Coty Inc. (NYSE: COTY) ("Coty" or "the Company") today announced its results for the third quarter of fiscal year 2022, ended March 31, 2022. The Company delivered another quarter of solid financial progress and continued strong execution across its strategic growth pillars.
In Q3, Coty's sales increased 15% as reported and 19% on an LFL basis, ahead of its prior guidance of mid-teens LFL growth. Sales were driven by strong results in both Prestige and Consumer Beauty, with overall revenue growth inline with sell-out performance. Geographically, revenue growth was fueled by the continued recovery in many EMEA markets, a strong rebound in Travel Retail, and continued momentum in the U.S. E-commerce maintained its momentum, with double digits e-commerce sales growth in Q3 and YTD, supporting high teens e-commerce penetration, even as stores re-opened.
Coty's Prestige segment reported very robust sales growth of 21% versus the prior year and 25% on a LFL basis, even as reductions in value distribution had a low single digit negative impact on growth. Prestige fragrance sales continued to accelerate, increasing over 20% in Q3, with particularly strong growth from Gucci Beauty, Chloe, Burberry, and Hugo Boss. This was driven by the continued in-market success of Coty's Q1 fragrance innovations, Gucci Flora Gorgeous Gardenia and Burberry Hero, combined with the success of Q3 launches of Hugo Boss The Scent Le Parfum and Burberry Her EDT. The two strong female fragrance launches this fiscal year demonstrate clear progress on Coty's strategy to further elevate its position in the large female fragrance market. Prestige cosmetics nearly doubled YoY in both Q3 and fiscal year-to-date, led by the continued momentum of Gucci Beauty, as well as solid performances by both Burberry and Kylie Cosmetics.
Consumer Beauty revenues increased 8% as reported and 10% LFL in Q3, with strong performance across color cosmetics, mass fragrances, and body care. While the global mass beauty market was moderately positive in the quarter, Coty continued to outperform the market and grow share on a global basis for the past 5 consecutive months. Rimmel delivered market share gains across its key geographies, driven by the success of the Kind & Free cosmetics range. Max Factor, Sally Hansen and CoverGirl also recorded share gains, although temporary supply constraints on CoverGirl’s Clean mascara have weighed on the brands more recent share performance. In addition, the recent re-positioning of Bourjois in its home market, France, has seen strong initial success, with the brand's growth outpacing the category by ~4x in March, and becoming the #1 mascara in the very competitive French market.
Despite the challenged inflationary environment, Coty continued to generate strong gross margin expansion in the quarter, while also maintaining an increased level of media investment to further fuel revenue and sell-out growth. In Q3, reported gross margins expanded by 240 bps YoY to 64.3%, while adjusted gross margin grew 240 bps YoY to 64.6%. This brings Coty's year-to-date reported gross margin to 64.0% and adjusted gross margin to 64.2%, a robust expansion of 450 bps YoY, even as inflationary headwinds worsened from less than 1% of net revenues in 1H22 to ~1.5% of revenues in Q3. This substantial gross margin expansion was driven by favorable product and category mix, pricing, and higher volumes. Coty delivered Q3 reported operating income of $57.1 million and adjusted EBITDA of $182.5 million. Year-to-date adjusted EBITDA totaled $772.9 million, reflecting 22% growth YoY.
Financial Net Debt improved by over $200 million to $4.2 billion at the end of Q3, fueled by the $210 million Wella shareholder distribution and the remaining cash proceeds from real estate sales. In the seasonally weak Q3 period, Coty's free cash flow was only modestly negative, aided by one time benefits as the Company exited the Wella TSA. As a result, the financial leverage ratio of 4.7x exiting Q3 improved sequentially from the 4.9x at the end of Q2. During Q3, Coty's retained 26% Wella stake was adjusted lower by $210M million to reflect the Wella distribution during the quarter, while its fair value increased by $61 million as a result of stronger results and outlook. As a result, Coty's Wella stake was valued at approximately $1.03 billion at quarter-end, with the Company's Economic Net Debt totaled approximately $3.2 billion.
Commenting on the operating results, Sue Y. Nabi, Coty's CEO, said:
"Our Q3 earnings mark the seventh consecutive quarter of Coty reporting results inline to ahead of expectations. I am extremely proud of the organization for delivering these results, and outperforming the overall beauty market, in an increasingly volatile environment. This confirms that Coty has the brands and the people to win in the beauty market, guided by our strategic priorities of delivering above-market sales growth and expanding gross margin, allowing for brand reinvestment, profit expansion and continued deleveraging.
Our market-leading Q3 LFL sales growth in both Prestige and Consumer Beauty confirm that our decision to step up media investment during Q2 has proven to be the right one. Importantly, our gross margins also showed solid expansion during the quarter, allowing us to maintain a strong level of media investment, while also delivering significant profit performance. The success of the virtuous cycle we have created is even more evident when looking at our year-to-date results, and the strong growth we are delivering across sales, gross margin, media investments, and profitability. I am also pleased to say that Q3 marks another quarter of improvement on debt reduction and free cash flow, with our leverage now at 4.7x and well on track to drive our leverage towards 4x by end of CY22.
During Q3, we continued to execute on each of our strategic pillars. I am pleased to say that our Consumer Beauty business continued to gain market share globally for the 5th consecutive month, a milestone that this business had not achieved in the previous 5 years. Underpinning this market share momentum is our phased approach to brand repositioning, which began with CoverGirl last spring, followed by Rimmel and Max Factor last fall, and most recently Bourjois that has delivered very strong initial results in France. We are also excited by the plans in place for adidas, whose repositioning is on track for late summer 2022.
We maintained outstanding trends within our Prestige fragrance business, even as we further reduced low quality sales, as consumers globally continue to gravitate towards the fragrance category, and our recent innovations continued to resonate with consumers. Meanwhile, we are as confident as ever regarding our expansion into prestige cosmetics, as Gucci Beauty, Burberry, and Kylie continue to deliver great results with plenty of room ahead to further build out both distribution and the product portfolios.
In parallel, we continued to progress in building out our skincare footprint, our third strategic pillar. I am very pleased to say that Lancaster had an outstanding quarter in both Hainan and mainland China, with Lancaster's iconic 365 Serum resonating with Chinese consumers and rapidly becoming the hero SKU in the portfolio. At the same time, we are continuing to build awareness for CoverGirl's first-ever entry into skincare. With only five SKUs launched thus far and in-store placement in the cosmetics wall, we are continuing to fine-tune the execution and see lots of opportunity for this range.
Our momentum across Digital - our fourth strategic pillar - continued to build, including double digit e-commerce sales growth, global momentum in brand livestreaming and social commerce, viral activations on TikTok, and the initial deployment of virtual try-on capabilities across markets. We also saw strong performance on our fifth pillar, China, during January and February, though the onset of COVID-related restrictions has weighed on the business exiting March. Importantly, Coty's Prestige business was once again the fastest growing amongst the leading prestige beauty companies in China, with double-digit sell-out growth in a flat market backdrop.
As we enter the final two months of FY22, the environment remains highly dynamic. Coty is benefiting from several category and market tailwinds led by fragrances, though at the same time, we and the industry face lockdowns in China, the war in Ukraine, inflationary headwinds, and global supply pressures. What is clear is that Coty has navigated this complex backdrop very successfully thus far. We have continued the premiumization of our portfolios in both Prestige and Consumer Beauty, to implement price increases as a means of retaining talent and protecting margins, while also maintaining the necessary flexibility in our supply chain. The strong year-to-date performance on revenues, profit and EPS allow us to confidently confirm our FY22 guidance and even raise our FY22 adjusted EPS outlook to $0.23-0.27.
We remain confident in our short-term and medium-term ambitions, as we continue to strengthen our position as a true global beauty powerhouse."
*Adjusted financial metrics used in this release are non-GAAP. See reconciliations of GAAP results to Adjusted results in the accompanying tables. |
1Based on fair market value, reflecting the Wella capital structure as of December 31, 2021 |
|
E-commerce revenues and penetration cover the vast majority of Coty’s markets and exclude certain markets like Travel Retail in EMEA and Americas. Additionally, the data includes estimated data for Brick and Click sales, which may be subject to change. |
Highlights
Outlook
Coty's strong revenues and sell-out momentum YTD, with LFL sales growth of +17%, reinforces Coty's confidence that its brand investments are driving attractive ROI and fueling strong topline growth. Taking into account the expected impact in Q4 from Coty's decision to exit operations in Russia including local Travel Retail, which accounts for approximately 3% of total revenues, as well as the near-term COVID lockdowns in China, the Company continues to expect FY22 LFL sales will be at the upper end of its guidance range of low-to-mid teens percentage growth. Based on current FX rates, Coty expects a headwind of ~4%-5% to its reported sales in Q4.
Coty continues to expect FY22 adjusted EBITDA of $900 million, as the Company navigates the inflationary environment while intentionally reinvesting gross margin gains and costs savings in its brands to maximize value. With FX providing a net benefit at the EBITDA level both in Q3 and YTD, compared to previous expectations for FX headwinds in 2H22, the Company intends to reinvest to fuel topline initiatives while still delivering $900 million in adjusted EBITDA at actual rates.
With the strong YTD EPS delivery, Coty raises its FY22 adjusted EPS guidance to $0.23-0.27, up from its previously guided range of $0.22-0.26. The FY22 adjusted EPS guidance includes approximately 1 cent of net discrete tax benefits expected for the year.
In addition, the Company continues to target leverage towards 4x exiting CY22 and approximately 2x exiting CY25.
Financial Results*
Refer to “Non-GAAP Financial Measures” for discussion of the non-GAAP financial measures used in this release; reconciliations from reported to adjusted results can be found at the end of this release.
