Q2 Performance Broadly in Line with Outlook
Cash Flow and Wella Divestiture Strengthen Balance Sheet; Debt and Leverage at Nine-Year Lows
New Leadership Initiating "Coty. Curated." Strategic Framework
Continuing Strategic Review of Consumer Beauty
NEW YORK--(BUSINESS WIRE)--February 05, 2026--
Regulatory News:
Coty Inc. $(COTY)$ (Paris: COTY) ("Coty" or "the Company") today announced its results for the second quarter of fiscal year 2026, ended December 31, 2025. Coty delivered Q2 results broadly in line with expectations, while significantly reducing its net debt and leverage to the lowest level in close to a decade.
"I'm truly excited and energized to join Coty at this pivotal moment," said Markus Strobel, Executive Chairman and Interim Chief Executive Officer.
"In my first month in the role, having visited our largest markets and key sites, it's very clear to me that Coty has many top-notch assets and competitive advantages: highly attractive brands, best-in-class fragrance innovation capabilities, a vertically integrated business model, and a creative, entrepreneurial organization.
At the same time, our financial performance over the past year and a half has been disappointing, and our current share price reflects that reality. Both things are true: Coty has outstanding assets and capabilities, yet we have not been delivering at the level we should.
To step-change our performance and channel our strengths, we are initiating our "Coty. Curated." strategic framework, encompassing sharper priorities, more focused investments, improved execution, and increased support behind our core businesses. These actions are anchored in consumer demand and a relentless focus on sell-out and market share.
In parallel, we are continuing our portfolio review to identify opportunities to unlock shareholder value in both the near and long term, complemented by other value-driving opportunities, such as our recent divestiture of our remaining stake in Wella at the end of CY25, delivering on our commitment.
With greater focus and discipline, I believe Coty is well positioned to deliver consistent, profitable growth and realize its full potential."
RESULTS AT A
GLANCE
---------------- ------- ----- --- --- ----- ------- ----- --- --- -----
Three Months Ended December 31, Six Months Ended December 31,
2025 2025
--------------------------------- ---------------------------------
(in millions,
except per
share data) Change YoY Change YoY
---------------------- ----------------------
Reported Reported
COTY, INC. Basis $(LFL)$(a) Basis (LFL)(a)
--------------- --------- ---------- ---------- --------- ---------- ----------
Net revenues $1,678.6 1% (3%) $3,255.8 (3%) (6%)
Operating
income -
reported 148.2 (45%) 333.2 (34)%
Net (loss)
income
attributable
to common
shareholders -
reported ** (126.9) <(100%) (62.3) <(100%)
Operating
income -
adjusted* 274.3 (18%) 514.8 (19)%
Net income
attributable
to common
shareholders -
adjusted* ** 119.7 21% 225.7 (1)%
EBITDA -
adjusted 330.2 (15%) 626.3 (17)%
EPS
attributable
to common
shareholders
(diluted) -
reported $ (0.14) <(100%) $ (0.07) <(100%)
EPS
attributable
to common
shareholders
(diluted) -
adjusted* $ 0.14 27% $ 0.26 --%
---------------- ------- ----- ---------- ------- ----- ----------
(a) LFL results for the three and six months ended December 31, 2025 include
immaterial help 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," 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.
Three Months Ended December 31, 2025, Summary Results
For the three months ended December 31, 2025, compared to the three months ended December 31, 2024:
-- Net revenue of $1,678.6 million increased 1% on a reported basis and
included a 4% benefit from foreign exchange (FX). On a like-for-like
(LFL) basis, net revenue declined 3%.
-- Prestige net revenue of $1,133.6 million, representing 68% of the
Company's total sales, increased 2% on a reported basis and declined 2%
on a LFL basis.
-- Consumer Beauty net revenue of $545.0 million, representing 32% of the
Company's total sales, decreased 2% on a reported basis and 6% on a LFL
basis.
-- Reported gross margin of 63.8% decreased 290 basis points
year-over-year.
-- Adjusted gross margin of 64.2% decreased 260 basis points
year-over-year.
-- Reported operating income of $148.2 million declined from reported
operating income of $268.2 million in the prior year, resulting in a
reported operating margin of 8.8%.
-- Adjusted operating income of $274.3 million declined 18%. The adjusted
operating margin of 16.3%, reflected a 370 basis point decline.
-- Reported net loss of $126.9 million compared to reported net income of
$20.4 million in the prior year. The reported net loss margin was 7.6%.
-- Reported loss per share of $0.14 compared to reported earnings per
share (EPS) of $0.02 in the prior year, and included a negative impact
from the equity swap mark-to-market of $0.04.
-- Adjusted EPS of $0.14 improved from $0.11 in the prior year, and
included a negative impact from the equity swap mark-to-market of $0.04.
-- Adjusted EBITDA of $330.2 million decreased 15% year-over-year. The
adjusted EBITDA margin of 19.7% reflected a 370 basis point decline.
-- Cash flow from operating activities was $559.7 million and free cash
flow totaled $513.1 million.
Six Months Ended December 31, 2025, Summary Results
For the six months ended December 31, 2025, compared to the six months ended December 31, 2024:
-- Net revenue of $3,255.8 million decreased 3% and included a 3% benefit
from FX. On a LFL basis, net revenue decreased 6%.
-- Prestige net revenue of $2,203.1 million, representing 68% of the
Company's total sales, decreased 1% on a reported basis and declined 4%
on a LFL basis.
-- Consumer Beauty net revenue of $1,052.7 million, representing 32% of
the Company's total sales, decreased 5% on a reported basis and 8% on a
LFL basis.
-- Reported gross margin of 64.1% decreased 200 basis points
year-over-year.
-- Adjusted gross margin of 64.3% decreased 180 basis points
year-over-year.
-- Reported operating income of $333.2 million declined from reported
operating income of $506.0 million in the prior year, resulting in a
reported operating margin of 10.2%.
-- Adjusted operating income of $514.8 million declined 19%. The adjusted
operating margin of 15.8%, reflected a 330 basis point decline.
-- Reported net loss of $62.3 million compared to net income of $100.0
million in the prior year. The reported net loss margin was 1.9%.
-- Reported loss per share of $0.07 compared to reported EPS of $0.11 in
the prior year, and included a negative impact from the equity swap
mark-to-market of $0.07.
-- Adjusted EPS of $0.26 was flat year-over-year, and included a negative
impact from the equity swap mark-to-market of $0.07.
-- Adjusted EBITDA of $626.3 million decreased 17% year-over-year. The
adjusted EBITDA margin of 19.2% reflected a 330 basis point decline.
-- Cash flow from operating activities was $624.9 million and free cash
flow totaled $524.3 million.
At quarter-end, total debt was $3,038.1 million, while financial net debt was $2,601.4 million. This resulted in a total debt to net income ratio of 5.9x and a financial leverage ratio (net debt to adjusted EBITDA) of 2.7x.
Noteworthy Developments:
-- Coty appointed Markus Strobel as Executive Chairman of the Board and
Interim Chief Executive Officer, effective January 1, 2026. Strobel
joined Coty after a distinguished 33-year career in Beauty & Grooming at
Procter & Gamble, where he most recently served as President of P&G's
Global Skin & Personal Care business, overseeing a multi-billion-dollar
portfolio of more than 12 global brands.
-- Coty sold its remaining 25.8% stake in Wella to KKR. Under the terms of
the transaction, Coty received $750 million in upfront cash and will have
the potential to receive proceeds from a further sale or an initial
public offering of the business, after KKR's preferred return has been
met. Coty used the vast majority of the Wella upfront cash proceeds
related to this transaction to pay down its long-term debt.
-- Coty continued to make progress on its strategic review of its Consumer
Beauty business.
-- Coty was upgraded from an A-- to an A by CDP Climate, earning a place
on the CDP Climate A List, the highest rating awarded.
