REV - Earnings call transcript Q3 2021

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Operator

Good morning. My name is Ashley, and I will be your conference operator today. At this time, I would like to welcome everyone to the Revlon Third Quarter 2021 Earnings Conference Call. [Operator Instructions]. Thank you, and I will now turn the call over to Jeff Kennel, Vice President, Treasury. ahead. go Please

Jeff Kennel

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

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

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

Debra Perelman

in share pleased our and I improved another the morning's momentum Thank business you thank for EBITDA the this which joining and key the demonstrate very to strong working. top challenges even you, are Jeff. navigate current we am that inherent financial execute growth Good results, of line is environment. continued strategy morning, The to in evidence call. positive our quarter ability as against our everyone, and macro our strategic our brands in pillars of performance

We are year. consecutive and prior for in quarter, brands grew core our segments on focused reporting driving growth the iconic second all compared to our the

Growth our an e-commerce business Global purchases world Accelerator Like other found and And the phase environment. to Importantly, into which our finally, and broader by evidenced this be a implementation our chain announced companies, the double-digit well digital a positive acceleration as of has been Revlon impact expand consumer continues the earlier growth and reach. have to we program, our to that continue supply on profitable we to for challenges the year growth. many focused channel this the global e-commerce for and are quarter. on as leveraging beauty partnerships viable impact remain convenient From committed us making perspective, around ESG we support both we our macro will are long-term

and pressures Specifically, of and shortages. components, modes logistics pricing ingredients persistent shortages across we key on all and are seeing transportation challenges labor

and steps the business and we'll costs We stabilizes. select our issues, until including continue are implementing appropriate managing manage these to taking situation address dynamically the to increases price

performance. to our Turning third quarter

versus $XXX sales of As million, year $XX or quarter. reported prior net X% representing growth were million

in by quarter reopening consumer growth this net with business. When our the impact quarter $XX market broader strong was of This Growth XXXX. versus of the results from negative impacted in of million, tapered continued global impacts, quarter challenges resuming. second quarter to COVID-XX million sales as due well of were third second or removing positively was driven exchange including the chain impact, supply XXXX growth of Foreign third representing as our activity $XX our X% the significant XXXX. markets

I million growth, margin. quarter, yield million. to pillars. you $XX This EBITDA growing detailed EBITDA results reported million the versus or was in our highest an third prior through both $XX on in years underscores And XX% the will take key and year that dollar relative focused in over of on Our reflects of growth update our Victoria shortly. quarters, continues will This strategy results. sustainable level $XX now third to financial X previously strategic provide adjusted profitable quarter our terms

of is scale of brands have or global to Our as unique Arden Elizabeth first market. maximize Revlon strength well the the in where positioning we brands pillar and those our iconic as

Arden few our approximately consumption with continue America a to markets third consecutive Revlon steady on in year-over-year second quarter. color Touching of very strong in growing strategies remains highlights. segments. the segment Net our in the double X% the market brand for focus in the executing in segments U.S. as global remaining with sales and cosmetics We of Revlon outpacing grew growth our in Revlon business North digits cosmetics and color our the on and prior grew X%. China U.S., key key quarter Portfolio Elizabeth third such In all quarter, with growth year double-digit our brand the over approximately

our our Satin Brow the and including Our filler support Ink to fiber in lip innovation Bad color, performance. Big Mascara continued market, Lash

sales of Our with Revlon strong remained business growth X%. net approximately Professional

XX% footprint, been less XX% reduced launch consumers in which Color formula very and as uses Our successful, air EMEA to and responding paper. has dressers plastic are and particularly vegan less Sublime packaging the

