Slide 1: Coty 1Q24 Earnings Call
COTY 1Q24 EARNINGS CALL November 7, 2023 1
Slide 2: Key Messages
KEY MESSAGES MARKET LEADING Q1 GROWTH, FUELED BY CATEGORY STRENGTH & TOP NOTCH INNOVATION ▪ Q1 LFL REVENUE GROWTH OF +18%, AHEAD OF 1H24 UPDATED LFL GUIDANCE OF +10-12%, WITH PARTICULAR STRENGTH IN PRESTIGE, DRIVEN BY EXISTING ICONS AND NEW LAUNCHES, COUPLED WITH STRONG 10% LFL GROWTH IN CONSUMER BE
Slide 3: Significant Sales Growth
SIGNIFICANT SALES GROWTH
Slide 4: 1Q24 LFL Growth of +18% Significantly Ahead of Raised Guidance
1Q24 LFL GROWTH OF +18% SIGNIFICANTLY AHEAD OF RAISED GUIDANCE OF +10-12% IN 1H24 CB +10% LFL PRESTIGE +22% LFL LFL REVENUE +18% LFL IN Q1, AHEAD OF 1H24 GUIDANCE PRESTIGE LFL +22% IN Q1 ➢ VERY STRONG LFL GROWTH PARTICULARLY IN 35% FRAGRANCES AND ACROSS ALL REGIONS, HELPED BY IMPROVED SERVICE LEVELS
Slide 5: Growth Across All Regions
GROWTH ACROSS ALL REGIONS APAC +19% LFL AMERICAS 12% AMERICAS +17% WITH DOUBLE-DIGIT % GROWTH IN +17% LFL EVERY MARKET AND TRAVEL RETAIL Q1 43% EMEA +18% DRIVEN BY DOUBLE-DIGIT % GROWTH REVENUE ACROSS MOST MARKETS AND TRAVEL RETAIL MIX 45% ASIA PACIFIC +19% FUELED BY VERY STRONG GROWTH ACROSS MOST M
Slide 6: Growth Fueled by Both Volumes and Price & Mix
GROWTH FUELED BY BOTH VOLUMES AND PRICE & MIX 1Q24 + LSD % Volume DOUBLE DIGIT % VOLUME GROWTH IN PRESTIGE FUELED BY BOTH CORE BUSINESS AND NEW LAUNCHES +HSD % Price STABLE VOLUMES IN CONSUMER BEAUTY +HSD % Mix & Other 6
Slide 7: Solid Profit Performance
SOLID PROFIT PERFORMANCE
Slide 8: Strong Service Levels & Visibility to Easing Inflation
STRONG SERVICE LEVELS & VISIBILITY TO EASING INFLATION ▪ PRESTIGE AND CONSUMER BEAUTY SERVICE LEVELS EXCEEDED EXPECTATIONS, ~96% IN Q1 ▪ COGS INFLATION OF ~2% OF REVENUES IN 1Q24, IN LINE WITH EXPECTATIONS ➢ NOW EXPECT EASING COGS INFLATION IN 2Q AND 2H24 BENEFITTING FROM STABILIZATION IN COMMODITIE
Slide 9: FY24 & FY25 Savings Targets on Track
FY24 & FY25 SAVINGS TARGETS ON TRACK ▪ Q1 SAVINGS DELIVERED OF ~$35M ▪ REMAIN ON TRACK FOR FY24 SAVINGS OF >$100M ➢ DRIVEN BY MATERIAL COSTS AND STRUCTURAL A&CP SAVINGS ▪ FY25 SAVINGS TARGET OF ~$75M REAFFIRMED ▪ ESTABLISH ENABLERS FOR BUSINESS ACCELERATION ➢ INCREASED SAVINGS AND SALES GROWTH TO FU
Slide 10: Q1 Gross Margin in Line with Expectations
Q1 GROSS MARGIN IN LINE WITH EXPECTATIONS, WITH EASING INFLATION TO AID GROSS MARGINS IN FY24 ADJUSTED GROSS MARGIN GROSS MARGIN 60 BPS LOWER YOY IN Q1, IN LINE WITH EXPECTATIONS, DRIVEN BY: -60 bps YoY ➢ ELEVATED COGS INFLATION ~2% OF REVENUES CARRIED OVER FROM FY23 64.1% 63.5% ➢ RETURN TO FRAGRANC
Slide 11: Maintaining Strong Marketing Investments
MAINTAINING STRONG MARKETING INVESTMENTS A&CP AS PERCENT OF SALES A&CP AT ~25% DURING Q1, +30 BPS YOY, INLINE WITH EXPECTATIONS +30 bps YoY CONTINUING TO SHIFT MEDIA SPEND TOWARD ~25% DIGITAL AND SOCIAL MEDIA ACTIVATIONS, NOW ~24% ACCOUNTING FOR MAJORITY OF SPEND CONTINUE TO EXPECT A&CP TO BE IN THE
Slide 12: Q1 Operating Income and EBITDA Growth
Q1 OPERATING INCOME AND EBITDA GROWTH ADJUSTED PROFIT ▪ 1Q24 ADJ OP INCOME +21% YOY +17%YoY ▪ 1Q24 ADJ OP MARGIN OF 18.4% INCREASED 40 BPS YOY, FUELED BY OPERATING LEVERAGE +21%YoY $360M ON FIXED COSTS $302M $308M ▪ 1Q24 ADJ EBITDA +17% YOY $250M ▪ 1Q24 ADJ EBITDA MARGIN OF 22.0% DECREASED 20 BPS YO
