Coty Reports Q3 Results And Shares Multi-Pronged Plan of Attack to Fuel Momentum in FY26 and Beyond
Q3 Results and Near-Term Outlook Reflect Complex Operating Environment
Strong Focus on Protecting Profitability and Cash Flow
All-In to Win Transformation Program to Boost Agility, Scale and Efficiency
Robust Pipeline of Launches, Distribution Expansion and Adjacent Opportunities for FY26
Updates Fiscal 2025 Outlook
NEW YORK--(BUSINESS WIRE)--May 06, 2025--
Regulatory News:
Coty Inc. $(COTY)$ (Paris: COTY) ("Coty" or "the Company") today announced its results for the first nine months and third quarter of fiscal year 2025, ended March 31, 2025. While an uncertain market backdrop and FX headwinds led to declining Q3 sales, Coty has built robust plans to fuel operational and financial improvement in FY26 and beyond.
"Across economic cycles, beauty has remained resilient for decades. Even in this challenging landscape, we have significantly strengthened our strategic, operational, and financial fundamentals, driving margin expansion, stronger cash flow generation, and substantial deleveraging over the past four years," said Sue Nabi, Coty's CEO. "While we are not satisfied with our net revenue performance, Coty's strong fundamentals, coupled with our multi-pronged attack-plan for accelerating innovation, distribution and efficiencies, gives us confidence for the years ahead.
2025 remains a transition year for Coty. In Prestige, we are absorbing the triple-headwind of a slowing fragrance market, lapping a blockbuster innovation year, and depleting elevated retailer inventory, all of which was particularly acute in the U.S. We are laser focused on entering FY26 with alignment between sell-in and sell-out, to create a healthy baseline for growth. In Consumer Beauty, we have begun recalibrating our business in response to diverging market trends between cosmetics on the one hand and fragrances on the other hand, taking into account our relative strengths. Our goal is to strengthen our cosmetics business while making it more profitable, while in parallel over-driving our mass fragrances business where we have leadership and a strong margin profile.
Importantly, we are in control of our destiny and are already making the changes needed to address many of these challenges, with new leadership in the U.S. as the market has slowed in recent months, an updated organizational structure to drive faster changes and improved execution, and a robust cost savings program to protect our P&L and increase our firepower to accelerate our business."
RESULTS AT A GLANCE
Nine Months Ended March 31,
Three Months Ended March 31, 2025 2025
--------------------------------- ------------------------------
(in millions,
except per
share data) Change YoY Change YoY
---------------------- -------------------
Reported Reported
COTY, INC. Basis $(LFL)$(a) Basis (LFL)
-------------- --------- ---------- ---------- --------- ---------- -------
Net revenues $1,299.1 (6%) (3%) $4,640.5 (2%) -- %
Operating
income -
reported (280.4) <(100%) 225.6 (56)%
Net income
attributable
to common
shareholders -
reported ** (409.0) <(100%) (309.0) <(100%)
Operating
income -
adjusted* 147.9 3% 785.2 4%
Net income
attributable
to common
shareholders -
adjusted* ** 6.8 (84%) 233.7 (33)%
EBITDA -
adjusted 204.2 2% 955.0 3%
EPS
attributable
to common
shareholders
(diluted) -
reported $ (0.47) N/A $ (0.36) <(100%)
EPS
attributable
to common
shareholders
(diluted) -
adjusted* $ 0.01 (80%) $ 0.27 (31%)
--------------- ------- ----- ---------- ------- ----- -------
(a) LFL results for the three and nine months ended March 31, 2025 include 0% help
and 1% help, respectively from Argentina resulting from significant price
increases due to hyperinflation.
* These measures, as well as "free cash flow," "adjusted earnings before interest,
taxes, depreciation and amortization (adjusted EBITDA)," "financial net debt," and
"economic net debt" are Non-GAAP Financial Measures. Refer to "Non-GAAP Financial
Measures" for discussion of these measures. Reconciliations from reported to
adjusted results can be found at the end of this release.
** Net income for Coty Inc. is net of the Convertible Series B Preferred Stock
dividends.
Nine Months Ended March 31, 2025, Summary Results
For the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024:
-- Net revenue of $4,640.5 million decreased 2% year-over-year and included
a 2% negative impact from FX. LFL net revenue were flat year-on-year.
-- Prestige net revenue of $3,059.6 million, or 66% of the Company's total
sales, were slightly positive year-over-year on a reported basis and grew
2% on a LFL basis.
-- Consumer Beauty net revenue of $1,580.9 million, or 34% of the Company's
total sales, declined 7% on a reported basis and declined 3% on a LFL
basis.
-- Reported gross margin of 65.5% increased 110 basis points year-over-year,
while adjusted gross margin of 65.6% increased by 120 basis points.
-- Reported operating income of $225.6 million declined 56% year-over-year,
with a reported operating margin of 4.9%.
-- Adjusted operating income of $785.2 million increased by 4%
year-over-year, while the adjusted operating margin of 16.9% reflected
100 basis points of margin expansion.
-- Reported net loss of $309.0 million decreased from net income of $176.4
million in the prior year.
-- Reported EPS of $(0.36) declined from $0.20 in the prior year, and
includes a negative impact from the equity swap mark-to-market of $0.21.
-- Adjusted EPS of $0.27 decreased from adjusted EPS of $0.39 in the prior
year, and includes a negative impact from the equity swap mark-to-market
of $0.21.
-- Adjusted EBITDA totaled $955.0 million, up 3% year-over-year, resulting
in an adjusted EBITDA margin of 20.6%, which reflected a strong 110 basis
points of margin expansion.
-- Cash from operating activities was $409.4 million and free cash flow was
$242.7 million.
Three Months Ended March 31, 2025, Summary Results
For the three months ended March 31, 2025, compared to the three months ended March 31, 2024:
-- Net revenue of $1,299.1 million declined 6% on a reported basis and
included a 3% headwind from FX. Coty's Q3 net revenue declined 3% on a
LFL basis.
-- Prestige net revenue of $829.4 million or 64% of Coty sales decreased 4%
on a reported basis and declined 2.5% LFL.
-- Consumer Beauty net revenue of $469.7 million, or 36% of Coty sales,
decreased by 9% on a reported basis, with LFL sales declining 5%.
-- Reported gross margin of 64.1% decreased 70 basis points year-over-year,
while adjusted gross margin of 64.3% decreased by 50 basis points.
-- Reported operating loss of $280.4 million declined from reported
operating income of $77.8 million in the prior year, resulting in a
reported loss margin of 21.6%.
-- Adjusted operating income of $147.9 million grew 3% year-over-year,
resulting in an adjusted operating margin of 11.4%, which expanded by 100
basis points year-over-year.
-- Reported net loss of $409.0 million decreased from net income of $0.5
million in the prior year.
-- Reported EPS of $(0.47) decreased from $0.00 in the prior year, and
included a negative impact from the equity swap mark-to-market of $0.07.
-- Adjusted EPS of $0.01 decreased from adjusted EPS of $0.05 in the prior
year, and includes a negative impact from the equity swap mark-to-market
of $0.07.
-- Adjusted EBITDA of $204.2 million increased 2% year-over-year, driving an
adjusted EBITDA margin of 15.7%, expanding by 130 basis points
year-over-year. Coty's adjusted EBITDA growth in both periods was boosted
by short term savings.
-- Cash outflow from operating activities was $122.5 million and free cash
outflow totaled $168.4 million.
The Q3 and fiscal year-to-date reported operating results included a $212.8 million asset impairment charge primarily in Consumer Beauty's color cosmetics business, reflecting the more challenged category trends in the U.S. and Europe.
Total debt at the end of the third quarter totaled $3,858.8 million, while financial net debt was $3,615.3 million. This drove the total debt to net loss ratio of 10.2x and the financial leverage ratio (net debt to adjusted EBITDA) to 3.2x, a reduction of 0.2x versus a year ago. Coty's retained 25.8% Wella stake was valued at $1,000.0 million at quarter-end, supporting economic net debt of $2,615.3 million.
Continuing on the operating results, Sue Nabi, Coty's CEO, said:
"We are much more strongly positioned to navigate the current complex dynamics including tariffs and broader macroeconomic uncertainty, supported by the strategic, operational and financial fundamentals which we've significantly strengthened over the last four years, even in the context of the highly constrained P&L. These improved fundamentals coupled with our multi-pronged plan of attack for accelerating innovation, distribution and efficiencies, give us measured confidence that business trends should gradually improve over the course of FY26.
First, beauty has always been a resilient category across economic cycles, precisely because of its aspirational nature and its affordability for consumers looking for a personal indulgence during more difficult times. We expect this economic cycle will be no different, with fragrances - both prestige and mass - now positioned to be one of the better performing beauty categories as the "fragrance index" remains at play. In fact, even as the U.S. beauty market is now in a moderate decline, the fragrance category continues to grow solidly across price points.
Second, in our Prestige business, we have robust plans to accelerate growth in FY26 and beyond, including a blockbuster launch in 1H FY26, a blockbuster launch in 2H FY26, the extension of one of our major brands into the U.S., and plans to capture many scenting opportunities, including ultra premium fragrances, body mists and pen sprays.
Third, in Consumer Beauty, we have a strong program here as well for FY26 and beyond, including new innovations under key mass fragrance brands, building on the exceptionally strong adidas Vibes collection launched this year, launching new fragrance lines co-developed with key retailers, expanding into body mists and other adjacencies, introducing several new technologies under our cosmetics brands, all while over driving the winning channels such as e-com and TikTok shop.
Fourth, the newly announced next phase of our All in To Win program will boost our agility and scale, while unlocking an incremental $370M in fixed cost and productivity savings in FY26 & FY27. These savings coupled with the pricing power of our brands should be able to offset the impact from the announced tariffs. In fact, Coty remains relatively better positioned to weather the tariff headwinds given our geographically diverse sales base, manufacturing, and sourcing.
And finally, with our brand desirability and equity at the highest level in years, a pipeline of initiatives which is the strongest in 5 years, and our margins, profit, debt and leverage all significantly improved versus four years ago, we have the levers to protect our profitability and cash flow in a variety of macroeconomic scenarios. Coty remains well positioned to succeed and outperform in the coming years."
Strategic Updates:
-- The prestige fragrance category continued to grow, but moderated to a
mid-single-digit percentage pace in Q3 on a comparable basis.
-- The global mass beauty category declined by a low-single-digit percentage
in Q3, well-below the nearly 10% growth in last year's third quarter,
which benefited from inflation-driven pricing.
-- Coty saw continued above market e-commerce sell-out in both Prestige and
Consumer Beauty in Q3, which accounts for approximately 20% of the
Company's sales.
-- Coty continued to make progress on its sustainability agenda. In the
quarter, Coty announced improvements in its Environmental, Social, and
Governance $(ESG)$ ratings from MSCI to A from BB, and from Sustainalytics
from 23.9 (medium risk) to 18.1 (low risk).
-- Coty announced the launch of the next phase of its transformative "All-in
to Win" program, establishing a simplified and scaled operating model,
reducing complexity across functions and markets, and sharpening its
focus on top innovation and market priorities. The program is expected to
generate annual fixed cost savings of approximately $130 million before
taxes over two years. The combination of the fixed cost savings program
and ongoing productivity savings of approximately $120 million annually
is expected to deliver close to $500 million of savings between FY25 and
FY27.
Pipeline for FY26 and Beyond:
Prestige Plans
-- Blockbuster launches in 1H and 2H FY26
-- Extension of one of our major brands into the U.S.
