Company Executed Aggressive Actions to Reduce
Costs amid COVID-19, in Addition to Continuing to Generate Cost
Reductions from Revlon 2020 Restructuring Program
New Financing Positions the Company to Emerge
Stronger as Markets Reopen
Revlon, Inc. (NYSE: REV) today announced its results for the
quarter ended March 31, 2020.
Quarter ended March 31, 2020 summary developments:1
- As Reported net sales were $453.0 million in the first quarter
of 2020, compared to $553.2 million during the prior-year period, a
decline of 18.1%. As Reported net sales include approximately $54
million of estimated negative impacts associated with COVID-19.
Excluding the COVID-19 impacts, net sales on a constant currency
basis declined 6.5%.
- As Reported operating loss increased to $186.2 million in the
first quarter of 2020, compared to a $23.3 million operating loss
during the prior-year period. The higher operating loss was driven
primarily by $124.3 million of non-cash intangible impairment
charges reflecting the financial impacts of COVID-19, $19.3 million
of higher restructuring charges primarily related to the Revlon
2020 Restructuring Program and the lower net sales, partially
offset by $43.2 million in lower selling, general and
administrative expenses, driven in part by reduced brand support in
response to COVID-19, as well as cost reductions associated with
the Company's restructuring programs. Adjusted operating loss in
the first quarter of 2020 increased by $2.2 million to $10.8
million from $8.6 million in the prior-year period.
- As Reported net loss increased to $213.9 million in the first
quarter of 2020, versus a $75.1 million net loss in the prior-year
period. The higher net loss was driven primarily by the $124.3
million non-cash intangible impairment charges and a $16.4 million
negative foreign currency impact, partially offset by a $37.3
million improvement in the benefit from income taxes driven in part
by the Company's adoption of the tax provisions under the new CARES
Act.
- Adjusted EBITDA(a) in the first quarter of 2020 was $28.4
million versus $38.8 million in the prior-year period, with the
decrease driven primarily by the lower net sales, partially offset
by the lower SG&A expenses and improved gross profit
margin.
- On May 7, 2020 the Company closed on a new $880 million term
loan facility, a portion of which the Company used at closing to
retire its $200 million 2019 Term Loan Facility and it also
provides a source of liquidity to support the Company's plans to
refinance its 5.75% Senior Notes due in February 2021. The
refinancing also extended the maturity of a substantial portion of
the Company's 2016 term loan and delivers new funding for the
business. As of May 7, 2020, the Company had approximately $600
million in total available liquidity.
"Although our business was significantly impacted during the
first quarter of 2020 by the ongoing global COVID-19 pandemic, we
have taken aggressive steps to mitigate these effects and feel
confident that we will emerge well positioned to continue our
transformation and maintain our leadership position within the
beauty category. Beauty is a resilient industry and we are already
seeing signs of a return to strong sales activity in China and
other markets. Elizabeth Arden, e-commerce and our personal care
products, including Revlon hair color, also maintained their
strength despite the global closure of key markets. For the
quarter, our e-commerce business grew approximately 47% and
represented over 12% of our total net sales, almost doubling the
scale of our e-commerce business since Q1 2019. With a streamlined
operation, lower costs and a stronger balance sheet, we are
confident that Revlon will be able to weather the pandemic crisis,
continue to serve our consumers and customers and drive value for
all our stakeholders,” said Debbie Perelman, Revlon's President and
Chief Executive Officer.
1 The results discussed include the
following measures: U.S. GAAP (“As Reported”); and non-GAAP
(“Adjusted”), which excludes certain Non-Operating Items and EBITDA
Exclusions (as defined in Footnote (a)) from As Reported results.
See footnote (a) for further discussion of the Company’s Adjusted
measures. Reconciliations of As Reported results to Adjusted
results are provided as an attachment to this release. In addition,
where indicated, the Company analyzes and presents its results
excluding the impact of foreign currency translation (“XFX”).
Unless otherwise noted, the discussion is presented on an As
Reported basis.
First Quarter 2020
Results
Total Company Results
In calculating Adjusted results, adjustments were made for the
Non-Operating Items and the EBITDA Exclusions in the case of
Adjusted EBITDA, in each case as described in footnote (a).
