Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Coty Delivers Strong 1Q22 Results, Well Ahead of Expectations


Coty Inc. (NYSE: COTY) ("Coty" or "the Company") today announced another quarter of improvement in its financial results and further progress across each of its strategic growth pillars for the first quarter of fiscal year 2022, ended September 30, 2021.

In Q1, revenues increased 22%, or 20.6% LFL, surpassing guidance of high-teens LFL growth, with a combination of strong brick & mortar growth and 23% growth in e-commerce. Coty's Prestige business delivered superior 35% reported and 34% LFL growth in the quarter, despite a low single digit negative impact from the continued reduction of sales in low quality channels. Prestige fragrance sales increased strongly across nearly all brands, with particularly strong performance from Gucci, Burberry, Hugo Boss, Marc Jacobs, Calvin Klein, and Chloe. This momentum was fueled by a very strong fragrance launch calendar in Q1 with particular standout results from Gucci Flora Gorgeous Gardenia and Burberry Hero. At the same time, Prestige cosmetics sales more than doubled year-on-year, led by Gucci makeup and the relaunch of Kylie Cosmetics. Regionally, the U.S. and China continued to deliver very robust performance, Travel Retail more than doubled led in particular by Asia and Europe, while trends in many Western European markets continued to improve.

During the quarter, Consumer Beauty revenues increased 4% as reported and 3% LFL, as the global mass beauty category returned to growth and Coty continued to make progress towards share stabilization. CoverGirl generated double digit percent sell-in and sell-out growth, growing market share in 4 of the last 7 months, with outsized momentum in the Magnificent 8 franchises. Meanwhile, the re-positioning of both Rimmel and Max Factor, which kicked off in the summer, have also been showing solid progress across key European markets. Rimmel's Wonder'Extension mascara has become its most successful mascara launch in the critical UK and German markets, with momentum building exiting Q1 with the launch of Rimmel's first-to-mass Kind & Free range of clean, vegan and cruelty free cosmetics products. At the same time, Max Factor's launch of its Facefinity foundation with Priyanka Chopra Jonas as spokesperson have propelled Max Factor to market share gains in the UK for the first time in years.

The strong topline growth was matched by very robust profitability growth in Q1, supported by both significant gross margin expansion and additional cost reductions, enabling a significant step-up in marketing spend, with working media doubling year-on-year. Reported gross margins expanded 460 bps in the quarter to 63.2%, while adjusted gross margin was up 480 bps to 63.4%, above pre-pandemic levels, driven by a combination of product and channel mix, improved excess & obsolescence, pricing and mix benefits, and higher production volumes. This substantial expansion fueled reinvestment behind key strategic initiatives. In addition, Coty continued to lower its cost base, with year-over-year savings of approximately $60 million, showing significant progress towards the FY22 savings target of over $90 million. The Company has now cumulatively achieved close to $400M of cost savings versus the FY20 baseline, and remains on track to achieve approximately $600M of savings by FY23. The gross margin improvement and cost reductions allowed Coty to continue to reinvest behind its brands and highest ROI opportunities, as working media more than doubled versus last year, and total A&CP remained consistent sequentially at ~26% of sales. At the same time, Coty delivered 1Q22 reported operating income of $17.2 million and adjusted EBITDA of $278.5 million, increasing 67% from last year and resulting in an adjusted EBITDA margin of 20.3% or 550 bps improvement versus 1Q21.

Financial Net Debt improved by approximately $200 million to just under $5 billion at the end of 1Q. Free cash flow was strong in a seasonally weaker quarter at $240.7 million. With an increase in the value of Coty's 40% Wella stake at quarter end to approximately $1.65 billion at quarter-end, the Company's Economic Net Debt totaled approximately $3.3 billion.

Commenting on the operating results, Sue Y. Nabi, Coty's CEO, said:

"Our objective coming into fiscal 2022 was to build on the great results we delivered last year and further execute on our strategic growth pillars. I am very pleased to say that we are off to a great start, building upon our success. Q1 marks the fifth consecutive quarter of Coty delivering results inline to ahead of expectations. Importantly, our Q1 results exemplify the virtuous cycle that we have been working to create, where our strong topline performance coupled with sustained gross margin expansion and cost initiatives, fuel both profit expansion and targeted re-investments to support future growth.

Coty's successful execution across each of our strategic pillars is exemplified in our Q1 performance. The repositioning of three key Consumer Beauty brands - CoverGirl, Rimmel and Max Factor - are taking hold, returning the overall segment to growth and pushing the Consumer Beauty business to share stabilization. Gucci Flora and Burberry Hero are well on their way to becoming global fragrance icons, helping to accelerate our prestige fragrance portfolio, while the assortment and distribution expansion of Gucci and Kylie cosmetics are solidifying Coty as a key player in prestige cosmetics. In skincare, Lancaster is building momentum in Hainan as the lead market for its repositioning, with several exciting initiatives to come in our skincare portfolio in the coming months. Our e-commerce sales continued its momentum, with strong growth across both Prestige and Consumer Beauty, with total e-commerce sales up 23%. And the combination of these areas fueled close to 50% growth in China. Finally, on sustainability, we have concluded our footprint study reflecting Coty's scope following the Wella divestiture, and will be publishing our second sustainability report very soon.

