |
|
|
|
(100 |
) |
|
(37 |
) |
|
|||
Total |
$ |
3,561 |
|
$ |
3,936 |
|
(10 |
)% |
(7 |
)% |
$ |
79 |
|
$ |
234 |
|
(66 |
)% |
Organic Net Sales Growth - Reconciliation to GAAP
|
||||||||
|
Three Months Ended June
|
|||||||
|
Organic
|
Impact of
|
Impact of
|
|
||||
|
(21 |
)% |
3 |
% |
(3 |
)% |
(21 |
)% |
Makeup |
8 |
|
(1 |
) |
(4 |
) |
3 |
|
Fragrance |
22 |
|
— |
|
(6 |
) |
16 |
|
Hair Care |
5 |
|
— |
|
(3 |
) |
2 |
|
Other |
13 |
|
— |
|
— |
|
13 |
|
Subtotal |
(8 |
)% |
1 |
% |
(3 |
)% |
(10 |
)% |
Returns associated with restructuring and other activities |
|
|
|
— |
|
|||
Total |
(8 |
)% |
1 |
% |
(3 |
)% |
(10 |
)% |
(1)Organic net sales growth represents net sales growth excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures (notably DECIEM and BECCA); as well as the impact of currency translation. |
||||||||
Results by |
||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
Three Months Ended |
|||||||||||||||||
|
|
Percentage Change |
Operating Income
|
Percentage
|
||||||||||||||
($ in millions) |
2022 |
2021 |
Reported
|
Constant
|
2022 |
2021 |
Reported
|
|||||||||||
The |
$ |
1,076 |
|
$ |
960 |
|
12 |
% |
11 |
% |
$ |
115 |
|
$ |
262 |
|
(56 |
)% |
|
|
1,480 |
|
|
1,670 |
|
(11 |
) |
(7 |
) |
|
(6 |
) |
|
(94 |
) |
94 |
|
|
|
1,006 |
|
|
1,310 |
|
(23 |
) |
(19 |
) |
|
70 |
|
|
103 |
|
(32 |
) |
Subtotal |
$ |
3,562 |
|
$ |
3,940 |
|
(10 |
)% |
(7 |
)% |
$ |
179 |
|
$ |
271 |
|
(34 |
)% |
Returns/charges associated with |
||||||||||||||||||
restructuring and other activities |
|
(1 |
) |
|
(4 |
) |
|
|
|
(100 |
) |
|
(37 |
) |
|
|||
Total |
$ |
3,561 |
|
$ |
3,936 |
|
(10 |
)% |
(7 |
)% |
$ |
79 |
|
$ |
234 |
|
(66 |
)% |
Organic Net Sales Growth - Reconciliation to GAAP
|
||||||||
|
Three Months Ended |
|||||||
|
Organic
|
Impact of
|
Impact of
|
|
||||
The |
9 |
% |
2 |
% |
1 |
% |
12 |
% |
|
(9 |
) |
2 |
|
(4 |
) |
(11 |
) |
|
(19 |
) |
— |
|
(4 |
) |
(23 |
) |
Subtotal |
(8 |
)% |
1 |
% |
(3 |
)% |
(10 |
)% |
Returns associated with restructuring and other activities |
|
|
|
— |
|
|||
Total |
(8 |
)% |
1 |
% |
(3 |
)% |
(10 |
)% |
(1)Organic net sales growth represents net sales growth excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures (notably DECIEM and BECCA); as well as the impact of currency translation. |
||||||||
This earnings release includes some non-GAAP financial measures relating to charges associated with restructuring and other activities and adjustments, as well as organic net sales. Included herein are reconciliations between the non-GAAP financial measures and the most directly comparable GAAP measures for certain consolidated statements of earnings accounts before and after these items. The Company uses certain non-GAAP financial measures, among other financial measures, to evaluate its operating performance, which represent the way the Company conducts and views its business. Management believes that excluding certain items that are not comparable from period-to-period, or do not reflect the Company’s underlying ongoing business, provides transparency for such items and helps investors and others compare and analyze operating performance from period to period. In the future, the Company expects to incur charges or make adjustments similar in nature to those presented herein; however, the impact to the Company’s results in a given period may be highly variable and difficult to predict. Our non-GAAP financial measures may not be comparable to similarly titled measures used by, or determined in a manner consistent with, other companies. While the Company considers the non-GAAP measures useful in analyzing its results, they are not intended to replace, or act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with GAAP.
