COTY INC. Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

The following discussion and analysis of the financial condition and results of
operations of Coty Inc. and its consolidated subsidiaries, should be read in
conjunction with the information contained in the Condensed Consolidated
Financial Statements and related notes included elsewhere in this document, and
in our other public filings with the Securities and Exchange Commission ("SEC"),
including our Annual Report on Form 10-K for the fiscal year ended June 30, 2021
("Fiscal 2021 Form 10-K"). When used in this discussion, the terms "Coty," the
"Company," "we," "our," or "us" mean, unless the context otherwise indicates,
Coty Inc. and its majority and wholly-owned subsidiaries. Also, when used in
this Quarterly Report on Form 10-Q, the term "includes" and "including" means,
unless the context otherwise indicates, including without limitation. The
following report includes certain non-GAAP financial measures. See
"Overview-Non-GAAP Financial Measures" for a discussion of non-GAAP financial
measures and how they are calculated.

All dollar amounts in the following discussion are in millions of United States ("U.S.") dollars, unless otherwise indicated.

More information about potential risks and uncertainties that could affect our
business and financial results is included under the heading "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in this Quarterly Report on Form 10-Q and other periodic reports we
have filed and may file with the SEC from time to time.

Forward-looking Statements

Certain statements in this Form 10-Q are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect our current views with respect to, among
other things, the impact of COVID-19 and potential recovery scenarios, strategic
planning, targets and outlook for future reporting periods (including the extent
and timing of revenue, expense and profit trends and changes in operating cash
flows and cash flows from operating activities and investing activities), the
impact of the sale of a majority stake in Coty's Professional and Retail Hair
business, including the Wella, Clairol, OPI and ghd brands, (together, the
"Wella Business") and the related transition services (the "TSA"), the wind down
of the Company's operations in Russia (including timing and expected impact),
the Company's future operations and strategy (including the expected
implementation and related impact of its strategic priorities), ongoing and
future cost efficiency, optimization and restructuring initiatives and programs,
strategic transactions (including their expected timing and impact),
expectations and/or plans with respect to joint ventures (including Wella and
the timing and size of any related distribution or return of capital), the
Company's capital allocation strategy and payment of dividends (including
suspension of dividend payments and the duration thereof and any plans to resume
cash dividends on common stock or to continue to pay dividends in cash on
preferred stock), investments, licenses and portfolio changes, product launches,
relaunches or rebranding (including the expected timing or impact thereof),
synergies, savings, performance, cost, timing and integration of acquisitions,
including the strategic partnerships with Kylie Jenner and Kim Kardashian West,
future cash flows, liquidity and borrowing capacity (including any refinancing
or deleveraging activities), timing and size of cash outflows and debt
deleveraging, the timing and extent of any future impairments, and synergies,
savings, impact, cost, timing and implementation of the Company's Transformation
Plan (as defined below), including operational and organizational structure
changes, operational execution and simplification initiatives, fixed cost
reductions, and supply chain changes, the impact, timing and implementation of
e-commerce and digital initiatives, expected impact, cost, timing and
implementation of sustainability initiatives, the expected impact of
geopolitical risks including the ongoing war in Ukraine on our business
operations, sales outlook and strategy, the expected impact of global supply
chain challenges and/or inflationary pressures (including as a result of
COVID-19 and/or the war in Ukraine), and the priorities of senior management.
These forward-looking statements are generally identified by words or phrases,
such as "anticipate", "are going to", "estimate", "plan", "project", "expect",
"believe", "intend", "foresee", "forecast", "will", "may", "should", "outlook",
"continue", "temporary", "target", "aim", "potential", "goal" and similar words
or phrases. These statements are based on certain assumptions and estimates that
we consider reasonable, but are subject to a number of risks and uncertainties,
many of which are beyond our control, which could cause actual events or results
(including our financial condition, results of operations, cash flows and
prospects) to differ materially from such statements, including risks and
uncertainties relating to:

•the impact of COVID-19 (or future similar events), including demand for the
Company's products, illness, quarantines, government actions, facility closures,
store closures or other restrictions in connection with the COVID-19 pandemic,
and the extent and duration thereof, the availability and widespread
distribution of effective vaccines, related impact on our ability to meet
customer needs and on the ability of third parties on which we rely, including
our suppliers, customers, contract manufacturers, distributors, contractors,
commercial banks and joint-venture partners, to meet their obligations to us, in
particular collections from customers, the extent that government funding and
reimbursement programs in connection with COVID-19 are available to us, and the
ability to successfully implement measures to respond to such impacts;

•our ability to successfully implement our multi-year Transformation Plan,
including our management realignment, reporting structure changes, operational
and organizational changes, and the initiatives to further reduce our cost base,

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and to develop and achieve our global business strategies (including mix
management, select price increases, more disciplined promotions, and foregoing
low value sales), compete effectively in the beauty industry, achieve the
benefits contemplated by our strategic initiatives (including revenue growth,
cost control, gross margin growth and debt deleveraging) and successfully
implement our strategic priorities (including innovation performance in Prestige
and mass channels, strengthening our positions in core markets, accelerating our
digital and e-commerce capabilities, building on our skincare portfolio, and
expanding our presence in China) in each case within the expected time frame or
at all;

•our ability to anticipate, gauge and respond to market trends and consumer
preferences, which may change rapidly, and the market acceptance of new
products, including new products related to Kylie Jenner's or Kim Kardashian
West's existing beauty businesses, any relaunched or rebranded products and the
anticipated costs and discounting associated with such relaunches and rebrands,
and consumer receptiveness to our current and future marketing philosophy and
consumer engagement activities (including digital marketing and media);

•use of estimates and assumptions in preparing our financial statements,
including with regard to revenue recognition, income taxes (including the
expected timing and amount of the release of any tax valuation allowance), the
assessment of goodwill, other intangible and long-lived assets for impairments,
the market value of inventory, the fair value of the equity investment, and the
fair value of acquired assets and liabilities associated with acquisitions;

•the impact of any future impairments;

•managerial, transformational, operational, regulatory, legal and financial
risks, including diversion of management attention to and management of cash
flows, expenses and costs associated with the Company's response to COVID-19,
the Transformation Plan, the TSA, the integration of the strategic partnerships
with Kylie Jenner and Kim Kardashian West, and future strategic initiatives,
and, in particular, our ability to manage and execute many initiatives
simultaneously including any resulting complexity, employee attrition or
diversion of resources;

•the timing, costs and impacts of divestitures and the amount and use of proceeds from any such transactions;

•future divestitures and the impact thereof on, and future acquisitions, new
licenses and joint ventures and the integration thereof with, our business,
operations, systems, financial data and culture and the ability to realize
synergies, manage supply chain challenges and avoid future supply chain and
other business disruptions, reduce costs (including through our cash efficiency
initiatives), avoid liabilities and realize potential efficiencies and benefits
(including through our restructuring initiatives) at the levels and at the costs
and within the time frames contemplated or at all;

•increased competition, consolidation among retailers, shifts in consumers'
preferred distribution and marketing channels (including to digital and Prestige
channels), distribution and shelf-space resets or reductions, compression of
go-to-market cycles, changes in product and marketing requirements by retailers,
reductions in retailer inventory levels and order lead-times or changes in
purchasing patterns, impact from COVID-19 on retail revenues, and other changes
in the retail, e-commerce and wholesale environment in which we do business and
sell our products and our ability to respond to such changes (including our
ability to expand our digital, direct-to-consumer and e-commerce capabilities
within contemplated timeframes or at all);

•our and our joint ventures', business partners' and licensors' abilities to
obtain, maintain and protect the intellectual property used in our and their
respective businesses, protect our and their respective reputations (including
those of our and their executives or influencers) and public goodwill, and
defend claims by third parties for infringement of intellectual property rights;

•any change to our capital allocation and/or cash management priorities,
including any change in our dividend policy or, if our Board declares dividends
on common stock, our stock dividend reinvestment program (the "Stock Dividend
Reinvestment Program");

•any unanticipated problems, liabilities or integration or other challenges
associated with a past or future acquired business, joint ventures or strategic
partnerships which could result in increased risk or new, unanticipated or
unknown liabilities, including with respect to environmental, competition and
other regulatory, compliance or legal matters, and specifically in connection
with the strategic partnerships with Kylie Jenner and Kim Kardashian West, risks
related to the entry into a new distribution channel, the potential for channel
conflict, risks of retaining customers and key employees, difficulties of
integration (or the risks associated with limiting integration), ability to
protect trademarks and brand names, litigation or investigations by governmental
authorities, and changes in law, regulations and policies that affect KKW
Holdings, LLC's ("KKW Holdings") business or products, including risk that
direct selling laws and regulations may be modified, interpreted or enforced in
a manner that results in a negative impact to KKW Holdings' business model,
revenue, sales force or business;

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•our international operations and joint ventures, including enforceability and
effectiveness of our joint venture agreements and reputational, compliance,
regulatory, economic and foreign political risks, including difficulties and
costs associated with maintaining compliance with a broad variety of complex
local and international regulations;

•our dependence on certain licenses (especially in the fragrance category) and our ability to renew expiring licenses on favorable terms or at all;

•our dependence on entities performing outsourced functions, including
outsourcing of distribution functions, and third-party manufacturers, logistics
and supply chain suppliers, and other suppliers, including third-party software
providers, web-hosting and e-commerce providers;

•administrative, product development and other difficulties in meeting the
expected timing of market expansions, product launches, re-launches and
marketing efforts, including in connection with new products related to Kylie
Jenner's or Kim Kardashian West's existing beauty businesses;

•global political and/or economic uncertainties, disruptions or major regulatory
or policy changes, and/or the enforcement thereof that affect our business,
financial performance, operations or products, including the impact of the war
in Ukraine and any escalation or expansion thereof, Brexit (and related business
or market disruption), upcoming elections in Brazil, the current U.S.
administration, changes in the U.S. tax code, and recent changes and future
changes in tariffs, retaliatory or trade protection measures, trade policies and
other international trade regulations in the U.S., the European Union, and Asia
and in other regions where we operate, and recent and future changes in
sanctions regulations including in connection with the war in Ukraine and any
escalation or expansion thereof;

•currency exchange rate volatility and currency devaluation and/or inflation;

•the number, type, outcomes (by judgment, order or settlement) and costs of
current or future legal, compliance, tax, regulatory or administrative
proceedings, investigations and/or litigation, including litigation relating to
the tender offer by Cottage Holdco B.V. (the "Cottage Tender Offer"), product
liability cases (including asbestos and talc-related litigation for which
indemnities and/or insurance may not be available), distributor or licensor
litigation, and compliance, litigation or investigations relating to our
strategic partnerships;

•our ability to manage seasonal factors and other variability and to anticipate future business trends and needs;