Importantly, even as we tracked industry-wide headwinds ranging from select component shortages, supply chain bottlenecks, and inflationary pressure in materials and freight, the strength of our business model and the agility of our teams allowed to us to exceed our sales guidance and deliver nearly 500 bps of gross margin expansion. We feel confident about our prospects for the remainder of the year and we are therefore raising our FY22 sales outlook to low-to-mid teens growth from our previous guidance of low teens growth. While inflation impact is expected to step up in the second half of FY22, we believe the impact is quite manageable, particularly as we double-down on accretive innovations and premiumizing our portfolio. As a result, we continue to expect gross margin expansion for the year as compared to FY21. We expect FY22 adjusted EBITDA of $900M at a minimum, as we are intentionally reinvesting our gross margin gain and costs savings in our brands to maximize value.

Fifteen months into our turnaround, I am highly encouraged by the strength of our portfolio, our people, and our strategic path, which together are delivering results in record time as we transform Coty into a true leader in beauty. I look forward to sharing more details on our progress and medium term trajectory at our Investor Day in New York City next week on November 18th."

*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 September 30, 2021

 

Highlights

Outlook

Entering 2Q22, Coty continues to see beauty market momentum, including continued strength in the U.S. and China, a strong rebound in Travel Retail, and steady improvement in Western Europe. Given this market backdrop, coupled with very strong performance of Coty's recent product launches, Coty raises its FY22 LFL sales outlook to low-to-mid teens percentage growth, up from its previous guidance of low teens growth.

The Company also expects FY22 adjusted EBITDA of $900 million at a minimum, on a constant currency basis, as Coty intentionally reinvests gross margin gain and costs savings in its brands to maximize value. This reflects strong EBITDA margin expansion YoY. With significant progress made to date in simplifying its capital structure, Coty anticipates FY22 adjusted EPS in the $0.19-0.23 range.

In addition, the Company continues to target leverage moving towards 5x exiting CY21, and a further reduction in leverage to approximately 4x exiting CY22.

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:

Immediate Liquidity:

First Quarter Business Review by Segment*

Prestige

In 1Q22, Prestige net revenues of $870.7 million or 63% of Coty sales, increased by 35.1% versus the prior year. On a LFL basis, Prestige net revenues delivered robust growth of 33.6%, driven by continued strength in the U.S. and China, as well as many key markets in the EMEA region and Travel Retail. In addition, LFL growth was broad-based across fragrances and makeup.

During the quarter, our U.S. Prestige fragrance sell-out continued to generate very robust growth, up strong double-digits versus last year, with particularly favorable performance from Burberry, Marc Jacobs, Gucci, and Chloe. Encouragingly, our recent key innovations such as Gucci Flora Gorgeous Gardenia and Burberry Hero are delivering stellar early results. In the EMEA region, Prestige fragrance continued to improve in 1Q22 as many markets remained on their re-opening trajectories. Similar to the U.S., the EMEA region also benefited from very strong results of the recent Prestige fragrance launches. Despite a resurgence of COVID-19 during the quarter, China continued to deliver solid results, with revenue increasing almost 50%.

Coty continued to execute on its newest growth pillars: expanding its presence in Prestige skincare and cosmetics. Within cosmetics, Gucci generated robust triple-digit sell-out growth across many key markets including in the U.S. and China. On skincare, the revitalization of Lancaster in Hainan continues to take hold with traffic and sales rebounding in September, following a brief COVID-related slowdown in August.

E-commerce sales for the segment continued to increase 21% in Q1, with solid growth across regions. E-commerce penetration was in the 20% level at the end of 1Q22.

The Prestige segment generated a reported operating income of $132.1 million in 1Q22, compared to a reported operating income of $34.0 million in the prior year. The 1Q22 adjusted operating income was $177.0 million, up from an adjusted operating income of $85.7 million in the prior year, driven by gross margin improvement and fixed cost reduction, partially offset by higher working media expenses. Adjusted EBITDA for the Prestige segment rose to $215.0 million from $119.8 million in the prior year, with a margin of 24.7%.

Consumer Beauty

In 1Q22, Consumer Beauty net revenues of $501.0 million, or 37% of Coty sales, increased by 4.4% versus the prior year. On a LFL basis, Consumer Beauty net revenues increased 3.0%.

During the quarter, Coty progressed towards share stabilization in Consumer Beauty. In the U.S., CoverGirl continues to prove it is on significantly stronger footing, with the Magnificent 8 franchises outperforming the cosmetics category and the brand returning to market share gains exiting Q1 and into Q2. Meanwhile, Sally Hansen also continued to deliver strong performance, gaining share throughout the quarter with sell-out tracking above 2019 levels.