Three Months Ended March 31,
(Unaudited)
2020
2019
As Reported
Adjusted (*)
(USD millions, except per share data)
As Reported
Adjusted (*)
As Reported
Adjusted (*)
% Change
% Change
Net Sales
$
453.0
$
457.2
$
553.2
$
553.2
(18.1)
%
(17.4)
%
Gross Profit
255.2
264.5
315.4
315.4
(19.1)
%
(16.1)
%
Gross Margin
56.3
%
57.9
%
57.0
%
57.0
%
-70bps
90bps
Operating Loss
$
(186.2)
$
(10.8)
$
(23.3)
$
(8.6)
(699.1)
%
(25.6)
%
Net Loss
(213.9)
(64.1)
(75.1)
(63.6)
(184.8)
%
(0.8)
%
Adjusted EBITDA
28.4
38.8
(26.8)
%
Diluted Loss per Common Share
$
(4.02)
$
(1.21)
$
(1.42)
$
(1.20)
(183.1)
%
(0.8)
%
(*) Refer to footnote (a) to this Earnings
Release for a discussion and reconciliation of our non-GAAP
measures, including Adjusted Net Sales, Adjusted Gross Profit,
Adjusted Gross Profit Margin, Adjusted Operating Income, Adjusted
EBITDA, Adjusted Net Income (Loss) and Adjusted Diluted Loss per
Common Share. Q1 2020 Adjusted Net Sales include $4.2 million of
excessive coupon redemption with a single U.S mass retailer.
Segment
Results
The Company operates in four reporting segments: Revlon;
Elizabeth Arden; Portfolio; and Fragrances:
Revlon - The Revlon segment is
comprised of the Company's flagship Revlon brands. Revlon segment
products are primarily marketed, distributed and sold in the mass
retail channel, large volume retailers, chain drug and food stores,
chemist shops, hypermarkets, general merchandise stores, e-commerce
sites, television shopping, department stores, professional hair
and nail salons, one-stop shopping beauty retailers and specialty
cosmetic stores in the U.S. and internationally under brands such
as Revlon in color cosmetics; Revlon ColorSilk and
Revlon Professional in hair color; and Revlon in
beauty tools.
Elizabeth Arden - The Elizabeth Arden
segment is comprised of the Company's Elizabeth Arden branded
products. The Elizabeth Arden segment markets, distributes and
sells fragrances, skin care and color cosmetics primarily to
prestige retailers, department and specialty stores, perfumeries,
boutiques, e-commerce sites, the mass retail channel, travel
retailers and distributors, as well as direct sales to consumers
via its Elizabeth Arden branded retail stores and
elizabetharden.com e-commerce websites, in the U.S. and
internationally, under brands such as Elizabeth Arden Ceramide,
Prevage, Eight Hour, SUPERSTART, Visible Difference and Skin
Illuminating in the Elizabeth Arden skin care brands; and
Elizabeth Arden White Tea, Elizabeth Arden Red Door, Elizabeth
Arden 5th Avenue and Elizabeth Arden Green Tea in
Elizabeth Arden fragrances.
Portfolio - The Company’s Portfolio
segment markets, distributes and sells a comprehensive line of
premium, specialty and mass products primarily to the mass retail
channel, hair and nail salons and professional salon distributors
in the U.S. and internationally and large volume retailers,
specialty and department stores under brands such as Almay
and SinfulColors in color cosmetics; American Crew in
men’s grooming products (which are also sold direct-to-consumer on
its americancrew.com website); CND in nail polishes, gel
nail color and nail enhancements; Mitchum in anti-perspirant
deodorants; and Cutex in nail care products. The Portfolio
segment also includes a multi-cultural hair care line consisting of
Creme of Nature hair care products, which are sold in both
professional salons and in large volume retailers and other
retailers, primarily in the U.S.; and a hair color line under the
Llongueras brand (licensed from a third party) that is sold
in the mass retail channel, large volume retailers and other
retailers, primarily in Spain.
Fragrances - The Fragrances segment
includes the development, marketing and distribution of certain
owned and licensed fragrances, as well as the distribution of
prestige fragrance brands owned by third parties. These products
are typically sold to retailers in the U.S. and internationally,
including prestige retailers, specialty stores, e-commerce sites,
the mass retail channel, travel retailers and other international
retailers. The owned and licensed fragrances include brands such as
Juicy Couture (which are also sold direct-to-consumer on its
juicycouturebeauty.com website), Britney Spears, Elizabeth
Taylor, Curve, John Varvatos, Christina Aguilera, Giorgio
Beverly Hills, Ed Hardy, Charlie, Lucky Brand,
Paul Sebastian, Alfred Sung, Jennifer Aniston,
Mariah Carey, Halston, Geoffrey Beene and
AllSaints.
