COTY INC

Previous wording

Certain statements in this Form 10-Q are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, strategic planning, targets and outlook for future reporting periods (including the extent and timing of revenue, expense and profit trends and changes in operating cash flows and cash flows from operating activities and investing activities), the Company’s future operations and strategy (including the expected implementation and related impact of its strategic priorities), ongoing and future cost efficiency, optimization and restructuring initiatives and programs, expectations of the impact of inflationary pressures and the timing, magnitude and impact of pricing actions to offset inflationary costs, strategic transactions (including their expected timing and impact), expectations and/or plans with respect to joint ventures (including Wella and the timing and size of any related divestiture, distribution or return of capital), the Company’s capital allocation strategy and payment of dividends (including suspension of dividend payments and the duration thereof and any plans to resume cash dividends on common stock or to continue to pay dividends in cash on preferred stock) and expectations for stock repurchases, investments, licenses and portfolio changes, product launches, relaunches or rebranding (including the expected timing or impact thereof), synergies, savings, performance, cost, timing and integration of acquisitions, future cash flows, liquidity and borrowing capacity (including any refinancing or deleveraging activities), timing and size of cash outflows and debt deleveraging, the timing and extent of any future impairments, and synergies, savings, impact, cost, timing and implementation of the Company’s ongoing strategic transformation agenda (including operational and organizational structure changes, operational execution and simplification initiatives, fixed cost reductions, continued process improvements and supply chain changes), the impact, cost, timing and implementation of e-commerce and digital initiatives, the expected impact, cost, timing and implementation of sustainability initiatives (including progress, plans, goals and our ability to achieve sustainability targets), the wind down of the Company’s operations in Russia (including timing and expected impact), the impact of public health events, the expected impact of geopolitical risks including the ongoing war in Ukraine and/or the armed conflict in the Middle East (including the Red Sea conflict) on our business operations, sales outlook and strategy, the expected impact of global supply chain challenges and/or inflationary pressures (including as a result of the war in Ukraine and/or armed conflict in the Middle East including the Red Sea conflict) and expectations regarding future service levels and inventory levels, the impact of …

Excerpt shortened here; the source contains the full paragraph.

Current wording

Certain statements in this Form 10-Q are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, strategic planning, targets and outlook for future reporting periods (including the extent and timing of revenue, expense and profit trends and changes in operating cash flows and cash flows from operating activities and investing activities), the Company’s future operations and strategy (including the expected implementation and related impact of its strategic priorities), ongoing and future cost efficiency, optimization and restructuring initiatives and programs, expectations of the impact of inflationary pressures and the timing, magnitude and impact of pricing actions to offset inflationary costs, strategic transactions (including their expected timing and impact), expectations and/or plans with respect to joint ventures (including Wella and the timing and size of any related divestiture, distribution or return of capital), the Company’s capital allocation strategy and payment of dividends (including suspension of dividend payments and the duration thereof and any plans to resume cash dividends on common stock or to continue to pay dividends in cash on preferred stock) and expectations for stock repurchases, investments, licenses and portfolio changes, product launches, relaunches or rebranding (including the expected timing or impact thereof), plans for growth in growth engine markets, channels and other white spaces, synergies, savings, performance, cost, timing and integration of acquisitions, future cash flows, liquidity and borrowing capacity (including any refinancing or deleveraging activities), timing and size of cash outflows and debt deleveraging, the timing and extent of any future impairments, and synergies, savings, impact, cost, timing and implementation of the Company’s ongoing strategic transformation agenda (including operational and organizational structure changes, operational execution and simplification initiatives, fixed cost reductions, continued process improvements and supply chain changes), the impact, cost, timing and implementation of e-commerce and digital initiatives, the expected impact, cost, timing and implementation of sustainability initiatives (including progress, plans, goals and our ability to achieve sustainability targets), the wind down of the Company’s operations in Russia (including timing and expected impact), the expected impact of geopolitical risks including the ongoing war in Ukraine and/or the armed conflict in the Middle East (including the Red Sea conflict) on our business operations, sales outlook and strategy, expectations regarding economic recovery in Asia, consumer purchasing trends and the related impact on our plans for growth in China, the expected impact of global supply chain challenges and/or inflationary pressures (including as a result of the…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