Coty's stabilization efforts in Europe continue to take hold through the re-positioning of Rimmel and Max Factor. Capitalizing on the success the Company has had with clean beauty in the U.S., Coty recently launched Rimmel Kind & Free, the biggest Consumer Beauty launch of FY22. Meanwhile, Max Factor is already realizing solid market share gains in the UK and Netherlands, with the overall brand maintaining or gaining share in over 75% of its markets.

1Q22 Consumer Beauty e-commerce sales grew 27%, driving e-commerce penetration as a percentage of sales to the high-single-digit percentage level.

Reported operating income was $11.4 million in 1Q22 versus reported operating loss of $13.7 million in the prior year. The 1Q22 adjusted operating income of $23.5 million increased from an adjusted operating loss of $0.0 million in the prior year, driven by a higher gross margin and solid fixed cost reductions, partially offset by a reinvestment in marketing expenses, particularly towards working media. During the quarter, adjusted EBITDA increased to $63.5 million from $46.8 million in the prior year, with a margin of 12.7%.

First Quarter Fiscal 2021 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 host a conference call at 8:00 a.m. (ET) today, November 8, 2021 to discuss its results. The dial-in number for the call is (800) 895-3361 in the U.S. or (785) 424-1062 internationally (conference passcode number: COTY1Q22). 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, and skin and body care. Coty is the global leader in fragrance, and number three in color cosmetics. Coty markets, sells and distributes the products in approximately 130 countries and territories. Coty and its brands are committed to a range of social causes as well as seeking to minimize its impact on the environment. For additional information about Coty Inc., please visit www.coty.com.

Forward Looking Statements
Certain statements in this Earnings Release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company's current views with respect to, among other things, the impact of COVID-19 and potential recovery scenarios, the Company's comprehensive transformation agenda (the "Transformation 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 impact of the Wella divestiture and the related transition services (the "Wella TSA"), 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), 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, synergies, savings, performance, cost, timing and integration of acquisitions, including the strategic partnership with Kylie Jenner and the strategic partnership with Kim Kardashian West, future cash flows, liquidity and borrowing capacity (including any debt refinancing 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, supply chain changes, e-commerce and digital initiatives, the expected impact of global supply chain challenges or inflationary pressures, 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 September 30, 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.

SUPPLEMENTAL SCHEDULES INCLUDING NON-GAAP FINANCIAL MEASURES(a)

 

RESULTS AT A GLANCE

 

 

Three Months Ended September 30,

2021

(in millions, except per share data)

 

 

 

Change YoY

 

CONTINUING OPERATIONS

 

 

 

Reported Basis

 

(LFL)

Net revenues

 

$

1,371.7

 

 

22

%

 

21

%

Operating income - reported

 

17.2

 

 

>100

%

 

 

Operating income - adjusted*

 

200.5

 

 

>100

%

 

 

EBITDA - adjusted

 

278.5

 

 

67

%

 

 

Net income attributable to common shareholders - reported**

 

103.0

 

 

7

%

 

 

Net income attributable to common shareholders - adjusted* **

 

63.1

 

 

>100

%

 

 

EPS attributable to common shareholders (diluted) - reported

 

$

0.13

 

 

?

%

 

 

EPS attributable to common shareholders (diluted) - adjusted*

 

$

0.08

 

 

>100

%

 

 

 

 

 

 

 

 

 

COTY, INC.

 

 

 

 

 

 

Net income attributable to common shareholders - reported **

 

103.0

 

 

(49

%)

 

 

Net income attributable to common shareholders - adjusted* **

 

63.1

 

 

(31

%)

 

 

EPS attributable to common shareholders (diluted) - reported

 

$

0.13

 

 

(46

%)

 

 

EPS attributable to common shareholders (diluted) - adjusted*

 

$

0.08

 

 

(33

%)

 

 

* 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.

FIRST QUARTER BY SEGMENT (CONTINUING OPERATIONS)

 

 

Three Months Ended September 30,

 

 

 

 

Net Revenues

 

Change

Reported Operating Income (Loss)

 

Adjusted Operating Income

(in millions)

 

2021

 

2020

 

Reported

Basis

 

LFL

 

2021

 

Change

 

Margin

 

2021

 

Change

 

Margin

Prestige

 

$

870.7

 

 

$

644.4

 

 

35

%

 

34

%

 

$

132.1

 

 

>100

%

 

15

%

 

$

177.0

 

 

>100%

 

20

%

Consumer Beauty

 

501.0

 

 

479.7

 

 

4

%

 

3

%

 

11.4

 

 

>100

%

 

2

%

 

23.5

 

 

N/A

 

5

%

Corporate

 

?

 

 

?

 

 

N/A

 

N/A

 

(126.3

)

 

(46

%)

 

N/A

 

?