UniqOne marks Additionally, the of edition. the year and special which a our anniversary the we relaunch collection franchise, anniversary of celebrated XXth XXXX with

prior fragrance Arden. Elizabeth of XX% in quarter to approximately Turning grew sales this segment's over Globally, robust with XX% growth the net category. over year the

as Asia X-hour Green that well all our Tea. from led for COVID-XX. in in as in as to consecutive well brand. Both grew fragrances X-hour EMEA, recover by market skincare, Arden Within online key performed continues retail the panel White double franchise exceptionally Elizabeth a the of franchise especially second well, newest our remarkably well performed as For our as strong travel Tea, quarter, China digits,

pillars and in digits in Our prior Juicy Couture/Viva Juicy fragrance quarter Juicy of the as in due U.S. market. Fragrances Couture as to Oui distribution is segment the grew sales both that to double relative third la year. of well part of newest net the Couture Neon growth John of notable marked launches our Juicy consecutive expansion It this quarter Varvatos

consumers Crew markets depressed brands these Almay Additionally, brands grew return and in American well to XX% following as over our both XXXX.

saw building XX% transformation. growth we growth committed as our represents true strategic robust to creating channel our pillar throughout e-commerce quarter in We double-digit of a approximately remain sales net omnichannel on digital with e-commerce the now channel Turning now to consumers. second up net This our delivered XXXX our for third as of sales. XX%. experience We well

We are channel. launch the new Thee edition a leveraging our e-commerce with limited by Stallion. StockX with consumers Critical to expanding makeup evidenced brand, to Megan to into as collection e-commerce bring our direct-to-consumer is Revlon's collaboration strategy

On owned including interactive counters, local have they and digital beauty offering quarter, are Arden foundation online, at for Germany, and and third experience continue find one-on-one elizabetharden.com we of offline direct-to-consumer Australia. the in in additional the will interactive sites finders. we platform, bring Our suite our a and largest including U.S., tools, our sites the launched thrilled consultation Similarly, Spain tools. our to to Elizabeth fragrance consumers in-store remain

and diversity, create Our our equity strategic a the products third on is our of to the sustainability around and impact world inclusion pillar positive us through initiatives.

of Our brands driving our on be incorporating XXXX in over elements, packaging. products the are X/X formulation, to mission forward focused sustainable our with towards ingredients either or new sustainable

compounded market the against through market implement Revlon as our the for to group to we foundation of throughout HBCUs, holistic key future. focused the a Revlon's our our $XX our program We well in In enhance million strength on students continue implemented partnership put fields strategic reflection as select will closing, College to Almay in our will deliver brands reductions to which business consists wellness was mid-single-digit between of a in well critical are make of and on two, as elements: growth beauty of of the growth annual approximately are horizon. to or to industry at pressures. basis. founded on Creme in capabilities Negro Nature and executed key with upscale the diverse key to ever-changing on increased was for the and and positive drive And Revlon is growth as X products In initiative to our the expectations annualized capability rate margins; be $XX to support invest be environmental inclusive, Revlon cost a One, Fund company-wide and operating addition internal work of as continue well remain BeautyUnited. of with we mission markets; the proud as also as support and company's our momentum of finally, and currently first partnering and more we end approximately to three, experiencing and well million is used XXXX our program. verification brands BeautyUnited enrolled Global an our adapt X-year to efficiencies, United with over BeautyUnited brand Accelerator working the The track organic employees revenue This in the one RGGA which time building to ability element sales as our to build Growth our ambitions supporters. place growth, a to the organization.

call will supply our to now focused into dynamically our the continue macro against details on challenges and the quarter We financial I remain XXXX results. external on expect more while Victoria third And managing hand pressures. executing we chain to share steadily strategy to XXXX,

Victoria Dolan

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

support the of results, details walked QX financial XXXX the like in over the our share put place I years X strategy to on the pillars Debbie Before reiterate through we to call. ago earlier strategic I'd

ensure to capital to priorities and our is our support liquidity both sufficient strategic goal our First, structure.

to margin P&L focused and businesses the optimizing as supply, brands business second, including and dynamically impact and logistical gross the circumstances industry. business with on to investment are in labor Our is to working strategic and priorities capital. balance agility served to objectives smart choices order strengthen our core focused continue lines on and investment the managing sheet, posture market in ultimately well iconic we our our shortages the making across Revlon And adapt These align our and of have to across disciplined ever-changing all market.

impacted impacts to disruptions and were able Revlon third the mitigate we was largely quarter. EBITDA in to by costs, the higher Although quarter these supply in