Three Months Ended March
31, (Unaudited)
Net Sales
As Reported
As Reported
(USD millions)
2020
2019
% Change
XFX % Change
Revlon
$
181.8
$
247.3
(26.5)
%
(25.1)
%
Elizabeth Arden
95.2
111.4
(14.5)
%
(12.3)
%
Portfolio
110.0
117.2
(6.1)
%
(4.4)
%
Fragrances
66.0
77.3
(14.6)
%
(13.5)
%
Total
$
453.0
$
553.2
(18.1)
%
(16.5)
%
Three Months Ended March
31, (Unaudited)
Segment Profit
As Reported
As Reported
(USD millions)
2020
2019
% Change
XFX % Change
Revlon
$
15.6
$
25.6
(39.1)
%
(36.3)
%
Elizabeth Arden
4.2
1.9
121.1
%
147.4
%
Portfolio
7.2
4.5
60.0
%
64.4
%
Fragrances
1.4
6.8
(79.4)
%
(77.9)
%
Total
$
28.4
$
38.8
(26.8)
%
(22.9)
%
Revlon Segment
Revlon segment net sales in the first quarter of 2020 were
$181.8 million, a 26.5% (or 25.1% XFX) decrease compared to the
prior-year period. The segment's lower net sales were driven
primarily by the global impacts associated with COVID-19, increased
trade spend, and increased pipeline shipments to support in-store
activity that occurred in the prior-year period.
Revlon segment profit in the first quarter of 2020 was $15.6
million, compared to $25.6 million in the prior-year period, driven
primarily by the segment's lower net sales and lower gross profit
margin.
Elizabeth Arden Segment
Elizabeth Arden segment net sales in the first quarter of 2020
were $95.2 million, a 14.5% (or 12.3% XFX) decrease compared to the
prior-year period, driven by lower net sales of certain Elizabeth
Arden-branded skin care products and color cosmetics and of certain
Elizabeth Arden-branded fragrances due, in part, to the closure of
department stores and travel retail outlets as a result of
COVID-19, partially offset by higher net sales of Ceramide skin
care products internationally.
Elizabeth Arden segment profit in the first quarter of 2020 was
$4.2 million, compared to $1.9 million in the prior-year period,
primarily due to the segment's higher gross profit margin and lower
brand support, partially offset by the lower segment net sales.
Portfolio Segment
Portfolio segment net sales of $110.0 million in the first
quarter of 2020 decreased by 6.1% (or 4.4% XFX) compared to the
prior-year period, driven primarily by the segment's lower net
sales of Almay and SinfulColors color cosmetics, American Crew
men's grooming products and CND nail products driven, in part, by
the closure of salons globally due to COVID-19, partially offset by
higher net sales of Mitchum anti-perspirant deodorants and Cutex
nail care products, primarily in North America.
Portfolio segment profit in the first quarter of 2020 improved
to $7.2 million, compared to $4.5 million in the prior-year period,
primarily as a result of lower brand support and higher gross
profit margin, partially offset by the lower segment net sales.
Fragrances Segment
Fragrances segment net sales of $66.0 million in the first
quarter of 2020 decreased by 14.6% (or 13.5% XFX) compared to the
prior-year period, driven primarily by the impacts from COVID-19
and category declines in the U.S. mass channel.
Fragrances segment profit in the first quarter of 2020 was $1.4
million, compared to $6.8 million in the prior-year period,
primarily as a result of lower segment net sales and higher brand
support, partially offset by higher gross profit margin and lower
distribution costs.
Geographic Net Sales
Overall, As Reported total net sales decreased by 18.1% (or
16.5% XFX), as detailed below by segment for the Company's North
America and International Regions.
Three Months Ended March
31, (Unaudited)
(USD millions)
2020 As
Reported
2019 As
Reported
As Reported %
Change
As Reported XFX %
Change
Net Sales:
Revlon
North America
$
99.1
$
133.2
(25.6)
%
(25.5)
%
International
82.7
114.1
(27.5)
%
(24.5)
%
Elizabeth Arden
North America
$
21.4
$
28.2
(24.1)
%
(23.4)
%
International
73.8
83.2
(11.3)
%
(8.5)
%
Portfolio
North America
$
70.8
$
70.1
1.0
%
0.9
%
International
39.2
47.1
(16.8)
%
(12.3)
%
Fragrances
North America
$
42.2
$
47.2
(10.6)
%
(10.6)
%
International
23.8
30.1
(20.9)
%
(17.9)
%
Total Net Sales
$
453.0
$
553.2
(18.1)
%
(16.5)
%
Total Net Sales Summary
North America
$
233.5
$
278.7
(16.2)
%
(16.1)
%
International
219.5
274.5
(20.0)
%
(16.9)
%
Revlon Segment
In North America, Revlon segment net sales of $99.1 million in
the first quarter of 2020 decreased by 25.6% compared to the
prior-year period, driven primarily by lower net sales of Revlon
color cosmetics due to overall category declines, higher levels of
promotionality, as well as lower net sales of Revlon beauty tools
within the U.S. mass retail channel, partially offset by higher net
sales of Revlon ColorSilk hair color products.
