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Item 7. Management’s Discussion and Analysis

2024-08-20 compared with 2023-08-22 · 334 added, 327 removed, 608 unchanged (52% of the section changed)

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We are one of the world’s largest beauty companies, with an iconic portfolio of brands across fragrance, color cosmetics, and skin and body care.

We continue to make progress on our strategic priorities, including stabilizing and growing our Consumer Beauty brands through leading innovation and improved execution, accelerating our Prestige fragrance business and ongoing expansion into Prestige cosmetics, building a comprehensive skincare portfolio leveraging existing brands, enhancing our e-commerce and Direct-to-Consumer (“DTC”) capabilities, expanding our presence in China and travel retail through Prestige products and select Consumer Beauty brands, and establishing Coty as an industry leader in sustainability.

Our brands empower people to express themselves freely, creating their own visions of beauty;

and we are committed to making a positive impact on the planet.

Our strategic priorities include stabilizing and growing our Consumer Beauty brands through leading innovation and improved execution, accelerating our Prestige fragrance business and ongoing expansion into Prestige cosmetics, building a comprehensive skincare portfolio over the mid-to-long term leveraging existing brands, enhancing our organizational growth capabilities including digital and research and development, expanding our presence in 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 and returned to stable growth and steady margin improvement.

Consumer Beauty net revenue grew 6% in fiscal 2024, with growth across mass fragrances, mass color cosmetics, skincare and body care led by Brazil.

We are now focusing on accelerating our digital advocacy strategy to amplify our brand and product innovations, leverage consumer analytics and insights, and improve the return on investment of our marketing activities.

Our e-commerce channel net revenues grew by over approximately 20% in fiscal 2024, with double-digit percentage growth in Prestige and Consumer Beauty.

In Prestige, we continue to accelerate the fragrance business with exceptional new launches and expansion in premium and ultra-premium categories, while steadily expanding the distribution, productivity and assortment of our Prestige cosmetics.

Our prestige cosmetics net revenues grew by a double-digit percentage in fiscal year 2024, led by Kylie Cosmetics and Burberry.

We are continuing to thoughtfully expand our skincare portfolio (which contributed a mid-single digit percentage of our fiscal 2024 net revenue) with our focus on winning over the most discerning skin care consumers in our areas of excellence – UV protection, photoaging prevention and repair, biotech-enhanced longevity science, and micro-dose formulations.

Our skincare business, which contributed a mid-single-digit percentage of sales, generated strong sales growth in fiscal year 2024.

We have successfully expanded our e-commerce capabilities, through best-in-class online launches, our digital advocacy strategy and active participation in key online shopping events, and increasing digital media competitiveness.

Revenues from our global Travel channel grew in all three regions – Americas, EMEA and Asia Pacific – contributing approximately 20% to the net revenue growth in fiscal year 2024.

Our growth engine markets net revenues grew in fiscal 2024, led by Brazil, the rest of LATAM, Southeast Asia, including India, and Africa.

Our products are marketed, sold and distributed 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, economic conditions in China have had, and are expected to continue to have, an impact on our strategic initiatives, including our growth agenda in the region for Prestige products and our skincare growth priorities.

Within the China market we continue to monitor and take actions to address the impact to our Consumer Beauty brands which have experienced sales declines as retailers and distributors continue to deplete their existing inventory.

We remain attentive to economic and geopolitical conditions that may materially impact our business.

We continue to explore and implement risk mitigation strategies in the face of these unfolding conditions and remain agile in adapting to changing circumstances.

Such conditions, including risks and uncertainties associated with the economy in China and the broader global economy, global inflation, and resulting impacts from the conflict between Russia and Ukraine, have or may have global implications that may impact the future performance and growth of our business in unpredictable ways.

Our operations outside of the United States account for a significant portion of our revenues and expenses.

As a result, a substantial portion of our total revenue and expenses are denominated in currencies other than the U.S.

Exchange rates between certain of these currencies and the U.S.

dollar have fluctuated significantly and may continue to do so in the future.

Our revenues grew across both divisions in fiscal 2023 and benefited from price increases across our product portfolio despite stable year-over-year sales volumes and market share declines across certain major product categories.

Fluctuations in foreign exchange rates may have a significant impact our operating results.

During fiscal 2023, fluctuations in the U.S.

dollar relative to certain other foreign currencies – such as the euro and British pound – reduced our reported revenue and expenses, such as those expenses principally related to cost of sales, fixed costs, and advertising and consumer promotional costs.

Refer to Part I, Item 1A under the heading “Risk Factors” for a discussion of these factors and other risks.

We expect that our net revenue for fiscal year 2024 will grow in the mid-to-high single digits versus the prior year, excluding the impact of foreign exchange and the early termination of the Lacoste fragrance license.

Such conditions have or may have global implications which may impact the future performance of our business in unpredictable ways.

Changing market trends may impact sales of our products across and within product categories and regions.

Within our Consumer Beauty segment, positive market trends within the skin and body care and mass color cosmetics categories in Brazil positively impacted the segment's sales volume during fiscal year 2024.

Excluding the contribution from the Brazilian brands, the Consumer Beauty segment experienced a decline in sales volume primarily in the skin and body care category, as a result of a decline in sales from China, and in the color cosmetic category primarily due to negative market trends in the U.S.

in mass color cosmetics market.

We expect that our net revenue for fiscal year 2025 will grow in the mid-single digit percent to high-single digit percent versus the prior year, excluding the impact of foreign exchange and the early termination of the Lacoste fragrance license.

We anticipate that our annual gross margin will remain in the mid-sixties, providing us with opportunities to fund new product initiatives and support our brands through advertising and consumer promotional investments.

We continue to target advertising and consumer promotional spending in the high-twenties percentage of net revenues.

However, our level of advertising and consumer promotional spending will depend on various factors, including seasonality, the timing of product launches, and budgetary considerations.

Global Supply Chain Challenges

We experienced global supply chain challenges resulting from industry-wide component shortages and transportation delays.

These challenges have negatively impacted order fill rates across our product categories, particularly prestige fragrances where there has been demand growth, especially in North America and certain European countries.

In the second half of fiscal 2023 we saw sequential quarterly improvements in our order fill rates on a company-wide basis and continue to take steps to improve order fill rates and mitigate the impact of these constraints, including working closely with our suppliers to ensure the availability of components such as glass and metal, and building our inventory levels to meet demand.

We expect to sustain the progress made this fiscal year, into the first quarter of fiscal 2024, or make incremental improvements to our order fill rates on a divisional and company-wide basis.

Inflationary trends in certain markets and global supply chain challenges may negatively affect our sales and operating performance.

We experienced the impact of inflation on material, logistical and other costs during fiscal 2023.

We will continue to implement mitigation strategies and price increases to offset these trends;

however, such measures may not fully offset the impact to our operating performance.

Russia-Ukraine War

We recognized total pre-tax gains of $17.0 in fiscal year 2023 related to our market exit of Russia primarily related to a bad debt accrual release due to better than expected collections.

We also recognized $0.4 of income tax benefits.

We anticipate that we will incur an immaterial amount of additional costs through completion of the wind down.

Additionally, we anticipate derecognizing the cumulative translation adjustment balance pertaining to the Russian subsidiary.

We have substantially completed 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.

Our ability to fulfill demand for our products is critical to our success.

Through steps taken to improve order fill rates and mitigate the impact of supply chain constraints, we have seen improvements in our order fill rates on a company-wide basis.

As a result, in fiscal year 2024 we achieved close to pre-COVID-19 service levels across our divisions.

The impact of inflation on material, logistical and other costs subsided during fiscal year 2024.

Inflation may continue to impact certain costs, such as labor.

However, we currently anticipate the overall impact of inflation to remain muted.

Selected Financial Data

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Asset impairment charges — — 31.4

Operating income (loss) 543.7 240.9 (48.6)

Operating income 546.7 543.7 240.9

Interest expense, net 252.0 257.9 224.0

Other Income, net (419.0) (409.9) (43.9)

Income (loss) from continuing operations before income taxes 704.8 426.8 (239.8)

Provision (benefit) for income taxes on continuing operations 181.6 164.8 (172.0)

Net income (loss) from continuing operations 523.2 262.0 (67.8)

Net income (loss) from discontinued operations — 5.7 (137.3)

Net income (loss) 523.2 267.7 (205.1)

Net income (loss) attributable to Coty Inc.

Other expense (income), net 90.2 (419.0) (409.9)

Income from continuing operations before income taxes 204.5 704.8 426.8

Provision for income taxes on continuing operations 95.1 181.6 164.8

Net income from continuing operations 109.4 523.2 262.0

Net income from discontinued operations — — 5.7

Net income 109.4 523.2 267.7

Net income attributable to Coty Inc.

$ 89.4 $ 508.2 $ 259.5

Amounts attributable to Coty Inc.:

Net income (loss) from continuing operations attributable to common stockholders $ 495.0 $ 55.5 $ (166.3)

Net income (loss) from continuing operations attributable to common stockholders $ 495.0 $ 61.2 $ (303.6)

Net income from continuing operations attributable to common stockholders $ 76.2 $ 495.0 $ 55.5

Net income from continuing operations attributable to common stockholders $ 76.2 $ 495.0 $ 61.2

Per Share Data:

Net income (loss) attributable to Coty Inc.

Net income attributable to Coty Inc.

per common share:

Basic income (loss) from continuing operations $ 0.58 $ 0.07 $ (0.22)

Basic income (loss) for Coty Inc.

Basic income from continuing operations $ 0.09 $ 0.58 $ 0.07

Basic income from discontinued operations $ 0.00 $ 0.00 $ 0.01

Basic income for Coty Inc.

$ 0.09 $ 0.58 $ 0.08

Diluted income (loss) from continuing operations $ 0.57 $ 0.07 $ (0.22)

Diluted income (loss) for Coty Inc.

Diluted income from continuing operations $ 0.09 $ 0.57 $ 0.07

Diluted income from discontinued operations $ 0.00 $ 0.00 $ 0.01

Diluted income for Coty Inc.

$ 0.09 $ 0.57 $ 0.08

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Total assets 12,082.5 12,661.6 12,116.1

Total debt, net of discount 4,265.9 4,473.9 5,476.9

Total debt 3,913.7 4,281.6 4,473.9

Total Coty Inc.

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Any future acquisitions may result in the amortization of additional intangible assets.

• Gain on sale and termination of brand assets:

We have excluded the impact of gain on sale and termination of brand assets as such amounts are inconsistent in amount and frequency and are significantly impacted by the size of the sale and termination of brand assets.

• Gain on sale and termination of brand assets and early license termination:

We have excluded the impact of gain on sale and termination of brand assets and early license termination as such amounts are inconsistent in amount and frequency and are significantly impacted by the size of the sale of brand assets and early license termination.

• Costs related to market exit:

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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 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.

Further, we have excluded the change in fair value of the investment in Wella, as well as expenses related to potential or actual sales transactions reducing equity investments, as our management believes these unrealized (gains) and losses do not reflect our underlying ongoing business, and the adjustment of such impact helps investors and others compare and analyze performance from period to period.

We have excluded the gain on the exchange of Series B Preferred Stock.

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• Deemed Preferred Stock Dividends:

We have excluded preferred stock deemed dividends related to the First Exchange and the Second Exchange (as disclosed and defined in Note 13—Equity Investments in our Annual Report on Form 10-K for fiscal 2023) from our calculation of adjusted net income attributable to Coty Inc.

We have excluded preferred stock deemed dividends related to the First Exchange and the Second Exchange (as disclosed and defined in Note 27—Related Party Transactions in our Annual Report on Form 10-K for fiscal 2023) from our calculation of adjusted net income attributable to Coty Inc.

These deemed dividends are nonmonetary in nature, the transactions were entered into to simplify our capital structure and do not reflect our underlying ongoing business.

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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.

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Period of acquisition, divestiture, termination, or market exit Acquisition, divestiture, termination, or market exit Impact on basis of 2024/2023 presentation Impact on basis of 2023/2022 presentation

Third quarter fiscal 2023 Market Exit from Russia Third and fourth quarters fiscal 2022 net revenue excluded.

Third quarter fiscal 2023 Market Exit from Russia First and second quarters fiscal 2023 net revenue excluded.

Third and fourth quarters fiscal 2022 net revenue excluded.

Third quarter fiscal 2024 Termination:

Lacoste Third and fourth quarters fiscal 2023 net revenue excluded.

