Delaware | 1-14064 | 11-2408943 | ||||||||||||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
767 Fifth Avenue, New York, New York
|
10153 | |||||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Class A Common Stock, $.01 par value | EL | New York Stock Exchange |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
|
Exhibit No. | Description | ||||||||||
99.1 | |||||||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
THE ESTÉE LAUDER COMPANIES INC. | |||||||||||
Date: |
February 5, 2021
|
By: | /s/ Tracey T. Travis | ||||||||
Tracey T. Travis | |||||||||||
Executive Vice President and Chief Financial Officer | |||||||||||
(Principal Financial and Accounting Officer) |
767 Fifth Avenue
New York, NY 10153
|
News
Contact:
Investors: Rainey Mancini
rmancini@estee.com
Media: Jill Marvin
jimarvin@estee.com
|
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Page 1 of 18
|
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Page 2 of 18
|
Reconciliation between GAAP and Non-GAAP
(Unaudited) |
||||||||||||||||||||
Three Months Ended December 31, 2020
|
Three Months Ended December 31
|
|||||||||||||||||||
Net Sales |
Diluted Earnings Per
Share (“EPS”) |
Diluted EPS | ||||||||||||||||||
% Change |
% Change,
Constant Currency |
% Change |
% Change,
Constant Currency |
2020 | 2019 | |||||||||||||||
As Reported Results (1)
|
5 | % | 3 | % | 56 | % | 52 | % | $ | 2.37 | $ | 1.52 | ||||||||
Restructuring and other charges | .08 | .03 | ||||||||||||||||||
Changes in fair value of contingent consideration | (.01) | (.02) | ||||||||||||||||||
Goodwill and other intangible asset impairments | .17 | 1.81 | ||||||||||||||||||
Other income | — | (1.23) | ||||||||||||||||||
Non-GAAP | 3 | % | 24 | % | $ | 2.61 | $ | 2.11 | ||||||||||||
Impact of foreign currency on earnings per share | (.06) | |||||||||||||||||||
Non-GAAP, constant currency earnings per share | 21 | % | $ | 2.55 | ||||||||||||||||
(1)Represents GAAP, except Constant Currency percentages
|
Results by Product Category
(Unaudited) |
|||||||||||||||||||||||
Three Months Ended December 31
|
|||||||||||||||||||||||
Net Sales | Percentage Change |
Operating
Income (Loss) |
Percentage
Change |
||||||||||||||||||||
($ in millions) | 2020 | 2019 |
Reported
Basis |
Constant
Currency |
2020 | 2019 |
Reported
Basis |
||||||||||||||||
Skin Care | $ | 2,819 | $ | 2,205 | 28 | % | 25 | % | $ | 928 | $ | 772 | 20 | % | |||||||||
Makeup | 1,247 | 1,660 | (25) | (26) | 28 | (611) | 100+ | ||||||||||||||||
Fragrance | 618 | 581 | 6 | 5 | 141 | 97 | 45 | ||||||||||||||||
Hair Care | 154 | 162 | (5) | (6) | 4 | 12 | (67) | ||||||||||||||||
Other | 15 | 16 | (6) | (19) | (1) | 4 | (100+) | ||||||||||||||||
Subtotal | 4,853 | 4,624 | 5 | 3 | 1,100 | 274 | 100+% | ||||||||||||||||
Charges associated with restructuring and other activities | — | — | (37) | (13) | |||||||||||||||||||
Total | $ | 4,853 | $ | 4,624 | 5 | % | 3 | % | $ | 1,063 | $ | 261 | 100+% |
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Page 3 of 18
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Page 4 of 18
|
Results by Geographic Region
(Unaudited) |
|||||||||||||||||||||||
Three Months Ended December 31
|
|||||||||||||||||||||||
Net Sales | Percentage Change |
Operating
Income (Loss) |
Percentage
Change |
||||||||||||||||||||
($ in millions) | 2020 | 2019 |
Reported
Basis |
Constant
Currency |
2020 | 2019 |
Reported
Basis |
||||||||||||||||
The Americas | $ | 1,048 | $ | 1,226 | (15) | % | (13) | % | $ | 36 | $ | (529) | 100+% | ||||||||||
Europe, the Middle East & Africa | 2,030 | 2,079 | (2) | (3) | 657 | 505 | 30 | ||||||||||||||||
Asia/Pacific | 1,775 | 1,319 | 35 | 27 | 407 | 298 | 37 | ||||||||||||||||
Subtotal | 4,853 | 4,624 | 5 | 3 | 1,100 | 274 | 100+% | ||||||||||||||||
Charges associated with restructuring and other activities | — | — | (37) | (13) | |||||||||||||||||||
Total | $ | 4,853 | $ | 4,624 | 5 | % | 3 | % | $ | 1,063 | $ | 261 | 100+% |
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Page 5 of 18
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Page 6 of 18
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Page 7 of 18
