REV - Earnings call transcript Q3 2020

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Operator

Good day, everyone. My name is David, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Revlon Third Quarter 2020 Earnings Conference Call. All participant lines have been placed in a listen-only mode to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator now President call and will Robinson, to Executive Vice General turn I over the Cari And Counsel. Please go ahead.

Cari Robinson

Thank thank you today, afternoon, XX, XXXX. everyone, the ended the Good its Earlier for released the you, call. Company September results quarter for operator. joining financial and

If not revloninc.com. at a already copy release, the earnings website you copy the can Company's have a be received of obtained on

over copied call the been or financial reporting and be obligations results. Debbie. include that, a at are amounts the in to Officer; reconciled end the cause the Pedreiro, statements GAAP today U.S. and might set this performance. our are call adjusted to and differ statements that Dolan, the any President today Form Debbie will in Consistent turn operating and Remarks These them will such except forward-looking to Act QX our in including undertakes items with Securities Reform this Chief forth call under And expectations Officer; of Executive should from include no based the to the rounded. obligation the Financial publicly also Operating have could exclude On measures XXXX. Chief certain of defined Litigation pursuant on with current Perelman, and tables certain call not we federal factors the Sergio materially discussion is certain results release. Victoria of Information today Company's our are also to The Officer. that afternoon Company directly XXXX attributable provided Chief discussion that securities laws. practices, provided for earnings and recorded. Private past non-operating its on throughout are update SEC non-GAAP are non-GAAP The the not XX-Q. Please The the that note are forward-looking filings, Company's Company's statements release underlying results affect forward-looking actual

Debra Perelman

for joining Cari. Thank you, Good afternoon, us. thank you and everyone,

coronavirus third COVID-XX the world, XXXX. compared I healthy. decline, health to our XXXX. sales million sales approximately safe compared remains with net million in regions third third is a the net XXXX As to estimate decline flat many were staying a all negatively our and segments million, concern and net $XXX the as-reported or serious XXXX, of excluding quarter Therefore, of sales hope We quarter listening call today's In that of everyone were to impacted. places XX% $XXX the COVID-XX essentially quarter third contributed impact, quarter to this $XXX around

sales adjusted adjusted net million, XX.X%. of a the and $XX our period. third is This million decline in quarter remained XX% at EBITDA prior line $XX was with in XXXX has margin versus year EBITDA approximately of decline of our steady Our decline, approximately

improvement quarter behaviors to and the align decline with net that continues a third XXXX COVID-XX strategies shift is of beauty Most sales as our the sequential In third consumers' our in reflects XX% notable quarter reviews resulting both to financial profitability the business, XX%. impact significant short as details adopt COVID-XX. Victoria third she the XXXX tactics to our on was will continued and from provide broader remains that and our have additional just quarter, quarter performance. decline to am continued e-commerce. of pleased on our that company topline net changing compared sales to While steady our a second I the industry

during behind company, third third to globally of XXXX, As we Asia we onetime our growth channel second see from we is the in events including color to have in quarters Building previous and pillar This the continued the the mentioned a in XX% due mass lower quarter, quarter strategic earnings quarter. acceleration to of growth previous dramatic seen resulting a momentum on calls, China. has key into slightly been channel. the in invest than the in this e-commerce launch our cosmetics e-commerce Revlon continue business, for e-commerce

Excluding our in would brands sales our under total just e-commerce mass net the quarter. XX% prior have relative to Asia, grown year

net net exceeding Year-to-date of In our channel the approximately expectations e-commerce from third XX% XXXX, for our of XX% XXXX. across the third as e-commerce e-commerce own pure-play partners represents approximately our X% sites, increase our Our as represents now well our quarter sales, total our already retail.com accounts. sales, the in approximately year. quarter, grew an of

strength North Our year. third show quarter in the growth triple-digit prior America with region continued to versus

with in Ceramide elizabetharden.com the by growth and XX% well, third our continued driven site our care to approximately of hyaluronic our franchise. quarter continued skin capsules, the latest in strength perform especially of launch acid Our

our other Our and key to double Asia e-commerce in with prestige EMEA brands. digits, continue grow including regions in

brands towards continue care products. consumers and we to personal see Additionally, shifting

