Business Wire | Nov 2, 2021 06:45AM EDT

The Este Lauder Companies Reports Outstanding Fiscal 2022 First Quarter Results

Nov. 02, 2021

NEW YORK--(BUSINESS WIRE)--Nov. 02, 2021--The Este Lauder Companies Inc. (NYSE: EL) today reported net sales of $4.39 billion for its first quarter ended September 30, 2021, an increase of 23% from $3.56 billion in the prior-year period. Net sales grew in every region and product category, reflecting the recovery in brick-and-mortar retail stores, primarily in western markets. Organic net sales increased 18%.

The Company reported net earnings of $692 million, compared with net earnings of $523 million in the prior-year period. Diluted net earnings per common share was $1.88, compared with $1.42 reported in the prior-year period. Excluding restructuring and other charges and adjustments as detailed on page 3, adjusted diluted earnings per common share increased 31% to $1.89, and rose 29% in constant currency.

Fabrizio Freda, President and Chief Executive Officer said, "We delivered excellent performance to begin fiscal 2022, despite the increased volatility and variability globally during the quarter, by virtue of our dynamic multiple engines of growth strategy. Our growth engines increasingly diversified, as we expected. Makeup, developed markets in the West, and brick-and-mortar reignited and complemented momentum in Skin Care, Fragrance, mainland China, Travel Retail in Asia/Pacific, and global Online2. Impressively, relative to the pre-pandemic first quarter of fiscal 2020, the overall business is much bigger and more profitable.

Thirteen brands contributed double-digit organic sales growth versus the prior-year period, demonstrating the breadth of strength across our portfolio. Este Lauder and MAC drove Makeup's emerging renaissance, while La Mer and Clinique delivered stand-out results in Skin Care. Fragrance soared double-digits in every region, driven by Tom Ford Beauty and Jo Malone London. Our hero products performed exceptionally well and our innovation proved, once more, to uniquely capture consumer desires."

______________________________^1 Organic net sales represents adjusted net sales excluding non-comparableimpacts of acquisitions, divestitures and brand closures as well as the impactsfrom currency. We believe the Non-GAAP measure of organic net sales growthprovides year-over-year sales comparisons on a consistent basis. See pages 3for reconciliations to GAAP.

^2 Online sales discussed throughout includes sales of our products from ourwebsites and third-party platforms, as well as estimated sales of our productssold through our retailers' websites.

Freda emphasized, "Looking ahead, we remain focused on the safety and well-being of our employees and consumers. For fiscal 2022, we continue to expect strong net sales and adjusted earnings per share growth with margin expansion. Our confidence in the long-term growth opportunities for global prestige beauty and our Company is reflected in the announcement today to raise the quarterly dividend."

Freda concluded, "Today, we will release our Fiscal 2021 Social Impact and Sustainability Report. We are incredibly inspired by the achievements of our employees around the world in realizing great progress towards our social impact and sustainability commitments and goals."

COVID-19 Business UpdateThe COVID-19 pandemic continued to disrupt the Company's operating environment, impacting retail traffic and consumer preferences in the first quarter of fiscal 2022. The resurgence of COVID-19 cases and the rapid spread of the Delta variant in most parts of the world led to government restrictions to prevent further spread of the virus. These restrictions included the intermittent closure of businesses deemed non-essential, curtailment of travel, social distancing and quarantines.

Retail ImpactWhile most brick-and-mortar retail stores globally that sell the Company's products, whether operated by the Company or its customers, were open during much of the first quarter of fiscal 2022, there were intermittent closures throughout the world. More specifically, in Continental Europe, much of Latin America and most of the Asia/Pacific region, many retail stores were temporarily closed for some period during the quarter due to the resurgence of COVID-19 cases. In much of Continental Europe and parts of the Asia/Pacific region, retail locations gradually reopened later in the quarter with capacity and other safety restrictions in place. Globally, in areas where stores were open, consumer traffic has not recovered to the pre-COVID-19 pandemic levels.

While international passenger traffic remained largely curtailed globally, passenger traffic in Europe, the Middle East & Africa and The Americas was somewhat improved, albeit significantly below pre-COVID-19 pandemic levels. The improvement was due, in part, to an increase in summer holiday travel as government restrictions were lifted, most notably in the United Kingdom, the United States, the Caribbean and Mexico. In Asia/Pacific, a surge in COVID-19 cases led to increased travel restrictions during much of the quarter.

Overall, online continued to grow led by areas where COVID-19 restrictions led to greater brick-and-mortar closures. Online sales were nearly double the pre-COVID level of fiscal 2020 first quarter.

Consumer PreferencesThe COVID-19 pandemic-related closures of offices, retail stores and other businesses and the significant decline in social gatherings have influenced consumer preferences and practices. While the demand for makeup improved significantly versus the prior year, it continues to be the only category that remains below the pre-COVID-19 pandemic period, given fewer makeup usage occasions and ongoing mask wearing, while skin care, fragrance and hair care have all grown from pre-pandemic levels.

Supply ChainThe COVID-19 pandemic has contributed to global transportation delays due to port congestion, labor and container shortages, and shipment delays. As a result, higher transportation and logistics costs are expected to negatively impact cost of sales and operating expenses in the remainder of fiscal 2022. The Company expects to mitigate most of the impact to its business and costs through strategic price increases, product mix, timing of shipments, use of air freight and less congested ports, and cost savings in other areas.

Fiscal 2022 First Quarter ResultsOrganic net sales growth represents adjusted net sales excluding non-comparable impacts of acquisitions, divestitures and brand closures (notably DECIEM) as well as the impacts from currency.

Reconciliation between GAAP and Non-GAAP Net Sales Growth(Unaudited)



Three Months Ended September 30, 2021

As Reported - GAAP^(1) 23 %



Organic, Non-GAAP^(2) 18 %

Impact of acquisitions, divestitures and brand closures 3

Impact of foreign currency 2

Returns associated with restructuring and other activities -

As Reported - GAAP^(1) 23 %

^(1)Includes returns associated with restructuring and other activities

^(2)Organic net sales growth represents adjusted net sales excludingnon-comparable impacts of acquisitions, divestitures and brand closures(notably DECIEM) as well as the impacts from currency.

Adjusted diluted earnings per common share excludes restructuring and other charges as detailed in the following table.

Reconciliation between GAAP and Non-GAAP - Diluted Earnings Per Share ("EPS")(Unaudited)



Three Months Ended

September 30

2021 2020 Growth

As Reported EPS - GAAP^(1) $ 1.88 $ 1.42 32 %



Non-GAAP

Restructuring and other charges .01 .02

Adjusted EPS - Non-GAAP $ 1.89 $ 1.44 31 %

Impact of foreign currency on earnings per share (.03 )

Adjusted Constant Currency EPS - Non-GAAP $ 1.86 $ 1.44 29 %

^(1)Includes restructuring and other charges and adjustments

Net sales and operating income in the Company's product categories and regions outside of the United States benefited from a weaker U.S. dollar in relation to most currencies.

