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Coty Inc. (COTY) SEC Filing 10-K Annual Report for the fiscal year ending Wednesday, June 30, 2021

Coty Inc.

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CIK: 1024305 Ticker: COTY

Coty Continues Momentum in Q4, with Topline and Profit Exceeding Guidance
FY21 Results Above High End of Guidance
Accelerating Progress Across Each Pillar of Strategic Plan
Strong Momentum Into FY22, with Low Teens Sales Growth Expected at Current FX Levels

NEW YORK - August 26, 2021-- Coty Inc. (NYSE: COTY) ("Coty" or "the Company") today announced another quarter of improvement in its financial results and demonstrated recovery across its operations for the fourth quarter of fiscal year 2021, ended June 30, 2021.

In Q4, revenues increased 89.6%, or 80.7% LFL, lapping the peak of COVID impact in the prior year, even as COVID-related restrictions continued in many markets. As a result, Coty ended the year with revenues of $4.63 billion, above the high end of its $4.5-4.6 billion guidance range. While all regions returned to YoY growth in Q4, the U.S. and China markets were standouts. The Americas region grew 67% in Q4 and 6% in FY21, with the full year performance driven by double-digit growth in U.S. prestige products, and growth in Brazil and Canada. Asia Pacific grew 59% in Q4, with China growing double digits on a quarterly and full-year basis both year-on-year and versus FY19. EMEA sales more than doubled in Q4, even as many markets remained under restrictions through most of the quarter, with the consumer beauty brands recording stable market share for the first time in over 5 years. Underpinning the global momentum was the continued strength in e-commerce, which grew nearly 19% in Q4 and 34% in FY21, resulting in a high-teens e-commerce penetration for the year.

Coty's prestige brands sales more than doubled in Q4 and were nearly flat LFL in FY21, even as the Company continued to reduce sales in low quality channels, which represented a low teens negative impact to prestige brand sales in Q4 and a high single digit negative impact in FY21, relative to FY19. Nearly all prestige brands were up double- to triple-digits, with standout performance from Gucci, Marc Jacobs, Burberry, Calvin Klein, and Chloe, supplemented with expansion in Coty's new growth engines, prestige cosmetics and skincare.

In the mass channel, Coty continued to strengthen its consumer beauty brands, reaching a key milestone with CoverGirl gaining market share for three consecutive months, a first for the brand in 5 years. Building on this momentum, Coty launched the new brand repositioning for Rimmel in June, followed by Max Factor in late July. Coty's mass beauty revenues increased 37.9% LFL in Q4, with growth across each region.

Over the course of the year, Coty also advanced on its strategic pillar to become a beauty leader in sustainability. The Company announced its partnership with Lanzatech, becoming the first company in the fragrance industry to introduce sustainable ethanol, created using carbon-capture technology, into its fragrance products with the goal of having the majority of its fragrance portfolio using carbon-captured ethanol by 2023. On the cosmetics side, Coty has been leading with clean, vegan and cruelty-free formulations across brands such as CoverGirl, Sally Hansen, and Kylie Cosmetics. This has solidified Coty as the #2 player in clean cosmetics, as tracked by U.S. Nielsen.

During the quarter, Coty continued to reduce its cost base, with savings totaling approximately $70 million in the quarter. This brought the FY21 savings to over $330 million, exceeding the Company's initial plan for the year by over $100 million. Coty remains on track to generate ~$600 million of savings by FY23, and is identifying additional savings opportunities beyond FY23. At the same time, Coty now expects one-time cash costs associated with the cost savings program to come in approximately $100 million below the original target, aided by the strong cash focus of the Company. The company's efforts to drive gross margin expansion through a combination of product and channel mix, COGS savings and improved excess & obsolescence resulted in a reported and adjusted gross margin of ~60% for the year, up ~200bps YoY and in line with FY19 levels on a Continuing Operations basis, despite a lower sales base. The combination of gross margin expansion and accelerated cost savings allowed Coty to deliver profitability above expectations, while simultaneously reinvesting in the business. Specifically, in Q4 working media investments increased triple-digits versus last year and up over 30% versus 4Q19. At the same time, Coty delivered FY21 reported operating loss of $48.6 million and an adjusted EBITDA $760.4 million, exceeding guidance of ~$750 million and reflecting an adjusted EBITDA margin of 16.4%, delivering over 300 bps of margin expansion versus FY19. Q4 EPS totaled $(0.27) as reported and $(0.09) adjusted. The adjusted EPS is impacted by non-operational items including deferred financing fee write-offs, annual catch-up of tax expenses, and the impact of the convertible preferred shares on the diluted EPS calculation.