Pipeline for FY26 and Beyond:
Prestige Plans
-- Continuing to amplify the fall 2025 blockbuster BOSS Bottled Beyond
fragrance launch globally, already the #2 male fragrance launch in its
category, alongside the relaunch and distribution extension of the Hugo
Boss brand in the U.S. market where the brand has already reached 90
basis points of market share
-- Building on the strong momentum of the recent launch of Cosmic Kylie
Jenner Intense fragrance in the U.S., which is performing well ahead of
expectations and double the levels of the prior year's fragrance launch
-- Launching a key female fragrance initiative under Calvin Klein in the
coming weeks
-- Makeup under Marc Jacobs Beauty expected to debut in CY26
-- Swarovski fragrance targeted to launch in CY27
Consumer Beauty Plans
-- Focusing investments behind core cosmetics brands and franchises under
CoverGirl and Rimmel, with early incremental improvements in sell-out
-- Continuing to globally expand and amplify adidas fragrances, led by the
adidas Vibes scenting collection
Outlook
Given the complex beauty market backdrop and Coty's leadership transition, the Company is withdrawing its prior FY26 guidance for EBITDA and free cash flow, and is providing guidance solely for Q3.
Coty expects LFL Q3 revenues to decline by a mid-single-digit percentage, primarily due to weakening in Consumer Beauty sales trends.
In Prestige, Coty estimates the fragrance market will grow at a low--to--mid--single--digit rate, which is consistent with Q2 levels and in line with the broader beauty market. While the estimated headwinds from retailer destocking significantly reduced in Q2, the promotional environment intensified through the holiday period and remains elevated across the category, representing a headwind to Coty's net sales performance and by extension, gross margin. Coty is refining its investment allocation behind key priorities and strengthening execution playbooks, targeting over time to improve its market share in key markets like U.S., U.K., and Germany, even as market share performance in Asia Pacific, Middle East and Latin America remains strong.
In Consumer Beauty, the Company estimates the mass beauty category will be flattish to up low--single--digits. Coty is beginning to implement the performance improvement plan for its color cosmetics business, which will narrow its sell-out gap versus the market over time. In the near-term however, the Company's sell-out gap to the cosmetics category will weigh on its results. At the same time, Coty anticipates weakness in the lifestyle fragrances business, as the Company streamlines small initiatives.
Coty anticipates Q3 gross margins to decline by 200 to 300 basis points year-on-year, consistent with Q2 trends. Factoring this gross margin decline, a sizable mechanical impact to fixed costs from the reversal of variable compensation expense, and the Company's commitment to protect A&CP to reignite market share improvement, Coty estimates Q3 adjusted EBITDA of $100 million to $110 million, translating to approximately breakeven adjusted EPS excluding the equity swap.
Finally, on free cash flow, Coty expects cash outflow, reflecting business seasonality, working capital phasing that benefited Q2 at the expense of Q3, as well as approximately $30 million of cash taxes related to the Wella sale in December.
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:
-- 2Q26 reported net revenue of $1,678.6 million increased 1%
year-over-year, reflecting a 2% increase in Prestige reported net revenue
and a 4% benefit from FX, partially offset by a 2% decline in Consumer
Beauty reported net revenue. On a LFL basis, net revenue declined 3%,
driven by a 6% decline in Consumer Beauty and a 2% decrease in Prestige.
-- Fiscal year-to-date reported net revenue of $3,255.8 million decreased
3% year-over-year, driven by a 5% decline in Consumer Beauty reported net
revenue and a 1% decrease in Prestige reported net revenue, partially
offset by a 3% benefit from FX. On a LFL basis, net revenue declined 6%,
reflecting an 8% decline in Consumer Beauty and a 4% decline in
Prestige.
Gross Margin:
-- 2Q26 reported gross margin of 63.8% decreased 290 basis points
year-over-year, reflecting the continued more promotional environment,
geographical mix impact and the impact from tariffs. Adjusted gross
margin, also 64.2%, decreased 260 basis points year-over-year.
-- Fiscal year-to-date reported and adjusted gross margin of 64.1%
decreased 200 basis points year-over-year, reflecting lower sales, the
continued more promotional environment, and the impact from tariffs.
Reported Profit:
-- 2Q26 reported operating income of $148.2 million decreased from $268.2
million in the prior year, driven by lower gross profit. 2Q26 reported
operating margin was 8.8%, compared to 16.1% in the prior year.
-- Fiscal year-to-date reported operating income of $333.2 million
declined from $506.0 million in the prior year. Fiscal year-to-date
reported operating margin was 10.2%, down from 15.1% in the prior year.
-- 2Q26 reported net loss of $126.9 million deteriorated from reported net
income of $20.4 million in the prior year primarily reflecting a realized
loss on the sale of Wella, lower gross profit, higher selling, general,
and administrative expenses partially offset by a benefit for income
taxes and lower interest expense. Reported net income included a $38.6
million negative impact from the mark-to-market on the equity swap,
compared with a $96.5 million negative impact from the mark-to-market on
the equity swap in the prior year quarter.
-- Fiscal year-to-date reported net loss of $62.3 million decreased from
net income of $100.0 million in the prior year. Reported net income
included a $65.1 million negative impact from the mark-to-market on the
equity swap, compared with a $128.8 million negative impact from the
mark-to-market on the equity swap in the prior year quarter.
-- 2Q26 reported net loss margin of 7.6%, declined 880 basis points from
1.2% in the prior year.
-- Fiscal year-to-date reported net loss margin of 1.9%, declined 490
basis points from reported net income of 3.0% in the prior year.
-- 2Q26 reported loss per share of $0.14 deteriorated from reported EPS of
$0.02 in the prior year. 2Q26 reported EPS included a negative impact
from the equity swap mark-to-market of $0.04, compared with an $0.11
impact from equity swap mark-to-market in the prior year quarter.
-- Fiscal year-to-date reported loss per share of $0.07 deteriorated from
reported EPS of $0.11 in the prior year. Fiscal year-to-date reported EPS
included a negative impact from the equity swap mark-to-market of $0.07,
compared with a $0.15 impact from the equity swap mark-to-market in the
prior year.
Adjusted Profit:
-- 2Q26 adjusted operating income of $274.3 million declined 18% from
$333.7 million in the prior year. 2Q26 adjusted operating margin was
16.3% down from 20.0% in the prior year.
-- Fiscal year-to-date adjusted operating income of $514.8 million
declined 19% from $637.3 million in the prior year. The adjusted
operating margin of 15.8% declined from 19.1% in the prior year.
-- 2Q26 adjusted EBITDA of $330.2 million decreased 15% from $390.7
million in the prior year primarily reflecting lower gross profit, with
fixed cost savings offset by an increase in other administrative
expenses. The adjusted EBITDA margin of 19.7% decreased by 370 basis
points.
-- Fiscal year-to-date adjusted EBITDA of $626.3 million decreased 17%
year-over-year from $750.8 million primarily driven by lower sales and
gross profit. The adjusted EBITDA margin of 19.2% reflected a 330 basis
point decline.
-- 2Q26 adjusted net income of $119.7 million increased from adjusted net
income of $98.8 million in the prior year. 2Q26 adjusted net income
included a $38.6 million impact from the mark-to-market on the equity
swap, compared with a $96.5 million negative impact from the
mark-to-market on the equity swap in the prior year quarter. 2Q26
adjusted net income margin of 7.1% increased from 5.9% in the prior
year.
-- Fiscal year-to-date adjusted net income of $225.7 million declined
slightly from adjusted net income of $226.9 million in the prior year.
Fiscal year-to-date adjusted net income included a $61.5 million impact
from the mark-to-market on the equity swap, compared with a $128.8
million negative impact from the mark-to-market on the equity swap in the
prior year quarter. Adjusted net income margin of 6.9% increased from
6.8% in the prior year.