•our ability to successfully implement our multi-year strategic transformation agenda and compete effectively in the beauty industry, achieve the benefits contemplated by our strategic initiatives (including revenue growth, cost control, gross margin growth and debt deleveraging) and successfully implement our strategic priorities (including stabilizing our consumer beauty brands through leading innovation and improved execution, accelerating our prestige fragrance brands and ongoing expansion into prestige cosmetics, building a comprehensive skincare portfolio, enhancing our e-commerce and direct-to-consumer (“DTC”) capabilities, expanding our presence in China through prestige products and select consumer beauty brands, and establishing Coty as an industry leader in sustainability) in each case within the expected time frame or at all;

Current wording

•our ability to successfully implement our multi-year strategic transformation agenda and compete effectively in the beauty industry, achieve the benefits contemplated by our strategic initiatives (including revenue growth, cost control, gross margin growth and debt deleveraging) and successfully implement our strategic priorities (including stabilizing our consumer beauty brands through leading innovation and improved execution, accelerating our prestige fragrance brands and ongoing expansion into prestige cosmetics, building a comprehensive skincare portfolio, enhancing our organizational growth capabilities including digital, direct-to-consumer (“DTC”)and research and development, expanding our presence in growth channels, in China and other growth engine markets, and establishing Coty as an industry leader in sustainability) in each case within the expected time frame or at all;

Previous wording

•global political and/or economic uncertainties, disruptions or major regulatory or policy changes, and/or the enforcement thereof that affect our business, financial performance, operations or products, including the impact of the war in Ukraine and any escalation or expansion thereof, armed conflict in the Middle East, the current U.S. administration and future elections, changes in the U.S. tax code and/or tax regulations in other jurisdictions where we operate (including recent and pending implementation of the global minimum corporate tax (part of the “Pillar Two Model Rules”) that may impact our tax liability in the European Union (“EU”)), and recent changes and future changes in tariffs, retaliatory or trade protection measures, trade policies and other international trade regulations in the U.S., the EU, and Asia and in other regions where we operate, potential regulatory limits on payment terms in the EU, future changes in sanctions regulations, regulatory uncertainty impacting the wind-down of our business in Russia, recent and future changes in regulations impacting the beauty industry, including regulatory measures addressing products, formulations, raw materials and packaging, and recent and future regulatory measures restricting or otherwise impacting the use of web sites, mobile applications or social media platforms that we use in connection with our digital marketing and e-commerce activities;

Current wording

•global political and/or economic uncertainties, disruptions or major regulatory or policy changes, and/or the enforcement thereof that affect our business, financial performance, operations or products, including the impact of the war in Ukraine and any escalation or expansion thereof, armed conflict in the Middle East, the outcome of U.S. elections, changes in the U.S. tax code and/or tax regulations in other jurisdictions where we operate (including recent and pending implementation of the global minimum corporate tax (part of the “Pillar Two Model Rules”) that may impact our tax liability in the European Union (“EU”)), and recent changes and future changes in tariffs, retaliatory or trade protection measures, trade policies and other international trade regulations in the U.S., the EU, and Asia and in other regions where we operate, potential regulatory limits on payment terms in the EU, future changes in sanctions regulations, regulatory uncertainty impacting the wind-down of our business in Russia, recent and future changes in regulations impacting the beauty industry, including regulatory measures addressing products, formulations, raw materials and packaging, and recent and future regulatory measures restricting or otherwise impacting the use of web sites, mobile applications or social media platforms that we use in connection with our digital marketing and e-commerce activities;

Previous wording

We are one of the world’s largest beauty companies, with an iconic portfolio of brands across fragrance, color cosmetics, and skin and body care. Our brands empower people to express themselves freely, creating their own visions of beauty; and we are committed to making a positive impact on the planet. Our strategic priorities include stabilizing and growing our Consumer Beauty brands through leading innovation and improved execution, accelerating our Prestige fragrance business and ongoing expansion into Prestige cosmetics, building a comprehensive skincare portfolio over the mid-to-long term leveraging existing brands, enhancing our organizational growth capabilities including digital and research and development, expanding our presence in China, the Travel Retail channel and growth markets, and establishing Coty as an industry leader in sustainability.