Results by Product Category(Unaudited)



Three Months Ended September 30

Net Sales Percentage Change Operating Percentage Income (Loss) Change

($ in 2021 2020 Reported Constant 2021 2020 Reportedmillions) Basis Currency Basis

Skin Care $ 2,449 $ 2,035 20 % 18 % $ 717 $ 721 (1 )%

Makeup 1,174 978 20 18 91 (71 ) 100 +

Fragrance 609 406 50 48 131 60 100 +

Hair Care 148 136 9 8 2 3 (33 )

Other 13 7 86 71 - 1 (100 )

Subtotal 4,393 3,562 23 21 941 714 32

Returns/chargesassociatedwith

restructuringand other (1 ) - (6 ) (9 ) activities

Total $ 4,392 $ 3,562 23 % 21 % $ 935 $ 705 33 %

Organic Net Sales Growth - Reconciliation to GAAP (Unaudited)

Three Months Ended September 30 2021 vs. 2020

Organic Net Sales Growth (Non-GAAP)(1)

Impact of Acquisitions, Divestitures and Brand Closures

Impact of Foreign Currency

Net Sales Growth(GAAP)

Skin Care

12

%

6

%

2

%

20

%

Makeup

18

-

2

20

Fragrance

48

-

2

50

Hair Care

8

-

1

9

Other

57

14

15

86

Subtotal

18

%

3

%

2

%

23

%

Returns associated with restructuring and other activities

-

%

Total

18

%

3

%

2

%

23

%

(1)Organic net sales growth represents adjusted net sales excluding non-comparable impacts of acquisitions, divestitures and brand closures (notably DECIEM) as well as the impacts from currency.

Total reported operating income was $935 million, a 33% increase from $705 million in the prior-year period. In constant currency, adjusted operating income increased 29%, primarily reflecting higher net sales and excluding the following items:

* Fiscal 2022 first quarter: $6 million of restructuring and other charges * Fiscal 2021 first quarter: $9 million of restructuring and other charges and adjustments * The favorable impact of currency translation of $18 million.

Skin Care

* Skin care net sales grew across every region, primarily led by La Mer and Clinique. * The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 6 percentage point to net sales growth. * Strong double-digit growth from La Mer reflected the brand's significant strength with Chinese consumers. Net sales growth was driven by increases in hero products, including Crme de la Mer, The Moisturizing Soft Cream, and The Treatment Lotion. The launch of The Hydrating Infused Emulsion and targeted expanded consumer reach, including the launch on a new online platform in Southeast Asia, also contributed to growth. * Clinique delivered double-digit growth driven by strong demand for its hero products, including Even Better Clinical Radical Dark Spot Corrector + Interrupter, and the launch of the Smart Clinical Repair Wrinkle Correcting Serum. * Skin care operating income decreased, primarily reflecting product mix, strategic investments in advertising and promotional activities and difficult comparisons to a prior year launch, largely offset by higher net sales from La Mer.

Makeup

* Makeup net sales increased, reflecting a nascent recovery in western markets as usage occasions increased and the category benefited from the easier comparisons to the prior year. The increase was led by strong double-digit sales growth from Este Lauder and MAC as COVID-19 restrictions eased somewhat and social events began to recover in certain locations. * Growth from Este Lauder was fueled by the Double Wear and Futurist foundation product lines as well as the successful launches of Double Wear Sheer Long-Wear Foundation and Pure Color Whipped Matte Lip Color. * MAC's growth reflected successful marketing campaigns to drive the makeup renaissance as COVID-19 restrictions subside, with particular strength in face and eye products. * Makeup operating income increased, primarily reflecting higher net sales, partially offset by strategic investments to support the makeup recovery.

Fragrance

* Net sales grew in every region and across virtually all brands that sell fragrances, driven by continued resilience in luxury fragrance, easy comparisons versus the prior-year period, and the timing of shipments, including holiday shipments. * Tom Ford Beauty grew strong double-digits, reflecting strength in Private Blend, including Oud Wood and Lost Cherry, and Signature, including Black Orchid. The launch of Ombre Leather Parfum and accelerated growth in emerging markets also contributed to growth. * Jo Malone London's net sales grew double digits primarily driven by strength in colognes, particularly in hero franchises like Wood Sage & Sea Salt and English Pear & Freesia. Bath & Body and Home also delivered strong growth reflecting consumer demand for home fragrance products during the pandemic. * Designer fragrances growth primarily reflected timing of holiday shipments as well as easy comparisons in travel retail versus the prior year. * Net sales from Le Labo and Este Lauder rose strong double digits with growth primarily reflecting the opening of brick-and-mortar, improved traffic to those retail locations and initial shipments of Este Lauder's The Luxury Collection. * Kilian Paris' net sales nearly doubled, driven by retail reopening and demand for hero products, including Love, Don't be Shy, and the successful launch of The Liquors franchise. * Fragrance operating income increased, driven primarily by higher net sales partly offset by strategic investments to support brick-and-mortar reopening.

Hair Care

* Hair care net sales rose, reflecting increases from both Bumble and bumble and Aveda primarily due to the reopening of brick-and-mortar salons and retail. * Hair care operating results were flat reflecting higher net sales offset by strategic investments to support the recovery as brick-and-mortar reopens.

Organic Net Sales Growth - Reconciliation to GAAP(Unaudited)

Three Months Ended September 30 2021 vs. 2020

Organic Impact of Net Sales Acquisitions, Impact Net Growth Divestitures of Sales (Non-GAAP) and Foreign Growth ^(1) Brand Currency (GAAP) Closures

Skin Care 12 % 6 % 2 % 20 %

Makeup 18 - 2 20

Fragrance 48 - 2 50

Hair Care 8 - 1 9

Other 57 14 15 86

Subtotal 18 % 3 % 2 % 23 %

Returns associated with restructuring - %and other activities

Total 18 % 3 % 2 % 23 %

^(1)Organic net sales growth represents adjusted net sales excludingnon-comparable impacts of acquisitions, divestitures and brand closures(notably DECIEM) as well as the impacts from currency.

Total reported operating income was $935 million, a 33% increase from $705 million in the prior-year period. In constant currency, adjusted operating income increased 29%, primarily reflecting higher net sales and excluding the following items:

* Fiscal 2022 first quarter: $6 million of restructuring and other charges * Fiscal 2021 first quarter: $9 million of restructuring and other charges and adjustments * The favorable impact of currency translation of $18 million.

Skin Care

* Skin care net sales grew across every region, primarily led by La Mer and Clinique. * The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 6 percentage point to net sales growth. * Strong double-digit growth from La Mer reflected the brand's significant strength with Chinese consumers. Net sales growth was driven by increases in hero products, including Crme de la Mer, The Moisturizing Soft Cream, and The Treatment Lotion. The launch of The Hydrating Infused Emulsion and targeted expanded consumer reach, including the launch on a new online platform in Southeast Asia, also contributed to growth. * Clinique delivered double-digit growth driven by strong demand for its hero products, including Even Better Clinical Radical Dark Spot Corrector + Interrupter, and the launch of the Smart Clinical Repair Wrinkle Correcting Serum. * Skin care operating income decreased, primarily reflecting product mix, strategic investments in advertising and promotional activities and difficult comparisons to a prior year launch, largely offset by higher net sales from La Mer.