 

 

N/A

 

N/A

Total

 

$

1,371.7

 

 

$

1,124.1

 

 

22

%

 

21

%

 

$

17.2

 

 

>100

%

 

1

%

 

$

200.5

 

 

>100%

 

15

%

 

(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

September 30,

(in millions)

 

2021

 

2020

Prestige

 

$

215.0

 

 

$

119.8

 

Consumer Beauty

 

63.5

 

 

46.8

 

Corporate

 

?

 

 

?

 

Total

 

$

278.5

 

 

$

166.6

 

FIRST QUARTER FISCAL 2022 BY REGION

 

Continuing Operations

 

 

Three Months Ended September 30,

 

 

Net Revenues

 

Change

(in millions)

 

2021

 

2020

 

Reported

Basis

 

LFL

Americas

 

$

581.5

 

 

$

470.6

 

 

24

%

 

23

%

EMEA

 

627.1

 

 

530.4

 

 

18

%

 

17

%

Asia Pacific

 

163.1

 

 

123.1

 

 

32

%

 

29

%

Total

 

$

1,371.7

 

 

$

1,124.1

 

 

22

%

 

21

%

COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

Three Months Ended

September 30,

(in millions, except per share data)

2021

 

2020

Net revenues

$

1,371.7

 

 

 

$

1,124.1

 

 

Cost of sales

504.8

 

 

 

464.9

 

 

as % of Net revenues

36.8

 

%

 

41.4

 

%

Gross profit

866.9

 

 

 

659.2

 

 

Gross margin

63.2

 

%

 

58.6

 

%

 

 

 

 

Selling, general and administrative expenses

776.3

 

 

 

583.4

 

 

as % of Net revenues

56.6

 

%

 

51.9

 

%

Amortization expense

57.0

 

 

 

65.4

 

 

Restructuring costs

12.4

 

 

 

30.1

 

 

Acquisition-and divestiture- related costs

4.0

 

 

 

46.3

 

 

Operating income (loss)

17.2

 

 

 

(66.0

)

 

as % of Net revenues

1.3

 

%

 

(5.9

 

%)

Interest expense, net

59.8

 

 

 

62.1

 

 

Other income, net

(386.1

)

 

 

(5.8

)

 

Income (loss) from continuing operations before income taxes

343.5

 

 

 

(122.3

)

 

as % of Net revenues

25.0

 

%

 

(10.9

 

%)

Provision (benefit) for income taxes on continuing operations

114.6

 

 

 

(244.9

)

 

Net income from continuing operations

228.9

 

 

 

122.6

 

 

as % of Net revenues

16.7

 

%

 

10.9

 

%

Net income from discontinued operations

?

 

 

 

104.7

 

 

Net income

228.9

 

 

 

227.3

 

 

Net (loss) income attributable to noncontrolling interests

(0.5

)

 

 

0.4

 

 

Net income attributable to redeemable noncontrolling interests

3.4

 

 

 

5.5

 

 

Net income attributable to Coty Inc.

$

226.0

 

 

 

$

221.4

 

 

Amounts attributable to Coty Inc.

 

 

 

Net income from continuing operations

$

226.0

 

 

 

$

116.7

 

 

Convertible Series B Preferred Stock dividends

(123.0

)

 

 

(20.8

)

 

Net income from continuing operations attributable to common stockholders

$

103.0

 

 

 

$

95.9

 

 

Net income from discontinued operations

?

 

 

 

104.7

 

 

Net income attributable to common stockholders

$

103.0

 

 

 

$

200.6

 

 

 

 

 

 

Earnings per common share:

 

 

 

Basic for Continuing Operations

$

0.13

 

 

 

$

0.13

 

 

Diluted for Continuing Operations(a)

$

0.13

 

 

 

$

0.13

 

 

Basic for Coty Inc.

$

0.13

 

 

 

$

0.26

 

 

Diluted for Coty Inc.(a)

$

0.13

 

 

 

$

0.24

 

 

Weighted-average common shares outstanding:

 

 

 

Basic

777.6

 

 

 

763.9

 

 

Diluted(a)

787.7

 

 

 

916.7

 

 

 

 

 

 

Depreciation - Continuing Operations

$

80.8

 

 

 

$

80.9

 

 

(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 $123.0 million and $20.8 million for the three months ended September 30, 2021 and 2020, respectively, on net income applicable to common stockholders during the period.

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 September 30, 2021

 

 

 

CONTINUING OPERATIONS

 

 

(in millions)

Reported

(GAAP)

 

Adjustments(a)

 

Adjusted

(Non-GAAP)

 

 

Net revenues

$

1,371.7

 

 

 

$

?