Current wording

We are one of the world’s largest beauty companies, with an iconic portfolio of brands across fragrance, color cosmetics, skincare, and body care. Our brands empower people to express themselves freely, creating their own visions of beauty and we are committed to making a positive impact on the planet. Our strategic priorities include stabilizing and growing our Consumer Beauty brands through leading innovation and improved execution, accelerating our Prestige fragrance business and ongoing expansion into Prestige cosmetics, building a comprehensive skincare portfolio over the mid-to-long term leveraging existing brands, enhancing our organizational growth capabilities including digital and research and development, expanding our presence in growth channels such as the Travel Retail channel, in China and other growth engine markets (Latin America, including Brazil, the Middle East, North and South East Asia, Africa, and India), and establishing Coty as an industry leader in sustainability.

Previous wording

We have been making progress on our strategic priorities. In Consumer Beauty, we have implemented the relaunch of our top brands and returned to stable growth and steady margin improvement. We are now focusing on accelerating our digital advocacy strategy to amplify our brand and product innovations and leveraging consumer analytics and insights to improve the return on investment of our marketing activities. In Prestige, we continue to accelerate the fragrance business with exceptional new launches and expansion in premium and ultra-premium categories, while steadily expanding the distribution, productivity and assortment of our Prestige cosmetics. We are continuing to thoughtfully expand our skincare portfolio, with our focus on winning over the most discerning skin care consumers in our areas of excellence – UV protection and photoaging prevention and repair, biotech-enhanced longevity science, and micro-dose formulations. We have successfully expanded our e-commerce capabilities, through best-in-class online launches, our digital advocacy strategy and active participation in key online shopping events, and increasing digital media competitiveness.

Current wording

We have been making progress on our strategic priorities. In Consumer Beauty, we have implemented the relaunch of our top brands. We are now focusing on accelerating our digital advocacy strategy to amplify our brand and product innovations and leveraging consumer analytics and insights to improve the return on investment of our marketing activities. In Prestige, we are accelerating our fragrance business with exceptional new launches and expanding our premium and ultra-premium categories, while also enhancing the assortment of our Prestige cosmetic products. We are continuing to thoughtfully expand our skincare portfolio (which contributed a low single digit percentage of our first quarter fiscal 2025 net revenue), with our focus on winning over the most discerning skin care consumers in our areas of excellence – UV protection and photoaging prevention and repair, biotech-enhanced longevity science, and micro-dose formulations. We have successfully expanded our e-commerce capabilities, through best-in-class online launches, our digital advocacy strategy and active participation in key online shopping events, and increasing digital media competitiveness.

Previous wording

Our products are sold in over 120 countries and territories. As a geographically diverse company we are susceptible to global economic trends, geopolitical conflicts, domestic and foreign governmental policies, and changes in foreign exchange rates. In particular, economic conditions in China have had, and are expected to continue to have, an impact on our strategic initiatives, including our growth agenda in the region for Prestige products and our skincare growth priorities. Within the China market we continue to monitor and take actions to address the impact to our Consumer Beauty brands which have experienced sales declines as retailers and distributors continue to deplete their existing inventory. In addition, as the conflict in the Red Sea continues to develop, we have implemented alternate transport routes and have purchased safety stock to mitigate impacts on the flow of goods. We remain attentive to economic and geopolitical conditions that may materially impact our business. We continue to explore and implement risk mitigation strategies in the face of these unfolding conditions and remain agile in adapting to changing circumstances. Such conditions have or may have global implications which may impact the future performance of our business in unpredictable ways.

Current wording

Our products are sold in approximately 121 countries and territories. As a geographically diverse company we are susceptible to global economic trends, geopolitical conflicts, domestic and foreign governmental policies, and changes in foreign exchange rates. In particular, economic conditions in China have had, and are expected to continue to have, an impact on our strategic initiatives, including our growth agenda in the region for Prestige products and our skincare growth priorities. Within the China market we continue to monitor and take actions to address the impact to our Consumer Beauty brands which have experienced sales declines as retailers and distributors continue to deplete their existing inventory. We remain attentive to economic and geopolitical conditions that may materially impact our business.

