Coty Inc.
Annual Report 2024

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2025 Report
2024 Report
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2022 Report
2021 Report

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Plain-text annual report

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ur common stock is listed on the New York Stock Exchange under the symbol “COTY.” It is also listed on the Euronext Paris Professional Segment. Stockholders of Record As of June 30, 2024 there were 588 stockholders of record of our Class A Common Stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. Dividend Policy On April 29, 2020, our Board of Directors suspended the payment of dividends on our common stock, in accordance with our 2018 Coty Credit Agreement, as amended. As we focus on preserving cash, we have continued to suspend the payment of Common Stock dividends. Any determination to pay dividends on our common stock in the future will be at the discretion of our Board of Directors and is subject to the restrictions under the terms of the Convertible Series B Preferred Stock described below. Dividends on the Convertible Series B Preferred Stock are payable in cash, or by increasing the amount of accrued dividends on Convertible Series B Preferred Stock, or any combination thereof, at the sole discretion of the Company. After the expiration of applicable restrictions under the 2018 Coty Credit Agreement, as amended, we began to pay dividends on the Convertible Series B Preferred Stock in cash for the period ended June 30, 2021, and we expect to continue to pay such dividends in cash on a quarterly basis, subject to the declaration thereof by our Board of Directors. The terms of the Convertible Series B Preferred Stock restrict our ability to declare cash dividends on our common stock until all accrued dividends on the Convertible Series B Preferred Stock have been declared and paid in cash. Furthermore, we are required to comply with certain covenants contained within the agreements that govern our indebtedness, including our credit agreements and the indentures relating to our senior secured notes and our senior unsecured notes. These agreements contain customary representations and warranties as well as customary affirmative and negative covenants, including but not limited to, restrictions on incurrence of additional debt, liens, dividends and other restricted payments, asset sales, investments, mergers, acquisitions and affiliate transactions. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition—Liquidity and Capital Resources—Debt” and Note 14—Debt in the notes to our Consolidated Financial Statements. 30 %3D=7F(7D8AD?3@57D3B: GEH9JAKGFG>6=9J MEMD9LAN=1GL9D/=LMJF9 GLQ&F;1@=0-&F<=P9F<#AK;9D-==J$JGMH: ,16 0- -==J$JGMH 'MF 0=H !=; *9J 'MF 0=H !=; *9J 'MF 0=H !=; *9J 'MF 0=H !=; *9J 'MF 0=H !=; *9J 'MF 9 1GL9DJ=LMJF9KKME=KJ=AFN=KLE=FLG>=9;@IM9JL=JKAF;='MF= : 1@=-==J$JGMHAF;DM<=K),JW9D0&F;"KLW=)9M<=J GEH9FA=K&F;=A=JK$0@AK=AMEK &F; 1@=*9JC=L-=J>GJE9F;=$J9H@9:GN=9KKME=K9AFN=KLE=FLGF'MF=AF GLQ&F;a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` ,F'MDQ L@=G9JH@9FLGEMFALKL@=_'MDQ$J9FL` GL@L@=!=;=E:=J$J9FL9F<'MDQ$J9FLLG *J=;@LO=J=GMLKA<=G>L@= GEH9FQaK"IMALQ9F<)GF? 1=JE&F;=FLAN=-D9F"9;@H@9FLGEMFAL@9K9F=;GFGEA;N9DM==IMAN9D=FLLG GF=K@9J=G>L@= GEH9FQa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tem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of the financial condition and results of operations of Coty Inc. and its consolidated subsidiaries, should be read in conjunction with the information contained in the Consolidated Financial Statements and related notes included elsewhere in this document. When used in this discussion, the terms “Coty,” the “Company,” “we,” “our,” or “us” mean, unless the context otherwise indicates, Coty Inc. and its majority and wholly-owned subsidiaries. The following discussion contains forward-looking statements. See “Forward-Looking Statements” and “Risk Factors” for a discussion on the uncertainties, risks and assumptions associated with these statements as well as any updates to such discussion as may be included in subsequent reports we file with the SEC. Actual results may differ materially and adversely from those contained in any forward-looking statements. The following discussion includes certain non-GAAP financial measures. See “Overview— Non-GAAP Financial Measures” for a discussion of non-GAAP financial measures and how they are calculated. All dollar amounts in the following discussion are in millions of United States (“U.S.”) dollars, unless otherwise indicated. OVERVIEW 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 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. 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. Consumer Beauty net revenue grew 6% in fiscal 2024, with growth across mass fragrances, mass color cosmetics, skincare and body care led by Brazil. We are now focusing on accelerating our digital advocacy strategy to amplify our brand and product innovations, leverage consumer analytics and insights, and improve the return on investment of our marketing activities. Our e-commerce channel net revenues grew by over approximately 20% in fiscal 2024, with double-digit percentage growth in Prestige and Consumer Beauty. 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. Our prestige cosmetics net revenues grew by a double-digit percentage in fiscal year 2024, led by Kylie Cosmetics and Burberry. We are continuing to thoughtfully expand our skincare portfolio (which contributed a mid-single digit percentage of our fiscal 2024 net revenue) with our focus on winning over the most discerning skin care consumers in our areas of excellence – UV protection, photoaging prevention and repair, biotech-enhanced longevity science, and micro-dose formulations. Our skincare business, which contributed a mid-single-digit percentage of sales, generated strong sales growth in fiscal year 2024. 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. Revenues from our global Travel channel grew in all three regions – Americas, EMEA and Asia Pacific – contributing approximately 20% to the net revenue growth in fiscal year 2024. Our growth engine markets net revenues grew in fiscal 2024, led by Brazil, the rest of LATAM, Southeast Asia, including India, and Africa. Our products are marketed, sold and distributed 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. 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. Changing market trends may impact sales of our products across and within product categories and regions. Within our Consumer Beauty segment, positive market trends within the skin and body care and mass color cosmetics categories in Brazil positively impacted the segment's sales volume during fiscal year 2024. Excluding the contribution from the Brazilian brands, the Consumer Beauty segment experienced a decline in sales volume primarily in the skin and body care category, as a result of a decline in sales from China, and in the color cosmetic category primarily due to negative market trends in the U.S. in mass color cosmetics market. 33 We expect that our net revenue for fiscal year 2025 will grow in the mid-single digit percent to high-single digit percent 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. 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. Global Supply Chain Challenges Our ability to fulfill demand for our products is critical to our success. Through steps taken to improve order fill rates and mitigate the impact of supply chain constraints, we have seen improvements in our order fill rates on a company-wide basis. As a result, in fiscal year 2024 we achieved close to pre-COVID-19 service levels across our divisions. Inflation The impact of inflation on material, logistical and other costs subsided during fiscal year 2024. Inflation may continue to impact certain costs, such as labor. However, we currently anticipate the overall impact of inflation to remain muted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a=IMALQ Non-GAAP Financial Measures To supplement the financial measures prepared in accordance with GAAP, we use non-GAAP financial measures for continuing operations and Coty Inc. including Adjusted operating income (loss), Adjusted EBITDA, Adjusted net income (loss), and Adjusted net income (loss) attributable to Coty Inc. to common stockholders (collectively, the “Adjusted Performance Measures”). The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in tables below. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for or superior to, financial measures reported in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies, including companies in the beauty industry, may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes. Despite the limitations of these non-GAAP financial measures, our management uses the Adjusted Performance Measures as key metrics in the evaluation of our performance and annual budgets and to benchmark performance of our business against our competitors. The following are examples of how these Adjusted Performance Measures are utilized by our management: • strategic plans and annual budgets are prepared using the Adjusted Performance Measures; • senior management receives a monthly analysis comparing budget to actual operating results that is prepared using the Adjusted Performance Measures; and • senior management’s annual compensation is calculated, in part, by using some of the Adjusted Performance Measures. In addition, our financial covenant compliance calculations under our debt agreements are substantially derived from these Adjusted Performance Measures. Our management believes that Adjusted Performance Measures are useful to investors in their assessment of our operating performance and the valuation of the Company. In addition, these non-GAAP financial measures address questions we routinely receive from analysts and investors and, in order to ensure that all investors have access to the same data, our management has determined that it is appropriate to make this data available to all investors. The Adjusted Performance Measures exclude the impact of certain items (as further described below) and provide supplemental information regarding our operating performance. By disclosing these non-GAAP financial measures, our management intends to provide investors with a supplemental comparison of our operating results and trends for the periods presented. Our management believes these measures are also useful to investors as such measures allow investors to evaluate our performance using the same metrics that our management uses to evaluate past performance and prospects for future performance. We provide disclosure of the effects of these non-GAAP financial measures by presenting the corresponding measure prepared in conformity with GAAP in our financial statements, and by providing a reconciliation to the corresponding GAAP measure so that investors may understand the adjustments made in arriving at the non-GAAP financial measures and use the information to perform their own analyses. Adjusted operating income/Adjusted EBITDA from continuing operations excludes restructuring costs and business structure realignment programs, amortization, acquisition- and divestiture-related costs and acquisition accounting impacts, stock-based compensation, and asset impairment charges and other adjustments as described below. For adjusted EBITDA, in addition to the preceding, we exclude adjusted depreciation as defined below. We do not consider these items to be reflective of our core operating performance due to the variability of such items from period-to-period in terms of size, nature and significance. They are primarily incurred to realign our operating structure and integrate new acquisitions, and implement divestitures of components of our business, and fluctuate based on specific facts and circumstances. Additionally, Adjusted net income attributable to Coty Inc. and Adjusted net income attributable to Coty Inc. per common share are adjusted for certain interest and other (income) expense items and preferred stock deemed dividends, as described below, and the related tax effects of each of the items used to derive Adjusted net income as such charges are not used by our management in assessing our operating performance period-to-period. Adjusted Performance Measures reflect adjustments based on the following items: • Costs related to acquisition and divestiture activities: We have excluded acquisition- and divestiture-related costs and the accounting impacts such as those related to transaction costs and costs associated with the revaluation of acquired inventory in connection with business combinations because these costs are unique to each transaction. Additionally, for divestitures, we exclude write-offs of assets that are no longer recoverable and contract related costs due to the divestiture. The nature and amount of such costs vary significantly based on the size and timing of the acquisitions and divestitures, and the maturities of the businesses being acquired or divested. Also, the size, complexity and/or volume of past transactions, which often drives the magnitude of such expenses, may not be indicative of the size, complexity and/or volume of any future acquisitions or divestitures. 36 • Restructuring and other business realignment costs: We have excluded costs associated with restructuring and business structure realignment programs to allow for comparable financial results to historical operations and forward-looking guidance. In addition, the nature and amount of such charges vary significantly based on the size and timing of the programs. By excluding the referenced expenses from our non-GAAP financial measures, our management is able to further evaluate our ability to utilize existing assets and estimate their long-term value. Furthermore, 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. • Asset impairment charges: We have excluded the impact of asset impairments as such non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. 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. • Amortization expense: We have excluded the impact of amortization of finite-lived intangible assets, as such non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. 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. Although we exclude amortization of intangible assets from our non-GAAP expenses, our management believes that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets. • Gain on sale and termination of brand assets and early license termination: We have excluded the impact of gain on sale and termination of brand assets and early license termination as such amounts are inconsistent in amount and frequency and are significantly impacted by the size of the sale of brand assets and early license termination. • Costs related to market exit: We have excluded the impact of direct incremental costs related to our decision to wind down our business operations in Russia. We believe that these direct and incremental costs are inconsistent and infrequent in nature. Consequently, 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. • Gains on sale of real estate: We have excluded the impact of gains on sale of real estate as such amounts are inconsistent in amount and frequency and are significantly impacted by the size of the sale. 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. • Stock-based compensation: Although stock-based compensation is a key incentive offered to our employees, we have excluded the effect of these expenses from the calculation of adjusted operating income and adjusted EBITDA. This is due to their primarily non-cash nature; in addition, the amount and timing of these expenses may be highly variable and unpredictable, which may negatively affect comparability between periods. • Depreciation and Adjusted depreciation: Our adjusted operating income excludes the impact of accelerated depreciation for certain restructuring projects that affect the expected useful lives of Property, Plant and Equipment, as such charges vary significantly based on the size and timing of the programs. Further, we have excluded adjusted depreciation, which represents depreciation expense net of accelerated depreciation charges, from our adjusted EBITDA. 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. • 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. • Noncontrolling interest: This adjustment represents the after-tax impact of the non-GAAP adjustments included in Net income attributable to noncontrolling interests based on the relevant noncontrolling interest percentage. • Tax: This adjustment represents the impact of the tax effect of the pretax items excluded from Adjusted net income. 