Estée Lauder(US:EL)2024-05-01 12:00Financial Performance - Net sales for Q3 fiscal 2024 reached $3.94 billion, a 5% increase from $3.75 billion in the prior-year period[1]. - Net earnings increased to $330 million, compared to $156 million in the prior-year period, with diluted EPS rising to $0.91 from $0.43[1]. - Total reported operating income was $531 million, a 79% increase from $297 million in the prior-year period[9]. - Net sales for the nine months ended March 31, 2024, were $11.74 billion, a 5% decrease compared to $12.30 billion in the prior-year period[32]. - The Company reported net earnings of $674 million, with diluted net earnings per common share at $1.87, down from $1,039 million and $2.88 in the prior-year period[32]. - For the fiscal 2024 fourth quarter, reported net sales are forecasted to increase between 5% and 9% compared to the prior-year period[40]. - Organic net sales for the fiscal 2024 fourth quarter are expected to increase between 6% and 10%[40]. - The Company anticipates reported diluted net earnings per common share to be between $1.96 and $2.09 for the full year[40]. - Net sales for the three months ended March 31, 2024, were reported at $3,940 million, a 5% increase from $3,751 million in 2023[49]. - Operating income for the three months ended March 31, 2024, was $531 million, a 79% increase from $297 million in 2023[49]. - Total net sales for the nine months ended March 31, 2024, were $11.737 billion, reflecting a 5% decrease compared to the prior year[58]. - Operating income for the nine months ended March 31, 2024, was $1,239 million, down 29% from $1,752 million in the prior year[66]. - Diluted EPS for the nine months ended March 31, 2024, was $1.87, a decrease of 42% compared to $2.88 in the same period of 2023[66]. Tax and Earnings - The effective tax rate decreased to 31.1% from 44.6% in the prior-year period, primarily due to a lower effective tax rate on foreign operations[1]. - The effective tax rate for the full year is projected to be approximately 35%, largely due to the geographical mix of earnings[37]. - The effective tax rate and increased net interest expense are expected to dilute net earnings per common share by $0.48[42]. Profit Recovery and Future Projections - The Profit Recovery Plan is projected to deliver $1.1 to $1.4 billion of incremental operating profit in fiscal years 2025 and 2026[5]. - The company expects operating margin in the second half of fiscal 2024 to be stronger than the first half and to expand from the year-ago period[5]. - The Profit Recovery Plan is expected to drive incremental operating profit of $1.1 billion to $1.4 billion, including net benefits from the restructuring program[36]. - The company forecasts GAAP diluted net earnings per share (EPS) for the three months ending June 30, 2024, to be between $0.11 and $0.22, representing a growth of over 100% compared to $(0.09) in the same period of 2023[42]. - For the twelve months ending June 30, 2024, the company expects GAAP diluted EPS to be between $1.96 and $2.09, reflecting a decrease of 25% from $2.79 in 2023[42]. - The company anticipates restructuring charges between $45 million and $55 million, equating to approximately $0.10 to $0.12 per diluted common share[42]. Sales and Market Performance - Organic net sales grew 6%, driven by double-digit growth in EMEA and Asia travel retail, with significant improvements in retail sales trends[1]. - Skin Care net sales increased 9%, with La Mer and Estée Lauder driving strong growth through hero products and new innovations[17]. - The Americas region reported net sales of $3,567 million, a 3% increase from $3,447 million in the previous year[62]. - Europe, the Middle East & Africa saw a 10% decline in net sales, totaling $4,488 million compared to $4,972 million in the prior year[62]. - Asia/Pacific net sales decreased by 5%, amounting to $3,683 million, down from $3,892 million[62]. - Organic net sales for Skin Care decreased by 8% to $920 million for the nine months ended March 31, 2024[58]. Expenses and Impairments - Capital expenditures increased to $702 million from $652 million in the prior-year period, primarily due to the manufacturing facility in Japan[32]. - The Company recorded a total of $36 million in operating expenses for the three months ended March 31, 2024[56]. - The restructuring program is projected to incur total charges of between $500 million and $700 million before taxes over the next two years[51]. - The Company recorded an impairment charge of $21 million for the Smashbox trademark intangible asset due to lower-than-expected results[52]. - The Company recorded other intangible asset impairment charges of $207 million for the nine months ended March 31, 2023, impacting earnings by $0.44 per common share[54]. - The Company performed interim impairment tests for trademarks and goodwill, concluding that the carrying amounts of goodwill were recoverable for Dr.Jart+ and Too Faced[53]. Cash Flow and Assets - The Company ended the quarter with $3.70 billion in cash and cash equivalents and paid dividends of $0.71 billion[32]. - Total current assets decreased to $8,534 million as of March 31, 2024, from $9,139 million a year earlier[68]. - Cash and cash equivalents decreased to $3,701 million from $4,029 million in the previous year[68]. - Net cash flows provided by operating activities for the nine months ended March 31, 2024, were $1,471 million, an increase from $1,017 million in the same period of 2023[70].