AVP - Earnings call transcript Q3 2019

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Operator

Greetings. Welcome to Avon's Third Quarter Earnings Conference Call. At this time, all participants are in-listen only. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

slides today's use remarks. will company to prepared support The webcast visible the The be the available slides will website. via on Relations company's Investor downloadable presentation the A the made of following available will call. be PDF

company -- in appendix During the which believe webcast A accordance superior comparable should with their be to in to GAAP reference is of to they this release. of non-GAAP to measures although be the financial GAAP. they website investors will section useful of earnings in not call financial non-GAAP company's measures the certain these located company's the the the and today considered measures reconciliation Relations included the measures are website. in Both Investor presented

company's uncertainties financial risks website company's in Investor call statements involve and are These which today's business company's the and cautionary contain will slides concern The also statement and strategies. Relations in in forward-looking detailed the statements the available filings. on the SEC that

now over will begin the conference IR. conference. Greene you Greene, Head and to of turn Chief the may Officer Ms. I Communications Amy

Amy Greene

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

now Jan. will I the call hand to over

Jan Zijderveld

for and good joining thank morning, us Amy, everyone, today. you Thanks, and

I will on up Miguel the of with with results start Gustavo financial our will give then transformation. an up an will opening update update us on update our close QX We an markets and from

past our Gustavo, take to year. against over strategy the for let at me hand we've been I executing which look a Before

This profitable X, sustainable modernize our to year to slide model. reset opening competitiveness, our last restore our and Avon business. fundamentals plan out our business execute building starting about rolled and business, year, to rebuild healthier up business to the we more has and been Moving strategy the a

the On Restoring brand the you formula Avon words, and pool. consumer for see and this our relevance, page outline the in the quarter highlights key other three. value of

making on through to our relevant continuing strengthen trend power. more Avon and and pricing this the are brand, restoring We

This specifically on stronger in X% improved we higher-priced quarter achieved improvement and mix discounts. price sharpening in effective a home. fewer and We're and a fashion with our with also portfolio, focus mix focusing pricing innovation and

drive while or joining and In more push element to creating our of our rebooting continue environment of selling representatives, that an model, opportunity. direct attractive productivity the making business process we go-to-market a Avon

Over we several working the we the to representative in quarter, base been a representatives saw than strengthen had and slight quarters, have more this X% active past uptick our two. quarter with sequentially we

representative a to continuing improve productivity sales entrepreneurs We productivity of them improving money. the and for as and measurement of to beauty it used easier and retention making average we earn are our

Average representatives X% this sales quarter. increased

quarter this agenda, increasing sales business of of drive the size in continue closing more to In to terms we our XX% access double our brand, XXXX. digital achieving to on goal our in online this

pilots been as bloggers selling entrepreneurs Russia beauty and to have development both We accelerate some influencers of Brazil. the Avon with kick-starting social and great Avon in

representative's consumers training continue business. tools to anytime, experience and to better her shop that enable run We expand tools new to improve digital anywhere, with digital and

restoring driving efficiencies to our size and of progress business, simplify cost reduce simplify to improving business, To we make our cash line and while competitiveness, and focus, flow our margin. the continue

growth women year. to margin our Monetizing doubled fully enabled goals much and last and track restructuring year, fuel our are to set a compared last on our and reenergize all our underscoring we as free This with empower lives their a purpose more times our later detailed we to fund we will to a focus activities expenses the for us four various their beauty workforce, provide more communities. all our on positive quarter continued make operating of I the generated elements impact has flow update and call. families, our assets out cash adjusted of smaller entrepreneurs, in and achieve on the to our strategy

the would to walk will to through Now, over like numbers. Gustavo who I hand

Gustavo Arnal

you, Jan. Thank

metrics; cash financial Let me flow. on QX three start sharing and the by highlights revenue, key margin,

growth representatives. average are healthier clearly As price/mix P&L and as constant declined. last increase productive continue a translating revenue dollar practices. more X% productivity X% Adjusted revenue year sales sales implement and into more representative was below expected, drive and of Encouragingly, we X%, to of efficient

adjusted enabled improvements price/mix margin and of $XX expanded Gross yielded of last the is operating by of margin operating This X%. adjusted FX. million driven profit and unfavorable savings. also These double margin results cost despite year,

four In million even the of profitability capital. driven $XXX and by our of times funding of better higher we year, $XX prior flow million than $XXX last investments. Year-to-date, free restructuring flow, than cash terms after cash, year, free cash working is generated million

