Coty Inc. (NYSE: COTY) (“Coty” or the “Company”) today announced a strategic partnership with global investment firm KKR which will provide the Company with an initial investment of $750 million through the sale of convertible preferred shares to KKR. Additionally, Coty and KKR signed a Memorandum of Understanding (“MOU”) for the sale of a majority in Coty’s Professional Beauty and Retail Hair Businesses including the Wella, Clairol, OPI and ghd brands (together, “Wella”) at a contemplated enterprise value of $4.3 billion, or 12.3x 2019 EBITDA. Coty also announced its financial results for the third quarter of fiscal year 2020, ended March 31, 2020, including comprehensive plans to reduce fixed costs by $700 million.
Under the terms of the MOU, Coty will carve out Wella into a standalone company in which KKR will acquire a 60 percent stake and Coty will retain the remaining 40 percent interest. The contemplated majority divestment of Wella would result in Coty receiving additional cash proceeds of approximately $3 billion. On signing of the Wella transaction,, KKR will also make an incremental convertible preferred investment of $250 million in Coty. Together with the initial $750 million investment, these transactions will result in significant deleveraging of Coty’s balance sheet and position the company for long-term growth and investment in its core portfolio. Coty’s mass beauty business in Brazil will remain a fully owned business of Coty.
Peter Harf, Founding Partner of JAB and Chairman of Coty, commented: “We are thrilled to enter into this strategic partnership with KKR, one of the world’s preeminent investment firms with an exemplary track record of value creation. Their investment and partnership will be instrumental to strengthening Coty’s balance sheet and helping the company to achieve long-term growth in shareholder value.”
Johannes Huth, Partner and Head of KKR EMEA, said: “Coty is a leader in the attractive global beauty market with iconic brands, global presence and scale, and a strong track record of innovation and growth. We are excited to form this partnership to invest in Coty to support it through this period of unprecedented global uncertainty and allow it to emerge as a stronger, more agile business, and to acquire a majority stake in Wella, a market leader with a strong portfolio of brands in the attractive professional hair market where we see significant opportunities to accelerate growth in partnership with its experienced leadership team. We look forward to working towards the establishment of a lasting and value-creating strategic partnership.”
Pierre-André Terisse, Coty COO and CFO added: “Today’s announcement with KKR provides an increased sense of energy and excitement for all of us at Coty. As part of a number of steps to continue Coty’s transformation, the strategic partnership with KKR is clearly the most game-changing. We will see immediate improvement to our balance sheet and are in the final stages of finalizing a 60/40 partnership for our Professional Beauty and Retail Hair businesses. In the shadow of a global lockdown, we have also announced a comprehensive plan to reduce fixed costs by $700 million, which allows us to confirm our target to reach mid teens operating margins by FY23. Overall, this alliance and the steps we are taking to strengthen our businesses will be key elements of our transformation.”
Strategic Transaction with KKR
Effective immediately, Coty has agreed to issue $750 million of convertible preference shares and KKR is fully subscribing to the issue. These shares will carry a coupon of 9% and will be convertible into Coty shares at $6.24, equating to a 20% premium to Coty’s closing stock price on May 8, 2020 of $5.20. KKR will be entitled to two seats on Coty’s Board of Directors following the completion of the transaction.
Simultaneously, Coty and KKR have signed an MOU and are engaged in exclusive talks to form a partnership for Wella at an enterprise value of $4.3 billion, in which KKR is expected to own 60 percent and Coty 40 percent, subject only to completion of limited confirmatory due diligence and execution of definitive documentation. Upon signing of the Wella transaction, Coty will issue $250 million of additional convertible preference shares to KKR with the same coupon and strike price provisions as the first $750 million tranche, resulting in incremental total proceeds of $3.3 billion. KKR is making its investment primarily from its flagship North American and European private equity funds, Americas Fund XII and European Fund V.
AFW LP and Credit Suisse are serving as financial advisors to Coty, and Skadden, Arps, Slate, Meagher & Flom LLP are serving as legal counsel to Coty.
Medium Term Outlook
Assuming the successful completion of the KKR partnership, Coty’s expanded $700 million fixed cost reduction program will make the Company more competitive. Coty continues to target operating margins in the mid-teens by FY23.
Financial Results
Highlights
Results at a glance |
|
Three Months Ended
|
|
|
Nine Months Ended
|
|||||||||||||||||||||
|
|
|
|
Change YoY |
|
|
|
|
Change YoY |
|||||||||||||||||
(in millions, except per share data) |
|
|
|
Reported Basis |
|
Organic (LFL) |
|
|
|
|
Reported Basis |
|
Organic (LFL) |
|||||||||||||
Net revenues |
|
$ |
|
1,528.0 |
|
|
|
(23 |
)% |
|
(20 |
)% |
|
|
$ |
|
5,815.8 |
|
|
|
(11 |
)% |
|
(7 |
) |
% |
Operating income - reported |
|
|
(258.8 |
) |
|
|
<(100%) |
|
|
|
|
|
(97.4 |
) |
|
|
87 |
% |
|
|
||||||
Operating income - adjusted* |
|
|
0.1 |
|
|
|
(100 |
)% |
|
|
|
|
|
479.8 |
|
|
|
(31 |
)% |
|
|
|||||
Net income (loss) - reported |
|
|
(271.6 |
) |
|
|
<(100%) |
|
|
|
|
|
(240.4 |
) |
|
|
76 |
% |
|
|
||||||
Net income - adjusted* |
|
|
(61.7 |
) |
|
|
<(100%) |
|
|
|
|
|
194.0 |
|
|
|
(47 |
)% |
|
|
||||||
EPS (diluted) - reported |
|
$ |
|
(0.36 |
) |
|
|
>100% |
|
|
|
|
$ |
|
(0.32 |
) |
|
|
>100% |
|
|
|||||
EPS (diluted) - adjusted* |
|
$ |
|
(0.08 |
) |
|
|
(162 |
)% |
|
|
|
|
$ |
|
0.25 |
|
|
|
(48 |
)% |
|
|
|||
* These measures, as well as “free cash flow,” “adjusted earnings before interest, taxes, depreciation and amortization (EBITDA),” "immediate liquidity," and “net debt,” are Non-GAAP Financial Measures. Refer to “Non-GAAP Financial Measures” for discussion of these measures. Net Income represents Net Income Attributable to Coty Inc. Reconciliations from reported to adjusted results can be found at the end of this release.
Revenues:
Gross Margin:
Operating Income:
Net Income:
Earnings Per Share (EPS):
Operating Cash Flow:
Net Debt and Dividend:
Third Quarter Fiscal 2020 Business Review by Segment
Americas
|
Three Months Ended March 31, 2020 |
|
Nine Months Ended March 31, 2020 |
||||
|
Actual |
Reported Basis YoY |
LFL |
|
Actual |
Reported Basis YoY |
LFL |
Net Revenues |
$492.6 |
(15.3)% |
(18.8)% |
|
$1,689.0 |
(11.0)% |
(11.3)% |
|
|
|
|
|
|
|
|
|
Reported |
Adjusted |
|
|
Reported |
Adjusted |
|
Operating Income |
$(16.8) |
$12.9 |
|
|
$20.0 |
$86.8 |
|
Operating Margin |
(3.4)% |
2.6% |
|
|
1.2% |
5.1% |
|
In 3Q20, reported Americas net revenues of $492.6 million decreased by 15.3% versus the prior year. On a LFL basis, Americas net revenues decreased by 18.8% primarily due to the outbreak of COVID-19 and related store closures.