The Company operates on a global basis, with the majority of its net sales generated outside
Reconciliation of Certain Consolidated Statements of Earnings Accounts Before and After Returns, Charges and Other Adjustments (Unaudited) |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Three Months Ended |
|
|||||||||||||||||||||||||
|
2022 |
2021 |
% Change |
||||||||||||||||||||||||
($ in millions, except per
|
As
|
Returns/
|
Non-
|
Impact of
|
Non-
|
As
|
Returns/
|
Non-
|
Non-
|
Non-
|
|||||||||||||||||
Net sales |
$ |
3,561 |
|
$ |
1 |
|
$ |
3,562 |
|
$ |
120 |
$ |
3,682 |
|
$ |
3,936 |
|
$ |
4 |
|
$ |
3,940 |
|
(10 |
)% |
(7 |
)% |
Cost of sales |
|
1,031 |
|
|
(7 |
) |
|
1,024 |
|
|
33 |
|
1,057 |
|
|
986 |
|
|
(1 |
) |
|
985 |
|
|
|
||
Gross profit |
|
2,530 |
|
|
8 |
|
|
2,538 |
|
|
87 |
|
2,625 |
|
|
2,950 |
|
|
5 |
|
|
2,955 |
|
(14 |
)% |
(11 |
)% |
Gross margin |
|
71.0 |
% |
|
|
71.3 |
% |
|
|
71.3 |
% |
|
74.9 |
% |
|
|
75.0 |
% |
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Operating expenses |
|
2,451 |
|
|
(120 |
) |
|
2,331 |
|
|
85 |
|
2,416 |
|
|
2,716 |
|
|
(146 |
) |
|
2,570 |
|
(9 |
)% |
(6 |
)% |
Operating expense |
|||||||||||||||||||||||||||
margin |
|
68.8 |
% |
|
|
65.4 |
% |
|
|
65.6 |
% |
|
69.0 |
% |
|
|
65.2 |
% |
|
|
|||||||
Operating income |
|
79 |
|
|
128 |
|
|
207 |
|
|
2 |
|
209 |
|
|
234 |
|
|
151 |
|
|
385 |
|
(46 |
)% |
(46 |
)% |
Operating income |
|||||||||||||||||||||||||||
margin |
|
2.2 |
% |
|
|
5.8 |
% |
|
|
5.7 |
% |
|
5.9 |
% |
|
|
9.8 |
% |
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Other income |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
|
847 |
|
|
(847 |
) |
|
— |
|
— |
% |
— |
% |
Provision(benefit) for |
|||||||||||||||||||||||||||
income taxes |
|
(2 |
) |
|
27 |
|
|
25 |
|
|
1 |
|
26 |
|
|
35 |
|
|
26 |
|
|
61 |
|
(59 |
)% |
(57 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net earnings |
|||||||||||||||||||||||||||
attributable to The |
|||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||
|
$ |
52 |
|
$ |
101 |
|
$ |
153 |
|
$ |
2 |
$ |
155 |
|
$ |
1,018 |
|
$ |
(731 |
) |
$ |
287 |
|
(47 |
)% |
(46 |
)% |
Diluted EPS |
$ |
.14 |
|
$ |
.28 |
|
$ |
.42 |
|
$ |
.01 |
$ |
.43 |
|
$ |
2.76 |
|
$ |
(1.98 |
) |
$ |
.78 |
|
(46 |
)% |
(45 |
)% |
Reconciliation of Certain Consolidated Statements of Earnings Accounts
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Year Ended |
|
||||||||||||||||||||||||||
|
2022 |
2021 |
% Change |
|||||||||||||||||||||||||
($ in millions, except per
|
As
|
Returns/
|
Non-
|
Impact of
|
Non-
|
As
|
Returns/
|
Non-
|
Non-
|
Non-
|
||||||||||||||||||
Net sales |
$ |
17,737 |
|
$ |
4 |
|
$ |
17,741 |
|
$ |
88 |
|
$ |
17,829 |
|
$ |
16,215 |
|
$ |
14 |
|
$ |
16,229 |
|
9 |
% |
10 |
% |
Cost of sales |
|
4,305 |
|
|
(7 |
) |
|
4,298 |
|
|
29 |
|
|
4,327 |
|
|
3,834 |
|
|
(10 |
) |
|
3,824 |
|
|
|
||
Gross profit |
|
13,432 |
|
|
11 |
|
|
13,443 |
|
|
59 |
|
|
13,502 |
|
|
12,381 |
|
|
24 |
|
|
12,405 |
|
8 |
% |
9 |
% |
Gross margin |
|
75.7 |
% |
|
|
75.8 |
% |
|
|
75.7 |
% |
|
76.4 |
% |
|
|
76.4 |
% |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Operating expenses |
|
10,262 |
|
|
(319 |
) |
|
9,943 |
|
|
80 |
|
|
10,023 |
|
|
9,763 |
|
|
(430 |
) |
|
9,333 |
|
7 |
% |
7 |
% |
Operating expense |
||||||||||||||||||||||||||||
margin |
|
57.9 |
% |
|
|
56.0 |
% |
|
|
56.2 |
% |
|
60.2 |
% |
|
|
57.5 |
% |
|
|
||||||||
Operating income |
|
3,170 |
|
|
330 |
|
|
3,500 |
|
|
(21 |
) |
|
3,479 |
|
|
2,618 |
|
|
454 |
|
|
3,072 |
|
14 |
% |
13 |
% |
Operating income margin |
|
17.9 |
% |
|
|
19.7 |
% |
|
|
19.5 |
% |
|
16.1 |
% |
|
|
18.9 |
% |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Other income |
|
1 |
|
|
(1 |
) |
|
— |
|
|
— |
|
|
— |
|
|
847 |
|
|
(847 |
) |
|
— |
|
— |
% |
— |
% |