Makeup

* Makeup net sales increased, reflecting a nascent recovery in western markets as usage occasions increased and the category benefited from the easier comparisons to the prior year. The increase was led by strong double-digit sales growth from Este Lauder and MAC as COVID-19 restrictions eased somewhat and social events began to recover in certain locations. * Growth from Este Lauder was fueled by the Double Wear and Futurist foundation product lines as well as the successful launches of Double Wear Sheer Long-Wear Foundation and Pure Color Whipped Matte Lip Color. * MAC's growth reflected successful marketing campaigns to drive the makeup renaissance as COVID-19 restrictions subside, with particular strength in face and eye products. * Makeup operating income increased, primarily reflecting higher net sales, partially offset by strategic investments to support the makeup recovery.

Fragrance

* Net sales grew in every region and across virtually all brands that sell fragrances, driven by continued resilience in luxury fragrance, easy comparisons versus the prior-year period, and the timing of shipments, including holiday shipments. * Tom Ford Beauty grew strong double-digits, reflecting strength in Private Blend, including Oud Wood and Lost Cherry, and Signature, including Black Orchid. The launch of Ombre Leather Parfum and accelerated growth in emerging markets also contributed to growth. * Jo Malone London's net sales grew double digits primarily driven by strength in colognes, particularly in hero franchises like Wood Sage & Sea Salt and English Pear & Freesia. Bath & Body and Home also delivered strong growth reflecting consumer demand for home fragrance products during the pandemic. * Designer fragrances growth primarily reflected timing of holiday shipments as well as easy comparisons in travel retail versus the prior year. * Net sales from Le Labo and Este Lauder rose strong double digits with growth primarily reflecting the opening of brick-and-mortar, improved traffic to those retail locations and initial shipments of Este Lauder's The Luxury Collection. * Kilian Paris' net sales nearly doubled, driven by retail reopening and demand for hero products, including Love, Don't be Shy, and the successful launch of The Liquors franchise. * Fragrance operating income increased, driven primarily by higher net sales partly offset by strategic investments to support brick-and-mortar reopening.

Hair Care

* Hair care net sales rose, reflecting increases from both Bumble and bumble and Aveda primarily due to the reopening of brick-and-mortar salons and retail. * Hair care operating results were flat reflecting higher net sales offset by strategic investments to support the recovery as brick-and-mortar reopens.

Results by Geographic Region

(Unaudited)



Three Months Ended September 30

Net Sales Percentage Change Operating Percentage Income (Loss) Change

($ in 2021 2020 Reported Constant 2021 2020 Reportedmillions) Basis Currency Basis

The Americas $ 1,194 $ 873 37 % 36 % $ 254 $ 65 100 +%

Europe, theMiddle East & 1,873 1,540 22 21 465 411 13 Africa

Asia/Pacific 1,326 1,149 15 11 222 238 (7 )

Subtotal 4,393 3,562 23 21 941 714 32

Returns/chargesassociated withrestructuringand

other (1 ) - (6 ) (9 ) activities

Total $ 4,392 $ 3,562 23 % 21 % $ 935 $ 705 33 %

Organic Net Sales Growth - Reconciliation to GAAP (Unaudited)

Three Months Ended September 30 2021 vs. 2020

Organic Net Sales Growth (Non-GAAP)(1)

Impact of Acquisitions, Divestitures and Brand Closures

Impact of Foreign Currency

Net Sales Growth(GAAP)

The Americas

27

%

9

%

1

%

37

%

Europe, the Middle East & Africa

19

2

1

22

Asia/Pacific

10

1

4

15

Subtotal

18

%

3

%

2

%

23

%

Returns associated with restructuring and other activities

-

%

Total

18

%

3

%

2

%

23

%

(1)Organic net sales growth represents adjusted net sales excluding non-comparable impacts of acquisitions, divestitures and brand closures (notably DECIEM) as well as the impacts from currency.

The Americas

* Net sales grew throughout the region as brick-and-mortar largely reopened and traffic began to recover as government restrictions eased in many parts of the region. Growth in the region was led by double-digit increases in the United States and Latin America. * The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 9 percentage point to net sales growth. * Brick-and-mortar sales increased strong double digits, more than offsetting a modest decline in organic online sales. Brick-and-mortar benefited from a year-over-year increase in open retail locations as well as improved traffic in those locations. Logistics constraints also caused some retailers to increase orders, including accelerating holiday purchases. * In North America, sales grew in every product category. The fragrance category continued to deliver double-digit growth, hair care increased double digits and skin care growth remained strong. Makeup, which was disproportionately impacted by the challenges stemming from the COVID-19 pandemic, returned to growth with a strong double-digit increase. * In Latin America, sales grew double digits in every market and every category. * Operating income in The Americas increased, primarily reflecting higher nets sales partially offset by strategic investments to support the reopening of brick-and mortar retail and the makeup recovery.

Europe, the Middle East & Africa

* Net sales grew in virtually every market, led by the United Kingdom, Russia and the Middle East. The growth reflects recovery in brick-and-mortar as vaccination rates rose compared to the prior year when retail traffic was negatively impacted by COVID-19. * The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 2 percentage point to net sales growth. * Sales increased in every category led by fragrance and makeup. * Global travel retail sales increased double digits reflecting continued growth in Asia/Pacific, despite a surge in COVID-19 cases that led to increased travel restrictions there during much of the first quarter of fiscal 2022, as well as the partial return of summer holiday travel in Europe, the Middle East & Africa and The Americas. * Organic online sales growth slowed from the fourth quarter of fiscal 2021, but remained positive, as brick-and-mortar recovered. * Operating income increased, primarily driven by higher net sales partially offset by strategic investments behind key hero franchises and to support the reopening of brick-and-mortar retail.

Asia/Pacific

* Net sales growth primarily reflected increases in Greater China and Korea as COVID-related retail store closures in the rest of the region negatively impacted growth. * The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 1 percentage point to net sales growth. * Fragrance and skin care net sales grew double digits in the region and hair care increased single digit. * The Company continued to focus its investments on digital marketing, resulting in strong double-digit online sales growth that more than offset the impact to brick-and-mortar from the resurgence of COVID-19 cases during the quarter. * In mainland China, net sales grew double digits led by skin care and fragrance. Sales also increased double digits in nearly every channel. * Operating income decreased, reflecting continued strategic investments despite increased headwinds from temporary restrictions due to COVID-19, which more than offset the higher net sales.

Cash Flows

* For the three months ended September 30, 2021, net cash flows provided by (used for) operating activities were $(81) million, compared with $358 million in the prior-year period, as working capital needs returned to a more normalized level for the first quarter, partially offset by higher earnings before taxes, excluding non-cash items. * Capital Expenditures increased to $205 million compared to $116 million in the prior-year period, primarily driven by increased investment for a new manufacturing facility in Japan. * The Company ended the quarter with $4 billion in cash and cash equivalents after returning $749 million cash to stockholders through dividends and share repurchases.

Outlook for Fiscal 2022 Second Quarter and Full YearWith multiple engines of growth across regions, brands, product categories and channels, the Company is well-positioned to continue to drive a gradual recovery as macro-conditions and market dynamics support it. The Company expects to invest in areas to support the recovery, including advertising, online, research and development and supply chain, to both drive growth in areas of opportunity and help nurture emerging trends in the rest of the business.

