AVP - Earnings call transcript Q1 2019

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Operator

Greetings, and welcome to Avon's First Quarter Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. The company will use slides to support today's prepared remarks. The slides will be visible via the webcast available on the company's Investor Relations website. the the be call. of the available PDF of end downloadable presentation made will at A

be in call although During website. statement which cautionary reference superior GAAP. measures, to concern These A certain now call to are the non-GAAP to I the today, conference. and begin in financial also which the the statements The measures Amy they accordance be and should filings. Stakeholder Investor company's not to over they strategies. company the the presented will in may website useful available considered will the investors, turn conference that in with contain forward-looking reconciliation financial Vice Ms. is in appendix on SEC the webcast and uncertainties, Relations will included the President Greene, are non-GAAP of earnings your Investor Relations. of detailed measures Both the their to today's and the statements involve financial company's these Relations of in slides of comparable measures Investor you release. company's the company's and GAAP section Greene, this risks on located business and believe company's

Amy Greene

will then the this will our to through morning's and hand us to Gustavo and will results. quarter we Q&A Miguel move I to morning, call now and you thank Avon's Avon's President. Jan, Avon's Avon's session. take Fernandez, Global you for our here CFO; Jan. and X agenda. first quarter Arnal, Good XXXX with Gustavo review joining progress a I'm CEO; Zijderveld, results, Jan over Slide has first and Miguel

Jan Zijderveld

today. for joining Good Amy. and morning, Thanks, us everyone, thanks

representatives. Gustavo will quarter in with new And September year. an our I results with Then last update strategy close and on on update we Open give Miguel We Arnal. financial an that our our X markets Up launched update will will start on from an CFO,

key some to to I over Gustavo, hand points. I want reiterate Before

Moving to Slide X.

Our all unchanged, quarter, repeatable with progress models with strategic year our Many and and It with Day is areas at our that core, and and remains and showing our the focus our both are against making generation. And restoring the new chart revenue, Investor to pleased three of progress margins our improved familiar clear strategy. execution in the cash stem driving our the speed. we out to it. our left growth. drive Avon performance value we're new return Up are a and breakouts, you Open and starts step shareholder culture with our and laid up September, executing last the we first strategy of made stabilize deliver is competitiveness In on steady in deploying decline of to we XXXX financially

improvements we total good Although continuing however, areas, many and in Brazil underlying Russia. especially we is down, performance Mexico; deteriorate revenue in the in did better see trends in

on improved representative are focusing We productivity.

have headcounts. mix reduced stepped pricing management significantly up and and our We and cost

you our right, of the the On formula. see Avon outline

business selling, and and it making our We're direct for on it to generations. to money make her with more building are We reboot scaled trend to of the brands, with by repeatable demand earn do value the models innovation next easier strengthening creating us. attracting

our available digital We and training. we representatives' and that with anytime anywhere. is Avon are tools And e-commerce digitizing digital unlocking experience so are

women. that and our and proud to of We to her be that lives and improve purpose empower initiatives continue are projects important people's very to promote

to welcome and to our Gustavo. results. to having now me hand I I minute over, team. pleased A cover financial great he's Before our that CFO, will very joint new introduce warm hand take him Gustavo. over to us a let I'm joining our to

Gustavo Arnal

call. Thank in you, Jan. It's great this be to

the on not the day first want to to with my job, was opportunity you yesterday miss I today. speak did While

I beginning an management I business. am few learning and the can looking with the Up start and weeks, work was form strategy. During to creation. shareholder closely Jan to the forward opinion to able to team help continue of the I accelerate onboarding driving am value turnaround past where I Open

Now on share perspective some the for the I will results quarter.

comparisons reminder, results. a no of for adopted. adjusted standard the revenue in non-GAAP The starting As there a information. and need pages X, XXXX, is recognition January new and presentation like-for-like a year behind, this With longer was revenue use constant history

For Avon's and the adjusted information non-GAAP find your of of on providing convenience, reconciliation table the in can a the website. also you reported and appendix this presentation

