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Dec 31, 2023
Coty Q2 2024 Earnings Report
Reported strong sales growth ahead of the beauty market, profit growth, and operating and EBITDA margin expansion.
Key Takeaways
Coty Inc. announced strong Q2 fiscal year 2024 results, with sales growth ahead of the beauty market, profit growth, and expansion in operating and EBITDA margins. The company's Q2 sales grew by 13% as reported and 11% LFL, exceeding expectations. Coty also strengthened its portfolio with a new luxury license, Marni, and multiple license extensions.
Q2 net revenues increased 13% as reported and 11% LFL, driven by double-digit percentage LFL growth in Prestige and mid-single-digit percentage LFL growth in Consumer Beauty.
Q2 reported operating income grew 19% to $236.7 million and adjusted operating income increased 18% to $309.3 million, with an adjusted operating margin of 17.9% reflecting 70 basis points of margin expansion.
Q2 adjusted EBITDA grew 15% to $366.4 million, with an adjusted EBITDA margin of 21.2%.
Q2 free cash flow totaled $363.0 million.
Revenue by Segment
Revenue by Geographic Location
Forward Guidance
Coty continues to expect FY24 LFL revenue growth of +9-11%, which includes expectations for +6-8% LFL revenue growth in second half FY24. Coty continues to target FY24 adjusted EBITDA margin expansion of 10 to 30 basis points and FY24 adjusted EBITDA of $1,080 to $1,090 million based on current FX rates. Coty continues to target FY24 adjusted EPS, excluding the equity swap, of $0.44 to $0.47.
Positive Outlook
- Beauty market remains a strong and outperforming category.
- Momentum across core categories.
- Strong launch results.
- Early wins in key white spaces.
- Strong year-over-year gross margin expansion is expected in the second half.
Challenges Ahead
- Exceptional double-digit percentage growth of the past two years normalizes closer to medium term trends.
- Faces an estimated low-to-mid single-digit percentage headwind in its Prestige business from retailer inventory restocking.
- Reported revenues in the second half are expected to include a 1-2% headwind from FX.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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