The full year outlook reflects the following assumptions:

* Global volatility and variability is expected to continue, including inflation, supply chain disruption and COVID-19 restrictions. In the context of this uncertain environment, the Company believes it can continue to mitigate emerging headwinds and manage through this environment while driving multiple engines of growth. * A recovery of the makeup and hair care categories as countries reduce COVID-19 restrictions. * Growth in developed markets in the west and in brick-and-mortar retail. * Targeted new distribution throughout the year to retailers that provide broader consumer reach. * A gradual resumption of international travel beginning later in the fiscal year. * Benefit from a nearly full year incremental impact of DECIEM in net sales and operating results. * Higher transportation and logistics costs are expected to negatively impact cost of sales and operating expenses in the remainder of fiscal 2022. The Company expects to mitigate most of the impact to its business and costs through strategic price increases, product mix, timing of shipments, use of air freight and less congested ports, and cost savings in other areas. * Incremental savings from the Post-COVID Business Acceleration Program and reinvestment in advertising and capabilities. * Full-year effective tax rate of approximately 23%.

The Company is mindful of ongoing risks related to the COVID-19 pandemic as well as risks related to social, economic and political matters, including restructurings and bankruptcies in the retail industry, geopolitical tensions, regulatory developments, global security issues, currency volatility, general economic challenges, including inflationary pressures and supply chain disruptions, and changes in consumer preferences that affect consumer spending in certain countries, channels and travel corridors. Longer-term, the Company expects to return to its growth targets of 6% to 8% sales growth, 50 basis points of operating margin expansion and double-digit adjusted diluted earnings per share growth in constant currency after a period of normalization as the impacts of COVID-19 subside.

Second Quarter Fiscal 2022

Sales Outlook

* Reported net sales are forecasted to increase between 11% and 13% versus the prior-year period. * Organic net sales, which excludes the non-comparable impacts from acquisitions, divestitures and brand closures as well as the impact from currency, are forecasted to increase between 8% and 10%.

Earnings per Share Outlook

* Reported diluted net earnings per common share are projected to be between $2.47 and $2.59. Excluding restructuring and other charges and adjustments, diluted net earnings per common share are projected to be between $2.51 and $2.61. The Company expects to take charges associated with previously approved restructuring and other activities. For the Post-COVID Business Acceleration Program, the charges are estimated to be between approximately $10 million to $20 million, equal to $.02 to $.04 per diluted common share. * Adjusted diluted earnings per common share are expected to be flat to down 4% on a constant currency basis. The prior year effective tax rate included the one-time benefit associated with the retroactive application of changes in global intangible low-taxed income ("GILTI") U.S. tax regulations. Currency exchange rates are volatile and difficult to predict. Using September 30, 2021 spot rates for the second quarter of fiscal 2022, the currency impact on diluted earnings per share is expected to be negligible. * The increase in ownership of DECIEM is also expected to be negligible to diluted earnings per common share.

Full Year Fiscal 2022

Sales Outlook

* Reported net sales are forecasted to increase between 12% and 15% versus the prior-year period. This is ahead of the Company's long-term goal of 6% to 8% as the business begins to normalize as it recovers from the impacts of COVID-19. * Organic net sales, which excludes the non-comparable impacts from acquisitions, divestitures and brand closures as well as the impact from currency, are forecasted to increase between 9% and 12%.

Earnings per Share Outlook

* Reported diluted net earnings per common share are projected to be between $7.09 and $7.30. Excluding restructuring and other charges and adjustments, diluted net earnings per common share are projected to be between $7.23 and $7.38. The Company expects to take charges associated with previously approved restructuring and other activities. For the Post-COVID Business Acceleration Program, the charges are estimated to be between approximately $40 million to $70 million, equal to $.08 to $.14 per diluted common share. * Adjusted diluted earnings per common share are expected to increase between 11% and 14% on a constant currency basis. Currency exchange rates are volatile and difficult to predict. Using September 30, 2021 spot rates for fiscal 2022, currency is expected to be about $.04 accretive to diluted earnings per share. * The increase in ownership of DECIEM is expected to be $.03 accretive to diluted earnings per common share.

Organic Net Sales Growth - Reconciliation to GAAP(Unaudited)

Three Months Ended September 30 2021 vs. 2020

Organic Impact of Net Sales Acquisitions, Impact of Net Growth Divestitures Foreign Sales (Non-GAAP) and Currency Growth ^(1) Brand (GAAP) Closures

The Americas 27 % 9 % 1 % 37 %

Europe, the Middle East & Africa 19 2 1 22

Asia/Pacific 10 1 4 15

Subtotal 18 % 3 % 2 % 23 %

Returns associated with restructuring - %and other activities

Total 18 % 3 % 2 % 23 %

^(1)Organic net sales growth represents adjusted net sales excludingnon-comparable impacts of acquisitions, divestitures and brand closures(notably DECIEM) as well as the impacts from currency.

The Americas

* Net sales grew throughout the region as brick-and-mortar largely reopened and traffic began to recover as government restrictions eased in many parts of the region. Growth in the region was led by double-digit increases in the United States and Latin America. * The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 9 percentage point to net sales growth. * Brick-and-mortar sales increased strong double digits, more than offsetting a modest decline in organic online sales. Brick-and-mortar benefited from a year-over-year increase in open retail locations as well as improved traffic in those locations. Logistics constraints also caused some retailers to increase orders, including accelerating holiday purchases. * In North America, sales grew in every product category. The fragrance category continued to deliver double-digit growth, hair care increased double digits and skin care growth remained strong. Makeup, which was disproportionately impacted by the challenges stemming from the COVID-19 pandemic, returned to growth with a strong double-digit increase. * In Latin America, sales grew double digits in every market and every category. * Operating income in The Americas increased, primarily reflecting higher nets sales partially offset by strategic investments to support the reopening of brick-and mortar retail and the makeup recovery.

Europe, the Middle East & Africa

* Net sales grew in virtually every market, led by the United Kingdom, Russia and the Middle East. The growth reflects recovery in brick-and-mortar as vaccination rates rose compared to the prior year when retail traffic was negatively impacted by COVID-19. * The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 2 percentage point to net sales growth. * Sales increased in every category led by fragrance and makeup. * Global travel retail sales increased double digits reflecting continued growth in Asia/Pacific, despite a surge in COVID-19 cases that led to increased travel restrictions there during much of the first quarter of fiscal 2022, as well as the partial return of summer holiday travel in Europe, the Middle East & Africa and The Americas. * Organic online sales growth slowed from the fourth quarter of fiscal 2021, but remained positive, as brick-and-mortar recovered. * Operating income increased, primarily driven by higher net sales partially offset by strategic investments behind key hero franchises and to support the reopening of brick-and-mortar retail.

