Prestige Brands and Asia Pacific Region Resume Growth
Over $180M Improvement in Reported Operating Income and Adjusted EBITDA, Fueled by Over 400bps of Gross Margin Expansion and Continued Cost Reductions
Executing on Strategic Plan with Early Results in Each Pillar
NEW YORK--(BUSINESS WIRE)-- Coty Inc. (NYSE: COTY) ("Coty" or "the Company") today announced continued improvement in its financial results and early evidence of recovery across its operations for the third quarter of fiscal year 2021, ended March 31, 2021.
In Q3, revenues declined 3%, or 5.5% LFL, in a persisting COVID context in Europe and select regions. At the same time results were buoyed by +20% LFL growth in Asia Pacific, 30% growth in e-commerce, and a relatively stable performance in the Americas, including strong growth in U.S. prestige sales. Brands like Gucci, Burberry and Marc Jacobs were standouts, with double digit growth in the quarter, and Coty continued to build upon its newer prestige engines of growth in cosmetics and skincare. The 2% LFL growth in the prestige sales was noteworthy, given Coty's higher commercial weighting in Europe and the continued active reduction of sales in low quality channels, which represented a high single digit negative impact to the prestige sales in the last two years.
In the mass channel, Coty’s strategic plans delivered early results, with CoverGirl gaining market share over the last 5 weeks according to the latest scanner data available; a first in over 4 years. While Coty's mass beauty revenues in Q3 declined 14.5%, the Company’s mass beauty retail sell-out returned to growth in the month of March.
Coty’s progress on profitability over last two quarters continued in Q3, with an adjusted EBITDA* of $183.2 million with a 17.8% margin, up over $180 million versus last year, and a reported operating loss of $1.4 million, an improvement of nearly $300 million versus last year. This was supported by reported and adjusted gross margin expansion up 450 bps year-on-year to 62.2%; fueled by revenue and mix management, lower excess & obsolescence, and improved demand planning. During the quarter, Coty continued to reduce its costs base, with savings totaling approximately $110 million in the quarter. Fiscal year-to-date cost savings totaled over $270 million, and the Company remains on track to achieve its target of approximately $300 million in cost savings in FY21. Fiscal year-to-date, adjusted EBITDA totaled $633.0 million, up 50% versus the last year.
As anticipated, Financial Net Debt at the end of Q3 totaled approximately $5.1 billion. With an increase in the value of Coty's retained Wella stake to approximately $1.25 billion1 at quarter-end, the Company's Economic Net Debt totaled approximately $3.9 billion. Coty also successfully raised $900 million in secured notes in April 2021, extending the maturity profile of its debt.
In line with Coty's recently unveiled growth acceleration strategy, the Company continues to make progress across each of its strategic pillars. This includes initial market share gains for CoverGirl in the U.S., with the re-positioning plans for Rimmel and Max Factor in Europe on track for the fourth quarter. Luxury fragrance demand remained strong in the key U.S. market, with Coty's portfolio outperforming the market. In addition, Coty continues to build upon its newer prestige engines of growth in cosmetics and skincare, which includes very strong growth of Gucci Beauty globally as well as encouraging results of Lancaster in China and Hainan. Meanwhile, the performance of digital and e-commerce grew close to 30% in Q3.
Commenting on the operating results, Sue Y. Nabi, Coty's CEO, said:
"Our Q3 marked another strong milestone in our journey to rejuvenate Coty's position as a global beauty powerhouse. In less than a year, the leadership team and the broader organization have successfully mapped out our strategy, activated our brand and category plans, while generating operational improvements, and strengthening our financial position.
From a results standpoint, in Q3 we saw a significant improvement in our sales trends even as we continued our efforts to strengthen the health of our business and brands by cutting sales in low quality channels. Importantly, the prestige sales returned to growth as the impact of the pandemic abated in many markets. We have seen strong momentum in several of our key markets, with China sales growing double-to-triple digits versus FY20 and FY19, and U.S. prestige sales up high single digits in the quarter and nearly flat in the fiscal year-to-date. While Europe sales remain under pressure, we are confident that the imminent lifting of COVID restrictions will drive improvement in this key region.
Financially, we took a significant step forward in reshaping our profitability profile, with gross margins over 62% and EBITDA margins up 18 percentage points year-on-year, despite a lower topline. With our year-to-date adjusted EBITDA of $633 million reaching over 80% of our FY21 target of approximately $750 million, we have generated capacity to significantly increase our marketing investments in Q4 to support our strategic growth initiatives while at the same time delivering on our financial commitments. We are also progressing on our deleveraging objectives, driving leverage towards 5x exiting CY21, and the recent successful $900 million bond issuance has helped Coty's maturity profile.
Finally, we were pleased to recently share our strategy for accelerating sales and profit growth in the coming years, anchored in six strategic pillars: 1) stabilization of Consumer Beauty make-up brands and Mass fragrances; 2) acceleration of luxury fragrances and establishing Coty as a key player in Prestige make-up; 3) building a Skincare portfolio across prestige and mass channels; 4) enhancing e-commerce and Direct-to-Consumer (DTC) capabilities; 5) expanding in China through Prestige and select Consumer Beauty brands; and 6) establishing Coty as an industry leader in sustainability.
With this clear path towards value creation, a strong portfolio of desirable beauty brands, and a renewed sense of tempo throughout the organization, I am confident in Coty's ability deliver on its near and long-term objectives."
*Adjusted financial metrics used in this release are non-GAAP. See reconciliations of GAAP results to Adjusted results in the accompanying tables. |
1Based on fair market value, reflecting the final Wella capital structure |
Highlights
Outlook
As announced during the Strategic Update on April 23, 2021, Coty expects to end the year with net revenues of $4.5 billion to $4.6 billion. With strengthened profitability, the Company expects to increase commercial investments in Q4 to support its strategic priorities and the improvement of sell-out trends, as the broader beauty market begins to recover.
These investments will be supported by the continued reduction of costs, with cost reductions on track to reach approximately $300 million in FY21 and total targeted savings of $600 million through FY23. In addition, Coty is reaffirming its target for adjusted EBITDA of $750 million in FY21. The Company plans to continue to lower its leverage ratio towards 5x by the end of CY21, as previously announced.
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:
Gross Margin:
Operating Income and EBITDA:
Net Income:
Earnings Per Share (EPS) - diluted:
Operating Cash Flow:
Financial Net Debt:
Immediate Liquidity:
Third Quarter Business Review by Segment
Americas
In 3Q21, Americas net revenues of $409.6 million or 40% of Coty sales, decreased by 6.0% versus the prior year. On a LFL basis, Americas net revenues decreased by 3.4%. Although the mass beauty sales showed sequential improvement, softness in the color cosmetics market continues to weigh on the overall performance of the mass category. Meanwhile, the U.S. prestige sales, excluding the travel retail channel, generated very strong growth, supported by robust performance across fragrances, cosmetics, and skincare.
During the quarter, our U.S. prestige fragrance business continued to generate very strong sell-out growth, with particularly strong performance from Burberry, Marc Jacobs, Gucci, Hugo Boss, and Tiffany. Encouragingly, Marc Jacobs Perfect continues to see very robust sell-out growth, moving Marc Jacobs brand up 4 spots to the #5 prestige fragrance house. Meanwhile, Burberry Her accelerated during the quarter, and was the fastest selling brand within the top 25 US prestige fragrances. Following on the success of prior quarters, Gucci continues to see strong sell-out across both fragrances and cosmetics. Within fragrances, the performance was driven by Gucci Guilty and Gucci Bloom Profumo. Within cosmetics, Gucci continued to generate robust sell-out growth in the triple-digits, driven by particularly strong performance of mascara, liquid primer, and bronzer.
Within our Americas mass beauty sales, the cosmetics and fragrance categories remained pressured through much of the quarter as usage occasions remained limited, though trends have started to improve. Despite this, we continued to execute our strategy, focusing on our key brands. For CoverGirl, our national media campaign went live in March, which has resulted in a clear improvement in trend for CoverGirl, and the Magnificent 8 in particular. Lash Blast Clean delivered very strong performance during the quarter, while Simply Ageless has also seen strong support at key retailers. Meanwhile, Sally Hansen continued to gain market share in the U.S. In addition, we continued to win market share in Brazil.
E-commerce sales for the region continued to increase over 50% in Q3 and over 60% fiscal year-to-date, with solid growth across both prestige and mass, driven by robust performance across all e-tailers and brick & click. Fiscal year-to-date, e-commerce penetration is in the low double-digits, up a mid-single-digit percent from last year.
The Americas segment generated a reported operating income of $2.3 million in 3Q21, compared to a reported operating loss of $40.3 million in the prior year. The 3Q21 adjusted operating income was $29.2 million, up from an adjusted operating loss of $16.0 million in the prior year, driven by gross margin improvement, strong fixed cost reduction, and close management of marketing investment, particularly non-working media spending. The adjusted operating margin was 7.1% versus (3.7)% in the prior year. Adjusted EBITDA for the Americas segment rose to $68.5 million from $14.7 million in the prior year, with a margin of 16.7%.
EMEA
In 3Q21, EMEA net revenues of $473.0 million, or 46% of Coty sales, declined by 7.8% versus the prior year. On a LFL basis, EMEA net revenues declined 12.9%, which included a mid single digit headwind from Travel Retail. Sales trends for both Mass and Prestige continued to be pressured by COVID-19 driving fairly broad-based lockdowns and restrictions across much of Western Europe during the quarter.
Within our EMEA prestige sales, Hugo Boss Bottled, Chloe Signature, and Gucci Guilty delivered strong performances, with Chloe Signature becoming the #2 female fragrance in Germany. Meanwhile, we continue to expand our presence in prestige cosmetics, with Gucci Beauty climbing the ranks at Sephora both online and in-store, and is now solidly in the top 10 makeup brands in the stores where it's present. In our mass beauty brands, Rimmel continued to expand its market share in the U.K., as well as in Spain and France. Importantly, we remain on-track with the repositioning of both Rimmel and Max Factor in June, which includes a ramp in working media investments to FY19 levels on a dollar basis as well as key new media assets and brand ambassadors. We expect both brands to be well positioned to benefit with the easing of lockdowns and restrictions across much of Western Europe.