Slide to Turning X.

key start by cash. me Let and margin financial sharing three revenue, highlights metrics: on

were were quarter segments: in Asia Europe, Pacific, steep constant offset Africa. North the there some First for X Middle in signs XXXX. line Revenues above from in the Yet last plan X.X%. decline segments of X a America, Latin year geographical Latin but stabilization reportable for and or East by declined of South currency and America were revenue and

overall savings cost delivered even if quarters. be Plans margin first Looking will some basis operating driven at This expansion years was on impacts. margin. pricing, the mix by it last initiatives across was remain positive a and unfavorable track is behind adjusted year. QX. in with XX expansion was It time fuel-for-growth the versus a there healthy in despite There points and FX variation for trend XXXX, in

In business. cash than million out. QX $XXX $X terms key QX flow of is minus was year, the cash quarter typically last of due worth Overall, seasonality few with free better calling million the cash, of negative a to drivers a

activities. investments restructuring First, transformational implement there additional were to

due be Second, to QX QX. during a there started corrected which payables transition, during vendor was processing backlog to a of

China selling facility. the Third, benefit manufacturing the from

generate positive flow been full XXXX. cash the expect upcoming the being has to historically, with As we quarters, in above year

revolving approximately increase unused. During remains is is million cycle. into the XXX liquidity EUR progress the yearly credit facility as and entered expected million was quarter, Current a $XXX and to we

X. Slide to Moving

delivered dollar we the geographical constant quarter, revenue growth first segments. of X the during mentioned, in As X

double-digit driven Latin and and Philippines X%, Asia growth the Pacific North China. grew, in grew America by Mexico. driven nearly by

in America by a offset a and Jan Latin Russia. Argentina, softening was slower speak with being in significant double-digit in by pricing, Miguel partially growth this. were by more decline Brazil. driven South EMEA will slightly Result disappointing, positive about in fueled

revenue Looking at drivers.

year-over-year, sales Representatives the were X% an momentum, traction showed during X%. down to with Active average up in positive execution representative price/mix While pricing Further, gain continues quarter. improvement

our investing help We management, on to and will in growth experience continue to their to improve revenue more. focus them earn while representatives

Moving to X. Slide

the Looking the past geographical we made. over five sense gives trends at the by a revenue for progress segment quarters

small region engagement. the stabilized positive growth SOLA importantly, and time, opportunity momentum footprint. the in brand which for competition in Brazil, sales this movement. of to Russia, driven some EMEA Philippines by Avon same toiletries and we trends which results and And in face momentum At yet, despite despite Mexico, challenges driven recognition, continues weaker in While to that to the growth are predominantly behind a a stemming growth was is continue declining be with it's headwinds. macro declines. pricing the seems grow, in leader fragrance. market, and we yet have economical a significant strong and are positive market largest Argentina there beauty not see contains our competitive in increased APAC, by NOLA, has illustrates that tremendous smooth directional We as market is the believe signs China. of In there landscape

despite for Adjusted delivered Moving positive again, several improvement of And to for years pricing mix is significant savings. Slide drive. margin XX. is first on the XXXX. key cost combination operating focus was and it time Delivering QX margin expansion with category in a a in improved coupled FX

As large we cost markets, her particularly price the we is out, and in in will with Strengthening our relationship and to imperative. improve in our continue to take invest representatives representatives, marketing experience.

and promotional mix more favorable points, largely countries. Savings basis by and $XX improved our continue more more XXXX. credit and growth, lower. through FX headcount fuel-for-growth Moving talk we debt, mix expect an million to efforts cycle some These improvements due more bad savings in improvements tighter effort QX. fuel-for-growth adjusted categories. basis the initiative margin of XX. points, savings savings from were costs to lower managing of to savings largely reductions impacting to more by in we Pricing pressure throughout the devaluation through due Brazil, as than were Other effective and which XXX disciplined margin implementation Slide from This continued Adjusted came initiative. continue during from revenue the Argentina were Total in shortly. about ongoing operating in actions. and from XX% is incentives in I XX currency will discounts, SG&A tiers additional pricing largely QX, will that provided Turkey. from and and

