# Coty Inc.: Form 10-Q for the period ended Mar 31, 2024

- Company: [Coty Inc.](/companies/coty.md) (CIK 1024305)
- Form: 10-Q
- Filed: 2024-05-07
- Accepted by EDGAR: May 7, 2024, 16:22 ET
- Period: 2024-03-31
- Accession: 0001024305-24-000023
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1024305/000102430524000023/coty-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1024305/000102430524000023/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $1.39bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-07-01 to 2024-03-31 | $4.75bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $487.8m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2023-07-01 to 2024-03-31 | $1.69bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-01-01 to 2024-03-31 | $897.8m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-07-01 to 2024-03-31 | $3.06bn | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $770.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2023-07-01 to 2024-03-31 | $2.37bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $77.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-07-01 to 2024-03-31 | $512.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $58.8m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-07-01 to 2024-03-31 | $187.3m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | −$5.4m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-07-01 to 2024-03-31 | $106.9m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $3.8m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-07-01 to 2024-03-31 | $186.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.00 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-07-01 to 2024-03-31 | $0.20 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.00 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-07-01 to 2024-03-31 | $0.20 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 892,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-07-01 to 2024-03-31 | 886,100,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-07-01 to 2024-03-31 | $438.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-07-01 to 2024-03-31 | $185.4m | us-gaap:PaymentsToAcquireProductiveAssets |
| Cash and equivalents | at 2024-03-31 | $260.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $1.99bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $12.32bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $2.48bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $7.90bn | us-gaap:Liabilities |
| Long-term debt | at 2024-03-31 | $3.90bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-03-31 | $4.4m | us-gaap:DebtCurrent |
| Short-term borrowings | at 2024-03-31 | $1.5m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2024-03-31 | $3.99bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 116,380 characters.

The following discussion and analysis of the financial condition and results of operations of Coty Inc. and its consolidated subsidiaries, should be read in conjunction with the information contained in the Condensed Consolidated Financial Statements and related notes included elsewhere in this document, and in our other public filings with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 (“Fiscal 2023 Form 10-K”). When used in this discussion, the terms “Coty,” the “Company,” “we,” “our,” or “us” mean, unless the context otherwise indicates, Coty Inc. and its majority and wholly-owned subsidiaries. Also, when used in this Quarterly Report on Form 10-Q, the term “includes” and “including” means, unless the context otherwise indicates, including without limitation. The following report includes certain non-GAAP financial measures. See “Overview—Non-GAAP Financial Measures” for a discussion of non-GAAP financial measures and how they are calculated.

All dollar amounts in the following discussion are in millions of United States (“U.S.”) dollars, unless otherwise indicated.

More information about potential risks and uncertainties that could affect our business and financial results is included under the heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q and other periodic reports we have filed and may file with the SEC from time to time.

### Forward-looking Statements

Certain statements in this Form 10-Q are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, strategic planning, targets and outlook for future reporting periods (including the extent and timing of revenue, expense and profit trends and changes in operating cash flows and cash flows from operating activities and investing activities), the Company’s future operations and strategy (including the expected implementation and related impact of its strategic priorities), ongoing and future cost efficiency, optimization and restructuring initiatives and programs, expectations of the impact of inflationary pressures and the timing, magnitude and impact of pricing actions to offset inflationary costs, strategic transactions (including their expected timing and impact), expectations and/or plans with respect to joint ventures (including Wella and the timing and size of any related divestiture, distribution or return of capital), the Company’s capital allocation strategy and payment of dividends (including suspension of dividend payments and the duration thereof and any plans to resume cash dividends on common stock or to continue to pay dividends in cash on preferred stock) and expectations for stock repurchases, investments, licenses and portfolio changes, product launches, relaunches or rebranding (including the expected timing or impact thereof), synergies, savings, performance, cost, timing and integration of acquisitions, future cash flows, liquidity and borrowing capacity (including any refinancing or deleveraging activities), timing and size of cash outflows and debt deleveraging, the timing and extent of any future impairments, and synergies, savings, impact, cost, timing and implementation of the Company’s ongoing strategic transformation agenda (including operational and organizational structure changes, operational execution and simplification initiatives, fixed cost reductions, continued process improvements and supply chain changes), the impact, cost, timing and implementation of e-commerce and digital initiatives, the expected impact, cost, timing and implementation of sustainability initiatives (including progress, plans, goals and our ability to achieve sustainability targets), the wind down of the Company’s operations in Russia (including timing and expected impact), the impact of public health events, the expected impact of geopolitical risks including the ongoing war in Ukraine and/or the armed conflict in the Middle East (including the Red Sea conflict) on our business operations, sales outlook and strategy, the expected impact of global supply chain challenges and/or inflationary pressures (including as a result of the war in Ukraine and/or armed conflict in the Middle East including the Red Sea conflict) and expectations regarding future service levels and inventory levels, the impact of the dual-listing of our Class A Common Stock on Euronext Paris, and the priorities of senior management. These forward-looking statements are generally identified by words or phrases, such as “anticipate”, “are going to”, “estimate”, “plan”, “project”, “expect”, “believe”, “intend”, “foresee”, “forecast”, “will”, “may”, “should”, “outlook”, “continue”, “temporary”, “target”, “aim”, “potential”, “goal” and similar words or phrases. These statements are based on certain assumptions and estimates that we consider reasonable, but are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual events or results (including our financial condition, results of operations, cash flows and prospects) to differ materially from such statements, including risks and uncertainties relating to:

- our ability to successfully implement our multi-year strategic transformation agenda and compete effectively in the beauty industry, achieve the benefits contemplated by our strategic initiatives (including revenue growth, cost control, gross margin growth and debt deleveraging) and successfully implement our strategic priorities (including stabilizing our consumer beauty brands through leading innovation and improved execution, accelerating our prestige fragrance brands and ongoing expansion into prestige cosmetics, building a comprehensive skincare portfolio, enhancing our e-commerce and direct-to-consumer (“DTC”) capabilities, expanding our presence in China through prestige products and select consumer beauty brands, and establishing Coty as an industry leader in sustainability) in each case within the expected time frame or at all;
- our ability to anticipate, gauge and respond to market trends and consumer preferences, which may change rapidly, and the market acceptance of new products, including new products in our skincare and prestige cosmetics portfolios, any relaunched or rebranded products and the anticipated costs and discounting associated with such relaunches and

rebrands, and consumer receptiveness to our current and future marketing philosophy and consumer engagement activities (including digital marketing and media), and our ability to effectively manage our production and inventory levels in response to demand;

- use of estimates and assumptions in preparing our financial statements, including with regard to revenue recognition, income taxes (including the expected timing and amount of the release of any tax valuation allowance), the assessment of goodwill, other intangible and long-lived assets for impairments, the market value of inventory, and the fair value of the equity investment;
- the impact of any future impairments;
- managerial, transformational, operational, regulatory, legal and financial risks, including diversion of management attention to and management of cash flows, expenses and costs associated with our transformation agenda, our global business strategies, the integration and management of our strategic partnerships, and future strategic initiatives, and, in particular, our ability to manage and execute many initiatives simultaneously including any resulting complexity, employee attrition or diversion of resources;
- the timing, costs and impacts of divestitures and the amount and use of proceeds from any such transactions;
- future divestitures and the impact thereof on, and future acquisitions, new licenses and joint ventures and the integration thereof with, our business, operations, systems, financial data and culture and the ability to realize synergies, manage supply chain challenges and other business disruptions, reduce costs (including through our cash efficiency initiatives), avoid liabilities and realize potential efficiencies and benefits (including through our restructuring initiatives) at the levels and at the costs and within the time frames contemplated or at all;
- increased competition, consolidation among retailers, shifts in consumers’ preferred distribution and marketing channels (including to digital and prestige channels), distribution and shelf-space resets or reductions, compression of go-to-market cycles, changes in product and marketing requirements by retailers, reductions in retailer inventory levels and order lead-times or changes in purchasing patterns, impact from COVID-19 or similar public health events on retail revenues, and other changes in the retail, e-commerce and wholesale environment in which we do business and sell our products and our ability to respond to such changes (including our ability to expand our digital, direct-to-consumer and e-commerce capabilities within contemplated timeframes or at all);
- our and our joint ventures’, business partners’ and licensors’ abilities to obtain, maintain and protect the intellectual property used in our and their respective businesses, protect our and their respective reputations (including those of our and their executives or influencers) and public goodwill, and defend claims by third parties for infringement of intellectual property rights;
- any change to our capital allocation and/or cash management priorities, including any change in our dividend policy and any change in our stock repurchase plans;
- any unanticipated problems, liabilities or integration or other challenges associated with a past or future acquired business, joint ventures or strategic partnerships, which could result in increased risk or new, unanticipated or unknown liabilities, including with respect to environmental, competition and other regulatory, compliance or legal matters, and specifically in connection with the strategic partnerships with Kylie Jenner and Kim Kardashian, risks related to the entry into a new distribution channel, the potential for channel conflict, risks of retaining customers and key employees, difficulties of integration (or the risks associated with limiting integration) and management of the partnerships, our relationships with Kylie Jenner and Kim Kardashian, our ability to protect trademarks and brand names, litigation, investigations by governmental authorities, and changes in law, regulations and policies that affect King Kylie LLC (“King Kylie”) and/or KKW Holdings, LLC’s (“KKW Holdings”) business or products, including risk that direct selling laws and regulations may be modified, interpreted or enforced in a manner that results in a negative impact to King Kylie and/or KKW Holdings’ business model, revenue, sales force or business;
- our international operations and joint ventures, including enforceability and effectiveness of our joint venture agreements and reputational, compliance, regulatory, economic and foreign political risks, including difficulties and costs associated with maintaining compliance with a broad variety of complex local and international regulations;
- our dependence on certain licenses (especially in the fragrance category) and our ability to renew expiring licenses on favorable terms or at all;
- our dependence on entities performing outsourced functions, including outsourcing of distribution functions, and third-party manufacturers, logistics and supply chain suppliers, and other suppliers, including third-party software providers, web-hosting and e-commerce providers;
- administrative, product development and other difficulties in meeting the expected timing of market expansions, product launches, re-launches and marketing efforts, including in connection with new products in our skincare and prestige cosmetics portfolios;
- changes in the demand for our products due to declining or depressed global or regional economic conditions, and declines in consumer confidence or spending, whether related to the economy (such as austerity measures, tax increases, high fuel costs, or higher unemployment), wars and other hostilities and armed conflicts, natural or other disasters, weather, pandemics, security concerns, terrorist attacks or other factors;
- global political and/or economic uncertainties, disruptions or major regulatory or policy changes, and/or the enforcement thereof that affect our business, financial performance, operations or products, including the impact of the war in Ukraine and any escalation or expansion thereof, armed conflict in the Middle East, the current U.S. administration and future elections, changes in the U.S. tax code and/or tax regulations in other jurisdictions where we operate (including recent and pending implementation of the global minimum corporate tax (part of the “Pillar Two Model Rules”) that may impact our tax liability in the European Union (“EU”)), and recent changes and future changes in tariffs, retaliatory or trade protection measures, trade policies and other international trade regulations in the U.S., the EU, and Asia and in other regions where we operate, potential regulatory limits on payment terms in the EU, future changes in sanctions regulations, regulatory uncertainty impacting the wind-down of our business in Russia, recent and future changes in regulations impacting the beauty industry, including regulatory measures addressing products, formulations, raw materials and packaging, and recent and future regulatory measures restricting or otherwise impacting the use of web sites, mobile applications or social media platforms that we use in connection with our digital marketing and e-commerce activities;
- currency exchange rate volatility and currency devaluation and/or inflation;
- our ability to implement and maintain pricing actions to effectively mitigate increased costs and inflationary pressures, and the reaction of customers or consumers to such pricing actions;
- the number, type, outcomes (by judgment, order or settlement) and costs of current or future legal, compliance, tax, regulatory or administrative proceedings, investigations and/or litigation, including product liability cases (including asbestos and talc-related litigation for which indemnities and/or insurance may not be available), distributor or licensor litigation, and compliance, litigation or investigations relating to our joint ventures or strategic partnerships;
- our ability to manage seasonal factors and other variability and to anticipate future business trends and needs;
- disruptions in the availability and distribution of raw materials and components needed to manufacture our products, and our ability to effectively manage our production and inventory levels in response to supply challenges;
- disruptions in operations, sales and in other areas, including due to disruptions in our supply chain, restructurings and other business alignment activities, manufacturing or information technology systems, labor disputes, extreme weather and natural disasters, impact from public health events, the outbreak of war or hostilities (including the war in Ukraine and armed conflict in the Middle East, including the Red Sea conflict, and any escalation or expansion thereof), the impact of global supply chain challenges or other disruptions in the international flow of goods, and the impact of such disruptions on our ability to generate profits, stabilize or grow revenues or cash flows, comply with our contractual obligations and accurately forecast demand and supply needs and/or future results;
- our ability to adapt our business to address climate change concerns, including through the implementation of new or unproven technologies or processes, and to respond to increasing governmental and regulatory measures relating to environmental, social and governance matters, including expanding mandatory and voluntary reporting, diligence and disclosure, as well as new taxes (including on energy and plastic), new diligence requirements and the impact of such measures or processes on our costs, business operations and strategy;
- restrictions imposed on us through our license agreements, credit facilities and senior unsecured bonds or other material contracts, our ability to generate cash flow to repay, refinance or recapitalize debt and otherwise comply with our debt instruments, and changes in the manner in which we finance our debt and future capital needs;
- increasing dependency on information technology, including as a result of remote working practices, and our ability or the ability of any of the third-party service providers we use to support our business, to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, including ransomware attacks, costs and timing of implementation and effectiveness of any upgrades or other changes to information technology systems, and the cost of compliance or our failure to comply with any privacy or data security laws (including the European Union General Data Protection Regulation (the “GDPR”), the California Consumer Privacy Act and similar state laws, the Brazil General Data Protection Law, and the China Data Security Law and Personal Information Protection Law) or to protect against theft of customer, employee and corporate sensitive information;
- our ability to attract and retain key personnel and the impact of senior management transitions;
- the distribution and sale by third parties of counterfeit and/or gray market versions of our products;
- the impact of our ongoing strategic transformation agenda and continued process improvements on our relationships with key customers and suppliers and certain material contracts;
- our relationship with JAB Beauty B.V., as our majority stockholder, and its affiliates, and any related conflicts of interest or litigation;
- our relationship with KKR, whose affiliate KKR Bidco, is an investor in the Wella Business, and any related conflicts of interest or litigation;
- future sales of a significant number of shares by our majority stockholder or the perception that such sales could occur; and
- other factors described elsewhere in this document and in documents that we file with the SEC from time to time.

