Revlon, Inc.
Q2 2018 Earnings Call Transcript

Published: 11 Aug 2018

[Operator:]

Hello and welcome to Revlon's Q2 Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded Thursday, August 9, 2018. I would now like to turn the conference over to your host, Eric Warren, Vice President, Treasurer and Head of Investor Relations. Please go ahead.

[Eric Warren:]

Thank you, Courtney. Good morning everyone and thanks for joining the call. Earlier today, the Company released it's financial results for the quarter ended June 30, 2018. If you have not already received a copy of the earnings release, a copy can be obtained on the Company's website at revloninc.com. On the call this morning are Debbie Perelman, President and Chief Executive Officer; and Victoria Dolan, Chief Financial Officer. The discussion today might include forward-looking statements that are based on current expectations and are provided pursuant to the Private Securities Litigation Reform Act of 1995. Information on factors that could affect actual results and cause them to differ materially from such forward-looking statements is set forth in the Company's SEC filings, including it's Q2 2018 Form 10-Q. The Company undertakes no obligation to publicly update any forward-looking statements, except for the Company's ongoing obligations under the U.S. Federal Securities Laws. Remarks today will include a discussion of certain GAAP and non-GAAP results. Consistent with past reporting practices, non-GAAP results excludes certain non-operating items that are not directly attributable to the Company's underlying operating performance. These adjusted measures are defined in the earnings release and are also reconciled in the financial tables at the end of the release. Please also note, that certain amounts provided throughout this call have been rounded. The call today should not be copied or recorded. And with that, we'll turn the call over to Debbie.

[Debra Perelman:]

Thank you, Eric. Good morning, everyone, thank you for joining the call. Before we get into business performance, I want to take a few minutes and share my thoughts and observations on stepping into my new role and taking leadership of the Company. Unlike many new CEOs, I'm not new to the Company. I've worked in and with Revlon in different capacities for more than 20 years and believe this is a great company. We have worldclass talent who are committed to being leaders and innovators who drive the future of beauty. Revlon and Elizabeth Arden, are both company of first. And I believe that our combined company will reclaim it's leadership position for sustained long-term growth. I believe we have the tools to succeed in the modern beauty world which is an industry that is both growing and transforming. We have iconic brands in our portfolio and talented and passionate people who are committed to innovation and delivering the best products to consumers. I'm confident in our digital transformation strategy across all of our brands and platforms and know that it will propel us to capture leadership positions where we should be winning. Our strategy focuses on strengthening our brands and enhancing the avenues through which we communicate and connect with our consumers. We are focused on ensuring total availability of our products where the consumer shops, both in the brick-and-mortar world, and online. In doing this we are building strategic capabilities and partnerships to position the Company to win over the long-term. I have confidence in our brands to succeed in the market and we have seen positive signs. In the second quarter, the Elizabeth Arden brand, as well as our portfolio brands have experienced growth of approximately 5% and 3% respectively in the quarter. Within the portfolio segment, our Almay and CND brands were up approximately 40% and 36% respectively. Additionally, sales from ecommerce for Revlon color cosmetics grew approximately 30%. We are also experiencing 46% growth in China, as well as 35% growth in Travel Retail. There is a lot of work to be done but with our talents, as well as industry expertise we have a winning combination. We are transforming the Company with many initiatives working in parallel. We have upgraded executive talent to build leadership in areas that are going to be critical in the journey ahead including ecommerce, digital marketing, as well as data and analytics. We recognize the dynamics that play in our industry and across the market with the increase of ecommerce and the migration of media consumption to the digital mobile space. We are moving quickly and implementing our comprehensive digital transformation where we have assembled the technology, processes and the right level of talent and bandwidth to build capabilities that are off critical importance now and in the future. We have set up an internal incubator to nurture new initiatives as well as an internal agency, the Redhouse, which will be our internal center of excellence for content creation, as well as drive cost efficiency. Our focus is on supporting our existing brands, as well as nurturing new ones. An example of this is our recent launch of Flesh which has generated a lot of excitement. These changes open the door for our iconic brands to refresh their connection with the consumer and unlock the potential for growth. In addition, as we execute on our strategy, we are consistently focused on enhancing our business practices, streamlining our processes and controlling our costs. Since becoming CEO in May I've already identified ways to reduce our cost structure for the rest of the year and going forward. As we build for the future and enhance our business operations, I also wanted to update you on our progress recovering from the SAP supply disruptions that affected us in first quarter and into second quarter. We have resolved the fundamental issues and our plan is back to producing a greater than pre-SAP levels. Sales have seen recovery in second quarter in North America with other markets following as the products reach them. I'm excited and honored to be taking the leadership position at this point in time. I believe that our transformation strategy is taking hold both within our Company and with our consumers. I'm looking forward to the months ahead. Now, I would like to turn the call over to Victoria to review our second quarter results.