Revenues:
Gross Margin:
Operating Income and EBITDA:
Net Income:
Earnings Per Share (EPS) - diluted:
Operating Cash Flow:
Financial Net Debt:
Third Quarter Business Review by Segment*
Prestige
In 3Q22, Prestige net revenues of $726.4 million or 61% of Coty sales, increased by 21% versus the prior year. On a LFL basis, Prestige net revenues delivered robust growth of 25%, driven by strength across all regions including continued recovery in most EMEA markets, Travel Retail, and the U.S.
During Q3, the Prestige fragrance category across North America and Europe, continued to generate robust growth, rising over 20% versus last year and versus 2019 levels, led in particular by the U.S. and Italy. In this favorable market backdrop, Coty's fragrance sales were inline with the market. Coty's performance continued to be driven by strong results from Burberry, Gucci Beauty, Chloe, and Hugo Boss. Encouragingly, key innovations from Fall 2021, Gucci Flora Gorgeous Gardenia and Burberry Hero, continued to see very strong sell-out performance and remain among the very top selling fragrance innovations in Coty's focus markets. In addition, Coty's Spring 2022 innovations are also off to a strong start, with the new Boss The Scent male and female lines driving market share gains for the Hugo Boss brand and the Burberry Her EDT launch quickly becoming the #3 ranked women's fragrance in the U.S. in March. Meanwhile, in China, performance was strong through January and February, though started to deteriorate as COVID-related restrictions and lockdowns were put in place
Coty continued to make further strides expanding in the white space areas of Prestige cosmetics and skincare during 3Q. Prestige cosmetics sales nearly doubled during the quarter and YTD, driven by strong performances of Gucci makeup, Kylie cosmetics, and Burberry makeup. In skincare, Lancaster had its best month ever during February in Hainan, generating its highest level of sales and outperforming key competitors, driven by particularly strong momentum of its 365 Skin Repair Serum. In addition, Lancaster was the #1 exclusive brand in Sephora China for March.
The Prestige segment generated a reported operating income of $83.8 million in 3Q22, compared to $30.9 million in the prior year. The 3Q22 adjusted operating income was $123.1 million, up from an adjusted operating income of $80.7 million in the prior year, driven by strong gross margin improvement, partially offset by higher A&CP expenses. Adjusted EBITDA for the Prestige segment rose to $155.9 million from $117.1 million in the prior year, with a margin of 21.5%.
Consumer Beauty
In 3Q22, Consumer Beauty net revenues of $459.8 million, or 39% of Coty sales, increased by 8% versus the prior year. On a LFL basis, Consumer Beauty net revenues rose 10%, with strong performance across color cosmetics, mass fragrances, and body care. Encouragingly, all regions generated LFL growth in the quarter.
During the quarter, the total Coty Consumer Beauty business continued to gain market share globally, driven by particularly strong performance of color cosmetics, which increased share by close to 100bps over the last 5 consecutive months. In the U.S., while CoverGirl trends are currently being impacted by temporary supply constraints for its highly successful Lash Blast Clean mascara, the brand continues to drive momentum in its Magnificent 8 franchises while at the same time steadily building consumer awareness and visibility for the brand's first-ever skincare range. Meanwhile, Sally Hansen's performance remains strong as it continued to gain share through the quarter.
In Europe, Coty's performance continued to be driven by the re-positioning of Rimmel and Max Factor, and more recently Bourjois. Rimmel has continued to strengthen its market share across multiple European markets, especially in e-commerce, fueled by the strong momentum for its key launch, Kind & Free clean and vegan makeup line. Meanwhile, Max Factor continued to grow market share across EMEA, including in the UK, where it has reached its highest market share of the last 2 years. And the recent repositioning campaign for Bourjois coupled with the relaunch of its innovative Twist Up mascara, drove Bourjois to outpace the category by ~4x in March in its core France market and increasing by 1 rank to the #3 color cosmetics brand.
The Consumer Beauty reported operating loss was $20.4 million in 3Q22, an increase from $9.1 million in the prior year. The 3Q22 adjusted operating loss of $9.5 million decreased from adjusted operating income of $21.5 million in the prior year, driven by substantial reinvestment in marketing to support the multiple key launches in the quarter, partially offset by higher gross margin in the business. During the quarter, adjusted EBITDA decreased to $26.6 million from $66.3 million in the prior year, with a margin of 5.8%.
Third Quarter Fiscal 2022 Business Review by Region*
Americas
EMEA
Asia Pacific
*As previously disclosed, we have realigned our reportable segments to a principally product category-based structure, comprised of a Prestige business segment and a Consumer Beauty business segment. In addition, we have amended the definition of stock compensation expense for use in certain Non-GAAP Financial Measures. In order to reflect these changes, the Company has recast reported net revenue by segment, reported operating income (loss) by segment, adjusted operating income (loss) by segment and total, adjusted EBITDA by segment, and total adjusted income (loss) before income taxes and total adjusted net income (loss) from continuing operations for all comparative periods shown. |
Noteworthy Company Developments
Other noteworthy company developments include:
Conference Call
Coty Inc. will issue pre-recorded remarks at approximately 7:20 AM (ET) today, May 9, 2022 and will hold a live question and answer session beginning at 8:15 AM (ET). The pre-recorded remarks and live question and answer session will be available at http://investors.coty.com. The dial-in number for the live question and answer session is (866) 952-8559 in the U.S. or (785) 424-1743 internationally (conference passcode number: COTY3Q22).
About Coty Inc.
Founded in Paris in 1904, Coty is one of the world’s largest beauty companies with a portfolio of iconic brands across fragrance, color cosmetics, and skin and body care. Coty serves consumers around the world, selling prestige and mass market products in more than 130 countries and territories. Coty and our brands empower people to express themselves freely, creating their own visions of beauty; and we are committed to making a positive impact on the planet. Learn more at coty.com or on LinkedIn and Instagram.
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 and potential recovery scenarios, the Company’s comprehensive transformation agenda (the “Transformation Plan”), strategic planning, targets and outlook for future reporting periods (including the extent and timing of revenue, expense and profit trends and changes in operating cash flows and cash flows from operating activities and investing activities), the impact of the Wella divestiture and the related transition services (the “Wella TSA”), the wind down of the Company’s operations in Russia (including timing and expected impact), the Company’s future operations and strategy (including the expected implementation and related impact of its strategic priorities), ongoing and future cost efficiency, optimization and restructuring initiatives and programs, strategic transactions (including their expected timing and impact), expectations and/or plans with respect to joint ventures (including Wella and the timing and size of any related distribution or return of capital), the Company’s capital allocation strategy and payment of dividends (including suspension of dividend payments and the duration thereof and any plans to resume cash dividends or to continue to pay dividends in cash on preferred stock), investments, licenses and portfolio changes, product launches, relaunches or rebranding (including the expected timing or impact thereof), synergies, savings, performance, cost, timing and integration of acquisitions, including the strategic partnerships with Kylie Jenner and Kim Kardashian West, future cash flows, liquidity and borrowing capacity (including any refinancing or deleveraging activities), timing and size of cash outflows and debt deleveraging, the timing and extent of any future impairments, and synergies, savings, impact, cost, timing and implementation of the Company’s Transformation Plan (including operational and organizational structure changes, operational execution and simplification initiatives, fixed cost reductions and supply chain changes), expected impact, cost, timing and implementation of e-commerce and digital initiatives, expected impact, cost, timing and implementation of sustainability initiatives, the expected impact of geopolitical risks including the ongoing war in Ukraine on our business operations, sales outlook and strategy, the expected impact of global supply chain challenges and/or inflationary pressures (including as a result of COVID-19 and/or the war in Ukraine), 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 Quarterly Report on Form 10-Q for the period ended December 31, 2021 and annual report on Form 10-K for the year ended June 30, 2021 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, EBITDA, and EPS (diluted) on a non-GAAP basis and specifies that these measures are non-GAAP by using the term “adjusted” (collectively the Adjusted Performance Measures). The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in tables below. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for or superior to, financial measures reported in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies, including companies in the beauty industry, may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
Adjusted operating income/Adjusted EBITDA from continuing operations excludes restructuring costs and business structure realignment programs, amortization, acquisition- and divestiture-related costs and acquisition accounting impacts, stock-based compensation, and asset impairment charges and other adjustments as described below. For adjusted EBITDA, in addition to the preceding, we exclude the adjusted depreciation as defined below. We do not consider these items to be reflective of our core operating performance due to the variability of such items from period-to-period in terms of size, nature and significance. They are primarily incurred to realign our operating structure and integrate new acquisitions, and exclude divestitures, and fluctuate based on specific facts and circumstances. Additionally, Adjusted net income attributable to Coty Inc. and Adjusted net income attributable to Coty Inc. per common share are adjusted for certain interest and other (income) expense and deemed preferred stock dividends, as described below, and the related tax effects of each of the items used to derive Adjusted net income as such charges are not used by our management in assessing our operating performance period-to-period.
Adjusted Performance Measures reflect adjustments based on the following items:
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 ("adjusted EBITDA"), immediate liquidity, Financial Net Debt and Economic Net Debt. Management believes that these measures are useful for investors because it provides them with an important perspective on the cash available for debt repayment and other strategic measures and provides them with the same measures that management uses as the basis for making resource allocation decisions. Free cash flow is defined as net cash provided by operating activities less capital expenditures; adjusted EBITDA is defined as adjusted operating income, excluding adjusted depreciation and non-cash stock-based compensation. Net debt or Financial Net Debt (which the Company referred to as "net debt" in prior reporting periods) is defined as total debt less cash and cash equivalents, and Economic Net Debt is defined as total debt less cash and cash equivalents less the value of the Wella Stake. For a reconciliation of Free Cash Flow, see the table entitled “Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow,” for adjusted EBITDA, see the table entitled “Reconciliation of Adjusted Operating Income to Adjusted EBITDA” and for Financial Net Debt and Economic Net Debt, see the tables entitled “Reconciliation of Total Debt to Financial Net Debt and Economic Net Debt.” 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, non-cash stock-based compensation, adjustments to inventory, and other charges reflected in our reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.
