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

- Company: [Coty Inc.](/companies/coty.md) (CIK 1024305)
- Form: 10-Q
- Filed: 2025-02-10
- Accepted by EDGAR: Feb 10, 2025, 21:14 ET
- Period: 2024-12-31
- Accession: 0001024305-25-000007
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1024305/000102430525000007/coty-20241231.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1024305/000102430525000007/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-10-01 to 2024-12-31 | $1.67bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-07-01 to 2024-12-31 | $3.34bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-10-01 to 2024-12-31 | $555.7m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2024-07-01 to 2024-12-31 | $1.13bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-10-01 to 2024-12-31 | $1.11bn | us-gaap:GrossProfit |
| Gross profit | 6 months, 2024-07-01 to 2024-12-31 | $2.21bn | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-10-01 to 2024-12-31 | $797.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2024-07-01 to 2024-12-31 | $1.61bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-10-01 to 2024-12-31 | $268.2m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-07-01 to 2024-12-31 | $506.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-10-01 to 2024-12-31 | $56.7m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 6 months, 2024-07-01 to 2024-12-31 | $117.1m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2024-10-01 to 2024-12-31 | $26.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-07-01 to 2024-12-31 | $68.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-10-01 to 2024-12-31 | $23.7m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-07-01 to 2024-12-31 | $106.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-10-01 to 2024-12-31 | $0.02 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-07-01 to 2024-12-31 | $0.11 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-10-01 to 2024-12-31 | $0.02 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-07-01 to 2024-12-31 | $0.11 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-10-01 to 2024-12-31 | 875,200,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-07-01 to 2024-12-31 | 875,200,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-07-01 to 2024-12-31 | $531.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-07-01 to 2024-12-31 | $120.8m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 6 months, 2024-07-01 to 2024-12-31 | $6.7m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2024-12-31 | $249.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-12-31 | $1.95bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-12-31 | $11.72bn | us-gaap:Assets |
| Current liabilities | at 2024-12-31 | $2.75bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-12-31 | $7.51bn | us-gaap:Liabilities |
| Long-term debt | at 2024-12-31 | $3.39bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-12-31 | $14.4m | us-gaap:DebtCurrent |
| Short-term borrowings | at 2024-12-31 | $1.5m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2024-12-31 | $3.78bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 115,219 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, 2024 (“Fiscal 2024 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), plans for growth in growth engine markets, channels and other white spaces, 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 magnitude of any “true up” payments in connection with our forward repurchase contracts, 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 expected impact of geopolitical risks including the ongoing war in Ukraine and/or the armed conflict in the Middle East on our business operations, sales outlook and strategy, expectations regarding the impact of tariffs (including magnitude, scope and timing) and plans to manage such impact, expectations regarding economic recovery in Asia, consumer purchasing trends and the related impact on our plans for growth in China, 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, or due to a change in tariffs or trade policy impacting raw materials) and expectations regarding future service levels and inventory levels, 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 organizational growth capabilities including digital, direct-to-consumer (“DTC”) and research and development, expanding our presence in growth channels, in China and other growth engine markets, 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 our strategic partnerships, 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 our strategic partners, our ability to protect trademarks and brand names, litigation, investigations by governmental authorities, and changes in law, regulations and policies that affect the business or products of our strategic partnerships, including risk that direct selling laws and regulations may be modified, interpreted or enforced in a manner that results in a negative impact to the business model, revenue, sales force or business of any of our strategic partnerships;
- 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 administration in the U.S. and related changes to regulatory and trade policies, 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 (and our ability to manage the impact of such changes), potential regulatory limits on payment terms in the EU, future changes in sanctions regulations, 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, and any escalation or expansion thereof), the impact of global supply chain challenges or other disruptions in the international flow of goods (including disruptions arising from changing tariff scenarios), 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 Company, 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 2025” refer to the fiscal year ending June 30, 2025. 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, skincare, 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, accelerating our Prestige fragrance business and ongoing expansion into Prestige cosmetics, building a comprehensive skincare portfolio, enhancing our organizational growth capabilities including digital and research and development, expanding our presence in growth channels such as the Travel Retail channel, in China and other growth engine markets (Latin America, including Brazil, the Middle East, North and South East Asia, Africa, and India), 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. 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 are accelerating our fragrance business with exceptional new launches and expanding our premium and ultra-premium category portfolio, while also enhancing the assortment of our Prestige cosmetic products. We are continuing to thoughtfully expand our skincare portfolio (which contributed a low single digit percentage of our first half fiscal 2025 net revenue). We continue to expand our e-commerce capabilities, through online launches, our digital advocacy strategy and active participation in key online shopping events. We expect to further refine our strategy as we monitor the evolving global macroeconomic conditions.

Our products are sold in approximately 121 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, challenging 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. We remain attentive to economic and geopolitical conditions that may materially impact our business. We also continue to monitor and take actions to address the impact to our Consumer Beauty brands in China.

Changing market trends continue to impact sales of our products across and within product categories and regions. In the first half of fiscal 2025, our fragrance category experienced mid-single digit percentage net revenue growth compared to the previous fiscal year, driven by high-single digit percentage growth in the overall fragrance market. Net revenues from Prestige fragrances increased by a mid-single digit percentage in the first half of fiscal 2025, reflecting a deceleration in growth compared to the prior year. Our net revenues from color cosmetics declined during the same period due to a weakening in market demand, particularly in the United States. Additionally, competitive pricing actions in Brazil negatively impacted demand for certain of our deodorant brands leading to a decline in our body care net revenues during the first half of the fiscal year, despite positive trends in the overall mass body care market. Regionally, net revenues in the Asia Pacific region declined by high-single digit percentage in the first half of fiscal 2025, impacted by China and a decline in sales in the Asia Travel Retail channel. Asia Travel Retail sales were negatively affected by regulatory restrictions in Asia aimed at formalizing cross-border shopping, which reduced *daigou* (surrogate shopping) purchases. Net revenues in the Americas declined by a mid-single digit percentage during the same period, driven by softness within the color cosmetics market in the United States, while revenues from EMEA increased by a mid-single digit percentage due to growth across most European markets. We continue to monitor the impact that potential tariffs could have on our business such as negatively affecting our sales and operating performance in certain markets. We expect that some of the market trends may continue into fiscal 2026.

We expect that our reported net revenue for fiscal 2025 will decline in the low-single-digit percentage versus the prior year, which includes an estimated low-single-digit percentage negative impact of foreign exchange. 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. In anticipation of a more uncertain demand backdrop, including cautious retailer behavior and a complex macroeconomic environment, we are re-accelerating our cost reduction efforts across to deliver savings above approximately $120.0. 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.