3Q21 EMEA e-commerce sales grew nearly 90%, driving e-commerce penetration as a percentage of sales to the high-teens percentage level, with strong growth in both prestige and mass.
Reported operating income was $28.7 million in 3Q21 versus reported operating loss of $57.5 million in the prior year. The 3Q21 adjusted operating income of $58.2 million increased from an adjusted operating loss of $26.3 million in the prior year, driven by a higher gross margin, controlled marketing spend, and solid fixed cost reductions. For 3Q21, the adjusted operating margin rose to 12.3% from (5.1)% in the prior year. During the quarter, adjusted EBITDA increased to $94.5 million from $0.8 million in the prior year, with a margin of 20.0%.
Asia Pacific
3Q21 Asia Pacific net revenues of $145.2 million, or 14% of Coty sales, increased 27.7% on a reported basis and rose 19.5% LFL. The LFL performance was fueled by robust growth within our prestige brands, despite travel retail continuing to face significant pressure from lower air travel. In addition, strength was particularly strong in China during the quarter.
In China, our prestige beauty brands across both brick & mortar and e-commerce continued to generate very strong sell-out growth, particularly Burberry and Gucci, both of which had triple-digit-sell-out growth during the quarter. In particular, we continued to see solid momentum in Gucci and Burberry's prestige cosmetics business. During the quarter, Gucci Beauty was launched on Tmall with very strong initial results that continued into the second month following the launch.
E-commerce generated very strong growth, increasing at a triple-digit rate during 3Q21, with penetration in the mid-teens.
Reported operating income in 3Q21 of $1.9 million increased from a reported operating loss of $31.4 million in the prior year. The 3Q21 adjusted operating income of $7.6 million rose from an adjusted operating loss of $25.2 million in the prior year, driven by reduced fixed costs and lower marketing investments. The 3Q21 adjusted operating margin of 5.2% increased from (22.2)% in the prior year. For 3Q21, adjusted EBITDA improved to $20.2 million from $(16.9) million in the prior year, with a margin of 13.9%.
Third Quarter Fiscal 2021 Business Review by Channel
Prestige
Mass
Noteworthy Company Developments
Other noteworthy company developments include:
Conference Call
Coty Inc. will host a conference call at 8:00 a.m. (ET) today, May 10, 2021 to discuss its results. The dial-in number for the call is (866) 834-4311 in the U.S. or (720) 405-2213 internationally (conference passcode number: 5099946. The live audio webcast and presentation slides will be available at http://investors.coty.com. The conference call will be available for replay.
About Coty Inc.
Coty is one of the world’s largest beauty companies with an iconic portfolio of brands across fragrance, color cosmetics, and skin and body care. Coty is the global leader in fragrance, and number three in color cosmetics. Coty’s products are sold in over 150 countries around the world. Coty and its brands are committed to a range of social causes as well as seeking to minimize its impact on the environment. For additional information about Coty Inc., please visit www.coty.com.
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, the impact of COVID-19 and potential recovery scenarios, the Company’s comprehensive transformation agenda (the “Transformation Plan”), strategic planning, targets, segment reporting 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 impact of the Wella divestiture and the related transition services (the “Wella TSA”), 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, strategic transactions (including their expected timing and impact), the Company’s capital allocation strategy and payment of dividends (including suspension of dividend payments and the duration thereof), investments, licenses and portfolio changes, synergies, savings, performance, cost, timing and integration of acquisitions, including the strategic partnership with Kylie Jenner and the strategic partnership with Kim Kardashian West, future cash flows, liquidity and borrowing capacity, timing and size of cash outflows and debt deleveraging, the availability of local government funding or reimbursement programs in connection with COVID-19 (including expected timing and amounts), the timing and extent of any future impairments, and synergies, savings, impact, cost, timing and implementation of the Company’s Transformation Plan, including operational and organizational structure changes, operational execution and simplification initiatives, fixed cost reductions, supply chain changes, e-commerce and digital initiatives, 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:
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 Quarterly Report on Form 10-Q for the period ended March 31, 2021 and annual report on Form 10-K for the year ended June 30, 2020 and other periodic reports the Company has filed and may file with the SEC from time to time.
All forward-looking statements made in this release are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this release, and the Company does not undertake any obligation, other than as may be required by applicable law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise.
Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance unless expressed as such, and should only be viewed as historical data.
Non-GAAP Financial Measures
The Company operates on a global basis, with the majority of net revenues generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect results of operations. Therefore, to supplement financial results presented in accordance with GAAP, certain financial information is presented excluding the impact of foreign currency exchange translations to provide a framework for assessing how the underlying businesses performed excluding the impact of foreign currency exchange translations (“constant currency”). Constant currency information compares results between periods as if exchange rates had remained constant period-over-period, with the current period’s results calculated at the prior-year period’s rates. The Company calculates constant currency information by translating current and prior-period results for entities reporting in currencies other than U.S. dollars into U.S. dollars using constant foreign currency exchange rates. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency that is different to the functional currency of that entity when exchange rates fluctuate. The constant currency information presented may not be comparable to similarly titled measures reported by other companies. The Company discloses the following constant currency financial measures: net revenues, organic like-for-like (LFL) net revenues, adjusted gross profit and adjusted operating income.
The Company presents period-over-period comparisons of net revenues on a constant currency basis as well as on an organic (LFL) basis. The Company believes that organic (LFL) better enables management and investors to analyze and compare the Company's net revenues performance from period to period. For the periods described in this release, the term “like-for-like” describes the Company's core operating performance, excluding the financial impact of (i) acquired brands or businesses in the current year period until we have twelve months of comparable financial results, (ii) the divested brands or businesses or early terminated brands, generally, in the prior year non-comparable periods, to maintain comparable financial results with the current fiscal year period and (iii) foreign currency exchange translations to the extent applicable. For a reconciliation of organic (LFL) period-over-period, see the table entitled “Reconciliation of Reported Net Revenues to Like-For-Like Net Revenues”.
The Company presents operating income, operating income margin, gross profit, gross margin, effective tax rate, net income, net income margin, net revenues, EBITDA, and EPS (diluted) on a non-GAAP basis and specifies that these measures are non-GAAP by using the term “adjusted” (collectively the Adjusted Performance Measures). The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in tables below. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for or superior to, financial measures reported in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies, including companies in the beauty industry, may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
Adjusted operating income/Adjusted EBITDA from continuing operations excludes restructuring costs and business structure realignment programs, amortization, acquisition- and divestiture-related costs and acquisition accounting impacts, asset impairment charges and other adjustments as described below. For adjusted EBITDA, in addition to the preceding, we adjust for non-cash stock-based compensation expense and depreciation. We do not consider these items to be reflective of our core operating performance due to the variability of such items from period-to-period in terms of size, nature and significance. They are primarily incurred to realign our operating structure and integrate new acquisitions, and exclude divestitures, and fluctuate based on specific facts and circumstances. Additionally, Adjusted net income attributable to Coty Inc. and Adjusted net income attributable to Coty Inc. per common share are adjusted for certain interest and other (income) expense 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:
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 and Economic Net Debt. Management believes that these measures are useful for investors because it provides them with an important perspective on the cash available for debt repayment and other strategic measures and provides them with the same measures that management uses as the basis for making resource allocation decisions. Free cash flow is defined as net cash provided by operating activities less capital expenditures; adjusted EBITDA is defined as adjusted operating income, excluding adjusted depreciation and non-cash stock-based compensation. Net debt or Financial Net Debt (which the Company referred to as "net debt" in prior reporting periods) is defined as total debt less cash and cash equivalents, and Economic Net Debt is defined as total debt less cash and cash equivalents less the value of the Wella Stake. For a reconciliation of Free Cash Flow, see the table entitled “Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow,” for adjusted EBITDA, see the table entitled “Reconciliation of Adjusted Operating Income to Adjusted EBITDA” and for Financial Net Debt and Economic Net Debt, see the tables entitled “Reconciliation of Total Debt to Financial Net Debt and Economic Net Debt.” 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").
