Coty Inc. (NYSE: COTY) today announced financial results for the second quarter of fiscal year 2020, ended December 31, 2019.
Results at a glance |
|
Three Months Ended
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Six Months Ended
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Change YoY |
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Change YoY |
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(in millions, except per share data) |
|
|
|
Reported
|
|
Organic
|
|
|
|
|
Reported
|
|
Organic
|
||||||||
Net revenues |
|
$ |
2,345.0 |
|
|
(6.6) |
% |
|
(1.4) |
% |
|
|
$ |
4,287.8 |
|
|
(5.6) |
% |
|
(1.3) |
% |
Operating income - reported |
|
35.4 |
|
|
>100% |
|
|
|
|
161.4 |
|
|
>100% |
|
|
||||||
Operating income - adjusted* |
|
325.0 |
|
|
1 |
% |
|
|
|
|
479.7 |
|
|
4 |
% |
|
|
||||
Net income (loss) - reported |
|
(21.1) |
|
|
98 |
% |
|
|
|
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31.2 |
|
|
>100% |
|
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|||||
Net income - adjusted* |
|
205.2 |
|
|
13 |
% |
|
|
|
|
255.7 |
|
|
(3) |
% |
|
|
||||
EPS (diluted) - reported |
|
$ |
(0.03) |
|
|
>100% |
|
|
|
|
$ |
0.04 |
|
|
>100% |
|
|
||||
EPS (diluted) - adjusted* |
|
$ |
0.27 |
|
|
13 |
% |
|
|
|
|
$ |
0.34 |
|
|
(3) |
% |
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||
* These measures, as well as “free cash flow,” “adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)” 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.
Highlights
Commenting on the operating results, Pierre Laubies, Coty CEO said:
"Our turnaround plan has now been underway for two quarters, and we are confident that the actions we are taking will build a much healthier business and growth. We saw momentum across many of our priority Luxury brands, including Burberry, Gucci, Tiffany and Hugo Boss, while continuing to grow our footprint in Luxury color cosmetics. Our global sell-out trends continue to improve in key mass beauty categories, and brands like Sally Hansen and Rimmel are gaining share in several core countries. The organization remains vigilant in driving strong gross margin improvement, activating the levers at the center of our strategy: mix management, select price increases, more disciplined promotions, and foregoing low value sales. This has allowed us to continue to increase the working media investments behind our brands. Although we are in the early stages of deploying our strategy and much work remains ahead, we continue to be very enthusiastic about the business we are building and our growth prospects."
Commenting on the financial results, Pierre-André Terisse, Coty CFO said:
"Our second quarter results were in-line with our expectations, and underpinned by strong results in our gross margin and free cash flow generation. This makes me confident in our ability to achieve our targets for the year. In the second half, we will start implementing restructuring and supply chain improvement, as per our turnaround plan. Additionally, we are progressing as planned with our strategic review, with strong interest from multiple parties, and continue to target a decision by this summer. Last, we have now commenced a strategic partnership with Kylie Jenner, and we look forward to building a high growth, digitally native beauty brand. In sum, we are continuing to execute on the three pillars of our roadmap, including implementing our turnaround plan, refocusing on our core fragrances, cosmetics and skincare businesses in conjunction with a substantially improved leverage profile, and amplifying our growth potential."
FY20 Outlook
The FY20 outlook remains unchanged:
Financial Results
Revenues:
Gross Margin:
Operating Income:
Net Income:
Earnings Per Share (EPS):
Operating Cash Flow:
Dividend and Net Debt:
Second Quarter Fiscal 2020 Business Review by Segment
Luxury
|
Three Months Ended December 31, 2019 |
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Six Months Ended December 31, 2019 |
||||
|
Actual |
Reported Basis
|
LFL |
|
Actual |
Reported Basis
|
LFL |
Net Revenues |
1,016.5 |
(0.1)% |
1.3% |
|
$1,823.2 |
0.7% |
2.7% |
|
|
|
|
|
|
|
|
|
Reported |
Adjusted |
|
|
Reported |
Adjusted |
|
Operating Income |
148.1 |
185.8 |
|
|
238.4 |
314.1 |
|
Operating Margin |
14.6% |
18.3% |
|
|
13.1% |
17.2% |
|
In 2Q20, reported Luxury net revenues of $1,016.5 million decreased by 0.1% versus the prior year. On a LFL basis, Luxury net revenues increased by 1.3% on a high base, fueled by growth in Travel Retail, ALMEA, and Europe. North America declined as a result of a very difficult comparison in the year-ago period following Hurricane-related shipment push-outs into 2Q19, as well as reduced holiday giftset activity as part of our effort to build a healthier business.
2Q20 results were supported by strength in Burberry, Gucci, Tiffany, Hugo Boss, and Lacoste, fueled by strong innovation. In particular, the launch of Tiffany & Love broadened the brand reach to both female and male fragrances, driving market share gains in our core markets. Our early stage expansion into luxury cosmetics continued to progress well, with Gucci lipstick gradually broadening its distribution, including a very successful launch in China in November 2019, setting the stage for the broadening of the cosmetics range in the coming quarters.
The teams have prepared a number of innovations which will be launched from Q3 onwards. In parallel, with a view to strengthen the quality of our business, we have been cutting low value sales since January, which will temporarily drive weak sell-in trends in Q3.
The Luxury division delivered reported operating income of $148.1 million, an increase of 30% vs. the prior-year period. 2Q20 adjusted operating income was $185.8 million, reflecting solid 5% growth from the prior year. The 2Q20 adjusted operating margin was 18.3%, an increase of 90 bps versus 2Q19, driven by over 100 bps of gross margin expansion.
Consumer Beauty
|
Three Months Ended December 31, 2019 |
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Six Months Ended December 31, 2019 |
||||
|
Actual |
Reported Basis
|
LFL |
|
Actual |
Reported Basis
|
LFL |
Net Revenues |
799.7 |
(17.4)% |
(6.7)% |
|
1,516.2 |
(15.6)% |
(8.1)% |
|
|
|
|
|
|
|
|
|
Reported |
Adjusted |
|
|
Reported |
Adjusted |
|
Operating Income (Loss) |
26.9 |
48.7 |
|
|
(16.4) |
34.5 |
|
Operating Margin |
3.4% |
6.1% |
|
|
(1.1)% |
2.3% |
|
2Q20 Consumer Beauty net revenues of $799.7 million declined 17.4% on a reported basis and declined 6.7% LFL. Even as the global mass beauty market in tracked channels has weakened moderately in recent months to a decline of approximately 3-4%, global sell-out trends for our brands have continued to show gradual improvement, declining in the mid-single digits in recent months. On a sell-in basis, our Europe revenues declined moderately in Q2, reflecting the low single digit mass beauty market declines and gradual progress in our performance. In North America, revenues remain pressured by shelf space losses and some weakening in the mass beauty market. ALMEA sales continued to be pressured by our proactive decision to reduce sales to lower value channels in select countries in support of our gross margin expansion agenda, even as our sell-out in the region remained solid.
