Revlon Announces Management Change and Preliminary 2017 Fourth Quarter and Full Year Financial Results
Jan 29, 2018
Fabian Garcia Steps Down as President and CEO
Paul Meister Named Executive Vice Chairman of the Board of Directors and Will Oversee Day-to-Day Operations of the Company on an Interim Basis
“It has been a privilege to serve as CEO of this iconic company,” said
“This has been a difficult year for us balancing the successful
integration of Elizabeth Arden with the rise of e-commerce and specialty
beauty stores. We are aggressively catching up to that rapid
transformation and I want to thank Fabian for his leadership through
this challenging and dynamic period,” said
Added Meister, “I’m thrilled to help lead
Results of Operations
In connection with the Company’s management transition,
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The Company currently estimates that net sales were approximately
$785 million for the three-month period endedDecember 31, 2017 , compared to$801 million in the fourth quarter of 2016. Full year 2017 net sales are estimated to be approximately$2.7 billion , compared to$2.3 billion in 2016. -
The Company estimates that its reported net loss for the fourth
quarter 2017 was in a range of approximately
$60 million to $80 million , compared to$36.5 million in the fourth quarter of 2016. Full year 2017 net loss is estimated to be in the range of approximately$165 million to $185 million , compared to$21.9 million in 2016. The 2017 net loss includes the expected impact of a significant non-cash charge related to the recently enacted Tax Cuts and Jobs Act (Tax Reform) and an approximate$11 million projected non-cash goodwill impairment charge, on both a pre-tax and after-tax basis, recognized in the fourth quarter of 2017 relating to the Company’s Global Color Brands reporting unit.
-
Fourth quarter 2017 Adjusted EBITDA(a) is estimated to be
between approximately
$110 and$115 million , compared to$149 million in the fourth quarter of 2016. Full year 2017 Adjusted EBITDA is expected to be approximately$260 million , compared to$415 million in 2016. -
The Company delivered strong results on the Elizabeth Arden
Integration Program, realizing approximately
$70 million of synergies and cost reductions in 2017.
Commenting on the preliminary results, Revlon’s Chief Operating Officer,
Operations and Chief Financial Officer,
Mr. Peterson continued, “Although we still have continuing improvements
to make, we’re encouraged by our fourth quarter results, which represent
a sequential improvement from the first nine months of the year. Our
liquidity position has strengthened, and
Mr. Peterson added, “Contrary to false rumors and pure speculation in public reports, a material asset transfer is not being considered.”
These preliminary unaudited results are derived from preliminary
internal financial reports and are subject to revision based on the
Company's financial closing procedures and controls associated with the
completion of its year-end financial reporting, including all customary
reviews and approvals, and completion by the Company's independent
registered public accounting firm of its audit of such financial
statements for the year ended
ABOUT
Footnotes to Press Release
(a) Non-GAAP Financial Measures: The Adjusted EBITDA figures (the “Non-GAAP Financial Measures”) are non-GAAP financial measures that are reconciled to their most directly comparable GAAP measures in the accompanying financial table. The Company defines EBITDA as income from continuing operations before interest, taxes, depreciation, amortization, gains/ losses on foreign currency fluctuations, gains/losses on the early extinguishment of debt and miscellaneous expenses (the foregoing being the “EBITDA Exclusions”). The Company presents Adjusted EBITDA to exclude the impact of non-cash stock compensation expense, the EBITDA Exclusions and certain other non-operating items that are not directly attributable to the Company's underlying operating performance (the “Non-Operating Items”).
The Company excludes the EBITDA Exclusions and Non-Operating Items, as applicable, in calculating Adjusted EBITDA because the Company's management believes that some of these items may not occur in certain periods, the amounts recognized can vary significantly from period to period and/or these items do not facilitate an understanding of the Company's underlying operating performance.
The Company's management uses the Non-GAAP Measures as operating performance measures (in conjunction with GAAP financial measures) as an integral part of its reporting and planning processes and to, among other things: (i) monitor and evaluate the performance of the Company's business operations, financial performance and overall liquidity; (ii) facilitate management's internal comparisons of the Company's historical operating performance of its business operations; (iii) facilitate management's external comparisons of the results of its overall business to the historical operating performance of other companies that may have different capital structures and debt levels; (iv) review and assess the operating performance of the Company's management team and, together with other operational objectives, as a measure in evaluating employee compensation, including bonuses and other incentive compensation; (v) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and (vi) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments.
Management believes that the Non-GAAP Measures are useful to investors to provide them with disclosures of the Company's operating results on the same basis as that used by management. Management believes that Adjusted EBITDA provides useful information to investors about the performance of the Company's overall business because such measure eliminates the effects of certain charges that are not directly attributable to the Company's underlying operating performance. Additionally, management believes that providing Adjusted EBITDA enhances the comparability for investors in assessing the Company’s financial reporting.