For much of 3Q20, results were trending in line with our expectations, and we continued to make progress against our turnaround plan. The broad-based store closures and declining traffic in open retailers over the course of March significantly impacted results across all major markets, resulting in prestige brand sales declining over 30% and mass brands declining in the mid-teens. Against these store closures, part of the demand shifted to e-commerce channels, with very strong e-commerce growth in our mass and prestige brands.
Key operational progress amongst our mass beauty brands included a stabilization of CoverGirl's U.S. market share in brick & mortar supported by the success of the new Clean Fresh product line and growing Cover Girl market share on Amazon, as well as strong market share gains for Sally Hansen aided by core properties and the new good.kind.pure launch. In addition, our prestige brands maintained their strong share on- and off-line, with particularly strong performance for CK Everyone.
The reported sales for the Americas segment benefited from the first quarter of contribution from the Kylie Beauty partnership. The brand had solid sales and profit performance in the quarter, with particular strength in the Kylie Skin line.
The Americas segment reported an operating loss of $16.8 million compared to reported operating income of $36.4 million in the prior-year period. 3Q20 adjusted operating income was $12.9 million, down from $56.4 million in the prior year, driven by the lower sales and resultant operating deleverage. The 3Q20 adjusted operating margin was 2.6% versus 9.7% in 3Q19.
EMEA
|
Three Months Ended March 31, 2020 |
|
Nine Months Ended March 31, 2020 |
||||
|
Actual |
Reported Basis YoY |
LFL |
|
Actual |
Reported Basis YoY |
LFL |
Net Revenues |
$550.6 |
(22.0)% |
(20.1)% |
|
$2,229.7 |
(7.3)% |
(4.9)% |
|
|
|
|
|
|
|
|
|
Reported |
Adjusted |
|
|
Reported |
Adjusted |
|
Operating Income (Loss) |
$(47.4) |
$(13.8) |
|
|
$108.8 |
$210.6 |
|
Operating Margin |
(8.6)% |
(2.5)% |
|
|
4.9% |
9.4% |
|
|
|
|
|
|
|
|
|
In 3Q20, reported EMEA net revenues of $550.6 million decreased by 22.0% versus the prior year. On a LFL basis, EMEA net revenues decreased 20.1%, which was largely due to the COVID-19 pandemic, as lockdowns commenced in Italy in February followed by most of Europe and the Middle East in March.
Our operational progress against our turnaround plan continued in the quarter, even as market conditions deteriorated. In our mass beauty business, we continued to gain market share with Rimmel in the U.K., as well as Max Factor, Bruno Banani and adidas in Germany. In our prestige business, the strong performance of recent launches Hugo Boss Alive and CK Everyone contributed to market share gains for our portfolio in the region.
Reported operating loss in 3Q20 was $47.4 million compared to reported operating income of $53.8 million in the prior year period. The 3Q20 adjusted operating loss of $13.8 million decreased from adjusted operating income of $88.3 million in the prior year period, driven by the lower sales and resultant operating deleverage. For 3Q20, the adjusted operating margin decreased to (2.5)% from 12.5% in the prior year.
Asia Pacific
|
Three Months Ended March 31, 2020 |
|
Nine Months Ended March 31, 2020 |
||||
|
Actual |
Reported Basis YoY |
LFL |
|
Actual |
Reported Basis YoY |
LFL |
Net Revenues |
$124.7 |
(36.9)% |
(34.8)% |
|
$537.5 |
(11.4)% |
(9.4)% |
|
|
|
|
|
|
|
|
|
Reported |
Adjusted |
|
|
Reported |
Adjusted |
|
Operating Income (Loss) |
$(24.7) |
$(17.6) |
|
|
$3.0 |
$24.2 |
|
Operating Margin |
(19.8)% |
(14.1)% |
|
|
0.6% |
4.5% |
|
|
|
|
|
|
|
|
|
3Q20 Asia Pacific net revenues of $124.7 million decreased 36.9% on a reported basis and decreased 34.8% LFL. The decline was largely the result of the COVID-19 pandemic, which impacted the region, particularly China and surrounding Travel Retail, earlier than many other regions.
Since the lifting of the lockdowns in China, we have begun to see some improvement in the sales trends in China over the course of April, particularly in our Lancaster skincare brand, though the fragrance category remains pressured.
Reported operating loss in 3Q20 of $24.7 million declined from a reported operating income of $22.4 million in the prior year period. The 3Q20 adjusted operating loss of $17.6 million decreased from adjusted operating income of $29.2 million in the prior year period, fueled by the operating deleverage on the declining sales. The adjusted operating margin decreased to (14.1)% from 14.8% in the prior year.
Professional Beauty
|
Three Months Ended March 31, 2020 |
|
Nine Months Ended March 31, 2020 |
||||
|
Actual |
Reported Basis YoY |
LFL |
|
Actual |
Reported Basis YoY |
LFL |
Net Revenues |
$360.1 |
(14.1)% |
(11.9)% |
|
$1,304.1 |
(3.3)% |
(1.2)% |
|
|
|
|
|
|
|
|
|
Reported |
Adjusted |
|
|
Reported |
Adjusted |
|
Operating Income |
$2.1 |
$19.3 |
|
|
$112.4 |
$163.9 |
|
Operating Margin |
0.6% |
5.4% |
|
|
8.6% |
12.6% |
|
Professional Beauty 3Q20 reported net revenues of $360.1 million declined by 14.1%, with LFL decreasing 11.9%. These declines were due to the COVID-19 pandemic, which resulted in a significant amount of salon door closures over the course of March, which impacted the Hair and Nail product lines. At the same time, ghd continued to generate strong sales growth, benefiting from its strong e-commerce business. Across the full division, e-commerce sales continued to grow in the double digits, supported by our DTC platforms and e-retailers.
Professional Beauty reported operating income of $2.1 million decreased from $33.0 million in the prior year period, while adjusted operating income declined to $19.3 million from $49.7 million. The Professional Beauty division adjusted operating margin of 5.4% decreased 650 bps from prior period, as solid gross margin improvement was offset by the operating deleverage.
Third Quarter Fiscal 2020 Business Review by Channel
|
|
Three Months Ended March 31, |
||||||||||||
|
|
Net Revenues |
|
Change |
||||||||||
(in millions) |
|
2020 |
|
2019 |
|
Reported
|
|
Organic
|
||||||
Luxury |
|
$ |
563.9 |
|
|
$ |
729.2 |
|
|
(22.7) |
% |
|
(26.3) |
% |
Consumer Beauty |
|
602.7 |
|
|
840.3 |
|
|
(28.3) |
% |
|
(16.9) |
% |
||
Professional Beauty |
|
361.4 |
|
|
421.1 |
|
|
(14.2) |
% |
|
(12.0) |
% |
||
Total |
|
$ |
1,528.0 |
|
|
$ |
1,990.6 |
|
|
(23.2) |
% |
|
(19.5) |
% |
|
|
|
|
|
|
|
|
|
Luxury
Consumer Beauty
Professional Beauty
Other Company Developments
Other company developments include:
Conference Call
Coty Inc. will host a conference call at 8:30 a.m. (ET) today, May 11, 2020 to discuss its results. The dial-in number for the call is (866) 834-4311 in the U.S. or (720) 405-2213 internationally (conference passcode number: 9961349). The live audio webcast and presentation slides will be available at http://investors.coty.com. The conference call will be available for replay.
About Coty Inc.