By category, net revenue in color cosmetics continued to decline high single digits. Within color cosmetics, we have improved our underperformance relative to the overall category, supported by market share gains in some of our priority brands including Rimmel in the U.K., Max Factor in Germany, Sally Hansen in the U.S., and Cover Girl in Canada. In retail hair, revenues continued to decline low single digits. In body care and mass fragrances, revenues declined in total, though our core brands adidas and Bruno Banani drove sell-out growth. As we continued to be deliberate in our resource allocation, we concentrated our working media investments behind our priority brand and country combinations, with revenues in these priority businesses declining low single digits, in line with 1Q20.
Reported operating income in 2Q20 of $26.9 million increased compared to reported operating loss of $906.9 million in the prior year period. The 2Q20 adjusted operating income of $48.7 million decreased from $54.1 million in the prior year period. However, the adjusted operating margin increased 50 bps to 6.1%, as a solid increase in working media was more than offset by control of non-working media spending.
Professional Beauty
|
Three Months Ended December 31, 2019 |
|
Six Months Ended December 31, 2019 |
||||
|
Actual |
Reported Basis
|
LFL |
|
Actual |
Reported Basis
|
LFL |
Net Revenues |
528.8 |
0.6% |
2.2% |
|
948.4 |
1.4% |
3.5% |
|
|
|
|
|
|
|
|
|
Reported |
Adjusted |
|
|
Reported |
Adjusted |
|
Operating Income |
73.5 |
90.8 |
|
|
97.9 |
132.4 |
|
Operating Margin |
13.9% |
17.2% |
|
|
10.3% |
14.0% |
|
Professional Beauty 2Q20 net revenues of $528.8 million rose by 0.6%, with LFL increasing 2.2%. The quarter was driven by continued strength of ghd and low single digit growth in the hair brands. Europe grew in the quarter, largely driven by distribution gains of Nail products. ALMEA sales were relatively flat, and North America declined slightly, due to declines in Nail.
Professional Beauty reported operating income of $73.5 million decreased from $73.8 million in the prior year period, while adjusted operating income was relatively flat at $90.8 million. The Professional Beauty division adjusted operating margin of 17.2% declined 10 bps from prior period.
Second Quarter Fiscal 2020 Business Review by Geographic Region
|
|
Three Months Ended December 31, |
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|
|
Net Revenues |
|
Change |
||||||||||
(in millions) |
|
2019 |
|
2018 |
|
Reported
|
|
Organic
|
||||||
North America |
|
$ |
635.0 |
|
|
$ |
742.2 |
|
|
(14.4) |
% |
|
(6.3) |
% |
Europe |
|
1,172.9 |
|
|
1,201.6 |
|
|
(2.4) |
% |
|
1.5 |
% |
||
ALMEA |
|
537.1 |
|
|
567.4 |
|
|
(5.3) |
% |
|
(1.7) |
% |
||
Total |
|
$ |
2,345.0 |
|
|
$ |
2,511.2 |
|
|
(6.6) |
% |
|
(1.4) |
% |
North America
Europe
ALMEA
Cash Flows
Other Company Developments
Today Coty announced its new sustainability strategy titled, “Beauty that Lasts”, with updated targets focusing on three pillars: people, products and planet. The sustainability strategy is part of the company’s Turnaround Plan to build a better business for all stakeholders while making a positive contribution towards achieving a more sustainable and equitable world. This strategy reinforces Coty’s continued support of the UN Global Compact Ten Principles which was announced five years ago.
Other company developments include:
Conference Call
Coty Inc. will host a conference call at 8:00 a.m. (ET) today, February 5, 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: 1766567). 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 Company’s turnaround plan announced on July 1, 2019 (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 hair and nail brands sold by the Consumer Beauty division and Brazilian operations and any transaction related thereto, including divestiture (the “Strategic Review”), including timing of such Strategic Review and any transaction and the use of proceeds from any such transaction, 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, timing and size of cash outflows and debt deleveraging, 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” 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") and net debt. Management believes that these measures are useful for investors because it provides them with an important perspective on the cash available for debt repayment and other strategic measures and provides them with the same measures that management uses as the basis for making resource allocation decisions. Free cash flow is defined as net cash provided by operating activities, less capital expenditures, adjusted EBITDA is defined as adjusted operating income 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.”
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
|
|||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(in millions, except per share data) |
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
Net revenues |
$ |
2,345.0 |
|
|
$ |
2,511.2 |
|
|
$ |
4,287.8 |
|
|
$ |
4,542.5 |
|
Cost of sales |
859.3 |
|
|
956.7 |
|
|
1,597.7 |
|
|
1,765.8 |
|
||||
as % of Net revenues |
36.6 |
% |
|
38.1 |
% |
|
37.3 |
% |
|
38.9 |
% |
||||
Gross profit |
1,485.7 |
|
|
1,554.5 |
|
|
2,690.1 |
|
|
2,776.7 |
|
||||
Gross margin |
63.4 |
% |
|
61.9 |
% |
|
62.7 |
% |
|
61.1 |
% |
||||
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses |
1,202.6 |
|
|
1,284.0 |
|
|
2,275.2 |
|
|
2,406.3 |
|
||||
as % of Net revenues |
51.3 |
% |
|
51.1 |
% |
|
53.1 |
% |
|
53.0 |
% |
||||
Gain on sale of business |
— |
|
|
— |
|
|
(84.5) |
|
|
— |
|
||||
Amortization expense |
76.8 |
|
|
88.5 |
|
|
161.1 |
|
|
181.0 |
|
||||
Restructuring costs |
134.9 |
|
|
21.5 |
|
|
140.9 |
|
|
37.0 |
|
||||
Acquisition and divestiture-related costs |
36.0 |
|
|
— |
|
|
36.0 |
|
|
— |
|
||||
Asset impairment charges |
— |
|
|
965.1 |
|
|
— |
|
|
977.7 |
|
||||
Operating income (loss) |
35.4 |
|
|
(804.6) |
|
|
161.4 |
|
|
(825.3) |
|
||||
as % of Net revenues |
1.5 |
% |
|
(32.0) |
% |
|
3.8 |
% |
|
(18.2) |
% |
||||
Interest expense, net |
71.1 |
|
|
68.3 |
|
|
148.5 |
|
|
132.4 |
|
||||
Other expense, net |
1.3 |
|
|
4.8 |
|
|
3.5 |
|
|
7.5 |
|
||||
(Loss) income before income taxes |
(37.0) |
|
|
(877.7) |
|
|
9.4 |
|
|
(965.2) |
|
||||
as % of Net revenues |
(1.6) |
% |
|
(35.0) |
% |
