REV - Earnings call transcript Q4 2020

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Operator

Good morning. My name is Nikki, and I will be your conference operator today. At this time, I would like to welcome everyone to the Revlon Fourth Quarter and Full Year 2020 Earnings Conference Call. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. the to turn President, Kennell, now Treasury. will call Jeff over Vice I go Please ahead.

Jeff Kennell

Good thank financial morning, the Nikki. XXXX. you, Thank and today, quarter December company the call. you the released for its results ended XX, Earlier joining for

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

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

Debbie Perelman

hope I joining are their and that Good healthy. families thank morning, us. Thank you staying everyone, you, safe everyone Jeff. for and and

our Our be saying families company focus year to and our by continues said, on the that this of navigated Revlon. It for a our without period. through for health consumers. XXXX encouraged was how I'm challenging and employees, their safety and industry That the goes

our resiliency, Our incredible products capture the and faced company increased enabled last accomplished to remain societal the key employees all Elizabeth iconic demonstrated the important the accelerated Arden as proud and discipline pandemic agility e-commerce and such year. U.S. and the make support causes on year. channel,as which as growth strict hand well company. due new well our cost to focused I in strategic the sanitizers, am throughout across brands including as e-commerce important complexity We channel, that the the of of our and Revlon mass pillars, China regions as company

Now the turning of our results to fourth for quarter XXXX.

was As with $XXX size were our while due COVID-XX, segments, believe, great category. especially the XX% perspective, by approximately by impact reported Revlon color impact the a fourth quarter we particular segment COVID-XX to of sales the the million. million impact our segments portfolio From net by $XXX relative and of approximately on driven of declined was all decline year-over-year. impact net cosmetics primarily sales impacted in to of This

quarter sales in prior third net XX% last decline steadily that the return year net second the of we notable decline our XXXX, declined improving While XX% prior versus an to followed by growth, is In eager decline and relative are now to the to quarter quarter-over-quarter. all it a approximate quarter. been sales year to XX% has

in the are we direction. right headwinds, macro through managing still heading While clearly

previous controls the from negative against top line expenses quarters, two maintained over COVID-XX. As impact mitigate strong with the we to

China. primarily on focus such as prioritize to we brand First, and areas support e-commerce growth

indirect actions control was we drive of from relative announced to These were able the at margin, period approximately year-defining EBITDA however, XXX our which, in to approximately our COVID-XX Adjusted an key program restructuring was work start XX% expenses. points. that of XXXX. capture to helped regions same we from the adjusted flat to brands. Revlon our and improved representing And increase million, all impacted $XXX basis third, fourth XXXX savings Though Second, XXXX. XX% XXXX at EBITDA, was and challenge approximately a year-over-year, of quarter

the in We we fourth remains the momentum importance recovery continues Tmall to saw of we to approximately perform and quarter strongly E-commerce very XXXX. have well and represents where performed in in North sales Across and grew mass, XX/XX brand net professional some the growth regions prestige particularly our approximately fourth XX% the this the XX%. growth e-commerce of Elizabetharden.com during in this most fourth exceeding across strong, company, channels now e-commerce e-commerce see also XX% growth as channel XX%, green seen We shoots XX% strong experienced China. and continue our double-digit of growth event to in quarter. the And channel. in over America, approximately quarter. on quarter in with compared

prior by XX%. remains with skin business grew China, grew Arden important America, and fragrances basis, quarter net supporting key company's In Elizabeth in year-over-year. important channel. growth quarter key a where invest Arden, our driven net growth brands constant approximately X% category. XX% for forward, global to pillar going the grew business catalyst we and aggressively And the North continue to further on showed building a e-commerce care our year capabilities also Elizabeth currency the in over last sales relative skincare in our As will sales and this an this resiliency

season a to the very holiday strong growth our in XXXX. the in saw of earlier Our in both drivers were Ceramide is launch selling Prevage fourth quarter year. critical and regions period and pleased due business, capsules brands that part franchises our for of fragrances acid hyaluronic I'm The key key a some this

when which double digits driven strong Arden launched by Our this fragrances over and Tea grew franchises, year earlier prior grew White in Tea it the of added animation White The launch XXXX. business Elizabeth branded year-over-year quarter. both Blossom to Green Mandarin our