Previous wording

We expect that our net revenue for fiscal year 2024 will grow in the high single digits to low double digits versus the prior year, excluding the impact of foreign exchange, the Russia Market Exit and the early termination of the Lacoste fragrance license. We anticipate that our annual gross margin will remain in the mid-sixties, providing us with opportunities to fund new product initiatives and support our brands through advertising and consumer promotional investments. We continue to target advertising and consumer promotional spending in the high-twenties percentage of net revenues. However, our level of advertising and consumer promotional spending will depend on various factors, including seasonality, the timing of product launches, and budgetary considerations. We anticipate that fixed costs as a percentage of our net revenues will incrementally improve annually as we continue to take steps to gradually optimize our fixed cost base.

Current wording

We expect that our net revenue for fiscal year 2025 will grow in the low to mid-single digits versus the prior year, excluding the impact of foreign exchange and the early termination of the Lacoste fragrance license. We anticipate that our annual gross margin will remain in the mid-sixties, providing us with opportunities to fund new product initiatives and support our brands through advertising and consumer promotional investments. In anticipation of a more uncertain demand backdrop, including cautious retailer behavior and a complex macroeconomic environment, we are re-accelerating our cost reduction efforts across to deliver savings well above approximately $75.0. We continue to target advertising and consumer promotional spending in the high-twenties percentage of net revenues. However, our level of advertising and consumer promotional spending will depend on various factors, including seasonality, the timing of product launches, and budgetary considerations.

Previous wording

•Other (income) expense: We have excluded the impact of pension curtailment (gains) and losses and pension settlements as such events are triggered by our restructuring and other business realignment activities and the amount of such charges vary significantly based on the size and timing of the programs. Further, we have excluded the change in fair value of the investment in Wella, as well as expenses related to potential or actual sales transactions reducing equity investments, as our management believes these unrealized (gains) and losses do not reflect our underlying ongoing business, and the adjustment of such impact helps investors and others compare and analyze performance from period to period. We have excluded the gain on the exchange of Series B Preferred Stock. Such transactions do not reflect our operating results and we have excluded the impact as our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.

Current wording

•Other (income) expense: We have excluded the impact of pension curtailment (gains) and losses and pension settlements as such events are triggered by our restructuring and other business realignment activities and the amount of such charges vary significantly based on the size and timing of the programs. Further, we have excluded the change in fair value of the investment in Wella, as well as expenses related to potential or actual sales transactions reducing equity investments, as our management believes these unrealized (gains) and losses do not reflect our underlying ongoing business, and the adjustment of such impact helps investors and others compare and analyze performance from period to period. Such transactions do not reflect our operating results and we have excluded the impact as our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.

Previous wording

The overall increase in net revenues reflects the continued success of our pricing and revenue management strategies, including the implementation of targeted price increases across our product portfolio earlier in the fiscal year. Volume growth across our fragrance portfolio, as well as in skin and body care products in Brazil helped drive the increase in revenues, partially offset by volume declines from certain color cosmetic and other body care brands in China due to macroeconomic conditions.

Current wording

The overall increase in net revenues reflects the continued success of our pricing and revenue management strategies, including the implementation of price increases across our product portfolio in the prior period. The overall increase in net revenues related to pricing is partially offset by volume declines primarily related to the Consumer Beauty product portfolio, specifically from Monange and the color cosmetics category.

Previous wording

In the three months ended March 31, 2024, net revenues from the Prestige segment increased 8%, or $67.5 to $867.2 compared to $799.7 in the three months ended March 31, 2023. Excluding net revenue from the third quarter of the prior period from Lacoste, net revenues from the Prestige segment increased 12% or $95.3 to $867.2 from $771.9 in the three months ended March 31, 2023, reflecting a positive price and mix impact of 10% (primarily due to the positive pricing impact as a result of global price increases earlier in the fiscal year, in line with the overall premiumization strategy and brand innovation), an increase in unit volume of 3%, partially offset by a negative foreign currency exchange translation impact of 1%. The increase in net revenues primarily reflects:

Current wording

In the three months ended September 30, 2024, net revenues from the Prestige segment increased 5%, or $49.4 to $1,114.1 compared to $1,064.7 in the three months ended September 30, 2023. Excluding net revenue from the first quarter of the prior period from Lacoste, net revenues from the Prestige segment increased 7% or $72.2 to $1,114.1 from $1,041.9 in the three months ended September 30, 2023, reflecting a positive price and mix impact of 5% (primarily due to the positive pricing impact as a result of price increases in the prior period, in line with the overall premiumization strategy), and an increase in unit volume of 2% (primarily due to innovation in prestige fragrance). The increase in net revenues primarily reflects:

Previous wording

These decreases were partially offset by the following increases:

Current wording

These decreases were partially offset by:

Previous wording

In the three months ended March 31, 2024, cost of sales increased 2%, or $9.7, to $487.8 from $478.1 in the three months ended March 31, 2023. Cost of sales as a percentage of net revenues decreased to 35.2% in the three months ended March 31, 2024 from 37.1% in the three months ended March 31, 2023, resulting in a gross margin increase of approximately 190 basis points, primarily reflecting:

Current wording

In the three months ended September 30, 2024, cost of sales decreased 4%, or $22.6, to $576.9 from $599.5 in the three months ended September 30, 2023. Cost of sales as a percentage of net revenues decreased to 34.5% in the three months ended September 30, 2024 from 36.5% in the three months ended September 30, 2023, resulting in a gross margin increase of approximately 200 basis points, primarily reflecting:

Previous wording

(i)approximately 180 basis points related to a decrease in manufacturing and material costs as a percentage of net revenues, driven by increased manufacturing efficiencies, improvements in productivity, as well as procurement and material cost optimization; and

Current wording

(i)approximately 110 basis points related to a decrease in manufacturing and material costs as a percentage of net revenues, driven by increased manufacturing efficiencies, improvements in productivity, as well as procurement and material cost optimization; and

Previous wording

(i)approximately 70 basis points related to an increase in excess and obsolescence costs primarily associated with the Prestige product portfolio; and

Current wording

(ii)approximately 80 basis points related to decreased excess and obsolescence costs primarily associated with the Prestige product portfolio.

Previous wording

In the three months ended March 31, 2024, selling, general and administrative expenses increased 7%, or $50.2, to $770.6 from $720.4 in the three months ended March 31, 2023. Selling, general and administrative expenses as a percentage of net revenues decreased to 55.6% in the three months ended March 31, 2024 from 55.9% in the three months ended March 31, 2023, or approximately 30 basis points. This decrease primarily reflects:

Current wording

In the three months ended September 30, 2024, selling, general and administrative expenses increased 5%, or $40.6, to $808.0 from $767.4 in the three months ended September 30, 2023. Selling, general and administrative expenses as a percentage of net revenues increased to 48.3% in the three months ended September 30, 2024 from 46.8% in the three months ended September 30, 2023, or approximately 150 basis points. This increase primarily reflects:

Previous wording

(i)120 basis points due to an increase in administrative costs as a percentage of net revenues due to higher compensation expense from increased headcount, partially offset by lower depreciation expense related to fully depreciated IT equipment; and

Current wording

(i)110 basis points due to an increase in administrative costs as a percentage of net revenues due to higher compensation expense from increased headcount;

Previous wording

(ii)60 basis points due to an increase in advertising and consumer promotional costs primarily due to increases in in-store merchandising execution and non-working media investments.

Current wording

(ii)40 basis points due to an increase in advertising and consumer promotional costs as a percentage of net revenues primarily due to increases in in-store merchandising execution and education, partially offset by declines in working media investment as a percentage of net revenues;

Previous wording

(iii)40 basis points due to favorable transactional impact from our exposure to foreign currency as a percentage of net revenues; and

Current wording

(iii)40 basis points due to unfavorable transactional impact from our exposure to foreign currency as a percentage of net revenues; and

Previous wording

In the nine months ended March 31, 2024, operating income was $512.0 compared to income of $414.7 in the nine months ended March 31, 2023. Operating margin as a percentage of net revenues, increased to 10.8% in the nine months ended March 31, 2024 as compared to an operating income as a percentage of net revenues of 9.9% in the nine months ended March 31, 2023. The increase in operating margin is largely driven by a decrease in stock compensation expense as a percentage of net revenues (approximately 80 basis points) primarily related to a reduction in expense recognized in connection with a prior year's grant made to the CEO, lower fixed costs as a percentage of net revenues (approximately 50 basis points) primarily related to non people-related costs, lower amortization expense as a percentage of net revenues (approximately 30 basis points), and lower cost of goods sold as a percentage of net revenues (approximately 20 basis points), partially offset by higher restructuring costs in the current period (approximately 90 basis points). In addition, the higher proportion of Consumer Beauty sales were from lower margin Brazil brands, compared to the prior year, negatively impacted our consolidated gross margin and operating income.