•disruptions in operations, sales and in other areas, including due to
disruptions in our supply chain, restructurings and other business alignment
activities, the Wella Transaction and related transition activities,
manufacturing or information technology systems, labor disputes, extreme weather
and natural disasters, impact from COVID-19 or similar global public health
events, the outbreak of war or hostilities (including the war in Ukraine and any
escalation or expansion thereof), the impact of global supply chain challenges,
and the impact of such disruptions on our ability to generate profits, stabilize
or grow revenues or cash flows, comply with our contractual obligations and
accurately forecast demand and supply needs and/or future results;

•restrictions imposed on us through our license agreements, credit facilities
and senior unsecured bonds or other material contracts, our ability to generate
cash flow to repay, refinance or recapitalize debt and otherwise comply with our
debt instruments, and changes in the manner in which we finance our debt and
future capital needs;

•increasing dependency on information technology, including as a result of
remote working in response to COVID-19, and our ability to protect against
service interruptions, data corruption, cyber-based attacks or network security
breaches, including ransomware attacks, costs and timing of implementation and
effectiveness of any upgrades or other changes to information technology
systems, and the cost of compliance or our failure to comply with any privacy or
data security laws (including the European Union General Data Protection
Regulation (the "GDPR"), the California Consumer Privacy Act and the Brazil
General Data Protection Law) or to protect against theft of customer, employee
and corporate sensitive information;

•our ability to attract and retain key personnel and the impact of senior management transitions and organizational structure changes;

•the distribution and sale by third parties of counterfeit and/or gray market versions of our products;

•the impact of our Transformation Plan as well as the Wella Transaction on our relationships with key customers and suppliers and certain material contracts;

•our relationship with Cottage Holdco B.V., as our majority stockholder, and its affiliates, and any related conflicts of interest or litigation;

•our relationship with KKR, whose affiliate KKR Bidco, is an investor in the Wella Business, and any related conflicts of interest or litigation;

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•future sales of a significant number of shares by our majority stockholder or the perception that such sales could occur; and

•other factors described elsewhere in this document and in documents that we file with the SEC from time to time.

All forward-looking statements made in this document are qualified by these
cautionary statements. These forward-looking statements are made only as of the
date of this document, and we do not undertake any obligation, other than as may
be required by applicable law, to update or revise any forward-looking or
cautionary statements to reflect changes in assumptions, the occurrence of
events, unanticipated or otherwise, or changes in future operating results over
time or otherwise.

Comparisons of results for current and any prior periods are not intended to
express any future trends or indications of future performance unless expressed
as such, and should only be viewed as historical data.

Industry, Ranking and Market Data

Unless otherwise indicated, information contained in this Quarterly Report on
Form 10-Q concerning our industry and the markets in which we operate, including
our general expectations about our industry, market position, market opportunity
and market sizes, is based on data from various sources including internal data
and estimates as well as third-party sources widely available to the public,
such as independent industry publications, government publications, reports by
market research firms or other published independent sources and on our
assumptions based on that data and other similar sources. We did not fund and
are not otherwise affiliated with the third-party sources that we cite. Industry
publications and other published sources generally state that the information
contained therein has been obtained from third-party sources believed to be
reliable. Internal data and estimates are based upon information obtained from
trade and business organizations and other contacts in the markets in which we
operate and management's understanding of industry conditions, and such
information has not been verified by any independent sources. These data involve
a number of assumptions and limitations, and you are cautioned not to give undue
weight to such estimates. While we generally believe the market, industry and
other information included in this Quarterly Report on Form 10-Q to be the most
recently available and to be reliable, such information is inherently imprecise
and we have not independently verified any third-party information or verified
that more recent information is not available.

Our fiscal year ends on June 30. Unless otherwise noted, any reference to a year
preceded by the word "fiscal" refers to the fiscal year ended June 30 of that
year. For example, references to "fiscal 2022" refer to the fiscal year ending
June 30, 2022. Any reference to a year not preceded by "fiscal" refers to a
calendar year.

OVERVIEW

We are one of the world's largest beauty companies, with an iconic portfolio of
brands across fragrance, color cosmetics, and skin and body care. Through
targeted strategic transactions, we have strengthened and diversified our
presence across the countries, categories and channels in which we compete,
building a strong beauty platform. The King Kylie and Kim Kardashian West
transactions complement our existing portfolio as personality-led
Direct-to-Consumer ("DTC") business models with strong social media engines. As
we transform the Company, we continue to make progress on our strategic
priorities, including stabilizing and growing our Consumer Beauty brands through
leading innovation and improved execution, accelerating our Prestige fragrance
business and ongoing expansion into Prestige cosmetics, building a comprehensive
skincare portfolio leveraging existing brands, enhancing our e-commerce and DTC
capabilities, expanding our presence in China through Prestige products and
select Consumer Beauty brands, and establishing Coty as an industry leader in
sustainability.

The completion of the strategic Wella Transaction is a reflection of our intent
to focus on our core go-to-market competencies and to simultaneously deleverage
our balance sheet. During the nine months ended March 31, 2022, we simplified
our capital structure through a series of transactions with KKR Aggregator, as a
result of which KKR Aggregator fully exited its ownership of Coty's shares.
Cumulatively, such transactions resulted in annual dividend savings of
approximately $77.0. Refer to Note 16-Equity and Convertible Preferred Stock. As
part of these transactions with KKR Aggregator, we exchanged a cumulative 14.1%
interest in Wella to redeem a portion of the KKR Aggregator's investment in our
Series B Preferred Stock. The exchange transactions occurred at a premium to the
value as of the date we sold Wella and illustrates the potential upside of the
stand-alone business in the longer term. Our recent issuances of the senior
secured notes, updated revolver facility and early bond redemption further
demonstrate our commitment to improve the maturity profile of our debt and to
deleverage our balance sheet. Refer to Note 12-Debt.

We expect that our reported net revenues for fiscal year 2022 will grow at the
upper end of our low to mid-teens growth range versus the prior year, excluding
the impact of foreign exchange.

We remain attentive to economic and geopolitical conditions that may materially
impact our business. We continue to explore and implement risk mitigation
strategies in the face of these unfolding conditions and remain agile in
adopting to changing circumstances. Such conditions - whether resulting from the
COVID-19 pandemic, Russia-Ukraine War or any other events - have or may have
global implications which may impact the future performance of our business in
unpredictable ways.
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COVID-19 Impacts Update

The COVID-19 pandemic has had material effects on all our product categories
across all segments and geographies. Most markets have recently shown
encouraging signs of emergence from the pandemic; however, sporadic containment
measures and travel restrictions continue to impact volume trends in certain
markets. However, the loosening of social distancing protocols and the gradual
removal or reduction of travel restrictions in certain key markets have
contributed to increased demand and sales growth, in most of the countries we
operate in, with the Prestige segment and the travel retail channel in
particular experiencing positive volume trends over the comparative period. We
also continue to experience growth in e-commerce. During the current quarter,
our Consumer Beauty segment has also shown strong signs of recovery over the
comparative period. However, many of our Consumer Beauty product categories
continue to experience negative effects on sales volume due to changes in
consumer behavior as a result of the pandemic and continued social distancing
measures in certain regions.

As previously reported, we have implemented several key measures in response to
the COVID-19 pandemic which continue to be in place. We have also amplified our
Transformation Plan, discussed below, to address the potentially longer-lasting
impacts of the COVID-19, the intermittent lockdowns and possible economic
uncertainty resulting from COVID-19 that continue in many markets. We anticipate
the recovery to be non-linear until COVID-19 containment measures are
discontinued across all regions and normal consumer traffic resumes on a
consistent basis. We currently expect that any easing of containment measures
and recovery of the impacted sectors of the economy will be gradual and uneven,
as regions face resurgence of COVID-19 and related uncertainties, and the
availability and widespread distribution of a safe and effective vaccine varies
across regions. As a result, we anticipate that consumer spending habits and
consumer confidence will continue to shift, causing future sales and volume
trends to be non-linear.

An increase of COVID-19 related cases in certain parts of China resulted in the
re-imposition of widespread lockdowns and restrictions in mid-March. As these
lockdowns in China occurred late in the current quarter the impact to the
Company was not significant. Looking forward, we believe that these lockdowns
may have a negative impact on our operations in China, due to reduced customer
traffic and supply chain constraints. Future impacts to our sales and operating
performance, however are difficult to predict due to the high level of
uncertainty regarding the duration and nature of the lockdowns.

Inflation

Inflationary trends in certain markets and global supply chain challenges may
negatively affect our sales and operating performance. We experienced the impact
of greater inflation on material, logistical and other costs during the current
quarter. We were able to largely offset these inflationary costs through a
combination of mix management, pricing, and cost savings. We currently
anticipate the impact of inflation in certain markets will be increasingly
significant continuing into the fourth quarter and fiscal 2023. We will continue
to implement mitigation strategies and price increases to offset these trends;
however, such measures may not fully offset the impact to our operating
performance. After the resumption of more typical business conditions, the
economics of developing, producing, launching, supporting and discontinuing
products will continue to impact the timing of our sales and operating
performance each period. In addition, as product life cycles shorten, results
are driven primarily by successfully developing, introducing and marketing new,
innovative products.

Russia-Ukraine War

In February of 2022, Russia invaded Ukraine and is still engaged in active armed
conflict against the country. As a result, governments of the United States, the
European Union, and other countries have enacted additional sanctions against
Russia and Russian interests. Our operations in Russia, including local Travel
Retail, accounted for approximately 3% of consolidated net sales in fiscal 2021.
We do not operate any stores, sales counters, e-commerce sites or industrial
activities in Russia. We do not have any operations in Ukraine.

In March 2022 we paused all brand initiatives in Russia, as well as all media
and advertisement and suspended the investment of any further capital in the
country. The impact of the pause to our results for the quarter ended March 31,
2022 was not material.

During April 2022, we announced our Board's decision to wind down the operations
of our Russian subsidiary as a result of the war and the related sanctions.
Management estimates that the fourth quarter pretax charges of the wind down
could be $100.0 or more, including related net cash charges that are not
expected to exceed $40.0. These charges would include the impact on the carrying
value of certain indefinite-lived trademarks, long-lived assets and
right-of-use-assets; separation costs; and accruals for contractual liabilities.
Additionally, management anticipates derecognizing the cumulative translation
adjustment balance pertaining to the Russian subsidiary. The wind down process
of Coty's Russian subsidiary is at an early stage and the execution of the wind
down may result in changes to its estimated losses due to uncertainties
surrounding the actions of the local government, customers, vendors and other
counterparties.

We will continue to monitor these events and any impacts to our global business
resulting from increased inflation, supply chain constraints, foreign currency
risk and other factors. However, future impacts to our net sales, earnings and
cash flows
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resulting from negative economic or geopolitical events in neighboring and other
territories in which we operate, is currently unknown.

Transformation Plan Update

As previously reported, we are implementing a comprehensive transformation
agenda (the "Transformation Plan"), which aims to stabilize and accelerate
revenue growth, improve our profitability through gross margin growth and cost
control, optimize our operating model for speed and agility, accelerate
e-commerce and digital growth, and deleverage our balance sheet. This
Transformation Plan is designed to adjust our cost base to allow us to exit the
post-COVID recovery phase as a financially and operationally stronger, more
nimble company, which is well positioned to capture growth opportunities. We are
continually reviewing ways to accelerate and amplify the transformation of the
Company, including through the implementation of additional initiatives in
connection with our Transformation Plan. These organizational, business and
structural changes are still being operationalized, which introduces additional
risk and complexity as we roll out several initiatives simultaneously.