 

 

$

1,371.7

 

 

 

 

Gross profit

866.9

 

 

 

2.7

 

 

869.6

 

 

 

 

Gross margin

63.2

 

%

 

 

 

63.4

 

%

 

 

Operating income

17.2

 

 

 

183.3

 

 

200.5

 

 

 

 

as % of Net revenues

1.3

 

%

 

 

 

14.6

 

%

 

 

Net income

103.0

 

 

 

(39.9

)

 

63.1

 

 

 

 

as % of Net revenues

7.5

 

%

 

 

 

4.6

 

%

 

 

Adjusted EBITDA

 

 

 

 

278.5

 

 

 

 

as % of Net revenues

 

 

 

 

20.3

 

%

 

 

 

COTY INC.

 

 

Net income attributable to Coty Inc.

103.0

 

 

 

(39.9

)

 

63.1

 

 

 

 

 

 

 

 

 

 

 

 

EPS (diluted)

$

0.13

 

 

 

 

 

$

0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2020

(in millions)

Reported

(GAAP)

 

Adjustments(a)

 

Adjusted

(Non-GAAP)

 

Discontinued

Operations

Adjusted

(Non-GAAP)

Net revenues

$

1,124.1

 

 

 

$

?

 

 

$

1,124.1

 

 

 

$

566.4

 

Gross profit

659.2

 

 

 

?

 

 

659.2

 

 

 

385.4

 

Gross margin

58.6

 

%

 

 

 

58.6

 

%

 

68.0

%

Operating (loss) income

(66.0

)

 

 

151.7

 

 

85.7

 

 

 

146.8

 

as % of Net revenues

(5.9

 

%)

 

 

 

7.6

 

%

 

26.0

%

Net income (loss)

95.9

 

 

 

(105.7

)

 

(9.8

)

 

 

101.1

 

as % of Net revenues

8.5

 

%

 

 

 

(0.9

 

%)

 

17.8

%

Adjusted EBITDA

 

 

 

 

166.6

 

 

 

146.8

 

as % of Net revenues

 

 

 

 

14.8

 

%

 

25.9

%

 

COTY INC.

 

 

Net income attributable to Coty Inc.

200.6

 

 

 

(109.3

)

 

91.3

 

 

 

 

 

 

 

 

 

 

 

 

EPS (diluted)

$

0.24

 

 

 

 

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

(a) See "Reconciliation of Reported Operating (Loss) Income 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 OPERATING (LOSS) INCOME TO ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA

 

CONTINUING OPERATIONS

 

Three Months Ended September 30,

(in millions)

 

2021

 

2020

 

Change

Reported Operating income (loss)

 

$

17.2

 

 

$

(66.0

)

 

 

>100

%

% of Net revenues

 

1.3

%

 

(5.9

 

%)

 

 

Amortization expense (a)

 

57.0

 

 

65.4

 

 

 

(13

%)

Restructuring and other business realignment costs (b)

 

14.1

 

 

34.4

 

 

 

(59

%)

Stock-based compensation (c)

 

108.2

 

 

5.6

 

 

 

>100

%

Acquisition- and divestiture-related costs (d)

 

4.0

 

 

46.3

 

 

 

(91

%)

Total adjustments to reported operating income (loss)

 

183.3

 

 

151.7

 

 

 

21

%

Adjusted Operating income

 

$

200.5

 

 

$

85.7

 

 

 

>100

%

% of Net revenues

 

14.6

%

 

7.6

 

%

 

 

Adjusted depreciation (e)

 

78.0

 

 

80.9

 

 

 

(4

%)

Adjusted EBITDA

 

$

278.5

 

 

$

166.6

 

 

 

67

%

% of Revenues

 

20.3

%

 

14.8

 

%

 

 

(a)

In the three months ended September 30, 2021, amortization expense of $44.9 and $12.1 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended September 30, 2020, amortization expense of $51.7 and $13.7 was reported in the Prestige and Consumer Beauty segments, respectively.

(b)

In the three months ended September 30, 2021, we incurred restructuring and other business structure realignment costs of $14.1. We incurred restructuring costs of $12.4 primarily related to the Transformation Plan, included in the Condensed Consolidated Statements of Operations; and business structure realignment costs of $1.7 primarily related to the Transformation Plan and certain other programs. This amount includes $(1.0) reported in selling, general and administrative expenses, and $2.7 reported in cost of sales in the Condensed Consolidated Statement of Operations. In the three months ended September 30, 2020, we incurred restructuring and other business structure realignment costs of $34.4. We incurred restructuring costs of $30.1 primarily related to the Transformation Plan, included in the Condensed Consolidated Statements of Operations; and business structure realignment costs of $4.3 primarily related to the Transformation Plan and certain other programs. This amount includes $4.3 reported in selling, general and administrative expenses, and nil reported in cost of sales in the Condensed Consolidated Statement of Operations.

(c)

In the three months ended September 30, 2021, stock-based compensation was $108.2 as compared with $5.6 in the three months ended September 30, 2020. The increase in stock-based compensation is primarily related to the CEO grant made on June 30, 2021.

(d)

In the three months ended September 30, 2021 and September 30, 2020, we incurred acquisition- and divestiture-related costs of $4.0 and $46.3, respectively. These costs were primarily associated with the Wella Transaction.