More information about potential risks and uncertainties that could affect our business and financial results is included under the heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q and other periodic reports we have filed and may file with the SEC from time to time.

All forward-looking statements made in this document are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this document, and we do not undertake any obligation, other than as may be required by applicable law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise.

Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance unless expressed as such, and should only be viewed as historical data.

### Industry, Ranking and Market Data

Unless otherwise indicated, information contained in this Quarterly Report on Form 10-Q concerning our industry and the markets in which we operate, including our general expectations about our industry, market position, market opportunity and market sizes, is based on data from various sources including internal data and estimates as well as third-party sources widely available to the public, such as independent industry publications, government publications, reports by market research firms or other published independent sources and on our assumptions based on that data and other similar sources. We did not fund and are not otherwise affiliated with the third-party sources that we cite. Industry publications and other published sources generally state that the information contained therein has been obtained from third-party sources believed to be reliable. Internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and management’s understanding of industry conditions, and such information has not been verified by any independent sources. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While we generally believe the market, industry and other information included in this Quarterly Report on Form 10-Q to be the most recently available and to be reliable, such information is inherently imprecise and we have not independently verified any third-party information or verified that more recent information is not available.

Our fiscal year ends on June 30. Unless otherwise noted, any reference to a year preceded by the word “fiscal” refers to the fiscal year ended June 30 of that year. For example, references to “fiscal 2024” refer to the fiscal year ending June 30, 2024. Any reference to a year not preceded by “fiscal” refers to a calendar year.

### OVERVIEW

We are one of the world’s largest beauty companies, with an iconic portfolio of brands across fragrance, color cosmetics, and skin and body care. Our brands empower people to express themselves freely, creating their own visions of beauty; and we are committed to making a positive impact on the planet. Our strategic priorities include stabilizing and growing our Consumer Beauty brands through leading innovation and improved execution, accelerating our Prestige fragrance business and ongoing expansion into Prestige cosmetics, building a comprehensive skincare portfolio over the mid-to-long term leveraging existing brands, enhancing our organizational growth capabilities including digital and research and development, expanding our presence in China, the Travel Retail channel and growth markets, and establishing Coty as an industry leader in sustainability.

We have been making progress on our strategic priorities. In Consumer Beauty, we have implemented the relaunch of our top brands and returned to stable growth and steady margin improvement. We are now focusing on accelerating our digital advocacy strategy to amplify our brand and product innovations and leveraging consumer analytics and insights to improve the return on investment of our marketing activities. In Prestige, we continue to accelerate the fragrance business with exceptional new launches and expansion in premium and ultra-premium categories, while steadily expanding the distribution, productivity and assortment of our Prestige cosmetics. We are continuing to thoughtfully expand our skincare portfolio, with our focus on winning over the most discerning skin care consumers in our areas of excellence – UV protection and photoaging prevention and repair, biotech-enhanced longevity science, and micro-dose formulations. We have successfully expanded our e-commerce capabilities, through best-in-class online launches, our digital advocacy strategy and active participation in key online shopping events, and increasing digital media competitiveness.

Our products are sold in over 120 countries and territories. As a geographically diverse company we are susceptible to global economic trends, geopolitical conflicts, domestic and foreign governmental policies, and changes in foreign exchange rates. In particular, economic conditions in China have had, and are expected to continue to have, an impact on our strategic initiatives, including our growth agenda in the region for Prestige products and our skincare growth priorities. Within the China market we continue to monitor and take actions to address the impact to our Consumer Beauty brands which have experienced sales declines as retailers and distributors continue to deplete their existing inventory. In addition, as the conflict in the Red Sea continues to develop, we have implemented alternate transport routes and have purchased safety stock to mitigate impacts on the flow of goods. We remain attentive to economic and geopolitical conditions that may materially impact our business. We continue to explore and implement risk mitigation strategies in the face of these unfolding conditions and remain agile in adapting to changing circumstances. Such conditions have or may have global implications which may impact the future performance of our business in unpredictable ways.

Changing market trends may impact sales of our products across and within product categories and regions. Within our Consumer Beauty segment, positive market trends within the skin and body care and mass color cosmetics categories in Brazil positively impacted the segment's sales volume during the third quarter. Excluding the contribution from the Brazilian brands, the Consumer Beauty segment experienced a decline in sales volume primarily in the skin and body care category, as a result of a decline in sales from China, and in the color cosmetic category, due to negative market trends in the U.S. in mass color cosmetics market.

We expect that our net revenue for fiscal year 2024 will grow in the high single digits to low double digits versus the prior year, excluding the impact of foreign exchange, the Russia Market Exit and the early termination of the Lacoste fragrance license. We anticipate that our annual gross margin will remain in the mid-sixties, providing us with opportunities to fund new product initiatives and support our brands through advertising and consumer promotional investments. We continue to target advertising and consumer promotional spending in the high-twenties percentage of net revenues. However, our level of advertising and consumer promotional spending will depend on various factors, including seasonality, the timing of product launches, and budgetary considerations. We anticipate that fixed costs as a percentage of our net revenues will incrementally improve annually as we continue to take steps to gradually optimize our fixed cost base.

#### Order Fill Rates

Our ability to fulfill demand for our products is critical to our success. Through steps taken to improve order fill rates and mitigate the impact of supply chain constraints, we have seen sequential quarterly improvements in our order fill rates on a company-wide basis. As a result, beginning in the second quarter we achieved close to pre-COVID-19 service levels across our divisions.

#### Inflation

Inflationary trends in certain markets and global supply chain challenges may negatively affect our sales and operating performance. The impact of inflation on material, logistical and other costs subsided during the nine months ended March 31, 2024, which was primarily driven by a significant easing during the second and third quarters. Inflation may continue to impact certain costs, such as labor, however, we currently anticipate the overall impact of inflation to remain muted in the fourth quarter of fiscal 2024.

#### Non-GAAP Financial Measures

To supplement the financial measures prepared in accordance with GAAP, we use non-GAAP financial measures for continuing operations and Coty Inc. including Adjusted operating income (loss), Adjusted EBITDA, Adjusted net income (loss), and Adjusted net income (loss) attributable to Coty Inc. to common stockholders (collectively, the “Adjusted Performance Measures”). The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in tables below. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for or superior to, financial measures reported in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies, including companies in the beauty industry, may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

Despite the limitations of these non-GAAP financial measures, our management uses the Adjusted Performance Measures as key metrics in the evaluation of our performance and annual budgets and to benchmark performance of our business against our competitors. The following are examples of how these Adjusted Performance Measures are utilized by our management:

- strategic plans and annual budgets are prepared using the Adjusted Performance Measures;
- senior management receives a monthly analysis comparing budget to actual operating results that is prepared using the Adjusted Performance Measures; and
- senior management’s annual compensation is calculated, in part, by using some of the Adjusted Performance Measures.

In addition, our financial covenant compliance calculations under our debt agreements are substantially derived from these Adjusted Performance Measures.

Our management believes that Adjusted Performance Measures are useful to investors in their assessment of our operating performance and the valuation of the Company. In addition, these non-GAAP financial measures address questions we routinely receive from analysts and investors and, in order to ensure that all investors have access to the same data, our management has determined that it is appropriate to make this data available to all investors. The Adjusted Performance Measures exclude the impact of certain items (as further described below) and provide supplemental information regarding our operating performance. By disclosing these non-GAAP financial measures, our management intends to provide investors with a supplemental comparison of our operating results and trends for the periods presented. Our management believes these measures are also useful to investors as such measures allow investors to evaluate our performance using the same metrics that our management uses to evaluate past performance and prospects for future performance. We provide disclosure of the effects of these non-GAAP financial measures by presenting the corresponding measure prepared in conformity with GAAP in our financial statements, and by providing a reconciliation to the corresponding GAAP measure so that investors may understand the adjustments made in arriving at the non-GAAP financial measures and use the information to perform their own analyses.

Adjusted operating income/Adjusted EBITDA from continuing operations excludes restructuring costs and business structure realignment programs, amortization, acquisition- and divestiture-related costs and acquisition accounting impacts, stock-based compensation, and asset impairment charges and other adjustments as described below. For adjusted EBITDA, in addition to the preceding, we exclude adjusted depreciation as defined below. We do not consider these items to be reflective of our core operating performance due to the variability of such items from period-to-period in terms of size, nature and significance. They are primarily incurred to realign our operating structure and integrate new acquisitions, and implement divestitures of components of our business, and fluctuate based on specific facts and circumstances. Additionally, Adjusted net income attributable to Coty Inc. and Adjusted net income attributable to Coty Inc. per common share are adjusted for certain interest and other (income) expense items and preferred stock deemed dividends, as described below, and the related tax effects of each of the items used to derive Adjusted net income as such charges are not used by our management in assessing our operating performance period-to-period.