I'd the Revlon's on basis. third to details, like Before into segment consolidated summarize results strong a I go quarter

XXXX of to X%, during the quarter As in currency basis. $XXX $XX an or a reported compared million $XXX sales of X% net third on period, roughly is were million the increase prior year million constant approximately which

as of While net and all the reported during Portfolio the over of revenue Arden XXXX prior our sales third double-digit segments Elizabeth quarter year grew, experienced period, growth. segments our

year growth now mentioned double-digit earlier, net experienced e-commerce XX% over approximately Revlon's also our the Debbie of As XX% represents at channel and prior sales. period

in $XX million offset third of and basis loss reported the million $XX As million points the period. in XXXX adjusted higher a increased year from XXXX quarter restructuring SG&A. income $X.X the million improvement by year $XX quarter EBITDA higher growth. in versus administrative higher operating gross XXX charges period. third a million the third in in selling, operating Adjusted of million by was higher driven income net prior million in and period, year driven million operating prior improved of in $XX sales Adjusted was of $X.X margin was primarily $XX the of margin to income by $XX during period, over The $XX compared operating in and prior income by general $XX quarter top of line the million gross prior the million and expenses, year XXXX to

versus by sales In year addition basis to the points period. this improved absolute of net percent as XXX improvement, prior a adjusted EBITDA

a versus loss net the in in XXXX quarter reported $XX loss As million period. third the net $XX prior year million was of

in as have approximately variance a would XXXX items, loss $XX of million year-over-year. nonoperating net million by reported from million, $XX debt foreign gain the and currency unfavorable driven Excluding in $XX of early by improved extinguishment

offset including offset Fragrances profit a of was lower a third quarter partially profit quarter basis sales in segment This The XXXX by million and of Juicy net or and net America the the net activity. double-digit due support constant regional products of Fragrances basis internationally. of currency the was progressive segment net Couture constant and XX% segment partially the net growth in segment on sales an increase period. in was increase extent, on brands. quarter were on Revlon brands of well ongoing sales to in to Elizabeth This products the million, North as year period. show hair or million increase million, pandemic sales of sales channel the compared XXXX This million outlets, XXXX higher third of professional of basis previously The department $XX America gross third a the partially net increase COVID-XX Cruise with X% are XX% of of above, a Revlon-branded was from offset ColorSilk a SG&A stores our beauty by higher increased to business. sales prior segment's XXXX the activity year constant increase profit traffic sales moderately connection the the brands, to quarter $X driven by period. compared net to of higher Elizabeth care in in million like higher to was increase to and particularly the third primarily currency a profit distributed moderately continuing as profit increase segment's over Higher an regions. primarily improvement other sales largely sales cosmetics, region care Revlon well care compared and prior related skin mass North million segment retail as portfolio prior was by of approximately was to of our basis driven the and increase was Tea international profit in part XX% by ongoing John regions. ongoing This foot million, to decrease as to or XX% of sales international $XXX portfolio Travel compared compared lower higher million, This year in channels was and certain This increase continuing and/or net in segment million at a expenses Revlon-branded other third $XX lifting activity. signs COVID-XX increase fragrances fragrances. higher color effects segment Tea a of Cosmetics margins. period. $XX to men's due the was partially increase currency segment retail by by basis the and year currency Arden tools partially on hair increase Revlon-branded Fragrances American in $X net also temporary quarter segment's Portfolio international in was the both of primarily Mitchum the America prestige as year prior CND currency net increase in in Next, to support regions. Portfolio during segment The skin constant million in partially the gross sales XXXX compared constant the Color decrease other by Revlon a $XX Retail Almay well by segments' XXXX higher decreased from in a strong Green North quarter sales the of the were gross on constant certain in described segment a increase COVID-XX antiperspirants to the improvement third net by offset was the a lower Varvatos. on the year XX% in the in America year and international basis or profit period. period. XXXX in $X sales million brand signs North support the the gross prior segment prior net during higher and local restrictions salons' the a and by White million, sold to of sales to of of driven ongoing during due $X higher growth to Arden due in nail This largely in profit care margin, from was improvement higher COVID-XX the sales with and expenses sales of in in or X% North by currency e-commerce were expenses, effects retail the $XX segment's the XXXX period. net were a to $XX million, net $XX of on products, growth was driven brand to support year net compared higher prior effects was pandemic. net increase Revlon higher driven There This increase higher quarter of pandemic America as sales offset brand in or constant to driven product. sales sales Fragrances a show growth The connection quarter sales partially international I'd $XX SG&A margin, Arden-branded the Elizabeth higher offset increase the support of regions, results. fragrances of margin. sales prior $X third sales $XXX by and net million, as period. and net approximately basis increase offset on and third million of was turn $XXX and net during pandemic, million, products, higher or $XXX lower net rooming signs and currency