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 | |||||||||||||||||||
RESULTS AT A GLANCE | |||||||||||||||||||
|
| Three Months Ended March 31, 2021 | Nine Months Ended March 31, 2021 | ||||||||||||||||
(in millions, except per share data) |
|
|
| Change YoY |
|
| Change YoY | ||||||||||||
CONTINUING OPERATIONS |
|
|
| Reported Basis |
| Organic (LFL) |
|
| Reported Basis |
| Organic (LFL) | ||||||||
Net revenues |
| $ | 1,027.8 |
|
| (3 | %) |
| (6 | %) | $ | 3,567.5 |
|
| (14 | %) |
| (15 | %) |
Operating income (loss) - reported |
| (1.4 | ) |
| 100 | % |
|
| (50.4 | ) |
| 84 | % |
|
| ||||
Operating income - adjusted* |
| 95.6 |
|
| >100 | % |
|
| 365.0 |
|
| >100 | % |
|
| ||||
EBITDA - adjusted |
| 183.2 |
|
| >100 | % |
|
| 633.0 |
|
| 50 | % |
|
| ||||
Net income (loss) attributable to common shareholders - reported** |
| (1.2 | ) |
| 100 | % |
|
| 54.8 |
|
|
|
|
| |||||
Net income attributable to common shareholders - adjusted* ** |
| 2.3 |
|
| >100 | % |
|
| 76.8 |
|
|
|
|
| |||||
EPS attributable to common shareholders (diluted) - reported |
| $ | 0.00 |
|
| 100 | % |
|
| $ | 0.07 |
|
|
|
|
| |||
EPS attributable to common shareholders (diluted) - adjusted* |
| $ | 0.00 |
|
| 100 | % |
|
| $ | 0.10 |
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
COTY, INC. |
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net (loss) attributable to common shareholders - reported ** |
| (18.5 | ) |
| 93 | % |
|
| (93.4 | ) |
|
|
|
| |||||
Net income attributable to common shareholders - adjusted* ** |
| 2.3 |
|
| >100 | % |
|
| 219.7 |
|
|
|
|
| |||||
EPS attributable to common shareholders (diluted) - reported |
| $ | (0.02 | ) |
| 94 | % |
|
| $ | (0.12 | ) |
|
|
|
| |||
EPS attributable to common shareholders (diluted) - adjusted* |
| $ | 0.00 |
|
| 100 | % |
|
| $ | 0.29 |
|
|
|
|
| |||
* | These measures, as well as “free cash flow,” “adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA),” "immediate liquidity," “financial net debt,” and "economic net debt" are Non-GAAP Financial Measures. Refer to “Non-GAAP Financial Measures” for discussion of these measures. Net income (loss) represents Net income (loss) Attributable to Coty Inc. Reconciliations from reported to adjusted results can be found at the end of this release. |
** | Net income (loss) for Continuing Operations and Coty Inc. are net of the Convertible Series B Preferred Stock dividends. |
THIRD QUARTER BY SEGMENT (CONTINUING OPERATIONS) | |||||||
Americas | |||||||
| Three Months Ended March 31, 2021 |
| Nine Months Ended March 31, 2021 | ||||
| Actual | Reported Basis YoY | Organic (LFL) |
| Actual | Reported Basis YoY | Organic (LFL) |
Net Revenues | $409.6 | (6.0%) | (3.4)% |
| $1,419.7 | (5.7%) | (5.3)% |
|
|
|
|
|
|
|
|
| Reported | Adjusted |
|
| Reported | Adjusted |
|
Operating income | $2.3 | $29.2 |
|
| $55.3 | $133.5 |
|
Operating Margin | 0.6% | 7.1% |
|
| 3.9% | 9.4% |
|
EMEA | |||||||
| Three Months Ended March 31, 2021 |
| Nine Months Ended March 31, 2021 | ||||
| Actual | Reported Basis YoY | Organic (LFL) |
| Actual | Reported Basis YoY | Organic (LFL) |
Net Revenues | $473.0 | (7.8%) | (12.9%) |
| $1,712.3 | (18.4%) | (21.8%) |
|
|
|
|
|
|
|
|
| Reported | Adjusted |
|
| Reported | Adjusted |
|
Operating Income | $28.7 | $58.2 |
|
| $129.7 | $222.5 |
|
Operating Margin | 6.1% | 12.3% |
|
| 7.6% | 13.0% |
|
Asia Pacific | |||||||
| Three Months Ended March 31, 2021 |
| Nine Months Ended March 31, 2021 | ||||
| Actual | Reported Basis YoY | Organic (LFL) |
| Actual | Reported Basis YoY | Organic (LFL) |
Net Revenues | $145.2 | 27.7% | 19.5% |
| $435.5 | (12.6%) | (16.2%) |
|
|
|
|
|
|
|
|
| Reported | Adjusted |
|
| Reported | Adjusted |
|
Operating Loss | $1.9 | $7.6 |
|
| $(10.9) | $7.5 |
|
Operating Margin | 1.3% | 5.2% |
|
| (2.5)% | 1.7% |
|
THIRD QUARTER FISCAL 2021 BY CHANNEL | ||||||||||||||||||||||||||||
Continuing Operations | ||||||||||||||||||||||||||||
|
| Three Months Ended March 31, |
| Nine Months Ended March 31, | ||||||||||||||||||||||||
|
| Net Revenues |
| Change |
| Net Revenues |
| Change | ||||||||||||||||||||
(in millions) |
| 2021 |
| 2020 |
| Reported Basis |
| Organic (LFL) |
| 2021 |
| 2020 |
| Reported Basis |
| Organic (LFL) | ||||||||||||
Prestige |
| $ | 600.6 |
|
| $ | 563.9 |
|
| 6.5 | % |
| 2 | % |
| $ | 2,148.4 |
|
| $ | 2,387.1 |
|
| (10 | )% |
| (15 | )% |
Mass |
| 427.4 |
|
| 498.7 |
|
| (14 | )% |
| (15 | )% |
| 1,418.7 |
|
| 1,770.4 |
|
| (20 | )% |
| (16 | )% | ||||
Corporate |
| (0.2 | ) |
| (0.1 | ) |
| N/M |
|
| N/M |
|
| 0.4 |
|
| (0.1 | ) |
| N/M |
|
| N/M |
| ||||
Total |
| $ | 1,027.8 |
|
| $ | 1,062.5 |
|
| (3 | )% |
| (6 | )% |
| $ | 3,567.5 |
|
| $ | 4,157.4 |
|
| (14 | )% |
| (15 | )% |
COTY INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| Three Months Ended March 31, |
| Nine Months Ended March 31, | ||||||||||||
(in millions, except per share data) | 2021 |
| 2020 |
| 2021 |
| 2020 | ||||||||
Net revenues | $ | 1,027.8 |
|
| $ | 1,062.5 |
|
| $ | 3,567.5 |
|
| $ | 4,157.4 |
|
Cost of sales | 391.7 |
|
| 460.8 |
|
| 1,440.6 |
|
| 1,655.0 |
| ||||
as % of Net revenues | 38.1 | % |
| 43.4 | % |
| 40.4 | % |
| 39.8 | % | ||||
Gross profit | 636.1 |
|
| 601.7 |
|
| 2,126.9 |
|
| 2,502.4 |
| ||||
Gross margin | 61.9 | % |
| 56.6 | % |
| 59.6 | % |
| 60.2 | % | ||||
|
|
|
|
|
|
|
| ||||||||
Selling, general and administrative expenses | 545.6 |
|
| 757.9 |
|
| 1,770.5 |
|
| 2,481.0 |
| ||||
as % of Net revenues | 53.1 | % |
| 71.3 | % |
| 49.6 | % |
| 59.7 | % | ||||
Amortization expense | 62.2 |
|
| 61.6 |
|
| 189.4 |
|
| 170.7 |
| ||||
Restructuring costs | — |
|
| (8.0 | ) |
| 89.7 |
|
| 125.5 |
| ||||
Acquisition-and divestiture- related costs | 29.7 |
|
| 49.3 |
|
| 127.7 |
|
| 85.3 |
| ||||
Asset impairment charges | — |
|
| 40.4 |
|
| — |
|
| 40.4 |
| ||||
Gain on divestitures and sale of brand assets | — |
|
| — |
|
| — |
|
| (84.5 | ) | ||||
Operating (loss) | (1.4 | ) |
| (299.5 | ) |
| (50.4 | ) |
| (316.0 | ) | ||||
as % of Net revenues | (0.1 | %) |
| (28.2 | %) |
| (1.4 | %) |
| (7.6 | %) | ||||
Interest expense, net | 50.3 |
|
| 63.8 |
|
| 171.6 |
|
| 185.3 |
| ||||
Other ( income) expense, net | (62.5 | ) |
| 0.3 |
|
| (50.7 | ) |
| 4.0 |
| ||||
Income (Loss) from continuing operations before income taxes | 10.8 |
|
| (363.6 | ) |
| (171.3 | ) |
| (505.3 | ) | ||||
as % of Net revenues | 1.1 | % |
| (34.2 | %) |
| (4.8 | %) |
| (12.2 | %) | ||||
Benefit for income taxes on continuing operations | (19.2 | ) |
| (59.8 | ) |
| (304.9 | ) |
| (117.0 | ) | ||||
Net income (loss) from continuing operations | 30.0 |
|
| (303.8 | ) |
| 133.6 |
|
| (388.3 | ) | ||||
as % of Net revenues | 2.9 | % |
| (28.6 | %) |
| 3.7 | % |
| (9.3 | %) | ||||
Net (loss) income from discontinued operations | (17.3 | ) |
| 39.4 |
|
| (148.2 | ) |
| 163.8 |
| ||||
Net income (loss) | 12.7 |
|
| (264.4 | ) |
| (14.6 | ) |
| (224.5 | ) | ||||
Net (loss) income attributable to noncontrolling interests | (9.4 | ) |
| 6.2 |
|
| (11.5 | ) |
| 9.5 |
| ||||
Net income attributable to redeemable noncontrolling interests | 6.5 |
|
| 1.0 |
|
| 12.2 |
|
| 6.4 |
| ||||
Net income (loss) attributable to Coty Inc. | $ | 15.6 |
|
| $ | (271.6 | ) |
| $ | (15.3 | ) |
| $ | (240.4 | ) |
Amounts attributable to Coty Inc. |
|
|
|
|
|
|
| ||||||||
Net income (loss) from continuing operations | $ | 32.9 |
|
| $ | (311.0 | ) |
| $ | 132.9 |
|
| $ | (404.2 | ) |
Convertible Series B Preferred Stock dividends | (34.1 | ) |
| — |
|
| (78.1 | ) |
| — |
| ||||
Net (loss) income from continuing operations attributable to common stockholders | $ | (1.2 | ) |
| $ | (311.0 | ) |
| $ | 54.8 |
|
| $ | (404.2 | ) |
Net (loss) income from discontinued operations | (17.3 | ) |
| 39.4 |
|
| (148.2 | ) |
| 163.8 |
| ||||
Net loss attributable to common stockholders | $ | (18.5 | ) |
| $ | (271.6 | ) |
| $ | (93.4 | ) |
| $ | (240.4 | ) |
|
|
|
|
|
|
|
| ||||||||
Net (loss) income attributable to Coty Inc. per common share: |
|
|
|
|
|
|
| ||||||||
Basic for Continuing Operations | $ | 0.00 |
|
| $ | (0.41 | ) |
| $ | 0.07 |
|
| $ | (0.53 | ) |
Diluted for Continuing Operations(a) | $ | 0.00 |
|
| $ | (0.41 | ) |
| $ | 0.07 |
|
| $ | (0.53 | ) |
Basic for Coty Inc | $ | (0.02 | ) |
| $ | (0.36 | ) |
| $ | (0.12 | ) |
| $ | (0.32 | ) |
Diluted for Coty Inc.(a) | $ | (0.02 | ) |
| $ | (0.36 | ) |
| $ | (0.12 | ) |
| $ | (0.32 | ) |
Weighted-average common shares outstanding: |
|
|
|
|
|
|
| ||||||||
Basic | 765.4 |
|
| 760.8 |
|
| 764.6 |
|
| 757.7 |
| ||||
Diluted(a) | 765.4 |
|
| 760.8 |
|
| 932.1 |
|
| 757.7 |
| ||||
|
|
|
|
|
|
|
| ||||||||
Depreciation - Continuing Operations | $ | 84.3 |
|
| $ | 93.0 |
|
| $ | 246.7 |
|
| $ | 268.8 |
|
(a) | Diluted EPS is adjusted by the effect of dilutive securities, including awards under our equity compensation plans and the convertible Series B Preferred Stock. We use the if-converted method for calculating any potential dilutive effect of the convertible Series B Preferred Stock, which requires an adjustment to reverse the impact of the preferred stock dividends of $34.1 million and $78.1 million on income applicable to common stockholders during three and nine months ended March 31, 2021, |
RECONCILIATION OF REPORTED TO ADJUSTED RESULTS FOR THE CONSOLIDATED STATEMENTS OF OPERATIONS
These supplemental schedules provide adjusted Non-GAAP financial information and a quantitative reconciliation of the difference between the Non-GAAP financial measure and the financial measure calculated and reported in accordance with GAAP.