Slide XX. turning to So

was impact currency mentioned, XXXX quarter. QX and the negative FX continued pressure during As significant

as spot expect pressure the half in and get XXXX cycle We QX. reflected. pressure less price strong the base expect At would FX to recent year through increases we we in the remain second rate, of

Moving to Slide XX.

throughout cash quarter flow of program. resulted by was SKU key self-funded. negatively $XXX investments reduction were our was there XXXX. million $X better Working in the was and flow due additional cost Free which restructuring business. the last offset restructuring in historically A optimization transition the vendor third-party the to will part than Also, a partially at restructuring million back initiative. is This in First drivers investments drive capital inventory impacted seasonality continue backlog negative This of of QX. payables year-end, transformational mentioning. by minus on cash were few are settle year, to worth

which of profit cash continue. as on facility, our is Lastly, underutilized cash noncore We plans from than generation for of we assets, quarters monetizing be with the flow Full China received believe we noncore efficiencies upcoming with consistent assets. higher also in to year last the $XX working million the year. will improvement, XXXX sale and delivering capital expected we're manufacturing efforts track monetize continue flow positive to proceeds

Finally, on Slide XX.

result was the continue Our prior was annualized adjusted $XX million planning from the provision tax efficient improvement income million, $X year. tax approximately of which and in tax an to rate. reductions to changes operational to Structural compared adjusted

the Looking cash year. XX% expect also We're of to focused ahead to course the over reductions to XX% XXXX, to tax. we reduce in on of continue the plans range

for or markets. with comfortable upcoming our our all we're available bond euro monitoring including liquidity U.S. refinancing Lastly, continue constantly existing using in and debt considering We're the address will the options to financial capital XXXX dollar liquidity maturity, a profile. markets

Now let over turn me to it Miguel.

Miguel Fernandez

you, Gustavo. Thank

Slide on up XX. Speaking

representatives we bit through opportunity competitive I our quarter, ever the activities the the revenue Avon. direct revenue Russia grew revenue Brazil. beauty quarter markets. of of over talk improving little out to year Mexico's the year. and new compensation a revenue in by and segment their In implementing to this to benefit time constant of quarter achieve process Where of performance beauty weaker with trend markets understood experienced growth, result and we a quarter. a X Philippines, continued a also by of Top our activities. In loss successful was X.X%, more for Mexico is selling, the earlier contract. including focus in to experience saw highly continue quarter a X help by income model our the driven significant and with which Avon easily strength XX% but particularly on in during in more in representatives this as increased meaningful Russia's fragrance the representative top Turning events, representatives first market, increased the reengagement first in field about growth we from designed to fourth shortly. a last the quarter, prior consecutive training the in be will

we We're During Smaller offering to bundles, to quarter, changes the sizes There continues, address also strong increased made our growth Argentina's XX.X% the Order products to in lower and the adoption help effective seeing macroeconomic pricing the to points, new e-commerce new at meaningful and headwinds. value offset Average et also due through reality. price platform. up saw based product growth and inflation are usage on adjustments pricing. of cetera. pack forex

to direct improvement by active improved the simplification basics, trends improvement selling on of X.X%. was with underlying we're refocusing due declined debt. bad from Brazilian Finally, better the lower coupled on the service Revenue largely in encouraged fundamentals. by activities, revenue on The portfolio Brazil,

Moving to Slide XX.

a challenging Russia been said, full in we mode. has Russia us. is reset for market As

experienced a We navigate GM ground a and team just have the to announced challenging this new SWAT have market. through on

by and not different productivity to Russia in to we one direct markets. thereby other our in selling We is strategy increasing have increase than training need Our on the earnings. reboot focusing drive

is programs Some such and of a market used the school, micro-influencer the training sales tactics to and include as being leader blogger in training segment which Segmented the recruit, retain. incentives train program.

and improve the products, continue image market brochures, to tools more brand, K-Beauty Launching take more driving overall our is the higher-end of digital relevancy. of upgrading will the fragrances. actions and part also including on-trend We improving to the perception Avon for better and

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Jan. back to Now

Jan Zijderveld

Thank you, Miguel.