Revlon grew of growth our We hand in and brands, sanitizing Beauty are also well behavior, and Notably, products continues brand Cutex and care strong and Tool, in double also and our Cutex our by Nature, our led brands. key the portfolio. Mitchum saw breadth Professional our our Creme capture of brands positioned shift given strong experienced digits, cleansing growth personal to Revlon in the we during multicultural to Revlon We across quarter. this product brands. maximize third

expanded the especially our of been Hygenderma, in to body closely you and in offer which provides tomorrow. from exchange the have brand well moisturizing intend runway on this we hand I this XXXX successfully strategies. a seen focused and very on to likely outcome, executing launch plans news as that to and bacteria, our today. that offers debt close have and we needed is many with exchange following hygienic us notes additional the the care relevant know benefits as EMEA senior pleased washes quarter, I am with fully business third of protection enter collection Additionally, which

we the drive in e-commerce where invest capital to as to our markets work our to have as optimize continue and well to structure. business scale continue brands will We

ahead and our quarter I'm brands, And confident not plan future is ahead over, I for will due the course, still exchange and the But there bright to uncertainty a hard work details portfolio remains successful turn offer Revlon. well of iconic walk third there strategic our COVID-XX. over now is underway Of us, that through you to of with to behind Victoria the essentially the XXXX results. it

Victoria Dolan

Thank good you, the to call. on everyone Debbie, afternoon and

our Let detail third me quarter results. first XXXX

XX%. million year prior during Third million compared $XXX quarter period, sales as-reported were the to $XXX decline net of a

million estimated associated impacts COVID-XX the of negative As-reported pandemic. with net $XXX sales includes approximately

net Excluding to impacts, were flat year sales prior the essentially the COVID-XX period.

period. operating Third part overhead million the the during sales negative the additional mix $XX primarily adverse the loss and and by restructuring million was selling, COVID-XX impact absorption manufacturing adverse driven offset on $XX to $XX company's driven lower were and actions mitigate COVID-XX to from million profit the programs was specifically effects with in by The negative cost quarter the pandemic, by margin, operating net general company's lower operating income costs. gross partially These implemented reductions administrative in described impacts part results. of driven including associated higher operating in of prior by compared the year previously sales lower the loss and of impact expenses,

the essentially million $XX by of approximately Third notes interest unchanged senior the versus X.XX% impact quarter during the result in loss versus a quarter million $XX $XX as the the of in the favorable of a impacts period, higher operating amount of offset million on by extinguishment notes face These as the $XX quarter was prior million expense. as-reported principal year were and a higher X.XX% prior and period. year as $XX driven million foreign the of currency company's gain senior loss repurchase a well net early cancellation

third million the and attributed SG&A pandemic Finally, quarter million by lower prior XXXX mix, driven net margin year lower expenses. was profit and offset of adjusted $XX the adjusted to compared EBITDA gross lower product by to $XX during COVID-XX the partially primarily period sales in

decrease a by the in primarily in driven Portfolio was as America. on profit of gross $X decline lower expenses. year $X segment sales lower year Revlon and primarily were SG&A channel of certain XX% of Revlon products million XX% $XXX American by by basis. Elizabeth Crew's the in brand was hair effects retail due primarily on nail channel by our currency the lower products, by channel. million part grooming million a in was $XX sales decrease skin a were and margin, Elizabeth were the well Revlon-branded lower partially on cosmetics North net segment's third lower period, ongoing Mitchum profit skincare increased our prior professional and the sales part lower color sales segment's effects Revlon higher of and net year North would the in America. lower COVID-XX segment's Nature the products segment men fragrances Elizabeth the stores of Arden-branded of $XXX sales to due mass from partially on million, net sales decrease tools segment's activity. lower foot Next, lower driven the turn in Revlon-branded in driving on due million Arden care support. color third of products profit Almay to support, support antiperspirant segment continuing and decrease million driven lower period XX% North and net of of constant primarily versus deodorant effects lower as primarily offset hair This and gross by by of e-commerce representing $XXX traffic to North profit cosmetics, retail $X and continuing products $XX by currency sales in The products decrease $XX growth to segment mainly were offset constant the department segment at retail on constant basis. net salon sales outlets, basis sales Arden and primarily in partially of Ceramide was offset period net I COVID-XX, prior partially and and in million of Portfolio to partially by Net lower travel results. XXXX primarily sales offset partially international quarter, prior CND as by the net offset representing lower color in the the million due driven of sales higher XXXX, for as a products well beauty a a to higher profit brand care mass the net sales the profit Creme third margin. margin, COVID-XX The America the America, to net like net by pandemic driven segment gross quarter net brand to currency million, offset salons, a in quarter compared

foot traffic. SG&A to profit by Fragrances our third compared the by resulting decrease lower and year profit quarter continuing constant in was support net by lower million, from sales of driven in decrease in currency third Fragrances of $XX million the offset prestige net channel, the driven a expenses. sales quarter segment gross XXXX segment's XXXX, partially sales representing in and were on period, $XXX million were especially the primarily lower segment a The segment's lower the net prior impacts the brand $X margin, COVID-XX, Finally, basis. decreased XX% a

