SEC Filing | Revlon, Inc.

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rev-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended September 30, 2021
			OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from__________________ to _______________

Commission File Number

Registrant; State of Incorporation; Address and Telephone Number

IRS Employer Identification No.

1-11178

Revlon, Inc.

13-3662955

Delaware

One New York Plaza

New York, New York 10004

212-527-4000

33-59650

Revlon Consumer Products Corporation

13-3662953

Delaware

One New York Plaza

New York, New York 10004

212-527-4000

Securities registered pursuant to Section 12(b) or 12(g) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Revlon, Inc.

Class A Common Stock

REV

New York Stock Exchange

Revlon Consumer Products Corporation

None

N/A

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.


Revlon, Inc.	Yes ☒	No ☐
Revlon Consumer Products Corporation	Yes ☐	No ☒

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller Reporting Company

Emerging Growth Company

Revlon, Inc.

Yes ☐ No ☒

Yes ☒ No ☐

Yes ☐ No ☒

Yes

☒

No ☐

Yes

☐

No ☒

Revlon Consumer Products Corporation

Yes ☐ No ☒

Yes ☒ No ☐

Yes

☒

No ☐

Yes

☐

No ☒

If an emerging growth company, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Act).


Revlon, Inc.	Yes	☐	No ☒
Revlon Consumer Products Corporation	Yes	☐	No ☒

Number of shares of common stock outstanding as of September 30, 2021:


Revlon, Inc. Class A Common Stock:			53,659,772
Revlon Consumer Products Corporation Common Stock:			5,260

At such date, (i) 46,223,321 shares of Revlon, Inc. Class A Common Stock were beneficially owned by MacAndrews & Forbes Incorporated and certain of its affiliates; and (ii) all shares of Revlon Consumer Products Corporation ("Products Corporation") Common Stock were held by Revlon, Inc.

Products Corporation meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q as, among other things, all of Products Corporation's equity securities are owned directly by Revlon, Inc., which is a reporting company under the Securities Exchange Act of 1934, as amended, and which filed with the SEC on November 5, 2021 all of the material required to be filed pursuant to Section 13, 14 or 15(d) thereof. Products Corporation is therefore filing this Form 10-Q with a reduced disclosure format applicable to Products Corporation.

REVLON, INC. AND SUBSIDIARIES

INDEX


PART I - Financial Information
Item 1.	Financial Statements of Revlon, Inc. and Subsidiaries
	Unaudited Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	2
	Unaudited Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020	3
	Unaudited Consolidated Statement of Stockholders' Deficiency for the Three and Nine Months Ended September 30, 2021 and 2020	4
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	5
	Financial Statements of Revlon Consumer Products Corporation and Subsidiaries
	Unaudited Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	7
	Unaudited Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020	8
	Unaudited Consolidated Statement of Stockholders' Deficiency for the Three and Nine Months Ended September 30, 2021 and 2020	9
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	10
	Combined Notes to Unaudited Consolidated Financial Statements	12
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	45
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	62
Item 4.	Controls and Procedures	63

PART II - Other Information
Item 1.	Legal Proceedings	66
Item 1A.	Risk Factors	66
Item 5.	Other Information	66
Item 6.	Exhibits	66
	Signatures

Table of Contents

REVLON, INC. AND SUBSIDIARIES

PART I - FINANCIAL INFORMATION

REVLON, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in millions, except share and per share amounts)

(Unaudited)


	September 30, 2021		December 31, 2020

ASSETS
Current assets:
Cash and cash equivalents	$	73.3	$	97.1
Trade receivables (net of allowance for doubtful accounts of $9.0 and $13.0, respectively)	391.3		352.3
Inventories, net	461.5		462.6
Prepaid expenses and other assets	132.7		134.4
Total current assets	1,058.8		1,046.4
Property, plant and equipment (net of accumulated depreciation of $559.9 and $528.9, respectively)	305.9		352.0
Deferred income taxes	23.7		25.7
Goodwill	563.1		563.7
Intangible assets (net of accumulated amortization and impairment of $318.8 and $296.8, respectively)	401.5		430.8
Other assets	95.2		109.1
Total assets	$	2,448.2	$	2,527.7

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current liabilities:
Short-term borrowings	$	0.6	$	2.5
Current portion of long-term debt	163.8		217.5
Accounts payable	245.6		203.3
Accrued expenses and other current liabilities	400.5		420.9