Other Matters

During the first quarter of fiscal 2022, our CODM finalized the Company's
organizational structure and how performance will be assessed, and we realigned
our reportable segments to a principally product category-based structure,
comprised of a Prestige business segment and a Consumer Beauty business segment
beginning in the first quarter of fiscal 2022.

Non-GAAP Financial Measures

To supplement the financial measures prepared in accordance with GAAP, we use
non-GAAP financial measures for continuing operations and Coty Inc. including
Adjusted operating income (loss), Adjusted EBITDA, Adjusted net income (loss),
and Adjusted net income (loss) attributable to Coty Inc. to common stockholders
(collectively, the "Adjusted Performance Measures"). The reconciliations of
these non-GAAP financial measures to the most directly comparable financial
measures calculated and presented in accordance with GAAP are shown in tables
below. These non-GAAP financial measures should not be considered in isolation
from, or as a substitute for or superior to, financial measures reported in
accordance with GAAP. Moreover, these non-GAAP financial measures have
limitations in that they do not reflect all the items associated with the
operations of the business as determined in accordance with GAAP. Other
companies, including companies in the beauty industry, may calculate similarly
titled non-GAAP financial measures differently than we do, limiting the
usefulness of those measures for comparative purposes.

Despite the limitations of these non-GAAP financial measures, our management
uses the Adjusted Performance Measures as key metrics in the evaluation of our
performance and annual budgets and to benchmark performance of our business
against our competitors. The following are examples of how these Adjusted
Performance Measures are utilized by our management:

•strategic plans and annual budgets are prepared using the Adjusted Performance Measures;

•senior management receives a monthly analysis comparing budget to actual operating results that is prepared using the Adjusted Performance Measures; and

•senior management's annual compensation is calculated, in part, by using some of the Adjusted Performance Measures.

In addition, our financial covenant compliance calculations under our debt agreements are substantially derived from these Adjusted Performance Measures.

Our management believes that Adjusted Performance Measures are useful to
investors in their assessment of our operating performance and the valuation of
the Company. In addition, these non-GAAP financial measures address questions we
routinely receive from analysts and investors and, in order to ensure that all
investors have access to the same data, our management has determined that it is
appropriate to make this data available to all investors. The Adjusted
Performance Measures exclude the impact of certain items (as further described
below) and provide supplemental information regarding our operating performance.
By disclosing these non-GAAP financial measures, our management intends to
provide investors with a supplemental comparison of our operating results and
trends for the periods presented. Our management believes these measures are
also useful to investors as such measures allow investors to evaluate our
performance using the same metrics that our management uses to evaluate past
performance and prospects for future performance. We provide disclosure of the
effects of these non-GAAP financial measures by presenting the corresponding
measure prepared in conformity with GAAP in our financial statements, and by
providing a reconciliation to the corresponding GAAP measure so that investors
may understand the adjustments made in arriving at the non-GAAP financial
measures and use the information to perform their own analyses.

Adjusted operating income/Adjusted EBITDA from continuing operations excludes
restructuring costs and business structure realignment programs, amortization,
acquisition- and divestiture-related costs and acquisition accounting impacts,
stock-based compensation, and asset impairment charges and other adjustments as
described below. For adjusted EBITDA, in addition to the preceding, we exclude
adjusted depreciation as defined below. We do not consider these items to be
reflective of our core operating performance due to the variability of such
items from period-to-period in terms of size, nature and
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significance. They are primarily incurred to realign our operating structure and
integrate new acquisitions, and implement divestitures of components of our
business, and fluctuate based on specific facts and circumstances. Additionally,
Adjusted net income attributable to Coty Inc. and Adjusted net income
attributable to Coty Inc. per common share are adjusted for certain interest and
other (income) expense items and preferred stock deemed dividends, as described
below, and the related tax effects of each of the items used to derive Adjusted
net income as such charges are not used by our management in assessing our
operating performance period-to-period.

Adjusted Performance Measures reflect adjustments based on the following items:

•Costs related to acquisition and divestiture activities: We have excluded
acquisition- and divestiture-related costs and the accounting impacts such as
those related to transaction costs and costs associated with the revaluation of
acquired inventory in connection with business combinations because these costs
are unique to each transaction. Additionally, for divestitures, we exclude
write-offs of assets that are no longer recoverable and contract related costs
due to the divestiture. The nature and amount of such costs vary significantly
based on the size and timing of the acquisitions and divestitures, and the
maturities of the businesses being acquired or divested. Also, the size,
complexity and/or volume of past transactions, which often drives the magnitude
of such expenses, may not be indicative of the size, complexity and/or volume of
any future acquisitions or divestitures.

•Restructuring and other business realignment costs: We have excluded costs
associated with restructuring and business structure realignment programs to
allow for comparable financial results to historical operations and
forward-looking guidance. In addition, the nature and amount of such charges
vary significantly based on the size and timing of the programs. By excluding
the referenced expenses from our non-GAAP financial measures, our management is
able to further evaluate our ability to utilize existing assets and estimate
their long-term value. Furthermore, our management believes that the adjustment
of these items supplements the GAAP information with a measure that can be used
to assess the sustainability of our operating performance.

•Asset impairment charges: We have excluded the impact of asset impairments as
such non-cash amounts are inconsistent in amount and frequency and are
significantly impacted by the timing and/or size of acquisitions. Our management
believes that the adjustment of these items supplements the GAAP information
with a measure that can be used to assess the sustainability of our operating
performance.

•Amortization expense: We have excluded the impact of amortization of
finite-lived intangible assets, as such non-cash amounts are inconsistent in
amount and frequency and are significantly impacted by the timing and/or size of
acquisitions. Our management believes that the adjustment of these items
supplements the GAAP information with a measure that can be used to assess the
sustainability of our operating performance. Although we exclude amortization of
intangible assets from our non-GAAP expenses, our management believes that it is
important for investors to understand that such intangible assets contribute to
revenue generation. Amortization of intangible assets that relate to past
acquisitions will recur in future periods until such intangible assets have been
fully amortized. Any future acquisitions may result in the amortization of
additional intangible assets.

•Loss/(Gain) on divestitures and Gain on sale of real estate: We have excluded
the impact of Loss/(gain) on divestitures and Gain on sale of real estate as
such amounts are inconsistent in amount and frequency and are significantly
impacted by the size of divestitures and sale of real estate. Our management
believes that the adjustment of these items supplements the GAAP information
with a measure that can be used to assess the sustainability of our operating
performance.

•Stock-based compensation: Although stock-based compensation is a key incentive
offered to our employees, we have excluded the effect of these expenses from the
calculation of adjusted operating income and adjusted EBITDA. This is due to
their primarily non-cash nature; in addition, the amount and timing of these
expenses may be highly variable and unpredictable, which may negatively affect
comparability between periods.

•Depreciation and Adjusted depreciation: Our adjusted operating income excludes
the impact of accelerated depreciation for certain restructuring projects that
affect the expected useful lives of Property, Plant and Equipment, as such
charges vary significantly based on the size and timing of the programs.
Further, we have excluded adjusted depreciation, which represents depreciation
expense net of accelerated depreciation charges, from our adjusted EBITDA. Our
management believes that the adjustment of these items supplements the GAAP
information with a measure that can be used to assess the sustainability of our
operating performance.

•Other (income) expense: We have excluded the write-off of deferred financing
fees and discounts that resulted from the pay down of our term debt from the
proceeds of the Wella sale, due to the requirements of the 2018 Coty Credit
Agreement, as amended. Our management believes these costs do not reflect our
underlying ongoing business, and the adjustment of such costs helps investors
and others compare and analyze performance from period to period. We have also
excluded the impact of pension curtailment (gains) and losses and pension
settlements as such events are triggered by our restructuring and other business
realignment activities and the amount of such charges vary significantly based
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on the size and timing of the programs. Further, we have excluded the change in
fair value of the investment in Wella, as our management believes these
unrealized (gains) and losses do not reflect our underlying ongoing business,
and the adjustment of such impact helps investors and others compare and analyze
performance from period to period. We have excluded the gain on the exchange of
Series B Preferred Stock. The transaction was entered into to simplify our
capital structure and do not reflect our underlying ongoing business.

•Noncontrolling interest: This adjustment represents the after-tax impact of the non-GAAP adjustments included in Net income attributable to noncontrolling interests based on the relevant non-controlling interest percentage.

•Tax: This adjustment represents the impact of the tax effect of the pretax
items excluded from Adjusted net income. The tax impact of the non-GAAP
adjustments is based on the tax rates related to the jurisdiction in which the
adjusted items are received or incurred. Additionally, adjustments are made for
the tax impact of any intra-entity transfer of assets and liabilities.

•Deemed Preferred Stock Dividends: We have excluded preferred stock deemed
dividends related to the First Exchange and the Second Exchange (as defined in
Note 16-Equity and Convertible Preferred Stock) from our calculation of adjusted
net income attributable to Coty Inc. These deemed dividends are nonmonetary in
nature, the transactions were entered into to simplify our capital structure and
do not reflect our underlying ongoing business. Management believes that this
adjustment helps investors and others compare and analyze our performance from
period to period.

While acquiring brands and licenses comprises a part of our overall growth
strategy, along with targeting organic growth opportunities, we have excluded
acquisition-related costs and acquisition accounting impacts in connection with
business combinations because these costs are unique to each transaction and the
amount and frequency are not consistent and are significantly impacted by the
timing and size of our acquisitions. Our management assesses the success of an
acquisition as a component of performance using a variety of indicators
depending on the size and nature of the acquisition, including:

•the scale of the combined company by evaluating consolidated and segment financial metrics;

•the expansion of product offerings by evaluating segment, brand, and geographic performance and the respective strength of the brands;

•the evaluation of share expansion in categories and geographies;

•the earnings per share accretion and substantial incremental free cash flow generation providing financial flexibility for us; and

•the comparison of actual and projected results, including achievement of projected synergies, post integration; provided that timing for any such comparison will depend on the size and complexity of the acquisition.

Constant Currency

We operate on a global basis, with the majority of our net revenues generated
outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates
can affect our results of operations. Therefore, to supplement financial results
presented in accordance with GAAP, certain financial information is presented in
"constant currency", excluding the impact of foreign currency exchange
translations to provide a framework for assessing how our underlying businesses
performed excluding the impact of foreign currency exchange translations.
Constant currency information compares results between periods as if exchange
rates had remained constant period-over-period. We calculate constant currency
information by translating current and prior-period results for entities
reporting in currencies other than U.S. dollars into U.S. dollars using prior
year foreign currency exchange rates. The constant currency calculations do not
adjust for the impact of revaluing specific transactions denominated in a
currency that is different to the functional currency of that entity when
exchange rates fluctuate. The constant currency information we present may not
be comparable to similarly titled measures reported by other companies.