Coty is one of the world’s largest beauty companies with an iconic portfolio of brands across fragrance, color cosmetics, hair color and styling, and skin and body care. Coty is the global leader in fragrance, a strong number two in professional hair color & styling, and number three in color cosmetics. Coty’s products are sold in over 150 countries around the world. Coty and its brands are committed to a range of social causes as well as seeking to minimize its impact on the environment. For additional information about Coty Inc., please visit www.coty.com.
Forward Looking Statements
Certain statements in this Earnings Release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company's current views with respect to, among other things, the impact of COVID-19, the Company’s turnaround plan announced on July 1, 2019 (including the cost reduction program announced on May 11, 2020, the "Turnaround Plan"), strategic planning, targets, segment reporting 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 strategic review of its Professional Beauty business, associated consumer hair and nail brands and Brazilian operations and any transaction related thereto, including the strategic partnership with KKR (the “Strategic Review”), including timing of such Strategic Review and any transaction and the use of proceeds from any such transaction, the issuance of preferred shares to KKR, its future operations and strategy, ongoing and future cost efficiency and restructuring initiatives and programs, strategic transactions (including their expected timing and impact), investments, licenses and portfolio changes, synergies, savings, performance, cost, timing and integration of acquisitions (including the strategic partnership with Kylie Jenner), future cash flows, liquidity and borrowing capacity, the availability of local government funding or reimbursement programs in connection with COVID-19 (including expected timing and amounts), timing and size of cash outflows and debt deleveraging, the timing and terms of equity financing transactions, the performance of launches or relaunches, the timing and impact of current or future destocking or shelf spaces losses, impact and timing of supply chain disruptions and the resolution thereof, timing and extent of any future impairments, and synergies, savings, impact, cost, timing and implementation of the Company’s Turnaround Plan, including operational and organizational structure changes, segment reporting changes, operational execution and simplification initiatives, the move of the Company’s headquarters, and the priorities of senior management. 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”, “temporary”, “target”, “aim”, “potential”, “goal” and similar words or phrases. These statements are based on certain assumptions and estimates that we consider reasonable, but are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual events or results (including our financial condition, results of operations, cash flows and prospects) to differ materially from such statements, including risks and uncertainties relating to:
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 fiscal year ended June 30, 2019 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 U.S. Accordingly, fluctuations in foreign currency exchange rates can affect results of operations. Therefore, to supplement financial results presented in accordance with GAAP, certain financial information is presented excluding the impact of foreign currency exchange translations to provide a framework for assessing how the underlying businesses performed excluding the impact of foreign currency exchange translations (“constant currency”). Constant currency information compares results between periods as if exchange rates had remained constant period-over-period, with the current period’s results calculated at the prior-year period’s rates. The Company calculates constant currency information by translating current and prior-period results for entities reporting in currencies other than U.S. dollars into U.S. dollars using constant foreign currency exchange rates. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency that is different to the functional currency of that entity when exchange rates fluctuate. The constant currency information presented may not be comparable to similarly titled measures reported by other companies. The Company discloses the following constant currency financial measures: net revenues, organic like-for-like (LFL) net revenues, adjusted gross profit and adjusted operating income.
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 and EPS (diluted) on a non-GAAP basis and specifies that these measures are non-GAAP by using the term “adjusted”. The Company believes these non-GAAP financial measures better enable management and investors to analyze and compare operating performance from period to period. In calculating adjusted operating income, operating income margin, gross profit, gross margin, effective tax rate, net income, net income margin and EPS (diluted), the Company excludes the following items:
The estimated supply chain impact to adjusted operating income in the prior year only includes the direct impact on net revenues and the associated impact on cost of sales, while the Company assumed no impact from any other operating expenses.
The Company has provided a quantitative reconciliation of the difference between the non-GAAP financial measures and the financial measures calculated and reported in accordance with GAAP. For a reconciliation of adjusted gross profit to gross profit, adjusted EPS (diluted) to EPS (diluted), and adjusted net revenues to net revenues, see the table entitled “Reconciliation of Reported to Adjusted Results for the Consolidated Statements of Operations.” For a reconciliation of adjusted operating income to operating income and adjusted operating income margin to operating income margin, see the tables entitled “Reconciliation of Reported Operating Income (Loss) to Adjusted Operating Income” and "Reconciliation of Reported Operating Income (Loss) to Adjusted Operating Income by Segment." For a reconciliation of adjusted effective tax rate to effective tax rate, see the table entitled “Reconciliation of Reported Income (Loss) Before Income Taxes and Effective Tax Rates to Adjusted Income Before Income Taxes and Adjusted Effective Tax Rates.” For a reconciliation of adjusted net income and adjusted net income margin to net income (loss), see the table entitled “Reconciliation of Reported Net Income (Loss) to Adjusted Net Income.”
The Company also presents free cash flow, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), net debt and immediate liquidity. 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 less depreciation and net debt is defined as total debt less cash and cash equivalents. 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 net debt, see the table entitled “Reconciliation of Total Debt to Net Debt.” Further, our immediate liquidity is defined as the sum of available cash and cash equivalents and available borrowings under our Revolving Credit Facility (please see table "Immediate Liquidity").
These non-GAAP measures should not be considered in isolation, or as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
To the extent that the Company provides guidance, it does so only on a non-GAAP basis and does not provide reconciliations of such forward-looking non-GAAP measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including adjustments that could be made for restructuring, integration and acquisition-related expenses, amortization expenses, adjustments to inventory, and other charges reflected in our reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.
COTY INC.
