Coty Inc. · NYSE:COTY
Coty — Q2 FY2021 Earnings Presentation
21 slides from Coty's earnings presentation, February 2021
Slide 1: Coty 2Q21 Earnings
COTY 2Q21 EARNINGS SINCE 1904
Slide 2: Coty Maintains Momentum in 2Q
COTY MAINTAINS MOMENTUM IN 2Q PROFIT AND NET Q2 REVENUES TANGIBLE NEW COTY DEBT AHEAD OF INLINE WITH PROGRESS ON FULLY IN PLACE EXPECTATIONS EXPECTATIONS STRATEGIC PRIORITIES Continued execution LFL trends improved (1) E-com / digital Expanded Leadership on fixed cost savings by 1pp vs. Q1 despite (
Slide 3: Revenue Improvement & Strategic Progress
REVENUE IMPROVEMENT & STRATEGIC PROGRESS TITLE OF THE PRESENTATION 3
Slide 4: Sales Trends in Line with Expectations in a Disrupted Environment
SALES TRENDS IN LINE WITH EXPECTATIONS IN A DISRUPTED ENVIRONMENT 1H21 Net Revenues by Channel 1H21 Net Revenues by Region Q1 LFL: -19% Q2 LFL: -18% APAC 11% Mass Americas 40% 40% Prestige 60% EMEA 49% REGIONAL Q2 LFL MASS PRESTIGE ➢ Americas -7%: Prestige business back ➢ Weakening LFL trends (- ➢ I
Slide 5: Strong E-Commerce Momentum, Enhanced Digital Strategy
(1) STRONG E-COMMERCE MOMENTUM, WITH ENHANCED DIGITAL STRATEGY ATTRACTING NEW CONSUMERS Q2 E-Commerce Net Revenues New E-Com & Digital Activations +40% * • Co-located UK warehousing reduced (penetration 19%) delivery lead times from 7 days to 3 days • 1st time Spanish language Amazon media campaign
Slide 6: Expanding Our Footprint in China
(2) EXPANDING OUR FOOTPRINT IN CHINA Strong growth in Coty Prestige business sell-out, with Gucci and Burberry growing strong double digits Gucci make-up is the #3 amongst all beauty brands and #2 amongst make-up brands in social buzz (Wechat) Significant opportunity on Tmall, with Gucci Beauty flag
Slide 7: Strong Push into Prestige Cosmetics and Skincare
(3) STRONG PUSH INTO PRESTIGE COSMETICS AND SKINCARE, NOW 8% OF SALES IN 1H21, UP FROM 6% IN FY20 Prestige Cosmetics • Gucci make-up showing huge potential: ➢ Q2 make-up retail sales 5x China, 2x in the U.S., 3x in Thailand, 3x in Singapore vs. last year ➢ Tremendous momentum with new foundation lau
Slide 8: Prestige Cosmetics and Skincare: Skincare
(3) STRONG PUSH INTO PRESTIGE COSMETICS AND SKINCARE, NOW 8% OF SALES IN 1H21, UP FROM 6% IN FY20 Skincare ➢ Philosophy growing, thanks to strong momentum on DTC and e-commerce ➢ Kylie Skin Advent Calendar sold out in ~30 minutes; Bath Collection had >$1M sales in one day 8
Slide 9: Building Market-Leading Innovation
(4) BUILDING MARKET-LEADING INNOVATION PERFECT - MARC ALIVE – HUGO BOSS LASH BLAST CLEAN – LASTING FINISH 25H JACOBS The #1 Fragrance Launch COVER GIRL – RIMMEL The #1 Fragrance in CY20 across U.S., U.K., Launch in CY20 in Already a Top 3 Cover Regained spot as #1 Canada and Australia Germany Girl S
Slide 10: Accelerating Core Prestige Fragrance Portfolio
(5) ACCELERATING CORE PRESTIGE FRAGRANCE PORTFOLIO… • Prestige fragrance category back to • In these markets, leading Coty brands growth in several markets: seeing strong momentum – with high ➢ U.S., China, Australia, Singapore and single digit to double digit sell-out growth: Thailand ➢ Gucci, Burb
Slide 11: Mass Brands Market Share Moving Toward Stabilization