[Victoria Dolan:]

Thank you, Debbie and good morning to everyone on the call. Before covering our business results, I wanted to highlight a number of predominantly onetime significant items which impacted our business in the quarter. First, there was a negative sales impact of approximately $30 million or $20 million in gross profit from our SAP supply disruption at our Oxford North Carolina manufacturing facility. Second, we incurred $23 million in costs associated with the remediation plan for the SAP supply disruptions. Third, we incurred a $20 million charge of which $19 million was non-cash associated with the reacquisition of certain Elizabeth Arden trademark rights. And fourth, we had a foreign exchange loss of $20 million versus the gain of $9 million in the prior quarter resulting in a $30 million swing. Ignoring the foreign exchange loss and the onetime costs, net sales would have been down slightly and operating profit flat year-over-year. Now starting with total company results; net sales for the second quarter of 2018 were $607 million, a decline of 6% on an as reported basis from the prior year quarter. We experienced net sales declines in our Revlon and fragrances businesses, offset by net sales growth in our Elizabeth Arden and portfolio segments. The overall sales decline is attributable predominantly to the knock-on impact from our SAP related disruptions in the Oxford plant which we estimate to have driven a loss of approximately $30 million in sales during the quarter, predominantly in our international operations. Excluding the approximately $30 million of loss sales associated with the SAP related disruption, our as reported net sales would have been only slightly down in the quarter. Next, our general and administrative expenses were higher in the quarter due to higher spend levels related to new permanent wall displays as we continue to focus on improving the consumer experience and increase distribution costs driven by our growth in Asia, as well as negative foreign exchange which drove the $6 million impact in the period, partially offset by cost savings. We remained deliberate in our choices around building capabilities, especially in digital and ecommerce, as well as investments in our growth markets, particularly Asia. We remain focused on cost controls and have seen a reduction in our year-to-date base overhead costs. In addition, in working with Debbie and as we progressed with the transformation of our business and the optimization of our organization and operations, we are focused on opportunities for cost reductions across the business. As reported, operating loss for the quarter was $58 million compared to operating income in the prior year quarter of $5 million. Included in our as reported results was a $20 million loss of which $19 million was non-cash related to reacquiring certain Elizabeth Arden trademark rights. We're excited to reacquire this iconic Arden trademark and see this as an opportunity for the Company and the brand going forward. On an adjusted basis, our operating loss was $5 million for the quarter compared to operating income of $22 million in the prior year period, driven by the decline in net sales coupled with the increase in selling, general and administrative expenses previously discussed. As reported net loss for the quarter was $123 million as compared to our as reported net loss in the prior year quarter of $37 million. In addition to the other drivers discussed previously, the higher net loss is attributable to unfavorable impact of foreign currency fluctuations offset by a tax benefit of $3 million as compared to a $12 million tax provision from the prior year period. Finally, adjusted EBITDA was $37 million for the current quarter compared to $62 million in the prior year quarter, and as noted, was primarily negatively impacted by the net sales reductions. We estimate that the net sales decline of $30 million due to the Oxford slowdown discussed previously negatively impacted our current quarter adjusted EBITDA by approximately $20 million assuming our 60% adjusted gross margin in the quarter. Let me now provide a further update on our SAP implementation. As you know, our production capabilities in our Oxford, North Carolina production facility were severely effective starting early April and were re-established back to pre-SAP levels during the month of April. During the time inventory levels in Revlon distribution centers and with our major retail and distribution partners, both domestic and international were depleted. Since then we've been rebuilding these inventory levels and service levels have significantly improved. The need to cycle productions through several thousand SKUs is the primary driver for the recovery duration, and we continue to see improvements with each successive month. As many companies have experienced, ERP implementations are extremely complex. Since identifying the production issues, we have had dedicated internal teams consisting of operations, information technology and finance, along with external business process experts involved in scrutinizing our process and system changes and are completing the final phases of improvements. We have accomplished a tremendous amount since the implementation and have continued to learn and evolve our internal processes and procedures as we move forward. We are confident that SAP will drive a stronger supply chain which will allow us to better serve our customers through service efficiency and support improved decision making. Next, I would like to turn to our segment results. Our Revlon segment net sales in the quarter of 2018 were $258 million which represents an 11% decline on an as reported basis. This decline was due mainly to the service level disruptions in Oxford which primarily impacted our international operations and resulted in the segment profit decline of 32% primarily due to the lower net sales. For Elizabeth Arden; net sales in the second quarter of 2018 were $106 million, representing a 5% increase on an as reported basis. This improvement was mainly driven by higher net sales of Elizabeth Arden skincare products, principally in our international territories. Elizabeth Arden segment profit declined primarily due to higher distribution costs associated with geographic mix and brand support expenses. Net sales for our Portfolio segment were $148 million in the second quarter of 2018, an increase of 3% on an as reported basis. This increase was primarily driven by higher net sales of Almay color cosmetics following the relaunch of the brand, as well as higher net sales of CND nail products as a result of Shellac and Binolec [ph] nail polish innovation. Portfolio segment profit declined as a result of higher brand support expenses which was partially offset by the higher net sales previously mentioned. Finally, net sales of our Fragrances segment were $95 million in the second quarter of 2018, representing a 15% decrease on an as reported basis. This decline was driven by the loss of certain licensees in 2018. As a result of cost reductions associated with insourcing production capabilities, fragrances segment profit increased by 39% which was partially offset by the lower net sales previously mentioned. Turning lastly to liquidity; free cash flow used in the first six months of 2018 was $220 million compared to $179 million in the prior year. The decline in free cash flow was primarily driven by the lower net sales and higher interest payments, partially offset by quarter-over-quarter differences in working capital changes and a decline in capital expenditures. Year-to-date through the second quarter of 2018, we spent $30 million in capital expenditures and $36 million in permanent displays. As of June 30, the company had approximately $107 million of available liquidity consistent of $82 million of unrestricted cash and cash equivalents, $35 million under our 2018 senior line of credit from [indiscernible], and $7 million in available borrowing capacity under the revolving credit facility less float of $17 million. In July, we were pleased to be able to further increase our liquidity position and entered into a foreign based asset-backed euro denominated $77 million term loan facility. Including available cash from the foreign based term loan, as of July 31, the Company's available liquidity was $164 million consisting of $81 million of unrestricted cash and cash equivalents, $50 million of available borrowing capacity under the 2018 senior line of credits, as well as $47 million in available borrowing capacity under the revolving credit facility, less float of $14 million. I will now turn the call back to Debbie for closing comments before the Q&A.