As declined mentioned, by productivity constant dollar revenue QX, while improved. X% from in reportable segments

optimization. can continue our quarter, representatives' as sustainable way, combination is to rep drive improve a of pricing focus on believe margins sales. see and as in innovation, We we increasing and that training This imperative to to well This improvement with in mix, earnings. an price/mix average strong we a enhance

is the volume. reps recent QX conference, diluted Reducing impact number Worth profitability in helping of during improve a to is short-term investor noting, sales if we slightly the as above were said prior on quarter. active there a even

We across mix continue portfolios. margin the and to right emphasize

assortment value. resetting optimize to are We

heavily away sales. from discounted We to shift aiming low are

items based a part complexity. came were continuity unit improve and greater of large of our dramatically portfolio declines towards means, the For fashion that in item We're This SKUs. example, to from on dilutive. and working profitability our category less productivity, our resetting assortment

are active Similarly, as down as XX% quarter. see reps appointments, versus prior productivity we active versus work we're have and increased stabilization said reps That selective on last making improving year. beginning to rep more

rep importantly, improvement training more a on is they as and to sell More in average, improving price/mix. productivity X% continued due

helping to to continues a key meaningful be and turn been and has in reps, meaningful earnings Avon. focus for Training contributions make obtain

we above margin basis Year-to-date quarter planned, through As year. X% XXX year. of last points delivered expansion is this up operating adjusted each have adjusted operating margin

Further, headwinds. $XXX last to are in despite million key coupled year-to-date profit all Sustained optimization each growth of the year. quarter, cost almost is amount expansion the in margin FX delivered price/mix with aggressive same

As in coming Brazil expected, pressure Argentina continues pressure and levels year, growing lapping continued Argentina. yet FX QX, from primarily prior is versus in the Brazil. FX

X% FX than We lower to to expect quarter third QX. versus revenue the last though, quarter. year, X% impact The reportable last currency still impact negative was through segment continue

than This X% QX Our adjusted last margin points, operating by lower effort of gross Price/mix growth, year, adjusted effective as innovation well supported pipeline. by an up given to pricing. is mix both and and two in managing enabled improvements as improvements in added points our revenue SG&A. our more times discounts, XXX margin, higher margin operating basis ongoing XXX which to was basis continues be

FX points, Unfavorable continue pressure margins. to XXX basis impact of

see it quarter, was to than in persist QX. impact is to continue we second less, drag expect a While it and the in the

processes. bad operating items, credit of to tighter quarter. other adjusted and productive reps. procurement cost Selective resulting margin savings basis control appointments to during contributing are credit of Finally, debt, and These provided from from it more transformation are points the lower tighter a benefits and lower savings largely XXX efforts number

cash represented savings. by points, basis Free by improved Gross year. points on improved $XX million by and working of in incremental of partially million. cost XXX and FX after restructuring prior price/mix, XXX margin operational in the was material This times on by self-funding of higher capital $XX QX an investments. million both adverse flow $XX than It four basis delivered largely offset costs. increase was SG&A was improvements earnings an and generation driven

cash to We we in track million benefit capital assets portion our the a net continue efficiencies flow monetizing investments. one-time the During $XX with million assets million self-fund new million and sale from for wave working tax profit realized proceeds indirect as year. $XX XXXX, QX, delivering tax $XX underutilized of prior help asset. from coming on we The impact for improvement, $XX cash remain transformation these, our of anniversaried monetizing monetizing and positive in on an for

year $XXX million is be margin made increase have financial can we cash generation and while significant funded The investments. than improving was year. seen, productivity, driving restructuring and flow this last by capital, optimizing progress asset As higher fully free cash Year-to-date, through monetization working generated margin.

