Estee Lauder Companies, Inc. (the) · NYSE:EL
Estee Lauder Companies, Inc. (the) — The Estée Lauder Companies — Investor Day (2019)
21 slides from Estee Lauder Companies, Inc. (the)'s investor day presentation, 2019
Slide 1: Investor Day 2019
ESTEE LAUDER COMPANIES NVES TO 2019 mt
Slide 2: Fueling Long-term Growth
FUELING TRACEY TRAVIS LONG-TERM EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER GROWTH
Slide 3: Forward-Looking Information and Non-GAAP Disclosures
FORWARD-LOOKING INFORMATION AND NON-GAAP DISCLOSURES Statements in the Investor Day presentations, including remarks by the CEO and other members of management, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may a
Slide 4: Delivering Outstanding Results
DELIVERING OUTSTANDING RESULTS 10 Years Ending FY19E Average Annual +8%(1) ANNUALIZED TOTAL Sales Growth SHAREHOLDER RETURN(2) Operating Margin ~+1,000 BPS Improvement 28% EPS Growth ~21% CAGR(1) 18% Operating Cash Flow $16B 15% 12% Cash Returned to +$10B Stockholders EL S&P 500 S&P 500 BEAUTY (1) N
Slide 5: Managing Investments with Agility
MANAGING INVESTMENTS WITH AGILITY USD$ billions, FY09-FY19E GROWTH DRIVEN BY GROWTH DRIVEN GROWTH DRIVEN BY INCREASE IN CONTRACTION IN BECCA / TOO FACED CHINESE CONSUMERS AND BY EL & MAC CONSUMER PULL ADVERTISING CHINESE SPENDING ACQUISITIONS INCREASED ADVERTISING AVERAGE ANNUAL SALES GROWTH(1) +5%
Slide 6: Diversified Net Sales Enables Industry Leading Growth
DIVERSIFIED NET SALES ENABLES INDUSTRY LEADING GROWTH The Americas 47% 37% Asia/Pacific Europe, the Middle East, and Africa FY09 FY18 BY REGION 18% 22% 35% 41% BY FY09 26% 30% 7% 9% 5% 1% 22% CHANNEL FY18 24% 15% 18% 10% 12% 5% 16% International North American Travel Retail Freestanding Specialty- B
Slide 7: Pivot Towards Fast Growth Areas
PIVOT TOWARDS FAST GROWTH AREAS NET SALES TRAVEL RETAIL EMERGING MARKETS(1) ONLINE(2) +19% +15% +26% CAGR CAGR CAGR FY09 FY18 FY09 FY18 FY09 FY18 (1) Emerging Markets include Brazil, Colombia, Mexico, Peru, Poland, Finland, Czech Republic, Hungary, Slovakia, India Affiliate, Middle East Affiliate, R
Slide 8: Our Business Model Is Designed for Continuous Sustainable Growth
OUR BUSINESS MODEL IS DESIGNED FOR CONTINUOUS SUSTAINABLE GROWTH… Innovation Markets $0-$500M $500M-$1B > $1B & Channels DEVELOPING SCALING LARGE Productivity BRANDS BRANDS BRANDS & Efficiencies
Slide 9: Positioned to Win in Fastest Growing Categories
$2.9 POSITIONED TO WIN SKIN CARE IN FASTEST GROWING 8% CAGR $5.6 CATEGORIES USD$ billions, FY09-FY18 $2.8 MAKEUP 8% CAGR $5.6 INVESTING IN GROWTH • Fast-growing Skin Care & Makeup subcategories • Hero Franchises $1.2 FRAGRANCE • Artisanal & Luxury Fragrance 5% CAGR $1.8 • Innovation $0.4 HAIR CARE F
Slide 10: Transformed Our Cost Structure to Support Growth
TRANSFORMED OUR COST STRUCTURE TO SUPPORT GROWTH OPERATING MARGIN & COST STRUCTURE OPERATING INCOME % of Net Sales, FY09 & FY18 USD$ billions, FY09 & FY18 OPERATING MARGIN 7.0% 9.6% 16.6% COST OF GOODS SOLD 25.6% 5.0% 20.6% $2.3 MEDIA & PROMOTIONAL EXPENSE 25.2% 0.4% 25.6% >4X OTHER OPERATING EXPENS
Slide 11: Leading Beauty Forward Is Enabling Further Flexibility