Basis of Presentation of Acquisitions, Divestitures and Terminations

During the period when we complete an acquisition, divestiture or early license
termination, the financial results of the current year period are not comparable
to the financial results presented in the prior year period. When explaining
such changes from period to period and to maintain a consistent basis between
periods, we exclude the financial contribution of: (i) the acquired brands or
businesses in the current year period until we have twelve months of comparable
financial results and (ii) the divested brands or businesses or early terminated
brands, to maintain comparable financial results with the current fiscal year
period. There are no acquisitions, divestitures or early license terminations in
the comparable periods that would impact the comparability of financial results
between periods presented in the Management's Discussion and Analysis of
Financial Condition and Results of Operations.
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As the sale of the Wella Business was completed on November 30, 2020, no net
revenues or operating expenses from discontinued operations were recorded in the
three and nine months ended March 31, 2022. Net income from discontinued
operations for the three and nine months ended March 31, 2022 reflects certain
working capital adjustments net of the related income tax impact. Financial
results for the Wella Business for fiscal year 2021 are presented as
discontinued operations.

Unless otherwise noted, the following section pertains to the results of continuing operations.

THREE MONTHS ENDED MARCH 31, 2022 AS COMPARED TO THREE MONTHS ENDED MARCH 31, 2021

NET REVENUES

In the three months ended March 31, 2022, net revenues increased 15%, or $158.4,
to $1,186.2 from $1,027.8 in the three months ended March 31, 2021, reflecting
an increase in unit volume of 10%, and a positive price and mix impact of 9%,
partially offset by a negative foreign currency exchange translation impact of
4%. The overall increase in net revenues primarily reflects the reopening of
stores across regions, increased leisure travel due to reduced COVID
restrictions. A number of countries continued to experience rolling lockdowns;
however, these lockdowns were confined to certain localities. Increased foot
traffic and demand had a favorable impact on both the Prestige and Consumer
Beauty segments, with the highest impact on the Prestige segment. In addition,
the Prestige segment benefited from various strong and successful launches such
as Gucci Flora, Burberry Hero, and the relaunch of Kylie cosmetics. Consumer
Beauty segment also experienced significant net revenue increase due to market
share gain as a result of a repositioning and reinvestment in key color
cosmetics brands. Furthermore, the growth of e-commerce and continued expansion
in the U.S. contributed to the net revenue increase.

Net Revenues by Segment

                      Three Months Ended
                          March 31,
(in millions)        2022           2021         Change %
NET REVENUES
Prestige          $   726.4      $   601.3           21  %
Consumer Beauty       459.8          426.5            8  %

Total             $ 1,186.2      $ 1,027.8           15  %



Prestige

In the three months ended March 31, 2022, net revenues from the Prestige segment
increased 21%, or $125.1 to $726.4 compared to $601.3 in the three months ended
March 31, 2021, reflecting an increase in unit volume of 19%, and a positive
price and mix impact of 6%, partially offset by a negative foreign currency
exchange translation impact of 4%. This increase in net revenues primarily
reflects:

(i)an increase in net revenues from the travel retail business as many
localities, particularly in North America, Europe, and China, had reduced travel
restrictions and reopened for leisure travel as they emerge from the COVID-19
pandemic;

(ii)an increase in net revenues from the new launches of Gucci Flora, Burberry
Hero, Chloe Atelier des Fleurs, Hugo Boss The Scent, and the global relaunch of
Kylie cosmetics in the current fiscal year, as well as the continued success of
Gucci Bloom, Burberry Her, Gucci Guilty and Gucci Makeup;

(iii)an increase in net revenues driven by market category growth in most markets amid a post COVID-19 recovery;

(iv)an increase in net revenues as a result of an overall premiumization strategy focusing on premium plus brands, selling new launches at higher prices, and reducing tail lines resulting in more optimized shelf space utilization; and

(v)an increase in the U.S. net revenues for improvements in returns trends for philosophy and fragrance brands.

These increases in net revenues were partially offset by lower net revenues due to strategic initiatives to reduce sales through lower priced channels.

Consumer Beauty

In the three months ended March 31, 2022, net revenues from the Consumer Beauty
segment increased 8%, or $33.3, to $459.8 from $426.5 in the three months ended
March 31, 2021, reflecting an increase in unit volume of 8%, and a positive
price and mix impact of 2%, partially offset by a negative foreign currency
exchange translation impact of 2%. The increase in net revenues primarily
reflects:

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(i)an increase in net revenues due to market share gain from the key color cosmetics brands as a result of new brand positioning and enhanced support for these brands;

(ii)an increase in net revenues due to reduction in sales returns, discounts and
allowances as a result of improvements in forecasting sales and better focus on
planning for new products; and

(iii)an increase in net revenues due to market recovery from COVID-19 and positive market share uplift in the color cosmetics and fragrance categories, increasing customer demand and store traffic, which positively impacted all brands within the segment.

COST OF SALES

In the three months ended March 31, 2022, cost of sales increased 8%, or $31.4,
to $423.1 from $391.7 in the three months ended March 31, 2021. Cost of sales as
a percentage of net revenues decreased to 35.7% in the three months ended March
31, 2022 from 38.1% in the three months ended March 31, 2021, resulting in a
gross margin increase of approximately 240 basis points, primarily reflecting:

(i)approximately 180 basis points related to positive product and category mix
associated with increased contribution from higher margin Prestige products,
reduced sales of products through lower priced channels, as well as price
increases within our product portfolio;

(ii)approximately 90 basis points related to freight expense, reflecting both
the contribution from our cost savings measures, as well as the increased volume
of higher priced Prestige products sold;

(iii)approximately 90 basis points related to manufacturing overhead costs and
variable costs due to increased manufacturing efficiencies and improvements in
productivity; and

(iv)approximately 40 basis points related to designer license fees due to higher royalty minimum paid in the prior year.

These increases were partially offset by approximately 150 basis points related to the impact of inflation on material and freight costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In the three months ended March 31, 2022, selling, general and administrative
expenses increased 21%, or $113.7, to $659.3 from $545.6 in the three months
ended March 31, 2021. Selling, general and administrative expenses as a
percentage of net revenues increased to 55.6% in the three months ended March
31, 2022 from 53.1% in the three months ended March 31, 2021, or approximately
250 basis points. This increase primarily reflects:

(i)400 basis points due to increase in advertising and consumer promotional costs related to support for certain key brands and product launches, as well as increased store promotions coinciding with store reopenings as COVID restrictions ease;

(ii)180 basis points in stock-based compensation primarily related to the CEO grant made on June 30, 2021; and

(iii)110 basis points related to unfavorable transactional impact from our exposure to foreign currency exchange fluctuations.

These increases were partially offset by the following decreases:

(i)180 basis points related to gain on sale of real estate;

(ii)100 basis points in administrative costs primarily due to a decrease in compensation related to a reduction in employee headcount; and

(iii)60 basis points related to lower logistics costs as a percentage of net revenue.

OPERATING INCOME (LOSS)

In the three months ended March 31, 2022, operating income was $57.1 compared to
loss of $1.4 in the three months ended March 31, 2021. Operating income as a
percentage of net revenues, increased to 4.8% in the three months ended March
31, 2022 as compared to an operating loss as a percentage of net revenues of
0.1% in the three months ended March 31, 2021. The improved operating margin is
largely driven by a gain recognized on the sale of real estate, lower cost of
goods sold as a percentage of net revenues, a reduction in fixed costs, decrease
in acquisition and divestiture related expenses, and lower amortization expense,
partially offset by an increase in advertising and consumer promotional costs
and higher stock-based compensation.

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Operating Income by Segment
                                 Three Months Ended
                                     March 31,
(in millions)                     2022             2021       Change %
Operating income (loss)
Prestige                   $     83.8            $ 30.9           >100%
Consumer Beauty                 (20.4)              9.1         <(100%)
Corporate                        (6.3)            (41.4)          85  %
Total                      $     57.1            $ (1.4)          >100%


Prestige

In the three months ended March 31, 2022, operating income for Prestige was
$83.8 compared to income of $30.9 in the three months ended March 31, 2021.
Operating margin increased to 11.5% of net revenues in the three months ended
March 31, 2022 as compared to 5.1% in the three months ended March 31, 2021,
driven by higher sales volume, lower cost of goods sold as a percentage of net
revenues, and a decrease in amortization expense, partially offset by an
increase in advertising and consumer promotional costs.

Consumer Beauty

In the three months ended March 31, 2022, operating loss for Consumer Beauty was
$20.4 compared to income of $9.1 in the three months ended March 31, 2021.
Operating margin decreased to (4.4)% of net revenues in the three months ended
March 31, 2022 as compared to 2.1% in the three months ended March 31, 2021,
driven by higher advertising and consumer promotional costs as a percentage of
net revenues, partially offset by a decrease in fixed costs.

Corporate

Corporate primarily includes income and expenses not directly relating to our
operating activities. These items are included in Corporate since we consider
them to be Corporate responsibilities, and these items are not used by our
management to measure the underlying performance of the segments.

In the three months ended March 31, 2022, the operating loss for Corporate was
$6.3 compared to a loss of $41.4 in the three months ended March 31, 2021, as
described under "Adjusted Operating Income (Loss) for Continuing Operations"
below. The decrease in the operating loss for Corporate was primarily driven by
gain recognized on the sale of real estate, and a decrease in acquisition and
divestiture related expenses, partially offset by an increase in share-based
compensation expense.

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Adjusted Operating Income (Loss) by Segment

We believe that adjusted operating income (loss) by segment further enhances an
investor's understanding of our performance. See "Overview-Non-GAAP Financial
Measures." A reconciliation of reported operating income (loss) to adjusted
operating income is presented below, by segment:

                                           Three Months Ended March 31, 2022
                                    Reported                                     Adjusted
(in millions)                        (GAAP)               Adjustments (a)       (Non-GAAP)
Operating income (loss)
Prestige                   $      83.8                   $           39.3      $     123.1
Consumer Beauty                  (20.4)                              10.9             (9.5)
Corporate                         (6.3)                               6.3                -
Total                      $      57.1                   $           56.5      $     113.6

                                           Three Months Ended March 31, 2021
                                    Reported                                     Adjusted
(in millions)                        (GAAP)               Adjustments (a)       (Non-GAAP)
Operating income (loss)
Prestige                   $      30.9                   $           49.8      $      80.7
Consumer Beauty                    9.1                               12.4             21.5
Corporate                        (41.4)                              41.4                -
Total                      $      (1.4)                  $          103.6      $     102.2




(a)See a reconciliation of reported operating income to adjusted operating
income and a description of the adjustments under "Adjusted Operating Income
(Loss) for Continuing Operations" below. All adjustments are reflected in
Corporate, except for amortization and asset impairment charges on goodwill,
indefinite-lived intangible assets, and finite-lived intangible assets, which
are reflected in the Prestige and Consumer Beauty segments.