| Three Months Ended March 31, 2021 | ||||||||||||||
| CONTINUING OPERATIONS |
| DISCONTINUED OPERATIONS | ||||||||||||
(in millions) | Reported (GAAP) |
| Adjustments(a) |
| Adjusted (Non-GAAP) |
| Adjusted (Non-GAAP) | ||||||||
Net revenues | $ | 1,027.8 |
|
| $ | — |
|
| $ | 1,027.8 |
|
| $ | — |
|
Gross profit | 636.1 |
|
| 3.1 |
|
| 639.2 |
|
| — |
| ||||
Gross margin | 61.9 | % |
|
|
| 62.2 | % |
| — | % | |||||
Operating (loss) income | (1.4 | ) |
| 97.0 |
|
| 95.6 |
|
| — |
| ||||
as % of Net revenues | (0.1 | %) |
|
|
| 9.3 | % |
| N/A | ||||||
Net (loss) income | (1.2 | ) |
| 3.5 |
|
| 2.3 |
|
| — |
| ||||
as % of Net revenues | (0.1 | %) |
|
|
| 0.2 | % |
| — | % | |||||
Adjusted EBITDA |
|
|
|
| 183.2 |
|
| — |
| ||||||
as % of Net revenues |
|
|
|
| 17.8 | % |
| — | % | ||||||
| COTY INC. |
|
| ||||||||||||
Net income (loss) attributable to Coty Inc. | (18.5 | ) |
| 20.8 |
|
| 2.3 |
|
|
| |||||
|
|
|
|
|
|
|
| ||||||||
EPS (diluted) | $ | (0.02 | ) |
|
|
| $ | 0.00 |
|
|
| ||||
|
|
|
|
|
|
|
| ||||||||
| Three Months Ended March 31, 2020 | ||||||||||||||
(in millions) | Reported (GAAP) |
| Adjustments(a) |
| Adjusted (Non-GAAP) |
| Adjusted (Non-GAAP) | ||||||||
Net revenues | $ | 1,062.5 |
|
| $ | — |
|
| $ | 1,062.5 |
|
| $ | 465.5 |
|
Gross profit | 601.7 |
|
| 11.2 |
|
| 612.9 |
|
| 309.2 |
| ||||
Gross margin | 56.6 | % |
|
|
| 57.7 | % |
| 66.4 | % | |||||
Operating (loss) income | (299.5 | ) |
| 231.3 |
|
| (68.2 | ) |
| 68.3 |
| ||||
as % of Net revenues | (28.2 | %) |
|
|
| (6.4 | %) |
| 14.7 | % | |||||
Net (loss) income | (311.0 | ) |
| 206.3 |
|
| (104.7 | ) |
| 43.0 |
| ||||
as % of Net revenues | (29.3 | %) |
|
|
| (9.9 | %) |
| 9.2 | % | |||||
Adjusted EBITDA |
|
|
|
| (1.4 | ) |
| 98.7 |
| ||||||
as % of Net revenues |
|
|
|
| (0.1 | %) |
| 21.2 | % | ||||||
| COTY INC. |
|
| ||||||||||||
Net (loss) income attributable to Coty Inc. | (271.6 | ) |
| 209.9 |
|
| (61.7 | ) |
|
| |||||
|
|
|
|
|
|
|
| ||||||||
EPS (diluted) | $ | (0.36 | ) |
|
|
| $ | (0.08 | ) |
|
| ||||
|
|
|
|
|
|
|
|
(a) See “Reconciliation of Reported Operating (Loss) Income to Adjusted Operated Income” 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.
| Nine Months Ended March 31, 2021 | ||||||||||||||
| CONTINUING OPERATIONS |
| DISCONTINUED OPERATIONS(b) | ||||||||||||
(in millions) | Reported (GAAP) |
| Adjustments(a) |
| Adjusted (Non-GAAP) |
| Adjusted (Non-GAAP) | ||||||||
Net revenues | $ | 3,567.5 |
|
| $ | — |
|
| $ | 3,567.5 |
|
| $ | 986.3 |
|
Gross profit | 2,126.9 |
|
| 3.1 |
|
| 2,130.0 |
|
| 663.8 |
| ||||
Gross margin | 59.6 | % |
|
|
| 59.7 | % |
| 67.3 | % | |||||
Operating (loss) income | (50.4 | ) |
| 415.4 |
|
| 365.0 |
|
| 220.1 |
| ||||
as % of Net revenues | (1.4 | %) |
|
|
| 10.2 | % |
| 22.3 | % | |||||
Net income (loss) | 54.8 |
|
| 22.0 |
|
| 76.8 |
|
| 142.9 |
| ||||
as % of Net revenues | 1.5 | % |
|
|
| 2.2 | % |
| 14.5 | % | |||||
Adjusted EBITDA |
|
|
|
| 633.0 |
|
| 222.3 |
| ||||||
as % of Net revenues |
|
|
|
| 17.7 | % |
| 22.5 | % | ||||||
| COTY INC. |
|
| ||||||||||||
Net loss (income) attributable to Coty Inc. | (93.4 | ) |
| 313.1 |
|
| 219.7 |
|
|
| |||||
|
|
|
|
|
|
|
| ||||||||
EPS (diluted) | $ | (0.12 | ) |
|
|
| $ | 0.29 |
|
|
| ||||
|
|
|
|
|
|
|
| ||||||||
| Nine Months Ended March 31, 2020 | ||||||||||||||
(in millions) | Reported (GAAP) |
| Adjustments(a) |
| Adjusted (Non-GAAP) |
| Adjusted (Non-GAAP) | ||||||||
Net revenues | $ | 4,157.4 |
|
| $ | — |
|
| $ | 4,157.4 |
|
| $ | 1,658.4 |
|
Gross profit | 2,502.4 |
|
| 11.2 |
|
| 2,513.6 |
|
| 1,098.6 |
| ||||
Gross margin | 60.2 | % |
|
|
| 60.5 | % |
| 66.2 | % | |||||
Operating (loss) income | (316.0 | ) |
| 489.6 |
|
| 173.6 |
|
| 306.2 |
| ||||
as % of Net revenues | (7.6 | %) |
|
|
| 4.2 | % |
| 18.5 | % | |||||
Net (loss) income | (404.2 | ) |
| 393.2 |
|
| (11.0 | ) |
| 205.0 |
| ||||
as % of Net revenues | (9.7 | %) |
|
|
| (0.3 | %) |
| 12.4 | % | |||||
Adjusted EBITDA |
|
|
|
| 421.2 |
|
| 360.4 |
| ||||||
as % of Net revenues |
|
|
|
| 10.1 | % |
| 21.7 | % | ||||||
| COTY INC. |
|
| ||||||||||||
Net (loss) income attributable to Coty Inc. | (240.4 | ) |
| 434.4 |
|
| 194.0 |
|
|
| |||||
|
|
|
|
|
|
|
| ||||||||
EPS (diluted) | $ | (0.32 | ) |
|
|
| $ | 0.25 |
|
|
|
(a) | See “Reconciliation of Reported Operating (Loss) Income to Adjusted Operated Income” and “Reconciliation of Reported Net (Loss) Income to Adjusted Net Income” for a detailed description of adjusted items. | |
| ||
(b) | Discontinued operations for the nine months ended March 31, 2021 includes activity only through November 30, 2020, the date of the sale of the Wella Business. |
RECONCILIATION OF REPORTED OPERATING (LOSS) INCOME TO ADJUSTED OPERATING INCOME (LOSS) | ||||||||||||||||||||||
CONTINUING OPERATIONS |
| Three Months Ended March 31, |
| Nine Months Ended March 31, | ||||||||||||||||||
(in millions) |
| 2021 |
| 2020 |
| Change |
| 2021 |
| 2020 |
| Change | ||||||||||
Reported Operating (loss) |
| $ | (1.4 | ) |
| $ | (299.5 | ) |
| 100 | % |
| $ | (50.4 | ) |
| $ | (316.0 | ) |
| 84 | % |
% of Net revenues |
| (0.1 | %) |
| (28.2 | %) |
|
|
| (1.4 | %) |
| (7.6 | %) |
|
| ||||||
Asset impairment charges (a) |
| — |
|
| 40.4 |
|
| (100 | %) |
| — |
|
| 40.4 |
|
| (100 | %) | ||||
Amortization expense (b) |
| 62.2 |
|
| 61.6 |
|
| 1 | % |
| 189.4 |
|
| 170.7 |
|
| 11 | % | ||||
Restructuring and other business realignment costs (c) |
| 5.1 |
|
| 80.0 |
|
| (94 | %) |
| 98.3 |
|
| 277.7 |
|
| (65 | %) | ||||
Acquisition- and divestiture-related costs (d) |
| 29.7 |
|
| 49.3 |
|
| (40 | %) |
| 127.7 |
|
| 85.3 |
|
| 50 | % | ||||
Gain on divestitures and sale of brand assets (e) |
| — |
|
| — |
|
| N/A |
| — |
|
| (84.5 | ) |
| 100 | % | |||||
Total adjustments to reported Operating (loss) income |
| 97.0 |
|
| 231.3 |
|
| (58 | %) |
| 415.4 |
|
| 489.6 |
|
| (15 | %) | ||||
Adjusted Operating (loss) income |
| $ | 95.6 |
|
| $ | (68.2 | ) |
| >100 | % |
| $ | 365.0 |
|
| $ | 173.6 |
|
| >100 | % |
% of Net revenues |
| 9.3 | % |
| (6.4 | )% |
|
|
| 10.2 | % |
| 4.2 | % |
|
| ||||||
Non-cash stock-based compensation (g) |
| 6.4 |
|
| (17.1 | ) |
| (137 | %) |
| 24.4 |
|
| (4.2 | ) |
| (681 | %) | ||||
Adjusted depreciation (f) |
| 81.2 |
|
| 83.9 |
|
| (3 | %) |
| 243.6 |
|
| 251.8 |
|
| (3 | %) | ||||
Adjusted EBITDA |
| $ | 183.2 |
|
| $ | (1.4 | ) |
| >100 | % |
| $ | 633.0 |
|
| $ | 421.2 |
|
| 50 | % |
% of Revenues |
| 17.8 | % |
| (0.1 | %) |
|
|
| 17.7 | % |
| 10.1 | % |
|
|
(a) | In the three months ended March 31, 2021, we did not incur any asset impairment charges. In the three months ended March 31, 2020, we incurred asset impairment charges of $40.4 in Corporate, relating to indefinite-lived other intangible assets (related to the CoverGirl, Max Factor and Bourjois trademarks). | |