Turning now to liquidity.

amount As cash as million credit less $X XXXX, revolving cash a borrowing was of first facility as of unrestricted $XXX million. equivalents by million cash had lower both anticipate million we of the as liquidity, business, XXXX, product used cash X capacity a by improve $XX XX, seasonality of used $XX September flow year approximately and Corporation's approximately period. in XXXX available on well loss prior of the compared the cash million liquidity in sequentially the amended in of decrease the million The months available used $XXX free year. a flow flows to will company cash free the finish float was Based driven in primarily and of net under the consisting decrease the of $XX as-reported working and capital. Free in used we

strategy, first capital chain our In the face in company the third million displays. XXXX, million, strength $XX quarter on challenges. coupled with positive our permanent reflect During $X our the and of industry macro X were of commercial expenditures broader the in spent months business summary, of momentum and the results the supply

Going the include These be industry-wide continue taking increases on managing supply the aggressively with the focused to with pressures. fourth to into suppliers right and working we chain risks associated price mitigate taking and costs. customers, steps quarter year, selective of our

our our and also closing comments. the Importantly, the strategic continue our deliver Debbie ability for to I'll on iconic are potential now hand brands. call confident execute growth we of to over to in against pillars

Debra Perelman

results our quarter. closing, In third in Victoria. of you, are proud strong Thank we the

the supply the questions. driving acceleration, And towards now and and focused including will program we challenges macro as of on brands our well on we omnichannel initiatives. move our actively ESG the through are as open our chain strategy, of iconic the we for remain RGGA executing the up our call As mitigating digital building our end momentum year,

Operator

first question Hale from Instructions] Barclays. with our take [Operator Holden We'll

Hale Holden

fourth the third give the to you if increases us a magnitude on product you of quarter that would saw that of and wondering the was whether or quarter? I ability sense shelf the cost overruns your in could impact the have in

Victoria Dolan

Thanks question. for the

We're top mind. obviously pleased in think results very I with of that's our QX.

was challenges way is we macro we're I think guess segment results -- given did X% said, the sell-in. talked it about that would of which best talked that Revlon results. we the we I about the some and our facing of our about dampen growth. As it about then And that also

consumption, we sales then our approaching in. also about So And sell-out was talked XX%. which and

color business. are is difference kind U.S. increases, of order case So a we it reduced of cost than We there and fill really some that saw the more other cosmetics, rate. that did magnitude our manage because you the of improve. margin parts mass though although And in saw Revlon impacted --

So P&L the deliver of to we the were across costs manage results to that. some be did we EBITDA And offset able that able we aggressively deliver. to

Debra Perelman

in your also And jump holiday. on question here to the with regards I'll

our driven mentioned portions as we've we're most work business which really able regards and Victoria to to has them seeing. impacted of vendors those closely suppliers ensure our been issues get protect worked chain with So side, from to shelf. on the on by the our with the holiday, and supply with that that been continue products holiday to the that we've And we color cosmetics are

Hale Holden

the growth second it then or your have some growth slower by impressive. really been affected wondering I if could stronger if in regions. were lockdowns had was And negatively question you or And quite international was I was