Current wording

In the three months ended September 30, 2024, operating income was $237.8 compared to income of $197.5 in the three months ended September 30, 2023. Operating income as a percentage of net revenues, increased to 14.2% in the three months ended September 30, 2024 as compared to 12.0% in the three months ended September 30, 2023. The increase in operating margin is primarily driven by a decrease in cost of goods sold as a percentage of net revenues (approximately 200 basis points), a decrease in restructuring costs as a percentage of net revenues (approximately 170 basis points), a decrease in stock-based compensation expense (approximately 80 basis points) primarily related to a reduction in expense recognized in connection with a prior year's grant made to the CEO, partially offset by an increase in fixed costs as a percentage of net revenues (approximately 100 basis points) primarily related to people costs, an increase in advertising and consumer promotional costs as a percentage of net revenues (approximately 40 basis points), an increase in losses from our exposure to foreign currency (approximately 40 basis points), and an increase in expense related to other miscellaneous operating expenses (approximately 40 basis points). Our consolidated operating income margin was negatively impacted by a greater proportion of net revenues generated by the lower margin brands from our Brazilian business, and lower sales of the higher margin color cosmetics in the United States compared to the prior year.

Previous wording

In the three months ended March 31, 2024, the operating loss for Corporate was $17.6 compared to a loss of $31.0 in the three months ended March 31, 2023, as described under “Adjusted Operating Income for Coty Inc.” below. The decrease in the operating loss for Corporate was primarily driven by a $13.2 decrease in stock compensation expense.

Current wording

In the three months ended September 30, 2024, the operating loss for Corporate was $17.7 compared to a loss of $56.1 in the three months ended September 30, 2023, as described under “Adjusted Operating Income for Coty Inc.” below. The decrease in the operating loss for Corporate was primarily driven by a $27.7 decrease in restructuring costs and a $12.7 decrease in stock-based compensation expense.

Previous wording

In the three months ended March 31, 2024, amortization expense increased to $48.5 from $48.2 in the three months ended March 31, 2023. In the three months ended March 31, 2024, amortization expense of $38.6 and $9.9 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended March 31, 2023, amortization expense of $38.3 and $9.9 was reported in the Prestige and Consumer Beauty segments, respectively.

Current wording

In the three months ended September 30, 2024, amortization expense decreased to $48.1 from $48.6 in the three months ended September 30, 2023. In the three months ended September 30, 2024, amortization expense of $38.2 and $9.9 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended September 30, 2023, amortization expense of $38.7 and $9.9 was reported in the Prestige and Consumer Beauty segments, respectively.

Previous wording

•We incurred restructuring costs of $35.0 primarily related to the Current Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and

Current wording

In the three months ended September 30, 2024, we incurred a credit in restructuring and other business structure realignment costs of $0.7, primarily related to the Current Restructuring Actions, included in the Condensed Consolidated Statements of Operations.

Previous wording

•We incurred restructuring costs of $0.9 primarily related to the Current Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and

Current wording

•We incurred restructuring costs of $28.4 primarily related to the Current Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and

Previous wording

•We incurred a credit in business structure realignment costs of $(2.6), which is reported in selling, general and administrative expenses.

Current wording

•We incurred a credit in business structure realignment costs of $(1.1), which is reported in selling, general and administrative expenses.

Previous wording

In the three months ended March 31, 2024, stock-based compensation was $20.5 as compared with $33.6 in the three months ended March 31, 2023. The decrease in stock-based compensation is primarily related to a reduction in expense recognized in connection with awards granted to the CEO.

Current wording

In the three months ended September 30, 2024, stock-based compensation was $17.0 as compared with $29.7 in the three months ended September 30, 2023. The decrease in stock-based compensation is primarily related to a reduction in expense recognized in connection with awards granted to the CEO.

Previous wording

In the nine months ended March 31, 2024 and 2023 we recognized gain of $(1.6) and $(1.0), respectively, related to sale of real estate.

Current wording

In the three months ended September 30, 2023, we recognized a gain of $1.7 related to sale of real estate.