Adjusted Operating Income (Loss) and Adjusted EBITDA for Continuing Operations

We believe that adjusted operating income (loss) further enhances an investor's
understanding of our performance. See "Overview-Non-GAAP Financial Measures."
Reconciliation of reported operating income to adjusted operating income is
presented below:
                                                            Three Months Ended
                                                                 March 31,
(in millions)                                            2022                 2021                 Change %
Reported operating income (loss)                    $      57.1          $      (1.4)                      >100%
% of net revenues                                           4.8  %              (0.1) %
Amortization expense                                       50.2                 62.2                      (19) %
Restructuring and other business realignment costs         (3.7)                 5.1                     <(100%)
Stock-based compensation                                   28.5                  6.6                       >100%
Costs related to acquisition and divestiture
activities                                                  3.3                 29.7                      (89) %
Gain on sale of real estate                               (21.8)                   -                         N/A

Total adjustments to reported operating income $ 56.5 $

   103.6                      (45) %
Adjusted operating income                           $     113.6          $     102.2                       11  %
% of net revenues                                           9.6  %               9.9  %
Adjusted depreciation                                      68.9                 81.2                      (15) %
Adjusted EBITDA                                     $     182.5          $     183.4                        -  %
% of net revenues                                          15.4  %              17.8  %



In the three months ended March 31, 2022, adjusted operating income increased
$11.4 to $113.6 from $102.2 in the three months ended March 31, 2021. Adjusted
operating margin decreased to 9.6% of net revenues in the three months ended
March

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31, 2022 from 9.9% in the three months ended March 31, 2021. In the three months
ended March 31, 2022, adjusted EBITDA decreased $0.9 to $182.5 from $183.4 in
the three months ended March 31, 2021. Adjusted EBITDA margin decreased to 15.4%
of net revenues in the three months ended March 31, 2022 from 17.8% in the three
months ended March 31, 2021, primarily driven by an increase in advertising and
consumer promotional costs as a percentage of net revenues, partially offset by
lower cost of goods sold as a percentage of net revenues.

Amortization Expense

In the three months ended March 31, 2022, amortization expense decreased to
$50.2 from $62.2 in the three months ended March 31, 2021. In the three months
ended March 31, 2022, amortization expense of $39.3 and $10.9 was reported in
the Prestige and Consumer Beauty segments, respectively. In the three months
ended March 31, 2021, amortization expense of $49.8 and $12.4 was reported in
the Prestige and Consumer Beauty segments, respectively. The decrease was
primarily driven by finite intangible assets that are fully amortized as of
fiscal 2021.

Restructuring and Other Business Realignment Costs

We continue to analyze our cost structure, including opportunities to simplify
and optimize operations. In connection with the four-year Turnaround plan
announced on July 1, 2019 to drive substantial improvement and optimization in
our business, we have and expect to continue to incur restructuring and other
business realignment costs. On May 11, 2020, we announced an expansion of the
Turnaround Plan to further reduce fixed costs, the Transformation Plan. We
incurred $419.3 of cash costs life-to-date as of March 31, 2022, which have been
recorded in Corporate.

In the three months ended March 31, 2022, we incurred a credit in restructuring and other business structure realignment costs of $3.7, as follows:

•We incurred a credit in restructuring costs of $6.8 primarily related to the
Transformation Plan due to the change in estimate, included in the Condensed
Consolidated Statements of Operations; and

•We incurred business structure realignment costs of $3.1 primarily related to
the Transformation Plan and certain other programs. This amount includes nil
reported in Selling, general and administrative expenses, and $3.1 reported in
Cost of sales in the Condensed Consolidated Statement of Operations.

In the three months ended March 31, 2021, we incurred restructuring and other business structure realignment costs of $5.1 as follows:

•We incurred restructuring costs of $0.0 primarily related to the Transformation Plan, included in the Condensed Consolidated Statements of Operations; and

•We incurred a credit in business structure realignment costs of $5.1 primarily
related to the Transformation Plan and certain other programs. This amount
includes $2.0 reported in Selling, general and administrative expenses, and $3.1
reported in Cost of sales in the Condensed Consolidated Statement of Operations.

In all reported periods, all restructuring and other business realignment costs were reported in Corporate.

Stock-Based Compensation

In the three months ended March 31, 2022, stock-based compensation was $28.5 as
compared with $6.6 in the three months ended March 31, 2021. The increase in
stock-based compensation is primarily related to the CEO grant made on June 30,
2021.

In all reported periods, all costs related to stock-based compensation were reported in Corporate.

Acquisition and Divestiture Activities

In the three months ended March 31, 2022 we incurred $3.3 of costs related to
acquisition and divestiture activities. These costs were primarily associated
with the Wella Transaction.

In the three months ended March 31, 2021, we incurred $29.7 of costs related to
acquisition and divestiture activities. These costs were primarily associated
with the Wella Transaction.

In all reported periods, all costs related to acquisition and divestiture activities were reported in Corporate.

Gain on Sale of Real Estate

In the three months ended March 31, 2022 we recognized gain of $21.8 related to sale of real estate.

In the three months ended March 31, 2021, we did not recognize any gain related to sale of real estate.

In all reported periods, all gains related to sale of real estate were reported in Corporate.

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Adjusted Depreciation Expense

In the three months ended March 31, 2022, adjusted depreciation expense of $32.8
and $36.1 was reported in the Prestige and Consumer Beauty segments,
respectively. In the three months ended March 31, 2021, adjusted depreciation
expense of $36.4 and $44.8 was reported in the Prestige and Consumer Beauty
segments, respectively.

INTEREST EXPENSE, NET

In the three months ended March 31, 2022, net interest expense was $62.9 as
compared with $50.3 in the three months ended March 31, 2021. This increase is
primarily due to the impact of higher average interest rates and debt, although
debt balances in the current period remain below prior year levels.

OTHER INCOME, NET

In the three months ended March 31, 2022, other income, net was $60.6 as
compared with $62.5 in the three months ended March 31, 2021. This decrease is
primarily due to a lower income resulting from the fair value adjustment to the
Wella equity investment in the current period.

INCOME TAXES

The effective income tax rate for the three months ended March 31, 2022 and 2021
was 0.9% and (177.8)%, respectively. The positive effective tax rate for the
three months ended March 31, 2022 results from reporting income before taxes and
a provision for income taxes. The negative effective tax rate for the three
months ended March 31, 2021 results from reporting income before income taxes
and a benefit for income taxes. The change in the effective tax rate for the
three months ended March 31, 2022, as compared with the three months ended March
31, 2021, is primarily due to the resolution of foreign uncertain tax positions
having a greater proportional effect in the prior period as well as the
limitation on the deductibility of executive stock compensation in the current
period.

The effective income tax rates vary from the U.S. federal statutory rate of 21% due to the effect of (i) jurisdictions with different statutory rates, (ii) adjustments to our unrecognized tax benefits and accrued interest, (iii) non-deductible expenses, (iv) audit settlements and (v) valuation allowance changes. Our effective tax rate could fluctuate significantly and could be adversely affected to the extent earnings are lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higher statutory rates.

Reconciliation of Reported (Loss) Income Before Income Taxes to Adjusted Income Before Income Taxes and Effective Tax Rates:

                                                           Three Months Ended                                                Three Months Ended
                                                             March 31, 2022                                                    March 31, 2021
                                       (Loss) Income           (Benefit)                                 (Loss) Income
                                       Before Income         Provision for          Effective Tax        Before Income         Provision for         Effective Tax
(in millions)                              Taxes             Income Taxes               Rate                 Taxes             Income Taxes               Rate

Reported income before income taxes $ 54.8 $ 0.5

                 0.9  %       $      10.8          $      (19.2)                (177.8) %
Adjustments to reported operating
income (a)                                   56.5                                                              103.6

Change in fair value of investment in
Wella Business (c)                          (60.7)                                                             (63.5)
Other adjustments (d)                         0.4                                                               (2.5)
Total Adjustments (b)                        (3.8)                   17.0                                       37.6                  28.3

Adjusted income before income taxes $ 51.0 $ 17.5

               34.3  %       $      48.4          $        9.1                   18.8  %

(a)See a description of adjustments under "Adjusted Operating Income (Loss) for Continuing Operations."

(b)The tax effects of each of the items included in adjusted income are
calculated in a manner that results in a corresponding income tax
expense/provision for adjusted income. In preparing the calculation, each
adjustment to reported income is first analyzed to determine if the adjustment
has an income tax consequence. The provision for taxes is then calculated based
on the jurisdiction in which the adjusted items are incurred, multiplied by the
respective statutory rates and offset by the increase or reversal of any
valuation allowances commensurate with the non-GAAP measure of profitability.

(c)The amount represents the realized and unrealized (gain) loss recognized for the change in fair value of the investment in Wella.

(d)For the three months ended March 31, 2022, this primarily represents
adjustments for equity loss from KKW offset by pension curtailment gains. For
the three months ended March 31, 2021, this primarily represents an adjustment
for pension curtailment gains.

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The adjusted effective tax rate was 34.3% for the three months ended March 31,
2022 compared to 18.8% for the three months ended March 31, 2021. The
differences were primarily due to the resolution of foreign uncertain tax
positions having a greater proportional effect in the prior period.

DISCONTINUED OPERATIONS

As the sale of the Wella Business was completed on November 30, 2020, no net
revenues or operating expenses from discontinued operations were recorded in the
three months ended March 31, 2022. Net income from discontinued operations for
the three months ended March 31, 2022 reflects certain working capital
adjustments net of the related income tax impact.

NET INCOME (LOSS) ATTRIBUTABLE TO COTY INC.

Net income attributable to Coty Inc. was $53.6 in the three months ended March
31, 2022 as compared to a loss of $15.6 in the three months ended March 31,
2021. The increase in the income is primarily driven by higher operating income
in the current year and the loss on sale of the Wella Business, which was
recorded in the comparative period.

We believe that adjusted net income (loss) attributable to Coty Inc. provides an
enhanced understanding of our performance. See "Overview-Non-GAAP Financial
Measures."

                                                                Three Months Ended
                                                                     March 31,
(in millions)                                                 2022                2021                Change %
Net income from Coty Inc. net of noncontrolling
interests                                                $     53.6           $    15.6                       >100%
Convertible Series B Preferred Stock dividends (a)             (3.3)              (34.1)                      90  %

Reported net income (loss) attributable to Coty Inc. $ 50.3

   $   (18.5)                      >100%
% of net revenues                                               4.2  %             (1.8) %
Adjustments to reported operating income (b)                   56.5               103.6                      (45) %
Adjustments to Loss on Sale of Business (c)                    (1.3)               27.5                     <(100%)

Change in fair value of investment in Wella Business (d) (60.7)

       (63.5)                       4  %
Adjustment to other expense (e)                                 0.4                (2.5)                      >100%
Adjustments to noncontrolling interests (f)                    (1.8)               (2.9)                      38  %

Change in tax provision due to adjustments to reported net income attributable to Coty Inc.