Avon of beauty been and we've see can both the You progress improve training to the our entrepreneurs. making productivity

her, Strategy changes and want speed culture to strategy This Turning I to current performance upscale To our Open business last more capabilities our to our are just as also and instill of and Avon. of to reengage the to CFO to Head talent to and our today, to Vikram Russia. Head XX. And our feel through some core. with but Kay progress with of we make improve as a improve we options new Chain. for making also the the transform competitive, the Supply new show our we joining Slide Manager year actions you Avon. General walk brochures, a to and includes new and Up of immediate of the Gustavo Starting took latest look our our increase HR new representatives, service and as announced reenergize now and delivery us and transform talents to rebooting

We transform breakouts have this four strategic business. to

value improving Avon, and First, increasing mix. our the equity strengthen transaction we perception improve brand average price and value of and must and the

people buy increase e-commerce channels as new to we and of new Second, available access through finally, consumers make will and the generation Avon like geographies to such more new people. Asia, and to attract Avon,

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operational to that and our success. more will some progress our tracking our metrics expectations see we be measure can You monitor and

on scorecard this through as we report year. will the We move

XX. that we a of is longer-term our plan Finally, leave making reminder reiterate but going on I you it and time, Slide with to are and progress, perseverance dedication.

are us return our Avon to you. determined all We growth you Thank and for to shareholders. to today. return back to Amy, value joining

Amy Greene

Jan. you, Thank

open We please will can the Operator, the queue? now Q&A open you session.

Operator

[Operator Instructions].

of Nicholson line Our first question with comes from Research. the Wendy Citi

Wendy Nicholson

two that's okay. I actually questions, had if

doing maybe fix worth to with words, issue, well market then my one or But quarters, is vibrant direct so talk other Avon congratulations the still two just that and business on your it quarter that what direct market fundamental First just in that. one in you and you is like And the elsewhere things choosing slow. a selling Brazil you as a sounds was on Do engage we about and at struggled past, then as go specifically. market original slowdown Russia for really think direct pressured market Russia share confidence to question, one that was in? will selling? generally, investing in Can opposed the another selling in second your of people that market, to is in looking starts great, in healthy

on -- call a a whack-a-mole else one that it's then thing bit game slows. we something So little that great this -- is and

in Brazil correct the sense that that able your sort work? in So visibility of slow? to if of and what's your be Will quickly now confidence are sustain things you working starts Brazil to continue of And fact your course can that? to what's

Miguel Fernandez

here. Miguel is This

So Russia, it's your is investing first yes. if on around the not, or worth answer short question

this in well not headwinds a tactical was, what received little of market obviously, bit that by the happened the few us made think but beauty, to changes I quarter were very market. conditions we in of a

we the less -- that lowered is The rep, too was recruiting one as the a to in first that smaller engaged recruiting caused few used than the for the made it market. they We leaders then focus that probably incentives be. normally the value for what rep, proposition the sales the was have focus the normally And one on as another to not it changes are be abruptly. newer we attractive we and

heavily. things in the Canada on combination announced count just as there, years. and of our rep sales we the Avon for X side run you saw, a two those is But So GM Russia New to positive coming impacted used from in new he the brand force that

not key targeted a each a ability of So leaders very to for think run to incentives And careful going that design the we which the be going for over he to. to have in XXX being the that do around way to shotgun up because And lot us very has sales Russia, a We're by group we in leaders. going lot to way used excited, are we there. as sales are training that around a of is also we're we market. experience set we're be centers we more turn also saying approach

going Now sales are leaders each of group specific on. and so on to have target a and so