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In fiscal 2023, net revenues in the Prestige segment increased 5%, or $152.6, to $3,420.5 from $3,267.9 in fiscal 2022. Excluding net revenue from the second half of the prior period from Russia, net revenues increased 6% or $169.0 to $3,420.5 from $3,251.5, reflecting a positive price and mix impact of 11% (primarily due to the positive pricing impact as a result of global price increases and in line with overall premiumization strategy) partially offset by a negative foreign currency exchange translation impact of 5%. The increase in net revenues primarily reflects: • Prestige fragrance sales growth of $197.9, due to the continued success of Burberry Hero, Burberry Her, Calvin Klein, Hugo Boss Boss Bottled, Gucci Flora, and Marc Jacobs Daisy, particularly in the U.S. due to positive market trends and innovation, and in the travel retail channel sales across all major regions impacted by increased leisure travel compared to the prior year. These increases were partially offset by: • Prestige makeup sales decline of $18.1, primarily due to Gucci makeup travel retail channel sales in the Asia Pacific region as a result of slow recovery from the lockdowns in China; and • Prestige skincare sales decline of $10.8, primarily due to lower net revenues for philosophy due to less innovation and repositioning of the brand. Consumer Beauty In fiscal 2024, net revenues in the Consumer Beauty segment increased 6%, or $127.1, to $2,260.7 from $2,133.6 in fiscal 2023. Excluding net revenue from the second half of the prior period from Russia, net revenues increased 7% or $145.8 to $2,260.7 from $2,114.9, reflecting a positive price and mix impact of 5% (primarily due to positive pricing impact as a result of price increases), an increase in unit volume of 1% (primarily due to increases from Brazilian brands offsetting decreases in volumes in most other markets), and a positive foreign currency exchange translation impact of 1%. The increase in net revenues primarily reflects: • Color cosmetics sales growth of $51.4, primarily due to the continued success of Rimmel Manhattan which saw continued brand innovation, such as Lasting Finish foundation and Thrill Seeker mascara, and Risque due to strong category momentum in Brazil and positive pricing impact, despite a category slowdown in the US; • Mass fragrance sales growth of $46.3, due to the continued success from the re-launch of David Beckham Instinct in the current period and success of Bruno Banani; and • Skin and body care sales growth of $44.6, due to the continued success of Brazilian brands Monange, Bozzano, and Paixao benefiting from strong category momentum and positive pricing impact. This growth was partially offset by lower sales volume for adidas primarily as a result of category slowdown in China which resulted in higher trade inventory levels. In fiscal 2023, net revenues in the Consumer Beauty segment increased 5%, or $97.1, to $2,133.6 from $2,036.5 in fiscal 2022. Excluding net revenue from the second half of the prior period from Russia, net revenues increased 6% or $107.8 to $2,133.6 from $2,025.8, reflecting a positive price and mix impact of 10% (primarily due to the positive pricing impact as a result of global price increases) partially offset by a negative foreign currency exchange translation impact of 4%. The increase in net revenues primarily reflects: • Color cosmetics sales growth of $59.1, resulting from Covergirl due to positive pricing impact and higher sell-out resulting in lower returns and markdowns in the U.S., and Rimmel Manhattan due to brand innovation and positive price and mix impact in major European markets, such as Germany, Austria, Switzerland, as well as Australia. • Skin and body care sales growth of $53.3, resulting from growth of brands in Brazil due to strong category momentum and positive product mix impact within our Brazilian brands’ portfolio, as well as due to innovation in brands such as Monange and market share gains for Paixao. 40 COST OF SALES In fiscal 2024, cost of sales increased 9%, or $172.0, to $2,178.8 from $2,006.8 in fiscal 2023. Cost of sales as a percentage of net revenues decreased to 35.6% in fiscal 2024 from 36.1% in fiscal 2023 resulting in a gross margin percentage increase of approximately 50 basis points, primarily reflecting: (i) approximately 80 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 (ii) approximately 50 basis points related to decreased freight costs. These increases were partially offset by: (i) approximately 50 basis points related to an increase in excess and obsolescence costs across various subcategories within the Prestige and Consumer Beauty product portfolios; and (ii) approximately 30 basis points related to an increase in designer license fees due to licensed Prestige brands comprising a larger portion of overall net revenues in the current period as well as favorable royalty activity in the prior period, which did not reoccur in the current period. The above reflects a positive impact from pricing net of inflation of approximately 160 basis points. In fiscal 2023, cost of sales increased 4%, or $71.6, to $2,006.8 from $1,935.2 in fiscal 2022. Cost of sales as a percentage of net revenues decreased to 36.1% in fiscal 2023 from 36.5% in fiscal 2022 resulting in a gross margin percentage increase of approximately 40 basis points primarily reflecting: (i) approximately 30 basis points primarily related to manufacturing and material costs due to productivity improvements; (ii) approximately 20 basis points related to designer license fees due to favorable royalty related activity; and (iii) approximately 10 basis points related to excess and obsolescence costs. These increases were partially offset by approximately 20 basis points in increased freight costs. The above includes the negative impact of inflation (principally for material costs) and the positive impact from pricing, estimated at approximately 200 basis points each. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES In fiscal 2024, selling, general and administrative expenses increased 12%, or $344.1, to $3,162.4 from $2,818.3 in fiscal 2023. Selling, general and administrative expenses as a percentage of net revenues increased to 51.7% in fiscal 2024 from 50.7% in fiscal 2023, or approximately 100 basis points. This increase was primarily due to: (i) 220 basis points due to a decrease in net gains in the current period compared to the prior year related to the early termination of the Lacoste license; (ii) 40 basis points due to an increase in bad debt expense as a percentage of net revenues. These increases were partially offset by the following decreases: (i) 100 basis points due to a decrease in stock-based compensation cost primarily related to a reduction in expense recognized in connection with awards granted to the CEO; (ii) 30 basis points due to a decrease in logistics costs as a percentage of net revenues; and (iii) 30 basis points due to favorable transactional impact from our exposure to foreign currency as a percentage of net revenues. In fiscal 2023, selling, general and administrative expenses decreased 2%, or $63.0, to $2,818.3 from $2,881.3 in fiscal 2022. Selling, general and administrative expenses as a percentage of net revenues decreased to 50.7% in fiscal 2023 from 54.3% in fiscal 2022, or approximately 360 basis points. This decrease was primarily due to: (i) 130 basis points in stock-based compensation cost primarily related to a reduction in expense recognized in connection with a prior year's grant made to the CEO; (ii) 100 basis points due to a decrease in advertising and consumer promotional costs as a percentage of net revenues primarily related to a reduction of working media in the fiscal period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4=AF;MJJ=<:MKAF=KKKLJM;LMJ=J=9DA?FE=FL;GKLKG>HJAE9JADQJ=D9L=GJE9LAGF-D9F1@AK9EGMFL AF;DM<=KJ=HGJL=K9D=KAFL@= GFKGDA<9L=<0L9L=E=FLG>,H=J9LAGFK9F<9;J= J=HGJL=AK;9DO=AF;MJJ=9K>GDDGOK [ 4=AF;MJJ=<9;J= HJAE9JADQJ=D9L=GJE9LAGF-D9FAF;DM<=,H=J9LAGFK&F;DM<=/MKKA99F< • We incurred business structure realignment costs of $11.2 primarily related to our Transformation Plan and certain other programs. This amount includes $11.6 reported in cost of sales due to an increase in accelerated depreciation as part of Transformation Plan, and a credit of $(0.4) reported included in selling, general and administrative expenses in the Consolidated Statement of Operations. In all reported periods, all restructuring and other business realignment costs were reported in Corporate. Stock-based compensation In fiscal 2024, stock-based compensation was $88.8 as compared with $135.9 in fiscal 2023. The decrease in stock-based compensation is primarily related to a reduction in expense recognized in connection with awards granted to the CEO. In fiscal 2023, stock-based compensation was $135.9 as compared with $195.5 in fiscal 2022. The decrease in stock-based compensation is