SUPPLEMENTAL SCHEDULES INCLUDING NON-GAAP FINANCIAL MEASURES
COTY INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
|||||||||||||||
|
Three Months Ended March 31, |
|
Nine Months Ended
|
||||||||||||
(in millions, except per share data) |
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Net revenues |
$ |
1,528.0 |
|
|
$ |
1,990.6 |
|
|
$ |
5,815.8 |
|
|
$ |
6,533.1 |
|
Cost of sales |
617.1 |
|
|
741.2 |
|
|
2,214.8 |
|
|
2,507.0 |
|
||||
as % of Net revenues |
40.4 |
% |
|
37.2 |
% |
|
38.1 |
% |
|
38.4 |
% |
||||
Gross profit |
910.9 |
|
|
1,249.4 |
|
|
3,601.0 |
|
|
4,026.1 |
|
||||
Gross margin |
59.6 |
% |
|
62.8 |
% |
|
61.9 |
% |
|
61.6 |
% |
||||
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses |
999.1 |
|
|
1,070.5 |
|
|
3,274.3 |
|
|
3,476.8 |
|
||||
as % of Net revenues |
65.4 |
% |
|
53.8 |
% |
|
56.3 |
% |
|
53.2 |
% |
||||
Gain on sale of business |
— |
|
|
— |
|
|
(84.5) |
|
|
— |
|
||||
Amortization expense |
87.6 |
|
|
86.7 |
|
|
248.7 |
|
|
267.7 |
|
||||
Restructuring costs |
(6.7) |
|
|
6.7 |
|
|
134.2 |
|
|
43.7 |
|
||||
Acquisition and divestiture-related costs |
49.3 |
|
|
— |
|
|
85.3 |
|
|
— |
|
||||
Asset impairment charges |
40.4 |
|
|
— |
|
|
40.4 |
|
|
977.7 |
|
||||
Operating (loss) income |
(258.8) |
|
|
85.5 |
|
|
(97.4) |
|
|
(739.8) |
|
||||
as % of Net revenues |
(16.9) |
% |
|
4.3 |
% |
|
(1.7) |
% |
|
(11.3) |
% |
||||
Interest expense, net |
73.6 |
|
|
72.0 |
|
|
222.1 |
|
|
204.4 |
|
||||
Other expense, net |
0.5 |
|
|
17.5 |
|
|
4.0 |
|
|
25.0 |
|
||||
Loss before income taxes |
(332.9) |
|
|
(4.0) |
|
|
(323.5) |
|
|
(969.2) |
|
||||
as % of Net revenues |
(21.8) |
% |
|
(0.2) |
% |
|
(5.6) |
% |
|
(14.8) |
% |
||||
(Benefit) provision for income taxes |
(68.5) |
|
|
— |
|
|
(99.0) |
|
|
0.9 |
|
||||
Net loss |
(264.4) |
|
|
(4.0) |
|
|
(224.5) |
|
|
(970.1) |
|
||||
as % of Net revenues |
(17.3) |
% |
|
(0.2) |
% |
|
(3.9) |
% |
|
(14.8) |
% |
||||
Net income attributable to noncontrolling interests |
6.2 |
|
|
2.3 |
|
|
9.5 |
|
|
4.1 |
|
||||
Net income attributable to redeemable noncontrolling interests |
1.0 |
|
|
5.8 |
|
|
6.4 |
|
|
10.6 |
|
||||
Net loss attributable to Coty Inc. |
$ |
(271.6) |
|
|
$ |
(12.1) |
|
|
$ |
(240.4) |
|
|
$ |
(984.8) |
|
as % of Net revenues |
(17.8) |
% |
|
(0.6) |
% |
|
(4.1) |
% |
|
(15.1) |
% |
||||
Net loss attributable to Coty Inc. per common share: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
(0.36) |
|
|
$ |
(0.02) |
|
|
$ |
(0.32) |
|
|
$ |
(1.31) |
|
Diluted |
$ |
(0.36) |
|
|
$ |
(0.02) |
|
|
$ |
(0.32) |
|
|
$ |
(1.31) |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
760.8 |
|
|
751.4 |
|
|
757.7 |
|
|
751.1 |
|
||||
Diluted |
760.8 |
|
|
751.4 |
|
|
757.7 |
|
|
751.1 |
|
COTY INC.
SUPPLEMENTAL SCHEDULES INCLUDING NON-GAAP FINANCIAL MEASURES
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 March 31, 2020 |
||||||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
Foreign Currency
|
|
Adjusted Results
|
||||||||||
Net revenues |
|
$ |
1,528.0 |
|
|
— |
|
|
$ |
1,528.0 |
|
|
$ |
42.9 |
|
|
$ |
1,570.9 |
|
|
Gross profit |
|
910.9 |
|
|
11.2 |
|
|
922.1 |
|
|
24.3 |
|
|
946.4 |
|
|||||
Gross margin |
|
59.6 |
% |
|
|
|
60.3 |
% |
|
|
|
60.2 |
% |
|||||||
Operating income |
|
(258.8) |
|
|
258.9 |
|
|
0.1 |
|
|
3.1 |
|
|
3.2 |
|
|||||
as % of Net revenues |
|
(16.9) |
% |
|
|
|
— |
% |
|
|
|
0.2 |
% |
|||||||
Net (loss) income attributable to Coty Inc. |
|
$ |
(271.6) |
|
|
$ |
209.9 |
|
|
$ |
(61.7) |
|
|
|
|
|
||||
as % of Net revenues |
|
(17.8) |
% |
|
|
|
(4.0) |
% |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EPS (diluted) |
|
$ |
(0.36) |
|
|
|
|
$ |
(0.08) |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Three Months Ended March 31, 2019 |
|
|
|
|
||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
|
|
|
||||||||||
Net revenues |
|
$ |
1,990.6 |
|
|
— |
|
|
$ |
1,990.6 |
|
|
|
|
|
|||||
Gross profit |
|
1,249.4 |
|
|
2.2 |
|
|
1,251.6 |
|
|
|
|
|
|||||||
Gross margin |
|
62.8 |
% |
|
|
|
62.9 |
% |
|
|
|
|
||||||||
Operating (loss) income |
|
85.5 |
|
|
144.0 |
|
|
229.5 |
|
|
|
|
|
|||||||
as % of Net revenues |
|
4.3 |
% |
|
|
|
11.5 |
% |
|
|
|
|
||||||||
Net (loss) income attributable to Coty Inc. |
|
$ |
(12.1) |
|
|
$ |
113.7 |
|
|
$ |
101.6 |
|
|
|
|
|
||||
as % of Net revenues |
|
(0.6) |
% |
|
|
|
5.1 |
% |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EPS (diluted) |
|
$ |
(0.02) |
|
|
|
|
$ |
0.13 |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
(a) See “Reconciliation of Reported Operating Income (Loss) to Adjusted Operated Income” and “Reconciliation of Reported Net Income (Loss) to Adjusted Net Income” for a detailed description of adjusted items.
|
|
Nine Months Ended March 31, 2020 |
||||||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
Foreign Currency
|
|
Adjusted Results
|
||||||||||
Net revenues |
|
$ |
5,815.8 |
|
|
$ |
— |
|
|
$ |
5,815.8 |
|
|
$ |
130.0 |
|
|
$ |
5,945.8 |
|
Gross profit |
|
3,601.0 |
|
|
11.2 |
|
|
3,612.2 |
|
|
79.8 |
|
|
3,692.0 |
|
|||||
Gross margin |
|
61.9 |
% |
|
|
|
62.1 |
% |
|
|
|
62.1 |
% |
|||||||
Operating income |
|
(97.4) |
|
|
577.2 |
|
|
479.8 |
|
|
15.8 |
|
|
495.6 |
|
|||||
as % of Net revenues |
|
(1.7) |
% |
|
|
|
8.2 |
% |
|
|
|
8.3 |
% |
|||||||
Net income attributable to Coty Inc. |
|
$ |
(240.4) |
|
|
$ |
434.4 |
|
|
$ |
194.0 |
|
|
|
|
|
||||
as % of Net revenues |
|
(4.1) |
% |
|
|
|
3.3 |
% |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EPS (diluted) |
|
$ |
(0.32) |
|
|
|
|
$ |
0.25 |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Nine Months Ended March 31, 2019 |
|
|
|
|
||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
|
|
|
||||||||||
Net revenues |
|
$ |
6,533.1 |
|
|
$ |
— |
|
|
$ |
6,533.1 |
|
|
|
|
|
||||
Gross profit |
|
4,026.1 |
|
|
12.0 |
|
|
4,038.1 |
|
|
|
|
|
|||||||
Gross margin |
|
61.6 |
% |
|
|
|
61.8 |
% |
|
|
|
|
||||||||
Operating (loss) income |
|
(739.8) |
|
|
1,432.4 |
|
|
692.6 |
|
|
|
|
|
|||||||
as % of Net revenues |
|
(11.3) |
% |
|
|
|
10.6 |
% |
|
|
|
|
||||||||
Net (loss) income attributable to Coty Inc. |
|
$ |
(984.8) |
|
|
$ |
1,348.8 |
|
|
$ |
364.0 |
|
|
|
|
|
||||
as % of Net revenues |
|
(15.1) |
% |
|
|
|
5.6 |
% |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EPS (diluted) |
|
$ |
(1.31) |
|
|
|
|
$ |
0.48 |
|
|
|
|
|
(a) See “Reconciliation of Reported Operating Income (Loss) to Adjusted Operated Income” and “Reconciliation of Reported Net Income (Loss) to Adjusted Net Income” for a detailed description of adjusted items.
