Revlon (REV) Reports Q2 Loss of $1.54, Revenues Miss

Revlon (NYSE: REV) reported Q2 EPS of ($1.54), versus ($0.27) reported last year. Revenue for the quarter came in at $606.8 million versus the consensus estimate of $637.3 million.

• As Reported net sales were $606.8 million in the second quarter of 2018, compared to $645.7 million during the prior-year period. The change in net sales was primarily driven by approximately $30 million in net sales declines related to the Oxford, N.C. SAP service level disruptions impacting the Revlon and Portfolio segments, predominantly in the international market; and also the loss of certain licenses in 2018 in the Fragrance segment. These declines were partially offset by net sales growth associated with new products in the Portfolio segment and global growth in the Elizabeth Arden segment.
• As Reported operating loss was $58.0 million in the second quarter of 2018, compared to operating income of $5.2 million in the prior-year period, driven by the $30 million net sales declines from the SAP service level disruptions; a $20.1 million loss, primarily non-cash, related to reacquiring certain iconic Elizabeth Arden trademark rights; and increased distribution costs driven by growth in Asia. On an Adjusted basis, operating loss was $4.7 million in the second quarter of 2018, which includes the $30 million negative impact of reduced net sales related to the SAP service level disruptions but excludes the impact of $23.1 million in charges related to the SAP service level disruptions and the $20.1 million charge associated with reacquiring certain Elizabeth Arden trademark rights, compared to operating income of $22.1 million in the prior-year period.
• As Reported net loss was $122.5 million in the second quarter of 2018, compared to $36.5 million in the prior-year period. This decline was primarily the result of the impacts from the $30 million in reduced net sales due to the SAP service level disruptions, increased distribution costs driven by growth in Asia, as well as a negative foreign currency impact of $29.6 million when compared to the prior year quarter. These decreases were partially offset by a benefit from the provision for income taxes of $2.8 million in the second quarter of 2018, as compared to a provision for income taxes of $11.9 million in the prior year quarter.
• Adjusted EBITDA(a) was $36.7 million, compared to $61.5 million in the prior-year period, primarily driven by approximately $30 million in reduced net sales associated with the SAP service level disruptions noted above.

“Despite SAP service level disruptions at the Oxford, N.C. plant and other broader market impacts, we are starting to see the positive effects of our strategic investments on our growth priorities. Our strategy continues to focus on strengthening our brands and enhancing the avenues through which we communicate and connect with our consumers. We are focused on ensuring broad availability of our products where the consumer shops in both brick and mortar and online. We are seeing strong growth in e-commerce and innovation, including a very positive response to the launch of Flesh, our new in-house incubated brand. We continue to build strategic capabilities and partnerships to position the company to win over the long term,” said Debra Perelman, President and CEO of Revlon.

For earnings history and earnings-related data on Revlon (REV) click here.

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