-- New brand launch on Amazon in the fall
-- More expansions into scenting opportunities, ultra-premium fragrances,
body mists and pen sprays
Consumer Beauty Plans
-- New innovations under key mass fragrance brands, building on the
exceptionally strong adidas Vibes collection launched this year
-- Launching new fragrance lines co-developed with key retailers
-- Expansions into body mists and other adjacencies
-- Introducing new cosmetics technologies, particularly in mascara and nail,
with amplified consumer benefits
-- Driving activity through winning channels such as e-com and TikTok shop
Outlook
As part of FY25 being a transition year, both in Q3 and even more so in Q4, Coty is continuing to clean the baseline including assuring that retailer inventories are rightsized relative to the current demand trends, that the Company is rebalancing our resources within Consumer Beauty to overdrive our profit engines while scaling its cosmetics innovations, and that the business remains disciplined in its promotional activity to protect the health of its brands. All of these efforts are targeted to prepare for a gradual improvement in sales trends over the course of FY26, underpinned by multiple levers, including several major launches in both divisions, geographic and channel expansion, and incrementally higher pricing contribution. And at the same time, Coty is actively intervening in key areas of the business to set the Company on stronger footing into FY26 and beyond. This includes stepped up fixed cost savings and productivity savings to protect the P&L and fuel its brands, and making concrete changes in its organizational set-up and leadership in key markets like the U.S. to improve execution and sell-out trends.
The continuation of current category trends, coupled with Coty's active interventions to clean up the baseline of the business to prepare for healthier FY26 business improvement, are driving Coty's expectation for a high single digit LFL decline in sales in Q4. This translates to a 2% decline in FY25 LFL sales. On the reported revenue side, Coty sees a mid single digit decline in reported sales, which embeds a roughly 3% headwind from FX. The Company continues to expect continued expansion in FY25 gross margins to approximately 65%, consistent with its prior outlook. Coty remains on track to deliver EBITDA margin expansion at the lower end of its guidance range, with approximately 70 basis points of expansion to roughly 18.5%. This translates to roughly flattish EBITDA in FY25, which includes a low single digit headwind from FX. The benefit from both lower interest expense and a lower tax rate is supporting relatively stronger EPS delivery, with FY25 EPS expected to be $0.49-0.50, near the low end of its prior guidance range.
On the cash flow side, Coty now expects FY25 free cash flow of approximately $300M. Finally, Coty expects leverage at the end of FY25 to be relatively inline with its leverage at the end of Q3.
Financial Results*
Refer to "Non-GAAP Financial Measures" for discussion of the non-GAAP financial measures used in this release; reconciliations from reported to adjusted results can be found at the end of this release.
Revenues:
-- Year-to-date reported net revenue of $4,640.5 million decreased 2%
year-over-year driven by a 7% decrease in Consumer Beauty reported net
revenue and a 2% negative impact from FX. Prestige reported net revenue
was flat year-over-year. On a LFL basis, net revenue was slightly
positive driven by a 2% increase in Prestige LFL net revenue mostly
offset by a 3% decrease in Consumer Beauty net revenue.
-- 3Q25 reported net revenue of $1,299.1 million decreased 6% year-over-year,
which reflected a 4% decrease in Prestige reported net revenue as well as
an 9% decrease in Consumer Beauty reported net revenue and a 3% headwind
from FX. On a LFL basis, net revenue declined 3% reflecting a 3% decrease
in Prestige and a 5% decline in Consumer Beauty.
Gross Margin:
-- Year-to-date reported gross margin of 65.5% increased 110 basis points
year-over-year. The improvement in reported gross margin was mainly
driven by supply chain savings, excess & obsolescence reduction, and a
net benefit from pricing. Year-to-date adjusted gross margin of 65.6%
increased by 120 basis points from 64.4% in the prior year.
-- 3Q25 reported gross margin of 64.1% decreased 70 basis points
year-over-year reflecting a normalization off the elevated gross margin
levels in the prior year quarter. 3Q25 adjusted gross margin of 64.3%
decreased by 50 basis points from 64.8% in the prior year.
Reported Profit:
-- Year-to-date reported operating income of $225.6 million declined from
$512.0 million in the prior year. The decline in reported operating
income included a $212.8 million asset impairment charge primarily in
Consumer Beauty's color cosmetics business reflecting the more challenged
category trends in the U.S. and Europe. Year-to-date reported operating
margin was 4.9%, reflecting 590 basis points lower year-over-year.
-- 3Q25 reported operating loss of $280.4 million declined from reported
operating income of $77.8 million in the prior year driven by a $212.8
million asset impairment charge primarily in Consumer Beauty's color
cosmetics business, higher restructuring costs of $75.7 million and a
$71.1 million loss on the divestiture of SKKN. As a result, 3Q25 reported
loss margin was 21.6%.
-- Year-to-date reported net loss of $309.0 million decreased from net
income of $176.4 million in the prior year. Reported net income included
an $189 million negative impact from the mark-to-market on the equity
swap, compared with an $16 million negative impact in the prior year.
Year-to-date reported net loss margin was 6.7%.
-- 3Q25 reported net loss of $409.0 million decreased from net income of
$0.5 million in the prior year. Reported net income included a $60
million negative impact from the mark-to-market on the equity swap,
compared with a $13 million impact from the mark-to-market on the equity
swap in the prior year quarter. 3Q25 reported net loss margin was 31.5%.
-- Year-to-date reported EPS of $(0.36) declined from $0.20 in the prior
year. Year-to-date reported EPS included a negative impact from the
equity swap mark-to-market of $0.21, compared with a $0.02 negative
impact from the equity swap mark-to-market in the prior year.
-- 3Q25 reported EPS of $(0.47) decreased from $0.00 in the prior year. 3Q25
reported EPS included a negative impact from the equity swap
mark-to-market of $0.07, compared with a $0.06 impact from equity swap
mark-to-market in the prior year quarter.
Adjusted Profit:
-- Year-to-date adjusted operating income of $785.2 million increased by 4%
from $755.4 million in the prior year. Year-to-date adjusted operating
margin of 16.9% was 100 basis points higher year-over-year compared with
15.9% in the prior year. The improvement in adjusted operating margin was
driven by strong year-to-date gross margin expansion.
-- 3Q25 adjusted operating income of $147.9 million increased 3% from $143.9
million in the prior year. 3Q25 adjusted operating margin of 11.4% was
100 basis points higher year-over-year compared with 10.4%.
-- Year-to-date adjusted EBITDA of $955.0 million increased 3% from $926.6
million in the prior year. Adjusted EBITDA margin of 20.6% increased by
110 basis points supported by the very strong year-to-date gross margin
expansion.
-- 3Q25 adjusted EBITDA of $204.2 million increased 2% from $199.9 million
in the prior year. Adjusted EBITDA margin of 15.7% increased by 130 basis
points, boosted by short term savings.
-- Year-to-date adjusted net income of $233.7 million decreased from $347.0
million in the prior year, reflecting a $189 million negative impact from
the equity swap mark-to-market, compared with an $16 million negative
impact in the prior year. Year-to-date adjusted net income margin of 5.0%
decreased from 7.3% in the prior year.
-- 3Q25 adjusted net income of $6.8 million decreased from adjusted net
income of $43.8 million in the prior year, reflecting a $60 million
impact from the mark-to-market on the equity swap in the prior year. 3Q25
adjusted net income margin of 0.5% decreased from 3.2% in the prior year.
-- Year-to-date adjusted EPS of $0.27 decreased from adjusted EPS of $0.39
in the prior year. Year-to-date adjusted EPS was lower year-over-year
primarily due to a negative impact from the equity swap mark-to-market of
$0.21, compared with a $0.02 negative impact from the equity swap
mark-to-market in the prior year.
-- 3Q25 adjusted EPS of $0.01 decreased from adjusted EPS of $0.05 in the
prior year. 3Q25 adjusted EPS was lower year-over-year due to a negative
impact from the equity swap mark-to-market of $0.07, compared with a
$0.06 negative impact from equity swap mark-to-market in the prior year
quarter.
Operating Cash Flow:
-- Year-to-date cash from operations was $409.4 million decreased from
$438.1 million during the same period in the prior year due to lower cash
profit.
-- 3Q25 cash from operations outflow totaled $122.5 million improving from
outflow of $170.0 million during the same period in the prior year.
-- Year-to-date free cash flow of $242.7 million decreased from free cash
flow of $252.7 million in the prior year driven by a $28.7 million
decrease in operating cash flow and a $18.7 million decrease in capex.
-- 3Q25 free cash outflow of $168.4 million improved from free cash outflow
of $234.3 million in the prior year driven by a $47.5 million increase in
operating cash flow and a $18.4 million decrease in capex.
Financial Net Debt:
-- Total debt of $3,858.8 million on March 31, 2025 increased from $3,459.0
million on December 31, 2024. This resulted in a total debt to net income
ratio of 10.2x.
-- Financial net debt of $3,615.3 million on March 31, 2025 decreased from
$3,209.4 million on December 31, 2024. This resulted in financial
leverage of 3.2x, up from 2.9x at the end of the prior quarter.
-- The value of Coty's retained 25.8% Wella stake totaled $1,000.0 million
at quarter-end, supporting Coty's economic net debt of $2,615.3 million.
Third Quarter Business Review by Segment*
Prestige
In the first nine months of FY25, Prestige net revenue of $3,059.6 million, or 66% of the Company's total sales, were slightly positive year-over-year on a reported basis as growth in prestige fragrances was mostly offset by lower year-over-year net revenue in the prestige makeup and skincare categories. This reported net revenue growth also included a 1% negative impact from FX. Prestige net revenue grew 2% on a LFL basis fiscal year-to-date. In 3Q25, Prestige net revenue of $829.4 million or 64% of Coty sales decreased 4% on a reported basis and included a 1% headwind from FX. On a LFL basis, net revenue declined 2.5% in the quarter. 3Q25 reported net revenue was impacted by declines in prestige makeup sales, a moderating prestige fragrance category and elevated prior year comparisons related to major fragrance launches.
In the first nine months of FY25, the Prestige segment generated reported operating income of $542.5 million, up from $531.0 million in the prior year. Fiscal year-to-date reported operating margin was 17.7%, up 30 basis points year-over-year. Year-to-date adjusted operating income was $698.5 million, up from $646.6 million in the prior year, with an adjusted operating margin of 22.8%, up 160 basis points year-over-year. Adjusted EBITDA rose to $781.7 million from $726.8 million in the prior year, with a margin of 25.5%, which expanded by 180 basis points year-over-year. In 3Q25, the Prestige segment generated reported operating income of $78.7 million, compared to $108.7 million in the prior year, resulting in reported operating margin of 9.5%, which declined by 300 basis points year-over-year. Adjusted operating income was $158.8 million in 3Q25, up from $147.3 million in the prior year, with an adjusted operating margin of 19.1%, which increased 210 basis points year-over-year. Adjusted EBITDA increased to $185.9 million from $173.0 million in the prior year quarter resulting in an adjusted EBITDA margin of 22.4%, up 250 basis points year-over-year.
Consumer Beauty
In the first nine months of FY25, Consumer Beauty net revenue of $1,580.9 million, or 34% of the Company's total sales, declined 7% on a reported basis, which included a 4% negative impact from FX. During this period, Consumer Beauty reported net revenue declined in body care and color cosmetics, which was partially offset by growth in mass fragrance and mass skincare. Consumer Beauty year-to-date net revenue declined 3% on a LFL basis. In 3Q25, Consumer Beauty net revenue of $469.7 million, or 36% of Coty sales, decreased by 9% on a reported basis. The quarterly decline in reported net revenue was driven by lower revenue in color cosmetics and body care coupled with a negative impact from FX of 4%. These declines were partially offset by growth in mass fragrance and mass skin care. In both periods, reported and LFL sales were impacted by the continued weakening in the mass color cosmetics market globally, particularly in the U.S.