RECONCILIATION OF REPORTED OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME |
||||||||||||||||||||||
|
|
Three Months Ended March 31, |
|
Nine Months Ended March 31, |
||||||||||||||||||
(in millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
||||||||||
Reported Operating Income (Loss) |
|
$ |
(258.8) |
|
|
$ |
85.5 |
|
|
<(100%) |
|
$ |
(97.4) |
|
|
$ |
(739.8) |
|
|
87 |
% |
|
% of Net revenues |
|
(16.9) |
% |
|
4.3 |
% |
|
|
|
(1.7) |
% |
|
(11.3) |
% |
|
|
||||||
Restructuring and other business realignment costs (a) |
|
81.6 |
|
|
57.3 |
|
|
42 |
% |
|
287.3 |
|
|
187.0 |
|
|
54 |
% |
||||
Amortization expense (b) |
|
87.6 |
|
|
86.7 |
|
|
1 |
% |
|
248.7 |
|
|
267.7 |
|
|
(7) |
% |
||||
Costs related to acquisition and divestiture activities (c) |
|
49.3 |
|
|
— |
|
|
N/A |
|
85.3 |
|
|
— |
|
|
N/A |
||||||
Gain on sale of business (d) |
|
— |
|
|
— |
|
|
N/A |
|
(84.5) |
|
|
— |
|
|
N/A |
||||||
Asset impairment charges (e) |
|
40.4 |
|
|
— |
|
|
N/A |
|
40.4 |
|
|
977.7 |
|
|
(96) |
% |
|||||
Total adjustments to Reported Operating Income |
|
$ |
258.9 |
|
|
$ |
144.0 |
|
|
80 |
% |
|
$ |
577.2 |
|
|
$ |
1,432.4 |
|
|
(60) |
% |
Adjusted Operating Income |
|
$ |
0.1 |
|
|
$ |
229.5 |
|
|
(100) |
% |
|
$ |
479.8 |
|
|
$ |
692.6 |
|
|
(31) |
% |
% of Net revenues |
|
— |
% |
|
11.5 |
% |
|
|
|
8.2 |
% |
|
10.6 |
% |
|
|
In the nine months ended March 31, 2020, we did not incur any asset impairment charges. In the nine months ended March 31, 2019, we incurred $977.7 of asset impairment charges primarily due to $832.5 related to goodwill, $90.8 related to indefinite-lived other intangible assets (mainly related to the CoverGirl and Clairol trademarks) and $7.0 related to finite-lived other intangible assets. Additionally, the Company identified indicators of impairment related to the philosophy trademark that is part of the Prestige Skin Care reporting unit and recorded an asset impairment charge of $22.8 and a $12.6 charge in the first quarter due to an acquired trademark associated with a terminated pre-existing license as a result of the acquisition. The Company also fully impaired a Corporate equity security investment and recorded an asset impairment charge of $12.0.
RECONCILIATION OF REPORTED INCOME (LOSS) BEFORE INCOME TAXES AND EFFECTIVE TAX RATES TO
|
|||||||||||||||||||||
|
Three Months Ended March 31, 2020 |
|
Three Months Ended March 31, 2019 |
||||||||||||||||||
(in millions) |
(Loss)
|
|
(Benefit)
|
|
Effective
|
|
(Loss)
|
|
Provision
|
|
Effective
|
||||||||||
Reported (Loss) Income Before Taxes |
$ |
(332.9) |
|
|
$ |
(68.5) |
|
|
20.6 |
% |
|
$ |
(4.0) |
|
|
$ |
— |
|
|
— |
% |
Adjustments to reported operating income (a) (b) |
258.9 |
|
|
52.1 |
|
|
|
|
144.0 |
|
|
38.6 |
|
|
|
||||||
Other Adjustments (b) (c) |
— |
|
|
— |
|
|
|
|
12.7 |
|
|
0.8 |
|
|
|
||||||
Adjusted (Loss) Income Before Taxes |
$ |
(74.0) |
|
|
$ |
(16.4) |
|
|
22.2 |
% |
|
$ |
152.7 |
|
|
$ |
39.4 |
|
|
25.8 |
% |
The adjusted effective tax rate was 22.2% for the three months ended March 31, 2020 compared to 25.8% for the three months ended March 31, 2019. The differences were primarily due to the jurisdictional mix of income.
|
Nine Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
(in millions) |
(Loss)
|
|
(Benefit)
|
|
Effective
|
|
(Loss)
|
|
Provision
|
|
Effective
|
||||||||||
Reported (Loss) Income Before Taxes |
$ |
(323.5) |
|
|
$ |
(99.0) |
|
|
30.6 |
% |
|
$ |
(969.2) |
|
|
$ |
0.9 |
|
|
(0.1) |
% |
Gain on sale of business adjustment (a)(b) |
(84.5) |
|
|
4.8 |
|
|
|
|
— |
|
|
— |
|
|
|
||||||
Adjustments to reported operating income (a) (b) |
661.7 |
|
|
138.1 |
|
|
|
|
1,432.4 |
|
|
84.5 |
|
|
|
||||||
Other Adjustments (b) (c) |
— |
|
|
— |
|
|
|
|
12.7 |
|
|
0.8 |
|
|
|
||||||
Adjusted Income Before Taxes |
$ |
253.7 |
|
|
$ |
43.9 |
|
|
17.3 |
% |
|
$ |
475.9 |
|
|
$ |
86.2 |
|
|
18.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
The adjusted effective tax rate was 17.3% for the nine months ended March 31, 2020 compared to 18.1% for the nine months ended March 31, 2019. The differences were primarily due to the jurisdictional mix of income.