Adjusted Performance Measures reflect adjustments based on the following items:

- Costs related to acquisition and divestiture activities: We have excluded acquisition- and divestiture-related costs and the accounting impacts such as those related to transaction costs and costs associated with the revaluation of acquired inventory in connection with business combinations because these costs are unique to each transaction. Additionally, for divestitures, we exclude write-offs of assets that are no longer recoverable and contract related costs due to the divestiture. The nature and amount of such costs vary significantly based on the size and timing of the acquisitions and divestitures, and the maturities of the businesses being acquired or divested. Also, the size, complexity and/or volume of past transactions, which often drives the magnitude of such expenses, may not be indicative of the size, complexity and/or volume of any future acquisitions or divestitures.
- Restructuring and other business realignment costs: We have excluded costs associated with restructuring and business structure realignment programs to allow for comparable financial results to historical operations and forward-looking guidance. In addition, the nature and amount of such charges vary significantly based on the size and timing of the programs. By excluding the referenced expenses from our non-GAAP financial measures, our management is able to further evaluate our ability to utilize existing assets and estimate their long-term value. Furthermore, our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
- Asset impairment charges: We have excluded the impact of asset impairments as such non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
- Amortization expense: We have excluded the impact of amortization of finite-lived intangible assets, as such non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance. Although we exclude amortization of intangible assets from our non-GAAP expenses, our management believes that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets.
- Gain on sale and early license termination: We have excluded the impact of gain on sale and early license termination as such amounts are inconsistent in amount and frequency and are significantly impacted by the size of the sale and early license termination.
- Costs related to market exit: We have excluded the impact of direct incremental costs related to our decision to wind down our business operations in Russia. We believe that these direct and incremental costs are inconsistent and infrequent in nature. Consequently, our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
- Gains on sale of real estate: We have excluded the impact of gains on sale of real estate as such amounts are inconsistent in amount and frequency and are significantly impacted by the size of the sale. Our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
- Stock-based compensation: Although stock-based compensation is a key incentive offered to our employees, we have excluded the effect of these expenses from the calculation of adjusted operating income and adjusted EBITDA. This is due to their primarily non-cash nature; in addition, the amount and timing of these expenses may be highly variable and unpredictable, which may negatively affect comparability between periods.
- Depreciation and Adjusted depreciation: Our adjusted operating income excludes the impact of accelerated depreciation for certain restructuring projects that affect the expected useful lives of Property, Plant and Equipment, as such charges vary significantly based on the size and timing of the programs. Further, we have excluded adjusted depreciation, which represents depreciation expense net of accelerated depreciation charges, from our adjusted EBITDA. Our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
- Other (income) expense: We have excluded the impact of pension curtailment (gains) and losses and pension settlements as such events are triggered by our restructuring and other business realignment activities and the amount of such charges vary significantly based on the size and timing of the programs. Further, we have excluded the change in fair value of the investment in Wella, as well as expenses related to potential or actual sales transactions reducing equity investments, as our management believes these unrealized (gains) and losses do not reflect our underlying ongoing business, and the adjustment of such impact helps investors and others compare and analyze performance from period to period. We have excluded the gain on the exchange of Series B Preferred Stock. Such transactions do not reflect our operating results and we have excluded the impact as our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
- Noncontrolling interest: This adjustment represents the after-tax impact of the non-GAAP adjustments included in Net income attributable to noncontrolling interests based on the relevant noncontrolling interest percentage.
- Tax: This adjustment represents the impact of the tax effect of the pretax items excluded from Adjusted net income. The tax impact of the non-GAAP adjustments is based on the tax rates related to the jurisdiction in which the adjusted

items are received or incurred. Additionally, adjustments are made for the tax impact of any intra-entity transfer of assets and liabilities.

- Deemed Preferred Stock Dividends: We have excluded preferred stock deemed dividends related to the First Exchange and the Second Exchange (as disclosed and defined in Note 27—Related Party Transactions in our Annual Report on Form 10-K for fiscal 2023) from our calculation of adjusted net income attributable to Coty Inc. These deemed dividends are nonmonetary in nature, the transactions were entered into to simplify our capital structure and do not reflect our underlying ongoing business. Management believes that this adjustment helps investors and others compare and analyze our performance from period to period.

#### Constant Currency

We operate on a global basis, with the majority of our net revenues generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect our results of operations. Therefore, to supplement financial results presented in accordance with GAAP, certain financial information is presented in “constant currency”, excluding the impact of foreign currency exchange translations to provide a framework for assessing how our underlying businesses performed excluding the impact of foreign currency exchange translations. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We calculate 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 prior year 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 we present may not be comparable to similarly titled measures reported by other companies.

#### Basis of Presentation of Acquisitions, Divestitures, Terminations and Market Exit from Russia

During the period when we complete an acquisition, divestiture, early license termination, or market exit, the financial results of the current year period are not comparable to the financial results presented in the prior year period. When explaining such changes from period to period and to maintain a consistent basis between periods, we exclude the financial contribution of: (i) the acquired brands or businesses in the current year period until we have twelve months of comparable financial results, and (ii) the divested brands or businesses or early terminated brands or markets exited in the prior year period, to maintain comparable financial results with the current fiscal year period. Acquisitions, divestitures, early license terminations, and market exits that would impact the comparability of financial results between periods presented in the Management’s Discussion and Analysis of Financial Condition and Results of Operations are shown in the table below.

### THREE MONTHS ENDED MARCH 31, 2024 AS COMPARED TO THREE MONTHS ENDED MARCH 31, 2023

NET REVENUES

In the three months ended March 31, 2024, net revenues increased 8%, or $96.7, to $1,385.6 from $1,288.9 in the three months ended March 31, 2023. Excluding net revenue from the third quarter of the prior period from Lacoste, net revenues increased 10% or $124.5 to $1,385.6 from $1,261.1 in the three months ended March 31, 2023, reflecting a positive price and mix impact of 6% and an increase in unit volume of 4%. The overall increase in net revenues reflects growth of prestige fragrances, specifically *Burberry*, as well as innovation from new launches including *Marc Jacobs Daisy Wild* and *Cosmic Kylie Jenner,* and positive performance in the prestige cosmetics category. Net revenues increased in our Consumer Beauty segment due to positive performance in the skin and body care category in Brazil, mass fragrance category, and color cosmetics category.

The overall increase in net revenues reflects the continued success of our pricing and revenue management strategies, including the implementation of targeted price increases across our product portfolio. Volume growth from certain brands in our prestige fragrance portfolio, as well as in skin and body care products in Brazil helped drive the increase in revenues. Increases were partially offset by volume declines from certain skin and body care brands in China where macroeconomic conditions have resulted in a decline in demand, and color cosmetics brands primarily in the U.S. due to negative market trends in the category.

Geographically, net revenues in all regions grew, led by the Americas. Additionally, there was an increase in the travel retail channel sales in all regions.

Digital and e-commerce channel sales growth also contributed to the increase in net revenues.

### Net Revenues by Segment

*(in millions)*

| NET REVENUES | Three Months Ended March 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| Prestige | $867.2 | $799.7 | 8% |
| Consumer Beauty | 518.4 | 489.2 | 6% |
| **Total** | **$1,385.6** | **$1,288.9** | **8%** |

#### Prestige

In the three months ended March 31, 2024, net revenues from the Prestige segment increased 8%, or $67.5 to $867.2 compared to $799.7 in the three months ended March 31, 2023. Excluding net revenue from the third quarter of the prior period from Lacoste, net revenues from the Prestige segment increased 12% or $95.3 to $867.2 from $771.9 in the three months ended March 31, 2023, reflecting a positive price and mix impact of 10% (primarily due to the positive pricing impact as a result of global price increases earlier in the fiscal year, in line with the overall premiumization strategy and brand innovation), an increase in unit volume of 3%, partially offset by a negative foreign currency exchange translation impact of 1%. The increase in net revenues primarily reflects:

- Prestige fragrance sales growth of $79.8, due to the continued success of *Burberry Goddess* and *Burberry Hero* and continued brand innovation such as *Cosmic Kylie Jenner.* The category sales growth can also be attributed to positive market trends as well as success in the travel retail channel; and
- Prestige cosmetic sales growth of $11.6, due to positive market trends in the prestige cosmetics category and brand innovation.

#### Consumer Beauty

In the three months ended March 31, 2024, net revenues from the Consumer Beauty segment increased 6%, or $29.2, to $518.4 from $489.2 in the three months ended March 31, 2023, reflecting an increase in unit volume of 4% (primarily due to Brazilian brands) and a positive price and mix impact of 2% (primarily due to price increases across the Consumer Beauty product portfolio, earlier in the fiscal year). The increase in net revenues primarily reflects:

- Skin and body care sales growth of $13.7, primarily due to the continued success of brands in Brazil led by *Monange*, as a result of strong category momentum and positive impact of pricing in the Brazilian market, partially offset by net revenue declines from certain brands in China due to volume declines resulting from macroeconomic trends which have negatively impacted demand resulting in a build-up of inventory at retailers and distributors; and
- Mass fragrance sales growth of $9.3, due to positive market trends and brand innovation.

Although color cosmetics net revenues grew $5.4, led by category momentum and price increases in Brazil, negative market trends primarily in the U.S. negatively impacted sales volumes, partially offsetting the overall category increase.

COST OF SALES

In the three months ended March 31, 2024, cost of sales increased 2%, or $9.7, to $487.8 from $478.1 in the three months ended March 31, 2023. Cost of sales as a percentage of net revenues decreased to 35.2% in the three months ended March 31, 2024 from 37.1% in the three months ended March 31, 2023, resulting in a gross margin increase of approximately 190 basis points, primarily reflecting:

(i) approximately 180 basis points related to a decrease in manufacturing and material costs as a percentage of net revenues, driven by increased manufacturing efficiencies, improvements in productivity, as well as procurement and material cost optimization; and

(ii) approximately 80 basis points related to decreased freight costs.

These increases were partially offset by:

(i) approximately 60 basis points related to increased excess and obsolescence costs associated with Consumer Beauty body care products in Brazil and across the Prestige product portfolio.

The above reflects a positive impact from pricing net of inflation of approximately 200 basis points.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In the three months ended March 31, 2024, selling, general and administrative expenses increased 7%, or $50.2, to $770.6 from $720.4 in the three months ended March 31, 2023. Selling, general and administrative expenses as a percentage of net revenues decreased to 55.6% in the three months ended March 31, 2024 from 55.9% in the three months ended March 31, 2023, or approximately 30 basis points. This decrease primarily reflects:

(i) 110 basis points due to a decrease in stock-based compensation cost primarily related to a reduction in expense recognized in connection with awards granted to the CEO; and

(ii) 110 basis points due to favorable transactional impact from our exposure to foreign currency as a percentage of net revenues.

These decreases were partially offset by the following increases:

(i) 120 basis points due to an increase in administrative costs as a percentage of net revenues due to higher compensation expense from increased headcount, partially offset by lower depreciation expense related to fully depreciated IT equipment; and

(ii) 60 basis points due to an increase in advertising and consumer promotional costs primarily due to increases in in-store merchandising execution and non-working media investments.

OPERATING INCOME

In the three months ended March 31, 2024, operating income was $77.8 compared to income of $43.5 in the three months ended March 31, 2023. Operating income as a percentage of net revenues, increased to 5.6% in the three months ended March 31, 2024 as compared to 3.4% in the three months ended March 31, 2023. The increase in operating margin is primarily driven by a decrease in cost of goods sold as a percentage of net revenues (approximately 190 basis points) primarily related to a decrease in manufacturing and material costs as a percentage of net revenues and a decrease in stock compensation expense (approximately 110 basis points) primarily related to a reduction in expense recognized in connection with a prior year's grant made to the CEO, partially offset by an increase in advertising and consumer promotional costs as a percentage of revenues (approximately 60 basis points) primarily related to increased in-store merchandising execution and non-working media spend, and an increase in restructuring costs (approximately 20 basis points). In addition, the higher proportion of Consumer Beauty sales were from lower margin Brazil brands, compared to the prior year, negatively impacted our consolidated gross margin and operating income.