In the nine months ended March 31, 2021, we did not incur any asset impairment charges. In the nine months ended March 31, 2020, we incurred asset impairment charges of $40.4 in Corporate, relating to indefinite-lived other intangible assets (related to the CoverGirl, Max Factor and Bourjois trademarks). | ||
(b) | In the three months ended March 31, 2021, amortization expense of $26.8, $29.6 and $5.8 was reported in the Americas, EMEA and Asia Pacific segments, respectively. In the three months ended March 31, 2020, amortization expense of $24.3, $31.1 and $6.2 was reported in the Americas, EMEA and Asia Pacific segments, respectively. | |
In the nine months ended March 31, 2021, amortization expense of $78.2, $92.8 and $18.4 was reported in the Americas, EMEA and Asia Pacific segments, respectively. In the nine months ended March 31, 2020, amortization expense of $49.8, $94.8, $18.7 and $7.4 was reported in the Americas, EMEA, Asia Pacific and Other segments, respectively. | ||
(c) | In the three months ended March 31, 2021, we incurred restructuring and other business structure realignment costs of $5.1. We incurred restructuring costs of $0.0 primarily related to the Transformation Plan, included in the Condensed Consolidated Statements of Operations; and business structure realignment costs of $5.1 primarily related to the Transformation Plan and certain other programs. This amount includes $2.0 reported in selling, general and administrative expenses, and $3.1 reported in cost of sales in the Condensed Consolidated Statement of Operations. In the three months ended March 31, 2020, we incurred business structure realignment costs of $80.0, including a revised estimate resulting in a credit in restructuring costs of $(8.0) primarily related to the Turnaround Plan. In addition, we incurred business structure realignment costs of $88.0 primarily related to the Turnaround Plan. This amount includes $76.8 reported in selling, general and administrative expenses, and $11.2 reported in cost of sales in the Condensed Consolidated Statement of Operations. | |
In the nine months ended March 31, 2021, we incurred restructuring and other business structure realignment costs of $98.3. We incurred restructuring costs of $89.7 primarily for charges related to the Transformation Plan, included in the Condensed Consolidated Statements of Operations; and business structure realignment costs of $8.6 primarily related to the Transformation Plan and certain other programs. This amount includes $5.5 reported in selling, general and administrative expenses, and $3.1 reported in cost of sales in the Condensed Consolidated Statement of Operations. In the nine months ended March 31, 2020, we incurred business structure realignment costs of $277.7, including restructuring costs of $125.5 primarily for charges related to the Transformation Plan, included in the Condensed Consolidated Statements of Operations. In addition, we incurred business structure realignment costs of $152.2 primarily related to our Turnaround plan. This amount includes $141.0 reported in selling, general and administrative expenses, and $11.2 reported in cost of sales in the Condensed Consolidated Statement of Operations. | ||
(d) | In the three months ended March 31, 2021, we incurred acquisition and divestiture related costs of $29.7. These costs were associated with the Wella Transaction. In the three months ended March 31, 2020, we incurred acquisition and divestiture related costs of $49.3. | |
In the nine months ended March 31, 2021, we incurred acquisition and divestiture related costs of $127.7. These costs were associated with the Wella Transaction. In the nine months ended March 31, 2020, we incurred acquisition and divestiture related costs of $85.3. | ||
(e) | In the three months ended March 31, 2021 and 2020, respectively, there were no gains on divestitures or sales of brand assets. | |
In the nine months ended March 31, 2021, there were no gains on divestitures or sales of brand assets. In the nine months ended March 31, 2020, we completed the divestiture of Younique resulting in income of $84.5 included in Gain on sale of business in the Condensed Consolidated Statements of Operations. | ||
(f) | In the three months ended March 31, 2021, adjusted depreciation expense of $36.5, $33.2 and $11.5 was reported in the Americas, EMEA and Asia Pacific segments, respectively. In the three months ended March 31, 2020, adjusted depreciation expense of $38.0, $35.7 and $10.2 was reported in the Americas, EMEA and Asia Pacific segments, respectively. | |
In the nine months ended March 31, 2021, adjusted depreciation expense of $109.5, $101.5 and $32.6 was reported in the Americas, EMEA and Asia Pacific segments, respectively. In the nine months ended March 31, 2020, adjusted depreciation expense of $107.1, $109.9, $30.9 and $3.9 was reported in the Americas, EMEA, Asia Pacific and Other segments, respectively. | ||
(g) | In the three months ended March 31, 2021, non-cash stock-based compensation of $2.6, $2.9 and $0.9 was reported in the Americas, EMEA and Asia Pacific segments, respectively. In the three months ended March 31, 2020, non-cash stock-based compensation of $(7.0), $(8.3) and $(1.8) was reported in the Americas, EMEA Asia Pacific and Corporate segments, respectively. | |
In the nine months ended March 31, 2021, non-cash stock-based compensation of $9.7, $11.7 and $3.0 was reported in the Americas, EMEA and Asia Pacific segments, respectively. In the nine months ended March 31, 2020, non-cash stock-based compensation of $(1.5), $(2.1) and $(0.5) was reported in the Americas, EMEA and Asia Pacific segments, respectively. |
RECONCILIATION OF REPORTED INCOME (LOSS) BEFORE INCOME TAXES AND EFFECTIVE TAX RATES TO ADJUSTED INCOME (LOSS) BEFORE INCOME TAXES AND ADJUSTED EFFECTIVE TAX RATES FOR CONTINUING OPERATIONS
|
| Three Months Ended March 31, 2021 |
| Three Months Ended March 31, 2020 | ||||||||||||||||||
(in millions) |
| (Loss) income before income taxes |
| (Benefit) Provision for income taxes |
| Effective tax rate |
| (Loss) income before income taxes |
| (Benefit) provision for income taxes |
| Effective tax rate | ||||||||||
Reported Income (Loss) before income taxes - Continuing Operations |
| $ | 10.8 |
|
| $ | (19.2 | ) |
| (177.8 | )% |
| $ | (363.6 | ) |
| $ | (59.8 | ) |
| 16.4 | % |
Adjustments to Reported Operating Income (a)(b) |
| 97.0 |
|
| 41.2 |
|
|
|
| 231.3 |
|
| 28.1 |
|
|
| ||||||
Change in fair value of investment in Wella Business (b) (d) |
| (63.5 | ) |
| (15.9 | ) |
|
|
| — |
|
| — |
|
|
| ||||||
Other adjustments(b) (e) |
| (2.5 | ) |
| (0.7 | ) |
|
|
| — |
|
| — |
|
|
| ||||||
Adjusted Income (Loss) before income taxes - Continuing Operations |
| $ | 41.8 |
|
| $ | 5.4 |
|
| 12.9 | % |
| $ | (132.3 | ) |
| $ | (31.7 | ) |
| 24.0 | % |
The adjusted effective tax rate was 12.9% for the three months ended March 31, 2021 compared to 24.0% for the three months ended March 31, 2020. The difference was primarily due to the jurisdictional mix of income.