Accordingly, the Company believes that the presentation of the Non-GAAP
Measures, when used in conjunction with GAAP financial measures, are
useful financial analytical measures that are used by management, as
described above, and therefore can assist investors in assessing the
Company's financial condition, operating performance and underlying
strength. The Non-GAAP Measures should not be considered in isolation or
as a substitute for their respective most directly comparable As
Reported financial measure prepared in accordance with GAAP, which for
Adjusted EBITDA is net income/loss. Other companies may define such
non-GAAP measures differently. Also, while Adjusted EBITDA, as used in
this release, is defined differently than Adjusted EBITDA for the
Company's credit agreements and indentures, certain financial covenants
in its borrowing arrangements are tied to similar financial measures.
The Non-GAAP Measures should be read in conjunction with the Company's
financial statements and related footnotes filed with the
REVLON, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
ADJUSTED EBITDA RECONCILIATION | |||||||||||||||||||||||||||||
(dollars in millions) | |||||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||
Reconciliation to net loss: | |||||||||||||||||||||||||||||
Net loss |
|
$ | (62.3 | ) | to | $ | (77.3 | ) | $ | (36.5 | ) | $ | (165.2 | ) | to | $ | (185.2 | ) | $ | (21.9 | ) | ||||||||
Income (loss) from discontinued operations, net of taxes | $ | 0.8 | (2.6 | ) | $ | 2.1 | (4.9 | ) | |||||||||||||||||||||
Loss from continuing operations, net of taxes | (63.1 | ) | (78.1 | ) | (33.9 | ) | (167.3 | ) | (187.3 | ) | (17.0 | ) | |||||||||||||||||
Interest expense and amortization of debt issuance costs | 41.8 | 38.1 | 158.9 | 112.0 | |||||||||||||||||||||||||
Loss on early extinguishment of debt | - | - | - | 16.9 | |||||||||||||||||||||||||
Foreign currency (gains) losses, net | (1.7 | ) | 12.2 | (18.5 | ) | 18.5 | |||||||||||||||||||||||
Provision for income taxes | 43.0 | to | 63.0 | 9.5 | 5.0 | to | 25.0 | 25.5 | |||||||||||||||||||||
Depreciation and amortization | 44.1 | 42.2 | 155.8 | 123.2 | |||||||||||||||||||||||||
Non-operating items(a) | 46.9 | 81.4 | 125.3 | 136.8 | |||||||||||||||||||||||||
Miscellaneous, net | (1.0 | ) | (0.5 | ) | 0.8 | (0.6 | ) | ||||||||||||||||||||||
Adjusted EBITDA |
|
$ |
110.0 | to | $ | 115.0 | $ | 149.0 | $ | 260.0 | $ | 415.3 |
(a) Includes the following items: non-cash stock compensation expense; restructuring and related charges; acquisition and integration costs; acquisition inventory adjustments; impairment charges; deferred consideration for CBB acquisition; and Elizabeth Arden 2016 Business Transformation program charges.
The provision for income taxes reflected in the table above includes a significant non-cash charge related to the recently enacted Tax Cuts and Jobs Act.
Forward Looking Statements
Statements made in this press release, which are not historical facts,
including statements about the Company's plans, strategies, focus,
beliefs and expectations, are forward-looking. Forward-looking
statements speak only as of the date they are made and, except for the
Company's ongoing obligations under the U.S. federal securities laws,
the Company undertakes no obligation to publicly update any
forward-looking statement, whether to reflect actual results of
operations; changes in financial condition; changes in general U.S. or
international economic, industry or cosmetics category conditions;
changes in estimates, expectations or assumptions; or other
circumstances, conditions, developments or events arising after the
issuance of this press release. Such forward-looking statements include,
without limitation, the following: (i) the Company’s belief that it is
aggressively catching up to the rapid transformation brought on by the
rise of e-commerce and specialty beauty stores; (ii) the Company’s
belief that it is evolving to grow, has gained momentum and is now
poised for future growth; (iii) the Company’s belief that while the
Company still has significant work to do, that putting its iconic brands
at the center of its strategy better positions the Company in the
rapidly evolving marketplace; (iv) the Company’s plans to enhance its
operating structure and drive innovation; (v) the Company’s belief that
it is gaining momentum on its strategy to respond to the accelerating
pace of innovation and increasing migration to digitally-focused
consumer engagement; (vi) the Company’s plans to expand its share of the
e-commerce category; (vii) the Company’s belief that with the momentum
that it generated in the fourth quarter of 2017, the combination of its
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Source:
Media:
Sard Verbinnen & Co
Stephanie Pillersdorf / Emily
Claffey / Julie Rudnick
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