Good morning, ladies and gentlemen. My name is Maria and I’ll be your conference operator today. At this time, I would like to welcome everyone to Coty’s Third Quarter Fiscal 2020 Results Conference Call. As a reminder, this conference is being recorded today, May 11, 2020. On today’s call are Pierre-André Terisse, Chief Operating and Chief Financial Officer; and Pierre Laubies, Chief Executive Officer. I would like to remind you that many of the comments today may contain forward-looking statements. Please refer to Coty’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. All commentary on like-for-like net revenue reflect the comparison of the business at constant currency in the current and prior-year excluding the impact of acquisitions and divestitures. In addition, except where noted, the discussion of our financial results and our expectations reflect certain adjustments as specified in the non-GAAP financial measures section of the earnings release. You can find the bridge from GAAP to non-GAAP results in the reconciliation tables in the earnings release. I will now turn the call over to Mr. Terisse. Pierre-André Terisse: Thank you, Maria, and good morning, everyone. Welcome to the third quarter conference call of Coty for fiscal 2020. I’m together with Pierre, who is in Amsterdam; Olga in New York; and I myself in London. And we’re very happy to host this exciting conference call. Before we start and we go in the middle of the topic, I just would like to thank Coty teams for what they have done and what they have demonstrated for the past few weeks and month now, beyond their hard work to handle the situation from the business standpoints. This crisis has been the opportunity for many…

Thank you, Pierre-André. As this is my last earnings call with Coty, I want to take a moment to thank everyone on this call for accompanying us on this journey, which continues of course, as Pierre-André has just indicated. And especially, I want to thank the Coty teams for the tremendous achievement of work and effort that they have put in over past two years to lay down the foundations for a stronger company. The Coty associates has demonstrated both in our first phase together and now in these testing times resilience, as well as an inspiring ability to learn and adopt new ways of working. The aim of the support, as you may remember, was and is to strike the right balance between creativity and discipline, and we are beginning to see the result of this work materialize across several brands, markets and initiative. As you can see on this slide, we had a number of strong innovation successes this quarter, even as COVID began to disrupt the demanding picture. Starting with CoverGirl. We continued our laser focus on improving e-commerce fundamentals. As a result, CoverGirl recently surpassed the competitive digitally-native brand to become number three mass cosmetics brand on Amazon US. The brand’s improved performance both online and offline was in part fueled by the launch of Clean Fresh earlier in the quarter. This was the first clean label product line across established mass cosmetics brands and quickly became the number one foundation launch in mass. Similarly, Rimmel maintain the momentum we have seen in recent quarters fueled by media support and strong in-store execution and supported by the recent launch of Scandaleyes Volume-on-Demand Mascara, Rimmel has now reached its highest market share in the UK in over five years at 31%. Sally Hansen continues to fire on…

Thank you. The floor is now open for questions. [Operator Instructions] Our first question comes from the line of Nik Modi of RBC.

Yeah, thank you. Good morning, everyone and, Pierre, great working with you. Good luck going forward. Just two questions on my end. One is on the taxes related to this transaction, Pierre-André, if you can just give us any perspective on how to think about that And then the second question just gets down to your margin targets and what kind of assumed top line have you embedded in that assumption? Thank you. A - Pierre-André Terisse : Thank you, Nik, and by the way good to talk to you. On the taxes, we’re talking of an amount, which is going to be within $300 million. Obviously, we need to complete the calculation, but that’s going to be within $300 million. On the margin, so we have to assume that we don’t know what the growth is going to be. The reality is that I think we have everything we need to get through, but you and I see the environment. We see the lockdown stopping and then restarting. You see the very, well, the social distanciation and its impact on the restart of the business, and therefore, we have to, I have – as a CFO and a COO, I have to assume that it’s not going to get better soon and if it does, that’s perfect because I will have the right cost structure, but if it doesn’t, I need to get protected. So, in building that, I have assumed in building this mid-teen margin, I’ve assumed that we will not come back to or we needed to be equipped to face the case where we will not come back to 2019 net revenue level before the back-end of the plan and even after that. So, it will take us time to do so, even in this case, or even in the case where that would happen, we will be delivering the mid-teen, sorry, OI margins I’ve been talking about.