|
| Nine Months Ended March 31, 2021 |
| Nine Months Ended March 31, 2020 | ||||||||||||||||||
(in millions) |
| (Loss) income before income taxes |
| (Benefit) Provision for income taxes |
| Effective tax rate |
| (Loss) income before income taxes |
| (Benefit) provision for income taxes |
| Effective tax rate | ||||||||||
Reported (Loss) before income taxes - Continuing Operations |
| $ | (171.3 | ) |
| $ | (304.9 | ) |
| 178.0 | % |
| $ | (505.3 | ) |
| $ | (117.0 | ) |
| 23.2 | % |
Adjustments to Reported Operating income(a)(b) |
| 415.4 |
|
| 122.2 |
|
|
|
| 574.1 |
|
| 91.7 |
|
|
| ||||||
Gain on divestitures and sale of brand assets (a)(b) |
| — |
|
| — |
|
|
|
| (84.5 | ) |
| 4.8 |
|
|
| ||||||
Tax impact from intra-entity transfer of assets (c) |
| — |
|
| 220.5 |
|
|
|
| — |
|
| — |
|
|
| ||||||
Change in fair value of investment in Wella Business (b) (d) |
| (63.5 | ) |
| (15.9 | ) |
|
|
| — |
|
| — |
|
|
| ||||||
Other adjustments(b) (e) |
| 5.9 |
|
| 1.6 |
|
|
|
| — |
|
| — |
|
|
| ||||||
Adjusted Income (Loss) before income taxes - Continuing Operations |
| $ | 186.5 |
|
| $ | 23.5 |
|
| 12.6 | % |
| $ | (15.7 | ) |
| $ | (20.5 | ) |
| 130.6 | % |
(a) | See a description of adjustments under “Adjusted Operating (Loss) Income for Continuing Operations.” | |
(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) | Tax benefit of $220.5 is the result of a tax rate differential on the deferred taxes recognized on the transfer of assets and liabilities, following the relocation of our main principal location from Geneva to Amsterdam. This amount will be finalized when negotiations with the tax authorities are completed. | |
(d) | The amount represents the unrealized (gain) loss recognized for the change in the fair value of the investment in Wella. | |
(e) | For the three months ended March 31, 2021, this primarily represents adjustments for pension curtailment gains. For the nine months ended March 31, 2021, this primarily represents the write-off of deferred financing fees related to the Wella sale and adjustments for pension curtailment gains. |
RECONCILIATION OF REPORTED NET INCOME (LOSS) TO ADJUSTED NET INCOME (LOSS) FOR CONTINUING OPERATIONS | ||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
| Three Months Ended March 31, |
| Nine Months Ended March 31, | |||||||||||||||||||||||||||||
(in millions) | 2021 |
| 2020 |
| Change |
| 2021 |
| 2020 |
| Change | |||||||||||||||||||||
Net income (loss) from Continuing Operations, net of noncontrolling interests | $ | 32.9 |
|
| $ | (311.0 | ) |
| >100 | % |
| $ | 132.9 |
|
| $ | (404.2 | ) |
| >100 | % | |||||||||||
Convertible Series B Preferred Stock dividends | (34.1 | ) |
| — |
|
| N/A |
| (78.1 | ) |
| — |
|
| N/A | |||||||||||||||||
Reported Net income (loss) attributable to Continuing Operations | $ | (1.2 | ) |
| $ | (311.0 | ) |
| 100 | % |
| $ | 54.8 |
|
| $ | (404.2 | ) |
| >100 | % | |||||||||||
% of Net revenues | (0.1 | %) |
| (29.3 | %) |
|
|
| 1.5 | % |
| (9.7 | %) |
|
| |||||||||||||||||
Adjustments to Reported Operating Income (a) | 97.0 |
|
| 231.3 |
|
| (58 | %) |
| 415.4 |
|
| 489.6 |
|
| (15 | %) | |||||||||||||||
Change in fair value of investment in Wella Business (d) | (63.5 | ) |
| — |
|
| N/A |
| (63.5 | ) |
| — |
|
| N/A | |||||||||||||||||
Adjustments to other (income) expense (e) | (2.5 | ) |
| — |
|
| N/A |
| 5.9 |
|
| — |
|
| N/A | |||||||||||||||||
Adjustments to noncontrolling interest expense (b) | (2.9 | ) |
| 3.1 |
|
| 100 | % |
| $ | (15.3 | ) |
| $ | (240.4 | ) |
| 94 | % | |||||||||||||
Convertible Series B Preferred Stock dividends | (34.1 | ) |
| — |
|
| N/A |
| (78.1 | ) |
| — |
|
| N/A | |||||||||||||||||
Reported Net income (loss) attributable to Coty Inc. | $ | (18.5 | ) |
| $ | (271.6 | ) |
| 93 | % |
| $ | (93.4 | ) |
| $ | (240.4 | ) |
| 61 | % | |||||||||||
% of Net revenues | (1.8 | %) |
| (17.8 | %) |
|
|
| (2.1 | %) |
| (4.1 | %) |
|
| |||||||||||||||||
Adjustments to Reported Operating income (a) | 97.0 |
|
| 258.9 |
|
| (63 | )% |
| 414.7 |
|
| 577.2 |
|
| (28 | )% | |||||||||||||||
(Gain) loss on sale of business | 27.5 |
|
| — |
|
| N/A |
| 246.6 |
|
| — |
|
| N/A | |||||||||||||||||
Change in fair value of investment in Wella Business (d) | (63.5 | ) |
| — |
|
| N/A |
| (63.5 | ) |
| — |
|
| N/A | |||||||||||||||||
Adjustments to other (income) expense (e) | (2.5 | ) |
| — |
|
| N/A |
| 5.9 |
|
| — |
|
| N/A | |||||||||||||||||
Adjustments to noncontrolling interest expense (b) | (2.9 | ) |
| 3.1 |
|
| N/A |
| (7.4 | ) |
| 0.1 |
|
| 100 | % |
| $ | 219.7 |
|
| $ | 194.0 |
|
| 13 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Per Share Data |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Adjusted weighted-average common shares |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Basic | 765.4 |
|
| 760.8 |
|
|
|
| 764.6 |
|
| 757.7 |
|
|
| |||||||||||||||||
Diluted (c) | 943.8 |
|
| 760.8 |
|
|
|
| 932.1 |
|
| 762.1 |
|
|
| |||||||||||||||||
Adjusted Net income (loss) attributable to Coty Inc. per Common Share |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Basic | $ | — |
|
| $ | (0.08 | ) |
|
|
| $ | 0.29 |
|
| $ | 0.26 |
|
|
| |||||||||||||
Diluted (c) | $ | — |
|
| $ | (0.08 | ) |
|
|
| $ | 0.29 |
|
| $ | 0.25 |
|
|
|
(a) | See a description of adjustments under “Adjusted Operating Income (loss) 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 our equity compensation plans and the convertible Series B Preferred Stock. We use the if-converted method for calculating any potential dilutive effect of the convertible Series B Preferred Stock, which requires an adjustment to reverse the impact of the preferred stock dividends of $34.1 and $78.1 for the three and nine months ended March 31, 2021, respectively, on income applicable to common stockholders during the period. | |
(d) | The amount represents the unrealized (gain) loss recognized for the change in the fair value of the investment in Wella. | |
(e) | For the three months ended March 31, 2021, this primarily represents adjustments for pension curtailment gains. For the nine months ended March 31, 2021, this primarily represents the write-off of deferred financing fees related to the Wella sale and adjustments for pension curtailment gains. |
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW | ||||||||||||||||
COTY INC. |
| Three Months Ended March 31, |
| Nine Months Ended March 31, | ||||||||||||
(in millions) |
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||||||
Net cash (used in) provided by operating activities |
| $ | (186.3 | ) |
| $ | (257.5 | ) |
| $ | 286.4 |
|
| $ | 204.5 |
|
Capital expenditures |
| (32.1 | ) |
| (61.4 | ) |
| (143.7 | ) |
| (206.4 | ) | ||||
Free cash flow |
| $ | (218.4 | ) |
| $ | (318.9 | ) |
| $ | 142.7 |
|
| $ | (1.9 | ) |
RECONCILIATION OF TOTAL DEBT TO FINANCIAL NET DEBT | |||
COTY INC. | As of | ||
(in millions) | March 31, 2021 | ||
Total debt | $ | 5,421.9 | |
Less: Cash and cash equivalents |
| 315.3 | |
Financial Net debt | $ | 5,106.6 | |
RECONCILIATION OF TOTAL DEBT TO ECONOMIC NET DEBT | |||
COTY INC. | As of | ||
(in millions) | March 31, 2021 | ||
Total debt | $ | 5,421.9 | |
Less: Cash and cash equivalents |
| 315.3 | |
Less Value of Wella stake |
| 1,250.0 | |
Economic Net debt | $ | 3,856.6 | |
IMMEDIATE LIQUIDITY | |||
COTY INC. | As of | ||
(in millions) | March 31, 2021 | ||
Cash and cash equivalents | $ | 315.3 | |
Unutilized revolving credit facility |
| 2,061.5 | |
Immediate Liquidity | $ | 2,376.8 | |
RECONCILIATION OF ADJUSTED OPERATING INCOME (LOSS) TO ADJUSTED EBITDA | |||
| Twelve months ended | ||
| March 31, 2021 | ||
(in millions) | CONTINUING OPERATIONS | ||
Adjusted operating income (loss) (a) | $ | 29.8 | |
Add: Adjusted depreciation(b) |
| 326.1 | |
Add: Non-cash stock-based compensation |
| 29.9 | |
Adjusted EBITDA | $ | 385.8 |
