Elizabeth Arden
(Company Red Door Logo)
** FOR IMMEDIATE RELEASE **
ELIZABETH ARDEN, INC. REPORTS THIRD QUARTER RESULTS
* EPS up 11% to $1.64; Above Expectations *
* Company's Net Sales Up 10% *
* EBITDA Up 8%; In-Line with Prior Guidance *
Miami, Florida (December 4, 2002) - Elizabeth Arden, Inc. (NASDAQ: RDEN),
a leading global prestige fragrance and beauty products company, today
reported its third consecutive quarter of significantly improved financial
results for fiscal 2003.
THIRD QUARTER RESULTS
Net sales increased 10% to $314.8 million compared with $286.2 million in
the third quarter of fiscal 2002. Sales growth was driven by continued
strength of the "open-sell" program with certain retailers, which was expanded
during the year to include significantly more doors. Also contributing to top
line growth are the Company's newly launched fragrances, ardenbeauty and
Forever Elizabeth, as well as the addition of certain popular distribution
brands. Finally, the Company's travel retail business continues to recover,
with solid sales increases as compared to the prior year period. The net
sales increase was partially offset by weak sales across the beauty category
in U.S. department stores and fewer U.S. prestige department store doors.
Gross profit increased 14.7% to $137.1 million, for a gross margin of 44%,
compared with gross profit of $119.5 million, for a gross margin of 42%, in
the prior year period. The gross margin improvement is a result of higher
margins on new products, a reduction in the effect of the "high cost"
Elizabeth Arden inventory which impacted fiscal 2002 results and certain
supply chain efficiencies, partially offset by increased sales of certain
distributed brands. Selling, general and administrative expenses increased to
$61.5 million, or 20% of net sales, compared with $49.3 million, or 17% of net
sales, for the same period last year, reflecting increased spending in
advertising and promotion to support the Elizabeth Arden "Open for Beauty"
campaign with Catherine Zeta Jones and our fragrance launches.
EBITDA (earnings before interest, taxes, depreciation, and amortization)
for the third quarter was $75.5 million, in-line with the Company's previously
provided guidance for the quarter and higher than EBITDA of $70.1 million in
the third quarter of fiscal 2002. Net income attributable to common
shareholders increased 13% to $36.8 million ($1.64 per diluted share),
compared with $32.6 million ($1.48 per diluted share) for the same period last
year, exceeding the analysts' consensus estimate of $1.58 per diluted share.
As of October 26, 2002, inventories were $199.7 million, below the prior
fiscal year's level of $214.1 million, reflecting improved working capital
efficiencies. Short-term borrowings totaled $125.0 million at the
end of the third quarter, compared to $133.6 million at the end of the third
quarter of the prior fiscal year, with approximately $50 million of
availability under the Company's revolving credit facility.
NINE MONTHS RESULTS
Net sales for the first nine months of fiscal 2003 increased 11% to
$582.3 million compared with $523.9 million for the same period of the prior
fiscal year. Gross profit increased 21% to $239.7 million, for a gross margin
of 41%, compared with a gross profit of $198.7 million, for a gross margin of
38%, in the prior year period. Selling, general and administrative expenses
were $163.2 million, or 28% of net sales, compared with $158.7 million, or 30%
of net sales, for the same period last year. EBITDA for the nine month period
increased to $76.5 million, a $36.5 million increase over EBITDA of $40.1
million for the same period last year.
E. Scott Beattie, Chairman, President and Chief Executive Officer of
Elizabeth Arden, Inc., commented, "We are pleased with the momentum in our
business and the consistent positive performance year to date, despite the
continuing challenges regarding consumer sentiment and unsettled world
conditions. The ability to achieve a 90% increase in EBITDA year-to-date over
last year in this difficult retail environment demonstrates the benefits of
fully integrating the Elizabeth Arden business and the strength of our
business model. Our results also reflect a tremendous effort by our
management team globally to re-position our business and focus on improving
profitability across all business units. Further, we have continued to improve
our balance sheet by reducing seasonal debt levels and working capital
requirements despite an 11% increase in net sales."
Mr. Beattie added, "We also continue to make significant strides in our
brand building efforts. During the third quarter we launched our 'Open for
Beauty' campaign featuring our corporate spokesperson, Catherine Zeta Jones,
and last month we began television advertising for our new Elizabeth Taylor
fragrance, Forever Elizabeth. We are pleased with the performance of our new
fragrances, as well as with the initial success of our marketing programs, and
believe they will continue to enhance the image and recognition of the
Elizabeth Arden and Elizabeth Taylor brands."
OUTLOOK FOR FISCAL 2003
With respect to the remainder of fiscal 2003, the Company still expects
to achieve net sales and EBITDA within its previously provided guidance but at
the lower end of the range provided, reflecting the ongoing weakness in the
global economy and challenging retail environment. The Company estimates net
sales of approximately $735 million to $745 million and EBITDA of
approximately $95 million to $100 million for the full year.
Elizabeth Arden is a leading global prestige fragrance and beauty
products company. The Company's portfolio of leading brands includes the
fragrance brands Red Door, Elizabeth Arden green tea, 5th Avenue, ardenbeauty,
Elizabeth Taylor's White Diamonds, Passion and Forever Elizabeth, White
Shoulders, Geoffrey Beene's Grey Flannel, Halston, Halston Z-14, Unbound, PS
Fine Cologne for Men, Design and Wings; the Elizabeth Arden skin care line,
including Ceramides and Millenium; and the Elizabeth Arden cosmetics line.
