Slide 1: Coty 3Q22 Earnings Call
COTY 3Q22 EARNINGS CALL May 9, 2022 1
Slide 2: Key Messages
KEY MESSAGES 3Q22 REVENUES GROWTH ACCELERATED ▪ Q3 LFL REVENUE GROWTH ACCELERATED TO +19%, AHEAD OF MID TEENS GROWTH GUIDANCE, WITH ALIGNED SELL-IN AND SELL-OUT ACHIEVED STRONG GROSS MARGIN EXPANSION AND MOMENTUM ON DELEVERING ▪ 3Q22 ADJ GROSS MARGIN +240 BPS YOY; NET DEBT LOWERED BY $0.2B TO $4.2B
Slide 3: Accelerated Revenue Growth
ACCELERATED REVENUE GROWTH 3
Slide 4: Q3 Revenue Growth Ahead of Expectations
Q3 REVENUE GROWTH AHEAD OF EXPECTATIONS Q3 REVENUES +19% LFL, ABOVE GUIDANCE, WITH CONSUMER BEAUTY PRESTIGE ALIGNED TOTAL SELL-IN AND SELL-OUT +10% LFL +25% LFL PRESTIGE +25% LFL, WITH STRONG CONTRIBUTIONS FROM BOTH VOLUMES AND PRICE/MIX, FUELED BY: 39% Q3 ➢ STRONG MOMENTUM IN GUCCI BEAUTY, BURBERRY
Slide 5: Growth Led by U.S., Europe and Travel Retail
GROWTH LED BY U.S., EUROPE AND TRAVEL RETAIL APAC +10% LFL AMERICAS AMERICAS +17% LFL IN Q3, DRIVEN BY BROAD BASED 13% +17% LFL STRENGTH IN NEARLY EVERY MARKET Q3 41% EMEA +23% LFL, FUELED BY DOUBLE-DIGIT GROWTH ACROSS NEARLY EVERY MARKET AND PARTICULARLY REVENUE STRONG TRAVEL RETAIL MOMENTUM MIX 46
Slide 6: Strong Profit Performance
STRONG PROFIT PERFORMANCE MAX FACTOR DIVINE LASHES
Slide 7: Strong Gross Margin Expansion in Difficult Backdrop
STRONG GROSS MARGIN EXPANSION IN DIFFICULT BACKDROP ADJUSTED GROSS MARGIN Q3 GROSS MARGIN UP STRONGLY AT +240BPS YOY +240 bps YoY +450 bps YoY GROSS MARGIN EXPANSION DRIVEN BY: 64.6% 64.2% ➢ STRONG MARGIN EXPANSION IN PRESTIGE 62.2% ➢ MIX SHIFT TOWARDS PRESTIGE BRANDS 59.7% ➢ PRICING & REVENUE MANAG
Slide 8: Navigating Through Increasingly Complex Environment
NAVIGATING THROUGH INCREASINGLY COMPLEX ENVIRONMENT • INCREASINGLY COMPLEX SUPPLY AND INFLATION ENVIRONMENT: ➢ COTY IMPACTED BY SELECT COMPONENT CONSTRAINTS AND LONG LEAD-TIME DISTANCES IN U.S. AND TRAVEL RETAIL ➢ ACTIVELY MANAGING CONSTRAINTS THROUGH SAFETY STOCKS, ALTERNATIVE MATERIALS, DUAL SOURC
Slide 9: Maintaining Stepped Up Marketing Investments
MAINTAINING STEPPED UP MARKETING INVESTMENTS A&CP AS PERCENT OF SALES A&CP AT ~27% LEVEL IN 3Q, WITH WORKING MEDIA UP SIGNIFICANTLY YOY ~30% INVESTMENTS SUPPORTING INITIATIVES WITH ~27% STRONG ROI, FUELING SALES GROWTH ~26% ~26% ACCELERATION IN 3Q22: ~23% ➢ KEY INNOVATIONS (I.E. GUCCI FLORA, ~20% BU
Slide 10: Continued Progress on All-In-To-Win Program