-- 2Q26 adjusted EPS of $0.14 increased from $0.11 in the prior year. 2Q26
adjusted EPS included a negative impact from the equity swap
mark-to-market of $0.04, compared with an $0.11 negative impact from
equity swap mark-to-market in the prior year quarter.
-- Fiscal year-to-date adjusted EPS of $0.26 was flat year-over-year.
Fiscal year-to-date adjusted EPS included a negative impact from the
equity swap mark-to-market of $0.07, compared with an $0.15 negative
impact from equity swap mark-to-market in the prior year quarter.
Operating Cash Flow:
-- 2Q26 cash from operations totaled $559.7 million, compared with $464.5
million during the same period in the prior year.
-- Fiscal year-to-date cash from operations totaled $624.9 million,
compared with $531.9 million during the same period in the prior year.
-- 2Q26 free cash flow of $513.1 million improved from free cash flow of
$419.0 million in the prior year driven by a $95.2 million increase in
operating cash flow partially offset by a $1.1 million increase in
capex.
-- Fiscal year-to-date free cash flow totaled $524.3 million, compared
with $411.1 million during the same period in the prior year.
Financial Net Debt:
-- Total debt of $3,038.1 million on December 31, 2025 decreased from
$4,069.3 million on September 30, 2025. This resulted in a total debt to
net income ratio of 5.9x.
-- Financial net debt of $2,601.4 million on December 31, 2025 decreased
from $3,209.4 million on September 30, 2025. This resulted in financial
leverage of 2.7x, down from 3.7x at the end of the prior quarter,
supported by the strong free cash flow and $750 million of immediate cash
proceeds from the sale of Coty's remaining 25.8% stake in Wella to KKR.
Second Quarter Fiscal 2026 Business Review by Segment
Prestige
In 2Q26, Prestige net revenue of $1,133.6 million, representing 68% of the Company's total quarterly sales, increased 2%, including a 4% FX benefit. Growth on a reported basis was supported by mid-single-digit percentage growth in the EMEA region, partially offset by declines in the Americas region. On a LFL basis, net revenue declined 2%, reflecting a sequential improvement from the prior quarters as the estimated headwind from retailer destocking was significantly reduced in the quarter, partially offset by moderating growth in the category and elevated promotional activity in the market. During the quarter, the Prestige business benefitted from mid-single-digit percentage growth in prestige makeup, led by Burberry and Kylie Cosmetics, and double-digit percentage growth in prestige skincare driven by Lancaster and philosophy. On a fiscal year-to-date basis, Prestige net revenue of $2,203.1 million, representing 68% of the Company's total fiscal year-to-date sales, decreased 1% on a reported basis and 4% on a LFL basis. Growth in prestige skincare was offset by lower year-over-year net revenue across the prestige fragrance and makeup categories.
In 2Q26, the Prestige segment generated reported operating income of $181.9 million, compared to $222.3 million in the prior year, resulting in a reported operating margin of 16.0%, down 390 basis points year-over-year. Adjusted operating income was $246.9 million, compared to $260.0 million in the prior year, with an adjusted operating margin of 21.8%, down 150 basis points year-over-year. The decline in reported and adjusted operating margins primarily reflected lower gross margins as a result of elevated promotions and higher tariff impact. Adjusted EBITDA was $274.8 million, compared to $288.2 million in the prior year quarter, with an adjusted EBITDA margin of 24.2%, down 160 basis points year-over-year. On a fiscal year-to-date basis, the Prestige segment generated reported operating income of $390.8 million, down from $463.8 million, resulting in a reported operating margin of 17.7%, down 310 basis points year-over-year. Adjusted operating income of $485.9 million declined from $539.7 million in the prior year, with an adjusted operating margin of 22.1%, down 210 basis points year-over-year. Fiscal year-to-date adjusted EBITDA of $542.5 million declined from $595.8 million in the prior year, resulting in an adjusted EBITDA margin of 24.6%, down 210 basis points year-over-year.
Consumer Beauty
In 2Q26, Consumer Beauty net revenue of $545.0 million, representing 32% of the Company's total sales, decreased by 2% on a reported basis. The decline in reported net revenue reflected a mid-single-digit percentage decline in color cosmetics and low-single-digit percentage declines in body care and mass fragrance, partially offset by double-digit percentage growth in mass skincare and a 4% FX benefit. On a LFL basis, net revenue declined 6% in 2Q26. On a fiscal year-to-date basis, Consumer Beauty net revenue of $1,052.7 million, representing 32% of the Company's total sales, decreased 5% on a reported basis and 8% on a LFL basis, reflecting broad-based category declines and weakness in the European and U.S. markets.
In 2Q26, the Consumer Beauty segment generated reported operating income of $18.3 million, compared to reported operating income of $64.1 million in the prior year, with a reported operating margin of 3.4%. Adjusted operating income was $27.4 million, compared to $73.7 million in the prior year, with an adjusted operating margin of 5.0%, compared to 13.3% in the prior year quarter. The decline in reported and adjusted operating margins was driven by lower gross margin primarily due to geographical mix and an increase in A&CP. 2Q26 adjusted EBITDA was $55.4 million, down from $102.5 million in the prior year, with an adjusted EBITDA margin of 10.2%, down 830 basis points year-over-year. On a fiscal year-to-date basis, the Consumer Beauty segment generated reported operating income of $10.6 million, down from $78.1 million in the prior year, resulting in a reported operating margin of 1.0%, down 600 basis points year-over-year. Adjusted operating income of $28.9 million declined from $97.6 million in the prior year, with an adjusted operating margin of 2.7%, down 610 basis points year-over-year. Fiscal year-to-date adjusted EBITDA of $83.8 million declined from $155.0 million in the prior year, resulting in an adjusted EBITDA margin of 8.0%, down 590 basis points year-over-year.
Second Quarter Fiscal 2026 Business Review by Region
Americas
-- In 2Q26, Americas net revenue of $624.5 million, representing 37% of
the Company's total sales, decreased 2% on a reported basis. The decline
was driven by lower reported net revenue in both Prestige and Consumer
Beauty, partially offset by a 1% FX benefit. On a LFL basis, Americas net
revenue decreased by 3% in the quarter. On a fiscal year-to-date basis,
Americas net revenue of $1,274.1 million decreased 4% on a reported basis
and 5% on a LFL basis. The reported net revenue decline in both periods
reflected lower Prestige net revenue as a result of elevated promotional
activity, the estimated headwind from retailer destocking, which was
significantly reduced in the quarter, and an inconsistent recovery in the
Company's market share in U.S. prestige fragrances, as well as lower
Consumer Beauty net revenue in U.S. cosmetics driven by the sell-out gap
to the category.
EMEA
-- In 2Q26, EMEA net revenue of $864.2 million increased 3% on a reported
basis and included a 7% FX benefit. On a LFL basis, EMEA net revenue
decreased by 4% in the quarter driven by lower net revenue in the
Prestige fragrance and Consumer Beauty color cosmetics businesses. On a
fiscal year-to-date basis, EMEA net revenue of $1,619.0 million decreased
1% on a reported basis and 7% on a LFL basis. The decline in reported net
revenue was driven by lower Consumer Beauty net revenue.
Asia Pacific
-- In 2Q26, Asia Pacific net revenue of $189.9 million, decreased 1% on a
reported basis and included a 1% FX benefit. On a LFL basis, Asia Pacific
net revenue decreased 2%. The decline in reported net revenue was
primarily driven by declines in Southeast Asia, partially offset by
growth in China including Hainan, and in Japan. On a fiscal year-to-date
basis, Asia Pacific net revenue of $362.7 million decreased 5% on a
reported and LFL basis. We are continuing to see beauty market trends in
China gradually improve with fragrances outperforming other beauty
categories as penetration increases.
