Estee Lauder Companies, Inc. (the) · NYSE:EL

Estee Lauder Companies, Inc. (the) — The Estée Lauder Companies — Shareholder Meeting (November 2017)

64 slides from Estee Lauder Companies, Inc. (the)'s shareholder meeting presentation, Nov 14, 2017

  1. Slide 1: The Global House of Prestige Beauty

    THE GLOBAL HOUSE OF PRESTIGE BEAUTY ANNUAL STOCKHOLDERS’ MEETING NOVEMBER 14, 2017 FABRIZIO FREDA PRESIDENT AND CHIEF EXECUTIVE OFFICER

  2. Slide 2: Forward-Looking Information

    FORWARD-LOOKING INFORMATION The forward-looking statements in this presentation, including those containing words and phrases like “will likely result,” “expect,” “believe,” “planned,” “may,” “should,” “could,” “anticipate,” “estimate,” “project,” “intend,” “forecast” or similar expressions are inte

  3. Slide 3: Non-GAAP Disclosures

    NON-GAAP DISCLOSURES These materials include some non-GAAP financial measures relating to: constant currency; charges associated with restructuring and other activities; goodwill and other intangible asset impairments; changes in the fair value of contingent consideration; and the China deferred tax

  4. Slide 4: Fiscal 2017 Highlights

    FISCAL 2017 HIGHLIGHTS Grew net sales ahead of global prestige beauty; gained share Pivoted business to capture new consumers Achieved strong double-digit sales growth in key areas Accelerated momentum in every quarter throughout the year Acquired Too Faced and BECCA

  5. Slide 5: Fiscal 2017 Financial Results

    FISCAL 2017 FINANCIAL RESULTS FISCAL 2017 VERSUS PRIOR YEAR NET SALES (% IN CONSTANT CURRENCY) $11.8 BILLION +7% OPERATING MARGIN 15.9% +30 BASIS POINTS NET EARNINGS $1.3 BILLION +7% EARNINGS PER SHARE (% IN CONSTANT CURRENCY) $3.47 +11% CASH FLOW FROM OPERATIONS $1.9 BILLION +7% Excludes restructur

  6. Slide 6: Broad-Based Regional Sales Growth

    BROAD-BASED REGIONAL SALES GROWTH IN CONSTANT CURRENCY EUROPE, AMERICAS THE MIDDLE EAST ASIA / PACIFIC +2% +9% & AFRICA +10%

  7. Slide 7: Exceptional Growth in Makeup and Fragrance

    EXCEPTIONAL GROWTH IN MAKEUP AND FRAGRANCE IN CONSTANT CURRENCY SKIN CARE MAKEUP FRAGRANCE HAIR CARE +3% +9% +13% -2%

  8. Slide 8: Fiscal 2017 Stockholder Value Created

    FISCAL 2017 STOCKHOLDER VALUE CREATED $1.9 billion value appreciation $413 million in share repurchases $486 million dividends paid Increased quarterly dividend by 13% to $.34 per share

  9. Slide 9: Fiscal 2018 First Quarter

    FISCAL 2018 FIRST QUARTER FISCAL 2018 VERSUS PRIOR YEAR FIRST QUARTER NET SALES (% IN CONSTANT CURRENCY) $3.3 BILLION +13% OPERATING MARGIN 18.5% +270 BASIS POINTS NET EARNINGS $0.5 BILLION +43% EARNINGS PER SHARE (% IN CONSTANT CURRENCY) $1.21 +41% Excludes restructuring and other charges and adjus

  10. Slide 10: Near and Long-Term Goals

    NEAR AND LONG-TERM GOALS FISCAL 2018 FY2018 TO FY2020 NET SALES GROWTH IN CONSTANT CURRENCY +8% TO +9% +6% TO +8% OPERATING MARGIN ~+50 BASIS POINTS ~+50 BASIS POINTS PER YEAR DILUTED EARNINGS PER SHARE $4.04 TO $4.12 ---- EARNINGS PER SHARE GROWTH IN CONSTANT CURRENCY +12% TO +14% DOUBLE-DIGITS Exc

  11. Slide 11: Fiscal 2018 Stockholder Value

    FISCAL 2018 STOCKHOLDER VALUE $10.6 billion value appreciation (through 11/10/17) $45+ billion market capitalization Increased quarterly dividend by 12% to $.38 per share

  12. Slide 12: Total Stockholder Return

    TOTAL STOCKHOLDER RETURN ESTĒE LAUDER COMPANIES PEER AVERAGE S&P 500 S&P CONSUMER STAPLES Twelve Months Ended November 10, 2017 62% 27% 22% 11% ESTĒE LAUDER PEER AVERAGE S&P 500 S&P CONSUMER STAPLES Peer group includes L’Oreal, LVMH, Shiseido, AmorePacific and Coty.

