THIRD QUARTER FY19 FINANCIAL RESULTS · THE PATH FORWARD - RETURN TO FUNDAMENTALS Management team...

THIRD QUARTER FY19 FINANCIAL RESULTS

May 8, 2019

CEO UPDATETHE PATH FORWARD - RETURN TO FUNDAMENTALS

Management team in place

Collectively identifying and prioritizing the strategic opportunities

Analysis of key markets and

business units

• Upside potential in shelf productivity

• Prioritization of brands/markets• Investment at scale• Talent that is skilled and results-

oriented

Core business principles confirmed

• Better, before bigger, business• Gross margin obsessed• Selective and scaled brand building

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• 3Q19 Net Revenue LFL (3.7%)

Includes ~2% negative impact from revenue recognition accounting change

YTD LFL Net Revenues of (3.3%)

• Increased control over cost structure enabling solid profit delivery in-line with our expectations

Supported by proactive reductions in fixed costs and non-working media

• Positive FCF in Q3 and YTD

Quarterly dividend of $0.125 per share

Option of stock dividend reinvestment program introduced

3Q19 AND YTD RESULTSSOLID PROFIT AND CASH DELIVERY

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$ Millions 3 Months Year-to-Date

Net Revenues 1,991 6,533

YoY -10.4% -8.0%LFL -3.7% -3.3%

Adj Operating Income 230 693

Adj Operating Margin 11.5% 10.6%

Free Cash Flow 142 121

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LUXURY Q3 FY19 HIGHLIGHTS

• 3Q19 Net Revenue LFL + 2.8%, which includes ~1% headwind from temporary factors

Continued strong underlying growth YTD

Solid 3Q19 results, despite lapping significant launch activity in the prior year

• Strong growth in Burberry, Gucci, Hugo Boss and Calvin Klein

• 3Q19 adjusted operating income of $126M (+26% YoY), reaching 17.3% adjusted operating margin

LUXURY 3Q19 AND YTD RESULTSCONTINUED STRONG TOPLINE AND PROFIT GROWTH

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Net Revenues 729 2,540

YoY -3.1% 2.9%LFL 2.8% 4.4%

Adj. Operating Income 126 405

Adj. Operating Margin 17.3% 15.9%

CONSUMER BEAUTY HIGHLIGHTS

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• 3Q19 Net Revenue LFL (10.0%), which includes ~3% headwind from temporary factors

• 3Q19 YTD LFL of (10.4%), which includes ~2% headwind from temporary factors

Adjusted for temporary factors, net revenue consistent with sell-out, and we are seeing some moderation in share loss

• Industry weakness and share loss in several key brands masking share improvement in WellaRetail, adidas, and Brazil local brands

• Adjusted operating income of $56M (-43% YoY), with an adjusted operating margin of 6.6%, which includes a negative impact of $23M from the revenue recognition accounting change

• Underlying efforts continue to improve gross margin and shift resources to priority brands and working media investments

CONSUMER BEAUTY 3Q19 RESULTSCONTINUED TOPLINE WEAKNESS, AS WE FOCUS ON BUILDING HEALTHIER BASE

* Supply chain impacts are calculated on the basis of estimated lost net revenues and gross profit, with no assumed impact to other operating expenses 7



YoY -17.8% -17.7%LFL -10.0% -10.4%



PROFESSIONAL BEAUTY Q3 HIGHLIGHTS

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• 3Q19 Net Revenue LFL (0.6%)

YTD Net Revenue LFL of (1.3%), which includes ~2% negative impact from the temporary factors

Business is solid, but recovering from supply chain issues

• Return to solid growth in OPI alongside strong momentum in ghd

• Adjusted operating income of $47M (+57% YoY), with adjusted operating margin of 11.2%

PROFESSIONAL BEAUTY 3Q19 RESULTSSLIGHTLY NEGATIVE LFL BELOW RUN-RATE TRENDS

* Supply chain impacts are calculated on the basis of estimated lost net revenues and gross profit, with no assumed impact to other operating expenses 9



YoY -6.1% -4.9%LFL -0.6% -1.3%



• 3Q19 gross margin 62.9%: Down 140 bps YoY, but up 80bps

vs. 2Q19 Continued margin expansion in

Luxury and Professional Beauty More than offset by Consumer

Beauty reflecting: High comps (Brazil) Negative impact from the

revenue recognition accounting change

Continued weakness in Younique

• Active cost control to drive flat 3Q19 Adj Operating income, in-line with our expectations Proactively managing fixed costs

and A&CP allocation Working media relatively stable

• 3Q19 adjusted EPS of $0.13 (flat YoY)