|
0.2 |
% |
|
(21.2) |
% |
||||
(Benefit) provision for income taxes |
(20.6) |
|
|
78.3 |
|
|
(30.5) |
|
|
0.9 |
|
||||
Net (loss) income |
(16.4) |
|
|
(956.0) |
|
|
39.9 |
|
|
(966.1) |
|
||||
as % of Net revenues |
(0.7) |
% |
|
(38.1) |
% |
|
0.9 |
% |
|
(21.3) |
% |
||||
Net income attributable to noncontrolling interests |
0.5 |
|
|
0.6 |
|
|
3.3 |
|
|
1.8 |
|
||||
Net income attributable to redeemable noncontrolling interests |
4.2 |
|
|
4.0 |
|
|
5.4 |
|
|
4.8 |
|
||||
Net (loss) income attributable to Coty Inc. |
$ |
(21.1) |
|
|
$ |
(960.6) |
|
|
$ |
31.2 |
|
|
$ |
(972.7) |
|
as % of Net revenues |
(0.9) |
% |
|
(38.3) |
% |
|
0.7 |
% |
|
(21.4) |
% |
||||
Net (loss) income attributable to Coty Inc. per common share: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
(0.03) |
|
|
$ |
(1.28) |
|
|
$ |
0.04 |
|
|
$ |
(1.30) |
|
Diluted |
$ |
(0.03) |
|
|
$ |
(1.28) |
|
|
$ |
0.04 |
|
|
$ |
(1.30) |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
758.1 |
|
|
751.1 |
|
|
756.1 |
|
|
751.0 |
|
||||
Diluted |
758.1 |
|
|
751.1 |
|
|
761.2 |
|
|
751.0 |
|
||||
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 December 31, 2019 |
||||||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
Foreign Currency
|
|
Adjusted Results at
|
||||||||||
Net revenues |
|
$ |
2,345.0 |
|
|
— |
|
|
$ |
2,345.0 |
|
|
$ |
38.5 |
|
|
$ |
2,383.5 |
|
|
Gross profit |
|
1,485.7 |
|
|
— |
|
|
1,485.7 |
|
|
24.1 |
|
|
1,509.8 |
|
|||||
Gross margin |
|
63.4 |
% |
|
|
|
63.4 |
% |
|
|
|
63.3 |
% |
|||||||
Operating income |
|
35.4 |
|
|
289.6 |
|
|
325.0 |
|
|
6.7 |
|
|
331.7 |
|
|||||
as % of Net revenues |
|
1.5 |
% |
|
|
|
13.9 |
% |
|
|
|
13.9 |
% |
|||||||
Net (loss) income attributable to Coty Inc. |
|
$ |
(21.1) |
|
|
$ |
226.3 |
|
|
$ |
205.2 |
|
|
|
|
|
||||
as % of Net revenues |
|
(0.9) |
% |
|
|
|
8.8 |
% |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EPS (diluted) |
|
$ |
(0.03) |
|
|
|
|
$ |
0.27 |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Three Months Ended December 31, 2018 |
|
|
|
|
||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
|
|
|
||||||||||
Net revenues |
|
$ |
2,511.2 |
|
|
— |
|
|
$ |
2,511.2 |
|
|
|
|
|
|||||
Gross profit |
|
1,554.5 |
|
|
4.6 |
|
|
1,559.1 |
|
|
|
|
|
|||||||
Gross margin |
|
61.9 |
% |
|
|
|
62.1 |
% |
|
|
|
|
||||||||
Operating (loss) income |
|
(804.6) |
|
|
1,126.9 |
|
|
322.3 |
|
|
|
|
|
|||||||
as % of Net revenues |
|
(32.0) |
% |
|
|
|
12.8 |
% |
|
|
|
|
||||||||
Net (loss) income attributable to Coty Inc. |
|
$ |
(960.6) |
|
|
$ |
1,142.5 |
|
|
$ |
181.9 |
|
|
|
|
|
||||
as % of Net revenues |
|
(38.3) |
% |
|
|
|
7.2 |
% |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EPS (diluted) |
|
$ |
(1.28) |
|
|
|
|
$ |
0.24 |
|
|
|
|
|
(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. |
|
|
Six Months Ended December 31, 2019 |
||||||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
Foreign Currency
|
|
Adjusted Results at
|
||||||||||
Net revenues |
|
$ |
4,287.8 |
|
|
$ |
— |
|
|
$ |
4,287.8 |
|
|
$ |
87.1 |
|
|
$ |
4,374.9 |
|
Gross profit |
|
2,690.1 |
|
|
— |
|
|
2,690.1 |
|
|
55.5 |
|
|
2,745.6 |
|
|||||
Gross margin |
|
62.7 |
% |
|
|
|
62.7 |
% |
|
|
|
62.8 |
% |
|||||||
Operating income |
|
161.4 |
|
|
318.3 |
|
|
479.7 |
|
|
12.7 |
|
|
492.4 |
|
|||||
as % of Net revenues |
|
3.8 |
% |
|
|
|
11.2 |
% |
|
|
|
11.3 |
% |
|||||||
Net income attributable to Coty Inc. |
|
$ |
31.2 |
|
|
$ |
224.5 |
|
|
$ |
255.7 |
|
|
|
|
|
||||
as % of Net revenues |
|
0.7 |
% |
|
|
|
6.0 |
% |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EPS (diluted) |
|
$ |
0.04 |
|
|
|
|
$ |
0.34 |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Six Months Ended December 31, 2018 |
|
|
|
|
||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
|
|
|
||||||||||
Net revenues |
|
$ |
4,542.5 |
|
|
$ |
— |
|
|
$ |
4,542.5 |
|
|
|
|
|
||||
Gross profit |
|
2,776.7 |
|
|
9.8 |
|
|
2,786.5 |
|
|
|
|
|
|||||||
Gross margin |
|
61.1 |
% |
|
|
|
61.3 |
% |
|
|
|
|
||||||||
Operating (loss) income |
|
(825.3) |
|
|
1,288.4 |
|
|
463.1 |
|
|
|
|
|
|||||||
as % of Net revenues |
|
(18.2) |
% |
|
|
|
10.2 |
% |
|
|
|
|
||||||||
Net (loss) income attributable to Coty Inc. |
|
$ |
(972.7) |
|
|
$ |
1,235.1 |
|
|
$ |
262.4 |
|
|
|
|
|
||||
as % of Net revenues |
|
(21.4) |
% |
|
|
|
5.8 |
% |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EPS (diluted) |
|
$ |
(1.30) |
|
|
|
|
$ |
0.35 |
|
|
|
|
|
(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 December 31, |
|
Six Months Ended December 31, |
||||||||||||||
(in millions) |
|
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
||||||
Reported Operating Income (Loss) |
|
35.4 |
|
|
(804.6) |
|
|
>100% |
|
161.4 |
|
|
(825.3) |
|
|
>100% |
||
% of Net revenues |
|
1.5 |
% |
|
(32.0) |
% |
|
|
|
3.8 |
% |
|
(18.2) |
% |
|
|
||
Restructuring and other business realignment costs (a) |
|
176.8 |
|
|
73.3 |
|
|
>100% |
|
205.7 |
|
|
129.7 |
|
|
59 |
% |
|
Amortization expense (b) |
|
76.8 |
|
|
88.5 |
|
|
(13) |
% |
|
161.1 |
|
|
181.0 |
|
|
(11) |
% |
Costs related to acquisition and divestiture activities (c) |
|
36.0 |
|
|
— |
|
|
N/A |
|
36.0 |
|
|
— |
|
|
N/A |
||
Gain on sale of business (d) |
|
— |
|
|
— |
|
|
N/A |
|
(84.5) |
|
|
|
|
N/A |
|||
Asset impairment charges (e) |
|
— |
|
|
965.1 |
|
|
(100) |
% |
|
— |
|
|
977.7 |
|
|
(100) |
% |
Total adjustments to Reported Operating Income |
|
289.6 |
|
|
1,126.9 |
|
|
(74) |
% |
|
318.3 |
|
|
1,288.4 |
|
|
(75) |
% |
Adjusted Operating Income |
|
325.0 |
|
|
322.3 |
|
|
1 |
% |
|
479.7 |
|
|
463.1 |
|
|
4 |
% |
% of Net revenues |
|
13.9 |
% |
|
12.8 |
% |
|
|
|
11.2 |
% |
|
10.2 |
% |
|
|
(a) |
In the three months ended December 31, 2019, we incurred restructuring and other business structure realignment costs of $176.8. We incurred Restructuring costs of $134.9 primarily related to the Turnaround Plan, included in the Condensed Consolidated Statements of Operations. We incurred business structure realignment costs of $41.9 primarily related to the Turnaround Plan, included in Selling, general and administrative expenses in the Condensed Consolidated Statement of Operations. In the three months ended December 31, 2018, we incurred restructuring and other business structure realignment costs of $73.3. We incurred Restructuring costs of $21.5 primarily related to our global integration activities, included in the Condensed Consolidated Statements of Operations. We incurred business structure realignment costs of $51.8 primarily related to our global integration activities and certain other programs. This amount primarily includes $47.2 in Selling, general and administrative expense and $4.6 in Cost of sales in the Condensed Consolidated Statement of Operations. |