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|
Page 8 of 18
|
Reconciliation between GAAP and Non-GAAP
(Unaudited) |
||||||||||||||||||||
Three Months Ending March 31, 2021 (F)
|
Three Months Ending March 31 | |||||||||||||||||||
Net Sales Growth | Diluted EPS Growth | Diluted Earnings/(Loss) Per Share | ||||||||||||||||||
% |
%,
Constant Currency |
% |
%,
Constant Currency |
2021 (F)
|
2020 | |||||||||||||||
Forecast / Actual Results (1)
|
13%-14% | 10%-11% | 100+% | 100+% | $.99-$1.11 | $ | (.02) | |||||||||||||
Non-GAAP | ||||||||||||||||||||
Restructuring and other charges | .09-.11 | .05 | ||||||||||||||||||
Changes in fair value of contingent consideration | — | (.01) | ||||||||||||||||||
Goodwill, other intangible and long-lived asset impairments | — | .83 | ||||||||||||||||||
Non-GAAP | 30%-42% | $1.10-$1.20 | $ | .85 | ||||||||||||||||
Impact of foreign currency on earnings per share | (.03) | |||||||||||||||||||
Forecasted constant currency net sales growth and earnings per share | 26%-38% | $1.07-$1.17 | ||||||||||||||||||
(1)Represents GAAP, except Constant Currency percentages; includes restructuring and other charges and adjustments
|
||||||||||||||||||||
(F)Represents forecast
|
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Page 9 of 18
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|
Page 10 of 18
|
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited) |
|||||||||||||||||||||||
Three Months Ended
December 31
|
Percentage Change |
Six Months Ended
December 31
|
Percentage Change | ||||||||||||||||||||
($ in millions, except per share data) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Net sales | $ | 4,853 | $ | 4,624 | 5 | % | $ | 8,415 | $ | 8,519 | (1) | % | |||||||||||
Cost of sales | 1,084 | 1,041 | 4 | 1,909 | 1,949 | (2) | |||||||||||||||||
Gross profit | 3,769 | 3,583 | 5 | 6,506 | 6,570 | (1) | |||||||||||||||||
Gross margin | 77.7 | % | 77.5 | % | 77.3 | % | 77.1 | % | |||||||||||||||
Operating expenses | |||||||||||||||||||||||
Selling, general and administrative(A)
|
2,590 | 2,538 | 2 | 4,616 | 4,723 | (2) | |||||||||||||||||
Restructuring and other charges (B)
|
35 | 7 | 100+ | 41 | 30 | 37 | |||||||||||||||||
Goodwill impairment (C)
|
54 | 511 | (89) | 54 | 511 | (89) | |||||||||||||||||
Impairment of other intangible assets (C)
|
27 | 266 | (90) | 27 | 266 | (90) | |||||||||||||||||
Total operating expenses | 2,706 | 3,322 | (19) | 4,738 | 5,530 | (14) | |||||||||||||||||
Operating expense margin | 55.8 | % | 71.8 | % | 56.3 | % | 64.9 | % | |||||||||||||||
Operating income | 1,063 | 261 | 100+ | 1,768 | 1,040 | 70 | |||||||||||||||||
Operating income margin | 21.9 | % | 5.6 | % | 21.0 | % | 12.2 | % | |||||||||||||||
Interest expense | 43 | 38 | 13 | 88 | 70 | 26 | |||||||||||||||||
Interest income and investment income, net | 17 | 13 | 31 | 31 | 27 | 15 | |||||||||||||||||
Other components of net periodic benefit cost | 7 | 1 | 100+ | 10 | 2 | 100+ | |||||||||||||||||
Other income(D)
|
— | 576 | (100) | — | 576 | (100) | |||||||||||||||||
Earnings before income taxes | 1,030 | 811 | 27 | 1,701 | 1,571 | 8 | |||||||||||||||||
Provision for income taxes | 153 | 250 | (39) | 299 | 412 | (27) | |||||||||||||||||
Net earnings | 877 | 561 | 56 | 1,402 | 1,159 | 21 | |||||||||||||||||
Net earnings attributable to noncontrolling interests | (4) | (4) | — | (6) | (7) | 14 | |||||||||||||||||
Net earnings attributable to The Estée Lauder Companies Inc. | $ | 873 | $ | 557 | 57 | % | $ | 1,396 | $ | 1,152 | 21 | % | |||||||||||
Net earnings attributable to The Estée Lauder Companies Inc. per common share | |||||||||||||||||||||||
Basic | $ | 2.40 | $ | 1.55 | 56 | % | $ | 3.84 | $ | 3.19 | 20 | % | |||||||||||
Diluted | $ | 2.37 | $ | 1.52 | 56 | % | $ | 3.79 | $ | 3.13 | 21 | % | |||||||||||
Weighted-average common shares outstanding | |||||||||||||||||||||||
Basic | 363.0 | 360.2 | 363.4 | 360.8 | |||||||||||||||||||
Diluted | 368.0 | 366.7 | 368.5 | 367.7 | |||||||||||||||||||
