Coty Q2 Bottom-Line Beats Street View; Raises FY22 Adjusted EPS Outlook

Coty Inc COTY reported second-quarter FY22 sales growth of 11.5% year-on-year, to $1.58 billion, missing the analyst consensus of $1.60 billion.
- Like-For-Like (LFL) revenue increased 12% Y/Y, driven by a 12% increase in both Prestige and Consumer Beauty segments.
- Revenue in the Americas rose 9% Y/Y, EMEA increased 12%, and Asia-Pacific grew 17%.
- The gross margin expanded 570 basis points Y/Y to 64.4%, and the gross profit rose 22.3% to $1.01 billion.
- The adjusted operating margin expanded 70 basis points to 15%, and the adjusted operating income for the quarter was $236.3 million.
- Adjusted EBITDA of $311.9 million increased 10% Y/Y, resulting in an adjusted EBITDA margin of 19.8%.
- Adjusted EPS of $0.17 beat the analyst consensus of $0.11.
- Cash from operating activities totaled $449 million with a free cash flow of $408 million. The company held $562.5 million in cash and equivalents as of December 31, 2021.
- "We continue to anticipate the impact of inflation to step up in the second half of FY22, and we expect to fully offset this through a combination of mix management, pricing, and cost savings," said CEO Sue Y. Nabi.
- Outlook: Coty sees FY22 LFL sales be at the upper end of its guidance range of low-to-mid teens percentage growth.
- The company expects FY22 adjusted EBITDA of $900 million at a minimum on a constant currency basis.
- Coty raised the FY22 adjusted EPS outlook to $0.22-$0.26 (previous view $0.20-$0.24) against the consensus of $0.26.
- Price Action: COTY shares are trading higher by 2.91% at $8.83 in premarket on the last check Tuesday.

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