In International, Revlon segment net sales of $82.7 million in
the first quarter of 2020 decreased by 27.5% (or 24.5% XFX)
compared to the prior-year period, driven primarily by the Revlon
segment's lower net sales of Revlon color cosmetics, primarily
within the Company's Asia and EMEA regions, as well as lower net
sales of Revlon-branded professional products due, in part, to
COVID-related salon closures, and Revlon ColorSilk hair color
products, primarily within the Company's EMEA region. This decrease
was partially offset by higher net sales of Revlon-branded beauty
tool products.
Elizabeth Arden Segment
In North America, Elizabeth Arden segment net sales were $21.4
million in the first quarter of 2020, a decrease of 24.1% (or 23.4%
XFX) compared to the prior-year period, driven in large part by
lower net sales of Elizabeth Arden-branded skin care and color
cosmetics products, as well as Elizabeth Arden-branded fragrances
due in part to store closures resulting from COVID-19 containment
measures, partially offset by higher net sales of Elizabeth Arden
Visible Difference skin care products.
In International, Elizabeth Arden segment net sales of $73.8
million in the first quarter of 2020 decreased by 11.3% (or 8.5%
XFX) compared to the prior-year period, driven by lower net sales
of certain Elizabeth Arden-branded skin care products and color
cosmetics products and certain Elizabeth Arden-branded fragrances,
partially offset by higher net sales of Ceramide skin care products
primarily within the Company's Asia region.
Portfolio Segment
In North America, Portfolio segment net sales of $70.8 million
in the first quarter of 2020 increased by 1.0% compared to the
prior-year period, driven primarily by higher net sales of Mitchum
anti-perspirant deodorants and higher net sales of certain local
and regional brands, including Creme of Nature, and CND and Cutex
nail products. This increase was partially offset by lower net
sales of Almay color cosmetics and American Crew men's grooming
products.
In International, Portfolio segment net sales of $39.2 million
in the first quarter of 2020 decreased by 16.8% (or 12.3% XFX)
compared to the prior-year period, due to lower net sales of local
and regional brands and of American Crew men's grooming products
and CND nail products, primarily in the Company's EMEA region. This
decrease was partially offset by higher net sales of Mitchum
anti-perspirant deodorants.
Fragrances Segment
In North America, Fragrances segment net sales of $42.2 million
in the first quarter of 2020 decreased by 10.6% (or 10.6% XFX)
compared to the prior-year period, driven primarily by lower net
sales of certain licensed fragrances.
In International, Fragrances segment net sales of $23.8 million
in the first quarter of 2020 decreased by 20.9% (or 17.9% XFX)
compared to the prior-year period, driven primarily by the
segment's lower net sales of certain licensed fragrances.
Cash Flow
Net cash used in operating activities in the first three months
of 2020 was $77.6 million, compared to $28.4 million in the
prior-year period. The increase in cash usage was driven primarily
by lower net sales and unfavorable working capital changes. Free
cash flow(a) used in the first three months of 2020 was $79.4
million, compared to $34.2 million used in the prior-year period.
The increase in free cash flow usage was driven by higher operating
cash flow usage, partially offset by lower capital
expenditures.
Liquidity Update
As of March 31, 2020, the Company had approximately $121.0
million of available liquidity, consisting of $62.8 million of
unrestricted cash and cash equivalents, as well as $34.3 million in
available borrowing capacity under the Amended 2016 Revolving
Credit Facility (which had $341.5 million drawn as of such date)
and $30.0 million in available borrowing capacity under the Amended
2019 Senior Line of Credit (which was undrawn as of such date),
less float of $6.1 million.
On May 7, 2020, the Company entered into a new 5-year $880
million senior secured term loan facility. Net proceeds of the new
facility are approximately $516 million after estimated fees and
expenses and the retirement of the Company's $200 million 2019 Term
Loan Facility and $50 million of the Company's 5.75% Senior Notes.
Proceeds of this refinancing will be used for general corporate
purposes including funding working capital requirements. As of May
7, 2020, the Company had approximately $600 million of total
available liquidity.
First Quarter 2020
Results Conference Call
The Company will host a conference call with members of the
investment community today, May 11, 2020, at 8:30 A.M. EDT to
discuss its first quarter 2020 financial results. Access to the
call is available to the public at www.revloninc.com.
Footnotes to Press Release
(a) Non-GAAP Financial
Measures: EBITDA; Adjusted EBITDA; Adjusted net sales;
Adjusted operating loss/income; Adjusted net income/loss; Adjusted
gross profit; Adjusted gross profit margin; Adjusted diluted loss
per common share and free cash flow (together, the “Non-GAAP
Measures”) are non-GAAP financial measures. See the reconciliations
of such Non-GAAP Measures to their most directly comparable GAAP
measures in the accompanying financial tables, to the extent not
otherwise directly reconciled in the Company’s financial
results.