Conference Call
Coty Inc. will issue pre-recorded remarks on February 5, 2026 at approximately 4:45 PM $(ET)$ / 10:45 PM $(CET)$ and will hold a live question and answer session on February 6, 2026 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 1-800-225-9448 in the U.S. or 1-203-518-9708 internationally (conference passcode number: COTY2Q26).
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), the strategic review of the Company's consumer beauty business, including its mass color cosmetics business and associated brands and the Company's distinct Brazil business comprised of local Brazilian brands, and any transactions related thereto, use of proceeds from any transaction and the timing and outcome of the strategic review, expectations and/or plans with respect to joint ventures, the timing and size of any future distribution related to the Wella distribution rights, 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, plans and expectations with respect to licenses and/or portfolio changes, product launches, relaunches or rebranding (including the expected timing or impact thereof), plans for growth in certain categories, 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 and plans for settlement of such 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 (including its recent fixed cost reduction plan), 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 strategic
priorities (including leveraging its leadership position and capabilities
in global fragrances to fuel strong expansion and continue to grow its
footprint and diversification in a limited number of structurally
profitable and growing beauty categories and geographic markets at scale),
achieve the benefits contemplated by the Company's strategic initiatives
(including revenue growth, cost control, gross margin growth and debt
deleveraging), and compete effectively in the beauty industry, 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, and the market value of inventory;
-- 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, the
strategic review of its consumer beauty business, 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 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 tax regulations in 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 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 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, 2025 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
To supplement the financial measures prepared in accordance with GAAP, we use non-GAAP financial measures for Coty Inc. including Adjusted operating income (loss), Adjusted EBITDA, Adjusted net income (loss), and Adjusted net income (loss) attributable to Coty Inc. to common stockholders (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.
Despite the limitations of these non-GAAP financial measures, our management uses the Adjusted Performance Measures as key metrics in the evaluation of our performance and annual budgets and to benchmark performance of our business against our competitors. The following are examples of how these Adjusted Performance Measures are utilized by our management:
-- strategic plans and annual budgets are prepared using the Adjusted
Performance Measures;
-- senior management receives a monthly analysis comparing budget to
actual operating results that is prepared using the Adjusted Performance
Measures; and
-- senior management's annual compensation is calculated, in part, by
using some of the Adjusted Performance Measures.
In addition, our financial covenant compliance calculations under our debt agreements are substantially derived from these Adjusted Performance Measures.
Our management believes that Adjusted Performance Measures are useful to investors in their assessment of our operating performance and the valuation of the Company. In addition, these non-GAAP financial measures address questions we routinely receive from analysts and investors and, in order to ensure that all investors have access to the same data, our management has determined that it is appropriate to make this data available to all investors. The Adjusted Performance Measures exclude the impact of certain items (as further described below) and provide supplemental information regarding our operating performance. By disclosing these non-GAAP financial measures, our management intends to provide investors with a supplemental comparison of our operating results and trends for the periods presented. Our management believes these measures are also useful to investors as such measures allow investors to evaluate our performance using the same metrics that our management uses to evaluate past performance and prospects for future performance. We provide disclosure of the effects of these non-GAAP financial measures by presenting the corresponding measure prepared in conformity with GAAP in our financial statements, and by providing a reconciliation to the corresponding GAAP measure so that investors may understand the adjustments made in arriving at the non-GAAP financial measures and use the information to perform their own analyses.
Adjusted operating income/Adjusted EBITDA excludes 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, in addition to the preceding, we exclude 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 implement divestitures of components of our business, 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 items, 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 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 our 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 or loss on sale and early license termination: The Company has
excluded the impact of gain or loss 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: The Company has 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: The Company has 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 realized and unrealized
gains and losses on 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 a reconciliation of adjusted operating income to operating income and adjusted operating income margin to operating income margin, see the tables entitled "Reconciliation of Reported Operating Income (Loss) to Adjusted Operating Income" and "Reconciliation of Reported Operating Income (Loss) to Adjusted Operating Income by Segment." 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 a reconciliation of adjusted net income and adjusted net income margin to net income (loss), 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"), immediate liquidity, Financial 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. 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, see the tables entitled "Reconciliation of Total Debt to Financial Net Debt." Further, our immediate liquidity is defined as the sum of available cash and cash equivalents and available borrowings under our Revolving Credit Facility (please see table "Immediate Liquidity").
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
SECOND QUARTER FISCAL 2026 BY SEGMENT (COTY INC)
Three Months Ended December 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 $1,133.6 $1,116.1 2% (2%) $181.9 (18%) 16.0% $246.9 (5%) 21.8%
Consumer Beauty 545.0 553.8 (2%) (6%) 18.3 (71%) 3.4% 27.4 (63%) 5.0%
Corporate -- -- N/A N/A (52.0) <(100%) N/A -- N/A N/A
------- ------- ----- -----
Total $1,678.6 $1,669.9 1% (3%) $148.2 (45%) 8.8% $274.3 (18%) 16.3%
======= ======= ===== =====
(a) Consolidated, Prestige, and Consumer Beauty LFL results for the three
months ended December 31, 2025 include immaterial help from Argentina
resulting from significant price increases due to hyperinflation.
Six Months Ended December 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 $2,203.1 $2,230.2 (1%) (4%) $390.8 (16%) 17.7% $485.9 (10%) 22.1%
Consumer Beauty 1,052.7 1,111.2 (5%) (8%) 10.6 (86%) 1.0% 28.9 (70%) 2.7%
Corporate -- -- N/A N/A (68.2) (90%) N/A -- N/A N/A
------- ------- ----- -----
Total $3,255.8 $3,341.4 (3%) (6%) $333.2 (34%) 10.2% $514.8 (19%) 15.8%
======= ======= ===== =====
(a) Consolidated, Prestige, and Consumer Beauty LFL results for the six months
ended December 31, 2025 include immaterial help from Argentina resulting from
significant price increases due to hyperinflation.
Adjusted EBITDA
-----------------------------------------------------
Three Months Ended Six Months Ended December
December 31, 31,
-------------------------- -------------------------
(in millions) 2025 2024 2025 2024
-------------- --- ------ --- -------- --- ------ --------
Prestige $ 274.8 $ 288.2 $ 542.5 $ 595.8
Consumer Beauty 55.4 102.5 83.8 155.0
Corporate -- -- -- --
--- ------ --- -------- --- ------ --------
Total $ 330.2 $ 390.7 $ 626.3 $ 750.8
=== ====== === ======== === ====== ========
SECOND QUARTER FISCAL 2026 BY REGION
Coty, Inc.
Three Months Ended December 31, Six Months Ended December 31,
------------------------------------------ ------------------------------------------
Net Revenues Change Net Revenues Change
------------------- --------------------- ------------------- ---------------------
Reported Reported
(in millions) 2025 2024 Basis LFL(a) 2025 2024 Basis LFL(a)
-------------- ------- -------- ----------- -------- ------- -------- ----------- --------
Americas $ 624.5 $ 638.6 (2)% (3)% $1,274.1 $ 1,332.1 (4)% (5)%
EMEA 864.2 839.8 3% (4)% 1,619.0 1,627.6 (1)% (7)%
Asia Pacific 189.9 191.5 (1)% (2)% 362.7 381.7 (5)% (5)%
--------------- ------- -------- ----- --- ------- -------- ----- ---
Total $1,678.6 $ 1,669.9 1% (3)% $3,255.8 $ 3,341.4 (3)% (6)%
======= ======== ======= ========
(a) Americas LFL results for the three and six months ended December 31, 2025
include immaterial help from Argentina resulting from significant price
increases due to hyperinflation.