In the first nine months of FY25, the Consumer Beauty segment posted a reported operating loss of $111.4 million, compared to reported operating income of $79.0 million in the prior year. The year-to-date reported loss margin was 7.0%. During the same period, adjusted operating income was $86.7 million, compared with $108.8 million in the prior year, with an adjusted operating margin of 5.5%, which decreased 90 basis points year-over-year. Adjusted EBITDA of $173.3 million declined from $199.8 million in the prior year, with a margin of 11.0%, down 80 basis points year-over-year. In 3Q25, the Consumer Beauty segment generated reported operating loss of $189.5 million, compared with a loss of $13.3 million in the prior year, with a reported loss margin of 40.3%. 3Q25 adjusted operating loss was $10.9 million compared to a loss of $3.4 million in the prior year, with an adjusted loss margin of 2.3%, deteriorating further from an adjusted operating loss margin of 0.7% in the prior year quarter. 3Q25 adjusted EBITDA of $18.3 million decreased slightly from $26.9 million in the prior year, resulting in an adjusted EBITDA margin of 3.9%, down 130 basis points year-over-year.
Third Quarter Fiscal 2025 Business Review by Region*
Americas
-- In the first nine months of FY25, Americas net revenue of $1,861.8
million, or 40% of Coty sales, decreased 6% on a reported basis, which
included a 5% negative impact from FX. On a LFL basis, Americas net
revenue decreased by 1% and included a 2% benefit from Argentina, which
experienced hyperinflation. In 3Q25, Americas net revenue of $529.7
million decreased 10% on a reported basis, including a 4% negative impact
from FX, with LFL declines of 6%. This reported and LFL sales decline
reflected lower Prestige net revenues in the U.S. in large part due to
elevated innovation comparisons in the prior year and a higher level of
retailer stock entering the year, lower Consumer Beauty net revenue in
the U.S. impacted by the market deterioration in the quarter, and lower
body care net revenue in Brazil.
EMEA
-- In the first nine months of FY25, EMEA net revenue of $2,237.6 million,
or 48% of Coty sales, increased 2% on a reported basis. On a LFL basis,
EMEA net revenue increased by 3% in the first nine months. The
year-to-date reported and LFL net revenue growth was supported by
broad-based growth across most European markets, coupled with strong
growth in Africa. In 3Q25, EMEA net revenue of $610.0 million decreased
3% on a reported basis reflecting by a 2% negative impact from FX coupled
with by lower reported net revenue in Consumer Beauty and Prestige. On a
LFL basis, EMEA net revenue decreased by 1% in the third quarter as
growth in the Prestige segment was more than offset by lower net revenue
in the Consumer Beauty segment.
Asia Pacific
-- In the first nine months of FY25, Asia Pacific net revenue of $541.1
million, or 12% of Coty sales, decreased 7% on both a reported basis and
LFL basis driven by lower Prestige revenues, partially offset by growth
in Consumer Beauty net revenues. Coty's lower year-over-year net revenues
in mainland China and the regional Travel Retail channel continued to be
impacted by the challenging market dynamics, which were partially offset
by double-digit percentage growth in Asia excluding China. In 3Q25, Asia
Pacific net revenue of $159.4 million, decreased 5% on a reported basis
largely driven by declines in Prestige net revenue in the Chinese
mainland and the Asia Travel Retail channel. On a LFL basis, Asia Pacific
net revenue decreased 4% in the third quarter.
Noteworthy Company Developments
Other noteworthy company developments include:
-- On March 21, 2025, Coty announced the conclusion of its partnership with
Kim Kardashian and the SKKN by Kim ("SKKN") brand, with the closing of
the sale of its 20% stake in the brand to SKIMS.
-- On April 16, 2025, Coty announced improvements in its Environmental,
Social, and Governance $(ESG.SI)$ ratings from both MSCI and Sustainalytics.
The Company's MSCI ESG Rating has been upgraded to A from BB. The
Company's Sustainalytics ESG rating is now at low risk and 3rd among
Household Product companies.
-- On April 24, 2025, Coty announced the launch the next phase of its
transformative "All-in to Win" program, establishing a simplified and
scaled operating model, reducing complexity across functions and markets,
and sharpening its focus on top innovation and market priorities. The
program is expected to generate annual fixed cost savings of
approximately $130 million before taxes over two years. The one-time cash
costs associated with the program are expected to be approximately $80
million, roughly evenly split between FY26 and FY27. In tandem, Coty will
continue its ongoing productivity program, with FY25 savings on track
with its original target of approximately $120M across the P&L, and is
committed to the same targeted productivity savings for FY26 and beyond,
primarily in supply chain and procurement. The combination of the fixed
cost savings program and ongoing productivity savings is expected to
deliver close to $500 million of savings between FY25 and FY27.
Conference Call
Coty Inc. will issue pre-recorded remarks on May 6, 2025 at approximately 4:45 PM $(ET)$ / 10:45 PM $(CET)$ and will hold a live question and answer session on May 7, 2025 beginning at 8:00 AM (ET) / 2:00 PM (CET). The pre-recorded remarks and live question and answer session will be available at http://investors.coty.com. The dial-in number for the live question and answer session is 1-800-267-6316 in the U.S. or 1-203-518-9783 internationally (conference passcode number: COTY3Q25).
About Coty Inc.
Founded in Paris in 1904, Coty is one of the world's largest beauty companies with a portfolio of iconic brands across fragrance, color cosmetics, and skin and body care. Coty serves consumers around the world, selling prestige and mass market products in over 120 countries and territories. Coty and our brands empower people to express themselves freely, creating their own visions of beauty; and we are committed to protecting the planet. Learn more at coty.com or on LinkedIn and Instagram.
Forward Looking Statements
Certain statements in this Earnings Release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 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 extent and timing of revenue, expense and profit trends and changes in operating cash flows and cash flows from operating activities and investing activities), the Company's future operations and strategy (including the expected implementation and related impact of its strategic priorities), ongoing and future cost efficiency, optimization and restructuring initiatives and programs, expectations of the impact of inflationary pressures and the timing, magnitude and impact of pricing actions to offset inflationary costs, strategic transactions (including their expected timing and impact), expectations and/or plans with respect to joint ventures (including Wella and the timing and size of any related divestiture, distribution or return of capital), the Company's capital allocation strategy and payment of dividends (including suspension of dividend payments and the duration thereof and any plans to resume cash dividends on common stock or to continue to pay dividends in cash on preferred stock and expectations for stock repurchases), investments, licenses and portfolio changes, product launches, relaunches or rebranding (including the expected timing or impact thereof), plans for growth in growth engine markets, channels and other white spaces, synergies, savings, performance, cost, timing and integration of acquisitions, future cash flows, liquidity and borrowing capacity (including any refinancing or deleveraging activities), timing and size of cash outflows and debt deleveraging, the timing and magnitude of any "true-up" payments in connection with the Company's forward repurchase contracts, the timing and extent of any future impairments, and synergies, savings, impact, cost, timing and implementation of the Company's ongoing strategic transformation agenda (including operational and organizational structure changes, operational execution and simplification initiatives, fixed cost reductions, continued process improvements and supply chain changes), the impact, cost, timing and implementation of e-commerce and digital initiatives, the expected impact, cost, timing and implementation of sustainability initiatives (including progress, plans, goals and our ability to achieve sustainability targets), the expected impact of geopolitical risks including the ongoing war in Ukraine and/or the armed conflict in the Middle East on its business operations, sales outlook and strategy, expectations regarding the impact of tariffs (including magnitude, scope and timing) and plans to manage such impact, expectations regarding economic recovery in Asia, consumer purchasing trends and the related impact on the Company's plans for growth in China, the expected impact of global supply chain challenges and/or inflationary pressures (including as a result of the war in Ukraine and/or armed conflict in the Middle East, or due to a change in tariffs or trade policy impacting raw materials) and expectations regarding future service levels and inventory levels, and the priorities of senior management. These forward-looking statements are generally identified by words or phrases, such as "anticipate", "are going to", "estimate", "plan", "project", "expect", "believe", "intend", "foresee", "forecast", "will", "may", "should", "outlook", "continue", "temporary", "target", "aim", "potential", "goal" and similar words or phrases. These statements are based on certain assumptions and estimates that we consider reasonable, but are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual events or results (including our financial condition, results of operations, cash flows and prospects) to differ materially from such statements, including risks and uncertainties relating to:
-- the Company's ability to successfully implement its multi-year strategic
transformation agenda and compete effectively in the beauty industry,
achieve the benefits contemplated by its strategic initiatives (including
revenue growth, cost control, gross margin growth and debt deleveraging)
and successfully implement its strategic priorities (including
stabilizing its consumer beauty brands through leading innovation and
improved execution, accelerating its prestige fragrance brands and
ongoing expansion into prestige cosmetics, building a comprehensive
skincare portfolio, enhancing its organizational growth capabilities
including digital, direct-to-consumer ("DTC") and research and
development, expanding its presence in growth channels, in China and
other growth engine markets, and establishing Coty as an industry leader
in sustainability) in each case within the expected time frame or at all;
-- the Company's ability to anticipate, gauge and respond to market trends
and consumer preferences, which may change rapidly, and the market
acceptance of new products, including new products in the Company's
skincare and prestige cosmetics portfolios, any relaunched or rebranded
products and the anticipated costs and discounting associated with such
relaunches and rebrands, and consumer receptiveness to the Company's
current and future marketing philosophy and consumer engagement
activities (including digital marketing and media) and the Company's
ability to effectively manage its production and inventory levels in
response to demand;
-- use of estimates and assumptions in preparing the Company's financial
statements, including with regard to revenue recognition, income taxes
(including the expected timing and amount of the release of any tax
valuation allowance), the assessment of goodwill, other intangible and
long-lived assets for impairments, the market value of inventory, and the
fair value of the equity investment;
-- the impact of any future impairments;
-- managerial, transformational, operational, regulatory, legal and
financial risks, including diversion of management attention to and
management of cash flows, expenses and costs associated with the
Company's transformation agenda, its global business strategies, the
integration and management of the Company's strategic partnerships, and
future strategic initiatives, and, in particular, the Company's ability
to manage and execute many initiatives simultaneously including any
resulting complexity, employee attrition or diversion of resources;
-- the timing, costs and impacts of divestitures and the amount and use of
proceeds from any such transactions;
-- future divestitures and the impact thereof on, and future acquisitions,
new licenses and joint ventures and the integration thereof with, our
business, operations, systems, financial data and culture and the ability
to realize synergies, manage supply chain challenges and other business
disruptions, reduce costs (including through the Company's cash
efficiency initiatives), avoid liabilities and realize potential
efficiencies and benefits (including through our restructuring
initiatives) at the levels and at the costs and within the time frames
contemplated or at all;
-- increased competition, consolidation among retailers, shifts in
consumers' preferred distribution and marketing channels (including to
digital and prestige channels), distribution and shelf-space resets or
reductions, compression of go-to-market cycles, changes in product and
marketing requirements by retailers, reductions in retailer inventory
levels and order lead-times or changes in purchasing patterns, impact
from COVID-19 or similar public health events on retail revenues, and
other changes in the retail, e-commerce and wholesale environment in
which the Company does business and sells its products and the Company's
ability to respond to such changes (including its ability to expand its
digital, direct-to-consumer and e-commerce capabilities within
contemplated timeframes or at all);
-- the Company and its joint ventures', business partners' and licensors'
abilities to obtain, maintain and protect the intellectual property used
in its and their respective businesses, protect its and their respective
reputations (including those of its and their executives or influencers),
public goodwill, and defend claims by third parties for infringement of
intellectual property rights;
-- any change to the Company's capital allocation and/or cash management
priorities, including any change in the Company's dividend policy and any
change in our stock repurchase plans;
-- any unanticipated problems, liabilities or integration or other
challenges associated with a past or future acquired business, joint
ventures or strategic partnerships which could result in increased risk
or new, unanticipated or unknown liabilities, including with respect to
environmental, competition and other regulatory, compliance or legal
matters, and specifically in connection with the Company's strategic
partnerships, risks related to the entry into a new distribution channel,
the potential for channel conflict, risks of retaining customers and key
employees, difficulties of integration (or the risks associated with
limiting integration) and management of the partnerships, the Company's
relationships with its strategic partners, the Company's ability to
protect trademarks and brand names, litigation or investigations by
governmental authorities, and changes in law, regulations and policies
that affect the business or products of the Company's strategic
partnerships, including risk that direct selling laws and regulations may
