Slide 1: Coty 3Q24 Earnings Call
COTY 3Q24 EARNINGS CALL May 6, 2024 1
Slide 2: Key Messages
KEY MESSAGES DOUBLE-DIGIT LFL GROWTH IN Q3 AND YTD, SUPPORTED BY BEAUTY STRENGTH & LEADING EXECUTION 1 ▪ Q3 LFL REVENUE GROWTH OF +10% AND FYTD +13%, FUELED BY BOTH DIVISIONS WITH PARTICULAR STRENGTH IN PRESTIGE; EXPANSION IN ALL 3 REGIONS, WITH MARKET SHARE GAINS IN ALL THREE REGIONS IN PRESTIGE; A
Slide 3: Significant Sales Growth
SIGNIFICANT SALES GROWTH 3
Slide 4: 3Q24 LFL Growth +10% and FYTD LFL Growth +13%
3Q24 LFL GROWTH +10% AND FYTD LFL GROWTH +13% CB +6% LFL PRESTIGE +13% LFL LFL REVENUE +10% LFL IN Q3 AND +13% LFL FYTD, AHEAD OF GUIDANCE PRESTIGE LFL +13% IN Q3 AND +17% FYTD ➢ STRONG LFL GROWTH ACROSS ALL CATEGORIES ➢ MOMENTUM ACROSS ACROSS ALL REGIONS, WITH 37% ESPECIALLY ROBUST GROWTH IN APAC,
Slide 5: Growth Across All Regions
GROWTH ACROSS ALL REGIONS APAC AMERICAS LFL +11% IN Q3 AND +13% FYTD +11% LFL AMERICAS DRIVEN BY VERY STRONG DOUBLE-DIGIT % 12% +11% LFL GROWTH IN LATIN AMERICA, CANADA AND THE TRAVEL RETAIL CHANNEL Q3 43% EMEA LFL +9% IN Q3 AND +12% FYTD SUPPORTED REVENUE BY GROWTH ACROSS MOST MARKETS AND THE TRAVE
Slide 6: Growth Fueled by Both Volumes and Price & Mix
GROWTH FUELED BY BOTH VOLUMES AND PRICE & MIX Q3 FYTD LSD – MSD % VOLUME GROWTH IN Q3 IN BOTH PRESTIGE & Volume + MSD % + LSD % CONSUMER BEAUTY TARGETED PRICING ACTIONS GOING FORWARD Price* + HSD % + HSD % SLIGHTLY NEGATIVE IMPACT FROM MIX AND OTHER IN Q3, ~ SLIGHTLY Mix & Other* NEGATIVE + LSD % WI
Slide 7: Solid Profit Performance
SOLID PROFIT PERFORMANCE 7
Slide 8: Strong Service Levels & Easing Inflation
STRONG SERVICE LEVELS & EASING INFLATION ▪ CONTINUED STRONG SERVICE LEVELS AT ~94% IN Q3 ▪ NEGLIGIBLE IMPACT FROM COGS INFLATION IN Q3 AND EXPECTED TO CONTINUE IN Q4 ▪ CURRENTLY SEE LIMITED RISK FROM RED SEA CONFLICT & BALTIMORE PORT CLOSURE ▪ EXCESS & OBSOLESCENCE HEADWIND MODERATING IN 2H24 AND IN
Slide 9: Confirmed FY24 & FY25 Savings Target
CONFIRMED FY24 & FY25 SAVINGS TARGET ▪ Q3 SAVINGS DELIVERED OF ~$25M, WITH FYTD TOTAL OF OVER $90M ▪ CONFIRMING FY24 SAVINGS TARGET TO $110-120M ➢ DRIVEN BY MATERIAL COSTS, DISTRIBUTION AND STRUCTURAL A&CP SAVINGS ➢ INCREASED SAVINGS FUELING REINVESTMENT IN STRUCTURAL GROWTH CAPABILITIES AND TEAMS,
Slide 10: Robust Q3 Gross Margin Expansion, with FY24 Reaffirmed
ROBUST Q3 GROSS MARGIN EXPANSION, WITH FY24 REAFFIRMED ADJUSTED GROSS MARGIN GROSS MARGIN 190 BPS BETTER YOY IN Q3, DRIVEN BY: +190 bps YoY +20 bps YoY ➢ BENEFIT FROM PREMIUMIZATION AND CARRY-OVER 64.8% PRICING 64.2% 64.4% 62.9% ➢ SIGNIFICANTLY EASING INFLATION ➢ SUPPLY CHAIN PRODUCTIVITY SAVINGS EX
Slide 11: Maintaining Strong Marketing Investments
MAINTAINING STRONG MARKETING INVESTMENTS Q3 A&CP AT ~28%, MODERATELY HIGHER YOY, A&CP AS PERCENT OF SALES INVESTING BEHIND: ~28% ➢ PRESTIGE INNOVATIONS AND ICONS LIKE ~27% ~26% ~26% BURBERRY GODDESS, AND THE NEW LAUNCHES INFINIMENT COTY PARIS, MARC JACOBS DAISY WILD AND COSMIC KYLIE JENNER ➢ CB INNO
Slide 12: Solid 3Q24 and FYTD Adjusted Profit Growth