Total current liabilities	810.5		844.2
Long-term debt	3,302.3		3,105.0
Long-term pension and other post-retirement plan liabilities	186.5		212.4
Other long-term liabilities	215.2		228.1

Stockholders’ deficiency:
Class A Common Stock, par value $0.01 per share: 900,000,000 shares authorized; 58,425,439 and 56,742,513 shares issued, respectively	0.5		0.5
Additional paid-in capital	1,092.7		1,082.3
Treasury stock, at cost: 1,992,225 and 1,774,200 shares of Class A Common Stock, respectively	(37.6)		(35.2)
Accumulated deficit	(2,848.5)		(2,631.7)
Accumulated other comprehensive loss	(273.4)		(277.9)
Total stockholders’ deficiency	(2,066.3)		(1,862.0)
Total liabilities and stockholders’ deficiency	$	2,448.2	$	2,527.7

See Accompanying Notes to Unaudited Consolidated Financial Statements

Table of Contents

REVLON, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(dollars in millions, except share and per share amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,

	2021		2020		2021		2020

Net sales	$	521.1	$	477.1	$	1,463.5	$	1,277.7
Cost of sales	221.2		234.3		608.7		600.7
Gross profit	299.9		242.8		854.8		677.0
Selling, general and administrative expenses	256.1		253.4		796.0		739.1
Acquisition, integration and divestiture costs	0.6		0.9		1.8		4.2
Restructuring charges and other, net	9.0		(0.7)		22.8		44.8
Impairment charges	—		—		—		144.1
Loss (gain) on divested assets	0.1		(1.1)		(1.7)		(0.5)
Operating income (loss)	34.1		(9.7)		35.9		(254.7)
Other expenses:
Interest expense, net	63.1		68.7		183.9		178.0

Amortization of debt issuance costs	8.7		7.8		30.7		17.8
Gain on early extinguishment of debt	—		(31.2)		—		(43.1)
Foreign currency losses (gains), net	9.9		(9.8)		11.5		9.1
Miscellaneous, net	0.1		(2.6)		2.8		13.9
Other expenses	81.8		32.9		228.9		175.7
Loss from operations before income taxes	(47.7)		(42.6)		(193.0)		(430.4)
Provision for (benefit from) income taxes	5.4		1.9		23.8		(45.2)


Net loss	$	(53.1)	$	(44.5)	$	(216.8)	$	(385.2)
Other comprehensive income (loss):
Foreign currency translation adjustments	(0.6)		2.2		(6.0)		7.3
Amortization of pension related costs, net of tax(a)(b)	3.5		2.8		10.5		9.3





Other comprehensive income, net	2.9		5.0		4.5		16.6
Total comprehensive loss	$	(50.2)	$	(39.5)	$	(212.3)	$	(368.6)


Basic and Diluted (loss) earnings per common share:	$	(0.98)	$	(0.83)	$	(4.02)	$	(7.22)









Weighted average number of common shares outstanding:
Basic	54,025,861		53,476,354		53,899,732		53,371,986
Diluted	54,025,861		53,476,354		53,899,732		53,371,986

(a) Net of tax expense of nil and $0.5 million for the three months ended September 30, 2021 and 2020, respectively, and net of tax benefit of nil and $0.7 million for the nine months ended September 30, 2021 and 2020, respectively.

(b) This amount is included in the computation of net periodic benefit costs (income). See Note 10, "Pension and Post-Retirement Benefits," for additional information regarding net periodic benefit costs (income).

See Accompanying Notes to Unaudited Consolidated Financial Statements

Table of Contents

REVLON, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY

(dollars in millions, except share and per share amounts)

(Unaudited)


	Common Stock		Additional Paid-In Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Deficiency

Balance, January 1, 2021	$	0.5	$	1,082.3	$	(35.2)	$	(2,631.7)	$	(277.9)	$	(1,862.0)
Treasury stock acquired, at cost (a)	—		—		(2.4)		—		—		(2.4)
Stock-based compensation amortization	—		3.1		—		—		—		3.1
Net loss	—		—		—		(96.0)		—		(96.0)
Other comprehensive (loss) income, net (b)	—		—		—		—		(1.4)		(1.4)
Balance, March 31, 2021	0.5		1,085.4		(37.6)		(2,727.7)		(279.3)		(1,958.7)
Treasury stock acquired, at cost (a)	—		—		—		—		—		0.0
Stock-based compensation amortization	—		3.4		—		—		—		3.4
Net loss	—		—		—		(67.7)		—		(67.7)
Other comprehensive (loss) income, net (b)	—		—		—		—		3.0		3.0
Balance, June 30, 2021	0.5		1,088.8		(37.6)		(2,795.4)		(276.3)		(2,020.0)