be modified, interpreted or enforced in a manner that results in a
negative impact to the' business model, revenue, sales force or business
of any of the Company's strategic partnerships;
-- the Company's international operations and joint ventures, including
enforceability and effectiveness of its joint venture agreements and
reputational, compliance, regulatory, economic and foreign political
risks, including difficulties and costs associated with maintaining
compliance with a broad variety of complex local and international
regulations;
-- the Company's dependence on certain licenses (especially in the fragrance
category) and the Company's ability to renew expiring licenses on
favorable terms or at all;
-- the Company's dependence on entities performing outsourced functions,
including outsourcing of distribution functions, and third-party
manufacturers, logistics and supply chain suppliers, and other suppliers,
including third-party software providers, web-hosting and e-commerce
providers;
-- administrative, product development and other difficulties in meeting the
expected timing of market expansions, product launches, re-launches and
marketing efforts, including in connection with new products in the
Company's skincare and prestige cosmetics portfolios;
-- changes in the demand for the Company's products due to declining or
depressed global or regional economic conditions, and declines in
consumer confidence or spending, whether related to the economy (such as
austerity measures, tax increases, high fuel costs, or higher
unemployment), wars and other hostilities and armed conflicts, natural or
other disasters, weather, pandemics, security concerns, terrorist attacks
or other factors;
-- global political and/or economic uncertainties, disruptions or major
regulatory or policy changes, and/or the enforcement thereof that affect
the Company's business, financial performance, operations or products,
including the impact of the war in Ukraine and any escalation or
expansion thereof, armed conflict in the Middle East, the current
administration in the U.S. and related changes to regulatory and trade
policies, changes in the U.S. tax code and/or other jurisdictions where
the Company operates (including recent and pending implementation of the
global minimum corporate tax (part of the "Pillar Two Model Rules") that
may impact the Company's tax liability in the European Union), and recent
changes and future changes in tariffs, retaliatory or trade protection
measures, trade policies and other international trade regulations in the
U.S., the European Union and Asia and in other regions where the Company
operates (and the Company's ability to manage the impact of such changes),
potential regulatory limits on payment terms in the European Union,
future changes in sanctions regulations, recent and future changes in
regulations impacting the beauty industry, including regulatory measures
addressing products, formulations, raw materials and packaging, and
recent and future regulatory measures restricting or otherwise impacting
the use of web sites, mobile applications or social media platforms that
the Company uses in connection with its digital marketing and e-commerce
activities;
-- currency exchange rate volatility and currency devaluation and/or
inflation;
-- our ability to implement and maintain pricing actions to effectively
mitigate increased costs and inflationary pressures, and the reaction of
customers or consumers to such pricing actions;
-- the number, type, outcomes (by judgment, order or settlement) and costs
of current or future legal, compliance, tax, regulatory or administrative
proceedings, investigations and/or litigation, including product
liability cases (including asbestos and talc-related litigation for which
indemnities and/or insurance may not be available), distributor or
licensor litigation, and compliance, litigation or investigations
relating to the Company's joint ventures or strategic partnerships;
-- the Company's ability to manage seasonal factors and other variability
and to anticipate future business trends and needs;
-- disruptions in the availability and distribution of raw materials and
components needed to manufacture the Company's products, and the
Company's ability to effectively manage its production and inventory
levels in response to supply challenges;
-- disruptions in operations, sales and in other areas, including due to
disruptions in our supply chain, restructurings and other business
alignment activities, manufacturing or information technology systems,
labor disputes, extreme weather and natural disasters, impact from public
health events, the outbreak of war or hostilities (including the war in
Ukraine and armed conflict in the Middle East (including the Red Sea
conflict) and any escalation or expansion thereof), the impact of global
supply chain challenges or other disruptions in the international flow of
goods (including disruptions arising from changing tariff scenarios), and
the impact of such disruptions on the Company's ability to generate
profits, stabilize or grow revenues or cash flows, comply with its
contractual obligations and accurately forecast demand and supply needs
and/or future results;
-- the Company's ability to adapt its business to address climate change
concerns, including through the implementation of new or unproven
technologies or processes, and to respond to increasing governmental and
regulatory measures relating to environmental, social and governance
matters, including expanding mandatory and voluntary reporting, diligence
and disclosure, as well as new taxes (including on energy and plastic),
new diligence requirements and the impact of such measures or processes
on its costs, business operations and strategy;
-- restrictions imposed on the Company through its license agreements,
credit facilities and senior unsecured bonds or other material contracts,
its ability to generate cash flow to repay, refinance or recapitalize
debt and otherwise comply with its debt instruments, and changes in the
manner in which the Company finances its debt and future capital needs;
-- increasing dependency on information technology, including as a result of
remote working practices, and the Company's ability or the ability of any
of the third-party service providers the Company uses to support its
business, to protect against service interruptions, data corruption,
cyber-based attacks or network security breaches, including ransomware
attacks, costs and timing of implementation and effectiveness of any
upgrades or other changes to information technology systems, and the cost
of compliance or the Company's failure to comply with any privacy or data
security laws (including the European Union General Data Protection
Regulation, the California Consumer Privacy Act and similar state laws,
the Brazil General Data Protection Law, and the China Data Security Law
and Personal Information Protection Law) or to protect against theft of
customer, employee and corporate sensitive information;
-- the Company's ability to attract and retain key personnel and the impact
of senior management transitions;
-- the distribution and sale by third parties of counterfeit and/or gray
market versions of the Company's products;
-- the impact of the Company's ongoing strategic transformation agenda and
continued process improvements on the Company's relationships with key
customers and suppliers and certain material contracts;
-- the Company's relationship with JAB Beauty B.V., as the Company's
majority stockholder, and its affiliates, and any related conflicts of
interest or litigation;
-- the Company's relationship with KKR, whose affiliate KKR Bidco is an
investor in the Wella Business, and any related conflicts of interest or
litigation;
-- future sales of a significant number of shares by the Company's majority
stockholder or the perception that such sales could occur; and
-- other factors described elsewhere in this document and in documents that
the Company files with the SEC from time to time.
When used herein, the term "includes" and "including" means, unless the context otherwise indicates, "including without limitation". More information about potential risks and uncertainties that could affect the Company's business and financial results is included under the heading "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the year ended June 30, 2024 and other periodic reports the Company has filed and may file with the SEC from time to time.
All forward-looking statements made in this release are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this release, and the Company does not undertake any obligation, other than as may be required by applicable law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise.
Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance unless expressed as such, and should only be viewed as historical data.
Non-GAAP Financial Measures
The Company operates on a global basis, with the majority of net revenues generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect results of operations. Therefore, to supplement financial results presented in accordance with GAAP, certain financial information is presented excluding the impact of foreign currency exchange translations to provide a framework for assessing how the underlying businesses performed excluding the impact of foreign currency exchange translations ("constant currency"). Constant currency information compares results between periods as if exchange rates had remained constant period-over-period, with the current period's results calculated at the prior-year period's rates. The Company calculates constant currency information by translating current and prior-period results for entities reporting in currencies other than U.S. dollars into U.S. dollars using constant foreign currency exchange rates. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency that is different to the functional currency of that entity when exchange rates fluctuate. The constant currency information presented may not be comparable to similarly titled measures reported by other companies. The Company discloses the following constant currency financial measures: net revenues, organic like-for-like (LFL) net revenues, adjusted gross profit and adjusted operating income.
The Company presents period-over-period comparisons of net revenues on a constant currency basis as well as on an organic (LFL) basis. The Company believes that organic (LFL) better enables management and investors to analyze and compare the Company's net revenues performance from period to period. For the periods described in this release, the term "like-for-like" describes the Company's core operating performance, excluding the financial impact of (i) acquired brands or businesses in the current year period until we have twelve months of comparable financial results, (ii) the divested brands or businesses or early terminated brands, generally, in the prior year non-comparable periods, to maintain comparable financial results with the current fiscal year period and (iii) foreign currency exchange translations to the extent applicable. For a reconciliation of organic (LFL) period-over-period, see the table entitled "Reconciliation of Reported Net Revenues to Like-For-Like Net Revenues".
The Company presents operating income, operating income margin, gross profit, gross margin, effective tax rate, net income, net income margin, net revenues, EBITDA, and EPS (diluted) on a non-GAAP basis and specifies that these measures are non-GAAP by using the term "adjusted" (collectively the Adjusted Performance Measures). The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in tables below. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for or superior to, financial measures reported in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies, including companies in the beauty industry, may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
Adjusted operating income/Adjusted EBITDA from Coty Inc., (as well as adjusted operating income margin and adjusted EBITDA margin, which are calculated by dividing Adjusted operating income from Coty Inc. and Adjusted EBITDA from Coty Inc., respectively, by net revenues) exclude restructuring costs and business structure realignment programs, amortization, acquisition- and divestiture-related costs and acquisition accounting impacts, stock-based compensation, and asset impairment charges and other adjustments as described below. For adjusted EBITDA and adjusted EBITDA margin, in addition to the preceding, we exclude the adjusted depreciation as defined below. We do not consider these items to be reflective of our core operating performance due to the variability of such items from period-to-period in terms of size, nature and significance. They are primarily incurred to realign our operating structure and integrate new acquisitions, and exclude divestitures, and fluctuate based on specific facts and circumstances. Additionally, Adjusted net income attributable to Coty Inc. and Adjusted net income attributable to Coty Inc. per common share are adjusted for certain interest and other (income) expense and deemed preferred stock dividends, as described below, and the related tax effects of each of the items used to derive Adjusted net income as such charges are not used by our management in assessing our operating performance period-to-period.
Adjusted Performance Measures reflect adjustments based on the following items:
-- Costs related to acquisition and divestiture activities: The Company has
excluded acquisition- and divestiture-related costs and the accounting
impacts such as those related to transaction costs and costs associated
with the revaluation of acquired inventory in connection with business
combinations because these costs are unique to each transaction.
Additionally, for divestitures, the Company excludes write-offs of assets
that are no longer recoverable and contract related costs due to the
divestiture. The nature and amount of such costs vary significantly based
on the size and timing of the acquisitions and divestitures, and the
maturities of the businesses being acquired or divested. Also, the size,
complexity and/or volume of past transactions, which often drives the
magnitude of such expenses, may not be indicative of the size, complexity
and/or volume of any future acquisitions or divestitures.
-- Restructuring and other business realignment costs: The Company has
excluded the costs associated with restructuring and business structure
realignment programs to allow for comparable financial results to
historical operations and forward-looking guidance. In addition, the
nature and amount of such charges vary significantly based on the size
and timing of the programs. By excluding the referenced expenses from the
non-GAAP financial measures, management is able to further evaluate the
Company's ability to utilize existing assets and estimate their long-term
value. Furthermore, our management believes that the adjustment of these
items supplements the GAAP information with a measure that can be used to
assess the sustainability of operating performance.
-- Asset impairment charges: The Company has excluded the impact of asset
impairments as such non-cash amounts are inconsistent in amount and
frequency and are significantly impacted by the timing and/or size of
acquisitions. Our management believes that the adjustment of these items
supplements the GAAP information with a measure that can be used to
assess the sustainability of our operating performance.