#### 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. 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.

#### 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 or Market Exit

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.

| Period of acquisition, divestiture, termination | Acquisition, divestiture, termination | Impact on basis of first and second quarter 2025/2024 presentation |
| --- | --- | --- |
| **Third quarter fiscal 2024** | Termination: Lacoste | First and second quarter fiscal 2024 net revenue excluded. |

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

NET REVENUES

In the three months ended December 31, 2024, net revenues decreased 3%, or $57.7, to $1,669.9 from $1,727.6 in the three months ended December 31, 2023. Excluding net revenue from the second quarter of the prior period from Lacoste, net revenues decreased 3% or $51.9 to $1,669.9 from $1,721.8 in the three months ended December 31, 2023, reflecting a decrease in unit volume of 3% (primarily due to body care brands under *Monange* in Brazil as a result of competitive pricing action in the deodorant market) and negative foreign currency exchange translation impact of 2% (primarily driven by foreign currency exposure to Brazilian Real), partially offset by a positive price and mix impact of 2% (primarily due to positive pricing impact as a result of prior year period price increases and in line with the overall premiumization strategy). The overall decrease in net revenues reflects declines within color cosmetics primarily due to negative market trends in the United States, declines within mass bodycare in Brazil primarily due to competitive pricing action in the Brazilian deodorant market, and declines within Prestige cosmetics due to sales volumes decline in the Travel Retail Asia channel as a result of regulations impacting surrogate shopping purchases. The decrease in net revenues was partially offset by growth in the Prestige fragrance category primarily due to positive market trends in most major markets.

Digital and e-commerce channel sales declines also contributed to the decrease in net revenues.

### Net Revenues by Segment

*(in millions)*

| NET REVENUES | Three Months Ended December 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| Prestige | $1,116.1 | $1,122.6 | (1)% |
| Consumer Beauty | 553.8 | 605.0 | (8)% |
| **Total** | **$1,669.9** | **$1,727.6** | **(3)%** |

#### Prestige

In the three months ended December 31, 2024, net revenues from the Prestige segment decreased 1%, or $6.5 to $1,116.1 compared to $1,122.6 in the three months ended December 31, 2023. Excluding net revenue from the second quarter of the prior year period from Lacoste, net revenues from the Prestige segment remained relatively flat, decreasing by $0.7 to $1,116.1 from $1,116.8 in the three months ended December 31, 2023, reflecting a decrease in unit volume of 3% (primarily due to lower sales through the Travel retail channel for Prestige cosmetics) and negative foreign currency exchange translation impact of 1%, partially offset by a positive price and mix impact of 4% (primarily due to positive pricing impact as a result of prior year period price increases and in line with the overall premiumization strategy). The decrease in net revenues primarily reflects:

- Prestige cosmetic sales declines of $15.3, primarily due to declines in sales volume in the Asia Travel Retail channel from *Gucci* makeup as a result of regulations impacting the surrogate shopping purchases. The overall category sales decline can also be attributed to negative market trends in China and fewer innovations compared to the prior year; and
- Prestige skincare sales declines of $4.3.

These decreases were partially offset by:

- Prestige fragrance sales growth of $18.9, due to successful performance of *Burberry* and *Gucci* from existing fragrance lines. In addition, continued brand innovation such as *Gucci Flora Gorgeous Orchid, Burberry Goddess Intense, Chloe Signature Intense*, and *Boss Bottled Absolu* contributed to the category sales growth. The category sales growth was partially offset by declines from *Calvin Klein* due to a reduction in value distribution channel sales and tight inventory management from certain retailers, as well as a decline due to the expiration of the *Roberto Cavalli* license in the prior year. The overall category sales growth can also be attributed to positive market trends in most major markets.

#### Consumer Beauty

In the three months ended December 31, 2024, net revenues from the Consumer Beauty segment decreased 8%, or $51.2, to $553.8 from $605.0 in the three months ended December 31, 2023, reflecting a negative foreign currency exchange translation impact of 4% (primarily driven by foreign currency exposure to Brazilian Real), a decrease in unit volume of 3% (primarily due to body care brands in Brazil), and a negative price and mix impact of 1% (primarily due to higher promotions in the current period). The decrease in net revenues primarily reflects:

- Color cosmetics sales decline of $27.7, primarily due to negative market trends in the color cosmetics market in the United States which impacted net revenues from several brands. Category sales declines were also impacted by increased discounts and promotions compared to the prior period. *Sally Hansen* also declined despite gaining market share in the current period due to negative market trends in the bottle and brush nail subcategory in the United States; and
- Mass body care decline of $25.3, primarily due to declines in sales volumes from *Monange* in Brazil due to competitive pricing action in the deodorant market; and
- Mass skincare sales decline of $0.6.

These decreases were partially offset by:

- Mass fragrance sales growth of $2.4.

COST OF SALES

In the three months ended December 31, 2024, cost of sales decreased 8%, or $47.8, to $555.7 from $603.5 in the three months ended December 31, 2023. Cost of sales as a percentage of net revenues decreased to 33.3% in the three months ended December 31, 2024 from 34.9% in the three months ended December 31, 2023, resulting in a gross margin increase of approximately 160 basis points, primarily reflecting:

(i) approximately 140 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 30 basis points related to decreased excess and obsolescence costs.

These decreases were partially offset by:

(i) approximately 20 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 and expanded Consumer Beauty collections under licensed brands driving increased license fees.

The above reflects a positive impact from pricing net of inflation of approximately 60 basis points.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In the three months ended December 31, 2024, selling, general and administrative expenses decreased 4%, or $36.1, to $797.3 from $833.4 in the three months ended December 31, 2023. Selling, general and administrative expenses as a percentage of net revenues decreased to 47.7% in the three months ended December 31, 2024 from 48.2% in the three months ended December 31, 2023, or approximately 50 basis points. This decrease primarily reflects:

(i) 120 basis points due to favorable transactional impact from our exposure to foreign currency as a percentage of net revenues; and

(ii) 20 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.

These decreases were partially offset by the following increases:

(i) 50 basis points due to an increase in advertising and consumer promotional costs as a percentage of net revenues primarily due to increases in in-store merchandising execution and education, partially offset by declines in working and non-working media investment as a percentage of net revenues; and

(ii) 30 basis points due to an increase in administrative costs as a percentage of net revenues primarily due to higher lease cost in the current period.

OPERATING INCOME

In the three months ended December 31, 2024, operating income was $268.2 compared to income of $236.7 in the three months ended December 31, 2023. Operating income as a percentage of net revenues, increased to 16.1% in the three months ended December 31, 2024 as compared to 13.7% in the three months ended December 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 160 basis points), an increase in gains in our exposure to foreign currency (approximately 100 basis points), a decrease in restructuring expense (approximately 20 basis points), and a decrease in stock-based compensation expense (approximately 20 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 net revenues (approximately 50 basis points) and an increase in fixed costs as a percentage of net revenues (approximately 30 basis points) primarily related to non-full time employee and non-people costs. Our consolidated operating income margin was positively impacted by a greater proportion of net revenues generated by the higher margin brands from our Prestige fragrance business, and lower proportion of net revenues generated from the lower margin brands in Brazil compared to the prior year.