(a) | Adjusted operating income (loss) for the twelve months ended March 31, 2021 represents the summation of the adjusted operating income (loss) for each of the quarters ended June 30, 2020, September 30, 2020, December 31, 2020 and March 31, 2021. For a reconciliation of adjusted operating income (loss) to operating income (loss) for each of those periods, see the tables entitled “Reconciliation of Reported Operating Income (loss) to Adjusted Operating Income (loss)” and "Reconciliation of Reported Operating Income (loss) to Adjusted Operating Income (loss) by Segment" for each of those periods. | |
(b) | Adjusted depreciation for the twelve months ended March 31, 2021 represents depreciation expense for continuing operations for the period, excluding accelerated depreciation. |
FINANCIAL NET DEBT/ADJUSTED EBITDA | ||||
|
| March 31, 2021 | ||
Financial Net Debt - Coty Inc. |
| $ | 5,106.6 |
|
Adjusted EBITDA - Continuing operations |
| 385.8 |
| |
Financial Net Debt/Adjusted EBITDA |
| 13.24 |
|
NET REVENUES AND ADJUSTED OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS BY SEGMENT
| |||||||||||||||||||||||||||
|
| Three Months Ended March 31, | |||||||||||||||||||||||||
|
| Net Revenues |
| Change | Reported Operating Income (Loss) | Adjusted Operating Income (Loss) | |||||||||||||||||||||
(in millions) |
| 2021 |
| 2020 |
| Reported Basis |
| LFL |
| 2021 |
| Change |
| 2021 |
| Change | |||||||||||
Americas |
| $ | 409.6 |
|
| $ | 435.9 |
|
| (6 | %) |
| (6 | %) |
| $ | 2.3 |
|
| >100% |
| $ | 29.2 |
|
| >100% | |
EMEA |
| 473.0 |
|
| 512.9 |
|
| (8 | %) |
| (8 | %) |
| 28.7 |
|
| >100% |
| 58.2 |
|
| >100% | |||||
Asia Pacific |
| 145.2 |
|
| 113.7 |
|
| 28 | % |
| 28 | % |
| 1.9 |
|
| >100% |
| 7.6 |
|
| >100% | |||||
Other |
| — |
|
| — |
|
| N/A |
| N/A |
| — |
|
| N/A |
| — |
|
| N/A | |||||||
Corporate |
| — |
|
| — |
|
| N/A |
| N/A |
| (34.3 | ) |
| 80 | % |
| 0.6 |
|
| >100% | ||||||
Total |
| $ | 1,027.8 |
|
| $ | 1,062.5 |
|
| (3 | %) |
| (3 | %) |
| $ | (1.4 | ) |
| 100 | % |
| $ | 95.6 |
|
| >100% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended March 31, | |||||||||||||||||||||||||||
|
| Net Revenues |
| Change | Reported Operating Income (Loss) | Adjusted Operating Income (Loss) | |||||||||||||||||||||||
(in millions) |
| 2021 |
| 2020 |
| Reported Basis |
| LFL |
| 2021 |
|
| Change |
| 2021 |
| Change | ||||||||||||
Americas |
| $ | 1,419.7 |
|
| $ | 1,506.2 |
|
| (6 | %) |
| (9 | %) |
| $ | 55.3 |
|
|
| >100% |
| $ | 133.5 |
|
| >100 | % | |
EMEA |
| 1,712.3 |
|
| 2,097.6 |
|
| (18 | %) |
| (18 | %) |
| 129.7 |
|
|
| 86 | % |
| 222.5 |
|
| 35 | % | ||||
Asia Pacific |
| 435.5 |
|
| 498.1 |
|
| (13 | %) |
| (13 | %) |
| (10.9 | ) |
|
| 37 | % |
| 7.5 |
|
| >100 | % | ||||
Other |
| — |
|
| 55.5 |
|
| (100 | %) |
| N/A |
| — |
|
|
| 100 | % |
| — |
|
| 100 | % | |||||
Corporate |
| — |
|
| — |
|
| — |
|
| — |
|
| (224.5 | ) |
|
| 30 | % |
| 1.5 |
|
| >100 | % | ||||
Total |
| $ | 3,567.5 |
|
| $ | 4,157.4 |
|
| (14 | %) |
| (14 | %) |
| $ | (50.4 | ) |
|
| 84 | % |
| $ | 365.0 |
|
| >100 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF REPORTED OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) BY SEGMENT AND EBITDA TO ADJUSTED EBITDA - CONTINUING OPERATIONS
|
| Three Months Ended March 31, 2021 | |||||||||||||||||||
|
| OPERATING INCOME (LOSS) |
| ADJUSTED EBITDA | |||||||||||||||||
(in millions) |
| Reported (GAAP) |
| Adjustments (a) |
| Adjusted (Non-GAAP) |
|
| Adjustments (a) |
| Adjusted (Non-GAAP) | ||||||||||
Americas |
| $ | 2.3 |
|
| $ | 26.9 |
|
| $ | 29.2 |
|
|
| $ | 39.3 |
|
| $ | 68.5 |
|
EMEA |
| 28.7 |
|
| 29.5 |
|
| 58.2 |
|
|
| 36.3 |
|
| 94.5 |
| |||||
Asia Pacific |
| 1.9 |
|
| 5.7 |
|
| 7.6 |
|
|
| 12.6 |
|
| 20.2 |
| |||||
Corporate |
| (34.3 | ) |
| 34.9 |
|
| 0.6 |
|
|
| (0.6 | ) |
| — |
| |||||
Total |
| $ | (1.4 | ) |
| $ | 97.0 |
|
| $ | 95.6 |
|
|
| $ | 87.6 |
|
| $ | 183.2 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
% OF REVENUES |
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Americas |
| 0.6 | % |
|
|
| 7.1 | % |
|
|
|
| 16.7 | % | |||||||
EMEA |
| 6.1 | % |
|
|
| 12.3 | % |
|
|
|
| 20.0 | % | |||||||
Asia Pacific |
| 1.3 | % |
|
|
| 5.2 | % |
|
|
|
| 13.9 | % | |||||||
Corporate |
| N/A |
|
|
| N/A |
|
|
|
| N/A | ||||||||||
Total |
| (0.1 | %) |
|
|
| 9.3 | % |
|
|
|
| 17.8 | % | |||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| Three Months Ended March 31, 2020 | |||||||||||||||||||
|
| OPERATING INCOME (LOSS) |
| ADJUSTED EBITDA | |||||||||||||||||
(in millions) |
| Reported (GAAP) |
| Adjustments (a) |
| Adjusted (Non-GAAP) |
|
| Adjustments (a) |
| Adjusted (Non-GAAP) | ||||||||||
Americas |
| $ | (40.3 | ) |
| $ | 24.3 |
|
| $ | (16.0 | ) |
|
| $ | 30.7 |
|
| $ | 14.7 |
|
EMEA |
| (57.5 | ) |
| 31.2 |
|
| (26.3 | ) |
|
| 27.1 |
|
| 0.8 |
| |||||
Asia Pacific |
| (31.4 | ) |
| 6.2 |
|
| (25.2 | ) |
|
| 8.3 |
|
| (16.9 | ) | |||||
Corporate |
| (170.3 | ) |
| 169.6 |
|
| (0.7 | ) |
|
| 0.7 |
|
| — |
| |||||
Total |
| $ | (299.5 | ) |
| $ | 231.3 |
|
| $ | (68.2 | ) |
|
| $ | 66.8 |
|
| $ | (1.4 | ) |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
% OF REVENUES |
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Americas |
| (9.2 | %) |
|
|
| (3.7 | %) |
|
|
|
| 3.4 | % | |||||||
EMEA |
| (11.2 | %) |
|
|
| (5.1 | %) |
|
|
|
| 0.2 | % | |||||||
Asia Pacific |
| (27.6 | %) |
|
|
| (22.2 | %) |
|
|
|
| (14.9 | %) | |||||||
Corporate |
| N/A |
|
|
| N/A |
|
|
|
| N/A | ||||||||||
Total |
| (28.2 | %) |
|
|
| (6.4 | %) |
|
|
|
| (0.1 | %) |
(a) | See “Reconciliation of Reported Operating Income (Loss) to Adjusted Operated Income (Loss)” for a detailed description of adjusted items. |
RECONCILIATION OF REPORTED OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) BY SEGMENT AND EBITDA TO ADJUSTED EBITDA - CONTINUING OPERATIONS
|
| Nine Months Ended March 31, 2021 | |||||||||||||||||||
|
| OPERATING INCOME (LOSS) |
| ADJUSTED EBITDA | |||||||||||||||||
(in millions) |
| Reported (GAAP) |
| Adjustments (a) |
| Adjusted (Non-GAAP) |
|
| Adjustments (a) |
| Adjusted (Non-GAAP) | ||||||||||
Americas |
| $ | 55.3 |
|
| $ | 78.2 |
|
| $ | 133.5 |
|
|
| $ | 119.8 |
|
| $ | 253.3 |
|
EMEA |
| 129.7 |
|
| 92.8 |
|
| 222.5 |
|
|
| 113.9 |
|
| 336.4 |
| |||||
Asia Pacific |
| (10.9 | ) |
| 18.4 |
|
| 7.5 |
|
|
| 35.8 |
|
| 43.3 |
| |||||
Corporate |
| (224.5 | ) |
| 226.0 |
|
| 1.5 |
|
|
| (1.5 | ) |
| — |
| |||||
Total |
| $ | (50.4 | ) |
| $ | 415.4 |
|
| $ | 365.0 |
|
|
| $ | 268.0 |
|
| $ | 633.0 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
% OF REVENUES |
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Americas |
| 3.9 | % |
|
|
| 9.4 | % |
|
|
|
| 17.8 | % | |||||||
EMEA |
| 7.6 | % |
|
|
| 13.0 | % |
|
|
|
| 19.6 | % | |||||||
Asia Pacific |
| (2.5 | %) |
|
|
| 1.7 | % |
|
|
|
| 9.9 | % | |||||||
Corporate |
| N/A |
|
|
| N/A |
|
|
|
| N/A | ||||||||||
Total |
| (1.4 | %) |
|
|
| 10.2 | % |
|
|
|
| 17.7 | % | |||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| Nine Months Ended March 31, 2020 | |||||||||||||||||||
|
| OPERATING INCOME (LOSS) |
| ADJUSTED EBITDA | |||||||||||||||||
(in millions) |
| Reported (GAAP) |
| Adjustments (a) |
| Adjusted (Non-GAAP) |
|
| Adjustments (a) |
| Adjusted (Non-GAAP) | ||||||||||
Americas |
| $ | (36.3 | ) |
| $ | 49.7 |
|
| $ | 13.4 |
|
|
| $ | 104.9 |
|
| $ | 118.3 |
|
EMEA |
| 69.6 |
|
| 94.9 |
|
| 164.5 |
|
|
| 106.8 |
|
| 271.3 |
| |||||
Asia Pacific |
| (17.3 | ) |
| 18.6 |
|
| 1.3 |
|
|
| 30.2 |
|
| 31.5 |
| |||||
Other |
| (10.9 | ) |
| 7.3 |
|
| (3.6 | ) |
|
| 3.7 |
|
| 0.1 |
| |||||
Corporate |
| (321.1 | ) |
| 319.1 |
|
| (2.0 | ) |
|
| 2.0 |
|
| — |
| |||||
Total |
| $ | (316.0 | ) |
| $ | 489.6 |
|
| $ | 173.6 |
|
|
| $ | 247.6 |
|
| $ | 421.2 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
% OF REVENUES |
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Americas |
| (2.4 | %) |
|
|
| 0.9 | % |
|
|
|
| 7.9 | % | |||||||
EMEA |
| 3.3 | % |
|
|
| 7.8 | % |
|
|
|
| 12.9 | % | |||||||
Asia Pacific |
| (3.5 | %) |
|
|
| 0.3 | % |
|
|
|
| 6.3 | % | |||||||
Other |
| (19.6 | %) |
|
|
| (6.5 | %) |
|
|
|
| 0.2 | % | |||||||
Corporate |
| N/A |
|
|
| N/A |
|
|
|
| N/A | ||||||||||
Total |
| (7.6 | %) |
|
|
| 4.2 | % |
|
|
|
