Good morning, ladies and gentlemen. My name is Nichole, and I'll be your conference operator today. At this time, I would like to welcome everyone to Coty's Fiscal Fourth Quarter and 2017 Full Year Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. As a reminder, this conference call is being recorded today, Tuesday, August 22. Thank you. I would now like to turn the call over to Kevin Monaco, Coty's Senior Vice President, Treasurer and Investor Relations. Mr. Monaco, please go ahead.

Good morning, and thank you for joining us. On today's call are Camillo Pane, Chief Executive Officer; and Patrice de Talhouët, Executive Vice President and Global Chief Financial Officer. I would like to remind you that many of our comments may contain forward-looking statements. Please refer to our press release and reports filed with the SEC, where we list factors that could cause actual results to differ materially from these forward-looking statements. All commentary on organic net revenues reflect the comparison of Legacy-Coty and the P&G Beauty business on a combined net revenue basis at constant currency in both the current and prior year periods excluding the impact of acquisitions, other than the acquisition of the P&G Beauty business. 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 our 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 Camillo.

Thank you, Kevin, and welcome, everybody, to Coty’s fiscal 2017 fourth quarter and full year conference call. Fiscal 2017 was a transformational year for Coty. First, we completed the incredibly complicated acquisition of the P&G Beauty Business, dealing with the complexities of both the carve-out the R&D structure. Second, we fully reorganized into a product and customer focused organizational structure, centered on three vertically integrated divisions. Third, we reached significant milestones in our integration efforts, and fourth, we strengthened our portfolio through the additions of Younique, ghd, and the pending acquisition of the Burberry Beauty license. I am particularly proud of the culture we are building within the new Coty where we embrace the diversity of consumer beauty, focus on destruction, - and welcome the challenge of an increasingly complex beauty industry. Equally important, we believe the strategy we outlined earlier in the year which focuses on strengthening our global brands, shifting more resources to fuel the growth of the brands with higher growth potential, stabilizing the remaining brands, and continue to expand the geographic reach of our portfolio, is beginning to bear fruit as demonstrated by the improvement in the net revenue trends in the second half of the fiscal year. So let’s begin with our performance at high level. In Q4, organic net revenues excluding acquisitions declined 3% in constant currency, which includes a 1% benefit as a result of pre-shipments to customers in advance of exiting the transitional service agreement with P&G for Europe which occurred on July 1. Q4 reflect a much improved and very good growth in both Luxury and Professional Beauty, but continued weakness in Consumer Beauty, which is a key priority for us to address. Include the ghd and Younique acquisitions, our Q4 net revenues grew 5%. Fiscal 2017 organic net revenues declined…

[Operator Instructions] Our first question comes from the line of Dara Mohsenian of Morgan Stanley. Your line is now open.

Hi. Just around the SG&A and fixed cost issue in the quarter, clearly, it’s worst than previously expected. You entered some of the regions behind that. Just how quickly can you solve that issue? What you saw was confidence in the longer term targets and synergy potential given the issue? And then can you just detail the range of solutions you are looking at and potential magnitude of solutions in terms of profit impact? Thanks. Patrice de Talhouët: So, Darren, thanks for the question. So, as you said, first we remained very committed on our overall synergy targets of $750 million and the phasing that we have outlined before. So there is no change on that. Second, what we have said is that, we are very committed about addressing this issue and come back in the coming quarters with answers. I think, we will come back with the clear action plans. We are – it’s a key priority to us and the measures that we are going to take are already now starting to be decided and will yield some results in the course of the year.

Okay. And does it – is it sort of sequentially built throughout the year? Is it a pretty substantial fix versus what you realized in Q4? And just given the magnitude of the issue in Q4, I just want to get a sense of how it progresses sequentially throughout the upcoming fiscal year?

No, I think what we have already pointed out is the fact that when it comes to synergies, the synergies is mainly weighted in the first on the second half of the year which will as a result of that impact the first half of year profitability. Now the measures that we are currently taking will yield some results sequentially in the coming quarters.

Okay. Thanks. I’ll get back in queue. Thanks.