[Debra Perelman:]

In closing, we believe in the power of our brands and are encouraged by the consumers response to our digital transformation initiatives and new advertising campaigns. In addition, we have identified opportunities to both optimize our business practices and controlled costs in the remainder of the year and going forward. With most of the SAP disruption behind us, we are focused on realizing the opportunities in our business and building for the future, including growing our brands, better serving our customers and our obsession with our consumer. With that, we will now open the call for questions.

[Operator:]

[Operator Instructions] Our first question comes in from the line of Grant Jordan calling from Wells Fargo.

[Grant Jordan:]

First, on the SAP. Do you expect any more sales or earnings issues going forward because as I go back and look at the last transcript, I thought you said the Oxford plant was back to normal production in early April?

[Victoria Dolan:]

As we said in the April transcript, yes, we were upto full production capacity but then -- after that we had to cycle through the complexity of those SKUs to be able to refill the pipeline and get it delivered to our customers. So we do continue to feel some of those impacts but we've made tremendous progress in both refilling our pipeline and improving our customer service levels.

[Grant Jordan:]

And the way you talked about the lost revenue and profitability, it sounds like the -- there weren't any -- there wouldn't be any additional SG&A cost associated with those lost sales?

[Victoria Dolan:]

No.

[Grant Jordan:]

On the SG&A front; I mean the SG&A expenses continue to be pretty high given the revenue declines, is that part of your plan to forgo [ph] some more cost cuts or do you see opportunity there?

[Victoria Dolan:]

I think Debbie and I both talked about our cost structure, and as Debbie talked about looking at the transformation of our business and driving our brand, we are looking at our operating structure and our cost structure.

[Grant Jordan:]

Liquidity last year in the third quarter -- you burnt [ph] through about $150 million in cash, do you feel like you've got the liquidity in place to get through the next 12 months?

[Victoria Dolan:]

Yes, we do. We have evaluated our liquidity position and are comfortable that we have sufficient liquidities to fund our operating needs.