CONTINUED PROGRESS ON ALL-IN-TO- WIN PROGRAM • AS EXPECTED, NEUTRAL NET SAVINGS IN Q3 AND EXPECTED IN Q4 ➢ CORE SAVINGS PROJECTS CONTINUE THROUGH THE YEAR ➢ GROSS SAVINGS IN 2H22 OFFSET BY: ▪ STEPPED UP RE-INVESTMENT IN GROWTH PILLARS ▪ PLANNED INFLATION ▪ LAPPING OF SEVERAL GROSS MARGIN INITIATIVES
Slide 11: Profit Ahead of Guidance
PROFIT AHEAD OF GUIDANCE ADJUSTED EBITDA • ADJ EBITDA DELIVERY AHEAD OF +22%YoY EXPECTATIONS $773M • YTD ADJ EBITDA +22% YOY, WITH MARGIN OF $635M 18.7% • PROFIT GROWTH YTD SUPPORTED BY: • STRONG SALES GROWTH $183M $183M • SIGNIFICANT GROSS MARGIN EXPANSION • FIXED COST LEVERAGE Q3 FYTD FY21 FY22 •
Slide 12: Solid Adjusted EPS Delivery
SOLID ADJUSTED EPS DELIVERY $ Millions Q3 FYTD • 3Q22 ADJ EPS OF $0.03, UP $0.02 YOY Adjusted EBITDA • YTD ADJ EPS OF $0.29, UP $0.16 YOY 183 773 (Continuing Ops) • STRONG PROFIT EXPANSION Depreciation (69) (222) • BENEFIT FROM EXITING KKR PREFERREDS Net Interest (63) (184) • Q3 TAX RATE AT ~34% Inc
Slide 13: Strong Free Cash Flow Improvement
STRONG FREE CASH FLOW IMPROVEMENT FREE CASH FLOW Q3 FYTD $ Millions • SEASONALLY WEAKER Q3 FCF AIDED Adjusted EBITDA 183 773 BY ONE-TIME BENEFIT FROM TSA EXIT • YTD FCF OF $627M (+$484M YOY) Capex, WC, one-offs (168) 43 ➢ ILLUSTRATES THE STRENGTHENING CASH Interest and tax (37) (189) CULTURE ACROSS
Slide 14: Continued Leverage Improvement
CONTINUED LEVERAGE IMPROVEMENT • WELLA DISTRIBUTION DRIVES ~$200M REDUCTION IN NET DEBT • LEVERAGE EXITING 3Q22 OF ~4.7X, A REDUCTION OF 0.2X FROM Q2 ~4.9x ($0.02) ~4.7x $0.2 $0.1 Seasonal Wella FCF Other cash ~$1.03 Shareholder benefits ~3.6x Distribution Bn $4.45 $4.2 Bn Wella 26% Bn financial ~$3
Slide 15: Executing on Strategic Pillars
EXECUTING ON STRATEGIC PILLARS 15
Slide 16: Consumer Beauty Maintains Global Share Gains, First Time in 5 Years
CONSUMER BEAUTY MAINTAINS GLOBAL SHARE GAINS, FOR THE FIRST TIME IN 5 YEARS Global Consumer Beauty market moderately positive YoY Coty Total Consumer Beauty (Global Share Pts YoY) Coty Color Cosmetics (Global Share Pts YoY) Source: NielsenIQ through Feb. 2022 Market: B&M and E-com (Amazon) 16 Total
Slide 17: Color Cosmetics Brands Gaining Share Globally
COLOR COSMETICS BRANDS GAINING SHARE GLOBALLY SUCCESSFUL KIND & FREE STRONG SHARE GROWTH GROWING GLOBAL SHARE RETURNED TO #3 IN CAMPAIGN, WITH ~5.5BN THROUGH FEB; RECENT DRIVEN BY UK, SPAIN, FRANCE AND GROWING TIK TOK VIEWS, FUELING PERFORMANCE IMPACTED CZECH REPUBLIC & ~4X THE MARKET IN MARCH GLOBA
Slide 18: Accelerating Luxury Fragrances
ACCELERATING LUXURY FRAGRANCES FRAGRANCE MARKET BACKDROP REMAINS FAVORABLE ➢ GLOBAL FRAGRANCE MARKET CONTINUES TO GROW >20% YOY ➢ U.S., EUROPE AND CHINA MARKETS UP VS. 2019 CONTINUING STRONG INNOVATION RESULTS • GUCCI FLORA REMAINS #1 FEMALE INNOVATION OF FY22 IN U.S., WITH STRONG POSITIONS GLOBALLY