At the end of Q4, Financial Net Debt totaled approximately $5.2 billion. With an increase in the value of Coty's retained Wella stake to approximately $1.26 billion1 at quarter-end, the Company's Economic Net Debt totaled
1

The following information was filed by Coty Inc. (COTY) on Thursday, August 26, 2021 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Coty Inc.'s 10-K Annual Report:

Financial Statements, Disclosures and Schedules

Inside this 10-K Annual Report

Cover Page
Consolidated Balance Sheets
Consolidated Balance Sheets (Parenthetical)
Consolidated Statements Of Cash Flows
Consolidated Statements Of Comprehensive Income (Loss)
Consolidated Statements Of Comprehensive Income (Loss) (Parenthetical)
Consolidated Statements Of Equity
Consolidated Statements Of Equity (Parenthetical)
Consolidated Statements Of Operations
Accrued Expenses And Other Current Liabilities
Accrued Expenses And Other Current Liabilities (Details)
Accrued Expenses And Other Current Liabilities (Tables)
Acquisition- And Divestiture-Related Costs
Acquisition- And Divestiture-Related Costs (Details)
Business Combinations, Asset Acquisitions And Divestitures
Business Combinations, Asset Acquisitions And Divestitures (Tables)
Business Combinations, Asset Acquisitions And Divestitures - Business Divestitures (Details)
Business Combinations, Asset Acquisitions And Divestitures - King Kylie Transaction (Details)
Business Combinations, Asset Acquisitions And Divestitures - Kkw Holdings Transaction (Details)
Business Combinations, Asset Acquisitions And Divestitures - Schedule Of Allocation Of Purchase Price To Net Assets Acquired (Details)
Debt
Debt (Tables)
Debt - 2018 Coty Credit Agreement (Details)
Debt - Covenants (Details)
Debt - Deferred Issuance Costs And Write-Offs (Details)
Debt - Interest (Details)
Debt - Long-Term Debt Repayment Schedule (Details)
Debt - Offering Of Senior Secured Notes (Details)
Debt - Offering Of Senior Unsecured Notes (Details)
Debt - Schedule Of Debt (Details)
Debt - Schedule Of Debt Pricing Tier (Details)
Debt - Schedule Of Debt Redemption (Details)
Debt - Schedule Of Fair Value Of Debt (Details)
Debt - Schedule Of Long Term Debt Facilities (Details)
Debt - Short-Term Debt (Details)
Derivative Instruments
Derivative Instruments (Tables)
Derivative Instruments - Amount Of Gains And Losses Reclassified From Aoci (Details)
Derivative Instruments - Amount Of Gains And Losses Related Derivative Financial Instruments Not Designated As Hedging Instruments (Details)
Derivative Instruments - Gains And Losses Recognized In Oci (Details)
Derivative Instruments - Narrative (Details)
Description Of Business
Description Of Business (Details)
Discontinued Operations
Discontinued Operations (Tables)
Discontinued Operations - Narrative (Details)
Discontinued Operations - Tables (Details)
Employee Benefit Plans
Employee Benefit Plans (Tables)
Employee Benefit Plans - Amount Recognized In Balance Sheet (Details)
Employee Benefit Plans - Changes In Plan Assets And Benefit Obligations Recognized In Oci (Details)
Employee Benefit Plans - Components Of Net Periodic Benefit Cost (Details)
Employee Benefit Plans - Expected Benefit Payments (Details)
Employee Benefit Plans - Fair Value Of Plan Assets (Details)
Employee Benefit Plans - Narrative (Details)
Employee Benefit Plans - Pension Plans With Accumulated Benefit Obligations In Excess Of Plan Assets (Details)
Employee Benefit Plans - Pre-Tax Amounts Recognized In Aoci (Details)