  13. Slide 13: Pivoting to Tomorrow

    PLVOTING TO TOMORROW es

  14. Slide 14: Enriching Our Brand Portfolio

    ENRICHING OUR BRAND PORTFOLIO 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

  15. Slide 15: We Are a Growth Company in a Dynamic, Growing Industry

    WE ARE A GROWTH COMPANY IN A DYNAMIC, GROWING INDUSTRY Prestige beauty is one of the fastest growing AVERAGE NET SALES GROWTH HPC industries 2011-2016 We have consistently outpaced the industry, 7% gaining global share Our focus on prestige beauty helps us stay ahead of the curve 5% 2% GLOBAL PRESTI

  16. Slide 16: Strength in Makeup and Skin Care, Opportunity in Fragrance

    WE HAVE STRENGTH IN MAKEUP AND SKIN CARE, OPPORTUNITY IN FRAGRANCE GLOBAL PRESTIGE BEAUTY ESTĒE LAUDER COMPANIES $100 Billion $12 Billion 5 year CAGR +5% 5 year CAGR +7% 9% 5% 14% 38% 27% 41% SKIN CARE 43% MAKEUP 23% FRAGRANCE HAIR CARE Source: ELC net sales F2017 and growth in constant currency for

  17. Slide 17: Successfully Executing Our Winning Strategy

    SUCCESSFULLY EXECUTING OUR WINNING STRATEGY We recognize changes in the industry and we have the courage to evolve and pivot • Focusing on high growth channels and markets • Embracing a digital-first mindset • Reaching new consumers and building loyalty • Strengthening our brand portfolio • Increasi

  18. Slide 18: Multiple Engines of Growth Powered by Long-Term Strategy

    OUR MULTIPLE ENGINES OF GROWTH ARE POWERED BY OUR LONG-TERM STRATEGY BRAND GEOGRAPHY CATEGORY CHANNEL

  19. Slide 19: Driving Momentum Around the World

    DRIVING MOMENTUM AROUND THE WORLD Reaching new consumers Building demand in emerging markets • Launching new brands • Trading consumers up from mass Attracting millennials in developed countries Focusing on the biggest fast-growth opportunities by region

  20. Slide 20: Applying a Digital-First Mindset

    APPLYING A DIGITAL-FIRST MINDSET

  21. Slide 21: Social Media Amplification

    SOCIAL MEDIA AMPLIFICATION PLATFORM ACTIVATION OF 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

  22. Slide 22: Strength Across Multiple Channels

    STRENGTH ACROSS MULTIPLE CHANNELS FREESTANDING OTHER RETAIL STORES PERFUMERIES TRAVEL RETAIL BRAND.COM INT’L DEPT STORES SPECIALTY-MULTI NA DEPT STORES 12% 10% 5% 5% 6% 7% 8% 11% 11% 11% 12% 14% 24% 24% 22% 18% FY2016 FY2017 *Other includes salons, spas, military and pharmacies

  23. Slide 23: Winning Online

    WINNING ONLINE 5 year CAGR ~25%, currently growing 30%+ Online penetration rose to 11% of F2017 net sales • Brand.com + Retailer.com In nearly 40 countries with strong growth across brand and retailer sites Added 100+ sites in first quarter Omnichannel opportunity Increasing mobile commerce

  24. Slide 24: Growing Demand in Travel Retail

    GROWING DEMAND IN TRAVEL RETAIL Travel retail is a high-growth channel forecasted to represent ~20% of global prestige beauty Leveraging strong traffic growth to convert travelers into shoppers Diversifying our business across brands and categories Connecting with consumers from planning a trip thro

  25. Slide 25: Growing Demand in Travel Retail

    GROWING DEMAND IN TRAVEL RETAIL Travel retail is a high-growth channel forecasted to represent ~20% of global prestige beauty Leveraging strong traffic growth to convert travelers into shoppers Diversifying our business across brands and categories Connecting with consumers from planning a trip thro

