Slide 1: Coty 1Q23 Earnings Call
COTY 1Q23 EARNINGS November 8, 2022 CALL 1
Slide 2: Key Messages
KEY MESSAGES ROBUST BEAUTY DEMAND DRIVE MARKET-LEADING Q1 SALES GROWTH AHEAD OF GUIDANCE ▪ Q1 LFL REVENUE GROWTH OF +9%, WITH CORE BUSINESS +11% LFL, AHEAD OF RAISED GUIDANCE OF +8-9% LFL SOLID GROSS MARGIN, PROFIT & NET DEBT PERFORMANCE DESPITE INFLATION ▪ 1Q22 ADJ GROSS MARGIN +70 BPS YOY; ADJ OPE
Slide 3: Strong Sales Delivery
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Slide 4: Q1 Sell-Out Led by Prestige, with Revenue LFL Skewed by Component Constraints
Q1 SELL-OUT LED BY PRESTIGE, WITH REVENUE LFL SKEWED BY COMPONENT CONSTRAINTS, RUSSIA EXIT AND LAUNCH PHASING Q1 REVENUES +11% LFL (ADJUSTING FOR RUSSIA EXIT), AHEAD OF UPDATED GUIDANCE OF 8-9%; OVERALL REVENUES +9% LFL Sell-In vs. Sell-Out Growth (YoY) PRESTIGE +7% LFL Low ➢ INCLUDES ~300BPS IMPACT
Slide 5: Solid Growth Across All Regions
SOLID GROWTH ACROSS ALL REGIONS APAC +12% LFL AMERICAS AMERICAS +5% LFL IN Q1, WITH PARTICULARLY 12% +5% LFL STRONG MOMENTUM IN LATAM AND TRAVEL RETAIL, WHILE U.S. CONSTRAINED BY PRESTIGE SUPPLY Q1 44% EMEA +11% LFL IN Q1 (INCLUDING ~500 BPS IMPACT REVENUE FROM RUSSIA EXIT), FUELED BY DOUBLE-DIGIT M
Slide 6: Robust Profit Performance
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Slide 7: Robust Gross Margin Performance
ROBUST GROSS MARGIN PERFORMANCE Q1 GROSS MARGIN UP STRONGLY AT +70BPS YOY ADJUSTED GROSS MARGIN GROSS MARGIN EXPANSION DRIVEN BY: +70 bps YoY ➢ PRICE IMPROVEMENT IN BOTH PRESTIGE AND 64.1% CONSUMER BEAUTY 63.4% ➢ IMPROVED TRADE SPEND ➢ PARTIALLY OFFSET BY ~2PPS OF INFLATION IMPACT SIGNIFICANT MANUFA
Slide 8: Strong Fragrance Demand Straining Component Supply
STRONG FRAGRANCE DEMAND STRAINING COMPONENT SUPPLY • GLOBAL SUPPLY CHAIN COMPLEXITIES COUPLED WITH ONGOING ROBUST FRAGRANCE MARKET DEMAND DRIVING INDUSTRY-WIDE SUPPLY CONSTRAINTS IN KEY FRAGRANCE COMPONENTS ➢ COTY’S Q1 SERVICE LEVELS IN LOW 90S FOR CONSUMER BEAUTY AND <80% FOR PRESTIGE, ON PAR WITH
Slide 9: Sustained Progress on All-In-To-Win Program
SUSTAINED PROGRESS ON ALL-IN- TO-WIN PROGRAM • DELIVERED OVER $20M OF SAVINGS IN Q1 • REMAIN ON TRACK FOR SAVINGS OF ~$170M IN FY23 ▪ CORE PROJECTS RAMPING UP AS PROGRESS THROUGH FY23 INCLUDING: ➢ MATERIAL VALUE ANALYSIS ➢ TRADE SPEND AND A&CP PROCUREMENT SAVINGS ➢ IMPROVEMENT IN EXCESS & OBSOLESCEN
Slide 10: Maintaining Strong Marketing Investments
MAINTAINING STRONG MARKETING INVESTMENTS A&CP AT ~24% DURING SELL-IN DRIVEN Q1, WITH EXPECTED MEANINGFUL STEP-UP IN Q2 TO DRIVE A&CP AS PERCENT OF SALES SELL-THROUGH 1 WORKING MEDIA UP YOY AND FLAT AS A % OF REVENUES BEHIND: ~25.5% ~24.2% • PRESTIGE INNOVATIONS LIKE BURBERRY HERO EDP, GUCCI FLORA GO
Slide 11: Strong 1Q23 Profit Delivery
STRONG 1Q23 PROFIT DELIVERY 1Q23 ADJUSTED PROFIT • 1Q23 ADJ OP INCOME +24% YOY, WITH MARGIN OF 18.0% (+340BPS YOY), AIDED BY +11%YoY -25% DECLINE IN DEPRECIATION +24%YoY $308M $279M • 1Q23 ADJ EBITDA +11% YOY (WITH FX IMPACT $250M $201M SEVERAL POINTS BELOW THE IMPACT ON REVENUES), WITH MARGIN OF 22