-- Amortization expense: The Company has excluded the impact of amortization
of finite-lived intangible assets, as such non-cash amounts are
inconsistent in amount and frequency and are significantly impacted by
the timing and/or size of acquisitions. Our management believes that the
adjustment of these items supplements the GAAP information with a measure
that can be used to assess the sustainability of our operating
performance. Although we exclude amortization of intangible assets from
our non-GAAP expenses, our management believes that it is important for
investors to understand that such intangible assets contribute to revenue
generation. Amortization of intangible assets that relate to past
acquisitions will recur in future periods until such intangible assets
have been fully amortized. Any future acquisitions may result in the
amortization of additional intangible assets.
-- Gain on sale and early license termination: We have excluded the impact
of gain on sale and early license termination as such amounts are
inconsistent in amount and frequency and are significantly impacted by
the size of the sale and early license termination.
-- Costs related to market exit: We have excluded the impact of direct
incremental costs related to our decision to wind down our business
operations in Russia. We believe that these direct and incremental costs
are inconsistent and infrequent in nature. Consequently, our management
believes that the adjustment of these items supplements the GAAP
information with a measure that can be used to assess the sustainability
of our operating performance.
-- Gains on sale of real estate: The Company has excluded the impact of
Gains on sale of real estate as such amounts are inconsistent in amount
and frequency and are significantly impacted by the size of the sale. Our
management believes that the adjustment of these items supplements the
GAAP information with a measure that can be used to assess the
sustainability of our operating performance.
-- Stock-based compensation: Although stock-based compensation is a key
incentive offered to our employees, we have excluded the effect of these
expenses from the calculation of adjusted operating income and adjusted
EBITDA. This is due to their primarily non-cash nature; in addition, the
amount and timing of these expenses may be highly variable and
unpredictable, which may negatively affect comparability between periods.
-- Depreciation and Adjusted depreciation: Our adjusted operating income
excludes the impact of accelerated depreciation for certain restructuring
projects that affect the expected useful lives of Property, Plant and
Equipment, as such charges vary significantly based on the size and
timing of the programs. Further, we have excluded adjusted depreciation,
which represents depreciation expense net of accelerated depreciation
charges, from our adjusted EBITDA. Our management believes that the
adjustment of these items supplements the GAAP information with a measure
that can be used to assess the sustainability of our operating
performance.
-- Other (income) expense: We have excluded the impact of pension
curtailment (gains) and losses and pension settlements as such events are
triggered by our restructuring and other business realignment activities
and the amount of such charges vary significantly based on the size and
timing of the programs. Further, we have excluded the change in fair
value of the investment in Wella, as well as expenses related to
potential or actual sales transactions reducing equity investments, as
our management believes these unrealized (gains) and losses do not
reflect our underlying ongoing business, and the adjustment of such
impact helps investors and others compare and analyze performance from
period to period. Such transactions do not reflect our operating results
and we have excluded the impact as our management believes that the
adjustment of these items supplements the GAAP information with a measure
that can be used to assess the sustainability of our operating
performance.
-- Noncontrolling interest: This adjustment represents the after-tax impact
of the non-GAAP adjustments included in Net income attributable to
noncontrolling interests based on the relevant noncontrolling interest
percentage.
-- Tax: This adjustment represents the impact of the tax effect of the
pretax items excluded from Adjusted net income. The tax impact of the
non-GAAP adjustments is based on the tax rates related to the
jurisdiction in which the adjusted items are received or incurred.
Additionally, adjustments are made for the tax impact of any intra-entity
transfer of assets and liabilities. Also, in connection with our market
exit in Russia, we have adjusted for the release of tax charges
previously taken related to certain direct incremental impacts of the
decision.
The Company has provided a quantitative reconciliation of the difference between the non-GAAP financial measures and the financial measures calculated and reported in accordance with GAAP. For a reconciliation of adjusted gross profit to gross profit, adjusted EPS (diluted) to EPS (diluted), and adjusted net revenues to net revenues, see the table entitled "Reconciliation of Reported to Adjusted Results for the Consolidated Statements of Operations." For reconciliations of: (i) adjusted EBITDA (and adjusted EBITDA margin) and adjusted operating income (and adjusted operating income margin) to net income (and net income margin), and (ii) adjusted segment operating income (and adjusted segment operating income margin) to segment operating income (and segment operating income margin), see the tables entitled "Reconciliation of Reported Net Income (Loss) to Adjusted Operating Income and Adjusted EBITDA" and "Reconciliations of Segment Reported Operating Income (Loss) to Segment Adjusted Operating Income (Loss) and Segment Adjusted EBITDA, respectively." For a reconciliation of adjusted effective tax rate to effective tax rate, see the table entitled "Reconciliation of Reported Income (Loss) Before Income Taxes and Effective Tax Rates to Adjusted Income Before Income Taxes and Adjusted Effective Tax Rates for Coty Inc." For a reconciliation of adjusted net income and adjusted net income margin to net income (and net income margin), see the table entitled "Reconciliation of Reported Net Income (Loss) to Adjusted Net Income."
The Company also presents free cash flow, adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA"), Financial Net Debt and Economic Net Debt. Management believes that these measures are useful for investors because it provides them with an important perspective on the cash available for debt repayment and other strategic measures and provides them with the same measures that management uses as the basis for making resource allocation decisions. Free cash flow is defined as net cash provided by operating activities less capital expenditures; adjusted EBITDA is defined as adjusted operating income, excluding adjusted depreciation and non-cash stock-based compensation. Net debt or Financial Net Debt (which the Company referred to as "net debt" in prior reporting periods) is defined as total debt less cash and cash equivalents, and Economic Net Debt is defined as total debt less cash and cash equivalents less the value of the Wella Stake. For a reconciliation of Free Cash Flow, see the table entitled "Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow," for adjusted EBITDA, see the table entitled "Reconciliation of Adjusted Operating Income to Adjusted EBITDA" and for Financial Net Debt and Economic Net Debt, see the tables entitled "Reconciliation of Total Debt to Financial Net Debt and Economic Net Debt."
We operate on a global basis, with the majority of our net revenues generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect our results of operations. Therefore, to supplement financial results presented in accordance with GAAP, certain financial information is presented in "constant currency", excluding the impact of foreign currency exchange translations to provide a framework for assessing how our underlying businesses performed excluding the impact of foreign currency exchange translations. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We calculate constant currency information by translating current and prior-period results for entities reporting in currencies other than U.S. dollars into U.S. dollars using prior year foreign currency exchange rates. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency that is different to the functional currency of that entity when exchange rates fluctuate, or for the impacts of hyperinflation. The constant currency information we present may not be comparable to similarly titled measures reported by other companies.
These non-GAAP measures should not be considered in isolation, or as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
To the extent that the Company provides guidance, it does so only on a non-GAAP basis and does not provide reconciliations of such forward-looking non-GAAP measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including adjustments that could be made for restructuring, integration and acquisition-related expenses, amortization expenses, non-cash stock-based compensation, adjustments to inventory, and other charges reflected in our reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.
- Tables Follow -
COTY INC.
SUPPLEMENTAL SCHEDULES INCLUDING NON-GAAP FINANCIAL MEASURES
THIRD QUARTER BY SEGMENT (COTY INC)
Three Months Ended March 31,
------------------------------------------------------------------------------------------------- --------
Reported Operating Income
Net Revenues Change (Loss) Adjusted Operating Income
------------------ -------------------- -------------------------------- -------------------------------
Reported
(in millions) 2025 2024 Basis LFL(a) 2025 Change Margin 2025 Change Margin
-------------- -------- -------- ---------- -------- ----------- --------- -------- ---------- --------- --------
Prestige $ 829.4 $ 867.2 (4%) (3%) $ 78.7 (28%) 10% $158.8 8% 19%
Consumer Beauty 469.7 518.4 (9%) (5%) (189.5) <(100%) (40)% (10.9) <(100 %) (2%)
Corporate -- -- N/A N/A (169.6) <(100%) N/A -- N/A N/A
------- ------- ------ -----
Total $1,299.1 $1,385.6 (6%) (3%) $(280.4) <(100%) (22)% $147.9 3% 11%
======= ======= ====== =====
(a) Consolidated LFL results, Prestige LFL results, and Consumer Beauty LFL results for the three months ended March 31,
2025 include an immaterial help from Argentina resulting from significant price increases due to hyperinflation.
Nine Months Ended March 31,
-------------------------------------------------------------------------------------------- --------
Reported Operating Income
Net Revenues Change (Loss) Adjusted Operating Income
------------------ -------------------- -------------------------------- --------------------------
Reported
(in millions) 2025 2024 Basis LFL(a) 2025 Change Margin 2025 Change Margin
-------------- -------- -------- ---------- -------- ----------- --------- -------- ------ -------- --------
Prestige $3,059.6 $3,054.5 0% 2% $ 542.5 2% 18% $698.5 8% 23%
Consumer Beauty 1,580.9 1,700.1 (7%) (3%) (111.4) <(100%) (7)% 86.7 (20%) 5%
Corporate -- -- N/A N/A (205.5) <(100%) N/A -- N/A N/A
------- ------- ------ -----
Total $4,640.5 $4,754.6 (2%) 0% $ 225.6 (56%) 5% $785.2 4% 17%
======= ======= ====== =====
(a) Consolidated LFL results for the nine months ended March 31, 2025 include 1% help from Argentina resulting from
significant price increases due to hyperinflation.
Prestige LFL results for the nine months ended March 31, 2025 include 1% help from Argentina resulting from
significant price increases due to hyperinflation.
Consumer Beauty LFL results for the nine months ended March 31, 2025 include 1% help from Argentina resulting from
significant price increases due to hyperinflation.
Adjusted EBITDA
---------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------- ---------------------
(in millions) 2025 2024 2025 2024
---------------- ------------ -------- ----------- --------
Prestige $ 185.9 $ 173.0 $ 781.7 $ 726.8
Consumer Beauty 18.3 26.9 173.3 199.8
Corporate -- -- -- --
-------- ------- ------- -------
Total $ 204.2 $ 199.9 $ 955.0 $ 926.6
======== ======= ======= =======
THIRD QUARTER FISCAL 2025 BY REGION
Coty, Inc.
Three Months Ended March 31, Nine Months Ended March 31,
------------------------------------------ ------------------------------------------
Net Revenues Change Net Revenues Change
------------------- --------------------- ------------------- ---------------------
Reported Reported
(in millions) 2025 2024 Basis LFL(a) 2025 2024 Basis LFL(a)
-------------- -------- --------- ----------- -------- -------- --------- ----------- --------
Americas $ 529.7 $ 589.0 (10)% (6)% $1,861.8 $ 1,984.9 (6)% (1)%
EMEA 610.0 628.0 (3)% (1)% 2,237.6 2,185.9 2% 3%
Asia Pacific 159.4 168.6 (5)% (4)% 541.1 583.8 (7)% (7)%
--------------- ------- -------- --- ---- --- ------- -------- ----- ---
Total $1,299.1 $ 1,385.6 (6)% (3)% $4,640.5 $ 4,754.6 (2)% --%
======= ======== ======= ========
(a) Americas LFL results for the three and nine months ended March 31, 2025 include 0% help and 2% help,
respectively from Argentina resulting from significant price increases due to hyperinflation.