[Operator:]

The next question comes in from the line of Karru Martinson calling from Jefferies.

[Karru Martinson:]

Just a point of clarification; on the trademark reacquisition, how is that a non-cash charge? I mean, just -- could you walk us through the mechanism of what you reacquired there?

[Victoria Dolan:]

Yes, we had an investment in a joint venture and we basically terminated those assets and so they -- and for us -- and then they paid us small cash charge associated with that but we have essentially liquidated that -- our joint venture position.

[Karru Martinson:]

And then when you guys talk about looking at the cost structure, looking at the operations -- what's the time horizon for kind of getting your hands around the opportunities there? I mean, what's the magnitude of the opportunity there?

[Victoria Dolan:]

First of all, we don't give forward-looking guidance and I think as both Debbie and I said, we've said that we are -- we should see impacts in the second half of the year as well as going forward.

[Karru Martinson:]

And then in terms of the liquidity position, when you talk about having evaluated over the next 12 months and having the runway there; does that envision tapping some of those add-on facilities that you have built in there or do you feel that the existing structure as we are today is sufficient?

[Victoria Dolan:]

We're not going to talk about our financing plans. Going forward we've evaluated our liquidity position and feel that it is sufficient for our operating needs.

[Karru Martinson:]

And just in terms of new products; you rolled our Flesh -- I mean, is that in all of the new ultra-stores and then you had a couple of launches, I think shoot the moon, electroshock for the second half of the year, I mean, where do we stand on those as well?

[Debra Perelman:]

With regards to Flesh, we are in a specific number of ultra-stores. As you may have read, there is tremendous excitement both in the market and from the retailer around Flesh. As you can imagine in this industry, we're always exploring new opportunities for new products to launch in the market to remain competitive.

[Karru Martinson:]

When you were talking about the ERP challenges, you mentioned that you didn't think there would be incremental loss sales of any meaningful size and additionally no elevated SG&A. Were there any shelf space losses associated with those or could it be possible that you would still have to continue to make any payments in terms of vendor reimbursements to your customers?

[Victoria Dolan:]

So let me clear up your first comment. I think what I said was we do continue to feel impacts from this, we've made tremendous progress, we have -- we're refilling our pipeline and we're improving our customer service levels with every passing week but we do continue to feel -- expect to feel some impact from this.

[Karru Martinson:]

So I guess I misunderstood a little bit. I guess in terms of the second portion of the question, would there be any additional vendor reimbursement that you would be paying to your customers or do you think you lost any shelf space?

[Victoria Dolan:]

We didn't talk about any vendor reimbursements, we are working with each of our customers, we have longstanding relationships with those customers and we are working with each of them to manage that relationship and get our stock back on shelf.

[Karru Martinson:]

And then you talked a lot about some marketing costs you've been spending associated with the relaunches of many of your brands, I guess would we expect that those marketing expenses would continue at their current levels or do you think that they were somewhat elevated due to the launches?

[Debra Perelman:]

We are always evaluating where we should be investing and what brands we should be investing behind. We made specific decisions to invest in the relaunches of specific brands in the market as each opportunity gets put forth within the Company, we will evaluate it with the same amount of rigor.

[Karru Martinson:]

I think in general your shelf space in the U.S. for the Revlon brand has been relatively consistent, at least according to commentary over the last maybe years earnings calls. Has there been any changes over the last quarter -- I guess in light of some of the relaunches that you had there as well?

[Victoria Dolan:]

No, we have not experienced any space loss in the last quarter, our space remains as it has been.

[Operator:]

The next question comes in from the line of [indiscernible] calling from Cantor Fitzgerald.

[Unidentified Analyst:]

Can you just offer broad commentary Debbie around two things; one is potential tariffs and it's impact on Revlon in general? And the second thing is what we're seeing is hyper-nationalization across the globe and people wanting to buy local and things of that nature, and how you're trying to adapt to that as well? Thank you.

[Debra Perelman:]

So as you know, it's an evolving situation with regards to tariffs. So currently we're looking at our plans and seeing how the tariffs can affect us. If we look at specific markets, particularly markets in Asia that are very important to our Company, we are evaluating tariffs with regards to how it will enable us to access those markets. So if we can move on to the second part of your question which I believe was on nationalization and people wanting to buy more local; so we're always looking at new opportunities in the market and opportunities where we can enhance our existing brands, as well as look for opportunities to either launch new brands or acquire brands. With regards to nationalization and localization, there is absolutely a place for national brands like Revlon and Almay that exists in the market, as well as for what I call smaller brands such as Flesh. So we are looking to balance the two.