Slide 19: Becoming a Key Player in Prestige Makeup
BECOMING A KEY PLAYER IN PRESTIGE MAKEUP 3Q22 AND FYTD TOTAL MAINTAINING STRONG MAKEUP IS NOW PRESTIGE MAKEUP REVENUES DOOR EXPANSION ACROSS ~50% OF CHINA SALES ~2X YOY ALL BRANDS, SUPPLEMENTED FOR BOTH GUCCI BEAUTY BY E-COM AND BURBERRY FYTD GUCCI BEAUTY BURBERRY KYLIE 19
Slide 20: Building Out Skincare
BUILDING OUT SKINCARE LANCASTER ACHIEVED RECORD LANCASTER’S 365 SKIN REPAIR CONTINUING TO BUILD MONTH OF SALES IN HAINAN & SERUM BECOMING BRAND’S CONSUMER AWARENESS FOR BECAME #1 EXCLUSIVE BRAND IN HERO SKU COVERGIRL SKINCARE CHINA SEPHORA 20
Slide 21: Building E-commerce & DTC Expertise
BUILDING E-COMMERCE & DTC EXPERTISE FYTD % OF Q3 REVENUES PRESTIGE +11% YoY MID 20S % CONSUMER +12% YoY BEAUTY ~10% COTY +11% YoY HIGH TEENS % E-commerce revenues and penetration cover the vast majority of Coty’s markets, and exclude certain markets like Travel Retail in EMEA and Americas. Additiona
Slide 22: Building E-commerce & DTC Expertise
BUILDING E-COMMERCE & DTC EXPERTISE NEW DISTRIBUTION NEW MODELS NEW TOOLS • 10 COTY BRANDS LAUNCHED ON • STRONG WW LIVESTREAMING • SALLY HANSEN VIRTUAL TRY ON FARFETCH – WORLD’S LEADING RESULTS IN PRESTIGE AND CB TOOL DOUBLING INTENT TO ONLINE LUXURY SITE – ON APRIL 20 PURCHASE AND TIME ON SITE • BO
Slide 23: Expanding in China
EXPANDING IN CHINA • COTY CHINA TOTAL REVENUES POSITIVE IN Q3 • COTY PRESTIGE AGAIN FASTEST GROWING BEAUTY CO IN TOP 10, WITH +14% SELL-OUT GROWTH IN FLAT MARKET • KEY ELEMENTS IN PLACE TO ACCELERATE BUSINESS ONCE LOCKDOWNS EASE: ➢ TMALL & OTHER E-COM ALREADY ~30% OF SALES ➢ MAKEUP ALREADY ~50% OF G
Slide 24: 4Q22 and FY22 Outlook
4Q22 AND FY22 OUTLOOK 4Q22 FY22 ON TRACK WITH GUIDANCE FOR 2H22 LFL SALES CONTINUE TO EXPECT FY22 LFL SALES AT UPPER END OF OUR GROWTH IN THE MID TEENS % (HIGH TEENS Q3, LOW GUIDANCE RANGE OF LOW-TO-MID TEENS GROWTH DOUBLE DIGITS Q4) (ASSUMING NO SIGNIFICANT DETERIORATION IN COVID OR MACRO ENVIRONME
Slide 25: Key Messages
KEY MESSAGES 3Q22 REVENUES GROWTH ACCELERATED ▪ Q3 LFL REVENUE GROWTH ACCELERATED TO +19%, AHEAD OF MID TEENS GROWTH GUIDANCE, WITH ALIGNED SELL-IN AND SELL-OUT ACHIEVED STRONG GROSS MARGIN EXPANSION AND MOMENTUM ON DELEVERING ▪ 3Q22 ADJ GROSS MARGIN +240 BPS YOY; NET DEBT LOWERED BY $0.2B TO $4.2B
Slide 26: 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
Slide 27: Since 1904
SINCE 1904