adjusted assets monetize operational of structural delivered in to amount. our so year, which changes to have proceeds tax the Our restructuring investments fully funded far and reductions Further, our annualized cash same million have rate. $XXX driven nearly have efforts this

year prior year-to-date adjusted significantly was expectations. tax and of rate than income Our ahead lower XX%, QX

years. been over Additionally, the taxes we past have reducing few cash

at there are XXXX. We levels we're less up, than expect of tradeoffs the performance. intentional financial To reductions XXXX choices to to improve to the half see all sum making significant it in

we're cash pleased results. our are and improvements the margin by sound We transitioning in making with more continued in to a progress organization evidenced financially

Now to Miguel.

Miguel Fernandez

XX. Thank up Picking you, Gustavo. on Slide

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Now, Jan. the me hand over to let call

Jan Zijderveld

Miguel. you, Thank

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joining today. Thank us you for

Operator

with Our [Operator Steph first from is proceed Jefferies. question Wissink your question. with you. Instructions] Thank Please

Steph Wissink

of It again It's your everyone. you compliment is the Hi. programs Good I model. morning, of to education. on, just question price/mix. and seems drivers on now be commendable. My around the one for big really you want violence to the

Or How one range is think think to that years? that in in something two X% Should should maybe we the degree? model next price mid-single-digit advantage we look durable ahead? quarter more something you we over more to as do about that the

Jan Zijderveld

stand the great important really, support Steph world. that around the the causes that Thanks, really women up one of you I the and causes. we're also think, of things that proud to for Yeah. all for It's

global even in -- personally, the of happening say but a to the against the by I happens against of of mobilize passionate is that's violence years. must I'm women local also world. teams teams very, the are about. doing passionately It awful last absolutely to many way violence the what over scandalous trend think parts women drive I and number that also improved lot hasn't people, work And very still And

-- Now to back price/mix. to business,

a we guidance year. five to improvement. consistent balance the really out will trying improve set you give real that drive So And is want I as I think continue really we looking And this to to or that forward, levers any don't I different to have think, we're something, that. price/mix. see we last obviously,

our in prices, higher mix at entry markets. that products, points that driving losing about innovation driving optimizing are so without our important promotions, And the is to of higher some

So as we're better getting on this.

think continue We'll get drive. to is that will an better I at. this to we engine continue

numbers this want I about -- think think a we of pretty the talk level. I high to is sort is

a further any But of Gustavo are Not to where think, happy this going. price/mix an it's many is thing guidance, balancing this giving without getting do But act. companies think in giving ongoing we're we're guidance difficult at And I I of stage. with sort level. terms also at

Steph Wissink

then, could... And if I Okay.

Gustavo Arnal

No.

what... that think I

Steph Wissink

sorry. I'm Go I am sorry. ahead.

Gustavo Arnal

that We to the we now. budget XXXX. speak. go, are as on a not company combined guidance position be completing XXXX will process the as Clearly do provide up to it we to in We're

price/mix is to productivity. health to said inflection Jan important just drive a management and enabler reinforcing an what as it's see point the key rep on a we company the of drive financial team What as

year some year, the catch-up have that not price/mix And But it as having some of reasonable XXXX et started there levels needed. was to given first next we're units will some to program. positive perhaps trade-offs, the on It was this we tradeoffs expect the will be with cetera.

Steph Wissink

you. Thank

Operator

no [Operator back to Instructions] for closing at this There more the over turn like time. I would remarks. conference are questions, management to

Jan Zijderveld

call. on and calling listening Yeah. Great, in so, again, thanks everyone for the

it I and building we're really sustainable I profitable think progress business. a up, I sum making. think, more to of We're the healthier, we're proud think,

creation so at That's calls We've we're follow-up to got we we've lined look many to discussions the calls. further that heart with what levers the value on up, of forward all got. trying do really the

And rest again you day. your thank morning. Bye-bye. your this enjoy and the for And calling support of in

Operator

concludes teleconference. This today's

And disconnect may your lines, your for at You time. you participation. thank this

Avon Products (AVP) 31 Oct 192019 Q3 Earnings call transcript