  26. Slide 26: Growing Demand in Travel Retail

    GROWING DEMAND IN TRAVEL RETAIL Travel retail is a high-growth channel forecasted to represent ~20% of global prestige beauty Leveraging strong traffic growth to convert travelers into shoppers Diversifying our business across brands and categories Connecting with consumers from planning a trip thro

  27. Slide 27: Global Success in Specialty-Multi Retail

    EVE AND BOY, THAILAND KICKS, SWEDEN SEPHORA, FRANCE ULTA BEAUTY, USA GLOBAL SUCCESS IN SPECIALTY-MULTI RETAIL SHOPPERS DRUG, CANADA DOUGLAS, GERMANY MECCA, AUSTRALIA BOOTS, UNITED KINGDOM

  28. Slide 28: Freestanding Retail Stores Drive Omnichannel

    FREESTANDING RETAIL STORES DRIVE OMNICHANNEL We operate more than 1,400 stores globally Integral to omnichannel experience Adding >100 in FY18, primarily for MAC, Jo Malone and Bobbi Brown in international markets New store formats Enhancing retail capabilities

  29. Slide 29: Freestanding Retail Stores Drive Omnichannel

    FREESTANDING RETAIL STORES DRIVE OMNICHANNEL We operate more than 1,400 stores globally Integral to omnichannel experience Adding >100 in FY18, primarily for MAC, Jo Malone and Bobbi Brown in international markets New store formats Enhancing retail capabilities MAC UNITED KINGDOM

  30. Slide 30: Department Stores Remain a Core Channel Globally

    MACY’S, USA SHANGHAI YAOHAN, CHINA LOTTE DAEGU, KOREA SIAM PARAGON, THAILAND DEPARTMENT STORES REMAIN A CORE CHANNEL GLOBALLY MAGASIN DU NORD, DENMARK GALERIES LAFAYETTE, FRANCE MITSUKOSHI, TAIWAN SELFRIDGES, UNITED KINGDOM

  31. Slide 31: Creativity and Innovation Underpin Our Success

    CREATIVITY AND INNOVATION UNDERPIN OUR SUCCESS Innovating hero franchises Trial vs. loyalty Developing breakthrough formulations and packaging Creating trends Improving speed to market

  32. Slide 32: Breadth of Skin Care Innovation

    BREADTH OF SKIN CARE INNOVATION

  33. Slide 33: Magnify the Beauty of Your Eyes

    MAGNIFY THE BEAUTY OF YOUR EYES. ADVANCED NIGHT REPAIR New Eye Concentrate Matrix Refreshed, radiant, renewed—wake up to eyes that look “wide open.” REPAIRS: Proven to dramatically reduce the look of lines, wrinkles, puffiness and dark circles FORTIFIES: With new 360° Matrix Technology, it strengthe

  34. Slide 34: Pow! De-aging for the Impatient

    Pow! De-aging for the impatient. Brighter, even, H retexturized skin. SF New. CLINIQUE

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  36. Slide 36: Capturing & Creating Makeup Trends

    CAPTURING & CREATING MAKEUP TRENDS

  37. Slide 37: Water Glow Radiance / Double Wear Cushion BB

    WATER GLOW RADIANCE J DOUBLE WEAR CUSHION BB All-Day Long Wear eup with the inenadible lastir c mo ft

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  41. Slide 41: Emotional Art of Fragrance

    PORTRAIT OF A LADY EMOTIONAL ART OF FRAGRANCE MICHAEL KORS SEXY RUBY AUTI ut ESTEE LAUE

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    » a2 a Oo Ww = = OD Pde = <i 4 LW Lu — Y) we

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  45. Slide 45: Magnify Your Sexy

    4 MAGNIFYYOURSEXY §> % © ) © S\ MICHAEL KORS © SEXY RUBY x clement \ i. 4

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  47. Slide 47: Advances in Hair Care

    w Dort blow it Great hair days for hard-to-manage manes ADVANCES IN HAIR CARE —no heat, no hassle. SUMMER-PROOF YOUR HAIR iy INSTAGRAM READY EV ABOUT #INVATI FIGHT FRIZZ: seemy_ HELLO CURLS FAREWELL FRIZZ