So the is, Brazil We're basics. the just on fixing in plan Brazil, still we what basics. honestly, fixing

us just that. responding that even the fixing market is showing that confident basics, by to is feel the we So

basics our we how We training run continue feel, in right the that Obviously, we is Brazil, when we ago. can the let's strong become but if say, future, the future? better and are in selling, on and direct the to lot all things our XX team we we keep management that. So predict Brazil, very confident know very fine now do better feel used to months of have and Brazil the them a and one about basic no brand strong in ingredients is we than to better

Jan Zijderveld

in is good one and the Mexico, I and was think probably I and that whack-a-mole, the in strategy up, model. holding down, terms the terms the is up rebooting And doing the is of one well, we're in think news terms refining of which new earlier of

fundamentals. up, in direct That's We got fixing the appointing talent we're more of you being selling, continue a building a same ground. in are driving We're training, We our value put to see the digital more brand start the had now exactly misstep Brazil. business, getting in place driving it. effective working and We've really terms rebooting and new Russia, That the to work is strengthening SWAT team on productivity and up, digitizing on company. service, happening in a people. we're on And all fundamentals better results.

So thanks, Wendy.

Operator

Our of comes next question Lauren Lieberman Barclays. the from line with

Lauren Lieberman

you on know today, bit in And where mention, remarks. of on reasons, talk for around sense a there your is brief there much The helpful, stand but question there update average just long to of this to in up. same premiumizes XX been but things making also bit a two longer-term that because how But kind working I U.K. you price it more you Jan, consumers? then through -- the a and premiumize, time doesn't mention question, a there have direction? to that great worried such the doubling this we're things makes the I on we have pricing at move it me. for are was months, One new on a little of quickly was alienate So right, risk color you was the obviously, wasn't be reps, number But little that opposite time lot go in long trends don't a of balance an attractive that is looks secondly, the that in just that Avon sure goal in but headline too could for hoping pricing. make brand business just a way would existing move the in release. you this chicken-and-egg

Miguel Fernandez

again. Miguel is This

substantially better, up is years. U.K. the seeing take time the on that answer QX better, for positive U.K. the in we're to the We're going question going much The first short first numbers feeling recruiting in I'm much So about more

and when to leading without as any, proposition that's So you biggest market going seeing up the to And the key indicator the know, business recruiting your you in what let's going we're the numbers in the continue and U.K. the up put and your And of of are business. that industry, extra that and incentives. in they proposition say, organically is grow sign your turnaround first our are in brand a relevancy is of the terms obviously, or

So we feel it. positive about

story the to quarters, going start U.K. next think I So positive in you're the few listening around to the

Jan Zijderveld

question. the for thanks Lauren,

have I one And the strategic we regain the erosion to we cycle I biggest on will and picked improve of and value made so. value. am this the thrusts of building the we do investor the really can is sort commitment that brand we're that and of up think XXX% value. and to we strong to confident capability price of our you At a reverse turn conference, of around,

I And in it see and and is good you, and already continue. that You really levers QX honestly to starting marketing QX. tell through the strategy got. that we've trick can in driving all The come will really good here

The and is a mix. start adjusting first one our maybe one simple

set is If of or other about those our digits. roughly $X, double face average you if categories all you our fragrance but or -- are in think price about bundles, care think prices

drive than the and price. anew, or i.e., sell or or selling selling how shift of lipstick, if to the training, up please training So just on jaw Vitamin C. automatically rather we sell the our just average through we mix fragrance And art sell encouraging start also fragrances Anew sell

the how sell thing So regimes encouraging and in them higher-value teaching that do. we or to is products bundles first

have The second we an to thing is when price. we ability innovate,

innovate even we So used to or lower at price in the past, the sometimes. price same

a little returning. product now a priced bit. make benefit with there to allow up is discipline better more you you platforms, be and a a better technology it When can So

Now sometimes you price XX%, it up XX%, XX%.

we go. bit. You coming them the will a can little be through, look seeing you innovations where that And bit start we price little a up

our a we a obviously, times, thing, promotions. heck third is The promote lot. I've optimize to said many of

a frequency a have we and high high So depth.