### Operating Income (Loss) by Segment

*(in millions)*

| Operating income (loss) | Three Months Ended December 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| Prestige | $222.3 | $200.6 | 11% |
| Consumer Beauty | 64.1 | 60.4 | 6% |
| Corporate | (18.2) | (24.3) | 25% |
| **Total** | **$268.2** | **$236.7** | **13%** |

#### Prestige

In the three months ended December 31, 2024, operating income for Prestige was $222.3 compared to income of $200.6 in the three months ended December 31, 2023. Operating margin increased to 19.9% of net revenues in the three months ended December 31, 2024 as compared to 17.9% in the three months ended December 31, 2023, driven by a decrease in cost of goods sold as a percentage of net revenues (approximately 160 basis points), an decrease in losses from our exposure to foreign currency (approximately 100 basis points), partially offset by an increase in advertising and consumer promotional costs as a percentage of net revenues (approximately 40 basis points), and an increase in fixed costs as a percentage of net revenues (approximately 20 basis points) primarily related to non-full time employee and non-people costs. Our Prestige operating income margin was positively impacted by a higher proportion of net revenues generated by the higher margin fragrance brands.

#### Consumer Beauty

In the three months ended December 31, 2024, operating income for Consumer Beauty was $64.1 compared to income of $60.4 in the three months ended December 31, 2023. Operating margin increased to 11.6% of net revenues in the three months ended December 31, 2024 as compared to 10.0% in the three months ended December 31, 2023, driven by a decrease in cost of goods sold as a percentage of net revenues (approximately 110 basis points), an decrease in losses from our exposure to foreign currency (approximately 90 basis points), partially offset by an increase in fixed costs as a percentage of net revenues (approximately 30 basis points) primarily related to non-full time employee and non-people costs. Our Consumer Beauty operating income margin was positively impacted by a lower proportion of Consumer Beauty net revenues generated by the lower margin brands from our Brazilian business.

#### 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 December 31, 2024, the operating loss for Corporate was $18.2 compared to a loss of $24.3 in the three months ended December 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 $4.9 decrease in stock-based compensation expense and a $1.3 decrease in restructuring and other business realignment costs.

### 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 December 31, 2024 Reported (GAAP) | Adjustments (a) | Adjusted (Non-GAAP) |
| --- | ---: | ---: | ---: |
| Prestige | $222.3 | $37.7 | $260.0 |
| Consumer Beauty | 64.1 | 9.6 | 73.7 |
| Corporate | (18.2) | 18.2 | — |
| **Total** | **$268.2** | **$65.5** | **$333.7** |
|  | **Three Months Ended December 31, 2023** |  |  |
| **(in millions)** | **Reported (GAAP)** | **Adjustments (a)** | **Adjusted (Non-GAAP)** |
| **Operating income** |  |  |  |
| Prestige | $200.6 | $38.4 | $239.0 |
| Consumer Beauty | 60.4 | 9.9 | 70.3 |
| Corporate | (24.3) | 24.3 | — |
| **Total** | **$236.7** | **$72.6** | **$309.3** |

(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 December 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Net income** | **$30.6** | **$186.0** | **(84)%** |
| Net income margin | 1.8% | 10.8% |  |
| Provision (benefit) for income taxes | 26.0 | 71.4 | (64)% |
| **Income before income taxes** | **$56.6** | **$257.4** | **(78)%** |
| Interest expense, net | 54.4 | 60.1 | (9)% |
| Other expense (income), net | 157.2 | (80.8) | \>100% |
| **Reported operating income** | **$268.2** | **$236.7** | **13%** |
| Reported operating income (loss) margin | 16.1% | 13.7% |  |
| Amortization expense | 47.3 | 48.3 | (2)% |
| Restructuring and other business realignment costs | 2.7 | 4.0 | (33)% |
| Stock-based compensation | 15.5 | 20.2 | (23)% |
| Gain on sale of real estate | — | 0.1 | (100)% |
| Total adjustments to reported operating income | $65.5 | $72.6 | (10)% |
| **Adjusted operating income** | **$333.7** | **$309.3** | **8%** |
| Adjusted operating income margin | 20.0% | 17.9% |  |
| Adjusted depreciation | 57.0 | 57.1 | —% |
| **Adjusted EBITDA** | **$390.7** | **$366.4** | **7%** |
| Adjusted EBITDA margin | 23.4% | 21.2% |  |

In the three months ended December 31, 2024, adjusted operating income increased $24.4 to $333.7 from $309.3 in the three months ended December 31, 2023. Adjusted operating margin increased to 20.0% of net revenues in the three months ended December 31, 2024 from 17.9% in the three months ended December 31, 2023. In the three months ended December 31, 2024, adjusted EBITDA increased $24.3 to $390.7 from $366.4 in the three months ended December 31, 2023. Adjusted EBITDA margin increased to 23.4% of net revenues in the three months ended December 31, 2024 from 21.2% in the three months ended December 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 December 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Reported operating income** | **$222.3** | **$200.6** | **11%** |
| Reported operating income margin | 19.9% | 17.9% |  |
| Amortization expense | 37.7 | 38.4 | (2)% |
| Total adjustments to reported operating income | $37.7 | $38.4 | (2)% |
| **Adjusted operating income** | **$260.0** | **$239.0** | **9%** |
| Adjusted operating income margin | 23.3% | 21.3% |  |
| Adjusted depreciation | 28.2 | 27.2 | 4% |
| **Adjusted EBITDA** | **$288.2** | **$266.2** | **8%** |
| Adjusted EBITDA margin | 25.8% | 23.7% |  |

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

*(in millions)*

|  | Three Months Ended December 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Reported operating income** | **$64.1** | **$60.4** | **6%** |
| Reported operating income margin | 11.6% | 10.0% |  |
| Amortization expense | 9.6 | 9.9 | (3)% |
| Total adjustments to reported operating income | $9.6 | $9.9 | (3)% |
| **Adjusted operating income** | **$73.7** | **$70.3** | **5%** |
| Adjusted operating income margin | 13.3% | 11.6% |  |
| Adjusted depreciation | 28.8 | 29.9 | (4)% |
| **Adjusted EBITDA** | **$102.5** | **$100.2** | **2%** |
| Adjusted EBITDA margin | 18.5% | 16.6% |  |

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

*(in millions)*

|  | Three Months Ended December 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Reported operating loss** | **$(18.2)** | **$(24.3)** | **25%** |
| Reported operating loss margin | N/A | N/A |  |
| Restructuring and other business realignment costs | 2.7 | 4.0 | (33)% |
| Stock-based compensation | 15.5 | 20.2 | (23)% |
| Gain on sale of real estate | — | 0.1 | (100)% |
| Total adjustments to reported operating income | $18.2 | $24.3 | (25)% |
| **Adjusted operating income** | **$—** | **$—** | **N/A** |
| Adjusted operating income margin | N/A | N/A |  |
| Adjusted depreciation | — | — | N/A |
| **Adjusted EBITDA** | **$—** | **$—** | **N/A** |
| Adjusted EBITDA margin | N/A | N/A |  |

45

#### Amortization Expense

In the three months ended December 31, 2024, amortization expense decreased to $47.3 from $48.3 in the three months ended December 31, 2023. In the three months ended December 31, 2024, amortization expense of $37.7 and $9.6 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended December 31, 2023, amortization expense of $38.4 and $9.9 was reported in the Prestige and Consumer Beauty segments, respectively.