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  49. Slide 49: Fe on YS 21)

    Fe on YS 21) § 2 g ys

  50. Slide 50: Creating Sustainability for the Long-Term

    CREATING SUSTAINABILITY FOR THE LONG-TERM

  51. Slide 51: Increasing Speed, Efficiency and Agility

    INCREASING SPEED, EFFICIENCY AND AGILITY Completed modernization of key systems • Now enabling cost savings Continuing information technology investment Leading Beauty Forward initiative • A growth program • Lowers overhead cost base / increases sales leverage • Funds priority investments • Annual n

  52. Slide 52: World Class Leadership and Talent Development

    WORLD CLASS LEADERSHIP AND TALENT DEVELOPMENT Leveraging our strengths • Great brand builders • Creativity and innovation capabilities Digital-first mindset reflected in hiring, development

  53. Slide 53: Commitment to Inclusion and Diversity

    COMMITMENT TO INCLUSION AND DIVERSITY 22 Employee Resource Groups globally High-Touch Inclusion Seminar delivered to over 8,000 employees globally I&D strategic plan and locally relevant affiliate plans Recognized for leadership in I&D Strong female representation at all levels

  54. Slide 54: Corporate Citizenship and Sustainability

    CORPORATE CITIZENSHIP AND SUSTAINABILITY Strong social and environmental commitments Invest in communities and causes that create positive environmental and social impacts across signature giving areas Promote climate resilience by committing to net-zero emissions by 2020 Commitment to safety

  55. Slide 55: Estée Lauder Companies

    ESTEE LAUDER COMPANIES -

  56. Slide 56: Appendix

    APPENDIX

  57. Slide 57: Reconciliations of Financial Results

    RECONCILIATIONS OF FINANCIAL RESULTS The following tables present a reconciliation of the Company’s financial results for the three months ended September 30, 2017 and 2016 and for the fiscal years ended June 30, 2017 and 2016 as reported in conformity with U.S. generally accepted accounting princip

  58. Slide 58: Fiscal 2018 First Quarter

    FISCAL 2018 FIRST QUARTER Total returns and charges associated with restructuring and other activities and changes in the fair value of contingent consideration included in net earnings for the three months ended September 30, 2017 and 2016 were: Operating Expenses Other . Charges/ Diluted (Unaudite

  59. Slide 59: Fiscal 2018 First Quarter

    FISCAL 2018 FIR T QUARTER Reconciliation of Certain Consolidated Statements of Earnings Accounts Before and After Returns, Charges and Other Adjustments (Unaudited; In millions, except per share data and percentages) Three Months Ended Three Months Ended September 30, 2017 September 30, 2016 Returns

  60. Slide 60: Fiscal 2018 First Quarter

    FISCAL 2018 FIRST QUARTER Three Months Ended Three Months Ended September 30, 2017 September 30 Reconciliation between GAAP and Diluted Earnings non-GAAP Net Sales Growth Diluted EPS Growth Per Share Reported Constant Reported Constant (Unaudited) Basis Currency Basis Currency — 2017 2016 Results in

  61. Slide 61: Fiscal 2018 Full Year Guidance

    FISCAL 2018 FULL YEAR GUIDANCE ISSUED NOVEMBER 1, 2017

  62. Slide 62: Fiscal 2017

    FISCAL 2017 In June 2017, the Company revised and approved financial projections for certain of its fiscal 2015 and 2016 acquisitions. In the process, the Company noted that actual results and the most recent projections were lower during their respective earn-out measurement periods than the financ

  63. Slide 63: Fiscal 2017

    CAL 2017 Total retums and charges associated with restructuring activities and other adjustments included in net earnings for the three months and year ended June 30, 2017 and 2016 were: nidited) Diluted Waaudited) ___________ sates. Costof Restructuring Adjust- After Earnings Ganuillions, except pe

  64. Slide 64: Fiscal 2017

    FISCAL 2017 Year Ended June 30, 2017 Year Ended June 30, 2016 Returns! Impact of Returns! Charges! foreign Charges! As Adjust- currency Constant As Adjust- Reported ments Adjusted translation Currency Reported ments Adjusted Net Sales... $11,824 $2 $11,826 $187 $12,013 $11,262 $1 $11,263 Cost of sal

The Estée Lauder Companies — Shareholder Meeting (November 2017) on 6ix