- Tables Follow -
COTY INC. |
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SUPPLEMENTAL SCHEDULES INCLUDING NON-GAAP FINANCIAL MEASURES(a) |
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RESULTS AT A GLANCE |
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|
|
Three Months Ended March 31, 2022 |
Nine Months Ended March 31, 2022 |
||||||||||||||||
(in millions, except per share data) |
|
|
|
Change YoY |
|
|
Change YoY |
||||||||||||
CONTINUING OPERATIONS |
|
|
|
Reported
|
|
(LFL) |
|
|
Reported
|
|
(LFL) |
||||||||
Net revenues |
|
$ |
1,186.2 |
|
15 |
% |
|
19 |
% |
$ |
4,136.1 |
|
16 |
% |
|
17 |
% |
||
Operating income - reported |
|
|
57.1 |
|
|
>100 |
% |
|
|
|
318.3 |
|
|
>100 |
% |
|
|
||
Operating income - adjusted* |
|
|
113.6 |
|
|
11 |
% |
|
|
|
550.4 |
|
|
41 |
% |
|
|
||
EBITDA - adjusted |
|
|
182.5 |
|
|
— |
% |
|
|
|
772.9 |
|
|
22 |
% |
|
|
||
Net income attributable to common shareholders - reported** |
|
|
49.6 |
|
|
>100 |
% |
|
|
|
341.5 |
|
|
>100 |
% |
|
|
||
Net income attributable to common shareholders - adjusted* ** |
|
|
27.0 |
|
|
>100 |
% |
|
|
|
237.8 |
|
|
>100 |
% |
|
|
||
EPS attributable to common shareholders (diluted) - reported |
|
$ |
0.06 |
|
|
N/A |
|
|
|
$ |
0.42 |
|
|
>100 |
% |
|
|
||
EPS attributable to common shareholders (diluted) - adjusted* |
|
$ |
0.03 |
|
|
>100 |
% |
|
|
$ |
0.29 |
|
|
>100 |
% |
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
COTY, INC. |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders - reported ** |
|
|
50.3 |
|
|
>100 |
% |
|
|
|
346.0 |
|
|
>100 |
% |
|
|
||
Net income attributable to common shareholders - adjusted* ** |
|
|
27.0 |
|
|
>100 |
% |
|
|
|
237.8 |
|
|
(2 |
)% |
|
|
||
EPS attributable to common shareholders (diluted) - reported |
|
$ |
0.06 |
|
|
>100 |
% |
|
|
$ |
0.42 |
|
|
>100 |
% |
|
|
||
EPS attributable to common shareholders (diluted) - adjusted* |
|
$ |
0.03 |
|
|
>100 |
% |
|
|
$ |
0.29 |
|
|
(9 |
%) |
|
|
* These measures, as well as “free cash flow,” “adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA),” "immediate liquidity," “financial net debt,” and "economic net debt" are Non-GAAP Financial Measures. Refer to “Non-GAAP Financial Measures” for discussion of these measures. Reconciliations from reported to adjusted results can be found at the end of this release. |
** Net income for Continuing Operations and Coty Inc. are net of the Convertible Series B Preferred Stock dividends. |
THIRD QUARTER BY SEGMENT (CONTINUING OPERATIONS) |
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|
|
Three Months Ended March 31, |
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|
|
Net Revenues |
|
Change |
Reported Operating Income
|
|
Adjusted Operating Income |
|||||||||||||||||||||||||||
(in millions) |
|
2022 |
|
2021 |
|
Reported Basis |
|
LFL |
2022 |
|
Change |
|
Margin |
|
2022 |
|
Change |
|
Margin |
|||||||||||||||
Prestige |
|
$ |
726.4 |
|
$ |
601.3 |
|
21 |
% |
|
25 |
% |
$ |
83.8 |
|
|
>100 |
% |
|
12 |
% |
|
$ |
123.1 |
|
|
53 |
% |
|
17 |
% |
|||
Consumer Beauty |
|
|
459.8 |
|
|
|
426.5 |
|
|
8 |
% |
|
10 |
% |
|
(20.4 |
) |
|
<(100 |
%) |
|
(4 |
)% |
|
|
(9.5 |
) |
|
<(100 |
%) |
|
(2 |
%) |
|
Corporate |
|
|
— |
|
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
(6.3 |
) |
|
85 |
% |
|
N/A |
|
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
Total |
|
$ |
1,186.2 |
|
|
$ |
1,027.8 |
|
|
15 |
% |
|
19 |
% |
$ |
57.1 |
|
|
>100 |
% |
|
5 |
% |
|
$ |
113.6 |
|
|
11 |
% |
|
10 |
% |
|
|
Nine Months Ended March 31, |
||||||||||||||||||||||||||||||||
|
|
Net Revenues |
|
Change |
Reported Operating Income
|
|
Adjusted Operating Income |
|||||||||||||||||||||||||||
(in millions) |
|
2022 |
|
2021 |
|
Reported Basis |
|
LFL |
2022 |
|
Change |
|
Margin |
|
2022 |
|
Change |
|
Margin |
|||||||||||||||
Prestige |
|
$ |
2,605.1 |
|
$ |
2,149.5 |
|
21 |
% |
|
22 |
% |
$ |
357.5 |
|
|
>100 |
% |
|
14 |
% |
|
$ |
482.2 |
|
47 |
% |
|
19 |
% |
||||
Consumer Beauty |
|
|
1,531.0 |
|
|
|
1,418.0 |
|
|
8 |
% |
|
8 |
% |
|
34.3 |
|
|
33 |
% |
|
2 |
% |
|
|
68.2 |
|
|
7 |
% |
|
4 |
% |
|
Corporate |
|
|
— |
|
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
(73.5 |
) |
|
71 |
% |
|
N/A |
|
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
Total |
|
$ |
4,136.1 |
|
|
$ |
3,567.5 |
|
|
16 |
% |
|
17 |
% |
$ |
318.3 |
|
|
>100 |
% |
|
8 |
% |
|
$ |
550.4 |
|
|
41 |
% |
|
13 |
% |
(a) As previously disclosed, we have realigned our reportable segments to a principally product category-based structure, comprised of a Prestige business segment and a Consumer Beauty business segment. In addition, we have amended the definition of stock compensation expense for use in certain Non-GAAP Financial Measures. In order to reflect these changes, the Company has recast reported net revenue by segment, reported operating income (loss) by segment, adjusted operating income (loss) by segment and total, adjusted EBITDA by segment, and total adjusted income (loss) before income taxes and total adjusted net income (loss) from continuing operations for all comparative periods shown. |
|
|
Adjusted EBITDA |
||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in millions) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Prestige |
|
$ |
155.9 |
|
$ |
117.1 |
|
$ |
589.9 |
|
$ |
436.3 |
||||
Consumer Beauty |
|
|
26.6 |
|
|
|
66.3 |
|
|
|
183.0 |
|
|
|
198.2 |
|
Corporate |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
182.5 |
|
|
$ |
183.4 |
|
|
$ |
772.9 |
|
|
$ |
634.5 |
|
THIRD QUARTER FISCAL 2022 BY REGION |
||||||||||||||||||||||||||||
Continuing Operations |
||||||||||||||||||||||||||||
|
|
Three Months Ended March 31, |
|
Nine Months Ended March 31, |
||||||||||||||||||||||||
|
|
Net Revenues |
|
Change |
|
Net Revenues |
|
Change |
||||||||||||||||||||
(in millions) |
|
2022 |
|
2021 |
|
Reported Basis |
|
LFL |
|
2022 |
|
2021 |
|
Reported Basis |
|
LFL |
||||||||||||
Americas |
|
$ |
479.9 |
|
|
$ |
409.6 |
|
|
17 |
% |
|
17 |
% |
|
$ |
1,648.5 |
|
|
$ |
1,419.7 |
|
|
16 |
% |
|
16 |
% |
EMEA |
|
|
548.2 |
|
|
|
473.0 |
|
|
16 |
% |
|
23 |
% |
|
|
1,970.4 |
|
|
|
1,712.3 |
|
|
15 |
% |
|
17 |
% |
Asia Pacific |
|
|
158.1 |
|
|
|
145.2 |
|
|
9 |
% |
|
10 |
% |
|
|
517.2 |
|
|
|
435.5 |
|
|
19 |
% |
|
18 |
% |
Total |
|
$ |
1,186.2 |
|
$ |
1,027.8 |
|
15 |
% |
|
19 |
% |
|
$ |
4,136.1 |
|
$ |
3,567.5 |
|
16 |
% |
|
17 |
% |
COTY INC. & SUBSIDIARIES |
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||||
(in millions, except per share data) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||||
Net revenues |
$ |
1,186.2 |
|
|
$ |
1,027.8 |
|
|
$ |
4,136.1 |
|
|
$ |
3,567.5 |
|
|
Cost of sales |
|
423.1 |
|
|
|
391.7 |
|
|
|
1,489.0 |
|
|
|
1,440.6 |
|
|
as % of Net revenues |
|
35.7 |
% |
|
|
38.1 |
% |
|
|
36.0 |
% |
|
|
40.4 |
% |
|
Gross profit |
|
763.1 |
|
|
|
636.1 |
|
|
|
2,647.1 |
|
|
|
2,126.9 |
|
|
Gross margin |
|
64.3 |
% |
|
|
61.9 |
% |
|
|
64.0 |
% |
|
|
59.6 |
% |
|
|
|
|
|
|
|
|
|
|||||||||
Selling, general and administrative expenses |
|
659.3 |
|
|
|
545.6 |
|
|
|
2,154.5 |
|
|
|
1,770.5 |
|
|
as % of Net revenues |
|
55.6 |
% |
|
|
53.1 |
% |
|
|
52.1 |
% |
|
|
49.6 |
% |
|
Amortization expense |
|
50.2 |
|
|
|
62.2 |
|
|
|
158.6 |
|
|
|
189.4 |
|
|
Restructuring costs |
|
(6.8 |
) |
|
|
— |
|
|
|
1.5 |
|
|
|
89.7 |
|
|
Acquisition-and divestiture- related costs |
|
3.3 |
|
|
|
29.7 |
|
|
|
14.2 |
|
|
|
127.7 |
|
|
Operating income (loss) |
|
57.1 |
|
|
|
(1.4 |
) |
|
|
318.3 |
