Slide 1: Coty 4Q22 Earnings Call
COTY 4Q22 EARNINGS CALL August 25, 2022 1
Slide 2: Key Messages
KEY MESSAGES 4Q22 LFL REVENUE GROWTH MARKET-LEADING AND AHEAD OF GUIDANCE ▪ Q4 LFL REVENUE GROWTH OF +16% (INCLUDING >150BPS GROWTH IMPACT FROM RUSSIA EXIT), AHEAD OF LOW DOUBLE DIGITS GROWTH GUIDANCE SOLID GROSS MARGIN, PROFIT & NET DEBT PERFORMANCE AMID HIGH INFLATION ▪ 4Q22 ADJ GROSS MARGIN +120
Slide 3: Robust Sales Performance
ROBUST SALES PERFORMANCE BOSSi a BOTTLED PARFUM Ss ‘ THE NEW INTENSITY a
Slide 4: Q4 Revenue Growth Ahead of Expectations
Q4 REVENUE GROWTH AHEAD OF EXPECTATIONS Q4 REVENUES +16% LFL (INCLUDING >150BPS CONSUMER BEAUTY PRESTIGE IMPACT FROM RUSSIA EXIT) AND FY22 +16% LFL, AHEAD OF GUIDANCE +7% LFL +23% LFL PRESTIGE +23% LFL IN Q4 AND +22% LFL IN FY22, WITH STRONG CONTRIBUTIONS FROM Q4 BOTH VOLUMES AND PRICE/MIX, FUELED B
Slide 5: Growth Led by Europe, Americas and Travel Retail
GROWTH LED BY EUROPE, AMERICAS AND TRAVEL RETAIL APAC +2% LFL AMERICAS AMERICAS +13% LFL IN Q4 AND +15% IN FY22, 12% DRIVEN BY SOLID GROWTH IN EVERY MARKET +13% LFL Q4 EMEA +22% LFL IN Q4 AND +18% IN FY22, FUELED 44% BY DOUBLE-DIGIT GROWTH ACROSS NEARLY EVERY REVENUE MARKET AND TRIPLE-DIGIT TRAVEL R
Slide 6: Solid Profit Performance
SOLID PROFIT PERFORMANCE 6
Slide 7: Solid Gross Margin Expansion Despite Inflation
SOLID GROSS MARGIN EXPANSION DESPITE INFLATION Q4 GROSS MARGIN UP STRONGLY AT +120BPS YOY ADJUSTED GROSS MARGIN GROSS MARGIN EXPANSION DRIVEN BY: +120 bps YoY +370 bps YoY ➢ STRONG PRICE/MIX MOMENTUM IN BOTH PRESTIGE 63.7% AND CONSUMER BEAUTY 62.1% 60.9% ➢ MIX-SHIFT TO PRESTIGE 60.0% ➢ HIGHER ABSORP
Slide 8: Navigating Through Increasingly Complex Environment
NAVIGATING THROUGH INCREASINGLY COMPLEX ENVIRONMENT • SUPPLY AND INFLATIONARY ENVIRONMENT REMAINS COMPLEX: ➢ AREAS OF SELECT COMPONENT CONSTRAINTS STABLE WITH Q3 ➢ ACTIVELY MANAGING CONSTRAINTS THROUGH SAFETY STOCKS, ALTERNATIVE MATERIALS, DUAL SOURCING ➢ STEP-UP IN COGS INFLATION IN Q4 TO ~2.1% OF
Slide 9: Sustained Progress on All-In-To-Win Program
SUSTAINED PROGRESS ON ALL-IN- TO-WIN PROGRAM • SIGNIFICANT PROGRESS IN AITW TRANSFORMATION PROGRAM, ACROSS THE 5 KEY WORK STREAMS • DELIVERED OVER $90M OF NET SAVINGS IN FY22, IN LINE WITH TARGET, PRIMARILY IN GROSS MARGIN ITEMS • REMAIN ON TRACK FOR SAVINGS OF ~$170M IN FY23 ➢ CORE SAVINGS PROJECTS
Slide 10: Maintaining Stepped Up Marketing Investments
MAINTAINING STEPPED UP MARKETING INVESTMENTS A&CP AT ~28% LEVEL IN 4Q, IN LINE WITH A&CP AS PERCENT OF SALES RECENT LEVELS INVESTMENTS SUPPORTING INITIATIVES WITH ~28% ~28% STRONG ROI, FUELING STRONG SALES GROWTH ~26% IN 4Q22: ~22% ➢ KEY INNOVATIONS (I.E. BURBERRY HERO AND HER, BOSS BOTTLED MARINE,
Slide 11: FY22 Profit in Line with Guidance