Asia/Pacific

* Net sales growth primarily reflected increases in Greater China and Korea as COVID-related retail store closures in the rest of the region negatively impacted growth. * The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 1 percentage point to net sales growth. * Fragrance and skin care net sales grew double digits in the region and hair care increased single digit. * The Company continued to focus its investments on digital marketing, resulting in strong double-digit online sales growth that more than offset the impact to brick-and-mortar from the resurgence of COVID-19 cases during the quarter. * In mainland China, net sales grew double digits led by skin care and fragrance. Sales also increased double digits in nearly every channel. * Operating income decreased, reflecting continued strategic investments despite increased headwinds from temporary restrictions due to COVID-19, which more than offset the higher net sales.

Cash Flows

* For the three months ended September 30, 2021, net cash flows provided by (used for) operating activities were $(81) million, compared with $358 million in the prior-year period, as working capital needs returned to a more normalized level for the first quarter, partially offset by higher earnings before taxes, excluding non-cash items. * Capital Expenditures increased to $205 million compared to $116 million in the prior-year period, primarily driven by increased investment for a new manufacturing facility in Japan. * The Company ended the quarter with $4 billion in cash and cash equivalents after returning $749 million cash to stockholders through dividends and share repurchases.

Outlook for Fiscal 2022 Second Quarter and Full YearWith multiple engines of growth across regions, brands, product categories and channels, the Company is well-positioned to continue to drive a gradual recovery as macro-conditions and market dynamics support it. The Company expects to invest in areas to support the recovery, including advertising, online, research and development and supply chain, to both drive growth in areas of opportunity and help nurture emerging trends in the rest of the business.

The full year outlook reflects the following assumptions:

* Global volatility and variability is expected to continue, including inflation, supply chain disruption and COVID-19 restrictions. In the context of this uncertain environment, the Company believes it can continue to mitigate emerging headwinds and manage through this environment while driving multiple engines of growth. * A recovery of the makeup and hair care categories as countries reduce COVID-19 restrictions. * Growth in developed markets in the west and in brick-and-mortar retail. * Targeted new distribution throughout the year to retailers that provide broader consumer reach. * A gradual resumption of international travel beginning later in the fiscal year. * Benefit from a nearly full year incremental impact of DECIEM in net sales and operating results. * Higher transportation and logistics costs are expected to negatively impact cost of sales and operating expenses in the remainder of fiscal 2022. The Company expects to mitigate most of the impact to its business and costs through strategic price increases, product mix, timing of shipments, use of air freight and less congested ports, and cost savings in other areas. * Incremental savings from the Post-COVID Business Acceleration Program and reinvestment in advertising and capabilities. * Full-year effective tax rate of approximately 23%.

The Company is mindful of ongoing risks related to the COVID-19 pandemic as well as risks related to social, economic and political matters, including restructurings and bankruptcies in the retail industry, geopolitical tensions, regulatory developments, global security issues, currency volatility, general economic challenges, including inflationary pressures and supply chain disruptions, and changes in consumer preferences that affect consumer spending in certain countries, channels and travel corridors. Longer-term, the Company expects to return to its growth targets of 6% to 8% sales growth, 50 basis points of operating margin expansion and double-digit adjusted diluted earnings per share growth in constant currency after a period of normalization as the impacts of COVID-19 subside.

Second Quarter Fiscal 2022

Sales Outlook

* Reported net sales are forecasted to increase between 11% and 13% versus the prior-year period. * Organic net sales, which excludes the non-comparable impacts from acquisitions, divestitures and brand closures as well as the impact from currency, are forecasted to increase between 8% and 10%.

Earnings per Share Outlook

* Reported diluted net earnings per common share are projected to be between $2.47 and $2.59. Excluding restructuring and other charges and adjustments, diluted net earnings per common share are projected to be between $2.51 and $2.61. The Company expects to take charges associated with previously approved restructuring and other activities. For the Post-COVID Business Acceleration Program, the charges are estimated to be between approximately $10 million to $20 million, equal to $.02 to $.04 per diluted common share. * Adjusted diluted earnings per common share are expected to be flat to down 4% on a constant currency basis. The prior year effective tax rate included the one-time benefit associated with the retroactive application of changes in global intangible low-taxed income ("GILTI") U.S. tax regulations. Currency exchange rates are volatile and difficult to predict. Using September 30, 2021 spot rates for the second quarter of fiscal 2022, the currency impact on diluted earnings per share is expected to be negligible. * The increase in ownership of DECIEM is also expected to be negligible to diluted earnings per common share.

Full Year Fiscal 2022

Sales Outlook

* Reported net sales are forecasted to increase between 12% and 15% versus the prior-year period. This is ahead of the Company's long-term goal of 6% to 8% as the business begins to normalize as it recovers from the impacts of COVID-19. * Organic net sales, which excludes the non-comparable impacts from acquisitions, divestitures and brand closures as well as the impact from currency, are forecasted to increase between 9% and 12%.

Earnings per Share Outlook

* Reported diluted net earnings per common share are projected to be between $7.09 and $7.30. Excluding restructuring and other charges and adjustments, diluted net earnings per common share are projected to be between $7.23 and $7.38. The Company expects to take charges associated with previously approved restructuring and other activities. For the Post-COVID Business Acceleration Program, the charges are estimated to be between approximately $40 million to $70 million, equal to $.08 to $.14 per diluted common share. * Adjusted diluted earnings per common share are expected to increase between 11% and 14% on a constant currency basis. Currency exchange rates are volatile and difficult to predict. Using September 30, 2021 spot rates for fiscal 2022, currency is expected to be about $.04 accretive to diluted earnings per share. * The increase in ownership of DECIEM is expected to be $.03 accretive to diluted earnings per common share.

Reconciliation between GAAP and Non-GAAP - Net Sales Growth (Unaudited)



Three Months Twelve Months Ending Ending

December 31, June 30, 2022^ 2021^(F) (F)

As Reported - GAAP^(1) 11% - 13 % 12% - 15 %



Organic, Non-GAAP^(2) 8% - 10 % 9% - 12 %

Impact of acquisitions, divestitures and brand 3 3closures, net

Impact of foreign currency - -

Returns associated with restructuring and other - -activities

As Reported - GAAP^(1) 11% - 13 % 12% - 15 %

^(1)Includes returns associated with restructuring and other activities

^(2)Organic net sales growth represents adjusted net sales excludingnon-comparable impacts of acquisitions, divestitures and brand closures as wellas the impacts from currency. Specifically, (i) for the fiscal quarter endingDecember 31, 2021, DECIEM and BECCA have been excluded from organic net salesgrowth, and (ii) for the fiscal year ending June 30, 2022, DECIEM has beenexcluded from organic net sales growth for the first 10.5 months and BECCA hasbeen excluded from organic net sales growth for the final nine months.