Debra Perelman

you growth With to that across all And shutdowns, pleased that. regions we're regards really international really the by. the we really the I strong the think managed through see, growth segments. exhibited

online. But meeting Pacific that could where you the there brands consumers have the well. Asia So as they're both the there team our region our shutdowns, some the in EMEA opened market in-store really and as well region, showcases it shopping delivered as in as really power were the as see, and they in shutdowns, were

Operator

next take JPMorgan. question Casella from Carla we'll with our And

Carla Casella

allowances we quarter? And and more a is this of picked barometer of bit kind are higher allowances. Or I'm they little why returns and quarter, to sequentially. a wondering fourth a level for and that returns of were returning The normal up

Victoria Dolan

So that's a good question.

closely. the not different on norm. worked some returns seen track allowances customers from very returns very anticipating a and our We and that's that. just in We've have with some We're just our timing our happen. customers terms of when think standpoint, of COVID, those that with returns anything timing with From the return is closely we I issues. volatility

into So nothing read that. unusual, to nothing

Carla Casella

then it is at you're thinking structural look opportunity where your forward, get Great. to of today to there revenue? the if of of going meaning pre-pandemic you smaller Okay. we in that levels? doors And would get are there prepandemic changes maybe businesses able to each versus back or shelf to the from or issues specific back being any fewer sectors, preclude or space Or XXXX of type levels

Debra Perelman

you you faster fairly much segment, can very, look right? stronger at know, growing perspective, don't care question, guidance. in if forward some operate recovering and a will that it's each track as the others, great continue you we say But well. So is industry Carla. see from any We And we the very skin segments are of than So give what an I carefully. recovered that's to that very

cosmetics slower at mass If in you really segment a the that's color recovery. had look globally,

continue watch dynamics industry, those know, you extremely we as So to beauty market. The is resilient. in the

the macro market. seeing remain that in on the the currently trends positive has focused it we're So impact very that we're environment, duty, very about the but on

Carla Casella

Okay.

it? mass, like Revlon terms I today the in space where your feet in of of other, just how in space shelf or other may ways know don't to brand So track it is drug, you food, specific, was comparable 'XX

Debra Perelman

versus with There's note see color we of cosmetics. of were Revlon where ebbs to say normal really nothing regards and we the would to continue call flows 'XX. in to like out I space today

Carla Casella

promotion sense one Do Fragrances fragrances? shipping just promotional Are going and items? back the into and for I'll setting it queue. get I'll a fragrance? thoughts pass holiday side, are holiday Any more on on, you up you we're a sets are And you retailers Okay. -- box on for big in planning more, the other or a quarter. then have the around But big in

Debra Perelman

our quarter the as highlighted I very, growth. fragrance mean, of fragrances. look recovered the whole, Prestige is performing consecutive we our third segment right, really strong, well as very And at a that's Fragrance as industry including fragrance globally prestige

we as when of be right, continue And to holiday able that I as we mentioned looking get forward going it's industry, on in to sets an performances. that holiday, we is to earlier as really all shelf believe to So question look were and another are strong. into those our equally

Operator

Wissink take next We'll question from your Steph Jefferies. with

Steph Wissink

on e-commerce business. the to wanted focus You

how If little much versus more you that about talk your of is could how dot-com is retail of much bit a partners? the businesses brand.com your

Debra Perelman

So thank question. you the for

e-commerce As e-commerce of when been to a continue at strategic has of X and and pillar sales the X acceleration. look quarter the the e-commerce I it on XXXX, you focus around mean, from you know, we XX% in at years net we progress made, And have in ended since, versus coming ours 'XX, we about was X%.

primarily brands as and our progress other there. we that is elizabetharden.com so well track own owned So e-commerce pure plays. we amount the brands, The continue to make e-commerce of way tremendous a as

So businesses. that capture in retailer.com number, not the do we

of there. the a So answer regards definitely with specifics it's we bit acceleration are seeing that a little But terms to to difficult in happening. trend,

Steph Wissink

follow-up question And channel mix. on one

your Do mentioned that some derisk the on of a to in traffic department you you the balance remarks direct the been improving. from Or I'm the had changes more legacy forward and channel you I you way? curious mix in if of emerging about continue of store that channels. do think think focus some reengage that going way in forward? channels