FY22 PROFIT IN LINE WITH GUIDANCE ADJUSTED EBITDA • ADJ EBITDA DELIVERY IN LINE WITH GUIDANCE +19%YoY • FY22 ADJ EBITDA +19% YOY, WITH MARGIN OF 17.1% (+60BPS YOY) $905M $762M • FY22 ADJ OP INCOME +41% YOY, WITH MARGIN OF 11.6% (+220BPS YOY), AIDED BY $36M DECLINE IN DEPRECIATION • FY22 PROFIT GROWT
Slide 12: FY22 Adjusted EPS Delivery in Line with Guidance
FY22 ADJUSTED EPS DELIVERY IN LINE WITH GUIDANCE $ Millions Q4 FY22 • 4Q22 ADJ EPS OF $(0.01), UP $0.07 Adjusted EBITDA YOY 132 905 (Continuing Ops) • FY22 ADJ EPS OF $0.28, UP $0.23 YOY Depreciation (67) (290) • STRONG PROFIT EXPANSION • BENEFIT FROM EXITING KKR Net Interest (40) (224) PREFERREDS •
Slide 13: Strong Free Cash Flow Improvement
STRONG FREE CASH FLOW IMPROVEMENT FREE CASH FLOW Q4 FY22 $ Millions • FCF NEGATIVE IN Q4 AS EXPECTED Adjusted EBITDA 132 905 • FY22 FCF OF $552M (UP ~$400M YOY) ➢ CAPEX UNDER TIGHT CONTROL Capex, WC, one-offs (83) (40) ➢ POSITIVE CONTRIBUTION FROM WORKING CAPITAL Interest and tax (124) (313) ➢ STEP-
Slide 14: Continued Leverage Improvement
CONTINUED LEVERAGE IMPROVEMENT • LEVERAGE EXITING 4Q22 OF ~4.7X, UNCHANGED FROM Q3 • WELLA COMPANY STAKE VALUATION ADJUSTED LOWER TO REFLECT WELLA’S EXIT FROM RUSSIA & THE MARKET DRIVEN INCREASE IN THE DISCOUNT RATE ➢ WELLA CONTINUES TO DELIVER ABOVE-PLAN RESULTS AND WITH THE RECENT HIGH GROWTH BRAN
Slide 15: Executing on Strategic Pillars
EXECUTING ON STRATEGIC PILLARS 15
Slide 16: Pillar 1: Consumer Beauty Gains Global Share
STRATEGIC PILLAR #1: CONSUMER BEAUTY GAINS GLOBAL SHARE FOR 8 CONSECUTIVE MONTHS Coty sell-out growing high single digits, above CB market growing mid single digits Coty Total Consumer Beauty (Global Share Pts YoY) 0.7 0.8 0.3 0.3 0.4 0.4 0.5 0.1 0.2 -0.2 -0.2 -0.4 -0.3 -0.7 -0.6 -1.3 -1.7 -2.7 -2.5
Slide 17: Pillar 1: Key CB Brands Gaining Share
STRATEGIC PILLAR #1: KEY CB BRANDS GAINING SHARE MASS COSMETICS SHARE MASS FRAGRANCES & BODYCARE (June 2022) (June 2022) * Source: NielsenIQ Market: B&M and E-com Period: June 2022 Categories: Color Cosmetics Mass, Fragrances Mass, Deodorants, Shower Gels Countries: Argentina, Australia, Brazil, Can
Slide 18: Pillar 2: Accelerating Luxury Fragrance Portfolio
STRATEGIC PILLAR #2: ACCELERATING OUR LUXURY FRAGRANCE PORTFOLIO IN A BOOMING FRAGRANCE MARKET Coty sell-out growing mid 20s %, above Prestige fragrance market growing ~20% Source (Prestige): NPD Retail Panel EUR5+NA June QTD 2022 Chloé Travel Retail APAC Rating as of May 2022 18
Slide 19: Pillar 2: Becoming a Key Player in Prestige Makeup
STRATEGIC PILLAR #2: BECOMING A KEY PLAYER IN PRESTIGE MAKEUP Coty Prestige Makeup sales grew Prestige makeup approximately Prestige makeup over 40% of over 70% in FY22, reaching ~4% half of Burberry brand sales in Coty sales in Travel Retail in FY22 (from ~3% in FY21) China in key channels APAC 19
Slide 20: Pillar 3: Building a Skincare Portfolio