strengthen and the as you drag take strengthen away slowly You brand. as that other you the elements

this to company. but and very delicate And in confident we about So that is marketing building do capabilities And balance, rebuilding the we're a is can strategic I'm capabilities. do that. really

and hiring am area. and this repeatable expressed got You've brand, seen to we've some pricing right. and of we being Because workshops and therefore the done the strength improve structure. get that We're that's really, improve are we'll models around basically confident margin earnings her our in that to And to our will the continue countries our I in of continue we've power. pricing rebuild all building done really

Operator

Research. with Lane Our next question of Lane comes from Doug the line

Douglas Lane

the the strategically it whatever, stick lower pricing SKUs for right picking weed going to in fair? decline on it with profits, just and point takes a forward. we mix, Is sounds long unit see that volumes -- with this the that the the out that more is mix quarter and words, and larger next volumes like better kind weed it uneconomical this how should out. question, In as them pricing unit profits, Just other of is on better you better and this metrics saw we

Jan Zijderveld

fair, think yes, it. analysis also that's good that's that's Yes, -- That's Doug. a I fair. and

of been the So We're we're have increasing I we've some of think been not price training. had to quite we've that Russia the and rep doing. and driving through quality that value that rep has not losses activity brands. productivity, been do connected rep like And the rep focused the

In hardly a fact, all. there's correlation there at

are through to all these improve on we're improve of the our that therefore rep things it thing And me we'll and quality and two Lauren's our gives So we're are do. absolutely question right the doing price/mix addressing, marketing confidence actually business. that separate and that issues base, the earnings improve rep

Gustavo Arnal

is Doug, here. this Gustavo

volume X it drivers The delicate if price/mix of other X, you decline. balance, and price/mix segments, across the I the perspective a the would is, each right, of X look offset of at didn't. components the segments, In the add unit four it's across

good we want but could unit So drive continue to volume extent we come drive profitability, do volume. to pricing. expand margins, declines, a of want It some at driving

Operator

line Stephanie Wissink with question Jefferies. the comes from next of Our

Ashley Helgans

This Wissink. I for the unpack the saves? to cadence effective of Steph cost is wanted Ashley on

Jan Zijderveld

-- I think you I of is that think answer don't I XX%. the cost year out to I look We've can many at one the streams putting -- last was we're cadence reduction, activity is another of in, the that this you the specifically the quarter So we've thanks Ashley, X%, question. called savings. at The can for and think think headcount is said savings, the the moment. committed which was X%. The we cadence What cost obviously

at by a savings, track reduce drives to So so this close it. Other chain. year, get that headcount looking cost the reduction to sort XX% well on your XX% X%, of of supply we're you obviously, when we're areas headcount

is there's that and opportunities And making very, That's formulations, many, of progress and and Africa. do. fit-for-purpose, chain areas obviously in drive in bad also going there many, that Supply And also Head can to is one of opening where savings driving we're products thoughts really is our also fuel-for-growth great a drivers we up we're further have very South many that Chain but in many we're things as hot. We after. the of new opportunity a area addition And supply new many Brazil, debt. the is other the of Vikram bucket

got debt and better balance bad right. we've discipline So getting about that

the whole our I also have tax. interest our think as hard done that's but looking of work think about as on Gustavo I'm improve really proud cash the being at, course, rate, team I improvements the And of worked tax really talked a that well. to and tax we're

tax and point at really cash of in So our drive to that all our us we're noncore we the that the that we down non-fit-for-purpose here again generate but think significant honestly, nothing rates we've the is to assets competitive operating margins very, areas cash business, delivery. assets cost cost or our off-limits make on improve, assets. to our offset, reiterate at more maybe and is a improves, sure working make want I the monetize to make to looking very and of the focus improve high and don't need will done that moment asset our inflow including and the also non-fit-for-purpose also cash tax drive improves, is capital Because our cash I sales

general I the including Vikram you all can future you high but and countries. our high all it's tell the give So our in agenda, on can't managers lists, the that's I cadence. on Gustavo, But