Excellent. And if I can just throw in one more. It seems pretty impressive actually you’re ramping up your cost savings quite a bit without extra cash charges, so I just wanted to see if you can provide any context around that because this is the first time at least I’ve seen that happen. A - Pierre-André Terisse : Sure. Well, the reality is that in the progress we see – we’ve made so far, we’ve seen a level of one-off cost, which has been narrowed than what we had indicated. We have been pretty careful at the outset of the turnaround because the history of the company was encouraging us to take some headroom. Now, the reality of what we have been managing for the past one year has been lower, and therefore, the envelope we had to deploy the turnaround is enough to cover the additional costs, which we would incur. I think in mind, two things. A, there’s a lot in the plan, which is not going to be or not only going to be about people and severance, so there’s a lot, which will be done by – through method and discipline rather than through severance. And the second one is that, yeah, we’ve improved that. For the past one year with the team it’s a silent work, but it’s a work, which we have done very methodically. We’ve been trying to make sure that we will minimize these one-off costs because we knew that they had been extremely helpful for the company. So, yeah, with this $500 million net by the way because we believe in the restructuring, we can also have some capital gain, which are going to finance some cost. We can do it with this envelope.

Our next question comes from the line of Robert Ottenstein of Evercore.

Great. Thank you very much, and congratulations on the transaction. A lot of moving pieces here and I just want to make sure I heard this right. I think maybe I didn’t, but you’re talking about taking $700 million of fixed costs out, but I think I also heard that the total that you’re going after is $850 million. Is the $150 million reinvestment in the business? I’m just trying to understand those parts again, and again, my apologies because I know you mentioned it. And then second, it looks like the working capital was pretty negative in the quarter. Can you talk a little bit more about that and what the working capital outlook looks like for the rest of the year? Thank you. A -Pierre-André Terisse : Yeah, hi. Well, thank you. No, indeed, let’s be clear on that. So, what I said is that we have a total program, a total list of opportunities, if you wish; serious opportunities, obviously, not only ideas, which amounts to $850 million. And we feel sufficiently confident in these opportunities to be able to commit on $700 million, which means that we assume that some of them are not going to be realized or not realized fully. That’s every time you do that kind of program, that’s what you have to assume. In the $700 million we are discussing, most of the elements are gross, but there is one element which is net, and it’s the A&CP component, which broadly speaking, is going to be efficiencies. We expect efficiency to be in the region of $250 million to $300 million, and half of that to be reinvested. So, in the $700 million I’m counting only halve of the saving I’m going to make on that side, okay? So, there are two…

Our next question comes from the line of Faiza Alwy of Deutsche Bank.

Yes. Hi. Thank you. A - Pierre-André Terisse : Hi.

So, my first question is just about the $700 million of reduction in fixed costs. So, how quickly do you think you can get there? It sounds like it’s by fiscal 2023 where the program ends. But I’m wondering if you can give us some guidepost in terms of what type of savings we should expect in fiscal 2021 as a start. A - Pierre-André Terisse : Well, I mean, my answer is going to be simple. It’s not going to be back loaded. It’s going to be more front loaded. We expect savings in fiscal 2021 to be more than a third between 35% and 40% in fiscal 2021. And then probably a third in fiscal 2022 and the remaining in fiscal 2023. And the reason for that is that, again, some initiative, first of all, are part of the turnaround, so only two-third of it is incremental. That’s the first point. The second point is that some initiatives are going to be leveraging on the current circumstances and what we are going to do on travel, what we are going to do on consulting are clearly going to be the extension of the crisis management mode we’ve been in for the past few months, as many other companies. And the last element is that many, many things have been studied at Coty, many project, which had not been implemented because we had decided to pressure other priorities. And now we’ve put them together; they exist. They have a lot of strong foundation and some of them can go pretty fast, and so that’s the reason why we’ll go [indiscernible] I mentioned.

Our next question comes from the line of Olivia Tong of Bank of America.

Great. Thanks. Good morning. A -Pierre-André Terisse : Hi, Olivia.

Hi. How are you? A - Pierre-André Terisse : I’m good.

Good. I guess first, just your businesses are very different. Some are significantly hurt by the pandemic and recession that’s going to come, like Luxury, while one could argue that Consumer Beauty should hold up better given wider availability and channels that are open. So, can you talk about your view? And then, maybe a little bit in terms of performance beginning-of-quarter to end-of-quarter and then April trends across your key businesses? Thanks. A - Pierre-André Terisse: Yeah, well, as I said at the beginning of the [indiscernible] three different trends. A, remember that we’ve been going from divisions to segments and there was some level of noise on that. B, more importantly, we had the beginning of COVID and the slowdown of Travel Retail following the Hong Kong issues, and so the performance of Asia and Travel Retail was weak. But C, at the same time, we have been seeing very successful launches, pretty good performance of CK Everyone, of Boss Alive and very interesting performance from CoverGirl, Clean Fresh and from Sally Hansen Pure. Two of the three brands, which we launched together with our sustainability platform. So, that’s where the mix of it, with plus and minuses, but broadly speaking in line with what we expected. And then March and to be precise, from the second week of March became very much under pressure, it started in Italy, but it’s been spread into Europe very, very quickly. And April, obviously, we expect is going to be significantly worse. May is likely to be in the same regions. And the big question is going to be about June and our ability to recover, and I think it depends very much business-by-business and probably market by market, among other reasons because of the phasing of the pandemic and the lockdown is different depending on the countries; and business by business, people want to go back to hairdresser. I think that’s fairly I guess for everyone. And the opening of some luxury store is going to take a bit more time. But yeah, April and May will be difficult. We expect June to start showing some sign of recovery, and we expect Q1 to be showing as well some sign of recovery. But I think Q1 will not be by any mean return to previous level and to normal.