Additionally, prestige Couture and to one line. strong in experienced Viva part channel. saw Juicy from prestige mass our growth core brands brand, men's our Juicy Further, key la the we our Lobule of remains Varvatos fragrance number growth John launches successful and the due of in the which Varvatos

and quarter Before pivoted XXXX have to to we reflecting handing a beyond. opportunities Victoria fourth to I the capture back on the to emerge details our circle and by call stronger as from anticipate this I to additional want share my internally how to opened remarks how we in XXXX regarding and whole results, poised year

cost First, measures, and our we addition played in Revlon restructuring EBITDA important role our on programs, an our have delivered successfully in our margin. XXXX in-year which to improved optimization control XXXX

U.S. learned And with adjusting asset-based and lastly, of poised our Second, of maturities ways we foreign term to has and plans, working the our XXXX our of changing swap our that are that be strategies to and you agile, debt of change undoubtedly evolve. completed I quarter, quarter ensure our accelerated Victoria revolver Revlon to are. there the to so truly And the a at continue that loan of adapt the the walk will and turn evolving forefront our in and we are to we will continue where is seeing will is adjust trends results. signal they of it and company, to to horizon. consumers our imminent consumer the in organization now dynamics are capture details amendment XXXX last no completed, through asset-based refinancing the reaching that fourth This on

Victoria Dolan

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

of XX% results. currency basis XXXX net quarter year XX% reported fourth decline and an sales as-reported compared our million to Fourth a detail on the first prior $XXX quarter a $XXX me on constant million were Let as basis. during period, approximately

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

Fourth along by have offset its lower impact impacts COVID-XX restructuring implemented associated operating the gross to margin specifically of and with impacts, was able general driven year the was associated increased reductions overhead and costs impacts the with Excluding activities. $XX of expenses, the associated with cost during impact operating driven income basis the These the versus mitigate program actions results. administrative with to in the compared SG&A, part sales impacts. the with company's improve reductions the to partially company's quarter COVID-XX by XXX period. negative refinancing in various by cost associated the $XX sales, costs of the currency operating on company's the COVID-XX were primarily by pandemic higher by lower foreign manufacturing COVID-XX favorable the program, points the adverse The selling, company along with absorption higher was additional debt pandemic, prior the net mix adverse million company's the and driven impacts costs restructuring income on million year pandemic Despite would million prior $XX net period. sales

As loss higher assets in deferred the reported by well company's primarily as $XX increase fourth versus million million period. charge net in valuation prior was net allowance for related to quarter income of was federal the driven million. expense $XXX million net XXXX interest an The $XXX as $XX loss net tax the year the noncash in of

our of year against EBITDA in expenses. primarily by quarter period was prior million flat $XXX driven adjusted essentially over the control fourth Finally, the XXXX, strong

was million segment's approximately through results to currency of company's of lower fragrances cost XX%. Revlon XXXX representing of fourth segment mitigate driven million our from higher driven an SG&A primarily lower net an to The Next, $XXX by Revlon lower which brand million, sales prior were the in by impact increase approximately decrease I reductions decrease driven America, color restructuring adverse cosmetics. allowances on XXXX mainly representing tools program. $XX in lower the beauty Elizabeth the Asia as quarter, region. basis. achieved operating by designed would quarter growth The primarily sales sales constant in like in $XXX on profit approximately net partially care reported North well X% company's support, Revlon in initiatives year segment's Revlon XX% constant expenses were to was on to increase period, COVID-XX by as fourth by the and results. grew customer the net $XX sales and the This an skin the net as currency Arden, the basis. were million a segment offset turn a the driven segment Revlon-branded increased

that higher indicating offset of brand net with revenues recovery to essentially support partially Additionally, being in flat a the year was segment sales increase X% million, against an as prior North higher America approximate growth, the by showed $XX beginnings geography. profit Elizabeth Arden the expenses. period due reported

which saw slight quarter were sales with declines segment million in was the of year currency support well color the As period by as expenses. in Mitchum, decrease unable decrease salon aligned offset and net segment in profit as portfolio constant lower Almay, declines $XXX offset both We as of American segment's Crew growth the our of XX% a and we've profit for versus reported $X prior by a to CND, were closures. this SG&A net lower XXXX, fourth was million expenses seen cosmetics margin, impacted but Portfolio category $XX Cream a lower basis. gross on and the sales Nature partially of brand million, in reported driven the by and