COTY INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March Nine Months Ended March
31, 31,
-------------------------- --------------------------
(in millions,
except per share
data) 2025 2024 2025 2024
------------ ------------ ------------ ------------
Net revenues $1,299.1 $1,385.6 $4,640.5 $4,754.6
Cost of sales 466.7 487.8 1,599.3 1,690.8
------- ------- ------- -------
as % of Net
revenues 35.9% 35.2% 34.5% 35.6%
Gross profit 832.4 897.8 3,041.2 3,063.8
Gross margin 64.1% 64.8% 65.5% 64.4%
Selling, general
and
administrative
expenses 777.5 770.6 2,382.8 2,371.4
as % of Net
revenues 59.8% 55.6% 51.3% 49.9%
Amortization
expense 45.9 48.5 141.3 145.4
Restructuring
costs 76.6 0.9 78.7 35.0
Asset impairment
charges 212.8 -- 212.8 --
------- ------- ------- -------
Operating (loss)
income (280.4) 77.8 225.6 512.0
as % of Net
revenues (21.6%) 5.6% 4.9% 10.8%
Interest expense,
net 47.9 60.4 164.1 190.3
Other expense
(income), net 132.3 14.0 332.8 9.8
------- ------- ------- -------
(Loss) income
before income
taxes (460.6) 3.4 (271.3) 311.9
as % of Net
revenues (35.5%) 0.2% (5.8%) 6.6%
(Benefit)
Provision for
income taxes (58.4) (5.4) 9.6 106.9
------- ------- ------- -------
Net (loss) income (402.2) 8.8 (280.9) 205.0
as % of Net
revenues (31.0%) 0.6% (6.1%) 4.3%
Net income
attributable to
noncontrolling
interests 2.0 2.4 5.7 4.0
Net income
attributable to
redeemable
noncontrolling
interests 1.5 2.6 12.5 14.7
------- ------- ------- -------
Net (loss) income
attributable to
Coty Inc. $ (405.7) $ 3.8 $ (299.1) $ 186.3
======= ======= ======= =======
Amounts
attributable to
Coty Inc.
Net (loss) income $ (405.7) $ 3.8 $ (299.1) $ 186.3
Convertible
Series B
Preferred Stock
dividends (3.3) (3.3) (9.9) (9.9)
------- ------- ------- -------
Net (loss) income
attributable to
common
stockholders $ (409.0) $ 0.5 $ (309.0) $ 176.4
======= ======= ======= =======
Earnings per
common share:
Basic for Coty
Inc. $ (0.47) $ -- $ (0.36) $ 0.20
Diluted for Coty
Inc.(a) $ (0.47) $ -- $ (0.36) $ 0.20
Weighted-average
common shares
outstanding:
Basic 872.1 883.1 870.4 876.7
Diluted(a)(b) 872.1 892.0 870.4 886.1
Depreciation -
Coty Inc. $ 59.3 $ 56.0 $ 174.1 $ 171.2
(a) Diluted EPS is adjusted by the effect of dilutive securities, including
awards under the Company's equity compensation plans, the convertible
Series B Preferred Stock, and the Forward Repurchase Contracts. When
calculating any potential dilutive effect of stock options, Series A
Preferred Stock, restricted stock, RSUs and PRSUs, the Company uses the
treasury method and the if-converted method for the Convertible Series
B Preferred Stock and the Forward Repurchase Contracts. The treasury
method typically does not adjust the net income attributable to Coty
Inc., while the if-converted method requires an adjustment to reverse
the impact of the preferred stock dividends of $3.3, and to reverse the
impact of fair market value losses/(gains) for contracts with the
option to settle in shares or cash of $60.0 and $7.1, respectively, if
dilutive, for the three months ended March 31, 2025 and 2024 on net
income applicable to common stockholders during the period. The
if-converted method requires an adjustment to reverse the impact of the
preferred stock dividends of $9,9, and to reverse the impact of fair
market value losses/(gains) for contracts with the option to settle in
shares or cash of $188.9 and $6.9 respectively, if dilutive, for the
nine months ended March 31, 2025 and 2024 on net income applicable to
common stockholders during the period.
(b) For the three months ended March 31, 2025 and 2024, outstanding stock
options with rights to purchase 3.4 million and 1.7 million shares of
Common Stock were anti-dilutive and excluded from the computation of
diluted EPS. Series A Preferred Stock had no dilutive effect, as the
exchange right expired on March 27, 2024. For the nine months ended
March 31, 2025 and 2024, outstanding stock options and Series A
Preferred Stock with purchase or conversion rights to purchase 3.5
million and 2.5 million weighted average shares of Common Stock,
respectively, were anti-dilutive and excluded from the computation of
diluted EPS.
RECONCILIATION OF REPORTED TO ADJUSTED RESULTS FOR THE CONSOLIDATED STATEMENTS OF OPERATIONS
These supplemental schedules provide adjusted Non-GAAP financial information and a quantitative reconciliation of the difference between the Non-GAAP financial measure and the financial measure calculated and reported in accordance with GAAP.
Three Months Ended March 31, 2025
---------------------------------------------------
COTY INC.
---------------------------------------------------
Reported Adjusted
(in millions) (GAAP) Adjustments(a) (Non-GAAP)
------------------- ------------------ ---------------- -------------
Net revenues $ 1,299.1 $ -- $ 1,299.1
Gross profit 832.4 3.0 835.4
Gross margin 64.1% 64.3%
Operating (loss)
income (280.4) 428.3 147.9
as % of Net
revenues (21.6%) 11.4%
Net (loss) income
attributable to
common
stockholders (409.0) 415.8 6.8
as % of Net
revenues (31.5%) 0.5%
Adjusted EBITDA 204.2
as % of Net
revenues 15.7%
EPS (diluted) $ (0.47) $ 0.01
Adjusted diluted EPS includes $0.07 hurt related to the net impact of
the Total Return Swaps in the three months ended March 31, 2025.
Three Months Ended March 31, 2024
---------------------------------------------------
COTY INC.
---------------------------------------------------
Reported Adjusted
(in millions) (GAAP) Adjustments(a) (Non-GAAP)
------------------- ------------------ ---------------- -------------
Net revenues $ 1,385.6 $ -- $ 1,385.6
Gross profit 897.8 -- 897.8
Gross margin 64.8% 64.8%
Operating income 77.8 66.1 143.9
as % of Net
revenues 5.6% 10.4%
Net income
attributable to
common
stockholders 0.5 43.3 43.8
as % of Net
revenues --% 3.2%
Adjusted EBITDA 199.9
as % of Net
revenues 14.4%
EPS (diluted) $ -- $ 0.05
Adjusted diluted EPS includes $0.01 hurt related to the net impact of
the Total Return Swaps in the three months ended March 31, 2024.
(a) See "Reconciliation of Reported Net Income, Adjusted Operating Income and
Adjusted EBITDA for Coty Inc" and "Reconciliation of Reported Net Income to
Adjusted Net Income" for a detailed description of adjusted items.
RECONCILIATION OF REPORTED TO ADJUSTED RESULTS FOR THE CONSOLIDATED
STATEMENTS OF OPERATIONS
These supplemental schedules provide adjusted Non-GAAP financial
information and a quantitative reconciliation of the difference between
the Non-GAAP financial measure and the financial measure calculated and
reported in accordance with GAAP.
Nine Months Ended March 31, 2025
---------------------------------------------------
COTY INC.
---------------------------------------------------
Reported Adjusted
(in millions) (GAAP) Adjustments(a) (Non-GAAP)
------------------- ------------------ ---------------- -------------
Net revenues $ 4,640.5 $ -- $ 4,640.5
Gross profit 3,041.2 4.3 3,045.5
Gross margin 65.5% 65.6%
Operating income 225.6 559.6 785.2
as % of Net
revenues 4.9% 16.9%
Net (loss) income
attributable to
common
stockholders (309.0) 542.7 233.7
as % of Net
revenues (6.7%) 5.0%
Adjusted EBITDA 955.0
as % of Net
revenues 20.6%
EPS (diluted) $ (0.36) $ 0.27
Adjusted diluted EPS includes $0.21 hurt related to the net impact of
the Total Return Swaps in the nine months ended March 31, 2025.
Nine Months Ended March 31, 2024
---------------------------------------------------
COTY INC.
---------------------------------------------------
Reported Adjusted
(in millions) (GAAP) Adjustments(a) (Non-GAAP)
------------------- ------------------ ---------------- -------------
Net revenues $ 4,754.6 $ -- $ 4,754.6
Gross profit 3,063.8 -- 3,063.8
Gross margin 64.4% 64.4%
Operating income 512.0 243.4 755.4
as % of Net
revenues 10.8% 15.9%
Net income
attributable to
common
stockholders 176.4 170.6 347.0
as % of Net
revenues 3.7% 7.3%
Adjusted EBITDA 926.6
as % of Net
revenues 19.5%
EPS (diluted) $ 0.20 $ 0.39
Adjusted diluted EPS includes $0.02 hurt related to the net impact of
the Total Return Swaps in the nine months ended March 31, 2024.
(a) See "Reconciliation of Reported Net Income to Adjusted Operating Income,
and Adjusted EBITDA" and "Reconciliation of Reported Net Income to Adjusted
Net Income" for a detailed description of adjusted items.
