COTY (Common Stock) Price: $27.64 0.17 -0.61%
|View printer-friendly version|
|Coty Inc. Reports Positive Fiscal 2013 Fourth Quarter and Full Year Results|
* These measures, as well as "free cash flow," are Non-GAAP Financial Measures. Refer to "Basis of Presentation and Exceptional Items" and "Non-GAAP Financial Measures" for discussion of these measures. Reconciliations from reported to adjusted results can be found at the end of this release.
Fiscal 2013 Summary
Fourth Quarter Fiscal 2013 Summary
Commenting on the Company's performance, Michele Scannavini, CEO of
Basis of Presentation and Exceptional Items
The term "like-for-like" describes the performance of the business on a comparable basis, excluding material acquisitions, disposals, discontinued operations and foreign currency exchange translations to the extent applicable. The term "adjusted" excludes the impact of non-recurring items, private company share-based compensation expense and restructuring costs to the extent applicable. Refer to "Non-GAAP Financial Measures" for a definition of free cash flow.
Net revenues are reported by segment and geographic region and are discussed below on a constant currency basis. Operating income is reported by segment. All changes in margin percentage are described in basis points rounded to the nearest tenth of a percent.
Net revenues, adjusted selling, general and administrative expense (SG&A) and adjusted operating income are presented on an actual and a constant currency basis. SG&A, operating income, effective tax rate, net income and earnings per share (EPS) are presented on a reported (GAAP) basis and an adjusted (non-GAAP) basis. Adjusted SG&A, adjusted operating income, adjusted effective tax rate, adjusted net income and adjusted EPS on an actual and constant currency basis, net revenues on a constant currency basis and like-for-like are non-GAAP financial measures. A reconciliation between GAAP and non-GAAP results can be found in the tables and footnotes at the end of this release.
Fiscal 2013 Summary Operating Review
Net revenues of
Gross margin decreased to 60.0% compared to 60.4%. This decline primarily reflected the negative impact of higher customer discounts and allowances necessary to compete in the difficult and highly promotional European market. The decline more than offset the cost of goods savings from our supply chain savings program. Since its implementation in fiscal 2010, the supply chain savings program has contributed to improvements in manufacturing costs resulting from more streamlined manufacturing processes, procurement savings programs with suppliers, and supply chain redesign including improved management of third-party contractors.
Adjusted SG&A expense was flat at constant currency and declined 2% at actual rates. As a percentage of net revenues, adjusted SG&A expense decreased 110 basis points to 45.7%. The reduction was related to lower administrative costs, efficiencies in indirect spending, and a shift of some advertising and consumer promotion spending toward customer discounts and allowances in the last part of the year to keep competitiveness in a highly promotional environment in the mass business, particularly in
Operating income increased to
Adjusted operating income at constant currency increased 8% to
Adjusted effective tax rate was 28.2% in fiscal 2013 compared to 27.7% in the prior year. The increase was primarily due to a change in jurisdictional mix with higher profits in countries with higher tax rates. The cash tax rate for the year was 16.9%.
Net income increased to
Adjusted net income increased to
Fiscal 2013 Business Review by Segment
Skin & Body Care
Fiscal 2013 Business Review by Geographic Region
Both developed and emerging markets experienced net revenue growth during the year, with emerging markets leading the way, growing 6% versus the prior year, and developed markets up 1%. Emerging markets now represent 24% of total net revenues, up from 23% in the prior year.
Fourth Quarter Fiscal 2013 Summary Operating Review
Outlook for Fiscal 2014 First Quarter and Full Year
Over the last few months the Company has seen a deceleration of market growth in the U.S. and
The Company will pay an annual dividend of
For additional information about
Forward Looking Statements
Certain statements in this release are forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, our operations and financial performance. These forward-looking statements are generally identified by words or phrases, such as "anticipate", "estimate", "plan", "project", "expect", "believe", "intend", "foresee", "forecast", "will", "may", "outlook" and similar words or phrases.