SOLID 3Q24 AND FYTD ADJUSTED PROFIT GROWTH ADJUSTED PROFIT ➢ 3Q24 ADJ OP INCOME +17% YOY, +15%YoY WITH FYTD ADJ OP INCOME +19% YOY +19% YoY $927M $807M ➢ 3Q24 ADJ OP MARGIN OF 10.4%, $755M WITH FYTD MARGIN 15.9% $634M INCREASING 80 BPS YOY ➢ 3Q24 ADJ EBITDA +10% YOY +10% YoY ABOVE GUIDANCE, WITH FYT
Slide 13: Strong 3Q24 Adjusted EPS Delivery
STRONG 3Q24 ADJUSTED EPS DELIVERY $ Millions Q3 FYTD Adjusted EBITDA 200 927 ➢ Q3 ADJ EPS EXCLUDING EQUITY SWAP OF $0.06 Depreciation (56) (171) Net Interest (60) (190) ➢ Q3 ADJ EPS INCLUDES A HURT FROM TOTAL RETURN SWAP MARK-TO- Income Tax (13) (159) MARKET OF ~$13M OR 1 CENT IN EPS DUE TO STOCK PR
Slide 14: 3Q24 Free Cash Flow In-Line with Expectations
3Q24 FREE CASH FLOW IN-LINE WITH EXPECTATIONS Q3 FYTD FREE CASH FLOW $ Millions ➢ 3Q24 FCF OF $(234)M, Adjusted EBITDA 200 927 REFLECTS: ➢ SEASONALLY WEAKER CASH FLOW ➢ PAYMENT OF TAXES FOR Capex, WC, one-offs (298) (404) PRIOR YEARS ➢ THE TIMING OF WORKING Interest and tax (136) (270) CAPITAL PAYME
Slide 15: On Track to End CY24 with Leverage Towards ~2.5x
ON TRACK TO END CY24 WITH LEVERAGE TOWARDS ~2.5X ➢ LEVERAGE EXITING 3Q24 OF ~3.4X, REFLECTING SEASONALLY NEGATIVE FREE CASH FLOW ➢ COMPLETED THE EXECUTION OF THE FIRST TRANCHE OF EQUITY SWAP AGREEMENT ON FEB. 22, 2024, RESULTING IN SHARE COUNT REDUCTION OF 27M AT A CASH COST OF $200 MILLION AND EFFE
Slide 16: Executing on Strategic Pillars
EXECUTING ON STRATEGIC PILLARS 16
Slide 17: Global Mass Beauty Market Continues to Grow, with Coty Consumer Beauty in Line
GLOBAL MASS BEAUTY MARKET CONTINUES TO GROW, WITH COTY CONSUMER BEAUTY IN LINE Coty Consumer Beauty Strong momentum in mass fragrance, Coty’s global shelf space broadly +6% LFL, in line with skin & body care, and cosmetics in most stable in Spring ‘24 resets and MSD % global mass countries, is offse
Slide 18: Coty Brands Outperforming Established Cosmetics Brands
COTY BRANDS OUTPERFORMING ESTABLISHED COSMETICS BRANDS, SUPPORTED BY SOCIAL MEDIA ADVOCACY STRATEGY COVERGIRL PROPELS TO RIMMEL RISES TO #3 #4 IN U.S. EMV IN MARCH 2024, IN U.K. EMV IN 3Q24, FROM #5 IN 3Q24 AND #6 IN 3Q23 FROM #5 IN 3Q23 18
Slide 19: Fragrance Category Accelerated in Q3 with Coty Gaining Share
FRAGRANCE CATEGORY ACCELERATED IN Q3 WITH COTY GAINING SHARE Prestige Fragrance Coty gaining market share in Coty Prestige Fragrance revenue grew market accelerated to Prestige Fragrances across regions, ~12% LFL in Q3 and ~18% LFL FYTD Mid Teens % growth in Q3 with High Teens % Sell-Out Growth supp
Slide 20: Coty's Successful Fragrance Launches Continue
COTY’S SUCCESSFUL FRAGRANCE LAUNCHES CONTINUE Burberry fragrance revenues Marc Jacobs Daisy Wild is the Cosmic Kylie Jenner is the >60% higher FYTD driven by #1 fragrance launch #2 fragrance launch in the U.S. Burberry Goddess, Coty’s biggest in the U.S. CYTD CYTD and very strong internationally, la
Slide 21: First Infiniment Coty Paris Boutique Opened
THE FIRST INFINIMENT GOTY PARIS BOUTIQUE OPENEDJONIMARGH 4 ‘ : 7 —4
Slide 22: Strong Expansion in Prestige Makeup
STRONG EXPANSION IN PRESTIGE MAKEUP Coty prestige makeup sales grew All Coty prestige makeup brands >25% LFL in Q3 and growing by double-digit double-digit % LFL FYTD % LFL in Q3 22