^(F)Represents forecast

Reconciliation between GAAP and Non-GAAP - Diluted Earnings Per Share ("EPS") (Unaudited)

Three Months Ending

Twelve Months Ending

December 31

June 30

2021(F)

2020

Growth

2022(F)

2021

Variance

Forecasted/As Reported EPS - GAAP(1)

$2.47 - $2.59

$

2.37

4% - 9

%

$7.09 - $7.30

$

7.79

(9%) - (6

%)

Non-GAAP

Restructuring and other charges

.02 - .04

.08

.08 - .14

.48

Changes in fair value of contingent consideration

-

(.01

)

-

(.01

)

Acquisition-related stock option expense

-

-

-

.09

Goodwill, other intangible and long-lived asset

impairments

-

.17

-

.40

Other income

-

-

-

(2.30

)

Forecasted/Adjusted EPS - Non-GAAP

$2.51- $2.61

$

2.61

(4%) - 0

%

$7.23 - $7.38

$

6.45

12% - 15

%

Impact of foreign currency

-

(.04

)

Forecasted Adjusted Constant Currency EPS -

Non-GAAP

$2.51 - $2.61

$

2.61

(4%) - 0

%

$7.19 - $7.34

$

6.45

11% - 14

%

(1)Includes restructuring and other charges and adjustments

(F)Represents forecast

Conference Call The Este Lauder Companies will host a conference call at 9:30 a.m. (ET) today, November 2, 2021 to discuss its results. The dial-in number for the call is 888-294-4716 in the U.S. or 706-902-0101 internationally (conference ID number: 6086324). The call will also be webcast live at http://www.elcompanies.com/investors/events-and-presentations.

Cautionary Note Regarding Forward-Looking StatementsStatements in this press release, in particular those in "Outlook," as well as remarks by the CEO and other members of management, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may address our expectations regarding sales, earnings or other future financial performance and liquidity, other performance measures, product introductions, entry into new geographic regions, information technology initiatives, new methods of sale, our long-term strategy, restructuring and other charges and resulting cost savings, and future operations or operating results. These statements may contain words like "expect," "will," "will likely result," "would," "believe," "estimate," "planned," "plans," "intends," "may," "should," "could," "anticipate," "estimate," "project," "projected," "forecast," and "forecasted" or similar expressions.

Factors that could cause actual results to differ materially from our forward-looking statements include the following:

Reconciliation between GAAP and Non-GAAP - Diluted Earnings Per Share ("EPS")(Unaudited)



Three Months Ending Twelve Months Ending

December 31 June 30

2021^(F) 2020 Growth 2022^(F) 2021 Variance

Forecasted/As Reported $2.47 - $ 2.37 4% - % $7.09 - $ 7.79 (9%) %)EPS - GAAP^(1) $2.59 9 $7.30 - (6



Non-GAAP

Restructuring and other .02 - .08 .08 - .48 charges .04 .14

Changes in fair value of - (.01 ) - (.01 ) contingent consideration

Acquisition-related stock - - - .09 option expense

Goodwill, otherintangible and long-lived asset

impairments - .17 - .40

Other income - - - (2.30 )

Forecasted/Adjusted EPS - $2.51- $ 2.61 (4%) % $7.23 - $ 6.45 12% - %Non-GAAP $2.61 - 0 $7.38 15

Impact of foreign - (.04 ) currency

Forecasted Adjusted Constant Currency EPS -

Non-GAAP $2.51 - $ 2.61 (4%) % $7.19 - $ 6.45 11% - % $2.61 - 0 $7.34 14

^(1)Includes restructuring and other charges and adjustments

^(F)Represents forecast

Conference Call The Este Lauder Companies will host a conference call at 9:30 a.m. (ET) today, November 2, 2021 to discuss its results. The dial-in number for the call is 888-294-4716 in the U.S. or 706-902-0101 internationally (conference ID number: 6086324). The call will also be webcast live at http://www.elcompanies.com/investors/events-and-presentations.

Cautionary Note Regarding Forward-Looking StatementsStatements in this press release, in particular those in "Outlook," as well as remarks by the CEO and other members of management, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may address our expectations regarding sales, earnings or other future financial performance and liquidity, other performance measures, product introductions, entry into new geographic regions, information technology initiatives, new methods of sale, our long-term strategy, restructuring and other charges and resulting cost savings, and future operations or operating results. These statements may contain words like "expect," "will," "will likely result," "would," "believe," "estimate," "planned," "plans," "intends," "may," "should," "could," "anticipate," "estimate," "project," "projected," "forecast," and "forecasted" or similar expressions.

Factors that could cause actual results to differ materially from our forward-looking statements include the following:

(1) increased competitive activity from companies in the skin care, makeup, fragrance and hair care businesses;

the Company's ability to develop, produce and market new products on(2) which future operating results may depend and to successfully address challenges in the Company's business;

consolidations, restructurings, bankruptcies and reorganizations in the retail industry causing a decrease in the number of stores that sell the(3) Company's products, an increase in the ownership concentration within the retail industry, ownership of retailers by the Company's competitors or ownership of competitors by the Company's customers that are retailers and our inability to collect receivables;

(4) destocking and tighter working capital management by retailers;

the success, or changes in timing or scope, of new product launches and(5) the success, or changes in the timing or the scope, of advertising, sampling and merchandising programs;

(6) shifts in the preferences of consumers as to where and how they shop;

social, political and economic risks to the Company's foreign or(7) domestic manufacturing, distribution and retail operations, including changes in foreign investment and trade policies and regulations of the host countries and of the United States;

changes in the laws, regulations and policies (including the interpretations and enforcement thereof) that affect, or will affect, the Company's business, including those relating to its products or(8) distribution networks, changes in accounting standards, tax laws and regulations, environmental or climate change laws, regulations or accords, trade rules and customs regulations, and the outcome and expense of legal or regulatory proceedings, and any action the Company may take as a result;

foreign currency fluctuations affecting the Company's results of operations and the value of its foreign assets, the relative prices at(9) which the Company and its foreign competitors sell products in the same markets and the Company's operating and manufacturing costs outside of the United States;

changes in global or local conditions, including those due to the volatility in the global credit and equity markets, natural or man-made disasters, real or perceived epidemics, or energy costs, that could affect consumer purchasing, the willingness or ability of consumers to travel and/or purchase the Company's products while traveling, the(10) financial strength of the Company's customers, suppliers or other contract counterparties, the Company's operations, the cost and availability of capital which the Company may need for new equipment, facilities or acquisitions, the returns that the Company is able to generate on its pension assets and the resulting impact on funding obligations, the cost and availability of raw materials and the assumptions underlying the Company's critical accounting estimates;

(11) impacts attributable to the COVID-19 pandemic, including disruptions to our global business;

shipment delays, commodity pricing, depletion of inventory and increased production costs resulting from disruptions of operations at any of the(12) facilities that manufacture the Company's products or at the Company's distribution or inventory centers, including disruptions that may be caused by the implementation of information technology initiatives, or by restructurings;

real estate rates and availability, which may affect the Company's(13) ability to increase or maintain the number of retail locations at which the Company sells its products and the costs associated with the Company's other facilities;

(14) changes in product mix to products which are less profitable;

the Company's ability to acquire, develop or implement new information and distribution technologies and initiatives on a timely basis and(15) within the Company's cost estimates and the Company's ability to maintain continuous operations of such systems and the security of data and other information that may be stored in such systems or other systems or media;

the Company's ability to capitalize on opportunities for improved(16) efficiency, such as publicly-announced strategies and restructuring and cost-savings initiatives, and to integrate acquired businesses and realize value therefrom;

consequences attributable to local or international conflicts around the(17) world, as well as from any terrorist action, retaliation and the threat of further action or retaliation;

(18) the timing and impact of acquisitions, investments and divestitures; and

additional factors as described in the Company's filings with the(19) Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

The Company assumes no responsibility to update forward-looking statements made herein or otherwise.

