Executive Summary
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.
Key Performance Indicators
QoQ: -20.13% | YoY:10.73%
QoQ: -67.13% | YoY:-60.92%
QoQ: -97.90% | YoY:-96.49%
QoQ: -97.85% | YoY:-96.42%
Key Insights
Revenue: 1,385.6 million USD; YoY +7.50% | QoQ -19.80%
Gross Profit: 897.8 million USD; YoY +10.73% | QoQ -20.13%
Gross Margin: 64.80%
EBITDA: 180.0 million USD; Margin 12.99%
Operating Income: 77.8 million USD; Margin 5.61%
Net Income: 3.8 million USD; Net Margin 0.27%
EPS (Diluted): 0.0043 USD
Weighted Avg Shares (out): 883.1 million; Diluted: 892.0 million
Cash Flow & Liquidity: Net cash from operating activities -170.0 million; Free cash flow -234.3 million; Cash at end of period 286.2 m...
Financial Highlights
Revenue: 1,385.6 million USD; YoY +7.50% | QoQ -19.80%
Gross Profit: 897.8 million USD; YoY +10.73% | QoQ -20.13%
Gross Margin: 64.80%
EBITDA: 180.0 million USD; Margin 12.99%
Operating Income: 77.8 million USD; Margin 5.61%
Net Income: 3.8 million USD; Net Margin 0.27%
EPS (Diluted): 0.0043 USD
Weighted Avg Shares (out): 883.1 million; Diluted: 892.0 million
Cash Flow & Liquidity: Net cash from operating activities -170.0 million; Free cash flow -234.3 million; Cash at end of period 286.2 million; Cash at beginning 483.5 million
Balance Sheet: Total assets 12.322B; Total liabilities 7.9038B; Total stockholders’ equity 4.135B; Long-term debt 4.1299B; Short-term debt 0.122B; Net debt 3.9379B
Liquidity Ratios: Current ratio 0.802; Quick ratio 0.495; Cash ratio 0.105
Profitability & Leverage: Debt/Capital 0.504; Debt/Equity 1.015; Interest Coverage 1.323; ROA 0.031%; ROE 0.092%; Payout ratio 86.8%; Dividend yield 0.031%
Valuation Context: Price-to-book ~2.54x; Price-to-sales ~7.58x; Price-to-earnings ~690.8x (reflecting low near-term earnings).
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.39B |
7.50% |
-19.80% |
| Gross Profit |
897.80M |
10.73% |
-20.13% |
| Operating Income |
77.80M |
-60.92% |
-67.13% |
| Net Income |
3.80M |
-96.49% |
-97.90% |
| EPS |
0.00 |
-96.42% |
-97.85% |
Key Financial Ratios
operatingProfitMargin
5.61%
operatingCashFlowPerShare
$-0.19
freeCashFlowPerShare
$-0.27
dividendPayoutRatio
86.8%
priceEarningsRatio
690.79
Management Commentary
Transcript data not provided in the supplied materials. Consequently, management quotes and thematic commentary from the QQ3 2024 earnings call could not be incorporated directly. The analysis below reflects the quantitative results and typical near-term considerations for a company of Coty’s profile. When the transcript becomes available, the highlights should center on strategy execution (pricing/mix, brand investments, and go-to-market acceleration), cost-savings progress, and deleveraging expectations.
Forward Guidance
No formal full-year guidance is included in the provided data. Based on industry dynamics and Coty’s reported metrics, the likely drivers of future performance include: (i) price/mix optimization to support gross margin stabilization or improvement as input costs stabilize; (ii) ongoing cost rationalization and SG&A discipline to protect EBITDA margins; (iii) working-capital optimization to improve operating cash flow (DA/working-capital cycle data indicate substantial cash outflows within the quarter); (iv) deleveraging trajectory through a combination of free cash flow generation and potential refinancing actions. Industry trends in beauty—accelerated e-commerce, digital penetration, and product innovations in prestige and mass segments—could provide upside if Coty successfully monetizes its brand portfolio and improves channel mix. Management focus on brand expansion, portfolio rationalization, and efficiency initiatives will be key. Investors should monitor: liquidity runway (cash burn rate vs. available facilities), progress on cost savings, working-capital metrics (days sales outstanding, inventory days, and payables days), and any announced refinancing or asset-lighting initiatives that could shorten the debt repayment horizon.