|
|
In the six months ended December 31, 2019, we incurred restructuring and other business structure realignment costs of $205.7. We incurred Restructuring costs of $140.9 primarily related to the Turnaround Plan, included in the Condensed Consolidated Statements of Operations. We incurred business structure realignment costs of $64.8 primarily related to the Turnaround Plan, included in Selling, general and administrative expenses in the Condensed Consolidated Statement of Operations. In the six months ended December 31, 2018, we incurred restructuring and other business structure realignment costs of $129.7. We incurred Restructuring costs of $37.0 primarily related to global integration activities and 2018 Restructuring Actions, included in the Condensed Consolidated Statements of Operations. We incurred business structure realignment costs of $92.7 primarily related to our global integration activities and certain other programs. This amount primarily includes $82.9 in Selling, general and administrative expense and $9.8 in Cost of sales in the Condensed Consolidated Statement of Operations. |
|
(b) |
In the three months ended December 31, 2019, amortization expense decreased to $76.8 from $88.5 in the three months ended December 31, 2018. In the three months ended December 31, 2019, amortization expense of $37.7, $21.8, and $17.3 was reported in the Luxury, Consumer Beauty and Professional Beauty segments, respectively. In three months ended December 31, 2018, amortization expense of $40.5, $30.7, and $17.3 was reported in the Luxury, Consumer Beauty, and Professional Beauty segments, respectively. |
|
|
In the six months ended December 31, 2019, amortization expense decreased to $161.1 from $181.0 in the six months ended December 31, 2018. In the three months ended December 31, 2019, amortization expense off $75.7, $ 50.9, and 34.5 was reported in the Luxury, Consumer Beauty and Professional Beauty segments, respectively. In the six months ended December 31, 2018, amortization expense of $80.8, $64.1, and $36.1 was reported in the Luxury, Consumer Beauty, and Professional Beauty segments, respectively. |
|
(c) |
In the three months ended December 31, 2019 we incurred $36.0 of costs related to acquisition and divestiture activities. These costs were partially driven by consulting and legal fees associated with the King Kylie purchase agreement, as well as consulting and legal fees associated with the process to explore strategic alternatives, including divestment, of the Professional Beauty business including associated hair brands sold by the Consumer Beauty division, as well as the Company’s Brazilian operations. In the three months ended December 31, 2018 there were no acquisition related charges incurred. |
|
|
In the six months ended December 31, 2019, we incurred $36.0 of cost relating to consulting and legal fees associated with the King Kylie purchase agreement, as well as consulting and legal fees associated with the process to explore strategic alternatives, including divestment, of the Professional Beauty business including associated hair brands sold by the Consumer Beauty division, as well as the Company’s Brazilian operations. In the six months ended December 31, 2018, there were no acquisition and divestiture related charges incurred. |
|
(d) |
In the three months ended December 31, 2019 and in three months ended December 31, 2018, we did not divest any business. |
|
|
In the six months ended December 31, 2019, we completed the divestiture of Younique resulting in income of $84.5 included in Gain on sale of business in the Condensed Consolidated Statements of Operations. In six months ended December 31, 2018, we did not divest any business. |
|
(e) |
In the three months ended December 31, 2019, we did not incur any asset impairment charges. In the three months ended December 31, 2018, we incurred $965.1 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 Luxury reporting unit and recorded an asset impairment charge of $22.8. The Company also fully impaired a Corporate equity security investment and recorded an asset impairment charge of $12.0. |
|
|
In the six months ended December 31, 2019, we did not incur any asset impairment charges. In the six months ended December 31, 2018, 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 Luxury 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 December 31, 2019 |
|
Three Months Ended December 31, 2018 |
||||||||||||||||||
(in millions) |
|
(Loss)
|
|
(Benefit)
|
|
Effective Tax
|
|
(Loss)
|
|
Provision
|
|
Effective Tax
|
||||||||||
Reported (Loss) Before Taxes |
|
$ |
(37.0) |
|
|
$ |
(20.6) |
|
|
55.7 |
% |
|
$ |
(877.7) |
|
|
$ |
78.3 |
|
|
(8.9) |
% |
Adjustments to reported operating income (a) (b) |
|
289.6 |
|
|
63.3 |
|
|
|
|
1,126.9 |
|
|
(19.2) |
|
|
|
||||||
Adjusted Income Before Taxes |
|
$ |
252.6 |
|
|
$ |
42.7 |
|
|
16.9 |
% |
|
$ |
249.2 |
|
|
$ |
59.1 |
|
|
23.7 |
% |
(a) | See a description of adjustments under “Reconciliation of Reported Operating Income (Loss) to Adjusted Operating Income”. |
(b) | The tax effects of each of the items included in adjusted income are calculated in a manner that results in a corresponding income tax benefit/provision for adjusted income. In preparing the calculation, each adjustment to reported income is first analyzed to determine if the adjustment has an income tax consequence. The benefit/provision for taxes is then calculated based on the jurisdiction in which the adjusted items are incurred, multiplied by the respective statutory rates and offset by the increase or reversal of any valuation allowances commensurate with the non–GAAP measure of profitability. |
The adjusted effective tax rate was 16.9% for the three months ended December 31, 2019 compared to 23.7% for the three months ended December 31, 2018. The differences were primarily due to the resolution of foreign uncertain tax positions of $11.8 in the current period.
