Elizabeth Arden
(Company Red Door Logo)
FOR IMMEDIATE RELEASE
ELIZABETH ARDEN, INC. REPORTS STRONG FOURTH QUARTER AND YEAR END RESULTS
AND PROVIDES GUIDANCE FOR FISCAL 2004
~ Better Than Expected Top Line Growth; Net Sales Up 12.5% for the Year;
18% for the Quarter ~
~ Fiscal 2003 EPS of $0.78; Ahead of Estimates ~
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New York, New York (March 19, 2003) - Elizabeth Arden, Inc. (NASDAQ:
RDEN), a leading global prestige fragrance and beauty products company, today
reported a 12.5% increase in net sales for fiscal 2003 to $752.0 million. On a
constant currency basis, net sales increased 11%. Earnings per diluted share
advanced to $0.78 versus a loss of $(1.92) per share in fiscal 2002.
FISCAL 2003 RESULTS
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Net sales for the year ended January 31, 2003 increased 12.5% to $752.0
million as compared to $668.1 million in fiscal 2002. Significant sales
growth with the Company's mass retail customers, driven by the Company's
"open-sell" program, new fragrance brands launched in U.S. department store
accounts and internationally, and the positive impact of increased advertising
and promotional activity, particularly its "Open for Beauty" campaign
featuring Catherine Zeta-Jones, fueled top line growth. The Company's
international business grew considerably, led by the strength of the new
Elizabeth Arden fragrance launch, ardenbeauty, and the rebound in the
Company's travel retail business. Selling, general and administrative expenses
decreased as a percentage of net sales to 28.8% or $216.5 million, compared
with 31.3% or $208.9 million in the prior year, despite a 25% increase in
advertising.
EBITDA (earnings before interest, taxes, depreciation, and amortization)
increased by approximately 150% to $90.9 million, compared with EBITDA of
$36.4 million for fiscal 2002 and cash flow from operations was $26.3 million,
compared to $8.7 million in the prior year. Capital expenditures totaled $9.7
million, which was lower than planned. After accounting for the unusual items
that impacted the prior year's results, this year's EBITDA increase reflects
the higher sales activity, lower distribution expenses and reduced overhead
costs, offset by the increased spending on advertising and promotion to
support existing and new products.
Net income before preferred dividends for the full fiscal year was $18.2
million, compared to a loss of $(29.8) million for the prior year. Net income
attributable to common shareholders for the fiscal year increased to $14.5
million, or $0.78 per fully diluted share, compared to a net loss of $(33.3)
million, or a loss of $(1.92) per share in the previous year. Earnings were
positively impacted by a decrease in interest expense due to reduced
borrowings and lower interest rates as well as a lower than planned effective
tax rate.
E. Scott Beattie, Chairman and Chief Executive Officer of Elizabeth
Arden, Inc., commented, "We are very pleased with our performance and all of
our accomplishments this year. Our significant improvement in profitability,
despite a challenging retail environment, demonstrates the success of our
'follow the consumer' strategy. We significantly grew our business with our
mass retail customers, which continue to be the fastest growing segment of the
prestige fragrance market. We experienced double digit sales growth with
several of our key retailers, and continued to build market share and
strengthen our retail relationships. Wal-Mart, for example, awarded Elizabeth
Arden the 'Supplier Award of Excellence' for the fourth quarter of 2002 in the
cosmetics, fragrance, skin care and bath and body category, a multi-billion
dollar category. Our 'open-sell' program, currently in over 4,500 doors,
continues to be successful and we plan to increase that program by an
additional 1,500 doors this year. We also expanded our Designer Collectibles
program to over 18,500 doors. This program allows retailers the opportunity to
offer half ounce and travel size prestige fragrances at affordable price
points on an 'open-sell' basis."
The Company's results also reflect the benefits of restructuring
initiatives implemented earlier in the year to reduce overhead costs and
increase productivity. In particular, the Company consolidated distribution
facilities from three facilities into two and re-balanced volumes more
efficiently between its two remaining facilities, migrated various services,
previously provided by Unilever, in-house or to lower cost providers,
restructured its U.S. department store business and consolidated its financial
information systems into a single enterprise application. In addition, the
Company merged its mid-tier and prestige department store fragrance sales
forces into a single unit. This is expected to improve the productivity of
its sales forces and positively impact profitability. The Company expects to
absorb any associated costs in the first half of the year, with the benefits
impacting results in the second half of the year.
FOURTH QUARTER RESULTS
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For the fourth quarter, net sales increased 18% to $169.8 million from
$144.2 million in the fourth quarter of fiscal 2002. EBITDA for the quarter
increased to $14.4 million compared to a loss of $(3.6) million in the prior
year period. The net loss attributable to common shareholders was $(440,000),
or a loss of $(0.02) per share versus a loss of $(20.1) million, or a loss of
$(1.14) per share in the prior year period.
Paul West, President and Chief Operating Officer added, "Our
accomplishments also reflect the tremendous success of building and promoting
the Elizabeth Arden brand and in creating consumer excitement globally. In
addition, for the tenth consecutive year, Elizabeth Taylor's White Diamonds
maintained its number one ranking in the mass and mid-tier retail channels and
ranked number five in the department store fragrance bar. As a result of these
successes, we intend to increase our advertising in fiscal 2004 to support and
promote our core product franchises. Our plans for this year include new
fragrance launches, a re-launch globally of our Elizabeth Arden green tea
fragrance and several new skin care and color brands, including the recently
launched First Defense skin care line. It is important to note that on a
comparable store basis to reflect closed department store doors, our skin care
and color businesses were up, as were our fragrance franchises across all
channels. I am also very proud of what we have accomplished internationally.