|
|
|
(50.4 |
) |
|
as % of Net revenues |
|
4.8 |
% |
|
|
(0.1 |
%) |
|
|
7.7 |
% |
|
|
(1.4 |
%) |
|
Interest expense, net |
|
62.9 |
|
|
|
50.3 |
|
|
|
183.6 |
|
|
|
171.6 |
|
|
Other income, net |
|
(60.6 |
) |
|
|
(62.5 |
) |
|
|
(572.9 |
) |
|
|
(50.7 |
) |
|
Income (loss) from continuing operations before income taxes |
|
54.8 |
|
|
|
10.8 |
|
|
|
707.6 |
|
|
|
(171.3 |
) |
|
as % of Net revenues |
|
4.6 |
% |
|
|
1.1 |
% |
|
|
17.1 |
% |
|
|
(4.8 |
%) |
|
Provision (benefit) for income taxes on continuing operations |
|
0.5 |
|
|
|
(19.2 |
) |
|
|
164.5 |
|
|
|
(304.9 |
) |
|
Net income from continuing operations |
|
54.3 |
|
|
|
30.0 |
|
|
|
543.1 |
|
|
|
133.6 |
|
|
as % of Net revenues |
|
4.6 |
% |
|
|
2.9 |
% |
|
|
13.1 |
% |
|
|
3.7 |
% |
|
Net income (loss) from discontinued operations |
|
0.7 |
|
|
|
(17.3 |
) |
|
|
4.5 |
|
|
|
(148.2 |
) |
|
Net income (loss) |
|
55.0 |
|
|
|
12.7 |
|
|
|
547.6 |
|
|
|
(14.6 |
) |
|
Net (loss) income attributable to noncontrolling interests |
|
(0.9 |
) |
|
|
(9.4 |
) |
|
|
(2.3 |
) |
|
|
(11.5 |
) |
|
Net income attributable to redeemable noncontrolling interests |
|
2.3 |
|
|
|
6.5 |
|
|
|
8.9 |
|
|
|
12.2 |
|
|
Net income (loss) attributable to Coty Inc. |
$ |
53.6 |
|
|
$ |
15.6 |
|
|
$ |
541.0 |
|
|
$ |
(15.3 |
) |
|
Amounts attributable to Coty Inc. |
|
|
|
|
|
|
|
|||||||||
Net income (loss) from continuing operations |
$ |
52.9 |
|
|
$ |
32.9 |
|
|
$ |
536.5 |
|
|
$ |
132.9 |
|
|
Convertible Series B Preferred Stock dividends |
|
(3.3 |
) |
|
|
(34.1 |
) |
|
|
(195.0 |
) |
|
|
(78.1 |
) |
|
Net income (loss) from continuing operations attributable to common stockholders |
$ |
49.6 |
|
|
$ |
(1.2 |
) |
|
$ |
341.5 |
|
|
$ |
54.8 |
|
|
Net income from discontinued operations |
|
0.7 |
|
|
|
(17.3 |
) |
|
|
4.5 |
|
|
|
(148.2 |
) |
|
Net income (loss) attributable to common stockholders |
$ |
50.3 |
|
|
$ |
(18.5 |
) |
|
$ |
346.0 |
|
|
$ |
(93.4 |
) |
|
|
|
|
|
|
|
|
|
|||||||||
Earnings per common share: |
|
|
|
|
|
|
|
|||||||||
Basic for Continuing Operations |
$ |
0.06 |
|
|
$ |
— |
|
|
$ |
0.42 |
|
|
$ |
0.07 |
|
|
Diluted for Continuing Operations(a)(b) |
$ |
0.06 |
|
|
$ |
— |
|
|
$ |
0.42 |
|
|
$ |
0.07 |
|
|
Basic for Coty Inc. |
$ |
0.06 |
|
|
$ |
(0.02 |
) |
|
$ |
0.42 |
|
|
$ |
(0.12 |
) |
|
Diluted for Coty Inc.(a)(b) |
$ |
0.06 |
|
|
$ |
(0.02 |
) |
|
$ |
0.42 |
|
|
$ |
(0.12 |
) |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|||||||||
Basic |
|
838.4 |
|
|
|
765.4 |
|
|
|
814.8 |
|
|
|
764.6 |
|
|
Diluted(a)(b) |
|
852.9 |
|
|
|
765.4 |
|
|
|
827.5 |
|
|
|
932.1 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Depreciation - Continuing Operations |
$ |
71.8 |
|
|
$ |
84.3 |
|
|
$ |
230.9 |
|
|
$ |
246.7 |
|
(a) | Diluted EPS is adjusted by the effect of dilutive securities, including awards under our equity compensation plans and the convertible Series B Preferred Stock. When calculating any potential dilutive effect of stock options, Series A Preferred Stock, restricted stock and RSUs we use the treasury method and the if-converted method for the Convertible Series B Preferred Stock. The treasury method typically does not adjust the net income attributable to Coty Inc., while the if-converted method requires an adjustment to reverse the impact of the preferred stock dividends of $3.3 million and $34.1 million for the three months ended March 31, 2022 and 2021, respectively, and $195.0 million and $78.1 million for the nine months ended March 31, 2022 and 2021, respectively, on net income applicable to common stockholders during the period. |
(b) | For the three months ended March 31, 2022, there were 23.7 million dilutive shares of Convertible Series B Preferred Stock excluded from the computation of diluted EPS as their inclusion would be anti-dilutive. For the three months ended March 31, 2021, Convertible Series B Preferred Stock shares were excluded from the computation of diluted EPS due to the net loss incurred during the period. For the nine months ended March 31, 2022, and 2021, there were 79.2 million and 0.0 million, respectively, weighted average dilutive shares of Convertible Series B Preferred Stock excluded from the computation of diluted EPS as their inclusion would be anti-dilutive. |
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, 2022 |
|
|
|||||||||||||
|
CONTINUING OPERATIONS |
|
|
|||||||||||||
(in millions) |
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
|
|||||||||
Net revenues |
$ |
1,186.2 |
|
|
$ |
— |
|
|
$ |
1,186.2 |
|
|
|
|||
Gross profit |
|
763.1 |
|
|
|
3.1 |
|
|
|
766.2 |
|
|
|
|||
Gross margin |
|
64.3 |
% |
|
|
|
|
64.6 |
% |
|
|
|||||
Operating income |
|
57.1 |
|
|
|
56.5 |
|
|
|
113.6 |
|
|
|
|||
as % of Net revenues |
|
4.8 |
% |
|
|
|
|
9.6 |
% |
|
|
|||||
Net income |
|
49.6 |
|
|
|
(22.6 |
) |
|
|
27.0 |
|
|
|
|||
as % of Net revenues |
|
4.2 |
% |
|
|
|
|
2.3 |
% |
|
|
|||||
Adjusted EBITDA |
|
|
|
|
|
182.5 |
|
|
|
|||||||
as % of Net revenues |
|
|
|
|
|
15.4 |
% |
|
|
|||||||
|
COTY INC. |
|
|
|||||||||||||
Net income attributable to Coty Inc. |
|
50.3 |
|
|
|
(23.3 |
) |
|
|
27.0 |
|
|
|
|||
|
|
|
|
|
|
|
|
|||||||||
EPS (diluted) |
$ |
0.06 |
|
|
|
|
$ |
0.03 |
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
|
Three Months Ended March 31, 2021 |
|||||||||||||||
|
CONTINUING OPERATIONS |
|
Discontinued
|
|||||||||||||
(in millions) |
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
Adjusted
|
|||||||||
Net revenues |
$ |
1,027.8 |
|
|
$ |
— |
|
|
$ |
1,027.8 |
|
|
$ |
— |
|
|
Gross profit |
|
636.1 |
|
|
|
3.1 |
|
|
|
639.2 |
|
|
|
— |
|
|
Gross margin |
|
61.9 |
% |
|
|
|
|
62.2 |
% |
|
|
— |
% |
|||
Operating (loss) income |
|
(1.4 |
) |
|
|
103.6 |
|
|
|
102.2 |
|
|
|
— |
|
|
as % of Net revenues |
|
(0.1 |
%) |
|
|
|
|
9.9 |
% |
|
|
N/A |
|
|||
Net income (loss) |
|
(1.2 |
) |
|
|
6.4 |
|
|
|
5.2 |
|
|
|
— |
|
|
as % of Net revenues |
|
(0.1 |
%) |
|
|
|
|
0.5 |
% |
|
|
— |
% |
|||
Adjusted EBITDA |
|
|
|
|
|
183.4 |
|
|
|
— |
|
|||||
as % of Net revenues |
|
|
|
|
|
17.8 |
% |
|
|
— |
% |
|||||
|
COTY INC. |
|
|
|||||||||||||
Net income attributable to Coty Inc. |
|
(18.5 |
) |
|
|
23.7 |
|
|
|
5.2 |
|
|
|
|||
|
|
|
|
|
|
|
|
|||||||||
EPS (diluted) |
$ |
(0.02 |
) |
|
|
|
$ |
0.01 |
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
(a) See “Reconciliation of Reported Operating Income (Loss) to Adjusted Operated Income” and “Reconciliation of Reported Net (Loss) Income to Adjusted Net Income” for a detailed description of adjusted items. |
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. |
||||||||||||||||
|
Nine Months Ended March 31, 2022 |
|
|
|||||||||||||
|
CONTINUING OPERATIONS |
|
|
|||||||||||||
(in millions) |
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
|
|||||||||
Net revenues |
$ |
4,136.1 |
|
|
$ |
— |
|
|
$ |
4,136.1 |
|
|
|
|||
Gross profit |
|
2,647.1 |
|
|
|
8.4 |
|
|
|
2,655.5 |
|
|
|
|||
Gross margin |
|
64.0 |
% |
|
|
|
|
64.2 |
% |
|
|
|||||
Operating (loss) income |
|
318.3 |
|
|
|
232.1 |
|
|
|
550.4 |
|
|
|
|||
as % of Net revenues |
|
7.7 |
% |
|
|
|
|
13.3 |
% |
|
|
|||||
Net income (loss) |
|
341.5 |
|
|
|
(103.7 |
) |
|
|
237.8 |
|
|
|
|||
as % of Net revenues |
|
8.3 |
% |
|
|
|
|
5.7 |
% |
|
|
|||||
Adjusted EBITDA |
|
|
|
|
|
772.9 |
|
|
|
|||||||
as % of Net revenues |
|
|
|
|
|
18.7 |
% |
|
|
|||||||
|
COTY INC. |
|
|
|||||||||||||
Net loss (income) attributable to Coty Inc. |
|
346.0 |
|
|
|
(108.2 |
) |
|
|
237.8 |
|
|
|
|||
|
|
|
|