Company Contact: Marcey Becker, Senior Vice President, Finance
(203) 462-5809
Investor Contact: Cara O'Brien/Priya Akhoury
FD Morgen-Walke Associates
(212) 850-5600
Press Contact: Laura Novak
FD Morgen-Walke Associates
(212) 850-5600
In connection with the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995, Elizabeth Arden, Inc., is hereby providing
cautionary statements identifying important factors that could cause our
actual results to differ materially from those projected in forward-looking
statements (as defined in such act) made in this Quarterly Report on Form 10-
Q. Any statements that express, or involve discussions as to, expectations,
beliefs, plans, objectives, assumptions or future events or performance
(often, but not always, through the use of words or phrases such as "will
likely result," "are expected to," "will continue," "is anticipated,"
"estimated," "intends," "plans" and "projection") are not historical facts and
may be forward-looking and may involve estimates and uncertainties which could
cause actual results to differ materially from those expressed in the forward-
looking statements. Accordingly, any such statements are qualified in their
entirety by reference to, and are accompanied by, the following key factors
that have a direct bearing on our results of operations: our substantial
indebtedness and debt service obligations; our ability to successfully and
cost-effectively integrate acquired businesses or new brands; our absence of
contracts with customers or suppliers and our ability to maintain and develop
relationships with customers and suppliers; international and domestic
economic and business changes that could impact consumer confidence, our
customers' financial condition, our ability to access capital for acquisitions
and the assumptions underlying our critical accounting estimates; the
retention and availability of key personnel; changes in the retail, fragrance
and cosmetic industries; our ability to launch new products and implement our
growth strategy; the impact of competitive products and pricing; changes in
product mix to less profitable products; risks of international operations,
including foreign currency fluctuations; economic and political consequences
of terrorist attacks and political instability in certain regions of the
world; delays in shipments, inventory shortages and higher costs of production
due to interruption of operations at key manufacturing or fulfillment
facilities that, after consolidations of manufacturing and fulfillment
locations, manufacture or provide logistic services for the majority of our
supply of certain products; changes in the legal, regulatory and political
environment that impact, or will impact, our business, including changes to
customs or trade regulations or accounting standards; legal and regulatory
proceedings that affect, or will affect, our business; and other risks and
uncertainties. We caution that the factors described herein could cause actual
results to differ materially from those expressed in any forward-looking
statements we make and that investors should not place undue reliance on any
such forward-looking statements. Further, any forward-looking statement
speaks only as of the date on which such statement is made, and we undertake
no obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or to reflect the
occurrence of anticipated or unanticipated events or circumstances. New
factors emerge from time to time, and it is not possible for us to predict all
of such factors. Further, we cannot assess the impact of each such factor on
our results of operations or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.
(Financial Tables To Follow)
ELIZABETH ARDEN, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT DATA
(Unaudited)
(In thousands, except percentages and per share data)
Three Months Ended Nine Months Ended
October 26, October 27, October 26, October 27,
2002 2001 2002 2001
----------- ----------- ---------- -----------
Net Sales $314,807 $286,202 $582,277 $523,897
Cost of Sales 177,738 166,737 342,577 325,177
-------- -------- -------- --------
Gross Profit 137,069 119,465 239,700 198,720
Gross Profit Percentage (a) 43.5% 41.7% 41.2% 37.9%
Selling, General and
Administrative Expenses 61,537 49,325 163,196 158,668
Depreciation and
Amortization 5,874 7,683 17,280 22,819
-------- -------- -------- --------
Total Operating Expenses 67,411 57,008 180,476 181,487
Interest Expense, Net (11,265) (11,622) (32,321) (34,303)
Other Income (Expense) 77 (50) 218 (22)
Income (Loss) Before
Income Taxes 58,470 50,785 27,121 (17,092)
Provision for (benefit from)
Income Taxes 20,738 17,340 9,455 (6,416)
-------- -------- -------- --------
Net Income (Loss) 37,732 33,445 17,666 (10,676)
Accretion and Dividend on
Preferred Stock 913 833 2,740 2,500
-------- -------- -------- --------
Net Income (Loss)
Attributable to
Common Shareholders $ 36,819 $ 32,612 $ 14,926 $(13,176)
======== ======== ======== ========
Basic Earnings (Loss)
Per Share $ 2.07 $ 1.85 $ 0.84 $ (0.77)
Diluted Earnings (Loss)
Per Share $ 1.64 $ 1.48 $ 0.77 $ (0.77)
Basic Shares 17,765 17,617 17,733 17,187
Diluted Shares 22,980 22,538 23,040 22,855
EBITDA $ 75,532 $ 70,140 $ 76,504 $ 40,052
EBITDA Percentage (a) 24.0% 24.5% 13.1% 7.6%
- -----------------------------------------------------------
(a) Based on the percentages of net sales for the periods.
-4-
ELIZABETH ARDEN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET DATA
(Unaudited except January 31, 2002)
(In thousands)
---------------- As of -----------------
October 26, January 31, October 27,
2002 2002 2001
---------- ----------- -----------
Cash $ 14,347 $ 15,913 $ 44,737
Accounts Receivable, Net 285,367 79,720 230,391
Inventories 199,702 192,736 214,121
Property and Equipment, Net 35,843 38,268 38,676
Brand Licenses and
Trademarks, Net 204,773 212,011 216,023
Total Assets 791,198 596,765 799,143
Short-Term Debt 125,000 7,700 133,592
Current Liabilities 312,557 138,421 328,486
Long-Term Liabilities 333,741 334,430 326,263
Total Debt 450,962 336,133 462,168
Preferred Stock 14,720 11,980 11,041
Shareholders' Equity 130,180 111,934 133,352
Working Capital 218,618 190,290 192,401
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