#### Restructuring and Other Business Realignment Costs

In the three months ended December 31, 2024, we incurred restructuring and other business structure realignment costs of $2.7 as follows:

- We incurred restructuring costs of $1.4 primarily related to the Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and
- We incurred business structure realignment costs of $1.3, which is reported in cost of sales.

In the three months ended December 31, 2023, we incurred restructuring and other business structure realignment costs of $4.0 as follows:

- We incurred restructuring costs of $5.7 primarily related to the Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and
- We incurred a credit in business structure realignment costs of $(1.7), which is reported in selling, general and administrative expenses.

#### Stock-Based Compensation

In the three months ended December 31, 2024, stock-based compensation was $15.5 as compared with $20.2 in the three months ended December 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.

#### Adjusted Depreciation Expense

In the three months ended December 31, 2024, adjusted depreciation expense of $28.2 and $28.8 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended December 31, 2023, adjusted depreciation expense of $27.2 and $29.9 was reported in the Prestige and Consumer Beauty segments, respectively.

INTEREST EXPENSE, NET

In the three months ended December 31, 2024, net interest expense was $54.4 as compared with $60.1 in the three months ended December 31, 2023. The decrease in interest expense is primarily due to lower debt balances in the current period as well as lower interest rates.

OTHER EXPENSE/INCOME

In the three months ended December 31, 2024, other expense was $157.2 as compared with other income of $80.8 in the three months ended December 31, 2023.

Other expense of $157.2 in the three months ended December 31, 2024 was principally comprised of net losses on forward repurchase contracts of $126.0 and equity investment related impacts of $33.1.

Other income of $80.8 in the three months ended December 31, 2023 was principally comprised of net gains on forward repurchase contracts of $72.1, and equity investment related gains of $11.5.

The increase in Other expense of $238.0 is primarily due to higher net losses on forward repurchase contracts of $198.1 compared to the gains in the prior year period and higher losses from equity investments of $45.0 as a result of an unfavorable fair market value adjustment related to our equity investment in Wella in the current period compared to a favorable adjustment in the prior year period.

INCOME TAXES

The effective income tax rate for the three months ended December 31, 2024 and 2023 was 45.9% and 27.7%, respectively. The increase in the effective tax rate was primarily attributable to the loss on forward repurchase contracts having a higher proportional impact in the current period, as well as the impact of fair value losses related to the investment in Wella taxed at a rate below the statutory rate of 21% in the current period.

The effective tax rate of 45.9% for the three months ended December 31, 2024, was higher than the Federal statutory rate of 21% primarily due to the limitation on the deductibility of executive stock compensation and the limitation on the deductibility of interest expense as well as the impact of fair value losses related to the investment in Wella taxed at a rate below the statutory rate of 21%.

The effective tax rate of 27.7% in the three months ended December 31, 2023, was higher than the Federal statutory rate of 21% primarily due to the limitation on the deductibility of executive stock compensation.

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 December 31, 2024 Income Before Income Taxes | Provision for Income Taxes | Effective Tax Rate | Three Months Ended December 31, 2023 Income Before Income Taxes | Provision for Income Taxes | Effective Tax Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Reported income before income taxes** | **$56.6** | **$26.0** | **45.9%** | **$257.4** | **$71.4** | **27.7%** |
| Adjustments to reported operating income (a) | 65.5 |  |  | 72.6 |  |  |
| Change in fair value of investment in Wella Company (c) | 32.0 |  |  | (13.0) |  |  |
| Other adjustments (d) | (0.1) |  |  | 0.2 |  |  |
| Total Adjustments (b) | 97.4 | 17.3 |  | 59.8 | 6.6 |  |
| **Adjusted income before income taxes** | **$154.0** | **$43.3** | **28.1%** | **$317.2** | **$78.0** | **24.6%** |

(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 unrealized (gain) loss recognized for the change in fair value of the investment in the Wella Company.

(d) For the three months ended December 31, 2024, this primarily represents recovery of previously written-off non-income tax credits and the amortization of basis differences in certain equity method investments. For the three months ended December 31, 2023, this primarily represents loss from our equity investment in KKW.

The adjusted effective tax rate was 28.1% for the three months ended December 31, 2024 compared to 24.6% for the three months ended December 31, 2023. The difference is primarily due to the loss on forward repurchase contracts having a higher proportional impact in the current period.

NET INCOME (LOSS) ATTRIBUTABLE TO COTY INC.

Net income attributable to Coty Inc. was $23.7 in the three months ended December 31, 2024 as compared to net income of $180.9 in the three months ended December 31, 2023. The decrease in the income was primarily driven higher net losses on forward repurchase contracts of $198.1 compared to the gains in the prior year period and a higher losses from equity investments of $45.0 as a result of an unfavorable fair market value adjustment in the current period compared to a favorable adjustment in the prior year period, partially offset by a lower provision for income taxes of $45.4 in the current period, and higher operating income of $31.5 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 December 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Net income attributable to Coty Inc.** | **$23.7** | **$180.9** | **(87)%** |
| Convertible Series B Preferred Stock dividends (a) | (3.3) | (3.3) | —% |
| **Reported net income (loss) attributable to common stockholders** | **$20.4** | **$177.6** | **(89)%** |
| % of net revenues | 1.2% | 10.3% |  |
| Adjustments to reported operating income (b) | 65.5 | 72.6 | (10)% |
| Change in fair value of investment in Wella Company (c) | 32.0 | (13.0) | \>100% |
| Adjustment to other expense (d) | (0.1) | 0.2 | \<(100%) |
| Adjustments to noncontrolling interests (e) | (1.7) | (1.7) | —% |
| Change in tax provision due to adjustments to reported net income (loss) attributable to Coty Inc. | (17.3) | (6.6) | \<(100%) |
| **Adjusted net income attributable to Coty Inc.** | **$98.8** | **$229.1** | **(57)%** |
| % of net revenues | 5.9% | 13.3% |  |
| **Per Share Data** |  |  |  |
| Adjusted weighted-average common shares |  |  |  |
| Basic | 871.4 | 892.8 |  |
| Diluted (a) | 875.2 | 922.8 |  |
| Adjusted net income attributable to Coty Inc. per common share |  |  |  |
| Basic | $0.11 | $0.26 |  |
| Diluted (a) | $0.11 | $0.25 |  |

(a) Adjusted Diluted EPS is adjusted by the effect of dilutive securities. For the three months ended December 31, 2024 and 2023, no dilutive shares of the Forward Repurchase Contracts were included in the computation of adjusted diluted EPS as 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 $96.5 and $(44.4), respectively. For the three months ended December 31, 2024, Convertible Series B Preferred Stock (23.7 million weighted average dilutive shares) was 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 December 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 “Net Income, Adjusted Operating Income and Adjusted EBITDA for Coty Inc."

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

(d) For the three months ended December 31, 2024, this primarily represents recovery of previously written-off non-income tax credits and the amortization of basis differences in certain equity method investments. For the three months ended December 31, 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.