RECONCILIATION OF REPORTED NET INCOME (LOSS) TO ADJUSTED NET INCOME |
||||||||||||||||||||||
|
|
Three Months Ended March 31, |
|
Nine Months Ended March 31, |
||||||||||||||||||
(in millions) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
||||||||||
Reported Net (Loss) Income Attributable to Coty Inc. |
|
$ |
(271.6) |
|
|
$ |
(12.1) |
|
|
<(100%) |
|
$ |
(240.4) |
|
|
$ |
(984.8) |
|
|
76 |
% |
|
% of Net revenues |
|
(17.8) |
% |
|
(0.6) |
% |
|
|
|
(4.1) |
% |
|
(15.1) |
% |
|
|
||||||
Adjustments to Reported Operating Income (a) |
|
258.9 |
|
|
144.0 |
|
|
80 |
% |
|
577.2 |
|
|
1,432.4 |
|
|
(60) |
% |
||||
Adjustments to Other Expense (b) |
|
— |
|
|
12.7 |
|
|
N/A |
|
— |
|
|
12.7 |
|
|
(100) |
% |
|||||
Adjustments to noncontrolling interests (b) |
|
3.1 |
|
|
(3.6) |
|
|
>100% |
|
0.1 |
|
|
(11.0) |
|
|
>100% |
||||||
Change in tax provision due to adjustments to Reported Net Income Attributable to Coty Inc. |
|
(52.1) |
|
|
(39.4) |
|
|
(32) |
% |
|
(142.9) |
|
|
(85.3) |
|
|
(68) |
% |
||||
Adjusted Net Income Attributable to Coty Inc. |
|
$ |
(61.7) |
|
|
$ |
101.6 |
|
|
<(100%) |
|
$ |
194.0 |
|
|
$ |
364.0 |
|
|
(47) |
% |
|
% of Net revenues |
|
(4.0) |
% |
|
5.1 |
% |
|
|
|
3.3 |
% |
|
5.6 |
% |
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Per Share Data |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted weighted-average common shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic |
|
760.8 |
|
|
751.4 |
|
|
|
|
757.7 |
|
|
751.1 |
|
|
|
||||||
Diluted |
|
760.8 |
|
|
753.9 |
|
|
|
|
762.1 |
|
|
753.0 |
|
|
|
||||||
Adjusted Net Income Attributable to Coty Inc. per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic |
|
$ |
(0.08) |
|
|
$ |
0.14 |
|
|
|
|
$ |
0.26 |
|
|
$ |
0.48 |
|
|
|
||
Diluted |
|
$ |
(0.08) |
|
|
$ |
0.13 |
|
|
|
|
$ |
0.25 |
|
|
$ |
0.48 |
|
|
|
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW |
|||||||||||||||
|
Three Months Ended March 31, |
|
Nine Months Ended March 31, |
||||||||||||
(in millions) |
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Net cash provided by operating activities |
$ |
(257.5) |
|
|
$ |
213.7 |
|
|
$ |
204.5 |
|
|
$ |
451.4 |
|
Capital expenditures |
(61.4) |
|
|
(71.6) |
|
|
(206.4) |
|
|
(330.9) |
|
||||
Free cash flow |
$ |
(318.9) |
|
|
$ |
142.1 |
|
|
$ |
(1.9) |
|
|
$ |
120.5 |
|
RECONCILIATION OF TOTAL DEBT TO NET DEBT |
||||
(in millions) |
|
March 31, 2020 |
||
Total debt |
|
$ |
9,425.9 |
|
Cash and cash equivalents |
|
1,278.5 |
|
|
Net debt |
|
$ |
8,147.4 |
|
IMMEDIATE LIQUIDITY |
||||
|
|
As of |
||
(in millions) |
|
March 31, 2020 |
||
Cash and cash equivalents |
|
$ |
1,278.5 |
|
Unutilized revolving credit facility |
|
11.2 |
|
|
Immediate Liquidity |
|
1,289.7 |
|
RECONCILIATION OF ADJUSTED OPERATING INCOME TO ADJUSTED EBITDA |
||||
|
|
Twelve Months Ended |
||
(in millions) |
|
March 31, 2020 |
||
Adjusted operating income(a) |
|
$ |
736.7 |
|
Depreciation (b) |
|
381.7 |
|
|
Pension Adjustment (c) |
|
3.0 |
|
|
Adjusted EBITDA |
|
1,121.4 |
|
NET DEBT/ADJUSTED EBITDA |
|||
|
|
March 31, 2020 |
|
Net Debt |
|
8,147.4 |
|
EBITDA |
|
1,121.4 |
|
Net Debt/Adjusted EBITDA |
|
7.27 |
|
NET REVENUES AND ADJUSTED OPERATING INCOME BY SEGMENT |
||||||||||||||||||||||||||||
|
|
Three Months Ended March 31, |
||||||||||||||||||||||||||
|
|
Net Revenues |
|
Change |
|
Reported Operating
|
|
Adjusted Operating
|
||||||||||||||||||||
(in millions) |
|
2020 |
|
2019 |
|
Reported
|
|
Constant
|
|
2020 |
|
Change |
|
2020 |
|
Change |
||||||||||||
Americas |
|
$ |
492.6 |
|
|
$ |
581.6 |
|
|
(15) |
% |
|
(12) |
% |
|
$ |
(16.8) |
|
|
<(100%) |
|
$ |
12.9 |
|
|
(77) |
% |
|
EMEA |
|
550.6 |
|
|
705.6 |
|
|
(22) |
% |
|
(20) |
% |
|
(47.4) |
|
|
<(100%) |
|
(13.8) |
|
|
<(100%) |
||||||
Asia Pacific |
|
124.7 |
|
|
197.7 |
|
|
(37) |
% |
|
(35) |
% |
|
(24.7) |
|
|
<(100%) |
|
(17.6) |
|
|
<(100%) |
||||||
Professional |
|
360.1 |
|
|
419.0 |
|
|
(14) |
% |
|
(12) |
% |
|
2.1 |
|
|
(94) |
% |
|
19.3 |
|
|
(61) |
% |
||||
Other |
|
— |
|
|
86.7 |
|
|
(100) |
% |
|
(100) |
% |
|
— |
|
|
100 |
% |
|
— |
|
|
(100) |
% |
||||
Corporate |
|
— |
|
|
— |
|
|
— |
% |
|
— |
% |
|
(172.0) |
|
|
<(100%) |
|
(0.7) |
|
|
<(100%) |
||||||
Total |
|
$ |
1,528.0 |
|
|
$ |
1,990.6 |
|
|
(23) |
% |
|
(21) |
% |
|
$ |
(258.8) |
|
|
<(100%) |
|
$ |
0.1 |
|
|
(100) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Nine Months Ended March 31, |
||||||||||||||||||||||||||
|
|
Net Revenues |
|
Change |
|
Reported Operating
|
|
Adjusted Operating
|
||||||||||||||||||||
(in millions) |
|
2020 |
|
2019 |
|
Reported
|
|
Constant
|
|
2020 |
|
Change |
|
2020 |
|
Change |
||||||||||||
Americas |
|
$ |
1,689.0 |
|
|
$ |
1,897.4 |
|
|
(11) |
% |
|
(9) |
% |
|
$ |
20.0 |
|
|
>100% |
|
$ |
86.8 |
|
|
(52) |
% |
|
EMEA |
|
2,229.7 |
|
|
2,406.0 |
|
|
(7) |
% |
|
(5) |
% |
|
108.8 |
|
|
>100% |
|
210.6 |
|
|
(22) |
% |
|||||
Asia Pacific |
|
537.5 |
|
|
606.5 |
|
|
(11) |
% |
|
(9) |
% |
|
3.0 |
|
|
>100% |
|
24.2 |
|
|
(62) |
% |
|||||
Professional |
|
1,304.1 |
|
|
1,348.6 |
|
|
(3) |
% |
|
(1) |
% |
|
112.4 |
|
|
1 |
% |
|
163.9 |
|
|
— |
% |
||||
Other |
|
55.5 |
|
|
274.6 |
|
|
(80) |
% |
|
(80) |
% |
|
(11.0) |
|
|
— |
% |
|
(3.6) |
|
|
<(100%) |
|||||
Corporate |
|
— |
|
|
— |
|
|
— |
% |
|
— |
% |
|
(330.6) |
|
|
(7) |
% |
|
(2.1) |
|
|
<(100%) |
|||||
Total |
|
$ |
5,815.8 |
|
|
$ |
6,533.1 |
|
|
(11) |
% |
|
(9) |
% |
|
$ |
(97.4) |
|
|
87 |
% |
|
$ |
479.8 |
|
|
(31) |
% |
RECONCILIATION OF REPORTED OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME BY SEGMENT |
