Coty (NYSE:COTY) reported Q3 EPS of $0.03, $0.02 better than the analyst estimate of $0.01. Revenue for the quarter came in at $1.19 billion versus the consensus estimate of $1.15 billion.
GUIDANCE:
Coty sees FY2022 EPS of $0.23-$0.27, versus the consensus of $0.27.
- Coty's strong revenues and sell-out momentum YTD, with LFL sales growth of +17%, reinforces Coty's confidence that its brand investments are driving attractive ROI and fueling strong topline growth. Taking into account the expected impact in Q4 from Coty's decision to exit operations in Russia including local Travel Retail, which accounts for approximately 3% of total revenues, as well as the near-term COVID lockdowns in China, the Company continues to expect FY22 LFL sales will be at the upper end of its guidance range of low-to-mid teens percentage growth. Based on current FX rates, Coty expects a headwind of ~4%-5% to its reported sales in Q4.
- Coty continues to expect FY22 adjusted EBITDA of $900 million, as the Company navigates the inflationary environment while intentionally reinvesting gross margin gains and costs savings in its brands to maximize value. With FX providing a net benefit at the EBITDA level both in Q3 and YTD, compared to previous expectations for FX headwinds in 2H22, the Company intends to reinvest to fuel topline initiatives while still delivering $900 million in adjusted EBITDA at actual rates.
- With the strong YTD EPS delivery, Coty raises its FY22 adjusted EPS guidance to $0.23-0.27, up from its previously guided range of $0.22-0.26. The FY22 adjusted EPS guidance includes approximately 1 cent of net discrete tax benefits expected for the year.
- In addition, the Company continues to target leverage towards 4x exiting CY22 and approximately 2x exiting CY25.