When used herein, the term “Acquisitions,” “Divestitures,” “Terminations,” and “Market Exit,” refer to the financial contributions of the related acquisitions or divestitures, early license terminations, and market exits shown above, during the period that is not comparable as a result of such acquisitions or divestitures, early license terminations, and market exits.

Financial results for the Wella Business for fiscal year 2021 are presented as discontinued operations.

Unless otherwise noted, the following section pertains to the results of continuing operations.

In fiscal 2024, net revenues increased 10%, or $563.9, to $6,118.0 from $5,554.1 in fiscal 2023.

Excluding net revenue from the first half of the prior period from Russia and the second half of the prior period from Lacoste, net revenues increased 12% or $654.3 to $6,118.0 from $5,463.7, reflecting a positive price and mix impact of 9%, an increase in unit volume of 2%, and a positive foreign currency exchange translation impact of 1%.

The overall increase in net revenues reflects growth in our prestige fragrance category due to the continued success of fragrance brands, specifically Burberry, Hugo Boss, Calvin Klein,

Gucci, Chloe, Davidoff, Joop, and Marc Jacobs, as well as innovation from the launches including Marc Jacobs Daisy Wild and Cosmic Kylie Jenner, and positive performance in the prestige cosmetics category.

The overall increase in net revenues for the Consumer Beauty segment was due to positive performance in the color cosmetics category specifically from Rimmel Manhattan and Risque , mass fragrance category specifically from David Beckham and Bruno Banani , and the skin and body care categories in Brazil, specifically from Monange , Paixao and Bozzano .

The overall increase in net revenues reflects the continued success of our pricing and revenue management strategies, including the implementation of price increases across our product portfolio earlier in the fiscal year.

Volume growth across our fragrance portfolio, as well as in skin and body care products in Brazil helped drive the increase in revenues, partially offset by volume declines from certain color cosmetic and other body care brands in China due to macroeconomic conditions which resulted in higher trade inventory levels.

Geographically, except for China, net revenues in all major markets grew, led by Brazil, the United States, and Germany.

Additionally, there was an increase in travel retail channel sales in all regions.

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

In fiscal 2023, net revenues increased 5%, or $249.7, to $5,554.1 from $5,304.4 in fiscal 2022.

Excluding net revenue from the second half of the prior period from Russia, net revenues increased 6% or $276.8 to $5,554.1 from $5,277.3, reflecting a positive price and mix impact of 11% partially offset by a negative foreign currency exchange translation impact of 5%.

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The overall increase in net revenues was partially offset by the negative impact of foreign exchange headwinds on net revenues, primarily affecting the euro and British pound.

Our ongoing exit from Russia impacted the overall change in our reported net revenues.

Considering total fiscal year-to-date net revenues from Russia in both the current and prior year periods, the net negative impact on our fiscal year-to-date reported net revenue was approximately 1% on a consolidated basis, 1% for our Prestige division, and 1% for our Consumer Beauty division.

In fiscal 2022, net revenues increased 15%, or $674.5, to $5,304.4 from $4,629.9 in fiscal 2021, reflecting a positive price and mix impact of 10%, an increase in unit volume of 6%, partially offset by a negative foreign currency exchange translation impact of 1%.

The increase in net revenues primarily reflects the reopening of stores across regions and increased leisure travel due to reduced COVID restrictions.

The reduced travel restrictions have contributed to increased sales through travel retail channels.

A number of countries continued to experience rolling lockdowns;

however, these lockdowns were confined to certain localities.

Increased foot traffic and demand had a favorable impact on both the Prestige and Consumer Beauty segments, with the highest impact on the Prestige segment.

In addition, the Prestige segment benefited from various strong and successful launches such as Gucci Flora, Burberry Hero, Tiffany Rose Gold, Hugo Boss The Scent and the relaunch of Kylie cosmetics .

The Consumer Beauty segment also experienced net revenue increase due to COVID-19 recovery and market share gains as a result of a repositioning and reinvestment in key color cosmetics brands.

Furthermore, the continued growth of e-commerce across the regions and continued market growth in the U.S.

and Europe contributed to the net revenue increase.

China also contributed to net revenue increase despite a downturn in economic conditions due to increased COVID-19 restrictions impacting performance in the second half of the fiscal year.

Our exit from Russia impacted the overall change in our reported net revenues.

Considering total fiscal 2023 year-to-date net revenues from Russia in both the current and prior fiscal 2022 period, the net negative impact on our fiscal year-to-date reported net revenue was approximately 1% on a consolidated basis, 1% for our Prestige division, and 1% for our Consumer Beauty division.

Year Ended June 30, Change %

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In fiscal 2024, net revenues in the Prestige segment increased 13%, or $436.8 to $3,857.3 from $3,420.5 in fiscal 2023.

Excluding net revenue from the first half of the prior period from Russia and the second half of the prior period from Lacoste, net revenues increased 15% or $508.5 to $3,857.3 from $3,348.8, reflecting a positive price and mix impact of 8% (primarily due to positive pricing impact as a result of price increases and in line with overall premiumization strategy), an increase in unit volume of 6% (primarily due to successful innovations and positive trends in the prestige fragrance category in many markets), and positive foreign currency exchange translation impact of 1%.

The increase in net revenues primarily reflects:

(i) the continued success and growth of prestige fragrances, specifically Burberry Hero, Burberry Her, Calvin Klein, Hugo Boss Boss Bottled, Gucci Flora, and Marc Jacobs Daisy ;

(ii) the positive pricing impact as a result of global price increases and in line with the overall premiumization strategy;

(iii) growth in travel retail net revenues in all major regions due to increased leisure travel compared to the prior year;

(iv) growth in the U.S due to positive market trends and innovation in the prestige fragrance brands.

These increases were partially offset by:

(i) lower net revenues in the Prestige makeup category impacted by a decline in Gucci makeup travel retail sales in the Asia Pacific region as a result of slow recovery from the lockdowns in China;

(ii) lower net revenues for philosophy due to less innovation and repositioning of the brand.

In fiscal 2022, net revenues in the Prestige segment increased 20%, or $547.1, to $3,267.9 from $2,720.8 in fiscal 2021, reflecting an increase in unit volume of 18%, a positive price and mix impact of 4%, partially offset by a negative foreign currency exchange translation impact of 2%.

• Prestige fragrance sales growth of $476.9, primarily due to the continued success of Burberry Goddess , Classic, Her and Hero, Hugo Boss Boss Bottled and Boss the Scent , Calvin Klein One , Euphoria , and Eternity , Gucci Guilty and Flora , Chloe Nomade and Signature , Marc Jacobs Daisy Wild , Davidoff Cool Water , and Joop Homme , as well as continued brand innovation within the Gucci Flora franchise and Cosmic Kylie Jenner.

Prestige fragrance sales grew in major markets such as the United States, Germany, Australia, and Spain as well as through travel retail channel sales across all regions.

This growth was partially offset by lower net revenues for the Lacoste brand in the first six months of the current period, which was primarily due to the early license termination resulting in a wind down of

sales through the end of the second quarter;

and no net revenues for the Bottega Veneta brand in the current period due to the ending of our licensing arrangement where sales of the brand ended in fiscal 2023;

• Prestige cosmetic sales growth of $24.5, primarily due to brand innovation from Kylie Cosmetics .

In fiscal 2023, net revenues in the Prestige segment increased 5%, or $152.6, to $3,420.5 from $3,267.9 in fiscal 2022.

Excluding net revenue from the second half of the prior period from Russia, net revenues increased 6% or $169.0 to $3,420.5 from $3,251.5, reflecting a positive price and mix impact of 11% (primarily due to the positive pricing impact as a result of global price increases and in line with overall premiumization strategy) partially offset by a negative foreign currency exchange translation impact of 5%.

The increase in net revenues primarily reflects:

(i) an increase in net revenues driven by market growth in the U.S.

and Europe amid a post COVID-19 recovery, as well as from the travel retail business in many localities, particularly in North America, Europe, and China, had reduced travel restrictions and reopened for leisure travel as they emerge from the COVID-19 pandemic;

(ii) an increase in net revenues from the new launches of Gucci Flora, Burberry Hero , Tiffany Rose Gold, CK Defy , Hugo Boss The Scent, and the global relaunch of Kylie cosmetics in the current fiscal year, as well as the continued success of Gucci Makeup , Gucci Guilty , Burberry Her , Gucci Bloom , Chloe Atelier des Fleurs , and Marc Jacobs Perfect ;

(iii) an increase in net revenues due to positive pricing impact and product mix as a result of global price increases and an overall premiumization strategy focusing on premium plus brands, selling new launches at higher prices, and reducing tail lines resulting in more optimized shelf space utilization;

(iv) an increase in net revenues due to the growth of e-commerce across the regions, distribution expansion in China, and additional shelf space in the U.S.

retail stores.

• Prestige fragrance sales growth of $197.9, due to the continued success of Burberry Hero , Burberry Her , Calvin Klein , Hugo Boss Boss Bottled , Gucci Flora , and Marc Jacobs Daisy , particularly in the U.S.

due to positive market trends and innovation, and in the travel retail channel sales across all major regions impacted by increased leisure travel compared to the prior year.

These increases were partially offset by:

(i) lower net revenues due to strategic initiatives to reduce sales through lower priced channels;

(ii) lower net revenues in the last fiscal quarter from China due to increased COVID restrictions limiting travel and consumer spending;

(iii) lower net revenues related to Kylie Skin products due to less innovation in the current fiscal year;

(iv) a decrease in the U.S.

net revenues for improvements in returns trends for philosophy in the prior year.

• Prestige makeup sales decline of $18.1, primarily due to Gucci makeup travel retail channel sales in the Asia Pacific region as a result of slow recovery from the lockdowns in China;

• Prestige skincare sales decline of $10.8, primarily due to lower net revenues for philosophy due to less innovation and repositioning of the brand.

Consumer Beauty

In fiscal 2024, net revenues in the Consumer Beauty segment increased 6%, or $127.1, to $2,260.7 from $2,133.6 in fiscal 2023.

Excluding net revenue from the second half of the prior period from Russia, net revenues increased 6% or $107.8 to $2,133.6 from $2,025.8, reflecting a positive price and mix impact of 10% partially offset by a negative foreign currency exchange translation impact of 4%.

Excluding net revenue from the second half of the prior period from Russia, net revenues increased 7% or $145.8 to $2,260.7 from $2,114.9, reflecting a positive price and mix impact of 5% (primarily due to positive pricing impact as a result of price increases), an increase in unit volume of 1% (primarily due to increases from Brazilian brands offsetting decreases in volumes in most other markets), and a positive foreign currency exchange translation impact of 1%.

The increase in net revenues primarily reflects:

(i) an increase in net revenues from color cosmetics brands, including CoverGirl due to positive pricing impact and higher sell out resulting in lower returns and markdowns in the U.S., and Rimmel Manhattan due to brand innovation and positive price and mix impact in major European markets, such as Germany, Austria and Switzerland, and Australia;

(ii) an increase in net revenues from the skin and body care brands in Brazil due to strong category momentum, and positive product mix impact, as well as due to innovation in brands such as Monange and market share gains for Paixao ;

(iii) due to price increases across the Consumer Beauty product portfolio.

These increases were partially offset by lower net revenues from the mass fragrance category, primarily due to negative foreign currency exchange translation impacts.

In fiscal 2022, net revenues in the Consumer Beauty segment increased 7%, or $127.4, to $2,036.5 from $1,909.1 in fiscal 2021, reflecting an increase in unit volume of 5%, and a positive price and mix impact of 3%, partially offset by a negative foreign currency exchange translation impact of 1%.

• Color cosmetics sales growth of $51.4, primarily due to the continued success of Rimmel Manhattan which saw continued brand innovation, such as Lasting Finish foundation and Thrill Seeker mascara, and Risque due to strong category momentum in Brazil and positive pricing impact, despite a category slowdown in the US;

• Mass fragrance sales growth of $46.3, due to the continued success from the re-launch of David Beckham Instinct in the current period and success of Bruno Banani ;

• Skin and body care sales growth of $44.6, due to the continued success of Brazilian brands Monange , Bozzano , and Paixao benefiting from strong category momentum and positive pricing impact.

This growth was partially offset by lower sales volume for adidas primarily as a result of category slowdown in China which resulted in higher trade inventory levels.

In fiscal 2023, net revenues in the Consumer Beauty segment increased 5%, or $97.1, to $2,133.6 from $2,036.5 in fiscal 2022.