(A)The Company recorded $2 million (gross and net of tax) of income within selling, general and administrative expenses for the three and six months ended December 31, 2020 to reflect changes in the fair value of its contingent consideration related to its fiscal 2016 acquisition. During the three and six months ended December 31, 2019, the Company recorded $7 million ($6 million, net of tax) of income to reflect changes in the fair value of its contingent consideration related to certain of its fiscal 2015 and 2016 acquisitions.
|
|||||||||||||||||||||||
(B)In May 2016, the Company announced a multi-year initiative (“Leading Beauty Forward”) to build on its strengths and better leverage its cost structure to free resources for investment to continue its growth momentum. Leading Beauty Forward is designed to enhance the Company’s go-to-market capabilities, reinforce its leadership in global prestige beauty and continue creating sustainable value. As of June 30, 2019, the Company concluded the approvals of all major initiatives under Leading Beauty Forward related to the optimization of select corporate functions, supply chain activities, and corporate and regional market support structures, as well as the exit of underperforming businesses, and expects to substantially complete those initiatives through fiscal 2021. Inclusive of approvals from inception through June 30, 2019, the Company estimates that Leading Beauty Forward may result in related restructuring and other charges totaling between $950 million and $990 million, before taxes, consisting of employee-related costs, asset write-offs and other costs to implement these initiatives. After its full implementation, the Company expects Leading Beauty Forward to yield annual net benefits, primarily in Selling, general and administrative expenses and, to a lesser extent, Cost of sales, of between $425 million and $475 million, before taxes. These savings can be used to improve margin, mitigate risk and invest in future growth initiatives.
|
|
Page 11 of 18
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In August 2020, the Company announced a two-year restructuring program, Post-COVID Business Acceleration Program (the “PCBA Program”), designed to resize its business against the dramatic shifts to its distribution landscape and consumer behaviors in the wake of the COVID-19 pandemic. The PCBA Program will help improve efficiency and effectiveness by rebalancing resources to growth areas of prestige beauty. It will further strengthen the Company by building upon the foundational capabilities in which the Company has invested. The PCBA Program’s main areas of focus include accelerating the shift to online with the realignment of the Company’s distribution network reflecting freestanding store and certain department store closures, with a focus on North America and Europe, the Middle East & Africa; the reduction in brick-and-mortar point of sale employees and related support staff; and the redesign of the Company’s regional branded marketing organizations, plus select opportunities in global brands and functions. This program is expected to position the Company to better execute its long-term strategy while strengthening its financial flexibility. The Company plans to approve specific initiatives under the PCBA Program through fiscal 2022 and expects to complete those initiatives through fiscal 2023. The Company expects that the PCBA Program will result in related restructuring and other charges totaling between $400 million and $500 million, before taxes.
|
|||||||||||||||||||||||
(C)During November 2020, given the actual and the estimate of the potential future impacts relating to the uncertainty of the duration and severity of COVID-19 impacting the Company and lower than expected results from geographic expansion, the Company made further revisions to the internal forecasts relating to its GLAMGLOW reporting unit, triggering a need for an interim impairment review. As a result of this review, the Company recorded $81 million ($63 million, net of tax) of goodwill and other intangible asset impairments, with an impact of $.17 per common share for the three and six months ended December 31, 2020.
