Coty Inc. · NYSE:COTY
Coty — Non-Deal Roadshow (September 2016)
34 slides from Coty's roadshow presentation, Sep 2, 2016
Slide 1: Creating a New Global Leader and Challenger in Beauty
Creating a New Global Leader and Challenger in Beauty Investor Presentation September 2016
Slide 2: Disclaimer: Forward-Looking Statements
DISCLAIMER Forward-Looking Statements Certain statements in this presentation are forward-looking statements. These forward-looking statements reflect Coty Inc.'s ( “Coty’s") current views with respect to its financial performance following the completion of the transaction with The Procter & Gamble
Slide 3: Disclaimer: Important Notices and Additional Information
DISCLAIMER Important Notices and Additional Information In connection with the proposed transaction, Coty and Galleria Co., a subsidiary of P&G that holds certain specified assets and liabilities relating to P&G Beauty Brands, have each filed registration statements with the SEC registering shares o
Slide 4: Coty Investment Highlights
Coty Investment Highlights @ Beauty is a Very Attractive Industry with Strong Growth, Margins, and Cash Flow Generation @ The Merger Creates a Pure-Play New Challenger in Beauty with ~$9.0B in Net Revenues COTY 3 | Merger Synergies Expected to Materially Enhance Coty’s Strong Margins and Cash Flow G
Slide 5: Transaction Overview
Transaction Overview * The transaction is structured as an exchange offer followed by a merger, with an expected closing date of early October: Tendering P&G shareholders will exchange their P&G shares to ultimately receive shares of New Coty ' Coty to assume ~$1.8Bn of P&G Beauty Brands debt upon c
Slide 6: 3OTTEGA VENE:
Ey 3OTTEGA VENE:
Slide 7: Coty's Ambition in Beauty
Coty’s Ambition in Beauty Strive to become over time a Global Industry Leader by being a Clear Challenger in Beauty, delighting our consumers and creating long term shareholder value.
Slide 8: Beauty is One of the Most Attractive Consumer Categories
Beauty is One of the Most Attractive Consumer Categories Beauty’ is a Large Consumer Industry... ...With Strong Fundamentals' $ Billions 7 $301 ¥ Historically recession resistant sig 8197 $20 v Low private label penetration ¥ Growing ahead of other consumer categories: 2005 2006 2007 2008 2009 2010
Slide 9: Creation of a $9.0Bn Leader and Challenger in Beauty
Creation of a $9.0Bn Leader and Challenger in Beauty Global Beauty “) FY16 Net Sales ($Bn) New Coty is expected to be: #1 in Fragrances #2 in Salon Hair #3 in Color Cosmetics Pure Play Beauty Player S Non Pure Play Beauty Player Skin Care Focused Players in Beauty Source: Based on company informatio
Slide 10: Stronger & More Diversified Presence in Countries, Categories and Channels
Stronger & More Diversified Presence in Countries, Categories and Channels FY2016 Revenue by Business Coty ($4.6Bn) ' - By Geography New Coty ($9.0Bn) 2 - By Geography ALMEA North America ($1.4Bn) 4 ($1.4Bn) ALMEA North ($2.3Bn) * America 31%) 31% ($2.9Bn) 38% Europe ($1.8Bn) 3 Coty ($4.6Bn) 1 - By
Slide 11: Iconic Portfolio of Leading Brands
Iconic Portfolio of Leading Brands Each of the three divisions will be anchored in major brands Coty Luxury CalvinKlein HUGO BOSS GUCCI philosophy MARC JACOBS Chloé JOOP! JILSANDER 80TTEGA VENETA miu Mu Pro Forma FY2016 Revenue: $3.0Bn TIFFANY & Co. Coty Consumer Beauty COVERGIRI RIMMEL LONDON MAX F
Slide 12: MIU MV
MIU MV MI MU)
Slide 13: Opportunity to Drive Substantial Synergies
Opportunity to Drive Substantial Synergies * Total potential cost savings of approximately $750MM | or 16%! of acquired revenues, composed of the following: = Initial synergies, reflecting P&G costs that will not transfer, of approximately $350MM = Incremental cost synergies, to be recognized over 4
Slide 14: Adjusted Operating Margin Impact of Transaction
• • • Standalone Coty PF Impact of Pro Forma Coty Top Peers (3) FY16 Adj. Operating Transaction (2) Adj. Operating Margin Margin (1) in Year 4
Slide 15: Total Impact of Transaction: ~$0.48 Accretion
~1.09 ~1.53 • 1.37 Adjustment to Exclude One Time Tax Settlement 1.05 • Benefit of $113M ~(0.61) Total Impact of Transaction: ~$0.48 Accretion Coty FY16 Impact of Share PF Impact of Adj. Coty New Adj. EPS (1) Issuance, Transaction Transaction (3) Pro Forma EPS Interest Expense (2) in Year 4
Slide 16: Retained Free Cash Flow Net of One-Time Cash Outflows
• • ‒ ‒ ‒ $1,000-1,100M $1,100-1,200M $800-900M $900-1,000M ~90% ~100% ~90% ~25% FY17 FY18 FY19 FY20 Retained Free Cash Flow Net of One-Time Cash Outflows Net One-time Cash Outflows ¹ • • •
Slide 17: BOURJOIS
BOURJOIS
Slide 18: A More Competitive Ambition