primarily related to a reduction in expense recognized in connection with a prior year's grant made to the CEO. In all reported periods, all costs related to stock-based compensation were reported in Corporate. Acquisition- and divestiture-related costs In fiscal 2024 and 2023, we incurred no costs related to acquisition- and divestiture-activities. In fiscal 2022, we incurred $14.7 of acquisition- and divestiture-related costs which were associated with the Wella Transaction. In all reported periods, all acquisition- and divestiture-related costs were reported in Corporate, except where otherwise noted. Asset Impairment Charges In fiscal 2024 and 2023, we did not incur any asset impairment charges. In fiscal 2022, we incurred $31.4 of asset impairment charges related to the impairment of indefinite-lived intangibles in connection with our decision to exit Russia, all of which was reported in Consumer Beauty. For further detail as to the factors resulting in the asset impairment charges, see Note 11 —Goodwill and Other Intangible Assets, net to the Consolidated Financial Statements. Early License Termination/Brand Asset Sale and Market Exit Costs In fiscal 2024, we recognized a gain of $(0.5) related to the early termination of a license and our decision to wind down our business in Russia. In fiscal 2023, we recognized gains of $(121.4) related to the early termination of a license and our decision to wind down our business in Russia. In fiscal 2022, we incurred costs of $36.4 related to our decision to wind down our business operations in Russia and the sale of brand assets. Gains on Sale of Real Estate In fiscal 2024, we recognized gains of $1.6 related to sale of real estate, which was reported in Corporate. In fiscal 2023, we recognized gains of $4.9 related to sale of real estate, which was reported in Corporate. In fiscal 2022, we recognized gains of $115.5 related to the sale of real estate, which was reported in Corporate. INTEREST EXPENSE, NET Net interest expense was $252.0, $257.9, and $224.0 in fiscal 2024, fiscal 2023 and fiscal 2022, respectively. In fiscal year 2024, the decrease in interest expense is primarily due to lower debt balances in the current period despite higher interest rates. In fiscal year 2023, the increase in interest expense is primarily due to the impact of a higher average interest rate despite lower debt balances compared to the previous year. OTHER EXPENSE (INCOME), NET In fiscal 2024, net other expense was $90.2, was principally comprised of net losses on forward repurchase contracts of $124.2, partially offset by a favorable adjustment for the unrealized gain in the Wella investment of $25.0. In fiscal 2023, net other income was $419.0, primarily related to a favorable adjustment for the unrealized gain in the Wella investment of $230.0 and unrealized gain on forward repurchase contracts of $196.9 partially offset by associated fees of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aK=>>=;LAN=L9PJ9L=1@AK BMJAK>=;LAN=L9PJ9L= 1@==>>=;LAN=J9L=KN9JQ>JGEL@=20#=<=J9DKL9LMLGJQJ9L=G>>=;LG>A BMJAK>=J=FL KL9LMLGJQJ9L=KAA 9ALK9F<9;;JM=>=;LAN=L9PJ9L=;GMD<>DM;LM9L=KA?FA>A;9FLDQ9F<;GMD<:=9>=;L=;3F;A@A8*7BADF76!@5A?7$AEE78AD7!@5A?7,3J7EFA6>;A@E $AEE ;@5A?7 478AD7 ;@5A?7 F3J7E 7@78;F BDAH;E;A@ 8AD ;@5A?7 F3J7E 8875F;H7 F3JD3F7 $AEE ;@5A?7 478AD7 ;@5A?7 F3J7E 7@78;F BDAH;E;A@ 8AD ;@5A?7 F3J7E 8875F;H7 F3JD3F7 $AEE ;@5A?7 478AD7 ;@5A?7 F3J7E 7@78;F BDAH;E;A@ 8AD ;@5A?7 F3J7E 8875F;H7 F3JD3F7 *7BADF76;@5A?7478AD7 ;@5A?7F3J7E 9AJN9DM=G> AFN=KLE=FLAF4=DD9 MKAF=KK< ,L@=J99GJ GLQ&F;` : 1@=L9P=>>=;LKG>=9;@G>L@=AL=EKAF;DM<=ALHJGNAKAGF>GJ9AJKL9F9DQR=L@= 9GJL9P=KAKL@=F;9D;MD9L=<:9K=>K=L:QL@=AF;J=9K=GJJ=N=JK9DG>9FQN9DM9LAGF9DDGO9F;=K;GEE=FKMJ9L= OAL@L@=FGF $-E=9KMJ=G>HJG>AL9:ADALQ&F;GFF=;LAGFOAL@GMJ<=;AKAGFLGOAF<GMJ<=;AKAGFO@A;@9J=J=>D=;L=AK;9D>AK;9D9F< >AK;9D ; 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Net working capital accounts in the current year were also positively impacted by a net inflow of $35.0 as a reimbursement from Wella for working capital financed by Coty since the separation from the Wella business. The decrease in cash provided by operating activities of $100.9 in fiscal 2023 as compared with fiscal 2022 is primarily driven by an overall net decrease in cash from working capital partially offset by an increase in cash related net income. The net decrease in cash from working capital was mainly the result of changes in accrued expenses and other current liabilities and increased inventory levels in fiscal 2023, partially offset by positive impacts from changes in trade receivables. The increase in cash related net income was due to an increase in net revenues and gross margin, and lower selling, general and administrative expenses in the current year compared to the prior year. Net cash (used in) provided by investing activities Net cash (used in) provided by investing activities was $(226.2), $(118.2) and $269.7 for fiscal 2024, 2023 and 2022, respectively. The increase in cash used in investing activities of $108.0 in fiscal 2024 as compared with fiscal 2023 was primarily due to lower current year proceeds related to the early termination of the Lacoste license agreement and proceeds from sale of other long-term assets combined with the impact of an increase in capital expenditures. The year over year increases in cash used in investing activities were partially offset by the current year collection of contingent consideration. The decrease in cash flows provided by investing activities of $387.9 in fiscal 2023 as compared with fiscal 2022 was mainly attributable to the prior year cash received from return of capital from one of our equity investments which did not reoccur during fiscal 2023. Additionally, the prior year included higher proceeds from the sales of long-lived assets and the positive impact from the receipt of contingent proceeds related to the Wella Business tax credits partially offset with higher capital expenditures in the current year. Net cash used in financing activities Net cash used in financing activities was $(336.7), $(469.3) and $(1,034.0) for fiscal 2024, 2023 and 2022, respectively. The decrease in cash used in financing activities of $132.6 in fiscal 2024 as compared to fiscal 2023 was primarily driven by the current year net proceeds from the issuance of Class A Common Stock in connection with the global offering and lower cash payments related to the Company’s financing related foreign currency contracts in the current year compared to the prior year. The decrease in cash used in financing activities was partially offset by higher outflows in the current year related to the Company’s forward repurchase contracts, higher current year net repayments as a result of current year debt related activity, as well as higher payments year over year for the associated deferred financing fees. The decrease in cash used in financing activities of $564.7 in fiscal 2023 as compared to fiscal 2022 was primarily driven by higher cash outflows in the prior year for net paydowns of the Company's revolving credit facility and other long term debt balances as well, as higher payments of deferred financing fees, and higher dividend payments on Series B Preferred Stock. Additionally, lower cash payments in the current year for the settlement of foreign currency contracts contributed to the overall decrease in use of cash but were partially offset by cash payments related to the Company's forward repurchase contracts. Dividends On April 29, 2020, the Board of Directors suspended the payment of dividends on Common Stock. As previously disclosed, we expect to suspend the payment of dividends until we approach a Net debt to Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) target of 2x. We expect to consider any future resumption of dividends in line with that target while continuing to pursue our deleveraging agenda and implementing our strategic initiatives. Any determination to pay dividends in the future will be at the discretion of our Board of Directors. Dividends on the Convertible Series B Preferred Stock are payable in cash, or by increasing the amount of accrued dividends on Convertible Series B Preferred Stock, or any combination thereof, at the sole discretion of the Company. We expect to pay such dividends in cash on a quarterly basis, subject to the declaration thereof by our Board of Directors. The terms of the Convertible Series B Preferred Stock restrict our ability to declare cash dividends on our common stock until all accrued dividends on the Convertible Series B Preferred Stock have been declared and paid in cash. During the twelve months ended June 30, 2024, the Board of Directors declared dividends on the Series B Preferred Stock of $13.2, of which $9.9 was paid during fiscal 2024 and $3.3 was paid in July 2024. For additional information on our dividends and dividend policy, respectively, see Note 21—Equity and Convertible Preferred Stock in the notes to our Consolidated Financial Statements and Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividend Policy”. 