|
Six Months Ended
|
|
Six Months Ended
|
||||||||||||||||||
(in millions) |
Income
|
|
(Benefit)
|
|
Effective
|
|
(Loss)
|
|
Provision
|
|
Effective
|
||||||||||
Reported Income (Loss) Before Taxes |
$ |
9.4 |
|
|
$ |
(30.5) |
|
|
(324.5) |
% |
|
$ |
(965.2) |
|
|
$ |
0.9 |
|
|
(0.1) |
% |
Gain on sale of business adjustment (a)(b) |
$ |
(84.5) |
|
|
$ |
4.8 |
|
|
|
|
|
|
|
|
|
||||||
Other adjustments to reported operating income (a) (b) |
402.8 |
|
|
86.0 |
|
|
|
|
1,288.4 |
|
|
45.9 |
|
|
|
||||||
Adjusted Income Before Taxes |
$ |
327.7 |
|
|
$ |
60.3 |
|
|
18.4 |
% |
|
$ |
323.2 |
|
|
$ |
46.8 |
|
|
14.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(a) | See a description of adjustments under “Reconciliation of Reported Operating Income (Loss) to Adjusted Operating Income”. |
(b) | The tax effects of each of the items included in adjusted income are calculated in a manner that results in a corresponding income tax expense/provision for adjusted income. In preparing the calculation, each adjustment to reported income is first analyzed to determine if the adjustment has an income tax consequence. The provision for taxes is then calculated based on the jurisdiction in which the adjusted items are incurred, multiplied by the respective statutory rates and offset by the increase or reversal of any valuation allowances commensurate with the non-GAAP measure of profitability. |
The adjusted effective tax rate was 18.4% for the six months ended December 31, 2019 compared to 14.5% for the six months ended December 31, 2018. The differences were primarily due to a $30.0 tax benefit recognized in the prior period as a result of a favorable Swiss tax ruling.
RECONCILIATION OF REPORTED NET INCOME (LOSS) TO ADJUSTED NET INCOME
|
|
Three Months Ended December 31, |
|
Six Months Ended December 31, |
||||||||||||||||||
(in millions) |
|
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
||||||||||
Reported Net (Loss) Income Attributable to Coty Inc. |
|
$ |
(21.1) |
|
|
$ |
(960.6) |
|
|
98 |
% |
|
$ |
31.2 |
|
|
$ |
(972.7) |
|
|
>100% |
|
% of Net revenues |
|
(0.9) |
% |
|
(38.3) |
% |
|
|
|
0.7 |
% |
|
(21.4) |
% |
|
|
||||||
Adjustments to Reported Operating Income (a) |
|
289.6 |
|
|
1,126.9 |
|
|
(74) |
% |
|
318.3 |
|
|
1,288.4 |
|
|
(75) |
% |
||||
Adjustments to noncontrolling interests (b) |
|
— |
|
|
(3.6) |
|
|
100 |
% |
|
(3.0) |
|
|
(7.4) |
|
|
59 |
% |
||||
Change in tax provision due to adjustments to Reported Net Income Attributable to Coty Inc. |
|
(63.3) |
|
|
19.2 |
|
|
<(100%) |
|
(90.8) |
|
|
(45.9) |
|
|
(98) |
% |
|||||
Adjusted Net Income Attributable to Coty Inc. |
|
$ |
205.2 |
|
|
$ |
181.9 |
|
|
13 |
% |
|
$ |
255.7 |
|
|
$ |
262.4 |
|
|
(3) |
% |
% of Net revenues |
|
8.8 |
% |
|
7.2 |
% |
|
|
|
6.0 |
% |
|
5.8 |
% |
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Per Share Data |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted weighted-average common shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic |
|
758.1 |
|
|
751.1 |
|
|
|
|
756.1 |
|
|
751.0 |
|
|
|
||||||
Diluted |
|
763.5 |
|
|
752.5 |
|
|
|
|
761.2 |
|
|
752.6 |
|
|
|
||||||
Adjusted Net Income Attributable to Coty Inc. per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic |
|
$ |
0.27 |
|
|
$ |
0.24 |
|
|
|
|
$ |
0.34 |
|
|
$ |
0.35 |
|
|
|
||
Diluted |
|
$ |
0.27 |
|
|
$ |
0.24 |
|
|
|
|
$ |
0.34 |
|
|
$ |
0.35 |
|
|
|
||
(a) | See a description of adjustments under “Reconciliation of Reported Operating Income (Loss) to Adjusted Operating Income”. |
(b) | The amounts represent the impact of non-GAAP adjustments to Net income attributable to noncontrolling interest related to the Company’s majority-owned consolidated subsidiaries. The amounts are based on the relevant noncontrolling interest’s percentage ownership in the related subsidiary, for which the non-GAAP adjustments were made. |
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
|
Three Months Ended December 31, |
|
Six Months Ended December 31, |
||||||||||||
(in millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
Net cash provided by operating activities |
$ |
422.1 |
|
|
$ |
319.6 |
|
|
$ |
462.0 |
|
|
$ |
237.7 |
|
Capital expenditures |
(58.6) |
|
|
(125.7) |
|
|
(145.0) |
|
|
(259.3) |
|
||||
Free cash flow |
$ |
363.5 |
|
|
$ |
193.9 |
|
|
$ |
317.0 |
|
|
$ |
(21.6) |
|
RECONCILIATION OF TOTAL DEBT TO NET DEBT
(in millions) |
|
December 31, 2019 |
||
Total debt |
|
$ |
7,494.7 |
|
Cash and cash equivalents |
|
288.8 |
|
|
Net debt |
|
$ |
7,205.9 |
|
RECONCILIATION OF ADJUSTED OPERATING INCOME TO ADJUSTED EBITDA
(in millions) |
|
Twelve Months Ended
|
||
Adjusted operating income(a) |