Our next question comes from the line of Steph Wissink of Jefferies.

Thanks. Good morning, everyone. Just a follow-up question on your e-commerce comment. It seems to be the one thread that was pretty positive across all of the segments. I’m wondering if you can maybe break down for us across mass, pro and prestige, what your strategies are to grow your online share and how that may transition or advance coming out of the crisis? Thank you. A - Pierre-André Terisse : Pierre, you want to take that?

I’ll take it, Pierre-André. [ph] Yeah, it’s Pierre. I think really, where we decided to make a decisive effort in e-commerce has been really on Consumer Beauty where we are really underplaying our fair share. So, in Luxury and in Professional, clearly, we continue to strengthen, and the growth has been solid in line with the market growth. So, that is very good. Where we have been really, as I said earlier, catching up, has been on the Consumer Beauty where we have by and large if I look at the last month, our business is growing globally by 75%. So, it’s a very, very good result, at least [indiscernible], and which is very, very substantial acceleration for market on the same panel, which we measure to be in the mid-teens, so around 15%. So, that’s a spectacular performance. Why have we done that? To be honest with you, a lot of basics; a lot of focus on conversion, a lot of focus on the basics of e-commerce, building our skill set into the organization and really building a playbook. Building a playbook, deploying the playbook, deploying the playbook in the key market, and after that, deploying the playbook from the key market to the smaller market. So, I think that we are, we have made a step here. And we have made a substantial step change. And I do not see why we would go backward going forward. And that’s clearly very pleasing. And again, in my view, it is very exemplary of the culture that we want to create – a culture of drive, but also a culture of discipline and distribution of playbook, so that make sure that everybody catches on that. And we feel very, very good about that. In the same way, then we feel…

Our next question comes from the line of Lauren Lieberman of Barclays. A - Pierre-André Terisse : Hi, Lauren.

Good morning. Hi. So, I just, I guess, I want to go back and think about today versus last July. And just thinking about strategic priorities from here versus what they may have been and how they may have changed since July. And as you think about kind of the pro forma portfolio, would you say that you now have what you need to grow? And I know you’ve made the comments on 2019 and when it gets back to that, but let’s try to pretend in a non-COVID world, right? Would the portfolio be better structured for growth now? Or do you still need additional assets to kind of get towards those faster-growing sub sectors within beauty? [indiscernible] A - Pierre-André Terisse : Yeah, I mean, I’ll start. And we can play it together. I think the fundamental difference as a year ago is exactly what we said we wanted to achieve with the opening of the strategic review, i.e., refocus the company – refocus the company on fragrance, on cosmetic, on skincare. Give ourselves a number of categories on which we can make a difference, which are basically adapted to the level of human investment efforts we can have and at the same time, resize the balance sheet to make sure that we have the means to develop these categories and to win in these categories. And so, yeah, I mean my answer would be that we have achieved exactly what we said we will be achieving. We have, in Luxury, and in fragrance that you know a number of assets, which are evidenced by the new launches we are doing and by the success of some of our brands. In Consumer Beauty we have the OpEx simplification program and a program of reinvestment behind our brands, which start working fundamentally. In Skin, we need to accelerate. Now we have one very, very strong and important element, which is playing both in skin and in direct-to-consumer and this is Kylie. And I can promise you that this is going to be a real, real asset for the company and all that with; A, less debt, level of debt, which is I believe the right one to have financial flexibility to support that portfolio. And B, with a real intention and program to address the simplification of Coty and to make it not only lighter in terms of costs, but also much more manageable. And so, yeah, I think strategically we have resized the company, re-scoped it to something which – in which or with which it can win.

Our next question comes from the line of Mark Astrachan of Stifel.