                          (16.4)              (38.5)                      57  %

Adjusted net income attributable to Coty Inc.            $     27.0           $     5.2                       >100%
% of net revenues                                               2.3   %             0.5  %
Per Share Data
Adjusted weighted-average common shares
Basic                                                         838.4         

765.4

Diluted (a)                                                   852.9         

765.4

Adjusted net income attributable to Coty Inc. per common
share
Basic                                                    $     0.03           $    0.01
Diluted (a)                                              $     0.03           $    0.01




(a)Adjusted Diluted EPS is adjusted by the effect of dilutive securities,
including awards under our equity compensation plans and the convertible Series
B Preferred Stock. For the three months ended March 31, 2022 and 2021, the
convertible Series B Preferred Stock was antidilutive. Accordingly, we excluded
the convertible Series B Preferred Stock from the diluted shares and did not
adjust the earnings for the related dividend.

(b)See a description of adjustments under "Adjusted Operating Income (Loss) for Continuing Operations"

(c)For the three months ended March 31, 2022, this amount reflects certain working capital adjustments related to the sale of the Wella Business.

(d)The amount represents the realized and unrealized gain recognized for the change in fair value of the investment in Wella.

(e)For the three months ended March 31, 2022, this primarily represents
adjustments for equity loss from KKW partially offset by pension curtailment
gains. For the three months ended March 31, 2021, this primarily represents an
adjustment for pension curtailment gains.

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Table of Contents (f)The amounts represent the after-tax impact of the non-GAAP adjustments included in Net loss attributable to noncontrolling interests based on the relevant noncontrolling interest percentage in the Condensed Consolidated Statements of Operations.

NINE MONTHS ENDED MARCH 31, 2022 AS COMPARED TO NINE MONTHS ENDED MARCH 31, 2021

NET REVENUES

In the nine months ended March 31, 2022, net revenues increased 16%, or $568.6,
to $4,136.1 from $3,567.5 in the nine months ended March 31, 2021, reflecting an
increase in unit volume of 6%, and a positive price and mix impact of 11%,
partially offset by a negative foreign currency exchange translation impact of
1%. The overall increase in net revenues primarily reflects the reopening of
stores across regions, increased leisure travel due to reduced COVID
restrictions. A number of countries continued to experience rolling lockdowns;
however, these lockdowns were confined to certain localities. Increased foot
traffic and demand had a favorable impact on both the Prestige and Consumer
Beauty segments, with the highest impact on the Prestige segment. In addition,
the Prestige segment benefited from various strong and successful launches such
as Gucci Flora, Burberry Hero, Tiffany Rose Gold, and the relaunch of Kylie
cosmetics. Consumer Beauty segment also experienced significant net revenue
increase due to COVID-19 recovery and market share gain as a result of a
repositioning and reinvestment in key color cosmetics brands. Furthermore, the
growth of e-commerce and continued expansion in the U.S. and China contributed
to the net revenue increase

Net Revenues by Segment

                      Nine Months Ended
                          March 31,
(in millions)        2022           2021         Change %
NET REVENUES
Prestige          $ 2,605.1      $ 2,149.5           21  %
Consumer Beauty     1,531.0        1,418.0            8  %

Total             $ 4,136.1      $ 3,567.5           16  %


Prestige

In the nine months ended March 31, 2022, net revenues from the Prestige segment
increased 21%, or $455.6, to $2,605.1 from $2,149.5 in the nine months ended
March 31, 2021, reflecting an increase in unit volume of 17%, and a positive
price and mix impact of 5%, partially offset by a negative foreign currency
exchange translation impact of 1%. The increase in net revenues primarily
reflects:

(i)an increase in net revenues driven by market growth in the U.S. and Europe
amid a post COVID-19 recovery, as well as from the travel retail business as
many localities, particularly in North America, Europe, and China, had reduced
travel restrictions and reopened for leisure travel as they emerge from the
COVID-19 pandemic;

(ii)an increase in net revenues from the new launches of Gucci Flora, Burberry
Hero, Chloe Atelier des Fleurs, Tiffany Rose Gold, CK Defy, and the global
relaunch of Kylie cosmetics in the current fiscal year, as well as the continued
success of Gucci Bloom, Burberry Her, Marc Jacobs Perfect, Gucci Guilty, and
Gucci Makeup;

(iii)an increase in net revenues due to positive pricing impact and product mix as a result of global price increase and an overall premiumization strategy focusing on premium plus brands, selling new launches at higher prices, and reducing tail lines resulting in more optimized shelf space utilization;

(iv)an increase in net revenues due to growth of e-commerce across the regions,
distribution expansion in China, and additional shelf space in the U.S. retail
stores; and

(v)an increase in net revenues for improvements in returns trends for philosophy
and U.S. fragrance brands, as well as from Kylie cosmetics due to a shelf reset
for a major customer in the prior year which did not occur in the current year.

These increases in net revenue were partially offset by:

(i)lower net revenues due to strategic initiatives to reduce sales through lower priced channels; and

(ii)lower net revenues related to Kylie skin products due to less innovation in the current fiscal year.

Consumer Beauty

In the nine months ended March 31, 2022, net revenues from the Consumer Beauty
segment increased 8%, or $113.0, to $1,531.0 from $1,418.0 in the nine months
ended March 31, 2021, reflecting an increase in unit volume of 5%, and a
positive price and mix impact of 3%. The increase in net revenues primarily
reflects:

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(i)an increase in net revenues due to market share gain from the key color cosmetics brands as a result of new brand positioning and enhanced support for these brands;

(ii)an increase in net revenues due to market recovery from COVID-19 and
positive market share uplift in the color cosmetics and fragrance categories,
increasing customer demand and store traffic, as well as a healthy growth in
e-commerce, which positively impacted all brands within the segment; and

(iii)an increase in net revenues due to reduction in sales returns, discounts
and allowances as a result of fewer shelf resets in the period and improvements
in forecasting sales and better focus on planning for new products.

These increases in net revenue were partially offset by lower net revenues as a result of license expiration from Beyonce and Stetson.

COST OF SALES

In the nine months ended March 31, 2022, cost of sales increased 3%, or $48.4,
to $1,489.0 from $1,440.6 in the nine months ended March 31, 2021. Cost of sales
as a percentage of net revenues decreased to 36.0% in the nine months ended
March 31, 2022 from 40.4% in the nine months ended March 31, 2021 resulting in a
gross margin increase of approximately 440 basis points primarily reflecting:

(i)approximately 270 basis points related to positive product and category mix
associated with increased contribution from higher margin Prestige products,
reduced sales of products through lower priced channels, as well as price
increases within our product portfolio;

(ii)approximately 80 basis points related to manufacturing overhead costs and
variable costs due to increased manufacturing efficiencies and improvements in
productivity;

(iii)approximately 70 basis points related to decreased excess and obsolescence
expense on inventory due to higher than normal costs in the prior year as a
result of the COVID-19 pandemic, as well as improvements in the current fiscal
year in forecasting sales and better focus on planning for new products;

(iv)approximately 50 basis points primarily related to reductions in Consumer
Beauty, as a percentage of revenues, in promotional allowances and other trade
spend items, which are recorded as adjustments to net sales;

(v)approximately 30 basis points related to designer license fees due to higher royalty minimum paid in the prior year; and

(vi)approximately 30 basis points related to freight expense, reflecting both
the contribution from our cost savings measures as well as the increased volume
of higher priced Prestige products sold.

These increases were partially offset by approximately 90 basis points related to the impact of inflation on material and freight costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In the nine months ended March 31, 2022, selling, general and administrative
expenses increased 22%, or $384.0, to $2,154.5 from $1,770.5 in the nine months
ended March 31, 2021. Selling, general and administrative expenses as a
percentage of net revenues increased to 52.1% in the nine months ended March 31,
2022 from 49.6% in the nine months ended March 31, 2021, or approximately 250
basis points. This increase was primarily due to:

(i)620 basis points due to increase in advertising and consumer promotional costs related to support for certain key brands and product launches, as well as increased store promotions coinciding with store reopenings as COVID restrictions ease; and

(ii)330 basis points in stock-based compensation primarily related to the CEO grant made on June 30, 2021.

These increases were partially offset by the following decreases:

(i)360 basis points in administrative costs primarily due to a decrease in compensation related to a reduction in employee headcount;

(ii)300 basis points related to gain on sale of real estate; and

(iii)50 basis points related to lower logistics costs as a percentage of net revenue.

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OPERATING INCOME (LOSS)

In the nine months ended March 31, 2022, operating income was $318.3 compared to
a loss of $50.4 in the nine months ended March 31, 2021. Operating margin as a
percentage of net revenues, increased to 7.7% in the nine months ended March 31,
2022 as compared to an operating loss as a percentage of net revenues of 1.4% in
the nine months ended March 31, 2021. The improved operating margin is largely
driven by lower cost of goods sold as a percentage of net revenues, a reduction
in fixed costs, decrease in acquisition and divestiture related expenses, gain
recognized on sale of real estate, decrease in restructuring expense, and lower
amortization expense, partially offset by an increase in advertising and
consumer promotional costs and higher stock-based compensation.

Operating Income (Loss) by Segment

                               Nine Months Ended
                                   March 31,
(in millions)                  2022          2021        Change %
Operating income (loss)
Prestige                   $    357.5      $ 175.7           >100%
Consumer Beauty                  34.3         25.8           33  %
Corporate                       (73.5)      (251.9)          71  %
Total                      $    318.3      $ (50.4)          >100%


Prestige

In the nine months ended March 31, 2022, operating income for Prestige was
$357.5 compared to income of $175.7 in the nine months ended March 31, 2021.
Operating margin increased to 13.7% of net revenues in the nine months ended
March 31, 2022 as compared to 8.2% in the nine months ended March 31, 2021,
driven primarily by higher sales volume, lower cost of goods sold as a
percentage of net revenues, lower fixed costs as a percentage of net revenues
and a decrease in amortization expense, partially offset by an increase in
advertising and consumer promotional costs.

Consumer Beauty

In the nine months ended March 31, 2022, operating income for Consumer Beauty
was $34.3 compared to income of $25.8 in the nine months ended March 31, 2021.
Operating margin increased to 2.2% of net revenues in the nine months ended
March 31, 2022 as compared to 1.8% in the nine months ended March 31, 2021,
driven by higher sales volume, a reduction in fixed costs, lower cost of goods
sold as a percentage of net revenues, and a decrease in amortization expense,
partially offset by an increase in advertising and consumer promotional costs.

Corporate

Corporate primarily includes corporate expenses not directly related to our operating activities. These items are included in Corporate since we consider them to be Corporate responsibilities, and these items are not used by our management to measure the underlying performance of the segments.

In the nine months ended March 31, 2022, the operating loss for Corporate was
$73.5 compared to a loss of $251.9 in the nine months ended March 31, 2021, as
described under "Adjusted Operating Income for Coty Inc." below. The decrease to
the operating loss for Corporate was primarily driven by a decrease in
acquisition and divestiture related expenses, lower restructuring expense, and
gain recognized on the sale of real estate, partially offset by an increase in
share-based compensation expense.


