Coty Inc. Class A

Good morning and good afternoon, everyone. My name is Chelsea, and I'll be your conference operator today. At this time, I would like to welcome everyone to COTI's fourth quarter fiscal 2025 question and answer conference call. As a reminder, this conference call is being recorded today, August 21st, 2025, at 8 o'clock a.m. Eastern Time or 2 o'clock p.m. Central European Time. Please note that on August 20th at approximately 4.30 p.m. Eastern Time or 10.30 p.m. Central European Time, Cody issued a press release and prepared remarks webcast, which can be found on its investor relations website. On today's call are Sue Navi, Chief Executive Officer, and Laurent Mercier, Chief Financial Officer. I would like to remind you that many of the comments today may contain forward-looking statements. Please refer to Cody's earnings release and the reports filed with the SEC where the company lists factors that could cause actual results to differ materially from these forward-looking statements. In addition, except where noted, the discussion of Cody's financial results and Cody's expectations reflect certain adjustments as specified in the non-GAAP financial measures section of the company's release. With that, we will now open the line for questions. If you would like to ask a question at this time, please press star 1 on your telephone keypad. Once again, that is star 1 to ask a question. And we'll take our first question from Olivia Tong with Raymond James. Please go ahead.

Thanks. Good morning. So clearly there's a lot going on with respect to The macros as well as the categories. And you gave a pretty detailed guide for Q1 and Q2 on sales, EBITDA and APS, but kept it pretty open-ended for the second half. So I wanted to understand a little bit about, if you could provide a little bit more detail on the second half, what initiatives go in place, what hits versus just the easing comps, your thought process around the magnitude of improvement in the second half versus the first half and the key drivers of that. Thank you.

yeah absolutely thank you um thank you olivia for for your question so indeed i think it's it's very important uh indeed that we you know we give you very clear indications for q1 and q2 and and we have this visibility and we share very precise guidance and indeed as we highlighted we we are seeing that we are still in a phase of you know retailers inventory reduction which should last till the end of calendar year 25 and that's why we are giving you know the sequential improvement in q1 and q2 despite still negative so at the same time as we indicated we are seeing you know the category especially in prestige fragments but also in mass fragments remaining very healthy i mean low to mid single digit And we are seeing also our sellout, you know, performing well in the key market. So now what it means is that the plan is that we are expecting that end of calendar year 25, you know, these retailer inventory headwind will end. And then we are entering calendar year 26, or H2 fiscal 26, in a very healthy manner, where our selling will coincide with our sellout. And this is supported indeed by the the market you know the healthy market and our sellout is supported also by you know very strong innovations that we we just shared you know during during the presentation and which will be at full speed in the h2 so this is really the the algorithm now indeed we we didn't give you no more precise numbers on H2, because as you say, there is high volatility. I mean, there are a lot of micro movements, but for sure, I mean, I can tell you with high level of confidence, H2 will be back to growth. once indeed we are going through this H1. So that's really the reasoning and really the logic on the top line. On EBITDA, that's also a similar approach. So we are really you know, giving very precise indication on the Q1 and the Q2. Then on H2 with full confidence, you know, with top line being back to growth and also all the actions, you know, all into wind being at full speed will really bring us to um you know to positive growth in in the h2 so which means that you know our ebitda full year will be would be above 1 billion uh for sure and indeed i mean the the major gap that we are seeing in a bit down the full year is driven by tariffs on tariffs in a way so if we if we exclude tariffs uh on a full year uh our ebitda would just be you know slightly slightly negative but indeed the major headwind is uh is the tax and last but not least i mean our free cash flow will grow in fiscal 26. so this is really the big picture i i can give you to explain to you really why we are we are we built our guidance this way and it's also um really to give you uh that it's very big, you know, these very strong facts, analysis, and again, very strong confidence in the H2O.