Provision for income |
||||||||||||||||||||||||||||
taxes |
|
628 |
|
|
89 |
|
|
717 |
|
|
(5 |
) |
|
712 |
|
|
456 |
|
|
92 |
|
|
548 |
|
31 |
% |
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net earnings attributable |
||||||||||||||||||||||||||||
to The |
||||||||||||||||||||||||||||
|
$ |
2,390 |
|
$ |
252 |
|
$ |
2,642 |
|
$ |
(14 |
) |
$ |
2,628 |
|
$ |
2,870 |
|
$ |
(494 |
) |
$ |
2,376 |
|
11 |
% |
11 |
% |
Diluted EPS |
$ |
6.55 |
|
$ |
.69 |
|
$ |
7.24 |
|
$ |
(.04 |
) |
$ |
7.2 |
|
$ |
7.79 |
|
$ |
(1.34 |
) |
$ |
6.45 |
|
12 |
% |
12 |
% |
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||
|
|
|
||||
|
|
|
||||
($ in millions) |
(Audited) |
|||||
ASSETS |
|
|
||||
|
|
|
||||
Cash and cash equivalents |
$ |
3,957 |
$ |
4,958 |
||
Accounts receivable, net |
|
1,629 |
|
1,702 |
||
Inventory and promotional merchandise |
|
2,920 |
|
2,505 |
||
Prepaid expenses and other current assets |
|
792 |
|
603 |
||
Total current assets |
|
9,298 |
|
9,768 |
||
Property, plant and equipment, net |
|
2,650 |
|
2,280 |
||
Operating lease right-of-use assets |
|
1,949 |
|
2,190 |
||
Other assets |
|
7,013 |
|
7,733 |
||
Total assets |
$ |
20,910 |
$ |
21,971 |
||
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
||||
|
|
|
||||
Current debt |
$ |
268 |
$ |
32 |
||
Accounts payable |
|
1,822 |
|
1,692 |
||
Operating lease liabilities |
|
365 |
|
379 |
||
Other accrued liabilities |
|
3,360 |
|
3,195 |
||
Total current liabilities |
|
5,815 |
|
5,298 |
||
Long-term debt |
|
5,144 |
|
5,537 |
||
Long-term operating lease liabilities |
|
1,868 |
|
2,151 |
||
Other noncurrent liabilities |
|
1,651 |
|
2,037 |
||
Total noncurrent liabilities |
|
8,663 |
|
9,725 |
||
Redeemable noncontrolling interest |
|
842 |
|
857 |
||
Total equity |
|
5,590 |
|
6,091 |
||
Total liabilities and equity |
$ |
20,910 |
$ |
21,971 |
||
|
|
|
||||
SELECT CASH FLOW DATA
|
||||||
|
|
|
||||
|
Twelve Months Ended
|
|||||
($ in millions) |
2022 |
2021
|
||||
Net earnings |
$ |
2,408 |
|
$ |
2,875 |
|
Adjustments to reconcile net earnings to net cash flows from operating |
|
|
||||
activities: |
||||||
Depreciation and amortization |
|
727 |
|
|
651 |
|
Deferred income taxes |
|
(149 |
) |
|
(230 |
) |
|
|
241 |
|
|
188 |
|
Gain on previously held equity method investment |
|
(1 |
) |
|
(847 |
) |
Other items |
|
368 |
|
|
440 |
|
Changes in operating assets and liabilities: |
|
|
||||
Increase in accounts receivable, net |
|
(10 |
) |
|
(398 |
) |
Increase in inventory and promotional merchandise |
|
(602 |
) |
|
(140 |
) |
Decrease (increase) in other assets, net |
|
(101 |
) |
|
13 |
|
Increase in accounts payable and other liabilities |
|
159 |
|
|
1,079 |
|
Net cash flows provided by operating activities |
$ |
3,040 |
|
$ |
3,631 |
|
|
|
|
||||
Other Investing and Financing Sources (Uses): |
|
|
||||
Capital expenditures |
$ |
(1,040 |
) |
$ |
(637 |
) |
Settlement of net investment hedges |
|
108 |
|
|
(152 |
) |
Payments for acquired businesses, net of cash acquired |
|
(3 |
) |
|
(1,065 |
) |
Purchases of investments |
|
(10 |
) |
|
(42 |
) |
Payments to acquire treasury stock |
|
(2,309 |
) |
|
(733 |
) |
Dividends paid |
|
(840 |
) |
|
(753 |
) |
Proceeds (repayments) of current debt, net |
|
(4 |
) |
|
(744 |
) |
Proceeds of long-term debt, net |
|
(18 |
) |
|
137 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220818005035/en/
Investors:
rmancini@estee.com
Media:
jimarvin@estee.com
Source:
FAQ
What were Estée Lauder's fiscal year 2022 net sales figures?
How much did Estée Lauder's diluted EPS change in fiscal year 2022?
What is the organic sales growth forecast for Estée Lauder in fiscal 2023?
What impact did COVID-19 have on Estée Lauder's fiscal year 2022 results?
Which product category performed best for Estée Lauder in fiscal 2022?