|
|
|
|
|||||||||
EPS (diluted) |
$ |
0.42 |
|
|
|
|
$ |
0.29 |
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
|
Nine Months Ended March 31, 2021 |
|||||||||||||||
|
CONTINUING OPERATIONS |
|
Discontinued
|
|||||||||||||
(in millions) |
Reported
|
|
Adjustments(a) |
|
Adjusted
|
|
Adjusted
|
|||||||||
Net revenues |
$ |
3,567.5 |
|
|
$ |
— |
|
|
$ |
3,567.5 |
|
|
$ |
986.3 |
|
|
Gross profit |
|
2,126.9 |
|
|
|
3.1 |
|
|
|
2,130.0 |
|
|
|
663.8 |
|
|
Gross margin |
|
59.6 |
% |
|
|
|
|
59.7 |
% |
|
|
67.3 |
% |
|||
Operating (loss) income |
|
(50.4 |
) |
|
|
441.3 |
|
|
|
390.9 |
|
|
|
222.3 |
|
|
as % of Net revenues |
|
(1.4 |
%) |
|
|
|
|
11.0 |
% |
|
|
22.5 |
% |
|||
Net (loss) income |
|
54.8 |
|
|
|
42.8 |
|
|
|
97.6 |
|
|
|
145.0 |
|
|
as % of Net revenues |
|
1.5 |
% |
|
|
|
|
2.7 |
% |
|
|
14.7 |
% |
|||
Adjusted EBITDA |
|
|
|
|
|
634.5 |
|
|
|
222.3 |
|
|||||
as % of Net revenues |
|
|
|
|
|
17.8 |
% |
|
|
22.5 |
% |
|||||
|
COTY INC. |
|
|
|||||||||||||
Net (loss) income attributable to Coty Inc. |
|
(93.4 |
) |
|
|
336.0 |
|
|
|
242.6 |
|
|
|
|||
|
|
|
|
|
|
|
|
|||||||||
EPS (diluted) |
$ |
(0.12 |
) |
|
|
|
$ |
0.32 |
|
|
|
|||||
(a) See “Reconciliation of Reported Operating Income (Loss) to Adjusted Operated Income” and “Reconciliation of Reported Net (Loss) Income to Adjusted Net Income” for a detailed description of adjusted items. |
||||||||||||||||
|
||||||||||||||||
(b) Discontinued operations for the fiscal year 2021 includes activity only through November 30, 2020, the date of the sale of the Wella Business. |
RECONCILIATION OF REPORTED OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA |
||||||||||||||||||||||
CONTINUING OPERATIONS |
|
Three Months Ended March 31, |
|
Nine Months Ended March 31, |
||||||||||||||||||
(in millions) |
|
2022 |
|
2021 |
|
Change |
|
2022 |
|
2021 |
|
Change |
||||||||||
Reported Operating income (loss) |
|
$ |
57.1 |
|
|
$ |
(1.4 |
) |
|
>100 |
% |
|
$ |
318.3 |
|
|
$ |
(50.4 |
) |
|
>100 |
% |
% of Net revenues |
|
|
4.8 |
% |
|
|
(0.1 |
%) |
|
|
|
|
7.7 |
% |
|
|
(1.4 |
%) |
|
|
||
Amortization expense (a) |
|
|
50.2 |
|
|
|
62.2 |
|
|
(19 |
%) |
|
|
158.6 |
|
|
|
189.4 |
|
|
(16 |
%) |
Restructuring and other business realignment costs (b) |
|
|
(3.7 |
) |
|
|
5.1 |
|
|
<(100 |
%) |
|
|
9.6 |
|
|
|
97.4 |
|
|
(90 |
%) |
Stock-based compensation |
|
|
28.5 |
|
|
|
6.6 |
|
|
>100 |
% |
|
|
164.3 |
|
|
|
26.8 |
|
|
>100 |
% |
Acquisition- and divestiture-related costs (c) |
|
|
3.3 |
|
|
|
29.7 |
|
|
(89 |
%) |
|
|
14.2 |
|
|
|
127.7 |
|
|
(89 |
%) |
(Gain) on sale of real estate (d) |
|
|
(21.8 |
) |
|
|
— |
|
|
N/A |
|
|
|
(114.6 |
) |
|
|
— |
|
|
N/A |
|
Total adjustments to reported operating income (loss) |
|
|
56.5 |
|
|
|
103.6 |
|
|
(45 |
%) |
|
|
232.1 |
|
|
|
441.3 |
|
|
(47 |
%) |
Adjusted Operating income |
|
$ |
113.6 |
|
|
$ |
102.2 |
|
|
11 |
% |
|
$ |
550.4 |
|
|
$ |
390.9 |
|
|
41 |
% |
% of Net revenues |
|
|
9.6 |
% |
|
|
9.9 |
% |
|
|
|
|
13.3 |
% |
|
|
11.0 |
% |
|
|
||
Adjusted depreciation (e) |
|
|
68.9 |
|
|
|
81.2 |
|
|
(15 |
%) |
|
|
222.5 |
|
|
|
243.6 |
|
|
(9 |
%) |
Adjusted EBITDA |
|
$ |
182.5 |
|
|
$ |
183.4 |
|
|
0 |
% |
|
$ |
772.9 |
|
|
$ |
634.5 |
|
|
22 |
% |
% of Revenues |
|
|
15.4 |
% |
|
|
17.8 |
% |
|
|
|
|
18.7 |
% |
|
|
17.8 |
% |
|
|
(a) | In the three months ended March 31, 2022, amortization expense of $39.3 and $10.9 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended March 31, 2021, amortization expense of $49.8 and $12.4 was reported in the Prestige and Consumer Beauty segments, respectively. |
In the nine months ended March 31, 2022, amortization expense of $124.7 and $33.9 was reported in the Prestige and Consumer Beauty segments, respectively. In the nine months ended March 31, 2021, amortization expense of $151.3 and $38.1 was reported in the Prestige and Consumer Beauty segments, respectively. |
|
(b) | In the three months ended March 31, 2022, we incurred a credit in restructuring and other business structure realignment costs of $(3.7). We incurred a credit in restructuring costs of $(6.8) primarily related to the Transformation Plan due to change in estimate, included in the Condensed Consolidated Statements of Operations; and business structure realignment costs of $3.1 primarily related to the Transformation Plan and certain other programs. This amount includes $— reported in Selling, general and administrative expenses, and $3.1 reported in Cost of sales in the Condensed Consolidated Statement of Operations. In the three months ended March 31, 2021, we incurred restructuring and other business structure realignment costs of $5.1. We incurred restructuring costs of $— primarily related to the Transformation Plan, included in the Condensed Consolidated Statements of Operations; and credit in business structure realignment costs of $5.1 primarily related to the Transformation Plan and certain other programs. This amount includes $2.0 reported in Selling, general and administrative expenses, and $3.1 reported in Cost of sales in the Condensed Consolidated Statement of Operations. |
In the nine months ended March 31, 2022, we incurred restructuring and other business structure realignment costs of $9.6. We incurred restructuring costs of $1.5 primarily related to the Transformation Plan, included in the Condensed Consolidated Statements of Operations; and business structure realignment costs of $8.1 primarily related to the Transformation Plan and certain other programs. This amount includes $(0.3) reported in Selling, general and administrative expenses, and $8.4 reported in Cost of sales in the Condensed Consolidated Statement of Operations. In the nine months ended March 31, 2021, we incurred restructuring and other business structure realignment costs of $97.4. We incurred restructuring costs of $89.7 primarily related to the Transformation Plan, included in the Condensed Consolidated Statements of Operations; and business structure realignment costs of $7.7 primarily related to the Transformation Plan and certain other programs. This amount includes $4.6 reported in Selling, general and administrative expenses, and $3.1 reported in Cost of sales in the Condensed Consolidated Statement of Operations. |
|
(c) | In the three months ended March 31, 2022 and March 31, 2021, we incurred acquisition- and divestiture-related costs of $3.3 and $29.7, respectively. These costs were primarily associated with the Wella Transaction. |
In the nine months ended March 31, 2022 and March 31, 2021, we incurred acquisition- and divestiture-related costs of $14.2 and $127.7, respectively. These costs were primarily associated with the Wella Transaction. |
|
(d) | In the three months ended March 31, 2022 we recognized a gain of $21.8 related to sale of real estate. In the three months ended March 31, 2021, we did not recognize any gain related to sale of real estate. |
In the nine months ended March 31, 2022 we recognized a gain of $114.6 related to sale of real estate. In the nine months ended March 31, 2021, we did not recognize any gain related to sale of real estate. |
|
(e) | In the three months ended March 31, 2022, adjusted depreciation expense of $32.8 and $36.1 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended March 31, 2021, adjusted depreciation expense of $36.4 and $44.8 was reported in the Prestige and Consumer Beauty segments, respectively. |