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The estimated aggregate amortization expense for each of the following fiscal years ending June 30 is presented below: 2025 $ 189.0 2026 158.0 2027 148.5 2028 145.0 2029 142.8 License Agreements The Company records assets for license agreements (“licenses”) acquired in transactions accounted for as business combinations. These licenses provide the Company with the exclusive right to manufacture and market on a worldwide and/or regional basis, certain of the Company’s products which comprise a significant portion of the Company’s revenues. These licenses have initial terms covering various periods. Certain brand licenses provide for automatic extensions ranging from 2 to 10 year terms, at the Company’s discretion. COTY INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ in millions, except per share data) F-23 )-!,1!&.+,%&,+ 1@= GEH9FQK=IMALQAFN=KLE=FLK;D9KKA>A=<9K"IMALQAFN=KLE=FLKGFL@= GFKGDA<9L=<9D9F;=0@==LK9KG>'MF= 9J=J=HJ=K=FL=<:QL@=>GDDGOAF? 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GF+GN=E:=J +: -9Q9:D=AF>MDD9L E9LMJALQ<9L= "MJG0=FAGJ 0=;MJ=<+GL=K 0=HL=E:=J b H=J9FFMEH9Q9:D=K=EA 9FFM9DDQAF9JJ=9JKGF*9J;@9F< 0=HL=E:=JG>=9;@Q=9J:=?AFFAF? GF*9J;@ +: -9Q9:D=AF>MDD9L E9LMJALQ<9L= !GDD9J 0=FAGJ0=;MJ=< +GL=K 'MDQ H=J9FFMEH9Q9:D=K=EA 9FFM9DDQAF9JJ=9JKGF'9FM9JQ9F< 'MDQG>=9;@Q=9J:=?AFFAF?GF '9FM9JQ +: -9Q9:D=AF>MDD9L E9LMJALQ<9L= GLQ /=NGDNAF? J= ? 'MDQ 9F< b 0,#/9 HDMK9E9J?AFJ9F?AF?>JGE LGH=J9FFMEGJ9:9K= J9L=HDMK9E9J?AFJ9F?AF?>JGE LGH=J9FFME:9K=MDD9L E9LMJALQ<9L= !GDD9J 0=FAGJ0=;MJ=< +GL=K '9FM9JQ H=J9FFMEH9Q9:D=K=EA 9FFM9DDQAF9JJ=9JKGF'9FM9JQ9F< 'MDQG>=9;@Q=9J:=?AFFAF?GF'MDQ +: -9Q9:D=AF>MDD9L E9LMJALQ<9L= GLQ /=NGDNAF? J= ? HJAD ^ 0,#/9 HDMK9E9J?AFJ9F?AF? >JGELGH=J9FFMEGJ9 :9K=J9L=HDMK9E9J?AFJ9F?AF? >JGELGH=J9FFME:9K=< GFL@= GEH9FQaKLGL9DF=LD=N=J9?= J9LAG; < = +: /=HD9;=<:Q GLQ /=NGDNAF? 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HJAD b^ 0,#/9 HDMK9E9J?AFG>H=J 9FFME< !GDD9J +GL=K HJAD ^ H=J9FFMEH9Q9:D=K=EA 9FFM9DDQ AF9JJ=9JKGFHJAD9F<,;LG:=JG> =9;@Q=9J:=?AFFAF?GF,;LG:=J +: +: -9Q9:D=AF>MDD9L E9LMJALQ<9L= "MJG +GL=K HJAD b H=J9FFMEH9Q9:D=K=EA 9FFM9DDQAF9JJ=9JKGFHJAD9F< ,;LG:=JG>=9;@Q=9J:=?AFFAF?GF ,;LG:=J +: +: 9 K<=>AF=AF=L@=9HHDA;9:D=GF=LOGL@J==KAPGJLO=DN=EGFL@AFL=J=KLJ9L=>GJL@=H=JAGL@= GEH9FQ ',1!& +-+!!*!+ &',+,''&+'$!,!&&!$+,,%&,+ ;@?;>>;A@E7J57BFB7DE:3D763F3 # (e) The Company will pay to the Revolving Credit Facility lenders an unused commitment fee calculated at a rate ranging from 0.10% to 0.35% per annum, based on the Company’s total net leverage ratio(d). As of June 30, 2024 and 2023, the applicable rate on the unused commitment fee was 0.25% and 0.25%, respectively. (f) As a result of the amendments entered into in fiscal 2024, the 2021 Coty Revolving Credit Facility was refinanced and replaced by the 2023 Coty Revolving Credit Facility due July 11, 2028 (as described below). (g) Except as described below in amendments to the 2018 Coty Credit Agreement, as amended (as defined below), original terms of the 2018 Coty Credit Agreement apply to these debt facilities. Fiscal 2024 Developments Offering of Senior Secured Notes On July 26, 2023, the Company issued an aggregate principal amount of $750.0 of 6.625% senior secured notes due 2030 (“2030 Dollar Senior Secured Notes”) in a private offering. Coty received net proceeds of $740.6 in connection with the offering of the 2030 Dollar Senior Secured Notes. In accordance with the 2018 Coty Credit Agreement (as defined below), as amended, the net proceeds received from this offering were utilized to pay down the outstanding balance of the U.S. dollar and euro portions of the 2018 Coty Term B Facility, as defined below, by $715.5 and €22.6 million (approximately $25.1), respectively, in addition to related fees and expenses to this offering. See the 2018 Term B Facility Repayment section below for discussion of the final repayment of the 2018 Term B Facility. On September 19, 2023, the Company issued an aggregate principal amount of €500.0 million of 5.750% senior secured notes due 2028 ("2028 Euro Senior Secured Notes") in a private offering. Coty received net proceeds of €493.8 million in connection with the offering of the 2028 Euro Senior Secured Notes. In accordance with the 2018 Coty Credit Agreement (as defined below), as amended, the net proceeds received from this offering were utilized to pay down a portion of the borrowings outstanding under the 2023 Coty Revolving Credit Facility, without a reduction in commitment. Coty used cash on hand to pay the related fees and expenses to this offering. On May 30, 2024, the Company issued an aggregate principal amount of €500.0 million of 4.50% senior secured notes due 2027 ("2027 Euro Senior Secured Notes") in a private offering. Coty received net proceeds of €493.7 million in connection with the offering of the 2027 Euro Senior Secured Notes. The net proceeds received from this offering were utilized to redeem the remaining $323.0 of existing 2026 Dollar Notes. The remaining net proceeds from this offering were utilized to pay down a portion of the borrowings outstanding under the 2023 Coty Revolving Credit Facility, without a reduction in commitment. Coty used a combination of proceeds from the issuance and cash on hand to pay fees and expenses associated with this offering. Cash Tender Offers On December 7, 2023, the Company completed its previously announced cash tender offers and redeemed $150.0 of the Company's 2026 Dollar Notes (as defined below) and $250.0 of the Company's 2026 Dollar Senior Secured Notes (as defined below). Refinancing Amendment On July 11, 2023, the Company entered into an amendment to the 2018 Coty Credit Agreement that (i) refinanced all of the existing $2,000.0 of revolving credit commitments and the outstanding loans made pursuant thereto (the "2021 Coty Revolving Credit Facility") with two new tranches of senior secured revolving credit commitments, one in an aggregate principal amount of $1,670.0 available in U.S. dollars and certain other currencies and the other in an aggregate principal amount of €300.0 million available in euros, maturing in July 2028 (together, the "2023 Coty Revolving Credit Facility"), (ii) provided for a credit spread adjustment of 0.10% for all interest periods, with respect to Secured Overnight Financing Rate ("SOFR") loans, (iii) added Fitch as a relevant rating agency for purposes of the collateral release provisions and determining applicable interest rates and fees and (iv) provided that certain covenants will cease to apply during a collateral release period. 2018 Term B Facility Repayment On August 3, 2023, the Company repaid €408.0 million (approximately $446.1) of the debt outstanding under the 2018 Term B Facility. Paydown of Brazilian Credit Facility On October 5, 2023, a wholly-owned subsidiary of the Company utilized cash on hand to fully paid down the U.S. Dollar- denominated credit facility in Brazil in the amount of $31.9. COTY INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ in millions, except per share data) F-29 Senior Secured Notes On April 21, 2021, the Company issued an aggregate principal amount of $900.0 of 5.00% senior secured notes due 2026 (the “2026 Dollar Senior Secured Notes”). Coty received gross proceeds of $900.0 in connection with the offering of the 2026 Dollar Senior Secured Notes. On June 16, 2021, the Company issued an aggregate principal amount of €700.0 of 3.875% senior secured notes due 2026 (the “2026 Euro Senior Secured Notes”) in a private offering. Coty received gross proceeds of €700.0 in connection with the offering of the 2026 Euro Senior Secured Notes. On November 30, 2021, the Company issued an aggregate principal amount of $500.0 of 4.75% senior secured notes due 2029 ("2029 Dollar Senior Secured Notes" and, together with the 2026 Dollar Senior Secured Notes, 2026 Euro Senior Secured Notes, 2027 Euro Senior Secured Notes, 2028 Euro Senior Secured Notes, 2029 Dollar Senior Secured Notes and 2030 Dollar Senior Secured Notes, the “Senior Secured Notes”). Coty received gross proceeds of $500.0 in connection with the offering of the 2029 