The Este Lauder Companies Inc. is one of the world's leading manufacturers, marketers and sellers of quality skin care, makeup, fragrance and hair care products. The Company's products are sold in approximately 150 countries and territories under brand names including: Este Lauder, Aramis, Clinique, Lab Series, Origins, Tommy Hilfiger, MAC, La Mer, Bobbi Brown, Donna Karan New York, DKNY, Aveda, Jo Malone London, Bumble and bumble, Michael Kors, Darphin Paris, TOM FORD BEAUTY, Smashbox, Ermenegildo Zegna, AERIN, Le Labo, Editions de Parfums Frdric Malle, GLAMGLOW, KILIAN PARIS, Too Faced, Dr.Jart+, and the DECIEM family of brands, including The Ordinary and NIOD.

ELC-F ELC-E

CONSOLIDATED STATEMENT OF EARNINGS(Unaudited)



Three Months Ended September 30 Percentage Change($ in millions, except per share data) 2021 2020

Net sales^(A) $ 4,392 $ 3,562 23 %

Cost of sales^(A) 1,057 825 28

Gross profit 3,335 2,737 22

Gross margin 75.9 % 76.8 %



Operating expenses

Selling, general and administrative 2,394 2,026 18

Restructuring and other charges^(A) 6 6 -

Total operating expenses 2,400 2,032 18

Operating expense margin 54.6 % 57.0 %

Operating income 935 705 33

Operating income margin 21.3 % 19.8 %



Interest expense 42 45 (7 )

Interest income and investment income, net 4 14 (71 )

Other components of net periodic benefit 1 3 (67 )cost

Other income 1 - 100

Earnings before income taxes 897 671 34

Provision for income taxes 202 146 38

Net earnings 695 525 32

Net earnings attributable to (1 ) (2 ) 50 noncontrolling interests

Net earnings attributable to redeemable (2 ) - (100 )noncontrolling interest

Net earnings attributable to The Est?e $ 692 $ 523 32 %Lauder Companies Inc.



Net earnings attributable to The Est?e Lauder Companies Inc. per common share

Basic $ 1.91 $ 1.44 32 %

Diluted $ 1.88 $ 1.42 32 %



Weighted-average common shares outstanding

Basic 362.2 362.1

Diluted 367.9 367.2

^(A)In August 2020, the Company announced a two-year restructuring program,Post-COVID Business Acceleration Program (the "PCBA Program"), designed torealign its business to address the dramatic shifts to its distributionlandscape and consumer behaviors in the wake of the COVID-19 pandemic. The PCBAProgram will help improve efficiency and effectiveness by rebalancing resourcesto growth areas of prestige beauty. It will further strengthen the Company bybuilding upon the foundational capabilities in which the Company has invested.The PCBA Program's main areas of focus include accelerating the shift to onlinewith the realignment of the Company's distribution network reflectingfreestanding store and certain department store closures, with a focus on NorthAmerica and Europe, the Middle East & Africa; the reduction in brick-and-mortarpoint of sale employees and related support staff; and the redesign of theCompany's regional branded marketing organizations, plus select opportunitiesin global brands and functions. This program is expected to position theCompany to better execute its long-term strategy while strengthening itsfinancial flexibility. The Company plans to approve specific initiatives underthe PCBA Program through fiscal 2022 and expects to complete those initiativesthrough fiscal 2023. The Company expects that the PCBA Program will result inrelated restructuring and other charges totaling between $400 million and $500million, before taxes.

The Company substantially completed initiatives approved under the LeadingBeauty Program (the "LBF Program") through fiscal 2021. Additional informationabout the LBF Program is included in the notes to consolidated financialstatements in the Company's Annual Report on Form 10-K for the fiscal yearended June 30, 2021.

Returns and Charges Associated With Restructuring and Other Activities and Other Adjustments

(Unaudited)

Three Months Ended September 30, 2021

Sales Returns

Cost of Sales

Operating Expenses

Total

After Tax

Diluted EPS

(In millions, except per share data)

RestructuringCharges

Other Charges/Adjustments

Leading Beauty Forward

$

-

$

-

$

1

$

3

$

4

$

3

$

.01

PCBA Program

1

(1

)

-

2

2

2

-

Total

$

1

$

(1

)

$

1

$

5

$

6

$

5

$

.01

Returns and Charges Associated With Restructuring and Other Activities andOther Adjustments

(Unaudited)



Three Months Ended September 30, 2021

Operating Expenses Sales Cost After Diluted(In millions, Returns of Restructuring Other Total Tax EPSexcept per share Sales Charges Charges/data) Adjustments

Leading Beauty $ - $ - $ 1 $ 3 $ 4 $ 3 $ .01 Forward

PCBA Program 1 (1 ) - 2 2 2 -

Total $ 1 $ (1 ) $ 1 $ 5 $ 6 $ 5 $ .01



Three Months Ended September 30, 2020

Sales Returns

Cost of Sales

Operating Expenses

Total

After Tax

Diluted EPS

(In millions, except per share data)

RestructuringCharges

Other Charges/Adjustments

Leading Beauty Forward

$

-

$

3

$

(8

)

$

2

$

(3

)

$

(2

)

$

-

PCBA Program

-

-

12

-

12

9

.02

Total

$

-

$

3

$

4

$

2

$

9

$

7

$

.02

This earnings release includes some non-GAAP financial measures relating to charges associated with restructuring and other activities. The following is a reconciliation between the non-GAAP financial measures and the most directly comparable GAAP measures for certain consolidated statements of earnings accounts before and after these items. The Company uses certain non-GAAP financial measures, among other financial measures, to evaluate its operating performance, which represent the way the Company conducts and views its business. Management believes that excluding certain items that are not comparable from period to period, or do not reflect the Company's underlying ongoing business, provides transparency for such items and helps investors and others compare and analyze operating performance from period to period. In the future, the Company expects to incur charges or adjustments similar in nature to those presented below; however, the impact to the Company's results in a given period may be highly variable and difficult to predict. Our non-GAAP financial measures may not be comparable to similarly titled measures used by, or determined in a manner consistent with, other companies. While the Company considers the non-GAAP measures useful in analyzing its results, they are not intended to replace, or act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with GAAP.

The Company operates on a global basis, with the majority of its net sales generated outside the United States. Accordingly, fluctuations in foreign currency exchange rates can affect the Company's results of operations. Therefore, the Company presents certain net sales, operating results and diluted earnings per share information excluding the effect of foreign currency rate fluctuations to provide a framework for assessing the performance of its underlying business outside the United States. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. The Company calculates constant currency information by translating current-period results using prior-year period monthly average foreign currency exchange rates and adjusting for the period-over-period impact of foreign currency cash flow hedging activities.