LEADING BEAUTY FORWARD IS ENABLING FURTHER FLEXIBILITY… IDEATE DEVELOP & INNOVATE & PLAN ANALYZE OPERATIONS CONCEPT TO CONSUMER SELL MARKET DISTRIBUTE & MERCHANDISE
Slide 12: ...And Helps Fuel Our Investment and Growth Model
...AND HELPS FUEL OUR INVESTMENT AND GROWTH MODEL Projected Results by FY 2021 2016 ESTIMATE CURRENT ESTIMATE Net Benefit Target $200-300M $350-450M One-Time Costs $600-700M $900-950M Projected Workforce Impact 900-1,200 1,800-2,000 Average Payback Period (Years) 2.6 2.2 Initiatives 40+ 55+
Slide 13: Disciplined Capital Allocation Has Supported Superior Returns
DISCIPLINED capital allocation has supported SUPERIOR RETURNS USD$ billions, FY10-FY19E REINVEST IN RETURN TO SOURCES OF CASH BUSINESS STOCKHOLDERS OPERATING CAPITAL STOCK CASH FLOW EXPENDITURES REPURCHASES $16B $5B $6B TSR(2): + + + 983% STOCK OPTION PROCEEDS, FX AND OTHER ACQUISITIONS(1) DIVIDENDS
Slide 14: Positioned for Continued Profitable Growth
POSITIONED FOR CONTINUED PROFITABLE GROWTH MID-SINGLE WORLD DIVERSIFIED DIGIT PRESTIGE CLASS REGIONS AND BEAUTY GROWTH BRANDS CHANNELS FINANCIAL FINANCIAL PROVEN DISCIPLINE FLEXIBILITY TALENT
Slide 15: Future Sales Growth Remains Balanced Across All Drivers
FUTURE SALES GROWTH REMAINS BALANCED ACROSS ALL DRIVERS +6% to +8% +1% +2% to +3% +2% +2% PRICING NEW EXISTING ACQUISITIONS FY20E-FY22E DISTRIBUTION BUSINESS The long-term targets are non-GAAP measures that cannot be reconciled to Net sales, Earnings per share and Operating margin, their most direct
Slide 16: Positioned to Improve Operating Margin While Funding Future Growth
POSITIONED TO IMPROVE OPERATING MARGIN WHILE FUNDING FUTURE GROWTH ~-30 BPS ~+150 BPS ~+80 BPS ~+50 BPS ~+50 BPS GROSS MARGIN SELLING EXPENSE G&A EXPENSE INVESTMENTS FY22E IMPROVEMENT LEVERAGE LEVERAGE/OTHER The long-term targets are non-GAAP measures that cannot be reconciled to Net sales, Earnings
Slide 17: Invest to Support Profitable Growth
INVEST TO SUPPORT PROFITABLE GROWTH INVESTMENTS RESOURCES SUSTAINABILITY INITIATIVES LEADING BEAUTY FORWARD SAVINGS EXPAND CONSUMER REACH FOR PRODUCTIVITY NEW / SMALLER BRANDS POSITIVE MIX AND MARGIN TECHNOLOGY ENHANCEMENTS PRICING REGULATORY / TARIFFS INNOVATION SUPPLY CHAIN CAPACITY AND AGILITY WA
Slide 18: Power Cash Generation
CASH GENERATION POWER FY19E FY22E ANNUAL CASH FLOW FROM ~$2.4B Double–Digit $3.5B–$4.0B OPERATIONS Earnings per Share Growth & Working Capital ANNUAL FREE Efficiencies CASH FLOW ~$1.6B $2.5B–$3.0B
Slide 19: Disciplined Capital Allocation Strategy to Drive Long-Term Stockholder Value
DISCIPLINED CAPITAL ALLOCATION STRATEGY TO DRIVE LONG-TERM STOCKHOLDER VALUE Capital Allocation Priorities INVEST IN RETURN ORGANIC M&A EXCESS CASH BUSINESS TO STOCK- GROWTH HOLDERS STRONG SINGLE-A RATING TARGET LEVERAGE(1) : 1.5X–2.0X (1) Moody’s Adjusted Leverage = Debt to EBITDA adjusted for oper
Slide 20: Expect Strong Sales and Double-Digit EPS Growth to Continue
EXPECT STRONG SALES AND DOUBLE-DIGIT EPS GROWTH TO CONTINUE THIRD QUARTER FISCAL 2019 FISCAL 2019 LONG-TERM ESTIMATE ESTIMATE TARGETS(2) Net Sales Growth in Constant Currency(1) +8% to +9% +8% to +9% +6% to +8% — ~+50 Basis Points ~+50 Basis Operating Margin(1) Points Per Year Diluted Earnings Per S
Slide 21: Best Diversified Pure Play
BEST DIVERSIFIED PURE PLAY