Excluding net revenue from the second half of the prior period from Russia, net revenues increased 6% or $107.8 to $2,133.6 from $2,025.8, reflecting a positive price and mix impact of 10% (primarily due to the positive pricing impact as a result of global price increases) partially offset by a negative foreign currency exchange translation impact of 4%.

The increase in net revenues primarily reflects:

(i) an increase in net revenues due to market share gain from certain key color cosmetics brands as a result of new brand positioning and enhanced support for these brands;

(ii) an increase in net revenues due to market recovery from COVID-19 and positive market share uplift in the color cosmetics and fragrance categories, increasing customer demand and store traffic, as well as a healthy growth in e-commerce, which positively impacted brands within the segment;

(iii) an increase in net revenues due to a reduction in sales returns, discounts and allowances, primarily as a result of actions implemented in connection to our Transformation Plan.

These actions involved selectively reducing the level of incentives and price reductions on certain products, limiting the frequency and number of shelf resets in the period, and better focusing on planning for new products.

These increase s were partially offset by lower net revenues from Beyoncé and Stetson as a result of license expiration.

Also, the exit from the Russian market negatively impacted brands such as Bourjois , which experienced a decline in net revenue, as well as Max Factor .

In addition, nail category declines had a negative impact on our Sally Hansen brand net revenue in the fourth quarter.

This resulted from the closure of nail salons in the prior year due to COVID restrictions which increased demand for at-home nail care, positively impacting the nail category and the brand’s net revenue in fiscal 2021.

• Color cosmetics sales growth of $59.1, resulting from Covergirl due to positive pricing impact and higher sell-out resulting in lower returns and markdowns in the U.S., and Rimmel Manhattan due to brand innovation and positive price and mix impact in major European markets, such as Germany, Austria, Switzerland, as well as Australia.

• Skin and body care sales growth of $53.3, resulting from growth of brands in Brazil due to strong category momentum and positive product mix impact within our Brazilian brands’ portfolio, as well as due to innovation in brands such as Monange and market share gains for Paixao .

COST OF SA LES

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Cost of sales as a percentage of net revenues decreased to 35.6% in fiscal 2024 from 36.1% in fiscal 2023 resulting in a gross margin percentage increase of approximately 50 basis points, primarily reflecting:

(i) approximately 80 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;

(ii) approximately 50 basis points related to decreased freight costs.

These increases were partially offset by:

(i) approximately 50 basis points related to an increase in excess and obsolescence costs across various subcategories within the Prestige and Consumer Beauty product portfolios;

(ii) approximately 30 basis points related to an increase in designer license fees due to licensed Prestige brands comprising a larger portion of overall net revenues in the current period as well as favorable royalty activity in the prior period, which did not reoccur in the current period.

The above reflects a positive impact from pricing net of inflation of approximately 160 basis points.

In fiscal 2023, cost of sales increased 4%, or $71.6, to $2,006.8 from $1,935.2 in fiscal 2022.

Cost of sales as a percentage of net revenues decreased to 36.1% in fiscal 2023 from 36.5% in fiscal 2022 resulting in a gross margin percentage increase of approximately 40 basis points primarily reflecting:

(i) approximately 30 basis points primarily related to manufacturing and material costs due to productivity improvements;

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The above includes the negative impact of inflation (principally for material costs) and the positive impact from pricing, estimated at approximately 200 basis points each.

In fisca l 2022, cost of sales increased 4%, or $73.5, to $1,935.2 from $1,861.7 in fiscal 2021.

Cost of sales as a percentage of net revenues decreased to 36.5% in fiscal 2022 from 40.2% in fiscal 2021 resulting in a gross margin percentage increase of approximately 370 basis points primarily reflecting:

(i) approximately 130 basis points related to positive product and category mix associated with increased contribution from higher margin Prestige products, reduced sales of products through lower priced channels, as well as price increases within our product portfolio;

(ii) approximately 120 basis points related to favorable manufacturing fixed-cost absorption, a favorable impact on variable costs due to increased manufacturing efficiencies, improvements in productivity, as well as procurement and material cost optimization;

(iii) approximately 60 basis points related to decreased excess and obsolescence expense on inventory due to improvements in the current fiscal year in forecasting sales and better focus on planning for new products, as well as the impact of greater sales volume in the fiscal year;

(iv) approximately 30 basis points primarily related to reductions in Consumer Beauty, as a percentage of revenues, in promotional allowances and other trade spend items, which are recorded as adjustments to net sales;

(v) approximately 20 basis points related to designer license fees due to a favorable impact associated with higher Prestige brand sales in the current year;

(vi) approximately 10 basis points related to freight expense, reflecting both the contribution from our cost savings measures as well as the increased volume of higher priced Prestige products sold.

Included in the above is the negative impact of inflation on material, freight, and energy costs of approximately 120 basis points.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In fiscal 2024, selling, general and administrative expenses increased 12%, or $344.1, to $3,162.4 from $2,818.3 in fiscal 2023.

Selling, general and administrative expenses as a percentage of net revenues increased to 51.7% in fiscal 2024 from 50.7% in fiscal 2023, or approximately 100 basis points.

This increase was primarily due to:

(i) 220 basis points due to a decrease in net gains in the current period compared to the prior year related to the early termination of the Lacoste license;

(ii) 40 basis points due to an increase in bad debt expense as a percentage of net revenues.

These increases were partially offset by the following decreases:

(i) 100 basis points due to a decrease in stock-based compensation cost primarily related to a reduction in expense recognized in connection with awards granted to the CEO;

(ii) 30 basis points due to a decrease in logistics costs as a percentage of net revenues;

(iii) 30 basis points due to favorable transactional impact from our exposure to foreign currency as a percentage of net revenues.

In fiscal 2023, selling, general and administrative expenses decreased 2%, or $63.0, to $2,818.3 from $2,881.3 in fiscal 2022.

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(ii) 30 basis points due to gains on sale of real estate recorded in the comparative period, which represented a greater percentage of net revenues compared to the net gains recorded in the current period, which primarily related to the early termination of the Lacoste license.

In fiscal 2022, selling, general and administrative expenses increased 22%, or $518.1, to $2,881.3 from $2,363.2 in fiscal 2021.

Selling, general and administrative expenses as a percentage of net revenues increased to 54.3% in fiscal 2022 from 51.0% in fiscal 2021, or approximately 330 basis points.

This increase was primarily due to:

(i) 520 basis points due to increase in advertising and consumer promotional costs related to support for certain key brands and product launches, as well as increased store promotions coinciding with store reopenings as COVID restrictions ease;

(ii) 310 basis points in stock-based compensation primarily related to the CEO grant made on June 30, 2021;

(iii) 90 basis points primarily related to the write-down of working capital, long-term assets, as well as contract termination charges and legal costs, in connection with our decision to exit Russia;

(iv) 30 basis points related to higher bad debt expense.

These increases were partially offset by the following decreases:

(i) 330 basis points in administrative costs primarily due to a decrease in compensation related to a reduction in employee headcount;

(ii) 220 basis points related to gains on sale of real estate;

(iii) 50 basis points related to lower logistics costs as a percentage of net revenue;

(iv) 20 basis points related to sale of rights associated with certain brands distributed by a subsidiary in South Africa.

OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS

In fiscal 2023, operating income from continuing operations was $543.7 compared to a income of $240.9 in fiscal 2022.

In fiscal 2024, operating income from continuing operations was $546.7 compared to income of $543.7 in fiscal 2023.

Operating income as a percentage of net revenues, worsened to 8.9% in fiscal 2024 as compared to Operating income as a percentage of net revenues of 9.8% in fiscal 2023.

The worsened operating margin is largely driven by gains from the early termination of the Lacoste license in the prior year (approximately 200 basis points), higher restructuring costs as a percentage of net revenues (approximately 70 basis points), partially offset by lower stock-based compensation expense (approximately 100 basis points) primarily related to a reduction in expense recognize in connection with grants made to the CEO, lower cost of sales as a percentage of net revenues (approximately 50 basis points), lower amortization expense as a percentage of net revenues (approximately 30 basis points), and lower fixed costs as a percentage of net revenues (approximately 30 basis points) primarily related to non-people costs.

In addition, the greater proportion of Consumer Beauty net revenues, including a greater proportion of revenues from our Brazilian business were from lower margin Brazil brands, compared to the prior year, negatively impacted our consolidated operating income margin.

In fiscal 2023, operating income from continuing operations was $543.7 compared to income of $240.9 in fiscal 2022.

Operating income as a percentage of net revenues, improved to 9.8% in fiscal 2023 as compared to Operating income as a percentage of net revenues of 4.5% in fiscal 2022.

The improved operating margin is largely driven by lower fixed costs as a percentage of net revenues, lower stock-based compensation as a percentage of net revenues, lower advertising and consumer promotional spending as a percentage of net revenues, and an asset impairment charge related to the impairment of indefinite-lived intangibles recorded in the prior period.

In fiscal 2022, operating income from continuing operations was $240.9 compared to a loss of $48.6 in fiscal 2021.

Operating income as a percentage of net revenues, improved to 4.5% in fiscal 2022 as compared to Operating loss as a percentage of net revenues of (1.0)% in fiscal 2021.

The improved operating margin is largely driven by lower cost of goods sold as a percentage of net revenues, a reduction in fixed costs, decrease in acquisition and divestiture related expenses, gains recognized on sale of real estate, lower amortization expense, decrease in restructuring expense, partially offset by an increase in advertising and consumer promotional costs, higher stock-based compensation and asset impairment charges related to the impairment of indefinite-lived intangibles.

The improved operating margin is largely driven by lower fixed costs as a percentage of net revenues (approximately 150 basis points) primarily due to lower depreciation expense related to fully depreciated IT equipment, lower stock-based compensation as a percentage of net revenues (approximately 130 basis points) primarily related to a reduction in expense recognized in connection with a prior year’s grant made to the CEO, lower advertising and consumer promotional spending as a percentage of net revenues (approximately 100 basis points) primarily due to a reduction in working media, and a decrease in asset impairment charges as a percentage of net revenues (approximately 60 basis points) related to the impairment of indefinite-lived intangibles recorded in the prior period.

In addition, despite a higher proportion of Consumer Beauty sales from lower margin Brazil brands in fiscal 2023 compared to the prior year, a greater proportion of higher margin Prestige product sales in 2023 positively benefited our consolidated gross margin and operating income.

Operating Income (Loss) by Segment

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In fiscal 2024, operating income for Prestige was $580.7 compared to income of $483.7 in fiscal 2023.

Operating margin improved to 14.1% of net revenues in fiscal 2023 as compared to 11.2% in fiscal 2022, driven primarily by lower fixed costs as a percentage of net revenues, lower cost of goods sold as a percentage of net revenues and lower amortization expense as a percentage of net revenues.

Operating margin improved to 15.1% of net revenues in fiscal 2024 as compared to 14.1% in fiscal 2023, driven primarily by lower amortization expense as a percentage of net revenues (approximately 40 basis points), lower cost of sales as a percentage of net revenues (approximately 40 basis points), lower fixed costs as a percentage of net revenues (approximately 30 basis points) primarily related to non-people costs.

In fiscal 2023, operating income for Prestige was $483.7 compared to income of $367.2 in fiscal 2022.

Operating margin improved to 11.2% of net revenues in fiscal 2022 as compared to 5.8% in fiscal 2021, driven primarily by higher sales volume, lower cost of goods sold as a percentage of net revenues, lower fixed costs as a percentage of net revenues and a decrease in amortization expense, partially offset by an increase in advertising and consumer promotional costs.

Operating margin improved to 14.1% of net revenues in fiscal 2023 as compared to 11.2% in fiscal 2022, driven primarily by lower fixed costs as a percentage of net revenues (approximately 110 basis points) primarily due to lower depreciation expense related to fully depreciated technology equipment, lower cost of goods sold as a percentage of net revenues (approximately 60 basis points) and lower amortization expense as a percentage of net revenues (approximately 60 basis points) mainly due to the certain definite-lived intangible assets reaching the end of their useful lives.

Consumer Beauty

In fiscal 2024, operating income for Consumer Beauty was $89.3 compared to income of $63.3 in fiscal 2023.