driven the results quarter the continued segment North fourth company's to a fourth This million constant spots, reported Varvatos were mitigate to designed in a the segment's The reported partially Juicy decrease in currency by the million impact segment basis. John as as the XXXX of including and fragrances driven on well were in net bright the America. $X XXXX, reductions increase of prior of net as XX% $XX primarily COVID-XX. operating lower the by COVID-XX through Fragrances on restructuring of Curve the a Couture, cost offset adverse compared was as impact our $XXX million, XXXX year program. sales adverse sales was achieved representing Revlon by period initiatives Finally, quarter profit company's

million used XXXX $XX was to cash $XX million in ongoing compared to free flow in operating increase part compared used operating the in to higher in to COVID-XX's cash during $XXX flow XXXX. business. in used Free used flow primarily Turning $XX usage activities impacts The was usage on was million cash adverse in due XXXX. liquidity. cash Net driven million by XXXX

During million in $XX on capital permanent and expenditures XXXX, $XX spent we million displays.

our X.XX% on a brief note Just offer. notes exchange senior

precedent the last exchange requirement we occurred As of the including consummation $XXX the were November million, stated XX. quarter, offer all to on minimum satisfied, and conditions settlement of liquidity

and closed refinanced amendment, an credit agent the continuing debt scheduled September from extends as or facilities. other its XXXX. extended things, agent. million company The our to the X, the June among XXXX We with revolving $XXX amendment facility collateral of two asset-based the XXXX, maturing March revolving During administrative of agreement credit maturity Citibank, XXXX to

mature We were I'll company's proceeds administrative comments. now foreign agent. call term used the scheduled fund XXXX. loan also closed is $XX Debbie July XXXX asset-based million Blue The and over facility, collateral loan a Torch The term facility mature agent ongoing in of to the and foreign replaces asset-based which needs. was liquidity LLC for term to of the scheduled X, hand to as to on loan XXXX repay on March Finance closing asset-based that term the the with the loan company's XXXX, new

Debbie Perelman

line the our top focusing by recovery now Revlon acceleration, We strategies, markets and emerging driving XXXX our up core the anticipate questions. and we to in including growth such closing, open for from that, brands fourth the towards key iconic growth Elizabeth line. call improvement bottom once With and driving on COVID-XX see business Thank Arden e-commerce we as quarter, will our China. you, of challenges protecting of again from Victoria. while continued In

Operator

[Operator Please now with our take Steph question Jefferies. Instructions] first ahead. from We'll Wissink go

Your open. line is

Steph Wissink

to gross that some of a into you Debbie, the you're Almay, thinking could brands. and permanent for SG&A of controls are into improvements to much to we performance carry for the Victoria, much the and the then just spend Just forward? how on on is the XXXX in should is year assess given Revlon How And shelf you over next for one you've the you've space that the continue COVID? in of back and improvements question cost program that margin, from how much course about how cosmetics. year the those come trying savings leaned just seen this color of even for cost support versus first

Debbie Perelman

question. uptick track looking cosmetics upturn. that see incredible summer and to little is really think industry happened and -- as a stimulus for I Do color of the sent what heard recovery industry any major mitigate cosmetics. the there believe start normal that regards see a focused But normal of is and throughout checks stimulus believe I this to We loss. from 'XX per provide there's but started the and trend, will category the opportunity what the you and guidance. very we can -- to with demand. ebbs see we again? some Thank so see start color changes. looking are towards say to came We XXXX, flows with didn't the regards the of space Look, the bit and that regards of as industries, to for space, the so. the reopen as with terms don't whole, shelf tracking With And and course decline an a states that pent-up we look, Debbie. in. standpoint, We're to that We're had working the over you've that industry. nothing to an consumers. in know it's within to believe checks 'XX, your we applicable as This to in on, in whole, cosmetics We a that We lot very the to regards have of is forward-looking consumer are question, when particularly other of obviously, I color behavior, understanding year this as

you. we guidance. the don't look don't an It's, know, our that forward-looking regards provide you to with have to short the space, that forward industry as again, regards is believe rebound. to Thank we seen extremely with But and I -- own resilient industry, So we disruption term.