(e)

In the three months ended September 30, 2021, adjusted depreciation expense of $38.0 and $40.0 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended September 30, 2020, adjusted depreciation expense of $34.1 and $46.8 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 September 30, 2021

 

Three Months Ended September 30, 2020

(in millions)

 

(Loss)

income

before

income

taxes

 

(Benefit)

Provision

for

income

taxes

 

Effective tax

rate

 

(Loss)

income

before

income

taxes

 

Provision

for

income

taxes

 

Effective tax

rate

Reported Income (Loss) before income taxes - Continuing Operations

 

$

343.5

 

 

$

114.6

 

 

33.4

%

 

$

(122.3

)

 

$

(244.9

)

 

200.2

%

Adjustments to Reported Operating Income (a)

 

183.3

 

 

 

 

 

 

151.7

 

 

 

 

 

Change in fair value of investment in Wella Business (c)

 

(390.0

)

 

 

 

 

 

?

 

 

 

 

 

Other adjustments (d)

 

0.2

 

 

 

 

 

 

(5.3

)

 

 

 

 

Total Adjustments (b) (e)

 

(206.5

)

 

(74.8

)

 

 

 

146.4

 

 

250.9

 

 

 

Adjusted Income before income taxes - Continuing Operations

 

$

137.0

 

 

$

39.8

 

 

29.1

%

 

$

24.1

 

 

$

6.0

 

 

24.9

%

The adjusted effective tax rate was 29.1% for the three months ended September 30, 2021 compared to 24.9% for the three months ended September 30, 2020. The difference was primarily due to the jurisdictional mix of income.

 

(a)

See a description of adjustments under "Adjusted Operating (Loss) Income 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 unrealized gain recognized for the change in the fair value of the investment in Wella.

(d)

For the three months ended September 30, 2021, this primarily represents the loss from the equity investment in KKW. For the three months ended September 30, 2020, this primarily represents the pension curtailment gain.

(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 (LOSS) FOR CONTINUING OPERATIONS

 

Three Months Ended September 30,

(in millions)

2021

 

2020

 

Change

Net income from Continuing Operations, net of noncontrolling interests

$

226.0

 

 

 

$

116.7

 

 

 

94

%

Convertible Series B Preferred Stock dividends (c)

(123.0

)

 

 

(20.8

)

 

 

<(100

%)

Reported Net income attributable to Continuing Operations

$

103.0

 

 

 

$

95.9

 

 

 

7

%

% of Net revenues

7.5

 

%

 

8.5

 

%

 

 

Adjustments to Reported Operating Income (a)

183.3

 

 

 

151.7

 

 

 

21

%

Change in fair value of investment in Wella Business (d)

(390.0

)

 

 

?

 

 

 

N/A

Adjustments to other (income) expense (e)

0.2

 

 

 

(5.3

)

 

 

>100

%

Adjustments to noncontrolling interest expense (b)

(1.8

)

 

 

(1.2

)

 

 

(50

%)

Change in tax provision due to adjustments to Reported Net income attributable to Continuing Operations

74.8

 

 

 

(250.9

)

 

 

>100

%

Adjustment for deemed Series B Preferred Stock dividends related to the Exchange Agreement (c) (f)

93.6

 

 

 

?

 

 

 

N/A

Adjusted Net income (loss) attributable to Continuing Operations

$

63.1

 

 

 

$

(9.8

)

 

 

>100

%

% of Net revenues

4.6

 

%

 

(0.9

 

%)

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

Adjusted weighted-average common shares

 

 

 

 

 

Basic

777.6

 

 

 

763.9

 

 

 

 

Diluted (c) (f)

787.7

 

 

 

763.9

 

 

 

 

Adjusted Net income (loss) attributable to Continuing Operations per Common Share

 

 

 

 

 

Basic

$

0.08

 

 

 

$

(0.01

)

 

 

 

Diluted (c)

$

0.08

 

 

 

$

(0.01

)

 

 

 

(a)

See a description of adjustments under "Adjusted Operating Income 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 both periods presented, 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 unrealized gain recognized for the change in the fair value of the investment in Wella.

(e)

For the three months ended September 30, 2021, this primarily represents the loss from equity investment in KKW. For the three months ended September 30, 2020, this primarily represents the pension curtailment gain.

(f)

This adjustment represents the deemed dividend that was caused by the entering into the Exchange Agreement on September 30, 2021. The deemed dividend is the difference between the carrying value and the fair value of the Convertible Series B Preferred Stock to be exchanged.

RECONCILIATION OF REPORTED NET INCOME TO ADJUSTED NET INCOME FOR COTY INC.

 

Three Months Ended September 30,

(in millions)

2021

 

2020

 

Change

Net income from Coty Inc. net of noncontrolling interests

$

226.0

 

 

 

$

221.4

 

 

 

2

 

%

Convertible Series B Preferred Stock dividends (c)

(123.0

)

 

 

(20.8

)

 

 

<(100

%)

Reported Net income attributable to Coty Inc.