Dollar Senior Secured Notes. See the above Recent Developments section for the issuances of the 2027 and 2028 Euro Senior Secured Notes, and 2030 Dollar Senior Secured Notes. Coty used the gross proceeds of the offerings of the Senior Secured Notes to repay a portion of the term loans outstanding under the existing credit facilities and to pay related fees and expenses thereto. The Senior Secured Notes are senior secured obligations of Coty and are guaranteed on a senior secured basis by each of Coty’s wholly-owned domestic subsidiaries that guarantees Coty’s obligations under its existing senior secured credit facilities and are secured by first priority liens on the same collateral that secures Coty’s obligations under its existing senior secured credit facilities, as described above. The Senior Secured Notes and the guarantees are equal in right of payment with all of Coty’s and the guarantors’ respective existing and future senior indebtedness and are pari passu with all of Coty’s and the guarantors’ respective existing and future indebtedness that is secured by a first priority lien on the collateral, including the existing senior secured credit facilities, to the extent of the value of such collateral. For the 2027 Euro Senior Secured Notes, the 2028 Euro Senior Secured Notes and the 2030 Dollar Senior Secured Notes, the collateral security and certain covenants will be released upon the respective Senior Secured Notes achieving investment grade ratings from two out of the three ratings agencies. Optional Redemption Applicable Premium The indentures governing the Senior Secured Notes specify the Applicable Premium (as defined in the respective indentures) to be paid upon early redemption of some or all of the Senior Secured Notes prior to, and on or after, April 15, 2023 for the 2026 Euro Senior Secured Notes and 2026 Dollar Senior Secured Notes, September 15, 2025 for the 2028 Euro Senior Secured Notes, May 15, 2026 for the 2027 Euro Senior Secured Notes, January 15, 2025 for the 2029 Dollar Senior Secured Notes, and July 15, 2026 for the 2030 Dollar Senior Secured Notes (the "Early Redemption Dates"). The Applicable Premium related to the respective Senior Secured Notes on any redemption date and as calculated by the Company is the greater of: (1) 1.0% of the then outstanding principal amount of the respective Senior Secured Notes; and (2) the excess, if any, of (a) the present value at such redemption date of (i) the redemption price of such respective Senior Secured Notes that would apply if such respective notes were redeemed on the respective Early Redemption Dates, (such redemption price is expressed as a percentage of the principal amount being set forth in the table appearing in the Redemption Pricing section below), plus (ii) all remaining scheduled payments of interest due on the respective Senior Secured Notes to and including the respective Early Redemption Dates, (excluding accrued but unpaid interest, if any, to, but excluding, the redemption date), with respect to each of subclause (i) and (ii), computed using a discount rate equal to the Treasury Rate in the case of the 2026 Dollar Senior Secured Notes, 2029 Dollar Senior Secured Notes and 2030 Dollar Senior Secured Notes, or Bund Rate in the case of the 2026 Euro Senior Secured Notes and the 2028 Euro Senior Secured Notes (both Treasury Rate and Bund Rate as defined in the respective indentures) as of such redemption date plus 50 basis points; over (b) the principal amount of the respective Senior Secured Notes. Redemption Pricing At any time and from time to time prior to the Early Redemption Dates, the Company may redeem some or all of the respective notes at redemption prices equal to 100% of the respective principal amounts being redeemed plus the Applicable Premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption dates. 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L=JEGH=J9LAF?D=9K=DA9:ADALA=K 1GL9DGH=J9LAF?D=9K=DA9:ADALA=K 19:D==P;DM<=KG:DA?9LAGFK>GJD=9K=KOAL@GJA?AF9DL=JEKG>LO=DN=EGFL@KGJD=KKO@A;@@9N=FGL:==FJ=;G?FAR=<9K/,29KK=LKGJ DA9:ADALA=KAFL@= GFKGDA<9L=<9D9F;=0@==LK ',1!& +-+!!*!+ &',+,''&+'$!,!&&!$+,,%&,+ ;@?;>>;A@E7J57BFB7DE:3D763F3 # !&'%,0+ &F;GE=>JGE;GFLAFMAF?GH=J9LAGFK:=>GJ=AF;GE=L9P=KAF>AK;9D9F<AKHJ=K=FL=<:=DGO 173D@676"G@7 2FAL=<0L9L=K #GJ=A?F 1GL9D 1@=;GEHGF=FLKG>L@= GEH9FQaKLGL9DHJGNAKAGF:=F=>AL >GJAF;GE=L9P=K>JGE;GFLAFMAF?GH=J9LAGFKAK;9D 9F<9J=HJ=K=FL=<:=DGO 173D@676"G@7 -JGNAKAGF>GJAF;GE=L9P=KGF;GFLAFMAF?GH=J9LAGFK MJJ=FL #=<=J9D 0L9L=9F=JJ=< #=<=J9D 0L9L=9FGJAF;GE=L9P=KGF;GFLAFMAF?GH=J9LAGFK 1@=J=;GF;ADA9LAGFG>L@=20#=<=J9DKL9LMLGJQL9PJ9L=LGL@= GEH9FQaK=>>=;LAN=AF;GE=L9PJ9L=AK;9D 9F<AKHJ=K=FL=<:=DGO 173D@676"G@7 &F;GE=DGKK >JGE;GFLAFMAF?GH=J9LAGFK:=>GJ=AF;GE=L9P=K -JGNAKAGF>GJAF;GE=L9P=K9LKL9LMLGJQJ9L= 0L9L=9F>=<=J9D:=F=>AL #GJ=A?FL9P >=J=FLA9DK @9F?=AFN9DM9LAGF9DDGO9F;=K @9F?=AFMFJ=;G?FAR=AL -=JE9F=FL >=J=F;=K^F=L +GF <=:MKAF=KK9KK=LK ^ ^ /MKKA9=PAL ^ -JAF;AH9DJ=DG;9LAGFJ=N9DM9LAGF ^ ^ +GF<=N9DM9LAGF9DDGO9F;= ^ ^ 19P/9L= @9F?=!=>=JJ=<19P)A9:ADALQ/=N9DM9LAGF ^ ^ ,L@=J -JGNAKAGF>GJAF;GE=L9P=KGF;GFLAFMAF?GH=J9LAGFK ">>=;LAN=AF;GE=L9PJ9L= ',1!& +-+!!*!+ &',+,''&+'$!,!&&!$+,,%&,+ ;@?;>>;A@E7J57BFB7DE:3D763F3 # The 20.7% increase in the effective tax rate in fiscal 2024 from fiscal 2023 was primarily driven by the following items: • a 17.6% increase from an increase in valuation allowances recorded on interest expense carryforwards; • a 13.5% increase due to changes to the net deferred taxes recognized on the assignment of strategic service functions from Amsterdam to Geneva, as an indirect result of the required revaluation of the original transfer of the main principal location from Geneva to Amsterdam in fiscal 2021; • a 11.8% from the revaluation of the Company’s deferred tax liabilities due to a tax rate increase enacted in Switzerland; and • a 11.7% increase in the foreign tax rate differential impact primarily due to lower fair value gains related to the investment in the Wella business taxed at a lower rate as compared to our U.S. Federal statutory rate of 21%. These increases were partially offset by the following decreases: • a 18.5% decrease as a result of the issuance of non-refundable income tax credits received from the Swiss Tax Authorities of $97.1. The Company recorded a benefit for the tax credit of $37.8, net of a valuation allowance; and • a 12.2% decrease from a reduction of foreign tax audits due to the settlement of foreign tax audits. The 12.8% decrease in the effective tax rate in fiscal 2023 from fiscal 2022 was primarily driven by the following items: • a 6.6% decrease in tax costs associated with the Company’s exit from Russia in the prior year; • a 6.6% decrease from a reduction in permanent differences related to non-deductible expenses and non-deductible foreign exchange losses; • a 4.8% decrease as a result of the reduction in the amount of non-deductible executive stock compensation; • a 3.0% decrease from a gain on the disposition of business assets (real estate) in the prior period; • a 1.9% decrease from a foreign exchange loss recognized on the repatriation of funds in the current year that were previously taxed. These decreases were partially offset by the following increases: • a 7.1% increase in unrecognized tax benefits due to the impact of increasing U.S. taxation of foreign sourced income; and • a 2.4% increase in foreign tax rate differential impact primarily due to lower fair value gains related to the investment in the Wella business taxed at a lower rate as compared to our U.S. Federal statutory rate of 21%. The Company has significant income in jurisdictions such as Germany, Netherlands, France, and Spain which have statutory tax rates higher than the U.S. Federal statutory rate of 21%. The impact of the foreign earnings in higher taxed jurisdictions coupled with U.S. losses at the statutory tax rate of 21% increases the Company’s effective tax rate. This jurisdictional mix is expected to have a continuing impact on the effective tax rate. 