| 10.1 | % |
(a) | See “Reconciliation of Reported Operating Income (Loss) to Adjusted Operated Income (Loss)” for a detailed description of adjusted items. |
RECONCILIATION OF REPORTED NET REVENUES TO LIKE-FOR-LIKE NET REVENUES | ||||||||||||
|
| Three Months Ended March 31, 2021 vs. Three Months Ended March 31, 2020 Net Revenue Change | ||||||||||
|
|
|
|
|
|
| ||||||
Net Revenues Change YoY |
| Reported Basis |
| Constant Currency |
| Impact from Acquisitions and Divestitures |
| Organic (LFL) | ||||
Americas |
| (6 | )% |
| (3 | )% |
| — | % |
| (3 | )% |
EMEA |
| (8 | )% |
| (13 | )% |
| — | % |
| (13 | )% |
Asia Pacific |
| 28 | % |
| 20 | % |
| — | % |
| 20 | % |
Other |
| N/A |
| — | % |
| — | % |
| — | % | |
Total Continuing Operations |
| (3 | )% |
| (6 | )% |
| — | % |
| (6 | )% |
|
| Nine Months Ended March 31, 2021 vs. Nine Months Ended March 31, 2020 Net Revenue Change | ||||||||||
|
|
|
|
|
|
| ||||||
Net Revenues Change YoY |
| Reported Basis |
| Constant Currency |
| Impact from Acquisitions and Divestitures1 |
| Organic (LFL) | ||||
Americas |
| (6 | )% |
| (2 | )% |
| 3 | % |
| (5 | )% |
EMEA |
| (18 | )% |
| (22 | )% |
| — | % |
| (22 | )% |
Asia Pacific |
| (13 | )% |
| (16 | )% |
| — | % |
| (16 | )% |
Other |
| (100 | )% |
| (100 | )% |
| (100 | )% |
| — | % |
Total Continuing Operations |
| (14 | )% |
| (15 | )% |
| — | % |
| (15 | )% |
¹ Like for Like (LFL) impact excludes the net revenue contribution from King Kylie for the first and second quarters of fiscal 2021 (due to the acquisition of King Kylie during the third quarter of fiscal 2020), and the net revenues of Younique for the nine months ended March 31, 2020 (due to the divestiture of Younique the first quarter of fiscal 2020). |
COTY INC. & SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in millions) |
| March 31, 2021 |
| June 30, 2020 | ||||
ASSETS |
|
|
|
| ||||
Current assets: |
|
|
|
| ||||
Cash and cash equivalents |
| $ | 315.3 |
|
| $ | 308.3 |
|
Restricted cash |
| 42.7 |
|
| 43.7 |
| ||
Trade receivables |
| 398.1 |
|
| 440.1 |
| ||
Inventories |
| 604.7 |
|
| 678.2 |
| ||
Prepaid expenses and other current assets |
| 457.4 |
|
| 411.6 |
| ||
Current assets held for sale |
| — |
|
| 4,613.1 |
| ||
Total current assets |
| 1,818.2 |
|
| 6,495.0 |
| ||
Property and equipment, net |
| 942.6 |
|
| 1,081.6 |
| ||
Goodwill |
| 4,026.6 |
|
| 3,973.9 |
| ||
Other intangible assets, net |
| 4,474.9 |
|
| 4,372.1 |
| ||
Equity investments |
| 1,266.8 |
|
| — |
| ||
Operating lease right-of-use assets |
| 331.4 |
|
| 371.4 |
| ||
Other noncurrent assets |
| 761.8 |
|
| 434.8 |
| ||
TOTAL ASSETS |
| $ | 13,622.3 |
|
| $ | 16,728.8 |
|
|
|
|
|
| ||||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY |
|
|
|
| ||||
Current liabilities: |
|
|
|
| ||||
Accounts payable |
| $ | 1,051.8 |
|
| $ | 1,190.3 |
|
Short-term debt and current portion of long-term debt |
| 193.7 |
|
| 188.3 |
| ||
Other current liabilities |
| 1,320.4 |
|
| 1,250.4 |
| ||
Current liabilities held for sale |
| — |
|
| 956.7 |
| ||
Total current liabilities |
| 2,565.9 |
|
| 3,585.7 |
| ||
Long-term debt, net |
| 5,182.4 |
|
| 7,892.1 |
| ||
Long-term operating lease liabilities |
| 280.4 |
|
| 317.4 |
| ||
Other noncurrent liabilities |
| 1,299.4 |
|
| 909.9 |
| ||
TOTAL LIABILITIES |
| 9,328.1 |
|
| 12,705.1 |
| ||
|
|
|
|
| ||||
CONVERTIBLE SERIES B PREFERRED STOCK |
| 1,036.3 |
|
| 715.8 |
| ||
REDEEMABLE NONCONTROLLING INTERESTS |
| 87.4 |
|
| 79.1 |
| ||
|
|
|
|
| ||||
Total Coty Inc. stockholders’ equity |
| 2,962.2 |
|
| 3,004.6 |
| ||
Noncontrolling interests |
| 208.3 |
|
| 224.2 |
| ||
Total equity |
| 3,170.5 |
|
| 3,228.8 |
| ||
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY |
| $ | 13,622.3 |
|
| $ | 16,728.8 |
|
COTY INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| Nine Months Ended March 31, | ||||||
| 2021 |
| 2020 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
| ||||
Net income | $ | (14.6 | ) |
| (224.5 | ) | |
|
|
|
| ||||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
|
|
| ||||
Depreciation and amortization | 436.1 |
|
| 547.7 |
| ||
Deferred income taxes | (238.8 | ) |
| (150.7 | ) | ||
Share-based compensation | 28.9 |
|
| 18.1 |
| ||
Gain on divestitures and sale of brand assets | — |
|
| (84.5 | ) | ||
Loss on sale of business in discontinued operations | 246.6 |
|
| — |
| ||
Asset impairment charges | — |
|
| 40.4 |
| ||
Unrealized (gains) and losses from equity investments, net | (60.9 | ) |
| — |
| ||
Other | 131.8 |
|
| 207.9 |
| ||
Change in operating assets and liabilities, net of effects from purchase of acquired companies: |
|
|
| ||||
Trade receivables | (57.3 | ) |
| 206.0 |
| ||
Inventories | 114.2 |
|
| 97.2 |
| ||
Prepaid expenses and other current assets | (133.0 | ) |
| (8.4 | ) | ||
Accounts payable | (137.8 | ) |
| (246.0 | ) | ||
Accrued expenses and other current liabilities | 64.8 |
|
| (31.7 | ) | ||
Operating lease liabilities | (104.4 | ) |
| (80.9 | ) | ||
Other assets and liabilities, net | 10.8 |
|
| (86.1 | ) | ||
Net cash provided by operating activities | 286.4 |
|
| 204.5 |
| ||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
| ||||
Capital expenditures | (143.7 | ) |
| (206.4 | ) | ||
Proceeds from sale of discontinued business, net of cash disposed | 2,374.1 |
|
| — |
| ||
Payment for business combinations and asset acquisitions, net of cash acquired | — |
|
| (592.2 | ) | ||
Return of capital from equity investments | 448.0 |
|
| — |
| ||
Proceeds from sale of business, net of cash disposed | 27.0 |
|
| 25.6 |
| ||
Termination of currency swaps designated as net investment hedges | (37.6 | ) |
| — |
| ||
Payment for equity investment and related asset acquisition | (200.0 | ) |
| — |
| ||
Other investing activities | 4.3 |
|
| 0.2 |
| ||
Net cash used in investing activities | 2,472.1 |
|
| (772.8 | ) | ||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
| ||||
(Repayments) proceeds from debt, net | (2,977.3 | ) |
| 1,811.5 |
| ||
Dividend payments | (1.5 | ) |
| (196.9 | ) | ||
Proceeds from issuance of Convertible Series B Preferred Stock | 227.2 |
|
| — |
| ||
Purchase of remaining mandatorily redeemable noncontrolling interest | — |
|
| (45.0 | ) | ||
Other financing activities | 9.2 |
|
| (39.8 | ) | ||
Net cash provided by financing activities | (2,742.4 | ) |
| 1,529.8 |
| ||
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (10.1 | ) |
| (30.3 | ) | ||
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 6.0 |
|
| 931.2 |
| ||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period | 352.0 |
|
| 380.4 |
| ||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period | $ | 358.0 |
|
| $ | 1,311.6 |
|
COTY INC. & SUBSIDIARIES DISCONTINUED OPERATIONS | |||||||||||||||
Selected Financial Information |
|
|
|
|
|
|
| ||||||||
| Three Months Ended March 31, |
| Nine Months Ended March 31, | ||||||||||||
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||||||
Net revenues | $ | — |
|
| $ | 465.5 |
|
| $ | 986.3 |
|
| $ | 1,658.4 |
|
|
|
|
|
|
|
|
| ||||||||
Income from discontinued operations before income taxes (a) | (27.5 | ) |
| 30.7 |
|
| (46.1 | ) |
| 181.8 |
| ||||
Income tax on discontinued operations (b) | (10.2 | ) |
| (8.7 | ) |
| 102.1 |
|
| 18.0 |
| ||||
Net income from discontinued operations | $ | (17.3 | ) |
| $ | 39.4 |
|
| $ | (148.2 | ) |
| $ | 163.8 |
|
(a) | The three and nine months ended March 31, 2021 include a loss on the sale of the Wella Business of $27.5 million, which reflects certain purchase price working capital adjustments in the current fiscal quarter, and $246.6 million, respectively. | |
(b) | The three and nine months ended March 31, 2021 reflect a tax benefit of approximately $10.2 million and tax cost of approximately $45.0 million, respectively, due to the sale of the Wella Business. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210510005243/en/
Investor Relations Olga Levinzon, +1 212 389-7733 olga_levinzon@cotyinc.com
Media Antonia Werther, +31 621 394495 / Antonia_Werther@cotyinc.com
Source: Coty Inc.