Coty(COTY) - 2026 Q2 - Quarterly Results

Financial Performance - Q2 2026 reported net revenue was $1,678.6 million, a 1% increase year-over-year, but a 3% decline on a like-for-like (LFL) basis[6] - Prestige net revenue was $1,133.6 million, accounting for 68% of total sales, with a 2% increase reported but a 2% decline on an LFL basis[6] - Consumer Beauty net revenue decreased to $545.0 million, representing 32% of total sales, with a 2% decline reported and a 6% decline on an LFL basis[6] - Reported operating income was $148.2 million, down 45% year-over-year, resulting in an operating margin of 8.8%[6] - The company reported a net loss of $126.9 million for Q2 2026, compared to a net income of $20.4 million in the prior year, leading to a net loss margin of 7.6%[6] - Adjusted EBITDA for Q2 2026 was $330.2 million, a 15% decrease year-over-year, with an adjusted EBITDA margin of 19.7%[6] - Fiscal year-to-date reported loss per share of $0.07, deteriorating from reported EPS of $0.11 in the prior year[19] - 2Q26 adjusted operating income of $274.3 million, down 18% from $333.7 million in the prior year, with an adjusted operating margin of 16.3%[24] - 2Q26 adjusted EBITDA of $330.2 million decreased 15% from $390.7 million in the prior year, with an adjusted EBITDA margin of 19.7%[24] - 2Q26 adjusted net income of $119.7 million increased from $98.8 million in the prior year, with an adjusted net income margin of 7.1%[24] Debt and Financial Position - Total debt at quarter-end was $3,038.1 million, with financial net debt at $2,601.4 million, resulting in a financial leverage ratio of 2.7x[7] - Coty sold its remaining 25.8% stake in Wella for $750 million, using most proceeds to pay down long-term debt[12] - The company reported a diluted EPS of $(0.14) for the three months ended December 31, 2025, compared to $0.02 in the same period of 2024[59] - Coty Inc.'s total debt as of December 31, 2025, was $3,038.1 million, with financial net debt amounting to $2,601.4 million after accounting for cash and cash equivalents of $436.7 million[82] - Long-term debt decreased to $2,986.8 million as of December 31, 2025, from $3,955.5 million as of June 30, 2025[91] Revenue by Region - Americas net revenue of $624.5 million in 2Q26, representing 37% of total sales, decreased 2% on a reported basis[29] - EMEA net revenue of $864.2 million in 2Q26 increased 3% on a reported basis, including a 7% FX benefit[31] - Asia Pacific net revenue of $189.9 million in 2Q26 decreased 1% on a reported basis, with a 1% FX benefit[32] - The Americas region reported net revenues of $624.5 million for the three months ended December 31, 2025, a decrease of 2% from $638.6 million in the same period of 2024[57] - EMEA region net revenues increased by 3% to $864.2 million for the three months ended December 31, 2025, compared to $839.8 million in the same period of 2024[57] Strategic Initiatives - The company is initiating the "Coty. Curated." strategic framework to improve performance and focus on core businesses[4] - The company is focusing on strategic planning and operational efficiency to enhance revenue growth and manage inflationary pressures[35] - Future operations will include a strategic review of the consumer beauty business, particularly in mass color cosmetics and local Brazilian brands[35] - The company anticipates ongoing cost efficiency initiatives and restructuring programs to improve profitability[36] - The company plans to implement new product launches and marketing strategies to respond to changing consumer preferences[36] - Adjusted Performance Measures will be used to evaluate performance and guide strategic decisions, including budgeting and senior management compensation[42] Operational Challenges - The company is addressing supply chain challenges and disruptions to ensure effective production and inventory management[37] - There is a focus on sustainability initiatives and compliance with evolving regulatory measures impacting the beauty industry[37] - The company is assessing the impact of geopolitical risks, including the war in Ukraine and conflicts in the Middle East, on its business operations[37] Cash Flow and Liquidity - 2Q26 cash from operations totaled $559.7 million, compared to $464.5 million during the same period in the prior year[24] - Net cash provided by operating activities for the six months ended December 31, 2025, was $624.9 million, an increase from $531.9 million in 2024[81] - Free cash flow for the three months ended December 31, 2025, was $513.1 million, compared to $419.0 million in the same period of 2024[81] - Future cash flows and liquidity management will be prioritized, including potential refinancing and debt deleveraging activities[36] Adjusted Performance Metrics - The company has excluded various costs from its adjusted performance measures, including restructuring costs and acquisition-related expenses, to provide a clearer view of its core operating performance[46] - The adjusted diluted EPS for the three months ended December 31, 2025, was $0.14, up from $0.11 in the same period of 2024[78] - Adjusted EBITDA for the twelve months ended December 31, 2025, was $957.2 million, reflecting the company's operational performance over the trailing twelve months[83] - The company reported a significant increase in adjustments to reported operating loss, totaling $662.1 million for the twelve months ended December 31, 2025[83] - Coty Inc. had an adjusted operating income of $730.4 million for the twelve months ended December 31, 2025, indicating strong operational efficiency[83]