The Company defines EBITDA as income from continuing operations
before interest, taxes, depreciation, amortization, gains/losses on
foreign currency fluctuations, gains/losses on the early
extinguishment of debt and miscellaneous expenses (the foregoing
being the “EBITDA Exclusions”). The Company presents Adjusted
EBITDA to exclude the EBITDA Exclusions, as well as the impact of
non-cash stock-based compensation expense and certain other
non-operating items that are not directly attributable to the
Company's underlying operating performance (the “Non-Operating
Items”). The following table identifies the Non-Operating Items
excluded in the presentation of Adjusted EBITDA for all
periods:
(USD millions)
Q1 2020
Q1 2019
Income Adjustments to EBITDA
(Unaudited)
Non-Operating Items:
Non-cash stock-based compensation
expense
$
2.4
$
0.4
Restructuring and related charges
34.4
12.1
Acquisition, integration and divestiture
costs
2.1
0.6
Loss on divested assets
0.8
—
Financial control remediation actions and
related charges
2.1
2.0
Impairment charges
124.3
—
Excessive coupon redemption
4.2
—
COVID-19 charges
7.5
—
Adjusted net loss and adjusted diluted loss per common share
exclude the after-tax impact of the Non-Operating Items from As
Reported net loss.
The Company excludes the EBITDA Exclusions and Non-Operating
Items, as applicable, in calculating the Non-GAAP Measures because
the Company's management believes that some of these items may not
occur in certain periods, the amounts recognized can vary
significantly from period to period and/or these items do not
facilitate an understanding of the Company's underlying operating
performance.
Free cash flow is defined as net cash provided by/used in
operating activities, less capital expenditures for property, plant
and equipment. Free cash flow excludes proceeds on sale of
discontinued operations. Free cash flow does not represent the
residual cash flow available for discretionary expenditures, as it
excludes certain expenditures such as mandatory debt service
requirements, which for the Company are significant.
The Company's management uses the Non-GAAP Measures as operating
performance measures, and in the case of free cash flow, as a
liquidity measure (in conjunction with GAAP financial measures), as
an integral part of its reporting and planning processes and to,
among other things: (i) monitor and evaluate the performance of the
Company's business operations, financial performance and overall
liquidity; (ii) facilitate management's internal comparisons of the
Company's historical operating performance of its business
operations; (iii) facilitate management's external comparisons of
the results of its overall business to the historical operating
performance of other companies that may have different capital
structures and debt levels; (iv) review and assess the operating
performance of the Company's management team and, together with
other operational objectives, as a measure in evaluating employee
compensation, including bonuses and other incentive compensation;
(v) analyze and evaluate financial and strategic planning decisions
regarding future operating investments; and (vi) plan for and
prepare future annual operating budgets and determine appropriate
levels of operating investments.
Management believes that the Non-GAAP Measures are useful to
investors to provide them with disclosures of the Company's
operating results on the same basis as that used by management.
Management believes that the Non-GAAP Measures provide useful
information to investors about the performance of the Company's
overall business because such measures eliminate the effects of
certain charges that are not directly attributable to the Company's
underlying operating performance. Additionally, management believes
that providing the Non-GAAP Measures enhances the comparability for
investors in assessing the Company’s financial reporting.
Management believes that free cash flow is useful for investors
because it provides them with an important perspective on the cash
available for debt service and other strategic measures, after
making necessary capital investments in property and equipment to
support the Company's ongoing business operations, and provides
them with the same measures that management uses as the basis for
making resource allocation decisions.
Accordingly, the Company believes that the presentation of the
Non-GAAP Measures, when used in conjunction with GAAP financial
measures, are useful financial analytical measures that are used by
management, as described above, and therefore can assist investors
in assessing the Company's financial condition, operating
performance and underlying strength. The Non-GAAP Measures should
not be considered in isolation or as a substitute for their
respective most directly comparable As Reported financial measures
prepared in accordance with GAAP, such as net income/loss,
operating income/loss, diluted earnings/loss per share or net cash
provided by (used in) operating activities. Other companies may
define such non-GAAP measures differently. Also, while EBITDA and
Adjusted EBITDA, as used in this release, are defined differently
than Adjusted EBITDA for the Company's credit agreements and
indentures, certain financial covenants in its borrowing
arrangements are tied to similar financial measures. These non-GAAP
financial measures should be read in conjunction with the Company's
financial statements and related footnotes filed with the SEC.
(b) Segment profit is defined as income from continuing
operations for each of the Company's Revlon, Elizabeth Arden,
Portfolio and Fragrances segments, excluding the EBITDA Exclusions.