Treasury stock acquired, at cost (a)	—		—		—		—		—		—
Stock-based compensation amortization	—		3.9		—		—		—		3.9
Net loss	—		—		—		(53.1)		—		(53.1)
Other comprehensive (loss) income, net (b)	—		—		—		—		2.9		2.9
Balance at September 30, 2021	$	0.5	$	1,092.7	$	(37.6)	$	(2,848.5)	$	(273.4)	$	(2,066.3)


	Common Stock		Additional Paid-In Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Deficiency
Balance, January 1, 2020	$	0.5	$	1,071.9	$	(33.5)	$	(2,012.7)	$	(247.4)	$	(1,221.2)
Treasury stock acquired, at cost (a)	—		—		(0.4)		—		—		(0.4)
Stock-based compensation amortization	—		2.4		—		—		—		2.4
Net loss	—		—		—		(213.9)		—		(213.9)
Other comprehensive (loss) income, net (b)	—		—		—		—		(2.7)		(2.7)
Balance, March 31, 2020	0.5		1,074.3		(33.9)		(2,226.6)		(250.1)		(1,435.8)
Treasury stock acquired, at cost (a)	—		—		(1.3)		—		—		(1.3)
Stock-based compensation amortization	—		1.1		—		—		—		1.1
Net loss	—		—		—		(126.8)		—		(126.8)
Other comprehensive (loss) income, net (b)	—		—		—		—		14.3		14.3
Balance, June 30, 2020	$	0.5	$	1,075.4	$	(35.2)	$	(2,353.4)	$	(235.8)	$	(1,548.5)
Treasury stock acquired, at cost (a)	—		—		—		—		—		—
Stock-based compensation amortization	—		5.1		—		—		—		5.1
Net loss	—		—		—		(44.5)		—		(44.5)
Other comprehensive (loss) income, net (b)	—		—		—		—		5.0		5.0
Balance, September 30, 2020	$	0.5	$	1,080.5	$	(35.2)	$	(2,397.9)	$	(230.8)	$	(1,582.9)

(a) Pursuant to the share withholding provisions of the Fourth Amended and Restated Revlon, Inc. Stock Plan (as amended, the "Stock Plan"), the Company withheld an aggregate of 763 and 756 shares of Revlon Class A Common Stock during the three months ended September 30, 2021 and 2020, respectively, and 163,259 and 127,725 shares of Revlon Class A Common Stock during the nine months ended September 30, 2021 and 2020, respectively, to satisfy certain minimum statutory tax withholding requirements related to the vesting of restricted shares and restricted stock units ("RSUs") for certain senior executives and employees. These withheld shares were recorded as treasury stock using the cost method, at a weighted-average price per share of $12.84 and $8.50 during the three months ended September 30, 2021 and 2020, respectively, and $14.94 and $12.99 during the nine months ended September 30, 2021 and 2020, respectively, based on the closing price of Revlon Class A Common Stock as reported on the New York Stock Exchange (the "NYSE") consolidated tape on each respective vesting date, for a total of approximately $9,700 and $6,400 during the three months ended September 30, 2021 and 2020, respectively, and $2.4 million and $1.6 million during the nine months ended September 30, 2021 and 2020. See Note 11, "Stock Compensation Plan," for details regarding restricted stock awards and RSUs under the Stock Plan.

(b) See Note 13, "Accumulated Other Comprehensive Loss," regarding the changes in the accumulated balances for each component of other comprehensive loss during the nine months ended September 30, 2021 and 2020, respectively.

See Accompanying Notes to Unaudited Consolidated Financial Statements

Table of Contents

REVLON, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)

(Unaudited)


	Nine Months Ended September 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(216.8)	$	(385.2)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	96.8		108.3
Foreign currency losses from re-measurement	11.5		9.1
Amortization of debt discount	0.7		1.3
Stock-based compensation amortization	10.4		8.6
Impairment charges	—		144.1
Provision for (benefit from) deferred income taxes	3.9		(54.4)
Gain on early extinguishment of debt	—		(43.1)
Amortization of debt issuance costs	30.7		17.8

Gain on divested assets	(1.7)		(0.5)
Pension and other post-retirement cost	3.6		4.2