(5) …WHILE MASS BRANDS MARKET SHARE MOVING TOWARD STABILIZATION Mass Beauty • North America and Europe mass beauty, particularly cosmetics, pressured by 1QCY20 2QCY20 3QCY20 4QCY20 resurgence of COVID Coty share YoY (bps)* • Coty brands’ market share moving toward -90 -80 -120 stabilization, aided b
Slide 12: Financial Update & Outlook
FINANCIAL UPDATE & OUTLOOK TITLE OF THE PRESENTATION 12
Slide 13: Continued Robust Profit Delivery
CONTINUED ROBUST PROFIT DELIVERY PROFIT Adjusted EBITDA ($M) • Gross margin of 58.7% stable with 1Q21 and inline with FY20 average $294 $284 TSA Income • 2Q21 Adj Operating Income of $188M for $268 Continuing Ops 20.8% 20.1% • 2Q21 Adj EBITDA of $284M for Continuing Ops or 15.9% $294M inclusive of W
Slide 14: Continued Fixed Cost Reductions
CONTINUED FIXED COST REDUCTIONS • In 2Q21, Fixed Costs decreased -12% YoY • Achieved approx. $80M of savings in Q2, consistent with Q1 • Year-to-date achieved ~$160M of savings, primarily from headcount reduction and savings in business services • Announced consolidation of fragrance manufacturing f
Slide 15: EPS Reflects Improvements Across the Board
EPS REFLECTS IMPROVEMENTS ACROSS THE BOARD $ Millions Q1 Q2 1H21 Adjusted EBITDA • Wella contribution to be variation 167 284 450 (Continuing Ops) in Fair Market Value Depreciation & (85) (96) (180) Non-Cash Stock Comp • Share count to stabilize as coupon on Convertible Preferred Stock to Net Intere
Slide 16: Better Than Expected Free Cash Flow
BETTER THAN EXPECTED FREE-CASH FLOW Q2 $ Millions • SOLID FREE CASH FLOW Adjusted EBITDA • Strong Operating Income and EBITDA 284 • Tight management of Capex and One- (Continuing Ops) off costs Wella EBITDA • Strong overdue reduction 75 (2 months contribution) • WELLA CONTRIBUTION Capex, WC, one-off
Slide 17: Substantively Improved Capital Structure
SUBSTANTIVELY IMPROVED CAPITAL STRUCTURE $0.4 Q2 Free Cash Flow $2.9 $0.3 ~$1.2 $7.86 Proceeds from Negative FX Wella 40% Bn Wella 60% impact $4.8 financial Bn stake ~$3.6 Bn Financial Net Debt Financial Net Debt Economic Net Debt Q1 Q2 Q2 RESET LEVERAGE IMPROVED CAPITAL STRUCTURE • Proceeds from di
Slide 18: FY21 Outlook
FY21 OUTLOOK • Short term orders volatility due to COVID • Cost savings for FY21 now targeted at $300M • Expecting FY21 adjusted EBITDA of $750M • Continue to drive leverage ratio towards 5x exiting CY21 TITLE OF THE PRESENTATION 18
Slide 19: Conclusion: Maintains Momentum in Q2
CONCLUSION: MAINTAINS MOMENTUM IN Q2 • The new team is in place • Optimizing short-term revenues and sell-out in a volatile context • Continue to control costs & debt, but focusing now on accelerating topline • Added FY21 savings will enable guided profit delivery, while increasing commercial invest
Slide 20: Disclaimer
DISCLAIMER Forward-Looking Statements Certain statements in this presentation are forward-looking statements. These forward-looking statements reflect the Company's current views with respect to, among other things, the impact of COVID-19 and potential recovery scenarios, the Company’s comprehensive
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