Moody's Lifts Outlook on Revlon (REV) to Stable

Moody's Investors Service ("Moody's") today affirmed Revlon (NYSE: REV) Ba3 Corporate Family Rating ("CFR") and revised the outlook to stable from negative. Concurrently, Moody's affirmed Revlon's Ba2 senior secured rating and its B2 senior unsecured rating. The change in outlook to stable reflects the company's improved operating performance since the acquisition of The Colomer Group ("Colomer") in 2013, the incremental decline in leverage in that time period and management's focus on continued deleveraging. While debt-to-EBITDA leverage is still high (5.5x at 3/31/15), Moody's expects that the company's ability to generate good free cash flow supports reducing leverage to under 5x by the end of FY2015 and ultimately to a level of 4x over the next 18 to 24 months.

Ratings affirmed :

Issuer: Revlon Consumer Products Corporation

- Corporate Family Rating at Ba3;

- Probability of Default Rating at Ba3-PD;

- Senior Secured Bank credit facilities at Ba2 (LGD 3);

- Senior Unsecured Regular Bond/Debenture due February 15, 2021 at B2 (LGD 5)

- Speculative Grade Liquidity Rating at SGL-1

The outlook is stable.

RATINGS RATIONALE

Revlon's Ba3 Corporate Family Rating (CFR) reflects the company's modest scale relative to primary competitors, high leverage and event risks related to the controlling ownership by M&F Worldwide/Ron Perelman. It also reflects the company's strong global brand franchises, as well as good geographic and product diversification for a number of well-known beauty brands.

Operational improvements in recent years is leading to positive and consistent cash flow. This is providing the company more flexibility to re-invest through product development, required display spending, increased product promotional support and through acquisitions. Revlon's high leverage and smaller scale relative to more diversified and highly competitive global cosmetic suppliers create vulnerability to changes in the economic environment, shifts in consumer demand and the product, pricing and promotional activities of competitors. Debt financing for the acquisition of Colomer in 2013 increased leverage to around 6.8x at closing, though the company has managed to reduced leverage to approximately 5.5 times as of March 30, 2015. Moody's expects that Revlon will generate modest revenue and EBITDA growth in 2015 and 2016. The rating agency also expects Revlon to utilize cash and free cash flow for continued debt reduction and earnings accretive acquisitions such that debt/EBITDA is reduced to a level below 5x by the end of 2015 and to a level of 4x within 18 to 24 months.

The stable outlook reflects Moody's expectation that Revlon will continue to generate good cash flow and maintain good liquidity.

Revlon's ratings could be downgraded if the company's operating performance deteriorates or if for any reason the company fails to reduce debt/EBITDA leverage below 4.5x over the next 18 to 24 months.

For an upgrade, Revlon will need to increase its scale, and generate meaningful free cash flow. Revlon will also need to maintain above average organic growth, and improve its market share for its core Revlon and Almay brands. Revlon will also need to sustain debt/EBITDA below 4.0x, EBIT-to-interest expense of at least 3.0x, and maintain good liquidity.

Please see the credit opinion on www.moodys.com for additional information on Revlon's ratings.

The principal methodology used in these ratings was Global Packaged Goods published in June 2013. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

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