Slide 12: 1Q23 Adjusted EPS Delivery
1Q23 ADJUSTED EPS DELIVERY $ Millions Q1 • 1Q23 ADJ EPS OF $0.11, UP $0.03 YOY Adjusted EBITDA • STRONG PROFIT EXPANSION 308 (Continuing Ops) Depreciation (58) • Q1 TAX RATE AT ~29.6%, IN LINE WITH EXPECTATIONS Net Interest (66) • Q1 EPS INCLUDES NON-CASH IMPACT Income Tax (44) FROM TOTAL RETURN SWA
Slide 13: Strong Free Cash Flow
STRONG FREE CASH FLOW FREE CASH FLOW Q1 $ Millions • 1Q23 FCF OF $88M, INLINE WITH Adjusted EBITDA 308 EXPECTATIONS ➢ REFLECTS TIMING OF CAPEX AND WORKING CAPITAL PAYMENTS Capex, WC, one-offs (181) ➢ RISING INVENTORY TO ADDRESS COMPONENT SHORTAGES Interest and tax (39) • CONTINUE TO EXPECT STRONG FC
Slide 14: Well-Positioned in Rising Rate Environment
WELL-POSITIONED IN RISING RATE ENVIRONMENT • LEVERAGE EXITING 1Q23 OF <4.5X, IMPROVED FROM 4.7X EXITING 4Q22 • ~90% OF DEBT IS FIXED, INCLUDING HEDGES • WELLA VALUE INCREASED TO ~$1.0B, REFLECTING RECENT HIGH-GROWTH BRAND ACQUISITION ~4.7x <4.5x $0.1 $0.1 $0.1 FCF Interest & ~$1.0 FX benefit other c
Slide 15: Executing on Strategic Pillars
EXECUTING ON STRATEGIC PILLARS 15
Slide 16: Consumer Beauty Gains Global Share for 10 Consecutive Months
CONSUMER BEAUTY GAINS GLOBAL SHARE FOR 10 CONSECUTIVE MONTHS Coty sell-out growing mid-to-high single digits, above CB market growing low single digits Coty Total Consumer Beauty (Global Share Pts YoY) 0.7 0.8 0.6 0.3 0.3 0.4 0.4 0.5 0.1 0.2 0.2 -0.2 -0.2 -0.4 -0.3 -0.7 -0.6 -1.3 -1.7 -2.7 -2.5 Dec-
Slide 17: New Thrillseeker Mascara
NEW THRILLSEEKER MASCARA
Slide 18: Premium Launches Fueling >25% LFL Growth in Bodycare Sales
PREMIUM LAUNCHES FUELING >25% LFL GROWTH IN BODYCARE SALES ▪ Active Skin & Mind premium bodycare range ▪ 1st to market non-silicone deodorants ▪ Clean, vegan formulas ▪ Coty patent-pending formulas ▪ Packed in 100% recycled,* recyclable, refillable bottles * 18 Except additive and out of cap & label
Slide 19: 2023 Creative Vision
2023 Creative vision Confidential. For internal use only. 19
Slide 20: Expanding FY22 Winning Launches, as the Fragrance Index Continues
EXPANDING FY22 WINNING LAUNCHES, AS THE “FRAGRANCE INDEX” CONTINUES Prestige fragrance market growing HSD % YoY and over 25% vs. 2019 (including >40% in U.S) Demand remains ahead of supply due to industry-wide component constraints Boss Bottled Franchise Hero Franchise Top 10 Flora Franchise now #1
Slide 21: Title of the Presentation
TITLE OF THE PRESENTATION 21
Slide 22: Becoming a Key Player in Prestige Makeup
BECOMING A KEY PLAYER IN PRESTIGE MAKEUP Coty Prestige Makeup sell-out Prestige makeup ~50% of Kylie counters continue to more than 2x the market in Coty sell-out in Travel Retail rank amongst top beauty the US through August APAC brands across key travel retail corridors* 22 *through August 2022
Slide 23: Building a Skincare Portfolio Across Both Divisions