Thank you. Our next question comes from the line of Faiza Alwy of Deutsche Bank. Your line is now open.

Yes, hi, thank you. So just to follow-up on the SG&A comment, could you try and just quantify for us, what the fixed cost impact were? I think you mentioned sort of some of the go to market, higher expenses in some markets and just – I am just having a difficult time conceptually trying to figure out what you are talking about as it relates to the TSA with P&G. So if you could just expand on some of the commentary around that? Thanks.

So, first, I think it’s important to remind that, when we comment on the lower profitability in Q4, what we said is that it’s the result of two things. First, a material improvement – increase, sorry, in the specimen in order to support the few momentum that we have in very few brands. So that’s the first one. The second one is indeed is a higher fixed cost base and as we said, this is first the reflection of our new divisional structure. Second the fact that we had limited visibility with the TSA exit and now that we are wrapping things up and exiting the TSA in North America, in Europe and then in EMEA will have everything under our belt and we’ll be able to address these costs very rapidly. So once again, we will come back in the coming quarters with some specific answers. We remain committed on our synergies of $750 million and on the phasing that we have outlined before.

Okay. And then, just if I could follow-up on any comment on how you think organic growth will trend in fiscal 2018? I think I heard you say some improvement that if you could just expand a little bit on that?

So, whenever I comment on specific guidance, we expect clearly to see momentum in the Luxury and Professional Beauty to continue and regarding Consumer Beauty, this is a more of a longer term as we discussed it’s a journey, and – but we are on the right path. We are really working on the relaunch of several brands or most brands in Consumer Beauty, already discussed this in the past. We are receiving very strong positive feedback from the retailer on all of the relaunches and so, we expect the overall momentum to continue for the two divisions, but we are not going to give you guidance for the overall company.

Thank you. Our next question comes from the line of Joe Lachky of Wells Fargo Securities. Your line is now open.

Thank you. So, I just wanted to get back to the organic sales outlook and I guess specifically, it took a lot of marketing support, obviously behind new innovation to show the stabilization in the top-line that you’ve seen. Can you talk a little bit about what sort of reinvestment behind A&P do you think you will need going forward in 2018 to continue to improve on the top-line?

We believe that we have the right level of investments behind our brands in our 2018 plan. What you have seen in Q4 is clearly material increase in the investments because we have certain launches that we believe are very important for us and they are going to yield some results and this is why you’ve see material increase behind launches like Hugo Boss Tonic, but also the preparation of Gucci Bloom and the Tiffany new fragrances we just launched but also the launch of the CK Obsessed and a couple of launches or campaigns in Consumer Beauty like the COVERGIRL PDA campaign or the Clairol Colour Crave launch. Early reaction on the GUCCI Bloom has been very favorable among consumers and retail partners. We had the prelaunch in house in the month of August and the results are actually very promising. They are above our expectations and the same is for the Tiffany launch we just did in Bloomingdale again it’s exclusive in the month of August and the results are actually very promising. They are above our expectations and the same is for the Tiffany launch which did in Bloomingdale, again it’s exclusive in the month of August and is also overachieving versus our expectations. Patrice de Talhouët: These being said, it’s also important to note that when you look at our long-term trends, the level of marketing spend that we have is really in line with what we have communicated at the beginning of the year which is around 25%. So, it’s not like we are changing drastically here. There was a seasonal effect in Q4, but the end of the day, when you look at the trend, we also see the 25% which is exactly what we said at the beginning of the year.

Okay. And then, maybe if you could talk about your long-term EPS target. The $1.53 you laid out by fiscal 2020 and obviously, you had some unforeseen struggles in fiscal 2017 and I would imagine you need to see some pretty material underlying improvement in the business. But also if you could talk about how aggressive you plan on being – well, first about you reiterate that target and then also how aggressive you plan on being to reach it be it M&A or other balance sheet activities like that? Thanks. Patrice de Talhouët: So, first we remain committed on the $1.53, as we said already in the last calls. So this is not changing. What we also said is, this is a long-term journey. So, I don’t think we should do a conclusion out of one quarter. This is a long-term journey. We are very committed to the $1.53 by 2020 as you rightly pointed out. We are not going to comment on the M&A and the way we are going to get there. As we said previously, there are many ways to get there and we can use some of our balance sheet to be able to get there, but we are not going to give you any angle on the way to get there.