||||||||||||||||||||
|
|
Three Months Ended March 31, 2020 |
||||||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments (a) |
|
Adjusted
|
|
Foreign Currency
|
|
Adjusted Results
|
||||||||||
OPERATING INCOME (LOSS) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Americas |
|
$ |
(16.8) |
|
|
$ |
(29.7) |
|
|
$ |
12.9 |
|
|
$ |
1.9 |
|
|
$ |
14.8 |
|
EMEA |
|
(47.4) |
|
|
(33.6) |
|
|
(13.8) |
|
|
0.5 |
|
|
(13.3) |
|
|||||
Asia Pacific |
|
(24.7) |
|
|
(7.1) |
|
|
(17.6) |
|
|
0.4 |
|
|
(17.2) |
|
|||||
Professional Beauty |
|
2.1 |
|
|
(17.2) |
|
|
19.3 |
|
|
0.2 |
|
|
19.5 |
|
|||||
Other |
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
0.1 |
|
|||||
Corporate |
|
(172.0) |
|
|
(171.3) |
|
|
(0.7) |
|
|
— |
|
|
(0.7) |
|
|||||
Total |
|
$ |
(258.8) |
|
|
$ |
(258.9) |
|
|
$ |
0.1 |
|
|
$ |
3.1 |
|
|
$ |
3.2 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING MARGIN |
|
|
|
|
|
|
|
|
|
|
||||||||||
Americas |
|
(3.4) |
% |
|
|
|
2.6 |
% |
|
|
|
2.9 |
% |
|||||||
EMEA |
|
(8.6) |
% |
|
|
|
(2.5) |
% |
|
|
|
(2.4) |
% |
|||||||
Asia Pacific |
|
(19.8) |
% |
|
|
|
(14.1) |
% |
|
|
|
(13.3) |
% |
|||||||
Professional Beauty |
|
0.6 |
% |
|
|
|
5.4 |
% |
|
|
|
5.3 |
% |
|||||||
Other |
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
||||||||||
Corporate |
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
||||||||||
Total |
|
(16.9) |
% |
|
|
|
— |
% |
|
|
|
0.2 |
% |
|||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Three Months Ended March 31, 2019 |
|
|
|
|
||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments (a) |
|
Adjusted
|
|
|
|
|
||||||||||
OPERATING (LOSS) INCOME |
|
|
|
|
|
|
|
|
|
|
||||||||||
Americas |
|
$ |
36.4 |
|
|
$ |
(20.0) |
|
|
$ |
56.4 |
|
|
|
|
|
||||
EMEA |
|
53.8 |
|
|
(34.5) |
|
|
$ |
88.3 |
|
|
|
|
|
||||||
Asia Pacific |
|
22.4 |
|
|
(6.8) |
|
|
$ |
29.2 |
|
|
|
|
|
||||||
Professional Beauty |
|
33.0 |
|
|
(16.7) |
|
|
$ |
49.7 |
|
|
|
|
|
||||||
Other |
|
(2.9) |
|
|
(8.5) |
|
|
$ |
5.6 |
|
|
|
|
|
||||||
Corporate |
|
(57.2) |
|
|
(57.5) |
|
|
0.3 |
|
|
|
|
|
|||||||
Total |
|
$ |
85.5 |
|
|
$ |
(144.0) |
|
|
$ |
229.5 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING MARGIN |
|
|
|
|
|
|
|
|
|
|
||||||||||
Americas |
|
6.3 |
% |
|
|
|
9.7 |
% |
|
|
|
|
||||||||
EMEA |
|
7.6 |
% |
|
|
|
12.5 |
% |
|
|
|
|
||||||||
Asia Pacific |
|
11.3 |
% |
|
|
|
14.8 |
% |
|
|
|
|
||||||||
Professional Beauty |
|
7.9 |
% |
|
|
|
11.9 |
% |
|
|
|
|
||||||||
Other |
|
(3.3) |
% |
|
|
|
6.5 |
% |
|
|
|
|
||||||||
Corporate |
|
N/A |
|
|
|
N/A |
|
|
|
|
||||||||||
Total |
|
4.3 |
% |
|
|
|
11.5 |
% |
|
|
|
|
(a) See “Reconciliation of Reported Operating Income (Loss) to Adjusted Operated Income” for a detailed description of adjusted items.
|
|
Nine Months Ended March 31, 2020 |
||||||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments (a) |
|
Adjusted
|
|
Foreign Currency
|
|
Adjusted Results
|
||||||||||
OPERATING INCOME (LOSS) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Americas |
|
$ |
20.0 |
|
|
$ |
(66.8) |
|
|
$ |
86.8 |
|
|
$ |
2.5 |
|
|
$ |
89.3 |
|
EMEA |
|
108.8 |
|
|
(101.8) |
|
|
210.6 |
|
|
10.4 |
|
|
221.0 |
|
|||||
Asia Pacific |
|
3.0 |
|
|
(21.2) |
|
|
24.2 |
|
|
1.3 |
|
|
25.5 |
|
|||||
Professional Beauty |
|
112.4 |
|
|
(51.5) |
|
|
163.9 |
|
|
1.6 |
|
|
165.5 |
|
|||||
Other |
|
(11.0) |
|
|
(7.4) |
|
|
(3.6) |
|
|
— |
|
|
(3.6) |
|
|||||
Corporate |
|
(330.6) |
|
|
(328.5) |
|
|
(2.1) |
|
|
— |
|
|
(2.1) |
|
|||||
Total |
|
$ |
(97.4) |
|
|
$ |
(577.2) |
|
|
$ |
479.8 |
|
|
$ |
15.8 |
|
|
$ |
495.6 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING MARGIN |
|
|
|
|
|
|
|
|
|
|
||||||||||
Americas |
|
1.2 |
% |
|
|
|
5.1 |
% |
|
|
|
5.2 |
% |
|||||||
EMEA |
|
4.9 |
% |
|
|
|
9.4 |
% |
|
|
|
9.7 |
% |
|||||||
Asia Pacific |
|
0.6 |
% |
|
|
|
4.5 |
% |
|
|
|
4.7 |
% |
|||||||
Professional Beauty |
|
8.6 |
% |
|
|
|
12.6 |
% |
|
|
|
12.4 |
% |
|||||||
Other |
|
(19.8) |
% |
|
|
|
(6.5) |
% |
|
|
|
(6.5) |
% |
|||||||
Corporate |
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
||||||||||
Total |
|
(1.7) |
% |
|
|
|
8.2 |
% |
|
|
|
8.3 |
% |
|||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Nine Months Ended March 31, 2019 |
|
|
|
|
||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments (a) |
|
Adjusted
|
|
|
|
|
||||||||||
OPERATING INCOME (LOSS) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Americas |
|
$ |
(293.3) |
|
|
$ |
(472.3) |
|
|
$ |
179.0 |
|
|
|
|
|
||||
EMEA |
|
(207.6) |
|
|
(477.9) |
|
|
270.3 |
|
|
|
|
|
|||||||
Asia Pacific |
|
(29.4) |
|
|
(93.0) |
|
|
63.6 |
|
|
|
|
|
|||||||
Professional Beauty |
|
110.8 |
|
|
(52.7) |
|
|
163.5 |
|
|
|
|
|
|||||||
Other |
|
(11.0) |
|
|
(26.1) |
|
|
15.1 |
|
|
|
|
|
|||||||
Corporate |
|
(309.3) |
|
|
(310.4) |
|
|
1.1 |
|
|
|
|
|
|||||||
Total |
|
$ |
(739.8) |
|
|
$ |
(1,432.4) |
|
|
$ |
692.6 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING MARGIN |
|
|
|
|
|
|
|
|
|
|
||||||||||
Americas |
|
(15.5) |
% |
|
|
|
9.4 |
% |
|
|
|
|
||||||||
EMEA |
|
(8.6) |
% |
|
|
|
11.2 |
% |
|
|
|
|
||||||||
Asia Pacific |
|
(4.8) |
% |
|
|
|
10.5 |
% |
|
|
|
|
||||||||
Professional Beauty |
|
8.2 |
% |
|
|
|
12.1 |
% |
|
|
|
|
||||||||
Other |
|
(4.0) |
% |
|
|
|
5.5 |
% |
|
|
|
|
||||||||
Corporate |
|
N/A |
|
|
|
N/A |
|
|
|
|
||||||||||
Total |
|
(11.3) |
% |
|
|
|
10.6 |
% |
|
|
|
|
(a) See “Reconciliation of Reported Operating Income to Adjusted Operated Income” for a detailed description of adjusted items.
