This morning Revlon Inc (NYSE: REV) reported their first quarter earnings and the company put up some pretty nice numbers. Revlon matched analyst estimates for the quarter with -$0.07 per share and showed improvements in overall sales as their restructuring plan is moving along as planned.The company is going to be hosting a conference call starting at 9:30 AM EDT this morning and I am going to be liveblogging the call in its entirety so be sure to refresh your page frequently for up to the minute details on the call.
9:20am- Listening to a little soft music and getting ready for today's call. The call should be getting under way in about 10 minutes.
9:25am- This morning's call should be getting started in about 5 minutes from now. Currently the stock is trading up 4.6% in the premarket. We will periodically check in on the current price through the call and see how traders are reacting to what they are hearing.
9:32am- Still waiting.. seems to be getting a little bit of a late start. Announcer just came on the line to say that the call will start shortly. Stock is trading up 3.1% 3 minutes into the trading session.
9:37am- Finally getting started here. Abby Goldstein going over some compliance issues and getting us started
9:39am- David Kennedy getting us started - going over the numbers: Net revenues of $328 million, up slightly from $325.5 million. Earnings came in at a loss of $35.2 million which as a good improvement from $58.2 million last year first quarter.
9:42am- International growth a result of strong growth in the Revlon brand.
9:43am- Market share demand in the Revlon brand reflected falling share in older Revlon products, but new products are gaining share. color stay soft and smooth lifesaver, and also limited collection edition. across the portfolio there are other new strong performers such as Almay Smart Shader, Smart Solid, Almay Hydocolor.
9:46am- Excluding Vital Radiance the company maintained the level of product support that the company had during first quarter 2006. Company continues to build and leverage core brands. In second half of 2007 we can expect to see more new product launches such as Revlon 3D Extreme, Revlon Age Defying Primer, and Almay Smart Shade line extensions.
9:48am- Company is intensely devoted to new product development and creating a new leadership team to overlook new product development.
9:49am- Recently hired two new artists to the strong lineup of super model lineup promoting the Revlon brand. New artists include Jessica Alba and Beau Garrett back in April.
9:50am- Very pleased with strong profitably growth internationally. This growth is being fueled by the Revlon brand. Results this quarter benefited from improvements related to recent restructuring program and expect to see these improvements remain stable.
9:52am- Net sales increased 60 basis points year over year. In the US net sales fell 2% due to lower shipments of color cosmetics in the Revlon. Excluding currency impacts international net sales advanced 5.5%. Quarterly gross margins were 61.6% compared to 64% last year first quarter.
9:54am- Earnings loss of 7 cents per share was a narrower than first quarter last year when the company lost 15 cents per share on a diluted scale. $4.3 million restructuring costs incurred during the quarter.
9:56am- Capital expenditures in the quarter were 2.7 million verse 4.8 million last year. For the full year 2007 they expect to see total capital expenditures of 20 to 25 million which is in line with previous years.
9:58am-Restructuring progress: Charges of $4.3 million in the quarter. Expect to show $7million in restructuring costs during the whole year 2007. Still expect to deliver total annual restructuring savings of around $55 million.
moving to question / answer portion of the call
10:00am- Bob @ CJS Securities: About re-focusing on the core Revlon brand; How long should it take before US market share data should be impacted? Wouldn't want to pin point a date on when the US Revlon share should start to improve. Bob trying to get them to at least give a ball-park estimate on how many quarters away we can see an impact... Still dodging this question. Looking for profitable share growth and would hope to see some progress going forward, but would not want to state a specific time table. -next question- What have competitors done to gain share, and can Revlon follow suit in their pursuit of share growth? They feel good, innovative products are the key to share growth. One reason why Revlon is so focussed on their new product development. Advertising and promotion is also a key, and they are working on that area as well. Refer back to the two new additions to the Revlon cover girl team.
10:05am- Bill @ Suntrust Robinson: Any way they can give us an inter-quarter progression on the Revlon brand? Virtually impossible to answer this question. But if you look at all the actions they are taking, the Revlon brand in the US market should be gradually improving, and they are working hard on the situation as they are investing in advertising, spokesmodels, etc.
10:11am- Kevin @ Goldman Sachs: Marketing spend for the quarter; since it was inline with the spending last year, do they think Revlon support was adequate? Yes, they think they are spending at competitive numbers. -next question- Are new products higher priced items? Limited edition products are slightly higher cost items, but the remainder of the items are basically in line with the rest of the companies products. Very healthy line-up of new products coming out this year.
10:15am- Caru @ Deutsche: In terms of Almay, what are the plans to improve that sector? They believe that Almay is a very well positioned brand. Will continue to bring out new products and extend product lines, and will basically continue to stick to the current plan in regards to Almay. In America and Internationally the strategy is working well.
10:20am- Philippe @ Credit Suisee: Anything special going on in UK? Seen strong numbers there from Estee Lauder, Elizabeth Arden and now Revlon... any reason? Just a strong market for cosmetics. Revlon has been working hard over the past couple of years in the area and are very pleased with their brand market share in the UK at this time. Are they having any impacts from rising energy costs, or the subprime mortgage concerns? No, they are not seeing any trends as of yet. They feel gasoline prices have been high for the past 2 years, but don't see that they are impacting business just yet
10:27am- Resa from Lehman Brothers: Is their fixed cost absorption basically a result of Vital Radiance? Production volumes are coming down and inventory has been lowered so we should see the numbers start to decline on a per volume basis. -next question- Any concern that Revlon share losses could result in loss in store shelf space which would create a cycle of lower shelf space creating lower market shares? They do not think think so. They are committed to the Revlon brand and are confident that they will continue to grow the brand which will ensure that they will continue to have sufficient store space moving ahead.
10:29am- Lance @ Concordia: What is precise share count? Amount of outstanding slightly above 477 million shares as of the end of March.
10:31am- Karen @ Bear Stearns: International is about 40% of sales. Can they comment on the International strategy? Strategy is the same they have been implementing over the past 5 years. Strategy is (1) leveraging Revlon brand (2) leverage and invest in multi-national brands they have around the world (3) controlling costs and investing in markets where they have good potential growth (4) creating the best business model for each individual market they are involved with around the globe. Leverage off of the Revlon brand coming out of the US around the world. Do some product adaptation depending upon what they understand knows and works in a particular market. Example- In Japan 30 or 40% products are adapted or locally developed products that are unique for the Japanese market. -next question- Has internation investment been at same level? Have maintained a healthy investment level and do not anticipate any major changes, they believe that the current system is working very well.
that's it for today's call. Revlon stock is now trading up 2.1% to $1.34 up $0.03.
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.
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