Paid-in-kind interest expense on the 2020 BrandCo Facilities	14.1		6.2
Change in assets and liabilities:
(Increase) decrease in trade receivables	(44.4)		78.0
Increase in inventories	(8.1)		(79.4)
Decrease (increase) in prepaid expenses and other current assets	0.2		(1.7)
Increase (decrease) in accounts payable	56.1		(27.8)
Decrease in accrued expenses and other current liabilities	(25.2)		(25.2)
Decrease in deferred revenue	(2.0)		—
Pension and other post-retirement plan contributions	(20.5)		(7.5)
Purchases of permanent displays	(15.0)		(16.5)
Other, net	19.0		6.8
Net cash used in operating activities	(86.7)		(256.9)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(6.3)		(7.4)


Proceeds from the sale of certain assets	2.1		—
Net cash used in investing activities	(4.2)		(7.4)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in short-term borrowings and overdraft	(12.5)		(0.7)
Borrowings on term loans	305.0		880.0
Repayments on term loans (a)	(186.7)		(354.7)


Net (repayments) borrowings under the revolving credit facilities	(2.7)		19.5





Payment of financing costs	(17.9)		(108.3)

Tax withholdings related to net share settlements of restricted stock and RSUs	(2.4)		(1.6)

Other financing activities	(0.3)		(0.3)
Net cash provided by financing activities	82.5		433.9
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(2.4)		(0.4)
Net (decrease) increase in cash, cash equivalents and restricted cash	(10.8)		169.2
Cash, cash equivalents and restricted cash at beginning of period (b)	102.5		104.5
Cash, cash equivalents and restricted cash at end of period (b)	$	91.7	$	273.7
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest	$	186.4	$	182.2
Income taxes, net of refunds	7.3		12.6

Supplemental schedule of non-cash investing and financing activities:

Non-cash roll-up of participating lenders from the 2016 Term Loan Facility to the 2020 BrandCo Facilities	$	—	$	846.0



Paid-in-kind debt issuance costs capitalized to the 2020 BrandCo Facilities	—		29.1
Paid-in-kind interest capitalized to the 2020 BrandCo Facilities	14.1		—

(a) Repayments on term loans for the nine months ended September 30, 2020 includes the repayment of the 2019 Term Loan Facility, repayment under the 2018 Foreign Asset-Based Term Loan and repayments under the 2016 Term Loan Facility of $200.0 million, $31.4 million and $9.2 million, respectively, as well as repurchases of the 5.75% Senior Notes of $114.1 million. During 2020, the Company used a portion of the proceeds from the 2020 BrandCo Facility to repurchase and subsequently cancel a portion of its 5.75% Senior Notes. See Note 8, "Debt" in the Company's 2020 Form 10-K for additional information.

Table of Contents

(b)These amounts include restricted cash of $18.4 million and $5.4 million as of September 30, 2021 and 2020, respectively. The balance as of September 30, 2021 represents: (i) cash on deposit in lieu of a mandatory prepayment and loan proceeds held in escrow until certain collateral perfection requirements are satisfied under the 2021 Foreign Asset-Based Term Agreement; and (ii) cash on deposit to support outstanding undrawn letters of credit. The balance as of September 30, 2020 represents: (i) cash on deposit in lieu of a mandatory prepayment under the 2018 Foreign Asset-Based Term Facility; and (ii) cash on deposit to support outstanding undrawn letters of credit. These balances were included within prepaid expenses and other current assets and other assets in the Company's Consolidated Balance Sheets as of September 30, 2021 and September 30, 2020, respectively.

See Accompanying Notes to Unaudited Consolidated Financial Statements

Table of Contents

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in millions, except share and per share amounts)

(Unaudited)


	September 30, 2021		December 31, 2020

ASSETS
Current assets:
Cash and cash equivalents	$	73.3	$	97.1
Trade receivables (net of allowance for doubtful accounts of $9.0 and $13.0, respectively)	391.3		352.3
Inventories, net	461.5		462.6
Prepaid expenses and other assets	128.6		130.5
Receivable from Revlon, Inc.	176.8		170.0
Total current assets	1,231.5		1,212.5
Property, plant and equipment (net of accumulated depreciation of $559.9 and $528.9, respectively)	305.9		352.0
Deferred income taxes	32.4		34.1
Goodwill	563.1		563.7
Intangible assets (net of accumulated amortization and impairment of $318.8 and $296.8, respectively)	401.5		430.8
Other assets	95.2		109.1
Total assets	$	2,629.6	$	2,702.2

LIABILITIES AND STOCKHOLDER'S DEFICIENCY
Current liabilities:
Short-term borrowings	$	0.6