Operating margin improved to 3.0% of net revenues in fiscal 2023 as compared to 0.5% in fiscal 2022, driven by lower advertising and consumer promotional costs as a percentage of net revenues, an impairment charge related to the impairment of indefinite-lived intangibles recorded in the prior period, and lower fixed costs as a percentage of net revenues, partially offset by an increase in cost of sales as a percentage of net revenues.

Operating margin improved to 4.0% of net revenues in fiscal 2024 as compared to 3.0% in fiscal 2023, primarily driven by lower advertising and consumer promotion expense as a percentage of net revenues (approximately 30 basis points) primarily due to lower spend in offline consumer engagement and lower transactional foreign exchange losses as a percentage of net revenues (approximately 30 basis points).

In fiscal 2023, operating income for Consumer Beauty was $63.3 compared to income of $9.5 in fiscal 2022.

Operating margin worsened to 0.5% of net revenues in fiscal 2022 as compared to 1.4% in fiscal 2021, driven by an increase in advertising and consumer promotional costs and asset impairment charges related to the impairment of indefinite-lived intangibles, partially offset by higher sales volume, a reduction in fixed costs, lower cost of goods sold as a percentage of net revenues, and a decrease in amortization expense.

Operating margin improved to 3.0% of net revenues in fiscal 2023 as compared to 0.5% in fiscal 2022, driven by lower advertising and consumer promotional costs as a percentage of net revenues (approximately 90 basis points) primarily due to lower depreciation expense on promotional fixtures as a result of fewer fixtures being installed during the COVID-19 pandemic, a decrease in impairment charges as a percentage of net revenues (approximately 150 basis points) related to the impairment of indefinite-lived intangibles recorded in the prior period, and lower fixed costs as a percentage of net revenues (approximately 130 basis points) primarily due to lower depreciation expense as a percentage of net revenues.

Corporate primarily includes expenses not directly relating to our operating activities.

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Operating loss for Corporate was $123.3, $3.3 and $135.8 in fiscal 2024, 2023 and 2022, respectively, as described under “Adjusted Operating Income” below.

The operating loss of $3.3 in fiscal 2023 declined in comparison to the prior year primarily due to lower stock based compensation, a gain recognized due to the early termination of the Lacoste fragrance license in the current period, and a reduction in acquisition and divestiture related costs, partially offset by a gain on sale of real estate recognized in the comparative period.

The operating loss of $135.8 in fiscal 2022 includes stock-based compensation, costs related to the Russia market exit, restructuring and other business realignment costs, acquisition and divestiture related costs, partially offset by a gains on the sale of real estate.

The operating loss of $233.6 in fiscal 2021 includes acquisition and divestiture related costs, restructuring and other business realignment costs, and stock-based compensation.

The operating loss of $123.3 in fiscal 2024 declined in comparison to the prior year primarily due to the gain recognized due to the early termination of the Lacoste fragrance license in the prior period ($104.4) lower stock based compensation ($47.1 reduction in expense) primarily related to a reduction in expense recognized in connection with grants made to the CEO, partially offset by an increase in restructuring and business realignment costs ($42.9 increase in expense).

The operating loss of $3.3 in fiscal 2023 includes stock-based compensation ($135.9), partially offset by gains related to the early termination of the Lacoste fragrance license ($104.4), gains related to the market exit in Russia (approximately $17.0), and gains on sale of real estate ($4.9)

The operating loss of $135.8 in fiscal 2022 includes stock-based compensation ($195.5), costs related to the Russia market exit ($45.9), restructuring and other business realignment costs ($4.7), acquisition and divestiture related costs ($14.7), partially offset by a gains on the sale of real estate ($115.5) and gains from sale of brand assets ($9.5).

Continuing Operations by Segment

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Total $ 240.9 $ 374.6 $ 615.5

(a) See a reconciliation of reported operating income (loss) to adjusted operating income and a description of the adjustments under “Adjusted Operating Income (Loss) from Continuing Operations for Coty Inc.” below.

All adjustments are reflected in Corporate, except for amortization and asset impairment charges on goodwill, regional indefinite-lived intangible assets, and finite-lived intangible assets, which are reflected in the Prestige and Consumer Beauty segments.

Adjusted Operating Income (Loss) and Adjusted EBITDA from Continuing Operations for Coty Inc.

Adjusted operating income (loss) from continuing operations provides investors with supplementary information relating to our performance.

(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.

Adjusted operating income and adjusted EBITDA provide investors with supplementary information relating to our performance.

See “Overview—Non-GAAP Financial Measures.” Reconciliation of reported operating loss to adjusted operating income (loss) is presented below:

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(in millions) 2024 2023 2022 2024/2023 2023/2022

Reported operating income (loss) from continuing operations $ 543.7 $ 240.9 $ (48.6) >100% >100%

Net income $ 109.4 $ 523.2 $ 262.0 (79 %) 100 %

Net income margin 1.8 % 9.4 % 4.9 %

Provision (benefit) for income taxes $ 95.1 $ 181.6 $ 164.8 (48 %) 10 %

Income before income taxes $ 204.5 $ 704.8 $ 426.8 (71 %) 65 %

Interest expense, net $ 252.0 $ 257.9 $ 224.0 (2 %) 15 %

Other expense (income), net $ 90.2 $ (419.0) $ (409.9) >100% (2 %)

Reported operating income $ 546.7 $ 543.7 $ 240.9 1 % >100%

% of Net revenues 8.9 % 9.8 % 4.5 %

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Stock-based compensation 88.8 135.9 195.5 (35 %) (30 %)

Costs related to acquisition and divestiture activities — 14.7 138.8 (100 %) (89 %)

Costs related to acquisition and divestiture activities — — 14.7 N/A (100 %)

Asset impairment charges — — 31.4 N/A (100 %)

(Gains) Costs related to market exit (17.0) 45.9 — <(100%) N/A

Gains on sale and termination of brand assets (104.4) (9.5) — <(100%) N/A

Gains on sale of real estate (4.9) (115.5) — 96 % N/A

Total adjustments to reported operating loss 195.1 374.6 484.8 (48 %) (23) %

Adjusted operating income from continuing operations $ 738.8 $ 615.5 $ 436.2 20 % 41 %

Early license termination/brand asset sale and market exit costs (0.5) (121.4) 36.4 100 % <(100%)

Gains on sale of real estate (1.6) (4.9) (115.5) 67 % 96 %

Total adjustments to reported operating income 316.7 195.1 374.6 62 % (48) %

Adjusted operating income $ 863.4 $ 738.8 $ 615.5 17 % 20 %

% of Net revenues 14.1 % 13.3 % 11.6 %

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In fiscal 2024, adjusted EBITDA was $1,091.1 compared to $972.8 in fiscal 2023.

Adjusted EBITDA margin increased to 17.5% of net revenues in 2023 as compared to 17.1% in fiscal 2022, primarily driven by lower fixed costs as a percentage of net revenues, and lower advertising and consumer promotional costs as a percentage of net revenues.

Adjusted EBITDA margin increased to 17.8% of net revenues in 2024 as compared to 17.5% in fiscal 2023.

In fiscal 2023, adjusted operating income was $738.8 compared to an income of $615.5 in fiscal 2022.

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In fiscal 2023, adjusted EBITDA was $972.8 compared to $905.3 in fiscal 2022.

Adjusted EBITDA margin increased to 17.1% of net revenues in 2022 as compared to 16.5% in fiscal 2021, primarily driven by higher sales volume, lower cost of goods sold as a percentage of net revenues, and a reduction in fixed costs, partially offset by an increase in advertising and consumer promotional costs.

Adjusted EBITDA margin increased to 17.5% of net revenues in 2023 as compared to 17.1% in fiscal 2022.

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

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

Year Ended June 30, Change %

(in millions) 2024 2023 2022 2024/2023 2023/2022

Reported operating income $ 580.7 $ 483.7 $ 367.2 20 % 32 %

Reported operating income margin 15.1 % 14.1 % 11.2 %

Amortization expense 153.7 151.4 162.9 2 % (7) %

Total adjustments to reported operating income $ 153.7 $ 151.4 $ 162.9 2 % (7) %

Adjusted operating income $ 734.4 $ 635.1 $ 530.1 16 % 20 %

Adjusted operating income margin 19.0 % 18.6 % 16.2 %

Adjusted depreciation 105.2 110.5 138.7 (5) % (20) %

Adjusted EBITDA $ 839.6 $ 745.6 $ 668.8 13 % 11 %

Adjusted EBITDA margin 21.8 % 21.8 % 20.5 %

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

Year Ended June 30, Change %

(in millions) 2024 2023 2022 2024/2023 2023/2022

Reported operating income $ 89.3 $ 63.3 $ 9.5 41 % >100%

Reported operating income margin 4.0 % 3.0 % 0.5 %

Amortization expense 39.7 40.4 44.5 (2) % (9) %

Asset impairment charges — — 31.4 N/A (100) %

Total adjustments to reported operating income $ 39.7 $ 40.4 $ 75.9 (2) % (47) %

Adjusted operating income $ 129.0 $ 103.7 $ 85.4 24 % 21 %

Adjusted operating income margin 5.7 % 4.9 % 4.2 %

Adjusted depreciation 122.5 123.5 151.1 (1) % (18) %

Adjusted EBITDA $ 251.5 $ 227.2 $ 236.5 11 % (4) %

Adjusted EBITDA margin 11.1 % 10.6 % 11.6 %

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

Year Ended June 30, Change %

(in millions) 2024 2023 2022 2024/2023 2023/2022

Reported operating loss $ (123.3) $ (3.3) $ (135.8) <(100%) 98 %

Reported operating (loss) margin — % — % — %

Restructuring and other business realignment costs $ 36.6 $ (6.3) $ 4.7 >100% <(100%)

Stock-based compensation $ 88.8 $ 135.9 $ 195.5 (35) % (30) %

Costs related to acquisition and divestiture activities $ — $ — $ 14.7 N/A (100) %

Early license termination/brand asset sale and market exit costs $ (0.5) $ (121.4) $ 36.4 100 % <(100%)

Gains on sale of real estate $ (1.6) $ (4.9) $ (115.5) 67 % 96 %

Total adjustments to reported operating income $ 123.3 $ 3.3 $ 135.8 >100% (98) %

Adjusted operating loss $ — $ — $ — N/A N/A

Adjusted operating income margin — % — % — %

Adjusted depreciation — — — N/A N/A

Adjusted EBITDA $ — $ — $ — N/A N/A

Adjusted EBITDA margin — % — % — %

Amortization Expense

In fiscal 2024, amortization expense increased to $193.4 from $191.8 in fiscal 2023.

In fiscal 2023, amortization expense decreased to $191.8 from $207.4 in fiscal 2022.

In fiscal 2023, amortization expense of $151.4 and $40.4, was reported in the Prestige and Consumer Beauty respectively.

In fiscal 2022, amortization expense of $162.9 and $44.5, was reported in the Prestige and Consumer Beauty segments, respectively.

The decrease was primarily driven by certain license and collaboration agreements, which fully amortized in early fiscal 2023 and fiscal 2022.

In fiscal 2022, amortization expense decreased to $207.4 from $251.2 in fiscal 2021.

In fiscal 2021, amortization expense of $201.2, $50.0, was reported in the Prestige and Consumer Beauty segments, respectively.

The decrease was primarily driven by finite intangible assets that are fully amortized as of fiscal 2021.

Restructuring and Other Business Realignment Costs

We continue to analyze our cost structure, including opportunities to simplify and optimize operations.

In connection with the four-year Turnaround plan announced on July 1, 2019 to drive substantial improvement and optimization in our business, we have reached the end of the plan at the end of the fiscal period, however, we will continue looking for opportunities to improve our cost structure.

Restructuring costs are initially based on estimates which may differ from actuals due to various factors including more than expected employee attrition and final negotiated severance packages.

On May 11, 2020 we

announced an expansion of the Turnaround Plan to further reduce fixed costs, the Transformation Plan.

We incurred $517.7 of cash costs life-to-date as of June 30, 2023, which have been recorded in Corporate.

We incurred $521.3 of cash costs life-to-date related to our previously announced and substantially completed Transformation Plan as of June 30, 2024, which have been recorded in Corporate.

In addition, we continue to analyze our cost structure and evaluate opportunities to streamline operations through a range of other cost reduction activities (“Current Restructuring Actions”).

In fiscal 2024, we incurred restructuring and other business structure realignment costs of $36.6, as follows:

• We incurred restructuring costs of $36.7, primarily related to the Current Restructuring Actions, included in the Consolidated Statements of Operations and

• We incurred a credit in business structure realignment costs of $(0.1) which is reported in selling, general and administrative expenses.