A More Competitive Ambition MISSION Strive to become over time a Global Industry Leader by being a Clear Challenger in Beauty, delighting our consumers and creating long term shareholder value. COT Y 18
Slide 19: A More Focused Organization
GROWTH A More Focused Organization cory 8) cory CONSUMER PROFESSIONAL @ ® Ve) - CORPORATE AFFAIRS Much closer to the customers & consumers * Intensely focused on very few categories * Intensely focused on customers & few channels * Aclear power-shift back to the frontline: the Country Very lean & co
Slide 20: Superior Consumer Innovation Creative and Original Product Presentation
Superior Consumer Innovation Creative and Original Product Presentation RIMMEL Sally Hansen Bourjois Marc Jacobs Miu Miu Cover Girl Volume Colorist Miracle Gel Rouge Velvet Lipstick Decadence Fragrance Katy Kat Matte Lip Color Philosophy Wella Koleston Calvin Klein Marc Jacobs Miracle Worker Overnig
Slide 21: Step Change the Level of Digital Engagement with Consumers
Step Change the Level of Digital Engagement with Consumers * Goal is to develop highly engaging digital content delivered at best-in-class costs (CPMs or cost per impression) New Dedicated External Resource New Corporate & Divisional Resources New Local Resources (7 ya la Ne ~ Recent acquisition of
Slide 22: Implement the Perfect Store for Our Categories & Brands
Implement the Perfect Store for Our Categories & Brands * Coty to improve in-store execution and capture value through: * Perfect Store: Maximize the category by creating shared standards with the retailer for the perfect store to maximize the consumer experience * Category Management: The global an
Slide 23: New Mergers & Acquisitions / Divestitures
New Mergers & Acquisitions / Divestitures Continually evaluating potential acquisitions to increase Coty’s exposure to higher market growth pools to help close the growth gap to best-in-class competitors BOURJOIS PARIS Beauty BeamlyO Rationalize current portfolio (up to 8% of combined company net re
Slide 24: Strong Management Team with Highly Relevant Experience
Strong Management Team with Highly Relevant Experience ' Camillo Patrice de Talhouét (CFO) Sylvie Moreau (President, Edgar Huber (President, Coty Luxury) Esi Eggleston Bracey (President, Mario Reis Ralph Macchio Chief (Chief Supply Scientific Officer) Officer) Sebastien Froidefond ief Hur Jules Kauf
Slide 25: Management Team Strongly Incentivized to Drive Shareholder Value
Management Team Strongly Incentivized to Drive Shareholder Value Classic base — bonus — Long Term Incentive compensation structure with two major components: Bonus focused on driving profitable & highly cash generative growth * Revenue growth * Profit Growth * Cash Conversion Incentives for manageme
Slide 26: Coty Investment Highlights
Coty Investment Highlights @ Beauty is a Very Attractive Industry with Strong Growth, Margins, and Cash Flow Generation @ The Merger Creates a Pure-Play New Challenger in Beauty with ~$9.0B in Net Revenues COTY 3 | Merger Synergies Expected to Materially Enhance Coty’s Strong Margins and Cash Flow G
Slide 27: Appendix
y APPENDIX
Slide 28: FY2015 S-4 P&G Beauty Net Sales Reconciliation
6,000 5,518 5,434 (84) 4,848 5,000 (586) 4,000 (1) FY2015 S-4 P&G Divested Brands FY2015 P&G Beauty Excluded FY2015 Acquired P&G Beauty Net Sales Adjusted Net Sales Brands (2) Net Sales 6,000 5,000 4,911 360 4,765 4,405 (506) 4,000 3,000 FY2016 S-4 Excluded FY2016 Acquired FY2016 FY2016 Constant Cur
Slide 29: P&G Beauty S-4 EBITDA Reconciliation
1,500 102 ~1,081 345 ~950 (~130) 750 634 0 FY2015 P&G Beauty Non-Transferred Costs Depreciation FY2015 P&G Beauty D&G and Christina FY2015 Acquired S-4 EBITDA and Adjustments (1) Accounting Adjusted EBITDA Aguilera Brand EBITDA Reclass (2) Contribution 1,500 102 ~970 66 ~915 555 ~850 750 (~120) 319
Slide 30: FY15 to FY16 Net Sales Bridge
6,000 5,518 (2)% (2)% 5,000 4,911 (7)% 4,000 3,000 FY15 Net Sales as Reported Organic Growth for Acquired Impact of Excluded and Divested Foreign Exchange FY16 Net Sales as Reported Brands (1) Brands (2)
Slide 31: FY15 to FY16 Net Sales Bridge
2,500 1,993 1% 1,749 (6)% (7)% 1,500 500 FY15 Net Sales as Reported Organic Growth for Acquired Impact of Excluded and Divested Foreign Exchange FY16 Net Sales as Reported Brands (1) Brands (2)
Slide 32: FY15 to FY16 Net Sales Bridge
2,500 2,119 (7)% 1,826 (7)% 1,500 500 FY15 Net Sales as Reported Organic Growth Foreign Exchange FY16 Net Sales as Reported
Slide 33: FY15 to FY16 Net Sales Bridge
2,000 3% 1,406 1,336 (8)% 1,000 0 FY15 Net Sales as Reported Organic Growth Foreign Exchange FY16 Net Sales as Reported
Slide 34: Slide 34