Revlon Announces Management Change and Preliminary 2017 Fourth Quarter and Full Year Financial Results
Jan 29, 2018
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,
- The Company currently estimates that net sales were approximately
$785 millionfor the three-month period ended December 31, 2017, compared to $801 millionin the fourth quarter of 2016. Full year 2017 net sales are estimated to be approximately $2.7 billion, compared to $2.3 billionin 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 millionin 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 millionin 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 millionprojected 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
$110and $115 million, compared to $149 millionin the fourth quarter of 2016. Full year 2017 Adjusted EBITDA is expected to be approximately $260 million, compared to $415 millionin 2016.
- The Company delivered strong results on the Elizabeth Arden Integration Program, realizing approximately
$70 millionof 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
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,|
|Reconciliation to net loss:|
|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|
(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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