We achieved double digit year-over-year sales increases in several of our
international markets, leveraging our advertising campaign and the successful
launch of ardenbeauty."
During fiscal 2003, the Company's balance sheet continued to improve. As
previously announced, due to its improved financial and operating performance,
the Company was able to amend its credit facility to provide for substantially
better terms, including a reduction in interest costs, the elimination of
certain financial covenants and the ability to use its expanded borrowing
capacity to reduce high cost debt. The Company has retired $10.7 million of
its senior notes, of which $5.5 million were repurchased in fiscal 2003 and
$5.2 million in fiscal 2004. As of January 31, 2003, short-term borrowings
under the Company's senior credit facility were $2.1 million, and the Company
had cash and cash equivalents of $22.7 million. Availability under the credit
facility at fiscal year end was $113 million versus $80 million as of January
31, 2002. Shareholders' equity increased 18% to $131.8 million as compared to
$111.9 million at the end of the prior fiscal year.
FISCAL 2004 OUTLOOK
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The Company's guidance for fiscal 2004 assumes some degree of economic
uncertainty and caution due to the challenging retail environment in the U.S.
Uncertain geopolitical events could, however, negatively impact the Company's
performance. Based on current visibility, the Company estimates a 5% to 7%
increase in net sales for the fiscal year ending January 31, 2004, assuming no
impact for changes in exchange rates. Cash flow from operations is estimated
to range between $40 million and $50 million for the year. Diluted earnings
per share are estimated to increase by approximately 20% to 25% over the prior
fiscal year. With respect to the first half of the fiscal year, the Company
estimates a 5% to 7% increase in net sales. The Company estimates the loss per
share, before giving effect to the anticipated tax benefit, to be in line with
the results of the first half of the prior year, as the Company's increased
advertising and promotional costs to support the Elizabeth Arden brands are
spread over the seasonally slow first and second quarters. The Company
anticipates a long-term top line growth rate of 4% to 6% and an EPS growth
rate in excess of 20% per year.
CONFERENCE CALL INFORMATION
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The Company will host a conference call today at 10:00 a.m. Eastern Time
to discuss fourth quarter and fiscal year-end results as well as its outlook
for fiscal year 2004. All interested parties can listen to a live web cast of
the Company's conference call by logging on to the Company's web site at
www.elizabetharden.com. An online archive of the broadcast will be available
within one hour of the completion of the call and will be accessible on either
the Company's web site at www.elizabetharden.com or at
www.firstcallevents.com/service/ajwz375472659gf12.html until March 26, 2003.
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 Eight Hour Cream; and the Elizabeth Arden cosmetics
line.
Company Contact: Marcey Becker, Senior Vice President, Finance
(203) 462-5809
Investor Contact: Cara O'Brien/Athan Dounis
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). 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; 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, including a possible war in Iraq; 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
(In thousands, except percentages and per share data)
Three Months Ended Year Ended
January 31, January 31, January 31, January 31,
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net Sales $169,759 $144,200 $752,041 $668,097
Cost of Sales 102,276 97,528 444,628 422,705
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Gross Profit 67,483 46,672 307,413 245,392
Gross Profit
Percentage (a) 39.8% 32.4% 40.9% 36.7%
Selling, General and
Administrative
Expenses 53,089 50,276 216,504 208,944
Depreciation and
Amortization 5,419 7,766 22,700 30,585
-------- -------- -------- --------
Total Operating
Expenses 58,508 58,042 239,204 239,529
Interest Expense, Net (10,754) (10,564) (43,075) (44,763)
Other (Expense) Income (144) 175 75 49
(Loss) Income Before
Income Taxes (1,923) (21,759) 25,209 (38,851)
(Benefit from)
Provision for Income
Taxes (2,396) (2,598) 7,059 (9,014)
-------- -------- -------- --------
Net Income (Loss) 473 (19,161) 18,150 (29,837)
Accretion and Dividend
on Preferred Stock 913 938 3,653 3,438
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Net (Loss) Income
Attributable to Common
Shareholders $ (440) $(20,099) $ 14,497 $(33,275)
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Basic (Loss) Earnings
Per Share $ (0.02) $ (1.14) $ 0.82 $ (1.92)
Diluted (Loss) Earnings
Per Share $ (0.02) $ (1.14) $ 0.78 $ (1.92)
Basic Shares 17,829 17,663 17,757 17,309
Diluted Shares 23,350 22,767 23,200 22,975
EBITDA $ 14,394 $ (3,604) $ 90,909 $ 36,448
EBITDA Percentage (a) 8.5% (2.5)% 12.1% 5.5%
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(a) Based on the percentages of net sales for the periods.
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ELIZABETH ARDEN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET DATA
(In thousands)
------------As of-----------
January 31, January 31,
2003 2002
----------- -----------
Cash $ 22,663 $ 15,913
Accounts Receivable, Net 118,844 79,720
Inventories 200,876 192,736
Property and Equipment, Net 36,216 38,268
Brand Licenses and Trademarks, Net 205,534 212,011
Total Assets 627,620 596,765
Short-Term Debt 2,068 7,700
Current Liabilities 150,833 138,421
Long-Term Liabilities 329,309 334,430
Total Debt 322,397 336,133
Preferred Stock 15,634 11,980
Shareholders' Equity 131,844 111,934
Working Capital 216,461 190,290
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