$

103.0

 

 

 

$

200.6

 

 

 

(49

 

%)

% of Net revenues

7.5

 

%

 

11.9

 

%

 

 

Adjustments to Reported Operating income (a)

183.3

 

 

 

153.1

 

 

 

20

 

%

Change in fair value of investment in Wella Business (d)

(390.0

)

 

 

?

 

 

 

N/A

Adjustments to other (income) expense (e)

0.2

 

 

 

(5.3

)

 

 

>100

%

Adjustments to noncontrolling interest expense (b)

(1.8

)

 

 

(1.2

)

 

 

(50

)

%

Change in tax provision due to adjustments to Reported Net income (loss) attributable to Coty Inc.

74.8

 

 

 

(255.9

)

 

 

>100

%

Adjustment for deemed Series B Preferred Stock dividends related to the Exchange Agreement (c) (f)

93.6

 

 

 

?

 

 

 

N/A

Adjusted Net income attributable to Coty Inc.

$

63.1

 

 

 

$

91.3

 

 

 

(31

)

%

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

Adjusted weighted-average common shares

 

 

 

 

 

Basic

777.6

 

 

 

763.9

 

 

 

 

Diluted (c) (f)

787.7

 

 

 

763.9

 

 

 

 

Adjusted Net income attributable to Coty Inc. per Common Share

 

 

 

 

 

Basic

$

0.08

 

 

 

$

0.12

 

 

 

 

Diluted (c)

$

0.08

 

 

 

$

0.12

 

 

 

 

(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 both periods presented, 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 unrealized gain recognized for the change in the fair value of the investment in Wella.

(e)

For the three months ended September 30, 2021, this primarily represents adjustment for the change in the fair value of investment in KKW.

(f)

This adjustment represents the deemed dividend that was caused by the entering into the Exchange Agreement on September 30, 2021. The deemed dividend is the difference between the carrying value and the fair value of the Convertible Series B Preferred Stock to be exchanged.

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

COTY INC.

 

Three Months Ended September

30,

(in millions)

 

2021

 

2020

Net cash provided by operating activities

 

$

285.7

 

 

$

42.6

 

Capital expenditures

 

(45.0

)

 

(70.9

)

Free cash flow

 

$

240.7

 

 

$

(28.3

)

RECONCILIATION OF TOTAL DEBT TO ECONOMIC NET DEBT

COTY INC.

As of

(in millions)

September 30, 2021

Total debt

$

5,332.0

Less: Cash and cash equivalents

 

376.9

Financial Net debt

$

4,955.1

Less Value of Wella stake

 

1,650.0

Economic Net debt

$

3,305.1

 
 

IMMEDIATE LIQUIDITY

COTY INC.

As of

(in millions)

September 30, 2021

Cash and cash equivalents

$

376.9

Unutilized revolving credit facility

 

2,149.9

Immediate Liquidity

$

2,526.8

 
 

RECONCILIATION OF ADJUSTED OPERATING INCOME TO ADJUSTED EBITDA

 

Twelve months ended

 

September 30, 2021

(in millions)

CONTINUING

OPERATIONS

Adjusted operating income (a)

$

551.0

Add: Adjusted depreciation(b)

 

322.9

Adjusted EBITDA

$

873.9

(a)

Adjusted operating income (loss) for the twelve months ended September 30, 2021 represents the summation of the adjusted operating income (loss) for each of the quarters ended December 31, 2020, March 31, 2021, June 30, 2021 and September 30, 2021. For a reconciliation of adjusted operating income (loss) to operating income (loss) for each of those periods, see the table entitled "Reconciliation of Reported Operating Income (loss) to Adjusted Operating Income (loss)" for each of those periods.

(b)

Adjusted depreciation for the twelve months ended September 30, 2021 represents depreciation expense for continuing operations for the period, excluding accelerated depreciation.

FINANCIAL NET DEBT/ADJUSTED EBITDA

 

 

September 30, 2021

Financial Net Debt - Coty Inc.

 

$

4,955.1

 

Adjusted EBITDA - Continuing operations

 

873.9

 

Financial Net Debt/Adjusted EBITDA

 

5.67

 

RECONCILIATION OF REPORTED NET REVENUES TO LIKE-FOR-LIKE NET REVENUES

 

 

 

Three Months Ended September 30, 2021 vs. Three Months Ended September 30, 2020

Net Revenue Change

Net Revenues Change YoY

 

Reported Basis

 

Constant Currency

 

Impact from Acquisitions

and Divestitures

 

LFL

Prestige

 

35

%

 

34

%

 

?

%

 

34

%

Consumer Beauty

 

4

%

 

3

%

 

?

%

 

3

%

Total Continuing Operations

 

22

%

 

21

%

 

?