### Operating Income (Loss) by Segment

*(in millions)*

| Operating income (loss) | Three Months Ended March 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| Prestige | $108.7 | $102.4 | 6% |
| Consumer Beauty | (13.3) | (27.9) | 52% |
| Corporate | (17.6) | (31.0) | 43% |
| **Total** | **$77.8** | **$43.5** | **79%** |

#### Prestige

In the three months ended March 31, 2024, operating income for Prestige was $108.7 compared to income of $102.4 in the three months ended March 31, 2023. Operating margin decreased to 12.5% of net revenues in the three months ended March 31, 2024 as compared to 12.8% in the three months ended March 31, 2023, driven by an increase in fixed costs as a percentage of net revenues (approximately 140 basis points) primarily related to non people-related costs and people-related costs, and an increase in advertising and consumer promotional expense as a percentage of net revenues (approximately 120 basis points) primarily related to increases in working and non-working media as a percentage of net revenues, partially offset by a decrease in cost of goods sold as a percentage of net revenues (approximately 190 basis points) primarily related to a decrease in manufacturing and material costs as a percentage of net revenues and a decrease in amortization expense as a percentage of net revenues (approximately 30 basis points).

#### Consumer Beauty

In the three months ended March 31, 2024, operating loss for Consumer Beauty was $13.3 compared to loss of $27.9 in the three months ended March 31, 2023. Operating margin increased to (2.6)% of net revenues in the three months ended March 31, 2024 as compared to (5.7)% in the three months ended March 31, 2023, driven by a decrease in transactional foreign exchange losses as a percentage of net revenues (approximately 180 basis points) primarily related to currency revaluation in Argentina in the prior year, a decrease in cost of goods sold as a percentage of net revenues (approximately 160 basis points) primarily related to a decrease in manufacturing and material costs as a percentage of net revenues, and a decrease in advertising and consumer promotional expense as a percentage of net revenues (approximately 30 basis points) primarily related to a decrease in working media, partially offset by an increase in fixed costs as a percentage of net revenues (approximately 70 basis points) primarily related to people-related costs.

#### Corporate

Corporate primarily includes income and expenses not directly relating to our operating activities. These items are included in Corporate since we consider them to be Corporate responsibilities, and these items are not used by our management to measure the underlying performance of the segments.

In the three months ended March 31, 2024, the operating loss for Corporate was $17.6 compared to a loss of $31.0 in the three months ended March 31, 2023, as described under “Adjusted Operating Income for Coty Inc.” below. The decrease in the operating loss for Corporate was primarily driven by a $13.2 decrease in stock compensation expense.

### Adjusted Operating Income by Segment

We believe that adjusted operating income by segment further enhances an investor’s understanding of our performance. See “Overview—Non-GAAP Financial Measures.” A reconciliation of reported operating income to adjusted operating income is presented below, by segment:

*(in millions)*

| Operating income | Three Months Ended March 31, 2024 Reported (GAAP) | Adjustments (a) | Adjusted (Non-GAAP) |
| --- | ---: | ---: | ---: |
| Prestige | $108.7 | $38.6 | $147.3 |
| Consumer Beauty | (13.3) | 9.9 | (3.4) |
| Corporate | (17.6) | 17.6 | — |
| **Total** | **$77.8** | **$66.1** | **$143.9** |
|  | **Three Months Ended March 31, 2023** |  |  |
| **(in millions)** | **Reported (GAAP)** | **Adjustments (a)** | **Adjusted (Non-GAAP)** |
| **Operating income** |  |  |  |
| Prestige | $102.4 | $38.3 | $140.7 |
| Consumer Beauty | (27.9) | 9.9 | (18.0) |
| Corporate | (31.0) | 31.0 | — |
| **Total** | **$43.5** | **$79.2** | **$122.7** |

(a) See a reconciliation of reported net income to operating income (loss) to adjusted operating income (loss) and adjusted EBITDA for Coty Inc. and reconciliations of segment operating income (loss) to segment adjusted operating income (loss) and segment adjusted EBITDA for the Prestige, Consumer Beauty and Corporate segments with a description of the adjustments under “Net Income, Adjusted Operating Income and Adjusted EBITDA for Coty Inc.” and “Segment Operating Income (Loss), Segment Adjusted Operating Income (Loss) and Segment Adjusted EBITDA”, below. All adjustments are reflected in Corporate, except for amortization and asset impairment charges on goodwill, indefinite-lived intangible assets, and finite-lived intangible assets, which are reflected in the Prestige and Consumer Beauty segments.

### Net Income, Adjusted Operating Income and Adjusted EBITDA for Coty Inc.

We believe that adjusted operating income further enhances an investor’s understanding of our performance. See “Overview—Non-GAAP Financial Measures.” Reconciliation of reported net income to adjusted operating income and adjusted EBITDA is presented below:

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Net income** | **$8.8** | **$111.8** | **(92)%** |
| Net income margin | 0.6% | 8.7% |  |
| Provision (benefit) for income taxes | (5.4) | 29.8 | \<(100%) |
| **Income before income taxes** | **$3.4** | **$141.6** | **(98)%** |
| Interest expense, net | 60.4 | 58.8 | 3% |
| Other income, net | 14.0 | (156.9) | \>100% |
| **Reported operating income** | **$77.8** | **$43.5** | **79%** |
| Reported operating income (loss) margin | 5.6% | 3.4% |  |
| Amortization expense | 48.5 | 48.2 | 1% |
| Restructuring and other business realignment costs | (1.7) | (1.3) | (31)% |
| Stock-based compensation | 20.5 | 33.6 | (39)% |
| Early license termination and market exit costs | (1.2) | (1.3) | 8% |
| Total adjustments to reported operating income | $66.1 | $79.2 | (17)% |
| **Adjusted operating income** | **$143.9** | **$122.7** | **17%** |
| Adjusted operating income margin | 10.4% | 9.5% |  |
| Adjusted depreciation | 56.0 | 59.2 | (5)% |
| **Adjusted EBITDA** | **$199.9** | **$181.9** | 10% |
| Adjusted EBITDA margin | 14.4% | 14.1% |  |

In the three months ended March 31, 2024, adjusted operating income increased $21.2 to $143.9 from $122.7 in the three months ended March 31, 2023. Adjusted operating margin increased to 10.4% of net revenues in the three months ended March 31, 2024 from 9.5% in the three months ended March 31, 2023, primarily driven by a decrease in cost of goods sold as a percentage of net revenues and a decrease in stock-based compensation expense. In the three months ended March 31, 2024, adjusted EBITDA increased $18.0 to $199.9 from $181.9 in the three months ended March 31, 2023. Adjusted EBITDA margin increased to 14.4% of net revenues in the three months ended March 31, 2024 from 14.1% in the three months ended March 31, 2023.

### Segment Operating Income (Loss), Segment Adjusted Operating Income (Loss) and Segment Adjusted EBITDA

#### Operating Income, Adjusted Operating Income and Adjusted EBITDA - Prestige Segment

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Reported operating income** | **$108.7** | **$102.4** | **6%** |
| Reported operating income (loss) margin | 12.5% | 12.8% |  |
| Amortization expense | 38.6 | 38.3 | 1% |
| Total adjustments to reported operating income | $38.6 | $38.3 | 1% |
| **Adjusted operating income** | **$147.3** | **$140.7** | **5%** |
| Adjusted operating income margin | 17.0% | 17.6% |  |
| Adjusted depreciation | 25.7 | 28.6 | (10)% |
| **Adjusted EBITDA** | **$173.0** | **$169.3** | **2%** |
| Adjusted EBITDA margin | 19.9% | 21.2% |  |

#### Operating Loss, Adjusted Operating Loss and Adjusted EBITDA - Consumer Beauty Segment

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Reported operating loss** | **$(13.3)** | **$(27.9)** | **52%** |
| Reported operating income (loss) margin | (2.6)% | (5.7)% |  |
| Amortization expense | 9.9 | 9.9 | —% |
| Total adjustments to reported operating income | $9.9 | $9.9 | —% |
| **Adjusted operating loss** | **$(3.4)** | **$(18.0)** | **81%** |
| Adjusted operating income (loss) margin | (0.7)% | (3.7)% |  |
| Adjusted depreciation | 30.3 | 30.6 | (1)% |
| **Adjusted EBITDA** | **$26.9** | **$12.6** | **\>100%** |
| Adjusted EBITDA margin | 5.2% | 2.6% |  |

#### Operating Loss, Adjusted Operating Loss and Adjusted EBITDA - Corporate Segment

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Reported operating loss** | **$(17.6)** | **$(31.0)** | **43%** |
| Reported operating income (loss) margin | N/A | N/A |  |
| Restructuring and other business realignment costs | (1.7) | (1.3) | (31)% |
| Stock-based compensation | 20.5 | 33.6 | (39)% |
| Early license termination and market exit costs | (1.2) | (1.3) | 8% |
| Total adjustments to reported operating income | $17.6 | $31.0 | (43)% |
| **Adjusted operating income** | **$—** | **$—** | **N/A** |
| Adjusted operating income margin | N/A | N/A |  |
| Adjusted depreciation | — | — | N/A |
| **Adjusted EBITDA** | **$—** | **$—** | **N/A** |
| Adjusted EBITDA margin | N/A | N/A |  |

46

#### Amortization Expense

In the three months ended March 31, 2024, amortization expense increased to $48.5 from $48.2 in the three months ended March 31, 2023. In the three months ended March 31, 2024, amortization expense of $38.6 and $9.9 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended March 31, 2023, amortization expense of $38.3 and $9.9 was reported in the Prestige and Consumer Beauty segments, respectively.

#### Restructuring and Other Business Realignment Costs

We incurred $521.1 of cash costs life-to-date related to our previously announced and substantially completed Transformation Plan as of March 31, 2024, which have been recorded in Corporate. In addition, we continue to analyze our cost structure and evaluate opportunities to streamline operations through a range of other cost reduction activities ("Current Restructuring Actions").

In the three months ended March 31, 2024, we incurred a credit in restructuring and other business structure realignment costs of $(1.7), as follows:

- We incurred restructuring costs of $0.9 primarily related to the Current Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and
- We incurred a credit in business structure realignment costs of $(2.6), which is reported in selling, general and administrative expenses.

In the three months ended March 31, 2023, we incurred a credit in restructuring and other business structure realignment costs of $(1.3) as follows:

- We incurred a credit in restructuring costs of $(1.3) primarily related to the Transformation Plan due to the change in estimate, included in the Condensed Consolidated Statements of Operations; and
- We incurred no business structure realignment costs.

#### Stock-Based Compensation

In the three months ended March 31, 2024, stock-based compensation was $20.5 as compared with $33.6 in the three months ended March 31, 2023. The decrease in stock-based compensation is primarily related to a reduction in expense recognized in connection with awards granted to the CEO.

#### Early License Termination and Market Exit Costs

In the three months ended March 31, 2024, we recognized a gain of $(1.2) related to our decision to wind down our business in Russia.

In the three months ended March 31, 2023, we recognized a gain of $(1.3) related to our decision to wind down our business in Russia.

#### Adjusted Depreciation Expense

In the three months ended March 31, 2024, adjusted depreciation expense of $25.7 and $30.3 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended March 31, 2023, adjusted depreciation expense of $28.6 and $30.6 was reported in the Prestige and Consumer Beauty segments, respectively.

INTEREST EXPENSE, NET

In the three months ended March 31, 2024, net interest expense was $60.4 as compared with $58.8 in the three months ended March 31, 2023, remaining relatively flat compared to the prior period.

OTHER INCOME/EXPENSE

In the three months ended March 31, 2024, other expense was $14.0 as compared with other income of $156.9 in the three months ended March 31, 2023.