In fiscal 2023, we incurred a credit in restructuring and other business structure realignment costs of $(6.3), as follows:

• We incurred a credit in restructuring costs of $(6.5), related to the Transformation Plan, included in the Consolidated Statements of Operations and

• We incurred a credit in restructuring costs of $(6.5) primarily related to the Transformation Plan, included in the Consolidated Statements of Operations and

• We incurred business structure realignment costs of $0.2 primarily related to our Transformation Plan.

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• We incurred business structure realignment costs of $11.2 primarily related to our Transformation Plan and certain other programs.

This amount includes $11.6 reported in cost of sales due to an increase in accelerated depreciation as part of Transformation Plan, and a credit of $(0.4) reported in selling, general and administrative expenses in the Consolidated Statement of Operations.

In fiscal 2021, we incurred restructuring and other business structure realignment costs of $67.0, as follows:

• We incurred restructuring costs of $63.6 primarily related to the Transformation Plan, included in the Consolidated Statements of Operations;

• We incurred business structure realignment costs of $3.4 primarily related to our Transformation Plan and certain other programs.

This amount includes $8.3 reported in cost of sales due to an increase in accelerated depreciation as part of Transformation Plan, and a credit of $(4.9) reported included in selling, general and administrative expenses, which is a result of changes in estimate, in the Consolidated Statement of Operations.

This amount includes $11.6 reported in cost of sales due to an increase in accelerated depreciation as part of Transformation Plan, and a credit of $(0.4) reported included in selling, general and administrative expenses in the Consolidated Statement of Operations.

In all reported periods, all restructuring and other business realignment costs were reported in Corporate.

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In fiscal 2024, stock-based compensation was $88.8 as compared with $135.9 in fiscal 2023.

The decrease in stock-based compensation is primarily related to a reduction in expense recognized in connection with a prior year's grant made to the CEO.

The decrease in stock-based compensation is primarily related to a reduction in expense recognized in connection with awards granted to the CEO.

In fiscal 2023, stock-based compensation was $135.9 as compared with $195.5 in fiscal 2022.

The increase in stock-based compensation is primarily related to the CEO grant made on June 30, 2021.

The decrease in stock-based compensation is primarily related to a reduction in expense recognized in connection with a prior year's grant made to the CEO.

In all reported periods, all costs related to stock-based compensation were reported in Corporate.

Acquisition- and divestiture-related costs

In fiscal 2023, we incurred no costs related to acquisition- and divestiture-activities.

In fiscal 2024 and 2023, we incurred no costs related to acquisition- and divestiture-activities.

In fiscal 2022, we incurred $14.7 of acquisition- and divestiture-related costs which were associated with the Wella Transaction.

In fiscal 2021, we incurred $138.8 of acquisition- and divestiture-related costs, of which $135.8 were associated with the Wella Transaction, and $3.0 were consulting and legal costs associated with the Kim Kardashian Transaction.

In all reported periods, all acquisition- and divestiture-related costs were reported in Corporate, except where otherwise noted.

Asset Impairment Charges

In fiscal 2023, we did not incur any asset impairment charges.

In fiscal 2024 and 2023, we did not incur any asset impairment charges.

In fiscal 2022, we incurred $31.4 of asset impairment charges related to the impairment of indefinite-lived intangibles in connection with our decision to exit Russia, all of which was reported in Consumer Beauty.

In fiscal 2021, we did not incur any asset impairment charges.

For further detail as to the factors resulting in the asset impairment charges please see Note 12 —Goodwill and Other Intangible Assets, net to the Consolidated Financial Statements.

(Gains) Costs Related to Market Exit

In fiscal 2023, we recognized gains of $(17.0) related to our decision to wind down our business operations in Russia which are included in Selling, general and administrative expenses and Cost of sales in the Consolidated Statements of Operations.

In fiscal 2022, we incurred costs of $45.9 related to our decision to wind down our business operations in Russia which are included in Selling, general and administrative expenses and Cost of sales in the Consolidated Statements of Operations.

In fiscal 2021, we did not recognize costs related to a market exit.

Gains on Sale and Termination of Brand Assets

In fiscal 2023, we recognized a gain of $104.4 related to the early termination of the Lacoste fragrance license.

In fiscal 2022, we recognized a gain of $9.5 related to sale of brand assets in South Africa, which was reported in Corporate.

In fiscal 2021, we did not recognize any gain or loss on the sale and termination of brand assets.

For further detail as to the factors resulting in the asset impairment charges, see Note 11 —Goodwill and Other Intangible Assets, net to the Consolidated Financial Statements.

Early License Termination/Brand Asset Sale and Market Exit Costs

In fiscal 2024, we recognized a gain of $(0.5) related to the early termination of a license and our decision to wind down our business in Russia.

In fiscal 2023, we recognized gains of $(121.4) related to the early termination of a license and our decision to wind down our business in Russia.

In fiscal 2022, we incurred costs of $36.4 related to our decision to wind down our business operations in Russia and the sale of brand assets.

Gains on Sale of Real Estate

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In fiscal 2023, we recognized gains of $4.9 related to sale of real estate, which was reported in Corporate.

In fiscal 2021, we did not recognize any gain or loss on the sale of real estate.

Adjusted depreciation expense

In fiscal 2023, adjusted depreciation expense of $110.5 and $123.5 was reported in the Prestige and Consumer Beauty segments, respectively.

In fiscal 2022, adjusted depreciation expense of $138.7 and $151.1 was reported in the Prestige and Consumer Beauty segments, respectively.

In fiscal 2021, adjusted depreciation expense of $144.4 and $181.4, was reported in the Prestige and Consumer Beauty segments, respectively.

In fiscal 2022, we recognized gains of $115.5 related to the sale of real estate, which was reported in Corporate.

INTEREST EXPENSE, NET

Net interest expense was $252.0, $257.9, and $224.0 in fiscal 2024, fiscal 2023 and fiscal 2022, respectively.

In fiscal year 2023, the increase in interest expense is primarily due to the impact of a higher average interest rate despite lower debt balances in the current period.

In fiscal year 2022, the decrease in interest expense was primarily due to foreign currency exchange gains, offset by the impact of higher interest rates despite lower average debt balances.

In fiscal year 2024, the decrease in interest expense is primarily due to lower debt balances in the current period despite higher interest rates.

In fiscal year 2023, the increase in interest expense is primarily due to the impact of a higher average interest rate despite lower debt balances compared to the previous year.

OTHER EXPENSE (INCOME), NET

In fiscal 2023, net other income was $419.0, primarily related to a favorable adjustment for the unrealized gain in the Wella investment of $230.0 and unrealized gain on forward repurchase contracts of $196.9.

In fiscal 2024, net other expense was $90.2, was principally comprised of net losses on forward repurchase contracts of $124.2, partially offset by a favorable adjustment for the unrealized gain in the Wella investment of $25.0.

In fiscal 2022, net other income was $409.9, primarily related to a favorable adjustment for the unrealized gain in the Wella investment of $403.9.

In fiscal 2021, net other income was $43.9, primarily related to a favorable adjustment for the unrealized gain in the Wella investment of $73.5, partially offset by write-off of deferred financing costs and debt discounts of $24.2 as a result of prepayments of the 2018 Coty Term A and B Facilities.

The following table presents our (benefit) provision for income taxes, and effective tax rates for the periods presented:

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Effective income tax rate 46.5 % 25.8 % 38.6 %

The effective income tax rate in fiscal 2023 is primarily due to the limitation on the deductibility of executive stock compensation, offset by fair value gains related to the investment in the Wella business at a lower tax rate.

The effective income tax rate in fiscal 2022 is primarily due to the limitation on the deductibility of executive stock compensation and tax costs associated with the Russia exit, offset by large fair value gains related to the investment in the Wella business at a lower rate.

The effective income tax rate in fiscal 2021 is primarily due to a preliminary benefit of $234.4 recorded as a result of a tax rate differential on the deferred taxes recognized on the transfer of assets and liabilities, following the Company’s relocation of the main principal location from Geneva to Amsterdam.

The overall value of the assets and liabilities transferred was negotiated with both the Swiss and Dutch Tax Authorities and per terms of the agreements, will be reevaluated after three years.

The Company also recorded an expense of $130.0 related to an internal restructuring following the Wella divestiture, primarily intended to create a more efficient structure to hold its equity investment in Wella.

The 20.7% increase in the effective tax rate in fiscal 2024 from fiscal 2023 was primarily driven by the following items:

• a 17.6% increase from an increase in valuation allowances recorded primarily on interest expense carryforwards;

• a 13.5% increase due to changes to the net deferred taxes recognized on the assignment of strategic service functions from Amsterdam to Geneva, as an indirect result of the required revaluation of the original transfer of the main principal location from Geneva to Amsterdam in fiscal 2021;

• an 11.8% increase from the revaluation of our deferred tax liabilities due to a tax rate increase enacted in Switzerland;

• an 11.7% increase in the foreign tax rate differential impact primarily due to lower fair value gains related to the investment in the Wella business taxed at a lower rate as compared to our U.S.

Federal statutory rate of 21%.

These increases were partially offset by the following decreases:

• an 18.5% decrease as a result of the issuance of non-refundable income tax credits received from the Swiss Tax Authorities of $97.1.

The Company recorded a benefit for the tax credit of $37.8, net of a valuation allowance;

• a 12.2% decrease from a reduction of foreign tax audits due to the settlement of foreign tax audits.

The 12.8% decrease in the effective tax rate in fiscal 2023 from fiscal 2022 was primarily driven by the following items:

• a 6.6% decrease in tax costs associated with the Company’s exit from Russia in the prior year;

• a 6.6% decrease from a reduction in permanent differences related to non-deductible expenses and non-deductible foreign exchange losses;

• a 4.8% decrease as a result of the reduction in the amount of non-deductible executive stock compensation;

• a 3.0% decrease from a gain on the disposition of business assets (real estate) in the prior period;

• a 1.9% decrease from a foreign exchange loss recognized on the repatriation of funds in the current year that were previously taxed.

These decreases were partially offset by the following increases:

• a 7.1% increase in unrecognized tax benefits due to the impact of increasing U.S.

taxation of foreign sourced income;

• a 2.4% increase in foreign tax rate differential impact primarily due to lower fair value gains related to the investment in the Wella business taxed at a lower rate as compared to our U.S.

Federal statutory rate of 21%.

The Company has significant income in jurisdictions such as Germany, Netherlands, France, and Spain which have statutory tax rates higher than the U.S.

Federal statutory rate of 21%.

The impact of the foreign earnings in higher taxed jurisdictions coupled with U.S.

losses at the statutory tax rate of 21% increases the Company’s effective tax rate.

This jurisdictional mix is expected to have a continuing impact on the effective tax rate.

The effective rates vary from the U.S.

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(in millions) (Loss)/ income before income taxes (Benefit) provision for income taxes Effective tax rate (Loss)/ income before income taxes (Benefit) provision for income taxes Effective tax rate (Loss)/income before income taxes (Benefit)provision for income taxes Effective tax rate

Reported income (loss) before income taxes $ 704.8 $ 181.6 25.8 % $ 426.8 $ 164.8 38.6 % $ (239.8) $ (172.0) 71.7 %

Reported income before income taxes $ 204.5 $ 95.1 46.5 % $ 704.8 $ 181.6 25.8 % $ 426.8 $ 164.8 38.6 %

Adjustments to reported operating income (loss) (a)

316.7 195.1 374.6

Change in fair value of investment in Wella Business (e)

Change in fair value of investment in Wella Business (d)

(25.0) (230.0) (403.9)

Other adjustments (f)

Other adjustments (e)

(2.4) 0.2 (2.4)

Total Adjustments (b)(c)(d)

Total Adjustments (b)(c)

289.3 $ 35.6 (34.7) (4.5) (31.7) (55.3)

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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.

In connection with our decision to wind down our operations in Russia, we recognized tax charges related to certain direct incremental impacts of our decision, which are reflected in this amount, in fiscal 2023 and fiscal 2022.

(c) The total tax impact on adjustments includes a tax benefit of $0.4 and tax expense of $24.1 for fiscal 2023 and fiscal 2022, respectively, recorded as the result of the Company’s exit from Russia.

(d) The total tax impact on adjustments in fiscal 2021 includes a $234.4 benefit recorded as the result of the tax rate differential on the deferred taxes recognized on the transfer of assets and liabilities, following the relocation of our main principal location from Geneva to Amsterdam on July 1, 2020.