|
$ |
966.3 |
|
Depreciation (b) |
|
383.9 |
|
|
Pension Adjustment (c) |
|
2.0 |
|
|
Adjusted EBITDA |
|
1,352.2 |
|
(a) | Adjusted operating income for the twelve months ended December 31, 2019 represents the summation of the adjusted operating income for each of the three months ended March 31, 2019, June 30, 2019, September 30, 2019, and December 31, 2019. For a reconciliation of adjusted operating income to operating income for each of those periods, see the tables entitled “Reconciliation of Reported Operating Income to Adjusted Operating Income” and "Reconciliation of Reported Operating Income to Adjusted Operating Income by Segment" for each of those periods. |
(b) | The depreciation adjustment for the twelve months ended December 31, 2019 represents the summation of depreciation expense for each of the three months ended March 31, 2019, June 30, 2019, September 30, 2019, and December 31, 2019 as adjusted by $0.2, $0, $0.2, and $7.8 respectively, for accelerated depreciation. The accelerated depreciation for the three months ended December 31, 2019 reflects the useful life modifications on assets impacted by Turnaround Plan activities. |
(c) | The pension expense adjustment for the twelve months ended December 31, 2019 represents the summation of the non-service cost components of net periodic pension cost for each of the three months ended March 31, 2019, June 30, 2019, September 30, 2019, and December 31, 2019. |
NET DEBT/ADJUSTED EBITDA
|
|
December 31, 2019 |
|
Net Debt |
|
7,205.9 |
|
EBITDA |
|
1,352.2 |
|
Net Debt/Adjusted EBITDA |
|
5.33 |
|
NET REVENUES AND ADJUSTED OPERATING INCOME BY SEGMENT
|
|
Three Months Ended December 31, |
||||||||||||||||||||||||||
|
|
Net Revenues |
|
Change |
|
Reported Operating
|
|
Adjusted Operating
|
||||||||||||||||||||
(in millions) |
|
2019 |
|
2018 |
|
Reported
|
|
Constant
|
|
2019 |
|
Change |
|
2019 |
|
Change |
||||||||||||
Luxury |
|
$ |
1,016.5 |
|
|
$ |
1,017.5 |
|
|
— |
% |
|
1 |
% |
|
$ |
148.1 |
|
|
30 |
% |
|
$ |
185.8 |
|
|
5 |
% |
Consumer Beauty |
|
799.7 |
|
|
967.8 |
|
|
(17) |
% |
|
(16) |
% |
|
26.9 |
|
|
>100% |
|
48.7 |
|
|
(10) |
% |
|||||
Professional |
|
528.8 |
|
|
525.9 |
|
|
1 |
% |
|
2 |
% |
|
73.5 |
|
|
— |
% |
|
90.8 |
|
|
— |
% |
||||
Corporate |
|
— |
|
|
— |
|
|
N/A |
|
N/A |
|
(213.1) |
|
|
<(100%) |
|
(0.3) |
|
|
<(100)% |
||||||||
Total |
|
$ |
2,345.0 |
|
|
$ |
2,511.2 |
|
|
(7) |
% |
|
(5) |
% |
|
$ |
35.4 |
|
|
>100% |
|
$ |
325.0 |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Six Months Ended December 31, |
||||||||||||||||||||||||||
|
|
Net Revenues |
|
Change |
|
Reported Operating
|
|
Adjusted Operating
|
||||||||||||||||||||
(in millions) |
|
2019 |
|
2018 |
|
Reported
|
|
Constant
|
|
2019 |
|
Change |
|
2019 |
|
Change |
||||||||||||
Luxury |
|
$ |
1,823.2 |
|
|
$ |
1,810.4 |
|
|
1 |
% |
|
3 |
% |
|
$ |
238.4 |
|
|
47 |
% |
|
$ |
314.1 |
|
|
13 |
% |
Consumer Beauty |
|
1,516.2 |
|
|
1,796.6 |
|
|
(16) |
% |
|
(14) |
% |
|
(16.4) |
|
|
98 |
% |
|
34.5 |
|
|
(50) |
% |
||||
Professional |
|
948.4 |
|
|
935.5 |
|
|
1 |
% |
|
4 |
% |
|
97.9 |
|
|
24 |
% |
|
132.4 |
|
|
15 |
% |
||||
Corporate |
|
— |
|
|
— |
|
|
N/A |
|
N/A |
|
(158.5) |
|
|
(12) |
% |
|
(1.3) |
|
|
<(100%) |
|||||||
Total |
|
$ |
4,287.8 |
|
|
$ |
4,542.5 |
|
|
(6) |
% |
|
(4) |
% |
|
$ |
161.4 |
|
|
>100% |
|
$ |
479.7 |
|
|
4 |
% |
|
NET REVENUES BY GEOGRAPHIC REGION
|
|
Three Months Ended December 31, |
||||||||||||
|
|
Net Revenues |
|
Change |
||||||||||
(in millions) |
|
2019 |
|
2018 |
|
Reported Basis |
|
Constant
|
||||||
North America |
|
$ |
635.0 |
|
|
$ |
742.2 |
|
|
(14) |
% |
|
(14) |
% |
Europe |
|
1,172.9 |
|
|
1,201.6 |
|
|
(2) |
% |
|
(1) |
% |
||
ALMEA |
|
537.1 |
|
|
567.4 |
|
|
(5) |
% |
|
(3) |
% |
||
Total |
|
$ |
2,345.0 |
|
|
$ |
2,511.2 |
|
|
(7) |
% |
|
(5) |
% |
|
|
|
|
|
|
|
|
|
||||||
|
|
Six Months Ended December 31, |
||||||||||||
|
|
Net Revenues |
|
Change |
||||||||||
(in millions) |
|
2019 |
|
2018 |
|
Reported Basis |
|
Constant
|
||||||
North America |
|
$ |
1,221.6 |
|
|
$ |
1,387.1 |
|
|
(12) |
% |
|
(12) |
% |
Europe |
|
2,042.5 |
|
|
2,073.8 |
|
|
(2) |
% |
|
1 |
% |
||
ALMEA |
|
1,023.7 |
|
|
1,081.6 |
|
|
(5) |
% |
|
(3) |
% |
||
Total |
|
$ |
4,287.8 |
|
|
$ |
4,542.5 |
|
|
(6) |
% |
|
(4) |
% |
RECONCILIATION OF REPORTED OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME BY SEGMENT |
||||||||||||||||||||
|
|
Three Months Ended December 31, 2019 |
||||||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments (a) |
|
Adjusted
|
|
Foreign
|
|
Adjusted Results
|
||||||||||
OPERATING INCOME (LOSS) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Luxury |