Operator

Our comes Dibadj Ali with Bernstein. the question next from of line

Ali Dibadj

the how go and ones, year, XX just Page So revisit 'XX to each particularly back between them. about feel to you over objectives to I want

down relate have Looked seeing you kind stabilized to and thoughts as you Argentina And have XXXX? growth, first it this may already, far than time, Organic target that recently you three. to about a that XX. down I even But take does want down actually Reps down the XX. be the will was than hard X honest, revenue Funds commentary depending one about to so the how of have to So as -- it's That's asked incremental for about featherlight quarter. how stabilized in think have and revenue reported about are you how itself, we're are sales lot to slight but from do so time quarter. are I What better And that in more you bit for quarter? although a the about more? revenue? quarter little the May slight was you're it you And stabilized stabilized do a have Argentina. X the improvement added just points the the actually made stabilization. to to the still target year? improvement drive pricing, had business? question you spend question, Are there revenue did this margin spent balancing you margin like what indeed a spend lot you going what similar of margin a Clearly, relative you then one. for improvement XXXX. to the can -- lighter of But in just think growth get you think

Jan Zijderveld

those lot are a and good questions of Ali, questions.

do bit think me let we little it. how So through a

And thing, key line. first a is focus stabilizing making top and I progress. about the So obviously, think stemming we're and

that improving making you a start and the or If making and investment, which hiccup of it's at look slower down units But we in is is and also our what the improve channel we marketing also we top improving productivity fix. investments those element of an there value the and and our of margins to in on line obviously level about, the business, decline of to costs, of Russia, a Then the the well. stabilize to -- and are reps, sure you America there's combination rep focus top because a new element level that and and top a it in stabilization some right we're significant investments. as driving And countries, we business, more profitability, sell investments, the stabilize and but strong to terms improving of try line hiccup, in make the of but quality need of is value. stem we sure Latin playing of starting an really yes, line productivity and which a levers is see other combination decline. on one a had, the at and with both we'll The again, a look areas of of return on and there's solid in how investing sell, we

on Russia, you worse are the That's continue important, for that, many KPIs the a strengthen our in pockets, digitize to also that been on And obviously, expected. and what's growth for is this a decline now better right the get And thing data we say around Asia that, rep act. e-commerce and business obviously, that's that give than while to issues, as we're So act, along say is the to to And unlock drive -- of of that something maybe doing a use bumpy to gone do. yet. the and than we the we you and the to expected. we working we productivity, around and decade. working they're has working road working we've you making said turn that I given why continue right down think build those trying said the consumers, little I right, and you our honestly, we to how in you think to right new e-commerce, cost. are Brazil, slightly But bit on me are that improve and we the slightly that younger to whether will or balancing a one bit is to some things is progress also on deliverables simplify new careful have, has that they're almost balancing all off thing fundamentals. attract fundamentals, on business agenda, things right channel you one brands,

Ali Dibadj

-- slightly question ownership change add And Clearly, your a in structure? there would How M&A the detail with what anymore options M&A. U.S. tells Anything of Natura with different be just you saw the out And we servicing and secondarily, M&A perhaps about then a us are if there agreements, R&D past, does board discussions other LG. perspective? from perhaps broader about could happened the that although the around that helpful. I facility,

Jan Zijderveld

all, of announced apart no Natura, the we Ali, update first with in for So from March. discussion there's what

around So we information can't give discussion. you that any further

great XX%, LG, setup the sold us. yes, that had to is of XX%. Avon, Cerberus New a we partner which owned Regarding was It's

structural our a at brought for -- really LG company, bought So Japan. way. in very bought And together we've in a They obviously had -- the who have working factory good relationship we're with more rights looking Avon China. in who they

Now North American business. they essentially, And no change. there's bought the

good us. we're partners. together for So the released way, cash We right they've work in and some also honestly

some have net that from we'll So proceeds sale.