Segment profit also excludes the impact of certain items that are
not directly attributable to the segments' underlying operating
performance, including the impact of the Non-Operating Items noted
above in footnote (a). The Company does not have any material
inter-segment sales.
FORWARD-LOOKING
STATEMENTS
Statements made in this press release, which are not historical
facts, are forward-looking and are provided pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements speak only as of the date they
are made and the Company undertakes no obligation to publicly
update any forward-looking statement, whether to reflect actual
results of operations; changes in financial condition; changes in
general U.S. or international economic or industry conditions
and/or conditions in the Company’s reportable segments; changes in
estimates, expectations or assumptions; or other circumstances,
conditions, developments and/or events arising after the issuance
of this press release, except for the Company's ongoing obligations
under the U.S. federal securities laws. Forward-looking statements
are subject to known and unknown risks and uncertainties and are
based on preliminary or potentially inaccurate estimates and
assumptions that could cause actual results to differ materially
from those expected or implied by the estimated financial
information. Such forward-looking statements include, among other
things: (i) the Company’s belief that it has taken aggressive steps
to mitigate the effects of the ongoing global COVID-19 pandemic and
its belief that it will emerge well positioned to continue its
transformation and maintain its leadership position within the
beauty category; and (ii) the Company’s belief that with a
streamlined operation, lower costs and a stronger balance sheet, it
will be able to weather the pandemic crisis, continue to serve our
consumers and customers and drive value for all our stakeholders.
Actual results may differ materially from the Company's
forward-looking statements for a number of reasons, including as a
result of the risks and other items described in Revlon’s filings
with the SEC, including, without limitation, in Revlon’s Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K and amendments thereto, if any, filed with the
SEC during 2019 and 2020 (which may be viewed on the SEC’s website
at http://www.sec.gov or on Revlon, Inc.’s website at
http://www.revloninc.com). Additional important factors that could
cause actual results to differ materially from those indicated by
the Company’s forward-looking statements include: (i) difficulties,
delays or the inability of the Company to successfully mitigate the
effects of the ongoing global COVID-19 pandemic and emerge well
positioned to continue its transformation and maintain its
leadership position within the beauty category, such as due to the
Company’s business experiencing greater than anticipated
disruptions due to COVID-19 related uncertainty or other related
factors making it more difficult to maintain relationships with
employees, business partners or governmental entities and/or other
unanticipated circumstances, trends or events affecting the
Company’s financial performance, including decreased consumer
spending in response to the COVID-19 pandemic and related
conditions and restrictions, weaker than expected economic
conditions due to the COVID-19 pandemic and its related
restrictions and conditions continuing for periods longer than
currently estimated or COVID-19 expanding into more territories
than currently anticipated, or other weakness in the consumption of
beauty-related products, lower than expected acceptance of the
Company’s new products, adverse changes in foreign currency
exchange rates, decreased sales of the Company’s products as a
result of increased competitive activities by the Company’s
competitors and/or decreased performance by third party suppliers;
and/or (ii) difficulties, delays or the inability of the Company to
successfully weather the pandemic crisis, continue to serve its
consumers and customers and drive value for all the Company’s
stakeholders, such as due to, among other things, and/or
difficulties with, delays in or the Company’s inability to generate
certain reductions in its selling, general and/or administrative
expenses and/or eliminate certain positions and/or changes in the
timing of realizing such benefits and/or less than anticipated
annualized cost reductions from the Revlon 2020 Restructuring
Program and other cost reduction initiatives and/or changes in the
timing of realizing such cost reductions, and/or more than expected
costs to achieve the expected cost reductions. Factors other than
those referred to above could also cause Revlon’s results to differ
materially from expected results. Additionally, the business and
financial materials and any other statement or disclosure on, or
made available through, Revlon’s website or other websites
referenced herein shall not be incorporated by reference into this
press release.