Other expense of $14.0 in the three months ended March 31, 2024 was principally comprised of net losses on forward repurchase contracts of $17.2.

Other income of $156.9 in the three months ended March 31, 2023 was principally comprised of net gains on forward repurchase contracts of $156.5.

The decrease in Other income of $170.9 is primarily due to net losses on forward repurchase contracts of $173.7 compared to the prior year period.

INCOME TAXES

The effective income tax rate for the three months ended March 31, 2024 and 2023 was (158.8)% and 21.0%, respectively. The effective tax rate of (158.8)% for the three months ended March 31, 2024, was primarily due to a benefit of $8.5 on the resolution of foreign uncertain tax positions compared to $3.4 of income in the period.

The effective tax rate of 21.0% in the three months ended March 31, 2023, was increased due to a large limitation on the deductibility of executive stock compensation offset by large fair value gains related to the investment in the Wella business taxed at a rate below the statutory tax rate of 21% as well as a foreign exchange loss recognized on repatriation of funds that were previously taxed.

The effective income tax rates vary from the U.S. federal statutory rate of 21% due to the effect of (i) jurisdictions with different statutory rates, including impacts of rate changes, (ii) adjustments to the Company’s unrealized tax benefits (“UTBs”) and accrued interest, (iii) non-deductible expenses, (iv) audit settlements and (v) valuation allowance changes. Our effective tax rate could fluctuate significantly and could be adversely affected to the extent earnings are lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higher statutory rates.

### Reconciliation of Reported Income Before Income Taxes to Adjusted Income Before Income Taxes and Effective Tax Rates:

*(in millions)*

|  | Three Months Ended March 31, 2024 Income Before Income Taxes | Provision for Income Taxes | Effective Tax Rate | Three Months Ended March 31, 2023 Income Before Income Taxes | Provision for Income Taxes | Effective Tax Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Reported income before income taxes** | **$3.4** | **$(5.4)** | **(158.8)%** | **$141.6** | **$29.8** | **21.0%** |
| Adjustments to reported operating income (a) | 66.1 |  |  | 79.2 |  |  |
| Change in fair value of investment in Wella Business (c) | (3.0) |  |  | — |  |  |
| Other adjustments (d) | 0.2 |  |  | 0.2 |  |  |
| Total Adjustments (b) | 63.3 | 18.3 |  | 79.4 | 14.8 |  |
| **Adjusted income before income taxes** | **$66.7** | **$12.9** | **19.3%** | **$221.0** | **$44.6** | **20.2%** |

(a) See a description of adjustments under “Net Income, Adjusted Operating Income and Adjusted EBITDA for Coty Inc.”

(b) The tax effects of each of the items included in adjusted income are calculated in a manner that results in a corresponding income tax expense/provision for adjusted income. In preparing the calculation, each adjustment to reported income is first analyzed to determine if the adjustment has an income tax consequence. The provision for taxes is then calculated based on the jurisdiction in which the adjusted items are incurred, multiplied by the respective statutory rates and offset by the increase or reversal of any valuation allowances commensurate with the non-GAAP measure of profitability.

(c) The amount represents the realized and unrealized (gain) loss recognized for the change in fair value of the investment in Wella.

(d) For the three months ended March 31, 2024 and 2023, this primarily represents loss from our equity investment in KKW.

The adjusted effective tax rate was 19.3% for the three months ended March 31, 2024 compared to 20.2% for the three months ended March 31, 2023. The differences were primarily due to the resolution of foreign uncertain tax positions having a greater proportional effect in the current period.

NET INCOME (LOSS) ATTRIBUTABLE TO COTY INC.

Net income attributable to Coty Inc. was $3.8 in the three months ended March 31, 2024 as compared to net income of $108.4 in the three months ended March 31, 2023. The decrease in the income was primarily driven by gains of $173.7 from forward repurchase contracts in the prior period that did not reoccur in the current period, partially offset by higher operating income of $34.3 in the current period.

We believe that adjusted net income attributable to Coty Inc. provides an enhanced understanding of our performance. See “Overview—Non-GAAP Financial Measures.”

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Net income from Coty Inc. net of noncontrolling interests** | **$3.8** | **$108.4** | **(96)%** |
| Convertible Series B Preferred Stock dividends (a) | (3.3) | (3.3) | —% |
| **Reported net income attributable to Coty Inc.** | **$0.5** | **$105.1** | **(100)%** |
| % of net revenues | —% | 8.2% |  |
| Adjustments to reported operating income (b) | 66.1 | 79.2 | (17)% |
| Change in fair value of investment in Wella Company (c) | (3.0) | — | N/A |
| Adjustment to other expense (d) | 0.2 | 0.2 | —% |
| Adjustments to noncontrolling interests (e) | (1.7) | (1.6) | (6)% |
| Change in tax provision due to adjustments to reported net income attributable to Coty Inc. | (18.3) | (14.8) | (24)% |
| **Adjusted net income attributable to Coty Inc.** | **$43.8** | **$168.1** | **(74)%** |
| % of net revenues | 3.2% | 13.0% |  |
| **Per Share Data** |  |  |  |
| Adjusted weighted-average common shares |  |  |  |
| Basic | 883.1 | 851.6 |  |
| Diluted (a) | 892.0 | 888.9 |  |
| Adjusted net income attributable to Coty Inc. per common share |  |  |  |
| Basic | $0.05 | $0.20 |  |
| Diluted (a) | $0.05 | $0.19 |  |

(a) Adjusted Diluted EPS is adjusted by the effect of dilutive securities. For the three months ended March 31, 2024 and 2023, shares for the Forward Repurchase Contracts were excluded from the computation of adjusted diluted EPS as Coty is in the position to receive shares from the counterparties and as such their inclusion would be anti-dilutive. Accordingly, we did not reverse the impact of the fair market value losses/(gains) for contracts with the option to settle in shares or cash of $7.1 and $(93.9), respectively. For the three months ended March 31, 2024, convertible Series B Preferred Stock (23.7 million weighted average dilutive shares) were anti-dilutive. Accordingly, we excluded these shares from the diluted shares and did not adjust the earnings for the related dividend of $3.3. For the three months ended March 31, 2023, as the Convertible Series B Preferred Stock was dilutive, an adjustment to reverse the impact of the preferred stock dividends of $3.3 was required.

(b) See a description of adjustments under “Adjusted Operating Income for Continuing Operations."

(c) For the three months ended March 31, 2024 and 2023, the amount represents the unrealized (gain) loss recognized for the change in fair value of the investment in Wella.

(d) For the three months ended March 31, 2024 and 2023, this primarily represents adjustments for equity loss from KKW.

(e) The amounts represent the after-tax impact of the non-GAAP adjustments included in net income attributable to noncontrolling interests based on the relevant noncontrolling interest percentage in the Condensed Consolidated Statements of Operations.

### NINE MONTHS ENDED MARCH 31, 2024 AS COMPARED TO NINE MONTHS ENDED MARCH 31, 2023

NET REVENUES

In the nine months ended March 31, 2024, net revenues increased 13%, or $552.1, to $4,754.6 from $4,202.5 in the nine months ended March 31, 2023. Excluding net revenue from the first and second quarters of the prior period from Russia and the third quarter of the prior period from Lacoste, net revenues increased 15% or $615.1 to $4,754.6 from $4,139.5 in the nine months ended March 31, 2023, reflecting a positive price and mix impact of 11%, positive foreign currency exchange translation impact of 2%, and an increase in unit volume of 2%. The overall increase in net revenues reflects growth in our prestige fragrance category due to the continued success of fragrance brands, specifically *Burberry, Hugo Boss, Calvin Klein, Gucci, Chloe, Marc Jacobs, Davidoff* and *Joop,* as well as innovation from the launches including *Marc Jacobs Daisy Wild* and *Cosmic Kylie Jenner,* and positive performance in the prestige cosmetics category. The overall increase in net revenues for the Consumer Beauty segment was due to positive performance in the color cosmetics category specifically from *Rimmel Manhattan* and *Risque*, mass fragrance category specifically from *David Beckham*, and the skin and body care category in Brazil, specifically from *Monange, Bozzano* and *Paixao.*

The overall increase in net revenues reflects the continued success of our pricing and revenue management strategies, including the implementation of targeted price increases across our product portfolio earlier in the fiscal year. Volume growth across our fragrance portfolio, as well as in skin and body care products in Brazil helped drive the increase in revenues, partially offset by volume declines from certain color cosmetic and other body care brands in China due to macroeconomic conditions.

Geographically, except for China, net revenues in all major markets grew, led by Brazil, the United States, and Germany. Additionally, there was an increase in travel retail channel sales in all regions.

Digital and e-commerce channel sales growth also contributed to the increase in net revenues.

### Net Revenues by Segment

*(in millions)*

| NET REVENUES | Nine Months Ended March 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| Prestige | $3,054.5 | $2,620.9 | 17% |
| Consumer Beauty | 1,700.1 | 1,581.6 | 8% |
| **Total** | **$4,754.6** | **$4,202.5** | **13%** |

#### Prestige

In the nine months ended March 31, 2024, net revenues from the Prestige segment increased 17%, or $433.6, to $3,054.5 from $2,620.9 in the nine months ended March 31, 2023. Excluding net revenue from the first and second quarters of the prior period from Russia and the third quarter of the prior period from Lacoste, net revenues from the Prestige segment increased 19% or $477.9 to $3,054.5 from $2,576.6 in the nine months ended March 31, 2023, reflecting a positive price and mix impact of 10% (primarily due to the positive pricing impact as a result of global price increases earlier in the fiscal year, in line with the overall premiumization strategy and brand innovation), an increase in unit volume of 7%, and positive foreign currency exchange translation impact of 2%. The increase in net revenues primarily reflects:

- Prestige fragrance sales growth of $446.7, primarily due to the continued success of *Burberry Goddess, Classic, Her and Hero, Hugo Boss Boss Bottled* and *Boss the Scent, Calvin Klein One, Euphoria*, and *Eternity, Gucci Guilty* and *Flora, Chloe Nomade* and *Signature, Marc Jacobs Daisy Wild, Davidoff Cool Water*, and *Joop Homme*, as well as continued brand innovation such as *Cosmic Kylie Jenner*. Prestige fragrance sales grew in major markets such as the United States, Germany, and Australia, as well as through travel retail channel sales across all regions. This growth was partially offset by lower net revenues for the *Lacoste* brand in the first six months of the current period, which was primarily due to the early license termination resulting in a wind down of sales through the end of the second quarter; and lower net revenues for the *Bottega Veneta* brand in the current period, which was primarily due to the license expiration; and
- Prestige cosmetic sales growth of $21.4, primarily due to brand innovation from *Kylie cosmetics* and *Gucci makeup.*

#### Consumer Beauty

In the nine months ended March 31, 2024, net revenues from the Consumer Beauty segment increased 8%, or $118.5, to $1,700.1 from $1,581.6 in the nine months ended March 31, 2023. Excluding net revenue from the first and second quarters of the prior period from Russia, net revenues from the Consumer Beauty segment increased 9% or $137.2 to $1,700.1 from $1,562.9 in the nine months ended March 31, 2023, reflecting a positive price and mix impact of 5% (primarily due to price increases across the Consumer Beauty product portfolio earlier in the fiscal year), a positive foreign currency exchange translation impact of 2%, and an increase in unit volume of 2% (primarily due to Brazilian brands). The increase in net revenues primarily reflects:

- Color cosmetics sales growth of $53.5, primarily due to the continued success of *Rimmel Manhattan* which saw continued brand innovation, such as *Lasting Finish* foundation and *Thrill Seeker* mascara, and *Risque* due to strong category momentum in Brazil and positive pricing impact, despite a category slowdown in the US;
- Skin and body care sales growth of $43.4, due to the continued success of Brazilian brands *Monange, Bozzano*, and *Paixao* benefiting from strong category momentum and positive pricing impact. This growth was partially offset by lower sales volume for *adidas* primarily as a result of category slowdown in China;
- Mass fragrance sales growth of $37.3, due to the continued success from the re-launch of *David Beckham Instinct* in the current period.