COTY INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended December Six Months Ended December
31, 31,
--------------------------- --------------------------
(in millions,
except per share
data) 2025 2024 2025 2024
------- ------- --- ------- -------
Net revenues $1,678.6 $1,669.9 $3,255.8 $3,341.4
Cost of sales 608.0 555.7 1,168.4 1,132.6
------- ------- --- ------- -------
as % of Net
revenues 36.2% 33.3% 35.9% 33.9%
Gross profit 1,070.6 1,114.2 2,087.4 2,208.8
Gross margin 63.8% 66.7% 64.1% 66.1%
Selling, general
and
administrative
expenses 842.5 797.3 1,636.0 1,605.3
as % of Net
revenues 50.2% 47.7% 50.2% 48.0%
Amortization
expense 74.1 47.3 113.4 95.4
Restructuring
costs 5.8 1.4 4.8 2.1
------- ------- --- ------- -------
Operating income 148.2 268.2 333.2 506.0
as % of Net
revenues 8.8% 16.1% 10.2% 15.1%
Interest expense,
net 41.4 54.4 88.0 116.2
Other expense,
net 275.4 157.2 306.7 200.5
------- ------- --- ------- -------
(Loss) Income
before income
taxes (168.6) 56.6 (61.5) 189.3
as % of Net
revenues (10.0%) 3.4% (1.9%) 5.7%
(Benefit)
provision for
income taxes (52.4) 26.0 (19.3) 68.0
------- ------- --- ------- -------
Net (loss) income (116.2) 30.6 (42.2) 121.3
as % of Net
revenues (6.9%) 1.8% (1.3%) 3.6%
Net income
attributable to
noncontrolling
interests 2.5 1.6 4.6 3.7
Net income
attributable to
redeemable
noncontrolling
interests 4.9 5.3 8.9 11.0
------- ------- --- ------- -------
Net (loss) income
attributable to
Coty Inc. $ (123.6) $ 23.7 $ (55.7) $ 106.6
======= ======= === ======= =======
Amounts
attributable to
Coty Inc.
Net (loss) income $ (123.6) $ 23.7 $ (55.7) $ 106.6
Convertible
Series B
Preferred Stock
dividends (3.3) (3.3) (6.6) (6.6)
------- ------- ------- -------
Net (loss) income
attributable to
common
stockholders $ (126.9) $ 20.4 $ (62.3) $ 100.0
======= ======= === ======= =======
Earnings per
common share:
Basic for Coty
Inc. $ (0.14) $ 0.02 $ (0.07) $ 0.11
Diluted for Coty
Inc.(a) $ (0.14) $ 0.02 $ (0.07) $ 0.11
Weighted-average
common shares
outstanding:
Basic 876.8 871.4 874.8 869.6
Diluted(a)(b) 876.8 875.2 874.8 875.2
Depreciation -
Coty Inc. $ 55.9 $ 58.3 $ 111.5 $ 114.8
(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 $38.6 and $96.5, respectively, if
dilutive, for the three months ended December 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 $6.6, and to reverse the impact of fair
market value losses/(gains) for contracts with the option to settle in
shares or cash of $65.1 and $128.8, respectively, if dilutive, for the
six months ended December 31, 2025 and 2024 on net income applicable to
common stockholders during the period.
(b) For the three months ended December 31, 2025 and 2024, outstanding
stock options with rights to purchase 3.4 million and 3.5 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 six
months ended December 31, 2025 and 2024, outstanding stock options and
Series A Preferred Stock with purchase or conversion rights to purchase
3.4 million and 3.5 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 December 31, 2025
-----------------------------------------------------
COTY INC.
-----------------------------------------------------
Reported Adjusted
(in millions) (GAAP) Adjustments(a) (Non-GAAP)
----------------- ------------------- ---------------- --------------
Net revenues $ 1,678.6 $ -- $ 1,678.6
Gross profit 1,070.6 6.7 1,077.3
Gross margin 63.8% 64.2%
Operating income 148.2 126.1 274.3
as % of Net
revenues 8.8% 16.3%
Net (loss) income
attributable to
common
stockholders (126.9) 246.6 119.7
as % of Net
revenues (7.6%) 7.1%
Adjusted EBITDA 330.2
as % of Net
revenues 19.7%
EPS (diluted) $ (0.14) $ 0.14
Adjusted diluted EPS includes $0.04 hurt related to the net impact of
the Total Return Swaps in the three months ended December 31, 2025.
Three Months Ended December 31, 2024
-----------------------------------------------------
COTY INC.
-----------------------------------------------------
Reported Adjusted
(in millions) (GAAP) Adjustments(a) (Non-GAAP)
----------------- ------------------- ---------------- --------------
Net revenues $ 1,669.9 $ -- $ 1,669.9
Gross profit 1,114.2 1.3 1,115.5
Gross margin 66.7% 66.8%
Operating income 268.2 65.5 333.7
as % of Net
revenues 16.1% 20.0%
Net income
attributable to
common
stockholders 20.4 78.4 98.8
as % of Net
revenues 1.2% 5.9%
Adjusted EBITDA 390.7
as % of Net
revenues 23.4%
EPS (diluted) $ 0.02 $ 0.11
Adjusted diluted EPS includes $0.11 hurt related to the net impact of
the Total Return Swaps in the three months ended December 31, 2024.
(a) See "Reconciliation of Reported Net (Loss) Income, Adjusted Operating
Income and Adjusted EBITDA for Coty Inc" and "Reconciliation of Reported Net
(Loss) 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.
Six Months Ended December 31, 2025
-----------------------------------------------------
COTY INC.
-----------------------------------------------------
Reported Adjusted
(in millions) (GAAP) Adjustments(a) (Non-GAAP)
----------------- ------------------- ---------------- --------------
Net revenues $ 3,255.8 $ -- $ 3,255.8
Gross profit 2,087.4 6.7 2,094.1
Gross margin 64.1% 64.3%
Operating income 333.2 181.6 514.8
as % of Net
revenues 10.2% 15.8%
Net (loss) income
attributable to
common
stockholders (62.3) 288.0 225.7
as % of Net
revenues (1.9%) 6.9%
Adjusted EBITDA 626.3
as % of Net
revenues 19.2%
EPS (diluted) $ (0.07) $ 0.26
Adjusted diluted EPS includes $0.07 hurt related to the net impact of
the Total Return Swaps in the six months ended December 31, 2025.
Six Months Ended December 31, 2024
-----------------------------------------------------
COTY INC.
-----------------------------------------------------
Reported Adjusted
(in millions) (GAAP) Adjustments(a) (Non-GAAP)
----------------- ------------------- ---------------- --------------
Net revenues $ 3,341.4 $ -- $ 3,341.4
Gross profit 2,208.8 1.3 2,210.1
Gross margin 66.1% 66.1%
Operating income 506.0 131.3 637.3
as % of Net
revenues 15.1% 19.1%
Net income
attributable to
common
stockholders 100.0 126.9 226.9
as % of Net
revenues 3.0% 6.8%
Adjusted EBITDA 750.8
as % of Net
revenues 22.5%
EPS (diluted) $ 0.11 $ 0.26
Adjusted diluted EPS includes $0.15 hurt related to the net impact of
the Total Return Swaps in the six months ended December 31, 2024.
(a) See "Reconciliation of Reported Net (Loss) Income to Adjusted Operating
Income, and Adjusted EBITDA" and "Reconciliation of Reported Net (Loss) Income
to Adjusted Net Income" for a detailed description of adjusted items.