Previous wording

In the nine months ended March 31, 2024, we recognized a gain of $(0.4) related to the early termination of a license and our decision to wind down our business in Russia.

Current wording

In the three months ended September 30, 2024 and 2023, we incurred costs of $0.0 and $0.8, respectively related to the early termination of a license and our decision to wind down our business in Russia.

Previous wording

In the three months ended March 31, 2024, adjusted depreciation expense of $25.7 and $30.3 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended March 31, 2023, adjusted depreciation expense of $28.6 and $30.6 was reported in the Prestige and Consumer Beauty segments, respectively.

Current wording

In the three months ended September 30, 2024, adjusted depreciation expense of $27.9 and $28.6 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended September 30, 2023, adjusted depreciation expense of $27.3 and $30.8 was reported in the Prestige and Consumer Beauty segments, respectively.

Previous wording

In the nine months ended March 31, 2024, net interest expense was $190.3 as compared with $185.7 in the nine months ended March 31, 2023. This increase is primarily due to higher foreign exchange losses, net of derivative contracts, the impact of a higher average interest rate despite lower debt balances in the current period, and lower amortization expense of deferred financing fees in the current period.

Current wording

In the three months ended September 30, 2024, net interest expense was $61.8 as compared with $69.8 in the three months ended September 30, 2023. The decrease in interest expense is primarily due to lower debt balances in the current period as well as lower interest rates.

Previous wording

In the three months ended March 31, 2024, other expense was $14.0 as compared with other income of $156.9 in the three months ended March 31, 2023.

Current wording

In the three months ended September 30, 2024, other expense was $43.3 as compared with other expense of $76.6 in the three months ended September 30, 2023.

Previous wording

The effective income tax rate for the nine months ended March 31, 2024 and 2023 was 34.3% and 22.1%, respectively. The effective tax rate of 34.3% for the nine months ended March 31, 2024, was driven up from the statutory tax rate of 21% due to an expense of $24.3 recognized in the current period on the revaluation of the Company's deferred tax liabilities due to a tax rate increase enacted in Switzerland, as well as the limitation on the deductibility of executive stock compensation.

Current wording

The effective tax rate of 80.0% in the three months ended September 30, 2023, was higher than the Federal statutory rate of 21% primarily due to an expense of $24.3 recognized on the revaluation of the Company's deferred tax liabilities due to a tax rate increase enacted in Switzerland as well as the limitation on the deductibility of executive stock compensation.

Previous wording

(c)For the three months ended March 31, 2024 and 2023, the amount represents the unrealized (gain) loss recognized for the change in fair value of the investment in Wella.

Current wording

(c)The amount represents the unrealized (gain) loss recognized for the change in fair value of the investment in Wella.

Previous wording

The adjusted effective tax rate was 29.4% for the nine months ended March 31, 2024 compared to 24.5% for the nine months ended March 31, 2023. The differences were primarily due to an expense of $24.3 in the current period recognized on the revaluation of the Company's deferred tax liabilities due to a tax rate increase enacted in Switzerland.

Current wording

The adjusted effective tax rate was 28.9% for the three months ended September 30, 2024 compared to 43.7% for the three months ended September 30, 2023. The differences were primarily due to an expense of $24.3 recognized in the prior period on the revaluation of the Company's deferred tax liabilities due to a tax rate increase enacted in Switzerland.

Previous wording

Net income attributable to Coty Inc. was $3.8 in the three months ended March 31, 2024 as compared to net income of $108.4 in the three months ended March 31, 2023. The decrease in the income was primarily driven by gains of $173.7 from forward repurchase contracts in the prior period that did not reoccur in the current period, partially offset by higher operating income of $34.3 in the current period.

Current wording

Net income attributable to Coty Inc. was $82.9 in the three months ended September 30, 2024 as compared to net income of $1.6 in the three months ended September 30, 2023. The increase in the income was primarily driven by higher operating income of $40.3 in the current period and lower net losses from forward repurchase contracts of $33.6 in the current period.