Thank you. [Operator Instructions] Our next question comes from the line of Step Wissink of Jefferies. Your line is now open.

Thanks, good morning everyone. Just a couple of follow-ups. The first on A&P on the Consumer segment. I am wondering if you can talk a little bit about the rate change that you expect to see in retail sales through some of the initiatives around both COVERGIRL and then some of your other color cosmetics brands. And then, secondly, just with respect to follow-up on the target. I am curious if you can just help us understand what the underlying business runrate would need to be to achieve that target $1.53 in fiscal 2020? What kind of step-up would we need to see in 2018, 2019 and 2020 to get to that level, the underlying organic runrate? Thank you.

So, regarding some of the launches or relaunches, I believe you have asked your question about Consumer Beauty, am I right?

Yes, please.

Okay. So, the plan to relaunch COVERGIRL is in the second half of fiscal 2018 and this as we discussed last time includes new positioning, new creative, new packaging and new store appearance. And as I said, the retailer feedback on our plan has been very positive so far. We’ve been working also with a new creative agency Droga5, which is one of the best agency in the world to build on an already strong brand equity. Recently, we have seen a research coming from the outside from an external market research company which highlighted that actually COVERGIRL is the number one cosmetic brand in the U.S. with the most loyal consumer base, especially amongst millennial. So, clearly, when we see this, this was not done by us. This research gives us quite a lot of confidence about the relaunch that we are preparing. And we have done a campaign called Project PDA, Public Display of Application which actually received a lot of positive feedback from consumers but also retailers. And again, it’s all around empowerment of women and the ability of self-distraction because we encourage women to actually apply make-up in public, which is quite a strong stand that we have taken with COVERGIRL and we are fully behind this. The new launch of COVERGIRL Total Tease Mascara has been a great success in Canada and is being now rollout in the U.S. but as I said, it’s going to be a gradual improvement over the performance because the fuller launch will have some four COVERGIRL in the second half of 2018. When I look at some of the other brands, we are also working quite hard on the relaunch of Clairol and we have quite a big initiatives coming again in the second half of 2018. We need…

Thank you. Our next question comes from the line of Andrea Teixeira of JPMorgan. Your line is now open.

Hi, good afternoon there, and good morning. I just wanted to clarify a little bit on the 750 - on the $750 million. You just discussed some of the phasing and I wanted to find out is actually this phasing of the synergies, if you can put a bridge on those synergies and how much it would flow into the bottom-line? We should be thinking of flowing it more into the fiscal year 2020 given your investments in COVERGIRL and launches of that? Thank you.

The synergies are really net of any potential reinvestment et cetera. So what we mentioned is that we are going to generate the $750 million and as part of our investment thesis, this $750 million would come line in order to achieve the $1.53 of EPS. So, this is net of any reinvestment and the support that would need to fuel the growth momentum. And so, once again…

And the cadence?

The impact of the P&L the $750 million is 20% this year. Then you have 50% that will be achieved in fiscal 2018 impacting the P&L in fiscal 2018, 80% impacting the P&L in fiscal 2019 and then the full $750 million impacting the P&L in fiscal 2020.

So, what you are saying, fiscal year 2017, we already had some impact of the synergies. Can you quantify? You said it was 18%, 20%.

20% of $750 million.

So the reason why we didn’t see is the TSA expenses and all everything else that was hard for us to see because what I wanted to figure out is like, what is the earnings power, so you just reiterated the $1.53, but as a cadence of the top-line what is behind the top-line that would get you to $1.53? Because that’s obviously – your $750 million depends on progression of top-line, right?