COST OF SALES

In the nine months ended March 31, 2024, cost of sales increased 12%, or $186.1, to $1,690.8 from $1,504.7 in the nine months ended March 31, 2023. Cost of sales as a percentage of net revenues decreased to 35.6% in the nine months ended March 31, 2024 from 35.8% in the nine months ended March 31, 2023 resulting in a gross margin increase of approximately 20 basis points primarily reflecting:

(i) approximately 70 basis points related to a decrease in manufacturing and material costs as a percentage of net revenues, driven by increased manufacturing efficiencies, improvements in productivity, as well as procurement and material cost optimization; and

(ii) approximately 60 basis points related to decreased freight costs.

These increases were partially offset by:

(i) approximately 70 basis points related to an increase in excess and obsolescence costs primarily associated with the Prestige product portfolio; and

(ii) approximately 40 basis points related to an increase in designer license fees due to licensed Prestige brands comprising a larger portion of overall net revenues in the current period as well as favorable royalty activity in the prior period, which did not reoccur in the current period.

The above reflects a positive impact from pricing net of inflation of approximately 130 basis points.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In the nine months ended March 31, 2024, selling, general and administrative expenses increased 11%, or $226.0, to $2,371.4 from $2,145.4 in the nine months ended March 31, 2023. Selling, general and administrative expenses as a percentage of net revenues decreased to 49.9% in the nine months ended March 31, 2024 from 51.1% in the nine months ended March 31, 2023, or approximately 120 basis points. This decrease was primarily due to:

(i) 80 basis points due to a decrease in stock-based compensation cost primarily related to a reduction in expense recognized in connection with awards granted to the CEO;

(ii) 40 basis points due to a decrease in logistics costs as a percentage of net revenues; and

(iii) 40 basis points due to favorable transactional impact from our exposure to foreign currency as a percentage of net revenues; and

These decreases were partially offset by the following increases:

(i) 40 basis points due to an increase in bad debt expense primarily related to a favorable activity in the prior period that did not reoccur in the current period.

OPERATING INCOME

In the nine months ended March 31, 2024, operating income was $512.0 compared to income of $414.7 in the nine months ended March 31, 2023. Operating margin as a percentage of net revenues, increased to 10.8% in the nine months ended March 31, 2024 as compared to an operating income as a percentage of net revenues of 9.9% in the nine months ended March 31, 2023. The increase in operating margin is largely driven by a decrease in stock compensation expense as a percentage of net revenues (approximately 80 basis points) primarily related to a reduction in expense recognized in connection with a prior year's grant made to the CEO, lower fixed costs as a percentage of net revenues (approximately 50 basis points) primarily related to non people-related costs, lower amortization expense as a percentage of net revenues (approximately 30 basis points), and lower cost of goods sold as a percentage of net revenues (approximately 20 basis points), partially offset by higher restructuring costs in the current period (approximately 90 basis points). In addition, the higher proportion of Consumer Beauty sales were from lower margin Brazil brands, compared to the prior year, negatively impacted our consolidated gross margin and operating income.

### Operating Income (Loss) by Segment

*(in millions)*

| Operating income (loss) | Nine Months Ended March 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| Prestige | $531.0 | $437.3 | 21% |
| Consumer Beauty | 79.0 | 53.3 | 48% |
| Corporate | (98.0) | (75.9) | (29)% |
| **Total** | **$512.0** | **$414.7** | **23%** |

#### Prestige

In the nine months ended March 31, 2024, operating income for Prestige was $531.0 compared to income of $437.3 in the nine months ended March 31, 2023. Operating margin increased to 17.4% of net revenues in the nine months ended March 31, 2024 as compared to 16.7% in the nine months ended March 31, 2023, driven primarily by a decrease in amortization expense as a percentage of net revenues (approximately 50 basis points) and a decrease in fixed costs as a percentage of net revenues (approximately 40 basis points) primarily related to non people-related costs.

#### Consumer Beauty

In the nine months ended March 31, 2024, operating income for Consumer Beauty was $79.0 compared to income of $53.3 in the nine months ended March 31, 2023. Operating margin increased to 4.6% of net revenues in the nine months ended March 31, 2024 as compared to 3.4% in the nine months ended March 31, 2023, driven by a decrease in transactional foreign exchange losses as a percentage of net revenues (approximately 50 basis points) primarily related to currency revaluation in Argentina in the prior year, a decrease in advertising and consumer promotional expense as a percentage of net revenues (approximately 50 basis points) primarily due to a decrease in working media, and a decrease in fixed costs as a percentage of net revenues (approximately 20 basis points) primarily related to non-people related costs.

#### Corporate

Corporate primarily includes corporate expenses not directly related to our operating activities. These items are included in Corporate since we consider them to be Corporate responsibilities, and these items are not used by our management to measure the underlying performance of the segments.

In the nine months ended March 31, 2024, the operating loss for Corporate was $98.0 compared to a loss of $75.9 in the nine months ended March 31, 2023, as described under “Adjusted Operating Income for Coty Inc.” below. The increase to the operating loss for Corporate was primarily driven by an increase of $40.4 in restructuring costs in the current period, partially offset by a decrease of $27.0 in stock compensation expense in the current period.

### Adjusted Operating Income by Segment

We believe that Adjusted Operating income by segment further enhances an investor’s understanding of our performance. See “Overview—Non-GAAP Financial Measures.” A reconciliation of reported Operating income to Adjusted Operating income is presented below, by segment:

*(in millions)*

| Operating income | Nine Months Ended March 31, 2024 Reported (GAAP) | Adjustments (a) | Adjusted (Non-GAAP) |
| --- | ---: | ---: | ---: |
| Prestige | 531.0 | $115.6 | $646.6 |
| Consumer Beauty | 79.0 | 29.8 | 108.8 |
| Corporate | (98.0) | 98.0 | — |
| **Total** | **$512.0** | **$243.4** | **$755.4** |

*(in millions)*

| Operating income | Nine Months Ended March 31, 2023 Reported (GAAP) | Adjustments (a) | Adjusted (Non-GAAP) |
| --- | ---: | ---: | ---: |
| Prestige | 437.3 | $112.7 | $550.0 |
| Consumer Beauty | 53.3 | 30.4 | 83.7 |
| Corporate | (75.9) | 75.9 | — |
| **Total** | **$414.7** | **$219.0** | **$633.7** |

(a) See a reconciliation of reported net income to operating income (loss) to adjusted operating income (loss) and adjusted EBITDA for Coty Inc. and reconciliations of segment operating income (loss) to segment adjusted operating income (loss) and segment adjusted EBITDA for the Prestige, Consumer Beauty and Corporate segments with a description of the adjustments under “Net Income, Adjusted Operating Income and Adjusted EBITDA for Coty Inc.” and “Segment Operating Income (Loss), Segment Adjusted Operating Income (Loss) and Segment Adjusted EBITDA”, below. All adjustments are reflected in Corporate, except for amortization and asset impairment charges on goodwill, indefinite-lived intangible assets, and finite-lived intangible assets, which are reflected in the Prestige and Consumer Beauty segments.

### Net Income, Adjusted Operating Income and Adjusted EBITDA for Coty Inc.

We believe that adjusted operating income further enhances an investor’s understanding of our performance. See “Overview—Non-GAAP Financial Measures.” A reconciliation of reported operating income to adjusted operating income is presented below:

*(in millions)*

|  | Nine Months Ended March 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Net income (loss)** | **$205.0** | **$487.7** | **(58)%** |
| Net income margin | 4.3% | 11.6% |  |
| Provision (benefit) for income taxes | 106.9 | 138.3 | (23)% |
| **Income (loss) before income taxes** | **$311.9** | **$626.0** | **(50)%** |
| Interest expense, net | 190.3 | 185.7 | 2% |
| Other income, net | 9.8 | (397.0) | \>100% |
| **Reported operating income** | **$512.0** | **$414.7** | **23%** |
| Reported operating income (loss) margin | 10.8% | 9.9% |  |
| Amortization expense | 145.4 | 143.1 | 2% |
| Restructuring and other business realignment costs | 29.6 | (5.0) | \>100% |
| Stock-based compensation | 70.4 | 98.9 | (29)% |
| Gain on sale of real estate | (1.6) | (1.0) | (60)% |
| Early license termination and market exit costs | (0.4) | (17.0) | 98% |
| Total adjustments to reported operating income | $243.4 | $219.0 | 11% |
| **Adjusted operating income** | **$755.4** | **$633.7** | **19%** |
| Adjusted operating income margin | 15.9% | 15.1% |  |
| Adjusted depreciation | 171.2 | 173.7 | (1)% |
| **Adjusted EBITDA** | **$926.6** | **$807.4** | **15%** |
| Adjusted EBITDA margin | 19.5% | 19.2% |  |

In the nine months ended March 31, 2024, adjusted operating income increased $121.7, to $755.4 from $633.7 in the nine months ended March 31, 2023. Adjusted operating margin increased to 15.9% of net revenues in the nine months ended March 31, 2024 from 15.1% in the nine months ended March 31, 2023, primarily due to a decrease in stock compensation expense as a percentage of net revenues, a decrease in fixed costs as a percentage of net revenues, a decrease in amortization expense as a percentage of net revenues and a decrease in costs of goods sold as a percentage of net revenues, partially offset by an increase in restructuring costs as a percentage of net revenues. In the nine months ended March 31, 2024, adjusted EBITDA increased $119.2 to $926.6 from $807.4 in the nine months ended March 31, 2023. Adjusted EBITDA margin increased to 19.5% of net revenues in the nine months ended March 31, 2024 from 19.2% in the nine months ended March 31, 2023.

### Segment Operating Income (Loss), Segment Adjusted Operating Income (Loss) and Segment Adjusted EBITDA

#### Operating Income, Adjusted Operating Income and Adjusted EBITDA - Prestige Segment

*(in millions)*

|  | Nine Months Ended March 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Reported operating income** | **531.0** | **437.3** | **21%** |
| Reported operating income (loss) margin | 17.4% | 16.7% |  |
| Amortization expense | 115.6 | 112.7 | 3% |
| Total adjustments to reported operating income | $115.6 | $112.7 | 3% |
| **Adjusted operating income** | **$646.6** | **$550.0** | **18%** |
| Adjusted operating income margin | 21.2% | 21.0% |  |
| Adjusted depreciation | 80.2 | 82.9 | (3)% |
| **Adjusted EBITDA** | **$726.8** | **$632.9** | **15%** |
| Adjusted EBITDA margin | 23.8% | 24.1% |  |

#### Operating Income, Adjusted Operating Income and Adjusted EBITDA - Consumer Beauty Segment

*(in millions)*

|  | Nine Months Ended March 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Reported operating income** | **79.0** | **53.3** | **48%** |
| Reported operating income (loss) margin | 4.6% | 3.4% |  |
| Amortization expense | 29.8 | 30.4 | (2)% |
| Total adjustments to reported operating income | $29.8 | $30.4 | (2)% |
| **Adjusted operating income** | **$108.8** | **$83.7** | **30%** |
| Adjusted operating income margin | 6.4% | 5.3% |  |
| Adjusted depreciation | 91.0 | 90.8 | —% |
| **Adjusted EBITDA** | **$199.8** | **$174.5** | **14%** |
| Adjusted EBITDA margin | 11.8% | 11.0% |  |

#### Operating Loss, Adjusted Operating Loss and Adjusted EBITDA - Corporate Segment

*(in millions)*

|  | Nine Months Ended March 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Reported operating loss** | **$(98.0)** | **$(75.9)** | **(29)%** |
| Reported operating income (loss) margin | N/A | N/A |  |
| Restructuring and other business realignment costs | 29.6 | (5.0) | \>100% |
| Stock-based compensation | 70.4 | 98.9 | (29)% |
| Gain on sale of real estate | (1.6) | (1.0) | (60)% |
| Early license termination and market exit costs | (0.4) | (17.0) | 98% |
| Total adjustments to reported operating income | $98.0 | $75.9 | 29% |
| **Adjusted operating income** | **$—** | **$—** | **N/A** |
| Adjusted operating income margin | N/A | N/A |  |
| Adjusted depreciation | — | — | N/A |
| **Adjusted EBITDA** | **$—** | **$—** | **N/A** |
| Adjusted EBITDA margin | N/A | N/A |  |

#### Amortization Expense

In the nine months ended March 31, 2024, amortization expense increased to $145.4 from $143.1 in the nine months ended March 31, 2023. In the nine months ended March 31, 2024, amortization expense of $115.6 and $29.8 was reported in the Prestige and Consumer Beauty segments, respectively. In the nine months ended March 31, 2023, amortization expense of $112.7 and $30.4 was reported in the Prestige and Consumer Beauty segments, respectively.