|
$ |
148.1 |
|
|
$ |
(37.7) |
|
|
$ |
185.8 |
|
|
$ |
6.5 |
|
|
$ |
192.3 |
|
Consumer Beauty |
|
26.9 |
|
|
(21.8) |
|
|
48.7 |
|
|
(0.1) |
|
|
48.6 |
|
|||||
Professional Beauty |
|
73.5 |
|
|
(17.3) |
|
|
90.8 |
|
|
0.3 |
|
|
91.1 |
|
|||||
Corporate |
|
(213.1) |
|
|
(212.8) |
|
|
(0.3) |
|
|
— |
|
|
(0.3) |
|
|||||
Total |
|
$ |
35.4 |
|
|
$ |
(289.6) |
|
|
$ |
325.0 |
|
|
$ |
6.7 |
|
|
$ |
331.7 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING MARGIN |
|
|
|
|
|
|
|
|
|
|
||||||||||
Luxury |
|
14.6 |
% |
|
|
|
18.3 |
% |
|
|
|
18.7 |
% |
|||||||
Consumer Beauty |
|
3.4 |
% |
|
|
|
6.1 |
% |
|
|
|
6.0 |
% |
|||||||
Professional Beauty |
|
13.9 |
% |
|
|
|
17.2 |
% |
|
|
|
17.0 |
% |
|||||||
Corporate |
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
||||||||||
Total |
|
1.5 |
% |
|
|
|
13.9 |
% |
|
|
|
13.9 |
% |
|||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Three Months Ended December 31, 2018 |
|
|
|
|
||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments (a) |
|
Adjusted
|
|
|
|
|
||||||||||
OPERATING (LOSS) INCOME |
|
|
|
|
|
|
|
|
|
|
||||||||||
Luxury |
|
$ |
113.6 |
|
|
$ |
(63.3) |
|
|
$ |
176.9 |
|
|
|
|
|
||||
Consumer Beauty |
|
(906.9) |
|
|
(961.0) |
|
|
54.1 |
|
|
|
|
|
|||||||
Professional Beauty |
|
73.8 |
|
|
(17.3) |
|
|
91.1 |
|
|
|
|
|
|||||||
Corporate |
|
(85.1) |
|
|
(85.3) |
|
|
0.2 |
|
|
|
|
|
|||||||
Total |
|
$ |
(804.6) |
|
|
$ |
(1,126.9) |
|
|
$ |
322.3 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING MARGIN |
|
|
|
|
|
|
|
|
|
|
||||||||||
Luxury |
|
11.2 |
% |
|
|
|
17.4 |
% |
|
|
|
|
||||||||
Consumer Beauty |
|
(93.7) |
% |
|
|
|
5.6 |
% |
|
|
|
|
||||||||
Professional Beauty |
|
14.0 |
% |
|
|
|
17.3 |
% |
|
|
|
|
||||||||
Corporate |
|
N/A |
|
|
|
N/A |
|
|
|
|
||||||||||
Total |
|
(32.0) |
% |
|
|
|
12.8 |
% |
|
|
|
|
(a) See “Reconciliation of Reported Operating Income (Loss) to Adjusted Operated Income” for a detailed description of adjusted items. |
|
|
Six Months Ended December 31, 2019 |
||||||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments (a) |
|
Adjusted
|
|
Foreign
|
|
Adjusted Results
|
||||||||||
OPERATING INCOME (LOSS) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Luxury |
|
$ |
238.4 |
|
|
$ |
(75.7) |
|
|
$ |
314.1 |
|
|
$ |
7.1 |
|
|
$ |
321.2 |
|
Consumer Beauty |
|
(16.4) |
|
|
(50.9) |
|
|
34.5 |
|
|
3.0 |
|
|
37.5 |
|
|||||
Professional Beauty |
|
97.9 |
|
|
(34.5) |
|
|
132.4 |
|
|
2.6 |
|
|
135.0 |
|
|||||
Corporate |
|
(158.5) |
|
|
(157.2) |
|
|
(1.3) |
|
|
— |
|
|
(1.3) |
|
|||||
Total |
|
$ |
161.4 |
|
|
$ |
(318.3) |
|
|
$ |
479.7 |
|
|
$ |
12.7 |
|
|
$ |
492.4 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING MARGIN |
|
|
|
|
|
|
|
|
|
|
||||||||||
Luxury |
|
13.1 |
% |
|
|
|
17.2 |
% |
|
|
|
17.3 |
% |
|||||||
Consumer Beauty |
|
(1.1) |
% |
|
|
|
2.3 |
% |
|
|
|
2.4 |
% |
|||||||
Professional Beauty |
|
10.3 |
% |
|
|
|
14.0 |
% |
|
|
|
13.9 |
% |
|||||||
Corporate |
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
||||||||||
Total |
|
3.8 |
% |
|
|
|
11.2 |
% |
|
|
|
11.3 |
% |
|||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Six Months Ended December 31, 2018 |
|
|
|
|
||||||||||||||
(in millions) |
|
Reported
|
|
Adjustments (a) |
|
Adjusted
|
|
|
|
|
||||||||||
OPERATING INCOME (LOSS) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Luxury |
|
$ |
162.3 |
|
|
$ |
(116.2) |
|
|
$ |
278.5 |
|
|
|
|
|
||||
Consumer Beauty |
|
(925.5) |
|
|
(994.4) |
|
|
68.9 |
|
|
|
|
|
|||||||
Professional Beauty |
|
78.8 |
|
|
(36.1) |
|
|
114.9 |
|
|
|
|
|
|||||||
Corporate |
|
(140.9) |
|
|
(141.7) |
|
|
0.8 |
|
|
|
|
|
|||||||
Total |
|
$ |
(825.3) |
|
|
$ |
(1,288.4) |
|
|
$ |
463.1 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OPERATING MARGIN |
|
|
|
|
|
|
|
|
|
|
||||||||||
Luxury |
|
9.0 |
% |
|
|
|
15.4 |
% |
|
|
|
|
||||||||
Consumer Beauty |
|
(51.5) |
% |
|
|
|
3.8 |
% |
|
|
|
|
||||||||
Professional Beauty |
|
8.4 |
% |
|
|
|
12.3 |
% |
|
|
|
|
||||||||
Corporate |
|
N/A |
|
|
|
N/A |
|
|
|
|
||||||||||
Total |
|
(18.2) |
% |
|
|
|
10.2 |
% |
|
|
|
|
(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 December 31, 2019 vs. Three Months Ended December 31, 2018
|
||||||||||
Net Revenues Change YoY |
|
Reported Basis |
|
Constant Currency |
|
Impact from
|
|
Organic (LFL) |
||||
Luxury |
|
— |
% |
|
1 |
% |
|
— |
% |
|
1 |
% |
Consumer Beauty |
|
(17) |
% |
|
(16) |
% |
|
(9) |
% |
|
(7) |
% |
Professional Beauty |
|
1 |
% |
|
2 |
% |
|
— |
% |
|
2 |
% |
Total Company |
|
(7) |
% |
|
(5) |
% |
|
(4) |
% |
|
(1) |
% |
|
|
|
Six Months Ended December 31, 2019 vs. Six Months Ended December 31, 2018
|
||||||||||