RECONCILIATION OF REPORTED NET INCOME TO ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA
COTY INC. Three Months Ended March 31, Nine Months Ended March 31,
----------------------------------- -----------------------------------
(in millions) 2025 2024 Change 2025 2024 Change
----------------- ------------ ---------- --------- ------------ ---------- ---------
Net (loss) income $(402.2) $ 8.8 <(100%) $(280.9) $205.0 <(100%)
Net (loss) income
margin (31.0)% 0.6% (6.1)% 4.3%
(Benefit)
Provision for
income taxes (58.4) (5.4) <(100%) 9.6 106.9 (91%)
------ ----- ------ --- -----
(Loss) Income
before income
taxes $(460.6) $ 3.4 <(100%) $(271.3) $311.9 <(100%)
Interest
expense, net 47.9 60.4 (21%) 164.1 190.3 (14%)
Other expense
(income), net 132.3 14.0 100% 332.8 9.8 >100%
------ --- ----- ------ --- -----
Reported Operating
(loss) income $(280.4) 77.8 <(100%) $ 225.6 $512.0 (56%)
Reported operating
(loss) income
margin (21.6%) 5.6% 4.9% 10.8%
Asset
impairment
charges 212.8 -- N/A 212.8 -- N/A
Amortization
expense 45.9 48.5 (5%) 141.3 145.4 (3%)
Restructuring
and other
business
realignment
costs 87.2 (1.7) >100% 90.6 29.6 >100%
Stock-based
compensation 12.1 20.5 (41%) 44.6 70.4 (37%)
Loss (Gain) on
sale of real
estate -- -- N/A -- (1.6) 100%
Early license
termination
and market
exit costs 70.3 (1.2) 42% 70.3 (0.4) >100%
------ --- ----- ------ --- -----
Total adjustments
to reported
operating income 428.3 66.1 >100% 559.6 243.4 >100%
------ --- ----- ------ --- -----
Adjusted Operating
income $ 147.9 $143.9 3% $ 785.2 $755.4 4%
------ --- ----- ------ --- -----
Adjusted operating
income margin 11.4% 10.4% 16.9% 15.9%
Adjusted
depreciation 56.3 56.0 1% 169.8 171.2 (1%)
------ --- ----- ------ --- -----
Adjusted EBITDA $ 204.2 $199.9 2% $ 955.0 $926.6 3%
====== === ===== ====== === =====
Adjusted EBITDA
margin 15.7% 14.4% 20.6% 19.5%
RECONCILIATIONS OF SEGMENT REPORTED OPERATING INCOME (LOSS) TO SEGMENT ADJUSTED
OPERATING INCOME (LOSS) AND SEGMENT ADJUSTED EBITDA
OPERATING INCOME, ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA- PRESTIGE SEGMENT
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------- ----------------------
(in millions) 2025 2024 Change % 2025 2024 Change %
---------------- ---------- ---------- ---------- ---------- ---------- ----------
Reported
operating
income $ 78.7 $108.7 (28)% $542.5 $531.0 2%
Reported
operating
income margin 9.5% 12.5% 17.7% 17.4%
Amortization
expense 37.2 38.6 (4%) 113.1 115.6 (2%)
Asset
impairment
charges 42.9 -- N/A 42.9 -- N/A
----- ----- ----- -----
Total
adjustments to
reported
operating
income 80.1 38.6 >100% 156.0 115.6 35%
----- ----- ----- -----
Adjusted
operating
income $158.8 147.3 8% $698.5 646.6 8%
===== ===== ===== =====
Adjusted
operating
income margin 19.1% 17.0% 22.8% 21.2%
Adjusted
depreciation 27.1 25.7 5% 83.2 80.2 4%
----- ----- ----- -----
Adjusted EBITDA $185.9 173.0 7% $781.7 726.8 8%
===== ===== ===== =====
Adjusted EBITDA
margin 22.4% 19.9% 25.5% 23.8%
OPERATING INCOME, ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA- CONSUMER BEAUTY SEGMENT
Three Months Ended Nine Months Ended
March 31, March 31,
----------------------- -----------------------
(in millions) 2025 2024 Change % 2025 2024 Change %
---------------- ----------- ---------- ---------- ----------- ---------- ----------
Reported
operating
(loss) income $(189.5) $(13.3) <(100%) $(111.4) $ 79.0 <(100%)
Reported
operating
(loss) income
margin (40.3)% (2.6)% (7.0)% 4.6%
Amortization
expense 8.7 9.9 (12%) 28.2 29.8 (5%)
Asset
impairment
charges 169.9 -- N/A 169.9 -- N/A
------ ----- ------ -----
Total
adjustments to
reported
operating
income 178.6 9.9 >100% 198.1 29.8 >100%
------ ----- ------ -----
Adjusted
operating
(loss) income $ (10.9) (3.4) <(100%) $ 86.7 108.8 (20%)
====== ===== ====== =====
Adjusted
operating
(loss) income
margin (2.3)% (0.7)% 5.5% 6.4%
Adjusted
depreciation 29.2 30.3 (4%) 86.6 91.0 (5%)
------ ----- ------ -----
Adjusted EBITDA $ 18.3 26.9 (32%) $ 173.3 199.8 (13%)
====== ===== ====== =====
Adjusted EBITDA
margin 3.9% 5.2% 11.0% 11.8%
OPERATING LOSS, ADJUSTED OPERATING LOSS AND ADJUSTED EBITDA- CORPORATE SEGMENT
Three Months Nine Months Ended
Ended March 31, March 31,
----------------- -----------------
(in millions) 2025 2024 Change % 2025 2024 Change %
----------------- -------- ------- ---------- -------- ------- ----------
Reported
operating loss $(169.6) $(17.6) <(100%) $(205.5) $(98.0) <(100%)
Reported
operating loss
margin N/A N/A N/A N/A
Restructuring
and other
business
realignment
costs 87.2 (1.7) >100% 90.6 29.6 >100%
Stock-based
compensation 12.1 20.5 (41%) 44.6 70.4 (37%)
(Gain) on sale
of real
estate $ -- $ -- N/A $ -- $ (1.6) 100%
Early license
termination
and market
exit costs $ 70.3 $ (1.2) >100% $ 70.3 $ (0.4) >100%
------ ----- ------ -----
Total adjustments
to reported
operating
income 169.6 17.6 >100% 205.5 98.0 >100%
------ ----- ------ -----
Adjusted $ -- $ -- N/A $ -- $ -- N/A
operating loss
====== ===== ====== =====
Adjusted N/A N/A N/A N/A
operating loss
margin
Adjusted -- -- N/A -- -- N/A
depreciation
------ ----- ------ -----
Adjusted EBITDA $ -- $ -- N/A $ -- $ -- N/A
====== ===== ====== =====
Adjusted EBITDA N/A N/A N/A N/A
margin
RECONCILIATION OF REPORTED INCOME BEFORE INCOME TAXES AND EFFECTIVE TAX RATES TO
ADJUSTED INCOME BEFORE INCOME TAXES AND ADJUSTED EFFECTIVE TAX RATES FOR COTY INC.
Three Months Ended Three Months Ended
March 31, 2025 March 31, 2024
---------------------------------- ----------------------------------
(Benefit) (Benefit)
Income Provision Income Provision
before for before for
income income Effective income income Effective
(in millions) taxes taxes tax rate taxes taxes tax rate
-------------- -------- ----------- ----------- ------ ------------- -----------
Reported (Loss)
Income before
income taxes $(460.6) $ (58.4) 12.7% $ 3.4 $ (5.4) (158.8)%
Adjustments to
Reported
Operating
Income (a) 428.3 66.1
Change in fair
value of
investment in
Wella Company
(c) 53.0 (3.0)
Other
adjustments
(d) 0.8 0.2
------ ----------- ---- -------------
Total
Adjustments
(b) 482.1 64.6 63.3 18.3
------ ------ ---- -----
Adjusted Income
before income
taxes $ 21.5 $ 6.2 28.8% $66.7 $ 12.9 19.3%
====== ====== ==== =====
The adjusted effective tax rate was 28.8% for the three months ended March 31, 2025
compared to 19.3% for the three months ended March 31, 2024. The difference is
primarily due to the loss on forward repurchase contracts having a higher proportional
impact in the current period.
Nine Months Ended Nine Months Ended
March 31, 2025 March 31, 2024
---------------------------------- ---------------------------------
Income Provision Income Provision
before for before for
income income Effective income income Effective
(in millions) taxes taxes tax rate taxes taxes tax rate
-------------- -------- ----------- ----------- ------- ----------- -----------
Reported (Loss)
Income before
income taxes -
Continuing
Operations $(271.3) $ 9.6 (3.5)% $311.9 $ 106.9 34.3%
Adjustments to
Reported
Operating
Income (a) 559.6 243.4
Change in fair
value of
investment in
Wella Company
(c) 85.0 (20.0)
Other
adjustments
(d) 0.4 4.3
------ ----------- ----- -----------
Total
Adjustments
(b) 645.0 97.2 227.7 52.0
------ ------- ----- -------
Adjusted Income
before income
taxes -
Continuing
Operations $ 373.7 $ 106.8 28.6% $539.6 $ 158.9 29.4%
====== ======= ===== =======
The adjusted effective tax rate was 28.6% for the nine months ended March 31, 2025
compared to 29.4% for the nine months ended March 31, 2024. The difference is
primarily due to an expense of $24.3 recognized on the revaluation of the Company's
deferred tax liabilities due to a tax rate increase enacted in Switzerland in the
prior period.
(a) See a description of adjustments under "Reconciliation of Reported Net
Income to Adjusted Operating Income and Adjusted EBITDA for Coty Inc.
(b) The tax effects of each of the items included in adjusted income are
calculated in a manner that results in a corresponding income tax
expense/provision for adjusted income. In preparing the calculation, each
adjustment to reported income is first analyzed to determine if the adjustment
has an income tax consequence. The provision for taxes is then calculated
based on the jurisdiction in which the adjusted items are incurred, multiplied
by the respective statutory rates and offset by the increase or reversal of
any valuation allowances commensurate with the non-GAAP measure of
profitability. The total tax impact on adjustments in the current period
includes a tax benefit of $10.0 on the resolution of uncertain tax positions
associated with the Company's exit from Russia in fiscal 2022.
(c) The amount represents the unrealized (gain) loss recognized for the change
in the fair value of the investment in Wella.
(d) For the three months ended March 31, 2025, this primarily represents
recovery of previously written-off non-income tax credits, the amortization of
basis differences in certain equity method investments, and net loss on the
sale of an equity investment. For the three months ended March 31, 2024, this
primarily represents adjustments for equity loss from KKW.
For the nine months ended March 31, 2025, this primarily represents recovery
of previously written-off non-income tax credits, the amortization of basis
differences in certain equity method investments, and net loss on the sale of
an equity investment. For the nine months ended March 31, 2024, this primarily
represents divestiture-related costs related to our equity investments and
loss from our equity investment in KKW.
RECONCILIATION OF REPORTED NET INCOME TO ADJUSTED NET INCOME FOR COTY INC.
Three Months Ended March 31, Nine Months Ended March 31,
----------------------------------- -----------------------------------
(in millions) 2025 2024 Change 2025 2024 Change
------------ ---------- --------- ------------ ---------- ---------
Net (loss) income
attributable to
Coty Inc. $(405.7) $ 3.8 <(100%) $(299.1) $186.3 <(100%)
Convertible
Series B
Preferred
Stock
dividends (c) (3.3) (3.3) --% (9.9) (9.9) --%
------ ----- ------ -----
Reported Net
(loss) income
attributable to
common
stockholders $(409.0) $ 0.5 <(100%) $(309.0) $176.4 <(100%)
% of Net revenues (31.5%) --% (6.7%) 3.7%
Adjustments to
Reported
Operating
income (a) 428.3 66.1 >100% 559.6 243.4 >100%
Change in fair
value of
investment in
Wella Company
(d) 53.0 (3.0) >100% 85.0 (20.0) >100%
Adjustments to
other expense
(e) 0.8 0.2 >100% 0.4 4.3 (91%)
Adjustments to
noncontrolling
interests (b) (1.7) (1.7) --% (5.1) (5.1) --%
Change in tax
provision due to
adjustments to
Reported Net
(loss) income
attributable to
Coty Inc. (64.6) (18.3) <(100%) (97.2) (52.0) (87%)
------ ----- ------ -----
Adjusted Net
(loss) income
attributable to
Coty Inc. $ 6.8 $ 43.8 (84%) $ 233.7 $347.0 (33%)
====== === ===== ====== === =====
% of Net revenues 0.5% 3.2% 5.0% 7.3%
Per Share Data
Adjusted
weighted-average
common shares
Basic 872.1 883.1 870.4 876.7
Diluted (c)(f) 875.0 892.0 875.5 886.1
Adjusted Net
income
attributable to
Coty Inc. per
Common Share
Basic $ 0.01 $ 0.05 $ 0.27 $ 0.40
Diluted (c) $ 0.01 $ 0.05 $ 0.27 $ 0.39
Adjusted diluted EPS includes $0.07 hurt and $0.21 hurt related to the net impact of the
Total Return Swaps in the three and nine months ended March 31, 2025, respectively. Adjusted
diluted EPS includes $0.01 hurt and $0.02 hurt related to the net impact of the Total Return
Swaps in the three and nine months ended March 31, 2024, respectively.
(a) See a description of adjustments under "Net Income, Adjusted Operating
Income and Adjusted EBITDA for Coty Inc."
(b) The amounts represent the after-tax impact of the non-GAAP adjustments
included in Net income attributable to noncontrolling interest based on
the relevant noncontrolling interest percentage in the Condensed
Consolidated Statements of Operations.
(c) Diluted EPS is adjusted by the effect of dilutive securities, including
awards under the Company's equity compensation plans, the convertible
Series B Preferred Stock and the Forward Repurchase Contracts, if
applicable. When calculating any potential dilutive effect of stock
options, Series A Preferred Stock, restricted stock, PRSUs and RSUs, the
Company uses the treasury method and the if-converted method for the
Convertible Series B Preferred Stock and the Forward Repurchase
Contracts. The treasury method typically does not adjust the net income
attributable to Coty Inc. while the if-converted method requires an
adjustment to reverse the impact of the preferred stock dividends and the
impact of fair market value (gains)/losses for contracts with the option
to settle in shares or cash, if dilutive, on net income applicable to
common stockholders during the period.
(d) The amount represents the unrealized (gain) loss recognized for the
change in the fair value of the investment in Wella.
(e) For the three months ended March 31, 2025, this primarily represents
recovery of previously written-off non-income tax credits, the
amortization of basis differences in certain equity method investments,
and net loss on the sale of an equity investment. For the three months
ended March 31, 2024, this primarily represents adjustments for equity
loss from KKW.