3Q19 P&L FOCUSED ON PROFIT DELIVERY

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3Q19 3Q18


Adj Gross Profit 1,252 1,428Adj Gross Margin 62.9% 64.3%

Adj Operating Income 230 229Adj Operating Margin 11.5% 10.3%

Adj Net Income to Coty 102 96

Adj EPS 0.13 0.13Diluted Shares 754 754

Total YoY Performance FX

-10.4% -5.5% -4.9%

-12.4% -7.9% -4.5%

0.4% 5.4% -5.0%

5.6%

0.0%

0.0%

Refer to the March 31, 2019 Press Release on Form 8-K for complete reconciliations of reported operating income to adjusted operating income and reported net income to adjusted net income, including descriptions of the adjustments.

• YTD gross margin down 60 bps to 61.8% a result of:

Significant pressure in 1H19 stemming from the supply chain disruptions

Continued topline weakness in Consumer Beauty

• YTD Adj OI -10% YoY or ($80M), including -4% FX headwind

OI trends consistent with gross profit decline

Active cost management to counteract ~$100M lost profit due to supply chain disruptions

• YTD adjusted EPS of $0.48 (-11% YoY)

YTD P&L FOCUSED ON PROFIT DELIVERY

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3Q19 YTD

3Q18YTD


Adj Gross Profit 4,038 4,431Adj Gross Margin 61.8% 62.4%

Adj Operating Income 693 773Adj Operating Margin 10.6% 10.9%

Adj Net Income to Coty 364 410

Adj EPS 0.48 0.54Diluted Shares 753 753

Total YoY Performance FX

-8.0% -4.4% -3.6%

-8.9% -5.7% -3.2%

-10.4% -6.3% -4.0%

-11.2%

-11.1%

0.0%

Refer to the March 31, 2019 Press Release on Form 8-K for complete reconciliations of reported operating income to adjusted operating income and reported net income to adjusted net income, including descriptions of the adjustments.

NET DEBT DECREASE IN 3Q19 SUPPORTED BY FREE CASH FLOWDELEVERAGING IS A TOP PRIORITY, KEY LEVER FOR VALUE CREATION

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• 3Q19 FCF of $142M improved by $348 million from 3Q18, reflecting impact of working capital management initiatives, including:

A solid improvement in the aging of our underlying receivables

The contribution of ~$110 million from receivables factoring

Lower capex as integration nears completion

• 3Q19 FCF was pressured by ~$100M of one-off cash costs, with year-to-date one-off cash costs over $300M

• Net Debt decreased by $100M in 3Q19 vs. 2Q19, resulting in Net Debt / Adj. EBITDA ratio of 5.7x

• Covenant adjusted leverage remains well below our permitted threshold

• Deleveraging remains our top priority, and we are targeting a Net Debt / adjusted EBITDA ratio of <4.0x in the medium term

3Q19

Adj Operating Income 230

Depreciation 96 Adj EBITDA 325

Adjustments to reconcile Ebitda (loss) to net cash provided by (used in) operating activities:

Working Capital including One Off cost (26) Capex (72) Interest (Cash) (55) Tax (Cash) (31) Other - Free Cash Flow 142

Dividends (94) Minority Interest (11) M&A 0 Miscellaneous (7) Cash Available for Debt Paydown 30

3Q 19

Net Debt - Opening (12/31/18) 7,489

Cash Available for Debt Paydown (30) FX and other (70) Net Debt - Closing (3/31/19) 7,389

LTM Adj EBITDA 1,298 Net Debt / Adj EBITDA 5.7x

• Consistent with our deleveraging objective, we are initiating a stock dividend reinvestment program giving shareholders the option to receive their full dividend in cash or to receive their dividend in 50% cash / 50% common stock Shareholders will be able to make this election on a quarterly basis, beginning

with the June 2019 dividend payment

• JAB, Coty’s largest shareholder, has informed us that it will elect to receive 50% of its dividend in common stock, until Coty has reached its targeted leverage of <4.0x Net Debt / Adjusted EBITDA

Election shows that JAB is fully supportive of Coty’s medium-term leverage target

Annual cash savings of $112M from JAB’s election alone Modest EPS dilution

• This, together with our confidence in Coty’s prospects, affirms our dividend commitment which remains an essential part of our financial policy

