Coty Inc. (NYSE:COTY) Q4 2020 Earnings Conference Call - Final Transcript

Aug 27, 2020 • 08:00 am ET


Coty Inc. (NYSE:COTY) Q4 2020 Earnings Conference Call - Final Transcript


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Good morning, ladies and gentlemen. My name is Maria and I'll be your conference operator today. At this time, I would like to welcome everyone to Coty's Fourth Quarter Fiscal 2020 Results Conference Call.

As a reminder, this conference is being recorded today, August 27, 2020. On today's call are Pierre-Andre Terisse, Chief Operating and Chief Financial Officer; Peter Harf, Coty' Founder and Executive Chairman; and Sue Nabi, Coty's appointed CEO.

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 where noted, the discussion of our financial results and our expectations reflect certain adjustments as specified in the non-GAAP financial measures section of our release.

Later, we will conduct a question-and-answer session. [Operator Instructions]

Thank you. It is now my pleasure to turn the call over to Pierre-Andre Terisse to begin. Please go ahead.

Pierre-Andre Terisse

Thank you, Maria, and good morning, everyone. This is Pierre-Andre Terisse speaking. I'll start this call with the financials and then we'll hand the call over to Peter and then to Sue.

To start the financial review this time, let's have a look at the scope of reporting as there are some meaningful changes as you know, we assigned the sale of 60% of Wella being our Professional Beauty division plus Retail Hair to KKR on the June 1, 2020, with a sale not being subject to any substantial condition as of that date. Wella is considered a discontinued operation in our GAAP. As a result, we have accounts for fiscal '19 and fiscal '20. And we now present continuing operations being the former Coty less Wella revenues and direct costs and directly attributable costs.

The costs borne by Coty on behalf of Wella following the closing will for about the invoice for transitional service agreements, and we have therefore prepared the set of numbers called ongoing Coty, which better reflect what Coty ex-Wella is expected to be post closing.

Going forward most members will refer to ongoing Coty and I will specifically flag when I use other metrics. You can find the bridges from Total Coty to continuing operations and then to ongoing Coty. In the recast, financial proceed on our Investor Relations Web site, as well as in today's earnings release and in the slide presentation.

In terms of numbers, Coty adjusted operating income in fiscal '19 on the left was $950 million, 11% margin, Wella profit ex central cost was $459 million or after including the estimate GSA cost $407 million and as a result Ongoing Coty operating income was $543 million or 8.7% operating margin and ongoing Coty EBITDA as $875 million.

Looking at fiscal '20, Total Coty adjusted operating income stands at $151 million, or 2.4% of net revenue, Wella stood at $271 million and Ongoing Coty at negative $110 million adjusted