It also includes a $130.0 tax expense recorded as the result of an internal restructuring following the Wella divestiture, primarily intended to create a more efficient structure to hold its equity investment in Wella.

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

(f) See “Reconciliation of Reported Net Income (Loss) Attributable to Coty Inc.

(c) In fiscal 2024, the total tax impact on adjustments includes a tax expense of $27.6 due to changes to the net deferred taxes recognized on the assignment of strategic service functions from Amsterdam to Geneva, as an indirect result of the required revaluation of the original transfer of the main principal location from Geneva to Amsterdam in fiscal 2021.

The total tax impact on adjustments also includes a tax benefit of $1.1, $0.4 and tax expense of $24.1 for fiscal 2024, fiscal 2023 and fiscal 2022, respectively, recorded as the result of the Company’s exit from Russia.

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

(e) See “Reconciliation of Reported Net Income (Loss) Attributable to Coty Inc.

to Adjusted Net Income (Loss) Attributable to Coty Inc.”

The adjusted effective tax rate was 26.5% compared to 26.4% in the prior-year period.

The differences were primarily due to permanent adjustments and jurisdictional mix of income.

The differences were primarily due to an increase in valuation allowances recorded primarily on interest expense carryforwards and the tax impact of the revaluation of the Company’s deferred tax liabilities due to a tax rate increase enacted in Switzerland offset by a tax benefit recorded as a result of the issuance of non-refundable income tax credits received from the Swiss Tax Authorities and a reduction of unrecognized tax benefits due to the settlement of foreign tax audits.

Cash paid during the years ended June 30, 2024, 2023 and 2022, for income taxes was $172.6, $58.6 and $97.2, respectively.

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was $89.4 compared to income of $508.2 in fiscal 2023.

The net income increase was primarily driven by higher operating income, incremental net gains associated with forward repurchase contracts, contingent consideration gains associated with the sale of Wella, partially offset by a less favorable adjustment related to the unrealized gain in the Wella investment in the current year, higher net interest expense in the current year and an increase in the provision for income taxes in the current year compared to the prior year.

The net income increase was primarily driven by losses from forward repurchase contracts of $124.2 compared to gains of $168.7 in the prior year and a lower favorable adjustment of $205.0 related to the unrealized gain in the Wella investment in the current year.

In fiscal 2023, net income attributable to Coty Inc.

was $259.5 compared to a loss of $201.3 in fiscal 2021.

was $508.2 compared to income of $259.5 in fiscal 2022.

The net income increase was primarily driven by higher operating income in the current year, a favorable adjustment of $230.0 related to the realized and unrealized gain in the Wella investment in the current year, and the loss on sale of the Wella Business, which was recorded in the comparative period, partially offset by a provision for income taxes in the current year compared to income tax benefit in the prior year.

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316.7 195.1 374.6 62 % (48 %)

Adjustments to Loss on Sale of Business — (6.1) 246.4 100 % <(100%)

Adjustments to Loss on Sale of Business — — (6.1) N/A 100 %

Change in fair value of investment in Wella Business (c)

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$ 0.37 $ 0.53 $ 0.28

(a) Diluted EPS is adjusted by the effect of dilutive securities, including awards under the Company's equity compensation plans, the convertible Series B Preferred Stock and the Forward Repurchase Contracts.

When calculating any potential dilutive effect of stock options, Series A Preferred Stock, restricted stock, PRSUs and RSUs, the Company uses the treasury method and the if-converted method for the Convertible Series B Preferred Stock and the Forward Repurchase Contracts.

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(c) In fiscal 2024, 2023, and 2022, the amount represents the unrealized (gain) loss recognized for the change in fair value of the investment in Wella.

(d) In fiscal 2023, the amount includes the amortization of basis differences in certain equity method investments and pension curtailment gains.

(d) In fiscal 2024, the amount includes recovery of previously written-off non-income tax credits and the amortization of basis differences in certain equity method investments.

In fiscal 2023, the amount includes the amortization of basis differences in certain equity method investments and pension curtailment gains.

In fiscal 2022, the amount includes a net gain on the exchange of Series B Preferred Stock partially offset by the amortization of basis differences in certain equity method investments and pension curtailment losses.

In fiscal 2021, the Company incurred losses of $13.8

due to the write-off of deferred financing fees related to the Wella sale, primarily offset by pension curtailment gains of $6.9 as a result of the Transformation Plan, which significantly reduced the expected years of future service for employees participating in our non-U.S.

pension plans.

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

(f) As of June 30, 2023 and 2022, 23.7 and 65.4 million dilutive shares of Convertible Series B Preferred Stock were excluded in the computation of adjusted weighted-average diluted shares because their effect would be anti-dilutive.

As of June 30, 2021, 171.1 million dilutive shares of RSUs and Convertible Series B Preferred Stock were excluded in the computation of adjusted weighted-average diluted shares because their effect would be anti-dilutive.

DISCONTINUED OPERATIONS

Due to the sale of the Wella Business on November 30, 2020, no net revenues or operating expenses from discontinued operations were recorded after November 30, 2020.

As such, our results from discontinued operations for the fiscal year ended June 30, 2021 reflect only five months of operations.

In fiscal 2021, net revenues from discontinued operations was $986.3 and operating income was $220.8 in fiscal 2021.

Net loss was $137.3 in fiscal 2021.

The loss on sale of the Wella Business was $246.4 in fiscal 2021.

Factored into the loss on sale are the proceeds received from the sale of our majority interest in Wella, the book value of net assets sold and costs to sell.

The book value of net assets sold was impacted by the seasonal effects on certain portions of the Wella Business during the months leading up to the sale, resulting in increases in the net assets sold.

Additionally, certain legal and tax structuring matters were finalized in the final month of the closing of the transaction, resulting in a reduction to certain deferred tax assets and liabilities that were transferred at the date of sale and an increase in the tax liabilities retained by us.

The loss on sale of the Wella Business also reflects certain purchase price working capital adjustments made during fiscal 2021.

In connection with the sale of a majority stake in the Wella Business, the Company recorded a tax cost of approximately $34.3 in fiscal 2021.

This cost is a combination of cash taxes incurred as well as a deferred tax expense due to the utilization of net operating loss carryforwards, capital loss carryforwards, and foreign tax credits.

(f) As of June 30, 2024, 2023 and 2022, 23.7 million dilutive shares of Convertible Series B Preferred Stock were excluded in the computation of adjusted weighted-average diluted shares because their effect would be anti-dilutive.

Quarterly Results of Operations Data

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Condensed Consolidated Statements of Operations Data:

Fiscal 2024 Fiscal 2023

Three Months Ended Three Months Ended

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Restructuring costs 1.7 0.9 5.7 28.4 (1.1) (1.3) (2.9) (1.2)

Acquisition-and divestiture-related costs — — — — 0.5 3.3 6.9 4.0

Asset impairment charges — — — — 31.4 — — —

Operating income (loss) 34.7 77.8 236.7 197.5 129.0 43.5 199.3 171.9

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Net (loss) income from continuing operations (95.6) 8.8 186.0 10.2 35.5 111.8 241.4 134.5

Net (loss) income from discontinued operations — — — — 1.2 0.7 3.8 —

Net (loss) income attributable to noncontrolling interests 1.3 2.4 0.5 1.1 (1.4) 1.0 (1.4) —

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per common share:

Basic for Continuing Operations $ 0.03 $ 0.12 $ 0.28 $ 0.15 $ (0.34) $ 0.06 $ 0.23 $ 0.13

Basic for Coty Inc $ (0.12) $ — $ 0.20 $ — $ 0.03 $ 0.12 $ 0.28 $ 0.15

Diluted for Continuing Operations $ 0.03 $ 0.12 $ 0.27 $ 0.15 $ (0.34) $ 0.06 $ 0.23 $ 0.13

Diluted for Coty Inc.

$ (0.12) $ — $ 0.20 $ — $ 0.03 $ 0.12 $ 0.27 $ 0.15

(a) The outstanding stock options and Series A/A-1 Preferred Stock with purchase or conversion rights to purchase shares of Common Stock, RSUs and Convertible Series B Preferred Stock were excluded in the computation of diluted shares when their effect would be antidilutive.

(a) The outstanding stock options and Series A Preferred Stock with purchase or conversion rights to purchase shares of Common Stock, RSUs and Convertible Series B Preferred Stock were excluded in the computation of diluted shares when their effect would be antidilutive.

FINANCIAL CONDITION

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Working capital movements are influenced by the sourcing of materials related to the production of products.

Cash and working capital management initiatives, including the phasing of vendor payments and factoring of trade receivables from time-to-time, may also impact the timing and amount of our operating cash flows.

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.

We continue to take steps to permanently reduce our debt, in order to reduce interest costs and improve our long term profitability and cash flows.

In addition, our 25.9% investment in Wella gives us the opportunity for further permanent debt reductions, when our equity position is divested.

On July 18, 2023 we announced that we entered into a binding letter of intent to sell a 3.6% stake in Wella to investment firm IGF Wealth Management for $150.0.

The closing of the transaction is subject to, among other things, completion of due diligence and the satisfaction of certain closing conditions, including the approval of the transaction by KKR.

If the transaction closes, we intend to use the net proceeds to pay down a portion of the outstanding principal balance of our Revolving Credit Facility.

Assuming the transaction closes, we would retain 22.3% of the Wella Company.

Variable rate debt accounts for approximately 34% of our total debt outstanding as of June 30, 2023.

We incurred higher average variable interest rates compared to the same period in the prior year.

We have taken action to reduce variability in our interest payments including paying down variable interest rate debt outstanding under our 2018 Coty Term B Facility, issuing fixed rate bonds (as discussed in the Debt section below), and entering into floating to fixed interest rate swaps.

Giving effect to transactions in July 2023 (as noted in the Debt section below) on our June 30, 2023 debt balances, the proportion of our fixed rate debt outstanding would have been approximately 84%.

During the fiscal year, we terminated our licensing arrangement for Lacoste fragrances and received termination payments from the licensor totaling €87.8 million (approximately $93.9).

We expect to receive an additional payment of €15.0 million (approximately $16.3) in fiscal 2024.

We used proceeds received to repay debt, as discussed below.

We continue to wind down the operations of our Russian subsidiary.

We anticipate that we will incur an immaterial amount of additional costs through completion of the wind down, and future net cash costs of $10.0 to $20.0, 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.

We have substantially completed our commercial activities in Russia.

In addition, our 25.84% investment in Wella gives us the opportunity for further permanent debt reductions, when our equity position is fully or partially divested.

The timing of any future divestiture of our Wella stake will depend on a combination of factors including market conditions and the decisions of KKR, the majority owner of Wella.

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 continue to experience inflationary pressures in most markets resulting in higher commodity and supply chain costs, including material, freight, and energy costs, as well as higher costs for services and labor.

Further, inflationary trends in certain markets and global supply chain challenges, including component shortages, may negatively affect our future sales and operating performance.

Supply chain constraints may impact the availability of raw materials used to manufacture our products which may negatively impact our ability to meet customer demands, thereby impacting our cash flows and profitability.

To mitigate the impact of these supply chain constraints on our ability to meet demand for our products, we have increased inventory levels throughout the year.

We continue to monitor supply chain and other factors impacting our ability to meet demand and we will take the necessary actions to optimize our inventory levels in light of these factors.

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.

The impact of inflation on material, logistical and other costs subsided during fiscal year 2024, which was primarily driven by a significant easing during the second and third quarters.

Inflation may continue to impact certain costs, such as labor, however, we currently anticipate the overall impact of inflation to remain muted.

Additionally, through steps taken to improve order fill rates and mitigate the impact of supply chain constraints, we have seen improvements in our order fill rates on a company-wide basis.

As a result, in fiscal year 2024 we achieved close to pre-COVID-19 service levels across our divisions.

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.

Actions that we have taken in fiscal 2023 and subsequently include the following.

• Senior Notes – We completed cash tender offers and redeemed $77.0 of our 2026 Dollar Notes and €69.7 million (approximately $72.2) of our 2026 Euro Notes.

• 2018 Term B Facility – We used proceeds associated with the termination of the Lacoste fragrances license to reduce the euro and U.S.

dollar portions of the 2018 Term B Facility, in the amounts of €20.1 million (approximately $21.5) and $29.5, respectively.