#### Restructuring and Other Business Realignment Costs

We incurred $521.1 of cash costs life-to-date related to our previously announced and substantially completed Transformation Plan as of March 31, 2024, which have been recorded in Corporate. In addition, we continue to analyze our cost structure and evaluate opportunities to streamline operations through a range of other cost reduction activities ("Current Restructuring Actions").

In the nine months ended March 31, 2024, we incurred restructuring and other business structure realignment costs of $29.6, as follows:

- We incurred restructuring costs of $35.0 primarily related to the Current Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and
- We incurred a credit in business structure realignment costs of $(5.4) which is reported in selling, general and administrative expenses.

In the nine months ended March 31, 2023, we incurred a credit in restructuring and other business structure realignment costs of $(5.0) as follows:

- We incurred a credit in restructuring costs of $(5.4) primarily related to the Transformation Plan, included in the Condensed Consolidated Statements of Operations.
- We incurred business structure realignment costs of $0.4 primarily related to our Transformation Plan and certain other programs. This amount includes $0.9 reported in Cost of sales in the Condensed Consolidated Statement of Operations and a credit of $(0.5) reported in Selling, general and administrative expenses.

#### Stock-based compensation

In the nine months ended March 31, 2024, stock-based compensation was $70.4 as compared with $98.9 in the nine months ended March 31, 2023. The decrease in stock-based compensation is primarily related to a reduction in expense recognized in connection with awards granted to the CEO.

#### Gain on Sale of Real Estate

In the nine months ended March 31, 2024 and 2023 we recognized gain of $(1.6) and $(1.0), respectively, related to sale of real estate.

#### Early License Termination and Market Exit Costs

In the nine months ended March 31, 2024, we recognized a gain of $(0.4) related to the early termination of a license and our decision to wind down our business in Russia.

In the nine months ended March 31, 2023, we recognized a gain of $(17.0) related to our decision to wind down our business in Russia.

#### Adjusted Depreciation Expense

In the nine months ended March 31, 2024, adjusted depreciation expense of $80.2 and $91.0 was reported in the Prestige and Consumer Beauty segments, respectively. In the nine months ended March 31, 2023, adjusted depreciation expense of $82.9 and $90.8 was reported in the Prestige and Consumer Beauty segments, respectively.

INTEREST EXPENSE, NET

In the nine months ended March 31, 2024, net interest expense was $190.3 as compared with $185.7 in the nine months ended March 31, 2023. This increase is primarily due to higher foreign exchange losses, net of derivative contracts, the impact of a higher average interest rate despite lower debt balances in the current period, and lower amortization expense of deferred financing fees in the current period.

OTHER INCOME/EXPENSE

In the nine months ended March 31, 2024, other expense was $9.8 as compared to other income of $397.0 in the nine months ended March 31, 2023.

Other expense of $9.8 in the nine months ended March 31, 2024 was principally comprised of net losses on forward repurchase contracts of $20.8 and deferred financing fees of $7.4, partially offset by fair value gains related to our equity investment in Wella of $20.0, and gains associated with earn-out provisions related to our sale of Wella of $9.9.

Other income of $397.0 in the nine months ended March 31, 2023 was principally comprised of gains related to our equity investment in the Wella company of $210.0, net gains on forward repurchase contracts of $167.1, and gains associated with earn-out provisions related to our sale of Wella of $28.5.

This decrease in Other income of $406.8 is primarily due to a less favorable fair value adjustment of $190.0 related to our equity investment in the Wella Company compared to the prior period, net losses on forward repurchase contracts of $187.9 compared to the prior year period, lower gains of $18.6 associated with earn-out provisions related to our sale of Wella as compared to the prior period.

INCOME TAXES

The effective income tax rate for the nine months ended March 31, 2024 and 2023 was 34.3% and 22.1%, respectively. The effective tax rate of 34.3% for the nine months ended March 31, 2024, was driven up from the statutory tax rate of 21% due to an expense of $24.3 recognized in the current period on the revaluation of the Company's deferred tax liabilities due to a tax rate increase enacted in Switzerland, as well as the limitation on the deductibility of executive stock compensation.

The effective tax rate of 22.1% for the nine months ended March 31, 2023 was increased from the statutory tax rate of 21% due to a large limitation on the deductibility of executive stock compensation. The increase was then offset by large fair value gains related to the investment in the Wella business taxed at a rate below the statutory tax rate of 21% as well as a foreign exchange loss recognized on the repatriation of funds that were previously taxed.

The effective income tax rates vary from the U.S. federal statutory rate of 21% due to the effect of: (i) jurisdictions with different statutory rates, including impacts of rate changes, (ii) adjustments to our unrecognized tax benefits and accrued interest; (iii) non-deductible expenses, (iv) audit settlements and (v) valuation allowance changes. Our effective tax rate could fluctuate significantly and could be adversely affected to the extent earnings are lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higher statutory rates.

### Reconciliation of Reported Income Before Income Taxes to Adjusted Income Before Income Taxes and Effective Tax Rates:

*(in millions)*

|  | Nine Months Ended March 31, 2024 Income Before Income Taxes | Provision for Income Taxes | Effective Tax Rate | Nine Months Ended March 31, 2023 Income Before Income Taxes | Provision for Income Taxes | Effective Tax Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Reported income before income taxes** | **$311.9** | **$106.9** | **34.3%** | **$626.0** | **$138.3** | **22.1%** |
| Other adjustments to reported operating income (a) | 243.4 |  |  | 219.0 |  |  |
| Change in fair value of investment in Wella Business (c) | (20.0) |  |  | (210.0) |  |  |
| Other adjustments (d) | 4.3 |  |  | 0.6 |  |  |
| Total Adjustments (b) | 227.7 | 52.0 |  | 9.6 | 17.2 |  |
| **Adjusted income before income taxes** | **$539.6** | **$158.9** | **29.4%** | **$635.6** | **$155.5** | **24.5%** |

(a) See a description of adjustments under “Net Income, Adjusted Operating Income and Adjusted EBITDA for Coty Inc.”

(b) The tax effects of each of the items included in adjusted income are calculated in a manner that results in a corresponding income tax expense/provision for adjusted income. In preparing the calculation, each adjustment to reported income is first analyzed to determine if the adjustment has an income tax consequence. The provision for taxes is then calculated based on the jurisdiction in which the adjusted items are incurred, multiplied by the respective statutory rates and offset by the increase or reversal of any valuation allowances commensurate with the non-GAAP measure of profitability.

(c) The amount represents the realized and unrealized (gain) loss recognized for the change in fair value of the investment in Wella.

(d) For the nine months ended March 31, 2024, this primarily this primarily represents divestiture-related costs related to our equity investments and loss from our equity investment in KKW. For the nine months ended March 31, 2023, this primarily represents adjustments for equity loss from KKW.

The adjusted effective tax rate was 29.4% for the nine months ended March 31, 2024 compared to 24.5% for the nine months ended March 31, 2023. The differences were primarily due to an expense of $24.3 in the current period recognized on the revaluation of the Company's deferred tax liabilities due to a tax rate increase enacted in Switzerland.

NET INCOME ATTRIBUTABLE TO COTY INC.

Net income attributable to Coty Inc. was $186.3 in the nine months ended March 31, 2024, as compared to net income of $475.3 in the nine months ended March 31, 2023. This decrease in net income was primarily driven by a less favorable fair value adjustment of $190.0 related to our investment in the Wella Company and net losses on forward repurchase contracts of $187.9 compared to the prior year period.

We believe that adjusted net income attributable to Coty Inc. provides an enhanced understanding of our performance. See “Overview—Non-GAAP Financial Measures.”

*(in millions)*

|  | Nine Months Ended March 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Net income from Coty Inc. net of noncontrolling interests** | **186.3** | **475.3** | **(61)%** |
| Convertible Series B Preferred Stock dividends (a) | (9.9) | (9.9) | —% |
| **Reported net income attributable to Coty Inc.** | **176.4** | **465.4** | **(62)%** |
| % of net revenues | 3.7% | 11.1% |  |
| Adjustments to reported operating income (b) | 243.4 | 219.0 | 11% |
| Change in fair value of investment in Wella Company (c) | (20.0) | (210.0) | 90% |
| Adjustment to other expense (d) | 4.3 | 0.6 | \>100% |
| Adjustments to noncontrolling interests (e) | (5.1) | (5.1) | —% |
| Change in tax provision due to adjustments to reported net income attributable to Coty Inc. | (52.0) | (17.2) | \<(100%) |
| **Adjusted net income attributable to Coty Inc.** | **347.0** | **452.7** | **(23)%** |
| % of net revenues | 7.3% | 10.8% |  |
| **Per Share Data** |  |  |  |
| Adjusted weighted-average common shares |  |  |  |
| Basic | 876.7 | 848.1 |  |
| Diluted (a) | 886.1 | 885.8 |  |
| Adjusted net income attributable to Coty Inc. per common share |  |  |  |
| Basic | $0.40 | $0.54 |  |
| Diluted (a) | $0.39 | $0.52 |  |

(a) Adjusted Diluted EPS is adjusted by the effect of dilutive securities. For the nine months ended March 31, 2024 and 2023, shares for the Forward Repurchase Contracts were excluded from the computation of adjusted diluted EPS as Coty is in the position to receive shares from the counterparties and as such their inclusion would be anti-dilutive. Accordingly, we did not reverse the impact of the fair market value losses/(gains) for contracts with the option to settle in shares or cash of $6.9 and $(100.7), respectively. For the nine months ended March 31, 2024, convertible Series B Preferred Stock (23.7 million weighted average dilutive shares) were anti-dilutive. Accordingly, we excluded these shares from the diluted shares and did not adjust the earnings for the related dividend of $9.9. For the nine months ended March 31, 2023, as the Convertible Series B Preferred Stock was dilutive, an adjustment to reverse the impact of the preferred stock dividends of $9.9 was required.

(b) See a description of adjustments under “Adjusted Operating Income for Continuing Operations”

(c) The amount represents the realized and unrealized (gain) loss recognized for the change in fair value of the investment in Wella.

(d) For the nine months ended March 31, 2024, this primarily divestiture-related costs related to our equity investments and loss from our equity investment in KKW. For the nine months ended March 31, 2023, this primarily represents loss from equity investment in KKW.

(e) The amounts represent the after-tax impact of the non-GAAP adjustments included in Net income (loss) attributable to noncontrolling interests based on the relevant noncontrolling interest percentage in the Condensed Consolidated Statements of Operations.

### FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

### Overview

Our primary sources of funds include cash expected to be generated from operations, borrowings from issuance of debt and lines of credit provided by banks and lenders in the U.S. and abroad.