During December 2019, given the continuing declines in prestige makeup, generally in North America, and the ongoing competitive activity, the Company’s Too Faced, BECCA and Smashbox reporting units made revisions to their internal forecasts concurrent with the Company’s brand strategy review process, triggering a need for an interim impairment review. As a result of this review, the Company recorded $777 million ($663 million, net of tax) of goodwill and other intangible asset impairments, with an impact of $1.81 and $1.80 per common share for the three and six months ended December 31, 2019, respectively.
|
|||||||||||||||||||||||
(D)In conjunction with the acquisition of the remaining equity interest in Have&Be Co. Ltd., the Company recorded a gain on its previously held equity method investment of $553 million (inclusive of the recognition of a previously unrealized foreign currency gain of $4 million, which was reclassified from accumulated other comprehensive income). The Company also recorded a $23 million foreign currency gain as a result of cash transferred to a foreign subsidiary for the purposes of making the closing payment. The total gain of $576 million had an impact of $1.23 and $1.22 per common share for the three and six months ended December 31, 2019, respectively.
|
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Page 12 of 18
|
Returns and Charges Associated With Restructuring and Other Activities and Other Adjustments
(Unaudited) |
|||||||||||||||||||||||
Three Months Ended December 31, 2020
|
|||||||||||||||||||||||
Sales Returns | Cost of Sales | Operating Expenses | Total | After Tax | Diluted EPS | ||||||||||||||||||
(In millions, except per share data) |
Restructuring
Charges |
Other Charges/
Adjustments |
|||||||||||||||||||||
Leading Beauty Forward | $ | — | $ | 2 | $ | (2) | $ | 3 | $ | 3 | $ | 2 | $ | .01 | |||||||||
PCBA Program | — | — | 34 | — | 34 | 24 | .07 | ||||||||||||||||
Changes in fair value of contingent consideration | — | — | — | (2) | (2) | (2) | (.01) | ||||||||||||||||
Goodwill and other intangible asset impairments | — | — | — | 81 | 81 | 63 | .17 | ||||||||||||||||
Total | $ | — | $ | 2 | $ | 32 | $ | 82 | $ | 116 | $ | 87 | $ | .24 | |||||||||
Six Months Ended December 31, 2020
|
|||||||||||||||||||||||
Sales Returns | Cost of Sales | Operating Expenses | Total | After Tax | Diluted EPS | ||||||||||||||||||
(In millions, except per share data) |
Restructuring
Charges |
Other Charges/
Adjustments |
|||||||||||||||||||||
Leading Beauty Forward | $ | — | $ | 5 | $ | (10) | $ | 5 | $ | — | $ | — | $ | — | |||||||||
PCBA Program | — | — | 46 | — | 46 | 33 | .09 | ||||||||||||||||
Changes in fair value of contingent consideration | — | — | — | (2) | (2) | (2) | (.01) | ||||||||||||||||
Goodwill and other intangible asset impairments | — | — | — | 81 | 81 | 63 | .17 | ||||||||||||||||
Total | $ | — | $ | 5 | $ | 36 | $ | 84 | $ | 125 | $ | 94 | $ | .25 | |||||||||
Three Months Ended December 31, 2019
|
|||||||||||||||||||||||
Sales Returns | Cost of Sales | Operating Expenses | Total | After Tax | Diluted EPS | ||||||||||||||||||
(In millions, except per share data) |
Restructuring
Charges |
Other Charges/
Adjustments |
|||||||||||||||||||||
Leading Beauty Forward | $ | — | $ | 6 | $ | — | $ | 7 | $ | 13 | $ | 10 | $ | .03 | |||||||||