[Unidentified Analyst:]

The question was really more that -- let's say if you live in a country X, they want to buy brands from that country; I mean used to [indiscernible] wanted to buy American stuff. Now if you go to Europe or Asia, they don't necessarily have the same view of American products. Do you brand in different markets under different labels or is it always under -- always with Arden's titles and Revlon? Just -- the question really is also on the international, the only international growth that we saw in this quarter wasn't always with Arden, I don't know if that really has to with the SAP conversion or for just losing some share? That was really what the question was about. Thank you.

[Debra Perelman:]

Thank you, I appreciate the clarification. So with regards to our Company, we do have a number of local brands that exists in various markets, that exists in Europe, that have done well over the years. So there is a focus for us in looking at our strategy in terms of how do we expand the presence of those brands.

[Operator:]

The next question comes in from the line of Steph Wissink calling from Jefferies.

[Stephanie Wissink:]

Just wanted to follow-up on your comments on marketing, you talked about a shift in spend towards digital and maybe some social as well. So if you could maybe just give us a sense of what percentage of your overall marketing budget today is within those channels and how do you see that evolving over the course of the next 12 to 24 months?

[Debra Perelman:]

So as you know, in the market today and the industry itself, there has been a tremendous shift from what I call traditional media into digital, including social that is part of our strategy, but we're not going to provide percentage of shift today but know that based on our strategy to continue invest in our capabilities with regard to digital, it remains a focus for the Company.

[Stephanie Wissink:]

And Debbie, should we think about it at some point being a disproportionate component as a combination of social and digital oversizing the legacy? Is there a tipping point that we should be mindful of just in terms of efficiency about spend?

[Debra Perelman:]

But I don't so, we're always looking for efficiency of spend as I'm sure you know, in this competitive industry it can be a differentiator. So with regards to us, we're always evaluating what's going to be most effective in reaching our consumer.

[Stephanie Wissink:]

And then just a second question on Flesh, I think you mentioned -- it's in a specific number of doors, I'm wondering if you're willing to give us that number and how we should think about the cadence of rollout within Ulta? How long is that exclusivity? And then any initial learning's from the launch in this idea of shade range and unique positioning seems to be something that is we're seeing across a number of brands and I'm curious if you can just share with us a little bit about some of the insights from the launch and whether you're feeling some competitive pressure around that idea of inclusivity and shade range?

[Debra Perelman:]

We are very excited on the launch of Flesh. As you know, we have seen a lot of them in the market with regard to the brand; what's really resonating with the consumer as we believe is the fact that we're speaking to inclusivity and we've launched with such a large shade range on the foundation, as well as very specific ancillary products. So while we're -- I'm not going to speak specific numbers today, we continue to watch the brand, it's been in market for now about six weeks. So the learning's are pretty early but what we do see working is the partnership with Ulta, as well as our ability to reach the consumers on digital.

[Stephanie Wissink:]

And then last question is just on Travel Retail in China, some really big growth numbers there. I think you mentioned China 46% in Travel Retail, 35% -- in both cases those growth rates significantly outpace the consumption levels. So I'm curious if you can talk about distribution gains and where you are across your portfolio in terms of penetrating the China market and the Travel Retail channel?

[Debra Perelman:]

So as we've spoken about both China and Travel Retail are gross markets where we continue to focus on as our main strategies and executing our strategy with regard to ecommerce in China, as well as growth in the Travel Retail market.

[Stephanie Wissink:]

And anything more you can talk about just in terms of the portfolio distribution; are you taking the entire portfolio within Travel Retail or China -- where are you in terms of the progress across the portfolio brands that you own?

[Debra Perelman:]

As you may remember, currently today in China we primarily sell Elizabeth Arden.

[Stephanie Wissink:]

And is it sure as well for Travel Retail leading with Elizabeth Arden as well?

[Debra Perelman:]

Correct. So Travel Retail we lead with Elizabeth Arden, Revlon has a presence in Travel Retail as Dutch Fragrance.

[Operator:]

The next question comes in from the line of Mary Gilbert calling from Imperial Capital.

[Mary Gilbert:]

I just wanted to follow-up on some of the questions; one, with regard to Flesh, do you do -- what is the timing of the exclusivity there? And then number two, are you planning to do any kind of events like in-store events to drive excitement, especially in some major market, just sort of -- just thinking about what KKW and Kylie [ph] are doing here in Los Angeles, they are driving a lot of events and bringing in a lot of consumers that way. Is there an opportunity for you to do that?