### SIX MONTHS ENDED DECEMBER 31, 2024 AS COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2023

NET REVENUES

In the six months ended December 31, 2024, net revenues decreased 1%, or $27.6, to $3,341.4 from $3,369.0 in the six months ended December 31, 2023. Excluding net revenue from the six months ended December 31, 2023 from Lacoste, net revenues remained relatively flat, increasing $1.0 to $3,341.4 from $3,340.4 in the six months ended December 31, 2023, reflecting a positive price and mix impact of 4% (primarily due to positive pricing impact as a result of prior year period price increases and in line with the overall premiumization strategy), a decrease in unit volume of 2% (primarily due to body care brands under *Monange* in Brazil as a result of competitive pricing action in the deodorant market), and a negative foreign currency exchange translation impact of 2% (primarily driven by foreign currency exposure to Brazilian Real). The overall increase in net revenues reflects growth in our prestige and mass fragrance categories due to the positive market trends in most major markets and geographical expansion of certain brands. This growth was mostly offset by declines in color cosmetics primarily due to negative market trends in the United States, declines within mass bodycare in Brazil primarily due to competitive pricing action in the Brazilian deodorant market, and declines within Prestige cosmetics primarily due to sales volumes decline in the Travel Retail Asia channel as a result of regulations impacting surrogate shopping purchases.

Digital and e-commerce channel sales remained relatively flat compared to the prior year.

### Net Revenues by Segment

*(in millions)*

| NET REVENUES | Six Months Ended December 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| Prestige | $2,230.2 | $2,187.3 | 2% |
| Consumer Beauty | 1,111.2 | 1,181.7 | (6)% |
| **Total** | **$3,341.4** | **$3,369.0** | **(1)%** |

#### Prestige

In the six months ended December 31, 2024, net revenues from the Prestige segment increased 2%, or $42.9, to $2,230.2 from $2,187.3 in the six months ended December 31, 2023. Excluding net revenue from the first and second quarters of the prior year period from Lacoste, net revenues from the Prestige segment increased 3% or $71.5 to $2,230.2 from $2,158.7 in the six months ended December 31, 2023, reflecting a positive price and mix impact of 4% (primarily due to positive pricing impact as a result of prior year period price increases and in line with the overall premiumization strategy), and negative foreign currency exchange translation impact of 1%. The increase in net revenues primarily reflects:

- Prestige fragrance sales growth of $102.1, due to successful performance of *Burberry, Chloe, Hugo Boss*, and *Gucci* from existing fragrance lines. In addition, continued brand innovation such as *Gucci Flora Gorgeous Orchid, Burberry Goddess Intense, Chloe Signature Intense*, and *Boss Bottled Absolu* contributed to the category sales growth. The category sales growth was partially offset by declines in *Calvin Klein* due to a reduction in value distribution channel sales and tight inventory management from certain retailers, declines in *philosophy* resulting from lower advertising and consumer promotional support, as well as a decline due to the expiration of the *Roberto Cavalli* license in the prior year. The overall category sales growth can also be attributed to positive market trends in most major markets.

These increases were partially offset by:

- Prestige cosmetic sales declines of $21.3, primarily due to declines in sales volume in the Asia Travel Retail channel from *Gucci* makeup as a result of regulations impacting the surrogate shopping purchases*; and*
- Prestige skincare sales declines of $9.3, due to declines across the prestige skincare portfolio.

#### Consumer Beauty

In the six months ended December 31, 2024, net revenues from the Consumer Beauty segment decreased 6%, or $70.5, to $1,111.2 from $1,181.7 in the six months ended December 31, 2023, reflecting a negative foreign currency exchange translation impact of 4% (primarily driven by foreign currency exposure to Brazilian Real), and a decrease in unit volume of 2% (primarily due to body care brands in Brazil). The decrease in net revenues primarily reflects:

- Color cosmetics sales declines of $57.5, primarily due to negative market trends in the color cosmetics market in the United States which impacted net revenues from *Covergirl. Rimmel* net revenues declined due to distribution losses and retailer destocking in certain markets, amid declining market share across several markets. Category net sales declines were also impacted by increased discounts and promotions compared to the prior period. *Sally Hansen* also declined despite gaining market share in the current period due to negative market trends in the bottle and brush nail subcategory in the United States; and
- Mass body care sales declines of $41.1, primarily due to declines in sales volumes from *Monange* in Brazil due to competitive pricing action in the deodorant market. The decline can also be attributed to lower sales volumes for *adidas* during the first quarter as a result of category slowdown in China which resulted in higher trade inventory levels.

These decreases were partially offset by:

- Mass fragrance sales growth of $25.6, due to brand innovation such as *adidas Vibes* and geographical expansion of existing products into growth-engine markets; and
- Mass skincare sales growth of $2.5.

COST OF SALES

In the six months ended December 31, 2024, cost of sales decreased 6%, or $70.4, to $1,132.6 from $1,203.0 in the six months ended December 31, 2023. Cost of sales as a percentage of net revenues decreased to 33.9% in the six months ended December 31, 2024 from 35.7% in the six months ended December 31, 2023 resulting in a gross margin increase of approximately 180 basis points primarily reflecting:

(i) approximately 120 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 an decrease in excess and obsolescence costs primarily associated with the Prestige product portfolio.

The above reflects a positive impact from pricing net of inflation of approximately 90 basis points.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In the six months ended December 31, 2024, selling, general and administrative expenses remained relatively flat, or increased $4.5, to $1,605.3 from $1,600.8 in the six months ended December 31, 2023. Selling, general and administrative expenses as a percentage of net revenues increased to 48.0% in the six months ended December 31, 2024 from 47.5% in the six months ended December 31, 2023, or approximately 50 basis points. This increase was primarily due to:

(i) 70 basis points due to an increase in administrative costs as a percentage of net revenues primarily due to higher compensation expense from increased headcount;

(ii) 40 basis points due to an increase in advertising and consumer promotional costs as a percentage of net revenues primarily due to increases in in-store merchandising execution and education, partially offset by declines in working media investment as a percentage of net revenues;

(iii) 20 basis points due to an increase in miscellaneous operating expenses.

These increases were partially offset by the following decreases:

(i) 50 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) 40 basis points due to favorable transactional impact from our exposure to foreign currency as a percentage of net revenues.

OPERATING INCOME

In the six months ended December 31, 2024, operating income was $506.0 compared to income of $434.2 in the six months ended December 31, 2023. Operating margin as a percentage of net revenues, increased to 15.1% in the six months ended December 31, 2024 as compared to an operating income as a percentage of net revenues of 12.9% in the six months ended December 31, 2023. The increase in operating margin is largely driven by lower cost of goods sold as a percentage of net revenues (approximately 180 basis points), lower restructuring costs in the current period (approximately 90 basis points), and a decrease in stock-based compensation expense (approximately 50 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 fixed costs as a percentage of net revenues (approximately 70 basis points) primarily related to non-full time employee and non-people costs and an increase in advertising and consumer promotional costs as a percentage of net revenues (approximately 40 basis points). Our consolidated operating income margin was positively impacted by a greater proportion of net revenues generated by the higher margin brands from our Prestige fragrance business, and lower proportion of net revenues generated from the lower margin brands in Brazil compared to the prior year.

