Coty, Inc. (COTY) Misses Q3 EPS by 3c

Coty, Inc. (NYSE: COTY) reported Q3 EPS of $0.09, $0.03 worse than the analyst estimate of $0.12. Revenue for the quarter came in at $950.7 million versus the consensus estimate of $970.73 million.

"Q3 revenues were consistent with our expectations for muted like-for-like trends through the end of the fiscal year, as we gradually rationalize non-strategic product lines and businesses. Power brands on the other hand continued to outperform the overall business both for the quarter and fiscal year-to-date. While Q3 adjusted operating income was down due to one-off items and fiscal year-to-date adjusted operating income is largely flat, we continue to target high single digit growth for the full year adjusted operating income at constant rates largely offset by negative FX impact.

On the merger and acquisition side, integration efforts are well underway for both the Bourjois business and the Brazilian Beauty Business acquired from Hypermarcas. We remain confident regarding the financial benefits of both transactions. Regarding the P&G Beauty Brands transaction, on April 22 we filed a Registration Statement on Form S-4 detailing the transaction and the historical results of the P&G Beauty Brands, as well as a Supplemental Financial Overview with bridged revenue and EBITDA. We will provide a more comprehensive update on the transaction, including estimated cost synergies, which we expect to be higher, one-time costs, and working capital benefits, on the investor call at 8:00am EDT. We have made very good progress both in terms of preparing for the integration and the steps needed to realize the financial benefits of this transaction, and we now expect the transaction to close in October.

In summary, we believe we are well on track to build a healthy platform for Coty to become a global leader and challenger in the beauty industry and provide the right basis to drive profitable growth and deliver shareholder value over time."

Outlook for Fiscal 2016 Full Year

The Company remains focused on growing its power brands around the world through innovation, strong support levels and improved “in-market” execution. The Company remains focused on cost optimization opportunities to improve profitability and to provide for investment in its power brands. For the full fiscal year, like-for-like revenue performance is expected to remain consistent with the year-to-date trend. Adjusted operating income is expected to be in line with the prior year due to the impact of foreign exchange, with high single digit growth on a constant currency basis.

Other noteworthy company developments include:

• Unconditional antitrust approval was received from the European Commission in connection with the P&G Beauty Brands transaction. The Company had previously received antitrust approval from the U.S., and several other countries.
• An incremental EUR 465 million term loan financing was secured under its existing credit facilities.
• On April 22, the Company filed a Registration Statement on Form S-4 related to the transaction with the P&G Beauty Brands.

For earnings history and earnings-related data on Coty, Inc. (COTY) click here.

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