Operator

question Davidson. our Bolton-Weiser of And Linda D.A. comes final line from the with

Linda Bolton-Weiser

XXXX? down My full focused you was to, sometimes see big the versus first on for would flow. just can this on just Wendy smaller remind then cash addition referred entire wanted XXXX the that to then sometimes that be secondly, and the performance. is that clarify question real wanted big you're markets drag have in often cash And flow that about, in your rightly what to we meant you up CapEx historically, operating so year-over-year in And ask year. I whole outlook for to you but decline markets, problem that whack-a-mole I

North X%, region Mexico but up whole Latin yet X%. in only your like was was the up America, So and

a markets you actually do in performance if that down at -- big is you example, region? this markets down the an to there as Latin are of worry And on were you and that just that about so, small because do taking small the need markets, or that that point? focus in just this North So America bunch close there dragged

Gustavo Arnal

here. Gustavo

can the Up than on for Transformation year, to cash operations, year. in from question prepared in self-funding XXXX mentioned free committed higher as last guidance On in first XXXX provide I we we remain specifically be So is we capital about expect remarks. expect spending, our last above explained flow what won't spending, that to on capital flow cash in do to be your Plan. Open I say was strategy but also flow operations of what the cash We from terms

We of assets restructuring will investments. fund use additional the of monetization to some the noncore

generation and So those free prospects all feel about in from we generation. flow cash good operations cash all, of

Jan Zijderveld

Yes, got for take... cash has and go cash sure strengthens our Miguel maybe priority make the Then will a of that as a position us smaller group so to markets, high we in as terms liquidity forward.

Miguel Fernandez

it, Yes. Linda. I will take

big is markets the in the one and the strategy So same basically, smaller ones. our

our what is we've And as in in ability that the of smaller management visibility execute people we all don't is question much the But supervision little changing that the change do smaller side, to all from smaller a in changes talking So in drive we the -- about. markets. leaders the flexibility markets. give been obviously, the of and all lot those our we're scenes, behind can markets, the so initiatives those they of with

markets. many visibility, markets and that or -- we strategy we people don't to away, -- and are putting other the everything right example and smaller it's case is those -- IMED, the that is Mediterranean few of gave with Italy about improvement supervision around we markets, seller Central that positive we're he with for the implementing changing part example And lot we it's Same of fixing smaller signs in strategy take a it. or So it. seeing -- put which And normally and America, right experienced that you months just and for gets brought give he our a ago. little it key can run very direct spoke a

Jan Zijderveld

and in the ongoing questions interest Thanks, for Linda. Thanks Avon. all

with we're start line we're slowing the about the and stabilizing I delivery. and we now driving terms strategy I our of that. think and really decline that sure are, execution top really track very cash improving improving clarity stemming committed of making on think We're and if our the where of think our operating you in to margin

data well orders level improvement analytics of to taken of of and and us unpacking business pillars you what's the breakout segmenting drive business, output and through of improvement work are And mix, the our important increasing really And our on I and our tenure of and strategy: what thinking. KPIs, our elements some underpinning that and just in to of sort data for So that then cost quarter feel from KPIs back our also of further these now. the the segmentation you out price Avon. drive starting easier that effectiveness, use confidence are segments four working to give value with. four we're driving we've that, improved we will on think we report sales starting to rep we're transform at given business with We've our our and strengthen all are which representatives feel; think drive platforms And and is working making continue of the leaders simplify our on the we I to business, our productivity. digitizing of good progress training new take make root we keep continue them breakouts the improve terms giving much as new productivity those there more reps to finally, tools improving and to giving harder, a through e-commerce to tools; better but to productive; and to as fundamentals to our every I become

Jan Zijderveld

for again near you many of you seeing in And look thank the call and the very we forward to the future. questions. So much

Operator

This concludes today's teleconference.

this you You lines at participation. your may Thank your for time. disconnect

Avon Products (AVP) 2 May 192019 Q1 Earnings call transcript