### Operating Income (Loss) by Segment

*(in millions)*

| Operating income (loss) | Six Months Ended December 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| Prestige | $463.8 | $422.2 | 10% |
| Consumer Beauty | 78.1 | 92.4 | (15)% |
| Corporate | (35.9) | (80.4) | 55% |
| **Total** | **$506.0** | **$434.2** | **17%** |

#### Prestige

In the six months ended December 31, 2024, operating income for Prestige was $463.8 compared to income of $422.2 in the six months ended December 31, 2023. Operating margin increased to 20.8% of net revenues in the six months ended December 31, 2024 as compared to 19.3% in the six months ended December 31, 2023, driven primarily by lower cost of goods sold as a percentage of net revenues (approximately 210 basis points), partially offset by an increase in fixed costs as a percentage of net revenues (approximately 60 basis points) primarily related to non-full time employee and non-people costs, and an increase in advertising and consumer promotional expense (approximately 20 basis points). Our Prestige operating income margin was positively impacted by a higher proportion of net revenues generated by the higher margin fragrance brands.

#### Consumer Beauty

In the six months ended December 31, 2024, operating income for Consumer Beauty was $78.1 compared to income of $92.4 in the six months ended December 31, 2023. Operating margin decreased to 7.0% of net revenues in the six months ended December 31, 2024 as compared to 7.8% in the six months ended December 31, 2023, driven by an increase in fixed costs as a percentage of net revenues (approximately 70 basis points) primarily related to people and non-people related costs, and an increase in advertising and consumer promotional expense as a percentage of net revenues (approximately 70 basis points), partially offset by lower costs of goods sold as a percentage of net revenues (approximately 60 basis points).

#### 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 six months ended December 31, 2024, the operating loss for Corporate was $35.9 compared to a loss of $80.4 in the six months ended December 31, 2023, as described under “Adjusted Operating Income for Coty Inc.” below. The decrease to the operating loss for Corporate was primarily driven by an decrease of $32.0 in restructuring costs in the current period and a decrease of $17.6 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 | Six Months Ended December 31, 2024 Reported (GAAP) | Adjustments (a) | Adjusted (Non-GAAP) |
| --- | ---: | ---: | ---: |
| Prestige | 463.8 | $75.9 | $539.7 |
| Consumer Beauty | 78.1 | 19.5 | 97.6 |
| Corporate | (35.9) | 35.9 | — |
| **Total** | **$506.0** | **$131.3** | **$637.3** |

*(in millions)*

| Operating income | Six Months Ended December 31, 2023 Reported (GAAP) | Adjustments (a) | Adjusted (Non-GAAP) |
| --- | ---: | ---: | ---: |
| Prestige | 422.2 | $77.1 | $499.3 |
| Consumer Beauty | 92.4 | 19.8 | 112.2 |
| Corporate | (80.4) | 80.4 | — |
| **Total** | **$434.2** | **$177.3** | **$611.5** |

(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)*

|  | Six Months Ended December 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Net income (loss)** | **$121.3** | **$196.2** | **(38)%** |
| Net income margin | 3.6% | 5.8% |  |
| Provision (benefit) for income taxes | 68.0 | 112.3 | (39)% |
| **Income (loss) before income taxes** | **$189.3** | **$308.5** | **(39)%** |
| Interest expense, net | 116.2 | 129.9 | (11)% |
| Other expense (income), net | 200.5 | (4.2) | \>100% |
| **Reported operating income** | **$506.0** | **$434.2** | **17%** |
| Reported operating income (loss) margin | 15.1% | 12.9% |  |
| Amortization expense | 95.4 | 96.9 | (2)% |
| Restructuring and other business realignment costs | 3.4 | 31.3 | (89)% |
| Stock-based compensation | 32.5 | 49.9 | (35)% |
| Gain on sale of real estate | — | (1.6) | 100% |
| Early license termination and market exit costs | — | 0.8 | (100)% |
| Total adjustments to reported operating income | $131.3 | $177.3 | (26)% |
| **Adjusted operating income** | **$637.3** | **$611.5** | **4%** |
| Adjusted operating income margin | 19.1% | 18.2% |  |
| Adjusted depreciation | 113.5 | 115.2 | (1)% |
| **Adjusted EBITDA** | **$750.8** | **$726.7** | **3%** |
| Adjusted EBITDA margin | 22.5% | 21.6% |  |

In the six months ended December 31, 2024, adjusted operating income increased $25.8, to $637.3 from $611.5 in the six months ended December 31, 2023. Adjusted operating margin increased to 19.1% of net revenues in the six months ended December 31, 2024 from 18.2% in the six months ended December 31, 2023. In the six months ended December 31, 2024, adjusted EBITDA increased $24.1 to $750.8 from $726.7 in the six months ended December 31, 2023. Adjusted EBITDA margin increased to 22.5% of net revenues in the six months ended December 31, 2024 from 21.6% in the six months ended December 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)*

|  | Six Months Ended December 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Reported operating income** | **463.8** | **422.2** | **10%** |
| Reported operating income (loss) margin | 20.8% | 19.3% |  |
| Amortization expense | 75.9 | 77.1 | (2)% |
| Total adjustments to reported operating income | $75.9 | $77.1 | (2)% |
| **Adjusted operating income** | **$539.7** | **$499.3** | **8%** |
| Adjusted operating income margin | 24.2% | 22.8% |  |
| Adjusted depreciation | 56.1 | 54.5 | 3% |
| **Adjusted EBITDA** | **$595.8** | **$553.8** | **8%** |
| Adjusted EBITDA margin | 26.7% | 25.3% |  |

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

*(in millions)*

|  | Six Months Ended December 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Reported operating income** | **78.1** | **92.4** | **(15)%** |
| Reported operating income (loss) margin | 7.0% | 7.8% |  |
| Amortization expense | 19.5 | 19.8 | (2)% |
| Total adjustments to reported operating income | $19.5 | $19.8 | (2)% |
| **Adjusted operating income** | **$97.6** | **$112.2** | **(13)%** |
| Adjusted operating income margin | 8.8% | 9.5% |  |
| Adjusted depreciation | 57.4 | 60.7 | (5)% |
| **Adjusted EBITDA** | **$155.0** | **$172.9** | **(10)%** |
| Adjusted EBITDA margin | 13.9% | 14.6% |  |

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

*(in millions)*

|  | Six Months Ended December 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Reported operating loss** | **$(35.9)** | **$(80.4)** | **55%** |
| Reported operating income (loss) margin | N/A | N/A |  |
| Restructuring and other business realignment costs | 3.4 | 31.3 | (89)% |
| Stock-based compensation | 32.5 | 49.9 | (35)% |
| Gain on sale of real estate | — | (1.6) | 100% |
| Early license termination and market exit costs | — | 0.8 | (100)% |
| Total adjustments to reported operating income | $35.9 | $80.4 | (55)% |
| **Adjusted operating income** | **$—** | **$—** | **N/A** |
| Adjusted operating income margin | N/A | N/A |  |
| Adjusted depreciation | — | — | N/A |
| **Adjusted EBITDA** | **$—** | **$—** | **N/A** |
| Adjusted EBITDA margin | N/A | N/A |  |

#### Amortization Expense

In the six months ended December 31, 2024, amortization expense decreased to $95.4 from $96.9 in the six months ended December 31, 2023. In the six months ended December 31, 2024, amortization expense of $75.9 and $19.5 was reported in the Prestige and Consumer Beauty segments, respectively. In the six months ended December 31, 2023, amortization expense of $77.1 and $19.8 was reported in the Prestige and Consumer Beauty segments, respectively.