In the nine months ended March 31, 2022, adjusted depreciation expense of $107.7 and $114.8 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended March 31, 2021, adjusted depreciation expense of $109.3 and $134.3 was reported in the Prestige and Consumer Beauty segments, respectively. |
RECONCILIATION OF REPORTED INCOME (LOSS) BEFORE INCOME TAXES AND EFFECTIVE TAX RATES TO ADJUSTED INCOME BEFORE INCOME TAXES AND ADJUSTED EFFECTIVE TAX RATES FOR CONTINUING OPERATIONS |
||||||||||||||||||||||
|
|
Three Months Ended March 31, 2022 |
|
Three Months Ended March 31, 2021 |
||||||||||||||||||
(in millions) |
|
(Loss)
|
|
(Benefit)
|
|
Effective tax
|
|
(Loss)
|
|
Provision
|
|
Effective tax
|
||||||||||
Reported Income before income taxes - Continuing Operations |
|
$ |
54.8 |
|
|
$ |
0.5 |
|
0.9 |
% |
|
$ |
10.8 |
|
|
$ |
(19.2 |
) |
|
(177.8 |
)% |
|
Adjustments to Reported Operating Income (a) |
|
|
56.5 |
|
|
|
|
|
|
|
103.6 |
|
|
|
|
|
||||||
Change in fair value of investment in Wella Business (c) |
|
|
(60.7 |
) |
|
|
|
|
|
|
(63.5 |
) |
|
|
|
|
||||||
Other adjustments (d) |
|
|
0.4 |
|
|
|
|
|
|
|
(2.5 |
) |
|
|
|
|
||||||
Total Adjustments (b) |
|
|
(3.8 |
) |
|
|
17.0 |
|
|
|
|
|
37.6 |
|
|
|
28.3 |
|
|
|
||
Adjusted Income before income taxes - Continuing Operations |
|
$ |
51.0 |
|
|
$ |
17.5 |
|
|
34.3 |
% |
|
$ |
48.4 |
|
|
$ |
9.1 |
|
|
18.8 |
% |
The adjusted effective tax rate was 34.3% for the three months ended March 31, 2022 compared to 18.8% for the three months ended March 31, 2021. The differences were primarily due to the jurisdictional mix of income as well as a benefit of $18.8 in the current period recognized on the revaluation of our deferred tax assets due to a tax rate increase enacted in the Netherlands. |
||||||||||||||||||||||
|
|
Nine Months Ended March 31, 2022 |
|
Nine Months Ended March 31, 2021 |
||||||||||||||||||
(in millions) |
|
(Loss)
|
|
(Benefit)
|
|
Effective tax
|
|
(Loss)
|
|
Provision
|
|
Effective tax
|
||||||||||
Reported Income (Loss) before income taxes - Continuing Operations |
|
$ |
707.6 |
|
|
$ |
164.5 |
|
|
23.2 |
% |
|
$ |
(171.3 |
) |
|
$ |
(304.9 |
) |
|
178.0 |
% |
Adjustments to Reported Operating Income (a) |
|
|
232.1 |
|
|
|
|
|
|
|
441.3 |
|
|
|
|
|
||||||
Change in fair value of investment in Wella Business (c) |
|
|
(579.0 |
) |
|
|
|
|
|
|
(63.5 |
) |
|
|
|
|
||||||
Other adjustments (d) |
|
|
(2.5 |
) |
|
|
|
|
|
|
5.7 |
|
|
|
|
|
||||||
Total Adjustments (b) (e) |
|
|
(349.4 |
) |
|
|
(91.0 |
) |
|
|
|
|
383.5 |
|
|
|
333.3 |
|
|
|
||
Adjusted Income before income taxes - Continuing Operations |
|
$ |
358.2 |
|
|
$ |
73.5 |
|
|
20.5 |
% |
|
$ |
212.2 |
|
|
$ |
28.4 |
|
|
13.4 |
% |
(a) | See a description of adjustments under “Adjusted Operating Income (Loss) for Continuing Operations.” |
(b) | The tax effects of each of the items included in adjusted income are calculated in a manner that results in a corresponding income tax expense/provision for adjusted income. In preparing the calculation, each adjustment to reported income is first analyzed to determine if the adjustment has an income tax consequence. The provision for taxes is then calculated based on the jurisdiction in which the adjusted items are incurred, multiplied by the respective statutory rates and offset by the increase or reversal of any valuation allowances commensurate with the non-GAAP measure of profitability. |
(c) | The amount represents the realized and unrealized gain recognized for the change in the fair value of the investment in Wella. |
(d) | For the three months ended March 31, 2022, this primarily represents a net gain on the exchange of Series B Preferred Stock closed on October 20, 2021. For the three months ended March 31, 2021, this primarily represents the write-off of deferred financing fees related to the Wella sale. |
For the nine months ended March 31, 2022, this primarily represents a net gain on the exchange of Series B Preferred Stock closed on October 20, 2021. For the nine months ended March 31, 2021, this primarily represents the write-off of deferred financing fees related to the Wella sale and adjustments for pension curtailment gains. |
|
(e) | The total tax impact on adjustments in the prior period includes a $220.5 benefit recorded as the result of a tax rate differential on the deferred taxes recognized on the transfer of assets and liabilities, following the relocation of our main principal location from Geneva to Amsterdam on July 1, 2020. |
RECONCILIATION OF REPORTED NET INCOME TO ADJUSTED NET INCOME FOR CONTINUING OPERATIONS |
||||||||||||||||||||||
|
Three Months Ended March 31, |
|
Nine Months Ended March 31, |
|||||||||||||||||||
(in millions) |
2022 |
|
2021 |
|
Change |
|
2022 |
|
2021 |
|
Change |
|||||||||||
Net income from Continuing Operations, net of noncontrolling interests |
$ |
52.9 |
|
|
$ |
32.9 |
|
|
61 |
% |
|
$ |
536.5 |
|
|
$ |
132.9 |
|
|
>100 |
% | |
Convertible Series B Preferred Stock dividends (c) |
|
(3.3 |
) |
|
|
(34.1 |
) |
|
90 |
% |
|
|
(195.0 |
) |
|
|
(78.1 |
) |
|
<(100 |
%) | |
Reported Net income attributable to Continuing Operations |
$ |
49.6 |
|
|
$ |
(1.2 |
) |
|
>100 |
% |
|
$ |
341.5 |
|
|
$ |
54.8 |
|
|
>100 |
% | |
% of Net revenues |
|
4.2 |
% |
|
|
(0.1 |
%) |
|
|
|
|
8.3 |
% |
|
|
1.5 |
% |
|
|
|||
Adjustments to Reported Operating Income (a) |
|
56.5 |
|
|
|
103.6 |
|
|
(45 |
%) |
|
|
232.1 |
|
|
|
441.3 |
|
|
(47 |
%) |
|
Change in fair value of investment in Wella Business (d) |
|
(60.7 |
) |
|
|
(63.5 |
) |
|
<(100 |
%) |
|
|
(579.0 |
) |
|
|
(63.5 |
) |
|
<(100 |
%) | |
Adjustments to other expense (e) |
|
0.4 |
|
|
|
(2.5 |
) |
|
>100 |
% |
|
|
(2.5 |
) |
|
|
5.7 |
|
|
<(100 |
%) | |
Adjustments to noncontrolling interests (b) |
|
(1.8 |
) |
|
|
(2.9 |
) |
|
38 |
% |
|
|
(5.3 |
) |
|
|
(7.4 |
) |
|
28 |
% |
|
Change in tax provision due to adjustments to Reported Net income attributable to Continuing Operations |
|
(17.0 |
) |
|
|
(28.3 |
) |
|
40 |
% |
|
|
91.0 |
|
|
|
(333.3 |
) |
|
>100 |
% | |
Adjustment for deemed Series B Preferred Stock dividends related to the First and Second Exchanges (c) (f) |
|
— |
|
|
|
— |
|
|
N/A |
|
|
|
160.0 |
|
|
|
— |
|
|
N/A |
|
|
Adjusted Net income attributable to Continuing Operations |
$ |
27.0 |
|
|
$ |
5.2 |
|
|
>100 |
% |
|
$ |
237.8 |
|
|
$ |
97.6 |
|
|
>100 |
% | |
% of Net revenues |
|
2.3 |
% |
|
|
0.5 |
% |
|
|
|
|
5.7 |
% |
|
|
2.7 |
% |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Per Share Data |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted weighted-average common shares |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic |
|
838.4 |
|
|
|
765.4 |
|
|
|
|
|
814.8 |
|
|
|
764.6 |
|
|
|
|||
Diluted (c) (f) |
|
852.9 |
|
|
|
765.4 |
|
|
|
|
|
827.5 |
|
|
|
932.1 |
|
|
|
|||
Adjusted Net income (loss) attributable to Continuing Operations per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic |
$ |
0.03 |
|
|
$ |
0.01 |
|
|
|
|
$ |
0.29 |
|
|
$ |
0.13 |
|
|
|
|||
Diluted (c) |
$ |
0.03 |
|
|
$ |
0.01 |
|
|
|
|
$ |
0.29 |
|
|
$ |
0.13 |
|
|
|
(a) | See a description of adjustments under “Adjusted Operating Income (Loss) for Continuing Operations.” |
(b) | The amounts represent the after-tax impact of the non-GAAP adjustments included in Net income attributable to noncontrolling interest based on the relevant noncontrolling interest percentage in the Condensed Consolidated Statements of Operations. |