Victoria Dolan

Okay. XXXX is program. And the savings, point you on the out: our There gross improvements with in were portions and one would rightly -- thank more and sustainable program; restructuring you then two which started optimization your as the for call XXXX to we I were SG&A structural, margin. reductions, cost with what question

other furloughs, some made as in relative changes were there brand temporary employee around investments work taken weeks Now will not which we to in support as and repeating. be well our measures reduced XXXX

unilaterally are of we focused so efficiency invest the amount the business, on can operating right have ensuring of we cash that ensuring brands flow So we line. can our our the that we so top in grow

it XXXX. what our deliver would announced which support $XXX restructuring continue XXXX fact through We million in that deliver, is we million of will to the the $XXX range to program

Steph Wissink

comments? innovation a going context hopefully, launch the to in put her the to your demand have category held just we're effect. out, first in you from you Were plans I XXXX back this with consumer could think excess X be follow-up I purchase. Maybe when more that capital of major well question what there bit the in just back, about some there's assess, you as come as innovation just excitement just a XXXX? in your of to does trying to any stimulus, to expect little that initiatives Debbie, to talk pent-up kind that thrill be as enough to

Debbie Perelman

focused it's think had teams you, in terms the really throughout that the we market. question. what are Look, executing highlights agility great the year Steph. on Thank managing of our in and a we I are how it And

of market as brands back the as well well on on look across in mass, professional lot a in both as of our we executing XXXX XXXX executing right, in with excitement of as the So bring into focus in-store brands a the digital. in on real our all with launches closures to market, executing innovation closures And product state across closures channel. actually actually the the multiple hold in did the do the given we given and prestige

So we're well prepared to excitement my right, I globally We're frankly, bring think to to that industry cosmetics. beyond pent-up is the itself capture as within from I prepared. that prepared perspective, that beauty, consumer as believe just demand, color that

Operator

take with from Please R.W. We next Ruggiero Steven will Pressbridge. question go ahead. our

open. line Your is

Steven Ruggiero

about can a to did it permanent of for that cut 'XX? if the million? or 'XX, give purchase that And is to continue sense displays, in back CapEx, $XX on you that a remain number Your 'XX will going of good you us also you're million in $XX that

Victoria Dolan

in XX-K, and -- taking those of we And our of have the question. updated those good we are for very a the see both ranges guidance in -- that That's both you'll up.

find right, you you're artificially me quickly the given Let reaction because, them for in somewhat low numbers those were to XXXX COVID.

if So just you you. for will I that one me second, bear with find

second. our saw they again, are have we X is continue And were but COVID It by reinvest Just in business. XX-K, up obviously, in to COVID. 'XX by as to because, both impacted, -- we you the

Steven Ruggiero

late And potential year. attractive you that trademark last transactions of deal any signed also that like license you're contemplating in Are Troy that, Helen 'XX? other

Victoria Dolan

don't we optimize to our But So really optimize at we transactions. are and and comment portfolio our ways always structure. capital our obviously, on business potential looking

Steven Ruggiero

can a us transactions give some Can result debt your of give just is sense? a March maturities? liquidity a the further-out with those as couple you of as in question, today? number liquidity you entered you us a provided final And into that transactions of What

Victoria Dolan

collaterals, The it so the So us that borrowing we $XX from collateral. some rightly liquidity. so amount as our with $XX went really the of million to we about incremental the U.S. point actually refinanced foreign ABTL Obviously, had transactions, base value the The same talked that ABL fluctuates out. million. to you immaterial provided

comfortable with are we year. position the have comfortable and liquidity liquidity for that also sufficient as are have our we now, we So we

Operator

now questions for back There Debbie at over call appear closing Perelman to to further be time. would the any I this remarks. turn no

Debbie Perelman

a let and all no truly passion make additional and you Thank say the of XXXX. all and Revlon am you. and efforts our note significant me a thank your to the today Have dedication single are safe efforts special of continue who continued joined to Thank the appreciative healthy. to members who listening. Seeing around you day. for day, throughout questions, good all you every I and world call team stay of all

Operator

today's wonderful conclude Revlon at Earnings have XXXX and a does this Quarter This and Full Fourth Year day. time, your Please lines Call. disconnect

Revlon (REVRQ) 11 Mar 212020 Q4 Earnings call transcript