#### Restructuring and Other Business Realignment Costs

In the six months ended December 31, 2024, we incurred restructuring and other business structure realignment costs of $3.4 as follows:

- We incurred restructuring costs of $2.1 primarily related to the Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and
- We incurred business structure realignment costs of $1.3 which is reported in cost of sales.

In the six months ended December 31, 2023, we incurred restructuring and other business structure realignment costs of $31.3 as follows:

- We incurred restructuring costs of $34.1 primarily related to the Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and
- We incurred a credit in business structure realignment costs of $(2.8) which is reported in Selling, general and administrative expenses.

#### Stock-based compensation

In the six months ended December 31, 2024, stock-based compensation was $32.5 as compared with $49.9 in the six months ended December 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 six months ended December 31, 2024 and 2023, we recognized $0.0 and a gain of $(1.6) related to sale of real estate, respectively.

#### Early License Termination and Market Exit Costs

In the six months ended December 31, 2024, we incurred no costs related to the early termination of a license and our decision to wind down our business in Russia.

In the six months ended December 31, 2023, we incurred costs of $0.8 related to the early termination of a license and market exit activity.

#### Adjusted Depreciation Expense

In the six months ended December 31, 2024, adjusted depreciation expense of $56.1 and $57.4 was reported in the Prestige and Consumer Beauty segments, respectively. In the six months ended December 31, 2023, adjusted depreciation expense of $54.5 and $60.7 was reported in the Prestige and Consumer Beauty segments, respectively.

INTEREST EXPENSE, NET

In the six months ended December 31, 2024, net interest expense was $116.2 as compared with $129.9 in the six months ended December 31, 2023. This decrease is primarily due to lower debt balances in the current period as well as lower interest rates.

OTHER EXPENSE/INCOME

In the six months ended December 31, 2024, other expense was $200.5 as compared to other income of $4.2 in the six months ended December 31, 2023.

Other expense of $200.5 in the six months ended December 31, 2024 was principally comprised of net losses on forward repurchase contracts of $168.1 and equity investment related impacts of $34.5.

Other income of $4.2 in the six months ended December 31, 2023 was principally comprised of equity investment related gains of $14.0, gains associated with earn-out provisions related to our sale of the Wella Business of $8.5, partially offset by deferred financing fee write-offs of $7.4, miscellaneous other expense of $7.1 and losses on forward repurchase contracts of $3.6.

This decrease in Other income of $204.7 is primarily due to higher net losses on forward repurchase contracts of $164.5 and higher losses from equity investments of $49.0 as a result of an unfavorable fair market value adjustment in the current period compared to favorable adjustments in the prior year period.

INCOME TAXES

The effective income tax rate for the six months ended December 31, 2024 and 2023 was 35.9% and 36.4%, respectively. The change in the effective rate is primarily due to the impact of a higher effective tax rate in the prior period related to the revaluation of the Company's deferred tax liabilities due to a tax rate increase enacted in Switzerland resulting in an expense of $24.3.

The effective tax rate of 35.9% for the six months ended December 31, 2024, was higher than the statutory tax rate of 21% due to the limitation on the deductibility of executive stock compensation and the limitation on the deductibility of interest expense as well as the impact of fair value losses related to the investment in Wella taxed at a rate below the statutory rate of 21%.

The effective tax rate of 36.4% for the six months ended December 31, 2023 was increased from the statutory tax rate of 21% due to an expense of $24.3 in the period recognized on the revaluation of the Company's deferred tax liabilities due to a tax rate increase enacted in Switzerland.

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)*

|  | Six Months Ended December 31, 2024 Income Before Income Taxes | Provision for Income Taxes | Effective Tax Rate | Six Months Ended December 31, 2023 Income Before Income Taxes | Provision for Income Taxes | Effective Tax Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Reported income before income taxes** | **$189.3** | **$68.0** | **35.9%** | **$308.5** | **$112.3** | **36.4%** |
| Other adjustments to reported operating income (a) | 131.3 |  |  | 177.3 |  |  |
| Change in fair value of investment in Wella Company (c) | 32.0 |  |  | (17.0) |  |  |
| Other adjustments (d) | (0.4) |  |  | 4.1 |  |  |
| Total Adjustments (b) | 162.9 | 32.6 |  | 164.4 | 33.7 |  |
| **Adjusted income before income taxes** | **$352.2** | **$100.6** | **28.6%** | **$472.9** | **$146.0** | **30.9%** |

(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 unrealized (gain) loss recognized for the change in fair value of the investment in the Wella Company.

(d) For the six months ended December 31, 2024, this primarily represents recovery of previously written-off non-income tax credits and the amortization of basis differences in certain equity method investments. For the six months ended December 31, 2023, this primarily represents divestiture-related costs related to our equity investments and loss from our equity investment in KKW.

The adjusted effective tax rate was 28.6% for the six months ended December 31, 2024 compared to 30.9% for the six months ended December 31, 2023. The difference is primarily due to an expense of $24.3 in the prior 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 $106.6 in the six months ended December 31, 2024, as compared to net income of $182.5 in the six months ended December 31, 2023. This decrease in net income was primarily driven by higher net losses on forward repurchase contracts of $164.5 and higher losses from equity investments of $49.0 as a result of an unfavorable fair market value adjustment in the current period compared to favorable adjustments in the prior year period, partially offset by higher operating income of $71.8 in the current period, a lower provision for income taxes of $44.3 in the current period, and lower interest expense of $13.7 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)*

|  | Six Months Ended December 31, 2024 | 2023 | Change % |
| --- | ---: | ---: | ---: |
| **Net income attributable to Coty Inc.** | **106.6** | **182.5** | **(42)%** |
| Convertible Series B Preferred Stock dividends (a) | (6.6) | (6.6) | —% |
| **Reported net income attributable to common stockholders** | **100.0** | **175.9** | **(43)%** |
| % of net revenues | 3.0% | 5.2% |  |
| Adjustments to reported operating income (b) | 131.3 | 177.3 | (26)% |
| Change in fair value of investment in Wella Company (c) | 32.0 | (17.0) | \>100% |
| Adjustment to other expense (d) | (0.4) | 4.1 | \<(100%) |
| Adjustments to noncontrolling interests (e) | (3.4) | (3.4) | —% |
| Change in tax provision due to adjustments to reported net income attributable to Coty Inc. | (32.6) | (33.7) | 3% |
| **Adjusted net income attributable to Coty Inc.** | **226.9** | **303.2** | **(25)%** |
| % of net revenues | 6.8% | 9.0% |  |
| **Per Share Data** |  |  |  |
| Adjusted weighted-average common shares |  |  |  |
| Basic | 869.6 | 873.6 |  |
| Diluted (a) | 875.2 | 907.0 |  |
| Adjusted net income attributable to Coty Inc. per common share |  |  |  |
| Basic | $0.26 | $0.35 |  |
| Diluted (a) | $0.26 | $0.34 |  |