Changes in fair value of contingent consideration | — | — | — | (7) | (7) | (6) | (.02) | ||||||||||||||||
Goodwill and other intangible asset impairments | — | — | — | 777 | 777 | 663 | 1.81 | ||||||||||||||||
Other income | — | — | — | (576) | (576) | (450) | (1.23) | ||||||||||||||||
Total | $ | — | $ | 6 | $ | — | $ | 201 | $ | 207 | $ | 217 | $ | .59 | |||||||||
Six Months Ended December 31, 2019
|
|||||||||||||||||||||||
Sales Returns | Cost of Sales | Operating Expenses | Total | After Tax | Diluted EPS | ||||||||||||||||||
(In millions, except per share data) |
Restructuring
Charges |
Other Charges/
Adjustments |
|||||||||||||||||||||
Leading Beauty Forward | $ | — | $ | 8 | $ | 1 | $ | 29 | $ | 38 | $ | 31 | $ | .09 | |||||||||
Changes in fair value of contingent consideration | — | — | — | (7) | (7) | (6) | (.02) | ||||||||||||||||
Goodwill and other intangible asset impairments | — | — | — | 777 | 777 | 663 | 1.80 | ||||||||||||||||
Other income | — | — | — | (576) | (576) | (450) | (1.22) | ||||||||||||||||
Total | $ | — | $ | 8 | $ | 1 | $ | 223 | $ | 232 | $ | 238 | $ | .65 |
|
Page 13 of 18
|
Results by Product Category
(Unaudited) |
|||||||||||||||||||||||
Six Months Ended December 31
|
|||||||||||||||||||||||
Net Sales | Percentage Change |
Operating
Income (Loss) |
Percentage
Change |
||||||||||||||||||||
($ in millions) | 2020 | 2019 |
Reported
Basis |
Constant
Currency |
2020 | 2019 |
Reported
Basis |
||||||||||||||||
Skin Care | $ | 4,854 | $ | 4,047 | 20 | % | 18 | % | $ | 1,649 | $ | 1,404 | 17 | % | |||||||||
Makeup | 2,225 | 3,103 | (28) | (29) | (43) | (507) | 92 | ||||||||||||||||
Fragrance | 1,024 | 1,043 | (2) | (3) | 201 | 163 | 23 | ||||||||||||||||
Hair Care | 290 | 298 | (3) | (3) | 7 | 12 | (42) | ||||||||||||||||
Other | 22 | 28 | (21) | (25) | — | 6 | (100) | ||||||||||||||||
Subtotal | 8,415 | 8,519 | (1) | (3) | 1,814 | 1,078 | 68 | ||||||||||||||||
Charges associated with restructuring and other activities | — | — | (46) | (38) | |||||||||||||||||||
Total | $ | 8,415 | $ | 8,519 | (1) | % | (3) | % | $ | 1,768 | $ | 1,040 | 70 | % |
Results by Geographic Region
(Unaudited) |
|||||||||||||||||||||||
Six Months Ended December 31
|
|||||||||||||||||||||||
Net Sales | Percentage Change |
Operating
Income (Loss) |
Percentage
Change |
||||||||||||||||||||
($ in millions) | 2020 | 2019 |
Reported
Basis |
Constant
Currency |
2020 | 2019 |
Reported
Basis |
||||||||||||||||
The Americas | $ | 1,921 | $ | 2,386 | (19) | % | (18) | % | $ | 101 | $ | (354) | 100+% | ||||||||||
Europe, the Middle East & Africa | 3,570 | 3,756 | (5) | (6) | 1,068 | 882 | 21 | ||||||||||||||||
Asia/Pacific | 2,924 | 2,377 | 23 | 18 | 645 | 550 | 17 | ||||||||||||||||
Subtotal | 8,415 | 8,519 | (1) | (3) | 1,814 | 1,078 | 68 | ||||||||||||||||
Charges associated with restructuring and other activities | — | — | (46) | (38) | |||||||||||||||||||
Total | $ | 8,415 | $ | 8,519 | (1) | % | (3) | % | $ | 1,768 | $ | 1,040 | 70 | % |
|
Page 14 of 18
|
Reconciliation of Certain Consolidated Statements of Earnings Accounts
Before and After Returns, Charges and Other Adjustments (Unaudited) |
||||||||||||||||||||||||||||||||
Three Months Ended December 31
|
||||||||||||||||||||||||||||||||
2020 | 2019 | % Change | ||||||||||||||||||||||||||||||