Risks and uncertainties may cause actual results to differ materially from the results predicted, and reported results should not be considered an indication of future performance. Risks and uncertainties to which our forward-looking statements are subject include:
More information about potential risks and uncertainties that could affect our business and financial results is included under "Risk Factors" and "Management Discussion and Analysis of financial Condition and Results of Operations" in the Company's Registration Statement on Form S-1 and other periodic reports the Company may file with the
The Company assumes no responsibility to update forward-looking statements made herein or otherwise.
Non-GAAP Financial Measures
The company operates on a global basis, with the majority of net revenues generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect results of operations. Therefore, to supplement financial results presented in accordance with GAAP, certain financial information is presented excluding the impact of foreign currency exchange translations to provide a framework for assessing how the underlying businesses performed excluding the impact of foreign currency exchange translations ("constant currency"). Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. The Company calculates constant currency information by translating current and prior-period results for entities reporting in currencies other than U.S. dollars into U.S. dollars using constant foreign currency exchange rates. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency that is different to the functional currency of that entity when exchange rates fluctuate. The constant currency information presented may not be comparable to similarly titled measures reported by other companies. The Company discloses the following constant currency financial measures: net revenues, adjusted SG&A expense and adjusted operating income.
The Company presents growth on a like-for-like basis. The Company believes that like-for-like growth better enables management and investors to analyze and compare our organic growth from period to period. In the periods described in this release, like-for-like growth only excludes the impact of foreign currency exchange translations and therefore is the same as constant currency presentations. See the table entitled "Reconciliation of Reported to Adjusted Results for the Consolidated Statements of Operation."
The Company presents SG&A expense, operating income, effective tax rate, net income and EPS on a non-GAAP basis and specifies that these measures are non-GAAP by using the term "adjusted". The Company believes these non-GAAP financial measures better enable management and investors to analyze and compare the underlying business results from period to period. In calculating, SG&A expense, operating income, effective tax rate, net income and EPS, the Company excludes the impact of nonrecurring items, private company share-based compensation expense and restructuring costs. The Company has provided a quantitative reconciliation of the difference between the non-GAAP financial measures and the financial measures calculated and reported in accordance with GAAP. For a reconciliation of adjusted SG&A expense to SG&A expense, and adjusted EPS to EPS, see the table entitled "Reconciliation of Reported to Adjusted Results for the Consolidated Statements of Operation." For a reconciliation of adjusted operating income to operating income, see the table entitled "Reconciliation of Reported Operating Income to Adjusted Operating Income." For a reconciliation of adjusted effective tax rate to effective tax rate, see the table entitled "Reconciliation of Reported Income Before Income Taxes and Effective Tax Rates to Adjusted Income Before Income Taxes and Effective Taxes." For a reconciliation of adjusted net income to net income, see the table entitled "Reconciliation of Reported Net Income to Adjusted Net Income."
The Company also presents free cash flow. Free cash flow is defined as net cash provided by operating activities, less capital expenditures and the contingent purchase price consideration payments of up to
These non-GAAP measures should not be considered in isolation, or as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
- Tables Follow -
RECONCILIATION OF REPORTED TO ADJUSTED RESULTS FOR THE CONSOLIDATED STATEMENTS OF OPERATIONS
These supplemental schedules provide adjusted Non-GAAP financial information and a quantitative reconciliation of the difference between the Non-GAAP financial measure and the financial measure calculated and reported in accordance with GAAP.
RECONCILIATION OF REPORTED OPERATING INCOME TO ADJUSTED OPERATING INCOME
RECONCILIATION OF REPORTED INCOME BEFORE INCOME TAXES AND EFFECTIVE TAX RATES TO ADJUSTED INCOME BEFORE INCOME TAXES AND EFFECTIVE TAX RATES
RECONCILIATION OF REPORTED NET INCOME TO ADJUSTED NET INCOME
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
NET REVENUES AND ADJUSTED OPERATING INCOME BY SEGMENT
NET REVENUES BY GEOGRAPHIC REGION
RECONCILIATION OF REPORTED OPERATING INCOME TO ADJUSTED OPERATING INCOME BY SEGMENT