In addition, on March 7, 2023, we amended the 2018 Coty Credit Agreement to effectuate the transition of the underlying variable interest rate from LIBOR to the Secured Overnight Financing Rate (“SOFR”).

Interest payments on our debt agreements were not materially impacted by the transition to SOFR.

First Quarter of Fiscal 2024

July Transactions

• 2018 Revolving Credit Facility – On July 11, 2023, we extended the maturity of the 2018 Revolving Credit Facility until July 2028.

• Senior Notes – On July 26, 2023, we completed a senior secured notes offering and received net proceeds of $740.6.

The new senior secured notes are due in 2030 and bear an annual interest rate of 6.625%.

• 2018 Term B Facility – At the time we completed the senior secured noted offering, we used net proceeds to fully repay our U.S.

dollar variable interest rate loans outstanding and repay a pro-rata portion of our euro variable interest rate loans outstanding under our existing 2018 Term B Facility.

August Transactions

• On August 3, 2023, we repaid €408.0 million of debt outstanding under our 2018 Term B Facility.

We have taken action to reduce variability in our interest payments including completely paying down variable interest rate debt outstanding under our 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 long-term debt outstanding as of June 30, 2024 is fixed rate debt, and all floating-to-fixed interest rate swaps have been terminated.

In the first quarter of fiscal 2024, we amended the 2018 Coty Credit Agreement and replaced our existing revolving commitments with two tranches of revolving commitments, having an aggregate principal amount of $1,670.0 available in U.S.

dollars and certain other currencies and the other in an aggregate principal amount of €300.0 million available in euros, and issued $750.0 and €500.0 million of senior secured notes due July 2030 and September 2028, respectively.

The net proceeds received from the offerings were used to primarily pay down the outstanding balance of the U.S.

dollar and euro portions of the 2018 Coty Term B Facility by $715.5 and €22.6 million (approximately $25.1), respectively and a portion of the borrowings outstanding under our revolving credit facility.

In August 2023, we repaid the €408.0 million (approximately $446.1) of the debt outstanding under the 2018 Term B Facility, thus repaying the facility in full.

In the second quarter of fiscal 2024, one of our wholly-owned subsidiaries utilized cash on hand to fully pay down the U.S.

Dollar-denominated credit facility in Brazil in the amount of $31.9.

Additionally, we completed cash tender offers on December 7, 2023, and redeemed $150.0 of the Company’s 2026 Dollar Notes and $250.0 of the Company’s 2026 Dollar Senior Secured Notes.

In the fourth quarter of fiscal 2024, we issued an aggregate principal amount of €500.0 million of 4.50% senior secured notes due 2027 ("2027 Euro Senior Secured Notes") in a private offering.

The net proceeds received of €493.7 million in connection with this offering were utilized to redeem the remaining $323.0 of existing 2026 Dollar Notes.

Coty used a combination of proceeds from the issuance and cash on hand to pay fees and expenses associated with this offering.

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

See Note 14—Debt in the notes to our Consolidated Financial Statements for additional information on our debt arrangements and prior period credit agreements, as well as definitions of capitalized terms.

See Note 28—Subsequent Events in the notes to our Consolidated Financial Statements for disclosures of transactions occurring after June 30, 2023.

A significant portion of our long-term debt maturities (excluding capital lease obligations) have been extended from fiscal 2024 and 2025 to fiscal 2029 and thereafter following the July 2023 transactions.

Following the transactions over 99% of our aggregate debt maturities have been pushed out to fiscal 2026 and beyond.

Equity Offering

On September 28, 2023, we entered into an agreement with a group of underwriters to issue and sell 33.0 million shares of our Class A common stock, par value $0.01 per share (see Note 21—Equity and Convertible Preferred Stock for additional information).

We used proceeds of approximately $348.4, net of underwriting fees, from this offering primarily to retire the principal amount of outstanding debt.

Other uses included general corporate purposes, such as strategic investments in the business, working capital and capital expenditures.

Settlement of the Offering occurred on October 2, 2023.

Share Repurchases

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

We physically settled the June 2022 forward repurchase contracts by delivering approximately $200.0 cash in exchange for 27.0 million shares of our Class A Common Stock during the third quarter of fiscal 2024.

The forward repurchase contracts permit a net cash settlement alternative in addition to the physical settlement.

We may elect net cash settlement of all, or some of the remaining forward repurchase contracts based on factors such as timing, the market value of the underlying shares at the settlement date and other internal cash management considerations.

We will continue to incur costs associated with the remaining forward repurchase contracts before settlement.

Cash costs incurred in the current fiscal year to date for all forward repurchase contracts amounted to $42.6.

Factoring of Receivables

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Remaining balances due from factors amounted to $10.0 and $14.2 as of June 30, 2024 and 2023, respectively.

Business Combinations

During fiscal 2023 and 2022, we did not enter into any business combinations or asset acquisitions.

During fiscal 2021, we completed the acquisition of a 20% ownership interest in KKW Holdings and the related collaboration agreement.

Total cash paid in the transaction totaled $200.0.

For additional information on our prior period activity from fiscal year 2022, see Note 4—Business Combinations, Asset Acquisitions and Divestitures in the notes to our Consolidated Financial Statements.

During fiscal 2023 and 2022, we did not enter into any business dispositions.

During fiscal 2021, we completed the sale of a majority stake in the Wella Business (as discussed below).

The Wella Business Divestiture

During fiscal 2021, we completed the sale of a majority stake in the Wella Business and received cash proceeds of $2,451.7 and retained an initial ownership stake of 40% in Wella.

Additionally, during fiscal 2021, we entered into a post-closing purchase consideration adjustment agreement for the Wella Business sale and received advanced contingent proceeds of $34.0.

During fiscal 2022, our ownership stake in the Wella Company was reduced to 25.9%.

During fiscal 2023 and 2022, we earned $30.8 and $0.7, respectively of the contingent proceeds advanced to us from the sale of Wella.

The remaining $2.5 is unearned as of June 30, 2023.

For additional information on our prior period business dispositions from fiscal year 2021, see Note 4—Business Combinations, Asset Acquisitions and Divestitures in the notes to our Consolidated Financial Statements.

Other Developments

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

Year Ended June 30,

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Net cash provided by operating activities was $614.6, $625.7 and $726.6 for fiscal 2024, 2023 and 2022, respectively.

The decrease in cash provided by operating activities of $11.1 in fiscal 2024 as compared with fiscal 2023 is primarily the result of a negative impact from changes in accounts payable due to the timing of payments and mix of vendor terms, higher cash outflows from the timing of income tax related payments and changes in trade receivables reflecting higher net revenues with an unfavorable customer mix and decreases from lower factoring.

These decreases were partially offset by higher year over year impacts from all other net working capital accounts which include a positive impact from inventory levels returning closer to normal compared to the prior year when inventory levels reflected increased safety stock to mitigate supply chain

Net working capital accounts in the current year were also positively impacted by a net inflow of $35.0 as a reimbursement from Wella for working capital financed by Coty since the separation from the Wella business.

The decrease in cash provided by operating activities of $100.9 in fiscal 2023 as compared with fiscal 2022 is primarily driven by an overall net decrease in cash from working capital partially offset by an increase in cash related net income.

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The increase in cash related net income was due to an increase in net revenues and gross margin, and lower selling, general and administrative expenses in the current year compared to the prior year.

The increase in cash provided by operating activities of $407.9 in fiscal 2022 as compared with fiscal 2021 is primarily driven by a year over year increase in cash related net income and overall increase in cash flows from changes in net working capital accounts.

Higher net revenues in both segments, lower costs as percentage of revenues, lower costs for acquisition and divestiture related activities, and lower cash outflows associated with operating leases contributed to the higher year over year cash flows from operating activities which were partially offset by outflows from higher costs during fiscal 2022 for selling, general, and administrative expenses.

Higher cash outflows during fiscal 2022 for net income tax payments is driven by the significant prior year tax overpayment collections and were primarily offset by lower year over year cash outflows for restructuring activity payments and payments for interest costs.

Net cash (used in) provided by investing activities

Net cash (used in) provided by investing activities was $(226.2), $(118.2) and $269.7 for fiscal 2024, 2023 and 2022, respectively.

The decrease in cash flows from investing activities of $387.9 in fiscal 2023 as compared with fiscal 2022 was mainly attributable to the prior year cash received from return of capital from one of our equity investments which did not reoccur

during the year ended June 30, 2023.

The increase in cash used in investing activities of $108.0 in fiscal 2024 as compared with fiscal 2023 was primarily due to lower current year proceeds related to the early termination of the Lacoste license agreement and proceeds from sale of other long-term assets combined with the impact of an increase in capital expenditures.

The year over year increases in cash used in investing activities were partially offset by the current year collection of contingent consideration.

The decrease in cash flows provided by investing activities of $387.9 in fiscal 2023 as compared with fiscal 2022 was mainly attributable to the prior year cash received from return of capital from one of our equity investments which did not reoccur during fiscal 2023.

Additionally, the prior year included higher proceeds from the sales of long-lived assets and the positive impact from the receipt of contingent proceeds related to the Wella Business tax credits partially offset with higher capital expenditures in the current year.

The decrease in cash flows provided by investing activities of $2,172.2 in fiscal 2022 as compared with fiscal 2021 was principally driven by higher cash proceeds associated with the sale of the discontinued Wella Business in the prior year.

Cash proceeds from the sale of the business and related returns on capital associated with Coty’s remaining stake in Wella whereby initial cash proceeds from the sale received were $2,374.1 in fiscal 2021 compared to the $34.0 proceeds from contingent consideration in the current fiscal year.

Returns of capital from equity investments for Coty’s remaining stake in Wella were $448.0 in prior year compared to $230.6 in the current year.

Higher proceeds from the sale of other long lived assets in fiscal 2022 and outflows from the prior year related to the KKW Holdings asset acquisition and 20% equity investment helped to partially offset the year over year decrease in cash from investing activities

Net cash used in financing activities

Net cash used in financing activities was $(336.7), $(469.3) and $(1,034.0) for fiscal 2024, 2023 and 2022, respectively.

The decrease in cash used in financing activities of $564.7 in fiscal 2023 as compared to fiscal 2022 was primarily driven mainly by higher cash outflows in the prior year for net paydowns of the Company's revolving credit facility and other long term debt balances as well, as higher payments of deferred financing fees, and higher dividend payments on Series B Preferred Stock.

The decrease in cash used in financing activities of $132.6 in fiscal 2024 as compared to fiscal 2023 was primarily driven by the current year net proceeds from the issuance of Class A Common Stock in connection with the global offering and lower cash payments related to the Company’s financing related foreign currency contracts in the current year compared to the prior year.

The decrease in cash used in financing activities was partially offset by higher outflows in the current year related to the Company’s forward repurchase contracts, higher current year net repayments as a result of current year debt related activity, as well as higher payments year over year for the associated deferred financing fees.

The decrease in cash used in financing activities of $564.7 in fiscal 2023 as compared to fiscal 2022 was primarily driven by higher cash outflows in the prior year for net paydowns of the Company's revolving credit facility and other long term debt balances as well, as higher payments of deferred financing fees, and higher dividend payments on Series B Preferred Stock.

Additionally, lower cash payments in the current year for the settlement of foreign currency contracts contributed to the overall decrease in use of cash but were partially offset by cash payments related to the Company's forward repurchase contracts.

The decrease in cash used in financing activities of $1,761.1 in fiscal 2022 as compared to fiscal 2021 was primarily driven by lower net cash outflows for repayments associated with the Company's revolving credit facility and other long term debt outstanding under the Company's Credit Agreement.

The year over year change in the level of debt repayments is primarily attributable to the impact of the use of prior year proceeds from the sale of the Wella discontinued business being used to prepay more than $2,000.0 of the outstanding debt on the Company's term loan facilities.

Net overall cash outflows also occurred in the current year but to a lesser extent and were offset by proceeds from the issuance of the 2029 Senior Secured Notes and the Brazilian Credit Facilities.

Increases in cash outflows for the settlement of realized losses on foreign currency contracts in the current year and the prior year inflows from the issuance of Convertible Series B Preferred Stock only partially offset the impact of the year over year changes in debt activities

On April 29, 2020, our Board of Directors suspended the payment of dividends, in keeping with our 2018 Coty Credit Agreement, as amended.

As we focus on preserving cash, we expect to suspend the payment of dividends until we reach a Net debt to Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of 2x.

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.