(c) | Adjusted Diluted EPS is adjusted by the effect of dilutive securities, including awards under our equity compensation plans and the convertible Series B Preferred Stock. For the three and nine months ended March 31, 2022, as well as the three months ended March 31, 2021, the convertible Series B Preferred Stock was antidilutive. Accordingly, we excluded the convertible Series B Preferred Stock from the diluted shares and did not adjust the earnings for the related dividend. |
(d) | The amount represents the realized and unrealized gain recognized for the change in the fair value of the investment in Wella. |
(e) | For the three months ended March 31, 2022, this primarily represents a net gain on the exchange of Series B Preferred Stock closed on October 20, 2021. For the three months ended March 31, 2021, this primarily represents the write-off of deferred financing fees related to the Wella sale. |
For the nine months ended March 31, 2022, this primarily represents a net gain on the exchange of Series B Preferred Stock closed on October 20, 2021. For the nine months ended March 31, 2021, this primarily represents the write-off of deferred financing fees related to the Wella sale and adjustments for pension curtailment gains. |
|
(f) | For the nine months ended March 31, 2022, this adjustment represents the deemed dividend from the Second Exchange that closed on November 30, 2021 and the deemed dividend from the First Exchange that closed on October 20, 2021. |
RECONCILIATION OF REPORTED NET INCOME (LOSS) TO ADJUSTED NET INCOME FOR COTY INC. |
||||||||||||||||||||||
|
Three Months Ended March 31, |
|
Nine Months Ended March 31, |
|||||||||||||||||||
(in millions) |
2022 |
|
2021 |
|
Change |
|
2022 |
|
2021 |
|
Change |
|||||||||||
Net income from Coty Inc. net of noncontrolling interests |
$ |
53.6 |
|
|
$ |
15.6 |
|
|
>100 |
% |
|
$ |
541.0 |
|
|
$ |
(15.3 |
) |
|
>100 |
% | |
Convertible Series B Preferred Stock dividends (c) |
|
(3.3 |
) |
|
|
(34.1 |
) |
|
90 |
% |
|
|
(195.0 |
) |
|
|
(78.1 |
) |
|
<(100 |
%) | |
Reported Net income attributable to Coty Inc. |
$ |
50.3 |
|
|
$ |
(18.5 |
) |
|
>100 |
% |
|
$ |
346.0 |
|
|
$ |
(93.4 |
) |
|
>100 |
% | |
% of Net revenues |
|
4.2 |
% |
|
|
(1.8 |
%) |
|
|
|
|
8.4 |
% |
|
|
(2.1 |
%) |
|
|
|||
Adjustments to Reported Operating income (a) |
|
56.5 |
|
|
|
103.6 |
|
|
(45 |
%) |
|
|
232.1 |
|
|
|
442.8 |
|
|
(48 |
%) |
|
Adjustments to loss on sale of business (g) |
|
(1.3 |
) |
|
|
27.5 |
|
|
<(100 |
%) |
|
|
(6.1 |
) |
|
|
246.6 |
|
|
<(100 |
%) | |
Change in fair value of investment in Wella Business (d) |
|
(60.7 |
) |
|
|
(63.5 |
) |
|
4 |
% |
|
|
(579.0 |
) |
|
|
(63.5 |
) |
|
(100 |
%) |
|
Adjustments to other expense (e) |
|
0.4 |
|
|
|
(2.5 |
) |
|
>100 |
% |
|
|
(2.5 |
) |
|
|
5.7 |
|
|
<(100 |
%) | |
Adjustments to noncontrolling interests (b) |
|
(1.8 |
) |
|
|
(2.9 |
) |
|
38 |
% |
|
|
(5.3 |
) |
|
|
(7.4 |
) |
|
28 |
% |
|
Change in tax provision due to adjustments to Reported Net income (loss) attributable to Coty Inc. |
|
(16.4 |
) |
|
|
(38.5 |
) |
|
57 |
% |
|
|
92.6 |
|
|
|
(288.2 |
) |
|
>100 |
% | |
Adjustment for deemed Series B Preferred Stock dividends related to the First and Second Exchanges (c) (f) |
|
— |
|
|
|
— |
|
|
N/A |
|
|
|
160.0 |
|
|
|
— |
|
|
N/A |
|
|
Adjusted Net income attributable to Coty Inc. |
$ |
27.0 |
|
|
$ |
5.2 |
|
|
>100 |
% |
|
$ |
237.8 |
|
|
$ |
242.6 |
|
|
(2 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Per Share Data |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted weighted-average common shares |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic |
|
838.4 |
|
|
|
765.4 |
|
|
|
|
|
814.8 |
|
|
|
764.6 |
|
|
|
|||
Diluted (c) (f) |
|
852.9 |
|
|
|
765.4 |
|
|
|
|
|
827.5 |
|
|
|
932.1 |
|
|
|
|||
Adjusted Net income attributable to Coty Inc. per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic |
$ |
0.03 |
|
|
$ |
0.01 |
|
|
|
|
$ |
0.29 |
|
|
$ |
0.32 |
|
|
|
|||
Diluted (c) |
$ |
0.03 |
|
|
$ |
0.01 |
|
|
|
|
$ |
0.29 |
|
|
$ |
0.32 |
|
|
|
(a) | See a description of adjustments under “Adjusted Operating Income (loss) for Coty Inc.” |
(b) | The amounts represent the after-tax impact of the non-GAAP adjustments included in Net income attributable to noncontrolling interest based on the relevant noncontrolling interest percentage in the Condensed Consolidated Statements of Operations. |
(c) | Adjusted Diluted EPS is adjusted by the effect of dilutive securities, including awards under our equity compensation plans and the convertible Series B Preferred Stock. For the three and nine months ended March 31, 2022, as well as the three months ended March 31, 2021, the convertible Series B Preferred Stock was antidilutive. Accordingly, we excluded the convertible Series B Preferred Stock from the diluted shares and did not adjust the earnings for the related dividend. |
(d) | The amount represents the realized and unrealized gain recognized for the change in the fair value of the investment in Wella. |
(e) | For the three months ended March 31, 2022, this primarily represents a net gain on the exchange of Series B Preferred Stock closed on October 20, 2021. For the three months ended March 31, 2021, this primarily represents the write-off of deferred financing fees related to the Wella sale. |
For the nine months ended March 31, 2022, this primarily represents a net gain on the exchange of Series B Preferred Stock closed on October 20, 2021. For the nine months ended March 31, 2021, this primarily represents the write-off of deferred financing fees related to the Wella sale and adjustments for pension curtailment gains. |
|
(f) | For the nine months ended March 31, 2022, this adjustment represents the deemed dividend from the Second Exchange that closed on November 30, 2021 and the deemed dividend from the First Exchange that closed on October 20, 2021. |
(g) | This amount reflects certain working capital adjustments related to the sale of the Wella Business. |
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW |
||||||||||||||||
COTY INC. |
|
Three Months Ended March 31, |
|
Nine Months Ended March 31, |
||||||||||||
(in millions) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net cash provided by operating activities |
|
$ |
24.8 |
|
|
$ |
(186.3 |
) |
|
$ |
759.5 |
|
|
$ |
286.4 |
|
Capital expenditures |
|
|
(47.0 |
) |
|
|
(32.1 |
) |
|
|
(133.0 |
) |
|
|
(143.7 |
) |
Free cash flow |
|
$ |
(22.2 |
) |
|
$ |
(218.4 |
) |
|
$ |
626.5 |
|
|
$ |
142.7 |
|
RECONCILIATION OF TOTAL DEBT TO ECONOMIC NET DEBT |
||||
COTY INC. |
|
As of |
||
(in millions) |
|
March 31, 2022 |
||
Total debt |
|
$ |
4,906.3 |
|
Less: Cash and cash equivalents |
|
|
668.6 |
|
Financial Net debt |
|
$ |
4,237.7 |
|
Less: Value of Wella stake |
|
|
1,025.0 |
|
Economic Net debt |
|
$ |
3,212.7 |
|
IMMEDIATE LIQUIDITY |
||||
COTY INC. |
|
As of |
||
(in millions) |
|
March 31, 2022 |
||
Cash and cash equivalents |
|
$ |
668.6 |
|
Unutilized revolving credit facility |
|
|
1,989.9 |
|
Immediate Liquidity |
|
$ |
2,658.5 |
|
RECONCILIATION OF ADJUSTED OPERATING INCOME TO ADJUSTED EBITDA |
||||
|
|
Twelve months ended |
||
|
|
March 31, 2022 |
||
(in millions) |
|
CONTINUING
|
||
Adjusted operating income (a) |
|
$ |
595.7 |
|
Add: Adjusted depreciation(b) |
|
|
304.7 |
|
Adjusted EBITDA |
|
$ |
900.4 |
|