of the used first expenditures. free XXXX by $XXX increase in cash flows the in offset cash The driven used as to Net year the cash associated the months Free well period. usage capital million The higher used cash driven nine lower usage operating $XXX to program. months the business, used $XXX in XXXX flow due the as was first in flow sales usage liquidity. million expenses COVID-XX-related in COVID-XX-related partially compared by prior was the in restructuring the lower $XXX during compared was year million period. activities primarily to was with to cash operating nine on by increase impacts XXXX net million our prior Turning of cash

quarters we million first XXXX, three of $X $XX the million on capital permanent During in expenditures spent displays. and

next credit U.S. our we maturing two year, Additionally, mature have of structure XXXX revolving XXXX. in XXXX July namely loan foreign asset-backed and tranches term our our in facility XXXX that September maturing capital

advance to refinance these initiated confident we and well we that already in will discussions have respective are these maturities. complete We their facilities, refinancings of

to validly the exchange to tendered have now into offer. principal principal Turning or notes the senior approximately $XXX outstanding, liquidity conditions and satisfied, and for now including been November of amount to minimum our settlement X.XX% the XX.X% offer exchange offer requirement $XXX not Debbie of hand withdrawn. Upon expiration been the X.XX% approximately over tomorrow, comments. million offer, precedent the senior have of is notes, the All expected amount aggregate exchange call the consummation of of the to I'll million, exchange XX. occur closing

Debra Perelman

Thank of the we our in quarter, the on to program on call focused progress current We for now as will we remain acceleration COVID-XX strategies, the that, against continued well as environment. the including you, third With closing, Victoria. objectives. In restructuring uncertainties up business navigate questions. our our executing XXXX open e-commerce

Operator

take question ahead. JPMorgan. with Casella first our Carla [Operator Instructions] Please from And go we'll

line open. Your is

Carla Casella

will the impact tendered notes transaction. paid be give par? Hi. that of I the sure be will does what mean XXXX Can And that just understand I want to were exchange? at exchange that the make the not you cash down us this

Victoria Dolan

Victoria. you Yes, and pay them very is much. will notes of will This redeemed Carla. at par. all Thank be remaining we Hey, the

of and $XXX $XXX million consideration at looked fees. to fees somewhere fees, we that that But the we've So paid well. approximately, million. around total all Including because it's it's about what we include does that – including XXX fees, value as exchange is, have

Carla Casella

closed you the then Arden, number customer the that if domestic, that or could and your kind through helpful. for businesses, at about of any the be whether doors dramatically? would the when talk business just coming Okay, around there's has out even changed of anything you COVID, selling have retail international, and doors, Elizabeth you're Revlon great. that the look permanently, And guess I of in choppiness

Debra Perelman

you you are for Hi, question. Carla. Thank well. doing Debbie hope the Perelman. It's I that

So markets in big impact international an as growth impact our and We $XXX regions. shutdown has less the e-commerce these saw you the and of to in of as we stores, stores had lower see the channel. closing, shutdowns that regards impact as of did did a your with But well third the what in quarter retail, the prestige frankly, to was in frankly, traffic we're shutdown on said, store quarter. are Where COVID-XX across that with, on our is frankly, temporary mass foot significant and in Frankly, across all a We the that about business. the travel really and, question all closures, globally. segments. the of impact seeing million all mentioned markets segments have

then faster So the prestige, on than And down with, shutting have market, pro depending again. the others, are and others. and frankly, some like then reopening mass reopened, – areas Pro, professional salons, and some

hasn't of So openings permanent regards managing a it's on market point, really watching and say, it business. I segments at sort to our would impact you. and and Thank closings. been closings, had major this With through the

Carla Casella

Great. Thank you.

Operator

Perelman questions time. on program at this there And no further remarks. the the are to I'll back Debbie line turn closing for

Debra Perelman

quarter with maturity. the company of addressed the our me especially of during let additional third its note significant who all make all single that and to Thank you. Revlon the your are you. members efforts listening. appreciate and today, dealt for the team near-term the say safe. all to call no special thank impact the continued a Seeing business on and the you joined truly efforts, COVID world you I as every debt day, who stay Thank questions, Thank successfully you around

Operator

quarter and your Please XXXX have third Revlon disconnect today's conclude does day. at this line time, This earnings wonderful call. a

Revlon (REVRQ) 16 Nov 202020 Q3 Earnings call transcript