Slide 23: Building Momentum in Skincare
BUILDING MOMENTUM IN SKINCARE Philosophy step-changing advocacy, Orveda’s FYTD Lancaster generated >25% growth LFL in Q3 and with solid overall sales growth FYTD, productivity growing supported by double-digit growth 3-5x YoY, >20% growth LFL FYTD in skincare lines while adding new doors 23 23
Slide 24: Broad-Based Digital Momentum
BROAD-BASED DIGITAL MOMENTUM E-com sales growth ~20% YoY E-com penetration ~190bps YoY, Coty’s Prestige and Consumer in Q3 and FYTD reaching ~20% FYTD Beauty businesses both rank #2 in e-commerce channel E-com penetration and contribution based on countries where e-com info is available; Coty's Pres
Slide 25: Continuing to Expand in Growth Engine Markets
CONTINUING TO EXPAND IN GROWTH ENGINE MARKETS Coty’s growth engine Strong momentum across Coty Prestige China sales grew markets revenues grew Brazil, rest of LATAM, strong double-digit % LFL, including >20% LFL in Q3 and FYTD, Southeast Asia, including India, triple digit growth in Hainan, accounti
Slide 26: Outstanding Growth in Travel Retail Channel
OUTSTANDING GROWTH IN TRAVEL RETAIL CHANNEL Coty’s Travel Retail Strong double digit % Travel Retail channel revenues grew sales growth accounts for ~9% of FYTD >20% LFL YoY in Q3 and FYTD in Europe, Americas and APAC revenues 26
Slide 27: New ESG Milestones Reached
NEW ESG MILESTONES REACHED 8 CARBON NEUTRAL1 SOLAR PANEL EXPANSION SITES, LABS AND OFFICES ACROSS 4 SITES STEADY IMPROVEMENT EXPANDING IN ESG RATINGS, REFILLABLE FORMATS INCLUDING ACHIEVING ACROSS NEW PRIME STATUS PRESTIGE FRAGRANCE WITH ISS ESG BOTTLE DESIGNS 27 1 Scope 1 & 2 emissions 27
Slide 28: Strong Coty In-Market Performance Continues
STRONG COTY IN-MARKET PERFORMANCE CONTINUES Coty Prestige Revenues LFL +18% LFL Coty Prestige Fragrance Sell-Out Est. 1 YoY Est. headwind from +13% HDD % restocking LY Prestige Fragrance Market 2 Est. ~13% LFL MDD % service recovery ~10% YoY MSD- LSDHSD% - LSD- MSD% MSD% 1H24 3Q24 4Q24E 1H25E ➢ COTY
Slide 29: Q4 Framework
Q4 FRAMEWORK LOW-TO-MID SINGLE LFL GROWTH REFLECTING AN REVENUE LFL ESTIMATED MID SINGLE-DIGIT % HEADWIND IN PRESTIGE FROM RETAILER INVENTORY RESTOCKING 1-2% HEADWIND FROM FX, AND ~2% HEADWIND FROM THE REPORTED REVENUE IMPACTS DIVESTITURE OF LACOSTE LICENSE ADJ GROSS MARGIN MODERATE IMPROVEMENT YOY
Slide 30: FY24 Guidance
FY24 GUIDANCE FY24 REVENUES AT HIGH END OF +9-11% LFL, WITH OUTPERFORMANCE BY REVENUE LFL PRESTIGE ~1% HEADWIND FROM FX FOR FULL YEAR AND ~2% HEADWIND FROM THE REPORTED REVENUE IMPACTS DIVESTITURE OF LACOSTE LICENSE IN 2H24 ADJ GROSS MARGIN MODEST EXPANSION YOY ADJ EBITDA MARGIN ADJ EBITDA MARGIN GR
Slide 31: Key Messages
KEY MESSAGES DOUBLE-DIGIT LFL GROWTH IN Q3 AND YTD, SUPPORTED BY BEAUTY STRENGTH & LEADING EXECUTION 1 ▪ Q3 LFL REVENUE GROWTH OF +10% AND FYTD +13%, FUELED BY BOTH DIVISIONS WITH PARTICULAR STRENGTH IN PRESTIGE; EXPANSION IN ALL 3 REGIONS, WITH MARKET SHARE GAINS IN ALL THREE REGIONS IN PRESTIGE; A
Slide 32: Since 1904
SINCE 1904
Slide 33: 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