Coty Inc. · NYSE:COTY
Coty — Bank of America Merrill Lynch Leveraged Finance Conference 2020
25 slides from Coty's conference presentation, Nov 30, 2020
Slide 1: Investors Conference
INVESTORS CONFERENCE 1
Slide 2: A Stronger Coty Emerging
A STRONGER COTY EMERGING 2 TITLE OF THE PRESENTATION
Slide 3: Clear Focus Areas
CLEAR FOCUS AREAS COTY IS MOVING FORWARD ALL DATA ONGOING COTY ONLY 3
Slide 4: Wella Partnership with KKR
WELLA PARTNERSHIP WITH KKR • Agreement announced on June 1, 2020 • KKR to own 60% of Wella Company and Coty to own the remaining 40% • Partnership to further strengthen our liquidity and financial structure • Coty to focus on a simplified portfolio with fragrances, skincare and make-up categories AL
Slide 5: Strong Platform
STRONG PLATFORM CONCENTRATED PORTFOLIO WITH TOP 10 BRANDS ACCOUNTING FOR 2/3 OF TOTAL REVENUE Strong Position in Key Markets Leading Brands #1 in fragrances #3 in color cosmetics #2 in mass cosmetics, #2 in Prestige Fragrances #1 in mass cosmetics, #2 in Prestige Fragrances #3 in mass cosmetics, #1
Slide 6: Lean and Focused Coty
LEAN AND FOCUSED COTY REGION AND CATEGORIES NET REVENUES FY20 Continuing Operations Net Revenues Mass FY19 $6.3bn | FY20 $4.7bn Bodycare & APAC, 12% Fragrances, FY21 Q1 $1.1bn 15% Americas, Prestige 39% Mass Fragrances, Cosmetics, 50% 29% EMEA, 49% Prestige Skin & Cosmetics, 6% Continuing Operations
Slide 7: World-Class Leadership Team
WORLD-CLASS LEADERSHIP TEAM Sue Y. Nabi Pierre-Andre Terisse Kristin Blazewicz Chief Executive Officer Chief Operating & Financial Chief Legal Officer & General - Founder of luxury skincare brand Officer Council Orveda - 30 years of public company finance - Previously responsible for SEC filings, -
Slide 8: Ownership Structure
OWNERSHIP STRUCTURE WELL RECOGNIZED LONG-TERM SHAREHOLDERS • Two large, long-term oriented shareholders with a combined ownership of ~65% on an as-converted basis • JAB (~50% ownership on an as-converted basis) with 4 board seats. Represented by: • Peter Harf • Olivier Goudet • Justine Tan • Joachim
Slide 9: Financial Overview
FINANCIAL OVERVIEW TITLE OF THE PRESENTATION 9
Slide 10: A Stronger Coty Emerging in Q1
A STRONGER COTY EMERGING IN Q1 Q1 RESULTS STRONG PROFIT STRONG PROGRESSING ABOVE AND CASH IMPROVEMENT OUR KEY EXPECTATIONS DELIVERY OF CAPITAL PRIORITIES STRUCTURE Market trends and Fixed cost program, Sizeable deleveraging Key launches, Coty sales improved in tight CAPEX and one- to follow Wella st
Slide 11: Our Most Recent Financial Metrics
OUR MOST RECENT FINANCIAL METRICS FY21 Q1 NET REVENUE (LFL) TOTAL COTY ASIA AMERICAS EMEA (RemainCo) PACIFIC -19%* -3.7% -21.6% -35.2% * -14% Excluding Travel Retail PROFITABILITY ADVERTISING CONTROLLABLE GROSS MARGIN & CONSUMER OPERATING INCOME FIXED COSTS PROMOTIONS SPEND ALL DATA ONGOING COTY ONL
Slide 12: Very Solid Profit
VERY SOLID PROFIT FY21 Q1 PROFIT Adjusted Operating Income ($M) • Gross margin of 58.6% inline with FY20 average $93 $81 TSA Income • 1Q21 Adj operating income of $81M for $65 8.2% Continuing Ops or $93M for Ongoing Coty, 7.2% inclusive of Wella cost recovery income 4.6% • 24% profit growth YoY desp
Slide 13: $600M Fixed Cost Reductions