($ in millions, except per share data) | As Reported |
Returns/
Charges/ Adjustments |
Non-GAAP | Impact of Foreign Currency Translation |
Non-GAAP,
Constant Currency |
As Reported |
Returns/
Charges/ Adjustments |
Non-GAAP | Non-GAAP |
Non-GAAP,
Constant Currency |
||||||||||||||||||||||
Net sales | $ | 4,853 | $ | — | $ | 4,853 | $ | (102) | $ | 4,751 | $ | 4,624 | $ | — | $ | 4,624 | 5 | % | 3 | % | ||||||||||||
Cost of sales | 1,084 | (2) | 1,082 | (17) | 1,065 | 1,041 | (6) | 1,035 | ||||||||||||||||||||||||
Gross profit | 3,769 | 2 | 3,771 | (85) | 3,686 | 3,583 | 6 | 3,589 | 5 | % | 3 | % | ||||||||||||||||||||
Gross margin | 77.7 | % | 77.7 | % | 77.6 | % | 77.5 | % | 77.6 | % | ||||||||||||||||||||||
Operating expenses | 2,706 | (114) | 2,592 | (55) | 2,537 | 3,322 | (777) | 2,545 | 2 | % | — | % | ||||||||||||||||||||
Operating expense margin | 55.8 | % | 53.4 | % | 53.4 | % | 71.8 | % | 55.0 | % | ||||||||||||||||||||||
Operating income | 1,063 | 116 | 1,179 | (30) | 1,149 | 261 | 783 | 1,044 | 13 | % | 10 | % | ||||||||||||||||||||
Operating income margin | 21.9 | % | 24.3 | % | 24.2 | % | 5.6 | % | 22.6 | % | ||||||||||||||||||||||
Other income | — | — | — | — | — | 576 | (576) | — | — | — | ||||||||||||||||||||||
Provision for income taxes | 153 | 29 | 182 | (7) | 175 | 250 | (10) | 240 | (24) | % | (27) | % | ||||||||||||||||||||
Net earnings attributable to The Estée Lauder Companies Inc. | $ | 873 | $ | 87 | $ | 960 | $ | (23) | $ | 937 | $ | 557 | $ | 217 | $ | 774 | 24 | % | 21 | % | ||||||||||||
Diluted EPS | $ | 2.37 | $ | .24 | $ | 2.61 | $ | (.06) | $ | 2.55 | $ | 1.52 | $ | .59 | $ | 2.11 | 24 | % | 21 | % | ||||||||||||
|
Page 15 of 18
|
Reconciliation of Certain Consolidated Statements of Earnings Accounts
Before and After Returns, Charges and Other Adjustments (Unaudited) |
||||||||||||||||||||||||||||||||
Six Months Ended December 31
|
||||||||||||||||||||||||||||||||
2020 | 2019 | % Change | ||||||||||||||||||||||||||||||
($ in millions, except per share data) | As Reported |
Returns/
Charges/ Adjustments |
Non-GAAP | Impact of Foreign Currency Translation |
Non-GAAP,
Constant Currency |
As Reported |
Returns/
Charges/ Adjustments |
Non-GAAP | Non-GAAP |
Non-GAAP,
Constant Currency |
||||||||||||||||||||||
Net sales | $ | 8,415 | $ | — | $ | 8,415 | $ | (117) | $ | 8,298 | $ | 8,519 | $ | — | $ | 8,519 | (1) | % | (3) | % | ||||||||||||
Cost of sales | 1,909 | (5) | 1,904 | (19) | 1,885 | 1,949 | (8) | 1,941 | ||||||||||||||||||||||||
Gross profit | 6,506 | 5 | 6,511 | (98) | 6,413 | 6,570 | 8 | 6,578 | (1) | % | (3) | % | ||||||||||||||||||||
Gross margin | 77.3 | % | 77.4 | % | 77.3 | % | 77.1 | % | 77.2 | % | ||||||||||||||||||||||
Operating expenses | 4,738 | (120) | 4,618 | (69) | 4,549 | 5,530 | (800) | 4,730 | (2) | % | (4) | % | ||||||||||||||||||||
Operating expense margin | 56.3 | % | 54.9 | % | 54.8 | % | 64.9 | % | 55.5 | % | ||||||||||||||||||||||
Operating income | 1,768 | 125 | 1,893 | (29) | 1,864 | 1,040 | 808 | 1,848 | 2 | % | 1 | % | ||||||||||||||||||||
Operating income margin | 21.0 | % | 22.5 | % | 22.5 | % | 12.2 | % | 21.7 | % | ||||||||||||||||||||||
Other income | — | — | — | — | — | 576 | (576) | — | — | — | ||||||||||||||||||||||
Provision for income taxes | 299 | 31 | 330 | (6) | 324 | 412 | (6) | 406 | (19) | % | (20) | % | ||||||||||||||||||||