Previous wording

(a)Adjusted Diluted EPS is adjusted by the effect of dilutive securities. For the three months ended March 31, 2024 and 2023, shares for the Forward Repurchase Contracts were excluded from the computation of adjusted diluted EPS as Coty is in the position to receive shares from the counterparties and as such their inclusion would be anti-dilutive. Accordingly, we did not reverse the impact of the fair market value losses/(gains) for contracts with the option to settle in shares or cash of $7.1 and $(93.9), respectively. For the three months ended March 31, 2024, convertible Series B Preferred Stock (23.7 million weighted average dilutive shares) were anti-dilutive. Accordingly, we excluded these shares from the diluted shares and did not adjust the earnings for the related dividend of $3.3. For the three months ended March 31, 2023, as the Convertible Series B Preferred Stock was dilutive, an adjustment to reverse the impact of the preferred stock dividends of $3.3 was required.

Current wording

(a)Adjusted Diluted EPS is adjusted by the effect of dilutive securities. For the three months ended September 30, 2024 and 2023, no dilutive shares of the Forward Repurchase Contracts were included in the computation of adjusted diluted EPS as their inclusion would be anti-dilutive. Accordingly, we did not reverse the impact of the fair market value losses/(gains) for contracts with the option to settle in shares or cash of $24.6 and $44.3, respectively. For the three months ended September 30, 2024, as the Convertible Series B Preferred Stock was dilutive, an adjustment to reverse the impact of the preferred stock dividends of $3.3 was required. For the three months ended September 30, 2023, convertible Series B Preferred Stock (23.7 million weighted average dilutive shares) were anti-dilutive. Accordingly, we excluded these shares from the diluted shares and did not adjust the earnings for the related dividend of $3.3.

Previous wording

(b)See a description of adjustments under “Adjusted Operating Income for Continuing Operations."

Current wording

(b)See a description of adjustments under “Net Income, Adjusted Operating Income and Adjusted EBITDA for Coty Inc."

Previous wording

Our principal uses of cash are to fund planned operating expenditures, capital expenditures, interest payments, dividends, share repurchases, any principal payments on debt, and from time to time, acquisitions, and business structure realignment expenditures. Working capital movements are influenced by the sourcing of materials related to the production of products. Cash and working capital management initiatives, including the phasing of vendor and tax payments and factoring of trade receivables from time-to-time, may also impact the timing and amount of our operating cash flows.

Current wording

Our principal uses of cash are to fund planned operating expenditures, capital expenditures, interest payments, dividends, share repurchases, any principal payments on debt, and from time to time, acquisitions, and business structure realignment expenditures. Working capital movements are influenced by the sourcing of materials related to the manufacturing of products.

Previous wording

We have substantially completed the exit of our commercial activities in Russia. However, we anticipate that the process related to the liquidation of the Russian legal entity will take an extended period of time. We anticipate that we will incur an future net cash costs of $10.0 to $15.0, which will be funded by our Russian subsidiary. The amount of future costs, including cash costs, will be subject to various factors, such as additional government regulation and the resolution of legal contingencies.

Current wording

We have substantially completed the exit of our commercial activities in Russia. However, we anticipate that the process related to the liquidation of the Russian legal entity will take an extended period of time. We anticipate that we will incur future net cash costs of $10.0 to $15.0, which will be funded by our Russian subsidiary. The amount of future costs, including cash costs, will be subject to various factors, such as additional government regulation and the resolution of legal contingencies.

Previous wording

We are in the process of deleveraging our company and improving the maturity mix of our debt, including through refinancing or repayment of a portion of our debt.

Current wording

We are in the process of deleveraging our company and improving the maturity mix of our debt, including through refinancing or repayment of a portion of our debt. We expect to continue to take actions to improve the maturity mix of our debt, including through redemptions and/or tender offers for near-dated maturities, from time to time as market conditions permit.

Previous wording

We have taken action to reduce variability in our interest payments including paying down variable interest rate debt outstanding under our 2018 Coty Term B Facility and issuing fixed rate bonds. As a result, all of our long-term debt was fixed rate debt as of December 31, 2023 and our remaining floating-to-fixed interest rate swaps have been terminated.

Current wording

We have taken action to reduce variability in our interest payments including paying down variable interest rate debt outstanding under our 2018 Coty Term B Facility and issuing fixed rate bonds. While our revolving credit facility, which we draw on from time to time, is subject to variable interest rates, all of our long-term debt outstanding as of September 30, 2024 is fixed rate debt.