$600M FIXED COST REDUCTIONS DELIVERY ON TRACK • In 1Q21, Fixed Costs decreased -17% YoY, accelerating vs. previous quarter • Achieved approx. $80M of savings in Q1 from headcount reduction and significant savings in business services • On track to reduce fixed costs by more than $200M in FY21 and $6
Slide 14: Better Than Expected Free Cash-Flow
BETTER THAN EXPECTED FREE CASH-FLOW FY21 Q1 TOTAL COTY $ Millions • SOLID FREE CASH FLOW • Strong Operating Income and EBITDA Adjusted EBITDA (Total Coty) 307 • Tight management of Capex and One- Working Capital / One-offs (236) off costs • Overdue reduction and working capital Capex (71) under cont
Slide 15: Starting a Virtuous Circle
…STARTING A VIRTUOUS CIRCLE Solid FCF & lower Net Debt Reduced Ability to VIRTUOUS invest behind cost & strong CIRCLE profits top line Improved Sell-Out, NR and C1 15
Slide 16: Wella Proceeds
WELLA PROCEEDS $ Billions Total Consideration ~3.0 • Total Consideration includes funds which will be used for estimated taxes and transaction costs WELLA expected ~2.5 Net Proceeds • $2.0bn to be allocated to the repayment of Term Loans A&B on a pro-rata basis To Repay TLA/TLB ~2.0 • $0.5bn for inv
Slide 17: Substantively Improved Capital Structure
SUBSTANTIVELY IMPROVED CAPITAL STRUCTURE POST WELLA CLOSING Positive Cash Flow $2.5 FY21 Q2 Net Proceeds $1.3 ~$7.9 from Wella Wella 40% Bn 60% financial ~$5.0 Bn stake < $4.0 Bn Financial Net Debt Financial Net Debt Economic Net Debt End of FY21 Q1 Post Closing / End of Post Closing / End of FY21 Q
Slide 18: Credit Rating Agencies
CREDIT RATING AGENCIES CREDIT RATING AFFIRMED BY S&P – CREDIT MEASURES EXPECTED TO FURTHER IMPROVE “The rating affirmation reflects our assessment of S&P Moody’s Coty's liquidity as adequate, and our forecast for improving credit measures and positive free cash CFR B- Caa1 flow due to better sales t
Slide 19: Pro Forma Debt After Wella Divestiture
PRO FORMA DEBT AFTER WELLA DIVESTITURE DEBT MATURITIES ARE BALANCED AND WELL-PACED Post Wella - total debt outstanding: $5.9bn with weighted average life of 3.4 years ($ Billions) • No immediate debt maturities • No current plans to refinance in FY21 as the current interest rate environment are well
Slide 20: Balanced Debt Structure
BALANCED DEBT STRUCTURE PRO-FORMA IMPACT OF WELLA PROCEEDS EXCL. FY21 Q2 CASH-FLOW Outstanding Wella Proceeds Post Wella ($ billions) at Sep 30, 2020 Debt Paydown Divestiture Cash and Cash Equivalents $0.5 $0.5 Short-Term Lines of Credit $0 $0.0 Revolver: $2,750 $1.6 ($0.5) $1.1 • $2.0bn to be alloc
Slide 21: Strong and Improving Liquidity
STRONG AND IMPROVING LIQUIDITY WELL ABOVE MINIMUM LIQUIDITY COVENANT OF $350M ($ Millions) Projected range post Wella Closing ALL DATA ONGOING COTY ONLY 21
Slide 22: Coty Debt Trading Levels
COTY DEBT TRADING LEVELS PROGRESSIVE RECOVERY TLA TLB • Coty’s Term Loan prices have rebounded since March 2020 signalling investor confidence in the company’s outlook TLA TLB ALL DATA ONGOING COTY ONLY 22
Slide 23: Stronger Coty Emerging, Starting a Virtuous Cycle
STRONGER COTY EMERGING… …STARTING A VIRTUOUS CYCLE Solid FCF & lower Net Debt Reduced Ability to VIRTUOUS invest behind cost & strong CIRCLE profits top line Improved Sell-Out, NR and C1 23
Slide 24: 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, the Company’s comprehensive
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