Net Revenues Change YoY |
|
Reported |
|
Constant Currency |
|
Impact from the
|
|
Organic (LFL) |
||||
Luxury |
|
1 |
% |
|
3 |
% |
|
— |
% |
|
3 |
% |
Consumer Beauty |
|
(16) |
% |
|
(14) |
% |
|
(6) |
% |
|
(8) |
% |
Professional Beauty |
|
1 |
% |
|
4 |
% |
|
— |
% |
|
4 |
% |
Total Company |
|
(6) |
% |
|
(4) |
% |
|
(3) |
% |
|
(1) |
% |
|
COTY INC. & SUBSIDIARIES
|
|||||||
(in millions) |
December
|
|
June 30,
|
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
288.8 |
|
|
$ |
340.4 |
|
Restricted cash |
50.7 |
|
|
40.0 |
|
||
Trade receivables |
1,110.0 |
|
|
1,161.2 |
|
||
Inventories |
1,015.8 |
|
|
1,153.3 |
|
||
Prepaid expenses and other current assets |
558.0 |
|
|
577.8 |
|
||
Total current assets |
3,023.3 |
|
|
3,272.7 |
|
||
Property and equipment, net |
1,461.7 |
|
|
1,600.6 |
|
||
Goodwill |
5,016.0 |
|
|
5,073.8 |
|
||
Other intangible assets, net |
6,992.5 |
|
|
7,422.3 |
|
||
Operating lease right-of-use assets(a) |
505.7 |
|
|
— |
|
||
Other noncurrent assets |
361.7 |
|
|
296.0 |
|
||
TOTAL ASSETS |
$ |
17,360.9 |
|
|
$ |
17,665.4 |
|
|
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
1,574.8 |
|
|
$ |
1,732.7 |
|
Short-term debt and current portion of long-term debt |
188.0 |
|
|
193.8 |
|
||
Current operating lease liabilities(a) |
109.3 |
|
|
— |
|
||
Other current liabilities |
1,641.5 |
|
|
1,550.6 |
|
||
Total current liabilities |
3,513.6 |
|
|
3,477.1 |
|
||
Long-term debt, net |
7,233.8 |
|
|
7,469.9 |
|
||
Long-term operating lease liabilities(a) |
454.2 |
|
|
— |
|
||
Other noncurrent liabilities |
1,579.1 |
|
|
1,673.2 |
|
||
Total liabilities |
12,780.7 |
|
|
12,620.2 |
|
||
REDEEMABLE NONCONTROLLING INTERESTS |
98.6 |
|
|
451.8 |
|
||
Total Coty Inc. stockholders’ equity |
4,471.7 |
|
|
4,586.9 |
|
||
Noncontrolling interests |
9.9 |
|
|
6.5 |
|
||
Total equity |
4,481.6 |
|
|
4,593.4 |
|
||
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
$ |
17,360.9 |
|
|
$ |
17,665.4 |
|
(a) Reflects the July 1, 2019 modified retrospective adoption of ASU 2016-02, Leases. |
COTY INC. & SUBSIDIARIES
|
|||||||
|
Six Months Ended
|
||||||
(in millions) |
2019 |
|
2018 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
||||
Net income (loss) |
$ |
39.9 |
|
|
$ |
(966.1) |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
357.3 |
|
|
367.7 |
|
||
Non-cash lease expense (a) |
51.8 |
|
|
— |
|
||
Deferred income taxes |
(50.4) |
|
|
(55.9) |
|
||
Share-based compensation |
16.5 |
|
|
8.2 |
|
||
Gain on sale of business |
(84.5) |
|
|
— |
|
||
Other |
70.1 |
|
|
1,055.5 |
|
||
Change in operating assets and liabilities, net of effects from purchase of acquired companies and sale of business: |
|
|
|
||||
Trade receivables |
12.3 |
|
|
(45.5) |
|
||
Inventories |
85.3 |
|
|
(35.2) |
|
||
Accounts payable |
(118.9) |
|
|
(28.6) |
|
||
Operating lease liabilities (a) |
(53.7) |
|
|
— |
|
||
Other |
136.3 |
|
|
(62.4) |
|
||
Net cash provided by operating activities |
462.0 |
|
|
237.7 |
|
||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
||||
Capital expenditures |
(145.0) |
|
|
(259.3) |
|
||
Proceeds from sale of business, net of cash disposed (b) |
25.6 |
|
|
— |
|
||
Payment for asset acquisitions |
— |
|
|
(40.8) |
|
||
Net cash used in investing activities |
(119.4) |
|
|
(300.1) |
|
||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
||||
Proceeds from debt, net |
(189.3) |
|
|
375.9 |
|
||
Dividend payment |
(130.4) |
|
|
(188.4) |
|
||
Purchase of remaining mandatorily redeemable noncontrolling interest |
(45.0) |
|
|
— |
|
||
Other financing activities |
(16.0) |
|
|
(33.8) |
|
||
Net cash (used in) provided by financing activities |
(380.7) |
|
|
153.7 |
|
||
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
(2.8) |
|
|
(8.5) |
|
||
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
(40.9) |
|
|
82.8 |
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period |
380.4 |
|
|
362.2 |
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period |
$ |
339.5 |
|
|
$ |
445.0 |
|
(a) | Reflects the July 1, 2019 modified retrospective adoption of ASU 2016-02, Leases. |
(b) | On August 27, 2019, the Company entered into a Contribution and Redemption Agreement to transfer all of its membership interest in Foundation, LLC (“Foundation”), which held the net assets of Younique, LLC (“Younique”), to an existing noncontrolling interest holder. Consideration received at the Closing Date consisted of $50.0 cash and a secured promissory note with a face value of $27.9. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200205005233/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
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