Employee Benefit Plans - Reconciliation Of The Projected Benefit Obligations, Plan Assets, Funded Status (Details)
Employee Benefit Plans - Reconciliations Of Level 3 Plan Assets (Details)
Employee Benefit Plans - Schedule Of Assumptions (Details)
Employee Benefit Plans - Target And Weighted-Average Asset Allocations (Details)
Equity And Convertible Preferred Stock
Equity And Convertible Preferred Stock (Tables)
Equity And Convertible Preferred Stock - Accumulated Other Comprehensive Income (Loss) (Details)
Equity And Convertible Preferred Stock - Common Stock (Details)
Equity And Convertible Preferred Stock - Preferred Stock (Details)
Equity And Convertible Preferred Stock - Schedule Of Declared Dividends (Details)
Equity And Convertible Preferred Stock - Schedule Of Key Terms Of Series A Preferred Stock (Details)
Equity And Convertible Preferred Stock - Treasury Stock - Share Repurchase Program (Details)
Equity Investments
Equity Investments (Tables)
Equity Investments - Narrative (Details)
Equity Investments - Schedule Of Equity Investments (Details)
Equity Investments - Summarized Balance Sheet Information (Details)
Equity Investments - Summarized Statements Of Operations Information (Details)
Equity Investments - Summary Of Movement In Equity Investments (Details)
Equity Investments - Summary Of Significant Unobservable Inputs Used In Level 3 Valuation (Details)
Goodwill And Other Intangible Assets, Net
Goodwill And Other Intangible Assets, Net (Tables)
Goodwill And Other Intangible Assets, Net - Narrative (Details)
Goodwill And Other Intangible Assets, Net - Schedule Of Amortization Expense (Details)
Goodwill And Other Intangible Assets, Net - Schedule Of Changes In The Carrying Amount Of Indefinite-Lived Other Intangible Assets (Details)
Goodwill And Other Intangible Assets, Net - Schedule Of Goodwill (Details)
Goodwill And Other Intangible Assets, Net - Schedule Of Intangible Assets Subject To Amortization (Details)
Goodwill And Other Intangible Assets, Net - Schedule Of Other Intangible Assets (Details)
Goodwill And Other Intangible Assets, Net - Schedule Of Weighted Average Remaining Lives Of Intangible Assets Subject To Amortization (Details)
Income Taxes
Income Taxes (Tables)
Income Taxes - Components Of Deferred Income Tax Assets And Liabilities (Details)
Income Taxes - Components Of Provision (Benefit) (Details)
Income Taxes - Expirations Of Tax Loss Carry Forwards (Details)
Income Taxes - Income (Loss) From Operations Before Income Taxes (Details)
Income Taxes - Narrative (Details)
Income Taxes - Reconciliation Of Federal Statutory Tax Rate To Effective Tax Rate (Details)
Income Taxes - Unrecognized Tax Benefit Reconciliation (Details)
Interest Expense, Net
Interest Expense, Net (Details)
Interest Expense, Net (Tables)
Inventories
Inventories (Details)
Inventories (Tables)
Leases
Leases (Tables)
Leases - Lease Cost (Details)
Leases - Minimum Lease Payments (Details)
Leases - Narrative (Details)
Legal And Other Contingencies
Legal And Other Contingencies (Tables)
Legal And Other Contingencies - Brazilian Tax Assessments (Details)
Legal And Other Contingencies - Narrative (Details)
Legal And Other Contingencies - Schedule Of Other Commitments (Details)
Mandatorily Redeemable Financial Interest
Mandatorily Redeemable Financial Interest (Details)
Net Loss Attributable To Coty Inc. Per Common Share
Net Loss Attributable To Coty Inc. Per Common Share (Details)
Net Loss Attributable To Coty Inc. Per Common Share (Tables)
Prepaid Expenses And Other Current Assets
