Revlon Inc (REV)

Q1 2012 Earnings Call

April 25, 2012 09:30 a.m. ET


Elise Garofalo – SVP, Treasurer, IR

Alan Ennis – President and CEO

Chris Elshaw – COO

Steven Berns – CFO


Paul – JPMorgan

David Wu – Telsey Advisory Group

Reza Vahabzadeh – Barclays

Connie Maneaty – BMO Capital

Jeff Kobylarz – Harbor Investments



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Good morning, ladies and gentlemen, and welcome to Revlon’s First Quarter 2012 Earnings Conference Call. At the request of Revlon, today’s conference call is being recorded, if you have any objections you may disconnect at this time. At the conclusion of today’s presentation, we will open the call for questions. (Operator Instructions) I would now like to turn the call over to Ms. Elise Garofalo, Revlon’s Senior Vice President, Treasurer and Investor Relations. You may now begin, Ma’am.

Elise Garofalo

Thank you, Dorris. Good morning, everyone, and thanks for joining today’s call. Earlier today, we released our results for the first quarter ended March 31, 2012. If you’ve not already received a copy of the earnings release, you can obtain one on our website at

On the call with me this morning are Alan Ennis, Revlon’s President and Chief Executive Officer; Chris Elshaw, Chief Operating Officer; and Steven Berns, Chief Financial Officer. Before I turn the call over to Alan, I’d like to remind everyone of a few things. First, our discussion this morning might include forward-looking statements, which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act. Information on factors that could affect the company’s results from time-to-time and cause them to differ materially from such forward-looking statements is set forth in the company’s filings with the SEC, including our 2011 Form 10-K and our 2012 first quarter Form 10-Q, which we filed earlier this morning.

Next, our remarks today will include a discussion of adjusted EBITDA and free cash flow, both of which are non-GAAP measures. These non-GAAP measures are defined in the footnotes to our release and are also reconciled to the most directly comparable GAAP measure in the financial tables at the end of our release. And finally as a reminder, our discussion this morning should not be copied or recorded. With that, I’ll turn the call over to Alan.

Alan Ennis

Thank you, Elise, and good morning everyone. As we’ve discussed with you in the past, Revlon’s vision is glamour, excitement and innovation through high quality products at affordable prices and this underpins everything we do. We realized this vision by executing the five key elements of our business strategy: building our strong brands; developing our organizational capability; driving our company to act globally; increasing our operating profit and cash flow; and improving our capital structure. We are carrying positive momentum into 2012 with respect to our strategic goal of profitably growing our business and in the first quarter, we made progress in a number of areas.

With regard to our top line, net sales grew, as a result of the inclusion of the acquisition of Sinful Colors and improved net sales in Asia Pacific, Latin America and Canada.

While we saw net sales growth in our Latin America region, we continue to experience lower net sales in Venezuela, as we have not yet fully resumed there following the June 2012 fire at our local facility. We saw some softness in the U.S and EMEA regions, which is primarily due to lower net sales of Almay color cosmetics in the US and fragrances in EMEA. Overall, we remain focused on generating profitable top line growth in each of our five regions. With regard to our Revlon brand, our new product launches performed very well in the marketplace with particularly strong performance by Revlon ColorBurst Lip Butter, and Revlon ColorStay Nail Enamel they’ll level, both of which were launched with compelling advertising campaigns.

We believe that Revlon’s brand success in the marketplace is driven by delivering it in a high-quality, new products, supported by effective brand communication and superb in-store execution. Our continued emphasis and focus of this approach is of the utmost importance to our objectives of driving profitable growth. From a financial perspective, we again delivered competitive operating income margins in the quarter. We continuously seek to optimize the investment of resources, focusing on opportunities that would deliver the greatest return.

And finally, our capital structure is solid and our financial profile is strong. And lastly, before I turn the call over to Chris, let me remind you that the Annual Revlon Run/Walk For Women, our New York Run/Walk is on Saturday, May 5, and will be hosted by our newest brand ambassadors, Emma Stone and Olivia Wilde.

Los Angeles Run/Walk is on Saturday, May 12 and will be hosted by our brand ambassador Halle Berry. We are very proud of our longstanding philanthropic support for women’s health initiatives and the fight against women’s cancers. Over the years we have helped raise millions of dollars for research, education and advocacy. If you would like to donate to this cause or register to participate in either of the Run/Walk events, please visit So with that I will hand it over to Chris who will talk about our marketplace performance.

Chris Elshaw

Thank you, Alan, and good morning, everyone. Today, I will review our net sales performance excluding the impact of changes in foreign currencies by region, and by brand. Total company net sales in the first quarter of 2012 was $330.7 million, an increase of $1.5 million versus the first quarter of last year.

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