Sure, sure, but we still – we start to see some growth momentum in two out of our three legs and this is going to continue to progress in the coming years, point one. Point two, you also have a material impact of the acquisition that we have made, ghd, Hypermarcas and Younique which are growing quite substantially and as a result of that, we’ll weight even more on our growth profile going forward.

Thank you. Our next question comes from the line of Mark Astrachan of Stifel. Your line is now open.

Yes, thanks, and hi, everybody. I wanted to talk about the sales expectation. So appreciate not wanting to get into specifics from a guidance standpoint. But I guess, maybe looking at it differently, what’s a realistic rate of growth for the business now as you think about it from a longer term standpoint? Or in a different way, what is the growth that you benchmark the orders against relative to the categories in which you are competing. I think, Part had said on the roadshow year ago, call it, very low single-digit, is that’s still something that you are benchmarking yourself against today?

Yes, I believe that’s the right benchmark because of the way the composition of our portfolio both from a brand point of view, channels point of view and markets point of view. So I confirm what Part said in the roadshow. In terms of sales expectation, as we said, the primary program will not be a straight-line wavered over the last couple of quarters we have now reported gradual improvements in our underlying net revenue trends before we had high single-digit decline in the first half. Now are in low to mid-single-digits of decline in the second half. We had two divisions which are confirming a strong positive momentum. And overall, what I can tell is that, we expect that strategic efforts that we are taking to continue to bear fruit in fiscal 2018.

Okay, and then, shifting a bit to cost and free cash flow. So, fixed costs are what they are in guess in the period that just ended. So, curious, how do you think about the total cost structure of this business today versus what you thought going in when you did the deal or even when the deal closed in October? And then, sort of related to that, you outperformed free cash flow outlook in fiscal 2017 relative to those going in expectations. So, thoughts on fiscal 2018 including CapEx and what you are going to do with the cash in terms of debt pay down or M&A or sort of both, obviously there is a dividend as well. So anything there would be helpful. Patrice de Talhouët: Sure, on the cash, we never – it’s – we are going to generate cash in line with the progression of our EBIT and we are going to keep on working on the working capital. We still have some investment in terms of CapEx to do in the coming year to finish and to wrap up the integration. So there is still some one-off CapEx to be done. These being said, as of outline – we are now having a negative working capital for the combined company which is quite an achievement. So, how we will return cash to the shareholders, depends a little bit. So, we will – it’s either of course by – via dividend or to further fuel the top-line with additional M&A. These will be discussed in due time. Now in terms of cost structure, do you have any expectation? We, once again, what we said is that, we have designed a divisional structure which is a focused organization, which is probably slightly more expensive than the mutualized organization. But we have done that on purpose to be able to have more focus on the growth agenda. So it’s a slightly more expensive structure than others. But, once again to have some more momentum on the top-line. So I think that’s what we can say today.

Thank you. Our next question comes from the line of Jason Gere of KeyBanc Capital Markets. Your line is now open.

Thanks. Good morning. Just two questions. I guess, more or less follow-ups on previous questions. But the first one, when you factor in some of the shelf space losses in 2018 that you’ll lap and then the contribution of acquisitions, do you think the momentum of Luxury and Professional can offset, I guess, the kind of weakness in Consumer Beauty in the first half of the year. So that’s the first question. And then the second question is really just on the e-commerce. I know you are talking about bunch of these relaunches. I just kind of curious about, I think one of your tenants is really kind of managing some of the in-store execution at your bigger retailers, but just the balance with the shift that we are seeing online, which segments are you seeing more of that growth coming into? Do you have the right capabilities in there to kind of manage this? So any perspective on those two questions will be great. Thank you.