STRATEGIC PILLAR #3: BUILDING A SKINCARE PORTFOLIO ACROSS BOTH DIVISIONS FY22: Kicked off Lancaster repositioning in Hainan and mainland China: ➢ Double digit growth in global Lancaster sales ➢ #2 exclusive brand in China Sephora ➢ #3 amongst niche skincare brands in key Hainan retailers FY23 ➢ SKKN
Slide 21: SKKN Launch Metrics
5.5M Followers Launch-to-date 9-Piece set ($575 ASP) 4+ Star review on @SKKN IG / sales already >20% by far the largest average for the >7B impressions of FY23 target seller range 21
Slide 22: Pillar 4: Build E-Commerce and DTC Capabilities
STRATEGIC PILLAR #4: BUILD E-COMMERCE AND DTC EXPERTISE AND CAPABILITIES FY22 % OF Q4 REVENUES PRESTIGE +12% YoY LOW 20S % CONSUMER +26% YoY BEAUTY ~10% COTY +15% YoY HIGH TEENS % E-commerce revenues and penetration cover the vast majority of Coty’s markets, and exclude certain markets like Travel R
Slide 23: Pillar 5: Expand in China
STRATEGIC PILLAR #5: EXPAND IN CHINA China revenue ~30% growth through February, prior to COVID lockdowns FY22 Tmall flagships revenues nearly doubled YoY Coty’s FY22 Prestige sell- out grew +11%, ahead of the market at -1%, with Coty ranked #5 in Fragrances and #7 in Makeup 23
Slide 24: Booming and Multi-Pronged Travel Retail Business
BOOMING AND MULTI-PRONGED TRAVEL RETAIL BUSINESS Travel retail revenues Travel retail back to HSD % Outperformance fueled by: >2x YoY in Q4 and FY22 of Coty sales, consistent ➢ Significant share gain in Europe with FY19, despite passenger and U.S. Travel Retail traffic -20% vs. FY19 ➢ Multi-category
Slide 25: Pillar 6: Becoming a Leader in Sustainability
STRATEGIC PILLAR #6: BECOMING A LEADER IN SUSTAINABILITY Multiple launches with clean formulations and more sustainable packaging Started production of first globally distributed fragrances made using Carbon-Captured Ethanol in partnership with LanzaTech Joined the EcoBeautyScore Consortium with ove
Slide 26: Robust Growth Pillars into 1H23
ROBUST GROWTH PILLARS INTO 1H23 TITLE OF THE PRESENTATION 26
Slide 27: 1Q23 and FY23 Outlook
1Q23 AND FY23 OUTLOOK 1Q23 / 1H23 FY23 EXPECT 1Q23 AND 1H23 LFL SALES GROWTH OF CORE EXPECT FY23 LFL SALES GROWTH OF CORE BUSINESS INLINE BUSINESS (EX RUSSIA) INLINE WITH FY23 ANNUAL WITH MEDIUM TERM GROWTH TARGET OF +6-8% (ADJUSTING FOR GROWTH OF +6-8% THE IMPACT OF THE RUSSIA EXIT; ASSUMING NO SIG
Slide 28: Key Messages
KEY MESSAGES 4Q22 LFL REVENUE GROWTH MARKET-LEADING AND AHEAD OF GUIDANCE ▪ Q4 LFL REVENUE GROWTH OF +16% (INCLUDING >150BPS GROWTH IMPACT FROM RUSSIA EXIT), AHEAD OF LOW DOUBLE DIGITS GROWTH GUIDANCE SOLID GROSS MARGIN, PROFIT & NET DEBT PERFORMANCE AMID HIGH INFLATION ▪ 4Q22 ADJ GROSS MARGIN +120
Slide 29: Since 1904
SINCE 1904
Slide 30: Disclaimer
DISCLAIMER Forward-Looking Statements Certain statements in this presentation are forward-looking statements. 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, strategic planning, targets