Coty reported QQ3 2024 results (quarter ended 2024-03-31) with revenue of $1.3856 billion, up 7.5% year-over-year but down 19.8% quarter-over-quarter. The gross margin stood at 64.8% (gross profit of $897.8 million), yielding an EBITDA of $180.0 million and operating income of $77.8 million (operating margin ~5.6%). Net income was modest at $3.8 million, or $0.0043 per share, signifying material bottom-line pressure despite a solid gross margin. Free cash flow remained negative at -$234.3 million, contributing to a net debt position of approximately $3.94 billion and a current ratio of 0.80, highlighting liquidity challenges in a capital-intensive business model.
From a cash-flow perspective, operating cash flow was -$170.0 million, with capex of $64.3 million and working-capital movements contributing meaningfully to the negative free cash flow. The balance sheet shows sizable goodwill ($3.966B) and intangible assets ($3.632B), with total assets of $12.322B and total liabilities of $7.903B, yielding a stockholders’ equity base of $4.135B. Leverage remains elevated (debt to capital ~0.50, debt to equity ~1.02) and interest coverage stands at 1.32x, underscoring ongoing refinancing and deleveraging considerations.
Overall, the QQ3 results underscore a transition phase: Coty benefits from a strong brand portfolio and gross-margin discipline, but profitability is being compressed by discretionary SG&A, working-capital dynamics, and a capital structure that requires balance-sheet optimization. The near-term investment thesis hinges on whether management can stabilize cash flow, improve working capital, and execute on cost-reduction initiatives to support deleveraging while defending upside from pricing/mix and e-commerce growth.