Estee Lauder Companies, Inc. (the) · NYSE:EL
Estee Lauder Companies, Inc. (the) — The Estée Lauder Companies — Deutsche Bank Global Consumer Conference 2017
28 slides from Estee Lauder Companies, Inc. (the)'s conference presentation, Jun 14, 2017
Slide 1: Deutsche Bank Global Consumer Conference
DEUTSCHE BANK GLOBAL CONSUMER CONFERENCE June 14, 2017 CEDRIC PROUVÉ GROUP PRESIDENT, INTERNATIONAL TRACEY T. TRAVIS EXECUTIVE VICE PRESIDENT AND CFO
Slide 2: Forward-Looking Information
FORWARD-LOOKING INFORMATION The forward-looking statements in this presentation, including those containing words like “expect,” “plans,” “may,” “could,” “anticipate,” “estimate,” “projected,” “forecasted,” involve risks and uncertainties. Factors that could cause actual results to differ materially
Slide 3: Non-GAAP Disclosures
NON-GAAP DISCLOSURES These materials include some non-GAAP financial measures relating to: constant currency; charges associated with restructuring activities; accelerated orders associated with the Company’s SMI rollout; the Venezuela remeasurement charges; and interest expense on debt extinguishme
Slide 4: We Are a Leader in Global Prestige Beauty
WE ARE A LEADER IN GLOBAL PRESTIGE BEAUTY • Diverse portfolio of 25+ brands • Four major product categories • Sold in more than 150 countries and territories • More than 10 prestige distribution channels • Broad demographic reach
Slide 5: We Are a Growth Company in a Dynamic, Growing Industry
WE ARE A GROWTH COMPANY IN A DYNAMIC, GROWING INDUSTRY Average Net Sales Growth • Prestige beauty is one of the 2011 - 2016 fastest growing HPC industries 7% • Our goal is to grow ≥ 1% above 6% industry, gaining global share 5% • We are solely focused on prestige 4% beauty 3% 2% 1% 0% Global Prestig
Slide 6: We Have Strength in Makeup and Skin Care and Opportunity in Fragrance
WE HAVE STRENGTH IN MAKEUP AND SKIN CARE AND OPPORTUNITY IN FRAGRANCE Global Prestige Beauty Estée Lauder Cos. $100B – CAGR +5% ~$12B – CAGR +7% $1B $9B CAGR CAGR +5% +4% $2B CAGR +8% $4B $27B $41B CAGR +4% CAGR +4% CAGR +5% $5B $23B CAGR +9% CAGR +7% Skin Care Makeup Fragrance Hair Care Source: ELC
Slide 7: Our Growth Is Powered by Our Long-Term Strategy
OUR GROWTH IS POWERED BY OUR LONG-TERM STRATEGY MULTIPLE ENGINES OF GROWTH BRAND CATEGORY GEOGRAPHY CHANNEL
Slide 8: Online Is Our Fastest Growing Channel
ONLINE IS OUR FASTEST GROWING CHANNEL • 5 year CAGR ~25% ONLINE SALES CAGR 25% • Representing ~11% of F2017E net sales • In multiple countries with opportunity for expansion • Strong growth across brand and retailer sites • Omnichannel F2013 F2014 F2015 F2016 F2017E NA UK EMEA APAC LATAM
Slide 9: Travel Retail Extends Our Brands to New Consumers Globally
TRAVEL RETAIL EXTENDS OUR BRANDS TO NEW CONSUMERS GLOBALLY • Travel retail is a high growth channel forecasted to represent ~20% of global prestige beauty • We are diversifying our business across brands and categories • Expanding reach of existing brands • Adding new brands • Leveraging luxury frag
Slide 10: We Are Leveraging Specialty-Multi Retail Growth Globally
EVE AND BOY, THAILAND KICKS, SWEDEN SEPHORA, FRANCE ULTA, USA WE ARE LEVERAGING SPECIALTY-MULTI RETAIL GROWTH GLOBALLY SHOPPERS DRUG, CANADA DOUGLAS, GERMANY MECCA, AUSTRALIA BOOTS, UK
Slide 11: Freestanding Retail Stores Fill Distribution Gaps and Showcase Brands
FREESTANDING RETAIL STORES FILL DISTRIBUTION GAPS AND SHOWCASE BRANDS 1,400 STORES MAC COMPANY STORES AVEDA JO MALONE AVEDA FLAGSHIP SALON, DUBAI JO MALONE, BRAZIL ORIGINS BOBBI BROWN CLINIQUE NEW BRANDS ESTEE LAUDER ALL OTHER ESTÉE LAUDER, CHINA MAC, UNITED KINGDOM
Slide 12: Department Stores Are Growing Internationally
Beijing Hanguang, China Shanghai Yaohan, China Lotte Daegu, Korea Siam Paragon, Thailand DEPARTMENT STORES ARE GROWING INTERNATIONALLY Magasin du Nord, Denmark Shenyang Zhongging, China Mitsukoshi, Taiwan Selfridge’s, United Kingdom
Slide 13: Creativity and Innovation Underpins Our Success
CREATIVITY AND INNOVATION UNDERPINS OUR SUCCESS Net Sales NEW PRODUCTS EXISTING PRODUCTS
Slide 14: The Way We Connect with Consumers Has Evolved
THE WAY WE CONNECT WITH CONSUMERS HAS EVOLVED “Telegraph, telephone, tell a woman”
Slide 15: Social Media Amplification