Net earnings attributable to The Estée Lauder Companies Inc. | $ | 1,396 | $ | 94 | $ | 1,490 | $ | (24) | $ | 1,466 | $ | 1,152 | $ | 238 | $ | 1,390 | 7 | % | 5 | % | ||||||||||||
Diluted EPS | $ | 3.79 | $ | .25 | $ | 4.04 | $ | (.06) | $ | 3.98 | $ | 3.13 | $ | .65 | $ | 3.78 | 7 | % | 5 | % | ||||||||||||
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CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, except where noted) |
|||||||||||
December 31, 2020 | June 30, 2020 | December 31, 2019 | |||||||||
($ in millions) | (Audited) | ||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 5,545 | $ | 5,022 | $ | 3,596 | |||||
Accounts receivable, net | 1,972 | 1,194 | 2,225 | ||||||||
Inventory and promotional merchandise | 2,116 | 2,062 | 2,058 | ||||||||
Prepaid expenses and other current assets | 658 | 614 | 469 | ||||||||
Total current assets | 10,291 | 8,892 | 8,348 | ||||||||
Property, plant and equipment, net | 2,142 | 2,055 | 2,086 | ||||||||
Operating lease right-of-use assets | 2,325 | 2,282 | 2,517 | ||||||||
Other assets | 4,837 | 4,552 | 4,986 | ||||||||
Total assets | $ | 19,595 | $ | 17,781 | $ | 17,937 | |||||
LIABILITIES AND EQUITY | |||||||||||
Current debt | $ | 470 | $ | 1,222 | $ | 522 | |||||
Accounts payable | 1,299 | 1,177 | 1,137 | ||||||||
Operating lease liabilities | 387 | 375 | 369 | ||||||||
Other accrued liabilities | 3,264 | 2,405 | 2,925 | ||||||||
Total current liabilities | 5,420 | 5,179 | 4,953 | ||||||||
Long-term debt | 4,913 | 4,914 | 4,662 | ||||||||
Long-term operating lease liabilities | 2,314 | 2,278 | 2,318 | ||||||||
Other noncurrent liabilities | 1,492 | 1,448 | 1,403 | ||||||||
Total noncurrent liabilities | 8,719 | 8,640 | 8,383 | ||||||||
Total equity | 5,456 | 3,962 | 4,601 | ||||||||
Total liabilities and equity | $ | 19,595 | $ | 17,781 | $ | 17,937 | |||||
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SELECT CASH FLOW DATA
(Unaudited) |
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Six Months Ended December 31
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($ in millions) | 2020 | 2019 | ||||||
Net earnings | $ | 1,402 | $ | 1,159 | ||||
Adjustments to reconcile net earnings to net cash flows from operating activities: | ||||||||
Depreciation and amortization | 316 | 287 | ||||||
Deferred income taxes | (49) | 7 | ||||||
Other items | 266 | 359 | ||||||
Changes in operating assets and liabilities: | ||||||||
Increase in accounts receivable, net | (720) | (347) | ||||||
Increase in inventory and promotional merchandise | 67 | 31 | ||||||
Increase in other assets, net | (110) | (120) | ||||||
Increase (decrease) in accounts payable and other liabilities, net | 806 | (121) | ||||||
Net cash flows provided by operating activities | $ | 1,978 | $ | 1,255 | ||||
Other Investing and Financing Sources (Uses): | ||||||||
Capital expenditures | $ | (250) | $ | (291) | ||||
Payments for acquired businesses, net of cash acquired | (6) | (1,040) | ||||||
Purchases of investments | (40) | (5) | ||||||
Payments to acquire treasury stock | (102) | (813) | ||||||
Dividends paid | (368) | (330) | ||||||
Proceeds (repayments) of current debt, net | (747) | 8 | ||||||
Proceeds (repayments) from issuance of long-term debt, net | (4) | 1,775 |
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