After the expiration of applicable restrictions under the 2018 Coty Credit Agreement, as amended, we began to pay dividends on the Convertible Series B Preferred Stock in cash for the period ending June 30, 2021, and we expect to continue to pay such dividends in cash on a quarterly basis, subject to the declaration thereof by our Board of Directors.

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.

During the twelve months ended June 30, 2023, the Board of Directors declared dividends on the Series B Preferred Stock of $13.2 of which $9.9 was paid and $3.3 was paid in July 2023.

During the twelve months ended June 30, 2024, the Board of Directors declared dividends on the Series B Preferred Stock of $13.2, of which $9.9 was paid during fiscal 2024 and $3.3 was paid in July 2024.

For additional information on our dividends and dividend policy, respectively, see Note 21—Equity and Convertible Preferred Stock in the notes to our Consolidated Financial Statements and Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividend Policy”.

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See Note 20—Redeemable Noncontrolling Interests in the notes to our Consolidated Financial Statements for further discussion related to the calculation of the redemption value of this noncontrolling interest.

The table also excludes $142.4 of preferred stock, which is reflected in Convertible Series B Preferred Stock in the Consolidated Balance Sheet as of June 30, 2023.

The table excludes $142.4 of preferred stock, which is reflected in Convertible Series B Preferred Stock in the Consolidated Balance Sheet as of June 30, 2024.

Given the provisions of the associated Put rights, Convertible Series B Preferred Stock is redeemable outside of our control upon certain change of control events and is recorded in temporary equity.

See Note 21—Equity and Convertible Preferred Stock in the notes to our Consolidated Financial Statements for further discussion related to the calculation of the Convertible Series B Preferred Stock.

The table excludes amounts related to our remaining forward repurchase contracts.

See Note 21—Equity and Convertible Preferred Stock in the notes to our Consolidated Financial Statements for further discussion.

Contingencies

From time to time, our Brazilian subsidiaries receive tax assessments from local, state, and federal tax authorities in Brazil.

See Note 26—Legal and Other Contingencies for more details on these tax assessments.

In relation to the appeal of our Brazilian tax assessments, we have entered into surety bonds of R$449.0 million (approximately $81.6) as of June 30, 2024.

As of June 30, 2023, we are in the early stages of administrative action and expect the judicial process in Brazil to take a number of years to conclude.

See Note 24—Legal and Other Contingencies for more details on these tax assessments.

Derivative Financial Instruments and Hedging Activities

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For foreign currency exposures, which primarily relate to receivables, inventory purchases and sales, payables and intercompany loans, derivatives are used to better manage the earnings and cash flow volatility arising from foreign currency exchange rate fluctuations.

We recorded foreign currency gains (losses) of $(32.3), $3.3 and $(7.8) in fiscal 2023, 2022 and 2021, respectively, resulting from non-financing foreign currency exchange transactions which are included in their associated expense type and are included in the Consolidated Statements of Operations.

We recorded net foreign currency (losses) gains of $(18.1), $(32.3) and $3.3 in fiscal 2024, 2023 and 2022, respectively, resulting from non-financing foreign currency exchange transactions which are included in their associated expense type and are included in the Consolidated Statements of Operations.

In July 2021, the Company entered into foreign exchange forward contracts to hedge up to 80% of our euro denominated external debt as part of management's strategy to minimize the impact of currency movements on those debt instruments.

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We have experienced and will continue to experience fluctuations in our net income as a result of balance sheet transactional exposures.

We use a combination of foreign currency forward contracts and cross currency contracts to offset these exposures.

We use a combination of foreign currency forward contracts and cross currency contracts when necessary to offset these exposures.

As of June 30, 2024, in the event of a 10% unfavorable change in the prevailing market rates of hedged foreign currencies versus the U.S.

dollar, the change in fair value of all foreign exchange forward contracts and cross currency contracts would result in a $91.6 decrease in the fair value of these forward contracts, which would be offset by an increase in the underlying foreign currency exposures.

dollar, the change in fair value of all foreign exchange forward contracts would result in a $89.5 decrease in the fair value of these forward contracts, which would be offset by an increase in the underlying foreign currency exposures.

Interest Rate Risk Management

We are exposed to interest rate risk that relates primarily to our indebtedness, which is affected by changes in the general level of the interest rates primarily in the U.S.

All of our long-term debt outstanding as of June 30, 2024 is fixed rate debt, however, we draw on our revolving credit facility which is subject to variable interest rates, from time to time.

We periodically enter into interest rate swap agreements to facilitate our interest rate management activities.

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We are exposed to changes in interest rates because of certain variable-rate debt discussed in Note 14—Debt.

If interest rates had been 10% higher and all other variables were held constant, Income (loss) from continuing operations before income taxes in fiscal 2023 would decrease by $8.4.

If interest rates had been 10% higher and all other variables were held constant, Income from continuing operations before income taxes in fiscal 2024 would decrease by $2.3.

As of June 30, 2024, we also had fixed-rate senior notes (the “Notes”) outstanding.

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See Note 12—Equity Investments for additional information.

In addition to the above equity investments, we entered into certain forward repurchase contracts to start hedging for two potential $200.0 and $196.0 share buyback programs, in 2024 and 2025, respectively.

These forward repurchase contracts are accounted for at fair value, with changes in the fair value recorded in Other income, net within the Consolidated Statements of Operations.

In addition to the above equity investments, we entered into forward repurchase contracts in December 2022 and November 2023 with three large financial institutions to hedge for potential $196.0 and $294.0 share buyback programs of share repurchases in 2025 and 2026, respectively.

These forward repurchase contracts are accounted for at fair value, with changes in the fair value recorded in Other expense (income), net within the Consolidated Statements of Operations.

Our primary exposure is the movements of our stock price during the contract period, which may be volatile and is likely to fluctuate due to a number of factors beyond our control.

These factors include actual or anticipated fluctuations in the quarterly and annual results of our Company or of other peer companies in the industry, market perceptions concerning the macroeconomic, social or political developments, industry conditions, changes in government regulation and the securities market trends.

We estimate that an immediate, hypothetical 10% decline in our stock price would result in a $60.9 decrease in the fair value of these forward repurchase contracts and reduce our Income (loss) from continuing operations before income

These factors include actual or anticipated fluctuations in the quarterly

and annual results of our Company or of other peer companies in the industry, market perceptions concerning the macroeconomic, social or political developments, industry conditions, changes in government regulation and the securities market trends.

We estimate that an immediate, hypothetical 10% decline in our stock price would result in a $47.6 decrease in the fair value of these forward repurchase contracts and reduce our Income (loss) from continuing operations before income taxes.

Any realized gains or losses resulting from such fair value changes would occur if we elect to terminate the forward repurchase contracts prior to or on maturity.

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Inflation Risk

We experienced the impact of inflation on our business during the fiscal year.

We believe that inflation may continue to have an effect on our business, financial condition or results of operations in fiscal year 2024.

Inflation may negatively impact our business by raising cost and reducing profitability and we may not be able to fully offset such higher costs through price increases.

The impact of inflation on material, logistical and other costs subsided during fiscal year 2024.

Inflation may continue to impact certain costs, such as labor, however.

Although we currently anticipate the overall impact of inflation to remain muted, inflation may negatively impact our business by raising cost and reducing profitability and we may not be able to fully offset such higher costs through price increases.

Our inability or failure to do so could harm our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities.

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The fair value is updated on a quarterly basis.

The investments are classified within Level 3 in the fair value hierarchy because we estimate the fair value of the investments using a combination of the income approach, the market approach and private

transactions, when applicable.

Changes in the fair value of equity investments under the fair value option are recorded in Other income, net within the Consolidated Statements of Operations (see Note 13—Equity Investments).

Changes in the fair value of equity investments under the fair value option are recorded in Other expense (income), net within the Consolidated Statements of Operations (see Note 12—Equity Investments).

Some of the inherent estimates and assumptions used in determining fair value of the Wella Company are outside the control of management, including interest rates, cost of capital, tax rates, credit ratings and industry growth.

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There were no impairments of goodwill at our reporting units in fiscal 2024, 2023 or fiscal 2022.

Based on the annual impairment test performed on May 1, 2023, we determined that the fair value of each of the reporting units exceeded their respective carrying values at that date by approximately 132.1% and 71.6% relating to the Prestige and Consumer Beauty reporting units, respectively.

Based on the annual impairment test performed on May 1, 2024, we determined that the fair value of each of the reporting units exceeded their respective carrying values at that date by approximately 143.6% and 69.9% relating to the Prestige and

Consumer Beauty reporting units, respectively.

Consequently, there were no goodwill impairment charges recorded as a result of the annual impairment test performed on May 1, 2024.

To determine the fair value of our reporting units, we have used annual revenue growth rates ranging from 3.0%-10.0% and 2.0%-7.8% for the Prestige and Consumer Beauty reporting units, respectively, and a discount rate of 9.5%.

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As a result of the May 1, 2022 annual impairment test, total impairments on indefinite-lived other intangible assets of $31.4 were recorded.

On May 1, 2023, we performed our annual impairment testing of indefinite-lived other intangible assets and determined that no adjustments to carrying values were required.

On May 1, 2024 and 2023, we performed our annual impairment testing of indefinite-lived other intangible assets and determined that no adjustments to carrying values were required.

As of May 1, 2024, we determined that the fair value of our Max Factor and Bourjois trademarks exceeded their carrying values by approximately 4.8% and 5.8%, respectively, using annual revenue growth rates ranging from 2.0%-15.0% and 2.0%-13.5%, respectively, and a discount rate of 10.37%.

The fair value of the Max Factor and Bourjois trademarks would fall below their carrying values if the average annual revenue growth rate decreased by approximately 55 basis points and 80 basis points, respectively, or the discount rate increased by 60 basis points and 90 basis points, respectively.

The fair value of the Max Factor and Bourjois trademarks would fall below their carrying values if the average annual revenue growth rate decreased by approximately 62 and 75 basis points, respectively, or the discount rate increased by 42 basis points and 50 basis points, respectively.

The fair values of the remaining indefinite-lived trademarks exceeded their carrying values by amounts ranging from 26% to 868%.

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Long-lived assets, including tangible and intangible assets with finite lives, are amortized over their respective lives to their estimated residual values and are also reviewed for impairment whenever certain triggering events may indicate impairment.

When such events or changes in circumstances occur, a recoverability test is performed comparing projected

undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying value.

When such events or changes in circumstances occur, a recoverability test is performed comparing projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying value.

If the projected undiscounted cash flows are less than the carrying value, an impairment would be recorded for the excess of the carrying value over the fair value, which is determined by discounting future cash flows.

During fiscal years 2023, 2022 and 2021, we recorded asset impairment charges of $4.3, $2.4 and $5.2, respectively, to Property and equipment, net and $1.1, $1.0 and $0.6, respectively to Operating lease right-of-use assets, primarily relating to the abandonment of equipment or leases no longer in use.

During fiscal years 2024, 2023 and 2022, we recorded asset impairment charges of $1.7, $4.3 and $2.4, respectively, to Property and equipment, net and nil, $1.1 and $1.0, respectively to Operating lease right-of-use assets, primarily relating to the abandonment of equipment or leases no longer in use.

These impairment charges are primarily recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations.

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Costs include direct materials, direct labor and overhead (e.g., indirect labor, rent and utilities, depreciation, purchasing, receiving, inspection and quality control) and in-bound freight costs.

We classify inventories into various categories based upon their stage in the product life cycle, future marketing sales plans and the disposition process.

We also record an inventory obsolescence reserve, which represents the excess of the cost of the inventory over its estimated net realizable value, based on various product sales projections.

The Company classifies inventories into various categories based upon their stage in the product life cycle, future marketing sales plans and the disposition process.

The Company also records an inventory obsolescence reserve, which represents the excess of the cost of the inventory over its net realizable value, based on product sales projections.

This reserve is calculated using an estimated obsolescence percentage applied to the inventory based on age, historical trends, and requirements to support forecasted sales.

In addition, and as necessary, we may establish specific reserves for future known or anticipated events.

These estimates could vary significantly, either favorably or unfavorably, from the amounts that we may ultimately realize upon the disposition of inventories if future economic conditions, customer inventory levels, product discontinuances, sales return levels, competitive conditions or other factors differ from our estimates and expectations.

In addition, and as necessary, the Company may establish specific reserves for future known or anticipated events.

We are subject to income taxes in the U.S.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis