Coty Inc. (NYSE:COTY) Q3 2024 Earnings Call Transcript May 6, 2024
Coty Inc. misses on earnings expectations. Reported EPS is $0.00987 EPS, expectations were $0.06. COTY isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Hello everyone, this is Olga Levinzon, Coty’s Senior Vice President of Investor Relations. Thank you for joining us today for the prepared remarks portion of Coty’s Third Quarter Fiscal 2024 Earnings. On Tuesday, May 7, 2024, at approximately 8.15 a.m. Eastern Time or 2.15 p.m. Central European Time, we will hold a separate live Q&A session on our results, which you can access via our Investor Relations website. Joining me for our presentation are Sue Nabi, Coty’s CEO, and Laurent Mercier, Coty’s CFO. Before I hand the call over to Sue, I would like to remind you that many of the comments today may contain forward-looking statements. Please refer to Coty’s earnings release and the reports filed with the SEC, where the company lists factors that could cause actual results to differ materially from these forward-looking statements.
In addition, except we’re noted, the discussion of Coty’s financial results and Coty’s expectations reflect certain adjustments as specified in the non-GAAP financial measures section of the company’s release. Thank you. I will now turn it over to our CEO, Sue Nabi.
Sue Nabi: Welcome everyone, first, let me begin by saying that Coty’s very strong Q3 results, with double-digit growth, reinforce our nearly four-year track record of delivering results in-line to ahead of expectations. We continue to see a strong and dynamic global beauty market even in the midst of a challenging geopolitical and macroeconomic environment. Coty’s diversified portfolio and strong execution have enabled us to once again outperform the broader global beauty market; and, our global and multi-category presence has proven to be a key area of strength and differentiation, as subdued trends in very few markets and subcategories, such as U.S. mass cosmetics, were more than offset by continued strong momentum in the majority of our core categories and markets.
This global and multi-category presence, coupled with our industry-leading capabilities and desirable brand portfolio, equipped Coty to boost consumers’ desire for beauty through our disruptive innovations and established icons. Our strong growth in Q3 was accompanied by strong and disciplined financial delivery, as we generated robust profit growth and margin expansion, allowing us to raise the midpoint of our guidance for the third time this year. Overall, we continue to target sales growth ahead of the beauty market, growing our profit ahead of sales, steadily deleveraging our balance sheet, and positioning Coty as a beauty powerhouse with still significant untapped potential. Let me summarize the key messages from our results today. First, we saw continued double-digit like-for-life growth in Q3 and year-to-date as we once again delivered market leading revenue growth, marking nearly four years of Coty reporting results in-line to ahead of expectations.
Our like-for-life revenues grew 10% in Q3 and grew 13% year-to-date, trending above our guidance of plus 9% to 11% like-for-life for the current fiscal ‘24. In Q3, we continued to deliver on our balanced growth agenda, with strong like-for-life growth in both Prestige and Consumer Beauty, across all regions and in each of our core categories fragrances, color cosmetics, skin care, and body care, all supported by a broad range of our leading brands, and with contribution from volumes and price mix. Second, in Q3 and year-to-date, we delivered strong profits and margin expansion despite reinvestments in the business, with adjusted gross margin increasing by 190 basis points in Q3 and up 20 basis points fiscal year-to-date to 64.4%. At the same time, our Q3 adjusted operating income and adjusted EBITDA both increased double-digits year-over-year, which drove 30 basis points of expansion in the EBITDA margin.
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