Debra Perelman

truly striving to omnichannel. today, It's you. because combination be both it of really a Thank is

to reopen, or in is the and store he back the they're has start have shopping engaged where consumer not wanted goes And They're consumer stores she to once But into that consumer -- right, the store. both on up was We today, So it going still meeting shopping. that to given online. online. did those back experiences see

to And that able the to the as consumer consultations elizabetharden.com so purchases. on tools digital to to up really sign We find enable able is for X. connect counter, digital our about their how they're well on it's the about us, mentioned for as

to So link more we're really both trying together seamlessly... channels

Steph Wissink

Retail. Travel on channels on us for one Last

you mentioned quarter. that, also think was in I the positive that

a are to your you 'XX? that If where for And what channel... sense just give of are relative could recovery expectations in you us

Debra Perelman

Yes. No, thank you so much.

been we've throughout quarters. really seen an as since aware, has With steady as the back travel industry, So as recovery has a a come XXXX. you travel not retail recovering And are to whole. regards XXXX,

travel impact And on a Travel has Retail. so industry big the

So from is with levels. I seen of our industry that industry that trends. as back reflective we XXXX have you perspective, come business -- what say to not to see regards would an And

Operator

Casella with take follow-up JPMorgan. We'll Carla from a

Carla Casella

retail Just of a Retail see out? mentioned couple before sales coming just Travel percentage of now what follow-ups. pandemic -- do One, travel you you the the and

Victoria Dolan

highly normally We significant to very not sales don't us, our overall mix. that relative but it's for out. Yes. profitable channel It's break a

Carla Casella

the from repatriating availability. repatriating Okay. revolver increase consider would you Great. and to the the cash do revolver have And that? that And balance you internationally, reduce then sitting restrictions

Victoria Dolan

talked focused revolver, dynamic governmental past approvals than some that that availability. restrictions others. of We've talked greater about a Obviously, have specific through exactly work in required where that you So we out that's daily the as and work good are But and constantly cash bring on that on for countries, entities capital know, you about and terms dynamic we question, are weekly working business. the that's paying minimum required. China it's are of foreign in all our to it's a dynamic basis. in some with the We hold so a we there the the specific down harder so they about,

Carla Casella

international have is of China, how you that $XX the And cash million? said Okay. much

Victoria Dolan

operate. as that that. need our -- cash required capital disclose minimum but to they it's balanced the I international don't across is to working not again, all But balanced right? We across entities, Because have international of said, it's

be globally. balanced So it's to going

Carla Casella

Great. pricing most impactful? which just Okay. it? to peak time seeing, the just coming the about that cost peak? you talk then of offset actions then increases cost increases? relate And you're your the do Or ones can And that does on is in passed are you how that see And quarter? we fourth where frame Have the to

Victoria Dolan

good a that's question. So

expecting of anybody -- the in I that But these industry, freight. labor inflationary the standpoint in cross as crystal about know, -- you I've as in think exact ball and I don't specifically what an on forward increases an are to read last well to seeing on As components and those when externally, not XXXX. we're into has know guidance pressures shortages I commodities, from even provide but what We're cost in industry think going that. people timing

And sure are We those a different so managing And right can go people taking have to have selective increases have like trade to against in announced making we the the manufacturing each of which factories against the into the that QX, and one inflationary offset are QX. to relative we effect the to of at plan our all holistic we will one, end we different pressures. keep going. price labor right, variables in strategies

our So the results. manage suppliers customers, structure working the also at to managing I increases, our price with own in cost, the QX that combination with of dynamic, relentlessly looking which our working top entire you line and think, then cost our saw,

Operator

to I closing time. this no further the call any questions at Debbie are over for Perelman will remarks. back There turn

Debra Perelman

you. that our Thank are to special you on you today joined you questions, world me a Revlon and all members make congratulations every efforts say additional the and quarter. the team all a no day, note to terrific for who call who Thank single around thank let listening. Seeing the

Operator

call. conclude And quarter third today's this does Revlon XXXX earnings

Revlon (REVRQ) 5 Nov 212021 Q3 Earnings call transcript