(a) | Adjusted operating income for the twelve months ended March 31, 2022 represents the summation of the adjusted operating income (loss) for continuing operations for each of the quarters ended June 30, 2021, September 30, 2021, December 31, 2021 and March 31, 2022. For a reconciliation of adjusted operating income (loss) to operating income (loss) for continuing operations for each of those periods, see the table entitled “Reconciliation of Reported Operating Income (loss) to Adjusted Operating Income for Continuing Operations” for each of those periods. |
(b) | Adjusted depreciation for the twelve months ended March 31, 2022 represents depreciation expense for continuing operations for the period, excluding accelerated depreciation. |
FINANCIAL NET DEBT/ADJUSTED EBITDA |
||||
|
|
March 31, 2022 |
||
Financial Net Debt - Coty Inc. |
|
$ |
4,237.7 |
|
Adjusted EBITDA - Continuing operations |
|
|
900.4 |
|
Financial Net Debt/Adjusted EBITDA |
|
|
4.71 |
|
RECONCILIATION OF REPORTED NET REVENUES TO LIKE-FOR-LIKE NET REVENUES |
||||||||||||
|
|
Three Months Ended March 31, 2022 vs. Three Months Ended March 31, 2021
|
||||||||||
Net Revenues Change YoY |
|
Reported Basis |
|
Constant Currency |
|
Impact from
|
|
LFL |
||||
Prestige |
|
21 |
% |
|
25 |
% |
|
— |
% |
|
25 |
% |
Consumer Beauty |
|
8 |
% |
|
10 |
% |
|
— |
% |
|
10 |
% |
Total Continuing Operations |
|
15 |
% |
|
19 |
% |
|
— |
% |
|
19 |
% |
|
||||||||||||
|
|
Nine Months Ended March 31, 2022 vs. Nine Months Ended March 31, 2021
|
||||||||||
Net Revenues Change YoY |
|
Reported Basis |
|
Constant Currency |
|
Impact from
|
|
LFL |
||||
Prestige |
|
21 |
% |
|
22 |
% |
|
— |
% |
|
22 |
% |
Consumer Beauty |
|
8 |
% |
|
8 |
% |
|
— |
% |
|
8 |
% |
Total Continuing Operations |
|
16 |
% |
|
17 |
% |
|
— |
% |
|
17 |
% |
COTY INC. & SUBSIDIARIES |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(in millions) |
|
March 31,
|
|
June 30,
|
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
668.6 |
|
$ |
253.5 |
||
Restricted cash |
|
|
31.6 |
|
|
|
56.9 |
|
Trade receivables, net |
|
|
479.2 |
|
|
|
348.0 |
|
Inventories |
|
|
643.1 |
|
|
|
650.8 |
|
Prepaid expenses and other current assets |
|
|
381.7 |
|
|
|
473.9 |
|
Total current assets |
|
|
2,204.2 |
|
|
|
1,783.1 |
|
Property and equipment, net |
|
|
740.3 |
|
|
|
918.1 |
|
Goodwill |
|
|
4,025.2 |
|
|
|
4,118.1 |
|
Other intangible assets, net |
|
|
4,139.2 |
|
|
|
4,463.0 |
|
Equity investments |
|
|
1,038.9 |
|
|
|
1,276.2 |
|
Operating lease right-of-use assets |
|
|
351.4 |
|
|
|
318.5 |
|
Other noncurrent assets |
|
|
769.9 |
|
|
|
814.4 |
|
TOTAL ASSETS |
|
$ |
13,269.1 |
|
|
$ |
13,691.4 |
|
|
|
|
|
|
||||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
1,280.5 |
|
|
$ |
1,166.1 |
|
Short-term debt and current portion of long-term debt |
|
|
516.5 |
|
|
|
24.2 |
|
Other current liabilities |
|
|
1,399.2 |
|
|
|
1,225.1 |
|
Total current liabilities |
|
|
3,196.2 |
|
|
|
2,415.4 |
|
Long-term debt, net |
|
|
4,316.9 |
|
|
|
5,401.0 |
|
Long-term operating lease liabilities |
|
|
307.3 |
|
|
|
269.3 |
|
Other noncurrent liabilities |
|
|
1,441.5 |
|
|
|
1,423.1 |
|
TOTAL LIABILITIES |
|
|
9,261.9 |
|
|
|
9,508.8 |
|
|
|
|
|
|
||||
CONVERTIBLE SERIES B PREFERRED STOCK |
|
|
142.4 |
|
|
|
1,036.3 |
|
REDEEMABLE NONCONTROLLING INTERESTS |
|
|
71.9 |
|
|
|
84.1 |
|
Total Coty Inc. stockholders’ equity |
|
|
3,598.7 |
|
|
|
2,860.7 |
|
Noncontrolling interests |
|
|
194.2 |
|
|
|
201.5 |
|
Total equity |
|
|
3,792.9 |
|
|
|
3,062.2 |
|
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY |
|
$ |
13,269.1 |
|
|
$ |
13,691.4 |
|
COTY INC. & SUBSIDIARIES |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
|
Nine Months Ended
|
|||||||
|
2022 |
|
2021 |
|||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|||||
Net income (loss) |
$ |
547.6 |
|
|
$ |
(14.6 |
) |
|
|
|
|
|
|||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|||||
Depreciation and amortization |
|
389.5 |
|
|
|
436.1 |
|
|
Non-cash lease expense |
|
55.6 |
|
|
|
61.6 |
|
|
Deferred income taxes |
|
48.6 |
|
|
|
(238.8 |
) |
|
Provision (releases) for bad debts |
|
2.6 |
|
|
|
(9.6 |
) |
|
Provision for pension and other post-employment benefits |
|
11.9 |
|
|
|
8.3 |
|
|
Share-based compensation |
|
164.3 |
|
|
|
28.9 |
|
|
Gains on disposals of long-term assets |
|
(111.1 |
) |
|
|
— |
|
|
(Gain) loss on sale of business in discontinued operations |
|
(6.1 |
) |
|
|
246.6 |
|
|
Realized and unrealized gains from equity investments, net |
|
(576.7 |
) |
|
|
(60.9 |
) |
|
Other |
|
16.3 |
|
|
|
71.5 |
|
|
Change in operating assets and liabilities, net of effects from purchase of acquired companies: |
|
|
|
|||||
Trade receivables |
|
(161.4 |
) |
|
|
(57.3 |
) |
|
Inventories |
|
(10.1 |
) |
|
|
114.2 |
|
|
Prepaid expenses and other current assets |
|
23.0 |
|
|
|
(133.0 |
) |
|
Accounts payable |
|
137.3 |
|
|
|
(137.8 |
) |
|
Accrued expenses and other current liabilities |
|
246.4 |
|
|
|
64.8 |
|
|
Operating lease liabilities |
|
(54.8 |
) |
|
|
(104.4 |
) |
|
Other assets and liabilities, net |
|
36.6 |
|
|
|
10.8 |
|
|
Net cash provided by operating activities |
|
759.5 |
|
|
|
286.4 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|||||
Capital expenditures |
|
(133.0 |
) |
|
|
(143.7 |
) |
|
Proceeds from sale of long-term assets |
|
169.7 |
|
|
|
4.3 |
|
|
Proceeds from sale of discontinued business, net of cash disposed |
|
— |
|
|
|
2,374.1 |
|
|
Proceeds from contingent consideration from sale of discontinued business |
|
34.0 |
|
|
|
— |
|
|
Return of capital from equity investments |
|
210.7 |
|
|
|
448.0 |
|
|
Proceeds from sale of business, net of cash disposed |
|
— |
|
|
|
27.0 |
|
|
Payment for equity investment and related asset acquisition |
|
— |
|
|
|
(200.0 |
) |
|
Termination of currency swaps designated as net investment hedges |
|
— |
|
|
|
(37.6 |
) |
|
Net cash used in investing activities |
|
281.4 |
|
|
|
2,472.1 |
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|||||
Net proceeds from short-term debt, original maturity less than three months |
|
4.8 |
|
|
|
0.5 |
|
|
Proceeds from revolving loan facilities |
|
444.3 |
|
|
|
2,147.9 |
|
|
Repayments of revolving loan facilities |
|
(1,114.7 |
) |
|
|
(2,963.7 |
) |
|
Proceeds from issuance of other long-term debt |
|
500.0 |
|
|
|
— |
|
|
Repayments of term loans and other long term debt |
|
(256.1 |
) |
|
|
(2,162.0 |
) |
|
Dividend payment on Class A Common Stock |
|
(1.3 |
) |
|
|
(1.5 |
) |
|
Dividend payment on Convertible Series B Preferred Stock |
|
(52.5 |
) |
|
|
— |
|
|
Proceeds from issuance of Convertible Series B Preferred Stock |
|
— |
|
|
|
227.2 |
|
|
Net (repayments for) proceeds from foreign currency contracts |
|
(94.1 |
) |
|
|
20.3 |
|
|
Purchase of remaining mandatorily redeemable noncontrolling interest |
|
(7.1 |
) |
|
|
— |
|
|
Distributions to noncontrolling interests, redeemable noncontrolling interests and mandatorily redeemable financial instruments |
|
(15.1 |
) |
|
|
(6.3 |
) |
|
Payment of deferred financing fees |
|
(39.3 |
) |
|
|
— |
|
|
All other |
|
(11.6 |
) |
|
|
(4.8 |
) |
|
Net cash provided by financing activities |
|
(642.7 |
) |
|
|
(2,742.4 |
) |
|
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
(8.4 |
) |
|
|
(10.1 |
) |
|
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
389.8 |
|
|
|
6.0 |
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period |
|
310.4 |
|
|
|
352.0 |
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period |
$ |
700.2 |
|
|
$ |
358.0 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220509005272/en/
Investor Relations
Olga Levinzon, +1 212 389-7733
[email protected]
Media
Antonia Werther, +31 621 394495 /
[email protected]