RECONCILIATION OF REPORTED NET (LOSS) INCOME TO ADJUSTED OPERATING INCOME AND ADJUSTED
EBITDA
COTY INC. Three Months Ended December 31, Six Months Ended December 31,
---------------------------------- ---------------------------------
(in millions) 2025 2024 Change 2025 2024 Change
----------------- ------ ----- --------- ----- ----- ---------
Net (loss) income $(116.2) $ 30.6 <(100%) $(42.2) $121.3 <(100%)
Net income margin (6.9)% 1.8% (1.3)% 3.6%
Provision for
income taxes (52.4) 26.0 <(100%) (19.3) 68.0 <(100%)
------ ----- ----- -----
(Loss) Income
before income
taxes $(168.6) $ 56.6 <(100%) $(61.5) $189.3 <(100%)
Interest
expense, net 41.4 54.4 (24%) 88.0 116.2 (24%)
Other expense,
net 275.4 157.2 75% 306.7 200.5 53%
------ ----- ----- -----
Reported Operating
income $ 148.2 268.2 (45%) $333.2 $506.0 (34%)
Reported operating
income margin 8.8% 16.1% 10.2% 15.1%
Amortization
expense 74.1 47.3 57% 113.4 95.4 19%
Restructuring
and other
business
realignment
costs 14.3 2.7 >100% 16.1 3.4 >100%
Stock-based
compensation 18.0 15.5 16% 32.4 32.5 0%
Early license
termination 19.7 -- N/A 19.7 -- N/A
------ ----- ----- -----
Total adjustments
to reported
operating income 126.1 65.5 93% 181.6 131.3 38%
------ ----- ----- -----
Adjusted Operating
income $ 274.3 $333.7 (18%) $514.8 $637.3 (19%)
------ ----- ----- -----
Adjusted operating
income margin 16.3% 20.0% 15.8% 19.1%
Adjusted
depreciation 55.9 57.0 (2%) 111.5 113.5 (2%)
------ ----- ----- -----
Adjusted EBITDA $ 330.2 $390.7 (15%) $626.3 $750.8 (17%)
====== ===== ===== =====
Adjusted EBITDA
margin 19.7% 23.4% 19.2% 22.5%
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 Six Months Ended
December 31, December 31,
---------------------- ----------------------
(in millions) 2025 2024 Change % 2025 2024 Change %
---------------- ----- ----- ---------- ----- ----- ----------
Reported
operating
income $181.9 $222.3 (18)% $390.8 $463.8 (16)%
Reported
operating income
margin 16.0% 19.9% 17.7% 20.8%
Amortization
expense 65.0 37.7 72% 95.1 75.9 25%
----- ----- ----- -----
Total adjustments
to reported
operating
income 65.0 37.7 72% 95.1 75.9 25%
----- ----- ----- -----
Adjusted
operating
income $246.9 260.0 (5%) $485.9 539.7 (10%)
===== ===== ===== =====
Adjusted
operating income
margin 21.8% 23.3% 22.1% 24.2%
Adjusted
depreciation 27.9 28.2 (1%) 56.6 56.1 1%
----- ----- ----- -----
Adjusted EBITDA $274.8 288.2 (5%) $542.5 595.8 (9%)
===== ===== ===== =====
Adjusted EBITDA
margin 24.2% 25.8% 24.6% 26.7%
OPERATING INCOME, ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA- CONSUMER BEAUTY
SEGMENT
Three Months Ended Six Months Ended
December 31, December 31,
--------------------- ---------------------
(in millions) 2025 2024 Change % 2025 2024 Change %
---------------- ---- ----- ---------- ---- ----- ----------
Reported
operating
income $18.3 $ 64.1 (71)% $10.6 $ 78.1 (86)%
Reported
operating income
margin 3.4% 11.6% 1.0% 7.0%
Amortization
expense 9.1 9.6 (5%) 18.3 19.5 (6%)
---- ----- ---- -----
Total adjustments
to reported
operating
income 9.1 9.6 (5%) 18.3 19.5 (6%)
---- ----- ---- -----
Adjusted
operating
income $27.4 73.7 (63%) $28.9 97.6 (70%)
==== ===== ==== =====
Adjusted
operating income
margin 5.0% 13.3% 2.7% 8.8%
Adjusted
depreciation 28.0 28.8 (3%) 54.9 57.4 (4%)
---- ----- ---- -----
Adjusted EBITDA $55.4 102.5 (46%) $83.8 155.0 (46%)
==== ===== ==== =====
Adjusted EBITDA
margin 10.2% 18.5% 8.0% 13.9%
OPERATING LOSS, ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA- CORPORATE
SEGMENT
Three Months
Ended December Six Months Ended
31, December 31,
---------------- ----------------
(in millions) 2025 2024 Change % 2025 2024 Change %
----------------- ----- ----- ---------- ----- ----- ----------
Reported operating
loss $(52.0) $(18.2) <(100 %) $(68.2) $(35.9) (90)%
Reported
operating loss
margin N/A N/A N/A N/A
Restructuring
and other
business
realignment
costs 14.3 2.7 >100% 16.1 3.4 >100%
Stock-based
compensation 18.0 15.5 16% 32.4 32.5 0%
Early license
termination 19.7 -- N/A 19.7 -- N/A
----- ----- ----- -----
Total adjustments
to reported
operating loss 52.0 18.2 >100% 68.2 35.9 90%
----- ----- ----- -----
Adjusted operating $ -- $ -- N/A $ -- $ -- N/A
income
===== ===== ===== =====
Adjusted operating N/A N/A N/A N/A
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 (LOSS) 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
December 31, 2025 December 31, 2024
--------------------------------------- -------------------------------------
Income Income
before Provision before Provision
income for income Effective income for income Effective
(in millions) taxes taxes tax rate taxes taxes tax rate
-------------------- ------------ ----------- ------------ ----------- ---------- ------------
Reported (Loss)
Income before income
taxes $(168.6) $(52.4) 31.1% $ 56.6 $ 26.0 45.9%
Adjustments to
Reported Operating
Income (a) 126.1 65.5
Realized/unrealized
loss on investment
in Wella Company
(c) 201.9 32.0
Other adjustments (d) (0.7) (0.1)
------ ----------- ----- ----------
Total Adjustments (b) 327.3 79.0 97.4 17.3
------ --- ----- --- ----- --- ---------
Adjusted Income
before income taxes $ 158.7 $ 26.6 16.8% $154.0 $ 43.3 28.1%
====== === ===== === ===== === =========
The adjusted effective tax rate was 16.8% for the three months ended December 31, 2025 compared to 28.1% for the three months ended December 31, 2024. The difference is primarily due to the release of uncertain tax positions in the current period and a higher limitation on the deductibility of interest expense in the prior period.
Six Months Ended Six Months Ended
December 31, 2025 December 31, 2024
-------------------------------------- -------------------------------------
Income Income
before Provision before Provision
income for income Effective income for income Effective
(in millions) taxes taxes tax rate taxes taxes tax rate
-------------------- ----------- ----------- ------------ ----------- ---------- ------------
Reported (Loss)
Income before income
taxes - Continuing
Operations $(61.5) $(19.3) 31.4% $189.3 $ 68.0 35.9%
Adjustments to
Reported Operating
Income (a) 181.6 131.3
Realized/unrealized
loss on investment
in Wella Company
(c) 200.9 32.0
Other adjustments (d) (0.7) (0.4)
----- ----------- ----- ----------
Total Adjustments (b) 381.8 90.3 162.9 32.6
----- --- ----- --- ----- --- ---------
Adjusted Income
before income taxes
- Continuing
Operations $320.3 $ 71.0 22.2% $352.2 $ 100.6 28.6%
===== === ===== === ===== === =========
The adjusted effective tax rate was 22.2% for the six months ended December 31, 2025 compared to 28.6% for the six months ended December 31, 2024. The difference is primarily due to the release of uncertain tax positions in the current period and a higher limitation on the deductibility of interest expense 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. (c) For the three months ended December 31, 2025, the amount represents the
realized loss related to the investment in the Wella Company. For the three
months ended December 31, 2024, the amount represents the unrealized (gain)
loss recognized for the change in the fair value of the investment in Wella.
For the six months ended December 31, 2025, this primarily represents the
realized loss on the sale of the investment in Wella. For the six months ended
December 31, 2024, this primarily represents unrealized loss recognized for
the change in fair value of the investment in Wella.