REVLON, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS
(dollars in millions, except
share and per share amounts)
Three Months Ended
March 31,
2020
2019
(Unaudited)
Net sales
$
453.0
$
553.2
Cost of sales
197.8
237.8
Gross profit
255.2
315.4
Selling, general and administrative
expenses
289.4
332.6
Acquisition, integration and divestiture
costs
2.1
0.6
Restructuring charges and other, net
24.8
5.5
Impairment charges
124.3
—
Loss on divested assets
0.8
—
Operating loss
(186.2)
(23.3)
Other expenses:
Interest expense
48.4
47.7
Amortization of debt issuance costs
4.0
3.2
Foreign currency losses, net
16.6
0.2
Miscellaneous, net
(4.1)
1.3
Other expenses
64.9
52.4
Loss from continuing operations before
income taxes
(251.1)
(75.7)
(Benefit from) provision for income
taxes
(37.2)
0.1
Loss from continuing operations, net of
taxes
(213.9)
(75.8)
Income from discontinued operations, net
of taxes
—
0.7
Net loss
$
(213.9)
$
(75.1)
Other comprehensive (loss) income:
Foreign currency translation
adjustments
(5.2)
(1.3)
Amortization of pension related costs, net
of tax
2.5
2.2
Other comprehensive (loss) income, net
(2.7)
0.9
Total comprehensive loss
$
(216.6)
$
(74.2)
Basic and Diluted earnings (loss) per
common share:
Continuing operations
$
(4.02)
$
(1.43)
Discontinued operations
—
0.01
Net loss
$
(4.02)
$
(1.42)
Weighted average number of common shares
outstanding:
Basic
53,167,453
52,913,388
Diluted
53,167,453
52,913,388
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE
SHEETS
(dollars in millions)
March 31,
December 31,
2020
2019
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents
$
62.8
$
104.3
Trade receivables, net
326.5
423.4
Inventories
479.8
448.4
Prepaid expenses and other current
assets
169.8
135.3
Total current assets
1,038.9
1,111.4
Property, plant and equipment, net
383.1
408.6
Deferred income taxes
209.3
175.1
Goodwill
573.7
673.7
Intangible assets, net
456.6
490.7
Other assets
118.0
121.1
Total assets
$
2,779.6
$
2,980.6
LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
Current liabilities:
Short-term borrowings
$
2.9
$
2.2
Current portion of long-term debt
856.1
288.0
Accounts payable
253.3
251.8
Accrued expenses and other current
liabilities
374.1
414.9
Total current liabilities
1,486.4
956.9
Long-term debt
2,405.5
2,906.2
Long-term pension and other
post-retirement plan liabilities
174.9
181.2
Other long-term liabilities
148.6
157.5
Total stockholders' deficiency
(1,435.8)
(1,221.2)
Total liabilities and stockholders'
deficiency
$
2,779.6
$
2,980.6
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(dollars in millions)
Three Months Ended
March 31,
2020
2019
CASH FLOWS FROM OPERATING
ACTIVITIES:
(Unaudited)
Net loss
$
(213.9)
$
(75.1)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
36.8
47.0
Foreign currency losses from
re-measurement
16.6
0.2
Amortization of debt discount
0.4
0.4
Stock-based compensation amortization
2.4
0.4
Impairment charges
124.3
—
Benefit from deferred income taxes
(37.2)
(5.6)
Amortization of debt issuance costs
4.0
3.2
Loss on divested assets
0.8
—
Pension and other post-retirement cost
1.2
2.0
Change in assets and liabilities:
Decrease in trade receivables
84.6
52.4
Increase in inventories
(42.5)
(24.0)
(Increase) decrease in prepaid expenses
and other current assets
(23.3)
1.5
Increase in accounts payable
14.9
41.1
Decrease in accrued expenses and other
current liabilities
(34.8)
(66.7)
Pension and other post-retirement plan
contributions
(3.6)
(1.8)
Purchases of permanent displays
(7.0)
(9.7)
Other, net
(1.3)
6.3
Net cash used in operating activities
(77.6)
(28.4)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures
(1.8)
(5.8)
Net cash used in investing activities
(1.8)
(5.8)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net decrease in short-term borrowings and
overdraft
(6.4)
(17.2)
Net borrowings under the Amended 2016
Revolving Credit Facility
69.1
40.6
Repayments under the 2016 Term Loan
Facility
(4.5)
(4.5)
Payment of financing costs
(0.3)
(0.9)
Tax withholdings related to net share
settlements of restricted stock and RSUs
(0.4)
(1.6)
Other financing activities
(0.1)
(0.2)
Net cash provided by financing
activities
57.4
16.2
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(3.3)
0.3
Net decrease in cash, cash equivalents and
restricted cash
(25.3)
(17.7)
Cash, cash equivalents and restricted cash
at beginning of period