Slide 13: Strong 1Q24 Adjusted EPS Delivery
STRONG 1Q24 ADJUSTED EPS DELIVERY $ Millions Q1 Adjusted EBITDA 360 ▪ Q1 ADJ EPS EXCLUDING EQUITY SWAP OF $0.15, FLAT YOY Depreciation (58) Net Interest (70) ▪ Q1 EPS IMPACTED BY CHANGE IN SWISS Income Tax (68) STATUTORY TAX RATE, RESULTING IN ONE-TIME NON-CASH TAX IMPACT OF Other (87) ~$24M OR 3 CE
Slide 14: 1Q24 Free Cash Flow Inline with Expectations
1Q24 FREE CASH FLOW INLINE WITH EXPECTATIONS Q1 FREE CASH FLOW $ Millions ▪ 1Q24 FCF OF $124M, UP 41% YOY Adjusted EBITDA 360 FROM $88M IN PRIOR YEAR QUARTER ➢ INCREASE DRIVEN BY HIGHER ADJUSTED EBITDA Capex, WC, one-offs (185) ▪ EXPECTING STRONG FY24 FCF GROWTH YOY Interest and tax (51) FREE CASH F
Slide 15: Coty Listed on Euronext Paris on September 28, 2023
COTY LISTED ON EURONEXT PARIS ON SEPTEMBER 28, 2023 Coty shares now trading To facilitate ownership by 27M share buyback planned Targeting further share on NYSE and the European investors, Coty in Q3 via equity swap should count reduction via professional segment of issued 33M shares at price of lar
Slide 16: Leverage on Track for ~3x Exiting CY23
LEVERAGE ON TRACK FOR ~3X EXITING CY23 ➢ LEVERAGE EXITING 1Q24 OF ~3.8X ➢ ISSUED €500M OF 2028 NOTES, EXTENDING DEBT MATURITY PROFILE, WITH FIXED RATE DEBT NOW CLOSE TO 100% ➢ LAUNCHING A TENDER TO RETIRE UP TO $400M OF OUTSTANDING 2026 USD BONDS ➢ IN LIGHT OF COTY’S STRONG FREE CASH FLOW TRAJECTORY
Slide 17: Executing on Strategic Pillars
EXECUTING ON STRATEGIC PILLARS
Slide 18: Continued Momentum in Consumer Beauty
CONTINUED MOMENTUM IN CONSUMER BEAUTY Coty Consumer Beauty Coty sales growth acceleration Mass color cosmetics category Revenues Grew in Mass Fragrances and solid continues to premiumize ~10% LFL, inline with Mass sales growth in Cosmetics and across key markets 18 Beauty market Skin & Bodycare in B
Slide 19: Step-Changing Influencer Engagement in FY24
STEP-CHANGING INFLUENCER ENGAGEMENT IN FY24 Established in-house Strong momentum already in U.K., Newly introduced 9-person TikTok studios across with Rimmel #4 and Max Factor Rimmel Creator Crew to drive 15 countries #6 cosmetics brands in EMV / VIT, brand buzz, engagement 19 which tripled YoY and
Slide 20: Coty's Top Brands Grew in the High 20s % LFL
COTY’S TOP 7 BRANDS GREW IN THE HIGH 20S % LFL YOY Prestige Fragrance Coty Prestige Fragrance Revenue Grew “Fragrance Index” in Market Grew ~25% LFL YoY in Q1 full effect >10% YoY in Q1 20 fueled by existing icons and new launches 20
Slide 21: Burberry Goddess Launch Sets New Records
BURBERRY GODDESS LAUNCH SETS NEW RECORDS Burberry Fragrance #1 Female Fragrance Top 6 Fragrance Line revenues nearly doubled YoY, Launch in Amongst New and Existing Driven By Burberry Goddess & Halo Key Markets Fragrance Lines 21 on Hero and Her icons 21
Slide 22: Steadily Strengthening Prestige Makeup
STEADILY STRENGTHENING PRESTIGE MAKEUP Building full makeup assortment Double digit % growth Strong growth in China under Kylie, with in Burberry makeup sell-out for Burberry and 22 Kylash mascara now #2 franchise Gucci makeup 22
Slide 23: Building Momentum in Skincare