(d) For the three months ended December 31, 2025, this primarily represents
recovery of previously written-off non-income tax credits and the amortization
of basis differences in certain equity method investments. For the three
months ended December 31, 2024, this primarily represents recovery of
previously written-off non-income tax credits and the amortization of basis
differences in certain equity method investments.
For the six months ended December 31, 2025, this primarily represents recovery
of previously written-off non-income tax credits and the amortization of basis
differences in certain equity method investments. For the six months ended
December 31, 2024, this primarily represents recovery of previously
written-off non-income tax credits and the amortization of basis differences
in certain equity method investments.
RECONCILIATION OF REPORTED NET (LOSS) INCOME TO ADJUSTED NET INCOME FOR COTY INC.
Three Months Ended December 31, Six Months Ended December 31,
---------------------------------- ---------------------------------
(in millions) 2025 2024 Change 2025 2024 Change
------ ----- --------- ----- ----- ---------
Net (loss) income
attributable to Coty
Inc. $(123.6) $ 23.7 <(100%) $(55.7) $106.6 <(100%)
Convertible Series B
Preferred Stock
dividends (c) (3.3) (3.3) --% (6.6) (6.6) --%
------ ----- ----- -----
Reported Net (loss)
income attributable to
common stockholders $(126.9) $ 20.4 <(100%) $(62.3) $100.0 <(100%)
% of Net revenues (7.6%) 1.2% (1.9%) 3.0%
Adjustments to
Reported Operating
income (a) 126.1 65.5 93% 181.6 131.3 38%
Realized/unrealized
loss on investment
in Wella Company
(d) 201.9 32.0 >100% 200.9 32.0 >100%
Adjustments to other
expense (e) (0.7) (0.1) <(100%) (0.7) (0.4) (75%)
Adjustments to
noncontrolling
interests (b) (1.7) (1.7) --% (3.5) (3.4) (3%)
Change in tax provision
due to adjustments to
Reported Net (loss)
income attributable to
Coty Inc. (79.0) (17.3) <(100%) (90.3) (32.6) <(100%)
------ ----- ----- -----
Adjusted Net income
attributable to Coty
Inc. $ 119.7 $ 98.8 21% $225.7 $226.9 (1%)
====== ===== ===== =====
% of Net revenues 7.1% 5.9% 6.9% 6.8%
Per Share Data
Adjusted
weighted-average common
shares
Basic 876.8 871.4 874.8 869.6
Diluted (c)(f) 878.6 875.2 877.5 875.2
Adjusted Net income
attributable to Coty
Inc. per Common Share
Basic $ 0.14 $ 0.11 $ 0.26 $ 0.26
Diluted (c) $ 0.14 $ 0.11 $ 0.26 $ 0.26
Adjusted diluted EPS includes $0.04 hurt and $0.07 hurt related to the net impact of the Total
Return Swaps in the three and six months ended December 31, 2025, respectively. Adjusted
diluted EPS includes $0.11 hurt and $0.15 hurt related to the net impact of the Total Return
Swaps in the three and six months ended December 31, 2024, respectively.
(a) See a description of adjustments under "Net (Loss) 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. When
calculating any potential dilutive effect of stock options, Series A
Preferred Stock, restricted stock, 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 of $3.3, and to reverse the
impact of fair market value losses for contracts with the option to
settle in shares or cash of $38.6 and $96.5, respectively, if dilutive,
for the three months ended December 31, 2025 and 2024 on net income
applicable to common stockholders during the period.
(d) For the three and six months ended December 31, 2025, this represents
the realized loss on the sale of the investment in Wella. For the three
and six months ended December 31, 2024, this represents unrealized loss
recognized for the change in fair value of the investment in Wella.
(e) For the three months ended December 31, 2025, this primarily represents
recovery of previously written-off non-income tax credits and the
amortization of basis differences in certain equity method investments.
For the three months ended December 31, 2024, this primarily recovery
of previously written-off non-income tax credits and the amortization
of basis differences in certain equity method investments
For the six months ended December 31, 2025, this primarily represents
recovery of previously written-off non-income tax credits and the
amortization of basis differences in certain equity method investments.
For the six months ended December 31, 2024, this primarily represents
recovery of previously written-off non-income tax credits and the
amortization of basis differences in certain equity method
investments.
(f) Adjusted Diluted EPS is adjusted by the effect of dilutive securities.
For the three months ended December 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 for contracts with the option to settle in shares
or cash of $38.6 and $96.5, respectively. For the three months ended
December 31, 2025, 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. For the three months ended
December 31, 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 six months ended December 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 $65.1 and $128.8, respectively. For the six months ended
December 31, 2025, 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 $6.6. For the six months ended
December 31, 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 $6.6.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING
ACTIVITIES TO FREE CASH FLOW
Three Months
Ended December Six Months Ended
COTY INC. 31, December 31,
---------------- -----------------------
(in millions) 2025 2024 2025 2024
-------------- ----- ----- ------ ------
Net cash
provided by
operating
activities $559.7 $464.5 $ 624.9 $ 531.9
Capital
expenditures (46.6) (45.5) (100.6) (120.8)
----- ----- ------ ------
Free cash flow $513.1 $419.0 $ 524.3 $ 411.1
----- ----- ------ ------
RECONCILIATION OF TOTAL DEBT TO FINANCIAL NET DEBT
COTY INC. As of
(in millions) December 31, 2025
----------------------------------------- -------------------
Total debt(1) $ 3,038.1
Less: Cash and cash equivalents 436.7
---- -------------
Financial Net debt $ 2,601.4
==== =============
____________________
(1) Total debt is derived from footnote 9 from the Form 10-Q for the
quarter-ended December 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 (LOSS) INCOME TO ADJUSTED OPERATING INCOME
AND ADJUSTED EBITDA
Twelve months
ended
-------------------------------------- --------------
March June December
31, 30, September 31, December 31,
2025 2025 30, 2025 2025 2025
-------- ------- --------- -------- --------------
(in millions)
---------------- -------- ------- --------- -------- --------------
Net (loss)
income $(402.2) $(69.3) $74.0 $(116.2) $(513.7)
(Benefit)
Provision for
income taxes on
continuing
operations $(58.4) $(4.2) $33.1 $(52.4) $(81.9)
-------- ------- --------- -------- --------------
(Loss) Income
before income
taxes $(460.6) $(73.5) $107.1 $(168.6) $(595.6)
Interest
expense, net $47.9 $50.1 $46.6 $41.4 $186.0
Other expense,
net $132.3 $38.9 $31.3 $275.4 $477.9
-------- ------- --------- -------- --------------
Reported
operating
(loss) income $(280.4) $15.5 $185.0 $148.2 $68.3
-------- ------- --------- -------- --------------
Amortization
expense $45.9 $45.6 $39.3 $74.1 $204.9
Restructuring
and other
business
realignment
costs $87.2 $1.2 $1.7 $14.3 $104.4
Stock-based
compensation $12.1 $5.4 $14.5 $18.0 $50.0
Asset impairment
charges $212.8 $-- $-- $-- $212.8
Early license
termination $70.3 $-- $-- $19.7 $90.0
-------- ------- --------- -------- --------------
Total
adjustments to
reported
operating loss $428.3 $52.2 $55.5 $126.1 $662.1
-------- ------- --------- -------- --------------
Adjusted
operating
income $147.9 $67.7 $240.5 $274.3 $730.4
-------- ------- --------- -------- --------------
Add: Adjusted
depreciation(b) $56.3 $59.0 $55.6 $55.9 $226.8
-------- ------- --------- -------- --------------
Adjusted EBITDA $204.2 $126.7 $296.1 $330.2 $957.2
======== ======= ========= ======== ==============
(a) Trailing twelve months $(TTM)$ net (loss) 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 December, 31, 2025, September 30, 2025,
June 30, 2025, and March 31, 2025.