104.5
87.5
Cash, cash equivalents and restricted cash
at end of period
$
79.2
$
69.8
Supplemental schedule of cash flow
information:
Cash paid during the period for:
Interest
$
62.9
$
61.3
Income taxes, net of refunds
1.0
0.4
REVLON, INC. AND
SUBSIDIARIES
EBITDA AND ADJUSTED EBITDA
RECONCILIATION
(dollars in millions)
Three Months Ended
March 31,
2020
2019
(Unaudited)
Reconciliation to net loss:
Net loss
$
(213.9)
$
(75.1)
Income from discontinued operations, net
of taxes
—
0.7
Loss from continuing operations, net of
taxes
(213.9)
(75.8)
Interest expense, net
48.4
47.7
Amortization of debt issuance costs
4.0
3.2
Foreign currency losses, net
16.6
0.2
(Benefit from) provision for income
taxes
(37.2)
0.1
Depreciation and amortization
36.8
47.0
Miscellaneous, net
(4.1)
1.3
EBITDA
$
(149.4)
$
23.7
Non-operating items:
Non-cash stock-based compensation
expense
2.4
0.4
Restructuring and related charges
34.4
12.1
Acquisition, integration and divestiture
costs
2.1
0.6
Loss on divested assets
0.8
—
Financial control remediation actions and
related charges
2.1
2.0
Impairment charges
124.3
—
Excessive coupon redemption
4.2
—
COVID-19 charges
7.5
—
Adjusted EBITDA
$
28.4
$
38.8
REVLON, INC. AND SUBSIDIARIES
SEGMENT PROFIT, ADJUSTED
EBITDA AND ADJUSTED OPERATING LOSS RECONCILIATION
(dollars in millions)
Three Months Ended
March 31,
2020
2019
(Unaudited)
Segment Profit:
Revlon
$
15.6
$
25.6
Elizabeth Arden
4.2
1.9
Portfolio
7.2
4.5
Fragrances
1.4
6.8
Total Segment Profit/Adjusted EBITDA
$
28.4
$
38.8
Reconciliation to loss from continuing
operations before income taxes:
Loss from continuing operations before
income taxes
$
(251.1)
$
(75.7)
Interest expense
48.4
47.7
Amortization of debt issuance costs
4.0
3.2
Foreign currency losses, net
16.6
0.2
Miscellaneous, net
(4.1)
1.3
Operating loss
(186.2)
(23.3)
Non-operating items:
Restructuring and related charges
34.4
12.1
Acquisition, integration and divestiture
costs
2.1
0.6
Loss on divested assets
0.8
—
Financial control remediation actions and
related charges
2.1
2.0
Impairment charge
124.3
—
Excessive coupon redemption
4.2
—
COVID-19 charges
7.5
—
Adjusted Operating loss
(10.8)
(8.6)
Non-cash stock-based compensation
expense
2.4
0.4
Depreciation and amortization
36.8
47.0
Adjusted EBITDA
$
28.4
$
38.8
REVLON, INC. AND SUBSIDIARIES
ADJUSTED NET SALES
RECONCILIATION
(dollars in millions)
Three Months Ended
March 31,
2020
2019
(Unaudited)
Segment Net Sales
Revlon
$
181.8
$
247.3
Elizabeth Arden
95.2
111.4
Portfolio
110.0
117.2
Fragrances
66.0
77.3
Total Segment Net Sales
$
453.0
$
553.2
Non-operating items:
Excessive coupon redemption
4.2
—
Total Adjusted Net Sales
$
457.2
$
553.2
REVLON, INC. AND SUBSIDIARIES
ADJUSTED GROSS PROFIT
RECONCILIATION
(dollars in millions)
Three Months Ended
March 31,
2020
2019
(Unaudited)
Gross Profit
$
255.2
$
315.4
Non-operating items:
COVID-19 charges
5.1
—
Excessive coupon redemption
4.2
—
Adjusted Gross Profit
$
264.5
$
315.4
REVLON, INC. AND SUBSIDIARIES
ADJUSTED NET INCOME (LOSS) AND
ADJUSTED DILUTED INCOME (LOSS) PER SHARE RECONCILIATION
(dollars in millions, except
share and per share amounts)
Three Months Ended
March 31,
2020
2019
(Unaudited)
Reconciliation to net loss and diluted
loss per share:
Net loss
$
(213.9)
$
(75.1)
Non-operating items (after-tax):
Restructuring and related charges
26.2
9.5
Acquisition, integration and divestiture
costs
1.6
0.5
Loss on divested assets
0.6
—
Financial control remediation actions and
related charges
1.6
1.5
Impairment charges
110.9
—
Excessive coupon redemption
3.2
—
COVID-19 charges
5.7
—
Adjusted net loss
$
(64.1)
$
(63.6)
Net loss:
Diluted loss per common share
(4.02)
(1.42)
Adjustment to diluted loss per common
share
2.81
0.22
Adjusted diluted loss per common share
$
(1.21)
$
(1.20)
U.S. GAAP weighted average number of
common shares outstanding:
Diluted
53,167,453
52,913,388
REVLON, INC. AND SUBSIDIARIES
FREE CASH FLOW
RECONCILIATION
(dollars in millions)
Three Months Ended
March 31,
2020
2019
(Unaudited)
Reconciliation to net cash used in
operating activities:
Net cash used in operating activities
$
(77.6)
$
(28.4)
Less capital expenditures
(1.8)
(5.8)
Free cash flow
$
(79.4)
$
(34.2)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200511005205/en/
Investor Relations: 212-527-4040 or
Eric.warren@revlon.com
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