[Debra Perelman:]

We have a very good partnership with Ulta on the Flesh brand and we have a very -- what I'm going to call fulsome marketing calendar with them which includes events, so yes, it is on the horizon. With regards to the term of exclusivity, we're not going to provide that information today.

[Mary Gilbert:]

And then also going back to the growth opportunities, particularly in China, so Revlon is only being sold through Timo [ph] in Hong Kong going into China. So I think you mentioned the online opportunity. Is there an opportunity to take it directly into China? And where do we stand with getting approval for those products to be sold directly into China, is that part of your strategy?

[Debra Perelman:]

As we know, the market in China is growing and there is opportunity for brands such as Revlon in the market. As you said we are sold on Timo [ph] which is a proof-of-concept that Revlon is being received well in China. We are always looking and exploring opportunities to launch the brand in China and we have begun exploring the registration process for our products.

[Mary Gilbert:]

Is that something more like 2019 event do you think?

[Debra Perelman:]

I'm not going to comment on that today. When we have additional news, we will share it.

[Mary Gilbert:]

And then can you talk about the level of innovation as we look at the back half of the year and the continued impact of SAP; it sounds like -- clearly, we're going to have an impact in Q3. I don't know if there is a way to get an idea of the magnitude of the impact that we're looking at in Q3 and just -- I guess, when we see line of site of being balanced in terms of inventories, will that be reached by the end of the year? And then just how we look at back half innovation and the opportunities there across the portfolio?

[Debra Perelman:]

As we've said before, we're not going to give forward guidance. I will reiterate what I said before is that we continue to feel the impact but that we are making tremendous progress on both refilling our pipeline and improving our customer service levels and we are seeing week-to-week improvements.

[Mary Gilbert:]

And then on the innovation side?

[Victoria Dolan:]

With regards to innovation for second half, we have innovation across the portfolio from Arden, to Revlon, to Almay, to Fragrance; so that's hitting the market now.

[Operator:]

Our final question comes in from the line of Tom Radionov calling from Corre Partners.

[Tom Radionov:]

So Debbie, I guess my question for you is, as you think about the strategy going forward -- should we think of it as being sort of revolutionary in nature where we should expect to see a lot of changes to the portfolio and the way you go to market or is it more likely to be -- I guess evolutionary in nature where you're going to I guess maintain some of the strategies developed under the prior management teams and sort of use that as a starting point? And as you answer that question, I guess also I'm kind of curious whether you have thought about asset sales and sort of the nature of the portfolio as it stands today? And also any major launches, I think you mentioned a couple of different launches which is kind of curious when you sort of think about Revlon versus Arden versus some of the other products out there. If there is a focus on a few of these products specifically as we think about the second half of the year?

[Debra Perelman:]

So with regards to the strategy, our strategy remains very focused on investing in our iconic brands, as well as investing in our digital transformation which includes digital marketing, as well as ecommerce. I've mentioned before, we are focused on some specific markets that we're looking for growth, Travel Retail in China, as well as some other markets in Asia. So I don't know if I would characterize it as revolutionary or evolutionary but we're sticking very focused to the strategy that we have laid out.

[Tom Radionov:]

And obviously Flesh is very exciting based on the early feedback; do you have any other products similar to Flesh in the pipeline or was that sort of the major launch for this year in terms of new products?

[Debra Perelman:]

I'm not going to focus on future projects today in terms of announcing them but what I will say is that we are always exploring new opportunities for our existing brands, as well as the potential of launching new ones.

[Tom Radionov:]

So quick question on EBITDA, I think you already answered this but basically the bottom-line I think is, you were saying $37 million in reported EBITDA presumably the impact from the loss sales should have been at $20 million incremental EBITDA had you been able to actually realize those sales. So presumably, $57 million is the right number for this quarter; had it not been for Oxford, this is the right math?

[Victoria Dolan:]

That's correct. So $57.5 million this quarter versus the same quarter last year at $61.5 million.

[Debra Perelman:]

So let me say thank you to all of you who have joined the call today. And a special note to our team members around the Revlon world who are listening; we appreciate all of the efforts you make every single day and although we have a lot of work ahead of us, we are truly excited about our future and the opportunity we have to grow our business together. Thank you.

[Operator:]

This does conclude the conference call for today. Please disconnect your lines and thank you for your participating.