I will start with your second question. So, in terms of balance of e-commerce and work on retailers, what I can tell you is that, we are working quite hard on rebalancing our in-store execution. This is one of our key pillar of growth of our strategy. And so, we are making choices of shifting money to investment at the stores and of course, we are working with our key partners retailers to improve the partnership to bring more value to them and of course to step up the Omni channel. And of course we are working on the relaunches of the brand which will hit the store in second half of 2018. Now that said, e-commerce is a big priority for us and I have already mentioned an announced a new structure with a new head of e-commerce, a new structure which has higher accountability on that. It’s important to say that our agency, Beamly which we acquired around one-and-a-half year ago, is now fully focused on helping us on the e-commerce efforts. And we are working with the key customers also on stepping up the e-tailing business. So the e-retailer business, which is clearly some, a channel that can react much fast as well our program is. We are seeing good results there. And let’s also not forget that Younique, the business that we bought just recently in February is full e-commerce business, 100% B2C where we have over 250,000 brand ambassadors, presenters, who every day are out there selling cosmetics under the Younique brand via the web, via the social media. So that’s – it’s a clear testament also to our new focus on e-commerce which is not done only through the acquisition of Younique, but also internally organically and the team is making big progress on this area. Now, your first question was about Luxury and Professional Beauty offsetting the Consumer Beauty pressure. What I can tell you is that, of course, we expect the momentum on Luxury and Professional Beauty to continue in 2018 and on Consumer Beauty, what I can tell you is, that the shelf space that have impacted us in 2017 truly only now in a certain ways having an impact, because the shelf reset from the key retailers it does happen around the March, April of each year, let’s say. So, we expect these headwinds on shelf space losses to actually lapse and continue until Q3 before 2018 when we start to lapse the current shelf space losses. Now, what’s happening is really the moment we are working with the retailers and presenting all our plans to ensure that we don’t see any more impact, let’s say post the new resets that will happen at the beginning of calendar 2018 - in the second half of fiscal 2018 and I have strong confidence that we will not see any more impact because of the great conversation we are having with the retailers and the positive feedback on our plans.

Okay, great. Thank you.

Thank you. Our next question comes from the line of Rosie Edwards of Berenberg. Your line is now open.

Yes, good morning. Just a couple of questions, firstly, if I use the prior EBIT margins of 11% as the starting point, and then add back synergies of $115 million, it implies those sort of drag on cost of over $200 million from weaker top-line and also the extra fixed cost you are talking about in the fourth quarter. Is that $200 million, is that sort of a balance you see, you’ll be able to sort of plough back if you like? Or is that sort of earning shortfall? I mean, in terms of like the ploughing it back either through your rate efficiencies or through kind of M&A as you’ve kind of previously alluded to? Patrice de Talhouët: So, I think you- when you in-staff 2016 with 11% blood margin of the combined business, you add back the synergies, the contribution of Younique and some of the acquisitions, what you also need to deduct is start the contraction of the business that we’ve seen which has been substantial and, yes, cost structure – a step-up in the cost structure, especially on the carve-out business to be able to handle business of twice the size. So I think that’s the way you should see it. It’s not only due to the cost structure, it’s also due to the fact that we had a contraction of the business versus the fiscal 2016. This being said, now, we have a synergy program and an ongoing productivity program in place, that we are actively working on and as we deliver synergies that will be able – that will be one of the elements that we will be able to deliver the $1.53 combined with one, use of the balance sheet to do M&A and second to return to go back to a growth momentum at one point in time.

Okay. And then, just on Consumer Beauty, pricing on the U.S., I just wonder, do your relaunches, sort of include any channel shifts or expansion of distribution points, current feeling of the moment, the brands would be sort of more weighted to sort of modern trade as opposed to for example, specialty, multi and things like that?

No doubt that our strategy has a channel mix and Specialty Beauty which you are alluding to, your mentioning is clearly a very important part of our channel mix. So we are focusing on that quite a lot and the e-commerce, what I discussed before, so working with our partner retailers and working on the e-tailing business, the e-retailing business is also a big focus. It’s no doubt that consumers are shifting and their behavior and it’s also important that we do deploy strategy that are also in line with this shifting consumer behavior. So, absolutely working with the brick and mortar retailers, specialty, beauty and e-commerce, truly the three key areas of focus for all the relaunches that I mentioned before.

Okay. Thank you.

Thank you and I am showing no further questions. At this time, I’d like to hand the call back over to Camillo Pane for any closing remarks.

So, I would like to thank all of you for the attention and for the questions and I wish you a great day.