(b) Adjusted depreciation for the twelve months ended December 31, 2025
represents depreciation expense for Coty Inc for the period, excluding
accelerated depreciation.
COMPARISON OF TOTAL DEBT/NET (LOSS) INCOME TO FINANCIAL NET DEBT/ADJUSTED
EBITDA
Numerator
------------------------------
Financial Net
Total Debt Debt(c)
---------- ------------------
$ 3,038.1 $ 2,601.4
------------------------- -------------- --------- --- -------------
TTM Net
Denominator loss(b) $ (513.7) 5.9 N/R(d)
------------ ------------ --------- --------- ------------------
TTM Adjusted EBITDA(a) $ 957.2 N/R(d) 2.7
------------------------- --------- ---------- --- -------------
(a) TTM Adjusted EBITDA for the twelve months ended December 31, 2025
represents the summation of Adjusted EBITDA for each of the quarters
ended December 31, 2025, September 30, 2025, June 30, 2025, and March
31, 2025. For a reconciliation of adjusted operating income to
operating income for Coty Inc. for each of those periods, see the table
entitled "Reconciliation of TTM of Net (Loss) Income to Adjusted
Operating Income to Adjusted EBITDA" for each of those periods.
(b) TTM net (loss) for the twelve months ended December 31, 2025 represents
the summation of net (loss) income for each of the quarters ended
December 31, 2025, September 30, 2025, June 30, 2025, and March 31,
2025.
(c) Financial Net Debt equals Total Debt minus Cash and cash equivalents as
of December 31, 2025. See table titled "Reconciliation of Total Debt to
Financial Net Debt".
(d) Not relevant.
RECONCILIATION OF REPORTED NET REVENUES TO LIKE-FOR-LIKE NET REVENUES
Three Months Ended December 31, 2025 vs. Three Months Ended
December 31, 2024 Net Revenue Change
----------- ------------------------------------------------------------
Net Impact from
Revenues Reported Constant Acquisitions and
Change YoY Basis Currency Divestitures(a) LFL(b)
----------- ------------ ------------ ------------------- -----------
Prestige 2% (2)% --% (2)%
Consumer
Beauty (2)% (6)% --% (6)%
------ ------ -------------- -----
Total
Continuing
Operations 1% (3)% --% (3)%
------- ------ -------------- -----
Six Months Ended December 31, 2025 vs. Six Months Ended
December 31, 2024 Net Revenue Change
----------- ----------------------------------------------------------
Net Impact from
Revenues Reported Constant Acquisitions and
Change YoY Basis Currency Divestitures(a) LFL(b)
----------- ------------ ------------ ------------------- ---------
Prestige (1)% (4)% --% (4)%
Consumer
Beauty (5)% (8)% --% (8)%
------ ------ -------------- ---
Total
Continuing
Operations (3)% (6)% --% (6)%
------ ------ -------------- ---
(a) There are no acquisitions, divestitures, early license terminations or
market exits that would impact the comparability of financial results
presented above.
(b) Consolidated, Prestige, and Consumer Beauty LFL results for the three
and six months ended December 31, 2025 include immaterial help from
Argentina resulting from significant price increases due to
hyperinflation.
COTY INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, June 30,
(in millions) 2025 2025
--------------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 436.7 $ 257.1
Restricted cash 11.3 13.3
Trade receivables, net 689.4 526.4
Inventories 778.2 794.5
Prepaid expenses and other current assets 329.8 362.0
----------- --------
Total current assets 2,245.4 1,953.3
Property and equipment, net 659.9 709.2
Goodwill 4,068.7 4,062.2
Other intangible assets, net 3,104.9 3,214.8
Equity investment -- 1,002.0
Operating lease right-of-use assets 253.1 265.7
Other noncurrent assets 745.1 700.5
----------- --------
TOTAL ASSETS $ 11,077.1 $11,907.7
=========== ========
LIABILITIES, MEZZANINE EQUITY AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 2,120.8 $ 1,890.0
Short-term debt and current portion of
long-term debt 2.4 3.5
Other current liabilities 716.6 644.8
----------- --------
Total current liabilities 2,839.8 2,538.3
Long-term debt, net 2,986.8 3,955.5
Long-term operating lease liabilities 209.6 221.8
Other noncurrent liabilities 1,096.2 1,236.5
----------- --------
TOTAL LIABILITIES 7,132.4 7,952.1
----------- --------
CONVERTIBLE SERIES B PREFERRED STOCK 142.4 142.4
REDEEMABLE NONCONTROLLING INTERESTS 94.7 94.2
Total Coty Inc. stockholders' equity 3,526.9 3,542.7
Noncontrolling interests 180.7 176.3
----------- --------
Total equity 3,707.6 3,719.0
----------- --------
TOTAL LIABILITIES, MEZZANINE EQUITY AND
STOCKHOLDERS' EQUITY $ 11,077.1 $11,907.7
=========== ========
COTY INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended December 31,
-------------------------------------
2025 2024
------------- ----------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) income $ (42.2) $ 121.3
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Depreciation and amortization 225.0 210.2
Non-cash lease expense 31.9 32.0
Deferred income taxes (74.3) 15.2
Provision for bad debts 6.2 2.6
Provision for pension and other
post-employment benefits 5.6 5.4
Share-based compensation 32.4 32.5
Other 308.7 212.4
Change in operating assets and
liabilities:
Trade receivables (166.6) (187.1)
Inventories 16.8 38.9
Prepaid expenses and other
current assets 25.0 13.7
Accounts payable and accrued
expenses 257.7 128.5
Other current liabilities 49.5 (89.4)
Operating lease liabilities (30.9) (28.8)
Other assets and liabilities,
net (19.9) 24.5
------------- ----------
Net cash provided by operating
activities 624.9 531.9
------------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures (100.6) (120.8)
Proceeds from sale of equity
investment 750.0 --
Proceeds from contingent
consideration, license
agreements, and sale of other
long-lived assets, net 9.3 12.6
------------- ----------
Net cash provided by (used in)
investing activities 658.7 (108.2)
------------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net proceeds from short-term
debt -- 10.0
Proceeds from revolving loan
facilities 853.9 1,011.9
Repayments of revolving loan
facilities (1,261.6) (943.8)
Proceeds from issuance of other
long-term debt 899.2 --
Repayments of other long-term
debt (1,465.7) (490.6)
Dividend payment on Class A
Common Stock and Series B
Preferred Stock (6.6) (6.7)
Net proceeds from (payments of)
foreign currency contracts 3.7 (10.3)
Payments related to forward
repurchase contracts, including
hedge valuation adjustment (85.6) (77.8)
Refunds related to hedge
valuation adjustment -- 61.8
Distribution to noncontrolling
interests (3.7) --
Payments of deferred financing
fees and premium on bond
extinguishment (29.7) (2.0)
All other (10.4) (13.8)
------------- ----------
Net cash used in financing
activities (1,106.5) (461.3)
------------- ----------
EFFECT OF EXCHANGE RATES ON CASH,
CASH EQUIVALENTS AND RESTRICTED
CASH 0.5 (14.4)
------------- ----------
NET INCREASE (DECREASE) IN CASH,
CASH EQUIVALENTS AND RESTRICTED
CASH 177.6 (52.0)
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH--Beginning of
period 270.4 320.6
------------- ----------
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH--End of period $ 448.0 $ 268.6
============= ==========
View source version on businesswire.com: https://www.businesswire.com/news/home/20260205126040/en/
CONTACT: Investor Relations
Olga Levinzon, +1 212 389-7733
olga_levinzon@cotyinc.com
Media
Antonia Werther, +31 621 394495
antonia_werther@cotyinc.com
(END) Dow Jones Newswires
February 05, 2026 16:30 ET (21:30 GMT)