Our cash flows are subject to seasonal variation throughout the year, including demands on cash made during our first fiscal quarter in anticipation of higher global sales during the second fiscal quarter and strong cash generation in the second fiscal quarter as a result of increased demand by retailers associated with the holiday season.

Our principal uses of cash are to fund planned operating expenditures, capital expenditures, interest payments, dividends, share repurchases, any principal payments on debt, and from time to time, acquisitions, and business structure realignment expenditures. Working capital movements are influenced by the sourcing of materials related to the production of products. Cash and working capital management initiatives, including the phasing of vendor and tax payments and factoring of trade receivables from time-to-time, may also impact the timing and amount of our operating cash flows.

We remain focused on deleveraging our balance sheet using cash flows generated from our operations and other targeted initiatives. We continue to take steps to permanently reduce our debt to reduce interest costs and improve our long-term profitability and cash flows. Our 25.84% investment in Wella continues to give us the opportunity for further permanent debt reductions when our equity position is divested.

We have substantially completed the exit of our commercial activities in Russia. However, we anticipate that the process related to the liquidation of the Russian legal entity will take an extended period of time. We anticipate that we will incur an future net cash costs of $10.0 to $15.0, which will be funded by our Russian subsidiary. The amount of future costs, including cash costs, will be subject to various factors, such as additional government regulation and the resolution of legal contingencies.

The impact of inflation on material, logistical and other costs subsided during the nine months ended March 31, 2024, which was primarily driven by a significant easing during the second and third quarters. Inflation may continue to impact certain costs, such as labor, however, we currently anticipate the overall impact of inflation to continue to ease in the fourth quarter of fiscal 2024. Additionally, we continued to see improved order fill rates and achieved near pre-COVID-19 service levels beginning in the second quarter and anticipate being able to maintain this level of service into the foreseeable future.

### Debt Financing

We are in the process of deleveraging our company and improving the maturity mix of our debt, including through refinancing or repayment of a portion of our debt.

We have taken action to reduce variability in our interest payments including paying down variable interest rate debt outstanding under our 2018 Coty Term B Facility and issuing fixed rate bonds. As a result, all of our long-term debt was fixed rate debt as of December 31, 2023 and our remaining floating-to-fixed interest rate swaps have been terminated.

In the first quarter of fiscal 2024, we amended the 2018 Coty Credit Agreement and replaced our existing revolving commitments with two tranches of revolving commitments, having an aggregate principal amount of $1,670.0 available in U.S. dollars and certain other currencies and the other in an aggregate principal amount of €300.0 million available in euros, and issued $750.0 and €500.0 million of senior secured notes due July 2030 and September 2028, respectively. The net proceeds received from the offerings were used to primarily pay down the outstanding balance of the U.S. dollar and euro portions of the 2018 Coty Term B Facility by $715.5 and €22.6 million (approximately $25.1), respectively and a portion of the borrowings outstanding under our revolving credit facility. In August 2023, we repaid the €408.0 million (approximately $446.1) of the debt outstanding under the 2018 Term B Facility, thus repaying the facility in full.

In the second quarter of fiscal 2024, one of our wholly-owned subsidiaries utilized cash on hand to fully pay down the U.S. Dollar-denominated credit facility in Brazil in the amount of $31.9. Additionally, we completed cash tender offers on December 7, 2023, and redeemed $150.0 of the Company’s 2026 Dollar Notes and $250.0 of the Company’s 2026 Dollar Senior Secured Notes. See Note 9—Debt in the notes to our Condensed Consolidated Financial Statements for additional information on our debt arrangements and prior period credit agreements, as well as definitions of capitalized terms.

We expect to continue to take actions to improve the maturity mix of our debt from time to time as market conditions permit.

### Equity Offering

On September 28, 2023, we entered into an agreement with a group of underwriters to issue and sell 33.0 million shares of our Class A common stock, par value $0.01 per share (see Note 13—Equity and Convertible Preferred Stock for additional information). We used proceeds of approximately $348.4, net of underwriting fees, from this offering primarily to retire the principal amount of outstanding debt. Other uses included general corporate purposes, such as strategic investments in the business, working capital and capital expenditures. Settlement of the Offering occurred on October 2, 2023.

### Share Repurchases

In connection with our Share Repurchase Program, we entered into forward repurchase contracts in June 2022, December 2022, and November 2023 with three large financial institutions to hedge for $200.0, and a potential $196.0 and $294.0 of share repurchases in 2024, 2025 and 2026, respectively.

We physically settled the June 2022 forward repurchase contracts by delivering approximately $200.0 cash in exchange for 27.0 million shares of our Class A Common Stock during the third quarter of fiscal 2024. The forward repurchase contracts permit a net cash settlement alternative in addition to the physical settlement. We may elect net cash settlement of all, or some of the remaining forward repurchase contracts based on factors such as timing, the market value of the underlying shares at the settlement date and other internal cash management considerations. We will continue to incur costs associated with the remaining forward repurchase contracts before settlement. Cash costs incurred in the current fiscal year to date for all forward repurchase contracts amounted to $34.0.

### Factoring of Receivables

From time to time, we supplement the timing of our cash flows through the factoring of trade receivables. In this regard, we have entered into factoring arrangements with financial institutions.

The net amount utilized under the factoring facilities was $192.7 and $202.9 as of March 31, 2024 and June 30, 2023, respectively. The aggregate amount of trade receivable invoices factored on a worldwide basis amounted to $1,196.9 and $1,192.4 during the nine months ended March 31, 2024 and 2023, respectively.

### Other Developments

We ended a previously existing distribution arrangement with Wella related to transition services for Wella Brazil in the third quarter of fiscal 2024, resulting in a net positive cash impact of approximately $35.0 during the nine months ended March 31, 2024 related to reimbursements for working capital financed by Coty since the separation of the Wella business.

### Cash Flows

| Condensed Consolidated Statements of Cash Flows Data: (in millions) | Nine Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $438.1 | $520.8 |
| Net cash used in investing activities | (161.5) | (97.7) |
| Net cash used in financing activities | (264.1) | (397.6) |

#### Net cash provided by operating activities

Net cash provided by operating activities was $438.1 and $520.8 for the nine months ended March 31, 2024 and 2023, respectively. The decrease in cash provided by operating activities of $82.7 was primarily driven by a negative impact from accounts payable due to the timing of payments and vendor mix, as well higher cash outflows for tax payments. However, these decreases to cash flows from operating activities were partially offset by higher net inflows from all other net working capital accounts, including changes in inventory offset by changes in trade receivables. Changes in inventory year over year reflect the impact of prior year increases in safety stock focused on mitigating supply chain constraints compared to an inflow from inventory in the current year as the Company adjusted inventory levels to a more normal level. The outflow from accounts receivable was due to increases in net revenue and a slowdown in collections, partially offset by lower factoring. Additionally, offsetting activity was due to lower year over year payments for restructuring and a net inflow of $35.0 as a reimbursement from Wella for working capital financed by Coty since the separation of the Wella business.

#### Net cash used in investing activities

Net cash used in investing activities was $161.5 and $97.7 for the nine months ended March 31, 2024 and 2023, respectively. The increase in cash used in investing activities of $63.8 was primarily due to lower current year proceeds related to an early license termination, and the impact of timing and increased capital expenditures. The collection of contingent consideration and proceeds from the sale of other long-term assets in the current year helped to partially offset the year over year increase in cash used in investing activities.

#### Net cash used in financing activities

Net cash used in financing activities during the nine months ended March 31, 2024 and 2023 was $264.1 and $397.6, respectively. The decrease in cash used in financing activities of $133.5 was primarily driven by the net proceeds from the issuance of Class A Common Stock mainly in connection with the global offering and lower cash payments in the current year compared to the prior year from realized net losses on the Company’s financing related foreign currency contracts. The decrease in cash used for financing activities was partially offset by higher outflows in the current year related to the Company’s forward repurchase contracts which includes a cash payment for the settlement of the June 2022 forward repurchase contract, higher year over year net cash repayments from the Company’s debt related activities, as well as cash payments for associated deferred financing fees.

### Dividends

On April 29, 2020, the Board of Directors suspended the payment of dividends on Common Stock. As previously disclosed, we expect to suspend the payment of dividends until we approach a Net debt to Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) target of 2x. We expect to consider any future resumption of dividends in line with that target while continuing to pursue our deleveraging agenda and implementing our strategic initiatives. Any determination to pay dividends in the future will be at the discretion of our Board of Directors.

Dividends on the Convertible Series B Preferred Stock are payable in cash, or by increasing the amount of accrued dividends on Convertible Series B Preferred Stock, or any combination thereof, at the sole discretion of the Company. We expect to pay such dividends in cash on a quarterly basis, subject to the declaration thereof by our Board of Directors. The terms of the Convertible Series B Preferred Stock restrict our ability to declare cash dividends on our common stock until all accrued dividends on the Convertible Series B Preferred Stock have been declared and paid in cash.

For additional information on our dividends, see Note 13—Equity and Convertible Preferred Stock in the notes to our Condensed Consolidated Financial Statements.

### Treasury Stock - Share Repurchase Program

For information on our Share Repurchase Program, see Note 13—Equity and Convertible Preferred Stock in the notes to our Condensed Consolidated Financial Statements.

### Commitments and Contingencies

See Note 16—Redeemable Noncontrolling Interests in the notes to our Condensed Consolidated Financial Statements for information on our subsidiary in the Middle East.

### Legal Contingencies

For information on our litigation matters and Brazilian tax assessments, see Note 17—Commitments and Contingencies in the notes to our Condensed Consolidated Financial Statements. In relation to the appeal of our Brazilian tax assessments, we have entered into surety bonds of R$464.3 million (approximately $92.6) as of March 31, 2024.

### Off-Balance Sheet Arrangements

We had undrawn letters of credit of $4.1 and $7.2 and bank guarantees of $21.1 and $16.3 as of March 31, 2024 and June 30, 2023, respectively.

### Contractual Obligations

Our principal contractual obligations and commitments as of June 30, 2023 are summarized in Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Contractual Obligations and Commitments,” of our Fiscal 2023 Form 10-K. Refer to Item 2 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Share Repurchases” above for discussion of the obligations related to our announced share repurchase during fiscal 2024. For the nine months ended March 31, 2024, there have been no other material changes in our contractual obligations outside the ordinary course of business.

### Critical Accounting Policies

We believe that the critical accounting policies listed below involve our more significant judgments, assumptions and estimates and, therefore, could have the greatest potential impact on our Condensed Consolidated Financial Statements:

- Revenue Recognition;
- Equity Investments;
- Goodwill, Other Intangible Assets and Long-Lived Assets;
- Inventory; and
- Income Taxes.

As of March 31, 2024, there have been no material changes to the items disclosed as critical accounting policies and estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II—Item 7 of our Fiscal 2023 Form 10-K.

## Market risk

As filed, 303 characters.

See Note 12—Derivative Instruments for updates to our foreign currency risk management and interest rate risk management. There have been no material changes in market risk from the information provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk of our Fiscal 2023 Form 10-K.

## Controls and procedures

As filed, 3,527 characters.

### Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer (the “CEO”) and our Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2024. Based on the evaluation of our disclosure controls and procedures as of March 31, 2024, our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(f) of the Exchange Act during the third fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Inherent Limitations on Effectiveness of Controls

Our management, including our CEO and CFO, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving our objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

## Risk factors

As filed, 196 characters.

We have disclosed information about the risk factors that could adversely affect our business in Part I, Item 1A under the heading “Risk Factors” in our Annual Report on Form 10-K for fiscal 2023.

Filed May 7, 2024.
Source: SEC EDGAR, the filing index for accession 0001024305-24-000023. Last ingested by Listed: Nov 5, 2026, 18:58 ET. No prices; not investment advice.