BUILDING A SKINCARE PORTFOLIO ACROSS BOTH DIVISIONS Lancaster sales growth of >20% in SKKN continuing to build Paixao & Monange gain +260bps Q1, fueled by Hainan; key product following and awareness on of share in Brazilian lotions & oils and activation initiatives on track DTC, with the 9-piece set
Slide 24: Fueling Digital Momentum Through Social Commerce, New Partnerships, and E-Retail
FUELING DIGITAL MOMENTUM THROUGH SOCIAL COMMERCE, NEW PARTNERSHIPS, AND E-RETAIL Organic advocates drive Marc Hugo Boss and Chloe flagships Winning during Amazon Prime Jacobs’ new Daisy Ever So Fresh to opened on LazMall Prestige – Week, with Coty’s sell out on Sephora in ~2 weeks reaching >90M cons
Slide 25: China Subdued Near-Term by Zero Covid Restrictions, but Structural Growth Drivers Intact
CHINA SUBDUED NEAR-TERM BY ZERO COVID RESTRICTIONS, BUT STRUCTURAL GROWTH DRIVERS INTACT Moderate Q1 revenue growth in China (mainland + Hainan) Innovative Douyin and brand partnerships drive >30% growth for adidas and Max Factor Attractiveness of China beauty market unchanged, with ultra- premium b
Slide 26: China Subdued Near-Term by Zero Covid Restrictions, but Structural Growth Drivers Intact
CHINA SUBDUED NEAR-TERM BY ZERO COVID RESTRICTIONS, BUT STRUCTURAL GROWTH DRIVERS INTACT Moderate Q1 revenue growth in China (mainland + Hainan) Innovative Douyin and brand partnerships drive >30% growth for adidas and Max Factor Attractiveness of China beauty market unchanged, with ultra- premium b
Slide 27: Booming and Multi-Pronged Travel Retail Business
BOOMING AND MULTI-PRONGED TRAVEL RETAIL BUSINESS Travel Retail revenues Coty gaining market Lancaster sales in growing >30% YoY share in Travel Retail Hainan grew >5x YoY globally 27
Slide 28: Strong Strides in ESG Agenda
STRONG STRIDES IN ESG AGENDA ESG RATINGS SOCIAL ENVIRONMENTAL Coty’s new ESG rating by Coty announced industry- Updates on carbon targets and Sustainalytics in the leading Global Gender progress to come very soon…. TOP QUARTILE Neutral Parental Leave of global Personal Products Policy companies (78
Slide 29: 1H23 and FY23 Outlook
1H23 AND FY23 OUTLOOK 1H23 FY23 EXPECT 1H23 LFL SALES GROWTH OF CORE BUSINESS CONTINUE TO EXPECT FY23 LFL SALES GROWTH OF CORE (ADJUSTING FOR RUSSIA EXIT) CONSISTENT WITH BUSINESS INLINE WITH MEDIUM TERM GROWTH TARGET OF +6-8% ALGORITHM AND PREVIOUS OUTLOOK OF +6-8% (ADJUSTING FOR THE IMPACT OF THE
Slide 30: Key Messages
KEY MESSAGES ROBUST BEAUTY DEMAND DRIVE MARKET-LEADING Q1 SALES GROWTH AHEAD OF GUIDANCE ▪ Q1 LFL REVENUE GROWTH OF +9%, WITH CORE BUSINESS +11% LFL, AHEAD OF RAISED GUIDANCE OF +8-9% LFL SOLID GROSS MARGIN, PROFIT & NET DEBT PERFORMANCE DESPITE INFLATION ▪ 1Q22 ADJ GROSS MARGIN +70 BPS YOY; ADJ OPE
Slide 31: Since 1904
SINCE 1904
Slide 32: 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, strategic planning, targets and outlook for future reporting periods (including the