For the nine months ended March 31, 2025, this primarily represents
recovery of previously written-off non-income tax credits, the
amortization of basis differences in certain equity method investments,
and net loss on the sale of an equity investment. For the nine months
ended March 31, 2024, this primarily represents divestiture-related costs
related to our equity investments and loss from equity investment in
KKW.
(f) Adjusted Diluted EPS is adjusted by the effect of dilutive securities.
For the three months ended March 31, 2025 and 2024, no dilutive shares of
the Forward Repurchase Contracts were included in the computation of
adjusted diluted EPS as their inclusion would be anti-dilutive.
Accordingly, we did not reverse the impact of the fair market value
losses/(gains) for contracts with the option to settle in shares or cash
of $60.0 and $7.1, respectively. For the three months ended March 31,
2025 and 2024, Convertible Series B Preferred Stock (23.7 million
weighted average dilutive shares) was anti-dilutive. Accordingly, we
excluded these shares from the diluted shares and did not adjust the
earnings for the related dividend of $3.3.
Adjusted Diluted EPS is adjusted by the effect of dilutive securities.
For the nine months ended March 31, 2025 and 2024, no dilutive shares of
the Forward Repurchase Contracts were included in the computation of
adjusted diluted EPS as their inclusion would be anti-dilutive.
Accordingly, we did not reverse the impact of the fair market value
losses/(gains) for contracts with the option to settle in shares or cash
of $188.9 and $6.9, respectively. For the nine months ended March 31,
2025 and 2024, convertible Series B Preferred Stock (23.7 million
weighted average dilutive shares) were anti-dilutive. Accordingly, we
excluded these shares from the diluted shares and did not adjust the
earnings for the related dividend of $9.9.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO
FREE CASH FLOW
Three Months Ended Nine Months Ended March
COTY INC. March 31, 31,
--------------------- -----------------------
(in millions) 2025 2024 2025 2024
-------------- ----------- -------- ----------- ----------
Net cash
provided by
operating
activities $(122.5) $(170.0) $ 409.4 $ 438.1
Capital
expenditures (45.9) (64.3) (166.7) (185.4)
------ ------ ------ ------
Free cash flow $(168.4) $(234.3) $ 242.7 $ 252.7
------ ------ ------ ------
RECONCILIATION OF TOTAL DEBT TO FINANCIAL NET DEBT AND ECONOMIC NET DEBT
COTY INC. As of
(in millions) March 31, 2025
--------------------------------------------------------- ----------------
Total debt(1) $ 3,858.8
Less: Cash and cash equivalents 243.5
------------
Financial Net debt $ 3,615.3
------------
Less: Value of Wella stake 1,000.0
------------
Economic Net debt $ 2,615.3
============
_____________________________
1 Total debt is derived from footnote 9 from the Form 10-Q for the
quarter-ended March 31, 2025 and includes both the Company's short-term and
long-term debt (including the current portion of long-term debt)
RECONCILIATION OF TTM(a) NET INCOME TO ADJUSTED OPERATING INCOME AND
ADJUSTED EBITDA
Twelve
months
ended
------------------------------------------ ------------
December
June 30, September 31, March 31, March 31,
2024 30, 2024 2024 2025 2025
---------- --------- -------- --------- ------------
(in millions)
---------------- ---------- --------- -------- --------- ------------
Net income
(loss) from
continuing
operations $(95.6) $90.7 $30.6 $(402.2) $(376.5)
Provision
(benefit) for
income taxes on
continuing
operations $(11.8) $42.0 $26.0 $(58.4) $(2.2)
--------- --------- -------- -------- --------
Income (loss)
from continuing
operations
before income
taxes $(107.4) $132.7 $56.6 $(460.6) $(378.7)
Interest
expense, net $61.7 $61.8 $54.4 $47.9 $225.8
Other (income)
expense, net $80.4 $43.3 $157.2 $132.3 $413.2
--------- --------- -------- -------- --------
Reported
operating
income from
continuing
operations $34.7 $237.8 $268.2 $(280.4) $260.3
--------- --------- -------- -------- --------
Amortization
expense $48.0 $48.1 $47.3 $45.9 $189.3
Restructuring
and other
business
realignment
costs $7.0 $0.7 $2.7 $87.2 $97.6
Stock-based
compensation $18.4 $17.0 $15.5 $12.1 $63.0
Asset impairment
charges $-- $-- $-- $212.8 $212.8
Early license
termination and
market exit
costs $(0.1) $-- $-- $70.3 $70.2
--------- --------- -------- -------- --------
Total
adjustments to
reported
operating loss $73.3 $65.8 $65.5 $428.3 $632.9
--------- --------- -------- -------- --------
Adjusted
operating
income $108.0 $303.6 $333.7 $147.9 $893.2
--------- --------- -------- -------- --------
Add: Adjusted
depreciation(b) $56.5 $56.5 $57.0 $56.3 $226.3
--------- --------- -------- -------- --------
Adjusted EBITDA $164.5 $360.1 $390.7 $204.2 $1,119.5
========= ========= ======== ======== ========
(a) Trailing twelve months $(TTM)$ net income from continuing operations,
reported operating income, adjusted operating income, and adjusted EBITDA
represents the summation of each of these financial metrics for the
quarters ended March 31, 2025, December 31, 2024, September 30, 2024, and
June 30, 2024.
(b) Adjusted depreciation for the twelve months ended March 31, 2025
represents depreciation expense for Coty Inc for the period, excluding
accelerated depreciation.
COMPARISON OF TOTAL DEBT/NET INCOME FROM CONTINUING OPERATIONS TO FINANCIAL NET DEBT/ADJUSTED EBITDA
Numerator
---------------------------------
Financial Net
Total Debt Debt(c)
------------ -------------------
$ 3,858.8 $ 3,615.3
--------------------------- --------- -------- --- --------------
TTM Net loss
from
continuing
Denominator operations(b) $ (376.5) 10.2 N/R(d)
------------ -------------- ------- -------- -------------------
TTM Adjusted EBITDA(a) $1,119.5 N/R(d) 3.2
--------------------------- ------- ------------ --- --------------
(a) TTM Adjusted EBITDA for the twelve months ended March 31, 2025 represents
the summation of Adjusted EBITDA for each of the quarters ended March 31,
2025, December 31, 2024, September 30, 2024, and June 30, 2024. For a
reconciliation of net income (loss) from continuing operations to
Adjusted EBITDA for each of those periods, see the table entitled
"Reconciliation of TTM Net Income to Adjusted Operating Income and
Adjusted EBITDA" for each of those periods.
(b) TTM net income from continuing operations for the twelve months ended
March 31, 2025 represents the summation of net income from continuing
operations for each of the quarters ended March 31, 2025, December 31,
2024, September 30, 2024, and June 30, 2024.
(c) Financial Net Debt equals Total Debt minus Cash and cash equivalents as
of March 31, 2025. See table titled "Reconciliation of Total Debt to
Financial Net Debt and Economic Net Debt".
(d) Not relevant.
RECONCILIATION OF REPORTED NET REVENUES TO LIKE-FOR-LIKE NET REVENUES
Three Months Ended March 31, 2025 vs. Three Months
Ended March 31, 2024 Net Revenue Change
-------------- -----------------------------------------------------
Impact from
Acquisitions
and
Net Revenues Constant Divestitures
Change YoY Reported Basis Currency (a) LFL(b)
-------------- -------------- ------------- ------------- -------
Prestige (4) % (3) % -- % (3) %
Consumer Beauty (9) % (5) % -- % (5) %
-------------- ------------- ------------- -------
Total
Continuing
Operations (6) % (3) % -- % (3) %
-------------- ------------- ------------- -------
Nine Months Ended March 31, 2025 vs. Nine Months
Ended March 31, 2024 Net Revenue Change
-------------- -----------------------------------------------------
Impact from
Acquisitions
Net Revenues Reported Constant and
Change YoY Basis Currency Divestitures(a) LFL(b)
-------------- ------------- ------------- --------------- ------
Prestige -- % 1 % (1) % 2 %
Consumer Beauty (7) % (3) % -- % (3) %
------------- ------------- --------------- ------
Total (2) % -- % -- % -- %
Continuing
Operations
------------- ------------- --------------- ------
(a) The Company had an early license termination with Lacoste and concluded
the sell-off period at the end of the second quarter of fiscal 2024. In
calculating the YTD YoY LFL revenue change, to maintain comparability, we
have excluded the first and second quarters of fiscal 2024 Lacoste
contribution.
(b) Consolidated LFL results, Prestige LFL results, and Consumer Beauty LFL
results for the three months ended March 31, 2025 include an immaterial
help from Argentina resulting from significant price increases due to
hyperinflation.
Consolidated LFL results for the nine months ended March 31, 2025 include
1% help from Argentina resulting from significant price increases due to
hyperinflation. Prestige LFL results for the nine months ended March 31,
2025 include 1% help from Argentina resulting from significant price
increases due to hyperinflation. Consumer Beauty LFL results for the nine
months ended March 31, 2025 include 1% help from Argentina resulting from
significant price increases due to hyperinflation
COTY INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, June 30,
(in millions) 2025 2024
------------ ---------
ASSETS
Current assets:
Cash and cash equivalents $ 243.5 $ 300.8
Restricted cash 15.9 19.8
Trade receivables, net 572.9 441.6
Inventories 717.3 764.1
Prepaid expenses and other current assets 380.5 437.2
-------- --------
Total current assets 1,930.1 1,963.5
Property and equipment, net 673.9 718.9
Goodwill 3,903.5 3,905.7
Other intangible assets, net 3,099.0 3,565.6
Equity investments 1,000.0 1,090.6
Operating lease right-of-use assets 262.9 255.3
Other noncurrent assets 601.1 582.9
-------- --------
TOTAL ASSETS $ 11,470.5 $12,082.5
======== ========
LIABILITIES, MEZZANINE EQUITY AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,279.8 $ 1,405.6
Short-term debt and current portion of
long-term debt 9.4 3.0
Other current liabilities 1,070.4 1,193.2
-------- --------
Total current liabilities 2,359.6 2,601.8
Long-term debt, net 3,796.1 3,841.8
Long-term operating lease liabilities 224.8 218.7
Other noncurrent liabilities 1,170.5 1,172.5
-------- --------
TOTAL LIABILITIES 7,551.0 7,834.8
-------- --------
CONVERTIBLE SERIES B PREFERRED STOCK 142.4 142.4
REDEEMABLE NONCONTROLLING INTERESTS 101.9 93.6
Total Coty Inc. stockholders' equity 3,495.0 3,827.1
Noncontrolling interests 180.2 184.6
-------- --------
Total equity 3,675.2 4,011.7
-------- --------
TOTAL LIABILITIES, MEZZANINE EQUITY AND
STOCKHOLDERS' EQUITY $ 11,470.5 $12,082.5
======== ========
COTY INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31,
-----------------------------------
2025 2024
------------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (280.9) $ 205.0
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 315.3 316.6
Non-cash lease expense 46.8 46.7
Deferred income taxes (41.2) 39.0
Provision for bad debts 8.7 3.5
Provision for pension and other
post-employment benefits 8.2 7.6
Share-based compensation 44.7 70.4
Asset impairment charges 212.8 --
Other 424.9 25.9
Change in operating assets and
liabilities:
Trade receivables (156.0) (131.9)
Inventories 46.9 83.5
Prepaid expenses and other current
assets 23.3 8.4
Accounts payable (82.9) (165.5)
Accrued expenses and other current
liabilities (141.4) 47.4
Operating lease liabilities (42.7) (44.4)
Other assets and liabilities, net 22.9 (74.1)
(MORE TO FOLLOW) Dow Jones Newswires
May 06, 2025 16:30 ET (20:30 GMT)
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