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On September 29, 2023 and October 2, 2023, the Company issued a total of 33.0 million shares of Class A common stock, par value $0.01 per share, at a public offering price of $10.80 (or €10.28) per share in a global offering (the “Offering”). The Company also announced the admission to listing and trading of its Common Stock on the professional segment of the Euronext Paris. The Company received $348.4 from the Offering, net of $10.0 of underwriting fees. Additionally, the Company incurred $6.0 in other professional fees. The underwriting fees and other professional fees incurred in connection with the Offering were incremental costs directly attributable to the issuance and thus were presented as a reduction of Equity in the Consolidated Balance Sheets. During the fiscal year ended June 30, 2022, the Company issued 69.9 million shares of its Class A Common Stock as a result of conversions of Series B Preferred Stock. The Company’s Majority Stockholder During the fiscal years ended June 30, 2024, 2023 and 2022, JAB Beauty B.V. (“JAB”), the Company’s largest stock holder, acquired 3.0, 0.0 and 0.0 million shares, respectively, of Class A Common Stock in the open market. As of June 30, 2024 JAB may be deemed to beneficially own approximately 55% of Coty’s Class A Common Stock. This is inclusive of all voting interests of Mr. Peter Harf, the Company's Chairman, and HFS Holdings S.à r.l, (“HFS”), which is beneficially owned by Mr. Harf, including its shares of Series B Preferred Stock on an if converted basis. The Company’s CEO, Sue Nabi, was granted a one-time sign-on award of restricted stock units on June 30, 2021. On October 29, 2021 and September 18, 2023, JAB completed the transfer of 10.0 million and 5.0 million shares of Common Stock, respectively, to Ms. Nabi pursuant to an equity transfer agreement. See Note 22—Share-Based Compensation Plans for additional information. Preferred Stock As of June 30, 2024, total authorized shares of preferred stock are 20.0 million. Series A Preferred Stock As of June 30, 2024, there were 1.0 million shares of Series A Preferred Stock, par value of $0.01 per share, authorized, issued and outstanding. Series A Preferred Stock are not entitled to receive any dividends and have no voting rights except as required by law. On March 27, 2017 a Series A Preferred Stock subscription agreement was entered into with Lambertus J.H. Becht (“Mr. Becht”), the Company’s former Chairman of the Board. Under the terms provided in the subscription agreement, the Series A Preferred Stock immediately vested on the grant date and the holder was entitled to exchange the vested shares after the fifth anniversary of the date of issuance. This exchange right expired on March 27, 2024. The Company has the right to redeem the Series A Preferred Stock (1.0 million shares) at a redemption price of $0.01 per share. The Company plans to redeem these shares of Series A Preferred Stock in accordance with their terms. An (income) expense of $(0.8), $0.2, and $(0.2) was recorded during fiscal 2024, 2023 and 2022, respectively, and has been included in Selling, general and administrative expenses on the Consolidated Statements of Operations. As of June 30, 2024 and 2023, the Company classified nil and $0.8, respectively, of Series A Preferred Stock as a liability, recorded in Other noncurrent liabilities in the Consolidated Balance Sheet. Convertible Series B Preferred Stock In 2020, the Company completed the issuance and sale to KKR Aggregator of 1.0 million shares of Convertible Series B Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”), for an aggregate purchase price of $1,000 per share. On August 27, 2021, KKR Aggregator and affiliated investment funds sold 146,057 shares of Series B Preferred Stock, to HFS Holdings S.à r.l, that is beneficially owned by Peter Harf, a director of the Company. As a result of various conversions and exchanges of KKR Aggregator's shares of the Series B Preferred Stock, as of December 31, 2021, KKR has fully redeemed/exchanged all of their Series B Preferred Stock. Cumulative preferred dividends accrue daily on the Series B Preferred Stock at a rate of 9.0% per year. During the twelve months ended June 30, 2024, 2023 and 2022, the Board of Directors declared dividends on the Series B Preferred Stock of COTY INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ in millions, except per share data) F-49 $13.2, $13.2 and $35.2, paid accrued dividends of $13.2, $13.2 and $55.8 and converted/exchanged dividends of nil, nil and $50.1, respectively. As of June 30, 2024 and 2023, the Series B Preferred Stock had outstanding accrued dividends of $3.3. Dividends - Common Stock On April 29, 2020, the Board of Directors suspended the payment of dividends on Common Stock. No dividends on Common Stock were declared for the year ended June 30, 2024. The change in dividends accrued recorded to APIC in the Consolidated Balance Sheet as of June 30, 2024, 2023 and 2022 was nil, $0.1 and $0.8, respectively, which represent dividends no longer expected to vest as a result of forfeitures of outstanding restricted stock units (“RSUs”). In addition, the Company made payments of $0.3 and $0.7, of which $0.1 and $0.2 related to employee taxes, and $1.4 for the previously accrued dividends on RSUs that vested during the twelve months ended June 30, 2024, 2023 and 2022, respectively. Total accrued dividends on unvested RSUs and phantom units included in Accrued expenses and other current liabilities are $0.8 and $1.0 as of June 30, 2024 and 2023, respectively. In addition, accrued dividends of $0.0 and $0.1 are included in Other noncurrent liabilities as of June 30, 2024 and 2023, respectively. Treasury Stock - Share Repurchase Program Since February 2014, the Board has authorized the Company to repurchase its Class A Common Stock under approved repurchase programs. On February 3, 2016, the Board authorized the Company to repurchase up to $500.0 of its Class A Common Stock, and on November 13, 2023, the Board increased the Company’s share repurchase authorization by an additional $600.0 (the “Share Repurchase Program”). Repurchases may be made from time to time at the Company’s discretion, based on ongoing assessments of the capital needs of the business, the market price of its Class A Common Stock, and general market conditions. As of June 30, 2024, the Company has $796.8 remaining under the Share Repurchase Program. In June 2022, December 2022, and November 2023, the Company entered into forward repurchase contracts (the “Forward” and together the “Forwards”) with three large financial institutions (“Counterparties”) to start hedging for potential $200.0, $196.0, and $294.0 share buyback programs in 2024, 2025, and 2026, respectively. In connection with the June 2022, December 2022, and November 2023 Forward transactions, the Company incurred certain execution fees of $2.0, $2.0, and $2.9, respectively, which were recognized as a premium to the forward price recorded at inception and amortized ratably over the contract periods. In February 2024, the Company elected to physically settle the June 2022 Forward for a cash payment of $200.0 in exchange for 27.0 million shares of its Class A Common Stock. The fair value of the shares repurchased was approximately $350.6, which was recorded as an increase to Treasury stock in the Consolidated Balance Sheets and Consolidated Statements of Equity. As part of the Forward agreements, the Company will pay interest on the outstanding underlying notional amount of the Forwards held by the Counterparties during the contract periods. The interest rates are variable, based on the United States secured overnight funding rate (“SOFR”) plus a spread. The weighted average interest rate plus applicable spread for the December 2022 and November 2023 Forward transactions were 9.8% and 8.2%, respectively, as of June 30, 2024. As part of the December 2022 Forward transaction, two of the Counterparties purchased approximately 11.0 million shares of the Company’s Class A Common Stock. In addition, as part of the November 2023 Forward transaction, the Counterparties purchased 25.0 million shares of the Company’s Class A Common Stock. These Forward agreements require the Company to: (i) repurchase the shares on or before December 15, 2024 and December 31, 2025, respectively, at a price based on the weighted average of the daily volume weighted average price (“VWAP”) during the initial acquisition period (“Initial Price”); or (ii) at the Company’s option, pay or receive the difference between the Final Price, defined as the weighted average of the daily VWAP during the unwind period as defined in the agreement, and Initial Price of the Forwards. As part of the December 2022 Forward transaction, the remaining Counterparty purchased approximately 11.5 million shares of the Company’s Class A Common Stock. This Forward requires the Company to pay or receive the difference between the Final Price and Initial Price established at inception of the Forward on or before January 15, 2025. In addition, the Forwards include a provision for a potential true-up in cash upon specified changes in the price of the Company’s Class A Common Stock relative to the Initial Price (“Hedge Valuation Adjustment”). Such Hedge Valuation adjustment shall not result in a termination date or any adjustment of the number of Coty’s Class A Common Stock shares purchased by the Counterparties at inception. In the event the Company declares and pays any cash dividends on its Class A Common Stock, the Forward Counterparties will be entitled to such dividend payments and payable at termination of the Forwards. 