(a) Adjusted Diluted EPS is adjusted by the effect of dilutive securities. For the six months ended December 31, 2024 and 2023, no dilutive shares of the Forward Repurchase Contracts were included in the computation of adjusted diluted EPS as 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 $128.8 and $(0.2), respectively. For the six months ended December 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 $6.6. For the six months ended December 31, 2023, as the Convertible Series B Preferred Stock was dilutive, an adjustment to reverse the impact of the preferred stock dividends of $6.6 was required.

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

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

(d) For the six months ended December 31, 2024, this primarily represents recovery of previously written-off non-income tax credits and the amortization of basis differences in certain equity method investments. For the six months ended December 31, 2023, this primarily divestiture-related costs related to our equity investments and loss from our equity investment in 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.

### 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 manufacturing 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 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.

### 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 expect to continue to take actions to improve the maturity mix of our debt, including through redemptions and/or tender offers for near-dated maturities, from time to time as market conditions permit.

We have taken action to reduce variability in our interest payments including paying down variable interest rate debt outstanding under our 2018 Coty Term A and 2018 Coty Term B Facility, and issuing fixed rate bonds. While our revolving credit facility, which we draw on from time to time, is subject to variable interest rates, all of our non-revolving credit facility long-term debt outstanding as of December 31, 2024 is fixed rate debt.

### 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 fiscal 2024.

Our remaining 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 $16.0.

Our forward repurchase contracts include a provision for a potential true-up in cash upon specified changes in the price of Coty’s Class A Common Stock relative to the counterparties’ initial purchase price (the “Hedge Valuation Adjustment”). In October 2024, the price of Coty’s Class A Common Stock declined, resulting in an increase in the liability to the counterparties to our forward repurchase contracts. The share price decline resulted in a potential Hedge Valuation Adjustment event under the November 2023 forward repurchase contracts, with a corresponding potential cash true-up obligation. During the second quarter of fiscal 2025, we paid $61.8 to the counterparties, which was refunded to us during the same period after we entered into agreements with the applicable counterparties in November 2024 for a temporary contractual amendment to the November 2023 forward repurchase contracts' Hedge Valuation Adjustment mechanism. The amendments are effective from October 2024 to February 2025 and did not apply to the forward repurchase contracts executed in December 2022. At the expiration of the amendment period granted by each of the counterparties, the threshold share price on which the Hedge Valuation Adjustment is based will revert to its pre-amendment amount. A higher threshold share price amount during the post-amendment period may result in a Hedge Valuation Adjustment event under the November 2023 forward repurchase contracts, requiring a cash payment to the counterparties. This cash settlement amount, based on Coty’s Class A Common Stock price as of February 7, 2025 and assuming a post-waiver threshold share price, would be approximately $88.0. If the share price declines further during the amendment period the cash settlement amount may be substantially greater, and may also trigger cash settlements under our December 2022 forward repurchase contracts. Any such cash payment will settle a portion of the outstanding cash settlement liability and will serve as a payment of the cash cost of either a potential future share repurchase (should we choose to take physical delivery of the underlying shares upon settlement), or a portion of the net settlement cost (should we choose to net settle in lieu of taking physical delivery of the underlying shares).

The cash settlement liability under all our forward repurchase contracts based on Coty's share price as of February 7, 2025 totaled approximately $169.0, a $10.0 increase from December 31, 2024. See Footnote 13— Equity for additional information on the Company's forward repurchase contracts.

### 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 factored under the factoring facilities was $201.8 and $195.3 as of December 31, 2024 and June 30, 2024, respectively. The aggregate amount of trade receivable invoices factored on a worldwide basis amounted to $784.5 and $874.0 during the six months ended December 31, 2024 and 2023, respectively.

### Cash Flows

| Condensed Consolidated Statements of Cash Flows Data: (in millions) | Six Months Ended December 31, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $531.9 | $608.1 |
| Net cash used in investing activities | (108.2) | (119.4) |
| Net cash used in financing activities | (461.3) | (285.9) |

#### Net cash provided by operating activities

Net cash provided by operating activities was $531.9 and $608.1 for the six months ended December 31, 2024 and 2023, respectively. The decrease in cash provided by operating activities of $76.2 was primarily the result of higher cash outflows from working capital, partially offset by higher cash-related Net Income. Higher net cash outflows from working capital include 1) lower net cash inflows from changes in accrued expenses and other current liabilities, principally due to the net impact of bonus accruals and payouts, net impact from the timing of invoice processing and lower trade accruals year-over-year, and the impact from the phasing of interest payments on third-party debt, 2) higher outflows from changes in trade receivables as a result of net revenues phasing towards the end of the second quarter and lower collections from factoring in the current period, and 3) lower inflows from changes in inventory, driven by higher decreases to safety stock levels in the prior year. Lower cash used for prepaid expenses and other current assets partially offset the decrease in cash provided by operating activities year-over-year.

#### Net cash used in investing activities

Net cash used in investing activities was $108.2 and $119.4 for the six months ended December 31, 2024 and 2023, respectively. The decrease in cash used in investing activities of $11.2 was primarily due to the positive impact from the current year collection of contingent consideration relating to the sale of a discontinued business.

#### Net cash used in financing activities

Net cash used in financing activities during the six months ended December 31, 2024 and 2023 was $461.3 and $285.9, respectively. The increase in cash used in financing activities of $175.4 was primarily driven by the impact of the prior year cash proceeds from issuance of Class A Common Stock in connection with the global offering which did not repeat in the current year. This was partially offset by lower year-over-year net repayments associated with the Company's revolver and other long-term debt and lower payments for deferred financing fees in the current year.

### 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$899.4 million (approximately $145.6) as of December 31, 2024.

### Off-Balance Sheet Arrangements

We had undrawn letters of credit of $4.1 and $4.1 and bank guarantees of $18.2 and $18.4 as of December 31, 2024 and June 30, 2024, respectively.

### Contractual Obligations

Our principal contractual obligations and commitments as of June 30, 2024 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 2024 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 six months ended December 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 December 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 2024 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 2024 Form 10-K.

## Controls and procedures

As filed, 3,534 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 December 31, 2024. Based on the evaluation of our disclosure controls and procedures as of December 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 second 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 2024.

Filed Feb 10, 2025.
Source: SEC EDGAR, the filing index for accession 0001024305-25-000007. Last ingested by Listed: Oct 24, 2026, 15:02 ET. No prices; not investment advice.