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Adjusted Operating Income (Loss) by Segment

We believe that Adjusted Operating income (loss) by segment further enhances an
investor's understanding of our performance. See "Overview-Non-GAAP Financial
Measures." A reconciliation of reported Operating income (loss) to Adjusted
Operating income is presented below, by segment:
                                           Nine Months Ended March 31, 2022
                                   Reported                                     Adjusted
(in millions)                       (GAAP)               Adjustments (a)       (Non-GAAP)
Operating income (loss)
Prestige                          357.5                 $          124.7      $     482.2
Consumer Beauty                    34.3                             33.9             68.2
Corporate                         (73.5)                            73.5                -
Total                      $      318.3                 $          232.1      $     550.4


                                              Nine Months Ended March 31, 2021
                                      Reported                                     Adjusted
   (in millions)                       (GAAP)               Adjustments (a)       (Non-GAAP)
   Operating (loss) income
   Prestige                          175.7                 $          151.3      $     327.0
   Consumer Beauty                    25.8                             38.1             63.9
   Corporate                        (251.9)                           251.9                -
   Total                      $      (50.4)                $          441.3      $     390.9




(a)See a reconciliation of reported operating income to adjusted operating
income and a description of the adjustments under "Adjusted Operating Income for
Coty Inc." below. All adjustments are reflected in Corporate, except for
amortization and asset impairment charges on goodwill, regional indefinite-lived
intangible assets, and finite-lived intangible assets, which are reflected in
the Prestige and Consumer Beauty segments.

Adjusted Operating Income (Loss) and Adjusted EBITDA for Continuing Operations

We believe that adjusted operating income further enhances an investor's
understanding of our performance. See "Overview-Non-GAAP Financial Measures." A
reconciliation of reported operating income (loss) to adjusted operating income
is presented below:
                                                              Nine Months Ended
                                                                  March 31,
(in millions)                                              2022                2021                Change %
Reported operating income (loss)                            318.3              (50.4)                      >100%
% of net revenues                                             7.7  %            (1.4) %
Amortization expense                                        158.6              189.4                      (16) %
Restructuring and other business realignment costs            9.6               97.4                      (90) %
Stock-based compensation                                    164.3               26.8                       >100%
Costs related to acquisition and divestiture
activities                                                   14.2              127.7                      (89) %
Gain on sale of real estate                                (114.6)                 -                         N/A

Total adjustments to reported operating income         $    232.1          $   441.3                      (47) %
Adjusted operating income                              $    550.4          $   390.9                       41  %
% of net revenues                                            13.3  %            11.0  %
Adjusted depreciation                                       222.5              243.6                       (9) %
Adjusted EBITDA                                        $    772.9          $   634.5                       22  %
% of net revenues                                            18.7  %            17.8  %



In the nine months ended March 31, 2022, adjusted operating income increased
$159.5, to $550.4 from $390.9 in the nine months ended March 31, 2021. Adjusted
operating margin increased to 13.3% of net revenues in the nine months ended
March 31, 2022 from 11.0% in the nine months ended March 31, 2021. In the nine
months ended March 31, 2022, adjusted EBITDA

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increased $138.4 to $772.9 from $634.5 in the nine months ended March 31, 2021.
Adjusted EBITDA margin increased to 18.7% of net revenues in the nine months
ended March 31, 2022 from 17.8% in the nine months ended March 31, 2021,
primarily driven by higher sales volume, lower cost of goods sold as a
percentage of net revenues, and a reduction in fixed costs, partially offset by
an increase in advertising and consumer promotional costs.

Amortization Expense

In the nine months ended March 31, 2022, amortization expense decreased to
$158.6 from $189.4 in the nine months ended March 31, 2021. In the nine months
ended March 31, 2022, amortization expense of $124.7 and $33.9 was reported in
the Prestige and Consumer Beauty segments, respectively. In the nine months
ended March 31, 2021, amortization expense of $151.3 and $38.1 was reported in
the Prestige and Consumer Beauty segments, respectively. The decrease was
primarily driven by finite intangible assets that are fully amortized as of
fiscal 2021.

Restructuring and Other Business Realignment Costs

We continue to analyze our cost structure, including opportunities to simplify
and optimize operations. In connection with the four-year Turnaround plan
announced on July 1, 2019 to drive substantial improvement and optimization in
our business, we have and expect to continue to incur restructuring and other
business realignment costs. On May 11, 2020 we announced an expansion of the
Turnaround Plan to further reduce fixed costs, the Transformation Plan. We
incurred $419.3 of cash costs life-to-date as of March 31, 2022, which have been
recorded in Corporate.

In the nine months ended March 31, 2022, we incurred restructuring and other business structure realignment costs of $9.6, as follows:

•We incurred restructuring costs of $1.5 primarily related to the Transformation Plan, included in the Condensed Consolidated Statements of Operations.

•We incurred business structure realignment costs of $8.1 primarily related to
our Transformation plan and certain other programs. This amount includes $8.4
reported in Cost of sales in the Condensed Consolidated Statement of Operations
and a credit of $0.3 reported in Selling, general and administrative expenses.

In the nine months ended March 31, 2021, we incurred restructuring and other business structure realignment costs of $97.4 as follows:

•We incurred restructuring costs of $89.7 primarily related to the Turnaround Plan, included in the Condensed Consolidated Statements of Operations.

•We incurred business structure realignment costs of $7.7 primarily related to
our Turnaround plan. This amount includes $4.6 reported in Selling, general and
administrative expenses, and $3.1 reported in Cost of sales in the Condensed
Consolidated Statement of Operations.

In all reported periods, all restructuring and other business realignment costs were reported in Corporate.

Stock-based compensation

In the nine months ended March 31, 2022, stock-based compensation was $164.3 as
compared with $26.8 in the nine months ended March 31, 2021. The increase in
stock-based compensation is primarily related to the CEO grant made on June 30,
2021.

In all reported periods, all costs related to stock-based compensation were reported in Corporate.

Acquisition and Divestiture Activities

In the nine months ended March 31, 2022, we incurred $14.2 of costs related to
acquisition and divestiture activities. These costs were primarily associated
with the Wella Transaction.

In the nine months ended March 31, 2021, we incurred $127.7 of cost relating to
acquisition and divestiture activities. These costs were primarily associated
with the Wella Transaction.

In all reported periods, all costs related to acquisition and divestiture activities were reported in Corporate.

Gain on Sale of Real Estate

In the nine months ended March 31, 2022 we recognized gain of $114.6 related to sale of real estate.

In the nine months ended March 31, 2021, we did not recognize any gain related to sale of real estate.

In all reported periods, all gains related to sale of real estate were reported in Corporate.

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Adjusted depreciation expense

In the nine months ended March 31, 2022, adjusted depreciation expense of $107.7
and $114.8 was reported in the Prestige and Consumer Beauty segments,
respectively. In the nine months ended March 31, 2021, adjusted depreciation
expense of $109.3 and $134.3 was reported in the Prestige and Consumer Beauty
segments, respectively.

INTEREST EXPENSE, NET

In the nine months ended March 31, 2022, net interest expense was $183.6 as
compared with $171.6 in the nine months ended March 31, 2021. This increase is
primarily due to the impact of higher average interest rates and debt, although
debt balances in the current period remain below prior year levels.

OTHER INCOME, NET

In the nine months ended March 31, 2022, other income, net was $572.9 as
compared with an expense of $50.7 in the nine months ended March 31, 2021. This
increase is primarily due to a favorable adjustment of $579.0 related to the
realized and unrealized gain in the Wella investment.

INCOME TAXES

The effective income tax rate for the nine months ended March 31, 2022 and 2021
was 23.2% and 178.0%, respectively. The change in the effective tax rate for the
nine months ended March 31, 2022, as compared to the prior period is primarily
due to the limitation on the deductibility of executive stock compensation and
large fair value gains related to the investment in the Wella business in the
current period as well as a benefit related to a change in the Company's main
principal location of $220.5 recorded in the prior period. The benefit recorded
in the prior period was the result of a tax rate differential on the deferred
taxes recognized on the transfer of assets and liabilities, following the
relocation of the Company's main principal location from Geneva to Amsterdam.

The effective income tax rates vary from the U.S. federal statutory rate of 21%
due to the effect of: (i) jurisdictions with different statutory rates, (ii)
adjustments to our unrecognized tax benefits and accrued interest; (iii)
non-deductible expenses, (iv) audit settlements and (v) valuation allowance
changes. Our effective tax rate could fluctuate significantly and could be
adversely affected to the extent earnings are lower than anticipated in
countries that have lower statutory rates and higher than anticipated in
countries that have higher statutory rates.

Reconciliation of Reported (Loss) Income Before Income Taxes to Adjusted Income Before Income Taxes and Effective Tax Rates:

                                                        Nine Months Ended                                               Nine Months Ended
                                                         March 31, 2022                                                  March 31, 2021
                                       (Loss)
                                       Income
                                       Before                                                       (Loss) Income          Provision
                                       Income          Provision for         Effective Tax          Before Income          for Income            Effective
(in millions)                          Taxes           Income Taxes               Rate                  Taxes                Taxes               Tax Rate
Reported (loss) income before income
taxes                                $ 707.6          $      164.5                   23.2  %       $     (171.3)         $   (304.9)

178.0 %

Other adjustments to reported
operating income (a)                   232.1                                                              441.3

Change in fair value of investment
in Wella Business (c)                 (579.0)                                                             (63.5)
Other adjustments (d)                   (2.5)                                                               5.7
Total Adjustments (b) (e)             (349.4)                (91.0)                                       383.5               333.3

Adjusted income before income taxes $ 358.2 $ 73.5

         20.5  %       $      212.2          $     28.4                    13.4  %

(a)See a description of adjustments under "Adjusted Operating Income for Continuing Operations."

(b)The tax effects of each of the items included in adjusted income are
calculated in a manner that results in a corresponding income tax
expense/provision for adjusted income. In preparing the calculation, each
adjustment to reported income is first analyzed to determine if the adjustment
has an income tax consequence. The provision for taxes is then calculated based
on the jurisdiction in which the adjusted items are incurred, multiplied by the
respective statutory rates and offset by the increase or reversal of any
valuation allowances commensurate with the non-GAAP measure of profitability.

(c)The amount represents the realized and unrealized (gain) loss recognized for the change in fair value of the investment in Wella.

(d)For the nine months ended March 31, 2022, this primarily represents a net
gain on the exchange of Series B Preferred Stock closed on October 20, 2021. For
the nine months ended March 31, 2021, this primarily represents the write-off of
deferred financing fees related to the Wella sale and adjustments for pension
curtailment gains.

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(e)The total tax impact on adjustments in the prior period includes a $220.5
benefit recorded as the result of a tax rate differential on the deferred taxes
recognized on the transfer of assets and liabilities, following the relocation
of our main principal location from Geneva to Amsterdam on July 1, 2020.