RECONCILIATION OF REPORTED NET REVENUES TO LIKE-FOR-LIKE NET REVENUES |
||||||||||||
|
|
Three Months Ended March 31, 2020 vs. Three Months Ended March 31, 2019
|
||||||||||
Net Revenues Change YoY |
|
Reported Basis |
|
Constant Currency |
|
Impact from
|
|
Organic (LFL) |
||||
Americas |
|
(15) |
% |
|
(12) |
% |
|
7 |
% |
|
(19) |
% |
EMEA |
|
(22) |
% |
|
(20) |
% |
|
— |
% |
|
(20) |
% |
Asia Pacific |
|
(37) |
% |
|
(35) |
% |
|
— |
% |
|
(35) |
% |
Professional Beauty |
|
(14) |
% |
|
(12) |
% |
|
— |
% |
|
(12) |
% |
Other |
|
(100) |
% |
|
(100) |
% |
|
(100) |
% |
|
— |
% |
Total Company |
|
(23) |
% |
|
(21) |
% |
|
(1) |
% |
|
(20) |
% |
|
|
Nine Months Ended March 31, 2020 vs. Nine Months Ended March 31, 2019 Net Revenue Change |
||||||||||
Net Revenues Change YoY |
|
Reported |
|
Constant Currency |
|
Impact from the
|
|
Organic (LFL) |
||||
Americas |
|
(11) |
% |
|
(9) |
% |
|
2 |
% |
|
(11) |
% |
EMEA |
|
(7) |
% |
|
(5) |
% |
|
— |
% |
|
(5) |
% |
Asia Pacific |
|
(11) |
% |
|
(9) |
% |
|
— |
% |
|
(9) |
% |
Professional Beauty |
|
(3) |
% |
|
(1) |
% |
|
— |
% |
|
(1) |
% |
Other |
|
(80) |
% |
|
(80) |
% |
|
(48) |
% |
|
(32) |
% |
Total Company |
|
(11) |
% |
|
(9) |
% |
|
(2) |
% |
|
(7) |
% |
COTY INC. & SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
|||||||
(in millions) |
March 31, 2020 |
|
June 30, 2019 |
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
1,278.5 |
|
|
$ |
340.4 |
|
Restricted cash |
33.1 |
|
|
40.0 |
|
||
Trade receivables |
844.2 |
|
|
1,161.2 |
|
||
Inventories |
959.9 |
|
|
1,153.3 |
|
||
Prepaid expenses and other current assets |
557.4 |
|
|
577.8 |
|
||
Total current assets |
3,673.1 |
|
|
3,272.7 |
|
||
Property and equipment, net |
1,355.9 |
|
|
1,600.6 |
|
||
Goodwill |
4,922.1 |
|
|
5,073.8 |
|
||
Other intangible assets, net |
7,442.2 |
|
|
7,422.3 |
|
||
Operating lease right-of-use assets(a) |
477.1 |
|
|
— |
|
||
Other noncurrent assets |
439.6 |
|
|
296.0 |
|
||
TOTAL ASSETS |
$ |
18,310.0 |
|
|
$ |
17,665.4 |
|
|
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
1,422.1 |
|
|
$ |
1,732.7 |
|
Short-term debt and current portion of long-term debt |
185.9 |
|
|
193.8 |
|
||
Current operating lease liabilities(a) |
104.9 |
|
|
— |
|
||
Other current liabilities |
1,372.9 |
|
|
1,550.6 |
|
||
Total current liabilities |
3,085.8 |
|
|
3,477.1 |
|
||
Long-term debt, net |
9,172.0 |
|
|
7,469.9 |
|
||
Long-term operating lease liabilities(a) |
429.0 |
|
|
— |
|
||
Other noncurrent liabilities |
1,563.4 |
|
|
1,673.2 |
|
||
Total liabilities |
14,250.2 |
|
|
12,620.2 |
|
||
REDEEMABLE NONCONTROLLING INTERESTS |
98.7 |
|
|
451.8 |
|
||
Total Coty Inc. stockholders’ equity |
3,732.2 |
|
|
4,586.9 |
|
||
Noncontrolling interests |
228.9 |
|
|
6.5 |
|
||
Total equity |
3,961.1 |
|
|
4,593.4 |
|
||
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
$ |
18,310.0 |
|
|
$ |
17,665.4 |
|
(a) Reflects the July 1, 2019 modified retrospective adoption of ASU 2016-02, Leases.
COTY INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
|||||||
|
Nine Months Ended
|
||||||
(in millions) |
2020 |
|
2019 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
||||
Net loss |
$ |
(224.5) |
|
|
$ |
(970.1) |
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
547.7 |
|
|
550.3 |
|
||
Non-cash lease expense (a) |
81.5 |
|
|
— |
|
||
Deferred income taxes |
(150.7) |
|
|
(57.5) |
|
||
Share-based compensation |
18.1 |
|
|
7.8 |
|
||
Gain on sale of business |
(84.5) |
|
|
— |
|
||
Asset impairment charges |
40.4 |
|
|
977.7 |
|
||
Other |
126.4 |
|
|
91.5 |
|
||
Change in operating assets and liabilities, net of effects from purchase of acquired companies and sale of business: |
|
|
|
||||
Trade receivables |
206.0 |
|
|
290.1 |
|
||
Inventories |
97.2 |
|
|
(59.4) |
|
||
Accounts payable |
(246.0) |
|
|
(5.3) |
|
||
Operating lease liabilities (a) |
(80.9) |
|
|
— |
|
||
Other assets and liabilities, net |
(126.2) |
|
|
(373.7) |
|
||
Net cash provided by operating activities |
204.5 |
|
|
451.4 |
|
||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
||||
Capital expenditures |
(206.4) |
|
|
(330.9) |
|
||
Proceeds from sale of business, net of cash disposed (b) |
25.6 |
|
|
— |
|
||
Payment for business combinations and asset acquisitions, net of cash acquired (c) |
(592.2) |
|
|
(40.8) |
|
||
Proceeds from sale of assets |
0.2 |
|
|
0.7 |
|
||
Net cash used in investing activities |
(772.8) |
|
|
(371.0) |
|
||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
||||
Proceeds from debt, net |
1,811.5 |
|
|
321.0 |
|
||
Dividend payment |
(196.9) |
|
|
(282.8) |
|
||
Purchase of remaining mandatorily redeemable noncontrolling interest |
(45.0) |
|
|
— |
|
||
Other financing activities |
(39.8) |
|
|
(54.9) |
|
||
Net cash provided by (used in) financing activities |
1,529.8 |
|
|
(16.7) |
|
||
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
(30.3) |
|
|
(5.7) |
|
||
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
931.2 |
|
|
58.0 |
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period |
380.4 |
|
|
362.2 |
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period |
$ |
1,311.6 |
|
|
$ |
420.2 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200511005443/en/
Investor Relations
Olga Levinzon, +1 212 389-7733
[email protected]
Media Relations
Lisa Kessler, +1 917 348-3373
[email protected]
Arnaud Leblin, +33 1 58 71 72 00
[email protected]