Three Months Ended September 30, 2020

Operating Expenses Sales Cost After Diluted(In millions, Returns of Restructuring Other Total Tax EPSexcept per share Sales Charges Charges/data) Adjustments

Leading Beauty $ - $ 3 $ (8 ) $ 2 $ (3 ) $ (2 ) $ - Forward

PCBA Program - - 12 - 12 9 .02

Total $ - $ 3 $ 4 $ 2 $ 9 $ 7 $ .02

This earnings release includes some non-GAAP financial measures relating to charges associated with restructuring and other activities. The following is a reconciliation between the non-GAAP financial measures and the most directly comparable GAAP measures for certain consolidated statements of earnings accounts before and after these items. The Company uses certain non-GAAP financial measures, among other financial measures, to evaluate its operating performance, which represent the way the Company conducts and views its business. Management believes that excluding certain items that are not comparable from period to period, or do not reflect the Company's underlying ongoing business, provides transparency for such items and helps investors and others compare and analyze operating performance from period to period. In the future, the Company expects to incur charges or adjustments similar in nature to those presented below; however, the impact to the Company's results in a given period may be highly variable and difficult to predict. Our non-GAAP financial measures may not be comparable to similarly titled measures used by, or determined in a manner consistent with, other companies. While the Company considers the non-GAAP measures useful in analyzing its results, they are not intended to replace, or act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with GAAP.

The Company operates on a global basis, with the majority of its net sales generated outside the United States. Accordingly, fluctuations in foreign currency exchange rates can affect the Company's results of operations. Therefore, the Company presents certain net sales, operating results and diluted earnings per share information excluding the effect of foreign currency rate fluctuations to provide a framework for assessing the performance of its underlying business outside the United States. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. The Company calculates constant currency information by translating current-period results using prior-year period monthly average foreign currency exchange rates and adjusting for the period-over-period impact of foreign currency cash flow hedging activities.

Reconciliation of Certain Consolidated Statements of Earnings AccountsBefore and After Returns, Charges and Other Adjustments(Unaudited)



Three Months Ended September 30

2021 2020 % Change

($ in millions, Returns/ Impact of Non- Returns/ Non-except per As Charges/ Non- Foreign GAAP, As Charges/ Non- Non- GAAP,share data) Reported Adjustments GAAP Currency Constant Reported Adjustments GAAP GAAP Constant Translation Currency Currency

Net sales $ 4,392 $ 1 $ 4,393 $ (77 ) $ 4,316 $ 3,562 $ - $ 3,562 23 % 21 %

Cost of sales 1,057 1 1,058 (17 ) 1,041 825 (3 ) 822

Gross profit 3,335 - 3,335 (60 ) 3,275 2,737 3 2,740 22 % 20 %

Gross margin 75.9 % 75.9 % 75.9 % 76.8 % 76.9 %



Operating 2,400 (6 ) 2,394 (42 ) 2,352 2,032 (6 ) 2,026 18 % 16 %expenses

Operating expense

margin 54.6 % 54.5 % 54.5 % 57.0 % 56.9 %

Operating income 935 6 941 (18 ) 923 705 9 714 32 % 29 %

Operating income

margin 21.3 % 21.4 % 21.4 % 19.8 % 20.0 %



Provision for 202 1 203 (4 ) 199 146 2 148 37 % 34 %income taxes



Net earnings

attributable toThe

Est?e Lauder

Companies Inc. $ 692 $ 4 $ 696 $ (13 ) $ 683 $ 523 $ 7 $ 530 31 % 29 %

Diluted EPS $ 1.88 $ .01 $ 1.89 $ (.03 ) $ 1.86 $ 1.42 $ .02 $ 1.44 31 % 29 %

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, except where noted)

September 30, 2021

June 30, 2021

September 30, 2020

($ in millions)

(Audited)

ASSETS

Cash and cash equivalents

$

3,995

$

4,958

$

4,267

Accounts receivable, net

2,265

1,702

1,812

Inventory and promotional merchandise

2,633

2,505

2,204

Prepaid expenses and other current assets

593

603

512

Total current assets

9,486

9,768

8,795

Property, plant and equipment, net

2,358

2,280

2,077

Operating lease right-of-use assets

2,113

2,190

2,322

Other assets

7,623

7,733

4,709

Total assets

$

21,580

$

21,971

$

17,903

LIABILITIES AND EQUITY

Current debt

$

281

$

32

$

473

Accounts payable

1,485

1,692

1,178

Operating lease liabilities

371

379

399

Other accrued liabilities

3,182

3,195

2,694

Total current liabilities

5,319

5,298

4,744

Long-term debt

5,267

5,537

4,913

Long-term operating lease liabilities

2,073

2,151

2,309

Other noncurrent liabilities

1,964

2,037

1,456

Total noncurrent liabilities

9,304

9,725

8,678

Redeemable noncontrolling interest

842

857

-

Total equity

6,115

6,091

4,481

Total liabilities and equity

$

21,580

$

21,971

$

17,903

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, except where noted)



September June 30, September 30, 2021 30, 2021 2020($ in millions) (Audited)

ASSETS



Cash and cash equivalents $ 3,995 $ 4,958 $ 4,267

Accounts receivable, net 2,265 1,702 1,812

Inventory and promotional merchandise 2,633 2,505 2,204

Prepaid expenses and other current assets 593 603 512

Total current assets 9,486 9,768 8,795

Property, plant and equipment, net 2,358 2,280 2,077

Operating lease right-of-use assets 2,113 2,190 2,322

Other assets 7,623 7,733 4,709

Total assets $ 21,580 $ 21,971 $ 17,903



LIABILITIES AND EQUITY



Current debt $ 281 $ 32 $ 473

Accounts payable 1,485 1,692 1,178

Operating lease liabilities 371 379 399

Other accrued liabilities 3,182 3,195 2,694

Total current liabilities 5,319 5,298 4,744

Long-term debt 5,267 5,537 4,913

Long-term operating lease liabilities 2,073 2,151 2,309

Other noncurrent liabilities 1,964 2,037 1,456

Total noncurrent liabilities 9,304 9,725 8,678

Redeemable noncontrolling interest 842 857 -

Total equity 6,115 6,091 4,481

Total liabilities and equity $ 21,580 $ 21,971 $ 17,903

SELECT CASH FLOW DATA(Unaudited)

Three Months Ended September 30

($ in millions)

2021

2020

Net earnings

$

695

$

525

Adjustments to reconcile net earnings to net cash flows from operating

activities:

Depreciation and amortization

183

156

Deferred income taxes

(57

)

(39

)

Other items

94

72

Changes in operating assets and liabilities:

Increase in accounts receivable, net

(583

)

(607

)

Increase in inventory and promotional merchandise

(178

)

(94

)

Decrease (increase) in other assets, net

(19

)

39

Increase (decrease) in accounts payable and other liabilities, net

(216

)

306

Net cash flows provided by (used for) operating activities

$

(81

)

$

358

Other Investing and Financing Sources (Uses):

Capital expenditures

$

(205

)

$

(116

)

Payments to acquire treasury stock

(557

)

(25

)

Dividends paid

(192

)

(174

)

Proceeds (repayments) of current debt, net

3

(747

)

View source version on businesswire.com: https://www.businesswire.com/news/home/20211102005348/en/

CONTACT: Investors:Rainey Mancini rmancini@estee.com Media:Jill Marvin jimarvin@estee.com