QUARTERLY DIVIDEND AT $0.125 PER SHAREOPTION TO RECEIVE 50% IN STOCK

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KEY RECENT DEVELOPMENTSJAB TENDER OFFER COMPLETED

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• JAB Tender Offer to acquire 150 million Coty shares completed on May 1, 2019

• 337M shares tendered, implying a proration of ~45%

• JAB's ownership of Coty now accounting for 60% of our outstanding shares

• Underlying expression of confidence and support of Coty from JAB

• During the final quarter of fiscal 2019, we continue to expect that FY19 constant currency adjusted operating income will be moderately below FY18

Constant currency adjusted operating income of $950-1,000M Implies a solid profit performance in 4Q19, despite expected

continued weakness in topline

• We continue to expect positive free cash flow for FY19, with solid free cash flow generation in 4Q19

• Expect to announce the strategic plan towards the end of June

FY19 OUTLOOK

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Forward-Looking Statements

Certain statements in this presentation are forward-looking statements. These forward-looking statements reflect Coty Inc.’s (“Coty’s”) current views with respect to, among other things, Coty’s strategic planning, targetsand outlook for future reporting periods (including the extent and timing of revenue and profit trends and the Consumer Beauty division’s stabilization), establishing Coty as a global leader and challenger in beauty, itsfuture operations and strategy (including management’s review of the business, as well as brand relaunches and performance in emerging markets and channels), synergies, savings, performance, cost, timing andintegration relating to our recent acquisitions (including The Proctor & Gamble Company’s beauty business (the “P&G Beauty Business”)), ongoing and future cost efficiency and restructuring initiatives and programs(including the expected timing and impact), strategic transactions (including mergers and acquisitions, joint ventures, investments, divestitures, licenses and portfolio rationalizations), future cash flows and liquidity andborrowing capacity, future effective tax rates, timing and size of cash outflows and debt deleveraging, impact and timing of supply chain disruptions and the resolution thereof, finalization of a strategic plan and theanticipated priorities of Coty’s new senior management, and the future impact of the U.S. tax laws including the base erosion anti-abuse tax and the global intangible low-taxed income rules. These forward-lookingstatements 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” 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 the control of Coty, which could cause actual results to differ materially from such statements. Such risks and uncertainties are identified in the Earnings Release dated May 8, 2019 to which thispresentation relates, including, but not limited to: Coty’s ability to develop and achieve its global business strategies, compete effectively in the beauty industry and achieve the benefits contemplated by its strategicinitiatives within the expected time frame or at all, the continued integration of the P&G Beauty Business and other recent acquisitions with Coty’s business, operations, systems, financial data and culture and the ability torealize synergies, avoid future supply chain and other business disruptions, reduce costs and realize other potential efficiencies and benefits (including through its restructuring initiatives) at the levels and at the costs andwithin the time frames contemplated or at all, and managerial, integration, operational, regulatory, legal and financial risks, including diversion of management attention to and management of cash flows, expenses andcosts associated with multiple ongoing and future strategic initiatives, internal reorganizations and restructuring activities.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included elsewhere. More information about potential risksand uncertainties that could affect Coty’s business and financial results is included under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Coty’s Annual Reporton Form 10-K for the fiscal year ended June 30, 2018, and other periodic reports Coty has filed and may file with the Securities and Exchange Commission (the “SEC”) from time to time. Any forward-looking statementsmade in this presentation are qualified in their entirety by these cautionary statements. All forward-looking statements are made only as of the date of this presentation, and, Coty undertakes no obligation, other than asmay be required by applicable law, 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 operatingresults over time or otherwise.

Non-GAAP Financial Measures

In this presentation, Coty presents certain-GAAP financial measures that we believe enable management and investors to analyze and compare the underlying business results from period to period. Adjusted and proforma metrics exclude nonrecurring items, purchase price accounting related amortization, acquisition-related costs, restructuring costs and certain other information as noted within this presentation. These non-GAAPfinancial measures should not be considered in isolation, or as a substitute for, or superior to, financial measures calculated in accordance with GAAP. A reconciliation from reported to adjusted results can be found in ourEarnings Release dated May 8, 2019, available in the “Investor Relations” section of our website at Coty.com.

Outlook Information

In this presentation, Coty presents outlook information as of May 8, 2010, as reported in its Earnings Release of such date.

Definitions and Notes

Fiscal year represents Coty’s fiscal year ended June 30.

DISCLAIMER

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THIRD QUARTER FY19 FINANCIAL RESULTS · THE PATH FORWARD - RETURN TO FUNDAMENTALS Management team...

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