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Estée Lauder(EL) - 2024 Q3 - Quarterly Results
ELEstée Lauder(EL)2024-05-01 12:00

Financial Performance - Net sales for Q3 fiscal 2024 reached 3.94billion,a53.94 billion, a 5% increase from 3.75 billion in the prior-year period[1]. - Net earnings increased to 330million,comparedto330 million, compared to 156 million in the prior-year period, with diluted EPS rising to 0.91from0.91 from 0.43[1]. - Total reported operating income was 531million,a79531 million, a 79% increase from 297 million in the prior-year period[9]. - Net sales for the nine months ended March 31, 2024, were 11.74billion,a511.74 billion, a 5% decrease compared to 12.30 billion in the prior-year period[32]. - The Company reported net earnings of 674million,withdilutednetearningspercommonshareat674 million, with diluted net earnings per common share at 1.87, down from 1,039millionand1,039 million and 2.88 in the prior-year period[32]. - For the fiscal 2024 fourth quarter, reported net sales are forecasted to increase between 5% and 9% compared to the prior-year period[40]. - Organic net sales for the fiscal 2024 fourth quarter are expected to increase between 6% and 10%[40]. - The Company anticipates reported diluted net earnings per common share to be between 1.96and1.96 and 2.09 for the full year[40]. - Net sales for the three months ended March 31, 2024, were reported at 3,940million,a53,940 million, a 5% increase from 3,751 million in 2023[49]. - Operating income for the three months ended March 31, 2024, was 531million,a79531 million, a 79% increase from 297 million in 2023[49]. - Total net sales for the nine months ended March 31, 2024, were 11.737billion,reflectinga511.737 billion, reflecting a 5% decrease compared to the prior year[58]. - Operating income for the nine months ended March 31, 2024, was 1,239 million, down 29% from 1,752millionintheprioryear[66].−DilutedEPSfortheninemonthsendedMarch31,2024,was1,752 million in the prior year[66]. - Diluted EPS for the nine months ended March 31, 2024, was 1.87, a decrease of 42% compared to 2.88inthesameperiodof2023[66].TaxandEarnings−Theeffectivetaxratedecreasedto31.12.88 in the same period of 2023[66]. Tax and Earnings - The effective tax rate decreased to 31.1% from 44.6% in the prior-year period, primarily due to a lower effective tax rate on foreign operations[1]. - The effective tax rate for the full year is projected to be approximately 35%, largely due to the geographical mix of earnings[37]. - The effective tax rate and increased net interest expense are expected to dilute net earnings per common share by 0.48[42]. Profit Recovery and Future Projections - The Profit Recovery Plan is projected to deliver 1.1to1.1 to 1.4 billion of incremental operating profit in fiscal years 2025 and 2026[5]. - The company expects operating margin in the second half of fiscal 2024 to be stronger than the first half and to expand from the year-ago period[5]. - The Profit Recovery Plan is expected to drive incremental operating profit of 1.1billionto1.1 billion to 1.4 billion, including net benefits from the restructuring program[36]. - The company forecasts GAAP diluted net earnings per share (EPS) for the three months ending June 30, 2024, to be between 0.11and0.11 and 0.22, representing a growth of over 100% compared to (0.09)inthesameperiodof2023[42].−ForthetwelvemonthsendingJune30,2024,thecompanyexpectsGAAPdilutedEPStobebetween(0.09) in the same period of 2023[42]. - For the twelve months ending June 30, 2024, the company expects GAAP diluted EPS to be between 1.96 and 2.09,reflectingadecreaseof252.09, reflecting a decrease of 25% from 2.79 in 2023[42]. - The company anticipates restructuring charges between 45millionand45 million and 55 million, equating to approximately 0.10to0.10 to 0.12 per diluted common share[42]. Sales and Market Performance - Organic net sales grew 6%, driven by double-digit growth in EMEA and Asia travel retail, with significant improvements in retail sales trends[1]. - Skin Care net sales increased 9%, with La Mer and Estée Lauder driving strong growth through hero products and new innovations[17]. - The Americas region reported net sales of 3,567million,a33,567 million, a 3% increase from 3,447 million in the previous year[62]. - Europe, the Middle East & Africa saw a 10% decline in net sales, totaling 4,488millioncomparedto4,488 million compared to 4,972 million in the prior year[62]. - Asia/Pacific net sales decreased by 5%, amounting to 3,683million,downfrom3,683 million, down from 3,892 million[62]. - Organic net sales for Skin Care decreased by 8% to 920millionfortheninemonthsendedMarch31,2024[58].ExpensesandImpairments−Capitalexpendituresincreasedto920 million for the nine months ended March 31, 2024[58]. Expenses and Impairments - Capital expenditures increased to 702 million from 652millionintheprior−yearperiod,primarilyduetothemanufacturingfacilityinJapan[32].−TheCompanyrecordedatotalof652 million in the prior-year period, primarily due to the manufacturing facility in Japan[32]. - The Company recorded a total of 36 million in operating expenses for the three months ended March 31, 2024[56]. - The restructuring program is projected to incur total charges of between 500millionand500 million and 700 million before taxes over the next two years[51]. - The Company recorded an impairment charge of 21millionfortheSmashboxtrademarkintangibleassetduetolower−than−expectedresults[52].−TheCompanyrecordedotherintangibleassetimpairmentchargesof21 million for the Smashbox trademark intangible asset due to lower-than-expected results[52]. - The Company recorded other intangible asset impairment charges of 207 million for the nine months ended March 31, 2023, impacting earnings by 0.44percommonshare[54].−TheCompanyperformedinterimimpairmenttestsfortrademarksandgoodwill,concludingthatthecarryingamountsofgoodwillwererecoverableforDr.Jart+andTooFaced[53].CashFlowandAssets−TheCompanyendedthequarterwith0.44 per common share[54]. - The Company performed interim impairment tests for trademarks and goodwill, concluding that the carrying amounts of goodwill were recoverable for Dr.Jart+ and Too Faced[53]. Cash Flow and Assets - The Company ended the quarter with 3.70 billion in cash and cash equivalents and paid dividends of 0.71billion[32].−Totalcurrentassetsdecreasedto0.71 billion[32]. - Total current assets decreased to 8,534 million as of March 31, 2024, from 9,139millionayearearlier[68].−Cashandcashequivalentsdecreasedto9,139 million a year earlier[68]. - Cash and cash equivalents decreased to 3,701 million from 4,029millioninthepreviousyear[68].−NetcashflowsprovidedbyoperatingactivitiesfortheninemonthsendedMarch31,2024,were4,029 million in the previous year[68]. - Net cash flows provided by operating activities for the nine months ended March 31, 2024, were 1,471 million, an increase from $1,017 million in the same period of 2023[70].