Yeah, thanks, and good morning, afternoon, everyone. I guess just first... A - Pierre-André Terisse : [indiscernible]

...maybe a bit more detail on the deal announced. So, can you maybe preliminarily talk about dilution when the deal closes in six to nine-months? And then on the Brazil business, so I recall your commentary about it having a fairly large hair components. So, I guess, I’m curious how to think about that business now given what has been announced and how to think about it competitively, as well as whether any other pieces of it or how much of the business gets sold as part of the deal. Thanks. A - Pierre-André Terisse : Yeah, thank you. So, in terms of dilution, we come up with precise numbers at this stage at which we are is an important step, but don’t forget that we are only talking an MOU and there’s a number of parameters we need to fix including the precise carve out, the buildup of the standard of this new 60/40 company, and the full way we are going to address the consequences on Coty. What’s sure is that there are stranded costs, but the stranded costs are going to be addressed by the $700 million cost reduction program. The way to look at that and to get confirmation of that is the fact that we confirm our mid-term target for operating margin even though this is now applying to a group, which is going to be about one-third lever in terms of size. So, we’ll deal with that, and that’s going to be as part of the $700 million that are cost reduction program. On Brazil, yes, you’re right. It’s more than that, but it’s a part of that, and basically, that means that similar to what we do in Luxury, where we are licensees of some brands, Brazil is going to be the licensee of developed brand in that country in the consumer space as long as both parties find it interesting. Now, the Wella brand is a very important brand in Brazil and the platform we have with Hypermarcas is an extremely efficient platform in Brazil with not many equivalents in terms of its ability to produce, distribute at the right cost and with efficiency and with reach. So, my bet is that this is going to continue for a quite long period of time. Conversely, we are reorganizing our Luxury business in Brazil and we have decided that we will be leveraging the [indiscernible] market platform to try and accelerate our penetration in the rest of our businesses.

Our next question comes from the line of Wendy Nicholson of Citi.

One of the things I know you talked about last July was a need or a desire to really pullback on your SKU assortment and really narrow your SKU count. And just in the context of what you mentioned, in terms of the conversations with some of your retailers, who are going through a difficult time right now. Just wondering, is that an opportunity to move faster on the SKU reduction? And so, if you could update us, how much progress have you made? Is COVID-19 a particularly good opportunity to move faster or what’s your thinking on that SKU side? Thanks. A - Pierre-André Terisse: Pierre, you want to take or you want me to do?

Sure. I think, honestly speaking, I don’t think that COVID makes a difference to our plan. We had the plan to focus on our power SKUs and to give them a disproportionate share of shelf and align, I would call it our power SKUs with – across the line from a distribution promotion and advertising standpoint. This is exactly what we are doing for instance with CoverGirl in the US. So, our view is that clearly, yes, we can always accelerate and we will, because we have now I would call it refined our approach. We started with a limited number of markets and now we see that this plan is working, so we are expanding and we are accelerating. We’re now at the second phase where we are looking at combination between markets. We have not only looked at complexity within market, but now we are looking at complexity between market and that’s the next stage of [indiscernible] on that one, but I’ll be honest; I don’t think COVID changes everything to the plan. We need to continue to push. We need to continue to push our core franchise. And as I said earlier, to have a total activation fully aligned from distribution to promotion to advertising through our core franchise, and we know that it is also the way we build brand attribution for our advertising support to make sure that we advertise the core line or the core sub-franchise of the brand, and we have seen it as a fantastic result in CoverGirl in the US market, for instance, where our top six or seven franchises are really growing very fast.

Our next question comes from the line of Joe Lachky of Wells Fargo Securities. A - Pierre-André Terisse : And that’s going to be our last, please. Thank you.

Hi. I wanted to ask about Kylie and the trends you’re seeing in that business as you’re kind of navigating through this crisis. Obviously, their largest retailer partner experienced some disruption closing stores and so forth, and obviously, Kylie has a pretty big e-comm presence. So, just wanted to figure out the balances as you’re working through there. And then, if there’s been any sort of manufacturing issues with that business? Are you able to keep up with supply? And if there were, are there any plans to move manufacturing in-house a little quicker than you had previously planned? Thanks. A - Pierre-André Terisse : Well, a lot of very good questions. So, yeah, we are constrained by – on cosmetic, we’ve clearly been constrained by production. The third-party manufacturing we’re using has been shutting down and therefore, we’ve been out-of-stock for a lot of the cosmetic references, which is a pity by the way because the direct-to-consumer still works and is very active, so we’re indeed looking at what are the options we are in the short-term, That’s going to be, I think the reopening, but in the more medium-term, of course, because we need to be able to make sure that we have supply at all time. We can’t be in that kind of position again. The other side is skincare and here, we have really, really seen a lot of traction, a lot of traction on the direct-to-consumer side in particular beyond what we thought. So, it’s really good because it means that we have confirmation that the skincare range of Kylie has a lot of future in front of her and we need to develop that. Now, what we’re also doing is take advantage of this period to, number one, accelerate on the building of the…

Thank you, ladies and gentlemen.

Thank you very much.

This does conclude today’s conference call. You may now disconnect.