%

 

21

%

COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(in millions)

 

September 30,

2021

 

June 30,

2021

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

376.9

 

 

$

253.5

 

Restricted cash

 

45.5

 

 

56.9

 

Trade receivables, net

 

517.8

 

 

348.0

 

Inventories

 

660.7

 

 

650.8

 

Prepaid expenses and other current assets

 

459.3

 

 

473.9

 

Total current assets

 

2,060.2

 

 

1,783.1

 

Property and equipment, net

 

847.1

 

 

918.1

 

Goodwill

 

4,037.4

 

 

4,118.1

 

Other intangible assets, net

 

4,336.0

 

 

4,463.0

 

Equity investments

 

1,665.6

 

 

1,276.2

 

Operating lease right-of-use assets

 

302.6

 

 

318.5

 

Other noncurrent assets

 

789.5

 

 

814.4

 

TOTAL ASSETS

 

$

14,038.4

 

 

$

13,691.4

 

 

 

 

 

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

1,232.5

 

 

$

1,166.1

 

Mandatorily redeemable Convertible Series B Preferred Stock

 

394.2

 

 

?

 

Short-term debt and current portion of long-term debt

 

24.0

 

 

24.2

 

Other current liabilities

 

1,421.1

 

 

1,225.1

 

Total current liabilities

 

3,071.8

 

 

2,415.4

 

Long-term debt, net

 

5,250.0

 

 

5,401.0

 

Long-term operating lease liabilities

 

257.8

 

 

269.3

 

Other noncurrent liabilities

 

1,477.5

 

 

1,423.1

 

TOTAL LIABILITIES

 

10,057.1

 

 

9,508.8

 

 

 

 

 

 

CONVERTIBLE SERIES B PREFERRED STOCK

 

453.7

 

 

1,036.3

 

REDEEMABLE NONCONTROLLING INTERESTS

 

83.4

 

 

84.1

 

Total Coty Inc. stockholders' equity

 

3,243.4

 

 

2,860.7

 

Noncontrolling interests

 

200.8

 

 

201.5

 

Total equity

 

3,444.2

 

 

3,062.2

 

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY

 

$

14,038.4

 

 

$

13,691.4

 

COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

Three Months Ended

September 30,

 

2021

 

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

228.9

 

 

227.3

 

 

 

 

 

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

Depreciation and amortization

137.8

 

 

146.2

 

Non-cash lease expense

18.2

 

 

18.0

 

Deferred income taxes

89.9

 

 

(216.0

)

Provision (releases) for bad debts

1.9

 

 

(3.4

)

Provision for pension and other post-employment benefits

4.1

 

 

2.1

 

Share-based compensation

108.2

 

 

7.0

 

Unrealized gains from equity investments, net

(389.4

)

 

?

 

Other

6.6

 

 

26.6

 

Change in operating assets and liabilities, net of effects from purchase of acquired companies:

 

 

 

Trade receivables

(183.5

)

 

(149.7

)

Inventories

(24.4

)

 

(15.5

)

Prepaid expenses and other current assets

(2.6

)

 

9.2

 

Accounts payable

82.9

 

 

(103.9

)

Accrued expenses and other current liabilities

231.0

 

 

152.6

 

Operating lease liabilities

(20.4

)

 

(34.9

)

Other assets and liabilities, net

(3.5

)

 

(23.0

)

Net cash provided by operating activities

285.7

 

 

42.6

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Capital expenditures

(45.0

)

 

(70.9

)

Proceeds from sale of business, net of cash disposed

?

 

 

27.0

 

Termination of currency swaps designated as net investment hedges

?

 

 

(37.6

)

Net cash used in investing activities

(45.0

)

 

(81.5

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Net proceeds from short-term debt, original maturity less than three months

?

 

 

1.6

 

Proceeds from revolving loan facilities

285.3

 

 

637.4

 

Repayments of revolving loan facilities

(365.5

)

 

(554.2

)

Repayments of term loans and other long term debt

(6.0

)

 

(48.3

)

Dividend payment on Class A Common Stock

(0.8

)

 

(0.8

)

Dividend payment on Convertible Series B Preferred Stock

(3.5

)

 

?

 

Proceeds from issuance of Convertible Series B Preferred Stock

?

 

 

227.2

 

Net proceeds from foreign currency contracts

(11.0

)

 

3.3

 

Purchase of remaining mandatorily redeemable noncontrolling interest

(7.1

)

 

?

 

Distributions to noncontrolling interests, redeemable noncontrolling interests and mandatorily redeemable financial instruments

?

 

 

(0.5

)

Payment of financing fees

(10.4

)

 

?

 

All other

(3.7

)

 

(1.5

)

Net cash provided by financing activities

(122.7

)

 

264.2

 

EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH

(6.0

)

 

(2.0

)

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

112.0

 

 

223.3

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH?Beginning of period

310.4

 

 

352.0

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH?End of period

$

422.4

 

 

$

575.3

 

 


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