BUILDING MOMENTUM IN SKINCARE: DOUBLE DIGIT % BRAND REVENUE GROWTH IN Q1 AND LAST 6 MONTHS STRONG MOMENTUM IN BOTH CORE SKINCARE AND NEW DOSE OF WISDOM SERUM #1 SKINCARE BRAND IN ADVOCACY IN U.S. UPGRADED MERCHANDISING IN >1,000 DOORS 23 23
Slide 24: Building Momentum in Skincare: Lancaster
BUILDING MOMENTUM IN SKINCARE: LANCASTER DOUBLE DIGIT % BRAND REVENUE GROWTH IN Q1 AND LAST 6 MONTHS ELEVATING LANCASTER’S AWARENESS AND CREDENTIALS IN CHINA BY WINNING TWO PRESTIGIOUS SKINCARE AWARDS 24 24
Slide 25: Building Momentum in Skincare: Orveda
BUILDING MOMENTUM IN SKINCARE: ORVEDA DTC launch of Authentic endorsements by Monthly sales at leading Omnipotent Concentrate, leading celebrities and KOLs, Orveda counters with leading 24% including Pamela Anderson accelerating, >2x YoY 25 concentration of actives during Paris Fashion Week 25
Slide 26: Broad-Based Digital Momentum
BROAD-BASED DIGITAL MOMENTUM Q1 e-commerce revenue LFL Both Prestige and Building Lancaster China e- growth >25% YoY in both Consumer Beauty com presence, with Q1 sales Prestige and Consumer growing market share online on Tmall and Douyin 26 Beauty 1.5-3x higher QoQ 26
Slide 27: Coty's China Prestige Sales Expanding and Outpacing Market
COTY’S CHINA PRESTIGE SALES EXPANDING AND OUTPACING MARKET Coty Prestige sales Sell-out growth in Coty's Prestige business continuing to grow, led by well ahead of the market, up double digits % in mainland China, while 27 mainland China and triple digits % in Hainan Consumer Beauty lower 27
Slide 28: Outstanding Growth in Travel Retail Business
OUTSTANDING GROWTH IN TRAVEL RETAIL BUSINESS Coty’s Travel Retail Double digit % sales growth Chinese cohort travel revenues grew in Europe, Americas recovering but still at ~50% 28 >20% YoY and APAC of pre-COVID levels 28
Slide 29: ESG Updates to Come in Our FY23 Sustainability Report
ESG UPDATES TO COME IN OUR FY23 SUSTAINABILITY REPORT PROGRESS ACROSS OUR THREE PILLARS Three carbon neutral Continuing to deliver on our Strengthened governance factories*: Spain, Monaco, gender equity commitment with dedicated Brazil Sustainability Office and 29 *For Scope 1 and 2 emissions four n
Slide 30: 1H24 Framework
1H24 FRAMEWORK NOW EXPECTING +11-13%, UP FROM PREVIOUS +10-12%, LFL WITH OUTPERFORMANCE BY PRESTIGE REPORTED REVENUE IMPACTS FX BENEFIT ~2% ADJ GROSS MARGIN IMPROVING TRENDS, WITH Q2 FLATTISH YOY ADJ EBITDA MARGIN ADJ EBITDA MARGIN +10-30 BPS, CONSISTENT WITH FY24 $0.32-0.34 INCLUDING ONE-TIME NON-C
Slide 31: Updated FY24 Guidance
UPDATED FY24 GUIDANCE NOW EXPECT FY24 REVENUES OF +9-11%, UP FROM RECENTLY RAISED CORE LFL GUIDANCE OF +8-10% LFL, WITH OUTPERFORMANCE BY PRESTIGE NEUTRAL TO 2% BENEFIT FROM FX PRIMARILY IN 1H24, AND 1-2% REPORTED REVENUE IMPACTS HEADWIND FROM THE DIVESTITURE OF LACOSTE LICENSE PRIMARILY IN 2H24 ADJ
Slide 32: Key Messages
KEY MESSAGES MARKET LEADING Q1 GROWTH, FUELED BY CATEGORY STRENGTH & TOP NOTCH INNOVATION ▪ Q1 LFL REVENUE GROWTH OF +18%, AHEAD OF 1H24 UPDATED LFL GUIDANCE OF +10-12%, WITH PARTICULAR STRENGTH IN PRESTIGE, DRIVEN BY EXISTING ICONS AND NEW LAUNCHES, COUPLED WITH STRONG 10% LFL GROWTH IN CONSUMER BE
Slide 33: Since 1904
SINCE 1904
Slide 34: 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