SOCIAL MEDIA AMPLIFICATION PLATFORM ACTIVATION ON THE MOMENT CONTENT INFLUENCER ACTIVATIONS IN-HOUSE INFLUENCERS global and local platforms global content amplification brand storytellers social ambassador programs new opportunities / formats local content creation commercial partners granularity in
Slide 16: Europe, the Middle East & Africa
EUROPE, THE MIDDLE EAST & AFRICA • 5 year net sales CAGR +9% • Gaining share • Strategy tailored by country • Leveraging ELC makeup strength • Strong growth in emerging markets • Selective retail store deployment • Digital / social expansion
Slide 17: Asia / Pacific
ASIA / PACIFIC • 5 year net sales CAGR +6% Tianjin Hai Xin, China Wuhan Plaza, China • Gaining share • Strong skin care markets • Makeup and fragrance developing • China accelerating, Korea trends China: Clinique Pep Start launch event in Shanghai. • Distribution becoming more balanced • Digital / s
Slide 18: Latin America
LATIN AMERICA • 5 year net sales CAGR +20% Peru: Bobbi Brown launch event with social media engagement. • Gaining share • Trading consumers up from mass • Building infrastructure • Launching new brands • Activating social media Mexico: Successful initiatives through integration of Social Media and B
Slide 19: ELC Is a Growth Company in a Vibrant Industry
ELC is a growth company in a vibrant industry Multiple engines of growth Pivoting to the most promising areas Investing in talent Delivering sustainable, profitable growth
Slide 20: North America
DEPARTMENT STORES • Large, profitable business NORTH AMERICA • Overexposure • Retailer.com accelerating • Reinventing experience • Net sales +2% CAGR, #1 prestige share ONLINE • Dynamic market • Rapid growth • Increasing penetration • Pivoting distribution to fast growth • Communication opportunity
Slide 21: Acquisition and License Strategy
ACQUISITION AND LICENSE STRATEGY Buying growth opportunity, not sales 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E
Slide 22: We Deliver Consistent, Best-in-Class Sales Growth
WE DELIVER CONSISTENT, BEST-IN-CLASS SALES GROWTH $ Billions 12 • Grew faster than global prestige beauty over five years 11 • Goal to grow at least 1pp faster every year 10 • Acquisitions targeted to add an additional point over 3 years 9 • Ample geographic, brand and channel F2012 F2013 F2014 F201
Slide 23: Supported by Increasing Modernization and Efficiency
SUPPORTED BY INCREASING MODERNIZATION AND EFFICIENCY • Completed modernization of key systems • Now enabling cost savings • Continuing information technology investment • Leading Beauty Forward initiative • Lowers overhead cost base / increases expense leverage • Funds priority investments • Annual
Slide 24: Resulting in Solid Organic Operating Margin Improvement
RESULTING IN SOLID ORGANIC OPERATING MARGIN IMPROVEMENT COST SAVINGS INITIATIVES +350 bps -150 bps EXPENSE LEVERAGE -70 bps EFFICIENCY / 15.5% EFFECTIVENESS CURRENCY TRANSLATION 14.2% INVESTMENTS / ACQUISITIONS RETAIL STORE ACCELERATION PRODUCT MIX F2012 ORGANIC CURRENCY ACQUISITIONS F2017E Adjusted
Slide 25: And Sustained Double-Digit EPS Growth
AND SUSTAINED DOUBLE-DIGIT EPS GROWTH $3.32 TO $3.37 $3.20 • Leveraging topline growth $2.95 $3.05 $2.64 • Margin expansion $2.27 • Impact of acquisitions and currency • Opportunities in tax rate and share repurchases • Double-digit EPS growth can continue F2012 F2013 F2014 F2015 F2016 F2017E REPORT
Slide 26: Strong Cash Generation and Returns to Stockholders
STRONG CASH GENERATION AND RETURNS TO STOCKHOLDERS $ Millions F2012 F2013 F2014 F2015 F2016 F2017E OPERATING CASH FLOW $1,127 $1,226 $1,535 $1,943 $1,789 $1,750 CAPEX 421 461 510 473 525 535 FREE CASH FLOW $706 $765 $1,025 $1,470 $1,264 $1,215 DIVIDENDS 204 419 302 350 423 485 SHARE REPURCHASES 593
Slide 27: Active Cash Flow Deployment
ACTIVE CASH FLOW DEPLOYMENT $ Millions 651 (5,323) 2,575 8,245 (2,508) (2,050) 2,938 1,348 Ending Cash 2012 Operating Cash Debt Stock Based Dividends / Share Capital Acquisitions Ending Cash & Flow Comp / Other Repurchases Expenditures Investments 2017E
Slide 28: Estee Lauder Companies
ESTEE LAUDER COMPANIES ESTEE LAUDER
The Estée Lauder Companies — Deutsche Bank Global Consumer Conference 2017 on 6ix