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This preferred stock conveyed to KKR Aggregator the right to designate two directors to the Company’s Board of Directors and voting rights on an as-converted basis. As a result of various conversions/exchanges described below, KKR no longer holds any preferred stock of the Company and no longer has the right to designate any directors to the Company's Board of Directors. • On November 16, 2020, KKR Aggregator and affiliated investment funds agreed to sell 146,057 shares of Series B Preferred Stock to HFS Holdings S.à r.l, a private limited liability company incorporated under the laws of Luxembourg that is beneficially owned by Peter Harf, a director of the Company. The transaction, which was subject to customary closing conditions, closed on August 27, 2021. • On September 10, 2021, KKR Aggregator converted a portion of its Series B Preferred Stock into Class A common stock and completed a secondary public offering of the converted shares of Class A common stock. • On October 20, 2021, the Company completed the sale of a 9.4% stake in Wella to KKR Aggregator in exchange for the redemption of 290,465 shares of KKR's Series B Convertible Preferred Stock shares in Coty and a portion of unpaid dividends . • On November 10, 2021, KKR Aggregator converted 123,219 shares of Series B Preferred Stock, and $1.2 of unpaid dividends into 19,944,701 shares of Class A common stock. Immediately after the conversion, KKR Aggregator completed a sale of 19,944,701 shares of Class A common stock. • On November 30, 2021, Coty completed the sale of an additional 4.7% stake in Wella to KKR Aggregator. The Company’s total shareholding in the Wella Company is now 25.84%. From time to time, certain funds held by KKR may hold the Company’s Senior Secured and Unsecured Notes (as defined in Note 14—Debt). These funds may receive principal and interest payments on the same terms as other investors in the Company’s Senior Secured and Unsecured Notes. Wella As of June 30, 2024, Coty owned 25.84% of the Wella Company as an equity investment and performs certain services to Wella. Refer to Note 12—Equity Investments. On December 22, 2021, the Company entered into an agreement with (“KKR Bidco”) related to post-closing adjustments to the purchase consideration the Wella Business. In relation to this contingent consideration agreement, the Company received cash proceeds of $6.0 during fiscal 2024 and recognized gains of $19.7, $30.8, and $0.7, during fiscal 2024, 2023 and 2022, respectively, reported in Other expense (income), net. In connection with the sale of the Wella Business, the Company and Wella entered into a Transitional Services Agreement (“TSA”). Subject to the terms of this TSA, the Company will perform services for Wella in exchange for related service fees. Such services include billing and collecting from Wella customers, certain logistics and warehouse services, as well as other administrative and systems support. The Company and Wella have mutually agreed to end the contracted TSA services on January 31, 2022, as well as previously existing distribution services in Brazil during fiscal 2024. The Company and Wella continue to have in place manufacturing arrangements to facilitate the Wella Business transition in the U.S. and Brazil. TSA fees and other fees earned were $2.2 and $10.0, respectively, for the year ended June 30, 2024, $3.3 and $7.6, respectively for the year ended June 30, 2023, and $87.5 and $6.7, respectively for the year ended June 30, 2022. The TSA fees are principally invoiced on a cost plus basis. The TSA fees and other fees were included in Selling, general and administrative expenses and Cost of sales, respectively, in the Company's Statement of Operations. As of June 30, 2024, accounts receivable from and accounts payable to Wella of $40.0 and nil, respectively, were included in Prepaid expenses and other current assets and Accrued expenses and other current liabilities, respectively, in the Company's Balance Sheets. Additionally, as of June 30, 2024, the Company has accrued $33.5 related to long-term payables due to Wella included in Other noncurrent liabilities in the Company's Consolidated Balance Sheet. In accordance with the separation agreement with Wella, Coty shall retain and be solely responsible for any amounts payable to former Coty employees transferred to Wella (“Wella employees”), who participated in the Coty Long-Term Incentive Plan. The Wella employees will continue to participate and vest on the current terms for the remaining vesting period after the separation. As such, Coty will continue to recognize the share-based compensation expense for Wella employees until the existing equity awards reach their vesting date. For the years ended June 30, 2024, 2023, and 2022 Coty recorded $2.1, $4.6, and $0.7 of share-based compensation expense related to Wella employees, which was presented as part of Other expense (income), net in the Consolidated Statements of Operations. COTY INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ in millions, except per share data) F-60 The Company also entered into an agreement with Wella to provide management, consulting and financial services to Wella and its direct and indirect divisions, subsidiaries, parent entities and controlled affiliates (in assisting it in the management of its business). Fees earned and reflected in Other expense (income), net in fiscal years 2024, 2023 and 2022 were $1.2, $2.7, and nil respectively. The Company has certain sublease arrangements with Wella after the sale. For the years ended June 30, 2024, 2023 and 2022, the Company reported sublease income of $8.2, $9.1, and $13.3 from Wella. Orveda The disinterested members of the Board reviewed and approved the entry into a license agreement with Orveda, an ultra- premium skincare brand co-founded by Coty’s CEO, Sue Nabi. Ms. Nabi has no continuing formal role at Orveda or economic interest in Orveda as a result of divesting her interests which was settled in cash in December 2021; however her business partner and co-founder, Nicolas Vu, is the sole owner and CEO of Orveda, and Mr. Vu also provides consulting services to Coty under the terms of a separate agreement. The initial term of the Orveda license agreement is five years, with two five-year automatic renewals subject to the achievement of certain net revenue milestones. The principal terms of the license agreement are consistent with other Coty prestige licenses and the Board determined that the terms were no more favorable than to an unaffiliated third party. Consulting Services and Other Arrangements Until June 30, 2023, Beatrice Ballini, a director, served as a senior member of the Retail Practice and a leader of the Board and CEO Advisory Partners group at Russell Reynolds Associates. From time to time, the Company has engaged Russell Reynolds Associates, a global leadership and search firm, for recruiting assistance. The amounts of such services provided to the Company for fiscal 2023 and 2022 were $0.9 and $0.7, respectively. As of fiscal 2024, Russell Reynolds Associates is no longer a related party. 26. SUBSEQUENT EVENTS The Company evaluated the effect of events and transactions subsequent to the consolidated balance sheet date of June 30, 2024 through the date of issuance of the Consolidated Financial Statements and determined that no subsequent events have occurred that require recognition in the Consolidated Financial Statements or disclosure in the notes to the Consolidated Financial Statements. COTY INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ in millions, except per share data) F-61 ',1!& +-+!!*!+ + -$!! .$-,!'&&)-$!1!&'-&,+ 173DE@676"G@73@6 ;@?;>>;A@E7J57BFB7DE:3D763F3 .3>G3F;A@3@6)G3>;8K;@955AG@FE3 7E5D;BF;A@ ,:D77173DE@676"G@7 3>3@573F 79;@@;@9A8 (7D;A6 :3D976FA AEFE3@6 JB7@E7E 76G5F;A@E 3>3@573F @6A8(7D;A6 >>AI3@578AD6AG4F8G>355AG@FE3@6AF:7D5GEFA?7D 676G5F;A@E 9 9 9 >>AI3@578AD5GEFA?7DD7FGD@E 787DD76F3JH3>G3F;A@3>>AI3@57E 9 &F;DM<=K9EGMFLKOJALL=F G>>F=LG>J=;GN=JA=K9F<;9K@

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