Prepaid Expenses And Other Current Assets (Details)
Prepaid Expenses And Other Current Assets (Tables)
Property And Equipment, Net
Property And Equipment, Net (Details)
Property And Equipment, Net (Tables)
Redeemable Noncontrolling Interests
Redeemable Noncontrolling Interests (Tables)
Redeemable Noncontrolling Interests - Narrative (Details)
Redeemable Noncontrolling Interests - Redeemable Noncontrolling Interest Adjustments (Details)
Related Party Transactions
Related Party Transactions (Details)
Restructuring Costs
Restructuring Costs (Tables)
Restructuring Costs - Narrative (Details)
Restructuring Costs - Restructuring Costs (Details)
Restructuring Costs - Restructuring Roll Forward (Details)
Segment Reporting
Segment Reporting (Tables)
Segment Reporting - Geographic Data (Details)
Segment Reporting - Reportable Segments, Product Categories Exceeding 10% Of Consolidated Net Revenues (Details)
Segment Reporting - Segment Data (Details)
Share-Based Compensation Plans
Share-Based Compensation Plans (Tables)
Share-Based Compensation Plans - Additional Information (Details)
Share-Based Compensation Plans - Black-Scholes Valuation Assumptions (Details)
Share-Based Compensation Plans - Executive Ownership Programs (Details)
Share-Based Compensation Plans - Nonqualified Stock Options Narrative (Details)
Share-Based Compensation Plans - Nonvested Nonqualified Stock Options (Details)
Share-Based Compensation Plans - Nonvested Shares Of Series A Preferred Stock (Details)
Share-Based Compensation Plans - Outstanding And Nonvested Restricted Share Units Activity (Details)
Share-Based Compensation Plans - Outstanding And Nonvested Restricted Stock Activity (Details)
Share-Based Compensation Plans - Outstanding Nonqualified Stock Options Activity (Details)
Share-Based Compensation Plans - Outstanding Preferred Stock Activity (Details)
Share-Based Compensation Plans - Phantom Units (Details)
Share-Based Compensation Plans - Restricted Share Units Activity (Details)
Share-Based Compensation Plans - Restricted Share Units Narrative (Details)
Share-Based Compensation Plans - Restricted Stock Activity (Details)
Share-Based Compensation Plans - Restricted Stock Narrative (Details)
Share-Based Compensation Plans - Series A And Series A-1 Preferred Stock Narrative (Details)
Share-Based Compensation Plans - Share-Based Compensation Expense (Details)
Share-Based Compensation Plans - Significant Assumptions Used In Binomial Lattice Model (Details) (Details)
Share-Based Compensation Plans - Summary Of The Total Intrinsic Value Of Stock Options Exercised And Payment To Settle Nonqualified Stock Options (Details)
Subsequent Events
Summary Of Significant Accounting Policies
Summary Of Significant Accounting Policies (Policies)
Summary Of Significant Accounting Policies (Tables)
Summary Of Significant Accounting Policies - Finite Lived Intangible Assets (Details)
Summary Of Significant Accounting Policies - Narrative (Details)
Summary Of Significant Accounting Policies - Property Plant And Equipment (Details)
Trade Receivables - Factoring
Trade Receivables - Factoring (Details)
Valuation And Qualifying Accounts
Valuation And Qualifying Accounts (Details)
Ticker: COTY
CIK: 1024305
Form Type: 10-K Annual Report
Accession Number: 0001024305-21-000063
Submitted to the SEC: Thu Aug 26 2021 4:02:29 PM EST
Accepted by the SEC: Thu Aug 26 2021
Period: Wednesday, June 30, 2021
Industry: Perfumes Cosmetics And Other Toilet Preparations

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