The adjusted effective tax rate was 20.5% for the nine months ended March 31,
2022 compared to 13.4% for the nine months ended March 31, 2021. The differences
were primarily due to the jurisdictional mix of income as well as a benefit of
$18.8 in the current period recognized on the revaluation of our deferred tax
assets due to a tax rate increase enacted in the Netherlands. In addition, the
resolution of foreign uncertain tax positions having a greater proportional
effect in the prior year.

DISCONTINUED OPERATIONS

As the sale of the Wella Business was completed on November 30, 2020, no net
revenues or operating expenses from discontinued operations were recorded in the
nine months ended March 31, 2022. Net income from discontinued operations for
the nine months ended March 31, 2022 reflects certain working capital
adjustments net of the related income tax impact. On December 22, 2021, we
entered into an agreement with the KKR Bidco related to post-closing adjustments
to the purchase consideration for the Wella Business. As part of this agreement,
we may receive future contingent proceeds. Earning the contingent proceeds is
based on the future recovery of certain tax credits of the Wella Business. See
Note 3-Discontinued Operations in the notes to our Consolidated Financial
Statements for additional information.

NET INCOME (LOSS) ATTRIBUTABLE TO COTY INC.

Net income attributable to Coty Inc. was $541.0 in the nine months ended March
31, 2022, as compared to net loss of $15.3 in the nine months ended March 31,
2021. This increase in net income was primarily driven by higher operating
income in the current year, a favorable adjustment of $579.0 related to the
realized and unrealized gain in the Wella investment in the current year, and
the loss on sale of the Wella Business, which was recorded in the comparative
period, partially offset by a tax benefit of $220.5 in the first quarter of
fiscal 2021 which was the result of a tax rate differential on the deferred
taxes recognized on the transfer of assets and liabilities, following the
relocation of our main principal location from Geneva to Amsterdam, the net loss
recognized from discontinued operations in the prior fiscal year.

We believe that adjusted net income attributable to Coty Inc. provides an
enhanced understanding of our performance. See "Overview-Non-GAAP Financial
Measures."

                                                                 Nine Months Ended
                                                                     March 31,
(in millions)                                                2022                2021                 Change %

Net income (loss) from Coty Inc. net of noncontrolling interests

                                                     541.0               (15.3)                      >100%
Convertible Series B Preferred Stock dividends (a)           (195.0)              (78.1)                    <(100%)

Reported net income (loss) attributable to Coty Inc. 346.0

       (93.4)                      >100%
% of net revenues                                               8.4  %             (2.1) %
Adjustments to reported operating income (b)                  232.1               442.8                      (48) %
Adjustments to Loss on Sale of Business (c)                    (6.1)              246.6                     <(100%)

Change in fair value of investment in Wella Business (d) (579.0)

       (63.5)                    (100) %
Adjustment to other expense (e)                                (2.5)                5.7                     <(100%)
Adjustments to noncontrolling interests (f)                    (5.3)               (7.4)                      28  %

Change in tax provision due to adjustments to reported net income attributable to Coty Inc.

                           92.6              (288.2)                      >100%

Adjustment for deemed Series B Preferred Stock dividends related to the First and Second Exchanges (a) (g)

             160.0                   -                         N/A
Adjusted net income attributable to Coty Inc.                 237.8               242.6                       (2) %
% of net revenues                                               5.7  %              5.3  %
Per Share Data
Adjusted weighted-average common shares
Basic                                                         814.8         

764.6

Diluted (a)                                                   827.5         

932.1

Adjusted net income attributable to Coty Inc. per common
share
Basic                                                    $     0.29          $     0.32
Diluted (a)                                              $     0.29          $     0.32


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(a)Adjusted Diluted EPS is adjusted by the effect of dilutive securities,
including awards under our equity compensation plans and the convertible Series
B Preferred Stock. For the nine months ended March 31, 2022, the convertible
Series B Preferred Stock was antidilutive. Accordingly, we excluded the
convertible Series B Preferred Stock from the diluted shares and did not adjust
the earnings for the related dividend.

(b)See a description of adjustments under "Adjusted Operating Income (Loss) for Continuing Operations"

(c)For the nine months ended March 31, 2022, this amount reflects certain working capital adjustments related to the sale of the Wella Business.

(d)The amount represents the realized and unrealized (gain) loss recognized for the change in fair value of the investment in Wella.

(e)For the nine months ended March 31, 2022, this primarily represents a net
gain on the exchange of Series B Preferred Stock closed on October 20, 2021. For
the nine months ended March 31, 2021, this primarily represents the write-off of
deferred financing fees related to the Wella sale and adjustments for pension
curtailment gains.

(f)The amounts represent the after-tax impact of the non-GAAP adjustments included in Net loss attributable to noncontrolling interests based on the relevant noncontrolling interest percentage in the Condensed Consolidated Statements of Operations.

(g)This adjustment represents the deemed dividend from the Second Exchange that
closed on November 30, 2021 and the deemed dividend from the First Exchange that
closed on October 20, 2021 (as defined in Note 16-Equity and Convertible
Preferred Stock).

FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our primary sources of funds include cash expected to be generated from operations, borrowings from issuance of debt and lines of credit provided by banks and lenders in the U.S. and abroad.

Our cash flows are subject to seasonal variation throughout the year, including
demands on cash made during our first fiscal quarter in anticipation of higher
global sales during the second fiscal quarter and strong cash generation in the
second fiscal quarter as a result of increased demand by retailers associated
with the holiday season.

Our principal uses of cash are to fund planned operating expenditures, capital
expenditures, business structure realignment expenditures, interest payments,
acquisitions, dividends, share repurchases and any principal payments on debt.
Working capital movements are influenced by the sourcing of materials related to
the production of products. Cash and working capital management initiatives,
including the phasing of vendor payments and factoring of trade receivables from
time-to-time, may also impact the timing and amount of our operating cash flows.

In the first half of fiscal 2022, we simplified our capital structure through a
series of transactions with KKR Aggregator, as a result of which KKR Aggregator
fully exited its ownership of Coty's shares. Cumulatively, such transactions
resulted in annual dividend savings of approximately $77.0. Refer to Note
16-Equity and Convertible Preferred Stock. In the third quarter of fiscal 2022,
we received a shareholder distribution of $210.7 from our equity investment in
Wella, which resulted in incremental cash on hand at the end of the quarter,
which we subsequently used to repay debt. We currently anticipate that we will
receive an additional distribution of approximately $29.0 in the fourth quarter,
which final amount may be impacted by currency exchange fluctuation and other
factors. Management expects to use any future distributions from the Wella
investment to pay down debt.

Due to the current status of Brazil's capital markets, we have withdrawn our
previously announced filing with the Brazilian Securities and Exchange
Commission, Comissão de Valores Mobiliários. Going forward, we will monitor
Brazil's capital markets to assess the timing and feasibility of a potential
public offering of a minority stake in our Brazilian operations.

During April 2022, we announced our Board's decision to wind down the operations
of our Russian subsidiary as a result of the war and the related sanctions.
Management estimates that the fourth quarter pretax charges of the wind down
could be $100.0 or more, including related net cash charges that are not
expected to exceed $40.0. The wind down of our Russian subsidiary is at an early
stage and the execution of the wind down may result in changes to our estimated
loss or expected cash flows due to uncertainties surrounding the actions of the
local government, customers, vendors and other counterparties.

Our response to the impact of COVID-19

In response to the ongoing risks presented by the COVID-19 pandemic, we continue
to utilize a number of measures to bolster our liquidity position and provide
additional financial flexibility. Such measures include actively aligning
operating expenses to the current state of the business, initiatives to improve
cash flow and hiring and travel restrictions. We have also reduced advertising
and consumer promotion costs for sales channels heavily impacted by the
pandemic. However, as certain

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markets have reopened, we have increased these expenditures to bolster key brands and product launches. We will continue to actively manage our working capital to support our liquidity needs.

Despite encouraging signs of recovery, the impact and duration of COVID-19 on
our business continues to be uncertain. Further, inflationary trends in certain
markets and global supply chain challenges may negatively affect our sales and
operating performance. The impact on the first half of 2022 was not significant.
However, we experienced the impact of greater inflation on material, logistical
and other costs during the current quarter and we anticipate more material
headwinds from inflation in the fourth quarter and into fiscal 2023.We intend to
offset the incremental inflation impacts by increasing prices in selected
markets. We will continue to implement mitigation strategies and price increases
to offset these trends; however, such measures may not fully offset the impact
to our operating performance. However, as a result of cash on hand and our plans
to manage expenses, we believe we have sufficient liquidity and covenant
headroom to meet our foreseeable business operating and recurring cash needs
(including for debt service and capital expenditures). To address the
potentially longer-lasting impacts of COVID-19, we have implemented a plan to
reduce our cost base by the end of fiscal 2023, with additional plans for
savings in fiscal 2024. This plan includes an adaptation of our supply network,
organizational changes, renegotiation of purchasing and licensing agreements, as
well as a reduction of certain discretionary expenses.

Debt

We are in the process of deleveraging our company and improving the maturity mix
of our debt, including through consideration of refinancing or redemption of a
portion of our debt.

In the fourth quarter of fiscal 2021, we refinanced $900.0 of our
dollar-denominated term loan debt and €700.0 million (approximately $833.3 as of
June 30, 2021) of our euro-denominated term loan debt that were scheduled to
mature in 2023 with new senior secured notes that mature in 2026.

In the second quarter of fiscal 2022, we replaced our two existing classes of
revolving commitments, having an aggregate principal amount of $2,750.0, with a
single class of revolving commitments, having an aggregate principal amount of
$2,000.0 due April 2025, and issued $500.0 of senior secured notes due January
2029. We used the net proceeds of these offerings to repay portions of the term
loans outstanding under the existing credit facilities originally due April 2023
and to pay related premiums, fees and expenses thereto.

In the third quarter of fiscal 2022, we issued a notice of full redemption of
our 2023 euro-denominated notes in the amount of €550.0 million (approximately
$606.4 at the redemption date), which we redeemed on April 15, 2022, by
utilizing cash on hand and drawing down on our revolving credit facility,
thereby accelerating our deleveraging trajectory.

See Note 12-Debt in the notes to our Condensed Consolidated Financial Statements for additional information on our debt arrangements and prior period credit agreements.

These activities improved our medium term liquidity. As noted above, our
Convertible Series B Preferred stock was fully converted and exchanged as of
December 31, 2021, which reduces our future commitment to preferred shareholders
improving our ability to reduce our external debt. As we refinance our debt in
order to extend maturing obligations, the applicable interest rates have been,
and are likely to continue to be, higher than previous applicable interest
rates, due in large part to prevailing macroeconomic conditions and our credit
ratings at the time.

Factoring of Receivables

From time to time, we supplement the timing of our cash flows through the factoring of trade receivables. In this regard, we have entered into factoring arrangements with financial institutions.

The net amount utilized under the factoring facilities was $156.7 and $133.6 as
of March 31, 2022 and June 30, 2021, respectively. The aggregate amount of trade
receivable invoices factored on a worldwide basis amounted to $813.1 and $574.5
during the nine months ended March 31, 2022 and 2021, respectively.

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