Revlon, Inc. (

REV

)

Q2 2011 Earnings Conference Call

July 28, 2011 09:30 ET

Executives

Elise Garofalo – Senior Vice President, Treasurer, and Investor Relations

Alan Ennis – President and Chief Executive Officer

Chris Elshaw – Executive Vice President and Chief Operating Officer

Steven Berns – Chief Financial Officer and Executive Vice President

Analysts

Carla Casella

Jeff Kobylarz

Zeke Kramer

David Wu

Presentation

Operator

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» Revlon, Inc. Q2 2010 Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to Revlon’s Second Quarter 2011 Earnings Conference Call. At the request of Revlon, today’s conference call is being recorded. (Operator Instructions)

I would now like to turn the call over to Ms. Elise Garofalo, Revlon’s Senior Vice President, Treasurer, and Investor Relations. Ms. Garofalo, you may begin.

Elise Garofalo – Senior Vice President, Treasurer, and Investor Relations

Thank you, (Tinica). Good morning, everyone, and thanks for joining today’s call. Earlier today, we released our results for the second quarter ended June 30, 2011. If you have not already accessed a copy of our second quarter earnings release, you can obtain one on our website at revloninc.com.

On the call with me this morning are Alan Ennis, Revlon’s President and Chief Executive Officer; Chris Elshaw, Executive Vice President and Chief Operating Officer; and Steven Berns, Executive Vice President and Chief Financial Officer.

Before I turn the call over to Alan, I would 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 2010 Form 10-K and our 2011 second quarter 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 their most directly comparable GAAP measures 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 will turn the call over to Alan.

Alan Ennis – President and Chief Executive Officer

Well, thank you, Elise and good morning everyone. As we have discussed with you in the past, Revlon’s vision is glamour, excitement, and innovation through high-quality products at affordable prices. This underpins everything we do. We realize this vision by executing the five key elements of our business strategy, which are designed to drive profitable growth. These elements are 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.

With regard to building our strong brands, during the second quarter of 2011, we made progress in a number of areas. From a top-line perspective, we delivered net sales growth of 4%, excluding the benefit of currency fluctuations driven by the U.S. and the Asia-Pacific regions. Our brands performed well in the marketplace and we are very pleased with both new and core product performance during the period. Our recent acquisition of Sinful Colors is transitioning well and we are pleased with its marketplace performance.

As we have discussed for sometime, we believe that the drivers of profitable growth are first, innovative high-quality consumer preferred brand offering; second, effective brand communication including appropriate levels of advertising and promotion; and third, superb execution with our retail partners to provide optimal in-store offering.

Our results in the quarter benefited from our focus on these drivers specifically. We are focused on our three-year global portfolio plans for our key brands in order to meet the needs of our consumers globally. This enabled us to have a compelling product offering across both our core and new products. Next, our brand communication is benefit driven, compelling to the consumer and consistently delivered across all touch points, including traditional media, in-store and a variety of digital platforms.

Lastly working alongside with our retail partners globally, we are creating and engaging shopper environment with eye-catching in-store displays and effective promotional activity.

With regard to our strategic objective of increase in our operating profit and cash flow, for the quarter we maintained competitive operating margins, while growing the top-line. We continue to support our brands at appropriate levels in the marketplace and invest in growth opportunities globally.

Our negative cash flow in the quarter was impacted primarily by the timing of debt interest payments, which Steven will discuss later. It is important to note, that it was not driven by any change in the underlying business.

With regard to our strategic objective of improving our capital structure, we refinanced our bank credit facilities in the quarter resulting in lower interest rates and extended maturities. Annualized savings associated with refinancing are an estimated $10 million.

So, in summary, driving profitable growth comes to brands and people. We have incredible talent and capabilities, broad geographic reach and strong global brands. Overall, we had a strong quarter and I am pleased with our performance so far in 2011.

So with that, I will hand it over to Chris, who will talk about our marketplace performance.

Chris Elshaw – Executive Vice President and Chief Operating Officer

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. Net sales in the second quarter were $351.2 million, an increase of 4% versus the second quarter last year. This increase in net sales was driven by Sinful Colors and Revlon color cosmetics.

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